Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Sep. 30, 2022 | Jan. 13, 2023 | Mar. 31, 2022 | |
Document Information Line Items | |||
Entity Registrant Name | GREEN GIANT INC. | ||
Trading Symbol | GGE | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Common Stock, Shares Outstanding | 55,753,268 | ||
Entity Public Float | $ 110 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001158420 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Sep. 30, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-34864 | ||
Entity Incorporation, State or Country Code | FL | ||
Entity Tax Identification Number | 33-0961490 | ||
Entity Address, Address Line One | 6 Xinghan Road, 19th Floor | ||
Entity Address, City or Town | Hanzhong City | ||
Entity Address, Country | CN | ||
Entity Address, Postal Zip Code | 723000 | ||
City Area Code | +(86) | ||
Local Phone Number | 091-62622612 | ||
Title of 12(b) Security | Common Stock, par value $0.001 | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Auditor Name | OneStop Assurance PAC | ||
Auditor Location | Singapore | ||
Auditor Firm ID | 6732 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
ASSETS | ||
Cash | $ 1,360,217 | $ 170,001 |
Restricted cash | 3,007,960 | 3,295,188 |
Contract assets | 7,628,770 | 13,723,793 |
Real estate property-development completed | 74,772,530 | 88,145,841 |
Other assets | 3,767,190 | 8,358,925 |
Prepayment for energy equipment | 26,936,915 | |
Property,plant and equipment,net | 483,219 | 558,086 |
Security deposits | 1,771,019 | 1,955,202 |
Real estate property under development | 145,300,588 | 222,458,149 |
Due from local government- property development completed | 42,358,986 | 46,335,378 |
Total Assets | 307,387,394 | 385,000,563 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Construction loans | 108,366,351 | 119,636,222 |
Accounts payable | 10,606,635 | 18,259,151 |
Other payables | 13,578,713 | 6,430,992 |
Construction deposits | 3,029,565 | 3,344,917 |
Contract liabilities | 1,989,898 | 1,886,075 |
Customer deposits, noncurrent | 19,842,768 | 19,803,917 |
Accrued expenses | 10,547,436 | 1,987,567 |
Taxes payable | 19,980,358 | 22,954,011 |
Total liabilities | 187,941,724 | 194,302,852 |
Commitments and Contingencies | ||
Commons stock,$0.001 par value,200,000,000 shares authorized;46,464,929 and 25,617,807 shares outstanding as at September 30, 2022 and September 30,2021 | 46,464 | 25,617 |
Additional paid-in capital | 184,821,771 | 136,535,303 |
Statutory surplus | 11,095,939 | 11,095,939 |
Retained earnings | (67,432,727) | 40,691,955 |
Accumulated other comprehensive loss | (9,085,777) | 2,348,897 |
Total stockholders’ equity | 119,445,670 | 190,697,711 |
Total Liabilities and Stockholders’ Equity | $ 307,387,394 | $ 385,000,563 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Sep. 30, 2022 | Aug. 10, 2022 | Mar. 16, 2022 | Dec. 10, 2021 | Sep. 30, 2021 |
Statement of Financial Position [Abstract] | |||||
Commons stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
Commons stock, shares authorized | 200,000,000 | 200,000,000 | |||
Commons stock, shares outstanding | 46,464,929 | 25,617,807 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Real estate sales | $ 9,577,405 | $ 58,915,239 |
Less: Sales tax | (505,652) | (424,074) |
Cost of real estate sales | 5,489,411 | 46,510,001 |
Gross profit | 3,582,342 | 11,981,164 |
Operating expenses | ||
Selling and distribution expenses | 361,746 | 186,886 |
General and administrative expenses | 31,198,365 | 2,691,170 |
Impairment of contract assets | 5,264,748 | |
Impairment of real estate property under development | 73,624,727 | |
Total operating expenses | 110,449,586 | 2,878,056 |
Operating (loss)income | (106,867,244) | 9,103,108 |
Interest income, net | 5,927 | 5,690 |
Other expense, net | (1,263,365) | (246,814) |
Income before income taxes | (108,124,682) | 8,861,984 |
Provision for income taxes | 2,486,546 | |
Net (loss)income | (108,124,682) | 6,375,438 |
Foreign currency translation adjustment | (11,434,674) | 9,388,387 |
Comprehensive (loss) income | $ (119,559,356) | $ 15,763,825 |
Basic and diluted income per common share*: | ||
Basic (in Dollars per share) | $ (2.99) | $ 0.27 |
Diluted (in Dollars per share) | $ (2.16) | $ 0.27 |
Weighted average common shares outstanding*: | ||
Basic (in Shares) | 36,189,189 | 23,944,328 |
Diluted (in Shares) | 50,055,537 | 23,944,328 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity - USD ($) | Common Stock | Additional Paid-in Capital | Statutory Reserve | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at Sep. 30, 2020 | $ 22,525 | $ 129,930,330 | $ 10,458,395 | $ 34,954,061 | $ (7,039,490) | $ 168,325,821 |
Balance (in Shares) at Sep. 30, 2020 | 22,525,693 | |||||
Issurance of shares for debt settlement | $ 3,092 | 6,604,973 | 6,608,065 | |||
Issurance of shares for debt settlement (in Shares) | 3,092,114 | |||||
Net income | 6,375,438 | 6,375,438 | ||||
Appropriation to statutory reserve | 637,544 | (637,544) | ||||
Foreign currency translation adjustments | 9,388,387 | 9,388,387 | ||||
Balance at Sep. 30, 2021 | $ 25,617 | 136,535,303 | 11,095,939 | 40,691,955 | 2,348,897 | 190,697,711 |
Balance (in Shares) at Sep. 30, 2021 | 25,617,807 | |||||
Net income | (108,124,682) | (108,124,682) | ||||
Appropriation to statutory reserve | ||||||
Share-based compensation | $ 6,000 | 19,364,400 | 19,370,400 | |||
Share-based compensation (in Shares) | 6,000,000 | |||||
Foreign currency translation adjustments | (11,434,674) | (11,434,674) | ||||
Balance at Sep. 30, 2022 | $ 46,464 | 184,821,771 | 11,095,939 | (67,432,727) | (9,085,777) | 119,445,670 |
Balance (in Shares) at Sep. 30, 2022 | 46,464,929 | |||||
Private placements | $ 14,847 | $ 28,922,068 | $ 28,936,915 | |||
Private placements (in Shares) | 14,847,122 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (108,124,682) | $ 6,375,438 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 24,201 | 43,510 |
Impairment | 78,889,475 | |
Share based compensation | 19,370,400 | |
Contract assets | (51,931) | 1,284,745 |
Real estate property development completed | 5,503,345 | 11,498,195 |
Real estate property under development | (13,039,391) | 21,526,902 |
Due from local government- property development completed | (43,311,572) | |
Other assets | 4,143,409 | 208,522 |
Accounts payables | (6,439,990) | (1,830,135) |
Other payables | 8,357,875 | 2,165,081 |
Contract liabilities | 305,561 | (60,288) |
Customer deposits | 2,067,231 | (637,942) |
Construction deposits | (29,601) | |
Accrued expenses | 9,482,260 | |
Taxes payables | (1,245,270) | 2,162,978 |
Net cash (used in) operating activities | (757,507) | (604,167) |
Cash Flows from Investing Activities: | ||
Prepayment for energy equipment | (26,936,915) | |
Net Cash (used in) Investing Activities | (26,936,915) | |
Cash flow from financing activities: | ||
Proceeds from private placements | 28,936,915 | |
Net cash provide by financing activities | 28,936,915 | |
Effect of changes in foreign exchange rate on cash | (339,505) | 201,820 |
Net increase (decrease) in cash | 902,988 | (402,347) |
Cash, restricted cash, beginning of year | 3,465,189 | 3,867,536 |
Cash, restricted cash, end of year | 4,368,177 | 3,465,189 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 2,018,918 | |
Income taxes paid | 18,733 | 266,999 |
Cash | 1,360,217 | 170,001 |
Restricted cash | 3,007,960 | 3,295,188 |
Total cash and restricted cash | 4,368,177 | 3,465,189 |
Non-cash financing activities: | ||
Reclassification of interest payable to construction loan | 6,612,142 | 5,024,385 |
Settlements of accounts payable with real estate property under development | (14,532,967) | |
Issuance of stock for settlement of accounts payable | $ 6,608,065 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Sep. 30, 2022 | |
Organization and Basis of Presentation [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Green Giant Inc (Formerly known as China HGS Real Estate Inc.) (the “Company” or “GGE” or “we”, “our”, “us”) is a corporation organized under the laws of the State of Florida. GGE does not conduct any substantive operations of its own. Instead, through its subsidiary, Shaanxi HGS Management and Consulting Co., Ltd (“Shaanxi HGS”), it entered into certain exclusive contractual agreements with the owners of the Company’s PRC operating subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd (“Guangsha”). Pursuant to these agreements, Shaanxi HGS is obligated to absorb a majority of the risk of loss from Guangsha’s activities and entitles Shaanxi HGS to receive a majority of Guangsha’s expected residual returns. In addition, Guangsha’s shareholders have pledged their equity interest in Guangsha to Shaanxi HGS, irrevocably granted Shaanxi HGS an exclusive option to purchase, to the extent permitted under PRC Law, all or part of the equity interests in Guangsha and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by Shaanxi HGS. Based on these contractual arrangements, management believes that Guangsha should be considered a “Variable Interest Entity” (“VIE”) under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51”, because the equity investors in Guangsha no longer have the characteristics of a controlling financial interest, and the Company, through Shaanxi HGS, is the primary beneficiary of Guangsha. Accordingly, Guangsha has been consolidated. The Company, through its subsidiaries and VIE, engages in real estate development, in the construction and sale of residential apartments, parking lots and commercial properties. Total assets and liabilities presented on the consolidated balance sheets and sales, cost of sales, net income presented on Consolidated Statement of Income and Comprehensive Income (Loss) as well as the