# EDGAR Filing Document

**Accession Number:** 0001791725
**File Stem:** 0001213900-25-072576
**Filing Date:** 2025-8
**Character Count:** 113976
**Document Hash:** 5314e7582791e15cd53f4f83115a267c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-072576.hdr.sgml**: 20250806

**ACCESSION NUMBER**: 0001213900-25-072576

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 103

**CONFORMED PERIOD OF REPORT**: 20250331

**FILED AS OF DATE**: 20250806

**DATE AS OF CHANGE**: 20250806

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Huadi International Group Co., Ltd.
- **CENTRAL INDEX KEY:** 0001791725
- **STANDARD INDUSTRIAL CLASSIFICATION:** STEEL PIPE & TUBES [3317]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39904
- **FILM NUMBER:** 251190146

**BUSINESS ADDRESS:**
- **STREET 1:** NO. 68, YAQIAN VILLAGE, YONGZHONG STREET
- **CITY:** WENZHOU
- **STATE:** F4
- **ZIP:** 325025
- **BUSINESS PHONE:** 86057786598888

**MAIL ADDRESS:**
- **STREET 1:** NO. 68, YAQIAN VILLAGE, YONGZHONG STREET
- **CITY:** WENZHOU
- **STATE:** F4
- **ZIP:** 325025

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER**

**PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

For the month of August 2025

Commission File Number: 001-39904

**HUADI INTERNATIONAL GROUP CO., LTD.** 

(Translation of registrant's name into English)

**No. 1688 Tianzhong Street, Longwan District, Wenzhou, Zhejiang Province People's Republic of China 325025 Tel: +86-057786598888**

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ &nbsp;&nbsp;&nbsp;&nbsp; Form 40-F ☐

**INFORMATION CONTAINED IN THIS FORM 6-K REPORT**

A copy of the Management's Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended March 31, 2025 and 2024 is furnished as Exhibit 99.1, and a copy of the Interim Financial Statements is furnished as Exhibit 99.2 to this report on Form 6-K.

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Management's Discussion and Analysis of Financial Condition and Results Of Operations for the Six Months Ended March 31, 2025 and 2024](ea025003901ex99-1_huadi.htm) |
| 99.2 | [Unaudited Interim Condensed Consolidated Financial Statements for the Six Months ended March 31, 2025 and 2024](ea025003901ex99-2_huadi.htm) |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: August 6, 2025 | **Huadi International Group Co., Ltd.** | **Huadi International Group Co., Ltd.** |
|  | By: | */s/ Huisen Wang* |
|  | Name: | Huisen Wang |
|  | Title: | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

**IN CONNECTION WITH THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024**

*In this report, as used herein, and unless the context suggests otherwise, the terms "Huadi" "Company" "we" "us" or "ours" refer to the combined business of Huadi International Group Co., Ltd., its subsidiaries. References to "dollar" and "$" are to U.S. dollars, the lawful currency of the United States, and references to "Renminbi" and "RMB" are to the legal currency of China. References to "SEC" are to the Securities and Exchange Commission.*

 

*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this report on Form 6-K and with the discussion and analysis of our financial condition and results of operations contained in our Annual Report on Form 20-F for the fiscal year ended September 30, 2024 filed with the Securities and Exchange Commission on filed on January 30, 2025 (the "2024 Annual Report"). This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those identified elsewhere in this report on Form 6-K, and those listed in the 2024 Annual Report under "Item 3—Key Information—Risk Factors" or in other parts of the 2024 Annual Report.*

**Results of Operations**

The tables in the following discussion summarize our consolidated statements of operations for the periods indicated. This information should be read together with our consolidated financial statements included elsewhere in this press release. The operating results in any period are not necessarily of the results that may be expected for any future period.

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Sales | $29073339 | $36613509 |
| Production service revenues | 305388 | 469277 |
| Cost of sales | (25296467) | (32267602) |
| **Gross profit** | **4082260** | **4815184** |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative | 3664431 | 3433248 |
| &nbsp;&nbsp;&nbsp;Research and development | 1067887 | 1216505 |
| &nbsp;&nbsp;&nbsp;Foreign currency transaction gains | (235965) | (29409) |
| **Total operating expenses** | **4496353** | **4620344** |
| **Operating (loss) income** | **(414093)** | **194840** |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Interest income (expenses), net | 190940 | 17492 |
| &nbsp;&nbsp;&nbsp;Other income, net | 288683 | 628195 |
| **Total other income (expense), net** | **479623** | **645687** |
| **Income before income taxes** | **65530** | **840527** |
| Income tax benefit/(provision) | 85255 | (24805) |
| **Net income** | **150785** | **815722** |
| Net income attributable to non-controlling interests | 4879 | 11210 |
| Net income attributable to Huadi International Group Co., Ltd. | $**145906** | $**804512** |
| Net income | $**150785** | $**815722** |
| Other comprehensive (loss) income: |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | (2579086) | 447604 |
| **Total comprehensive (loss) income** | **(2428301)** | **1263326** |

---

*Revenues*

Revenues decreased by approximately $7.7 million or 20.78%, to approximately $29.4 million for the six months ended March 31, 2025, compared to approximately $37.1 million for the six months ended March 31, 2024. The decrease was mainly due to the overall economic downturn in China, demand of construction materials decreased correspondingly.

*Gross profit*

Our gross profit decreased by approximately $0.7 million or 15.22%, to approximately $4.1 million for the six months ended March 31, 2025, compared to approximately $4.8 million for the six months ended March 31, 2024. The decrease of gross profit was consistent with the decrease of revenues. Gross profit margin was 13.90% for the six months ended March 31, 2025, as compared to 12.98% for the six months ended March 31, 2024. The increase of gross profit margin was mainly attributable to increased production efficiency and a reduction in defective parts.

*Selling, General and Administrative Expenses*

 

Our selling, general and administrative expenses increased by approximately $0.2 million or 6.73%, to approximately $3.7 million for the six months ended March 31, 2025, compared to approximately $3.4 million for the six months ended March 31, 2024. The increase in selling, general and administrative expenses was primarily attributable to the increase of expected credit losses, the Company accrued a credit losses expense approximately $5,000 for the six months ended March 31, 2025, and a credit recovery approximately $0.6 million for the six months ended March 31, 2024, because of the cumulative-effect adjustment of adoption of ASC 326.

*Research and Development Expenses*

Our research and development expenses decreased slightly by approximately $0.1 million or 12.22%, to approximately $1.1 million for the six months ended March 31, 2025, compared to approximately $1.2 million for the six months ended March 31, 2024. The decrease in R&D expenses is primarily due to a reduction in ongoing research projects during the current period.

*Foreign currency transaction (gains) loss*

The Company incurred foreign currency transaction gains of approximately $0.2 million for the six months ended March 31, 2025, compared to foreign currency transaction gains of approximately $29,000 for the six months ended March 31, 2024.

*Income from operations*

As a result of the factors described above, we incurred an operating loss of approximately $0.4 million for the six months ended March 31, 2025, compared to an operating income approximately $0.2 million for the six months ended March 31, 2024, representing a decrease in operating income of approximately $0.6 million.

*Other income and expense*

Our total other income (expense), net decreased by approximately $0.1 million or 25.72%, to other income approximately $0.5 million for the six months ended March 31, 2025, compared to other income approximately $0.6 million for the six months ended March 31, 2024. The decrease was mainly attributable to a $0.3 million decrease in other income because of the decrease in our government grants and partially offset by an increase of interest expenses of $0.2 million because of the increase of bank borrowings.

*Income tax benefit (provision)*

Our income tax benefit (provision) decreased by approximately $0.1 million, to an income tax benefit approximately $90,000 for the six months ended March 31, 2025, compared to income tax provision approximately $20,000 for the six months ended March 31, 2024, because of the recognition of deferred income tax benefits.

*Net income* 

As a result of the combination of factors discussed above, our net income decreased by approximately $0.6 million to net income of approximately $0.2 million for the six months ended March 31, 2025, compared to net income of approximately $0.8 million for the six months ended March 31, 2024.

*Foreign currency translation*

The Company's consolidated financial statements are expressed in U.S. dollars but the functional currency of our operating subsidiaries is RMB. The Company's results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the financial statements denominated in RMB into U.S. dollars are included in determining comprehensive income. Our foreign currency translation adjustment loss for the six months ended March 31, 2025 was approximately $2.6 million, compared to a currency translation adjustment gain of approximately $0.4 million for the six months ended March 31, 2024, representing a decrease of income approximately $3 million.

**Liquidity and Capital Resources**

As of March 31, 2025 and September 30, 2024, we had cash and cash equivalents of $9,205,552 and $18,118,456, respectively. We believe that our current cash, cash to be generated from our operations and access to capital market will be sufficient to meet our working capital needs for at least the next twelve months. However, we do not have any amounts committed to be provided by our related party. We are also not dependent upon future financing to meet our liquidity needs for the next twelve months. 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.

