2023 Q3 Form 20-F Financial Statement

#000121390024009988 Filed on February 05, 2024

View on sec.gov

Income Statement

Concept 2023 Q3 2023 2022 Q3
Revenue $46.38M $1.219M $39.58M
YoY Change 17.18% -98.4% -1.93%
Cost Of Revenue $39.75M $84.33M $34.39M
YoY Change 15.61% 29.28% -0.02%
Gross Profit $6.626M $12.36M $5.193M
YoY Change 27.59% 10.96% -12.97%
Gross Profit Margin 14.29% 1013.55% 13.12%
Selling, General & Admin $3.612M $7.338M $2.423M
YoY Change 49.08% 13.73% -17.63%
% of Gross Profit 54.52% 59.39% 46.66%
Research & Development $1.409M $2.551M $1.108M
YoY Change 27.19% 9.43% -1.88%
% of Gross Profit 21.26% 20.64% 21.33%
Depreciation & Amortization $326.7K $657.1K $401.8K
YoY Change -18.69% -20.35%
% of Gross Profit 4.93% 5.32% 7.74%
Operating Expenses $5.021M $9.245M $3.531M
YoY Change 42.22% 5.26% -13.26%
Operating Profit $1.605M $3.111M $1.663M
YoY Change -3.48% 32.22% -12.33%
Interest Expense $25.98K $347.9K -$677.0K
YoY Change -103.84% -121.35% -40.21%
% of Operating Profit 1.62% 11.18% -40.72%
Other Income/Expense, Net $290.0K $405.5K $1.145M
YoY Change -74.67% -71.0% 15.4%
Pretax Income $1.921M $3.516M $2.130M
YoY Change -9.84% 65.77% 21.3%
Income Tax $79.48K $220.9K $173.0K
% Of Pretax Income 4.14% 6.28% 8.12%
Net Earnings $1.821M $3.258M $1.933M
YoY Change -5.8% 69.3% 1.99%
Net Earnings / Revenue 3.93% 267.24% 4.88%
Basic Earnings Per Share $0.23
Diluted Earnings Per Share $0.13 $0.23 $0.15
COMMON SHARES
Basic Shares Outstanding 14.26M shares 14.14M shares
Diluted Shares Outstanding 14.14M shares

Balance Sheet

Concept 2023 Q3 2023 2022 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $20.19M $20.19M $13.20M
YoY Change 53.02% 53.02% -14.03%
Cash & Equivalents $20.19M $20.19M $13.20M
Short-Term Investments
Other Short-Term Assets $2.875M $2.875M $4.717M
YoY Change -39.04% -39.04% -55.76%
Inventory $26.71M $26.71M $24.87M
Prepaid Expenses
Receivables $22.63M $22.63M $19.66M
Other Receivables $171.2K $7.832M $1.963M
Total Short-Term Assets $80.24M $80.24M $64.40M
YoY Change 24.59% 24.59% -16.45%
LONG-TERM ASSETS
Property, Plant & Equipment $5.355M $5.355M $5.989M
YoY Change -10.59% -10.59% -16.92%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $12.52M $12.52M $12.84M
YoY Change -2.5% -2.5% -9.42%
Other Assets $198.2K $590.9K $338.7K
YoY Change -41.49% 74.45% -38.4%
Total Long-Term Assets $22.77M $22.77M $20.23M
YoY Change 12.55% 12.55% -12.65%
TOTAL ASSETS
Total Short-Term Assets $80.24M $80.24M $64.40M
Total Long-Term Assets $22.77M $22.77M $20.23M
Total Assets $103.0M $103.0M $84.64M
YoY Change 21.71% 21.71% -15.57%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $3.434M $7.126M $3.359M
YoY Change 2.25% 112.18% 95.98%
Accrued Expenses $1.946M $1.946M $1.771M
YoY Change 9.88% 9.88% -13.55%
Deferred Revenue $2.393M $4.006M
YoY Change -40.26%
Short-Term Debt $4.443M $6.075M $12.44M
YoY Change -64.28% -51.15% -65.23%
Long-Term Debt Due $43.86K $43.86K
YoY Change
Total Short-Term Liabilities $22.61M $22.61M $25.70M
YoY Change -12.03% -12.03% -47.3%
LONG-TERM LIABILITIES
Long-Term Debt $5.399M $5.399M $9.301M
YoY Change -41.95% -41.95%
Other Long-Term Liabilities $317.7K $317.7K
YoY Change
Total Long-Term Liabilities $5.399M $5.717M $9.301M
YoY Change -41.95% -38.54%
TOTAL LIABILITIES
Total Short-Term Liabilities $22.61M $22.61M $25.70M
Total Long-Term Liabilities $5.399M $5.717M $9.301M
Total Liabilities $28.33M $28.60M $35.25M
YoY Change -19.65% -18.87% -28.1%
SHAREHOLDERS EQUITY
Retained Earnings $6.680M $3.802M
YoY Change 75.68%
Common Stock $67.28M $44.21M
YoY Change 52.18%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $74.41M $74.41M $49.38M
YoY Change
Total Liabilities & Shareholders Equity $103.0M $103.0M $84.64M
YoY Change 21.71% 21.71% -15.57%

