Document and Entity Information
Document and Entity Information | 12 Months Ended |
Sep. 30, 2022 shares | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Sep. 30, 2022 |
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 | 2022 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Auditor Name | ZH CPA, LLC |
Auditor Firm ID | 6413 |
Auditor Location | Denver, Colorado |
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, 2022 | Sep. 30, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalent | $ 14,319,234 | $ 10,467,357 |
Restricted cash | 659,779 | 2,140,016 |
Accounts receivable, net | 815,325 | 1,733,306 |
Bank acceptance notes receivable | 2,585,886 | 11,722,096 |
Inventories, net | 8,879,486 | 12,495,831 |
Advances to suppliers, net | 1,215,105 | 1,380,925 |
Other current assets | 1,559,174 | 425,622 |
TOTAL CURRENT ASSETS | 30,033,989 | 40,365,153 |
Property and equipment, net | 10,184,029 | 9,119,502 |
Intangible assets, net | 1,726,928 | 1,927,933 |
Investment in available-for-sale securities | 19,470,400 | 20,323,400 |
Long term investment | 617,570 | 639,466 |
Operating lease right of use assets | 86,584 | 118,154 |
Deferred tax assets | 212,876 | 427,120 |
Prepayments for property and equipment | 2,021,330 | 2,243,622 |
Other long term assets | 172,911 | 188,913 |
TOTAL ASSETS | 64,526,617 | 75,353,263 |
CURRENT LIABILITIES: | ||
Bank loans | 140,578 | |
Accounts payable | 5,289,481 | 6,643,691 |
Advance from customers | 556,418 | 2,467,296 |
Advance from customers - related parties | 0 | 17,318 |
Bank notes payable | 1,531,649 | 7,867,018 |
Deferred government grants-current | 121,542 | 351,567 |
Taxes payable | 815,811 | 305,305 |
Operating lease liabilities, current | 23,859 | 55,847 |
Accrued expenses and other payables | 701,263 | 466,838 |
TOTAL CURRENT LIABILITIES | 9,180,601 | 18,174,880 |
LONG TERM LIABILITIES | ||
Non-current operating lease liabilities | 72,537 | 106,180 |
Deferred government grants - noncurrent | 309,943 | 403,745 |
TOTAL LIABILITIES | 9,563,081 | 18,684,805 |
EQUITY: | ||
Ordinary Shares, $0.00166667 par value, 100,000,000 shares authorized, 35,750,000 and 35,750,000 Ordinary Shares issued and outstanding as of September 30, 2022 and September 30, 2021 , respectively | 59,583 | 59,583 |
Additional paid-in capital | 36,410,931 | 36,390,931 |
Statutory Reserve | 3,118,542 | 2,857,121 |
Retained earnings | 15,509,177 | 14,693,905 |
Accumulated other comprehensive loss | (2,046,091) | 857,066 |
Total shareholders' equity attributable to Qilian International | 53,052,142 | 54,858,606 |
Noncontrolling interests | 1,911,394 | 1,809,852 |
TOTAL EQUITY | 54,963,536 | 56,668,458 |
TOTAL LIABILITIES AND EQUITY | $ 64,526,617 | $ 75,353,263 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Sep. 30, 2021 |
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 | 35,750,000 | 35,750,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||
NET REVENUE | $ 64,855,025 | $ 57,099,884 | $ 50,033,200 |
COST OF REVENUE | 58,627,728 | 51,461,354 | 42,494,047 |
GROSS PROFIT | 6,227,297 | 5,638,530 | 7,539,153 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 4,125,294 | 3,250,485 | 2,728,009 |
INCOME FROM OPERATIONS | 2,102,003 | 2,388,045 | 4,811,144 |
Other income (expenses) | |||
Interest income (expense), net | 24,860 | (57,671) | (242,877) |
Investment income (loss) | (812,804) | 462,014 | 57,984 |
Grant income | 413,717 | 564,098 | 1,082,053 |
Other income (expense) | (167,217) | 6,791 | 97,045 |
Total Other income (expense) | (541,444) | 975,232 | 994,205 |
INCOME BEFORE INCOME TAX PROVISION | 1,560,559 | 3,363,277 | 5,805,349 |
PROVISION FOR INCOME TAXES | 194,302 | 255,133 | 864,908 |
NET INCOME | 1,366,257 | 3,108,144 | 4,940,441 |
Less: net income (loss) attributable to non-controlling interest | 289,564 | (44,724) | (123,269) |
NET INCOME ATTRIBUTABLE TO QILIAN INTERNATIONAL HOLDING GROUP LIMITED | 1,076,693 | 3,152,868 | 5,063,710 |
OTHER COMPREHENSIVE INCOME | |||
Foreign currency translation adjustment | (3,091,179) | 1,560,381 | 1,263,140 |
COMPREHENSIVE INCOME (LOSS) | (1,724,922) | 4,668,525 | 6,203,581 |
Less: comprehensive income (loss) attributable to non - controlling interests | 101,542 | 56,590 | (1,303) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO QILIAN INTERNATIONAL HOLDING GROUP LIMITED | $ (1,826,464) | $ 4,611,935 | $ 6,204,884 |
Earnings per ordinary share Basic | $ 0.03 | $ 0.09 | $ 0.17 |
Earnings per ordinary share Diluted | $ 0.03 | $ 0.09 | $ 0.17 |
Weighted average ordinary shares Basic | 35,750,000 | 34,089,286 | 30,000,000 |
Weighted average ordinary shares Diluted | 35,750,000 | 34,089,286 | 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 (Loss) | Shareholders' Equity | Non-controlling Interests | Total |
Balance at beginning 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 beginning (in shares) at Sep. 30, 2020 | 30,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Ordinary share issued in initial public offering, net of issuance cost | $ 9,583 | 23,855,502 | 23,865,085 | 23,865,085 | ||||
Ordinary share issued in initial public offering, net of issuance cost (in shares) | 5,750,000 | |||||||
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 | ||||||
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 | 54,858,606 | 1,809,852 | $ 56,668,458 |
Balance at ending (in shares) at Sep. 30, 2021 | 35,750,000 | 35,750,000 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income for the year | 1,076,693 | 1,076,693 | 289,564 | $ 1,366,257 | ||||
Stock based compensation | 20,000 | 20,000 | 20,000 | |||||
Appropriation for statutory reserve | (261,421) | 261,421 | ||||||
Foreign currency translation adjustment | (2,903,157) | (2,903,157) | (188,022) | (3,091,179) | ||||
Balance at ending at Sep. 30, 2022 | $ 59,583 | $ 36,410,931 | $ 15,509,177 | $ 3,118,542 | $ (2,046,091) | $ 53,052,142 | $ 1,911,394 | $ 54,963,536 |
Balance at ending (in shares) at Sep. 30, 2022 | 35,750,000 | 35,750,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | |||
Net Income | $ 1,366,257 | $ 3,108,144 | $ 4,940,441 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization of the Right-of-use assets | 22,451 | 62,410 | 62,410 |
Stock based compensation | 20,000 | ||
Depreciation and amortization | 1,224,672 | 1,201,229 | 1,105,588 |
Provision of doubtful accounts | (186,814) | (7,918) | 188,095 |
Inventory reserve | 444,894 | 92,059 | (290,968) |
Deferred tax expense | 189,838 | (46,187) | (86,495) |
Unrealized loss (gain) from available-for-sale securities | 853,000 | (323,400) | |
Investment income | (40,196) | (69,494) | (57,984) |
Loss from assets disposal | 8,755 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 1,027,671 | (545,175) | (660,667) |
Bank acceptance notes receivable | 8,744,826 | 387,673 | (5,583,925) |
Inventories | 2,230,723 | 46,801 | 1,402,620 |
Advances to suppliers | 41,869 | (855,977) | 498,378 |
Other current assets | (1,198,646) | (1,020,875) | 125,261 |
Accounts payable | (805,443) | 2,015,833 | 613,339 |
Advance from customers | (1,827,461) | (1,221,897) | 1,461,407 |
Advance from customers - related parties | (17,066) | (17,467) | 29,973 |
Deferred revenue | (275,963) | (407,563) | (314,238) |
Tax payables | 584,693 | (1,142,721) | 988,423 |
Accrued expenses and other payables | 301,165 | (897,496) | 722,284 |
Operating lease liabilities | (55,036) | (12,945) | (67,928) |
Net cash provided by operating activities | 12,654,188 | 345,034 | 5,076,014 |
Cash flows from investing activities: | |||
Purchase of property and equipment | (3,232,269) | (3,491,564) | (449,766) |
Purchase of intangible assets | (26,683) | (1,810) | (8,798) |
Proceeds from long term investment | 82,972 | ||
Purchase of available-for-sale securities | (20,000,000) | ||
Acquisition of non-controlling interest | (706,658) | ||
Net cash used in investing activities | (3,258,953) | (24,200,032) | (375,592) |
Cash flows from financing activities: | |||
Proceeds from bank loans | 3,204,541 | 7,135,009 | |
Repayment of bank loans | (3,051,944) | (7,681,081) | (4,994,506) |
Proceeds from (Repayment of) bank notes payable | (6,090,126) | 7,804,778 | |
Cash receipts from equity issuance, net of issuance cost | 23,869,641 | ||
Net cash provided by (used in) financing activities | (5,937,529) | 23,993,338 | 2,140,503 |
Effect of exchange rate change on Cash | (1,086,067) | 601,903 | 431,765 |
Net increase in cash and cash equivalents | 2,371,640 | 740,243 | 7,272,690 |
Cash, cash equivalent and restricted cash at beginning of period | 12,607,373 | 11,867,130 | 4,594,440 |
Cash, cash equivalent and restricted cash at end of period | 14,979,013 | 12,607,373 | 11,867,130 |
Supplemental cash flow information | |||
Cash paid for interest | $ 122,237 | 152,499 | 280,169 |
