Document and Entity Information
Document and Entity Information | 12 Months Ended |
Sep. 30, 2021 shares | |
Document Type | 20-F/A |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Sep. 30, 2021 |
Entity File Number | 001-39805 |
Entity Registrant Name | Qilian International Holding Group Limited |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Country | CN |
Entity Address, Address Line One | Jiuquan Economic and Technological Development Zone |
Entity Address, City or Town | Jiuquan City |
Entity Address, Postal Zip Code | 735000 |
Title of 12(b) Security | Ordinary Shares |
Trading Symbol | QLI |
Security Exchange Name | NASDAQ |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Shell Company | false |
ICFR Auditor Attestation Flag | false |
Document Accounting Standard | U.S. GAAP |
Entity Common Stock, Shares Outstanding | 35,750,000 |
Entity Central Index Key | 0001779578 |
Current Fiscal Year End Date | --09-30 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | FY |
Amendment Flag | true |
Amendment Description | Amendment No. 3 |
Business Contact [Member] | |
Contact Personnel Email Address | xinzc@163.com |
Entity Address, Country | CN |
Entity Address, Address Line One | Jiuquan Economic and Technological Development Zone |
Entity Address, City or Town | Jiuquan City |
Entity Address, Postal Zip Code | 735000 |
City Area Code | +86 |
Local Phone Number | 028-64775180 |
Contact Personnel Name | Zhanchang Xin |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalent | $ 10,467,357 | $ 11,867,130 |
Restricted cash | 2,140,016 | |
Accounts receivable, net | 1,733,306 | 1,118,476 |
Bank acceptance notes receivable | 11,722,096 | 11,498,075 |
Inventories, net | 12,495,831 | 11,994,471 |
Advances to suppliers, net | 1,380,925 | 491,827 |
Other current assets | 425,622 | 547,443 |
TOTAL CURRENT ASSETS | 40,365,153 | 37,517,422 |
Property and equipment, net | 9,119,502 | 7,419,028 |
Intangible assets, net | 1,927,933 | 1,881,722 |
Investment in available-for-sale securities | 20,323,400 | |
Long term investment | 639,466 | 540,517 |
Operating lease right of use assets | 118,154 | 243,874 |
Deferred tax assets | 427,120 | 361,250 |
Prepayments for property and equipment | 2,243,622 | |
Other long term assets | 188,913 | 179,325 |
TOTAL ASSETS | 75,353,263 | 48,143,138 |
CURRENT LIABILITIES: | ||
Bank loans | 7,349,375 | |
Accounts payable | 6,643,691 | 4,377,712 |
Advance from customers | 2,467,296 | 3,511,198 |
Advance from customers - related parties | 17,318 | 33,152 |
Bank notes payable | 7,867,018 | |
Deferred government grants-current | 351,567 | 384,802 |
Taxes payable | 305,305 | 1,383,182 |
Operating lease liabilities, current | 55,847 | 82,468 |
Accrued expenses and other payables | 466,838 | 1,301,882 |
TOTAL CURRENT LIABILITIES | 18,174,880 | 18,423,771 |
LONG TERM LIABILITIES | ||
Operating lease liabilities, noncurrent | 106,180 | 155,723 |
Deferred government grants - noncurrent | 403,745 | 722,137 |
TOTAL LIABILITIES | 18,684,805 | 19,301,631 |
EQUITY: | ||
Ordinary Shares, $0.00166667 par value, 100,000,000 shares authorized, 35,750,000 and 30,000,000 Ordinary Shares issued and outstanding as of September 30, 2021 and September 30, 2020, respectively | 59,583 | 50,000 |
Additional paid-in capital | 36,390,931 | 12,252,077 |
Statutory Reserve | 2,857,121 | 2,200,786 |
Retained earnings | 14,693,905 | 12,197,372 |
Accumulated other comprehensive loss | 857,066 | (602,001) |
Total shareholders' equity attributable to Qilian International | 54,858,606 | 26,098,234 |
Noncontrolling interests | 1,809,852 | 2,743,273 |
TOTAL EQUITY | 56,668,458 | 28,841,507 |
TOTAL LIABILITIES AND EQUITY | $ 75,353,263 | $ 48,143,138 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Sep. 30, 2020 |
Consolidated Balance Sheets | ||
Ordinary shares, par value | $ 0.00166667 | $ 0.00166667 |
Ordinary shares, shares authorized | 100,000,000 | 100,000,000 |
Ordinary shares, shares issued | 35,750,000 | 35,750,000 |
Ordinary shares, shares outstanding | 30,000,000 | 30,000,000 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Consolidated Statements of Income and Comprehensive Income | |||
NET REVENUE | $ 57,099,884 | $ 50,033,200 | $ 46,096,684 |
COST OF REVENUE | 51,461,354 | 42,494,047 | 36,416,772 |
GROSS PROFIT | 5,638,530 | 7,539,153 | 9,679,912 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 3,250,485 | 2,728,009 | 3,501,374 |
INCOME FROM OPERATIONS | 2,388,045 | 4,811,144 | 6,178,538 |
Other Income (Expenses) | |||
Interest expense, net | (57,671) | (242,877) | (223,657) |
Investment income | 462,014 | 57,984 | 89,197 |
Grant income | 564,098 | 1,082,053 | 833,072 |
Other income | 6,791 | 97,045 | 64,769 |
Total Other income | 975,232 | 994,205 | 763,381 |
INCOME BEFORE INCOME TAX PROVISION | 3,363,277 | 5,805,349 | 6,941,919 |
PROVISION FOR INCOME TAXES | 255,133 | 864,908 | 1,033,440 |
NET INCOME | 3,108,144 | 4,940,441 | 5,908,479 |
Less: net (income) loss attributable to non-controlling interest | (44,724) | (123,269) | 576,161 |
NET INCOME ATTRIBUTABLE TO QILIAN INTERNATIONAL HOLDING GROUP LIMITED | 3,152,868 | 5,063,710 | 5,332,318 |
OTHER COMPREHENSIVE INCOME | |||
Foreign currency translation adjustment | 1,560,381 | 1,263,140 | (858,337) |
COMPREHENSIVE INCOME | 4,668,525 | 6,203,581 | 5,050,142 |
Less: comprehensive income attributable to non - controlling interests | 56,590 | (1,303) | 478,722 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO QILIAN INTERNATIONAL HOLDING GROUP LIMITED | $ 4,611,935 | $ 6,204,884 | $ 4,571,420 |
Earnings per common share Basic | $ 0.09 | $ 0.17 | $ 0.18 |
Earnings per common share Diluted | $ 0.09 | $ 0.17 | $ 0.18 |
Weighted average shares Basic | 34,089,286 | 30,000,000 | 30,000,000 |
Weighted average shares Diluted | 34,089,286 | 30,000,000 | 30,000,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Ordinary Shares | Additional Paid-In Capital | Retained Earnings | Statutory Reserve | Accumulated Other Comprehensive Income | Shareholders' Equity | Non-controlling Interests | Total |
Balance at beginning at Sep. 30, 2019 | $ 50,000 | $ 12,252,077 | $ 7,560,631 | $ 1,773,817 | $ (1,743,175) | $ 19,893,350 | $ 2,744,576 | $ 22,637,926 |
Balance at beginning (in shares) at Sep. 30, 2019 | 30,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income for the year | 5,063,710 | 5,063,710 | (123,269) | 4,940,441 | ||||
Appropriation for statutory reserve | (426,969) | 426,969 | ||||||
Foreign currency translation adjustment | 1,141,174 | 1,141,174 | 121,966 | 1,263,140 | ||||
Balance at ending at Sep. 30, 2020 | $ 50,000 | 12,252,077 | 12,197,372 | 2,200,786 | (602,001) | 26,098,234 | 2,743,273 | $ 28,841,507 |
Balance at ending (in shares) at Sep. 30, 2020 | 30,000,000 | 30,000,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' Equity | $ 26,098,234 | |||||||
Net income for the year | 3,152,868 | 3,152,868 | (44,724) | 3,108,144 | ||||
Acquisition of Noncontrolling interest | 283,352 | 283,352 | (990,011) | (706,659) | ||||
Appropriation for statutory reserve | (656,335) | 656,335 | ||||||
Ordinary shares Issued In Initial public Offering, Net of issuance cost | $ 9,583 | 23,855,502 | 23,865,085 | 23,865,085 | ||||
Ordinary shares issued in initial public offering, net of issuance cost (in shares) | 5,750,000 | |||||||
Foreign currency translation adjustment | 1,459,067 | 1,459,067 | 101,314 | 1,560,381 | ||||
Balance at ending at Sep. 30, 2021 | $ 59,583 | $ 36,390,931 | $ 14,693,905 | $ 2,857,121 | $ 857,066 | $ 1,809,852 | $ 56,668,458 | |
Balance at ending (in shares) at Sep. 30, 2021 | 35,750,000 | 30,000,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stockholders' Equity | $ 54,858,606 | $ 54,858,606 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | |||
Net Income | $ 3,108,144 | $ 4,940,441 | $ 5,908,479 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Amortization of the right-of-use assets | 62,410 | 62,410 | |
Depreciation and amortization | 1,201,229 | 1,105,588 | 1,188,173 |
Provision of doubtful accounts | (7,918) | 188,095 | (9,301) |
Inventory reserve | 92,059 | (290,968) | 67,719 |
Deferred tax expense | (46,187) | (86,495) | 48,656 |
Unrealized gain from marketable securities | (323,400) | ||
Investment income | (69,494) | (57,984) | (89,197) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (545,175) | (660,667) | 706,582 |
Bank acceptance notes receivable | 387,673 | (5,583,925) | (2,171,300) |
Inventories | 46,801 | 1,402,620 | (3,492,342) |
Advances to suppliers | (855,977) | 498,378 | 653,028 |
Other current assets | (1,020,875) | 125,261 | (29,853) |
Accounts payable | 2,015,833 | 613,339 | (46,999) |
Accounts payable - related parties | (3,042) | ||
Advance from customers | (1,221,897) | 1,461,407 | (2,232,858) |
Advance from customers - related parties | (17,467) | 29,973 | 2,254 |
Deferred revenue | (407,563) | (314,238) | (319,982) |
Tax payables | (1,142,721) | 988,423 | (834,183) |
Accrued expenses and other payables | (897,496) | 722,284 | 73,969 |
Operating lease liabilities | (12,945) | (67,928) | |
Net cash provided by (used in) operating activities | 345,034 | 5,076,014 | (580,197) |
Cash flows from investing activities: | |||
Purchase of property and equipment | (3,491,564) | (449,766) | (616,388) |
Purchase of intangible assets | (1,810) | (8,798) | (635) |
Proceeds from (payment made for) long term investment | 82,972 | (64,165) | |
Purchase of available-for-sale securities | (20,000,000) | 14,559 | |
Acquisition of non-controlling interest | (706,658) | (133,552) | |
Net cash used in investing activities | (24,200,032) | (375,592) | (800,181) |
Cash flows from financing activities: | |||
Proceeds from bank loans | 7,135,009 | 5,089,651 | |
Repayment of bank loans | (7,681,081) | (4,994,506) | (3,635,465) |
Proceeds from (repayment of) bank notes payable | 7,804,778 | (581,674) | |
Cash receipts from equity issuance, net of issuance cost | 23,869,641 | ||
Payment for deferred offering costs | (365,310) | ||
Net cash provided by financing activities | 23,993,338 | 2,140,503 | 507,202 |
Effect of exchange rate change on Cash | 601,903 | 431,765 | (157,163) |
Net increase (decrease) in cash and cash equivalents | 740,243 | 7,272,690 | (1,030,339) |
Cash and cash equivalents at beginning of period | 11,867,130 | 4,594,440 | 5,624,779 |
Cash and cash equivalents at end of period | 12,607,373 | 11,867,130 | 4,594,440 |
Supplemental cash flow information | |||
Cash paid for interest | 152,499 | 280,169 | 210,588 |
Cash paid for income taxes | $ 820,972 | 275,607 | $ 1,109,655 |
Operating lease right of use assets obtained in exchange of lease liabilities | $ 143,443 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Sep. 30, 2021 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Qilian International Holding Group Limited (“Qilian International”, or “the Company”) is a Cayman Islands exempted company incorporated on February 7, 2019 as a holding company to develop business opportunities in the People’s Republic of China (“PRC” or “China”). Qilian International (Hong Kong) Holdings Ltd (“Qilian HK”) is a wholly-owned subsidiary of Qilian International formed in accordance with the laws and regulations of Hong Kong on January 30, 2019. Qilian International is a holding company whose only asset is 100% of the equity interest in Qilian HK. Qilian HK is a holding company whose only asset is 100% of the equity interest in Chengdu Qilian Trading Co., Ltd (“Qilian Chengdu”, or the “WFOE”), a wholly foreign-owned entity organized under the laws of the PRC. Qilian International and Qilian HK do not have any substantive operations of their own but conduct their primary business operations through Qilian Chengdu’s variable interest entity, Gansu Qilianshan Pharmaceutical Co., Ltd (“Gansu QLS”, or the “VIE”). Gansu QLS was established in August 2006 under the laws of the PRC with initial capital of approximately $0.27 million. After several registered capital increases and capital contributions, the registered capital of Gansu QLS was approximately $12.2 million as of September 30, 2021 and 2020. Over the years, Gansu QLS has established seven subsidiaries: Ownership as of September September 30, 2021 30, 2020 Moshangfa (Gansu) Fertilizer Industry Co., Ltd (formerly Jiuquan Qiming Biotechnology Co., Ltd, “Moshangfa”) 100 % 100 % Chengdu Qilianshan Biotechnology Co., Ltd (“Chengdu QLS”) 79.51 % 71.75 % Jiuquan Ahan Biotechnology Co., Ltd. (“Ahan”) 100 % 75 % Tibet Samen Trading Co., Ltd (“Samen”) 100 % 100 % Tibet Cangmen Trading Co., Ltd (“Cangmen”) 100 % 100 % Rugao Tianlu Animal Products Co., Ltd (“Rugao”)* 79.51 % 71.75 % Chongqing Shengfu Biological Technology Co., Ltd (“Chongqing”) * 79.51 % NA * Rugao and Chongqing were incorporated as a wholly-owned subsidiary of Chengdu QLS in 2020 and 2021, respectively. On May 20, 2019, Qilian International, through its WFOE, Qilian Chengdu, entered into a series of agreements with Gansu QLS and its shareholders, including an Exclusive Services Agreement, Call Option Agreement, Shareholders’ Voting Rights Proxy and Equity Pledge Agreement, Powers of Attorney, and the Spousal Consents (collectively “VIE agreements”). These contractual arrangements oblige Qilian Chengdu to absorb a majority of the risk of loss from Gansu QLS’s activities and entitle Qilian Chengdu to receive a majority of their residual returns. In essence, Qilian Chengdu has gained certain level of control over Gansu QLS. In addition, 99.214% and 98.297% of Gansu QLS’s shareholders have pledged their equity interest in Gansu QLS to Qilian Chengdu on September 30, 2021 and 2020, respectively, irrevocably granted Qilian Chengdu an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Gansu QLS, and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by Qilian Chengdu. Through these contractual arrangements, Qilian Chengdu holds 99.214% and 98.297% of the variable interests of Gansu QLS on September 30, 2021 and 2020, respectively. Based on these contractual arrangements, Gansu QLS is considered as a VIE of Qilian Chengdu under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 810 (“ASC 810”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No.51”, because the equity investors in Gansu QLS do not have the characteristics of a controlling financial interest. In addition, Qilian Chengdu is the primary beneficiary of Gansu QLS, and, as such, Gansu QLS’s books and records are consolidated into those of Qilian Chengdu. Risks in relation to the VIE structure are discussed under “Risks and Uncertainties” below. As the above entities were under common control before and after the consummation of the VIE agreements, the restructuring was accounted for as a reorganization of entities under common control and the consolidation of Qilian International and its subsidiaries, the VIE and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Qilian International, its subsidiaries, the VIE and VIE’s subsidiaries are principally engaged in the development, manufacture, marketing, and sale of licorice products, oxytetracycline products, traditional Chinese medicine derivatives (“TCMD”) product, heparin product, sausage casings, and fertilizers. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company, its subsidiaries, the VIE and VIE’s subsidiaries consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the financial statements of Qilian International, and its subsidiaries, the VIE and VIE’s subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. See Risks and Uncertainties disclosure for VIE structures in China. The carrying amounts of the assets, liabilities, the results of operations and cash flows of the VIE and VIE’s subsidiaries included in the Company, its subsidiaries, the VIE and VIE subsidiaries’ consolidated financial statements after the elimination of intercompany balances and transactions among the VIE and VIE’s subsidiaries, and the Company and its subsidiaries are as follows: September 30, September 30, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 4,161,582 $ 5,493,215 Restricted cash 2,140,016 — Accounts receivable, net 1,733,306 660,398 Bank acceptance receivable 11,722,096 11,460,512 Inventories, net 12,495,831 11,994,471 Advances to suppliers, net 1,380,757 465,755 Other current assets 423,331 535,981 Total current assets 34,056,919 30,610,332 Property and equipment, net 9,041,995 7,395,965 Intangible assets, net 1,927,933 1,881,722 Long-term investment 639,466 540,517 Long term security deposits 188,913 179,325 Right of use assets-lease 118,154 134,511 Deferred tax assets 427,172 361,250 Total assets $ 46,400,552 $ 41,103,622 LIABILITIES Current liabilities: Bank loans $ — $ 7,349,375 Accounts payable 6,642,625 3,958,804 Advance from customers 2,467,296 3,511,198 Advance from customers - related parties 17,318 33,152 Bank notes payable 7,867,018 — Deferred government grants - current 351,567 384,802 Taxes payable 371,325 1,322,354 Operating lease liabilities, current 55,847 22,354 Accrued expenses and other payables 466,188 1,301,881 Total current liabilities 18,239,184 17,883,920 Operating lease liabilities, long term 106,180 124,406 Deferred government grants - noncurrent 403,745 722,137 Total liabilities 18,749,109 18,730,463 For the year ended September 30, 2021 2020 2019 Net revenue $ 57,049,381 $ 46,731,913 $ 46,096,684 Income from operations $ 2,370,647 $ 4,840,614 $ 6,178,538 Net income $ 2,857,492 $ 4,936,357 $ 5,908,479 For the Year Ended September 30, 2021 2020 2019 Net cash provided by (used in) operating activities $ 2,122,539 $ 4,131,468 $ (580,193) Net cash used in investing activities (1,781,618) (5,648,762) (800,254) Net cash provided by (used in) financing activities 123,697 2,140,503 507,202 Effect of exchange rate on cash 343,759 275,566 (157,094) Net increase (decrease) in cash and cash equivalents $ 808,377 $ 898,775 $ (1,030,339) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company, its subsidiaries, the VIE and VIE’s subsidiaries’ critical accounting estimates included, but are not limited to: allowance for estimated uncollectible receivables, inventory valuations, impairment of long-lived assets, impairment of intangible assets, and income taxes. Actual results could differ from those estimates. Risks and Uncertainties Risks of Operation in China The main operation of the Company, through the WFOE, the VIE and VIE’s subsidiaries, is located in the PRC. Accordingly, the Company, its subsidiaries, the VIE and VIE’s subsidiaries’ 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, its subsidiaries, the VIE and VIE’s subsidiaries’ results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company, its subsidiaries, the VIE and VIE’s subsidiaries’ have 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. Risks in relation to the VIE structure The Company is incorporated in the Cayman Islands. As a holding company with no material operations, the Company conducts its operations in China through the variable interest entities, Gansu QLS and its subsidiaries. The Company receives the economic benefits of Gansu QLS and its subsidiaries’ business operation through a series of contractual arrangements, or the VIE Agreements, which have not been tested in court. As a result of the Company’s indirect ownership in the Qilian Chengdu and the VIE Agreements, the Company is regarded as the primary beneficiary of its VIE. The VIE structure is used to replicate foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment in the operating companies, and that investors may never directly hold equity interests in the Chinese operating entities. The Company relies on contractual arrangements with the VIE and its subsidiaries in China for the business operations, which may not be as effective in providing operational control or enabling the Company to derive economic benefits as through ownership of controlling equity interests, and the VIE’s shareholders may fail to perform their obligations under the contractual arrangements. If the PRC government deems that the VIE Agreements in relation to the VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, the Company may have difficulty in enforcing any rights the Company may have under the VIE Agreements in PRC and the Company could be subject to severe penalties or be forced to relinquish the Company’s interests in those operations. Technology Innovation and Commodity Risks The Company, its subsidiaries, the VIE and VIE’s subsidiaries’ business faces rapid technological change, and there is a possibility that the competitors may achieve regulatory approval and develop new product candidates before the Company, its subsidiaries, the VIE and VIE’s subsidiaries, which may harm the financial condition and the ability to successfully market or commercialize any of the product candidates. The development and commercialization of new pharmaceutical products and fertilizers is highly competitive, and both industries currently are characterized by rapidly changing technologies, significant competition and a strong emphasis on intellectual property. The Company, its subsidiaries, the VIE and VIE’s subsidiaries will face competition with respect to the current and future pharmaceutical and fertilizer product candidates from major pharmaceutical and chemical companies in China. The Heparin and sausage casing products are made from livestock products, which are subject significant risks of the market supply of the raw materials. Exchange Rate Risks The WFOE, the VIE and VIE’s subsidiaries operate in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the US$ and the RMB. As at September 30, 2021 and September 30, 2020, cash and restricted cash of $7,305,799 (RMB 51,226,986 ) and $10,847,959 (RMB 73,801,918 ), respectively, is denominated in RMB and is held in PRC. Currency Convertibility Risks Substantially all of the WFOE, the VIE and VIE’s subsidiaries’ 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. Other Uncertainties In early January of 2020, the outbreak of the novel coronavirus, commonly referred to as “COVID-19”, first found in mainland China, then in Asia and eventually throughout the world, has significantly affected business and other activities within China. China has experienced widespread economic disruption owing to the outbreak of the COVID-19 coronavirus and stringent government measures to contain it, including nationwide restricting access to provinces and cities, reducing agglomeration activities, and postponing non-essential business activates. The VIE and VIE’s subsidiaries shut down the manufacturing of all products, except Oxytetracycline, and stopped all distribution during February 2020. Almost all of the WFOE,the VIE and VIE subsidiaries’ suppliers and customers had different levels of business disruptions as well, therefore the WFOE,the VIE and VIE subsidiaries have experienced substantive diminutions in raw material supplies and such prices have increased significantly. The VIE and VIE’s subsidiaries have resumed manufacturing activities since February 27, 2020. Most production lines of the Company have been restored to normal production capacity. As of the date of issuance of these financial statements, the COVID-19 coronavirus surged in China due to Omicron and Delta variants, business activities were not significantly affected and being interrupted to some extent. The extent of future impact to which the VIE and VIE’s subsidiaries’ operations or those of the third-party vendors and customers, including those customers that distribute to Europe and other jurisdictions outside of mainland China is still considered uncertain as COVID-19 continues to adversely affect the global economy and the potential for resurgences remain. Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure short-term bank notes payable. The VIE is required to keep amounts equal to 30% - 50% of the notes payable value on deposit that are subject to withdrawal restrictions. Upon the maturity of the bank acceptance notes, the VIE is required to deposit the remainder to the escrow account to settle the bank notes payable. The notes payable are generally short term in nature due to their short maturity period of three months to one year; thus, restricted cash is classified as a current asset. Accounts Receivable, net Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The WFOE, the VIE and VIE’s subsidiaries usually grant credit to customers with good credit standing with a maximum of 90 days and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Inventories, net Inventories are stated at the lower of cost or net realizable value . Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Allowances for obsolescence are also assessed based on expiration dates, as applicable, taking into consideration historical and expected future product sales. Property, Plant and Equipment Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Items Useful life Property and buildings 20–25 years Leasehold improvement Lesser of useful life and lease term Machinery and equipment 5–10 years Automobiles 3–5 years Office and electric equipment 3–5 years Construction in progress is comprised of costs related to the capital projects that are not completed and is not depreciated until such time as the subject asset is placed in service. Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the statement of income in other income and expenses. Intangible Assets Intangible assets consist primarily of land use rights, software and license for drug manufacturing (See Note 7). Under the PRC law, all land in the PRC is owned by the government and cannot be sold to an individual or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. Land use rights are stated at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Items Useful life Land use rights 50 years Software 10 years License for drug manufacturing 10 years Leases On October 1, 2019 the Company adopted Accounting Standards Update (“ASU”) 2016-02. For all leases that were entered into prior to the effective date of ASC 842, we elected to apply the package of practical expedients Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. Investment in Available-for-Sale Securities The Company entered into an investment with a iFactors SPC related to shares participating in the Golden Bridge Global Income Opportunities SP (the Fund), an exempted segregated Portfolio Company incorporated in the Cayman Islands and managed by Golden Bridge Capital Management Limited. The Fund primarily invests in bonds offered by private entities (debt securities), globally and also invests in convertible debt securities, publicly traded debt and stock, and governmental fixed income securities. The redemption of such shares for cash can be made with ninety days advance written notice (such written notice period can be extended by the investment manager), except during the lock up period which is 24 months, from the initial investment date. The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded as either short term or long term on the Balance Sheet, based on contractual maturity date and are stated at amortized cost. Investment securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value. Investment securities not classified as trading securities or as held-to-maturity securities shall be classified as available-for-sale securities. As of September 30, 2021, the investment consisted of 20,000 units of the Fund. Such securities have been classified as available for sale securities. The private equity fund are measured at fair value with gains and losses recognized in earnings. As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the Fund. NAV is primarily determined based on information provided by external fund administrators. The NAV of the Fund was $20,323,400 as of September 30, 2021. See Fair Value of Financial Instruments disclosure in this footnote. The Company evaluates whether an investment is other-than-temporarily impaired based on the specific facts and circumstances. Factors that are considered in determining whether an other-than-temporary decline in value has occurred include the market value of the security in relation to its cost basis, the financial condition of the investee, and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment. Long-Term Investment Investments in entity in which the Company, its subsidiaries, the VIE and VIE’s subsidiaries can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting. Under the equity method, the Company, its subsidiaries, the VIE and VIE’s subsidiaries initially record its investment at cost and the difference between the cost and the fair value of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill, which is included in the equity method investment on the consolidated balance sheets. The Company, its subsidiaries, the VIE and VIE’s subsidiaries evaluate the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary. The Company, its subsidiaries, the VIE and VIE’s subsidiaries subsequently adjust the carrying amount of the investment to recognize their proportionate share of each equity investee’s net income or loss into earnings after the date of investment. Impairment of Long-lived Assets The Company, its subsidiaries, the VIE and VIE’s subsidiaries review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no indicators of impairment of long lived assets as of September 30, 2021 and September 30, 2020. Transactions with Non-controlling Interests of Subsidiaries The Company, its subsidiaries, the VIE and VIE’s subsidiaries account for a change in ownership interests in its subsidiaries that does not result in a change of control of the subsidiary under the provisions of ASC 810-10-45-23, Consolidation – Other Presentation Matters, which prescribes the accounting for changes in ownership interest that do not result in a change in control of the subsidiary, as defined by GAAP, before and after the transaction. Under this guidance, changes in a controlling shareholder’s ownership interest that do not result in a change of control, as defined by GAAP, in the subsidiary are accounted for as equity transactions. Accordingly, if the controlling shareholder retains control, no gain or loss is recognized in the statements of operations of the controlling shareholder. Similarly, the controlling shareholder will not record any additional acquisition adjustments to reflect its subsequent purchases of additional shares in the subsidiary if there is no change of control. Only a proportional and immediate transfer of carrying value between the controlling and the noncontrolling shareholders occurs based on the respective ownership percentages. For the year ended September 30, 2021, the VIE, Gansu QLS acquired 7.76% of equity interest in Chengdu QLS and its subsidiaries from its shareholders. The equity interest Gansu QLS has in Chengdu QLS increased from 71.75% as of September 30, 2020 to 79.51% as of September 30, 2021. Non-controlling Interests Non-controlling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder. For the Company’s consolidated subsidiaries, VIE and VIE’s subsidiaries, non-controlling interests represent a minority shareholder’s 0.786% ownership interest in Gansu QLS, 20.49% ownership interest in Chengdu QLS and in subsidiaries including Rugao and Chongqing as of September 30, 2021, and 1.703% ownership interest in Gansu QLS, 28.25% ownership interest in Chengdu QLS and its subsidiaries as of September 30, 2020. The following table summarizes the shareholders’ equity for the non-controlling interest from each subsidiary that is not 100% owned by the Company: As of September 30, September 30, 2021 2020 Gansu QLS $ 240,683 $ 387,420 Chengdu QLS and subsidiaries 1,569,169 2,355,853 Total $ 1,809,852 $ 2,743,273 Non-controlling interest in the equity of a subsidiary is reported in equity in the consolidated balance sheets. Net income and losses attributable to the non-controlling interest is reported as described above in the consolidated statement of income and comprehensive income. Revenue Recognition The Company, its subsidiaries, the VIE and VIE’s subsidiaries recognize revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To perform revenue recognition for arrangements within the scope of ASC 606, the Company, its subsidiaries, the VIE and VIE’s subsidiaries perform the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. The majority of the WFOE, the VIE and VIE’s subsidiaries’ contracts have one single performance obligation as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and are, therefore, not distinct. The revenue streams are recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The WFOE, the VIE and VIE’s subsidiaries’ products are sold with no right of return and The WFOE, the VIE and VIE’s subsidiaries do not provide other credits or sales incentives, which would be accounted for as variable consideration. Sales taxes invoiced to customers and remitted to government authorities are excluded from net sales. The contract liabilities are recorded on the consolidated balance sheets as advance from customers as of September 30, 2021 and September 30, 2020. Refer to Note 15 for disaggregated revenue information. Government Grants Government