Cashflow Statement

Concept 2023 Q3 2023 2022 Q3
OPERATING ACTIVITIES
Net Income $1.821M $3.258M $1.933M
YoY Change -5.8% 69.3% 1.99%
Depreciation, Depletion And Amortization $326.7K $657.1K $401.8K
YoY Change -18.69% -20.35%
Cash From Operating Activities -$1.882M -$2.448M -$2.070M
YoY Change -9.05% -130.49%
INVESTING ACTIVITIES
Capital Expenditures $3.544M $157.6K $134.6K
YoY Change 2532.51% -23.58%
Acquisitions
YoY Change
Other Investing Activities $4.020K $4.020K $110.2K
YoY Change -96.35%
Cash From Investing Activities -$3.540M -$3.594M -$24.41K
YoY Change 14402.83% 1643.16%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $0.00
YoY Change
Debt Paid & Issued, Net $9.390M
YoY Change
Cash From Financing Activities 6.099M $11.58M -938.7K
YoY Change -749.74% -218.85%
NET CHANGE
Cash From Operating Activities -1.882M -$2.448M -2.070M
Cash From Investing Activities -3.540M -$3.594M -24.41K
Cash From Financing Activities 6.099M $11.58M -938.7K
Net Change In Cash 676.5K $6.418M -3.033M
YoY Change -122.31% -433.74%
FREE CASH FLOW
Cash From Operating Activities -$1.882M -$2.448M -$2.070M
Capital Expenditures $3.544M $157.6K $134.6K
Free Cash Flow -$5.427M -$2.605M -$2.204M
YoY Change 146.17% -133.31%

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Use of Estimates</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying notes. Such estimates include, but are not limited to, allowances for doubtful accounts, inventory valuation, useful lives of property, plant and equipment, intangible assets, impairment in equity investment, and income taxes related to realization of deferred tax assets and uncertain tax position. Actual results could differ from those estimates.</p>
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CY2022Q3 hudi Advance From Customer
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CY2023 hudi Tax Benefits Percentage
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Certain Risks and Concentration </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Exchange Rate Risks</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in PRC, which may give rise to significant foreign currency risks mainly from fluctuations and the degree of volatility of foreign exchange rates between the USD and the RMB.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Currency Convertibility Risks</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Concentration of Credit Risks</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, notes receivable. The Company places its cash and cash equivalents, restricted cash, and note receivable in good credit quality financial institutions in Hong Kong and PRC. Concentration of credit risks with respect to accounts receivables is linked to the concentration of revenue. To manage credit risk, the Company performs ongoing credit evaluations of customers’ financial condition. The Company maintains most bank accounts in PRC. Cash balances in bank accounts in PRC are protected under Deposit Protection Scheme in accordance with the Deposit Protection Scheme Ordinance. The maximum protection is up to RMB500,000 per depositor per Scheme member, including both principal and interest.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Interest Rate Risks</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is subject to interest rate risk. The Company has bank interest bearing loans charged at variable interest rates. And although some bank interest bearing loans are charged at fixed interest rates within the reporting period, the Company is still subject to the risk of adverse changes in the interest rates charged by the banks when these loans are refinanced.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Risks and Uncertainties</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Liquidity Risks</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our primary sources of liquidity consist of existing cash balances, cash flows from our operating activities and availability under our revolving credit facility. Our ability to generate sufficient cash flows from our operating activities is primarily dependent on our sales of steel pipe, tube and ancillary products to our customers at margins sufficient to cover fixed and variable expenses. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of September 30, 2023 and 2022, we had cash and cash equivalents of $20,192,460 and $13,195,999, respectively. We believe that our current cash, cash to be generated from our operations and access to loans from our related parties will be sufficient to meet our working capital needs for at least the next twelve months. However, we do not have any amounts committed to be provided by our related party. We plan to expand our business to implement our growth strategies in our existing market and strengthen our position in the marketplace. To do so, we will need more capital through equity financing to increase our production and meet market demands.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
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CY2022Q3 us-gaap Inventory Work In Process
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CY2023Q3 us-gaap Inventory Finished Goods
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CY2022Q3 us-gaap Inventory Finished Goods
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