Executive Summary / Key Takeaways

• ZK International Group Co., Ltd. (NASDAQ:ZKIN) is undergoing a significant strategic transformation, balancing its foundational business in high-performance steel pipe manufacturing with an ambitious expansion into digital asset markets, including an NFT marketplace, sports betting, casino operations, and a unique crypto financing strategy.
• The company's core steel business, specializing in patented thin-walled stainless steel and carbon steel pipes, serves critical infrastructure needs globally, offering superior corrosion resistance and durability for water and gas transmission.
• Despite a 3.05% revenue decrease to $108.20 million in fiscal year 2024, ZKIN achieved a remarkable 405% increase in gross profit to $6.55 million, significantly reducing its net loss by 95.44% to $2.78 million, indicating improved operational efficiency in its traditional segment.
• A pivotal strategic initiative involves a unique financing strategy targeting the XRP cryptocurrency community, aiming to raise up to $1 billion by offering ZKIN warrants exercisable with XRP, thereby bridging decentralized finance with traditional equity markets.
• While the company demonstrates a commitment to innovation and market diversification, investors must weigh the potential upside of its digital asset ventures against the inherent volatility of these markets and the ongoing financial challenges in its traditional operations, including negative operating and free cash flow.

A Company Forged in Steel, Embracing Digital Horizons

ZK International Group Co., Ltd., established in 2015, has built its foundation as an engineering company specializing in the design, production, and sale of high-performance steel pipe and fitting products in China and for export to Europe, Africa, and Southeast Asia. Its product portfolio, encompassing carbon steel and stainless steel strips, light gauge stainless steel pipes, and various connections and fittings, serves diverse applications such as urban infrastructural development for water and gas transmission, residential housing, food and beverage production, oil and gas exploitation, and agricultural irrigation. The company has supplied stainless steel pipelines for over 2,000 projects, including prominent landmarks like the Beijing National Airport and the 2008 Beijing Olympics venues, the "Water Cube" and "Bird's Nest".

In recent years, ZK International has strategically diversified beyond its traditional steel manufacturing, venturing into the import and export of goods and technology, trading of steel coil, steel strip, and nickel materials. More notably, it has expanded into the digital and entertainment sectors, operating in the non-fungible token (NFT) marketplace, sports betting, and casino operations. This diversification reflects a strategic intent to capitalize on emerging markets and technologies, positioning the company for new growth avenues.

The competitive landscape for ZKIN's traditional steel pipe and fittings business is characterized by the presence of larger, more established players like Nucor Corporation , United States Steel Corporation (X), and Tenaris S.A. . These competitors often benefit from greater scale, broader product ranges, and more extensive distribution networks. For instance, Nucor, a major U.S.-based steel producer, demonstrates consistent revenue expansion and improved profitability margins, driven by strong demand in infrastructure projects. Similarly, U.S. Steel, with its focus on modernization and sustainable production, shows periods of revenue growth and improved margins from cost-cutting measures. Tenaris, a global leader in steel pipe manufacturing, particularly for the energy sector, exhibits revenue expansion from international projects and improved profitability through operational efficiencies.

In contrast, ZKIN operates as a more specialized player, focusing on niche applications and export markets. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, ZKIN's qualitative strengths lie in its product customization and adaptability to regional standards, particularly in Asia. Indirect competitors, such as manufacturers of plastic or composite pipes, also pose a threat by offering alternative materials that may be more corrosion-resistant or easier to install for certain applications, potentially impacting ZKIN's market share.

Technological Edge: Precision in Piping

At the core of ZK International's traditional business lies its differentiated technology in high-performance steel products. The company specializes in engineering and manufacturing patented thin-walled stainless steel and carbon steel pipe products. This specialization is crucial for sophisticated water and gas pipeline systems, offering tangible benefits such as superior corrosion resistance and durability. The company's products are designed to deliver high-quality, highly sustainable, and environmentally sound drinkable water, particularly in the Chinese, Asian, and European markets.

ZK International holds 28 patents, 21 trademarks, 2 Technical Achievement Awards, and 10 National and Industry Standard Awards, underscoring its commitment to technological innovation. This focus on advanced engineering, particularly in double-press thin-walled stainless steel tubes and fittings, allows ZKIN to target high-value, customized projects in sectors like urban infrastructure, food and beverage production, and industrial seawater desalination. This technological edge provides a competitive moat, enabling ZKIN to differentiate its offerings from the broader, more commoditized products of larger steel manufacturers. While specific quantitative performance metrics for its technology are not publicly disclosed, the strategic intent is to provide products with enhanced longevity and efficiency in demanding environments, thereby fostering stronger customer loyalty and potentially commanding better pricing in its niche markets.

Financial Performance: A Path to Profitability Amidst Transformation

ZK International's financial performance in recent years reflects a company in transition, demonstrating both significant challenges and signs of operational improvement. For the fiscal year ended September 30, 2024, the company reported total revenue of $108.20 million, a slight decrease of 3.05% from $111.60 million in fiscal year 2023. Despite this revenue dip, ZKIN achieved a remarkable 405% increase in gross profit, reaching $6.55 million, up from $1.30 million in the prior fiscal year. This led to a substantial improvement in gross profit margin, from 1.16% in 2023 to 6.05% in 2024. This improvement in gross profitability was primarily driven by a rise in the weighted average selling price, partially offset by rising costs.

