Regulatory Compliance and Risks - ZK International's current auditor, Fortune CPA, Inc., is not subject to PCAOB inspection, which poses risks for compliance under the HFCAA[16] - The PCAOB announced it secured complete access to inspect audit firms in mainland China and Hong Kong in 2022, but future inspections remain uncertain[15] - ZK International has not been identified under the HFCAA, but potential delisting risks exist if the PCAOB cannot inspect its auditor for two consecutive years[16] - The approval requirements from the China Securities Regulatory Commission for future offerings may pose additional risks to the company's ability to raise capital[24] - New cybersecurity laws and regulations may affect the company's ability to conduct business and accept foreign investments[98] - Approval from the CSRC may be required for future offerings, which could impact the company's ability to list on overseas exchanges[99] - The CSRC has implemented new filing procedures for overseas securities offerings by PRC domestic enterprises, effective March 31, 2023[102] - The PRC government has issued new regulations emphasizing the need for stricter oversight of overseas listings by PRC-based companies, which may hinder the company's ability to raise additional capital[120] Operational and Market Risks - The company operates through subsidiaries primarily based in China, which exposes it to significant legal and operational risks due to Chinese government regulations[18] - Recent regulatory actions in China may impact the company's ability to conduct business and accept foreign investments, leading to potential depreciation of its ordinary shares[18] - The PRC Data Security Law and Personal Information Protection Law may affect the company's operations, although it currently does not require approval from PRC authorities for foreign investments[22] - The company faces scrutiny and negative publicity related to U.S.-listed Chinese companies, which could harm its business operations and reputation[26] - The Chinese government's influence over business operations may lead to significant changes in the company's operational landscape and financial stability[21] - The company's operations are significantly influenced by political, economic, and social conditions in China, which could adversely affect its competitive position and demand for products[27] - Trade barriers and taxes may reduce the company's ability to conduct business internationally, potentially harming profitability due to decreased sales in targeted emerging markets[28] - The ongoing COVID-19 pandemic has materially impacted operations in Zhejiang Province, with future financial conditions remaining uncertain[34] - The company faces intense competition in the pipe and fitting products market, which could pressure margins and adversely affect financial conditions[35] - Supply chain disruptions due to fragmentation and local protectionism in China may adversely impact the company's manufacturing capabilities and distribution[40] Financial Performance and Capital Structure - The company relies on dividends from its subsidiaries for cash needs, which could be limited by regulatory constraints on dividend payments[17] - The company's reliance on dividends from PRC subsidiaries for cash needs may be restricted by PRC regulations, affecting its ability to fund operations and pay dividends to shareholders[33] - Revenue is primarily generated in Renminbi, which is not freely convertible, potentially limiting the ability to pay dividends due to currency exchange restrictions[80] - A withholding tax rate of up to 10% applies to dividends paid to non-PRC-resident enterprises, which may be reduced to 5% under certain conditions[81] - The company may face delays or restrictions in making loans or capital contributions to its PRC subsidiaries due to PRC regulations[83] - Loans to PRC subsidiaries must be registered with the local SAFE and cannot exceed statutory limits[84] - Future capital contributions to PRC subsidiaries are subject to registration or approval by MOFCOM, which may affect the ability to use proceeds from future offerings[85] - The company does not expect to pay any cash dividends in the foreseeable future, as earnings will be used for business operations[65] - The company recorded a foreign currency translation adjustment loss of $861,280 for the fiscal year ended September 30, 2024, compared to a gain of $(549,332) in 2023 and a loss of $(5,504,385) in 2022[126] - The company is subject to a preferential income tax rate of 15% as a certified high-tech enterprise, but may face challenges from PRC taxing authorities regarding tax liabilities[136] Shareholder and Market Dynamics - The market price of the company's ordinary shares has been volatile, which could affect its ability to issue additional shares or obtain financing[47] - The company is not in compliance with Nasdaq's minimum bid price requirement of $1.00 per share and has until February 10, 2025, to regain compliance[48] - A reverse share split ratio of 1-for-7 was approved by the board on January 14, 2025, to help regain compliance with Nasdaq listing rules[48] - The concentration of ownership among officers and directors, who beneficially own approximately 24% of outstanding shares, may impact management decisions and shareholder outcomes[185] - The ordinary shares may face suspension and delisting from Nasdaq if compliance with listing rules is not regained, potentially leading to trading difficulties in the over-the-counter market[208] - A determination that the ordinary shares constitute a "penny stock" could impose stricter trading rules, resulting in reduced trading activity and lower prices[208] Management and Operational Challenges - The company is heavily reliant on senior management and key personnel, with potential risks associated with their loss or competition for their services[159][161] - The company may face significant costs and business disruptions due to insufficient insurance coverage for natural disasters or accidents[172] - The company is subject to increased legal and financial compliance costs due to public company regulations, which may strain resources and divert management's attention[190] - The company may experience litigation risks due to increased visibility of its business and financial condition as a public entity[191] - The company may face competitive disadvantages due to the obligation to disclose information publicly, which private competitors are not required to do[195] Economic and Industry Factors - The company is susceptible to fluctuations in general economic conditions, which could adversely affect operating results and revenue growth[169] - A slowdown in the Chinese economy, particularly in the real estate and hospitality sectors, could negatively affect demand for the company's products, which rely on consumer spending[140] - Revenue is at risk of decreasing if the construction industry, which is a primary market for the company's products, experiences a prolonged slowdown[142] - Fluctuations in the availability and cost of raw materials could materially affect the company's earnings and production capabilities[143][144] - The company experienced net cash usage of $6,475,650 in operating activities for the fiscal year ended September 30, 2024, indicating potential liquidity challenges[146] - Two vendors accounted for 51% of total purchases in the fiscal year ended September 30, 2024, highlighting dependency on key suppliers[147] - The company plans to explore strategic acquisitions to support growth, but may face challenges in identifying suitable candidates and integrating them effectively[153][154]