grants are recognized when there is reasonable assurance that the attached conditions will be complied with. When the grant relates to an expense item, it is net against the expense and recognized in the consolidated statements of income and comprehensive income over the period necessary to match the grant on a systematic basis to the related costs. Where the grant relates to an asset acquisition, it is recognized in the consolidated statements of income and comprehensive income in proportion to the useful life of the related assets. Government grants received for the year ended September 30, 2021, 2020 and 2019 were $152,265, $764,962 and $360,169, respectively. Grant income recognized for the year ended September 30, 2021, 2020 and 2019 were $559,828, $1,079,200 and $680,151, respectively, included in other income within the consolidated statement of income and comprehensive income. As of September 30, 2021 and 2020, the deferred government grants were $755,312 and $1,106,939, respectively. The weighted average remaining periods for the government grant to be recognized were 4.15 years and 4.36 years, respectively. Research and Development Expenses The Company, its subsidiaries, the VIE and VIE’s subsidiaries expense all internal research costs as incurred, which primarily comprise employee costs, internal and external costs related to execution of studies, including manufacturing costs, facility costs of the research center, and amortization, depreciation of intangible assets and property, plant and equipment used in the research and development activities. For the year ended September 30, 2021 and 2020, total research and development expense were approximately $8,000 and $54,000 , respectively, which were recorded in general and administrative expenses in the consolidated statement of income and comprehensive income. Income Taxes The Company, its subsidiaries, the VIE and VIE’s subsidiaries account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company, its subsidiaries, the VIE and VIE’s subsidiaries determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company, its subsidiaries, the VIE and VIE’s subsidiaries recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, the Company, its subsidiaries, the VIE and VIE’s subsidiaries consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company, its subsidiaries, the VIE and VIE’s subsidiaries determine that they would be able to realize the deferred tax assets in the future in excess of their net recorded amount, they would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company, its subsidiaries, the VIE and VIE’s subsidiaries record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company, its subsidiaries, the VIE and VIE’s subsidiaries determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company, its subsidiaries, the VIE and VIE’s subsidiaries recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company does not believe that there were any uncertain tax positions at September 30, 2021 and 2020. Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the year ended September 30, 2021, 300,000 underwriter warrants were considered in the diluted EPS calculation using treasury stock method. There were no diluted shares for the years ended September 30, 2021, 2020 and 2019. The following table sets forth the computation of basic and diluted earnings per share for the years ended September 30, 2021, 2020 and 2019: For the Years ended September 30, 2021 2020 2019 Numerator: Net income attributable to ordinary shareholders $ 3,152,868 $ 5,063,710 $ 5,332,318 Denominator: Weighted-average number of ordinary shares outstanding – basic 34,089,286 30,000,000 30,000,000 Outstanding warrants — — — Potentially dilutive shares from outstanding options and warrants — — — Weighted-average number of ordinary shares outstanding – diluted 34,089,286 30,000,000 30,000,000 Earnings per share – basic $ 0.09 $ 0.17 $ 0.18 Earnings per share – diluted $ 0.09 $ 0.17 $ 0.18 Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. Our financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in statement of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive income. The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Sep. 30, 2021 | |
ACCOUNTS RECEIVABLE, NET | |
ACCOUNTS RECEIVABLE, NET | NOTE 3 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following: As of As of September 30, 2021 September 30, 2020 Trade accounts receivable $ 1,945,719 $ 1,325,333 Less: allowances for doubtful accounts (212,413) (206,857) Accounts receivable, net $ 1,733,306 $ 1,118,476 |
INVENTORY, NET
INVENTORY, NET | 12 Months Ended |
Sep. 30, 2021 | |
INVENTORY, NET | |
INVENTORY, NET | NOTE 4 – INVENTORY, NET Inventories consisted of the following: As of As of September 30, 2021 September 30, 2020 Raw materials $ 6,285,887 $ 3,241,903 Work-in-progress 832,499 704,991 Finished goods 5,502,591 8,078,288 Inventory valuation allowance (125,146) (30,711) Total inventory $ 12,495,831 $ 11,994,471 |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 12 Months Ended |
Sep. 30, 2021 | |
OTHER CURRENT ASSETS | |
OTHER CURRENT ASSETS | NOTE 5 – OTHER CURRENT ASSETS Other current assets consisted of the following: As of As of September 30, 2021 September 30, 2020 Deferred offering costs $ — $ 384,847 Security deposits 327,104 150,093 Prepaid expense 84,428 4,377 Other receivables 14,090 8,126 Total other current assets $ 425,622 $ 547,443 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Sep. 30, 2021 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: As of As of September 30, 2021 September 30, 2020 Property and Buildings $ 9,711,722 $ 9,114,893 Machinery and equipment 19,594,986 18,175,739 Automobiles 689,651 611,923 Office and electric equipment 148,439 137,588 Subtotal 30,144,798 28,040,143 Construction in progress 2,020,457 158,975 Less: accumulated depreciation (23,045,753) (20,780,090) Property and equipment, net $ 9,119,502 $ 7,419,028 Depreciation expense was $1,145,447, $1,055,314 and $1,137,822 for the years ended September 30, 2021, 2020 and 2019 respectively. Construction in progress represents costs of construction incurred for Gansu QLS’s new manufacturing facilities in Dongdong Gobi Agricultural Industrial Park, Jiuquan, Gansu. The construction was completed and transferred to Property and equipment in November 2021. As of September, 30, 2021, Qilian Chengdu made advance payments for property and buildings acquisition for $2,243,622 , which was recorded in prepayments for property and equipment on the consolidated balance sheets. $1,061,037 of the property was received and accepted in November 2021. The rest properties are anticipated to receive by December 2022. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | NOTE 7 – INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: As of As of September 30, 2021 September 30, 2020 Land use rights $ 2,521,646 $ 2,393,660 Software 43,875 39,916 License for drug manufacturing 61,939 58,796 Total 2,627,460 2,492,372 Less: accumulated amortization (699,527) (610,650) Intangible assets, net $ 1,927,933 $ 1,881,722 Amortization expense was $55,782, $50,274, and $50,351 for the years ended September 30, 2021, 2020 and 2019, respectively. Estimated future amortization expense for intangible assets is as follows: Amortization Year ending September 30, expense 2022 $ 55,914 2023 55,307 2024 55,307 2025 55,307 2026 55,307 Thereafter 1,650,791 $ 1,927,933 |
LONG-TERM INVESTMENT
LONG-TERM INVESTMENT | 12 Months Ended |
Sep. 30, 2021 | |
LONG-TERM INVESTMENT | |
LONG-TERM INVESTMENT | NOTE 8 – LONG-TERM INVESTMENT In July 2017, Gansu QLS acquired 40% ownership interest of JiuQuan Funong Biotech Co., Ltd (“Funong”) with a total investment amount of RMB3,300,000, which have been paid in the amount of RMB1,200,000 ($176,121 equivalent) in 2017, RMB1,658,750 ($253,596 equivalent) in 2018, and RMB441,250 ($64,165 equivalent) in 2019, respectively. The investment was accounted for using equity method. Equity method investment consisted of the following: As of As of September 30, 2021 September 30, 2020 Equity method investment: Cost of equity method investment 510,994 485,059 Profit from equity method investment 188,605 112,538 Dividend Distribution received (60,133) (57,080) Total long-term investment $ 639,466 $ 540,517 The investment income attributable to the equity investment of $69,494, $32,093 and $89,197 for the years ended September 30, 2021, 2020 and 2019, respectively, were included in other income (expense) on the statement of income and comprehensive income. |
BANK LOANS
BANK LOANS | 12 Months Ended |
Sep. 30, 2021 | |
BANK LOANS. | |
BANK LOANS | NOTE 9 – BANK LOANS Bank loans represent amounts due to various banks normally due within one year. The principals of the loans are due at maturity. Accrued interest is due either monthly or quarterly. As of September 30, 2021 and 2020, the bank loans consist of the following: As of As of September 30, 2021 September 30, 2020 Agricultural Bank of China (“ABC”) (1) $ — $ 2,939,750 Agricultural Development Bank of China (“ADBC”) (2) — 2,939,750 Lanzhou Bank (3) — 1,469,875 Total — 7,349,375 (1) In 2019 and 2020, Gansu QLS entered into a series of short-term bank loan agreements with ABC with a loan period of twelve months . Gansu QLS pledged its property and buildings as collateral for the loans. The loans bear fixed interest rates ranging from 4.05% to 5.44% per annum. The loans are guaranteed by Mr. Zhanchang Xin, principal shareholder of the Company and Gansu QLS and pledged by Gansu QLS’s building and land use right. The loans outstanding as of September 30, 2020 matured in February 2021 to March of 2021 and have been fully repaid. The terms of the loan agreements contain certain restrictive financial covenants which, among other things, require Gansu QLS to maintain specified debt ratio and contingent liability ratio. As of September 30, 2020, Gansu QLS was in compliance with such covenants. (2) In February and April 2020 , Gansu QLS entered into two short-term bank loan agreements with ADBC for twelve months . The loans bear fixed interest rates ranging of 4.15% per annum. Gansu QLS’s building and land use right were pledged for the loans. One loan of RMB 10,000,000 (approximately $1.5 million) matured in February 2021 and was fully repaid upon maturity. The other loan outstanding as of September 30, 2020 matured in April of 2021 and has been fully repaid. (3) In April 2020, Gansu QLS entered into one short-term bank loan agreements with Lanzhou Bank for twelve months. The loan bears fixed interest rates ranging of 4.55% per annum. Gansu QLS’s building and land use right were pledged for the loans. The loans outstanding as of September 30, 2020 matured in April of 2021 and has been fully repaid. |
BANK NOTES PAYABLE
BANK NOTES PAYABLE | 12 Months Ended |
Sep. 30, 2021 | |
BANK NOTES PAYABLE | |
BANK NOTES PAYABLE | NOTE 10 – BANK NOTES PAYABLE Bank notes payable are lines of credit extended by banks that can be endorsed and assigned to vendors as payments for purchases. The notes payable are generally payable within six months. These short-term notes payable are guaranteed by the bank for their full face value. In addition, the banks usually require Gansu QLS to deposit a certain amount of cash (usually in the range of 30% to 50% of the face value of the notes) at the bank as a guarantee deposit, which is classified on the balance sheet as restricted cash. Gansu QLS had bank notes payable of $7,867,018 to China Zheshang Bank (“CZB”) as of September 30, 2021. The notes have due date from October 2021 to March 2022. The notes of $5,315,995 , with due date before the issuance of this report have been fully repaid on the due date. As of September 30, 2021, $2,140,016 in cash deposits were held by banks as a security deposit for the notes payable, and recorded as restricted cash on consolidated balance sheets. |
TAXES
TAXES | 12 Months Ended |
Sep. 30, 2021 | |
TAXES. | |
TAXES | NOTE 11 –TAXES (a) The Company, its subsidiaries, the VIE and VIE’s subsidiaries are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Cayman Islands Under the current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders. Hong Kong In accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within Hong Kong at the applicable tax rate on taxable income. From year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are 8.25% on assessable profits up to HK$2,000,000, and 16.5% on any part of assessable profits over HK$2,000,000. However, the Company’s HK subsidiary did not generate any assessable profits arising in or derived from Hong Kong for the fiscal years ended September 30, 2021, 2020 and 2019, and accordingly no provision for Hong Kong profits tax has been made in these periods. China The WFOE, the VIE and VIE’s subsidiaries are all incorporated in the PRC and are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the Corporate Income Tax Law of PRC, current corporate income tax rate of 25% is applicable to all companies, including both domestic and foreign-invested companies. However, according to Tax Preferential Policies for the Development of the Western Region, Qilian Chengdu and Chengdu QLS are eligible for a favorable income tax rate of 15% for the years ended September 30, 2021, 2020 and 2019. In accordance with the implementation rules of Corporate Income Tax Law of PRC, a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of 15% with HNTE certificate, subject to a requirement that they re-apply for HNTE status every three years. Gansu QLS is eligible for a favorable income tax rate of 15% for the years ended September 30, 2021, 2020 and 2019. On January 17, 2019, the State Taxation Administration issued the notice on the scope of small-scale and low-profit corporate income tax preferential policies of the Ministry of Finance and the State Administration of Taxation, [2019] No. 13 for small-scale and low-profit enterprises whose annual taxable income is less than RMB1,000,000 (including RMB1,000,000), approximately $154,000, for the period from January 1, 2019 to December 31, 2020, the income before tax is reduced to 25% as their taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 5%. While for the portion of annual taxable income exceeding RMB1,000,000, approximately $154,000, but not more than RMB3,000,000, approximately $465,000, the income is reduced to 50% as their taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 10%. On April 2, 2021, the State Taxation Administration further reduced the tax for small-scale and low-profit enterprises for the periods from Jan 1, 2021 to December 31, 2022 as following: for entities whose annual taxable income is less than RMB1,000,000 (including RMB1,000,000), approximately $154,000, the income before tax is reduced to 12.5% as its taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 2.5%. While for the portion of annual taxable income exceeding RMB1,000,000, approximately $154,000, but not more than RMB3,000,000, approximately $465,000, the income is reduced to 50% as their taxable income, and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 10%. The qualifications of small-scale and low-profit enterprises were examined annually by the Tax Bureau. All of the Company’s affiliated entities other than Qilian Chengdu, Gansu QLS and Chengdu QLS met the criteria of small-scale and low-profit enterprises. Income before income taxes is derived from the following jurisdiction: For the year ended September 30, 2021 2020 2019 China $ 3,252,583 $ 5,805,349 $ 6,941,919 Cayman Islands 110,694 — — Total $ 3,363,277 $ 5,805,349 $ 6,941,919 Significant components of the provision for income taxes were as follows: For the year ended September 30, 2021 2020 2019 Current income taxes $ 301,320 $ 951,403 $ 984,785 Deferred income taxes (46,187) (86,495) 48,655 Total $ 255,133 $ 864,908 $ 1,033,440 The impact of these tax holidays decreased our taxes by $458,163, $603,091 and $710,083 for the years ended September 30, 2021, 2020 and 2019, respectively. The benefit of the tax holidays on net income per share was $0.013, $0.020 and $0.024 for the years ended September 30, 2021, 2020 and 2011, respectively. Deferred income taxes reflect the net effects of temporary difference between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Temporary differences and carryforwards of the Company, its subsidiaries, the VIE and VIE’s subsidiaries that created significant deferred tax assets and liabilities are as follows: As of As of September 30, 2021 September 30, 2020 Deferred tax assets: Allowance for doubtful accounts and inventory provision $ 51,122 $ 36,451 NOL Carryforwards 262,701 158,758 Deferred government grants 113,297 166,041 Total deferred tax assets $ 427,120 $ 361,250 The Company, its subsidiaries, the VIE and VIE’s subsidiaries periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Based upon management’s assessment of all available evidence, there was no valuation allowance provided as of September 30, 2021 and 2020. All of the tax returns of WFOE, VIE and VIE’s subsidiaries remain open for statutory examination by PRC tax authorities for five years from the date of filing. The eligibility of favorable income tax rate is also subject to review by tax authority. The following table reconciles the statutory rates to the Company, its subsidiaries, the VIE and VIE’s subsidiaries’ effective tax rate: For the year ended September 30, 2021 2020 2019 China Statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of favorable income tax rate in the PRC (13.6) % (10.5) % (10.2) % Permanent difference (3.8) % 0.4 % 0.1 % Effective tax rate 7.6 % 14.9 % 14.9 % (b) The Company, its subsidiaries, the VIE and VIE’s subsidiaries’ taxes payable consists of the following: September 30, September 30, 2021 2020 VAT tax payable $ 64,129 $ 644,244 Corporate income tax payable 148,204 631,590 Business and other taxes payable 92,972 107,348 Total $ 305,305 $ 1,383,182 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Sep. 30, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS During the normal course of business, the VIE and VIE’s subsidiaries may make sales to affiliated companies controlled by its major shareholders or subsidiaries. For the years ended September 30, 2021, 2020 and 2019, the VIE and VIE’s subsidiaries made sales to affiliated companies in the amount of $31,587 , $10,134 , $94,316 , respectively. There were no purchases in the respective periods. As of September 30, 2021 and 2020, the VIE and VIE’s subsidiaries had advances from affiliated company for $17,318 and $33,152, respectively. |
