WEB NEWS Going Private News
Shareholder Koza proposes to help Gold Horse International. 13D/A filed 10/9/2012
Mike Koza (12,7% shareholder) thinks Gold Horse may go dark because costs staying listed are bigger than the benefits (raising capital, image, etc...). He proposes to help them. Here is an excerpt from SC 13D/A he filed yesterday (Koza=Reporting Person):
The Reporting Person may take actions as deemed appropriate, possibly in conjunction with other shareholders, including one or more of the following:
1. Offering to pay all or part of the expenses (including back pay) of continued U.S. listing, including the re-hiring of Mr. Li (the fiscal year 2012 Chief Financial Officer) or an alternate Chief Financial Officer to be agreed upon;
2. Encouraging the Issuer to make a tender offer for all outstanding shares;
3. Assisting the Issuer in voluntarily deregistering its common stock, and arranging for the dissemination of periodic financial information to shareholders of the Issuer, in a simple format agreeable to the Issuer and shareholders. This outcome would be acceptable only if the SEC did not deny voluntary deregistration;
4. Entering into negotiations with China-based shareholders of the Issuer to sell to these shareholders the shares owned by the Reporting Person. According to a Form 10-K filed by the Issuer on October 6, 2008, 36 individuals residing in China purchased 55,481 shares (split-adjusted) from the Issuer for $2,219,252 in 2007. The purchase price was $40 per share (split-adjusted). Although the reported book value per share of the Issuer has roughly doubled from December 31, 2007 to March 31, 2012, according to SEC filings, the Reporting Person would be willing to sell his shares to China-based shareholders at a significant discount to the amounts paid per share by these China-based shareholders in 2007. The Reporting Person believes that many of the China-based shareholders of the Issuer are employees of the Jin Ma Companies, which are controlled by the Issuer through contractual agreements;
5. Assisting the Issuer in unwinding its variable-interest entity structure.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US DOLLAR)
(UNAUDITED)
For the Three Months Ended
For the Six Months Ended
December 31,
December 31,
2011
2010
2011
2010
NET REVENUES
Construction
$
14,231,619
$
15,400,661
$
25,595,039
$
24,991,149
Hotel
564,383
724,213
1,045,537
1,565,475
Real estate
191,628
302,400
191,628
713,369
Total Revenues
14,987,630
16,427,274
26,832,204
27,269,993
COST OF REVENUES
Construction
12,190,725
13,280,141
21,929,118
21,437,820
Hotel
266,401
393,607
506,469
909,055
Real estate
201,449
241,712
201,449
540,214
Total Cost of Revenues
12,658,575
13,915,460
22,637,036
22,887,089
GROSS PROFIT
2,329,055
2,511,814
4,195,168
4,382,904
OPERATING EXPENSES:
Other hotel operating expenses
12,673
12,255
27,014
31,960
Bad debt recovery
(156,929
)
(188,120
)
(172,055
)
(195,612
)
Salaries and employee benefits
153,656
207,251
340,006
418,610
Depreciation
218,072
197,965
434,517
392,437
Selling, general and administrative
114,534
165,044
230,801
467,734
Total Operating Expenses
342,006
394,395
860,283
1,115,129
INCOME FROM OPERATIONS
1,987,049
2,117,419
3,334,885
3,267,775
OTHER (EXPENSES) INCOME:
Other income
-
58
-
6,842
Gain on change in fair value of derivative liabilities
8,417
121,612
32,219
157,092
Interest income
559,806
431,248
559,894
650,860
Interest expense
(218,640
)
(125,960
)
(419,912
)
(252,006
)
Total Other (Expenses) Income
349,583
426,958
172,201
562,788
INCOME BEFORE PROVISION FOR INCOME TAX
2,336,632
2,544,377
3,507,086
3,830,563
PROVISION FOR INCOME TAXES
607,059
648,547
929,441
1,020,468
NET INCOME
$
1,729,573
$
1,895,830
$
2,577,645
$
2,810,095
COMPREHENSIVE INCOME:
Net income
$
1,729,573
$
1,895,830
$
2,577,645
$
2,810,095
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain
305,057
529,724
850,736
1,154,673
COMPREHENSIVE INCOME
$
2,034,630
$
2,425,554
$
3,428,381
$
3,964,768
NET INCOME PER COMMON SHARE:
Basic
$
0.79
$
0.97
$
1.19
$
1.45
Diluted
$
0.79
$
0.96
$
1.18
$
1.42
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
2,178,729
1,947,992
2,172,002
1,941,476
Diluted
2,195,033
1,981,696
2,190,081
1,972,611
The decrease in Jan Ma Construction’s revenue for the second quarter of 2012 as compared to the second quarter of 2011 was attributable to the timing of Jin Ma Construction’s business as well as a turnaround in the real estate market in Hohhot which occurred in the second quarter of 2011.
