HOHHOT, China, May 20 /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
announced its financial results for the three and nine months ended
March 31, 2009. Third Quarter Highlights -- Net revenue increased
102.4% year-over-year to $9.3 million -- Gross profit increased
80.4% year-over-year to $1.7 million, gross margin was 17.7% --
Operating income was $1.1 million compared to an operating loss of
$45,931 a year ago -- Net loss decreased 89.1% year-over-year to
$88,080 from $811,789 -- Excluding non-cash debt financing
expenses, adjusted net income was $359,603, or $0.01 per fully
diluted share, versus adjusted net loss of $364,106, or a loss of
$0.01 per fully diluted share, a year ago "During the third quarter
of fiscal 2009, we continued to make progress on each of our
construction and real estate projects. As the third quarter of our
fiscal year is a slower period in construction due to weather
conditions and the Chinese New Year holiday, we are pleased that we
not only recorded strong increases in our revenue and gross profit
but also generated operating income," said Mr. Liankuan Yang,
chairman and CEO of Gold Horse International, Inc. Third Quarter
Results For the third quarter of fiscal year 2009, net revenue was
$9.3 million, up 102.4% from $4.6 million in the same quarter of
2008. Construction revenue was $8.4 million, or 90.1% of net
revenue, up from $3.5 million, or 76.7% of net revenue, for the
three months ended March 31, 2008. The 137.7% increase was mainly
due to several major construction projects: Fu Xing Bath Center,
Lanyu Garden Number 3 residential building and Ai Bo Garden
residential apartment project (Phase II). Revenue from the hotel
segment was $0.9 million, up 20.4% from $0.7 million in the same
quarter last year. The Company generated insignificant real estate
revenue, as a result of the previous sale of its real estate
inventory and refocused business strategy to concentrate on its
construction segment. Gross profit for the quarter was $1.7
million, up 80.4% from $0.9 million for the same quarter last year.
Gross margin was 17.7%, down from 19.9% compared to the same period
prior year. The decrease in gross margin was primarily due to
increased construction costs. Operating expenses for the quarter
were $0.6 million, or 6.3% of net revenue, down 39.3% for the three
months ended March 31, 2008, or 20.9% of net revenue. While the
Company incurred higher salaries and employment benefits and
depreciation and amortization expenses, operating expenses declined
due to decreases in hotel operating expenses and general and
administrative expenses. Operating income for the quarter was $1.1
million, reversing the $45,931 operating loss for the same period
in the prior year. Operating margin for the third quarter of 2009
was 11.5%. The Company recorded a net loss of $88,080 for the
quarter ended March 31, 2009, compared to a net loss of $811,789
for the same period prior year. Excluding non-cash debt financing
expenses, adjusted net income was $359,603, or $0.01 per fully
diluted share compared with adjusted net loss of $364,106, or $0.01
per fully dilutes share, a year ago. Nine Months Results Net
revenue for the nine months ended March 31, 2009 was $51.6 million,
up 140.4% from $21.5 million in the same period prior year.
Construction revenue was $48.6 million, or 94.2% of net revenue, up
176.6% from $17.6 million, or 81.8% of net revenue, in the same
period of 2008. Revenue from the hotel segment was $2.6 million, or
5.1% of net revenue, up 11.6% from $2.3 million, or 10.9% of net
revenue, in the same period prior year. Revenue from the real
estate segment was $0.4 million, or 0.7% of net revenue, down 75.5%
from $1.6 million, or 7.3% of net revenue, in the same period prior
year. Gross profit was $8.2 million, or 15.8% of net revenue, up
88.8% from $4.3 million, or 20.2% of net revenue for the same
period of last year. Operating income was $6.7 million, or 13.0% of
net revenue, up 208.4% from $2.2 million, or 10.2% of net revenue,
in the same period of 2008. Net income was $3.3 million, or $0.05
per fully diluted share, up 738.0% from $0.4 million, or $0.01 per
fully diluted share in the same period of 2008. Excluding non-cash
debt financing expenses, adjusted net income was $4.6 million, or
$0.07 per fully diluted share for the nine months ended March 31,
2009, compared with adjusted net income of $1.0 million, or $0.02
per fully diluted share, in the same period last year. Financial
Condition As of March 31, 2009, Gold Horse had $0.2 million in cash
and cash equivalents, $9.1 million in working capital and a current
ratio of 1.9 to 1. At quarter end, the Company had short-term debt,
including the unamortized discount on the Company's convertible
debt, of $3.7 million and long-term debt of $3.3 million.