Substantially all of our operations are conducted in China and all of our revenues, expense, cash and cash equivalents are denominated in Renminbi (RMB). RMB is subject to the exchange control regulation in China, and, as a result, we may have difficulty distributing any dividends outside of China due to PRC exchange control regulations that restrict its ability to convert RMB into U.S. Dollars.

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reaches 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation. Under PRC law, RMB is currently convertible into U.S. Dollars under a company's "current account," which includes dividends, trade and service-related foreign exchange transactions, without prior approval of the State Administration of Foreign Exchange (SAFE), but is not from a company's "capital account," which includes foreign direct investments and loans, without the prior approval of the SAFE.

With respect to retained earnings accrued after such date, our board of directors may declare dividends after taking into account our operations, earnings, financial condition, cash requirements and availability and other factors as it may deem relevant at such time. Any declaration and payment, as well as the amount, of dividends will be subject to our By-Laws, charter and applicable Chinese and U.S. state and federal laws and regulations, including the approval from the shareholders of each subsidiary which intends to declare such dividends, if applicable.

We have limited financial obligations dominated in US dollars, thus the foreign currency restrictions and regulations in the PRC on the dividends distribution will not have a material impact on the liquidity, financial condition and results of operations of the Company.

**Cash Flow Summary**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> March 31,** | **For the Six Months Ended<br> March 31,** |
|  | **2025** | **2024** |
| Net cash used in operating activities | $(10899394) | $(5463293) |
| Net cash used in investing activities | (3015324) | (81163) |
| Net cash provided by (used in) financing activities | 4006389 | (5753782) |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (469071) | (62912) |
| Net (decrease) increase in cash and cash equivalents and restricted cash | $(10377400) | (11361150) |

---

*Operating activities*

Net cash used in operating activities was approximately $10.9 million for the six months ended March 31, 2025, as compared to net cash used in operating activities which was approximately $5.5 million for the six months ended March 31, 2024.

Net cash used in operating activities for the six months ended March 31, 2025 was primarily attributable to i) a non-cash adjustment of foreign currency transaction gain approximately $0.2 million. ii) an increase in inventories of approximately $5.2 million, which was mainly due to more raw materials were prepared for upcoming orders. iii) an increase in advances to suppliers of approximately $0.5 million. iii) an increase in other receivable of approximately $0.5 million. iv) a decrease in accounts payable of approximately $4.4 million. v) a decrease in tax payable of approximately $0.8 million. The net cash used in operating activities was partially offset by i) a non-cash adjustment of depreciation expense of approximately $0.3 million. ii) a decrease in accounts receivable of approximately $0.4 million. iii) an increase in advances from customers of approximately $1.1 million.

Net cash used in operating activities for the six months ended March 31, 2024 was primarily attributable to i) a non-cash adjustment of credit loss reversal of approximately $0.6 million; ii) an increase in notes receivable of approximately $1.3 million, which was mainly due the notes received from new customers; iii) an increase in inventories of approximately $2.0 million, which was mainly due to more raw materials were prepared for upcoming orders; iv) an increase in advances to suppliers; v) a decrease in accounts payable of approximately $5.8 million; vi) a decrease in advances from customers of approximately $1.9 million; vii) a decrease in tax payable of approximately $1.1 million. The net cash used in operating activities was partially offset by i) net income approximately $0.8 million; ii) a non-cash adjustment of depreciation expense of approximately $0.4 million; iii) a decrease in accounts receivable of approximately $5.2 million; iv) an increase in notes payable of approximately $3.2 million.

*Investing activities*

Net cash used in investing activities was approximately $3.0 million for the six months ended March 31, 2025, as compared to approximately $81,000 for the six months ended March 31, 2024.

Net cash used in investing activities for the six months ended March 31, 2025 was attributable to the Acquisition of CIP approximately $3.0 million.

Net cash used in investing activities for the six months ended March 31, 2024 was attributable to the purchases of property, plant and equipment of approximately $81,000.

*Financing activities*

Net cash provided by financing activities was approximately $4.0 million for the six months ended March 31, 2025, as compared to net cash used in approximately $5.8 million for the six months ended March 31, 2024.

Net cash provided by financing activities for the six months ended March 31, 2025 was primarily attributable to i) proceeds from short-term borrowings of approximately $2.5 million, ii) proceeds from long-term borrowings of approximately $2.7 million, which was partially offset by the repayments on short-term borrowings of approximately $1.2 million.

Net cash used in financing activities for the six months ended March 31, 2024 was primarily attributable to i) the repayment on short-term borrowings of approximately $4.5 million, which was partially offset by proceeds from short-term borrowings of approximately $2.5 million; ii) and the repayment on long-term borrowings of approximately $6.5 million, which was partially offset by proceeds from long-term borrowings of approximately $2.8 million.

**Statement Regarding Unaudited Financial Information**

The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company's year-end financial statements, which could result in significant differences from this unaudited financial information.

**Safe Harbor Statement**

This report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may, "will, "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

## Exhibit 99.2

?xml version='1.0' encoding='ASCII'?

**Exhibit 99.2**

**HUADI INTERNATIONAL GROUP CO., LTD.**

**INTERIM CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024**

**(UNAUDITED)**

**HUADI INTERNATIONAL GROUP CO., LTD.**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **Consolidated Financial Statements** |  |
| [Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024 (Unaudited)](#a_001) | F-2 |
| [Consolidated Statements of Income and Comprehensive (Loss) Income for the six months ended March 31, 2025 and 2024 (Unaudited)](#a_002) | F-3 |
| [Consolidated Statements of Changes in Shareholders' Equity for the six months ended March 31, 2025 and 2024 (Unaudited)](#a_003) | F-4 |
| [Consolidated Statements of Cash Flows for the six months ended March 31, 2025 and 2024 (Unaudited)](#a_004) | F-5 |
| [Notes to Consolidated Financial Statements (Unaudited)](#a_005) | F-6 - F-28 |

---

**HUADI INTERNATIONAL GROUP CO., LTD.**

**CONSOLIDATED BALANCE SHEETS**

**AS OF MARCH 31, 2025 AND SEPTEMBER 30, 2024**

(**UNAUDITED, IN U.S. DOLLARS, EXCEPT SHARE DATA)**

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| **ASSETS** | | |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $9205552 | 18118456 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 2945993 | 4410489 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for expected credit loss of $1,044,690 and $1,003,514, respectively | 17579236 | 18713342 |
| &nbsp;&nbsp;&nbsp;Notes receivable, net | 7779889 | 7901784 |
| &nbsp;&nbsp;&nbsp;Inventories | 27762730 | 23312978 |
| &nbsp;&nbsp;&nbsp;Advances to suppliers, net | 4674487 | 3622162 |
| &nbsp;&nbsp;&nbsp;Advances to suppliers, net – related parties | 453 | 692485 |
| &nbsp;&nbsp;&nbsp;Other receivables, net | 1176030 | 700513 |
| Total current assets | 71124370 | 77472209 |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment, net | 10475237 | 8047615 |
| &nbsp;&nbsp;&nbsp;Land use rights, net | 4181325 | 4373158 |
| &nbsp;&nbsp;&nbsp;Long-term investments | 12583599 | 13012340 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets | 617674 | 550874 |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets, net | 115508 | 138335 |
| **TOTAL ASSETS** | $**99097713** | **103594531** |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $779848 | 1889342 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 1969739 | 2153227 |
| &nbsp;&nbsp;&nbsp;Notes payable | 8474375 | 13337893 |
| &nbsp;&nbsp;&nbsp;Advances from customers | 2595297 | 1548151 |
| &nbsp;&nbsp;&nbsp;Advances from customers - related parties | 20616 | 5650 |
| &nbsp;&nbsp;&nbsp;Short-term borrowings | 2492833 | 1249765 |
| &nbsp;&nbsp;&nbsp;Long-term borrowings - current portion | 5512 | - |
| &nbsp;&nbsp;&nbsp;Taxes payable | 2766865 | 3644165 |
| Total current liabilities | 19105085 | 23828193 |
| &nbsp;&nbsp;&nbsp;Long-term borrowings | 2750562 | - |
| &nbsp;&nbsp;&nbsp;Due to related parties - noncurrent portion | 250499 | 308908 |
| &nbsp;&nbsp;&nbsp;Deferred government grants - noncurrent portion | 1102429 | 1139991 |
| **TOTAL LIABILITIES** | **23208575** | **25277092** |
| **COMMITMENTS AND CONTIGENCIES** |  |  |
| Shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.0002 par value, 250,000,000 shares authorized, 14,279,182 and 14,279,182 shares issued and outstanding at March 31, 2025 and September 30, 2024. | 2856 | 2856 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 67329705 | 67329705 |
| &nbsp;&nbsp;&nbsp;Statutory surplus reserves | 964381 | 919978 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 7805962 | 7704459 |
| Accumulated other comprehensive (loss) income | (507067) | 2046228 |
| Total equity attributable to Huadi International Group Co., Ltd. | 75595837 | 78003226 |
| Equity attributable to non-controlling interests | 293301 | 314213 |
| Total shareholders' equity | 75889138 | 78317439 |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**99097713** | **103594531** |