LEASE
LEASE | 12 Months Ended |
Sep. 30, 2021 | |
LEASE | |
LEASE | NOTE 13 – LEASE As of September 30, 2021, the VIE and VIE’s subsidiaries have one factory lease with expiration date through December 2025. For the years ended September 30, 2021, 2020 and 2019, the lease expenses were $109,346 , $71,826 and $10,470 , respectively. Balance sheet information related to the VIE and VIE’s subsidiaries’ operating leases as of September 30, 2021 and 2020 was as follows: As of As of September 30, September 30, 2021 2020 Operating Lease Assets: Operating Lease $ 118,154 $ 243,874 Total operating lease assets 118,154 243,874 Operating lease obligations: Current operating lease liabilities 55,847 82,468 Non-current operating lease liabilities 106,180 155,723 Total Lease liabilities $ 162,027 $ 238,191 Remaining Lease Term Operating Lease 2.07 years 3.07 years Discount rate 5.5 % 5.5 % Lease liability maturities as of September 30, 2021, are as follows: Operating, lease 2021 61,939 2022 30,969 2023 30,969 2024 30,969 2025 23,229 Total minimum lease payments $ 178,075 Less: Amount representing interest (16,048) Total $ 162,027 |
EQUITY
EQUITY | 12 Months Ended |
Sep. 30, 2021 | |
EQUITY | |
EQUITY | NOTE 14 –EQUITY Ordinary Shares Qilian International was incorporated on February 7, 2019, with 50,000,000 ordinary shares, $0.001 par value, authorized and issued On October 16, 2019, the Company’s shareholders approved a reverse split of our outstanding ordinary shares at a ratio of 1-for- 1.66667 shares, which resulted in 30,000,000 ordinary shares issued and outstanding. In addition, on the same day, our shareholders approved an increase of the Company’s authorized shares from 50,000,000 ordinary shares at par value of $0.001 per share to 100,000,000 ordinary shares at par value of $0.00166667 per share. The above actions are collectively referred to as the “reserve split.” As a result of this reverse split, the maximum number of shares that the Company is authorized to issue is 100,000,000 ordinary shares, of $0.00166667 par value per share, of which 30,000,000 ordinary shares are issued All share information included in the consolidated financial statements and notes thereto have been retroactively adjusted as if the stock reserve split occurred on the first day of the first period presented. On January 14, 2021, the Company closed its initial public offering (“IPO”) of 5,000,000 ordinary shares, par value $0.00166667 per share, priced at $5.00 per share. The Company completed the IPO pursuant to its registration statement on Form F-1 (File No. 333-234460), originally filed with the Securities and Exchange Commission (the “SEC”) on November 4, 2019 (as amended, the “Registration Statement”). The Registration Statement was declared effective by the SEC on December 30, 2020. On January 15, 2021, the underwriter exercised its over-allotment option to purchase additional 750,000 Ordinary Shares at the price of $5 per share. Total net proceeds the Company received from the IPO were $25,728,401.50. The Ordinary Shares were previously approved for listing on The Nasdaq Global Market and commenced trading under the ticker symbol “QLI” on January 12, 2021. Underwriter Warrants In connection with the Company’s IPO, the Company also agreed to issue to the underwriters and to register herein warrants to purchase up to a total of 300,000 ordinary shares of the Company (equal to 6% of the total number of Ordinary Shares sold in the IPO). These warrants have warrant term of five years, with an exercise price of $5.50 per share (equal to 110% of the Company’s IPO offering price of $5.00 per share). The warrants are exercisable at any time, and from time to time, in whole or in part, commencing July 10, 2021 and expiring on January 10, 2026. Management determined that these warrants meet the requirements for equity classification under ASC 815-40 because they are indexed to its own stock. As of September 30, 2021, 300,000 underwriter warrants were issued and outstanding (none of the warrants has been exercised as of the date). Statutory Reserve WFOE, VIE and VIE’s subsidiaries are required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the surplus reserve are made at the discretion of the Board of Directors. As of September 30, 2021 and September 30, 2020, the balance of statutory reserve was $2,857,121 and $2,200,786 , respectively. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Sep. 30, 2021 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 15 – SEGMENT REPORTING ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different products. Based on management’s assessment, the Company has determined that it has three operating segments as defined by ASC 280. The Company, its subsidiaries, the VIE and VIE’s subsidiaries mainly manufactures and distributes active pharmaceutical ingredients and TCMD products as well as other by-products in China. Currently no revenue is derived from international markets. The following table presents segment information for years ended September 30, 2021, 2020 and 2019, respectively: For the year ended September 30, 2021 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 33,451,159 $ 486,171 $ 23,162,554 $ 57,099,884 Cost of revenue 28,362,016 463,738 22,635,600 51,461,354 Gross profit $ 5,089,143 $ 22,433 $ 526,954 $ 5,638,530 Depreciation and amortization $ 951,015 $ 47,194 $ 203,020 $ 1,201,229 Capital expenditures $ 3,321,629 $ 46,169 $ 125,576 $ 3,493,374 For the year ended September 30, 2020 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 32,602,384 $ 701,701 $ 16,729,115 $ 50,033,200 Cost of revenue 25,004,712 304,670 17,184,665 42,494,047 Gross profit $ 7,597,672 $ 397,031 $ (455,550) $ 7,539,153 Depreciation and amortization $ 886,323 $ 38,792 $ 180,473 $ 1,105,588 Capital expenditures $ 377,953 $ 33,914 $ 37,898 $ 449,765 For the year ended September 30, 2019 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 30,149,950 $ 549,231 $ 15,397,503 $ 46,096,684 Cost of revenue 22,324,422 186,504 13,905,846 36,416,772 Gross profit $ 7,825,528 $ 362,727 $ 1,491,657 $ 9,679,912 Depreciation and amortization $ 985,212 $ 38,525 $ 164,436 $ 1,188,173 Capital expenditures $ 331,917 $ 5,598 $ 278,873 $ 616,388 September 30, September 30, 2021 2020 Total Assets Oxytetracycline & Licorice products and TCMD $ 60,786,870 $ 34,370,665 Fertilizer $ 2,540,189 $ 2,438,442 Heparin products and Sausage casing $ 12,026,204 $ 11,334,031 Total $ 75,353,263 $ 48,143,138 |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS | |
COMMITMENTS | NOTE 16 – COMMITMENTS On July 5, 2021, Chengdu QLS entered into an Investment Agreement with Chongqing Jintong Industrial Construction Investment Co., Ltd (“Chongqing Jintong”). Chengdu QLS would invest and construct factory for manufacturing pig by-products in Chongqing Tongnan High Tech Industrial Zone. As of September 30, 2021, Chengdu QLS made RMB 2,000,000 (approximately $ 0.3 million) guarantee deposit to Chongqing Jintong, which will be fully repaid once the land use right purchase agreement is delivered. In January 2022, Chengdu QLS made RMB 8,000,000 (approximately $1.2 million) payment to Chongqing Jintong as prepayment for land use right. As of September 30, 2021 and issuance date of this financial statement, the investment was in early planning stage and the Chengdu QLS didn’t enter any other construction agreements . |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Sep. 30, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS In October and December 2021, Gansu QLS borrowed RMB10,000,000 (approximately $1.5 million), and RMB10,000,000 (approximately $1.5 million), respectively, from a credit facility of RMB 20,000,000 entered into on September 17, 2021 with Agricultural Development Bank of China, which will mature in one year. The loan is secured by Gansu QLS’s land use right and guaranteed by the Company’s CEO, Mr. Xin. The financial covenants requires Gansu QLS to maintain debt asset ratio below 70%, contingency liability ratio below 20% and not to have negative operating cash flows for two consecutive years. In December 2021, Qilian Chengdu entered into real estate purchase agreement for four properties with total price of RMB 7,619,075 (approximately $ 1.2 million). Qilian Chengdu made full payment in December 2021. The four properties are anticipated to receive in July 2022. In May 2022, Gansu QLS entered into supply chain facility agreement (the “Facility Agreement” with China Construction Bank. The total credit limit under the Facility Agreement is RMB 30,000,000 (approximately $ 4.6 million). As of the date of the report, Gansu QLS utilized RMB 1,000,000 (approximately $ 0.2 million) of the credit limit, which will be due on March 23, 2023 . The credit is secured by Gansu QLS’s buildings. On February 21, 2022, Mr. David Moss resigned his position as independent director and his positions on audit committee, compensation committee and nominating and corporate governance committees for personal reasons. Ms. Marta New resigned her position as independent director and her positions on nominating and corporate governance committees, audit committee, and compensation committee and for personal reasons. The resignation of these two independent directors was not a result of any disagreement with the Company or any of its subsidiaries and affiliates on any matter related to the operations, policies, or practices of the Company or any of its subsidiaries and affiliates. On April 15, 2022, the board of directors appointed Mr. Yixuan (Adam) Sun and Ms Qingling Zhang as an independent director of the Company. Mr. Sun will act as the chairperson of the audit committee and a member of the compensation committee and the nomination and corporate governance committee. Ms. Zhang will act as the chairperson of the nomination and corporate governance committee and the member of the audit committee and the compensation committee. The Company’s management reviewed all material events that have occurred after the balance sheet date through June 30, 2022 on which these financial statements were issued. Based upon this review, the Company did not identify any subsequent events except disclosed in above that would have required adjustment or disclosure in the financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Company, its subsidiaries, the VIE and VIE’s subsidiaries consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the financial statements of Qilian International, and its subsidiaries, the VIE and VIE’s subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. See Risks and Uncertainties disclosure for VIE structures in China. The carrying amounts of the assets, liabilities, the results of operations and cash flows of the VIE and VIE’s subsidiaries included in the Company, its subsidiaries, the VIE and VIE subsidiaries’ consolidated financial statements after the elimination of intercompany balances and transactions among the VIE and VIE’s subsidiaries, and the Company and its subsidiaries are as follows: September 30, September 30, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 4,161,582 $ 5,493,215 Restricted cash 2,140,016 — Accounts receivable, net 1,733,306 660,398 Bank acceptance receivable 11,722,096 11,460,512 Inventories, net 12,495,831 11,994,471 Advances to suppliers, net 1,380,757 465,755 Other current assets 423,331 535,981 Total current assets 34,056,919 30,610,332 Property and equipment, net 9,041,995 7,395,965 Intangible assets, net 1,927,933 1,881,722 Long-term investment 639,466 540,517 Long term security deposits 188,913 179,325 Right of use assets-lease 118,154 134,511 Deferred tax assets 427,172 361,250 Total assets $ 46,400,552 $ 41,103,622 LIABILITIES Current liabilities: Bank loans $ — $ 7,349,375 Accounts payable 6,642,625 3,958,804 Advance from customers 2,467,296 3,511,198 Advance from customers - related parties 17,318 33,152 Bank notes payable 7,867,018 — Deferred government grants - current 351,567 384,802 Taxes payable 371,325 1,322,354 Operating lease liabilities, current 55,847 22,354 Accrued expenses and other payables 466,188 1,301,881 Total current liabilities 18,239,184 17,883,920 Operating lease liabilities, long term 106,180 124,406 Deferred government grants - noncurrent 403,745 722,137 Total liabilities 18,749,109 18,730,463 For the year ended September 30, 2021 2020 2019 Net revenue $ 57,049,381 $ 46,731,913 $ 46,096,684 Income from operations $ 2,370,647 $ 4,840,614 $ 6,178,538 Net income $ 2,857,492 $ 4,936,357 $ 5,908,479 For the Year Ended September 30, 2021 2020 2019 Net cash provided by (used in) operating activities $ 2,122,539 $ 4,131,468 $ (580,193) Net cash used in investing activities (1,781,618) (5,648,762) (800,254) Net cash provided by (used in) financing activities 123,697 2,140,503 507,202 Effect of exchange rate on cash 343,759 275,566 (157,094) Net increase (decrease) in cash and cash equivalents $ 808,377 $ 898,775 $ (1,030,339) |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company, its subsidiaries, the VIE and VIE’s subsidiaries’ critical accounting estimates included, but are not limited to: allowance for estimated uncollectible receivables, inventory valuations, impairment of long-lived assets, impairment of intangible assets, and income taxes. Actual results could differ from those estimates. |