Additionally, the Company had approximately $2.2 million of secured
convertible debt, which management did not repay when it became due
on March 31, 2009. The Company is in the process of finalizing an
agreement with its convertible note holders to extend and modify
the payment terms of these notes. Pursuant to current negotiations
with investors, during the nine months ended March 31, 2009, the
Company accrued default interest of $218,300. This amount
represents 10% of the outstanding principal balance, which is
management's estimate of the default payments that will be due upon
successful negotiations with the investors. Shareholders' equity
was $25.3 million, up from $21.8 million as of June 30, 2008. Cash
used in operating activities during the first nine months of fiscal
2009 was $5.9 million, which was primarily attributable to an
increase in construction in progress related to the construction of
student dormitories which will be leased to the school for a period
of 20 years. The Company is currently in negotiations with several
banks and expects to secure short-term bank loans to fund its
ongoing operations. Business Outlook For fiscal year 2009, Gold
Horse affirms its net revenue guidance of approximately $90.0
million, based on the number of construction projects underway for
the fourth quarter of 2009. "Although the current business
environment remains challenging and unpredictable, we believe the
stimulus package introduced by the Chinese government will play an
important role in creating favorable long term benefits for our
construction business," commented Mr. Yang. "We are actively
bidding on several projects that meet our profitability
requirements in the Inner Mongolia region, and look forward to
securing some of them in the months ahead." Use of Non-GAAP
Financial Information GAAP results for the three month and nine
month periods ended March 31, 2009 and for the three and nine
months ended March 31, 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 reflect adjusted net
income and adjusted fully diluted earnings per share, and exclude
the impact of the non-cash debt financing expenses discussed above.
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. For further 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: Elaine
Ketchmere, VP of Financial Writing Tel: +1-310-954-1345 Email: Web:
http://www.ccgirasia.com/ GOLD HORSE INTERNATIONAL, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME For the Three Months Ended For the Nine Months
Ended March 31, March 31, 2009 2008 2009 2008 (Unaudited)
(Unaudited) (Unaudited) (Unaudited) NET REVENUES Construction
$8,376,388 $3,524,291 $48,649,659 $17,585,684 Hotel 922,826 766,158
2,610,290 2,339,870 Real estate 362 304,755 382,552 1,560,283 Total
Revenues 9,299,576 4,595,204 51,642,501 21,485,837 COST Of REVENUES
Construction 7,175,985 3,027,432 41,766,632 14,895,208 Hotel
472,956 456,677 1,394,491 1,318,281 Real estate 284 196,377 300,587
938,406 Total Cost of Revenues 7,649,225 3,680,486 43,461,710
17,151,895 GROSS PROFIT 1,650,351 914,718 8,180,791 4,333,942
OPERATING EXPENSES: Hotel operating expenses 11,046 19,347 43,336
75,661 Bad debt expense (recovery) 22,550 489,184 (171,351) 796,875
Salaries and employee benefits 278,047 231,764 579,895 550,262
Depreciation and amortization 206,670 135,010 644,927 361,126
General and administrative 64,434 85,344 358,913 369,071 Total
Operating Expenses 582,747 960,649 1,455,720 2,152,995 INCOME
(LOSS) FROM OPERATIONS 1,067,604 (45,931) 6,725,071 2,180,947 OTHER
INCOME (EXPENSES): Other income(expense) 3 (26) 2,381 (1,698)
Registration rights penalty -- (55,000) -- (55,000) Interest income
559 4,992 552,877 7,106 Interest expense (889,529) (565,973)
(2,225,755) (858,378) Total Other Expenses (888,967) (616,007)
(1,670,497) (907,970) INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX
178,637 (661,938) 5,054,574 1,272,977 PROVISION FOR INCOME TAXES
266,717 149,851 1,767,459 880,708 NET INCOME (LOSS) $(88,080)
$(811,789) $3,287,115 $392,269 COMPREHENSIVE INCOME (LOSS): NET
INCOME (LOSS) $(88,080) $(811,789) $3,287,115 $392,269 Unrealized
foreign currency translation gain 29,935 615,780 93,659 1,173,805
COMPREHENSIVE INCOME (LOSS) $(58,145) $(196,009) $3,380,774
$1,566,074 NET INCOME (LOSS) PER COMMON SHARE: Basic -- $(0.02)
$0.06 $0.01 Diluted -- $(0.02) $0.05 $0.01 WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING: Basic 52,668,603 52,483,824 52,612,486
51,210,607 Diluted 52,668,603 52,483,824 61,242,951 55,970,580 GOLD
HORSE INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF
NON-GAAP FINANCIAL DATA For the Three For the Three Adjusted Net
income Months Ended Months Ended March 31, 2009 March 31, 2008
Diluted Diluted Net Income EPS Net Loss EPS Net Income (Loss)
Diluted EPS Adjusted Amount $359,603 $0.01 $(364,106)$(0.01)
Adjustments Interest expense from amortization of debt discount
409,313 0.01 409,313 0.01 Amortization of debt issuance costs
38,370 0.00 38,370 0.00 Amount per consolidated statement of income
$(88,080)$(0.00)$(811,789)$(0.01) Adjusted Net income For the Nine
For the Nine Months Ended March Months Ended 31, 2009 March 31,