cash flows from operations, investing and financing activities presented on the Consolidated Statement of Cash Flows are substantially the financial position, operations and cash flow of Guangsha. The Company has not provided any financial support to Guangsha for the years ended September 30, 2022 and 2021. The following assets,liabilities and impairment loss of the consolidated VIE are included in the accompanying consolidated financial statements of the Company as of September 30, 2022 and 2021: Balance as of September 30, September 30, 2022 2021 Total assets $ 280,939,924 $ 385,000,583 Total liabilities $ 183,674,040 $ 189,470,931 2022 2021 Impairment loss 78,889,475 — |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation and basis of presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Inc. (the “Company” or “China HGS”), China HGS Investment Inc. (“HGS Investment”), Shaanxi HGS Management and Consulting Co., Ltd. (“Shaanxi HGS”) and its variable interest entity (“VIE”), Shaanxi Guangsha Investment and Development Group Co., Ltd. (“Guangsha”). All inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation. The Company’s operations involve real estate development and sales. Starting from the year ended September 30, 2020, the Company has been involved in larger real estate property development with an extended development cycle. As a result, it is not possible to precisely measure the duration of its operating cycle. The accompanying consolidated balance sheets of the Company have been prepared on an unclassified basis in accordance with real estate industry practice. Liquidity In assessing the liquidity, management monitors and analyzes the Company’s cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. As of September 30, 2022, our total cash and restricted cash balance was approximately $4.37 million, a increase from approximately $3.5 million as of September 30, 2021. With respect to capital funding requirements, the Company budgeted its capital spending based on ongoing assessments of needs to maintain adequate cash. As of September 30, 2022, we had approximately $74.8 million of completed residential apartments and commercial units available for sale to potential buyers. Although we reported approximately $10.6 million accounts payable as of September 30, 2022, due to the long-term relationship with our construction suppliers and subcontractors, we were able to effectively manage cash spending on construction and negotiate with them to adjust the payment schedule based on our cash on hand. In addition, most of our existing real estate development projects relate to the old town renovation which are supported by the local government. As of September 30, 2022, we reported approximately $108.4 million of construction loans borrowed from financial institutions controlled by the local government and such loans can only be used on the old town renovation related project development. We expect that we will be able to renew all of the existing construction loans upon their maturity and borrow additional new loans from local financial institutions, when necessary, based on our past experience and the Company’s good credit history. Also, the Company’s cash flows from pre-sales and current sales should provide financial support for our current development projects and operations. For the year ended September 30, 2022, we had six large ongoing construction projects (see Note 3, real estate properties under development) which were under the preliminary development stage due to delayed inspection and acceptance of the development plans by the local government. In June 2020, we completed the residence relocation surrounding the Liangzhou Road related projects and launched the construction of these projects in December 2020. For the other four projects, we expect we will be able to obtain the government’s approval of the development plans on these projects in the coming fiscal year and start the pre-sale of the real estate properties to generate cash when certain property development milestones have been achieved. Revenue recognition The Company follows FASB ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, Revenue from Contracts with Customers, revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration that the Company expects to be entitled to for those goods and services. The Company determines revenue recognition through the following steps: ● identification of the contract, or contracts, with a customer; ● identification of the performance obligations in the contract; ● determination of the transaction price, including the constraint on variable consideration; ● allocation of the transaction price to the performance obligations in the contract; and ● recognition of revenue when (or as) the Company satisfies a performance obligation. Most of the Company’s revenue is derived from real estate sales of condominiums and commercial properties in the PRC. The majority of the Company’s contracts contain a single performance obligation involving significant real estate development activities that are performed together to deliver a real estate property to its customers. Revenues arising from real estate sales are recognized when or as the control of the asset is transferred to the customer. The control of the asset may transfer over time or at a point in time. For the sales of individual condominium units in a real estate development project, the Company has an enforceable right to payment for performance completed to date, revenue is recognized over time by measuring the progress towards complete satisfaction of that performance obligation (“percentage completion method”). Otherwise, revenue is recognized at a point in time when the customer obtains control of the asset. For the years ended September 30, 2022 and 2021, the Company did not have any construction in progress meet the revenue recognition under percentage completion method. Under the percentage completion method, revenue and profit from the sales of long-term real estate development properties is recognized by the percentage of completion method on the sale of individual units when all the following criteria are met: a. Construction is beyond a preliminary stage. b. The buyer is committed to the extent of being unable to require a refund except for non-delivery of the unit or interest. c. Sufficient units have already been sold to assure that the entire property will not revert to rental property. d. Sale prices are collectible. e. Aggregate sales proceeds and costs can be reasonably estimated. If any of the above criteria are not met, proceeds shall be accounted for as deposits until the criteria are met. Under the percentage of completion method, revenues from individual real estate condominium units sold under development and related costs are recognized over the course of the construction period, based on the completion progress of a project. The progress towards complete satisfaction of the performance obligation is measured based on the Company’s efforts or inputs to the satisfaction of the performance obligation, by reference to the contract costs incurred up to the end of reporting period as a percentage of total estimated costs for each contract. In relation to any project, revenue is determined by calculating the ratio of incurred costs, including land use rights costs and construction costs, to total estimated costs and applying that ratio to the contracted sales amounts. Cost of sales is recognized by determining the ratio of contracted sales during the period to total estimated sales value and applying that ratio to the incurred costs. Current period amounts are calculated based on the difference between the life-to-date project totals and the previously recognized amounts. Any changes in significant judgments and/or estimates used in determining construction and development revenue could significantly change the timing or amount of construction and development revenue recognized. Changes in total estimated project costs or losses, if any, are recognized in the period in which they are determined. Revenue from the sales of previously completed real estate condominium units is recognized at the time of the closing of an individual unit sale. This occurs when the customer obtains the physical possession, the legal title, or the significant risks and rewards of ownership of the property and the Company has the right to payment and the collection of the consideration is probable. For municipal road construction projects, revenues are generally recognized at the time the projects are completed. Disaggregation of Revenues Disaggregated revenues are as follows: For the years ended September 30, 2022 2021 Revenue recognized for completed condominium real estate projects, net of sales taxes $ 9,071,753 $ 15,179,593 Revenue recognized for completed condominium real estate projects sold to government, net of sales taxes — 43,311,572 Total revenue, net of sales taxes $ 9,071,753 $ 58,491,165 Contract balances Timing of revenue recognition may differ from the timing of billing and cash receipts from customers. The Company records a contract asset when revenue is recognized prior to invoicing, or a contract liability when cash is received in advance of recognizing revenue. A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets include billed and billable receivables, which are the Company’s unconditional rights to consideration other than the passage of time. Contract liabilities include cash collected in advance and in excess of revenue recognized. Customer deposits are excluded from contract liabilities. The Company has elected to apply the optional practical expedient for costs to obtain a contract which allows the Company to immediately