Risks and Uncertainties | Risks and Uncertainties Risks of Operation in China The main operation of the Company, through the WFOE, the VIE and VIE’s subsidiaries, is located in the PRC. Accordingly, the Company, its subsidiaries, the VIE and VIE’s subsidiaries’ 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, its subsidiaries, the VIE and VIE’s subsidiaries’ results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company, its subsidiaries, the VIE and VIE’s subsidiaries’ have 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. Risks in relation to the VIE structure The Company is incorporated in the Cayman Islands. As a holding company with no material operations, the Company conducts its operations in China through the variable interest entities, Gansu QLS and its subsidiaries. The Company receives the economic benefits of Gansu QLS and its subsidiaries’ business operation through a series of contractual arrangements, or the VIE Agreements, which have not been tested in court. As a result of the Company’s indirect ownership in the Qilian Chengdu and the VIE Agreements, the Company is regarded as the primary beneficiary of its VIE. The VIE structure is used to replicate foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment in the operating companies, and that investors may never directly hold equity interests in the Chinese operating entities. The Company relies on contractual arrangements with the VIE and its subsidiaries in China for the business operations, which may not be as effective in providing operational control or enabling the Company to derive economic benefits as through ownership of controlling equity interests, and the VIE’s shareholders may fail to perform their obligations under the contractual arrangements. If the PRC government deems that the VIE Agreements in relation to the VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, the Company may have difficulty in enforcing any rights the Company may have under the VIE Agreements in PRC and the Company could be subject to severe penalties or be forced to relinquish the Company’s interests in those operations. Technology Innovation and Commodity Risks The Company, its subsidiaries, the VIE and VIE’s subsidiaries’ business faces rapid technological change, and there is a possibility that the competitors may achieve regulatory approval and develop new product candidates before the Company, its subsidiaries, the VIE and VIE’s subsidiaries, which may harm the financial condition and the ability to successfully market or commercialize any of the product candidates. The development and commercialization of new pharmaceutical products and fertilizers is highly competitive, and both industries currently are characterized by rapidly changing technologies, significant competition and a strong emphasis on intellectual property. The Company, its subsidiaries, the VIE and VIE’s subsidiaries will face competition with respect to the current and future pharmaceutical and fertilizer product candidates from major pharmaceutical and chemical companies in China. The Heparin and sausage casing products are made from livestock products, which are subject significant risks of the market supply of the raw materials. Exchange Rate Risks The WFOE, the VIE and VIE’s subsidiaries operate in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the US$ and the RMB. As at September 30, 2021 and September 30, 2020, cash and restricted cash of $7,305,799 (RMB 51,226,986 ) and $10,847,959 (RMB 73,801,918 ), respectively, is denominated in RMB and is held in PRC. Currency Convertibility Risks Substantially all of the WFOE, the VIE and VIE’s subsidiaries’ 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. Other Uncertainties In early January of 2020, the outbreak of the novel coronavirus, commonly referred to as “COVID-19”, first found in mainland China, then in Asia and eventually throughout the world, has significantly affected business and other activities within China. China has experienced widespread economic disruption owing to the outbreak of the COVID-19 coronavirus and stringent government measures to contain it, including nationwide restricting access to provinces and cities, reducing agglomeration activities, and postponing non-essential business activates. The VIE and VIE’s subsidiaries shut down the manufacturing of all products, except Oxytetracycline, and stopped all distribution during February 2020. Almost all of the WFOE,the VIE and VIE subsidiaries’ suppliers and customers had different levels of business disruptions as well, therefore the WFOE,the VIE and VIE subsidiaries have experienced substantive diminutions in raw material supplies and such prices have increased significantly. The VIE and VIE’s subsidiaries have resumed manufacturing activities since February 27, 2020. Most production lines of the Company have been restored to normal production capacity. As of the date of issuance of these financial statements, the COVID-19 coronavirus surged in China due to Omicron and Delta variants, business activities were not significantly affected and being interrupted to some extent. The extent of future impact to which the VIE and VIE’s subsidiaries’ operations or those of the third-party vendors and customers, including those customers that distribute to Europe and other jurisdictions outside of mainland China is still considered uncertain as COVID-19 continues to adversely affect the global economy and the potential for resurgences remain. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash consists of cash equivalents used as collateral to secure short-term bank notes payable. The VIE is required to keep amounts equal to 30% - 50% of the notes payable value on deposit that are subject to withdrawal restrictions. Upon the maturity of the bank acceptance notes, the VIE is required to deposit the remainder to the escrow account to settle the bank notes payable. The notes payable are generally short term in nature due to their short maturity period of three months to one year; thus, restricted cash is classified as a current asset. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The WFOE, the VIE and VIE’s subsidiaries usually grant credit to customers with good credit standing with a maximum of 90 days and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. |
Inventories, net | Inventories, net Inventories are stated at the lower of cost or net realizable value . Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Allowances for obsolescence are also assessed based on expiration dates, as applicable, taking into consideration historical and expected future product sales. |
Property, Plant and Equipment | Property, Plant and Equipment Property and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives of the assets, as follows: Items Useful life Property and buildings 20–25 years Leasehold improvement Lesser of useful life and lease term Machinery and equipment 5–10 years Automobiles 3–5 years Office and electric equipment 3–5 years Construction in progress is comprised of costs related to the capital projects that are not completed and is not depreciated until such time as the subject asset is placed in service. Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the statement of income in other income and expenses. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of land use rights, software and license for drug manufacturing (See Note 7). Under the PRC law, all land in the PRC is owned by the government and cannot be sold to an individual or company. The government grants individuals and companies the right to use parcels of land for specified periods of time. Land use rights are stated at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the following estimated useful lives: Items Useful life Land use rights 50 years Software 10 years License for drug manufacturing 10 years |
Leases | Leases On October 1, 2019 the Company adopted Accounting Standards Update (“ASU”) 2016-02. For all leases that were entered into prior to the effective date of ASC 842, we elected to apply the package of practical expedients Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. |
Investment in Available-for-Sale Securities | Investment in Available-for-Sale Securities The Company entered into an investment with a iFactors SPC related to shares participating in the Golden Bridge Global Income Opportunities SP (the Fund), an exempted segregated Portfolio Company incorporated in the Cayman Islands and managed by Golden Bridge Capital Management Limited. The Fund primarily invests in bonds offered by private entities (debt securities), globally and also invests in convertible debt securities, publicly traded debt and stock, and governmental fixed income securities. The redemption of such shares for cash can be made with ninety days advance written notice (such written notice period can be extended by the investment manager), except during the lock up period which is 24 months, from the initial investment date. The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are recorded as either short term or long term on the Balance Sheet, based on contractual maturity date and are stated at amortized cost. Investment securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value. Investment securities not classified as trading securities or as held-to-maturity securities shall be classified as available-for-sale securities. As of September 30, 2021, the investment consisted of 20,000 units of the Fund. Such securities have been classified as available for sale securities. The private equity fund are measured at fair value with gains and losses recognized in earnings. As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of the Fund. NAV is primarily determined based on information provided by external fund administrators. The NAV of the Fund was $20,323,400 as of September 30, 2021. See Fair Value of Financial Instruments disclosure in this footnote. The Company evaluates whether an investment is other-than-temporarily impaired based on the specific facts and circumstances. Factors that are considered in determining whether an other-than-temporary decline in value has occurred include the market value of the security in relation to its cost basis, the financial condition of the investee, and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment. |
Long-Term Investment | Long-Term Investment Investments in entity in which the Company, its subsidiaries, the VIE and VIE’s subsidiaries can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting. Under the equity method, the Company, its subsidiaries, the VIE and VIE’s subsidiaries initially record its investment at cost and the difference between the cost and the fair value of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill, which is included in the equity method investment on the consolidated balance sheets. The Company, its subsidiaries, the VIE and VIE’s subsidiaries evaluate the equity method investments for impairment under ASC 323. An impairment loss on the equity method investments is recognized in earnings when the decline in value is determined to be other-than-temporary. The Company, its subsidiaries, the VIE and VIE’s subsidiaries subsequently adjust the carrying amount of the investment to recognize their proportionate share of each equity investee’s net income or loss into earnings after the date of investment. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company, its subsidiaries, the VIE and VIE’s subsidiaries review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no indicators of impairment of long lived assets as of September 30, 2021 and September 30, 2020. |
Transactions with Non-controlling Interests of Subsidiaries | Transactions with Non-controlling Interests of Subsidiaries The Company, its subsidiaries, the VIE and VIE’s subsidiaries account for a change in ownership interests in its subsidiaries that does not result in a change of control of the subsidiary under the provisions of ASC 810-10-45-23, Consolidation – Other Presentation Matters, which prescribes the accounting for changes in ownership interest that do not result in a change in control of the subsidiary, as defined by GAAP, before and after the transaction. Under this guidance, changes in a controlling shareholder’s ownership interest that do not result in a change of control, as defined by GAAP, in the subsidiary are accounted for as equity transactions. Accordingly, if the controlling shareholder retains control, no gain or loss is recognized in the statements of operations of the controlling shareholder. Similarly, the controlling shareholder will not record any additional acquisition adjustments to reflect its subsequent purchases of additional shares in the subsidiary if there is no change of control. Only a proportional and immediate transfer of carrying value between the controlling and the noncontrolling shareholders occurs based on the respective ownership percentages. For the year ended September 30, 2021, the VIE, Gansu QLS acquired 7.76% of equity interest in Chengdu QLS and its subsidiaries from its shareholders. The equity interest Gansu QLS has in Chengdu QLS increased from 71.75% as of September 30, 2020 to 79.51% as of September 30, 2021. |
Non-controlling interests | Non-controlling Interests Non-controlling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder. For the Company’s consolidated subsidiaries, VIE and VIE’s subsidiaries, non-controlling interests represent a minority shareholder’s 0.786% ownership interest in Gansu QLS, 20.49% ownership interest in Chengdu QLS and in subsidiaries including Rugao and Chongqing as of September 30, 2021, and 1.703% ownership interest in Gansu QLS, 28.25% ownership interest in Chengdu QLS and its subsidiaries as of September 30, 2020. The following table summarizes the shareholders’ equity for the non-controlling interest from each subsidiary that is not 100% owned by the Company: As of September 30, September 30, 2021 2020 Gansu QLS $ 240,683 $ 387,420 Chengdu QLS and subsidiaries 1,569,169 2,355,853 Total $ 1,809,852 $ 2,743,273 Non-controlling interest in the equity of a subsidiary is reported in equity in the consolidated balance sheets. Net income and losses attributable to the non-controlling interest is reported as described above in the consolidated statement of income and comprehensive income. |
Revenue Recognition | Revenue Recognition The Company, its subsidiaries, the VIE and VIE’s subsidiaries recognize revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To perform revenue recognition for arrangements within the scope of ASC 606, the Company, its subsidiaries, the VIE and VIE’s subsidiaries perform the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) we satisfy each performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. The majority of the WFOE, the VIE and VIE’s subsidiaries’ contracts have one single performance obligation as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and are, therefore, not distinct. The revenue streams are recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The WFOE, the VIE and VIE’s subsidiaries’ products are sold with no right of return and The WFOE, the VIE and VIE’s subsidiaries do not provide other credits or sales incentives, which would be accounted for as variable consideration. Sales taxes invoiced to customers and remitted to government authorities are excluded from net sales. The contract liabilities are recorded on the consolidated balance sheets as advance from customers as of September 30, 2021 and September 30, 2020. Refer to Note 15 for disaggregated revenue information. |
Government Grants | Government Grants Government grants are recognized when there is reasonable assurance that the attached conditions will be complied with. When the grant relates to an expense item, it is net against the expense and recognized in the consolidated statements of income and comprehensive income over the period necessary to match the grant on a systematic basis to the related costs. Where the grant relates to an asset acquisition, it is recognized in the consolidated statements of income and comprehensive income in proportion to the useful life of the related assets. Government grants received for the year ended September 30, 2021, 2020 and 2019 were $152,265, $764,962 and $360,169, respectively. Grant income recognized for the year ended September 30, 2021, 2020 and 2019 were $559,828, $1,079,200 and $680,151, respectively, included in other income within the consolidated statement of income and comprehensive income. As of September 30, 2021 and 2020, the deferred government grants were $755,312 and $1,106,939, respectively. The weighted average remaining periods for the government grant to be recognized were 4.15 years and 4.36 years, respectively. |
Research and Development Expenses | Research and Development Expenses The Company, its subsidiaries, the VIE and VIE’s subsidiaries expense all internal research costs as incurred, which primarily comprise employee costs, internal and external costs related to execution of studies, including manufacturing costs, facility costs of the research center, and amortization, depreciation of intangible assets and property, plant and equipment used in the research and development activities. For the year ended September 30, 2021 and 2020, total research and development expense were approximately $8,000 and $54,000 , respectively, which were recorded in general and administrative expenses in the consolidated statement of income and comprehensive income. |
