| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements
and related notes have been prepared in accordance with generally accepted accounting principles in the United Stated of America (“US
GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of
the Company and its majority-owned and controlled subsidiaries. All significant inter-company transactions and balances have been eliminated
upon consolidation. Use of Estimates The preparation of consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions
using the currently available information. The estimates include, but are not limited to: allowances for doubtful accounts, inventory
valuation, useful lives of property, plant and equipment, land use rights, impairment in equity investment, and income taxes related to
realization of deferred tax assets and uncertain tax position. Foreign Currency Translation The financial records of the Company’s subsidiaries
in People’s Republic of China (“PRC”) are maintained in the local currency which is Chinese Yuan (“CNY”
or “RMB”). Monetary assets and liabilities denominated in currencies other than their local currencies are translated into
local currencies at the rates of exchange in effect at the consolidated balance sheet dates. Transactions denominated in currencies other
than the local currencies during the year are converted into local currencies at the applicable rates of exchange prevailing when the
transactions occur. Transaction gains and losses are recorded in operating expenses in the consolidated statements of income and comprehensive
income. For the six months ended March 31, 2023 and 2022, the Company incurred foreign currency transaction gains of $590,132 and foreign
currency transaction loss $36,021, respectively. The Company maintains its financial records using
the United States dollar (“US dollar”) as the functional currency, while the subsidiaries of the Company in Hong Kong and
mainland China maintained financial records using RMB as the functional currency. The reporting currency of the Company is the US dollar.
When translating local financial reports of the Company’s subsidiaries into US dollar, assets and liabilities are translated at
the exchange rates at the consolidated balance sheet date, equity accounts are translated at historical exchange rates and revenue, expenses,
gains and losses are translated at the average rate for the period. Translation adjustments are reported as cumulative translation adjustments
and are shown as a separate component of other comprehensive income in the consolidated statements of income and comprehensive income. The relevant exchange rates are listed below:
March 31, September 30, March 31,
Period Ended RMB: USD exchange rate 6.8676 7.1135 6.3393
Period Average RMB: USD exchange rate 6.9761 6.5532 6.3694 Cash and Cash Equivalents Cash and cash equivalents primarily consist of
cash and deposits with financial institutions which are unrestricted as to withdrawal and use. Cash equivalents consist of highly liquid
investments that are readily convertible to cash generally with original maturities of three months or less when purchased. Restricted Cash The Company has bank acceptance notes outstanding
with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These notes are generally
short term in nature due to their short maturity period of six to nine months; thus, restricted cash is classified as a current asset.
Restricted cash is included in the beginning or ending balance of cash and cash equivalents and restricted cash in the consolidated statements
of cash flows. As of March 31, 2023 and September 30, 2022, restricted
cash was $915,242 and $1,347,246, respectively. No restricted cash is held to ensure future credit availability. Accounts Receivable and Allowance for Doubtful
Accounts Accounts receivable are recognized and carried at the originally invoiced
amount, less an estimated allowance for uncollectible accounts. The Company determines the adequacy of reserves for doubtful accounts
based on an individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables
when there is objective evidence that the Company may not be able to collect amounts due. 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. Based on management
of customers’ credit and ongoing relationships, management makes conclusions whether any balances outstanding at the end of the
period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables
balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Delinquent account balances
are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. The allowance for doubtful accounts recognized
as of March 31, 2023 and September 30, 2022 was $2,342,732 and $2,197,396, respectively. Inventories Inventories are stated at the lower of cost or net realizable value.