Cash paid for income taxes | $ 820,972 | 275,607 | |
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 Qilian International Trade (Chengdu) Co., Ltd. (“Qilian Chengdu”) and Qilian Shan International Trade (Hainan) Co., Ltd. (“Hainan Trading”), collectively the “WFOE”), which are wholly foreign-owned entities 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 and paid capital of Gansu QLS was approximately $12.2 million as of September 30, 2022 and 2021. Over the years, Gansu QLS has established seven subsidiaries: Ownership as of September 30, 2022 and 2021 Moshangfa (Gansu) Fertilizer Industry Co., Ltd (formerly Jiuquan Qiming Biotechnology Co., Ltd, “Moshangfa”) 100 % Chengdu Qilianshan Biotechnology Co., Ltd (“Chengdu QLS”) 79.51 % Jiuquan Ahan Biotechnology Co., Ltd. (“Ahan”) 100 % Tibet Samen Trading Co., Ltd (“Samen”) 100 % Tibet Cangmen Trading Co., Ltd (“Cangmen”) 100 % Rugao Tianlu Animal Products Co., Ltd (“Rugao”) 79.51 % Chongqing Shengfu Biological Technology Co., Ltd (“Chongqing”) * 79.51 % * 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% of Gansu QLS’s shareholders have pledged their equity interest in Gansu QLS to Qilian Chengdu on September 30, 2022 and 2021, 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% of the variable interests of Gansu QLS on September 30, 2022 and 2021. 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, 2022 | |
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, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 10,027,168 $ 4,161,582 Restricted cash 659,779 2,140,016 Accounts receivable, net 815,022 1,733,306 Bank acceptance receivable 2,585,886 11,722,096 Inventories, net 8,879,486 12,495,831 Advances to suppliers, net 1,214,951 1,380,757 Other current assets 1,493,304 423,331 Total current assets 25,675,596 34,056,919 Property and equipment, net 9,361,862 9,041,995 Intangible assets, net 1,726,928 1,927,933 Long-term investment 617,570 639,466 Other long-term assets 172,911 188,913 Right of use assets-lease 86,584 118,154 Deferred tax assets 212,876 427,172 Total assets $ 37,854,327 $ 46,400,552 LIABILITIES Current liabilities: Bank loans $ 140,578 $ — Accounts payable 5,266,571 6,642,625 Advance from customers 556,418 2,467,296 Advance from customers - related parties — 17,318 Bank notes payable 1,531,649 7,867,018 Deferred government grants - current 121,542 351,567 Taxes payable 825,301 371,325 Operating lease liabilities, current 23,859 55,847 Accrued expenses and other payables 701,263 466,188 Total current liabilities 9,167,181 18,239,184 Operating lease liabilities, long term 72,537 106,180 Deferred government grants - noncurrent 309,943 403,745 Total liabilities 9,549,661 18,749,109 For the year ended September 30, 2022 2021 2020 Net revenue $ 64,468,807 $ 57,049,381 $ 46,731,913 Income from operations $ 2,502,014 $ 2,370,647 $ 4,840,614 Net income $ 2,752,212 $ 2,857,492 $ 4,936,357 For the Year Ended September 30, 2022 2021 2020 Net cash provided by operating activities $ 12,901,270 $ 2,122,539 $ 4,131,468 Net cash used in investing activities (1,153,972) (1,781,618) (5,648,762) Net cash provided by (used in) financing activities (5,937,529) 123,697 2,140,503 Effect of exchange rate on cash (1,018,698) 343,759 275,566 Net increase in cash and cash equivalents $ 4,791,071 $ 808,377 $ 898,775 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’ 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 subjected to 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, 2022 and September 30, 2021, cash and restricted cash of $10,277,243 (RMB 73,107,168) and $7,305,799 (RMB 51,226,986), 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 September 30, 2022, 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. The cash and cash equivalent don’t have withdrawal restrictions. 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 is 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 ready for its intended use. 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 statements of operations 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. 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, 2022 and 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 $19,470,400 and $20,323,400 as of September 30, 2022 and 2021, respectively. 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. The Company’s share of investee earnings or losses is recorded in our Consolidated Statements of Operations within Other income (expense). The Company’s interest in the net assets of the investees 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, the adjustment of basis difference initially recognized and the other comprehensive income allocated to the Company from the investees. 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, 2022 and September 30, 2021. 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, 2022 and 2021. 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, 2022 2021 Gansu QLS $ 237,397 $ 240,683 Chengdu QLS and subsidiaries 1,673,997 1,569,169 Total $ 1,911,394 $ 1,809,852 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 statements of operations 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, 2022 and September 30, 2021. 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 operations 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 operations and comprehensive income in proportion to the useful life of the related assets. Government grants received for the year ended September 30, 2022, 2021 and 2020 were $76,299, $152,265, and $764,962, respectively. Grant income recognized for the year ended September 30, 2022, 2021 and 2020 were $352,262, $559,828 and $1,079,200, respectively, included in other income within the consolidated statements of operations and comprehensive income. As of September 30, 2022 and 2021, the deferred government grants were $431,485 and $755,312, respectively. The weighted average remaining periods for the government grant to be recognized were 3.96 years and 4.15 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, 2022, 2021 and 2020, total research and development expense were approximately $1,224,344, $8,000 and $54,000, respectively, which were recorded in general and administrative expenses in the consolidated statements of operations and comprehensive income. Advertising Cost Advertising costs are expensed when incurred and are included in selling, general and administrative expense on the accompanying consolidated statements of operations. The Company incurred $166,064, $118,020 and $2,488 of advertising costs during the years ended September 30, 2022, 2021 and 2020, respectively. Advertising costs consist primarily of online marketing costs, such as advertising on social networking sites and e-mail marketing campaigns. 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, 2022 and 2021. 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, 2022 and 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, 2022, 2021 and 2020. The following table sets forth the computation of basic and diluted earnings per share for the years ended September 30, 2022, 2021 and 2020: For the Years ended September 30, 2022 2021 2020 Numerator: Net income attributable to ordinary shareholders $ 1,076,693 $ 3,152,868 $ 5,063,710 Denominator: Weighted-average number of ordinary shares outstanding – basic 35,750,000 34,089,286 30,000,000 Outstanding warrants — — — Potentially dilutive shares from outstanding options and warrants — — — Weighted-average number of ordinary shares outstanding – diluted 35,750,000 34,089,286 30,000,000 Earnings per share – basic $ 0.03 $ 0.09 $ 0.17 Earnings per share – diluted $ 0.03 $ 0.09 $ 0.17 Stock Based Compensation The Company issued shares for its independent director for the service rendered. Stock-based compensation is estimated at the grant date based on the fair value of the shares and is recognized as expense over the requisite service period of the award. The Company recognizes compensation cost on a straight-line basis over the requisite service period of the award, which is generally the award vesting term. The Company has elected to recognize forfeitures as incurred. 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 currency other than U.S. Dollars 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 t |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS RECEIVABLE, NET | |
ACCOUNTS RECEIVABLE, NET | NOTE 3 – ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following: As of As of September 30, 2022 September 30, 2021 Trade accounts receivable $ 819,698 $ 1,945,719 Less: allowances for doubtful accounts (4,373) (212,413) Accounts receivable, net $ 815,325 $ 1,733,306 |
INVENTORY, NET
INVENTORY, NET | 12 Months Ended |
Sep. 30, 2022 | |
INVENTORY, NET | |