Income Taxes | Income Taxes The Company, its subsidiaries, the VIE and VIE’s subsidiaries account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company, its subsidiaries, the VIE and VIE’s subsidiaries determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company, its subsidiaries, the VIE and VIE’s subsidiaries recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, the Company, its subsidiaries, the VIE and VIE’s subsidiaries consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company, its subsidiaries, the VIE and VIE’s subsidiaries determine that they would be able to realize the deferred tax assets in the future in excess of their net recorded amount, they would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company, its subsidiaries, the VIE and VIE’s subsidiaries record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company, its subsidiaries, the VIE and VIE’s subsidiaries determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company, its subsidiaries, the VIE and VIE’s subsidiaries recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company does not believe that there were any uncertain tax positions at September 30, 2021 and 2020. |
Earnings per Share | Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the year ended September 30, 2021, 300,000 underwriter warrants were considered in the diluted EPS calculation using treasury stock method. There were no diluted shares for the years ended September 30, 2021, 2020 and 2019. The following table sets forth the computation of basic and diluted earnings per share for the years ended September 30, 2021, 2020 and 2019: For the Years ended September 30, 2021 2020 2019 Numerator: Net income attributable to ordinary shareholders $ 3,152,868 $ 5,063,710 $ 5,332,318 Denominator: Weighted-average number of ordinary shares outstanding – basic 34,089,286 30,000,000 30,000,000 Outstanding warrants — — — Potentially dilutive shares from outstanding options and warrants — — — Weighted-average number of ordinary shares outstanding – diluted 34,089,286 30,000,000 30,000,000 Earnings per share – basic $ 0.09 $ 0.17 $ 0.18 Earnings per share – diluted $ 0.09 $ 0.17 $ 0.18 |
Foreign Currency Translation | Foreign Currency Translation The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. Our financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in statement of changes in equity. Gains and losses from foreign currency transactions are included in the consolidated statement of income and comprehensive income. The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: September 30, 2021 September 30, 2020 September 30, 2019 Year-end spot rate US$1=RMB 6.4580 US$1=RMB 6.8033 US$1=RMB 7.1383 Average rate US$1=RMB 6.5095 US$1=RMB 7.0077 US$1=RMB 6.8767 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company records its financial assets and liabilities in accordance with the framework for measuring fair value in accordance with U.S GAAP. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in the impairment analysis of intangible assets and long-lived assets. As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of its certain fund investment. NAV is primarily determined based on information provided by external fund administrators. The Company’s investments valued at NAV as a practical expedient are private equity funds, which represent the investment in available-for-sale securities on the balance sheet. Cash and cash equivalents, restricted cash, accounts receivable, bank notes receivable, advances to suppliers, other current assets, accounts payable, deferred revenue, advances from customers and accrued expenses and other payables approximate fair value because of the short maturity of those instruments. Based on comparable open market transactions, the fair value of the bank loans, bank notes payable and other liabilities, including current maturities, approximated their carrying value as of September 30, 2021 and September 30, 2020, respectively. The Company's estimates of the fair value of bank loans and notes payable and other liabilities (including current maturities) were classified as Level 2 in the fair value hierarchy. The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for the year ended September 30, 2021 and 2020: As of As of September 30, September 30, 2021 2020 Beginning balance $ — $ — Fair value of investment in available-for-sale securities at inception 20,000,000 — Change in fair value 323,400 — Ending balance $ 20,323,400 $ — |
Concentrations and Credit Risk | Concentrations and Credit Risk A majority of the Company, its subsidiaries, the VIE and VIE’s subsidiaries’ expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries, the VIE and VIE’s subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company, its subsidiaries, the VIE and VIE’s subsidiaries in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance. As of September 30, 2021 and 2020, $7,305,799 and $10,847,959 of the Company’s cash and cash equivalents, certificates of deposit and restricted cash were on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. Cash and cash equivalent of $1,073,196 and $1,018,726 were deposited at financial institutions in Hong Kong as of September 30, 2021 and 2020, which are insured by Hong Kong Deposit Board and subject to a certain limitation of HKD 500,000 (approximately $ 65,000). As of September 30, 2021 and 2020, $4,228,173 and nil of the Company’s cash were on deposit at financial institutions in the U.S. which were insured by the FDIC subject to certain limitations. The Company has not experienced any losses in such accounts. Substantially all of the Company’s sales are made to customers that are located in China. The Company has a concentration of its revenues and receivables with specific customers. For the year ended September 30, 2021, three customers accounted for 11% , 11% and 10% of total revenue, respectively and one vendor accounted for 13% of total purchase, respectively. As of September 30, 2021, one major customer’s account receivable accounted for 77% of the total account receivable, respectively. For the year ended September 30, 2020, three customers accounted for 18%, 11% and 10% of the Company’s total revenue, respectively and two vendors accounted for 11% and 10% of the Company’s total purchase, respectively As of September 30, 2020, three major customers’ account receivable accounted for 35%, 16% and 14% of the total account receivable, respectively. For the year ended September 30, 2019, one customer accounted for 15% the Company’s total revenue, and two vendors accounted for 13% and 10% of the Company’s total purchase, respectively. As of September 30, 2019, two major customers’ account receivable accounted for 46% and 30% of the total account receivable, respectively. A loss of any of these customers or suppliers could adversely affect the operating results or cash flows of the Company. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For public business entities that meet the definition of an U.S. Securities and Exchange (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application of the amendments is permitted. As a smaller reporting company, the Company will adopt this update for fiscal year beginning from October 1, 2023. The Company does not expect the adoption will have material impact on its consolidated financial statements. In December 2019, the FASB issued Accounting Standards Update No. 2019-12 - Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of income and cash flows. |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
Gansu QLS | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Schedule of subsidiaries | Ownership as of September September 30, 2021 30, 2020 Moshangfa (Gansu) Fertilizer Industry Co., Ltd (formerly Jiuquan Qiming Biotechnology Co., Ltd, “Moshangfa”) 100 % 100 % Chengdu Qilianshan Biotechnology Co., Ltd (“Chengdu QLS”) 79.51 % 71.75 % Jiuquan Ahan Biotechnology Co., Ltd. (“Ahan”) 100 % 75 % Tibet Samen Trading Co., Ltd (“Samen”) 100 % 100 % Tibet Cangmen Trading Co., Ltd (“Cangmen”) 100 % 100 % Rugao Tianlu Animal Products Co., Ltd (“Rugao”)* 79.51 % 71.75 % Chongqing Shengfu Biological Technology Co., Ltd (“Chongqing”) * 79.51 % NA * Rugao and Chongqing were incorporated as a wholly-owned subsidiary of Chengdu QLS in 2020 and 2021, respectively. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of carrying amounts of the assets, liabilities, the results of operations and cash flows of the VIE and its subsidiaries | The carrying amounts of the assets, liabilities, the results of operations and cash flows of the VIE and VIE’s subsidiaries included in the Company, its subsidiaries, the VIE and VIE subsidiaries’ consolidated financial statements after the elimination of intercompany balances and transactions among the VIE and VIE’s subsidiaries, and the Company and its subsidiaries are as follows: September 30, September 30, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 4,161,582 $ 5,493,215 Restricted cash 2,140,016 — Accounts receivable, net 1,733,306 660,398 Bank acceptance receivable 11,722,096 11,460,512 Inventories, net 12,495,831 11,994,471 Advances to suppliers, net 1,380,757 465,755 Other current assets 423,331 535,981 Total current assets 34,056,919 30,610,332 Property and equipment, net 9,041,995 7,395,965 Intangible assets, net 1,927,933 1,881,722 Long-term investment 639,466 540,517 Long term security deposits 188,913 179,325 Right of use assets-lease 118,154 134,511 Deferred tax assets 427,172 361,250 Total assets $ 46,400,552 $ 41,103,622 LIABILITIES Current liabilities: Bank loans $ — $ 7,349,375 Accounts payable 6,642,625 3,958,804 Advance from customers 2,467,296 3,511,198 Advance from customers - related parties 17,318 33,152 Bank notes payable 7,867,018 — Deferred government grants - current 351,567 384,802 Taxes payable 371,325 1,322,354 Operating lease liabilities, current 55,847 22,354 Accrued expenses and other payables 466,188 1,301,881 Total current liabilities 18,239,184 17,883,920 Operating lease liabilities, long term 106,180 124,406 Deferred government grants - noncurrent 403,745 722,137 Total liabilities 18,749,109 18,730,463 For the year ended September 30, 2021 2020 2019 Net revenue $ 57,049,381 $ 46,731,913 $ 46,096,684 Income from operations $ 2,370,647 $ 4,840,614 $ 6,178,538 Net income $ 2,857,492 $ 4,936,357 $ 5,908,479 For the Year Ended September 30, 2021 2020 2019 Net cash provided by (used in) operating activities $ 2,122,539 $ 4,131,468 $ (580,193) Net cash used in investing activities (1,781,618) (5,648,762) (800,254) Net cash provided by (used in) financing activities 123,697 2,140,503 507,202 Effect of exchange rate on cash 343,759 275,566 (157,094) Net increase (decrease) in cash and cash equivalents $ 808,377 $ 898,775 $ (1,030,339) |
Schedule of estimated useful lives of the assets | Items Useful life Property and buildings 20–25 years Leasehold improvement Lesser of useful life and lease term Machinery and equipment 5–10 years Automobiles 3–5 years Office and electric equipment 3–5 years |
Schedule of estimated useful lives of intangible assets | Items Useful life Land use rights 50 years Software 10 years License for drug manufacturing 10 years |
Schedule of shareholders' equity for the non-controlling interest from each subsidiary that is not 100% owned | The following table summarizes the shareholders’ equity for the non-controlling interest from each subsidiary that is not 100% owned by the Company: As of September 30, September 30, 2021 2020 Gansu QLS $ 240,683 $ 387,420 Chengdu QLS and subsidiaries 1,569,169 2,355,853 Total $ 1,809,852 $ 2,743,273 |
Schedule of computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share for the years ended September 30, 2021, 2020 and 2019: For the Years ended September 30, 2021 2020 2019 Numerator: Net income attributable to ordinary shareholders $ 3,152,868 $ 5,063,710 $ 5,332,318 Denominator: Weighted-average number of ordinary shares outstanding – basic 34,089,286 30,000,000 30,000,000 Outstanding warrants — — — Potentially dilutive shares from outstanding options and warrants — — — Weighted-average number of ordinary shares outstanding – diluted 34,089,286 30,000,000 30,000,000 Earnings per share – basic $ 0.09 $ 0.17 $ 0.18 Earnings per share – diluted $ 0.09 $ 0.17 $ 0.18 |
Schedule of currency exchange rates | September 30, 2021 September 30, 2020 September 30, 2019 Year-end spot rate US$1=RMB 6.4580 US$1=RMB 6.8033 US$1=RMB 7.1383 Average rate US$1=RMB 6.5095 US$1=RMB 7.0077 US$1=RMB 6.8767 |
Schedule of reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on recurring basis | The following is a reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on a recurring basis for the year ended September 30, 2021 and 2020: As of As of September 30, September 30, 2021 2020 Beginning balance $ — $ — Fair value of investment in available-for-sale securities at inception 20,000,000 — Change in fair value 323,400 — Ending balance $ 20,323,400 $ — |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
ACCOUNTS RECEIVABLE, NET | |
Schedule of accounts receivable | Accounts receivable consisted of the following: As of As of September 30, 2021 September 30, 2020 Trade accounts receivable $ 1,945,719 $ 1,325,333 Less: allowances for doubtful accounts (212,413) (206,857) Accounts receivable, net $ 1,733,306 $ 1,118,476 |
INVENTORY, NET (Tables)
INVENTORY, NET (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
INVENTORY, NET | |
Schedule of inventories | Inventories consisted of the following: As of As of September 30, 2021 September 30, 2020 Raw materials $ 6,285,887 $ 3,241,903 Work-in-progress 832,499 704,991 Finished goods 5,502,591 8,078,288 Inventory valuation allowance (125,146) (30,711) Total inventory $ 12,495,831 $ 11,994,471 |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
OTHER CURRENT ASSETS | |
Schedule of other current assets | Other current assets consisted of the following: As of As of September 30, 2021 September 30, 2020 Deferred offering costs $ — $ 384,847 Security deposits 327,104 150,093 Prepaid expense 84,428 4,377 Other receivables 14,090 8,126 Total other current assets $ 425,622 $ 547,443 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
Schedule of property and equipment | Property, plant and equipment, net consisted of the following: As of As of September 30, 2021 September 30, 2020 Property and Buildings $ 9,711,722 $ 9,114,893 Machinery and equipment 19,594,986 18,175,739 Automobiles 689,651 611,923 Office and electric equipment 148,439 137,588 Subtotal 30,144,798 28,040,143 Construction in progress 2,020,457 158,975 Less: accumulated depreciation (23,045,753) (20,780,090) Property and equipment, net $ 9,119,502 $ 7,419,028 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets, net | Intangible assets, net consisted of the following: As of As of September 30, 2021 September 30, 2020 Land use rights $ 2,521,646 $ 2,393,660 Software 43,875 39,916 License for drug manufacturing 61,939 58,796 Total 2,627,460 2,492,372 Less: accumulated amortization (699,527) (610,650) Intangible assets, net $ 1,927,933 $ 1,881,722 |
Schedule of estimated future amortization expense for intangible assets | Estimated future amortization expense for intangible assets is as follows: Amortization Year ending September 30, expense 2022 $ 55,914 2023 55,307 2024 55,307 2025 55,307 2026 55,307 Thereafter 1,650,791 $ 1,927,933 |
LONG-TERM INVESTMENT (Tables)
LONG-TERM INVESTMENT (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
LONG-TERM INVESTMENT | |
Schedule of equity method investment | Equity method investment consisted of the following: As of As of September 30, 2021 September 30, 2020 Equity method investment: Cost of equity method investment 510,994 485,059 Profit from equity method investment 188,605 112,538 Dividend Distribution received (60,133) (57,080) Total long-term investment $ 639,466 $ 540,517 |
BANK LOANS (Tables)
BANK LOANS (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
BANK LOANS. | |