expense sales commissions (included under selling expenses) because the amortization period of the asset that the Company otherwise would have used is one year or less. The Company provides “mortgage loan guarantees” only with respect to buyers who make down-payments of 20%-50% of the total purchase price of the property. The period of the mortgage loan guarantee begins on the date the bank approves the buyer’s mortgage and we receive the loan proceeds in our bank account and ends on the date the “Certificate of Ownership” evidencing that title to the property has been transferred to the buyer. The procedures to obtain the Certificate of Ownership take six to twelve months (the “Mortgage Loan Guarantee Period”). If, after investigation of the buyer’s income and other relevant factors, the bank decides not to grant the mortgage loan, our mortgage-loan based sales contract terminates and there will be no guarantee obligation. If, during the Mortgage Loan Guarantee Period, the buyer defaults on his or her monthly mortgage payment for three consecutive months, we are required to return the loan proceeds back to the bank, although we have the right to keep the customer’s deposit and resell the property to a third party. Once the Certificate of Ownership has been issued by the relevant government authority, our loan guarantee terminates. If the buyer then defaults on his or her mortgage loan, the bank has the right to take the property back and sell it and use the proceeds to pay off the loan. The Company is not liable for any shortfall that the bank may incur in this event. To date, no buyer has defaulted on his or her mortgage payments during the Mortgage Loan Guarantee Period and the Company has not returned any loan proceeds pursuant to its mortgage loan guarantees. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, and disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates are used for, but not limited to, the assumptions and estimates used by management in recognizing development revenue under the percentage of completion method, the selection of the useful lives of property and equipment, provision necessary for contingent liabilities, revenue recognition, taxes and budgeted costs. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results could differ from these estimates. Changes of estimated gross profit margins related to revenue recognized under the percentage of completion method are made in the period in which circumstances requiring the revisions become known. For the year ended September 30, 2022 and 2021, the Company did not change the estimated revenue and related gross profit margin. Going Concern The Company’s financial statements are prepared assuming that the Company will continue as a going concern. The Company incurred operating losses of $106.9 million and had negative operating cash flows of $0.8 million and may continue to incur operating losses and generate negative cash flows as the Company implements its future business plan. In order to meet its working capital needs through the next twelve months and to fund the growth of the Company, the Company may consider plans to raise additional funds through the issuance of equity or debt. Although the Company intends to obtain additional financing to meet its cash needs, the Company may be unable to secure any additional financing on terms that are favorable or acceptable to it, if at all. The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. The Company is transforming itself from legacy business to a new energy corporation and has appointed a CEO in USA subsidiary to lead and operate the new business venture. Fair value of financial instruments The Company follows the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures.” It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions or what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the accompanying consolidated balance sheets for cash, restricted cash and all other current assets, security deposits for land use rights, loans and all current liabilities approximate their fair value based on the short-term maturity of these instruments. The fair value of the customer, construction and security deposits approximate their carrying amounts because the deposits are received in cash. It was impractical to estimate the fair value of the amount due from the local government and the other payables. Foreign currency translation The Company’s financial information is presented in U.S. dollars. The functional currency of the Company’s operating VIE is Renminbi (“RMB”), the currency of the PRC. The consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC Topic 830-30 “Translation of Financial Statements”. The financial information is first prepared in RMB and then is translated into U.S. dollars at year-end exchange rates as to assets and liabilities and average exchange rates as to revenue,expenses and cash flows. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in stockholders’ equity. 2022 2021 Year end RMB : USD exchange rate 7.1135 6.4434 Annual average RMB : USD exchange rate 6.5532 6.5072 The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. Cash Cash includes cash on hand and demand deposits in accounts maintained with large reputable commercial banks within the PRC. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Restricted cash The restricted cash is required by the banks as collateral for mortgage loans given to the home buyers before obtaining the certificates of ownership of the properties as collateral. In order to provide the banks with the certificates of ownership, the Company is required to complete certain procedures with the Chinese government, which normally takes six to twelve months. Because the banks provide the loan proceeds to the Company without obtaining certificates of ownership as loan collateral during this six to twelve month period, the mortgage banks require the Company to maintain, as restricted cash, 5% to 10% of the mortgage proceeds as security for the Company’s obligations under such guarantees. The restricted cash is released by the banks once they receive the certificate of ownership. These deposits are not covered by insurance. The Company has not experienced any losses in such accounts and management believes its restricted cash account is not exposed to any significant risks. Security deposits for land use rights Security deposits for land use rights consist of deposits held by the PRC government for the purchase of land use rights and the deposits held by an unrelated party to transfer its land use rights to the Company. The deposits will be reclassified to real estate property under development upon the transfer of legal title. Real estate property development completed and under development Real estate property consists of finished residential unit sites, commercial offices and residential unit sites under development. The Company leases the land for the residential unit sites under land use right leases with various terms from the PRC government. The cost of land use rights is included in the development cost and allocated to each project. Real estate property development completed and real estate property under development are stated at the lower of cost or fair value. Expenditures for land development, including cost of land use rights, deed tax, pre-development costs, and engineering costs, exclusive of depreciation, are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales area of units to the estimated total sales area of the project (or phase of the project) multiplied by the total cost of the project (or phase of the project). Cost of amenities transferred to buyers is allocated to specific units as a component of total construction cost. The amenity cost includes landscaping, road paving, etc. Once the projects are completed, the amenities are under control of the property management companies. Real estate property development completed and under development are subject to valuation adjustments when the carrying amount exceeds fair value. An impairment loss is recognized only if the carrying amount of the assets is not recoverable and exceeds its fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated by the assets. The Company reviews all of its real estate projects for future losses and impairment by comparing the estimated future undiscounted cash flows for each project to the carrying value of such project. For the years ended September 30, 2022 and 2021, the Company recognized $73.6 million and nil impairment loss for its real estate properties, respectively. Capitalization of interest Interest incurred during and directly related to real estate development projects is capitalized to the related real estate property under development during the active development period, which generally commences when borrowings are used to acquire real estate assets and ends when the properties are substantially complete or the property becomes inactive. Interest is capitalized based on the interest rate applicable to specific borrowings or the weighted average of the rates applicable to other borrowings during the period. Interest capitalized to real estate property under development is recorded as a component of cost of real estate sales when related units are sold. All other interest is expensed as incurred. For the years ended September 30, 2022 and 2021, the total interest capitalized in the real estate property development was $6,612,142 and $7,043,303, respectively. Property, plant and equipment, net Property, plant and equipment are recorded at cost less accumulated depreciation and any impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, less any estimated residual value. Estimated useful lives of the assets