INVENTORY, NET | NOTE 4 – INVENTORY, NET Inventories consisted of the following: As of As of September 30, 2022 September 30, 2021 Raw materials $ 4,575,964 $ 6,285,887 Work-in-progress 748,845 832,499 Finished goods 4,078,142 5,502,591 Inventory valuation allowance (523,465) (125,146) Total inventory $ 8,879,486 $ 12,495,831 |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 12 Months Ended |
Sep. 30, 2022 | |
OTHER CURRENT ASSETS | |
OTHER CURRENT ASSETS | NOTE 5 – OTHER CURRENT ASSETS Other current assets consisted of the following: As of As of September 30, 2022 September 30, 2021 Security deposits $ — $ 327,104 Prepaid expense 88,727 84,428 Other receivables 1,470,448 14,090 Total other current assets $ 1,559,175 $ 425,622 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Sep. 30, 2022 | |
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, 2022 September 30, 2021 Property and Buildings $ 11,848,216 $ 9,711,722 Machinery and equipment 18,275,500 19,594,986 Automobiles 586,630 689,651 Office and electric equipment 191,893 148,439 Subtotal 30,902,239 30,144,798 Construction in progress 1,198,759 2,020,457 Less: accumulated depreciation (21,916,969) (23,045,753) Property and equipment, net $ 10,184,029 $ 9,119,502 Depreciation expense was $1,172,644, $1,145,447 and $1,055,314 for the years ended September 30, 2022, 2021 and 2020 respectively. Certain properties and equipment have been pledged as collateral under the bank loan agreement as discussed in Note 9. Construction in progress as of September 30, 2022 represents costs of construction incurred for Chongqing’s new manufacturing facilities for heparin products. As of September, 30, 2022 and 2021, Qilian Chengdu made advance payments for property and buildings acquisition for $2,021,330 and 2,243,622, respectively, which was recorded in prepayments for property and equipment on the consolidated balance sheets. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | NOTE 7 – INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: As of As of September 30, 2022 September 30, 2021 Land use rights $ 2,313,861 $ 2,521,646 Software 39,832 43,875 License for drug manufacturing 56,231 61,939 Total 2,409,924 2,627,460 Less: accumulated amortization (682,996) (699,527) Intangible assets, net $ 1,726,928 $ 1,927,933 Amortization expense was $52,028, $55,782, and $50,274 for the years ended September 30, 2022, 2021 and 2020, respectively. Estimated future amortization expense for intangible assets is as follows: Amortization Year ending September 30, expense 2023 $ 52,668 2024 52,668 2025 52,668 2026 52,668 2027 52,668 Thereafter 1,463,587 $ 1,726,928 |
LONG-TERM INVESTMENT
LONG-TERM INVESTMENT | 12 Months Ended |
Sep. 30, 2022 | |
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, 2022 September 30, 2021 Equity method investment: Cost of equity method investment 463,907 510,994 Profit from equity method investment 208,255 188,605 Dividend Distribution received (54,592) (60,133) Total long-term investment $ 617,570 $ 639,466 The investment income attributable to the equity investment of $40,196, $69,494 and $32,093 for the years ended September 30, 2022, 2021 and 2020, respectively, were included in other income (expense) on the statements of operations and comprehensive income. |
BANK LOANS
BANK LOANS | 12 Months Ended |
Sep. 30, 2022 | |
BANK LOANS. | |
BANK LOANS | NOTE 9 – BANK LOANS 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 loans bear fixed interest rates of 3% per annum. The credit is secured by Gansu QLS’s buildings. |
BANK NOTES PAYABLE
BANK NOTES PAYABLE | 12 Months Ended |
Sep. 30, 2022 | |
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 for payment and payable 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 $1,531,649 and $7,867,018 to China Zheshang Bank (“CZB”) as of September 30, 2022 and 2021, respectively. The notes have due date from November 2022 to March 2023. The notes of $1,531,649 outstanding as of September 30, 2022 have been fully repaid on the due date before the issuance of this report. As of September 30, 2022 and 2021, $659,779 and $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, 2022 | |
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, 2022, 2021 and 2020, 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, 2022, 2021 and 2020. 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, 2022, 2021 and 2020. 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, which is further reduced to 25% starting from January 2022 and enterprise income tax is paid at 20% tax rate, which is essentially resulting in a favorable income tax rate of 10%, or 5% under the further reduced rate starting from January 2022. 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, 2022 2021 2020 China $ 2,936,530 $ 3,252,583 $ 5,805,349 Cayman Islands (1,375,971) 110,694 — Total $ 1,560,559 $ 3,363,277 $ 5,805,349 Significant components of the provision for income taxes were as follows: For the year ended September 30, 2022 2021 2020 Current income taxes $ 4,464 $ 301,320 $ 951,403 Deferred income taxes 189,838 (46,187) (86,495) Total $ 194,302 $ 255,133 $ 864,908 The impact of these tax holidays decreased our taxes by $171,217, $458,163 and $603,091 for the years ended September 30, 2022, 2021 and 2020, respectively. The benefit of the tax holidays on net income per share was $0.006, $0.013 and $0.020 for the years ended September 30, 2022, 2021 and 2020, 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, 2022 September 30, 2021 Deferred tax assets: Allowance for doubtful accounts and inventory provision $ 82,111 $ 51,122 NOL Carryforwards 79,588 262,701 Deferred government grants 51,177 113,297 Total deferred tax assets $ 212,876 $ 427,120 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, 2022 and 2021. The Company’s NOL carryforwards will begin to expire in 2026 and fully expire in 2027. All of the tax returns of WFOE, VIE and VIE’s subsidiaries remain open for statutory examination by PRC tax authorities for five 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, 2022 2021 2020 China Statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of favorable income tax rate in the PRC (11) % (13.6) % (10.5) % Permanent difference (1.6) % (3.8) % 0.4 % Effective tax rate 12.5 % 7.6 % 14.9 % (b) The Company, its subsidiaries, the VIE and VIE’s subsidiaries’ taxes payable consists of the following: September 30, September 30, 2022 2021 VAT tax payable $ 556,022 $ 64,129 Corporate income tax payable 142,255 148,204 Business and other taxes payable 117,534 92,972 Total $ 815,811 $ 305,305 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Sep. 30, 2022 | |
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, 2022, 2021 and 2020, the VIE and VIE’s subsidiaries made sales to affiliated companies in the amount of $122,189, $31,587, $10,134, respectively. There were no purchases in the respective periods. As of September 30, 2022 and 2021, the VIE and VIE’s subsidiaries had advance from affiliated company for $8,740, and $17,318, respectively, which is due on demand. |
LEASE
LEASE | 12 Months Ended |
Sep. 30, 2022 | |
LEASE | |
LEASE | NOTE 13 – LEASE As of September 30, 2022, the VIE and VIE’s subsidiaries have one factory lease with expiration date through December 2025. For the years ended September 30, 2022, 2021 and 2020, the lease expenses were $63,480, $109,346 and $71,826, respectively. Balance sheet information related to the VIE and VIE’s subsidiaries’ operating leases as of September 30, 2022 and 2021 was as follows: As of As of September 30, September 30, 2022 2021 Operating Lease Assets: Operating Lease right of use asset $ 86,584 $ 118,154 Total operating lease assets 86,584 118,154 Operating lease obligations: Current operating lease liabilities 23,859 55,847 Non-current operating lease liabilities 72,537 106,180 Total Lease liabilities $ 96,396 $ 162,027 Remaining Lease Term Operating Lease 3.25 years 2.07 years Discount rate 5.5 % 5.5 % Lease liability maturities as of September 30, 2022, are as follows: Operating, lease 2022 28,116 2023 28,116 2024 28,116 2025 21,087 Total minimum lease payments $ 105,435 Less: Imputed interest (9,039) Total $ 96,396 |
EQUITY
EQUITY | 12 Months Ended |
Sep. 30, 2022 | |
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 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. Stock Based Compensation As of September 30, 2022, the Company was obligated to issue shares with $20,000 to its former independent directors. The expense was recorded as selling, general and administrative expense. 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, 2022, 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 voluntary surplus reserve are made at the discretion of the Board of Directors. As of September 30, 2022 and September 30, 2021, the balance of statutory reserve was $3,118,542 and $2,857,121, respectively. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Sep. 30, 2022 | |
