Form 8-K CHINA HGS REAL ESTATE For: Dec 21

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): December 21, 2016

 

China HGS Real Estate, Inc.

(Exact Name of Registrant as Specified in Charter)
 

Florida		001-34864		33-0961490
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

 

6 Xinghan Road, 19th Floor Hanzhong City Shaanxi Province, PRC 723000

(Address of Principal Executive Offices and Zip Code)

 

Registrant’s telephone number, including area code: (86) 091-62622612

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On December 21, 2016, China HGS Real Estate, Inc. issued a press release regarding its financial results for the fiscal year ended September 30, 2016. A copy of the press release is filed herewith as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

 

As provided in General Instruction B.2 of SEC Form 8-K, such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Current Report on Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)

Exhibits

 

Exhibit No.		Description
99.1		Press Release dated December 21, 2016

 

 

SIGNATURE

 

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 hereunto duly authorized.

 

Dated: December 21, 2016	China HGS Real Estate, Inc.
	By:	/s/Xiaojun Zhu
		Name: Xiaojun Zhu
		Title: Chief Executive Officer and Chairman

 

 

 

Exhibit 99.1

 

 

China HGS Reports Full Year Financial Results for the Fiscal Year 2016

HANZHONG, CHINA – December 21, 2016 – China HGS Real Estate Inc. (NASDAQ: HGSH) (“China HGS” or the “Company”), a leading regional real estate developer headquartered in Hanzhong City, Shaanxi Province, China, today filed its Annual Report on Form 10-K for the fiscal year 2016 ended September 30, 2016 with the U.S. Securities and Exchange Commission. An electronic copy of the Annual Report on Form 10-K can be accessed on the SEC's website at www.sec.gov.

 

Highlights for the Fiscal 2016

 

•

Total revenues for the fiscal 2016 were approximately $40.6 million, a decrease of approximately 50% from approximately $81.1 million in fiscal 2015.

 

•

For the Company’s long-term real estate development projects, the related revenue recognized from percentage of completion method was approximately $25.2 million, which accounted for 62% of total revenue in fiscal 2016 and decreased 67% from the revenue recognized from percentage completion method in fiscal 2015.

 

•

Net income for the fiscal 2016 totaled approximately $5.0 million, a decrease of approximately 84% from the net income of approximately $31.4 million in fiscal 2015.

 

•

Basic and diluted net earnings per share (“EPS”) attributable to shareholders for the fiscal 2016 were $0.11, compared to $0.70 for the fiscal 2015.

 

Safe Harbor Statement

This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China HGS Real Estate Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: the uncertain market for the Company's business, macroeconomic, technological, regulatory, or other factors affecting the profitability of real estate business; and other risks related to the Company's business and risks related to operating in China. Please refer to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

 

About China HGS Real Estate, Inc.

China HGS Real Estate, Inc. (NASDAQ: HGSH), founded in 1995 and headquartered in Hanzhong City, Shaanxi Province, is a leading real estate developer in the region and holds the national grade I real estate qualification. The Company focuses on the development of high-rise, sub-high-rise residential buildings and multi-building apartment complexes in China's Tier 3 and Tier 4 cities and counties with rapidly growing populations driven by increased urbanization. The Company provides affordable housing with popular and modern designs to meet the needs of multiple buyer groups. The Company’s development activity spans a range of services, including land acquisition, project planning, design management, construction management, sales and marketing, and property management. For further information about China HGS, please go to www.chinahgs.com. 

 

Company contact:

 

Randy Xiong, President of Capital Market
China Phone: (86) 091-62622612

Email: [email protected]

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED BALANCE SHEETS

 

		September 30,
		2016				2015
ASSETS
Current assets:
Cash		$	6,401,237			$	1,333,919
Restricted cash			1,493,537				1,715,268
Cost and earnings in excess of billings			11,891,230				11,825,036
Real estate property development completed			113,185,929				75,391,512
Real estate property under development			-				55,154,153
Other current assets			2,722,036				228,223
Total current assets			135,693,969				145,648,111
Property, plant and equipment, net			792,650				780,038
Real estate property development completed, net of current portion			1,657,055				2,140,271
Security deposits			7,940,137				3,146,237
Real estate property under development, net of current portion			207,384,015				143,660,781
Due from local government for real estate property development completed			2,920,990				3,065,000
Total Assets		$	356,388,816			$	298,440,438
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loan		$	-			$	6,292,474
Other loans			6,125,753				5,674,239
Accounts payable			30,574,497				41,501,682
Other payables			5,200,807				12,676,362
Construction deposits			1,911,158				1,959,706
Billings in excess of cost and earnings			2,110,808				3,315,302
Customer deposits			16,790,208				17,387,969
Shareholder loans			2,709,523				1,810,000
Accrued expenses			3,205,099				4,855,891
Taxes payable			15,843,815				15,830,886
Total current liabilities			84,471,668				111,304,511
Deferred tax liabilities			5,107,887				4,711,161
Customer deposits, net of current portion			10,687,272				8,246,004
Other loans, less current portion			99,843,228				15,731,186
Construction deposits, net of current portion			1,329,820				972,432
Total liabilities			201,439,875				140,965,294
Commitments and Contingencies
Stockholders' equity
Common stock, $0.001 par value, 100,000,000 shares
authorized, 45,050,000 shares issued and outstanding		$	45,050			$	45,050
Additional paid-in capital			129,793,572				17,764,316
Statutory surplus			8,495,631				16,439,333
Retained earnings			20,661,184				119,668,198
Accumulated other comprehensive income (loss)			(4,046,496	)			3,558,247
Total stockholders' equity			154,948,941				157,475,144
Total Liabilities and Stockholders' Equity		$	356,388,816			$	298,440,438