are as follows: Buildings 39 years Machinery and office equipment 5-10 years Vehicles 8 years Any gain or loss on disposal or retirement of a fixed asset is recognized in the profit and loss account and is the difference between the net sales proceeds and the net carrying amount of the asset. When property and equipment are retired or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting profit or loss is reflected in income (loss). Maintenance, repairs and minor renewals are charged directly to expense as incurred unless such expenditures extend the useful life or represent a betterment, in which case they are capitalized. Impairment of long-lived assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset’s expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There impairment of long-lived assets is $78.9 million and nil For contract assets and prepayment of uncompleted projects, the Company adopts aging analysis and discounted cash flow by attaching a percentage rate to calculate impair loss respecctively. Customer deposits Customer deposits consist of amounts received from customers relating to the sale of residential units in the PRC. In the PRC, customers will generally obtain permanent financing for the purchase of their residential unit prior to the completion of the project. The lending institution will provide the funding to the Company upon the completion of the financing rather than the completion of the project. The Company receives these funds and recognizes them as a liability until the revenue can be recognized. Property warranties The Company provides its customers with warranties which cover major defects of the building structure and certain fittings and facilities of properties sold. The warranty period varies from two years to five years, depending on different property components the warranty covers. The Company continually estimates potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a property. Reserves are determined based on historical data and trends with respect to similar property types and geographical areas. The Company continually monitors the warranty reserve and makes adjustments to its pre-existing warranties, if any, in order to reflect changes in trends and historical data as information becomes available. The Company may seek further recourse against its contractors or any related third parties if it can be proved that the faults are caused by them. In addition, the Company also withholds up to 2% of the contract cost from sub-contractors for periods of two to five years. These amounts are included in construction deposits, and are only paid to the extent that there has been no warranty claim against the Company relating to the work performed or materials supplied by the subcontractors. For the years ended September 30, 2022 and 2021, the Company had not recognized any warranty costs in excess of the amount retained from subcontractors and therefore, no warranty reserve is considered necessary at the balance sheet dates. Construction deposits Construction deposits are the warranty deposits the real estate contractors provide to the Company upon signing the construction contracts. The Company can use such deposits to reimburse customers in the event of customer claims due to construction defects. The remaining balance of the deposits are returned to the contractors when the terms of the after-sale property warranty expires, which normally occurs within two to five years after the date of the deposit. Income taxes In accordance with FASB ASC Topic 740 “Income Taxes,” deferred tax assets and liabilities are for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowances is established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. ASC 740-10-25 prescribes a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax positions taken (or expected to be taken) in a tax return. It also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, years open for tax examination, accounting for income taxes in interim periods and income tax disclosures. There are no material uncertain tax positions as of September 30, 2022 and September 30, 2021. The Company is a corporation organized under the laws of the State of Florida. However, all of the Company’s operations are conducted solely by its subsidiaries and VIE in the PRC. No income is earned in the United States and the management does not repatriate any earnings outside the PRC. As a result, the Company did not generate any U.S. taxable income for the years ended September 30, 2022 and 2021. As of September 30, 2022, the Chinese entities’ income tax returns filed in China for the years ended December 31, 2021, 2020, 2019, 2018, 2017 and 2016 are subject to examination by the Chinese taxing authorities. The parent Company, China HGS Real Estate Inc.’s both U.S. federal tax returns and Florida state tax returns are delinquent since 2009. Its tax years ended September 30, 2009 through September 30, 2021 remain open for statutory examination by U.S. federal and state tax authorities. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a U.S. corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. Due to the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded accrued amounts in our consolidated financial statements as of September 30, 2022 and 2021, including an approximately $2.3 million provision on the deemed repatriation of undistributed foreign earnings and an additional $0.8 million provision for delinquent U.S. and State tax fillings. The Company is in the process of engaging a tax professional to file its delinquent tax returns. Failure to furnish any income tax and information returns with respect to any foreign business entity required, within the time prescribed by the IRS, subjects the Company to civil penalties. Land appreciation tax (“LAT”) In accordance with the relevant taxation laws in the PRC, the Company is subject to LAT based on progressive rates ranging from 30% to 60% on the appreciation of land value, which is calculated as the proceeds of sales of properties less deductible expenditures including borrowing costs and all property development expenditures. LAT is exempted if the appreciation values do not exceed certain thresholds specified in the relevant tax laws. The whole project must be completed before the LAT obligation can be assessed. Accordingly, the Company should record the liability and the total related expense at the completion of a project unless the tax authorities impose an assessment at an earlier date. The methods to implement this tax law vary among different geographic areas. Hanzhong, where the projects Mingzhu Garden, Nan Dajie and Central Plaza are located, implements this tax rule by requiring real estate companies prepay the LAT based upon customer deposits received. The tax rate in Hanzhong is 1%. Yang County, where the Yangzhou Pearl Garden and Yangzhou Palace projects are located, has a tax rate of 0.5%. Comprehensive income (loss) In accordance with ASC 220-10-55, comprehensive income (loss) is defined as all changes in equity except those resulting from investments by owners and distributions to owners. The Company’s only components of comprehensive income (loss) for the years ended September 30, 2022 and 2021 were net income and foreign currency translation adjustments. Advertising expenses Advertising costs are expensed as incurred. For the years ended September 30, 2022 and 2021, the Company recorded advertising expenses of $4,593 and $59,481, respectively. Basic and diluted earnings (loss) per share The Company computes earnings (loss) per share (“EPS”) in accordance with the FASB ASC Topic 260, “Earnings per share,” which requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of September 30, 2022, there were outstanding warrants to purchase approximately 30,741,366 shares of the Company’s common stock (September |
Prepayment for Equipment
Prepayment for Equipment | 12 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PREPAYMENT FOR EQUIPMENT | NOTE 3. PREPAYMENT FOR EQUIPMENT As of September 30, 2022 and 2021, prepayment for energy equipment was as follows: As of September 30, 2022 2021 Energy Equipments 26,936,915 - Total $ 26,936,915 $ - The above prepayment was for the Company's new business on green energy. The counterparties are Golden Mainland Inc. and Golden Ocean Inc. |
Real Estate Property Completed
Real Estate Property Completed and Under Development | 12 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