Core Viewpoint - ZK International Group Co., Ltd. has reported a significant improvement in its financial performance for the fiscal year ended September 30, 2024, with a 405% increase in gross profit and a 95.44% reduction in net loss, indicating a positive turnaround for the company [1][15]. Financial Highlights - Revenue for the fiscal year 2024 was $108.20 million, a decrease of 3.05% from $111.60 million in 2023 [2]. - Gross profit increased to $6.55 million from $1.30 million, marking a 405.02% increase [2]. - Gross margin improved to 6.5% from 1.16%, an increase of 4.89 percentage points [2]. - Loss from operations decreased to $1.72 million from $60.44 million, a reduction of 97.16% [2][9]. - Net loss attributable to ZK International was $2.78 million, compared to $61.06 million in the previous year, resulting in a loss per share of $0.08 versus $1.94 [2][13]. - Net book value per share increased to $0.82 from $0.80 [2][14]. Revenue Analysis - The decrease in revenue was primarily due to increased competition and loss of price-sensitive customers after raising the average selling price (ASP) in response to rising raw material costs [3][4]. - The recovery in the real estate market during fiscal year 2024 contributed to increased demand, contrasting with the downturn experienced in 2023 [3]. - The company anticipates a gross profit margin of 10% to 12% for the fiscal year 2025, driven by further increases in ASP and public sector investments [5][7]. Gross Profit Insights - The substantial increase in gross profit was attributed to a rise in the weighted average selling price, despite pressures from rising production costs [6]. - Gross profit margin for the year ended September 30, 2024, was 6.05%, up from 1.16% in the previous year [6]. Operational Loss Reduction - The significant decrease in operational loss was mainly due to improved gross margin performance and reduced one-off asset impairment costs incurred in the previous fiscal year [9]. - The company recorded a substantial asset impairment cost of $53.20 million in fiscal year 2023, primarily related to its investment in CG Malta and associated software platforms [10][11]. Strategic Outlook - The Chairman of ZK International expressed optimism about the company's future, highlighting the improved business climate and the potential for significant growth in profit margins and net profit [15]. - The company is focused on expanding its market share and enhancing operational strategies to capitalize on the recovering market conditions [15].

Core Insights - ZK International Group has secured a $4.47 million contract with Shenzhen Gas Group for the Shenzhen Municipal Infrastructural Gas Pipeline Procurement Project, focusing on crimped carbon steel pipes and fittings for gas engineering in residential buildings [1][2] - This contract reinforces ZK International's leadership in the gas infrastructure sector and highlights its commitment to innovative pipeline solutions [2] - The company is positioned to benefit from China's ongoing infrastructure development and modernization, particularly with the support of Shenzhen Gas Group [2][4] Innovation and Technological Leadership - ZK International has developed crimped carbon steel pipes and fittings that offer advantages over traditional materials, including improved safety, longevity, and cost-efficiency [3] - The products comply with key industry standards, showcasing the company's commitment to quality and innovation [3] Economic Context - The contract aligns with China's economic stimulus package aimed at revitalizing the economy through infrastructure investment, which is expected to benefit companies like ZK International [4] - ZK International reported a 9% increase in revenue, reaching $111.6 million, with its Chinese operations contributing a $2 million net income, indicating strong growth potential [5] Future Outlook - The company aims to optimize its pipeline technology to enhance safety, reliability, and sustainability, positioning itself as a vital player in China's evolving infrastructure landscape [6]

