Full Press Release Details
JIN MEDICAL INTERNATIONAL LTD. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | September 30, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 8,874,902 | $ | 6,929,508 | ||||
| Short-term investments | 17,113,103 | 9,768,835 | ||||||
| Accounts receivable, net | 3,856,529 | 3,283,266 | ||||||
| Accounts receivable - related parties | 1,524,570 | 947,949 | ||||||
| Inventories | 4,540,852 | 5,053,136 | ||||||
| Due from related parties | 65,037 | 4,240,524 | ||||||
| Prepaid expenses and other current assets | 2,202,847 | 892,597 | ||||||
| TOTAL CURRENT ASSETS | 38,177,840 | 31,115,815 | ||||||
| Operating lease right-of-use assets | 263,331 | - | ||||||
| Property, plant and equipment, net | 1,464,107 | 1,480,796 | ||||||
| Land use right, net | 1,124,404 | 154,364 | ||||||
| Deferred tax assets, net | 130,441 | 152,475 | ||||||
| TOTAL ASSETS | $ | 41,160,123 | $ | 32,903,450 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term bank loans | $ | 9,681,150 | $ | 4,113,000 | ||||
| Accounts payable | 3,146,451 | 3,391,079 | ||||||
| Accrued liabilities and other payables | 527,822 | 318,500 | ||||||
| Deferred revenue | 546,988 | 710,099 | ||||||
| Deferred revenue - related parties | 131,521 | 119,120 | ||||||
| Taxes payable | 564,626 | 271,423 | ||||||
| Due to related parties | 138,664 | 1,124 | ||||||
| Operating lease liabilities, current | 88,297 | - | ||||||
| TOTAL CURRENT LIABILITIES | 14,825,519 | 8,924,345 | ||||||
| NON-CURRENT LIABILITIES: | ||||||||
| Operating lease liabilities, non-current | 179,691 | - | ||||||
| 179,691 | - | |||||||
| TOTAL LIABILITIES | 15,005,210 | 8,924,345 | ||||||
| COMMITMENTS AND CONTINGENCIES | ' | |||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Ordinary shares, $ 0.00005 par value, 1,000,000,000 shares authorized, 156,547,100 shares 155,947,100 shares were issued and outstanding as of March 31, 2024 and September 30, 2023, respectively* | 7,827 | 7,797 | ||||||
| Additional paid-in capital | 6,749,144 | 6,437,179 | ||||||
| Statutory reserves | 2,277,430 | 2,010,890 | ||||||
| Retained earnings | 18,455,159 | 16,927,605 | ||||||
| Accumulated other comprehensive loss | ( 1,245,394 | ) | ( 1,404,366 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY | 26,244,166 | 23,979,105 | ||||||
| Non-controlling interest | ( 89,253 | ) | - | |||||
| TOTAL EQUITY | 26,154,913 | 23,979,105 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 41,160,123 | $ | 32,903,450 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| For the Six months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| REVENUE | ||||||||
| Revenue - third party | $ | 9,380,513 | $ | 9,890,292 | ||||
| Revenue - related party | 1,176,378 | 362,871 | ||||||
| Total revenue | 10,556,891 | 10,253,163 | ||||||
| COST OF REVENUE AND RELATED TAX | ||||||||
| Cost of revenue | 6,759,586 | 6,620,447 | ||||||
| Business and sales related tax | 60,975 | 101,843 | ||||||
| Total cost of revenue and related tax | 6,820,561 | 6,722,290 | ||||||
| GROSS PROFIT | 3,736,330 | 3,530,873 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling expenses | 358,768 | 206,194 | ||||||
| General and administrative expenses | 1,538,680 | 922,188 | ||||||
| Research and development expenses | 609,645 | 631,034 | ||||||
| Total operating expenses | 2,507,093 | 1,759,416 | ||||||