REAL ESTATE PROPERTY COMPLETED AND UNDER DEVELOPMENT | NOTE 4. REAL ESTATE PROPERTY COMPLETED AND UNDER DEVELOPMENT The following summarizes the components of real estate property completed and under development as of September 30, 2022 and 2021: Balance as of: September 30, September 30, 2022 2021 Development completed: Hanzhong City Mingzhu Garden Phase II $ 20,672,000 $ 23,464,365 Hanzhong City Oriental Pearl Garden 17,425,514 19,435,711 Yang County Yangzhou Pearl Garden Phase II 2,039,912 2,250,388 Yang County Yangzhou Palace 34,635,104 42,995,377 Real estate property development completed $ 74,772,530 $ 88,145,841 Under development: Hanzhong City Liangzhou Road and related projects (a) $ 173,289,941 $ 180,389,654 Hanzhong City Hanfeng Beiyuan East (b) 786,954 868,796 Hanzhong City Beidajie (b) 31,144,446 34,763,987 Yang County East 2 nd 7,904,869 6,435,712 Real estate property under development $ 213,126,210 $ 222,458,149 Impairment (67,825,622 ) - Real estate property under development $ 145,300,588 $ 222,458,149 (a) In September 2013, the Company entered into an agreement (“Liangzhou Agreement”) with the Hanzhong local government on the Liangzhou Road reformation and expansion project (Liangzhou Road Project”). Pursuant to the agreement, the Company is contracted to reform and expand the Liangzhou Road, a commercial street in downtown Hanzhong City, with a total length of 2,080 meters and a width of 30 meters and to resettle the existing residences in the Liangzhou road area. The government’s original road construction budget was approximately $33 million in accordance with the Liangzhou Agreement. The Company, in return, is being compensated by the local government to have an exclusive right on acquiring at least 394.5 Mu land use rights in a specified location of Hanzhong City. The Liangzhou Road Project’s road construction started at the end of 2013. In 2014, the original scope and budget on the Liangzhou road reformation and expansion project was extended, because the local government included more area and resettlement residences into the project, which resulted in additional investments from the Company. In return, the Company is authorized by the local government to develop and manage the commercial and residential properties surrounding the Liangzhou Road project. The Company launched the construction of the Liangzhou Road related projects in December 2020. As of September 30, 2022, the main Liangzhou road construction is substantially completed. The Company’s development cost incurred on Liangzhou Road Project is treated as the Company’s deposit on purchasing the related land use rights, as agreed by the local government. As of September 30, 2022, the actual costs incurred by the Company were approximately $173.3 million (September 30, 2021 - $180.4 million) and the incremental cost related to residence resettlements approved by the local government. The Company determined that the Company’s Investment in the Liangzhou Road Project in exchange for interests in future land use rights is a barter transaction with commercial substance. (b) In September 2012, the Company was approved by the Hanzhong local government to construct four municipal roads with a total length of approximately 1,192 meters. The project was deferred and then restarted during the quarter ended June 30, 2014. As of September 30, 2021, the local government has not completed the budget for these projects therefore the delivery for these projects for the government’s acceptance and related settlement were extended to 2022. Due to delays in the government approval and slow development progress, in January 2021, the Company disposed of certain construction properties in the Beidajie project at carrying value to Hanzhong Guangsha Real Estate Development Inc. (“Hanzhong Guangsha”) an entity controlled by the Company’s former chairman and Chief executive officer, Mr. Xiaojun Zhu to settle the payable of approximately $28.2 million related to Hanzhong Guangsha in connection with the acquisition of the Hanzhong Nanyuan II Project disclosed below. On January 20, 2021, the Company entered into agreement with Hanzhong Guangsha, an entity controlled by Mr. Xiaojun Zhu, to acquire certain real estate under development in the Hanzhong Nanyuan II Project in the amount of approximately $28.2 million, for the local government’s residence reallocation related to the Liangzhou road and affiliated project. All the real estate property in Hanzhong Nanyuan II project was completed and sold to the local government for residence reallocation purposes by September 30, 2021. (c) The Company was engaged by the Yang County local government to construct the Eas t |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 5. PROPERTY, PLANT AND EQUIPMENT, NET As of September 30, 2022 and 2021, property, plant and equipment was as follows: As of September 30, 2022 2021 Buildings $ 768,544 $ 848,471 Automobiles — — Total 768,544 848,471 Less: accumulated depreciation (285,325 ) (290,385 ) Property, plant and equipment, net $ 483,219 $ 558,086 Depreciation expense for the years ended September 30, 2022 and 2021 was $24,201 and $43,510, respectively. For the year ended September 30, 2022, the Company disposed of the automobile which was fully depreciated, with no gain or loss recognized. |
Receivable From Local Governmen
Receivable From Local Government | 12 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
RECEIVABLE FROM LOCAL GOVERNMENT | NOTE 6. RECEIVABLE FROM LOCAL GOVERNMENT In June 2012, the Company was approved by the Hanzhong local government to construct two municipal roads with a total length of 1,064 meters. The Company completed and delivered these two roads to the local government on March 21, 2014 with the local government’s approval. The Company recognized such revenue during the year ended September 30, 2014. As of September 30, 2022, a receivable balance from the Hanzhong local government was $2,738,960 (September 30, 2021 $3,023,806) and the Company expects to realize the receivable to offset municipal surcharges from the local government for the Liangzhou Road related projects when the Company started the Liangzhou Road related real estate property construction in 2022 and later years. During the fiscal year of 2021, the Company purchased a building from a third party and spent money in putting everything in good conditions to sell it to local governments for the amount of $ 43,311,572. For the fiscal year ended Setpember 30, 2022, the exchange rate of RMB against US$ depreciated over the year, the translated amount in dollars became $39,620,027 as at September 30, 2022, as compared to $43,311,572 the same period of last year. The Company believes it is collectable and hence no bad debt provision is provided during the fiscal year. The reclassifications have been made to the prior year financial statements to conform to the current year presentation. The reclassification increased "Due from local government - property development completed" by $43,311,572 and decreased "Real estate property under development" by the same amount on the previous years balance sheet and cash flow statements. The reclassification had no impact on previously reported net loss and comprehensive loss. |
Security Deposits
Security Deposits | 12 Months Ended |
Sep. 30, 2022 | |
Security Deposits [Abstract] | |
SECURITY DEPOSITS | NOTE 7. SECURITY DEPOSITS As of September 30, 2022 and 2021, security deposits were as follows: As of September 30, 2022 2021 Security deposit for land use right (1) $ 1,771,019 $ 1,955,202 (1) In May 2011, the Company entered into a development agreement with the Hanzhong local government. Pursuant to the agreement, the Company prepaid $1,771,019 and $1,955,202 to Hanzhong Urban Construction Investment Development Co., Ltd to acquire certain land use rights through public bidding as of September 30, 2022 and 2021, respectively. The Company currently expects to make payment of the remaining development cost as the government’s work progresses. |
Construction Loans
Construction Loans | 12 Months Ended |
Sep. 30, 2022 | |
Construction Loans [Abstract] | |
CONSTRUCTION LOANS | NOTE 8. CONSTRUCTION LOANS September 30, September 30, Loan A (i) $ 91,675,668 $ 101,209,744 Loan C (ii) 16,690,683 18,426,478 $ 108,366,351 $ 119,636,222 (i) On June 26, 2015 and March 10, 2016, the Company signed phase I and Phase II agreements with Hanzhong Urban Construction Investment Development Co., Ltd, a state-owned Company, to borrow up to approximately $118.8 million (RMB775,000,000) for a long term loan with interest at 4.75% to the develop Liangzhou Road Project. As of September 30, 2022, the Company borrowed $91,675,668 under this credit line (September 30, 2021 - $101,209,744). Due to the local government’s delay in the reallocation of residences in the Liangzhou Road Project and related area, the Hanzhong Urban Construction Investment Development Co., Ltd has not released all the funds available to the Company and additional withdrawals will be based on the project’s development progress and the Company expects the loan will be extended upon maturity. The loan is guaranteed by Hanzhong City Hantai District Municipal Government and pledged by the Company’s Yang County Yangzhou Palace project with a carrying value of $34,635,104 as of September 30, 2022 (September 30, 2021 - $42,995,377). For the year ended September 30, 2022, the interest was $6,066,302 (September 30, 2021 - $6,488,162), which was capitalized into the development cost of the Liangzhou Road Project. (ii) In December 2016, the Company signed a loan agreement with Hantai District Urban Construction Investment Development Co., Ltd, a state-owned Company, to borrow up to approximately $18.4 million (RMB119,000,000) for the development of the Hanzhong City Liangzhou Road Project. The interest is 1.2% and due on June 20, 2031. The Company is required to repay the loan in equal annual principal repayments of approximately $3.3 million commencing from December 2027 through June 2031 with interest payable on an annual basis. The Company pledged the assets of the Liangzhou Road related projects with a carrying value of $173,289,941 as collateral for the loan. Total interest of $220,935 for the year ended September 30, 2022 was capitalized into the development cost of the Hanzhong City Liangzhou Road Project (September 30, 2021 - $224,700). Additionally, in September 2017, the Urban Development Center Co., Ltd. approved a construction loan for the Company in the amount of approximately $27.1 million (RMB175,000,000) with an annual interest rate of 1.2% per year in connection with the Liangzhou Road and related Project. The Company is required to repay the loan in equal annual principal repayment of approximately $5 million commencing from December 2027 through May 2031 with the interest payable on an annual basis. The amount of this loan is available to be drawn down as soon as the land use rights of the Liangzhou Road Project are approved and the construction starts, which is expected to be completed before the end of 2022. As of September 30, 2022 and 2021, the outstanding balance of the loan was Nil |
