HOHHOT, China, Nov. 10 /Xinhua-PRNewswire/ -- Gold Horse
International, Inc., (OTC:GHII) (BULLETIN BOARD: GHII) ("Gold
Horse" or "the Company"), a multifaceted business group that
controls and operates a construction company, real estate
development business and a hotel in Inner Mongolia, China, today
provided its financial results for the three months ended September
30, 2008. First Quarter Highlights -- Net revenue increased 204.4%
year-over-year to $29.4 million -- Gross profit increased 131.1%
year-over-year to $4.5 million, gross margin was 15.2% -- Operating
income increased 237.8% year-over-year to $4.0 million -- Net
income increased 224.4% year-over-year to $2.4 million, or $0.04
per fully diluted share -- Excluding non-cash debt financing
expenses, adjusted net income rose 285.3% to $2.8 million, or $0.05
per fully diluted share -- Awarded the Lanyu Garden No. 3
Residential Building project in September 2008 with expected net
profit of $800,000 -- Secured requisite approvals and
certifications to move forward with joint venture agreement to
build a 45MW wind farm in Inner Mongolia First Quarter Results For
the first quarter of fiscal year 2009 ending on September 30, 2008,
net revenue was $29.4 million, up 204.4% from $9.7 million in the
same quarter of 2007. Construction revenue was $28.4 million, or
96.4% of net revenue, up from $7.9 million, or 81.5% of net
revenue, for the three months ended September 30, 2007. The
significant increase was mainly due to three major construction
projects that began in April 2008 and are expected to be completed
in November 2008: Riverbank Garden Community (phase two), Ai Bo
Gardens residential apartment project and the Tian Fu Garden
residential project (phases one and two). Revenue from the hotel
segment was $0.8 million, relatively unchanged from the same
quarter prior year, and revenue from the real estate segment was
$0.2 million, down from $0.9 million a year ago due to the
successful completion and sale of all real estate projects. "We are
pleased to report strong results for the first quarter of fiscal
2009, which reflect the continued success of our management team in
securing and executing construction projects and maintaining
excellent government and customer relationships," commented Mr.
Liankuan Yang, chairman and CEO of Gold Horse International, Inc.
"After announcing strong year-end results for fiscal year 2008 in
October, Gold Horse continues to thrive as a leading construction
and engineering company in the rapidly growing Inner Mongolia
region. Given our regional focus, we are relatively insulated from
the volatile conditions associated with the global financial market
crisis and have an active pipeline of new construction projects
available for bid." Gross profit for the quarter was $4.5 million,
up 131.1% from $1.9 million for the same quarter last year. Gross
margin was 15.2%, down from 20.0% compared to the same period prior
year. The decrease in gross margin was primarily due to the
increased contribution of construction segment during the first
quarter of fiscal 2009, as this segment produces a lower gross
margin than the real estate segment, thereby reducing overall gross
margin, and the rising costs of building supplies and labor costs
for the construction segment. Operating expenses for the quarter
were $0.4 million, or 1.4% of net revenue, down 42.8% from $0.7
million, or 7.6% of net revenue, a year ago. While the Company
incurred higher depreciation and amortization expenses and
increased salaries and benefits, operating expenses decreased
overall due to a $0.2 million recovery of bad debt expense and
lower hotel operating expenses. Operating income for the quarter
was $4.0 million, up 237.8% from $1.1 million for the same period
prior year. Operating margin was 13.7% for the quarter, compared to
12.4% a year ago. Net income for the quarter was $2.4 million, or
$0.04 per fully diluted share, compared to net income of $0.7
million, or $0.01 per fully diluted share, for the same period
prior year. Excluding non-cash debt financing expenses, adjusted
net income was $2.8 million, or $0.05 per fully diluted share, for
the quarter. Financial Condition As of September 30, 2008, Gold
Horse had $1.4 million in cash and cash equivalents, $17.5 million
in working capital and a current ratio of 3.6 to 1. Long-term debt
was $4.5 million, excluding the current portion, and shareholders'
equity stood at $24.2 million, up from $21.8 million as of June 30,
2008. Cash used in operating activities during the quarter was $2.5
