Financial Performance - Total revenues increased by 30.13% from $29.05 million in 2023 to $37.81 million in 2024, driven by a 27.58% increase in sales volume[325]. - Gross profit rose by 23.09% to $13.56 million in 2024, although the gross profit margin decreased from 37.93% to 35.88% due to higher sales of lower-margin products[329][330]. - Income from operations plummeted by 73.98% to $1.63 million, impacted by rising expenses and lower profit margins[338]. - Net income decreased by 52.37% to $3.66 million, primarily due to reduced income from operations and increased expenses[343]. - Net income grew by 5.65% to $7.69 million in 2023, with net income attributable to the company's shareholders at $7.69 million[363]. - Other income, net increased by 27.20% to $2.69 million, attributed to higher investment income and rental income[361]. Expenses - General and administrative expenses surged by 164.88% to $6.70 million, primarily due to increased professional service fees related to the initial public offering[332]. - Selling and marketing expenses increased by 169.08% to $4.71 million, attributed to higher sales commissions and freight costs from market expansion into North America and other regions[334]. - Research and development expenses grew by 20.36% to $0.55 million, reflecting increased personnel costs despite a slight decrease in material consumption[336]. - General and administrative expenses surged by 78.76% to $2.53 million, primarily due to increased disposal expenses and salaries[353]. - Selling and marketing expenses increased by 88.60% to $1.75 million, driven by higher sales commissions and transportation fees[355]. - Research and development expenses decreased by 6.59% to $0.46 million, mainly due to reduced material consumption[357]. Revenue Sources - Revenues from customers in China accounted for 93.50% in 2023 and decreased to 86.79% in 2024, indicating a slight diversification in revenue sources[324]. - The company reported a significant increase in sales volume for screws by 32.17%, contributing $3.77 million to revenue despite a slight decrease in average unit sales price[326]. - Total revenues increased by 17.20% from $24.79 million in 2022 to $29.05 million in 2023, with revenues from China accounting for 93.50% of total revenue in 2023[347][348]. Cash Flow and Investments - Cash and cash equivalents at the end of 2023 were $3.90 million, with positive working capital of $19.52 million[365]. - Net cash provided by operating activities for 2023 was $4.12 million, primarily due to net income and adjustments for non-cash items[371]. - The company reported net cash provided by investing activities of $1.29 million for the year ended December 31, 2023, mainly from dividends received of $1.86 million[375]. - For the year ended December 31, 2024, net cash used in investing activities was US$2.80 million, primarily due to machinery and equipment purchases of US$2.47 million[374]. - For the year ended December 31, 2024, net cash provided by financing activities was US$6.75 million, primarily from IPO proceeds of US$6.91 million[377]. - The company reported net cash used in financing activities of US$2.95 million for the year ended December 31, 2023, mainly due to long-term debt repayments of US$1.75 million[378]. - Capital expenditures for the company amounted to US$0.37 million and US$2.52 million for the years ended December 31, 2023 and 2024, respectively[382]. Obligations and Receivables - As of December 31, 2024, total contractual obligations amounted to US$3,610,309, with US$2,821,103 due within one year[383]. - As of December 31, 2024, 98.70% of accounts receivable was within 180 days, indicating strong collection performance[394]. - The company experienced an increase of US$2.36 million in accounts payable due to increased third-party procurement for the year ended December 31, 2022[373]. Revenue Recognition and Tax Position - The company recognizes revenue from product sales when control of the goods is obtained by the customer, following the five-step process outlined in ASC 606[400]. - No contract assets or liabilities were recognized as of December 31, 2023, and 2024, indicating stable revenue recognition practices[404]. - Warranty costs are treated as a fulfillment cost, with no liabilities accrued for product returns related to quality issues as of December 31, 2023, and 2024[405]. - All product revenue is recorded on a gross basis, with the company primarily responsible for fulfilling sales contracts[406]. - Performance obligations are satisfied upon delivery or pickup of goods, with relevant documentation collected[407]. - There were no uncertain tax positions for the years ended December 31, 2022, 2023, and 2024, reflecting a stable tax position[410]. Foreign Exchange Risks - Foreign currency exchange gains were recognized as follows: US$18,314 in 2022, US$12,433 in 2023, and US$113,736 in 2024, indicating fluctuations in exchange rates[567]. - Revenue and expenses in mainland China are generally denominated in Renminbi, affecting the value of investments in U.S. dollars[564]. - The company faces foreign exchange risks due to the non-convertibility of Renminbi into foreign currencies, requiring regulatory approval for currency remittances[565]. - Appreciation of the Renminbi against the U.S. dollar adversely affects the amount received from conversions for operational needs[566]. - The company has not accrued any liabilities related to product returns for quality issues, indicating effective quality control measures[405].
ZJK Industrial Co., Ltd.(ZJK) - 2024 Q4 - Annual Report