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 13, 2022
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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a - 12(b)) |
| ¨ | 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 240.13d-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 13, 2022, China HGS Real Estate, Inc. issued a press release regarding its financial results for the fiscal year ended September 30, 2021. 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 13, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 13, 2022 | China HGS Real Estate, Inc. | |
| By: | /s/ Neng Chen | |
| Name: Neng Chen | ||
| Title: Chief Executive Officer and Chairman | ||
Exhibit 99.1
China HGS Reports Full Year Financial Results for the Fiscal Year 2021
HANZHONG, CHINA – January 13, 2022 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 2021 ended September 30, 2021 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 2021
| · | Total revenues for the fiscal 2021 were approximately $58.9 million, significantly increased from approximately $13.0 million in fiscal 2020. |
| · | Net income for the fiscal 2021 totaled approximately $6.4 million, increased by $5.4 million from the net income of approximately $1.0 million in fiscal 2020. |
| · | Basic and diluted net earnings per share attributable to shareholders for the fiscal 2021 were $0.27, compared to $0.04 for the fiscal 2020. |
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, 2021, 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, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Cash | $ | 170,001 | $ | 457,699 | ||||
| Restricted cash | 3,295,188 | 3,409,837 | ||||||
| Contract assets | 13,723,793 | 14,255,328 | ||||||
| Real estate property-development completed | 88,145,841 | 94,671,258 | ||||||
| Other assets | 8,358,925 | 8,132,555 | ||||||
| Property, plant and equipment, net | 558,086 | 571,330 | ||||||
| Security deposits | 1,955,202 | 1,855,506 | ||||||
| Real estate property under development | 265,769,721 | 227,741,017 | ||||||
| Due from local government - development completed | 3,023,806 | 2,869,623 | ||||||
| Total Assets | $ | 385,000,563 | $ | 353,964,153 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Construction loans | $ | 119,636,222 | $ | 109,937,408 | ||||
| Accounts payable | 18,259,151 | 25,415,352 | ||||||
| Other payables | 6,430,992 | 4,028,048 | ||||||
| Construction deposits | 3,344,917 | 3,202,730 | ||||||
| Contract liabilities | 1,886,075 | 1,847,685 | ||||||
| Customer deposits | 19,803,917 | 19,405,528 | ||||||
| Accrued expenses | 1,987,567 | 1,920,370 | ||||||
| Taxes payable | 22,954,011 | 19,881,211 | ||||||
| Total liabilities | 194,302,852 | 185,638,332 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Common stock, $0.001 par value, 50,000,000 shares authorized, 25,617,807 and 22,525,693 shares issued and outstanding September 30, 2021 and 2020 | 25,617 | 22,525 | ||||||
| Additional paid-in capital | 136,535,303 | 129,930,330 | ||||||
| Statutory surplus | 11,095,939 | 10,458,395 | ||||||
| Retained earnings | 40,691,955 | 34,954,061 | ||||||
| Accumulated other comprehensive loss | 2,348,897 | (7,039,490 | ) | |||||
| Total stockholders’ equity | 190,697,711 | 168,325,821 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 385,000,563 | $ | 353,964,153 | ||||
The accompanying notes are an integral part of these consolidated financial statements
CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020
| 2021 | 2020 | |||||||
| Real estate sales | $ | 58,915,239 | $ | 12,979,227 | ||||
| Less: Sales tax | (424,074 | ) | (193,719 | ) | ||||
| Impairment losses on real estate property completed | — | (2,703,031 | ) | |||||
| Cost of real estate sales | (46,510,001 | ) | (9,369,820 | ) | ||||
| Gross profit | 11,981,164 | 712,657 | ||||||
| Operating expenses | ||||||||
| Selling and distribution expenses | 186,886 | 580,639 | ||||||
| General and administrative expenses | 2,691,170 | 2,324,057 | ||||||
| Total operating expenses | 2,878,056 | 2,904,696 | ||||||
| Operating income (loss) | 9,103,108 | (2,192,039 | ) | |||||
| Interest income (expense), net | 5,690 | (65,535 | ) | |||||
| Other (expense) income, net | (246,814 | ) | 4,080,945 | |||||
| Income before income taxes | 8,861,984 | 1,823,371 | ||||||
| Provision for income taxes | 2,486,546 | 841,933 | ||||||
| Net income | 6,375,438 | 981,438 | ||||||
| Other comprehensive income: | ||||||||