---

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

**HUADI INTERNATIONAL GROUP CO., LTD.**

**CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE (LOSS) INCOME**

**FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024 (UNAUDITED, IN U.S. DOLLARS, EXCEPT SHARE DATA)**

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Sales | $29073339 | $36613509 |
| Production service revenues | 305388 | 469277 |
| Cost of sales | (25296467) | (32267602) |
| **Gross profit** | **4082260** | **4815184** |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative | 3664431 | 3433248 |
| &nbsp;&nbsp;&nbsp;Research and development | 1067887 | 1216505 |
| &nbsp;&nbsp;&nbsp;Foreign currency transaction gains | (235965) | (29409) |
| **Total operating expenses** | **4496353** | **4620344** |
| **Operating (loss) income** | **(414093)** | **194840** |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Interest income (expenses), net | 190940 | 17492 |
| &nbsp;&nbsp;&nbsp;Other income, net | 288683 | 628195 |
| **Total other income (expense), net** | **479623** | **645687** |
| **Income before income taxes** | **65530** | **840527** |
| Income tax benefit/(provision) | 85255 | (24805) |
| **Net income** | **150785** | **815722** |
| Net income attributable to non-controlling interests | 4879 | 11210 |
| Net income attributable to Huadi International Group Co., Ltd. | $**145906** | $**804512** |
| Net income | $**150785** | $**815722** |
| Other comprehensive (loss) income: |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | (2579086) | 447604 |
| **Total comprehensive (loss) income** | **(2428301)** | **1263326** |
| Comprehensive (loss) income attributable to non-controlling interests | (20912) | 15686 |
| Comprehensive (loss) income attributable to Huadi International Group Co., Ltd. | $**(2407389)** | $**1247640** |
| Basic and diluted (loss) earnings per share |  |  |
| &nbsp;&nbsp;&nbsp;Basic | $(0.01) | $0.06 |
| &nbsp;&nbsp;&nbsp;Diluted | $(0.01) | $0.06 |
| Weighted average numbers of common shares outstanding |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 14279182 | 14259182 |
| &nbsp;&nbsp;&nbsp;Diluted | 14279182 | 14259182 |

---

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

**HUADI INTERNATIONAL GROUP CO., LTD.**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024**

**(UNAUDITED, IN U.S. DOLLARS, EXCEPT SHARE DATA)** 

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Shares** | **Amount** | **Additional<br> paid-in<br> capital** | **Retained earnings** | **Accumulated<br> other<br> comprehensive<br> income** | **Statutory Surplus Reserve** | **Shareholders'<br> equity to<br> Huadi<br> International <br> Group Co., Ltd.** | **Non-<br> controlling<br> interests** | **Total shareholders'<br> equity** |
| **Balance at September 30, 2023** | **14259182** | **2852** | **67280709** | **6679692** | **(428779)** | **874518** | **74408992** | **274818** | **74683810** |
| Share issuance |  |  |  |  |  |  |  |  |  |
| Appropriation for statutory reserve |  |  |  | (106739) |  | 106739 |  |  |  |
| Foreign currency translation gain |  |  |  |  | 443128 |  | 443128 | 4476 | 447604 |
| Net income |  |  |  | 804512 |  |  | 804512 | 11210 | 815722 |
| **Balance at March 31, 2024** | **14259182** | **2852** | **67280709** | **7377465** | **14349** | **981257** | **75656632** | **290504** | **75947136** |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Shares** | **Amount** | **Additional<br> paid-in<br> capital** | **Retained earnings** | **Accumulated<br> other<br> comprehensive<br> income** | **Statutory Surplus Reserve** | **Shareholders'<br> equity to<br> Huadi<br> International <br> Group Co., Ltd.** | **Non-<br> controlling<br> interests** | **Total shareholders'<br> equity** |
| **Balance at September 30, 2024** | **14279182** | **2856** | **67329705** | **7704459** | **2046228** | **919978** | **78003226** | **314213** | **78317439** |
| Appropriation for statutory reserve |  |  |  | (44403) |  | 44403 |  |  |  |
| Foreign currency translation loss |  |  |  |  | (2553295) |  | (2553295) | (25791) | (2579086) |
| Net income |  |  |  | 145906 |  |  | 145906 | 4879 | 150785 |
| **Balance at March 31, 2025** | **14279182** | **2856** | **67329705** | **7805962** | **(507067)** | **964381** | **75595837** | **293301** | **75889138** |

---

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

**HUADI INTERNATIONAL GROUP CO., LTD.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR THE SIX MONTHS ENDED MARCH 31, 2025 AND 2024**

**(UNAUDITED, IN U.S. DOLLARS)**

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Cash Flows from Operating Activities: |  |  |
| Net income | $150785 | $815722 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | 314344 | 353586 |
| &nbsp;&nbsp;&nbsp;Amortization | 47914 | 48476 |
| &nbsp;&nbsp;&nbsp;Credit loss (recovery) | 4818 | (567384) |
| &nbsp;&nbsp;&nbsp;Deferred tax (benefits) expenses | (85255) | 24805 |
| &nbsp;&nbsp;&nbsp;Gains on disposal of fixed assets | (1448) | - |
| &nbsp;&nbsp;&nbsp;Foreign currency transaction (gains) loss | (235965) | (29409) |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 444870 | 5222075 |
| &nbsp;&nbsp;&nbsp;Notes receivable | (71521) | (1287936) |
| &nbsp;&nbsp;&nbsp;Inventories | (5236578) | (1967053) |
| &nbsp;&nbsp;&nbsp;Advances to suppliers | (1175868) | (703267) |
| &nbsp;&nbsp;&nbsp;Advances to suppliers – related parties | 671612 | (1010512) |
| &nbsp;&nbsp;&nbsp;Other receivables | (499423) | (382670) |
| &nbsp;&nbsp;&nbsp;Other noncurrent assets | 19628 | (742) |
| &nbsp;&nbsp;&nbsp;Accounts payable | (1050993) | (2095988) |
| &nbsp;&nbsp;&nbsp;Accounts payable - related parties | - | (3738303) |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | (113772) | (354407) |
| &nbsp;&nbsp;&nbsp;Notes payable | (4439896) | 3167373 |
| &nbsp;&nbsp;&nbsp;Advances from customers | 1102089 | (883933) |
| &nbsp;&nbsp;&nbsp;Advances from customers – related parties | 15207 | (1008232) |
| &nbsp;&nbsp;&nbsp;Taxes payable | (759942) | (1065494) |
| &nbsp;&nbsp;&nbsp;Net cash used in operating activities | (10899394) | (5463293) |
| Cash Flows from Investing Activities: |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of property, plant and equipment | (75244) | (81163) |
| &nbsp;&nbsp;&nbsp;Proceeds from disposition of property, plant and equipment | 14686 | - |
| &nbsp;&nbsp;&nbsp;Acquisition of CIP | (2954766) | - |
| Net cash used in investing activities | (3015324) | (81163) |
| Cash Flows from Financing Activities: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term borrowings | 2501762 | 2499324 |
| &nbsp;&nbsp;&nbsp;Repayments on short-term borrowings | (1212915) | (4498110) |
| &nbsp;&nbsp;&nbsp;Proceeds from long-term borrowings | 2765946 | 2761434 |
| &nbsp;&nbsp;&nbsp;Repayments on long-term borrowings | - | (6495615) |
| &nbsp;&nbsp;&nbsp;Proceeds from share issuance, net of offering costs | - | - |
| &nbsp;&nbsp;&nbsp;Repayments to related parties | (48404) | (20815) |
| Net cash provided by (used in) financing activities | 4006389 | (5753782) |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (469071) | (62912) |
| Net (decrease) increase in cash and cash equivalents and restricted cash | (10377400) | (11361150) |
| Cash and cash equivalents and restricted cash at the beginning of period | 22528945 | 20961693 |
| Cash and cash equivalents and restricted cash at the end of period | $12151545 | $9600543 |
| Reconciliation of cash and cash equivalents and restricted cash to the Consolidated Balance Sheet |  |  |
| Cash and cash equivalents | $9205552 | $7803550 |
| Restricted cash | $2945993 | $1796993 |
| Total cash and cash equivalents and restricted cash at the end of period | $12151545 | $9600543 |
| Supplemental disclosures of cash flows information: |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for income taxes | $340560 | $362992 |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $53631 | $90630 |

---

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

**HUADI INTERNATIONAL GROUP CO., LTD.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS**

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| | | | |
|:---|:---|:---|:---|
| **Entity Name** | **Registered<br> Location** | **Date of Incorporation** | **Ownership as of the<br> issuance date of the report** |
| Huadi International Group Co., Ltd. ("Huadi International") | Cayman Island | September 27, 2018 | Parent |
| Yongqiang Tuoxing Limited. ("Yongqiang Tuoxing") | British Virgin Island | October 2, 2018 | 100% by the Parent |
| Hong Kong Beach Limited. ("HK Beach") | Hong Kong | November 7, 2018 | 100% by Yongqiang Tuoxing |
| Wenzhou Hongshun Stainless Steel Limited. ("Hongshun") | Wenzhou,<br> China | June 3, 2019 | 100% by HK Beach |
| Huadi Steel Group Limited. ("Huadi Steel") | Wenzhou, <br> China | November 12, 1998 | 99% by Wenzhou Hongshun |
| Huadi (Songyang) Co., Ltd. ("Huadi Songyang") | Songyang,<br> China | June 15, 2023 | 100% by HK Beach |

---

**Huadi International Group Co., Ltd. ("Huadi International")**

Huadi International was incorporated on September 27, 2018 under the laws of Cayman Islands. Under its memorandum of association, Huadi International is authorized to issue 250,000,000 ordinary shares of a single class, par value $0.0002 per ordinary share. There are currently 14,279,182 issued and outstanding ordinary shares. Huadi International is a holding company and is currently not actively engaged in any business. Huadi International's registered agent is Harneys Fiduciary (Cayman) Limited and its registered office is at 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman, KY1-1002, Cayman Islands.