Net revenues for Jin Ma Hotel’s operations decreased 22.1% for the second quarter of 2012 from the second quarter of 2011 primarily due to keen competition in the hotel, banquet and catering business as a result of more hotels commencing operation in the city of Hohhot in the second quarter of 2012. We continue to focus our marketing efforts to attract more tour groups to stay in our hotel and more local customers to our banquet facilities.
Net revenues for Jin Ma Real Estate’s operations decreased by $110,772, or 36.6%, for the second quarter of 2012 from the second quarter of 2011. The decrease was attributable to a lack of inventory of apartment units available for sale and the overdue payment from the Chemistry School.
Assciated press release:
HOHHOT, China , Feb. 27, 2012 /PRNewswire-Asia/ -- Gold Horse International, Inc., (OTC Bulletin Board: GHII ) ("Gold Horse" or the "Company"), a multifaceted business group that controls and through the Jin Ma Companies operates a construction company, real estate development business and a hotel/banquet facility in Inner Mongolia, China , today announced its financial results for the six months ended December 31, 2011 .
The Second Quarter Fiscal Year 2012 Highlights
Net revenue decreased 1.6% period-over-period to $26.8 million
Gross margin was 15.6% compared to 16.1% in the prior comparable period
Gross profit decreased 4.3% period-over-period to $4.2 million
Income from operations was $3.33 million compared to income from operations of $3.27 million in the prior comparable period
Net income decreased 8.3% period-over-period to $2.6 million from $2.8 million
Adjusted net income excluding non-cash gains was $2.5 million , or $1.16 per fully diluted common share as compared to adjusted net income of $2.7 million , or $1.34 per fully diluted common share, in the prior comparable period
"Strategically, we sold all remaining inventory of apartment units available for sale in the fourth quarter of fiscal 2011 and have no apartment units available for sale now. Consequently, we minimize the effects of the slower real estate markets on Gold Horse. Moreover, we will keep going forward on track to become one of the most prominent construction and real estate development companies in Inner Mongolia, China and we are confident that the construction and the real estate development in Hohhot, Inner Mongolia and its surrounding areas, a third-tier city, will remain strong in the future," said Mr. Liankuan Yang, chairman and CEO of Gold Horse.
Business Outlook
At December 31, 2011 , the construction segment is in various stages of development of three new construction projects totaling approximately $45 million in estimated revenues over fiscal years 2012 to 2013. The real estate segment has acquired several land use rights and began developing one residential project. The project is a joint effort between the construction segment and the real estate segment with the construction business serving as the general contractor for the construction of the project.
Mr. Liankuan Yang, Chairman and CEO of Gold Horse, offered a brief description on each project:
In construction segment, three new projects began in October 2011 :
The Fuhengyuan residential No. 11 – No. 19 project consists of nine residential buildings with a total construction area of 97,368 square and is expected to be completed in December 2012 and was 11.3% complete at December 31, 2011 .
The Xinyuan residential project consists of twelve residential buildings with a total construction area of 91,669 square meters and is expected to be completed in August 2012 and was 17.8% complete at December 31, 2011 .
The Haitianshengdi project consists of ten residential buildings with a total construction area of 51,600 square meters and is expected to be completed in June 2012 and was 16.0% complete at December 31, 2011 .
In real estate segment:
In September 2011 , construction of buildings No. 6 of the Procuratorate Housing Estates began which consists of a construction area of 38,000 square meters and is expected to be completed in August 2013 , with estimated revenues of $27.8 million . Jin Ma Real Estate will sell units to individual homebuyers.