Schedule of bank loans | As of September 30, 2021 and 2020, the bank loans consist of the following: As of As of September 30, 2021 September 30, 2020 Agricultural Bank of China (“ABC”) (1) $ — $ 2,939,750 Agricultural Development Bank of China (“ADBC”) (2) — 2,939,750 Lanzhou Bank (3) — 1,469,875 Total — 7,349,375 (1) In 2019 and 2020, Gansu QLS entered into a series of short-term bank loan agreements with ABC with a loan period of twelve months . Gansu QLS pledged its property and buildings as collateral for the loans. The loans bear fixed interest rates ranging from 4.05% to 5.44% per annum. The loans are guaranteed by Mr. Zhanchang Xin, principal shareholder of the Company and Gansu QLS and pledged by Gansu QLS’s building and land use right. The loans outstanding as of September 30, 2020 matured in February 2021 to March of 2021 and have been fully repaid. The terms of the loan agreements contain certain restrictive financial covenants which, among other things, require Gansu QLS to maintain specified debt ratio and contingent liability ratio. As of September 30, 2020, Gansu QLS was in compliance with such covenants. (2) In February and April 2020 , Gansu QLS entered into two short-term bank loan agreements with ADBC for twelve months . The loans bear fixed interest rates ranging of 4.15% per annum. Gansu QLS’s building and land use right were pledged for the loans. One loan of RMB 10,000,000 (approximately $1.5 million) matured in February 2021 and was fully repaid upon maturity. The other loan outstanding as of September 30, 2020 matured in April of 2021 and has been fully repaid. (3) In April 2020, Gansu QLS entered into one short-term bank loan agreements with Lanzhou Bank for twelve months. The loan bears fixed interest rates ranging of 4.55% per annum. Gansu QLS’s building and land use right were pledged for the loans. The loans outstanding as of September 30, 2020 matured in April of 2021 and has been fully repaid. |
TAXES (Tables)
TAXES (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
TAXES. | |
Schedule of income before income taxes | Income before income taxes is derived from the following jurisdiction: For the year ended September 30, 2021 2020 2019 China $ 3,252,583 $ 5,805,349 $ 6,941,919 Cayman Islands 110,694 — — Total $ 3,363,277 $ 5,805,349 $ 6,941,919 |
Schedule of significant components of the provision for income taxes | Significant components of the provision for income taxes were as follows: For the year ended September 30, 2021 2020 2019 Current income taxes $ 301,320 $ 951,403 $ 984,785 Deferred income taxes (46,187) (86,495) 48,655 Total $ 255,133 $ 864,908 $ 1,033,440 |
Schedule of significant deferred tax assets and liabilities | Temporary differences and carryforwards of the Company, its subsidiaries, the VIE and VIE’s subsidiaries that created significant deferred tax assets and liabilities are as follows: As of As of September 30, 2021 September 30, 2020 Deferred tax assets: Allowance for doubtful accounts and inventory provision $ 51,122 $ 36,451 NOL Carryforwards 262,701 158,758 Deferred government grants 113,297 166,041 Total deferred tax assets $ 427,120 $ 361,250 |
Schedule of reconciliation of the statutory rates to the effective tax rate | The following table reconciles the statutory rates to the Company, its subsidiaries, the VIE and VIE’s subsidiaries’ effective tax rate: For the year ended September 30, 2021 2020 2019 China Statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of favorable income tax rate in the PRC (13.6) % (10.5) % (10.2) % Permanent difference (3.8) % 0.4 % 0.1 % Effective tax rate 7.6 % 14.9 % 14.9 % |
Schedule of taxes payable | The Company, its subsidiaries, the VIE and VIE’s subsidiaries’ taxes payable consists of the following: September 30, September 30, 2021 2020 VAT tax payable $ 64,129 $ 644,244 Corporate income tax payable 148,204 631,590 Business and other taxes payable 92,972 107,348 Total $ 305,305 $ 1,383,182 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
LEASE | |
Schedule of balance sheet information related to the operating leases | As of As of September 30, September 30, 2021 2020 Operating Lease Assets: Operating Lease $ 118,154 $ 243,874 Total operating lease assets 118,154 243,874 Operating lease obligations: Current operating lease liabilities 55,847 82,468 Non-current operating lease liabilities 106,180 155,723 Total Lease liabilities $ 162,027 $ 238,191 Remaining Lease Term Operating Lease 2.07 years 3.07 years Discount rate 5.5 % 5.5 % |
Schedule of weighted average remaining lease term and discount rate | As of As of September 30, September 30, 2021 2020 Operating Lease Assets: Operating Lease $ 118,154 $ 243,874 Total operating lease assets 118,154 243,874 Operating lease obligations: Current operating lease liabilities 55,847 82,468 Non-current operating lease liabilities 106,180 155,723 Total Lease liabilities $ 162,027 $ 238,191 Remaining Lease Term Operating Lease 2.07 years 3.07 years Discount rate 5.5 % 5.5 % |
Schedule of lease liability maturities | Lease liability maturities as of September 30, 2021, are as follows: Operating, lease 2021 61,939 2022 30,969 2023 30,969 2024 30,969 2025 23,229 Total minimum lease payments $ 178,075 Less: Amount representing interest (16,048) Total $ 162,027 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Sep. 30, 2021 | |
SEGMENT REPORTING | |
Schedule of segment information | For the year ended September 30, 2021 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 33,451,159 $ 486,171 $ 23,162,554 $ 57,099,884 Cost of revenue 28,362,016 463,738 22,635,600 51,461,354 Gross profit $ 5,089,143 $ 22,433 $ 526,954 $ 5,638,530 Depreciation and amortization $ 951,015 $ 47,194 $ 203,020 $ 1,201,229 Capital expenditures $ 3,321,629 $ 46,169 $ 125,576 $ 3,493,374 For the year ended September 30, 2020 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 32,602,384 $ 701,701 $ 16,729,115 $ 50,033,200 Cost of revenue 25,004,712 304,670 17,184,665 42,494,047 Gross profit $ 7,597,672 $ 397,031 $ (455,550) $ 7,539,153 Depreciation and amortization $ 886,323 $ 38,792 $ 180,473 $ 1,105,588 Capital expenditures $ 377,953 $ 33,914 $ 37,898 $ 449,765 For the year ended September 30, 2019 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 30,149,950 $ 549,231 $ 15,397,503 $ 46,096,684 Cost of revenue 22,324,422 186,504 13,905,846 36,416,772 Gross profit $ 7,825,528 $ 362,727 $ 1,491,657 $ 9,679,912 Depreciation and amortization $ 985,212 $ 38,525 $ 164,436 $ 1,188,173 Capital expenditures $ 331,917 $ 5,598 $ 278,873 $ 616,388 September 30, September 30, 2021 2020 Total Assets Oxytetracycline & Licorice products and TCMD $ 60,786,870 $ 34,370,665 Fertilizer $ 2,540,189 $ 2,438,442 Heparin products and Sausage casing $ 12,026,204 $ 11,334,031 Total $ 75,353,263 $ 48,143,138 |
ORGANIZATION AND DESCRIPTION _3
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2021 USD ($) subsidiary | Sep. 30, 2020 USD ($) | Aug. 31, 2006 USD ($) | |
Qilian HK | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 100% | ||
Qilian Chengdu | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 100% | ||
Gansu QLS | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Initial capital | $ 270 | ||
registered capital | $ 12,200 | $ 12,200 | |
Number of subsidiaries | subsidiary | 7 | ||
Amount of pledged equity interest (in percent) | 99.214% | 98.297% | |
Gansu QLS | Qilian Chengdu | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 99.214% | 98.297% | |
Gansu QLS | Jiuquan Qiming Biotechnology Co., Ltd ("Qiming") | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 100% | 100% | |
Gansu QLS | Chengdu QLS and subsidiaries | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 79.51% | 71.75% | |
Gansu QLS | Ahan | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 100% | 75% | |
Gansu QLS | Tibet Samen Trading Co., Ltd ("Samen") | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 100% | 100% | |
Gansu QLS | Tibet Cangmen Trading Co., Ltd ("Cangmen") | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 100% | 100% | |
Gansu QLS | Rugao Tianlu Animal Products Co., Ltd ("Rugao")* | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 79.51% | 71.75% | |
Gansu QLS | Chongqing Shengfu Biological Technology Co., Ltd ("Chongqing") | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 79.51% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basis of Presentation and Principles of Consolidation (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Current assets: | |||
Cash and cash equivalents | $ 10,467,357 | $ 11,867,130 | |
Restricted cash | 2,140,016 | ||
Accounts receivable, net | 1,733,306 | 1,118,476 | |
Bank acceptance receivable | 11,722,096 | 11,498,075 | |
Inventories, net | 12,495,831 | 11,994,471 | |
Advances to suppliers, net | 1,380,925 | 491,827 | |
Other current assets | 425,622 | 547,443 | |
TOTAL CURRENT ASSETS | 40,365,153 | 37,517,422 | |
Property and equipment, net | 9,119,502 | 7,419,028 | |
Intangible assets, net | 1,927,933 | 1,881,722 | |
Long term investment | 639,466 | 540,517 | |
Right of use assets-lease | 118,154 | 243,874 | |
Deferred tax assets | 427,120 | 361,250 | |
TOTAL ASSETS | 75,353,263 | 48,143,138 | |
Current liabilities: | |||
Bank loans | 7,349,375 | ||
Accounts payable | 6,643,691 | 4,377,712 | |
Advance from customers | 2,467,296 | 3,511,198 | |
Advance from customers - related parties | 17,318 | 33,152 | |
Bank notes payable | 7,867,018 | ||
Deferred government grants - current | 351,567 | 384,802 | |
Taxes payable | 305,305 | 1,383,182 | |
Operating lease liabilities, current | 55,847 | 82,468 | |
Accrued expenses and other payables | 466,838 | 1,301,882 | |
TOTAL CURRENT LIABILITIES | 18,174,880 | 18,423,771 | |
Operating lease liabilities, long term | 106,180 | 155,723 | |
Deferred government grants - noncurrent | 403,745 | 722,137 | |
TOTAL LIABILITIES | 18,684,805 | 19,301,631 | |
Total revenues | 57,099,884 | 50,033,200 | $ 46,096,684 |
Income from operations | 3,363,277 | 5,805,349 | 6,941,919 |
Net income | 3,108,144 | 4,940,441 | 5,908,479 |
Net cash provided by (used in) operating activities | 345,034 | 5,076,014 | (580,197) |
Net cash used in investing activities | (24,200,032) | (375,592) | (800,181) |
Net cash provided by financing activities | 23,993,338 | 2,140,503 | 507,202 |
Effect of exchange rate on cash | 601,903 | 431,765 | (157,163) |
Net increase (decrease) in cash and cash equivalents | 740,243 | 7,272,690 | (1,030,339) |
VIE and its subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | 4,161,582 | 5,493,215 | |
Restricted cash | 2,140,016 | ||
Accounts receivable, net | 1,733,306 | 660,398 | |
Bank acceptance receivable | 11,722,096 | 11,460,512 | |
Inventories, net | 12,495,831 | 11,994,471 | |
Advances to suppliers, net | 1,380,757 | 465,755 | |
Other current assets | 423,331 | 535,981 | |
TOTAL CURRENT ASSETS | 34,056,919 | 30,610,332 | |
Property and equipment, net | 9,041,995 | 7,395,965 | |
Intangible assets, net | 1,927,933 | 1,881,722 | |
Long term investment | 639,466 | 540,517 | |
Long term security deposits | 188,913 | 179,325 | |
Right of use assets-lease | 118,154 | 134,511 | |
Deferred tax assets | 427,172 | 361,250 | |
TOTAL ASSETS | 46,400,552 | 41,103,622 | |
Current liabilities: | |||
Bank loans | 7,349,375 | ||
Accounts payable | 6,642,625 | 3,958,804 | |
Advance from customers | 2,467,296 | 3,511,198 | |
Advance from customers - related parties | 17,318 | 33,152 | |
Bank notes payable | 7,867,018 | ||
Deferred government grants - current | 351,567 | 384,802 | |
Taxes payable | 371,325 | 1,322,354 | |
Operating lease liabilities, current | 55,847 | 22,354 | |
Accrued expenses and other payables | 466,188 | 1,301,881 | |
TOTAL CURRENT LIABILITIES | 18,239,184 | 17,883,920 | |
Operating lease liabilities, long term | 106,180 | 124,406 | |
Deferred government grants - noncurrent | 403,745 | 722,137 | |
TOTAL LIABILITIES | 18,749,109 | 18,730,463 | |
Total revenues | 57,049,381 | 46,731,913 | 46,096,684 |
Income from operations | 2,370,647 | 4,840,614 | 6,178,538 |
Net income | 2,857,492 | 4,936,357 | 5,908,479 |
Net cash provided by (used in) operating activities | 2,122,539 | 4,131,468 | (580,193) |
Net cash used in investing activities | (1,781,618) | (5,648,762) | (800,254) |
Net cash provided by financing activities | 123,697 | 2,140,503 | 507,202 |
Effect of exchange rate on cash | 343,759 | 275,566 | (157,094) |
Net increase (decrease) in cash and cash equivalents | $ 808,377 | $ 898,775 | $ (1,030,339) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) | 12 Months Ended |
Sep. 30, 2021 | |
Maximum | Property and Buildings | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 25 years |
Maximum | Machinery and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 10 years |
Maximum | Automobiles | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 5 years |
Maximum | Office and electric equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 5 years |
Minimum | Property and Buildings | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 20 years |
Minimum | Machinery and equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 5 years |
Minimum | Automobiles | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 3 years |
Minimum | Office and electric equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (in years) | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) | 12 Months Ended |
Sep. 30, 2021 | |
Land use rights | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives (in years) | 50 years |
Software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives (in years) | 10 years |
License for drug manufacturing | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives (in years) | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Non-controlling interests (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Noncontrolling Interest [Line Items] | ||
Acquisition of Noncontrolling interest | $ 706,659 | |
Noncontrolling interests | $ 1,809,852 | $ 2,743,273 |
Chengdu QLS and subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Acquired equity interest, subsidiaries, percentage | 7.76% | |
Chengdu QLS and subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Equity interest, percentage | 79.51% | 71.75% |
Gansu QLS | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest (in percent) | 0.786% | 1.703% |
Noncontrolling interests | $ 240,683 | $ 387,420 |
Chengdu QLS and subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest (in percent) | 20.49% | 28.25% |
Noncontrolling interests | $ 1,569,169 | $ 2,355,853 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Computation of basic and diluted earnings per share (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | |||
Net income attributable to ordinary shareholders | $ 3,152,868 | $ 5,063,710 | $ 5,332,318 |
Denominator: | |||
Weighted-average number of ordinary shares outstanding - basic | 34,089,286 | 30,000,000 | 30,000,000 |
Outstanding warrants | 300,000 | ||
Weighted-average number of ordinary shares outstanding - diluted | 34,089,286 | 30,000,000 | 30,000,000 |
Earnings per share - basic | $ 0.09 | $ 0.17 | $ 0.18 |
Earnings per share - diluted | $ 0.09 | $ 0.17 | $ 0.18 |
Underwriter warrants considered in diluted EPS calculation using treasury stock method | 300,000 | ||
Diluted shares | 0 | 0 | 0 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency Translation (Details) - ¥ / $ | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Year-end spot rate | 6.4580 | 6.8033 | 7.1383 |
Average rate | 6.5095 | 7.0077 | 6.8767 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on recurring basis (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 0 | $ 0 |
Fair value of short term investment at inception | 20,000,000 | |
Change in fair value | 323,400 | 0 |
Ending balance | $ 20,323,400 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 12 Months Ended | |||||
Oct. 01, 2019 | Sep. 30, 2021 USD ($) | Sep. 30, 2020 USD ($) | Sep. 30, 2019 USD ($) | Sep. 30, 2021 CNY (¥) | Sep. 30, 2020 CNY (¥) | |
Cash held in PRC | $ 7,305,799 | $ 10,847,959 | ¥ 51,226,986 | ¥ 73,801,918 | ||
Lease, Practical expedients | true | |||||
Operating lease right of use assets | 118,154 | 243,874 | ||||
Government grants | 152,265 | 764,962 | $ 360,169 | |||
Grant income | 559,828 | 1,079,200 | $ 680,151 | |||
Deferred government grants | $ 755,312 | $ 1,106,939 | ||||
Weighted average remaining periods for the government grant to be recognized | 4 years 1 month 24 days | 4 years 4 months 9 days | ||||
Research and development expense | $ 8,000 | $ 54,000 | ||||
Number of units in the fund | 20,000 | |||||
NAV of the Fund | $ 20,323,400 | |||||
Minimum | ||||||
Restricted cash required to keep amounts equal of notes payable value on deposit, percentage | 30% | |||||
Maximum | ||||||
Restricted cash required to keep amounts equal of notes payable value on deposit, percentage | 50% |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations and Credit Risk (Details) | 12 Months Ended | |||
Sep. 30, 2021 USD ($) | Sep. 30, 2020 USD ($) | Sep. 30, 2019 USD ($) | Sep. 30, 2021 HKD ($) | |
Concentration Risk [Line Items] | ||||
Cash and cash equivalents, certificates of deposit and restricted cash were on deposit at financial institutions not subject to insured | $ 7,305,799 | $ 10,847,959 | ||
Cash and cash equivalents deposited in financial institutions | 1,073,196 | $ 1,018,726 | ||