**Yongqiang Tuoxing Limited ("Yongqiang Tuoxing")**

Yongqiang Tuoxing was incorporated on October 2, 2018 under the laws of British Virgin Islands. Under its memorandum of association, Yongqiang Tuoxing is authorized to issue 50,000 ordinary shares of a single class, par value $1.00 per ordinary share. Yongqiang Tuoxing is a wholly owned subsidiary of Huadi International and is currently not actively engaged in any business. Yongqiang Tuoxing's registered agent is Harneys Corporate Services Limited and its registered office is at Craigmuir Chambers, Road Town, Tortola, VG1110, British Virgin Islands.

**Hong Kong Beach Limited ("HK Beach")**

HK Beach was incorporated on November 7, 2018 under the laws of Hong Kong and is a wholly owned subsidiary of Yongqiang Tuoxing. HK Beach is currently not actively engaged in any business.

**Wenzhou Hongshun Stainless Steel Ltd. ("Wenzhou Hongshun")**

Wenzhou Hongshun was incorporated on June 3, 2019 in China and is a wholly owned subsidiary of HK Beach. Wenzhou Hongshun is a wholly-foreign owned enterprise organized under the laws of the People's Republic of China. The registered principal activities of Wenzhou Hongshun are sales of stainless steel pipes, stainless steel bars, stainless steel elbows, stainless steel products, auto parts and components; import and export of goods, technology import and export. Wenzhou Hongshun did not have any operations as of March 31, 2025.

**Huadi Steel Group Limited. ("Huadi Steel")**

Huadi Steel was incorporated on November 12, 1998 under the laws of the People's Republic of China. Since August 18, 2015, Huadi Steel was owned by nine shareholders in People's Republic of China ("PRC Shareholders"). Huadi Steel focuses on manufacturing of industrial stainless steel seamless pipes and tubes products with extensive distribution facilities and network in China.

**Huadi (Songyang) Co., Ltd. ("Huadi Songyang")**

Huadi Songyang was incorporated on June 15, 2023 in China and is a wholly owned subsidiary of HK Beach. Huadi Songyang is a wholly-foreign owned enterprise organized under the laws of the People's Republic of China. Huadi Songyang is established for the purpose of expanding product line of industrial steel pipe and tube products manufacture and distribution.

Except where the context otherwise requires and for purposes of these financial statements only, "the Company", "we", "us", "our company", "our" and "Huadi" refer to the above-mentioned entities.

**Reorganization**

In or about August 2019, the Company completed a corporate reorganization to roll several controlled entities (now referred to as the subsidiaries) into one legal corporation (the Company). Di Wang, one of the PRC Shareholders transferred 5% equity of Huadi Steel to a Hong Kong entity which was subsequently transferred to Wenzhou Hongshun on August 28, 2019. On August 22, 2019, Wenzhou Hongshun acquired 94% equity of Huadi Steel from the PRC Shareholders. As a result, Huadi Steel's equity interest is 99% held by Wenzhou Hongshun and 1% held by Di Wang as of March 31, 2025.

During the periods presented in these consolidated financial statements, control of these entities did not change as the Company was always under the control of PRC Shareholders. Accordingly, the combination has been treated as a corporate restructuring (reorganization) of entities under common control and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common control are presented on a combined basis for all periods to which such entities were under common control. The consolidation of the Company 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.

**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. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. All significant inter-company transactions and balances have been eliminated upon consolidation.

The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities Exchange Commission ("SEC"). In the opinion of management, all adjustments (which include normal recurring adjustments) are necessary to present a fair presentation of the Company's financial position, its results of operations and its cash flows, as applicable, have been made. Interim results are not necessarily indicative of results to be expected for the full year. Accordingly, these statements should be read in conjunction with the Company's audited financial statements and note thereto as of and for the years ended September 30, 2024 and 2023.

**Non-controlling interests**

For the Company's subsidiaries, 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. Non-controlling interests are classified as a separate line item in the equity section of the Company's consolidated balance sheets and have been separately disclosed in the Company's consolidated statements of income and comprehensive Income to distinguish the interests from that of the Company.

**Use of Estimates**

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). The preparation of the 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, related disclosures of contingent liabilities at the balance sheet date, and the reported revenues and expenses during the reported period in the consolidated financial statements and accompanying notes. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows may be affected.

Significant accounting estimates are used for, but not limited to, allowances for expected credit losses, inventory valuation, useful lives of property, plant and equipment, and land use rights, impairment in long-term investment, and income taxes related to realization of deferred tax assets and uncertain tax position. We have assessed the impact and are not aware of any specific events or circumstances that required an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of issuance of this report. These estimates may change as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

**Foreign Currency Translation**

The reporting currency of the Company is U.S. dollars ("US$"). The functional currency of the Company's entities incorporated in Cayman Islands, BVI and Hong Kong generally is US$. The Company's PRC subsidiaries generally determined their functional currency to be RMB. The determination of the respective functional currency is based on the criteria of ASC Topic 830, Foreign Currency Matters.

Transactions denominated in currencies other than functional currency are translated into functional currency at the exchange rates quoted by authoritative banks prevailing at the dates of the transactions. Exchange gains and losses resulting from those foreign currency transactions denominated in a currency other than the functional currency are recorded as a component of operating expenses in the consolidated statements of income and comprehensive Income.

The consolidated financial statements of the Company are translated from the functional currency into US$. Assets and liabilities denominated in foreign currencies are translated into US$ using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in current year are translated into US$ at the appropriate historical rates. Revenues, expenses, gains and losses are translated into US$ using the periodic average exchange rates. The resulting foreign currency translation adjustments are recorded in accumulated other comprehensive income as a component of shareholders' equity. Cash flows are also translated at average translation rates for the periods; therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

The relevant exchange rates are listed below:

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| | | | |
|:---|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30,<br> 2024** | **March 31,<br> 2024** |
| **Period Ended RMB: USD exchange rate** | 7.2567 | 7.0176 | 7.2203 |
| **Period Average RMB: USD exchange rate** | 7.2308 | 7.2043 | 7.2064 |

---

**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. The Company maintains majority of its bank accounts in the PRC as of March 31, 2025. Cash balances in bank accounts in PRC are protected under Deposit Protection Scheme in accordance with the Deposit Protection Scheme Ordinance. The maximum protection is up to RMB500,000 per depositor per Scheme member, including both principal and interest.

**Restricted Cash**

Restricted cash mainly represents deposits held in designated bank accounts for issuance of bank acceptance notes and letter of guarantee. Those notes are generally short term in nature due to their short maturity period of three to six months, while letter of guarantee is generally due within one year; 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, 2025 and September 30, 2024, restricted cash was $2,945,993 and $4,410,489, respectively. No restricted cash is held to ensure future credit availability.

**Accounts Receivable, Net**

Accounts receivable, net includes receivables mainly from customers that represent revenues earned but not yet collected. Accounts receivable, net are initially measured at fair value and subsequently measured at their amortized cost less allowance for credit losses. Please refer to Note 2 - Allowance for credit losses for adoption of expected credit losses model.

**Notes Receivable, Net**

Notes receivable represent bank acceptance notes and commercial acceptance notes the Company receives from its customers in exchange for goods or services that it has transferred to customers. The notes generally range from three to six months from the date of issuance. The carrying value of notes receivable is reduced by an allowance of credit losses. Please refer to Note 2 - Allowance for credit losses for adoption of expected credit losses model.