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, 2022, 2021 and 2020, respectively: For the year ended September 30, 2022 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 40,305,988 $ 1,088,570 $ 23,460,467 $ 64,855,025 Cost of revenue 36,210,950 760,030 21,656,748 58,627,728 Gross profit $ 4,095,038 $ 328,540 $ 1,803,719 $ 6,227,297 Depreciation and amortization $ 963,457 $ 48,804 $ 212,412 $ 1,224,673 Capital expenditures $ 1,882,198 $ 91,029 $ 1,259,042 $ 3,232,269 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 September 30, September 30, 2022 2021 Total Assets Oxytetracycline & Licorice products and TCMD $ 50,690,503 $ 60,786,870 Fertilizer $ 2,613,859 $ 2,540,189 Heparin products and Sausage casing $ 11,222,255 $ 12,026,204 Total $ 64,526,617 $ 75,353,263 |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS | |
COMMITMENTS | NOTE 16 – COMMITMENTS On July 5, 2021, The Company entered into an Investment Agreement with Chongqing Jintong Industrial Construction Investment Co., Ltd (“Chongqing Jintong”). The Company would invest and construct factory for manufacturing pig by-products in Chongqing Tongnan High Tech Industrial Zone. A total of $7.1 million (RMB 50 million) construction contracts has been signed for this project, the Company’s obligation shall be satisfied during the process of construction. As of September 30, 2022, $2.7 million (RMB 18.9 million) has been paid and the Company paid $1.3 million (RMB 9.0 million) through the issuance of the consolidated financial statements. The Company has commitment to pay $2.1 million (RMB 15.2 million) up to September 30, 2023. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Sep. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS As part of the “Company’s efforts to optimize its corporate structure, on December 1, 2022, Qilian Chengdu and Gansu QLS executed certain exclusive service termination agreement (the “Service Termination Agreement”) to terminate certain contractual service arrangements between Qilian Chengdu and Gansu QLS. As a result of the aforementioned termination, Qilian Chengdu will no longer have contractual control over, nor receive the economic benefits of Gansu QLS. In connection with such termination, Hainan Trade, a wholly-owned subsidiary of Qilian International (Hong Kong) Holdings Ltd, entered into a certain exclusive service agreement with Gansu QLS (the “Hainan Exclusive Service Agreement”), through which Hainan Trade obtained contractual control over Gansu QLS.The Service Termination Agreement and Hainan Exclusive Service Agreement do not change the controlling financials interest the Company has within Gansu QLS, thus Gansu QLS is still considered as a VIE of the Company. The Company does not expect any accounting impact from the changes as described. On February 16, 2023, the Company declared a one-time special cash dividend of $0.05 per ordinary shares, payable on or about March 6, 2023, to shareholders of record as of February 28, 2023. As of September 30, 2022, the Company made RMB 10,000,000 (approximately $1.4 million) deposits for the land use right purchase. The purchase has been closed in March 2023. The Company’s management reviewed all material events that have occurred after the balance sheet date through April 19, 2023 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, 2022 | |
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, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 10,027,168 $ 4,161,582 Restricted cash 659,779 2,140,016 Accounts receivable, net 815,022 1,733,306 Bank acceptance receivable 2,585,886 11,722,096 Inventories, net 8,879,486 12,495,831 Advances to suppliers, net 1,214,951 1,380,757 Other current assets 1,493,304 423,331 Total current assets 25,675,596 34,056,919 Property and equipment, net 9,361,862 9,041,995 Intangible assets, net 1,726,928 1,927,933 Long-term investment 617,570 639,466 Other long-term assets 172,911 188,913 Right of use assets-lease 86,584 118,154 Deferred tax assets 212,876 427,172 Total assets $ 37,854,327 $ 46,400,552 LIABILITIES Current liabilities: Bank loans $ 140,578 $ — Accounts payable 5,266,571 6,642,625 Advance from customers 556,418 2,467,296 Advance from customers - related parties — 17,318 Bank notes payable 1,531,649 7,867,018 Deferred government grants - current 121,542 351,567 Taxes payable 825,301 371,325 Operating lease liabilities, current 23,859 55,847 Accrued expenses and other payables 701,263 466,188 Total current liabilities 9,167,181 18,239,184 Operating lease liabilities, long term 72,537 106,180 Deferred government grants - noncurrent 309,943 403,745 Total liabilities 9,549,661 18,749,109 For the year ended September 30, 2022 2021 2020 Net revenue $ 64,468,807 $ 57,049,381 $ 46,731,913 Income from operations $ 2,502,014 $ 2,370,647 $ 4,840,614 Net income $ 2,752,212 $ 2,857,492 $ 4,936,357 For the Year Ended September 30, 2022 2021 2020 Net cash provided by operating activities $ 12,901,270 $ 2,122,539 $ 4,131,468 Net cash used in investing activities (1,153,972) (1,781,618) (5,648,762) Net cash provided by (used in) financing activities (5,937,529) 123,697 2,140,503 Effect of exchange rate on cash (1,018,698) 343,759 275,566 Net increase in cash and cash equivalents $ 4,791,071 $ 808,377 $ 898,775 |
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’ 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 subjected to 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, 2022 and September 30, 2021, cash and restricted cash of $10,277,243 (RMB 73,107,168) and $7,305,799 (RMB 51,226,986), 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 September 30, 2022, 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. The cash and cash equivalent don’t have withdrawal restrictions. |
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 is 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 ready for its intended use. 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 statements of operations 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. 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, 2022 and 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 $19,470,400 and $20,323,400 as of September 30, 2022 and 2021, respectively. 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. The Company’s share of investee earnings or losses is recorded in our Consolidated Statements of Operations within Other income (expense). The Company’s interest in the net assets of the investees 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, the adjustment of basis difference initially recognized and the other comprehensive income allocated to the Company from the investees. |
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, 2022 and September 30, 2021. |
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, 2022 and 2021. 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, 2022 2021 Gansu QLS $ 237,397 $ 240,683 Chengdu QLS and subsidiaries 1,673,997 1,569,169 Total $ 1,911,394 $ 1,809,852 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 statements of operations 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, 2022 and September 30, 2021. 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 operations 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 operations and comprehensive income in proportion to the useful life of the related assets. Government grants received for the year ended September 30, 2022, 2021 and 2020 were $76,299, $152,265, and $764,962, respectively. Grant income recognized for the year ended September 30, 2022, 2021 and 2020 were $352,262, $559,828 and $1,079,200, respectively, included in other income within the consolidated statements of operations and comprehensive income. As of September 30, 2022 and 2021, the deferred government grants were $431,485 and $755,312, respectively. The weighted average remaining periods for the government grant to be recognized were 3.96 years and 4.15 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, 2022, 2021 and 2020, total research and development expense were approximately $1,224,344, $8,000 and $54,000, respectively, which were recorded in general and administrative expenses in the consolidated statements of operations and comprehensive income. |
Advertising Cost | Advertising Cost Advertising costs are expensed when incurred and are included in selling, general and administrative expense on the accompanying consolidated statements of operations. The Company incurred $166,064, $118,020 and $2,488 of advertising costs during the years ended September 30, 2022, 2021 and 2020, respectively. Advertising costs consist primarily of online marketing costs, such as advertising on social networking sites and e-mail marketing campaigns. |
