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): August 19, 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 August 19, 2020, China HGS Real Estate, Inc. issued a press release regarding its financial results for the three and nine months ended June 30, 2020. 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 August 19, 2020

 

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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: August 19, 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 Third quarter of Fiscal Year 2020 Results

 


HANZHONG, CHINA – August 19, 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 third quarter of fiscal 2020 ended June 30, 2020 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

 

Total revenues for the third quarter of fiscal 2020 were approximately $3.0 million, representing a decrease of 62.7% from approximately $8.2 million in the same quarter of fiscal 2019 due to less gross floor area sold during the current quarter.

 

Total gross profit for the third quarter of fiscal 2020 were approximately negative $1.4 million, representing a decrease of $2.2 million from gross profit of approximately $0.8 million in the same quarter of fiscal 2019 due to impairment losses of $2.7 million recognized for certain slow moving real estate property development completed during this quarter.

 

Net loss for the third quarter of fiscal 2020 totaled approximately $2.6 million, decreased by $2.7 million from net income of approximately $0.2 million in the same period of last year, primarily due to impairment losses of $2.7 million recognized on certain slow moving real estate property development completed projects.

 

Basic and diluted net income per share (“EPS”) attributable to shareholders for the third quarter of fiscal 2020 were negative $0.06, comparing to EPS of $0.01 for the third quarter of fiscal 2019.

 

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, 2019, 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)

 

    June 30,     September 30,  
    2020     2019  
ASSETS                
Current assets:                
Cash   $ 516,272     $ 263,139  
Restricted cash     3,277,401       3,938,978  
Contract assets     267,875       12,668,925  
Real estate property development completed     12,186,696       100,817,944  
Other current assets     3,221,166       2,031,937  
Total current assets     19,469,410       119,720,923  
                 
Property, plant and equipment, net     565,049       614,008  
Real estate property development completed, net of current portion     95,754,116       1,115,086  
Security deposits     3,323,619       7,972,117  
Real estate property under development     222,643,172       215,745,225  
Deferred tax assets     265,238       -  
Due from local government for real estate property development completed     2,757,723       2,725,854  
Total Assets   $ 344,778,327     $ 347,893,213  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Construction loans   $ 88,507,594     $ 77,332,569  
Accounts payables     27,034,139       27,368,510  
Other payables     5,501,340       5,289,176  
Construction deposits     1,835,018       1,814,232  
Contract liabilities     1,790,712       1,907,828  
Customer deposits     18,276,196       16,139,572  
Shareholder loans     2,132,845       2,129,114  
Accrued expenses     2,991,946       3,585,644  
Taxes  payable     12,172,114       13,882,875  
Total current liabilities     160,241,904       149,449,520  
                 
Tax payable - long term     8,100,554       8,006,943  
Customer deposits, net of current portion     886,045       1,043,692  
Construction loans, less current portion     17,142,861       29,464,867  
Construction deposits, net of current portion     1,242,398       1,228,041  
Total liabilities     187,613,762       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 as of June 30,2020 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     30,614,192       34,070,767  
Accumulated other comprehensive loss     (13,762,733 )     (15,683,723 )
Total stockholders' equity     157,164,565       158,700,150  
                 
Total Liabilities and Stockholders' Equity   $ 344,778,327     $ 347,893,213  

 

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

 

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CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

   Three months ended June 30,   Nine months ended June 30, 
   2020   2019   2020   2019 
Real estate sales  $3,046,430   $8,156,204   $7,240,503    25,260,556 
Less: Sales tax   (29,222)   (283,809)   (95,503)   (788,766)
Impairment losses on real estate property development completed   (2,703,031)        (2,703,031)   - 
Cost of real estate sales   (1,728,217)   (7,091,672)   (4,900,210)   (20,571,449)
Gross (loss) profit   (1,414,040)   780,723    (458,241)   3,900,341 
Operating expenses                    
Selling and distribution expenses   77,404    85,863    477,962    360,763 
General and administrative expenses   973,318    467,159    2,381,572    1,721,778 
Total operating expenses   1,050,722    553,022    2,859,534    2,082,541 
Operating (loss) income   (2,464,762)   227,701    (3,317,775)   1,817,800 
Interest expense, net   (16,171)   (11,307)   (49,010)   (152,149)
Other expense   (58,380)   (9,982)   (155,109)   (312,145)
(Loss) income   before income taxes   (2,539,313)   206,412    (3,521,894)   1,353,506 
Provision (benefit) for income taxes   35,860    53,243    (65,319)   374,582 
Net (loss) income   (2,575,173)   153,169    (3,456,575)   978,924 
Other Comprehensive income (loss)                    
Foreign currency translation adjustment   363,273    (3,837,762)   1,920,990    66,953 
Comprehensive (loss) income  $(2,211,900)  $(3,684,593)  $(1,535,585)   1,045,877 
Basic and diluted (loss) income  per common share                    
Basic and diluted  $(0.06)  $0.01   $(0.08)   0.02 
Weighted average common shares outstanding                    
Basic and diluted   45,050,000    45,050,000    45,050,000    45,050,000 