As part of the regular business and in case of immediate cash needs, the Company sells its notes receivable at a discount with or without recourse. Notes receivables are considered sold and derecognized from balance sheet when they are transferred beyond the reach of the Company and its creditors, the purchaser has the right to pledge or exchange the note receivables, and the Company has surrendered control over the transferred note receivables. If the Company does not surrender control, typically for those arrangements with recourse, the cash received from the purchaser is accounted for as a secured borrowing. In the case of arrangements with recourse, notes receivables are not derecognized.

**Inventories, net**

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 write-downs are based upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory. Once inventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

There were no write-downs recognized of inventories for the six months ended March 31, 2025 and 2024.

**Advances to Suppliers, net**

Advances to suppliers refer to advances for purchase of materials or other service agreements.

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, 2025 and September 30, 2024 was $261,247 and $270,148, respectively.

**Property, Plant, and Equipment, net**

Property, plant, and equipment are recorded at cost less accumulated depreciation and impairment. 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 comprehensive Income.

**Land Use Rights, net**

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:

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| | |
|:---|:---|
|  | **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 the cost-minus-impairment 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.

**Allowance for credit losses**

In 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASC 326"), which replaced the "incurred loss" impairment methodology with an approach based on "expected losses" to estimate credit losses on certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted this guidance on October 1, 2023 using a modified retrospective approach with a cumulative effect recorded as increase of retained earnings and non-controlling interests with amount of $942,227, net of tax.

ASC 326 requires financial assets to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the cost of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. Under this guidance, the Company has exposure to credit losses for financial assets including accounts receivable, notes receivable, other receivable and other noncurrent assets. The Company considered various factors, including nature, historical collection experience, the age of the above-mentioned assets' balance, credit quality and specific risk characteristics of its customers, current economic conditions, forecasts of future economic conditions, reversion period, and qualitative and quantitative adjustments to develop an estimate of credit losses. The Company has adopted loss rate method which is a combination of historical rate method and adjustment rate method, to estimate the credit loss.

Financial assets are presented net of the allowance for credit losses in the consolidated balance sheets. The measurement of the allowance for credit losses is recognized through current expected credit loss expense. Current expected credit loss expense is included as a component of general and administrative expenses in the consolidated statements of income and comprehensive Income. Write-offs are recorded in the period in which the asset is deemed to be uncollectible.

As of March 31, 2025, the allowance for credit losses of accounts receivable, notes receivable, other receivable and other noncurrent assets was $1,044,690, $146,044, $13,024 and $104,916, respectively.

**Impairment of Long-lived Assets**

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset or an asset group may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment for the long-lived assets by comparing the carrying value of the asset or the asset group to an estimate of future undiscounted cash flows expected to be generated from the use of the asset or the asset group and its eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the asset or the asset group, the Company recognizes an impairment loss based on the excess of the carrying value of the asset or the asset group over its fair value.

There was no impairment charge recognized for long-lived assets for the six months ended March 31, 2025 and 2024.

**Fair Value Measurement**

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

● 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 are unobservable and significant to the fair value..

Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.

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 Short-term borrowings, the carrying amounts approximate their fair values due to their short maturities as of March 31, 2025 and September 30, 2024. The carrying amount of long-term bank loans reported in the balance sheet approximates their fair value due to their interest rates that approximate current market rates for similar instruments.

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, 2025 and September 30, 2024.

**Revenue Recognition**

The Company adopted ASC Topic 606 Revenue from Contracts with Customers ("ASC 606") on October 1, 2018 using the modified retrospective approach. There is no adjustment to the opening balance of retained earnings at October 1, 2018, since there was no change to the timing and pattern of revenue recognition upon adoption of ASC 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company's customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added tax ("VAT"). To achieve that core principle, the Company applies the following steps:

Step 1: Identify the contract (s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

The Company derives its revenues from two sources: (1) revenue from sales of steel piping products, (2) revenue from production service.

(1) Revenue from sales of steel piping products

The Company considers customer purchase orders, 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 the principal versus agent consideration, since no another party is involved in transactions, the Company is a principal.

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.

The Company does not routinely permit customers to return products, while in certain conditions product changes are allowed. The customer does not have the option to purchase the warranty separately. Also, the warranty does not provide a service to the customer beyond fixing defects that existed at the time of sale. Thus, the warranty is assurance-type, and historically customer returns have been immaterial.

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). 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 as 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.

(2) Revenue from production service

The Company identifies the product processing agreement as contract. For each contract, the Company considers the promise to provide production service, each of which are distinct, to be the identified performance obligations. In the principal versus agent consideration, since no another party is involved in transactions, the Company is a principal. The transaction price is clearly stated on the contract and not subject to adjustment. The Company allocates the transaction price to each distinct service based on their relative standalone selling price. Production service revenue is recognized when production order is completed and transferred to customer.

*<u>Contract costs</u>*

Contract costs include contract acquisition costs and contract fulfillment costs which are all recorded within prepayments, deposits, and other assets in the consolidated balance sheets.

Contract acquisition costs consist of incremental costs incurred by the Company to originate contracts with customers. Contract acquisition costs, which generally include costs that are only incurred as a result of obtaining a contract, are capitalized when the incremental costs are expected to be recovered over the contract period. All other costs incurred regardless of obtaining a contract are expensed as incurred. Contract acquisition costs are amortized over the period the costs are expected to contribute directly or indirectly to future cash flows, which is generally over the contract term, on a basis consistent with the transfer of goods or services to the customer to which the costs relate. Contract fulfillments costs consist of costs incurred by the Company to fulfill a contract with a customer and are capitalized when the costs generate or enhance resources that will be used in satisfying future performance obligations of the contract and the costs are expected to be recovered. Capitalized contract fulfillment costs generally include contracted services, direct labor, materials, and allocable overhead directly related to resources required to fulfill the contract. Contract fulfillment costs are recognized in cost of revenue during the period that the related costs are expected to contribute directly or indirectly to future cash flows, which is generally over the contract term, on a basis consistent with the transfer of goods or services to the customer to which the costs are related. There were no contract fulfillment cost and contract acquisition costs as of March 31, 2025 and 2024.

*<u>Contract balance</u>*

The Company does not have amounts of contract assets since revenue is recognized at a point in time. Contract liabilities are presented as advance from customers on the consolidated balance sheet. Contract liabilities are recognized when the Company receives prepayment from customers resulting from purchase order or product processing agreement. Contract liabilities will be recognized as revenue when the products are delivered. As of March 31, 2025 and September 30, 2024 the balance of advance from customers amounted to $2,615,913 and $1,553,801, respectively. For the six-month ended March 31, 2025 and 2024, the beginning balance of advance from customers of $1,216,185 and $2,639,083 were recognized as revenue when the products are delivered.

**Value-added Tax ("VAT")**

The Company is subject to VAT and related surcharges on revenue generated from products and services. The VAT is based on gross sales price and VAT rates range from 6% to 13% between October 1, 2021 and March 31, 2025 depending on the type of products sold or services provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in accrued expenses and other current liabilities. All of the VAT returns filed by the Company's subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing.

**Cost of sales**

Cost of sales consists primarily of direct and indirect materials, labor costs, manufacturing overhead, including depreciation costs of machinery and equipment and allocations of electricity and infrastructure costs.

**Selling Expenses**

Selling expenses consist primarily of shipping and handling costs, travel expenses, advertising costs, and payroll and related expenses for employees involved in marketing and business development activities.

Shipping and handling costs are expensed as incurred and are included in selling, general and administrative expense. Shipping and handling costs were $488,242 and $750,055 for the six months ended March 31, 2025 and 2024, respectively.

Advertising costs are expensed as incurred. Advertising costs were $83,884 and $143,932 for the six months ended March 31, 2025 and 2024, respectively.

**General and Administrative Expenses**

General and administrative expenses consist primarily of employee-related expenses for general corporate functions, including accounting, finance, tax, legal and human relations; costs associated with these functions including facilities and equipment depreciation expenses, repair and maintenance expenses and other general corporate related expenses.

**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.

**Government Grants**

Government grants consist of specific subsidies and other subsidies. Specific subsidies are subsidies that the local government has provided for a specific purpose, such as research and development purpose, construction of production plants and facilities related to manufacturing base. Other subsidies are the subsidies that the local government has not specified its purpose for and are not tied to future trends or performance of the Company, receipt of such subsidy income is not contingent upon any further actions or performance of the Company and the amounts do not have to be refunded under any circumstances.

The government grants are recorded when received with no further conditions to be met or certain operating conditions are met for which the grants are intended to compensate. Government grants compensate for asset are recognized as a deduction of the carrying amount of the asset when conditions are met.

As of March 31, 2025 and September 30, 2024, liabilities included $1,102,429 and $1,139,991, respectively, in deferred government grants, which were mainly to support the factory construction in Songyang. For the six months ended March 31, 2025 and 2024, the Company recognized government grants of $243,044, and $584,671, respectively, in other income (expense), net in the consolidated statements of operations and other comprehensive income.

**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. All of the 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 years 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.