million, and was used to fund accounts receivable and construction
in progress for the Inner Mongolia Electrical Vocational Technical
School, which was completed in October 2008 and will begin
generating annual lease income of $685,000 for Jin Ma Real Estate
in the second quarter of fiscal 2009. The Company has historically
funded its capital expenditures and ongoing development projects
from working capital. The Company intends to meet its liquidity
requirements, including capital expenditures related to the
purchase of land for the development of our future projects,
through cash flow provided by operations and additional funds
raised by future financings. Upon acquiring land for future
development, the Company intends to raise funds to develop the
projects by obtaining mortgage financing from local banking
institutions. Recent Events In October 2008, Jin Ma Construction
began construction of the 28,000 square-meter Lanyu Garden No. 3
Residential Building Project. The Company expects $800,000 in net
profit from this project, which is scheduled for completion in
December 2009. During the quarter, Jin Ma Construction received the
requisite approvals and certifications to move forward with a joint
venture agreement the Company signed in May 2008 with two
development-stage companies to construct a wind- power plant and
the construction of a manufacturing facility to build wind power
generator modules to be used at the wind power plant in Inner
Mongolia. Gold Horse has been pursuing financing sources to meet
the initial $30 million capital requirement to build the wind farm
and power plant which is expected to cost approximately $70
million. However, the availability of capital has been limited by
the current global economic crisis. The Company intends to utilize
internally generated resources, if necessary, to begin construction
during the second half of calendar 2009 as scheduled. Jin Ma has no
plans to begin the construction or financing of the manufacturing
facility at this time which is estimated to cost $30 million.
Business Outlook 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 majority of revenue is expected to come from the
construction division in fiscal 2009 due to the number of projects
currently under construction and management's strategy of
selectively bidding on profitable projects from the number of
available projects for bid. The hotel management segment is
expected to remain consistent with fiscal 2008. While the real
estate segment is not expected to be a major growth driver in 2009,
the recent interest rate cuts and other actions from the Chinese
central bank could rejuvenate this segment over time by making real
estate property more affordable for both developers and consumers.
"We began fiscal 2009 with solid growth in revenue and net income.
Our construction segment continues to execute on our existing
projects and recently commenced building the Lanyu Garden project.
We have also completed the Inner Mongolia Electrical Vocational
Technical School, which will generate a stable source of lease
income for years to come," Mr. Yang said. "With a number of
projects scheduled for completion in November, we are actively
pursuing new construction projects using discretion in selecting
the most profitable and attractive projects in order to provide the
best possible return and maximize value to our shareholders."
Conference Call The Company will host a conference call at 9:00 AM
Eastern Standard Time on Tuesday, November 11, 2008 to discuss
results for the quarter ended September 30, 2008. To participate in
the conference call, please dial the following number five to ten
minutes prior to the scheduled conference call time: 888-419-5570.
International callers should dial 617-896-9871. The passcode for
the call is 140-766-19. If you are unable to participate in the
call at this time, a replay will be available for 14 days starting
from Thursday, November 11 at 11:00 AM Eastern Standard Time. To
access the replay, dial 888-286-8010. International callers should
dial 617-801-6888. The conference passcode is 579-357-13. Use of
Non-GAAP Financial Information GAAP results for the three month
periods ended September 30, 2008 include certain non-cash debt
financing expenses. To supplement the Company's condensed
consolidated financial statements presented on a GAAP basis, the
Company has provided non-GAAP financial information, which are
adjusted net income and adjusted earnings per share, excluding the
impact of these items in this release. The Company's management
believes that these non-GAAP measures provide investors with a