| INCOME FROM OPERATIONS | 1,229,237 | 1,771,457 | ||||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest income, net | 681,588 | 94,571 | ||||||
| Foreign exchange gain (loss) | 414 | ( 63,253 | ) | |||||
| Other income, net | 102,164 | 167,625 | ||||||
| Total other income, net | 784,166 | 198,943 | ||||||
| INCOME BEFORE INCOME TAX PROVISION | 2,013,403 | 1,970,400 | ||||||
| PROVISION FOR INCOME TAXES | 309,013 | 204,053 | ||||||
| NET INCOME | 1,704,390 | 1,766,347 | ||||||
| Less: net loss attributable to non-controlling interest | ( 89,704 | ) | - | |||||
| NET INCOME ATTRIBUTABLE TO JIN MEDICAL INTERNATIONAL LTD. | $ | 1,794,094 | $ | 1,766,347 | ||||
| COMPREHENSIVE INCOME | ||||||||
| Net income | 1,704,390 | 1,766,347 | ||||||
| Foreign currency translation gain | 159,423 | 570,160 | ||||||
| Comprehensive income | 1,863,813 | 2,336,507 | ||||||
| Less: comprehensive loss attributable to non-controlling interest | ( 89,253 | ) | - | |||||
| COMPREHENSIVE INCOME ATTRIBUTABLE TO JIN MEDICAL INTERNATIONAL LTD. | $ | 1,953,066 | $ | 2,336,507 | ||||
| Earnings per common share - basic and diluted | $ | 0.01 | $ | 0.01 | ||||
| Weighted average shares - basic and diluted* | 156,401,198 | 135,219,780 |
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
THE SIX MONTHS ENDED MARCH 31, 2024 AND 2023
| Ordinary Shares* | Additional Paid in | Statutory | Retained | Accumulated Other Comprehensive | Total Shareholders' | Non- controlling | Total | |||||||||||||||||||||||||||||
| Shares | Amount | Capital | Reserves | Earnings | Income (Loss) | Equity | Interest | Equity | ||||||||||||||||||||||||||||
| Balance at September 30, 2022 | 6,750,000 | $ | 6,750 | $ | 79,810 | $ | 1,651,422 | $ | 14,408,843 | $ | ( 911,134 | ) | $ | 15,235,691 | - | 15,235,691 | ||||||||||||||||||||
| Issuance of ordinary shares in initial public offerings, gross | 1,000,000 | 1,000 | 7,999,000 | - | - | - | 8,000,000 | - | 8,000,000 | |||||||||||||||||||||||||||
| Cost directly related to the initial public offering | - | - | ( 2,025,679 | ) | - | - | - | ( 2,025,679 | ) | - | ( 2,025,679 | ) | ||||||||||||||||||||||||
| Net income | - | - | - | - | 1,766,347 | - | 1,766,347 | - | 1,766,347 | |||||||||||||||||||||||||||
| Statutory reserve | - | - | - | 176,550 | ( 176,550 | ) | - | - | - | - | ||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | 570,160 | 570,160 | - | 570,160 | |||||||||||||||||||||||||||
| Balance at March 31, 2023 | 7,750,000 | $ | 7,750 | $ | 6,053,131 | $ | 1,827,972 | $ | 15,998,640 | $ | ( 340,974 | ) | $ | 23,546,519 | - | 23,546,519 | ||||||||||||||||||||
| Balance at September 30, 2023 | 155,947,100 | $ | 7,797 | $ | 6,437,179 | $ | 2,010,890 | $ | 16,927,605 | $ | ( 1,404,366 | ) | $ | 23,979,105 | - | 23,979,105 | ||||||||||||||||||||
| Issuance of Ordinary Shares | 30,000 | 30 | 311,965 | - | - | - | 311,995 | - | 311,995 | |||||||||||||||||||||||||||
| Net income (loss) | - | - | - | - | 1,794,094 | - | 1,794,094 | ( 89,704 | ) | 1,704,390 | ||||||||||||||||||||||||||
| Statutory reserve | - | - | - | 266,540 | ( 266,540 | ) | - | - | - | - | ||||||||||||||||||||||||||
| Foreign currency translation gain | - | - | - | - | - | 158,972 | 158,972 | 451 | 159,423 | |||||||||||||||||||||||||||
| Balance at March 31, 2024 | 155,977,100 | $ | 7,827 | $ | 6,749,144 | $ | 2,277,430 | $ | 18,455,159 | $ | ( 1,245,394 | ) | $ | 26,244,166 | ( 89,253 | ) | 26,154,913 |