 

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

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED SEPTEMBER 30,

     

		2016				2015
Real estate sales		$	40,576,717			$	81,115,494
Less:   Sales tax			2,102,616				5,194,616
Cost of real estate sales			28,670,778				39,258,557
Gross profit			9,803,323				36,662,321
Operating expenses
Selling and distribution expenses			1,118,282				917,344
General and administrative expenses			2,466,717				2,304,706
Total operating expenses			3,584,999				3,222,050
Operating income			6,218,324				33,440,271
Interest expense- net			(225,155	)			(61,419	)
Other income - net			459				-
Income before income taxes			5,993,628				33,378,852
Provision for income taxes			974,688				1,951,226
Net income			5,018,940				31,427,626
Other comprehensive income (loss)
Foreign currency translation adjustment			(7,604,743	)			(5,186,242	)
Comprehensive income (loss)		$	(2,585,803	)		$	26,241,384
Basic and diluted income per common share
Basic		$	0.11			$	0.70
Diluted		$	0.11			$	0.70
Weighted average common shares outstanding
Basic			45,050,000				45,050,000
Diluted			45,050,000				45,052,252

 

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

 

 

CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

 

		Common Stock								Additional Paid-in				Statutory				Retained				Accumulated Other Comprehensive
		Shares				Amount				Capital				Surplus				Earnings				Income (Loss)				Total
Balance at September 30, 2014			45,050,000			$	45,050			$	17,759,349			$	12,845,197			$	91,834,708			$	8,744,489			$	131,228,793
Stock-based Compensation											4,967																4,967
Appropriation of statutory reserve															3,594,136				(3,594,136	)							-
Net income for the year			-																31,427,626								31,427,626
Foreign currency translation adjustments																							(5,186,242	)			(5,186,242	)
Balance at September 30, 2015			45,050,000			$	45,050			$	17,764,316			$	16,439,333			$	119,668,198			$	3,558,247			$	157,475,144
Stock-based Compensation											59,600																59,600
Appropriation of statutory reserve															516,314				(516,314	)							-
Net income for the year																			5,018,940								5,018,940
Recapitalization of VIE (“Guangsha”) equity*											111,969,656				(8,460,016	)			(103,509,640	)							-
Foreign currency translation adjustments																							(7,604,743	)			(7,604,743	)
Balance at September 30, 2016			45,050,000			$	45,050			$	129,793,572			$	8,495,631			$	20,661,184			$	(4,046,496	)		$	154,948,941

 

* For the year ended September 30, 2016, Shaanxi Guangsha Investment and Development Group Co., Ltd (“Guangsha”), the VIE of the Company, had a recapitalization. The VIE’s accumulated retained earnings and statutory reserve were reclassified to additional paid-in capital in the consolidated financial statements. 

 

 

The accompanying notes are an integral part of these consolidated financial statement

 

 

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30,

 

		2016				2015
Cash flows from operating activities
Net income		$	5,018,940			$	31,427,626
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred tax provision			631,099				1,870,180
Depreciation			74,723				83,701
Stock based compensation			59,600				4,967
Changes in assets and liabilities:
Advances to vendors			(60,480	)			-
Security deposits			(5,045,816	)			-
Cost and earnings in excess of billings			(634,893	)			118,861
Real estate property development completed			(41,816,677	)			(71,332,340	)
Real estate property under development			(18,287,677	)			63,376,691
Other current assets			(2,496,811	)			1,171,630
Accounts payable			(9,166,316	)			(14,428,567	)
Other payables			(7,024,872	)			(684,063	)
Billings in excess of cost and earnings			(1,070,814	)			462,916
Customer deposits			3,112,121				(8,439,960	)
Construction deposits			456,014				1,654,075
Accrued expenses			(1,468,888	)			1,201,727
Taxes payable			772,684				3,765,165
Net cash (used in ) provided by operating activities			(76,948,063	)			10,252,609
Cash flow from investing activities
Purchase of fixed assets			(125,023	)			-
Net cash used in investing activities			(125,023	)			-
Cash flow from financing activities
Restricted cash			144,112				(181,392	)
Proceeds from other loans			93,658,620				27,670,998
Repayment of other loans			(6,286,930	)			(20,865,164	)
Repayment of bank loan			(6,123,136	)			(12,975,849	)
Proceeds from shareholder loan			3,236,078				11,642,580
Repayment of shareholder loan			(2,317,607	)			(15,292,038	)
Net cash provided by (used in) financing activities			82,311,136				(10,000,865	)
Effect of changes of foreign exchange rate on cash			(170,732	)			(43,370	)
Net increase in cash			5,067,318				208,374
Cash, beginning of year			1,333,919				1,125,545
Cash, end of year			6,401,237				1,333,919
Supplemental disclosures of cash flow information:
Interest paid		$	5,102,735			$	1,840,535
Income taxes paid		$	424,970			$	144,742
Non-cash financing activities:
Recapitalization of VIE (“Guangsha”)		$	111,969,656				-

 

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

 

 

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