**Comprehensive Income/(Loss)**

Comprehensive income/(loss) is defined as the changes in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments from shareholders and distributions to shareholders. Comprehensive income/(loss) for the periods presented primarily includes net income/(loss) and foreign currency translation adjustments.

**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, 2025 and 2024.

**Statutory surplus reserves**

Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable "statutory surplus reserve fund". Subject to certain cumulative limits, the "statutory surplus reserve fund" requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the "reserve fund". For foreign invested enterprises, the annual appropriation for the "reserve fund" cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulated loss.

**Contingencies**

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable, and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company's management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.

**Related Party Transactions**

A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the Company's securities (ii) the Company's management and or their immediate family, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm's length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

**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*

 

Assets that potentially subject the Company to significant concentrations of credit risk primarily consist of cash and cash equivalents, restricted cash, accounts receivable and notes receivable. The maximum exposure of such assets to credit risk is their carrying amounts as of the balance sheet dates. As of March 31, 2025 and September 30, 2024, all of the Company's cash and cash equivalents, restricted cash and notes receivable were held at major financial institutions located in the PRC which the management believes are of high credit quality. Cash balances in bank accounts in PRC are protected under Deposit Protection Scheme in accordance with the Deposit Protection Scheme Ordinance. The maximum protection is up to RMB500,000 per depositor per Scheme member, including both principal and interest. Bank failure is uncommon in PRC and the Company believes that those Chinese banks that hold the Company's cash and cash equivalents, restricted cash and notes receivable are financially sound based on publicly available information. Accounts receivable are typically unsecured and are mainly derived from revenues earned from customers in the PRC. The risk with respect to accounts receivable is mitigated by credit evaluations the Company performs on its customers and its ongoing monitoring processes of outstanding balances.

*Interest Rate Risks*

The Company is subject to interest rate risk. Although bank interest bearing loans are charged at fixed interest rates within the reporting period, the Company is still subject to the risk of adverse changes in the interest rates charged by the banks when these loans are refinanced.

*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, 2025 and September 30, 2024, we had cash and cash equivalents of $9,205,552 and $18,118,456, respectively. We believe that our current cash, cash to be generated from our operations and access to loans from our related parties will be sufficient to meet our working capital needs for at least the next twelve months. However, we do not have any amounts committed to be provided by our related party. We plan to expand our business to implement our growth strategies in our existing market and strengthen our position in the marketplace. To do so, we will need more capital through equity financing to increase our production and meet market demands.

**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. Therefore, the Company's financial statements may not be comparable to financial statements of companies that comply with public company effective dates.

*<u>New Accounting Pronouncements Not Yet Adopted</u>*

In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280)". The amendment in this ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments also require a public entity to disclose the title and position of the chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. For a public entity with a single reportable segment, the ASU requires the entity to provide all the disclosures required by the amendments in the ASU and all existing segment disclosures in Topic 280. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company will adopt this ASU for the fiscal year beginning on October 1, 2024 and interim periods within fiscal years beginning on October 1, 2025. The Company does not expect the adoption to have a material impact on the Company's consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The ASU requires that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). The ASU is effective for public business entities for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. The Company will adopt this ASU on October 1, 2026. The Company does not expect the adoption to have a material impact on the Company's consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU No. 2024-02, Codification Improvements-Amendments to Remove References to the Concepts Statements ("ASU 2024-02"). The amendments in this Update affect a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guide. This update contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior statements to provide guidance in certain topical areas. ASU 2024-02 is effective for public business entities for fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025. The Company will adopt this ASU on October 1, 2026. The Company does not expect the adoption to have a material impact on the Company's consolidated financial statements and related disclosures.

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.

**NOTE 3 – ACCOUNTS RECEIVABLE, NET**

Accounts receivable, net as of March 31, 2025 and September 30, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Accounts receivable | $18623926 | $19716856 |
| Less: allowance for credit losses | (1044690) | (1003514) |
| Accounts receivable, net | $17579236 | $18713342 |

---

The Company's customers are primarily governmental entities, state-owned entities and construction companies. Due to the nature of these customers and the practice of the industry, the Company generally allows credit period of 180 days to its customers. The average accounts receivable turnover period was approximately 118 days and 112 days for the six months ended March 31, 2025 and 2024, respectively.

Changes in the allowance for credit losses as of March 31, 2025 and September 30, 2024 are as follow:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Beginning balance | $1003514 | $2391641 |
| Cumulative-effect adjustment of adoption of CECL | - | (1271219) |
| Addition/(Reversal) | 74506 | (157175) |
| Exchange difference | (33330) | 40267 |
| Ending balance | $1044690 | $1003514 |

---

**NOTE 4 – NOTES RECEIVABLE, NET**

Notes receivable, net as of March 31, 2025 and September 30, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Notes receivable | $7925933 | $8122287 |
| Less: allowance for credit losses | (146044) | (220503) |
| Notes receivable, net | $7779889 | $7901784 |

---

Changes in the allowance for credit losses as of March 31, 2025 and September 30, 2024 are as follow:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Beginning balance | $220503 | $- |
| Cumulative-effect adjustment of adoption of CECL | - | 116097 |
| (Reversal)/Addition | (67435) | 97214 |
| Exchange difference | (7024) | 7192 |
| Ending balance | $146044 | $220503 |

---

Notes receivable consisted of bank acceptance notes and commercial acceptance notes. These notes with 3-6 months maturity dates were issued by customers to pay their payable balances to the Company. Factored notes receivable with recourse amounted $2,492,833 and $1,249,765 were recorded as short-term borrowings as of March 31, 2025 and September 30, 2024, respectively.

**NOTE 5 – INVENTORIES, NET**

Inventories, net as of March 31, 2025 and September 30, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30,<br> 2024** |
| Raw materials | $16956350 | $13985558 |
| Work in process | 252925 | 264814 |
| Finished goods | 10553455 | 9062606 |
| Total inventories | 27762730 | $23312978 |
| Less: inventory valuation allowance | - | - |
| Inventories, net | $27762730 | $23312978 |

---

There was no inventory write-downs recognized for the six months ended March 31, 2025 and 2024.

**NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET**

Property, plant, and equipment as of March 31, 2025 and September 30, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Buildings | $2929249 | $3029053 |
| Machinery and equipment | 9874977 | 10139959 |
| Transportation vehicles | 1079774 | 1116564 |
| Office equipment | 642792 | 636193 |
| Construction in progress ("CIP") | 5480430 | 2917883 |
| Total property, plant, and equipment, at cost | 20007222 | 17839652 |
| Less: accumulated depreciation | (9531985) | (9792037) |
| Property, plant, and equipment, net | $10475237 | $8047615 |

---

Depreciation expense was $314,344 and $353,586 for the six months ended March 31, 2025 and 2024, respectively. During the six months ended March 31, 2025, the Company sold fixed assets with a net carrying value of $13,191, and recorded gain on sale of fixed assets of $1,448. During the six months ended March 31, 2024, no fixed asset was sold.

As of March 31, 2025 and September 30, 2024, the Company pledged buildings to secure banking facilities granted to the Company. The carrying values of the pledged buildings to secure bank borrowings by the Company are shown in *Note 11*.

**NOTE 7 – LAND USE RIGHTS, NET**

Land use rights as of March 31, 2025 and September 30, 2024 consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Land use rights, cost | $4850486 | $5015749 |
| Less: accumulated amortization | (669161) | (642591) |
| Land use rights, net | $4181325 | $4373158 |

---

Amortization expense was $47,914 and $48,476 for the six months ended March 31, 2025 and 2024, respectively.

**NOTE 8 – LONG-TERM INVESTMENTS**

Long-term investments consisted of the following as of March 31, 2025 and September 30, 2024:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Huashang Micro Finance Co. | $5236540 | $5414957 |
| Longwan Rural Commercial Bank | 6198685 | 6409883 |
| Wenzhou Longlian Development Co., Ltd | 1148374 | 1187500 |
| Total long-term investments | $12583599 | $13012340 |

---

In 2009, the Company made an investment of RMB 90,000,000 ($13,203,257 in USD) to acquire 22.5% in Huashang Micro Finance Co. ("Huashang"), a finance company offers micro loans to its customers. In 2015, as the result of a capital reduction, the Company's ownership was reduced by 3.5% to 19% for a cash consideration of RMB 52,000,000 ($8,535,827 in USD). The Company carries this investment at cost-minus-impairment measurement alternative on its consolidated balance sheets. The Company did not receive dividend income from Huashang during the six months ended March 31, 2025 and 2024.

In 2011, the Company made an investment of RMB 8,333,400 ($1,307,982 in USD) to acquire 8.3334% in Wenzhou Longlian Development Co., Ltd. ("Longlian"), a property and infrastructure development company. The Company carries this investment at the cost-minus-impairment measurement alternative on its consolidated balance sheets. The Company did not receive any dividend income from Longlian during the six months ended March 31, 2025 and 2024.

