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): February 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, 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)
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 February 14, 2020, China HGS Real Estate, Inc. issued a press release regarding its financial results for the quarter ended December 31, 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 February 14, 2020 |
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: February 14, 2020 | China HGS Real Estate, Inc. | |
| By: | /s/Xiaojun Zhu | |
| Name: Xiaojun Zhu | ||
| Title: Chief Executive Officer and Chairman | ||
Exhibit 99.1
China HGS Reports First Quarter of Fiscal Year 2020 Results
HANZHONG, CHINA – February 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 reported its financial results for the first quarter of fiscal 2020 ended December 31, 2019 with the U.S. Securities and Exchange Commission. An electronic copy of the quarterly report on Form 10-Q can be accessed on the SEC's website at www.sec.gov
Highlights for the quarter
| l | Total revenues for the first quarter of fiscal 2020 were approximately $2.3 million, a decrease of 70.2% from approximately $7.7 million in the same quarter of fiscal 2018 due to less gross floor area sold during the current quarter. |
| l | Net loss for the first quarter of fiscal 2020 totaled approximately $0.3 million, a decrease of approximately $0.7 million from the net income of approximately $0.5 million in the same period of last year. |
| l | Basic and diluted net loss per share (“EPS”) attributable to shareholders for the first quarter of fiscal 2020 were $0.01, compared to net earning per share of $0.03 for the same quarter of the last year. |
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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| December 31, | September 30, | |||||||
| 2019 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 660,414 | $ | 263,139 | ||||
| Restricted cash | 4,025,327 | 3,938,978 | ||||||
| Contract assets | 12,489,790 | 12,668,925 | ||||||
| Real estate property development completed | 71,968,879 | 100,817,944 | ||||||
| Other current assets | 2,796,320 | 2,031,937 | ||||||
| Total current assets | 91,940,730 | 119,720,923 | ||||||
| Property and equipment, net | 611,414 | 614,008 | ||||||
| Real estate property development completed, net of current portion | 31,196,057 | 1,115,086 | ||||||
| Security deposits | 6,569,714 | 7,972,117 | ||||||
| Real estate property under development | 222,479,582 | 215,745,225 | ||||||
| Deferred tax asset | 57,154 | - | ||||||
| Due from local government for real estate property development completed | 2,798,642 | 2,725,854 | ||||||
| Total Assets | $ | 355,653,293 | $ | 347,893,213 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Construction loans | $ | 89,820,880 | $ | 77,332,569 | ||||
| Accounts payables | 28,489,542 | 27,368,510 | ||||||
| Other payables | 5,428,747 | 5,289,176 | ||||||
| Construction deposits | 1,862,246 | 1,814,232 | ||||||
| Contract liabilities | 1,926,363 | 1,907,828 | ||||||
| Customer deposits | 18,229,686 | 16,139,572 | ||||||
| Shareholder loans | 2,137,635 | 2,129,114 | ||||||
| Accrued expenses | 3,080,313 | 3,585,644 | ||||||
| Taxes payable | 13,630,957 | 13,882,875 | ||||||
| Total current liabilities | 164,606,369 | 149,449,520 | ||||||
| Tax payable - long term | 8,220,751 | 8,006,943 | ||||||
| Customer deposits, net of current portion | 1,057,198 | 1,043,692 | ||||||
| Construction loans, less current portion | 17,684,511 | 29,464,867 | ||||||
| Construction deposits, net of current portion | 1,260,833 | 1,228,041 | ||||||
| Total liabilities | 192,829,662 | 189,193,063 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' equity | ||||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized, 45,050,000 shares issued and outstanding December 31, 2019 and September 30, 2019 | 45,050 | 45,050 | ||||||
| Additional paid-in capital | 129,907,805 | 129,907,805 | ||||||
| Statutory surplus | 10,360,251 | 10,360,251 | ||||||
| Retained earnings | 33,813,386 | 34,070,767 | ||||||
| Accumulated other comprehensive loss | (11,302,861) | (15,683,723 | ) | |||||
| Total stockholders' equity | 162,823,631 | 158,700,150 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 355,653,293 | $ | 347,893,213 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CHINA HGS REAL ESTATE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three months ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Real estate sales | $ | 2,304,244 | $ | 7,737,196 | ||||
