8-K

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): January 14, 2020

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, 19^th 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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	HGSH	The NASDAQ Capital Market

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02 Results of Operations and Financial Condition.

On January 14, 2020, China HGS Real Estate, Inc. issued a press release regarding its financial results for the fiscal year ended September 30, 2019. 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 January 14, 2020

2

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: January 14, 2020	China HGS Real Estate, Inc.
	By:	/s/Xiaojun Zhu
		Name: Xiaojun Zhu
		Title: Chief Executive Officer and Chairman

EX-99.1

Exhibit 99.1

China HGS Reports Full Year Financial Results for the Fiscal Year 2019

HANZHONG, CHINA – January 14, 2020, 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 2019 ended September 30, 2019 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 2019

l Total revenues for the fiscal 2019 were approximately $40.0 million, a decrease of approximately 39% from approximately $65.5 million in fiscal 2018.

l Net income for the fiscal 2019 totaled approximately $3.7 million, a decrease of approximately 29% from the net income of approximately $5.2 million in fiscal 2018.

l Basic and diluted net earnings per share attributable to shareholders for the fiscal 2019 were $0.08, compared to $0.12 for the fiscal 2018.

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, 2018, 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: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE INC.

CONSOLIDATED BALANCE SHEETS

	September 30,			September 30,
	2019			2018
ASSETS
Current assets:
Cash	$	263,139		$	3,267,020
Restricted cash		3,938,978			3,508,557
Contract assets		12,668,925			12,582,965
Real estate property development completed		100,817,944			58,999,178
Real estate property under development		-			60,128,554
Other current assets		2,031,937			1,408,826
Total current assets		119,720,923			139,895,100
Property, plant and equipment, net		614,008			718,366
Real estate property development completed, net of current portion		1,115,086			1,217,650
Security deposits		7,972,117			8,296,782
Real estate property under development, net of current portion		215,745,225			215,431,915
Due from local government for real estate property development completed		2,725,854			2,836,865
Total Assets	$	347,893,213		$	368,396,678
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Construction loans	$	77,332,569		$	55,610,803
Accounts payables		27,368,510			20,507,128
Other payables		5,289,176			4,894,774
Construction deposits		1,814,232			1,879,570
Contract liabilities		1,907,828			5,844,189
Customer deposits		16,139,572			20,234,072
Shareholder loans		2,129,114			2,142,110
Accrued expenses		3,585,644			3,006,150
Taxes  payable		13,882,875			15,492,902
Total current liabilities		149,449,520			129,611,698
Deferred tax liabilities		-			2,068,257
Tax payable - long term		8,006,943			4,960,779
Customer deposits, net of current portion		1,043,692			1,914,677
Construction loans, less current portion		29,464,867			66,885,378
Construction deposits, net of current portion		1,228,041			1,278,053
Total liabilities		189,193,063			206,718,842
Commitments and Contingencies
Stockholders’ equity
Common stock, $0.001 par value, 100,000,000 shares authorized, 45,050,000 shares issued and outstanding September 30, 2019 and 2018		45,050			45,050
Additional paid-in capital		129,907,805			129,907,805
Statutory surplus		10,360,251			9,925,794
Retained earnings		34,070,767			30,803,052
Accumulated other comprehensive loss		(15,683,723	)		(9,003,865	)
Total stockholders’ equity		158,700,150			161,677,836
Total Liabilities and Stockholders’ Equity	$	347,893,213		$	368,396,678

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED SEPTEMBER 30, 2019 and 2018

	2019			2018
Real estate sales	$	39,964,556		$	65,487,296
Less: Sales tax		389,406			1,248,230
Net real estate sales		39,575,150			64,239,066
Cost of real estate sales		30,253,511			48,642,392
Gross profit		9,321,639			15,596,674
Operating expenses
Selling and distribution expenses		494,646			843,813
General and administrative expenses		2,661,578			2,530,269
Total operating expenses		3,156,224			3,374,082
Operating income		6,165,415			12,222,592
Interest expense, net		(131,270	)		(499,855	)
Other income (expense), net		(309,930	)		(1,407,109	)
Income before income taxes		5,724,215			10,315,628
Provision for income taxes		2,022,043			5,072,711
Net income		3,702,172			5,242,917
Other comprehensive loss
Foreign currency translation adjustment		(6,679,858	)		(5,509,080	)
Comprehensive loss	$	(2,977,686	)	$	(266,163	)
Basic and diluted income per common share
Basic and diluted	$	0.08		$	0.12
Weighted average common shares outstanding
Basic and diluted		45,050,000			45,050,000

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

	Common Stock				Additional		Statutory		Retained			Accumulated Other Comprehensive
	Shares		Amount		Paid-in Capital		Surplus		Earnings			Loss			Total
Balance at September 30, 2017		45,050,000		45,050		129,853,172		9,142,899		26,343,030			(3,494,785	)		161,889,366
Stock-based Compensation		-		-		54,633										54,633
Appropriation of statutory reserve		-		-				782,895		(782,895	)					-
Net income for the year		-		-						5,242,917						5,242,917
Foreign currency translation adjustments		-		-									(5,509,080	)		(5,509,080	)
Balance at September 30, 2018		45,050,000	$	45,050	$	129,907,805	$	9,925,794	$	30,803,052		$	(9,003,865	)	$	161,677,836
Stock-based Compensation
Appropriation of statutory reserve								434,457		(434,457	)					-
Net income for the year										3,702,172						3,702,172
Foreign currency translation adjustments													(6,679,858	)		(6,679,858	)
Balance at September 30, 2019
		45,050,000	$	45,050	$	129,907,805	$	10,360,251	$	34,070,767		$	(15,683,723	)	$	158,700,150

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2019 and 2018

	2019			2018
Cash flows from operating activities
Net income	$	3,702,172		$	5,242,917
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred tax provision		1,302,606			1,999,052
Depreciation		79,270			85,788
Stock based compensation		-			54,633
Changes in assets and liabilities:
Advances to vendors		20,395			38,990
Security deposits					-
Contract assets		(601,265	)		(321,291	)
Real estate property development completed		(45,818,735	)		18,789,499
Real estate property under development		50,974,817			(16,955,946	)
Other current assets		(725,508	)		37,764
Accounts payables		7,967,500			(2,930,405	)
Other payables		609,156			1,176,231
Contract liabilities		(3,854,568	)		1,817,121
Customer deposits		(4,261,166	)		(4,137,470	)
Construction deposits		8,538			(26,353	)
Accrued expenses		700,527			(74,789	)
Taxes payables		(1,166,158	)		(1,413,508	)
Net cash provided by operating activities		8,937,581			3,382,233
Cash flow from financing activities
Proceeds from construction loans		488,307			5,150,795
Repayment of construction loans		(11,825,666	)		(6,060,305	)
Proceeds from shareholder loans		-			1,505,324
Repayment of shareholder loans		-			(1,659,834	)
Net cash used in financing activities		(11,337,359	)		(1,064,020	)
Effect of changes of foreign exchange rate on cash		(173,682	)		(259,240	)
Net increase (decrease) in cash		(2,573,460	)		2,058,973
Cash, restricted cash, beginning of year		6,775,577			4,716,604
Cash, restricted, cash, end of year	$	4,202,117		$	6,775,577
Supplemental disclosures of cash flow information:
Interest paid	$	7,199,086		$	6,643,169
Income taxes paid	$	347,675		$	772,337
Representing
Cash	$	263,139		$	3,267,020
Restricted cash	$	3,938,978		$	3,508,557
	$	4,202,117		$	6,775,577