Gold Horse Intl (PINK:GHII)

Shareholder Koza proposes to help Gold Horse International. 13D/A filed 10/9/2012

Mike Koza (12,7% shareholder) thinks Gold Horse may go dark because costs staying listed are bigger than the benefits (raising capital, image, etc...). He proposes to help them. Here is an excerpt from SC 13D/A he filed yesterday (Koza=Reporting Person):

The Reporting Person may take actions as deemed appropriate, possibly in conjunction with other shareholders, including one or more of the following:

1. Offering to pay all or part of the expenses (including back pay) of continued U.S. listing, including the re-hiring of Mr. Li (the fiscal year 2012 Chief Financial Officer) or an alternate Chief Financial Officer to be agreed upon;

2. Encouraging the Issuer to make a tender offer for all outstanding shares;

3. Assisting the Issuer in voluntarily deregistering its common stock, and arranging for the dissemination of periodic financial information to shareholders of the Issuer, in a simple format agreeable to the Issuer and shareholders. This outcome would be acceptable only if the SEC did not deny voluntary deregistration;

4. Entering into negotiations with China-based shareholders of the Issuer to sell to these shareholders the shares owned by the Reporting Person. According to a Form 10-K filed by the Issuer on October 6, 2008, 36 individuals residing in China purchased 55,481 shares (split-adjusted) from the Issuer for $2,219,252 in 2007. The purchase price was $40 per share (split-adjusted). Although the reported book value per share of the Issuer has roughly doubled from December 31, 2007 to March 31, 2012, according to SEC filings, the Reporting Person would be willing to sell his shares to China-based shareholders at a significant discount to the amounts paid per share by these China-based shareholders in 2007. The Reporting Person believes that many of the China-based shareholders of the Issuer are employees of the Jin Ma Companies, which are controlled by the Issuer through contractual agreements;

5. Assisting the Issuer in unwinding its variable-interest entity structure.

GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US DOLLAR)
(UNAUDITED)
		For the Three Months Ended								For the Six Months Ended
		December 31,								December 31,
		2011				2010				2011				2010
NET REVENUES
Construction		$	14,231,619			$	15,400,661			$	25,595,039			$	24,991,149
Hotel			564,383				724,213				1,045,537				1,565,475
Real estate			191,628				302,400				191,628				713,369
Total Revenues			14,987,630				16,427,274				26,832,204				27,269,993
COST OF REVENUES
Construction			12,190,725				13,280,141				21,929,118				21,437,820
Hotel			266,401				393,607				506,469				909,055
Real estate			201,449				241,712				201,449				540,214
Total Cost of Revenues			12,658,575				13,915,460				22,637,036				22,887,089
GROSS PROFIT			2,329,055				2,511,814				4,195,168				4,382,904
OPERATING EXPENSES:
Other hotel operating expenses			12,673				12,255				27,014				31,960
Bad debt recovery			(156,929	)			(188,120	)			(172,055	)			(195,612	)
Salaries and employee benefits			153,656				207,251				340,006				418,610
Depreciation			218,072				197,965				434,517				392,437
Selling, general and administrative			114,534				165,044				230,801				467,734
Total Operating Expenses			342,006				394,395				860,283				1,115,129
INCOME FROM OPERATIONS			1,987,049				2,117,419				3,334,885				3,267,775
OTHER (EXPENSES) INCOME:
Other income			-				58				-				6,842
Gain on change in fair value of derivative liabilities			8,417				121,612				32,219				157,092
Interest income			559,806				431,248				559,894				650,860
Interest expense			(218,640	)			(125,960	)			(419,912	)			(252,006	)
Total Other (Expenses) Income			349,583				426,958				172,201				562,788
INCOME BEFORE PROVISION FOR INCOME TAX			2,336,632				2,544,377				3,507,086				3,830,563
PROVISION FOR INCOME TAXES			607,059				648,547				929,441				1,020,468
NET INCOME		$	1,729,573			$	1,895,830			$	2,577,645			$	2,810,095
COMPREHENSIVE INCOME:
Net income		$	1,729,573			$	1,895,830			$	2,577,645			$	2,810,095
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain			305,057				529,724				850,736				1,154,673
COMPREHENSIVE INCOME		$	2,034,630			$	2,425,554			$	3,428,381			$	3,964,768
NET INCOME PER COMMON SHARE:
Basic		$	0.79			$	0.97			$	1.19			$	1.45
Diluted		$	0.79			$	0.96			$	1.18			$	1.42
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic			2,178,729				1,947,992				2,172,002				1,941,476
Diluted			2,195,033				1,981,696				2,190,081				1,972,611

• The decrease in Jan Ma Construction’s revenue for the second quarter of 2012 as compared to the second quarter of 2011 was attributable to the timing of Jin Ma Construction’s business as well as a turnaround in the real estate market in Hohhot which occurred in the second quarter of 2011.
• Net revenues for Jin Ma Hotel’s operations decreased 22.1% for the second quarter of 2012 from the second quarter of 2011 primarily due to keen competition in the hotel, banquet and catering business as a result of more hotels commencing operation in the city of Hohhot in the second quarter of 2012. We continue to focus our marketing efforts to attract more tour groups to stay in our hotel and more local customers to our banquet facilities.
• Net revenues for Jin Ma Real Estate’s operations decreased by $110,772, or 36.6%, for the second quarter of 2012 from the second quarter of 2011. The decrease was attributable to a lack of inventory of apartment units available for sale and the overdue payment from the Chemistry School.

Assciated press release:

HOHHOT, China, Feb. 27, 2012 /PRNewswire-Asia/ -- Gold Horse International, Inc., (OTC Bulletin Board: GHII) ("Gold Horse" or the "Company"), a multifaceted business group that controls and through the Jin Ma Companies operates a construction company, real estate development business and a hotel/banquet facility in Inner Mongolia, China, today announced its financial results for the six months ended December 31, 2011.

The Second Quarter Fiscal Year 2012 Highlights

• Net revenue decreased 1.6% period-over-period to $26.8 million 
• Gross margin was 15.6% compared to 16.1% in the prior comparable period
• Gross profit decreased 4.3% period-over-period to $4.2 million 
• Income from operations was $3.33 million compared to income from operations of $3.27 million in the prior comparable period
• Net income decreased 8.3% period-over-period to $2.6 million from $2.8 million 
• Adjusted net income excluding non-cash gains was $2.5 million, or $1.16 per fully diluted common share as compared to adjusted net income of $2.7 million, or $1.34 per fully diluted common share, in the prior comparable period

"Strategically, we sold all remaining inventory of apartment units available for sale in the fourth quarter of fiscal 2011 and have no apartment units available for sale now. Consequently, we minimize the effects of the slower real estate markets on Gold Horse. Moreover, we will keep going forward on track to become one of the most prominent construction and real estate development companies in Inner Mongolia, China and we are confident that the construction and the real estate development in Hohhot, Inner Mongolia and its surrounding areas, a third-tier city, will remain strong in the future," said Mr. Liankuan Yang, chairman and CEO of Gold Horse.

Business Outlook

At December 31, 2011, the construction segment is in various stages of development of three new construction projects totaling approximately $45 million in estimated revenues over fiscal years 2012 to 2013. The real estate segment has acquired several land use rights and began developing one residential project. The project is a joint effort between the construction segment and the real estate segment with the construction business serving as the general contractor for the construction of the project.

Mr. Liankuan Yang, Chairman and CEO of Gold Horse, offered a brief description on each project:

In construction segment, three new projects began in October 2011:

• The Fuhengyuan residential No. 11 – No. 19 project consists of nine residential buildings with a total construction area of 97,368 square and is expected to be completed in December 2012 and was 11.3% complete at December 31, 2011.
• The Xinyuan residential project consists of twelve residential buildings with a total construction area of 91,669 square meters and is expected to be completed in August 2012 and was 17.8% complete at December 31, 2011.
• The Haitianshengdi project consists of ten residential buildings with a total construction area of 51,600 square meters and is expected to be completed in June 2012 and was 16.0% complete at December 31, 2011.

In real estate segment:

• In September 2011, construction of buildings No. 6 of the Procuratorate Housing Estates began which consists of a construction area of 38,000 square meters and is expected to be completed in August 2013, with estimated revenues of $27.8 million. Jin Ma Real Estate will sell units to individual homebuyers.

Effective September 30, 2011, the Board of Directors of Gold Horse International, Inc. (the “Company”), appointed Mr. Xiaodong Li to replace Mr. Adam Wasserman as the Company’s Chief Financial Offer.

GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(AMOUNTS EXPRESSED IN US DOLLAR)

 

		For the Years Ended June 30,
		2011				2010
NET REVENUES
Construction		$	40,990,034			$	37,496,002
Hotel			3,046,914				3,086,553
Real estate			32,463,687				10,331,004
Total Revenues			76,500,635				50,913,559
COST OF REVENUES
Construction			35,222,201				32,311,960
Hotel			1,794,737				1,965,973
Real estate			25,761,636				6,465,472
Total Cost of Revenues			62,778,574				40,743,405
GROSS PROFIT			13,722,061				10,170,154
OPERATING EXPENSES:
Other hotel operating expenses			224,063				89,292
Bad debt recovery			(224,351	)			(102,704	)
Salaries and employee benefits			875,084				908,590
Depreciation			796,429				775,715
Selling, general and administrative			692,750				516,230
Total Operating Expenses			2,363,975				2,187,123
INCOME FROM OPERATIONS			11,358,086				7,983,031
OTHER INCOME (EXPENSES):
Other income			6,848				—
Gain on extinguishment of derivative liabilities			—				2,111,506
Gain on change in fair value of derivative liabilities			568,917				1,756,959
(Loss) gain on sale of land use rights and property and equipment			(1,929	)			350,885
Interest income			1,566,116				1,274,999
Interest expense			(522,743	)			(2,864,685	)
Total Other Income			1,617,209				2,629,664
INCOME BEFORE PROVISION FOR INCOME TAX			12,975,295				10,612,695
PROVISION FOR INCOME TAXES			3,248,935				2,339,637
NET INCOME		$	9,726,360			$	8,273,058
COMPREHENSIVE INCOME:
Net income		$	9,726,360			$	8,273,058
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain			2,234,499				187,809
COMPREHENSIVE INCOME		$	11,960,859			$	8,460,867
NET INCOME PER COMMON SHARE:
Basic		$	4.94			$	5.14
Diluted		$	4.90			$	5.01
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic			1,968,507				1,608,685
Diluted			1,984,075				1,651,520

 

The contracts between Messrs. Gregory Wolfson and Noel "Bud" Robyn (“Directors”) and Gold Horse International, Inc. (the "Company") expire effective July 1, 2011. Both the Company and the Directors agree that they should not stand for re-election as members of Board of Directors for fiscal 2012. Messrs. Wolfson and Robyn were both members of the Company’s Audit Committee, while Mr. Wolfson was a member of the Nomination and Governance Committee, and Mr. Robyn was a member of the Compensation Committee. As of the date of their disengagement, there are no disputes over any issue regarding business or services between the Directors and the Company, and the discontinuance of the appointment was prompted by the determination by the Company that the Company expects to reconstruct the management team with the purpose of reducing redundancy and increase work efficiency of the Board of Directors.

HOHHOT, China, June 10, 2011 /PRNewswire-Asia/ -- Gold Horse International, Inc., (OTC Bulletin Board: GHII) ("Gold Horse" or the "Company"), a multifaceted business group that controls and through the Jin Ma Companies operates a construction company, real estate development business and a hotel/banquet facility in Inner Mongolia, China, today announced its financial results for the nine months ended March 31, 2011.

• Net revenue increased 54.8% period-over-period to $36.2 million
• Gross margin was 16.3% compared to 15.7% in the prior comparable period

• Gross profit increased 60.8% period-over-period to $5.9 million

• Operating income was $4.2 million compared to operating income of $2.2 million in the prior comparable period

• Net income decreased 6.3% period-over-period to $3.7 million from $3.9 million

• Adjusted net income excluding non-cash gains and expenses was $3.2 million, or $1.63 per fully diluted common share as compared to adjusted net income of $0.3 million, or $0.21 per fully diluted common share, in the prior comparable period

"We remain confident that real estate development in Hohhot, Inner Mongolia and its surrounding areas, a third- tier city, will remain strong and will not feel the effects of the slower real estate markets occurring in tier-one cities such as Beijing and Shanghai. We intend to meet our liquidity requirements, including capital expenditures related to the purchase of land for the development of future projects, through cash flow provided by operations, from the collection of outstanding accounts and notes receivable balances and the from the sale of units at the Shuian Renjia residential project. Through March 31, 2011, we have capitalized construction in progress consisting of the acquisition of land use rights and construction costs related to the Shuian Renjia project of approximately $19.8 million. In connection with the acquisition of land use rights and for construction costs, pursuant to  agreements with Jin Ma Construction's sub-contractors, we will only partially pay subcontractors until such time as we begin selling units of real estate held for sale and accordingly, accounts payable has increased substantially. Subcontractors are willing to extend us credit due to long-term relationship with the Jin Ma Companies.  During the fourth quarter of 2011, we expect to sell all of our units in Shuian Renjia and we expect to collect approximately $30,000,000 from these sales which will be used to pay subcontractors and other accounts payable balances and will be used for working capital purposes," said Mr. Liankuan Yang, chairman and CEO of Gold Horse

GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

		For the Three Months Ended March 31,						For the Nine Months Ended March 31,
		2011			2010			2011			2010
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
NET REVENUES
Construction		$	7,994,860		$	11,143,476		$	32,986,009		$	20,739,488
Hotel			739,027			749,749			2,304,502			2,262,578
Real estate			193,661			227,917			907,030			386,898
Total Revenues			8,927,548			12,121,142			36,197,541			23,388,964
COST OF REVENUES
Construction			6,851,787			9,559,477			28,289,607			17,889,157
Hotel			414,640			478,135			1,323,695			1,486,994
Real estate			130,334			168,805			670,548			335,855
Total Cost of Revenues			7,396,761			10,206,417			30,283,850			19,712,006
GROSS PROFIT			1,530,787			1,914,725			5,913,691			3,676,958
OPERATING EXPENSES:
Other hotel operating expenses			15,156			(26,052	)		47,116			77,307
Bad debt recovery			(1,291	)		(109,535	)		(196,903	)		(215,090	)
Salaries and employee benefits			293,197			290,845			711,807			683,280
Depreciation			200,224			198,081			592,661			583,202
Selling, general and administrative			97,549			113,126			565,283			365,689
Total Operating Expenses			604,835			466,465			1,719,964			1,494,388
INCOME FROM OPERATIONS			925,952			1,448,260			4,193,727			2,182,570
OTHER INCOME (EXPENSES):
Other income (expense)			(38	)		—			6,804			—
Gain on extinguishment of derivative liabilities			—			270,101			—			1,893,310
Gain on change in fair value of derivative liabilities			304,837			(298,283	)		461,929			1,704,654
Gain on sale of land use rights and property			—			55			—			449,528
Interest income			54,462			731,521			705,322			1,274,716
Interest expense			(125,722	)		(394,667	)		(377,728	)		(2,711,743	)
Total Other Income			233,539			308,727			796,327			2,610,465
INCOME BEFORE PROVISION FOR INCOME TAX			1,159,491			1,756,987			4,990,054			4,793,035
PROVISION FOR INCOME TAXES			288,058			550,772			1,308,526			865,550
NET INCOME		$	871,433		$	1,206,215		$	3,681,528		$	3,927,485
COMPREHENSIVE INCOME:
Net income		$	871,433		$	1,206,215		$	3,681,528		$	3,927,485
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency translation gain			252,349			4,753			1,407,022			38,613
COMPREHENSIVE INCOME		$	1,123,782		$	1,210,968		$	5,088,550		$	3,966,098
NET INCOME PER COMMON SHARE:
Basic		$	0.44		$	0.71		$	1.88		$	2.57
Diluted		$	0.44		$	0.70		$	1.86		$	2.54
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic			1,989,459			1,702,336			1,957,237			1,531,055
Diluted			1,989,459			1,711,679			1,977,994			1,548,957

GeoTeam® Note: 2011 vs. 2010 Third Quarter Adjusted EPS was $0.28 vs. $0.95

GOLD HORSE INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

		For the Three Months Ended December 31,						For the Six Months Ended December 31,
		2010			2009			2010			2009
		(Unaudited)			(Unaudited) (As Restated)			(Unaudited)			(Unaudited) (As Restated)
NET REVENUES
Construction		$	15,400,661		$	4,405,892		$	24,991,149		$	9,596,012
Hotel			724,213			734,809			1,565,475			1,512,829
Real estate			302,400			158,981			713,369			158,981
Total Revenues			16,427,274			5,299,682			27,269,993			11,267,822
COST OF REVENUES
Construction			13,280,141			3,878,214			21,437,820			8,329,680
Hotel			393,607			494,312			909,055			1,008,859
Real estate			241,712