| Less: Sales tax | (39,233) | (142,111 | ) | |||||
| Cost of real estate sales | (1,705,612) | (5,923,184 | ) | |||||
| Gross profit | 559,399 | 1,671,901 | ||||||
| Operating expenses | ||||||||
| Selling and distribution expenses | 200,168 | 169,974 | ||||||
| General and administrative expenses | 588,839 | 470,932 | ||||||
| Total operating expenses | 789,007 | 640,906 | ||||||
| Operating income (loss) | (229,608) | 1,030,995 | ||||||
| Interest expense, net | (17,253) | (105,231) | ||||||
| Other income (expense), net | - | (273,153) | ||||||
| Income (loss) before income taxes | (246,861) | 652,611 | ||||||
| Provision for income taxes | 10,520 | 168,401 | ||||||
| Net income (loss) | (257,381) | 484,210 | ||||||
| Other Comprehensive income (loss) | ||||||||
| Foreign currency translation adjustment | 4,380,862 | (178,758) | ||||||
| Comprehensive income | $ | 4,123,481 | $ | 305,452 | ||||
| Basic and diluted income (loss) per common share | ||||||||
| Basic and diluted | $ | (0.01) | $ | 0.01 | ||||
| Weighted average common shares outstanding | ||||||||
| Basic and diluted | 45,050,000 | 45,050,000 | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CHINA HGS REAL ESTATE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
| Common Stock | Additional | Statutory | Retained | Accumulated Comprehensive | ||||||||||||||||||||||||
| Shares | Amount | Paid-in Capital | Surplus | Earnings | Loss | Total | ||||||||||||||||||||||
| 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 | ||||||||||||||
| Net income for the period | - | - | - | - | 484,210 | - | 484,210 | |||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | (178,758 | ) | (178,758 | ) | |||||||||||||||||||
| Balance at December 31, 2018 | 45,050,000 | $ | 45,050 | $ | 129,907,805 | $ | 9,925,794 | $ | 31,287,262 | $ | (9,182,623 | ) | $ | 161,983,288 | ||||||||||||||
| 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 | ||||||||||||||
| Net loss for the period | - | - | - | - | (257,381 | ) | - | (257,381 | ) | |||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | 4,380,862 | 4,380,862 | |||||||||||||||||||||
| Balance at December 31,2019 | 45,050,000 | $ | 45,050 | $ | 129,907,805 | $ | 10,360,251 | $ | 33,813,386 | $ | (11,302,861 | ) | $ | 162,823,631 | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CHINA HGS REAL ESTATE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three months ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities | ||||||||
| Net (loss) income | $ | (257,381 | ) | $ | 484,210 | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Deferred tax provision (benefit) | (56,480 | ) | 168,401 | |||||
| Depreciation | 18,767 | 19,869 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Contract assets | 511,335 | 1,626,468 | ||||||
| Real estate property development completed | 1,472,443 | 571,816 | ||||||
| Real estate property under development | (961,873 | ) | 2,423,593 | |||||
| Other current assets | (701,760 | ) | (159,357 | ) | ||||
| Security deposit | 1,596,250 | - | ||||||
| Accounts payables | 385,617 | (89,978 | ) | |||||
| Other payables | (1,646 | ) | 136,739 | |||||
| Contract liabilities | (32,028 | ) | 362,900 | |||||
| Customer deposits | 1,625,398 | (1,842,581 | ) | |||||
| Construction deposits | (426 | ) | - | |||||
| Accrued expenses | (578,021 | ) | (79,484 | ) | ||||
| Taxes payables | (534,574 | ) | (552,602 | ) | ||||
| Net cash provided by operating activities | 2,485,621 | 3,069,994 | ||||||
| Cash flow from financing activities | ||||||||
| Net proceeds from shareholder loans | - | 485,552 | ||||||
| Repayments of construction loans | (2,118,584 | ) | (5,261,559 | ) | ||||
| Net cash used in financing activities | (2,118,584 | ) | (4,776,007 | ) | ||||
| Effect of changes of foreign exchange rate on cash and restricted cash | 116,587 | (283,390 | ) | |||||
| Net increase (decrease) in cash and restricted cash | 483,624 | (1,989,403 | ) | |||||
| Cash and restricted cash , beginning of period | 4,202,117 | 6,775,577 | ||||||
| Cash and restricted cash, end of period | $ | 4,685,741 | $ | 4,786,174 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | 1,722,840 | $ | 1,786,958 | ||||
| Income taxes paid | $ | 26,001 | $ | 102,591 | ||||
| Representing | ||||||||
| Cash | $ | 660,414 | $ | 1,020,954 | ||||
| Restricted | $ | 4,025,327 | $ | 3,765,220 | ||||
| Total cash and restricted cash | $ | 4,685,741 | $ | 4,786,174 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.