better understanding of how the results relate to the Company's
historical performance. A reconciliation of adjustments to GAAP
results appears below (Table 2). This additional non-GAAP
information is not meant to be considered in isolation or as a
substitute for GAAP financials. The non-GAAP financial information
that the Company provides also may differ from the non-GAAP
information provided by other companies. About Gold Horse
International, Inc. Gold Horse International, Inc., through its
wholly owned subsidiaries, Gold Horse International, Inc. (Nevada)
and Global Rise International Ltd., controls and operates Inner
Mongolia Jin Ma Construction Co., Ltd., Inner Mongolia Jin Ma Hotel
Co., Ltd., and Inner Mongolia Jin Ma Real Estate Development Co.,
Ltd., all based in Hohhot, the regional capital of Inner Mongolia
Autonomous Region in China. Jin Ma Construction has been providing
construction and general contractor services in Hohhot to both
private developers and to the local and regional governments since
1980. Jin Ma Hotel owns, operates and manages the Jin Ma Hotel, a
full-service, two-star hotel and restaurant and banquet facility
located in Hohhot. Jin Ma Real Estate develops residential and
commercial properties in Hohhot. Safe Harbor Statement This release
contains certain "forward-looking statements" relating to the
business of the Company and its subsidiary companies. These forward
looking statements are often identified by the use of
forward-looking terminology such as "believes, expects" or similar
expressions. Such forward looking statements involve known and
unknown risks and uncertainties such as cost overruns, lack of
materials, projected earnings not realized and other risks of
construction that may cause actual results to be materially
different from those described herein as anticipated, believed,
estimated or expected. Investors should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. The Company's actual results could differ
materially from those anticipated in these forward-looking
statements as a result of a variety of factors, including those
discussed in the Company's periodic reports that are filed with the
Securities and Exchange Commission and available on its Web site
(http://www.sec.gov/). All forward-looking statements attributable
to the Company or to persons acting on its behalf are expressly
qualified in their entirety by these factors other than as required
under the securities laws. The Company does not assume a duty to
update these forward- looking statements. -- Financial Tables
Follow -- GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the
Three Month Ended September 30, 2008 2007 (Unaudited) (Unaudited)
NET REVENUES Construction $28,378,442 $7,883,769 Hotel 829,086
856,186 Real estate 232,700 930,814 Total Revenues 29,440,228
9,670,769 COST Of REVENUES Construction 24,383,004 6,690,373 Hotel
446,087 482,379 Real estate 143,216 564,654 Total Cost of Revenues
24,972,307 7,737,406 GROSS PROFIT 4,467,921 1,933,363 OPERATING
EXPENSES: Hotel operating expenses 15,631 35,176 Bad debt expense
(recovery) (182,616) 300,894 Salaries and employee benefits 151,541
134,201 Depreciation and amortization 228,603 99,426 General and
administrative 207,328 165,471 Total Operating Expenses 420,487
735,168 INCOME FROM OPERATIONS 4,047,434 1,198,195 OTHER INCOME
(EXPENSES): Other income 292 -- Interest income 945 87 Interest
expense (664,391) (64,713) Total Other Expenses (663,154) (64,626)
INCOME BEFORE PROVISION FOR INCOME TAX 3,384,280 1,133,569
PROVISION FOR INCOME TAXES 1,000,506 398,699 NET INCOME $2,383,774
$734,870 COMPREHENSIVE INCOME: NET INCOME $2,383,774 $734,870
Unrealized foreign currency translation gain 54,594 159,074
COMPREHENSIVE INCOME $2,438,368 $893,944 NET INCOME PER COMMON
SHARE: Basic $0.05 $0.01 Diluted $0.04 $0.01 WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING: Basic 52,544,603 50,000,002 Diluted
58,890,533 50,000,002 Gold Horse International, INC. RECONCILIATION
OF NON-GAAP FINANCIAL DATA For the Three Months For the Three
Months ended ended Adjusted Net income September 30, 2008 September
30, 2007 ($ in thousands except per share data) Net Income (Loss)
Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Adjusted
Amount 2,831 0.05 735 0.01 Adjustments Interest expense from
amortization of debt discount 409 0.01 -- -- Amortization of debt
Issuance costs 38 0.00 -- -- Amount per consolidated statement of
operations 2,384 0.04 735 0.01 GOLD HORSE INTERNATIONAL, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS As of As of