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, 2022 and 2021. |
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, 2022 and 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, 2022, 2021 and 2020. The following table sets forth the computation of basic and diluted earnings per share for the years ended September 30, 2022, 2021 and 2020: For the Years ended September 30, 2022 2021 2020 Numerator: Net income attributable to ordinary shareholders $ 1,076,693 $ 3,152,868 $ 5,063,710 Denominator: Weighted-average number of ordinary shares outstanding – basic 35,750,000 34,089,286 30,000,000 Outstanding warrants — — — Potentially dilutive shares from outstanding options and warrants — — — Weighted-average number of ordinary shares outstanding – diluted 35,750,000 34,089,286 30,000,000 Earnings per share – basic $ 0.03 $ 0.09 $ 0.17 Earnings per share – diluted $ 0.03 $ 0.09 $ 0.17 |
Stock Based Compensation | Stock Based Compensation The Company issued shares for its independent director for the service rendered. Stock-based compensation is estimated at the grant date based on the fair value of the shares and is recognized as expense over the requisite service period of the award. The Company recognizes compensation cost on a straight-line basis over the requisite service period of the award, which is generally the award vesting term. The Company has elected to recognize forfeitures as incurred. |
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 currency other than U.S. Dollars 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 statements of operations 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, 2022 September 30, 2021 September 30, 2020 Year-end spot rate US$1=RMB 7.1135 US$1=RMB 6.4580 US$1=RMB 6.8033 Average rate US$1=RMB 6.5532 US$1=RMB 6.5095 US$1=RMB 7.0077 |
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. 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 government grants, 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, lease liabilities, bank notes payable and other liabilities, including current maturities, approximated their carrying value as of September 30, 2022 and September 30, 2021, 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 Company noted no transfers 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, 2022 and 2021: As of As of September 30, September 30, 2022 2021 Beginning balance $ 20,323,400 $ — Fair value of investment in available-for-sale securities at inception (853,000) 20,000,000 Change in fair value — 323,400 Ending balance $ 19,470,400 $ 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, 2022 and 2021, $10,277,243 and $7,305,799 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 $1,001,568 and $1,073,196 were deposited at financial institutions in Hong Kong as of September 30, 2022 and 2021, 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, 2022 and 2021, $3,700,202 and $4,228,173 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, 2022, two customers accounted for 11% and 11% of total revenue, respectively and one vendor accounted for 14% of total purchase. As of September 30, 2022, three major customer’s account receivable accounted for 61%, 13% and 11% of the total account receivable, respectively, and one vendor accounted for 18% of the total accounts payable outstanding. 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. 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 October 2021, the FASB issued ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers 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 operations and cash flows. |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Gansu QLS | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Schedule of subsidiaries | Ownership as of September 30, 2022 and 2021 Moshangfa (Gansu) Fertilizer Industry Co., Ltd (formerly Jiuquan Qiming Biotechnology Co., Ltd, “Moshangfa”) 100 % Chengdu Qilianshan Biotechnology Co., Ltd (“Chengdu QLS”) 79.51 % Jiuquan Ahan Biotechnology Co., Ltd. (“Ahan”) 100 % Tibet Samen Trading Co., Ltd (“Samen”) 100 % Tibet Cangmen Trading Co., Ltd (“Cangmen”) 100 % Rugao Tianlu Animal Products Co., Ltd (“Rugao”) 79.51 % Chongqing Shengfu Biological Technology Co., Ltd (“Chongqing”) * 79.51 % * 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, 2022 | |
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, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 10,027,168 $ 4,161,582 Restricted cash 659,779 2,140,016 Accounts receivable, net 815,022 1,733,306 Bank acceptance receivable 2,585,886 11,722,096 Inventories, net 8,879,486 12,495,831 Advances to suppliers, net 1,214,951 1,380,757 Other current assets 1,493,304 423,331 Total current assets 25,675,596 34,056,919 Property and equipment, net 9,361,862 9,041,995 Intangible assets, net 1,726,928 1,927,933 Long-term investment 617,570 639,466 Other long-term assets 172,911 188,913 Right of use assets-lease 86,584 118,154 Deferred tax assets 212,876 427,172 Total assets $ 37,854,327 $ 46,400,552 LIABILITIES Current liabilities: Bank loans $ 140,578 $ — Accounts payable 5,266,571 6,642,625 Advance from customers 556,418 2,467,296 Advance from customers - related parties — 17,318 Bank notes payable 1,531,649 7,867,018 Deferred government grants - current 121,542 351,567 Taxes payable 825,301 371,325 Operating lease liabilities, current 23,859 55,847 Accrued expenses and other payables 701,263 466,188 Total current liabilities 9,167,181 18,239,184 Operating lease liabilities, long term 72,537 106,180 Deferred government grants - noncurrent 309,943 403,745 Total liabilities 9,549,661 18,749,109 For the year ended September 30, 2022 2021 2020 Net revenue $ 64,468,807 $ 57,049,381 $ 46,731,913 Income from operations $ 2,502,014 $ 2,370,647 $ 4,840,614 Net income $ 2,752,212 $ 2,857,492 $ 4,936,357 For the Year Ended September 30, 2022 2021 2020 Net cash provided by operating activities $ 12,901,270 $ 2,122,539 $ 4,131,468 Net cash used in investing activities (1,153,972) (1,781,618) (5,648,762) Net cash provided by (used in) financing activities (5,937,529) 123,697 2,140,503 Effect of exchange rate on cash (1,018,698) 343,759 275,566 Net increase in cash and cash equivalents $ 4,791,071 $ 808,377 $ 898,775 |
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, 2022 2021 Gansu QLS $ 237,397 $ 240,683 Chengdu QLS and subsidiaries 1,673,997 1,569,169 Total $ 1,911,394 $ 1,809,852 |
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, 2022, 2021 and 2020: For the Years ended September 30, 2022 2021 2020 Numerator: Net income attributable to ordinary shareholders $ 1,076,693 $ 3,152,868 $ 5,063,710 Denominator: Weighted-average number of ordinary shares outstanding – basic 35,750,000 34,089,286 30,000,000 Outstanding warrants — — — Potentially dilutive shares from outstanding options and warrants — — — Weighted-average number of ordinary shares outstanding – diluted 35,750,000 34,089,286 30,000,000 Earnings per share – basic $ 0.03 $ 0.09 $ 0.17 Earnings per share – diluted $ 0.03 $ 0.09 $ 0.17 |
Schedule of currency exchange rates | September 30, 2022 September 30, 2021 September 30, 2020 Year-end spot rate US$1=RMB 7.1135 US$1=RMB 6.4580 US$1=RMB 6.8033 Average rate US$1=RMB 6.5532 US$1=RMB 6.5095 US$1=RMB 7.0077 |
Schedule of reconciliation of the beginning and ending balance of the assets and liabilities measured at fair value on recurring basis | The Company noted no transfers 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, 2022 and 2021: As of As of September 30, September 30, 2022 2021 Beginning balance $ 20,323,400 $ — Fair value of investment in available-for-sale securities at inception (853,000) 20,000,000 Change in fair value — 323,400 Ending balance $ 19,470,400 $ 20,323,400 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
ACCOUNTS RECEIVABLE, NET | |
Schedule of accounts receivable | Accounts receivable consisted of the following: As of As of September 30, 2022 September 30, 2021 Trade accounts receivable $ 819,698 $ 1,945,719 Less: allowances for doubtful accounts (4,373) (212,413) Accounts receivable, net $ 815,325 $ 1,733,306 |
INVENTORY, NET (Tables)
INVENTORY, NET (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
INVENTORY, NET | |
Schedule of inventories | Inventories consisted of the following: As of As of September 30, 2022 September 30, 2021 Raw materials $ 4,575,964 $ 6,285,887 Work-in-progress 748,845 832,499 Finished goods 4,078,142 5,502,591 Inventory valuation allowance (523,465) (125,146) Total inventory $ 8,879,486 $ 12,495,831 |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
OTHER CURRENT ASSETS | |