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 1,704,390 | $ | 1,766,347 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Amortization of operating lease right-of-use assets | 48,105 | - | ||||||
| Depreciation and amortization | 120,046 | 114,465 | ||||||
| Gain on disposition of property and equipment | 2,590 | 523 | ||||||
| Provision for (net recovery of) credit losses | ( 87,627 | ) | 171,522 | |||||
| Deferred tax provision | 23,711 | 68,561 | ||||||
| Short-term investments income | ( 11,655 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( 454,837 | ) | ( 75,355 | ) | ||||
| Accounts receivable - related parties | ( 569,807 | ) | ( 28,932 | ) | ||||
| Inventories | 566,734 | 447,024 | ||||||
| Prepaid expenses and other current assets | ( 1,308,346 | ) | 47,501 | |||||
| Accounts payable | ( 278,216 | ) | 348,579 | |||||
| Accrued liabilities and other payables | 206,416 | ( 29,199 | ) | |||||
| Deferred revenue | ( 171,223 | ) | ( 293,968 | ) | ||||
| Deferred revenue - related parties | 11,241 | 122,795 | ||||||
| Taxes payable | 291,899 | 83,630 | ||||||
| Operating lease liabilities | ( 43,424 | ) | - | |||||
| Net cash provided by operating activities | 49,997 | 2,743,493 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to property, plant and equipment | ( 83,680 | ) | ( 11,014 | ) | ||||
| Additions to land use right | ( 980,692 | ) | - | |||||
| Proceeds from disposal of property and equipment | 348 | 100 | ||||||
| Payments for short-term investments | ( 16,136,000 | ) | ( 3,152,600 | ) | ||||
| Redemption of short-term investments | 8,810,675 | 850,154 | ||||||
| Repayment of (payments of) advances made to related parties | 4,240,111 | ( 4,760,469 | ) | |||||
| Net cash used in investing activities | ( 4,149,238 | ) | ( 7,073,829 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Gross proceeds from initial public offerings | - | 8,000,000 | ||||||
| Direct costs disbursed from initial public offerings proceeds | - | ( 1,212,779 | ) | |||||
| Proceeds from sale of Ordinary Shares, net of issuance costs | 311,995 | - | ||||||
| Proceeds from short-term bank loans | 5,554,080 | 1,433,000 | ||||||
| Proceeds from (repayment of) amount due to related parties | 138,223 | ( 120,333 | ) | |||||
| Net cash provided by financing activities | 6,004,298 | 8,099,888 | ||||||
| Effect of exchange rate changes on cash | 40,337 | 122,004 | ||||||
| Net increase in cash | 1,945,394 | 3,891,556 | ||||||
| Cash, beginning of period | 6,929,508 | 4,792,632 | ||||||
| Cash, end of period | $ | 8,874,902 | $ | 8,684,188 | ||||
| Supplemental disclosure information: | ||||||||
| Cash paid for income tax | $ | 2,234 | $ | 28,415 | ||||
| Cash paid for interest | $ | 93,256 | $ | - | ||||
| Non-cash operating, investing and financing activities | ||||||||
| Deferred IPO cost offset with additional paid-in capital | $ | - | $ | 812,900 | ||||
| Right of use assets obtained in exchange for operating lease liabilities | $ | 312,767 | $ | - |
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
JIN MEDICAL INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION
JIN MEDICAL INTERNATIONAL
LTD. ("Jin Med" or the "Company") was established under the laws of the Cayman Islands on January 14, 2020 as
equity interest of Zhongjin International Limited ("Zhongjin HK"), an entity incorporated on February 25, 2020 in accordance
with the laws and regulations in Hong Kong.