Other Payables
Other Payables | 12 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
OTHER PAYABLES | NOTE 9. OTHER PAYABLES The following table presents the other payables balances as of September 30, 2022 and 2021. As of September 30, 2022 2021 Accrued interest expense 7,790,654 1,747,755 Maintenance Funds 2,002,289 2,214,360 Others 3,785,770 2,468,877 Total $ 13,578,713 $ 6,430,992 |
Contract Liabilities
Contract Liabilities | 12 Months Ended |
Sep. 30, 2022 | |
Contract Liabilities [Abstract] | |
CONTRACT LIABILITIES | NOTE 10. CONTRACT LIABILITIES The following table presents the contract balances as of September 30, 2022 and 2021. As of September 30, 2022 2021 Contract liabilities 1,989,898 1,886,075 Total $ 1,989,898 $ 1,886,075 |
Customer Deposits
Customer Deposits | 12 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
CUSTOMER DEPOSITS | NOTE 11. CUSTOMER DEPOSITS Customer deposits consist of amounts received from customers for the pre-sale of residential units in the PRC. The details of customer deposits are as follows: As of September 30, 2022 2021 Customer deposits by real estate projects: Mingzhu Garden (Mingzhu Nanyuan and Mingzhu Beiyuan) $ 8,300,749 $ 8,210,839 Oriental Pearl Garden 3,015,526 2,780,917 Liangzhou road related projects 186,968 617,686 Yang County Pearl Garden 731,206 827,426 Yang County Eas t 2,108,667 2,327,964 Yangzhou Palace 5,499,652 5,039,085 Total $ 19,842,768 $ 19,803,917 Customer deposits are typically 10% - 20% of the unit selling price for those customers who purchase properties in cash and 30%-50% of the unit selling price for those customers who purchase properties with mortgages. |
Taxes
Taxes | 12 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
TAXES | NOTE 12. TAXES (A) Business sales tax and VAT The Company is subject to a 5% VAT for its existing real estate projects based on the local tax authority’s practice. As of September 30, 2022, the Company had business VAT tax payable of $4,144,254 (September 30, 2021 - $5,660,149), which is expected to be paid when the projects are completed and assessed by the local tax authority. (B) Corporate income taxes (“CIT”) The Company’s PRC subsidiary and VIE are governed by the Income Tax Law of the People’s Republic of China concerning the privately run enterprises, which are generally subject to income tax on income reported in the statutory financial statements after appropriate tax adjustments. The Company’s CIT rate is 25% on taxable income. Although the possibility exists for reinterpretation of the application of the tax regulations by higher tax authorities in the PRC, potentially overturning the decision made by the local tax authority, the Company has not experienced any reevaluation of the income taxes for prior years. The PRC tax rules are different from the local tax rules and the Company is required to comply with local tax rules. The difference between the two tax rules will not be a liability of the Company. There will be no further tax payments for the difference. As of September 30, 2022 and September 30, 2021, the Company’s total income tax payable amounted to $13,279,845 and $14,326,646, respectively, which included the income tax payable balances in the PRC of $9,714,844 and $10,761,646, respectively and the Company expects to pay this income tax payable balance when the related real estate projects are completely sold. The following table reconciles the statutory rates to the Company’s effective tax rate for the years ended September 30, 2022 and 2021: For the years ended 2022 2021 Chinese statutory tax rate 25.0 % 25.0 % Impairment (18.2 )% — % Valuation allowance change* (2.1 )% — % Net impact of tax exemption and other adjustments (4.7 )% 3.1 % Effective tax rate — % 28.1 % * Valuation allowance change for the year ended September 30, 2020 were primarily related to valuation allowance changes on historical losses. For years ended September 30, 2022 and 2021, the change in valuation allowance of $25,411,557 and $ nil Income tax expense for the years ended September 30, 2022 and 2021 is summarized as follows: For the years ended 2022 2021 Current tax provision $ — $ 2,486,546 Deferred tax provision — — Income tax expense $ — $ 2,486,546 Recent U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years or in a single lump sum. The U.S. Tax Reform also includes provisions for a new tax on Global Intangible Low-Taxed Income (“GILTI”) effective for tax years of foreign corporations beginning after December 31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of controlled foreign corporations (“CFCs”), subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations. As of September 30, 2022 and 2021, the Company’s GILTI tax payable was Nil For the year ended September 30, 2018, the Company recognized a one-time transition toll tax of approximately $2.3 million that represented management’s estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries and VIE of the Company mandated by the U.S. Tax Reform. The Company’s estimate of the onetime transition toll Tax is subject to the finalization of management’s analysis related to certain matters, such as developing interpretations of the provisions of the Tax Act and amounts related to the earnings and profits of certain foreign VIEs and the filing of our tax returns. U.S. Treasury regulations, administrative interpretations or court decisions interpreting the Tax Act may require further adjustments and changes in our estimates. As of September 30, 2022 and 2021, the Company provided an additional $0.8 million provision due to delinquent U.S. tax return fillings. GREEN GIANT INC. Composition of deferred tax assets and liabilities: As of September 30, Deferred tax assets Impairment 19,722,369 Tax losses carried forward and other 7,308,802 27,031,171 Valuation allowance (27,031,171 ) Total deferred tax assets - (C) Land appreciation tax (“LAT”) Since January 1, 1994, LAT has been applicable at progressive tax rates ranging from 30% to 60% on the appreciation of land values, which is calculated as the proceeds of sales of properties less deductible expenditures including borrowing costs and all property development expenditures. LAT is exempted if the appreciation values do not exceed certain thresholds specified in the relevant tax laws. The whole project must be completed before the LAT obligation can be assessed. Accordingly, the Company should record the liability and the total related expense at the completion of a project unless the tax authorities impose an assessment at an earlier date. The methods to implement this tax law vary among different geographic areas. Hanzhong, where the projects Mingzhu Garden, Nan Dajie and Central Plaza are located, implements this tax rule by requiring real estate companies prepay the LAT based upon customer deposits received. The tax rate in Hanzhong is 1%. Yang County, where the Yangzhou Pearl Garden and Yangzhou Palace projects are located, has a tax rate of 0.5%. As at September 30, 2022 and 2021, the outstanding LAT payable balance was Nil (D) Taxes payable consisted of the following: September 30, September 30, 2022 2021 CIT $ 13,279,845 $ 14,326,646 Business tax 4,144,254 5,660,149 Other taxes and fees 2,556,259 2,967,216 Total taxes payables $ 19,980,358 $ 22,954,011 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 13. STOCKHOLDERS’ EQUITY (a) Common stock On August 19, 2020, the Company filed an Amendment to the Company’s Articles of Incorporation (the “Certificate of Amendment”) with the Florida Secretary of State to affect a one-for-two reverse split of the Company’s authorized and issued and outstanding shares of common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective in accordance with the terms of the Certificate of Amendment on August 20, 2020 (the “Effective Time”). At the Effective Time, every two shares of the Company’s common stock authorized issued and outstanding were automatically combined into one share of common stock, without any change in the par value per share. The Company will not issue any fractional shares in connection with the Reverse Stock Split. Instead, fractional shares will be rounded up to the nearest full share. The Company had a total of 45,050,000 shares of common stock issued and outstanding prior to the Reverse Stock Split. On April 19, 2021 (the “Closing Date”), pursuant to the terms of the Equity Acquisition Agreement between the “Company and Shaanxi Tianhao Construction Engineer Co., Ltd (“Shaanxi Tianhao”) (the “Purchaser”) (the “Equity Acquisition Agreement”), the Company issued 3,092,114 shares of common stock to the Purchaser in exchange for the settlement of its accounts payable balance. In accordance with the Equity Acquisition Agreement, the Purchaser received on a pro rata basis the Company’s common stock equivalent consideration of approximately $6.6 million (RMB 43 million) based on a conversion price of $2.13 which was the average price of the Company’s stock during the five (5) trading days preceding to the Closing Date. On December 10, 2021, China HGS Real Estate Inc. (the “Company”) entered into a certain securities purchase agreement (the “SPA”) with certain purchasers whom are “non-U.S. Persons” (the “Investors”) as defined in Regulation S of the Securities Act, pursuant to which the Company agreed to sell an aggregate of 10,247,122 units (the “Units”), each Unit consisting of one share of common stock, par value $0.001 per share (“Common Stock”) and a warrant to purchase three shares of Common Stock (the “Warrant”) with an initial exercise price of $2.375 at a price of $2.375 per Unit, for