Schedule of other current assets | Other current assets consisted of the following: As of As of September 30, 2022 September 30, 2021 Security deposits $ — $ 327,104 Prepaid expense 88,727 84,428 Other receivables 1,470,448 14,090 Total other current assets $ 1,559,175 $ 425,622 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
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, 2022 September 30, 2021 Property and Buildings $ 11,848,216 $ 9,711,722 Machinery and equipment 18,275,500 19,594,986 Automobiles 586,630 689,651 Office and electric equipment 191,893 148,439 Subtotal 30,902,239 30,144,798 Construction in progress 1,198,759 2,020,457 Less: accumulated depreciation (21,916,969) (23,045,753) Property and equipment, net $ 10,184,029 $ 9,119,502 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets, net | Intangible assets, net consisted of the following: As of As of September 30, 2022 September 30, 2021 Land use rights $ 2,313,861 $ 2,521,646 Software 39,832 43,875 License for drug manufacturing 56,231 61,939 Total 2,409,924 2,627,460 Less: accumulated amortization (682,996) (699,527) Intangible assets, net $ 1,726,928 $ 1,927,933 |
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 2023 $ 52,668 2024 52,668 2025 52,668 2026 52,668 2027 52,668 Thereafter 1,463,587 $ 1,726,928 |
LONG-TERM INVESTMENT (Tables)
LONG-TERM INVESTMENT (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
LONG-TERM INVESTMENT | |
Schedule of equity method investment | Equity method investment consisted of the following: As of As of September 30, 2022 September 30, 2021 Equity method investment: Cost of equity method investment 463,907 510,994 Profit from equity method investment 208,255 188,605 Dividend Distribution received (54,592) (60,133) Total long-term investment $ 617,570 $ 639,466 |
TAXES (Tables)
TAXES (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
TAXES. | |
Schedule of income before income taxes | Income before income taxes is derived from the following jurisdiction: For the year ended September 30, 2022 2021 2020 China $ 2,936,530 $ 3,252,583 $ 5,805,349 Cayman Islands (1,375,971) 110,694 — Total $ 1,560,559 $ 3,363,277 $ 5,805,349 |
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, 2022 2021 2020 Current income taxes $ 4,464 $ 301,320 $ 951,403 Deferred income taxes 189,838 (46,187) (86,495) Total $ 194,302 $ 255,133 $ 864,908 |
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, 2022 September 30, 2021 Deferred tax assets: Allowance for doubtful accounts and inventory provision $ 82,111 $ 51,122 NOL Carryforwards 79,588 262,701 Deferred government grants 51,177 113,297 Total deferred tax assets $ 212,876 $ 427,120 |
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, 2022 2021 2020 China Statutory income tax rate 25.0 % 25.0 % 25.0 % Effect of favorable income tax rate in the PRC (11) % (13.6) % (10.5) % Permanent difference (1.6) % (3.8) % 0.4 % Effective tax rate 12.5 % 7.6 % 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, 2022 2021 VAT tax payable $ 556,022 $ 64,129 Corporate income tax payable 142,255 148,204 Business and other taxes payable 117,534 92,972 Total $ 815,811 $ 305,305 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
LEASE | |
Schedule of weighted average remaining lease term and discount rate | As of As of September 30, September 30, 2022 2021 Operating Lease Assets: Operating Lease right of use asset $ 86,584 $ 118,154 Total operating lease assets 86,584 118,154 Operating lease obligations: Current operating lease liabilities 23,859 55,847 Non-current operating lease liabilities 72,537 106,180 Total Lease liabilities $ 96,396 $ 162,027 Remaining Lease Term Operating Lease 3.25 years 2.07 years Discount rate 5.5 % 5.5 % |
Schedule of lease liability maturities | Lease liability maturities as of September 30, 2022, are as follows: Operating, lease 2022 28,116 2023 28,116 2024 28,116 2025 21,087 Total minimum lease payments $ 105,435 Less: Imputed interest (9,039) Total $ 96,396 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
SEGMENT REPORTING | |
Schedule of segment information | For the year ended September 30, 2022 Oxytetracycline & Licorice Heparin products and products and TCMD Fertilizer Sausage casing Total Revenue $ 40,305,988 $ 1,088,570 $ 23,460,467 $ 64,855,025 Cost of revenue 36,210,950 760,030 21,656,748 58,627,728 Gross profit $ 4,095,038 $ 328,540 $ 1,803,719 $ 6,227,297 Depreciation and amortization $ 963,457 $ 48,804 $ 212,412 $ 1,224,673 Capital expenditures $ 1,882,198 $ 91,029 $ 1,259,042 $ 3,232,269 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 September 30, September 30, 2022 2021 Total Assets Oxytetracycline & Licorice products and TCMD $ 50,690,503 $ 60,786,870 Fertilizer $ 2,613,859 $ 2,540,189 Heparin products and Sausage casing $ 11,222,255 $ 12,026,204 Total $ 64,526,617 $ 75,353,263 |
ORGANIZATION AND DESCRIPTION _3
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2022 USD ($) subsidiary | Sep. 30, 2021 USD ($) | 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% | 99.214% | |
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% | 99.214% | |
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% | 79.51% | |
Gansu QLS | Ahan | |||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||
Ownership interest (in percent) | 100% | 100% | |
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% | 79.51% | |
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% | 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, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Current assets: | |||
Cash and cash equivalents | $ 14,319,234 | $ 10,467,357 | |
Restricted cash | 659,779 | 2,140,016 | |
Accounts receivable, net | 815,325 | 1,733,306 | |
Bank acceptance receivable | 2,585,886 | 11,722,096 | |
Inventories, net | 8,879,486 | 12,495,831 | |
Advances to suppliers, net | 1,215,105 | 1,380,925 | |
Other current assets | 1,559,174 | 425,622 | |
TOTAL CURRENT ASSETS | 30,033,989 | 40,365,153 | |
Property and equipment, net | 10,184,029 | 9,119,502 | |
Intangible assets, net | 1,726,928 | 1,927,933 | |
Long term investment | 617,570 | 639,466 | |
Right of use assets-lease | 86,584 | 118,154 | |
Deferred tax assets | 212,876 | 427,120 | |
TOTAL ASSETS | 64,526,617 | 75,353,263 | |
Current liabilities: | |||
Bank loans | 140,578 | ||
Accounts payable | 5,289,481 | 6,643,691 | |
Advance from customers | 556,418 | 2,467,296 | |
Advance from customers - related parties | 0 | 17,318 | |
Bank notes payable | 1,531,649 | 7,867,018 | |
Deferred government grants - current | 121,542 | 351,567 | |
Taxes payable | 815,811 | 305,305 | |
Operating lease liabilities, current | 23,859 | 55,847 | |
Accrued expenses and other payables | 701,263 | 466,838 | |
TOTAL CURRENT LIABILITIES | 9,180,601 | 18,174,880 | |
Operating lease liabilities, long term | 72,537 | 106,180 | |
Deferred government grants - noncurrent | 309,943 | 403,745 | |
TOTAL LIABILITIES | 9,563,081 | 18,684,805 | |
Total revenues | 64,855,025 | 57,099,884 | $ 50,033,200 |
Income from operations | 1,560,559 | 3,363,277 | 5,805,349 |
Net income attributable to ordinary shareholders | 1,076,693 | 3,152,868 | 5,063,710 |
Net cash provided by operating activities | 12,654,188 | 345,034 | 5,076,014 |
Net cash used in investing activities | (3,258,953) | (24,200,032) | (375,592) |
Net cash provided by (used in) financing activities | (5,937,529) | 23,993,338 | 2,140,503 |
Effect of exchange rate on cash | (1,086,067) | 601,903 | 431,765 |
Net increase in cash and cash equivalents | 2,371,640 | 740,243 | 7,272,690 |
VIE and its subsidiaries | |||
Current assets: | |||
Cash and cash equivalents | 10,027,168 | 4,161,582 | |
Restricted cash | 659,779 | 2,140,016 | |
Accounts receivable, net | 815,022 | 1,733,306 | |
Bank acceptance receivable | 2,585,886 | 11,722,096 | |
Inventories, net | 8,879,486 | 12,495,831 | |
Advances to suppliers, net | 1,214,951 | 1,380,757 | |
Other current assets | 1,493,304 | 423,331 | |
TOTAL CURRENT ASSETS | 25,675,596 | 34,056,919 | |
Property and equipment, net | 9,361,862 | 9,041,995 | |
Intangible assets, net | 1,726,928 | 1,927,933 | |
Long term investment | 617,570 | 639,466 | |
Other long-term assets | 172,911 | 188,913 | |
Right of use assets-lease | 86,584 | 118,154 | |
Deferred tax assets | 212,876 | 427,172 | |
TOTAL ASSETS | 37,854,327 | 46,400,552 | |
Current liabilities: | |||
Bank loans | 140,578 | ||
Accounts payable | 5,266,571 | 6,642,625 | |
Advance from customers | 556,418 | 2,467,296 | |
Advance from customers - related parties | 17,318 | ||
Bank notes payable | 1,531,649 | 7,867,018 | |
Deferred government grants - current | 121,542 | 351,567 | |
Taxes payable | 825,301 | 371,325 | |
Operating lease liabilities, current | 23,859 | 55,847 | |
Accrued expenses and other payables | 701,263 | 466,188 | |
TOTAL CURRENT LIABILITIES | 9,167,181 | 18,239,184 | |
Operating lease liabilities, long term | 72,537 | 106,180 | |