Erhua Medical Technology
(Changzhou) Co., Ltd. ("Erhua Med") was formed on September 24, 2020, as a Wholly Foreign-Owned Enterprise ("WFOE")
in the People's Republic of China ("PRC"). Zhongjin HK owns 100% equity interest of Erhua Med.
Jin Med, Zhongjin HK
and Erhua Med are currently not engaging in any active business operations and merely acting as holding companies.
Changzhou Zhongjin Medical
Equipment Co., Ltd. ("Changzhou Zhongjin") was incorporated on January 26, 2006 in accordance with PRC laws. Changzhou Zhongjin
has two wholly-owned subsidiaries, Zhongjin Medical Equipment Taizhou Co., Ltd. ("Taizhou Zhongjin"), incorporated on June
17, 2013, and Changzhou Zhongjin Jing'ao Trading Co., Ltd ("Zhongjin Jing'ao"), incorporated on December 18, 2014
in accordance with PRC laws.
Zhongjin Kangma Information
Technology Jiangsu Co., Ltd. ("Zhongjin Kangma") was incorporated on August 21, 2023 in accordance with PRC laws. Changzhou
Zhongjin owns an equity interest of 80% of Zhongjin Kangma, and the remaining 20% equity interest is owned by one shareholder.
Changzhou Zhongjin, Taizhou
Zhongjin, Zhongjin Jing'ao and Zhongjin Kangma are collectively referred to as the "Zhongjin Operating Companies" below.
Zhongjin Medical Equipment
Anhui Co., Ltd. ("Anhui Zhongjin") was incorporated on October 7, 2023, as a WFOE in the PRC. Zhongjin HK owns 100% equity
interest of Anhui Zhongjin. Anhui Zhongjin is currently not engaging in any active business operations.
The Company, through
its wholly-owned subsidiaries and entities controlled through contractual arrangements, is primarily engaged in the design, development,
manufacturing and sales of wheelchair and other living aids products to be used by people with disabilities or impaired mobility. The
Company's products are sold to distributors in both China and in the overseas markets.
A reorganization of the
legal structure of the Company ("Reorganization") was completed on November 26, 2020. The Reorganization involved the incorporation
of Jin Med, Zhongjin HK and Erhua Med, and signing of certain contractual arrangements (collectively, the "VIE Agreements")
between Zhongjin Technology, the shareholders of Changzhou Zhongjin and Changzhou Zhongjin. Consequently, the Company became the ultimate
holding company of Zhongjin HK, Erhua Med, and through the contractual arrangements, WFOE, or Erhua Med, became the primary beneficiary
of the Variable Interest Entity ("VIE"), Changzhou Zhongjin, and its subsidiaries. Pursuant to the VIE Agreements, Erhua Med
has gained effective control over Changzhou Zhongjin. Therefore, Changzhou Zhongjin should be treated as a VIE under the Statements of
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810 Consolidation. Since
Taizhou Zhongjin and Zhongjin Jing'ao are wholly-owned subsidiaries of Changzhou Zhongjin, they are further referenced as VIE's
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION (continued)
Reorganization (continued)
together with its wholly owned subsidiaries, the VIE and the VIE's subsidiaries, are effectively controlled by the same shareholders
before and after the Reorganization and therefore the Reorganization is considered as a recapitalization of entities under common control.
The consolidation of the Company, its subsidiaries, the VIE and the VIE's subsidiaries has been accounted for at historical cost.