an aggregate purchase price of approximately $24.3 million (the “Offering”). The Warrants are exercisable at any time after the six-month anniversary of the issuance date at an initial exercise price of $2.375 for cash (the “Warrant Shares”). The Warrants may also be exercised cashlessly if at any time after the six-month anniversary of the issuance date, there is no effective registration statement registering, or no current prospectus available for, the resale of the Warrant Shares. The Warrants shall expire five and a half years from its date of issuance. The Warrants are subject to customary anti-dilution provisions reflecting stock dividends and splits or other similar transactions. On January 14, 2022, the transaction contemplated by the SPA closed. On March 16, 2022, the Company entered into a certain securities purchase agreement (the “SPA”) with certain purchasers whom are “non-U.S. Persons” (the “Investors”) as defined in Regulation S of the Securities Act, pursuant to which the Company agreed to sell an aggregate of 4,600,000 shares (the “Shares”) of common stock, par value $0.001 per share, for an aggregate purchase price of approximately $4.6 million (the “Offering”). On March 30, 2022, the transaction contemplated by the SPA closed. On September 25, 2012, our shareholders approved the Company’s 2012 Omnibus Securities and Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of awards which are distribution equivalent rights, incentive stock options, non-qualified stock options, performance shares, performance units, restricted shares of common stock, restricted stock units, stock appreciation rights (“SARs”), tandem stock appreciation rights, unrestricted shares of common stock or any combination of the foregoing, to key management employees and nonemployee directors of, and nonemployee consultants of, the Company or any of its subsidiaries (each a “participant”). We have reserved a total of 1,000,000 shares of common stock for issuance under the 2012 Plan. The number of shares of common stock for which awards which are options or SARs may be granted to a participant under the 2012 Plan during any calendar year is limited to 500,000. The Company awards common stocks to a director and three consultants pursuant to the 2022 Equity Incentive Plan, which was registered on the Form S-8.. Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date. These common stocks are vested immediately after granted. On August 10, 2022, Board of directors of the Company issued an aggregate of 5,990,000 registered common stock of the Company, par value $0.001 per share (“Common Stock’), from the Company's current registration statement on Form S-8 (Form S-8), to the Consultants or their designees namely, Aizhen Wei, Jun Liao and Youbing Li on the terms and conditions setforth in the Agreements, immediately vested upon grant. We record stock-based compensation expense for non-employees at fair value on the grant date as the consideration for service received. On August 10, 2022 the grant date, the Company’s share price closed at $3.23 per share, hence total share-based compensation is equal to $19,347,700; On September 6, 2022, the Company awarded Jia Zhang, one of the independent directors of the Board, of 10,000 common shares as annual compensation for his role with the Board immediately vested upon the grant date. On September 6, 2022/the grant date, the Company’s share price closed at $2.27 per share, hence total share-based compensation is equal to $22,700. Total share-based compensation amounts to $19,370,400 for three individuals plus the independent director. (b) Statutory surplus reserves The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve is required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory surplus reserve fund is non-discretionary other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of shares currently held by them, provided that the remaining statutory surplus reserve balance after such issue is not less than 25% of the registered capital before the conversion. The Company is required to appropriate 10% of its net profits as statutory surplus reserve. As of September 30, 2022 and 2021, the balance of statutory surplus reserve was $11,095,939 and $11,095,939, respectively. The discretionary surplus reserve may be used to acquire fixed assets or to increase the working capital to expend on production and operations of the business. The Company’s Board of Directors decided not to make an appropriation to this reserve for the years ended September 30, 2022 and 2021. |
Contingencies and Commitments
Contingencies and Commitments | 12 Months Ended |
Sep. 30, 2022 | |
Contingencies and Commitments [Abstract] | |
CONTINGENCIES AND COMMITMENTS | NOTE 14. CONTINGENCIES AND COMMITMENTS From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not believe the liability from the disposition of such claims and litigation individually or in the aggregate would have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows. As an industry practice, the Company provides guarantees to PRC banks with respect to loans procured by the purchasers of the Company’s real estate properties for the total mortgage loan amount until the buyer obtains the “Certificate of Ownership” of the properties from the government, which generally takes six to twelve months. Because the banks provide loan proceeds without getting the “Certificate of Ownership” as loan collateral during the six to twelve month period, the mortgage banks require the Company to maintain, as restricted cash of at least 5% of the mortgage proceeds as security for the Company’s obligations under such guarantees. If a purchaser defaults on its payment obligations, the mortgage bank may deduct the delinquent mortgage payment from the security deposit and require the Company to pay the excess amount if the delinquent mortgage payments exceed the security deposit. If the delinquent mortgage payments exceed the security deposit, the banks may require us to pay the excess amount. If multiple purchasers’ default on their payment obligations at around the same time, we will be required to make significant payments to the banks to satisfy our guarantee obligations. If we are unable to resell the properties underlying defaulted mortgages on a timely basis or at prices higher than the amounts of our guarantees and related expenses, we will suffer financial losses. The Company has the required reserves in its restricted cash account to cover any potential mortgage defaults as required by the mortgage lenders. Since inception through the release of this report, the Company has not experienced any delinquent mortgage loans and has not experienced any losses related to these guarantees. As of September 30, 2022 and 2021, our outstanding guarantees in respect of our customers’ mortgage loans amounted to approximately $24.87 million and $66 million, respectively. As of September 30, 2022 and 2021, the amount of restricted cash reserved for these guarantees was approximately $3.0 million and $3.3 million, respectively, and the Company believes that such reserves are sufficient. The Company has been named as a defendant in a number of lawsuits arising in its ordinary course of business. As of the date of this annual report, the Company continues to use all commercially reasonable efforts to defend itself in these proceedings and is undergoing on-going discussion with regulatory authorities. 1) Case between the labor contract dispute between Wangcang County Lexin Labor Service Co., Ltd. and Zhejiang Hongcheng Construction Group Co., Ltd., Zhejiang Hongcheng Construction Group Co., Ltd. Xi 'an Branch and Shaanxi Guangsha Investment Development Group Co., Ltd. Hongcheng Company was judged to compensate Lexin Company, and Shaanxi Guangsha Company was jointly and severally liable, with an execution amount of $3,373,867. 2) Related to the above Case 1 disputes between Zhejiang Hongcheng Construction Group Co., Ltd. and Shaanxi Guangsha Investment Development Group Co., Ltd. on the construction project contract. The execution target of this case is $9,091,868 million inchuding $3,373,867 in Case 1. 3) Case between Hantai District Commuity Center Hanzhong Urban Counsel and Shaanxi Guangsha Investment Development Group Co., Ltd., which was ordered by Hanzhong Hantai District Court to the settle the amount of $131,498 and it is still outstanding as at September 30, 2022.. 4) Case between Hanzhong City Puyang Plumber Agency Co., Ltd and Shaanxi Guangsha Investment Development Group Co., Ltd., was settled. 5) Two individuals of property buyers Hanshen Lu & Xin Lu and Shaanxi Guangsha Investment Development Group Co., Ltd., was settled. 6) Dispute between an disclosed property buyer and Shaanxi Guangsha Investment Development Group Co., Ltd., which was ordered by local court to pay the plaintiff of $127,979 which is still outstanding as at September 30, 2022. The Company acrued $9,351,344 for the above six cases in the current fiscal year as the contingency liabilities could not be quantified till nearby current fiscal year or within current fiscal year as at September 30, 2022. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15. Subsequent Events On October 5, 2022, the Company entered into a certain securities purchase agreement with certain purchasers whom are “non-U.S. Persons” as defined in Regulation S of the Securities Act, pursuant to which the Company agreed to sell an aggregate of 9,288,339 units, each consisting of one share of the common stock of the Company, par value $0.001 per share and a warrant to purchase three shares of Common Stock, for an aggregate purchase price of approximately $5.2 million. On October 17, 2022, the Board appointed Ms. Sheng (Dorothy) Liu as the Chief Operating Officer of the Company. Ms. Sheng (Dorothy) Liu does not have a family relationship with any director or executive officer of the Company and has not been involved in any transaction with the Company during the past two years that would require disclosure under Item 404(a) of Regulation S-K. On November 2, 2022, the Company entered into certain Management Services Agreement with Incrementum Management LLC (the “Consultant”), and Mr. Junaid Ali (the “Executive”), pursuant to which the Company shall engage the management services of the Consultant and the Executive to implement its plan to engage in the green energy or carbon free energy sector in the U.S. The Executive will be appointed as Chief Executive Officer of the Company. On January 12, 2023, the Company and FT Global Capital Inc. (“FT Global”) entered into a settlement agreement (the “FT Global Settlement Agreement”), pursuant to which FT Global has waived all claims and liabilities against the Company in connection with the Company’s private placement in October 2022 and terminated the Exclusive Placement Agent Agreement entered by and between the Company and FT Global in May 2022. Under the terms of the FT Global Settlement Agreement, the Company is obligated to pay to FT Global cash compensation of $40,000 and share compensation of 40,000 shares of the Company’s restricted common stock. |