Deferred government grants - noncurrent | 309,943 | 403,745 | |
TOTAL LIABILITIES | 9,549,661 | 18,749,109 | |
Total revenues | 64,468,807 | 57,049,381 | 46,731,913 |
Income from operations | 2,502,014 | 2,370,647 | 4,840,614 |
Net income attributable to ordinary shareholders | 2,752,212 | 2,857,492 | 4,936,357 |
Net cash provided by operating activities | 12,901,270 | 2,122,539 | 4,131,468 |
Net cash used in investing activities | (1,153,972) | (1,781,618) | (5,648,762) |
Net cash provided by (used in) financing activities | (5,937,529) | 123,697 | 2,140,503 |
Effect of exchange rate on cash | (1,018,698) | 343,759 | 275,566 |
Net increase in cash and cash equivalents | $ 4,791,071 | $ 808,377 | $ 898,775 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) | 12 Months Ended |
Sep. 30, 2022 | |
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 |
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 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) | 12 Months Ended |
Sep. 30, 2022 | |
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 ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Noncontrolling Interest [Line Items] | ||
Noncontrolling interests | $ 1,911,394 | $ 1,809,852 |
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% | 0.786% |
Noncontrolling interests | $ 237,397 | $ 240,683 |
Chengdu QLS and subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest (in percent) | 20.49% | 20.49% |
Noncontrolling interests | $ 1,673,997 | $ 1,569,169 |
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, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator: | |||
Net income attributable to ordinary shareholders | $ 1,076,693 | $ 3,152,868 | $ 5,063,710 |
Denominator: | |||
Weighted-average number of ordinary shares outstanding - basic | 35,750,000 | 34,089,286 | 30,000,000 |
Outstanding warrants | 300,000 | ||
Weighted-average number of ordinary shares outstanding - diluted | 35,750,000 | 34,089,286 | 30,000,000 |
Earnings per share - basic | $ 0.03 | $ 0.09 | $ 0.17 |
Earnings per share - diluted | $ 0.03 | $ 0.09 | $ 0.17 |
Underwriter warrants considered in diluted EPS calculation using treasury stock method | 300,000 | 300,000 | |
Diluted shares | 0 | 0 | 0 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency Translation (Details) - ¥ / $ | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Year-end spot rate | 7.1135 | 6.4580 | 6.8033 |
Average rate | 6.5532 | 6.5095 | 7.0077 |
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, 2022 | Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 20,323,400 | $ 0 |
Fair value of investment in available-for-sale securities at inception | (853,000) | 20,000,000 |
Change in fair value | 0 | 323,400 |
Ending balance | $ 19,470,400 | $ 20,323,400 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 12 Months Ended | |||||
Oct. 01, 2019 | Sep. 30, 2022 USD ($) item | Sep. 30, 2021 USD ($) | Sep. 30, 2020 USD ($) | Sep. 30, 2022 CNY (¥) | Sep. 30, 2021 CNY (¥) | |
Cash held in PRC | $ 10,277,243 | $ 7,305,799 | ¥ 73,107,168 | ¥ 51,226,986 | ||
Lease, Practical expedients | true | |||||
Operating lease right of use assets | 86,584 | 118,154 | ||||
Government grants | 76,299 | 152,265 | $ 764,962 | |||
Grant income | 352,262 | 559,828 | 1,079,200 | |||
Deferred government grants | $ 431,485 | $ 755,312 | ||||
Weighted average remaining periods for the government grant to be recognized | 3 years 11 months 15 days | 4 years 1 month 24 days | ||||
Research and development expense | $ 1,224,344 | $ 8,000 | 54,000 | |||
Advertising costs | $ 166,064 | 118,020 | $ 2,488 | |||
Number of units in the fund | item | 20,000 | |||||
NAV of the Fund | $ 19,470,400 | 20,323,400 | ||||
Impairment of long-lived assets | $ 0 | $ 0 | ||||
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, 2022 USD ($) item customer | Sep. 30, 2021 USD ($) customer item | Sep. 30, 2020 customer item | Sep. 30, 2022 HKD ($) customer item | |
Concentration Risk [Line Items] | ||||
Transfer between level 1and level 2 | $ 0 | |||
Asset, transfer into (out of) of level 3 | 0 | |||
Cash and cash equivalents, certificates of deposit and restricted cash were on deposit at financial institutions not subject to insured | 10,277,243 | $ 7,305,799 | ||
Cash and cash equivalents deposited in financial institutions | 1,001,568 | 1,073,196 | ||
Cash and cash equivalents deposited in financial institutions annual limit | 65,000 | $ 500,000 | ||
Cash deposited in FI insured by FDIC | $ 3,700,202 | $ 4,228,173 | ||
Customer | Revenue | ||||
Concentration Risk [Line Items] | ||||
Number of customers | customer | 2 | 3 | 3 | 2 |
Customer | Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Number of customers | customer | 3 | 1 | 3 | 3 |
Customer | Customer One | Revenue | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 11% | 11% | 18% | |
Customer | Customer One | Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 61% | 77% | 35% | |
Customer | Customer Two | Revenue | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 11% | 11% | 11% | |
Customer | Customer Two | Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 13% | 16% | ||
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) | 11% | 14% | ||
Supplier | Purchases | ||||
Concentration Risk [Line Items] | ||||
Number of vendors | item | 1 | 1 | 2 | 1 |
Supplier | Supplier One | Purchases | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 14% | 13% | 11% | |
Supplier | Supplier One | Accounts Receivable | ||||
Concentration Risk [Line Items] | ||||
Percentage of accounts payable outstanding from transaction with supplier | 18% | |||
Supplier | Supplier Two | Purchases | ||||
Concentration Risk [Line Items] | ||||
Concentration risk (in percent) | 10% |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
ACCOUNTS RECEIVABLE, NET | ||
Trade accounts receivable | $ 819,698 | $ 1,945,719 |
Less: allowances for doubtful accounts | (4,373) | (212,413) |
Accounts receivable, net | $ 815,325 | $ 1,733,306 |
INVENTORY, NET (Details)
INVENTORY, NET (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
INVENTORY, NET | ||
Raw materials | $ 4,575,964 | $ 6,285,887 |
Work-in-progress | 748,845 | 832,499 |
Finished goods | 4,078,142 | 5,502,591 |
Inventory valuation allowance | (523,465) | (125,146) |
Total inventory | $ 8,879,486 | $ 12,495,831 |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
OTHER CURRENT ASSETS | ||
Security deposits | $ 327,104 | |
Prepaid expense | $ 88,727 | 84,428 |
Other receivables | 1,470,448 | 14,090 |
Total other current assets | $ 1,559,174 | $ 425,622 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 30,902,239 | $ 30,144,798 | |
Construction in progress | 1,198,759 | 2,020,457 | |
Less: accumulated depreciation | (21,916,969) | (23,045,753) | |
Property and equipment, net | 10,184,029 | 9,119,502 | |
Depreciation expense | 1,172,644 | 1,145,447 | $ 1,055,314 |
Prepayments for property and equipment | 2,021,330 | 2,243,622 | |
Property received and accepted out of Prepayments | 2,243,622 | 2,243,622 | |
Property and buildings | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 11,848,216 | 9,711,722 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 18,275,500 | 19,594,986 | |
Automobiles | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 586,630 | 689,651 | |
Office and electric equipment | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 191,893 | $ 148,439 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total | $ 2,409,924 | $ 2,627,460 | |
Less: accumulated amortization | (682,996) | (699,527) | |
Intangible assets, net | 1,726,928 | 1,927,933 | |
Amortization expense | 52,028 | 55,782 | $ 50,274 |
Land use rights | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total | 2,313,861 | 2,521,646 | |
Software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total | 39,832 | 43,875 | |
License for drug manufacturing | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total | $ 56,231 | $ 61,939 |
INTANGIBLE ASSETS, NET - Estima
INTANGIBLE ASSETS, NET - Estimated future amortization expense (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2023 | $ 52,668 | |
2024 | 52,668 | |
2025 | 52,668 | |
2026 | 52,668 | |
2027 | 52,668 | |
Thereafter | 1,463,587 | |
Intangible assets, net | $ 1,726,928 | $ 1,927,933 |
LONG-TERM INVESTMENT (Details)
LONG-TERM INVESTMENT (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
LONG-TERM INVESTMENT | ||
Cost of equity method investment | $ 463,907 | $ 510,994 |
Profit from equity method investment | 208,255 | 188,605 |
Dividend Distribution received | (54,592) | (60,133) |
Total long-term investment | $ 617,570 | $ 639,466 |
LONG-TERM INVESTMENT- Additiona