The company also significantly reduced its net loss by 95.44%, reporting a net loss of $2.78 million, or $0.08 per share, for fiscal year 2024, a considerable improvement from the $61.06 million net loss, or $1.94 per share, in fiscal year 2023. This reduction in net loss was also attributed to a 97.16% decrease in operational losses, largely due to lower asset impairment costs. However, ZKIN has consistently experienced negative operating cash flow and free cash flow, with operating cash flow at -$6.88 million and free cash flow at -$7.48 million for the trailing twelve months (TTM).

The company's liquidity position shows a current ratio of 1.26 and a quick ratio of 0.55. ZKIN carries a total debt of $26.88 million and a debt-to-equity ratio of 95.26% (TTM), indicating a significant debt burden.

Comparing ZKIN's profitability metrics to its larger competitors highlights its ongoing challenges. While ZKIN's TTM gross profit margin stands at 6.05%, companies like Tenaris S.A. (TS) reported a gross profit margin of 35.34% in 2024, and Nucor Corporation (NUE) had net margins of 4.2%. ZKIN's TTM operating profit margin is -1.59% and net profit margin is -2.57%, contrasting sharply with the positive margins of its peers.

Strategic Pivot: Unlocking Value Through Digital Assets

A significant strategic shift for ZK International involves its ambitious foray into the digital asset space. On May 21, 2025, the company, through its wholly-owned subsidiary xSigma Corporation, announced a unique financing strategy aimed at the global XRP cryptocurrency community. This initiative seeks to raise up to $1 billion by offering ZKIN warrants that can be exercised using XRP, a digital asset with a market cap of approximately $130 billion and over 5 million active wallets. This innovative approach is designed to bridge the cryptocurrency market with the stock capital market, allowing XRP holders to gain exposure to a Nasdaq-listed equity without converting their XRP into fiat currency.

Chairman Jiancong Huang emphasized that this plan is not a speculative play but a "purpose-built platform to bring decentralized finance to Wall Street through a compliant, creative mechanisms like XRP-denominated warrant access". To support this, ZK International plans to appoint a Crypto Integration Facilitator to handle research, feasibility analysis, compliance, and design of blockchain and digital asset initiatives, while also implementing strict governance standards. This strategy, if successful, could provide a substantial capital injection to ZKIN's overall operations.

Further bolstering its internal structure, on August 20, 2025, ZK International adopted a 2025 Equity Incentive Plan. This plan, with a maximum of 650,000 ordinary shares available for issuance, is intended to motivate, attract, and retain directors, consultants, or key employees, aligning their personal interests with those of the company's shareholders.

Risks and Outlook: Charting a Course Through Dual Markets

ZK International's dual strategy presents a complex risk-reward profile. The company faces inherent risks associated with its traditional manufacturing business, including commodity price fluctuations and intense competition from larger, more financially robust players. Its smaller scale and reliance on export markets make it vulnerable to global trade tensions and supply chain disruptions.

The venture into digital assets introduces a new layer of significant risks. The cryptocurrency market is notoriously volatile, and there is no assurance that the XRP-denominated warrants will become exercisable or that the received XRP will maintain its value or liquidity. Regulatory uncertainties in the rapidly evolving crypto space also pose a considerable challenge. Furthermore, the company's operations in China expose it to potential intervention or influence from the Chinese government, which could materially impact its operations and the value of its shares. The risk of delisting under the Holding Foreign Companies Accountable Act due to PCAOB inspection limitations for its auditors also remains a concern.

While specific quantitative guidance for future financial performance is not available, ZK International expects to achieve a gross profit margin in the range of 10% to 12% for fiscal year 2025, indicating a continued focus on improving profitability in its core steel business. The strategic expansion into Southeast Asia and the Middle East, coupled with active pursuit of partnerships, signals a commitment to global growth and meeting demand for sustainable infrastructure. The innovative crypto financing strategy, if successfully executed, could unlock significant capital and provide a unique competitive advantage by tapping into a new investor base. However, the company's ability to execute on these diverse initiatives while managing its existing financial challenges, including negative cash flow and a significant debt burden, will be critical for its long-term success.

Conclusion

ZK International Group Co., Ltd. stands at a pivotal juncture, seeking to redefine its investment narrative through a bold dual strategy. Its enduring foundation in specialized, high-performance steel pipe manufacturing, underpinned by patented technology and a focus on critical infrastructure, provides a stable, albeit competitive, base. The recent improvements in gross profit and a significant reduction in net loss for fiscal year 2024 demonstrate a positive shift in operational efficiency within this traditional segment.

However, the company's future trajectory is increasingly tied to its ambitious pivot into the digital asset economy, particularly its unique XRP-denominated warrant financing strategy. This innovative approach to capital raising and investor engagement could unlock substantial value by bridging traditional finance with the burgeoning cryptocurrency market. While this diversification offers considerable upside potential, it also introduces exposure to the inherent volatility and regulatory complexities of the digital asset space. For investors, ZKIN represents a compelling, albeit high-risk, opportunity to invest in a company striving for transformation, where the success of its technological differentiation in steel and its pioneering digital asset initiatives will ultimately determine its long-term growth and profitability.