Comments & Business Outlook
GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US DOLLAR)
(UNAUDITED)
For the Three Months Ended
September 30,
2011
2010
NET REVENUES
Construction
$
11,363,420
$
9,590,488
Hotel
481,154
841,262
Real estate
-
410,969
Total Revenues
11,844,574
10,842,719
COST OF REVENUES
Construction
9,738,393
8,157,679
Hotel
240,068
515,448
Real estate
-
298,502
Total Cost of Revenues
9,978,461
8,971,629
GROSS PROFIT
1,866,113
1,871,090
OPERATING EXPENSES:
Other hotel operating expenses
14,341
19,705
Bad debt recovery
(15,126
)
(7,492
)
Salaries and employee benefits
186,350
211,359
Depreciation
216,445
194,472
Selling, general and administrative
116,267
302,690
Total Operating Expenses
518,277
720,734
INCOME FROM OPERATIONS
1,347,836
1,150,356
OTHER (EXPENSES) INCOME:
Other income
-
6,784
Gain on change in fair value of derivative liabilities
23,802
35,480
Interest income
88
219,612
Interest expense
(201,272
)
(126,046
)
Total Other (Expenses) Income
(177,382
)
135,830
INCOME BEFORE PROVISION FOR INCOME TAX
1,170,454
1,286,186
PROVISION FOR INCOME TAXES
322,382
371,921
NET INCOME
$
848,072
$
914,265
COMPREHENSIVE INCOME:
Net income
$
848,072
$
914,265
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain
545,679
624,949
COMPREHENSIVE INCOME
$
1,393,751
$
1,539,214
NET INCOME PER COMMON SHARE:
Basic
$
0.39
$
0.47
Diluted
$
0.39
$
0.47
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
2,165,275
1,934,959
Diluted
2,185,128
1,963,526
Comments & Business Outlook
Fiscal Year 2011 Highlights
Net revenue increased 50.3% year-over-year to $76.5 million
Gross margin was 17.9% compared to 20.0% in the prior year
Gross profit increased 34.9% year-over-year to $13.7 million
Operating income was $11.36 million compared to operating income of $7.98 million in the prior year
Net income increased 17.6% year-over-year to $9.7 million from $8.3 million
Adjusted net income excluding non-cash gains and expenses was $9.2 million , or $4.62 per fully diluted common share as compared to adjusted net income of $6.6 million , or $3.99 per fully diluted common share, a year ago
"We are quite pleased with Jin Ma Real Estate's new real estate development projects, and we are confident that the Jin Ma Companies remain on track to become one of the most prominent construction and real estate development companies in Inner Mongolia, China . We are confident that real estate development in Hohhot, Inner Mongolia and its surrounding areas, a third- tier city, will remain strong and will not feel the effects of the slower real estate markets occurring in tier-one cities such as Beijing and Shanghai ," said Mr. Liankuan Yang, chairman and CEO of Gold Horse.
Business Outlook
The Jin Ma Companies are in various stages of development of three new real estate development projects totaling approximately $96 million in estimated revenues over fiscal years 2014 to 2016. These projects are a joint effort between the Jin Ma Construction and Jin Ma Real Estate with the construction business serving as the general contractor for the construction of these projects.
CFO Trail
Effective September 30, 2011, the Board of Directors of Gold Horse International, Inc. (the “Company”), appointed Mr. Xiaodong Li to
replace Mr. Adam Wasserman as the Company’s Chief Financial Offer.
