HOHHOT, China, Feb. 18 /PRNewswire-Asia/ -- 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 and six months ended
December 31, 2008. Second Quarter Highlights -- Net revenue
increased 78.7% year-over-year to $12.9 million -- Gross profit
increased 38.8% year-over-year to $2.1 million, gross margin was
16.0% -- Operating income increased 56.5% year-over-year to $1.6
million -- Net income increased 111.3% year-over-year to $1.0
million, or $0.02 per fully diluted share -- Excluding non-cash
debt financing expenses, adjusted net income rose 132.7% to $1.4
million, or $0.02 per fully diluted share -- Successfully completed
three construction projects on schedule: phases one and two of the
Tian Fu Garden residential project, phase one of the Ai Bo Garden
residential apartment project and phase two of the Riverbank Garden
Community residential project -- Secured new construction work with
aggregate estimated revenues of RMB 294.2 million ($43 million) and
gross profit of $8 million: Ai Bo Garden Phase Two residential
apartment project and the Fu Xing Committee Bath Center project
Second Quarter Results For the second quarter of fiscal year 2009,
net revenue was $12.9 million, up 78.7% from $7.2 million in the
same quarter of 2007. Construction revenue was $11.9 million, or
92.2% of net revenue, up from $6.2 million, or 85.6% of net
revenue, for the three months ended December 31, 2007. The
significant increase was mainly due to several major construction
projects: River Bank Garden (buildings 5 to 8 and phase two), Tian
Fu residential project (phases one and two), the Ai Bo Garden
residential apartment project (phase one and two), the Lanyu Garden
Number 3 Residential Project and the Fu Xing Committee Bath Center
project. Revenue from the hotel segment was $0.9 million, up 19.6%
from $0.7 million in the same quarter prior year and revenue from
the real estate segment was $0.1 million, down 54.0% from $0.3
million a year ago due to the Company's sale of its remaining real
estate inventory and refocused business strategy to concentrate on
its construction segment. "Our strong second-quarter results
reflect the continued success of our experienced management team in
executing a business strategy that capitalizes on our excellent
government relationships and core competencies in construction and
project management," said Mr. Liankuan Yang, chairman and CEO of
Gold Horse International, Inc. "Given our established presence in
an expanding region and the Chinese government's stimulus plan to
foster real estate and infrastructure construction, we are
confident that we will secure additional profitable projects to
meet our guidance for 2009." Gross profit for the quarter was $2.1
million, up 38.8% from $1.5 million for the same quarter last year.
Gross margin was 16.0%, down from 20.6% compared to the same period
prior year. The decrease in gross margin was primarily due to
increases in costs for building supplies and labor costs incurred
on projects. Operating expenses for the quarter were $0.5 million,
or 3.5% of net revenue, down slightly for the three months ended
December 31, 2007, or 6.3% of net revenue. While the Company
incurred higher depreciation and amortization expenses, operating
expenses decreased slightly due to decreases in salaries and
employee benefits and general and administrative expenses.
Operating income for the quarter was $1.6 million, up 56.5% from
$1.0 million for the same period prior year. Operating margin was
12.5% for the quarter, compared to 14.2% for the same period in
2007. Net income for the quarter was $1.0 million, or $0.02 per
fully diluted share, compared to net income of $0.5 million, or
$0.01 per fully diluted share, for the same period prior year.
Excluding non-cash debt financing expenses, adjusted net income was
$1.4 million, or $0.02 per fully diluted share compared with
adjusted net income of $0.6 million, or $0.01 per fully diluted
share, a year ago. Six Months Results Net revenue for the six
months ended December 31, 2008 was $42.3 million, up 150.7% from
$16.9 million in the same period prior year. Construction revenue
was $40.3 million, or 95.1% of net revenue, up 186.4% from $14.1
million, or 83.3% of net revenue, in the same period of 2007.
Revenue from the hotel segment was $1.7 million, or 4.0% of net
revenue, up 7.2% from $1.6 million, or 9.3% of net revenue, in the
same period prior year. Revenue from the real estate segment was
$0.4 million, or 0.9% of net revenue, down 69.6% from $1.3 million,
or 7.4% of net revenue, in the same period prior year. Gross profit
was $6.5 million, or 15.4% of net revenue, up 91.0% from $3.4
million, or 20.2% of net revenue for the same period of last year.
Operating income was $5.7 million, or 13.4% of net revenue, up
154.1% from $2.2 million, or 13.2% of net revenue, in the same
period of 2007. Net income was $3.4 million, or $0.06 per fully
diluted share, up 180.3% from $1.2 million, or $0.02 per fully
diluted share in the same period of 2007. Excluding non-cash debt
financing expenses, adjusted net income was $4.3 million, or $0.07
per fully diluted share for the six months ended December 31, 2008,
compared with adjusted net income of $1.4 million, or $0.02 per
fully diluted share, in the same period last year. Financial
Condition As of December 31, 2008, Gold Horse had $0.2 million in
cash and cash equivalents, $10.0 million in working capital and a
current ratio of 2.1 to 1. At quarter end the Company had
short-term debt, including the unamortized discount on the
Company's convertible debt, of $2.3 million and long-term debt of
$4.4 million. Shareholders' equity stood at $25.3 million, up from
$21.8 million as of June 30, 2008. Cash used in operating
activities during the first half of fiscal 2009 was $5.2 million,
and was used to fund construction in progress and accounts
receivable. The Company is currently in negotiations with several
banks and expects to secure short-term bank loans by the end of the
third quarter of fiscal 2009. In addition, the Company has
established a special committee to accelerate collections of
accounts receivable in order to improve cash flow. 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 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. Conference Call The Company will host
a conference call at 9:00 AM Eastern Standard Time on Wednesday,
February 18, 2009 to discuss results for the quarter ended December
31, 2008. To participate in the conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: 888-339-2688. International callers should
dial 617-847-3007. The passcode for the call is 722-936-38. If you
are unable to participate in the call at this time, a replay will
be available for 14 days starting from Wednesday, February 18 at
11: 00 AM Eastern Standard Time. To access the replay, dial
893-541-79. International callers should dial 617-801-6888. The
conference passcode is 893-541-79. Use of Non-GAAP Financial
Information GAAP results for the three month and six month periods
ended December 31, 2008 and for the three and six months ended
December 31, 2007 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 fully diluted 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 the ability of the Company to secure short
term bank loans and accelerate collection of receivables, 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
- Table 1 GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the
Three For the Six Months Ended Months Ended December 31, December
31, 2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited)
(Unaudited) NET REVENUES Construction $11,894,829 $6,177,624
$40,273,271 $14,061,393 Hotel 858,378 717,526 1,687,464 1,573,712
Real estate 149,490 324,714 382,190 1,255,528 Total Revenues
12,902,697 7,219,864 42,342,925 16,890,633 COST OF REVENUES
Construction 10,207,643 5,177,403 34,590,647 11,867,776 Hotel
475,448 379,225 921,535 861,604 Real estate 157,087 177,375 300,303
742,029 Total Cost of Revenues 10,840,178 5,734,003 35,812,485
13,471,409 GROSS PROFIT 2,062,519 1,485,861 6,530,440 3,419,224
OPERATING EXPENSES: Hotel operating expenses 16,659 21,138 32,290
56,314 Bad debt expense (recovery) (11,285) 6,797 (193,901) 307,691
Salaries and employee benefits 150,307 184,297 301,848 318,498
Depreciation and amortization 209,654 126,690 438,257 226,116
General and administrative 87,151 118,256 294,479 283,727 Total
Operating Expenses 452,486 457,178 872,973 1,192,346 INCOME FROM
OPERATIONS 1,610,033 1,028,683 5,657,467 2,226,878 OTHER INCOME
(EXPENSES): Other income (expense) 2,086 (1,672) 2,378 (1,672)
Interest income 551,373 2,027 552,318 2,114 Interest expense
(671,835) (227,692) (1,336,226) (292,405) Total Other Expenses
(118,376) (227,337) (781,530) (291,963) INCOME BEFORE PROVISION FOR
INCOME TAX 1,491,657 801,346 4,875,937 1,934,915 PROVISION FOR
INCOME TAXES 500,236 332,158 1,500,742 730,857 NET INCOME $991,421
$469,188 $3,375,195 $1,204,058 COMPREHENSIVE INCOME: NET INCOME
$991,421 $469,188 $3,375,195 $1,204,058 Unrealized foreign currency
translation gain 9,130 398,951 63,724 558,025 COMPREHENSIVE INCOME
$1,000,551 $868,139 $3,438,919 $1,762,083 NET INCOME PER COMMON
SHARE: Basic $0.02 $0.01 $0.06 $0.02 Diluted $0.02 $0.01 $0.06
$0.02 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 52,625,473
51,161,837 52,585,038 50,580,920 Diluted 58,971,403 59,434,147
58,930,968 55,902,121 Table 2 Gold Horse International, INC.
RECONCILIATION OF NON-GAAP FINANCIAL DATA For the three For the
three Months ended Months ended Adjusted Net income December 31,
2008 December 31, 2007 ($ in thousands except per share data) Net
Income (Loss) Net Diluted Net Diluted Diluted EPS Income EPS Income
EPS Adjusted Amount 1,439 0.02 618 0.01 Adjustments Interest
expense from amortization of debt discount 409 -- 136 --
Amortization of debt issuance costs 38 -- 13 -- Amount per
consolidated statement of operations 991 0.02 469 0.01 For the Six
For the Six Months ended Months ended Adjusted Net income December
31, 2008 December 31, 2007 ($ in thousands except per share data)
Net Income (Loss) Net Diluted Net Diluted Diluted EPS Income EPS
Income EPS Adjusted Amount 4,271 0.07 1,353 0.02 Adjustments
Interest expense from amortization of debt discount 819 0.01 136 --
Amortization of debt issuance costs 77 -- 13 -- Amount per
consolidated statement of operations 3,375 0.06 1,204 0.02 Table 3
GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS As of As of December 31, June 30, 2008
2008 (Unaudited) ASSETS Cash and cash equivalents $243,983
$1,637,986 Accounts receivable, net 11,554,905 7,528,608 Note
receivable, net - current portion 158,618 -- Inventories, net
41,579 56,847 Advances to suppliers, net 98,038 95,754 Other
receivable, net 28,761 35,478 Due from related parties 43,074
1,700,036 Deferred debt costs 38,370 115,110 Real estate held for
sale -- 125,070 Cost and estimated earnings in excess of billings
5,103 221,537 Construction in progress 5,084,686 4,537,240 Deposit
on prepaid land use rights 1,889,419 2,524,877 Prepaid land use
rights - current portion 3,570 3,561 Refundable performance deposit
-- 145,522 Total Current Assets 19,190,106 18,727,626 Property and
equipment, net 10,082,495 10,476,397 Note receivable - non-current
portion, net 8,641,523 -- Deposit on prepaid land use rights
802,428 2,182,835 Prepaid land use rights - non-current portion
163,951 165,312 Total Assets $38,880,503 $31,552,170 LIABILITIES
AND STOCKHOLDERS' EQUITY Current Liabilities: Convertible debt, net
$1,773,687 $955,062 Loans payable, current portion 259,695 145,522
Accounts payable 5,436,970 1,278,779 Accrued expenses 596,891
468,235 Taxes payable 839,027 2,215,381 Advances from customers
194,888 192,356 Billings in excess of costs and estimated earnings
51,228 23,369 Total Current Liabilities 9,152,386 5,278,704 Loans
payable, net of current portion 4,387,967 4,490,235 Total
Liabilities 13,540,353 9,768,939 Commitments (Note 16) -- --
Stockholders' equity: Preferred stock ($.0001 par value; 20,000,000
shares authorized; none issued and outstanding) -- -- Common stock
($.0001 par value; 300,000,000 shares authorized; 52,668,603 and
52,544,603 shares issued and outstanding at December 31, 2008 and
June 30, 2008) 5,266 5,254 Non-controlling interest in variable
interest entities 6,095,314 6,095,314 Additional paid-in capital
4,689,166 4,571,178 Statutory reserve 1,665,779 1,216,292 Retained
earnings 10,451,852 7,526,144 Other comprehensive income 2,432,773
2,369,049 Total Stockholders' Equity 25,340,150 21,783,231 Total
Liabilities and Stockholders' Equity $38,880,503 $31,552,170 Table
4 GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Month Ended
December 31, 2008 2007 (Unaudited) (Unaudited) CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $3,375,195 $1,204,058 Adjustments
to reconcile net income to net cash (used in) provided by operating
activities: Depreciation 438,257 226,116 Rent expense associated
with prepaid land use rights 1,786 -- Bad debt expense (recovery)
(193,901) 307,691 Interest expense from amortization of debt
discount 818,625 136,437 Amortization of debt issuance costs 76,740
12,790 Recognition of unearned gain (51,735) -- Changes in assets
and liabilities: Accounts receivable (3,847,036) 754,410 Note
receivable 200,378 -- Inventories 15,417 (30,785) Other receivables
40,119 154,832 Advance to suppliers (2,038) (86,010) Costs and
estimated earnings in excess of billings 217,038 14,289 Real estate
held for sale 125,412 647,237 Construction in progress (9,486,120)
(978,031) Refundable performance deposit 145,920 -- Accounts
payable and accrued expenses 4,283,475 (642,811) Taxes payable
(1,382,271) (280,423) Advances from customers 2,038 (459,089)
Billings in excess of costs and estimated earnings 27,804 (124,843)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (5,194,897)
855,868 CASH FLOWS FROM INVESTING ACTIVITIES: Repayment of amounts
due from related party 1,661,601 36,128 Proceeds from sale of
property and equipment -- 1,451 Proceeds from return of deposit on
prepaid land use rights 2,028,288 -- Payment of deposits for
prepaid land use rights -- (732,722) Purchase of property and
equipment (17,384) (1,854,866) NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 3,672,505 (2,550,009) CASH FLOWS FROM
FINANCING ACTIVITIES: Proceeds from convertible debt -- 2,183,000
Payment of placement fees -- (204,640) Repayment of loans payable
-- (133,222) Proceeds from sale of common stock 118,000 2,219,252
NET CASH PROVIDED BY FINANCING ACTIVITIES 118,000 4,064,390 EFFECT
OF EXCHANGE RATE ON CASH 10,389 68,065 NET (DECREASE) INCREASE IN
CASH & CASH EQUIVALENTS (1,394,003) 2,438,314 CASH & CASH
EQUIVALENTS - beginning of period 1,637,986 251,044 CASH & CASH
EQUIVALENTS - end of the period $243,983 $2,689,358 SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest
$193,043 $801,336 Income taxes $2,308,429 $946,591 For more
information, please contact: Gold Horse International, Inc. Mr.
Adam Wasserman, CFO Tel: +1-800-867-0078 x702 Email: CCG Investor
Relations Mr. Crocker Coulson, President Tel: +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., +1-800-867-0078 x702, ; or Mr. Crocker
Coulson, President of CCG Investor Relations, +1-646-213-1915,
Copyright