Cost is principally determined using the weighted-average method. The Company records adjustments to inventory for excess quantities,
obsolescence or impairment when appropriate to reflect inventory at net realizable value. These adjustments are based upon a combination
of factors including current sales volume, market conditions, a lower of cost or market analysis and expected realizable value of the
inventory. There were no write-downs recognized of inventories
for the six months ended March 31, 2023 and 2022. Advances to Suppliers Advances to suppliers refer to advances for purchase
of materials or other service agreements, which are applied against accounts payable when the materials or services are received. The Company reviews a supplier’s credit
history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting
in an impairment of their ability to deliver goods or provide services, the Company would write off such amount in the period when it
is considered as impaired. The allowance for advance to suppliers recognized as of March 31, 2023 and September 30, 2022 was $60,569 and
$60,794, respectively. Advances from Customers Advances from customers refer to advances received
from customers regarding product sales, which are applied against accounts receivable when products are sold. Property, Plant, and Equipment, net Property, plant, and equipment are recorded at
cost less accumulated depreciation. Depreciation commences upon placing the asset in usage and is recognized on a straight-line basis
over the estimated useful lives of the assets with 5% of residual value, as follows:
Useful lives
Buildings 10-32 years
Machinery and equipment 5-20 years
Transportation vehicles 3-10 years
Office equipment 3-10 years 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 consolidated statements of income and other
comprehensive income in other income or expenses. Land Use Rights 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. These land use rights are sometimes referred to informally as “ownership.” Land use
rights are stated at cost less accumulated amortization. Land use rights are amortized using the straight-line method with the following
estimated useful lives:
Useful lives
Land use rights 50 years Long-term Investments Effective October 1, 2020, the Company adopted
Accounting Standards Update (“ASU”) 2016-01 and related ASU 2018-03 concerning recognition and measurement of financial assets
and financial liabilities. In adopting this new guidance, the Company has made an accounting policy election to adopt an adjusted cost
method measurement alternative for investments in equity securities without readily determinable fair values. For equity investments that are accounted for
using the measurement alternative, the Company initially records equity investments at cost but is required to adjust the carrying value
of such equity investments through earnings when there is an observable transaction involving the same or a similar investment with the
same issuer or upon an impairment. Impairment of Long-lived Assets The Company’s management reviews the carrying
values of long-lived assets whenever events and circumstances, such as a significant decline in the asset’s market value, obsolescence
or physical damage affecting the asset, significant adverse changes in the assets use, deterioration in the expected level of the assets
performance, cash flows for maintaining the asset are higher than forecast, indicate that the net book value of an asset may not be recovered
through expected future cash flows from its use and eventual disposition. 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 was no impairment charge recognized for
long-lived assets for the six months ended March 31, 2023 and 2022. Fair Value Measurement Fair value measurements and disclosures require disclosure of the fair
value of financial instruments held by the Company. Fair value is defined as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy
prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize
the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
● Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
● Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical
or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for
substantially the full term of the financial instrument.
● Level
3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement. This includes
certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. For the Company’s financial instruments,
including cash and cash equivalents, restricted cash, accounts receivable, notes receivable, other receivables, accounts payable, other
current liabilities, notes payable and bank loans, the carrying amounts approximate their fair values due to their short maturities as
of March 31, 2023 and September 30, 2022. The Company noted no transfers between levels
during any of the periods presented. The Company did not have any instruments that were measured at fair value on a recurring nor non-recurring
basis as of March 31, 2023 and September 30, 2022. Value-added Tax (“VAT”) Sales revenue represents the invoiced value of
goods, net of VAT. All of the Company’s products are sold in the PRC and are subject to a VAT on the gross sales price. The
Company is subject to a VAT rate of 17% before May 1, 2018, a VAT rate of 16% effective on May 1, 2018, and the most current VAT rate
of 13% effective on April 1, 2019. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the
cost of producing or acquiring its finished products. Revenue Recognition The Company generates its revenues mainly from
sales of steel piping products while a small portion of revenue is generated from production services provided to third-party entities.
The Company follows Financial Accounting Standards Board (“FASB”) ASC 606 and accounting standards updates (“ASU”)
2014-09 for revenue recognition. The Company considers revenue realized or realizable and earned when all the five following criteria
are met: (1) Identify the Contract with a Customer, (2) Identify the Performance Obligations in the Contract, (3) Determine the Transaction
Price, (4) Allocate the Transaction Price to the Performance Obligations in the Contract, and (5) Recognize Revenue When (or As) the Entity
Satisfies a Performance Obligation. In the principal versus agent consideration, since no another party is involved in transactions, the
Company is a principal. The Company considers customer purchase orders and production service
agreements, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of its consideration
of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract,
the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price the Company
evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled.
As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18
to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product
based on their relative standalone selling price. Revenues are reported net of all value added taxes. The Company does
not routinely permit customers to return products, while in certain conditions product changes are allowed, and historically customer
returns have been immaterial. Due to the nature of the Company’s products no warranty is offered. Sales revenue is recognized when control of the
product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied at a point in time). Production
service revenue is recognized when production order is completed and transferred to customer, and VAT invoice is issued to customer. The Company sells its products either under free
onboard (“FOB”) shipping point term or under FOB destination term. For sales under FOB shipping point term, the Company recognize
revenues when products are loaded on the ships. Product delivery is evidenced by warehouse shipping logs as well assigned shipping bills
from the shipping companies. For sales under FOB destination term, the Company recognize revenues when the products are delivered and
accepted by customers. Product delivery is evidenced by signed receipt documents and title transfers upon delivery. Prices are determined
based on negotiations with the Company’s customers and are not subject to adjustment. As a result, the Company expects returns to
be minimal. Government Grants Government grants are recognized when received