Comments & Business Outlook
GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (AMOUNTS EXPRESSED IN US DOLLAR)
For the Years Ended June 30,
2011
2010
NET REVENUES
Construction
$
40,990,034
$
37,496,002
Hotel
3,046,914
3,086,553
Real estate
32,463,687
10,331,004
Total Revenues
76,500,635
50,913,559
COST OF REVENUES
Construction
35,222,201
32,311,960
Hotel
1,794,737
1,965,973
Real estate
25,761,636
6,465,472
Total Cost of Revenues
62,778,574
40,743,405
GROSS PROFIT
13,722,061
10,170,154
OPERATING EXPENSES:
Other hotel operating expenses
224,063
89,292
Bad debt recovery
(224,351
)
(102,704
)
Salaries and employee benefits
875,084
908,590
Depreciation
796,429
775,715
Selling, general and administrative
692,750
516,230
Total Operating Expenses
2,363,975
2,187,123
INCOME FROM OPERATIONS
11,358,086
7,983,031
OTHER INCOME (EXPENSES):
Other income
6,848
—
Gain on extinguishment of derivative liabilities
—
2,111,506
Gain on change in fair value of derivative liabilities
568,917
1,756,959
(Loss) gain on sale of land use rights and property and equipment
(1,929
)
350,885
Interest income
1,566,116
1,274,999
Interest expense
(522,743
)
(2,864,685
)
Total Other Income
1,617,209
2,629,664
INCOME BEFORE PROVISION FOR INCOME TAX
12,975,295
10,612,695
PROVISION FOR INCOME TAXES
3,248,935
2,339,637
NET INCOME
$
9,726,360
$
8,273,058
COMPREHENSIVE INCOME:
Net income
$
9,726,360
$
8,273,058
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain
2,234,499
187,809
COMPREHENSIVE INCOME
$
11,960,859
$
8,460,867
NET INCOME PER COMMON SHARE:
Basic
$
4.94
$
5.14
Diluted
$
4.90
$
5.01
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
1,968,507
1,608,685
Diluted
1,984,075
1,651,520
Corporate Governance
The contracts between Messrs. Gregory Wolfson and Noel "Bud" Robyn (“Directors”) and Gold Horse International, Inc. (the "Company") expire effective July 1, 2011.
Both the Company and the Directors agree that they should not stand for re-election as members of Board of Directors for fiscal 2012. Messrs. Wolfson and Robyn were both members of the Company’s Audit Committee, while Mr. Wolfson was a member of the Nomination and Governance Committee, and Mr. Robyn was a member of the Compensation Committee. As of the date of their disengagement, there are no disputes over any issue regarding business or services between the Directors and the Company, and the discontinuance of the appointment was prompted by the determination by the Company that the Company expects to reconstruct the management team with the purpose of reducing redundancy and increase work efficiency of the Board of Directors.
Comments & Business Outlook
HOHHOT, China, June 10, 2011 /PRNewswire-Asia / -- Gold Horse International, Inc., (OTC Bulletin Board: GHII) ("Gold Horse" or the "Company"), a multifaceted business group that controls and through the Jin Ma Companies operates a construction company, real estate development business and a hotel/banquet facility in Inner Mongolia, China, today announced its financial results for the nine months ended March 31, 2011.
Net revenue increased 54.8% period-over-period to $36.2 million
Gross margin was 16.3% compared to 15.7% in the prior comparable period
Gross profit increased 60.8% period-over-period to $5.9 million
Operating income was $4.2 million compared to operating income of $2.2 million in the prior comparable period
Net income decreased 6.3% period-over-period to $3.7 million from $3.9 million
Adjusted net income excluding non-cash gains and expenses was $3.2 million, or $1.63 per fully diluted common share as compared to adjusted net income of $0.3 million, or $0.21 per fully diluted common share , in the prior comparable period