Core Viewpoint - ZK International Group Co., Ltd. reported a revenue increase of 6.50% for the first half of fiscal year 2024, driven by a recovery in the real estate market, despite facing rising raw material costs and a net loss for the period [2][3][4]. Financial Performance - Revenue for the six months ended March 31, 2024, was $52.89 million, up from $49.66 million in the same period of 2023, marking a 6.50% increase [2][3]. - Gross profit rose by 5.68% to $3.35 million, with a gross margin of 6.33%, slightly down from 6.38% in the prior year due to increased raw material costs [2][4]. - The company incurred an operating loss of $0.16 million, compared to an operating income of $0.14 million in the previous year, resulting in an operating margin of -0.31% [2][6]. - Net loss for the period was $0.48 million, compared to a net loss of $0.06 million for the same period in the prior year [2][6]. Cost Structure - Selling and marketing expenses decreased by 8.60% to $0.88 million, attributed to reduced marketing activities [4][5]. - General and administrative expenses increased by 39.26% to $2.01 million, primarily due to higher consulting fees and employee salaries [5]. - Research and development expenses slightly increased by 0.53% to $0.62 million [5]. Financial Condition - As of March 31, 2024, total current assets were $62.05 million, with current liabilities of $40.03 million, resulting in a current ratio of 1.55 [7]. - Cash and cash equivalents totaled $5.06 million, with short-term bank borrowings increasing to $13.34 million from $9.39 million as of September 30, 2023 [7]. - Accounts receivable rose to $20.56 million, while inventories decreased to $13.39 million [7]. Company Overview - ZK International is a designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products, focusing on the water and gas supply sectors [8][9]. - The company holds 33 patents and has supplied stainless steel pipelines for over 2,000 projects, including significant venues for the 2008 Beijing Olympics [8].

Core Viewpoint - ZK International Group Co., Ltd. reported a significant net loss for the fiscal year 2023, primarily due to one-time write-offs related to non-core investments, while revenue increased modestly, indicating challenges in the market but potential for recovery in the future [10][11]. Financial Performance - Revenue for the fiscal year ended September 30, 2023, was $111.60 million, an increase of 8.99% from $102.39 million in 2022 [2][3]. - Gross profit decreased by 82.93% to $1.30 million from $7.60 million in the previous year, with a gross margin of 1.16% compared to 7.42% [2][6]. - Loss from operations was $60.44 million, a significant increase from a loss of $3.96 million in the prior year, largely due to one-off asset impairment costs [2][7]. - Net loss attributable to ZK International was $61.06 million, or $1.94 per share, compared to a net loss of $6.08 million, or $0.21 per share, in the previous year [2][10]. Market Dynamics - The increase in revenue was driven by a strategic reduction in average selling prices to boost sales volume amid a declining real estate market in China, particularly influenced by the collapse of Evergrande [3][4]. - The average selling price of steel pipe decreased by 20.25% from RMB 140.26 per piece in 2022 to RMB 111.86 in 2023, while the sales volume of steel strip increased by 87.73% [4][5]. Asset Impairment and Strategic Focus - The company recorded an asset impairment cost of $53.20 million, primarily related to the write-off of long-term investments in CG Malta and various software platforms [7][9]. - The decision to cease funding CG Malta was made due to increasing competition in the gaming market, leading to a resolution to wind up the entity [8][9]. Future Outlook - The company anticipates a recovery in the real estate market and an increase in market demand for the fiscal year 2024, leading to an increase in average selling prices [3][6]. - The strategic write-offs are part of a broader plan to streamline operations and focus on high-growth opportunities, aiming for a more robust financial foundation [10].