  

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

 

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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  
Net income for the period     -       -       -       -       341,545       -       341,545  
Foreign currency translation
adjustments		     -       -       -       -       -       4,083,473       4,083,473  
Balance at March 31, 2019     45,050,000     $ 45,050     $ 129,907,805     $ 9,925,794     $ 31,628,807     $ (5,099,150 )   $ 166,408,306  
Net income for the period     -       -       -       -       153,169       -       153,169  
Foreign currency translation adjustments     -       -       -       -       -       (3,837,762 )     (3,837,762 )
Balance at June 30, 2019     45,050,000     $ 45,050     $ 129,907,805     $ 9,925,794     $ 31,781,976     $ (8,936,912 )   $ 162,723,713  
                                                         
Balance at September 30, 2019     45,050,000     $ 45,050     $ 129,907,805     $ 10,360,251     $ 34,070,767     $ (15,683,723 )   $ 158,700150  
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     $ 33,189,365     $ (11,302,861 )   $ 162,823,631  
Net loss for the period     -       -       -       -       (624,021 )     -       (624,021 )
Foreign currency translation adjustments     -       -       -       -       -       (2,823,145 )     (2,823,145 )
Balance at March 31,2020     45,050,000     $ 45,050     $ 129,907,805     $ 10,360,251     $ 33,189,365     $ (14,126,006 )   $ 159,376,465  
Net loss for the period     -       -       -       -       (2,575,173 )     -       (2,575,173 )
Foreign currency translation adjustments     -       -       -       -       -       363,273       363,273  
Balance at June 30,2020     45,050,000     $ 45,050     $ 129,907,805     $ 10,360,251     $ 30,614,192     $ (13,762,733 )   $ 157,164,565  

 

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

 

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CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine  months ended June 30, 
   2020   2019 
Cash flows from operating activities          
Net (loss) income  $(3,456,575)  $978,924 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Deferred tax provision (benefit)   (266,319)   374,582 
Depreciation   56,366    60,065 
Impairment losses on real estate property development completed   2,703,031    - 
Changes in assets and liabilities:          
Contract assets   12,600,352    2,028,876 
Real estate property development completed   (7,549,755)   (57,234,276)
Real estate property under development   (4,393,458)   58,333,457 
Other current assets   (1,170,228)   (183,682)
Security deposit   4,761,043    - 
Accounts payables   (657,012)   11,517,215 
Other payables   150,939    584,025 
Contract liabilities   (139,990)   (4,004,221)
Customer deposits   1,785,335    (1,644,082)
Construction deposits   (426)   8,599 
Accrued expenses   (631,420)   (12,911)
Taxes payables   (1,979,971)   (1,599,226)
Net cash provided by operating activities   1,811,912    9,207,345 
           
Cash flow from financing activities          
Repayments of construction loans   (2,405,349)   (11,418,405)
Net cash used in financing activities   (2,405,349)   (11,418,405)
           
Effect of changes of foreign exchange rate on cash and restricted cash   184,993    15,360 
Net decrease in cash and restricted cash   (408,444)   (2,195,700)
Cash and restricted cash , beginning of period   4,202,117    6,775,577 
Cash and restricted cash, end of period  $3,793,673   $4,579,877 
Supplemental disclosures of cash flow information:          
Interest paid  $5,142,658   $5,439,715 
Income taxes paid  $504,064   $287,416 
           
Reconciliation to amounts on condensed consolidated balance sheets:          
Cash  $516,272   $538,666 
Restricted Cash  $3,277,401   $4,041,211 
Total cash and restricted cash  $3,793,673   $4,579,877 

 

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

 

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