"We remain confident that real estate development in Hohhot, Inner Mongolia and its surrounding areas, a third- tier city, will remain strong and will not feel the effects of the slower real estate markets occurring in tier-one cities such as Beijing and Shanghai. We intend to meet our liquidity requirements, including capital expenditures related to the purchase of land for the development of future projects, through cash flow provided by operations, from the collection of outstanding accounts and notes receivable balances and the from the sale of units at the Shuian Renjia residential project. Through March 31, 2011, we have capitalized construction in progress consisting of the acquisition of land use rights and construction costs related to the Shuian Renjia project of approximately $19.8 million. In connection with the acquisition of land use rights and for construction costs, pursuant to agreements with Jin Ma Construction's sub-contractors, we will only partially pay subcontractors until such time as we begin selling units of real estate held for sale and accordingly, accounts payable has increased substantially. Subcontractors are willing to extend us credit due to long-term relationship with the Jin Ma Companies. During the fourth quarter of 2011, we expect to sell all of our units in Shuian Renjia and we expect to collect approximately $30,000,000 from these sales which will be used to pay subcontractors and other accounts payable balances and will be used for working capital purposes ," said Mr. Liankuan Yang, chairman and CEO of Gold Horse
Comments & Business Outlook
GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months Ended March 31,
For the Nine Months Ended March 31,
2011
2010
2011
2010
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
NET REVENUES
Construction
$
7,994,860
$
11,143,476
$
32,986,009
$
20,739,488
Hotel
739,027
749,749
2,304,502
2,262,578
Real estate
193,661
227,917
907,030
386,898
Total Revenues
8,927,548
12,121,142
36,197,541
23,388,964
COST OF REVENUES
Construction
6,851,787
9,559,477
28,289,607
17,889,157
Hotel
414,640
478,135
1,323,695
1,486,994
Real estate
130,334
168,805
670,548
335,855
Total Cost of Revenues
7,396,761
10,206,417
30,283,850
19,712,006
GROSS PROFIT
1,530,787
1,914,725
5,913,691
3,676,958
OPERATING EXPENSES:
Other hotel operating expenses
15,156
(26,052
)
47,116
77,307
Bad debt recovery
(1,291
)
(109,535
)
(196,903
)
(215,090
)
Salaries and employee benefits
293,197
290,845
711,807
683,280
Depreciation
200,224
198,081
592,661
583,202
Selling, general and administrative
97,549
113,126
565,283
365,689
Total Operating Expenses
604,835
466,465
1,719,964
1,494,388
INCOME FROM OPERATIONS
925,952
1,448,260
4,193,727
2,182,570
OTHER INCOME (EXPENSES):
Other income (expense)
(38
)
—
6,804
—
Gain on extinguishment of derivative liabilities
—
270,101
—
1,893,310
Gain on change in fair value of derivative liabilities
304,837
(298,283
)
461,929
1,704,654
Gain on sale of land use rights and property
—
55
—
449,528
Interest income
54,462
731,521
705,322
1,274,716
Interest expense
(125,722
)
(394,667
)
(377,728
)
(2,711,743
)
Total Other Income
233,539
308,727
796,327
2,610,465
INCOME BEFORE PROVISION FOR INCOME TAX
1,159,491
1,756,987
4,990,054
4,793,035
PROVISION FOR INCOME TAXES
288,058
550,772
1,308,526
865,550
NET INCOME
$
871,433
$
1,206,215
$
3,681,528
$
3,927,485
COMPREHENSIVE INCOME:
Net income
$
871,433
$
1,206,215
$
3,681,528
$
3,927,485
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain
252,349
4,753
1,407,022
38,613
COMPREHENSIVE INCOME
$
1,123,782
$
1,210,968
$
5,088,550
$
3,966,098
NET INCOME PER COMMON SHARE:
Basic
$
0.44
$
0.71
$
1.88
$
2.57
Diluted
$
0.44
$
0.70
$
1.86
$
2.54
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
1,989,459
1,702,336
1,957,237
1,531,055
Diluted
1,989,459
1,711,679
1,977,994
1,548,957
GeoTeam ® Note : 2011 vs. 2010 Third Quarter Adjusted EPS was $0.28 vs. $0.95
Comments & Business Outlook
GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Three Months Ended December 31,
For the Six Months Ended December 31,
2010
2009
2010
2009
(Unaudited)
(Unaudited) (As Restated)
(Unaudited)
(Unaudited) (As Restated)
NET REVENUES
Construction
$
15,400,661
$
4,405,892
$
24,991,149
$
9,596,012
Hotel
724,213
734,809
1,565,475
1,512,829
Real estate
302,400
158,981
713,369
158,981
Total Revenues
16,427,274
5,299,682
27,269,993
11,267,822
COST OF REVENUES
Construction
13,280,141
3,878,214
21,437,820
8,329,680
Hotel
393,607
494,312
909,055
1,008,859
Real estate
241,712
167,050
540,214
167,050
Total Cost of Revenues
13,915,460
4,539,576
22,887,089
9,505,589
GROSS PROFIT
2,511,814
760,106
4,382,904
1,762,233
OPERATING EXPENSES:
Other hotel operating expenses
12,255
76,586
31,960
103,359
Bad debt recovery
(188,120
)
(97,564
)
(195,612
)
(105,555
)
Salaries and employee benefits