Cash and cash equivalents deposited in financial institutions annual limit | 65,000 | $ 500,000 | ||
Cash deposited in FI insured by FDIC | $ 4,228,173 | $ 4,228,173 | ||
Customer | Customer One | Revenue | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 11% | 18% | 15% | |
Customer | Customer One | Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 77% | 35% | 46% | |
Customer | Customer Two | Revenue | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 11% | 11% | ||
Customer | Customer Two | Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 16% | 30% | ||
Customer | Customer Three | Revenue | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 10% | 10% | ||
Customer | Customer Three | Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 14% | |||
Supplier | Supplier One | Purchases | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 13% | 11% | 13% | |
Supplier | Supplier Two | Purchases | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 10% | 10% |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
ACCOUNTS RECEIVABLE, NET | ||
Trade accounts receivable | $ 1,945,719 | $ 1,325,333 |
Less: allowances for doubtful accounts | (212,413) | (206,857) |
Accounts receivable, net | $ 1,733,306 | $ 1,118,476 |
INVENTORY, NET (Details)
INVENTORY, NET (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
INVENTORY, NET | ||
Raw materials | $ 6,285,887 | $ 3,241,903 |
Work-in-progress | 832,499 | 704,991 |
Finished goods | 5,502,591 | 8,078,288 |
Inventory valuation allowance | (125,146) | (30,711) |
Total inventory | $ 12,495,831 | $ 11,994,471 |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
OTHER CURRENT ASSETS | ||
Deferred offering costs | $ 384,847 | |
Security deposits | $ 327,104 | 150,093 |
Prepaid expense | 84,428 | 4,377 |
Other receivables | 14,090 | 8,126 |
Total other current assets | $ 425,622 | $ 547,443 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 30,144,798 | $ 28,040,143 | |
Construction in progress | 2,020,457 | 158,975 | |
Less: accumulated depreciation | (23,045,753) | (20,780,090) | |
Property and equipment, net | 9,119,502 | 7,419,028 | |
Depreciation expense | 1,145,447 | 1,055,314 | $ 1,137,822 |
Prepayments for property and equipment | 2,243,622 | ||
Property received and accepted out of Prepayments | 1,061,037 | ||
Property and Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 9,711,722 | 9,114,893 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 19,594,986 | 18,175,739 | |
Automobiles | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 689,651 | 611,923 | |
Office and electric equipment | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 148,439 | $ 137,588 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total | $ 2,627,460 | $ 2,492,372 | |
Less: accumulated amortization | (699,527) | (610,650) | |
Intangible assets, net | 1,927,933 | 1,881,722 | |
Amortization expense | 55,782 | 50,274 | $ 50,351 |
Land use rights | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total | 2,521,646 | 2,393,660 | |
Software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total | 43,875 | 39,916 | |
License for drug manufacturing | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total | $ 61,939 | $ 58,796 |
INTANGIBLE ASSETS, NET - Estima
INTANGIBLE ASSETS, NET - Estimated future amortization expense (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2022 | $ 55,914 | |
2023 | 55,307 | |
2024 | 55,307 | |
2025 | 55,307 | |
2026 | 55,307 | |
Thereafter | 1,650,791 | |
Intangible assets, net | $ 1,927,933 | $ 1,881,722 |
LONG-TERM INVESTMENT (Details)
LONG-TERM INVESTMENT (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
LONG-TERM INVESTMENT | ||
Cost of equity method investment | $ 510,994 | $ 485,059 |
Profit from equity method investment | 188,605 | 112,538 |
Dividend Distribution received | (60,133) | (57,080) |
Total long-term investment | $ 639,466 | $ 540,517 |
LONG-TERM INVESTMENT- Additiona
LONG-TERM INVESTMENT- Additional Information (Details) | 12 Months Ended | ||||||||
Sep. 30, 2021 USD ($) | Sep. 30, 2020 USD ($) | Sep. 30, 2019 CNY (¥) | Sep. 30, 2019 USD ($) | Sep. 30, 2018 CNY (¥) | Sep. 30, 2018 USD ($) | Sep. 30, 2017 CNY (¥) | Sep. 30, 2017 USD ($) | Jul. 31, 2017 CNY (¥) | |
Schedule of Equity Method Investments [Line Items] | |||||||||
Total investment | $ 510,994 | $ 485,059 | |||||||
Investment income attributable to the equity investment | $ 69,494 | $ 32,093 | $ 89,197 | ||||||
Gansu QLS | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Ownership interest acquired (in percent) | 40% | ||||||||
Total investment | ¥ | ¥ 3,300,000 | ||||||||
Funong | Gansu QLS | |||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||
Payments to acquire investments | ¥ 441,250 | $ 64,165 | ¥ 1,658,750 | $ 253,596 | ¥ 1,200,000 | $ 176,121 |
BANK LOANS (Details)
BANK LOANS (Details) | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2020 agreement | Feb. 29, 2020 agreement | Sep. 30, 2021 USD ($) | Sep. 30, 2020 USD ($) | Sep. 30, 2020 CNY (¥) | Sep. 30, 2019 USD ($) | |
Short-term Debt [Line Items] | ||||||
Bank loans | $ 7,349,375 | |||||
Repayment of loan | $ 7,681,081 | 4,994,506 | $ 3,635,465 | |||
Agricultural Bank of China ("ABC") | ||||||
Short-term Debt [Line Items] | ||||||
Bank loans | $ 2,939,750 | |||||
Loan term | 12 months | 12 months | 12 months | |||
Agricultural Development Bank of China ("ADBC") | ||||||
Short-term Debt [Line Items] | ||||||
Bank loans | $ 2,939,750 | |||||
Loan term | 12 months | 12 months | ||||
Fixed interest rate (in percent) | 4.15% | 4.15% | ||||
Number of short-term loan agreements | agreement | 2 | 2 | ||||
Repayment of loan | 1,500,000 | ¥ 10,000,000 | ||||
Lanzhou Bank | ||||||
Short-term Debt [Line Items] | ||||||
Bank loans | $ 1,469,875 | |||||
Fixed interest rate (in percent) | 4.55% | |||||
Number of short-term loan agreements | agreement | 1 | |||||
Maximum | Agricultural Bank of China ("ABC") | ||||||
Short-term Debt [Line Items] | ||||||
Fixed interest rate (in percent) | 5.44% | |||||
Minimum | Agricultural Bank of China ("ABC") | ||||||
Short-term Debt [Line Items] | ||||||
Fixed interest rate (in percent) | 4.05% |
BANK NOTES PAYABLE (Details)
BANK NOTES PAYABLE (Details) | 12 Months Ended |
Sep. 30, 2021 USD ($) | |
Bank notes payable | $ 7,867,018 |
Repayment of notes payable to bank | 5,315,995 |
Cash deposits | $ 2,140,016 |
Maximum | |
Percentage of deposit of amount of cash | 50% |
Minimum | |
Percentage of deposit of amount of cash | 30% |
TAXES - Income before income ta
TAXES - Income before income taxes (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investments, Owned, Federal Income Tax Note [Line Items] | |||
Income before income taxes | $ 3,363,277 | $ 5,805,349 | $ 6,941,919 |
China | |||
Investments, Owned, Federal Income Tax Note [Line Items] | |||
Income before income taxes | 3,252,583 | $ 5,805,349 | $ 6,941,919 |
Cayman Islands | |||
Investments, Owned, Federal Income Tax Note [Line Items] | |||
Income before income taxes | $ 110,694 |
TAXES - Provision for Income Ta
TAXES - Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
TAXES. | |||
Current income taxes | $ 301,320 | $ 951,403 | $ 984,785 |
Deferred income taxes | (46,187) | (86,495) | 48,655 |
Total | $ 255,133 | $ 864,908 | $ 1,033,440 |
TAXES - Temporary Differences a
TAXES - Temporary Differences and Carryforwards (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
Deferred tax assets: | ||
Allowance for doubtful accounts and inventory provision | $ 51,122 | $ 36,451 |
NOL Carryforwards | 262,701 | 158,758 |
Deferred government grants | 113,297 | 166,041 |
Total deferred tax assets | $ 427,120 | $ 361,250 |
TAXES - Company's Effective Tax
TAXES - Company's Effective Tax Rate (Details) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Reconciles the statutory rates, Percent | |||
China Statutory income tax rate | 25% | 25% | 25% |
Effect of favorable income tax rate in the PRC | (13.60%) | (10.50%) | (10.20%) |
Non-deductible permanent difference | (3.80%) | 0.40% | 0.10% |
Effective tax rate | 7.60% | 14.90% | 14.90% |
TAXES - Taxes Payable (Details)
TAXES - Taxes Payable (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
TAXES. | ||
VAT tax payable | $ 64,129 | $ 644,244 |
Corporate income tax payable | 148,204 | 631,590 |
Business and other taxes payable | 92,972 | 107,348 |
Total | $ 305,305 | $ 1,383,182 |
TAXES - Additional Information
TAXES - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2018 | |
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Corporate income tax rate (in percent) | 7.60% | 14.90% | 14.90% | |
Decrease in taxes due to tax holiday | $ 458,163 | $ 603,091 | $ 710,083 | |
Benefit of the tax holidays on net income per share | $ 0.013 | $ 0.020 | $ 0.024 | |
Chengdu QLS and subsidiaries | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (as a percent) | 15% | 15% | 15% | 15% |
HNTE | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (as a percent) | 15% | 15% | 15% | |
Hong Kong | Scenario One | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (as a percent) | 8.25% | |||
Base profit for calculating tax rate | $ 2,000,000 | |||
Hong Kong | Scenario Two | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (as a percent) | 16.50% | |||
Base profit for calculating tax rate | $ 2,000,000 | |||
China | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Corporate income tax rate (in percent) | 25% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
RELATED PARTY TRANSACTIONS | |||
Sales to affiliated companies | $ 31,587 | $ 10,134 | $ 94,316 |
Purchases from affiliated companies | 17,318 | ||
Advances from affiliated company | $ 17,318 | $ 33,152 |
LEASE (Details)
LEASE (Details) | 12 Months Ended | ||
Sep. 30, 2021 USD ($) lease | Sep. 30, 2020 USD ($) | Sep. 30, 2019 USD ($) | |
LEASE | |||
Operating Lease Expenses | $ 109,346 | $ 71,826 | $ 10,470 |
Number of Operating Leases | lease | 1 | ||
Operating Lease Assets: | |||
Total operating lease assets | $ 118,154 | 243,874 | |
Operating lease obligations: | |||
Current operating lease liabilities | 55,847 | 82,468 | |
Operating lease liabilities, noncurrent | 106,180 | 155,723 | |
Total Lease liabilities | $ 162,027 | $ 238,191 |
LEASE - Weighted Average Remain
LEASE - Weighted Average Remaining Lease Term and Discount Rate (Details) | Sep. 30, 2021 | Sep. 30, 2020 |
LEASE | ||
Remaining Lease Term Operating Lease | 2 years 25 days | 3 years 25 days |
Discount rate | 5.50% | 5.50% |
LEASE - Lease Liability Maturit
LEASE - Lease Liability Maturities (Details) - USD ($) | Sep. 30, 2021 | Sep. 30, 2020 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2021 | $ 61,939 | |
2022 | 30,969 | |
2023 | 30,969 | |
2024 | 30,969 | |
2025 | 23,229 | |
Total minimum lease payments | 178,075 | |
Less: Amount representing interest | (16,048) | |
Total Lease liabilities | $ 162,027 | $ 238,191 |
EQUITY (Details)
EQUITY (Details) | Jan. 15, 2021 USD ($) $ / shares shares | Jan. 14, 2021 $ / shares shares | Oct. 16, 2019 $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | Sep. 30, 2020 USD ($) $ / shares shares | Sep. 30, 2019 shares | Feb. 07, 2019 $ / shares shares |
Class of Stock [Line Items] | |||||||
Ordinary shares, par value | $ / shares | $ 0.00166667 | $ 0.00166667 | |||||
Ordinary shares, shares authorized | 100,000,000 | 100,000,000 | |||||
Ordinary shares, shares issued | 35,750,000 | 35,750,000 | |||||
Ordinary shares, shares outstanding | 30,000,000 | 30,000,000 | |||||
Share issue price | $ / shares | $ 5 | ||||||
Warrant term | 5 years | ||||||
Exercise price | $ / shares | $ 5.50 | ||||||
Percentage of warrants exercise Price based on IPO issue price | 110% | ||||||
Warrants outstanding | 300,000 | ||||||
Statutory Reserve. | $ | $ 2,857,121 | $ 2,200,786 | |||||
IPO | |||||||
Class of Stock [Line Items] | |||||||
Ordinary shares, par value | $ / shares | $ 0.00166667 | ||||||
Number of units issued | 5,000,000 | ||||||
Proceeds from issuance of IPO | $ | $ 25,728,401.50 | ||||||
Share issue price | $ / shares | $ 5 | ||||||
Number of warrants issued | 300,000 | ||||||
Percentage of Number of Ordinary Shares Sold In IPO | 6% | ||||||
Over-allotment option | |||||||
Class of Stock [Line Items] | |||||||
Number of units issued | 750,000 | ||||||
Share issue price | $ / shares | $ 5 | ||||||
Ordinary Shares | |||||||
Class of Stock [Line Items] | |||||||
Ordinary shares, par value | $ / shares | $ 0.001 | $ 0.001 | |||||
Ordinary shares, shares authorized | 50,000,000 | 50,000,000 | |||||
Ordinary shares, shares issued | 30,000,000 | 50,000,000 | |||||
Stock split ratio | 1.66667 | ||||||
Ordinary shares, shares outstanding | 30,000,000 | 35,750,000 | 30,000,000 | 30,000,000 | |||
Ordinary Shares | Maximum | |||||||
Class of Stock [Line Items] | |||||||
Ordinary shares, par value | $ / shares | $ 0.00166667 | ||||||
Ordinary shares, shares authorized | 100,000,000 | ||||||
Ordinary shares, shares issued | 30,000,000 | ||||||
Ordinary shares, shares outstanding | 30,000,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) | 12 Months Ended | ||
Sep. 30, 2021 USD ($) segment | Sep. 30, 2020 USD ($) | Sep. 30, 2019 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of operating segments | segment | 3 | ||
Total revenues | $ 57,099,884 | $ 50,033,200 | $ 46,096,684 |
Cost of revenues | 51,461,354 | 42,494,047 | 36,416,772 |
GROSS PROFIT | 5,638,530 | 7,539,153 | 9,679,912 |
Depreciation and amortization | 1,201,229 | 1,105,588 | 1,188,173 |
Capital Expenditures | 3,493,374 | 449,765 | 616,388 |
TOTAL ASSETS | 75,353,263 | 48,143,138 | |
Oxytetracycline & Licorice products and TCMD | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 33,451,159 | 32,602,384 | 30,149,950 |
Cost of revenues | 28,362,016 | 25,004,712 | 22,324,422 |
GROSS PROFIT | 5,089,143 | 7,597,672 | 7,825,528 |
Depreciation and amortization | 951,015 | 886,323 | 985,212 |
Capital Expenditures | 3,321,629 | 377,953 | 331,917 |
TOTAL ASSETS | 60,786,870 | 34,370,665 | |
Fertilizer | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 486,171 | 701,701 | 549,231 |
Cost of revenues | 463,738 | 304,670 | 186,504 |
GROSS PROFIT | 22,433 | 397,031 | 362,727 |
Depreciation and amortization | 47,194 | 38,792 | 38,525 |
Capital Expenditures | 46,169 | 33,914 | 5,598 |
TOTAL ASSETS | 2,540,189 | 2,438,442 | |
Heparin products and Sausage casing | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 23,162,554 | 16,729,115 | 15,397,503 |
Cost of revenues | 22,635,600 | 17,184,665 | 13,905,846 |
GROSS PROFIT | 526,954 | (455,550) | 1,491,657 |
Depreciation and amortization | 203,020 | 180,473 | 164,436 |
Capital Expenditures | 125,576 | 37,898 | $ 278,873 |
TOTAL ASSETS | $ 12,026,204 | $ 11,334,031 |
COMMITMENTS (Details)
COMMITMENTS (Details) - Chongqing Jintong Industrial Construction Investment Co., Ltd ("Chongqing Jintong") - Chengdu QLS and subsidiaries $ in Millions | 1 Months Ended | |||
Jan. 31, 2022 USD ($) | Jan. 31, 2022 CNY (¥) | Sep. 30, 2021 USD ($) | Sep. 30, 2021 CNY (¥) | |
Loss Contingencies [Line Items] | ||||
Guarantee Deposit | $ 0.3 | ¥ 2,000,000 | ||
Prepayment made for Land use right | $ 1.2 | ¥ 8,000,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 1 Months Ended | 12 Months Ended | |||||||
Jan. 15, 2021 USD ($) | May 31, 2022 USD ($) | Sep. 30, 2021 CNY (¥) | Jul. 31, 2022 property | May 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) property | Dec. 31, 2021 CNY (¥) property | Oct. 31, 2021 USD ($) | Oct. 31, 2021 CNY (¥) | |
Subsequent events | Qilian Chengdu Purchase Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of real estate properties | property | 4 | 4 | 4 | ||||||
Total price of real estate | $ 1,200,000 | ¥ 7,619,075 | |||||||
Subsequent events | Gansu QLS Supply Chain Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Credit facility | $ 4,600,000 | ¥ 30,000,000 | |||||||
Subsequent events | China Construction Bank | |||||||||
Subsequent Event [Line Items] | |||||||||
Credit facility | $ 200,000 | ¥ 1,000,000 | |||||||
Credit limit due date | Mar. 23, 2023 | ||||||||
Agricultural Development Bank of China ("ADBC") | Gansu QLS | |||||||||
Subsequent Event [Line Items] | |||||||||
Repayment of Debt | ¥ | ¥ 20,000,000 | ||||||||
Debt Asset Ratio | 70 | ||||||||
Contingency Liability Ratio | 20 | ||||||||
Agricultural Development Bank of China ("ADBC") | Subsequent events | Gansu QLS | |||||||||
Subsequent Event [Line Items] | |||||||||
Amount borrowed | $ 1,500,000 | ¥ 10,000,000 | $ 1,500,000 | ¥ 10,000,000 | |||||
IPO | |||||||||
Subsequent Event [Line Items] | |||||||||
Net proceeds from IPO | $ | $ 25,728,401.50 |