In 2012, the Company made an investment of RMB 44,982,000 ($7,172,207 in USD) to acquire 2.1% in Longwan Rural Commercial Bank. ("LRCB"), a private bank accepting deposits and providing short-term or long-term lending to its customers. The Company carries this investment at cost-minus-impairment measurement alternative on its consolidated balance sheets. The Company did not receive dividend income from LRCB during the six months ended March 31, 2025 and 2024.

The ownership percentage of the above long-term investments has not changed during the six months ended March 31, 2025 and 2024. During the six months ended March 31, 2025 and 2024, no impairment of long-term investment was recognized.

**NOTE 9 – NOTES PAYABLE**

Notes payable consisted of bank notes payable of $8,474,375 and $13,337,893 provided by the Company to its suppliers as of March 31, 2025 and September 30, 2024, respectively. These short-term bank notes can be endorsed and assigned to suppliers as payments for purchases. The bank notes payable are generally payable within six months. These short-term notes payable are guaranteed by the bank for their full face value. In addition, the banks usually require the Company to deposit a certain amount of funds at the bank as a guarantee deposit, which is classified on the consolidated balance sheets as restricted cash.

**NOTE 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**

Accrued expenses and other current liabilities consisted of the following as of March 31, 2025 and September 30, 2024:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Accrued payroll and other welfare | $1695879 | $1898958 |
| Other accrued expenses | 273860 | 254269 |
| Total | $1969739 | $2153227 |

---

**NOTE 11 – SHORT-TERM AND LONG-TERM BORROWINGS**

Short-term and long-term borrowings consisted of the following as of March 31, 2025 and September 30, 2024:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| **Short-term borrowings** | $2492833 | $1249765 |
| **Long-term borrowings** |  |  |
| Current portion | $5512 | $- |
| Non-current portion | 2750562 | - |
| **Total long-term borrowings** | $2756074 | $- |

---

**Short-term borrowings**

Short-term borrowings outstanding at March 31, 2025 and September 30, 2024 were undue factored notes receivable with recourse as shown in *Note 4*. These notes receivable will be expired in no more than six months from March 31, 2025.

**Long-term borrowings**

Long-term borrowings consisted of the following at March 31, 2025:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Bank Name** | **Amount - RMB** | **Amount - RMB** | **Amount - USD** | **Issuance Date** | **Expiration Date** | **Interest** |
| Agricultural Bank |  | 10000000 | $1378037 | 03/20/2025 | 03/19/2028 | 2.40% |
| Agricultural Bank |  | 10000000 | 1378037 | 03/28/2025 | 03/27/2028 | 2.45% |
| **Total** | **RMB** | **20000000** | $**2756074** |  |  |  |

---

No long-term borrowings were outstanding at September 30, 2024.

The following is a maturity analysis of long-term borrowings as of March 31, 2025:

---

| | | |
|:---|:---|:---|
|  | **RMB** | **USD** |
| Years ending March 31, |  |  |
| 2026 | 40000 | 5512 |
| 2027 | 40000 | 5512 |
| 2028 | 19920000 | 2745050 |
| 2029 | - | - |
| 2030 and thereafter | - | - |
| **Total** | 20000000 | 2756074 |

---

**Pledges and Guarantees**

The Company's short-term and long-term bank borrowings are pledged by its assets as listed below:

---

| | | |
|:---|:---|:---|
|  | **March 31, 2025** | **September 30, <br> 2024** |
| Buildings, net | $23989 | $23860 |
| Land use right, net | 408228 | 414738 |
| Total | $432217 | $438598 |

---

**Interest expense**

For the six months ended March 31, 2025 and 2024, interest expense on all short-term borrowings, long-term borrowings and discounts on notes receivable amounted to $53,631 and $90,630, respectively.

**NOTE 12 – CUSTOMER AND SUPPLIER CONCENTRATIONS**

Significant customers and suppliers are those that account for greater than 10% of the Company's revenues and purchases.

**Customer concentration**

For the six months ended March 31, 2025, one customer accounted for 19.37% of total revenue. As of March 31, 2025, there was no customer which accounts receivable accounted for over 10% of the Company's total accounts receivable.

The Company had no significant customer during the six months ended March 31, 2024. There was one customer accounted for a significant portion of total accounts receivable for the six months ended March 31, 2024, which accounted for 19.46% of the Company's total accounts receivable.

The loss of our significant customers or the failure to attract new customers could have a material adverse effect on our business, consolidated results of operations and financial condition.

**Supplier concentration**

For the six months ended March 31, 2025, three suppliers accounted for 22.88%, 11.97% and 10.35% of the Company's total purchase. There were four suppliers that have significant concentration (over 10%) of total accounts payable for the six months ended March 31, 2025, which accounted for 30.79%, 15.72%, 11.78%, and 10.39% of the Company's total accounts payable.

For the six months ended March 31, 2024, three suppliers accounted for 29.16%, 13.51% and 10.61% of the Company's total purchase. There were two suppliers that have significant concentration (over 10%) of total accounts payable for the six months ended March 31, 2024, which accounted for 35.44% and 29.66% of the Company's total accounts payable.

The Company believes there are numerous other suppliers that could be substituted should these suppliers become unavailable or non-competitive.

**NOTE 13 – RELATED PARTY TRANSACTIONS**

*1) Nature of relationships with related parties:*

---

| | |
|:---|:---|
| **Name** | **Relationship with the Company** |
| Taizhou Huadi Industrial Ltd. ("Taizhou Huadi") | An entity 30% owned by Jueqin Wang, principal shareholder of the Company |
| Huashang Micro Finance Co. ("Huashang") | An entity 19% owned by the Company |
| Taizhou Huadi Material Technology Co. (Huadi Material) | An entity 100% owned by Jueguang Wang, Immediate family member of Jueqin Wang |
| Jueqin Wang | Principal shareholder of the Company |

---

*2) Related party transactions*

**Six Months Ended March 31, 2025**

During the six months ended March 31, 2025, the Company purchased $2,769,266 in raw materials from Taizhou Huadi.

During the six months ended March 31, 2025, the Company leased an office to Huashang with annual rent amounted $27,337, and the Company recorded $12,131 rental income. As of March 31, 2025, the Company had advance balance of $20,616 from this entity.

**Six Months Ended March 31, 2024**

During the six months ended March 31, 2024, the Company purchased a total of $1,832 raw materials from Taizhou Huadi. These raw materials primarily consisted of stainless steel bars and stainless steel strips.

During the six months ended March 31, 2024, the Company purchased a total of $368,424 raw materials from Huadi Material and sold a total of $7,341 steel materials to Huadi Material. As of March 31, 2024, the Company had advance balance of $1,008,567 to this entity.

During the six months ended March 31, 2024, the Company leased an office to Huashang with annual rent amounted $29,182, and the Company recorded $15,632 rental income. As of March 31, 2024, the Company had advance balance of $20,054 from this entity.

*3) Related party balances*

Net outstanding balances with related parties consisted of the following as of March 31, 2025 and September 30, 2024:

---

| | | | |
|:---|:---|:---|:---|
| **Accounts** | **Name of related parties** | **March 31, <br> 2025** | **September 30,<br> 2024** |
| Advances to suppliers | Taizhou Huadi Material Technology Co. | $453 | $692485 |
| Advances from customers | Huashang Micro Finance Co. | (20616) | (5650) |
| Due to related parties – noncurrent portion | Jueqin Wang | (250499) | (308908) |

---

**NOTE 14 – SHAREHOLDERS' EQUITY**

**Ordinary shares**

*Shares Issuances*

On November 7, 2022, the Company entered into a securities purchase agreement with two institutional investors pursuant to which the Company agreed to sell up to 3,500,000 ordinary shares, par value $0.0002 per share, in a registered direct offering. On November 9, 2022, the Company closed the Offering for the sale of 1,000,000 ordinary shares. The Company received gross proceeds from the sale of the Shares of approximately $25,000,000, before deducting placement agent fees and other offering expenses. The Company has agreed to grant each purchaser, for a period of one ninety (90) days after the closing date, or for an additional thirty (30) days thereafter at the election of the Company, the right to purchase additional ordinary shares in an aggregate amount equal to up to 250% of the Shares issued or issuable to each purchaser pursuant to the Purchase Agreement, on the same terms, conditions and price at the purchase of the ordinary shares. Management determined that these warrants are equity instruments because the warrants are both a) indexed to its own stock; and b) classified in stockholders' equity. The warrants were recorded at their fair value on the date of grant as a component of stockholders' equity. As of March 31, 2025, all warrants have expired.

**Non-controlling interests**

Non-controlling interests represent the interest of non-controlling shareholder in Huadi Steel based on his proportionate interests in the equity of that company adjusted for its proportionate share of income or losses from operations. In August 2019, Wenzhou Hongshun acquired 99% equity percentage of Huadi Steel from the PRC Shareholders. As the result, Huadi Steel's equity interest is 99% held by Wenzhou Hongshun and 1% held by Di Wang. The non-controlling interest in Huadi Steel was 1% as of both March 31, 2025 and September 30, 2024.