Regulatory Environment - ZK International is not expected to be identified under the Holding Foreign Companies Accountable Act (HFCAA) and its current auditor, Fortune CPA, Inc., is subject to PCAOB inspections[13]. - The PCAOB announced it secured complete access to inspect and investigate PCAOB-registered public accounting firms in mainland China and Hong Kong in 2022[12]. - Recent regulatory actions in China may create uncertainties regarding the ability to list on U.S. exchanges, potentially leading to significant depreciation of the company's ordinary shares[19]. - The approval from Chinese authorities may be required for future offerings, which could hinder the company's ability to operate and offer securities[23]. - Intense scrutiny of U.S.-listed Chinese companies may negatively impact the company's operations and reputation, potentially affecting investor confidence[27]. - The PRC Data Security Law and Personal Information Protection Law may impose new compliance requirements, affecting the company's operations and ability to attract foreign investments[21]. - The Measures for Cybersecurity Review (2021) require online platform operators with over one million users' personal information to undergo a cybersecurity review before listing in foreign markets[102]. - The Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, effective March 31, 2023, mandates filing procedures for PRC domestic enterprises seeking to list overseas, which could hinder future offerings[110]. - The PRC government may strengthen oversight over overseas offerings, which could hinder the company's ability to raise additional capital[131]. - The SEC has taken the position that certain cryptocurrencies may be classified as securities, impacting regulatory obligations for trading[208]. - If a stablecoin offered on xSigma's platform is deemed a security, the company could face legal or regulatory actions[208]. - The CFTC generally classifies cryptocurrencies as commodities, which may also subject xSigma Corporation to regulatory scrutiny[208]. Financial Stability and Operations - The company relies on dividends from its subsidiaries for cash needs, and any limitations on these payments could affect its financial stability[16]. - The company operates without a variable interest entity structure, which presents unique risks to investors[16]. - The company conducts substantially all of its operations in China, making it significantly influenced by the political, economic, and social conditions in the region[28]. - The company faces risks related to trade barriers and taxes that may reduce its ability to conduct international business, potentially harming profitability[29]. - There are uncertainties regarding the enforcement of laws in China, which could adversely affect the company's operations and financial performance[31]. - The PRC government imposes controls on currency conversion, which may affect the company's ability to pay dividends in foreign currencies[32]. - The company relies on dividends from its PRC subsidiaries to meet cash needs, and any limitations on these payments could impact financial stability[35]. - The ongoing COVID-19 pandemic has materially impacted operations in Zhejiang Province, with future effects on financial condition remaining uncertain[36]. - The company operates in a highly competitive industry, facing pressure on margins from both regional and importing manufacturers[37]. - Fluctuations in the availability and prices of raw materials could materially increase costs and lower earnings[38]. - Supply chain disruptions due to local protectionism and other factors could adversely impact the company's ability to produce and deliver products[41]. - The company may incur liability for unpaid taxes, including interest and penalties, as it faces challenges from PRC taxing authorities regarding tax amounts due[147]. - The company may require additional capital to support business growth and may need to engage in equity or debt financings[152]. - The company’s financial condition and results of operations may be adversely affected by failure to make adequate contributions to employee benefit plans as required by PRC regulations[143]. - The company’s ability to produce and deliver products may be adversely impacted by disruptions in the supply chain of raw materials[160]. Corporate Governance and Management - The company is heavily dependent on senior management and key personnel for its operations, with a particular reliance on the CEO Jiancong Huang[173]. - The company may face challenges in retaining key employees and customers post-acquisition, which could impact future earnings[168]. - The company’s ability to manage growth effectively is critical, as failure to do so could strain resources and adversely affect business prospects[169]. Market and Competitive Risks - The company is exploring strategic acquisitions in the PRC to complement its existing business, but currently has no commitments or agreements in place[167]. - The company’s growth strategy includes enhancing research and development capabilities, improving information technology systems, and increasing marketing and sales activities[169]. - The company acknowledges that the adoption of cryptocurrencies may slow or not develop as anticipated, which would negatively impact its business and financial results[201]. - The cryptocurrency market is subject to significant volatility, and the trading volume of digital assets can be influenced by various factors, including market conditions and regulatory changes[196][198]. - The online gaming and interactive entertainment industry, which includes CG Malta Holding Limited, presents significant uncertainty and business risks due to evolving regulations and competition[192][193]. Revenue Generation and Financial Performance - The company is dependent on the volume of transactions on its stablecoin exchange platform, with low trading volume posing risks to revenue generation[48]. - xSigma Corporation's revenue is dependent on the transaction volume conducted on its stablecoin exchange platform, and failure to grow this volume could adversely affect its business and financial condition[194]. - For the fiscal years ended September 30, 2023, 2022, and 2021, xSigma Corporation decided not to recognize revenue for its token SIG due to low trading volume and unstable market price[195]. - The stablecoin exchange platform launched by xSigma Corporation in February 2021 aims to generate commission revenue based on transaction fees, which could be a flat fee or a percentage of the transaction value[195]. - xSigma Corporation's stablecoin exchange currently supports the exchange of DAI, USDC, and USDT, which are fiat-backed stablecoins but not considered legal tender[200]. Taxation and Compliance - PRC regulations require subsidiaries to set aside at least 10% of their net income after taxes as statutory surplus reserves until the cumulative amount reaches 50% of their registered capital[75]. - A withholding tax rate of up to 10% applies to dividends payable by Chinese companies to non-PRC-resident enterprises, which could affect cash distributions[90]. - The 10% withholding tax rate may be reduced to 5% under certain conditions, but obtaining the necessary tax resident certificate is not guaranteed[91]. - The company may be classified as a "Resident Enterprise" under the PRC Enterprise Income Tax Law, which could subject it to a 25% tax rate on worldwide income[119]. - If classified as a "Resident Enterprise," dividends from PRC subsidiaries would be considered "tax-exempt income," but a 10% withholding tax may apply to dividends paid to non-PRC stockholders[121]. - The company has no current non-China source income, but future developments could lead to adverse tax consequences if such income is generated[121]. - The RMB is subject to government controls on currency conversion, which may restrict the ability to remit foreign currency for dividends or other payments[133]. - For the fiscal year ended September 30, 2023, the company reported a foreign currency translation adjustment loss of $(542,114)[136]. Cybersecurity and Data Protection - The company implements know-your-customer (KYC) procedures to mitigate risks associated with outdated or misleading information from users, but cannot fully guarantee the accuracy of such information[56]. - xSigma Collectibles must safeguard customers' fiat and crypto assets; failure to do so could lead to significant financial losses and reputational harm[57]. - xSigma Corporation has implemented know-your-customer (KYC) procedures to prevent sales of CFD and crypto assets to U.S. persons[210]. - The company will reject all account applications with any U.S. exposure, including U.S. citizens or residents[211]. - xSigma Trading will establish a blacklist of IP addresses to block users from U.S. sanctioned countries[211]. - The company faces risks related to outdated or inaccurate client information provided during the account registration process[210]. - xSigma Corporation cannot fully confirm the accuracy of client information beyond reasonable efforts, which may lead to compliance risks[210].