2008 Diluted Diluted Net Income EPS Net Income EPS Net Income
Diluted EPS Adjusted Amount $4,630,163 $0.07 $989,179 $0.02
Adjustments Interest expense from amortization of debt discount
1,227,938 0.02 545,750 0.01 Amortization of debt issuance costs
115,110 -- 51,160 -- Amount per consolidated statement of income
$3,287,115 $0.05 $392,269 $0.01 GOLD HORSE INTERNATIONAL, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS As of As of
March 31, June 30, 2009 2008 (Unaudited) ASSETS Cash and cash
equivalents $190,211 $1,637,986 Accounts receivable, net 11,943,185
7,528,608 Note receivable, net - current portion 158,818 --
Inventories, net 44,004 56,847 Advances to suppliers, net 98,161
95,754 Other receivable, net 23,421 35,478 Due from related parties
16,828 1,700,036 Deferred debt costs -- 115,110 Real estate held
for sale -- 125,070 Cost and estimated earnings in excess of
billings 48,319 221,537 Construction in progress 5,091,074
4,537,240 Deposit on prepaid land use rights 1,672,674 2,524,877
Prepaid land use rights - current portion 3,575 3,561 Refundable
performance deposit -- 145,522 Total Current Assets 19,290,270
18,727,626 Property and equipment, net 9,888,876 10,476,397 Note
receivable - non-current portion, net 8,652,379 -- Deposit on
prepaid land use rights 803,436 2,182,835 Prepaid land use rights -
non- current portion 163,263 165,312 Total Assets $38,798,224
$31,552,170 LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities: Convertible debt, net $2,183,000 $955,062 Loans
payable, current portion 1,498,189 145,522 Accounts payable
4,759,067 1,278,779 Accrued expenses 848,152 468,235 Taxes payable
487,451 2,215,381 Advances from customers 311,997 192,356 Billings
in excess of costs and estimated earnings 126,972 23,369 Total
Current Liabilities 10,214,828 5,278,704 Loans payable, net of
current portion 3,301,391 4,490,235 Total Liabilities 13,516,219
9,768,939 Commitments (Note 16) -- -- Stockholders' Equity:
Preferred stock ($.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 March 31, 2009 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 1,666,204 1,216,292 Retained earnings 10,363,347
7,526,144 Other comprehensive income 2,462,708 2,369,049 Total
Stockholders' Equity 25,282,005 21,783,231 Total Liabilities and
Stockholders' Equity $38,798,224 $31,552,170 GOLD HORSE
INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS For the Nine Months Ended March 31, 2009
2008 (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,287,115 $392,269 Adjustments to reconcile net income
to net cash (used in) provided by operating activities:
Depreciation 644,927 361,126 Rent expense associated with prepaid
land use rights 2,681 -- Bad debt expense (recovery) (171,351)
796,875 Common stock issued for services -- 156,680 Interest
expense from amortization of debt discount 1,227,938 545,750
Amortization of debt issuance costs 115,110 51,160 Recognition of
unearned gain (51,784) -- Changes in assets and liabilities:
Accounts receivable (4,247,794) (647,734) Note receivable 200,568
-- Inventories 13,059 (42,682) Other receivables 46,206 163,366
Advance to suppliers (2,040) (62,728) Costs and estimated earnings
in excess of billings 174,040 15,707 Real estate held for sale
125,531 815,288 Construction in progress (9,495,098) (2,719,216)
Refundable performance deposit 146,058 -- Accounts payable and
accrued expenses 3,853,631 1,698,293 Taxes payable (1,736,158)
(346,164) Advances from customers 118,887 (433,432) Billings in
excess of costs and estimated earnings 103,498 (122,978) NET CASH
(USED IN ) PROVIDED BY OPERATING ACTIVITIES (5,644,976) 621,580
CASH FLOWS FROM INVESTING ACTIVITIES: Repayment of amounts due from
related party 1,689,469 -- Proceeds from sale of property and
equipment -- 83,424 Proceeds from return of deposit on prepaid land
use rights 2,249,295 7,993 Payment of deposits for prepaid land use
rights -- (1,351,923) Purchase of property and equipment (17,400)
(1,900,345) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
3,921,364 (3,160,851) CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible debt -- 2,183,000 Payment of placement
fees -- (204,640) Repayment of loans payable -- (135,192) Capital
contribution -- 140,507 Proceeds from loan 146,058 -- Proceeds from
sale of common stock 118,000 2,219,252 NET CASH PROVIDED BY
FINANCING ACTIVITIES 264,058 4,202,927 EFFECT OF EXCHANGE RATE ON
CASH 11,779 115,147 NET (DECREASE) INCREASE IN CASH & CASH
EQUIVALENTS (1,447,775) 1,778,803 CASH & CASH EQUIVALENTS -
beginning of period 1,637,986 251,044 CASH & CASH EQUIVALENTS -
end of the period $190,211 $2,029,847 SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION: Cash paid for: Interest $399,906 $855,027
Income taxes $2,801,659 $1,188,993 DATASOURCE: Gold Horse
International, Inc. CONTACT: Gold Horse International, Inc., Mr.
Adam Wasserman, CFO, +1-800-867-0078 x702, or CCG Investor
Relations, Mr. Crocker Coulson, President, +1-646-213-1915, and
Elaine Ketchmere, VP of Financial Writing, +1-310-954-1345, , both
for Gold Horse International, Inc. Web site:
http://www.ccgirasia.com/
Copyright