207,251
198,349
418,610
392,435
Depreciation
197,965
191,532
392,437
385,121
Selling, general and administrative
165,044
102,611
467,734
252,563
Total Operating Expenses
394,395
471,514
1,115,129
1,027,923
INCOME FROM OPERATIONS
2,117,419
288,592
3,267,775
734,310
OTHER INCOME (EXPENSES):
Other income (expense)
58
(27
)
6,842
46
Gain on extinguishment of derivative liabilities
—
561,602
—
1,623,209
Gain on change in fair value of derivative liabilities
121,612
1,314,381
157,092
2,002,937
Gain on sale of land use rights and property
—
167
—
449,473
Interest income
431,248
543,092
650,860
543,149
Interest expense
(125,960
)
(745,695
)
(252,006
)
(2,317,076
)
Total Other Income
426,958
1,673,520
562,788
2,301,738
INCOME BEFORE PROVISION FOR INCOME TAX
2,544,377
1,962,112
3,830,563
3,036,048
PROVISION FOR INCOME TAXES
648,547
79,632
1,020,468
314,778
NET INCOME
$
1,895,830
$
1,882,480
$
2,810,095
$
2,721,270
COMPREHENSIVE INCOME:
Net income
$
1,895,830
$
1,882,480
$
2,810,095
$
2,721,270
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain
529,724
1,716
1,154,673
33,861
COMPREHENSIVE INCOME
$
2,425,554
$
1,884,196
$
3,964,768
$
2,755,131
NET INCOME PER COMMON SHARE:
Basic
$
0.97
$
1.22
$
1.45
$
1.88
Diluted
$
0.96
$
1.22
$
1.42
$
1.85
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
1,947,992
1,544,003
1,941,476
1,447,276
Diluted
1,981,696
1,544,003
1,972,611
1,469,458
GeoTeam ® Note : Adjusting EPS for non-operational gains yields EPS of $0.77 the fiscal 2011 second quarter compared to ( $0.05) in the comparable prior year period.
Comments & Business Outlook
For the Three Months Ended
September 30,
2010
2009
(Unaudited)
(Unaudited)
NET REVENUES
Construction
$
9,590,488
$
5,190,120
Hotel
841,262
778,020
Real estate
410,969
—
Total Revenues
10,842,719
5,968,140
COST OF REVENUES
Construction
8,157,679
4,451,466
Hotel
515,448
514,547
Real estate
298,502
—
Total Cost of Revenues
8,971,629
4,966,013
GROSS PROFIT
1,871,090
1,002,127
OPERATING EXPENSES:
Other hotel operating expenses
19,705
26,773
Bad debt recovery
(7,492
)
(7,991
)
Salaries and employee benefits
211,359
194,086
Depreciation and amortization
194,472
193,589
Selling, general and administrative
302,690
149,952
Total Operating Expenses
720,734
556,409
INCOME FROM OPERATIONS
1,150,356
445,718
OTHER INCOME (EXPENSES):
Other income
6,784
73
Gain on extinguishment of derivative liabilities
—
1,061,607
Gain on change in fair value of derivative liabilities
35,480
688,556
Gain on sale of land use rights and property
—
449,306
Interest income
219,612
57
Interest expense
(126,046
)
(1,571,381
)
Total Other Income
135,830
628,218
INCOME BEFORE PROVISION FOR INCOME TAX
1,286,186
1,073,936
PROVISION FOR INCOME TAXES
371,921
235,146
NET INCOME
$
914,265
$
838,790
COMPREHENSIVE INCOME:
Net income
$
914,265
$
838,790
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain
624,949
32,145
COMPREHENSIVE INCOME
$
1,539,214
$
870,935
NET INCOME PER COMMON SHARE:
Basic
$
0.47
$
0.62
Diluted
$
0.47
$
0.43
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
1,934,959
1,350,549
Diluted
1,963,526
1,939,810
Non-GAAP EPS was $0.47 vs. a loss of two cents.
Comments & Business Outlook
Gold Horse International, Inc., today announced one new real estate development project and one new construction project, scheduled to commence this fall and reach completion by year-end 2011.
Mr. Yang Liankuan, Gold Horse CEO, explained: "The Tianti Housing Project, a construction project with our construction segment acting as general contractor, will consist of seven residential buildings with a total construction area of 90,606.65 square meters . Officially underway last month, the anticipated completion date is December 2011, with total estimated revenue of $26.4 million and estimated gross profit of $3.4 million.
"Our next project, Shuian Renjia, will be developed by our real estate business in cooperation with our construction company who will act as general contractor, an example of a project under our new integrated business model.
"Shuian Renjia is located at the south part of East Xinhua Street in Hohhot, and will consist of two buildings each with 17 floors and a total of 364 apartments. The total development area will amount to 56,841.2 square meters .