September 30, June 30, 2008 2008 (Unaudited) ASSETS Cash and cash
equivalents $1,417,461 $1,637,986 Accounts receivable, net
10,468,752 7,528,608 Inventories, net 51,346 56,847 Advances to
suppliers, net 96,566 95,754 Other receivable, net 181,441 35,478
Due from related parties 781,920 1,700,036 Deferred debt costs
76,740 115,110 Real estate held for sale -- 125,070 Cost and
estimated earnings in excess of billings 6,745 221,537 Construction
in progress 7,752,373 4,537,240 Deposit on prepaid land use rights
3,129,124 2,524,877 Prepaid land use rights - current portion 3,570
3,561 Refundable performance deposit 145,877 145,522 Total Current
Assets 24,111,915 18,727,626 Property and equipment, net 10,290,768
10,476,397 Deposit on prepaid land use rights 802,322 2,182,835
Prepaid land use rights - non-current portion 164,822 165,312 Total
Assets $35,369,827 $31,552,170 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: Convertible debt, net $1,364,375 $955,062
Loans payable, current portion 145,877 145,522 Accounts payable
2,337,336 1,278,779 Accrued expenses 526,910 468,235 Taxes payable
1,483,737 2,215,381 Advances from customers 193,404 192,356 Due to
related parties 583,507 -- Billings in excess of costs and
estimated earnings 11,908 23,369 Total Current Liabilities
6,647,054 5,278,704 Loans payable, net of current portion 4,501,174
4,490,235 Total Liabilities 11,148,228 9,768,939 Commitments -- --
Stockholders' equity: Preferred stock ($.0001 par value; 20,000,000
shares authorized; none issued and outstanding) -- -- Common stock
($.0001 par value; 300,000,000 shares authorized; 52,544,603 and
50,000,002 shares issued and outstanding at September 30, 2008 and
June 30, 2008, respectively) 5,254 5,254 Non-controlling interest
in variable interest entities 6,095,314 6,095,314 Additional
paid-in capital 4,571,178 4,571,178 Statutory reserve 1,516,444
1,216,292 Retained earnings 9,609,766 7,526,144 Other comprehensive
income 2,423,643 2,369,049 Total Stockholders' Equity 24,221,599
21,783,231 Total Liabilities and Stockholders' Equity $35,369,827
$31,552,170 GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Month
Ended September 30, 2008 2007 (Unaudited) (Unaudited) CASH FLOWS
FROM OPERATING ACTIVITIES: Net income $2,383,774 $734,870
Adjustments to reconcile net income to net cash (used in) provided
by operating activities: Depreciation 228,603 99,426 Rent expense
associated with prepaid land use rights 893 -- Bad debt expense
(recovery) (182,616) 300,894 Interest expense from amortization of
debt discount 409,313 -- Amortization of debt issuance costs 38,370
-- Changes in assets and liabilities: Accounts receivable
(2,762,312) (2,251,612) Inventories 5,642 (28,269) Other
receivables (123,728) (30,808) Advance to suppliers (579) (170,828)
Costs and estimated earnings in excess of billings 215,400 13,454
Real estate held for sale 125,415 494,377 Construction in progress
(3,205,099) -- Accounts payable and accrued expenses 1,113,716
2,322,996 Income tax payable (737,276) (160,241) Advances from
customers 579 136,612 Billings in excess of costs and estimated
earnings (11,521) 47,203 NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES (2,501,426) 1,508,074 CASH FLOWS FROM INVESTING
ACTIVITIES: Repayment of amounts due from related party 922,550
2,677 Proceeds from return of deposit on prepaid land use rights
787,985 -- Payment of deposits for prepaid land use rights --
(66,058) Purchase of property and equipment (17,384) (1,517,860)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,693,151
(1,581,241) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from
advances from related party 583,693 -- Proceeds from sale of common
stock -- 624,459 NET CASH PROVIDED BY FINANCING ACTIVITIES 583,693
624,459 EFFECT OF EXCHANGE RATE ON CASH 4,057 3,850 NET (DECREASE)
INCREASE IN CASH & CASH EQUIVALENTS (220,525) 555,142 CASH
& CASH EQUIVALENTS - beginning of year 1,637,986 251,044 CASH
& CASH EQUIVALENTS - end of the period $1,417,461 $806,186
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for:
Interest $921,508 $-- Income taxes $1,417,616 $534,451 For more
information, please contact: Gold Horse International, Inc. Mr.
Adam Wasserman, CFO Phone: 800-867-0078 x702 Email: CCG Investor
Relations Mr. Crocker Coulson, President Phone: +1-646-213-1915
Email: Web: http://www.ccgirasia.com/ DATASOURCE: Gold Horse
International, Inc. CONTACT: Mr. Adam Wasserman, CFO of Gold Horse
International, Inc., 800- 867-0078 x702, or ; or at CCG Investor
Relations, Mr. Crocker Coulson, President, +1-646-213-1915, or ,
for GHII
Copyright