and all the conditions for their receipt have been met. Government grants for compensation for expenses or losses already incurred
or for the purpose of giving immediate financial support to the Company with no future related cost are recognized in profit or loss in
the period in which they become receivable. For the six months ended March 31, 2023 and 2022, the Company received
government grants for expenses of $333,999, and $321,658, respectively. The grants were recorded as other income in the consolidated statements
for income. Research and Development Costs Research and development activities are directed
toward the development of new products as well as improvements in existing processes. These costs, which primarily include salaries, contract
services and supplies, are expensed as incurred. Shipping and Handling Costs Shipping and handling costs are expensed when
incurred and are included in selling, general and administrative expense. Shipping and handling costs were $502,826 and $611,566 for the
six months ended March 31, 2023 and 2022, respectively. Advertising Costs Advertising costs are expensed as incurred and are included in selling,
general and administrative expense. Advertising costs were $56,507 and $115,892 for the six months ended March 31, 2023 and 2022, respectively. Income Taxes The Company accounts for income taxes using the
asset and liability method whereby it calculates deferred tax assets or liabilities for temporary differences between the tax basis of
assets and liabilities and their reported amounts in the consolidated financial statements, net operating loss carry forwards and credits
by applying enacted tax rates applicable to the years in which those temporary differences are expected to be reversed or settled. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing
authorities. The components of the deferred tax assets and liabilities are individually classified as non-current amounts. The Company records uncertain tax positions in
accordance with ASC 740 on the basis of a two-step process whereby (1) the Company determines 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 recognizes the largest amount of tax benefit that is more than 50 percent likely
to be realized upon ultimate settlement with the related tax authority. To the extent applicable, the Company records interest and penalties
as other expense. Tax returns of the Company’s PRC subsidiaries remain subject to examination by PRC tax authorities for five years
from the date of filing. The fiscal year for tax purpose in PRC is December 31. The Company and its subsidiaries are not subject
to U.S. tax laws and local state tax laws. The Company’s income and that of its related entities must be computed in accordance
with Chinese and foreign tax laws, as applicable, and all of which may be changed in a manner that could adversely affect the amount of
distributions to shareholders. There can be no assurance that Income Tax Laws of PRC will not be changed in a manner that adversely affects
shareholders. In particular, any such change could increase the amount of tax payable by the Company, reducing the amount available to
pay dividends to the holders of the Company’s ordinary shares. Earnings Per Share Earnings (loss) per share is calculated in accordance
with ASC 260 Earnings per Share. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable to shareholders
of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is computed in
accordance with the treasury stock method and based on the weighted average number of ordinary shares and dilutive common share equivalents.
Dilutive common share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.
There were no dilutive common share equivalents outstanding for the six months ended March 31, 2023 and 2022. Certain Risks and Concentration Exchange Rate Risks The Company operates in PRC, which may give rise
to significant foreign currency risks mainly from fluctuations and the degree of volatility of foreign exchange rates between the USD
and the RMB. Currency Convertibility Risks Substantially all of the Company’s operating
activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place
either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted
by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions
requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and
signed contracts. Concentration of Credit Risks Financial instruments that potentially subject
the Company to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, notes receivable. The Company
places its cash and cash equivalents, restricted cash, and note receivable in good credit quality financial institutions in Hong Kong
and PRC. Concentration of credit risks with respect to accounts receivables is linked to the concentration of revenue. To manage credit
risk, the Company performs ongoing credit evaluations of customers’ financial condition. Interest Rate Risks The Company is subject to interest rate risk. The Company has bank
interest bearing loans charged at variable interest rates. Some bank interest bearing loans are charged at fixed interest rates within
the reporting period, the Company is subject to the risk of adverse changes in the interest rates charged by the banks when these loans
are refinanced. Risks and Uncertainties The operations of the Company are located in the
PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic,
and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected
by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations
and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1,
this may not be indicative of future results. Liquidity Risks Our primary sources of liquidity consist of existing
cash balances, cash flows from our operating activities and availability under our revolving credit facility. Our ability to generate
sufficient cash flows from our operating activities is primarily dependent on our sales of steel pipe, tube and ancillary products to
our customers at margins sufficient to cover fixed and variable expenses. As of March 31, 2023 and September 30, 2022, we
had cash and cash equivalents of $19,754,552 and $13,195,999, respectively. We believe that our current cash, cash to be generated
from our operations and access to loans from our related parties will be sufficient to meet our working capital needs for at least
the next twelve months. We do not have any amounts committed to be provided by our related party. However, we plan to expand our business
to implement our growth strategies in our existing market and strengthen our position in the marketplace. To do so, we will need more
capital through equity financing to increase our production and meet market demands. Recent Accounting Pronouncements The Company considers the applicability and impact
of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under
the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging
growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the
adoption of accounting standards until they would apply to private companies. In June 2016, the FASB issued ASU No. 2016-13,
“Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. Which amends guidelines
on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized
cost, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect
its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized
cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit
losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as
an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are
not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in
leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have
the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit
Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date of
ASU 2016-13. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal
years beginning October 1, 2023. Early adoption is permitted. The Company does not expect to early adopt this guidance and is in the process
of evaluating the impact of adoption of this guidance on the Company’s consolidated financial statements. Except as mentioned above, the Company does not
believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s
consolidated balance sheets, statements of income and comprehensive income and statements of cash flows. |