"The Shuian Renjia project is expected to be completed by May 2011 and requires a total investment of 140 million RMB or about $21 million . The successful completion of this project is expected to yield revenues of 220 million RMB or $32.9 million .
"We are proud of the performance of Gold Horse in the past fiscal year, and we believe the Company is on track for an equally good or superior 2011. Western China remains the best location for growth and development in all of China, and Gold Horse is a leader amongst developers in this dynamic region," concluded Mr. Yang.
Comments & Business Outlook
For fiscal 2010
Net revenues decreased 37.1% from fiscal 2009.
The decrease in net revenues was mainly due to decreased activity in Jin Ma Construction’s operations caused by a softening of the real estate market in Hohhot
Net income increased 34.2% for fiscal 2010 from fiscal 2009. This increase was primarily attributable to an increase in gains recognized related to derivative liabilities, an increase in interest income, and a decrease in income tax expense offset by an increase in interest expenses and decrease in income from operations as described above.
Basic net income per common share of $5.14 and $4.69 , and diluted net income per common share of $5.01 and $3.17 , for fiscal 2010 and 2009, respectively
GeoTeam ® Note : After taking into account several non-operating items and applying a 25.0% tax rate , we calculate that 2010 vs. 2009 EPS would have been $4.04 vs. $3.71
"As a result of the change in the focus of Jin Ma Construction from acting as a general contractor for third party projects to building projects for Jin Ma Real Estate, we expect that both the Jin Ma Companies’ revenues and gross profit will be impacted in fiscal 2011 .
Jin Ma Construction will not report revenues from work completed for Jin Ma Real Estate, but Jin Ma Real Estate’s gross profit in sales of its properties should increase significantly .
Jin Ma Construction expects that the Jianhe Garden residential project will be completed during fiscal 2011 and Jin Ma Real Estate will continue to record revenues from both the Vocational School and the Chemistry School during fiscal 2011. While Jin Ma Real Estate has additional projects in early development, the timing of any revenues from those projects is presently undeterminable."
Liquidity Requirements
During fiscal 2010 , we satisfied all remaining amended and restated 14% secured convertible debentures by issuing 325,467 shares of our common stock for the principal balance of $1,199,450 and repaying the remaining principal balance of $983,550 using cash . The elimination of the debt will reduce our interest expense in future periods.
The Jin Ma Companies intend to meet their liquidity requirements, including capital expenditures related to the purchase of land for the development of future projects, through cash flow provided by operations, and from the collection of outstanding accounts and notes receivable balances. Upon acquiring land for future developments, the Jin Ma Companies intend to raise funds to develop its projects by the presale of units and by obtaining financing mainly from local banking institutions with which it has done business in the past. We believe that the relationships with these banks are in good standing and that the Jin Ma Companies’ real estate will secure the loans needed.
Investor Alert
On September 8, 2010 the Audit Committee of the Board of Directors of Gold Horse International, Inc. determined that our unaudited interim financial statements for the periods ended September 30, 2009, December 31, 2009 and March 31, 2010 included in our Quarterly Reports on Form 10-Q for the respective periods as filed with the Securities and Exchange Commission should not be relied upon as a result of errors in the consolidated financial statements.
All of the respective restatement adjustments are non-cash in nature and not related to the operations of the Jin Ma Companies . The correction of these accounting errors will result in an increase in our total liabilities as of September 30, 2009, December 31, 2009 and March 31, 2010. In addition, the correction of these accounting errors will result in a gain on derivative liabilities in each of the three months ended September 30, 2009 and December 31, 2009 and a loss in the three months ended March 31, 2010, all of which will impact our net income (loss) in each of those periods.
Investor Presentations
On September 12, 2010 to September 15, 2010, Mr. Adam Wasserman, Gold Horse International, Inc.'s Chief Financial Officer and Noel "Bud" Robyn, director, will
present at the Rodman & Renshaw Annual Global Investment Conference in New York, NY.
Up-Listing Watch
CEO and Chairman Liankuan Yang stated, "Our most significant annual directors' meeting since we became a U.S. publicly traded company, took place last week with all of our board members present, including our newest member, Mr. Bud Robyn, who traveled all the way from the United States to join us. The board unanimously approved an action to take the appropriate step to get Gold Horse International listed on a senior U.S. stock exchange, such as the American Stock Exchange or NASDAQ, before the end of 2010.