WENZHOU, China, July 19, 2024 /PRNewswire/ -- ZK International Group Co., Ltd. (Nasdaq: ZKIN) ("ZKIN", "ZK International" or the "Company"), a leading manufacturer and supplier of patented high-performance stainless steel and carbon steel pipe products, is pleased to announce that on July 12, 2024, the Board of Directors approved and ratified an investment of $2 million in Recruiter.com Group, Inc. (Nasdaq: RCRT) ("Recruiter.com") through the purchase of 2,000,000 shares of Common Stock at a purchase price ...

WENZHOU, China, June 26, 2024 /PRNewswire/ -- ZK International Group Co., Ltd. (Nasdaq: ZKIN) (the "Company") announces that Nasdaq has granted the Company an additional extension to file its Form 20-F for the fiscal year ended September 30, 2023. Initially, Nasdaq had extended the deadline to June 7, 2024. However, upon a subsequent request, Nasdaq has provided a further extension through August 13, 2024. This extension allows the Company more time to complete and submit its annual report. Should the Compa ...

WENZHOU, China, May 7, 2024 /PRNewswire/ -- ZK International Group Co., Ltd. (Nasdaq: ZKIN) ("ZKIN," "ZK International" or the "Company"), a leading provider of advanced steel products, is pleased to announce the successful closing of its previously announced $5 million financing. The additional investment of US$1.5 million, was calculated at 165% premium, thus reinforces CF Opportunity Fund's dedication to ZK and its confidence in the Company's capacity for growth. As previously disclosed in the report of ...

WENZHOU, China, May 6, 2024 /PRNewswire/ -- ZK International Group Co., Ltd. (Nasdaq: ZKIN) ("ZKIN," "ZK International" or the "Company"), a global leader in the design, manufacture, and sale of high-performance stainless steel and carbon steel pipe products, announces today that it has been granted an exception by Nasdaq Staff regarding its Form 20-F filing for the period ended September 30, 2023. On February 20, 2024, Nasdaq Staff notified the Company of non-compliance with Nasdaq's filing requirements un ...