The unaudited condensed consolidated financial
statements of the Company include the following entities:
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities | ||||||||
| Jin Med | January 14, 2020 | Cayman Island | Parent | Investment holding | ||||||||
| Zhongjin HK | February 25, 2020 | Hong Kong | 100% | Investment holding | ||||||||
| Erhua Med | September 24, 2020 | PRC | 100% | WFOE, Investment holding | ||||||||
| Changzhou Zhongjin | January 26, 2006 | PRC | VIE | Design, development, manufacturing and sales of wheelchair and other mobility products | ||||||||
| Taizhou Zhongjin | June 17, 2013 | PRC | 100% controlled subsidiary of the VIE | Design, development, manufacturing and sales of wheelchair and other mobility products | ||||||||
| Zhongjin Jing'ao | December 18, 2014 | PRC | 100% controlled subsidiary of the VIE | Design, development, manufacturing and sales of wheelchair and other mobility products | ||||||||
| Zhongjin Kangma | August 21, 2023 | PRC | 80% controlled subsidiary of the VIE | Sales of wheelchair and other mobility products | ||||||||
| Anhui Zhongjin | October 7, 2023 | PRC | 100% | Newly incorporated - not in operation yet |
The VIE contractual arrangements
operating entities, Changzhou Zhongjin and its subsidiaries Taizhou Zhongjin, Zhongjin Jing'ao and Zhongjin Kangma (or the "Zhongjin
Operating Companies" as referred above), are controlled through contractual arrangements in lieu of direct equity ownership by the
A VIE is an entity which
has a total equity investment that is insufficient to finance its activities without additional subordinated financial support, or whose
equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected
residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has
a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate, the VIE, because it met the
condition under the accounting principles generally accepted in the United States of America ("U.S. GAAP") to consolidate
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION (continued)
Erhua Med, is deemed to have a controlling financial
interest in and be the primary beneficiary of the Zhongjin Operating Companies because it has both of the following characteristics:
Pursuant to these contractual arrangements, the
Zhongjin Operating Companies shall pay service fees equal to all of their net profits after tax payments to Erhua Med. At the same time,
Erhua Med has the right to receive substantially all of their economic benefits for accounting purposes. Such contractual arrangements
are designed so that the operations of the Zhongjin Operating Companies are solely for the benefit of Erhua Med and ultimately, the Company,
and therefore the Company must consolidate the Zhongjin Operating Companies under U.S. GAAP.
Risks associated with the VIE structure
The Company believes that the contractual arrangements
with the VIE and the shareholders of the VIE are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties
in the PRC legal system could limit the Company's ability to enforce the contractual arrangements. If the legal structure and contractual
arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
The Company's ability to conduct its businesses
may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. In such case, the Company may
not be able to consolidate the VIE and the VIE's subsidiaries in its unaudited condensed consolidated financial statements as it
may lose the ability to exert effective control over the VIE and its shareholders and it may lose the ability to receive economic benefits
from the VIE and the VIE's subsidiaries for accounting purposes under U.S. GAAP. The Company, however, does not believe such actions
would result in the liquidation or dissolution of the Company, its PRC subsidiaries and the VIE and the VIE's subsidiaries.
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION (continued)
The Company, Zhongjin HK and Erhua Med are essentially
holding companies and do not have active operations as of March 31, 2024 and September 30, 2023. As a result, total assets and liabilities
presented on the unaudited condensed consolidated balance sheets and revenue, expenses, and net income presented on the unaudited condensed
consolidated statement of comprehensive income as well as the cash flows from operating, investing and financing activities presented
on the unaudited condensed consolidated statement of cash flows are substantially the financial position, operation results and cash flows
of the VIE and the VIE's subsidiaries. The Company has not provided any financial support to the VIE and the VIE's subsidiaries
during the six months ended March 31, 2024, and 2023. Additionally, pursuant to the VIE Agreements, Erhua Med has the right to receive
service fees equal to the VIE's net profits after tax payments. None of these fees were paid to Erhua Med as of March 31, 2024.