Special Situations
Update:
This morning, we have put Gold Horse International back on our watch list. The company provided some revenue and gross profit figures based on new construction projects valued at RMB 301.8 million ($44.2 million) with an expected gross profit of RMB 60.3 million ($8.8 million).
C oncerns S till Remain
The nature of Gold Horse's business can result in lumpy quarters.
Fiscal first quarter 2010 financials were not impressive.
$8.8 million is still below 2009 gross profit levels of $12.4 million.
It appears that these projects will not impact fiscal 2010 financials.
Fully diluted shares outstanding are be above our 50 million threshold.
Liquidity issues may exist:
"Other than our existing cash we presently have no other alternative source of working capital. We have no operations other than the Contractual Arrangements with the Jin Ma Companies and, accordingly, we are dependent upon the quarterly service fees due us to or for the receipt of working capital from the Jin Ma Companies to provide cash to pay our operating expenses. To date, no quarterly service fees have been tendered to us and those funds are being retained by the Jin Ma Companies to fund their operations. At September 30, 2009 we were owed approximately $15.1 million in service fees, which such amount remains outstanding as of the date of this report.
I n addition, we transferred $1,800,000 of the net proceeds from the November 2007 sale of the 10% secured convertible debentures to the Jin Ma Companies in the form of an unsecured, interest free advance for use by the Jin Ma Companies in their operations and to fund their registered capital requirements under PRC wholly-owned foreign enterprise rules. Jin Ma Companies repaid us approximately $921,000 of the amounts advanced to that company from July 2009 to September 2009. The rest of that amount remains outstanding and we do not have an understanding with the Jin Ma Companies regarding the repayment of the remainder."
We will code GHII as low tier GeoSpecial at $0.10 as we dissect this story a little more. Investors may conclude that the risk reward trade off is worth the risk. (We had briefly placed GHII on the GeoSpecial list in October of 2009 ).
Liquidity Requirements
Gold Horse Intl restructures debt and related pay out schedule in response to receiving default notice. New terms will potentially lead to dilution. Refer to the
SEC 8K fling, (July 6,2009) for more details.
Comments & Business Outlook
Guidance Report:
For fiscal year 2009 , Gold Horse affirms its net revenue guidance, based on the number of construction projects underway for the fourth quarter of 2009.
'Although the current business environment remains challenging and unpredictable, we believe the stimulus package introduced by the Chinese government will play an important role in creating favorable long term benefits for our construction business,' commented Mr. Yang. 'We are actively bidding on several projects that meet our profitability requirements in the Inner Mongolia region, and look forward to securing some of them in the months ahead.'
Full Year Fiscal 2009 Guidance Ending June
2009 Guidance
2008 Reported
Period Change
GAAP Revenue
$90.0 million
$ 61.7 million
45.87%
The company has not provided EPS guidance.
Source: See Release , May 20, 2009
Comments & Business Outlook
Guidance Report:
Full Year Fiscal 2009 Guidance Ending June
2009 Guidance
2008 Reported
Period Change
GAAP Revenue
$90.0 million
$ 61.7 million
45.87%
The company has not provided EPS guidance.
For fiscal year 2009, Gold Horse expects to generate combined revenue of approximately $90.0 million from its construction, hotel management and real estate development operations. The construction division is expected to generate the majority of revenue in fiscal 2009 due to the number of construction projects in progress and management's strategy to selectively bid on profitable projects. The hotel management segment is expected to remain consistent with fiscal 2008 . For the real estate segment, continued interest rate cuts and the Chinese central government's commitment to offer more affordable property in its effort to weather the current global financial crisis should stimulate the real estate sector over time. Currently the Company expects to receive annual payments from projects built by Gold Horse and sold to educational institutions.
"We see many potential business opportunities for our construction business, especially given the Chinese government's recent allocation of RMB 4 trillion to encourage affordable housing, rural development and infrastructure projects in response to the current global financial crisis. In addition, the Chinese government continues to foster the real estate market by lowering interest rates," commented Mr. Yang. "While the near term impact of these measures is not clear, we believe they provide favorable long term benefits for our construction and real estate development businesses," added Mr. Yang.
Source: PR Newswire (February 18, 2009)