LONG-TERM INVESTMENT- Additional Information (Details) | 12 Months Ended | |||||||||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | 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 | $ 463,907 | $ 510,994 | ||||||||
Investment income attributable to the equity investment | $ 40,196 | $ 69,494 | $ 32,093 | |||||||
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) - China Construction Bank $ in Millions | Mar. 23, 2023 CNY (¥) | Mar. 23, 2023 USD ($) | Sep. 30, 2022 | May 31, 2022 CNY (¥) | May 31, 2022 USD ($) |
Short-term Debt [Line Items] | |||||
Fixed interest rate (in percent) | 3% | ||||
Maximum borrowing capacity | ¥ 30,000,000 | $ 4.6 | |||
Subsequent events | |||||
Short-term Debt [Line Items] | |||||
Maximum borrowing capacity | ¥ 1,000,000 | $ 0.2 |
BANK NOTES PAYABLE (Details)
BANK NOTES PAYABLE (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Bank notes payable | $ 1,531,649 | $ 7,867,018 |
Repayment of notes payable to bank | 1,531,649 | |
Cash deposits | $ 659,779 | $ 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, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Investments, Owned, Federal Income Tax Note [Line Items] | |||
Income before income taxes | $ 1,560,559 | $ 3,363,277 | $ 5,805,349 |
China | |||
Investments, Owned, Federal Income Tax Note [Line Items] | |||
Income before income taxes | 2,936,530 | 3,252,583 | $ 5,805,349 |
Cayman Islands | |||
Investments, Owned, Federal Income Tax Note [Line Items] | |||
Income before income taxes | $ (1,375,971) | $ 110,694 |
TAXES - Provision for Income Ta
TAXES - Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
TAXES. | |||
Current income taxes | $ 4,464 | $ 301,320 | $ 951,403 |
Deferred income taxes | 189,838 | (46,187) | (86,495) |
Total | $ 194,302 | $ 255,133 | $ 864,908 |
TAXES - Temporary Differences a
TAXES - Temporary Differences and Carryforwards (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Deferred tax assets: | ||
Allowance for doubtful accounts and inventory provision | $ 82,111 | $ 51,122 |
NOL Carryforwards | 79,588 | 262,701 |
Deferred government grants | 51,177 | 113,297 |
Total deferred tax assets | $ 212,876 | $ 427,120 |
TAXES - Company's Effective Tax
TAXES - Company's Effective Tax Rate (Details) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reconciles the statutory rates, Percent | |||
China Statutory income tax rate | 25% | 25% | 25% |
Effect of favorable income tax rate in the PRC | (11.00%) | (13.60%) | (10.50%) |
Non-deductible permanent difference | (1.60%) | (3.80%) | 0.40% |
Effective tax rate | 12.50% | 7.60% | 14.90% |
TAXES - Taxes Payable (Details)
TAXES - Taxes Payable (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
TAXES. | ||
VAT tax payable | $ 556,022 | $ 64,129 |
Corporate income tax payable | 142,255 | 148,204 |
Business and other taxes payable | 117,534 | 92,972 |
Total | $ 815,811 | $ 305,305 |
TAXES - Additional Information
TAXES - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Corporate income tax rate (in percent) | 12.50% | 7.60% | 14.90% | |
Decrease in taxes due to tax holiday | $ 171,217 | $ 458,163 | $ 603,091 | |
Benefit of the tax holidays on net income per share | $ 0.006 | $ 0.013 | $ 0.020 | |
Gansu QLS | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (in percent) | 15% | 15% | 15% | |
Chengdu QLS and subsidiaries | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (in percent) | 15% | 15% | 15% | |
Qilian Chengdu | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (in percent) | 15% | 15% | 15% | |
Hong Kong | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Base profit for calculating tax rate | $ 0 | $ 0 | $ 0 | |
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% | |||
Preferential tax rate (in percent) | 15% | |||
Western Region | ||||
Investments, Owned, Federal Income Tax Note [Line Items] | ||||
Favorable tax rate (in percent) | 15% | 15% | 15% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - VIE and its subsidiaries - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Related Party Transaction [Line Items] | |||
Sales to affiliated companies | $ 122,189 | $ 31,587 | $ 10,134 |
Purchases from affiliated companies | 0 | 0 | |
Advances from affiliated company | $ 8,740 | $ 17,318 |
LEASE (Details)
LEASE (Details) | 12 Months Ended | ||
Sep. 30, 2022 USD ($) lease | Sep. 30, 2021 USD ($) | Sep. 30, 2020 USD ($) | |
LEASE | |||
Operating Lease Expenses | $ 63,480 | $ 109,346 | $ 71,826 |
Number of Operating Leases | lease | 1 | ||
Operating Lease Assets: | |||
Total operating lease assets | $ 86,584 | 118,154 | |
Operating lease obligations: | |||
Current operating lease liabilities | 23,859 | 55,847 | |
Non-current operating lease liabilities | 72,537 | 106,180 | |
Total Lease liabilities | $ 96,396 | $ 162,027 |
LEASE - Weighted Average Remain
LEASE - Weighted Average Remaining Lease Term and Discount Rate (Details) | Sep. 30, 2022 | Sep. 30, 2021 |
LEASE | ||
Remaining Lease Term Operating Lease | 3 years 3 months | 2 years 25 days |
Discount rate | 5.50% | 5.50% |
LEASE - Lease Liability Maturit
LEASE - Lease Liability Maturities (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2022 | $ 28,116 | |
2023 | 28,116 | |
2024 | 28,116 | |
2025 | 21,087 | |
Total minimum lease payments | 105,435 | |
Less: Imputed interest | (9,039) | |
Total Lease liabilities | $ 96,396 | $ 162,027 |
EQUITY (Details)
EQUITY (Details) | 12 Months Ended | ||||||
Jan. 15, 2021 USD ($) $ / shares shares | Jan. 14, 2021 $ / shares shares | Oct. 16, 2019 $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | Sep. 30, 2020 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 | 35,750,000 | 35,750,000 | |||||
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 | ||||||
Percentage of reserve of registered capital for statutory surplus reserve | 10% | ||||||
Percentage of statutory surplus reserve | 50% | ||||||
Statutory Reserve. | $ | $ 3,118,542 | $ 2,857,121 | |||||
Former independent directors | |||||||
Class of Stock [Line Items] | |||||||
Number of shares obligated to issue | 20,000 | ||||||
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 | 35,750,000 | 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, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | Sep. 30, 2020 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of operating segments | segment | 3 | ||
Total revenues | $ 64,855,025 | $ 57,099,884 | $ 50,033,200 |
Cost of revenues | 58,627,728 | 51,461,354 | 42,494,047 |
GROSS PROFIT | 6,227,297 | 5,638,530 | 7,539,153 |
Depreciation and amortization | 1,224,673 | 1,201,229 | 1,105,588 |
Capital Expenditures | 3,232,269 | 3,493,374 | 449,765 |
TOTAL ASSETS | 64,526,617 | 75,353,263 | |
Oxytetracycline & Licorice products and TCMD | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 40,305,988 | 33,451,159 | 32,602,384 |
Cost of revenues | 36,210,950 | 28,362,016 | 25,004,712 |
GROSS PROFIT | 4,095,038 | 5,089,143 | 7,597,672 |
Depreciation and amortization | 963,457 | 951,015 | 886,323 |
Capital Expenditures | 1,882,198 | 3,321,629 | 377,953 |
TOTAL ASSETS | 50,690,503 | 60,786,870 | |
Fertilizer | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 1,088,570 | 486,171 | 701,701 |
Cost of revenues | 760,030 | 463,738 | 304,670 |
GROSS PROFIT | 328,540 | 22,433 | 397,031 |
Depreciation and amortization | 48,804 | 47,194 | 38,792 |
Capital Expenditures | 91,029 | 46,169 | 33,914 |
TOTAL ASSETS | 2,613,859 | 2,540,189 | |
Heparin products and Sausage casing | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 23,460,467 | 23,162,554 | 16,729,115 |
Cost of revenues | 21,656,748 | 22,635,600 | 17,184,665 |
GROSS PROFIT | 1,803,719 | 526,954 | (455,550) |
Depreciation and amortization | 212,412 | 203,020 | 180,473 |
Capital Expenditures | 1,259,042 | 125,576 | $ 37,898 |
TOTAL ASSETS | 11,222,255 | $ 12,026,204 | |
International markets | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 0 |
COMMITMENTS (Details)
COMMITMENTS (Details) ¥ in Millions, $ in Millions | Sep. 30, 2023 USD ($) | Sep. 30, 2023 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 CNY (¥) | Jul. 05, 2021 USD ($) | Jul. 05, 2021 CNY (¥) |
Loss Contingencies [Line Items] | ||||||
Commitments paid | $ 2.7 | ¥ 18.9 | ||||
Commitment | $ 1.3 | ¥ 9 | ||||
Subsequent events | ||||||
Loss Contingencies [Line Items] | ||||||
Commitments paid | $ 2.1 | ¥ 15.2 | ||||
Chongqing Jintong Industrial Construction Investment Co., Ltd ("Chongqing Jintong") | ||||||
Loss Contingencies [Line Items] | ||||||
Commitments paid | $ 7.1 | ¥ 50 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Millions | Feb. 16, 2023 $ / shares | Sep. 30, 2022 CNY (¥) | Sep. 30, 2022 USD ($) |
Subsequent events | |||
Subsequent Event [Line Items] | |||
Cash dividend | $ 0.05 | ||
Agricultural Development Bank of China ("ADBC") | Gansu QLS | |||
Subsequent Event [Line Items] | |||
Amount borrowed | ¥ 10,000,000 | $ 1.4 |