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

 

lTotal 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.

 

lNet 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.

 

lBasic 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
Other

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.