**Restricted net assets**

The Company's ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by WFOEs and Huadi Steel (collectively, the "Huadi PRC Subsidiaries") only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Huadi PRC Subsidiaries.

Huadi PRC Subsidiaries are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of their respective registered capital. In addition, Huadi PRC Subsidiaries may allocate a portion of their after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at their discretion. Huadi PRC Subsidiaries may allocate a portion of their respective after-tax profits based on PRC accounting standards to a discretionary surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.

As a result of the foregoing restrictions, Huadi PRC Subsidiaries are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulations in the PRC may further restrict Huadi PRC Subsidiaries from transferring funds to the Company in the form of dividends, loans and advances. As of March 31, 2025 and September 30, 2024, amounts restricted are the paid-in-capital and statutory reserve of Huadi PRC Subsidiaries as follows:

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| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Statutory reserves | $964381 | $919978 |
| Paid-in-capital | 25285336 | 24815336 |
| Total restricted net assets | $26249717 | $25735314 |

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**NOTE 15 – INCOME TAXES**

**Enterprise Income Taxes ("EIT")**

 

*Cayman Islands*

Huadi International is incorporated in Cayman Island as an offshore holding company. Under the current laws of the Cayman Islands, Huadi International is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.

*British Virgin Islands*

Yongqiang Tuoxing is incorporated in British Virgin Islands as an offshore holding company. Under the current laws of the British Virgin Islands, Yongqiang Tuoxing is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no British Virgin Islands withholding tax will be imposed.

*Hong Kong*

HK Beach is established in Hong Kong. Under the current Hong Kong Inland Revenue Ordinance, companies are subject to 16.5% income tax or on its taxable income generated from operations in Hong Kong. On December 29, 2017, Hong Kong government announced a two-tiered profit tax rate regime. Under the two-tiered tax rate regime, the Company's Hong Kong subsidiary, HK Beach, the first HK$2.0 million assessable profits will be subject to an 8.25% lower tax rate and the remaining taxable income will continue to be taxed at the existing 16.5% tax rate. The two-tiered tax regime becomes effective from the assessment year of 2018 and 2019, which is on or after April 1, 2018. The application of the two-tiered rates is restricted to only one nominated enterprise among connected entities. HK Beach is nominated by the Company as the entity to apply the two-tiered rates among the group for the assessment years of 2025, 2024 and 2023.

*PRC*

Wenzhou Hongshun is established in PRC and is subject to statutory income tax rate at 25%.

Huadi Steel, the Company's main operating subsidiary in PRC, was entitled High and New Technology Enterprise ("HNTE") and enjoyed preferential tax rate of 15% for a three-year validity period from fiscal year 2019, and the HNTE certificate was renewed on December 24, 2022. Thus, Huadi Steel is eligible for a 15% preferential tax rate from fiscal year 2020 to fiscal year 2025. As of March 31, 2025, the tax years ended December 31, 2019 through December 31, 2024 for the Company's PRC entities remain open for statutory examination by PRC tax authorities.

Huadi Songyang is established in PRC and is subject to statutory income tax rate at 25%.

Income taxes for the six months ended March 31, 2025 and 2024 are attributed to the Company's continuing operations in China and consisted of:

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Current income tax | $- | $- |
| Deferred income tax expense (benefit) | (85255) | 24805 |
| Total income tax expense (benefit) | $(85255) | $24805 |

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Income tax expense reconciliation are as follows:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Income before taxes | $65532 | $840527 |
| PRC EIT tax rates | 15% | 15% |
| Tax at the PRC EIT tax rates | $9830 | 126079 |
| Rate differences in various jurisdictions | 50570 | 45789 |
| Tax effect of R&D expenses deduction | (160183) | (182476) |
| Tax effect of non-taxable investment income and government grant |  | - |
| Tax effect of non-deductible expenses | 14529 | 35413 |
| Income tax expenses (benefits) | $(85255) | $24805 |

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**Deferred tax assets**

The tax effects of temporary differences that give rise to significant portions of the deferred tax asset at March 31, 2025 and September 30, 2024 are presented below:

---

| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Allowance for expected credit losses | $196301 | $202245 |
| &nbsp;&nbsp;&nbsp;Allowance for bad debt | 29187 | 47416 |
| &nbsp;&nbsp;&nbsp;Loss carryforward | 402395 | 318856 |
| &nbsp;&nbsp;&nbsp;DTA allowance | (10209) | (17643) |
| Total | $617674 | $550874 |

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**Uncertain tax positions**

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2025 and September 30, 2024 the Company did not have any significant unrecognized uncertain tax positions.

Taxes payable consist of the following:

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| | | |
|:---|:---|:---|
|  | **March 31,<br> 2025** | **September 30, <br> 2024** |
| Income tax payable | $2869955 | $3318644 |
| VAT and tax payable (receivable) | (103090) | 325521 |
| Total tax payable | $2766865 | $3644165 |

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**NOTE 16 – COMMITMENT AND CONTINGENCIES**

**Commitments**

*Capital commitments*

The Company's capital commitments primarily relate to capital expenditures contracted for construction of new factories. Total capital commitments contracted but not provided for amounted to $5,576,569 and $6,238,097 as of March 31, 2025 and September 30, 2024, respectively. All the commitments were within 1 year.

**Contingencies**

From time to time, the Company is involved in various legal proceedings, claims and other disputes arising from commercial operations, employees, and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the Company can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on the Company, the Company believes that any ultimate liability resulting from the outcome of such proceedings to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity. As of March 31, 2025 and September 30, 2024, the Company had no material pending legal proceedings outstanding.

**NOTE 17 – 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 only one operating segment as defined by ASC 280.

*Revenue disaggregation*

The following table presents revenue by business lines:

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> March 31,** | **For the Six Months Ended<br> March 31,** |
|  | **2025** | **2024** |
| **Revenue** |  |  |
| Sales | $29073339 | $36613509 |
| Production service revenue | 305388 | 469277 |
| Total revenue | $29378727 | $37082786 |

---

*Geographical areas*

The following table presents revenues by geographic areas for the six months ended March 31, 2025.

---

| | | |
|:---|:---|:---|
|  | **March 31, 2025** | **March 31, 2025** |
|  | **Sales Amount<br> (In USD)** | **As %<br> of Sales** |
| **Top 5 geographic areas:** | | |
| China | $21758925 | 74.06% |
| USA | 5903553 | 20.09% |
| India | 727821 | 2.48% |
| Singapore | 324146 | 1.10% |
| Australia | 308046 | 1.05% |
| Other foreign countries | 356236 | 1.21% |

---

The following table presents revenues by geographic areas for the six months ended March 31, 2024.

---

| | | |
|:---|:---|:---|
|  | **March 31, 2024** | **March 31, 2024** |
|  | **Sales Amount<br> (In USD)** | **As %<br> of Sales** |
| **Top 5 geographic areas:** | | |
| China | $31901682 | 86.03% |
| USA | 2582339 | 6.96% |
| Cayman | 830944 | 2.24% |
| India | 740287 | 2.00% |
| The United Arab Emirates | 686438 | 1.85% |
| Other foreign countries | 341096 | 0.92% |

---

Due to the nature of the Company's products, it is impractical to disclose revenues generated from each product or each group of similar products. Also, as the Company's long-lived assets are primarily located in the PRC, no geographical segments are presented.

**NOTE 18 – OTHER INCOME (EXPENSE), NET**

Other income (expense), net for the six months ended March 31, 2025 and 2024 consisted of the following:

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| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> March 31,** | **For the Six Months Ended<br> March 31,** |
|  | **2025** | **2024** |
| Government grants | $243044 | $584671 |
| Rental income | 49748 | 67232 |
| Other net miscellaneous income (expenses) | (4109) | (23708) |
| Total | $288683 | $628195 |

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**NOTE 19 – SUBSEQUENT EVENTS**

In accordance with ASC Topic 855, "Subsequent Events", which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the unaudited financial statements are issued. The Company has evaluated all events or transactions that occurred after March 31, 2025, up through August 6, 2025, the Company issued the unaudited consolidated financial statements and concluded that no other material subsequent events except for the disclosed below:

**Bank borrowings**

 

*Borrowings repayment*

 

From March 31, 2025 to the date the unaudited consolidated financial statements were available to be issued, the Company repaid part of its long-term borrowings of $2,756 (RMB 20,000).

*New borrowings*

As the date the unaudited audited consolidated financial statements were available to be issued, the Company has new bank borrowings in the amount of $1,378,037 (RMB 10,000,000) with interest rates at 2.50% as follows:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Bank Name** | **Amount - RMB** | **Amount - USD** | **Issuance Date** | **Expiration Date** | **Interest** |
| Agricultural Bank | 10000000 | $1378037 | 06/12/2025 | 05/18/2028 | 2.50% |
| **Total** | **10000000** | $**1378037** |  |  |  |

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