| Foreign currency translation adjustment | 9,388,387 | 8,644,233 | ||||||
| Comprehensive income | $ | 15,763,825 | $ | 9,625,671 | ||||
| Basic and diluted income per common share: | ||||||||
| Basic and diluted | $ | 0.27 | $ | 0.04 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic and diluted | 23,944,328 | 22,525,000 | ||||||
The accompanying notes are an integral part of these consolidated financial statements
CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2021 AND 2020
| Accumulated | ||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||
| Common Stock | Additional | Statutory | Retained | Comprehensive | ||||||||||||||||||||||||
| Shares | Amount | Paid-in Capital | Reserve | Earnings | Income (Loss) | Total | ||||||||||||||||||||||
| Balance at September 30, 2019 | 22,525,693 | $ | 22,525 | $ | 129,930,330 | $ | 10,360,251 | $ | 34,070,767 | $ | (15,683,723 | ) | $ | 158,700,150 | ||||||||||||||
| Net income | — | — | — | — | 981,438 | — | 981,438 | |||||||||||||||||||||
| Appropriation to statutory reserve | — | — | — | 98,144 | (98,144 | ) | — | — | ||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | 8,644,233 | 8,644,233 | |||||||||||||||||||||
| Balance at September 30, 2020 | 22,525,693 | 22,525 | 129,930,330 | 10,458,395 | 34,954,061 | (7,039,490 | ) | 168,325,821 | ||||||||||||||||||||
| Issuance of shares for debt settlement | 3,092,114 | 3,092 | 6,604,973 | — | — | — | 6,608,065 | |||||||||||||||||||||
| Net income | — | — | — | — | 6,375,438 | — | 6,375,438 | |||||||||||||||||||||
| Appropriation to statutory reserve | — | — | — | 637,544 | (637,544 | ) | — | — | ||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | — | — | 9,388,387 | 9,388,387 | |||||||||||||||||||||
| Balance at September 30, 2021 | 25,617,807 | $ | 25,617 | $ | 136,535,303 | $ | 11,095,939 | $ | 40,691,955 | $ | 2,348,897 | $ | 190,697,711 | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
CHINA HGS REAL ESTATE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2021 and 2020
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 6,375,438 | $ | 981,438 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Deferred tax provision | — | — | ||||||
| Depreciation | 43,510 | 72,748 | ||||||
| Impairment losses on real estate property development completed | 2,703,031 | |||||||
| Gain on settlement of shareholder loan and payables with suppliers | (4,998,762 | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Security deposits | — | 6,335,525 | ||||||
| Contract assets | 1,284,745 | (889,901 | ) | |||||
| Real estate property development completed | 11,498,195 | 9,369,820 | ||||||
| Real estate property under development | (21,784,670 | ) | (7,511,989 | ) | ||||
| Other assets | 208,522 | (398,747 | ) | |||||
| Accounts payables | (1,830,135 | ) | (1,498,176 | ) | ||||
| Other payables | 2,165,081 | 23,918 | ||||||
| Contract liabilities | (60,288 | ) | (155,809 | ) | ||||
| Customer deposits | (637,942 | ) | 1,275,401 | |||||
| Construction deposits | (29,601 | ) | — | |||||
| Accrued expenses | — | (474,420 | ) | |||||
| Taxes payables | 2,162,978 | (2,616,813 | ) | |||||
| Net cash (used in) provided by operating activities | (604,167 | ) | 2,217,264 | |||||
| Cash flow from financing activities: | ||||||||
| Repayment of construction loans | — | (2,415,924 | ) | |||||
| Net cash (used in) financing activities | — | (2,415,924 | ) | |||||
| Effect of changes in foreign exchange rate on cash | 201,820 | (135,921 | ) | |||||
| Net (decrease) in cash | (402,347 | ) | (334,581 | ) | ||||
| Cash, restricted cash, beginning of year | 3,687,536 | 4,202,117 | ||||||
| Cash, restricted cash, end of year | $ | 3,465,189 | $ | 3,867,536 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | 2,018,918 | $ | 6,847,515 | ||||
| Income taxes paid | $ | 266,999 | $ | 782,836 | ||||
| Cash | $ | 170,001 | $ | 457,699 | ||||
| Restricted cash | $ | 3,295,188 | $ | 3,409,837 | ||||
| $ | 3,465,189 | $ | 3,867,536 | |||||
| Non-cash financing activities: | ||||||||
| Reclassification of interest payable to construction loan | $ | 5,024,385 | $ | — | ||||
| Settlement of shareholder loan and related accrued interest | $ | — | $ | (3,402,313 | ) | |||
| Settlements of accounts payable with real estate property under development | $ | (14,532,967 | ) | $ | — | |||
| Issuance of stock for settlement of accounts payable | $ | 6,608,065 | $ | — | ||||
| Settlement of payables with suppliers | $ | — | $ | (3,415,572 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements