Full year revenues increased 136.3% to $66.9 million Full year net
income increased 74.7% year-over-year to $4.5 million HOHHOT,
China, Oct. 7 /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 fourth quarter and fiscal year ended June 30, 2008.
Fourth Quarter 2008 Highlights -- Net revenue increased 471.3%
year-over-year to $45.4 million -- Gross profit increased 260.2%
year-over-year to $7.0 million, gross margin was 15.5% -- Operating
income increased 299.5% year-over-year to $6.2 million -- Excluding
non-cash debt financing expenses, adjusted net income rose 379.1%
to $4.6 million, or $0.08 per fully diluted share -- Net income
increased 332.3% year-over-year to $4.1 million, or $0.07 per fully
diluted share -- Entered into a joint venture agreement to build a
45,000 KW wind farm and a manufacturing facility to build wind
power generator modules in Inner Mongolia Fiscal Year 2008
Highlights -- Net revenue increased 136.3% year-over-year to $66.9
million -- Gross profit increased 91.2% year-over-year to $11.4
million, gross margin was 17.0% -- Operating income increased 89.7%
year-over-year to $8.4 million -- Excluding non-cash debt financing
expenses, adjusted net income rose 114.9% to $5.6 million, or $0.10
per fully diluted share -- Net income increased 74.7%
year-over-year to $4.5 million, or $0.08 per fully diluted share --
Completed a private placement of 10% secured convertible notes
generating gross proceeds of $2.2 million Fourth Quarter 2008
Results For the fourth quarter ended June 30, 2008, net revenue was
$45.4 million, up 471.3% from $8.0 million in the same quarter of
2007. Construction revenue was $44.1 million, or 97.1% of net
revenue, up from $3.6 million, or 44.8% of net revenue, for the
fourth quarter of fiscal 2007. The significant increase was mainly
due to three major construction projects which began in April 2008
and are expected to be completed in November 2008: Ai Bo Gardens
residential apartment project, get, and the Tian Fu Garden
residential project (phases one and two). Revenue from the hotel
segment was $0.8 million, relatively unchanged from the fourth
quarter of fiscal 2007, and revenue from the real estate segment
was $0.5 million, down from $3.6 million a year ago due to the
successful completion and sales of all real estate projects. "Our
outstanding results in the fourth quarter were the result of timely
execution of our high-quality construction projects, including Ai
Bo Gardens, Tian Fu Garden and the Riverbank Garden Community,"
commented Mr. Liankuan Yang, CEO of Gold Horse International Inc.
"In addition to our excellent financial performance in fiscal 2008,
Gold Horse became a publicly traded company and raised capital for
future growth." Gross profit for the quarter was $7.0 million, up
260.2% from $2.0 million for the same quarter last year. Gross
margin was 15.5%, down 9.1% from 24.6% compared to the fourth
quarter of 2007. The decrease was primarily due to the significant
contribution of the real estate segment during the quarter fourth
quarter of fiscal 2007, as this segment produces a higher gross
margin than the construction segment, which helped increase overall
gross margins. Operating expenses for the fourth quarter of 2008
were $0.9 million, or 1.9% of net revenue, up 110.3% from $0.4
million, or 5.1% of net revenue, a year ago. The increase in
operating expenses was mainly due to higher depreciation and
amortization expenses, salary expenses, and general and
administrative expenses, which were offset by a $0.5 million
recovery of bad debt expense. Operating income for the quarter was
$6.2 million, up 299.5% from $1.5 million for the same period last
year. Operating margin was 13.6% in the fourth quarter of fiscal
2008, compared to 19.5% a year ago. Net income was $4.1 million, or
$0.07 per fully diluted share, compared to net income of $1.0
million, or $0.02 per fully diluted share, in the fourth quarter of
2007. Excluding non-cash debt financing expenses, adjusted net
income was $4.6 million, or $0.08 per fully diluted share, in the
fourth quarter of 2008. Fiscal Year 2008 Results Net revenue for
fiscal 2008 was $66.9 million, up 136.3% from $28.3 million in
2007. Construction revenue was $61.7 million, or 92.2% of net
revenue, up 185.5% from $21.6 million, or 76.3% of net revenue, in
fiscal 2007. Revenue from the hotel segment was $3.2 million, or
4.7% of net revenue, up 15.2% from $2.7 million, or 9.7% of net
revenue, in fiscal 2007. Revenue from the real estate segment was
$2.0 million, or 3.0% of net revenue, down from $4.0 million, or
14.0% of net revenue, in fiscal 2007. Gross profit was $11.4
million, or 17.0% of net revenue, up 91.2% from $6.0 million, or
21.0% of net revenue, last year. Operating profit was $8.4 million,
or 12.5% of net revenue, up 89.7% from $4.4 million, or 15.6% of
net revenue, in 2007. Net income was $4.5 million, or $0.08 per
fully diluted share, up 74.7% from $2.6 million, or $0.05 per fully
diluted share in 2007. Excluding non-cash debt financing expenses,
adjusted net income was $5.6 million, or $0.10 per fully diluted
share, in 2008. Financial Condition As of June 30, 2008, Gold Horse
had $1.6 million in cash and cash equivalents, $13.4 million in
working capital and a current ratio of 3.5. Long-term debt was $4.5
million, excluding the current portion and shareholders' equity
stood at $21.8 million, up from $10.7 million last year. The
Company generated $2.9 million in cash flow from operating
activities in fiscal 2008, up from $1.3 million in fiscal 2007.
Recent Events In September 2008, Gold Horse was awarded the Lanyu
Garden No. 3 Residential Building project, which covers a
construction area of 28,000 square meters. Gold Horse expects to
commence construction in October 2008, and will complete the
project in December 2009. In July 2008, the Company's Inner
Mongolia affiliate, Jin Ma Real Estate Development Co. Ltd. ("Jin
Ma Real Estate"), began constructing the 60,000 square-meter Jian
Guan residential project in the Yu Quan District of Hohhot and
expects to complete the project in December 2009. The construction
cost of this project is approximately RMB 108 million ($15.9
million), with a net profit of approximately RMB 50 million ($7.4
million). Jin Ma Construction Co. Ltd. ("Jin Ma Construction") is
performing all of the construction services on behalf of Jin Ma
Real Estate. In July 2008, Jin Ma Real Estate began the
construction of student apartments for the Inner Mongolia Chemistry
College situated in Inner Mongolia University City, a compound
where many higher education institutions are located. Jin Ma
Construction began developing the 51,037 square-meter project in
July 2008 and expects to complete the project in the first quarter
of fiscal 2009. Jin Ma Construction is performing all of the
construction services on behalf of Jin Ma Real Estate for this
project as well. Once completed, the Company will lease the
buildings to the college for a period of 20 years. The cost of
construction is estimated to be RMB 50 million ($7.4 million), and
the Company expects the annual investment returns to be RMB 7
million ($1 million) for 20 years. Business Outlook For fiscal year
2009, the Company expects its construction, hotel management and
real estate development operations to generate combined revenue of
approximately $90.0 million. Management expects that the
construction division will continue to generate the majority of
revenue in fiscal 2009, due to the number of projects currently
under construction and an active pipeline of future projects
available for bid. The hotel management segment is expected to
remain consistent with fiscal 2008. The real estate segment is not
expected to be a major growth driver in fiscal 2009 as Chinese
authorities have attempted to reign in the real estate market by
being more stringent in the granting of land use rights, raising
interest rates and increasing capital requirements for lenders. In
May 2008, Jin Ma Construction signed an agreement to form a joint
venture with two development stage companies, Erlianhaote Hengyuan
Wind Power Company Ltd. and Inner Mongolia Tianwei Wind Power
Equipment Company Ltd., to construct a wind-power plant and a
manufacturing facility to build wind-power generator modules to be
used at the wind power plant. The Company plans to commence
construction of the wind farm in the second half of calendar year
2009. Gold Horse is in the process of securing necessary approvals
and certificates, and is seeking funding from various sources to
move forward with the project. "We closed the year with excellent
performance and look forward to another successful year in fiscal
2009. The building construction market in Hohhot continues to
thrive, and we believe we are well positioned to win new business
due to our skilled workforce, solid relationships with customers
and commitment to quality," said Mr. Yang. "We are also excited
about our joint venture in the wind power industry and look forward
to contributing our construction expertise to the growing demand
for wind farms and wind-related construction in Inner Mongolia --
one of the China's leading resources for wind power." Conference
Call The Company will host a conference call at 9:00 AM EDT on
Tuesday, October 7, 2008 to discuss results for the fourth quarter
and full year 2008. To participate in the conference call, please
dial the following number five to ten minutes prior to the
scheduled conference call time: 800-688-0796. International callers
should dial 617-614-4070. The passcode for the call is 307-780-68.
If you are unable to participate in the call at this time, a replay
will be available for 14 days starting from Tuesday, October 7 at
11:00 AM EDT. To access the replay, dial 888-286-8010.
International callers should dial 617-801-6888. The conference
passcode is 937-251-60. Use of Non-GAAP Financial Information GAAP
results for the three and twelve month periods ended June 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 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. GOLD HORSE INTERNATIONAL, INC. AND
SUBSIDIARIES AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS For
Three Months Ended For the Years Ended June 30, June 30, 2008 2007
2008 2007 (unaudited) (unaudited) NET REVENUES Construction
$44,128,381 $3,562,654 $61,714,065 $21,615,061 Hotel 827,613
837,678 3,167,483 2,747,727 Real estate 471,995 3,551,572 2,032,278
3,959,518 Net Revenues 45,427,989 7,951,904 66,913,826 28,322,306
COST OF REVENUES Construction 37,631,877 3,094,416 52,527,085
18,178,472 Hotel 445,687 439,891 1,763,968 1,440,978 Real estate
305,601 2,461,878 1,244,007 2,750,522 Net Cost of REVENUES
38,383,165 5,996,185 55,535,060 22,369,972 GROSS PROFIT 7,044,824
1,955,719 11,378,766 5,952,334 OPERATING EXPENSES Hotel 56,774
(50,776) 132,435 171,879 Bad debt (502,038) 49,200 294,837 530,963
Salaries and employee benefits 482,228 229,633 1,032,490 359,473
Depreciation and amortization 656,946 131,996 1,018,072 348,059
General and administrative 160,104 45,985 529,175 127,808 Total
Operating Expenses 854,014 406,038 3,007,009 1,538,182 INCOME FROM
OPERATIONS 6,190,810 1,549,681 8,371,757 4,414,152 OTHER INCOME
(EXPENSES) Other income 14,430 (220) 12,732 119 Registration rights
penalty (62,882) -- ( 117,882) -- Interest income 848 65 7,954 618
Interest expense (567,760) (63,672) (1,426,138) (250,272) Total
Other Expenses (615,364) (63,827) (1,523,334) (249,535) INCOME
BEFORE PROVISION FOR INCOME TAX 5,575,446 1,485,854 6,848,423
4,164,617 PROVISION FOR INCOME TAXES 1,435,581 528,234 2,316,289
1,570,091 NET INCOME $ 4,139,865 $ 957,620 $ 4,532,134 $ 2,594,526
COMPREHENSIVE INCOME: NET INCOME $ 4,139,865 $ 957,620 $ 4,532,134
$ 2,594,526 Unrealized foreign currency translation gain 650,366
161,754 1,824,171 453,154 COMPREHENSIVE INCOME $ 4,790,231 $
1,119,374 $ 6,356,305 $ 3,047,680 NET INCOME PER COMMON SHARE Basic
$ 0.08 $ 0.02 $ 0.09 $ 0.05 Diluted $ 0.07 $ 0.02 $ 0.08 $ 0.05
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic 52,544,603
48,516,484 51,542,284 48,504,110 Diluted 59,154,133 48,516,484
57,631,061 48,504,110 Gold Horse International, INC. RECONCILIATION
OF NON-GAAP FINANCIAL DATA For the Three Months For the Three
Months Adjusted Net income ended June 30, 2008 ended June 30, 2007
($ in thousands except per share data) Net Income (Loss) Diluted
Net Diluted Net Diluted EPS Income EPS Income EPS Adjusted Amount
4,588 0.08 958 0.02 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 4,140
0.07 958 0.02 For the Year ended For the Year ended Adjusted Net
income June 30, 2008 June 30, 2007 ($ in thousands except per share
data) Net Income (Loss) Diluted Net Diluted Net Diluted EPS Income
EPS Income EPS Adjusted Amount 5,577 0.10 2,595 0.05 Adjustments
Interest expense from amortization of debt discount 955 0.02 -- --
Amortization of debt issuance costs 90 0.00 -- -- Amount per
consolidated statement of operations 4,532 0.08 2,595 0.05 GOLD
HORSE INTERNATIONAL, INC. AND SUBSIDIARIES AUDITED CONSOLIDATED
BALANCE SHEETS As of June 30, 2008 2007 ASSETS Cash and cash
equivalents $ 1,637,986 251,044 Accounts receivable, net 7,528,608
5,246,986 Inventories, net 56,847 20,477 Advances to suppliers, net
95,754 198,113 Other receivable, net 35,478 193,815 Due from
related parties 1,700,036 1,047,832 Deferred debt costs 115,110 --
Real estate held for sale 125,070 1,149,906 Cost and estimated in
excess of billings 221,537 15,237 Construction in progress
4,537,240 -- Deposit on prepaid land use rights 2,524,877 2,223,069
Prepaid land use rights -- current portion 3,561 -- Refundable
performance deposit 145,522 131,151 Total Current Assets 18,727,626
10,477,630 Property and equipment, net 10,476,397 4,731,168 Deposit
on prepaid land use rights 2,182,835 -- Prepaid land use rights -
non-current 165,312 160,487 Total Assets $31,552,170 $15,369,285
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities
Convertible debt, net $ 955,062 $ -- Loans payable, current portion
145,522 -- Accounts payable 1,278,779 611,215 Accrued expenses
468,235 1,091,154 Taxes payable 2,215,381 532,257 Advances from
customers 192,356 609,574 Billings in excess of costs and estimated
earnings 23,369 124,021 Total Current Liabilities 5,278,704
2,968,221 Loans payable, net of current portion 4,490,235 1,686,077
Total Liabilities 9,768,939 4,654,298 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 June 30, 2008 and 2007,
respectively) 5,254 5,000 Non-controlling interest in variable
interest entities 6,095,314 5,954,807 Additional paid-in capital
4,571,178 -- Statutory reserve 1,216,292 594,006 Retained earnings
7,526,144 3,616,296 Other comprehensive income 2,369,049 544,878
Total Stockholders' Equity 21,783,231 10,714,987 Total Liabilities
and Stockholders' Equity $31,552,170 $15,369,285 GOLD HORSE
INTERNATIONAL, INC. AND SUBSIDIARIES AUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS For the Years Ended June 30 2008 2007 CASH
FLOWS FROM OPERATING ACTIVITIES Net income $ 4,532,134 $ 2,594,526
Adjustments to reconcile net income to net cash provided by
operating activities Depreciation 1,018,072 348,059 Rent expense
associated with prepaid land use rights 8,672 -- Bad debt expense
294,837 593,236 Common stock issued for services 156,680 --
Interest expense from amortization of debt discount 955,062 --
Amortization of debt issuance costs 89,530 -- Loss on disposal and
sale of property and equipment 39,536 -- Changes in assets and
liabilities: Accounts receivable (2,036,507) 5,786,777 Inventories
(32,166) 173,451 Other receivables 302,306 (213,943) Advance to
suppliers 116,941 1,274,467 Prepaid expenses 12,500 -- Costs and
estimated earnings in excess of billings (192,874) (14,841) Real
estate held for sale 1,084,727 (947,019) Construction in progress
(4,276,586) -- Other assets -- (127,738) Accounts payable and
accrued expenses (124,344) (8,500,105) Income tax payable 1,531,459
32,000 Advances from customers (456,208) 123,643 Billings in excess
of costs and estimated earnings (107,679) 120,793 NET CASH PROVIDED
BY OPERATING ACTIVITIES 2,916,092 1,243,306 CASH FLOWS FROM
INVESTING ACTIVITIES: Payments to related party (3,294,408)
(891,019) Repayment of amounts due from related party 2,787,896 --
Construction in progress -- 101,429 Proceeds from sale of property
and equipment 16,459 -- Payment of deposits for prepaid land use
rights (2,112,300) -- Purchase of property and equipment
(6,000,595) (394,242) NET CASH USED IN INVESTING ACTIVITIES
(8,602,948) (1,183,832) CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible debt 2,183,000 -- Payment of placement
fees (204,640) -- Proceeds from loans payable 2,606,085 -- Capital
contributions 140,507 -- Proceeds from sale of common stock
2,219,252 -- NET CASH PROVIDED BY FINANCING ACTIVITIES 6,944,204 --
EFFECT OF EXCHANGE RATE ON CASH 129,594 10,646 NET INCREASE IN CASH
& CASH EQUIVALENTS 1,386,942 70,120 CASH & CASH EQUIVALENTS
- beginning of year 251,044 180,924 CASH & CASH EQUIVALENTS -
end of the year $ 1,637,986 $ 251,044 SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION: Cash paid for: Interest $ 921,508 $ --
Income taxes $ 1,417,616 $ 1,220,790 For further information,
please contact: Gold Horse International, Inc. Mr. Adam Wasserman,
CFO Tel: +1-800-867-0078 Email: CCG Investor Relations Mr. Crocker
Coulson, President Tel: +1-646-213-1915 Email: Web:
http://www.ccgir.com/ DATASOURCE: Gold Horse International, Inc.
CONTACT: Mr. Adam Wasserman, CFO of Gold Horse International, Inc.,
+1- 800-867-0078, or ; Or Mr. Crocker Coulson, President of CCG
Investor Relations, +1-646-213-1915, or Web site:
http://www.ccgir.com/
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