Schedule I
Schedule I | 12 Months Ended |
Sep. 30, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
SCHEDULE I | September 30, 2022 2021 ASSETS Cash $ 1,074,440 — Other assets 161,700 — Prepayment for energy equipment 26,936,915 — Amount due from related party 2,000 — Investment in subsidiary and VIE $ 94,868,534 $ 194,262,711 Total assets $ 123,043,589 $ 194,262,711 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Accrued expenses $ 17,528 — Other payables 15,391 — Tax payable 3,565,000 $ 3,565,000 Total liabilities 3,597,919 3,565,000 Stockholders’ equity*: Commons stock,$0.001 par value,200,000,000 shares authorized;46,464,929 and 25,617,807 shares outstanding as at September 30, 2022 and September 30,2021 46,464 25,617 Additional paid-in capital 184,821,771 136,535,303 Statutory surplus 11,095,939 11,095,939 Retained earnings (67,432,727 ) 40,691,955 Accumulated other comprehensive income (loss) (9,085,777 ) 2,348,897 Total stockholders’ equity 119,445,670 190,697,711 Total Liabilities and Stockholders’ Equity $ 123,043,589 $ 194,262,711 * Adjusted to give retroactive effect to a one-for-two reverse stock split effective on August 20, 2020. 2022 2021 Equity in profit of subsidiary and VIE $ (87,959,503 ) $ 6,643,438 General and administrative expenses (20,164,709 ) — Interest expense (470 ) — (Loss) income before income taxes (108,124,682 ) 6,643,438 Provision for income taxes — 268,000 Net (loss) income (108,124,682 ) 6,375,438 Other comprehensive loss Foreign currency translation adjustment (11,434,674 ) 9,388,387 Comprehensive loss $ (119,559,356 ) $ 15,763,825 2022 2021 Cash flows from operating activities Net (loss) income $ (108,124,682 ) $ 6,375,438 Adjustments to reconcile net income to net cash used in operating activities: Share based compensation 19,370,400 — Equity in profit of subsidiary and VIE 87,959,503 (6,643,438 ) Changes in assets and liabilities: Taxes payable — 268,000 Other assets (161,700 ) — Other payables 15,391 — Accrued expenses 17,528 — Interco (2,000 ) — Net cash used in operating activities (925,560 ) — Cash Flows from Investing Activities: Prepayment for energy equipment (26,936,915 ) — Net Cash Used in Investing Activities (26,936,915 ) — Cash flow from financing activities: Proceeds from private placements 28,936,915 — Net cash (used in) financing activities 28,936,915 — Net increase (decrease) in cash 1,074,440 — Cash, beginning of year — — Cash, end of year $ 1,074,440 $ — Supplemental disclosures of cash flow information: Interest paid $ — $ — Income taxes paid $ — $ — NOTE 1. BASIS OF PRESENTATION Certain information and footnote disclosures normally included in financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted. The Company’s investment in subsidiary and variable interest entity (“VIE”) is stated at cost plus equity income (loss) in undistributed earnings (loss) of subsidiaries and VIE. NOTE 2. RESTRICTED ASSETS The Company’s PRC VIE and subsidiary are restricted in their ability to transfer a portion of their net assets to the Company. The payment of dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. The Company’s subsidiary and its VIE are also required to set aside at least 10% of their after-tax profit based on PRC accounting standards each year to their statutory reserve accounts until the accumulated amount of such reserves reaches 50% of their respective registered capital. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. In addition, the Company’s operations and revenues are conducted and generated in China, all of the Company’s revenues being earned and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulations in China, and, as a result, the Company may be unable to distribute any dividends outside of China due to PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into US Dollars. Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries and VIEs shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries and VIEs (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries and VIEs in the form of loans, advances or cash dividends without the consent of a third party. The condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the Company’s PRC subsidiary and VIE exceed 25% of the consolidated net assets of the Company. NOTE 3. COMMITMENTS The Company did not have any significant commitments or long-term obligations as at September 30, 2022 and 2021. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Principles of consolidation and basis of presentation | Principles of consolidation and basis of presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of Inc. (the “Company” or “China HGS”), China HGS Investment Inc. (“HGS Investment”), Shaanxi HGS Management and Consulting Co., Ltd. (“Shaanxi HGS”) and its variable interest entity (“VIE”), Shaanxi Guangsha Investment and Development Group Co., Ltd. (“Guangsha”). All inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation. The Company’s operations involve real estate development and sales. Starting from the year ended September 30, 2020, the Company has been involved in larger real estate property development with an extended development cycle. As a result, it is not possible to precisely measure the duration of its operating cycle. The accompanying consolidated balance sheets of the Company have been prepared on an unclassified basis in accordance with real estate industry practice. |
Liquidity | Liquidity In assessing the liquidity, management monitors and analyzes the Company’s cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. As of September 30, 2022, our total cash and restricted cash balance was approximately $4.37 million, a increase from approximately $3.5 million as of September 30, 2021. With respect to capital funding requirements, the Company budgeted its capital spending based on ongoing assessments of needs to maintain adequate cash. As of September 30, 2022, we had approximately $74.8 million of completed residential apartments and commercial units available for sale to potential buyers. Although we reported approximately $10.6 million accounts payable as of September 30, 2022, due to the long-term relationship with our construction suppliers and subcontractors, we were able to effectively manage cash spending on construction and negotiate with them to adjust the payment schedule based on our cash on hand. In addition, most of our existing real estate development projects relate to the old town renovation which are supported by the local government. As of September 30, 2022, we reported approximately $108.4 million of construction loans borrowed from financial institutions controlled by the local government and such loans can only be used on the old town renovation related project development. We expect that we will be able to renew all of the existing construction loans upon their maturity and borrow additional new loans from local financial institutions, when necessary, based on our past experience and the Company’s good credit history. Also, the Company’s cash flows from pre-sales and current sales should provide financial support for our current development projects and operations. For the year ended September 30, 2022, we had six large ongoing construction projects (see Note 3, real estate properties under development) which were under the preliminary development stage due to delayed inspection and acceptance of the development plans by the local government. In June 2020, we completed the residence relocation surrounding the Liangzhou Road related projects and launched the construction of these projects in December 2020. For the other four projects, we expect we will be able to obtain the government’s approval of the development plans on these projects in the coming fiscal year and start the pre-sale of the real estate properties to generate cash when certain property development milestones have been achieved. |
Revenue recognition | Revenue recognition The Company follows FASB ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, Revenue from Contracts with Customers, revenue is recognized in accordance with the transfer of goods and services to customers at an amount that reflects the consideration that the Company expects to be entitled to for those goods and services. The Company determines revenue recognition through the following steps: ● identification of the contract, or contracts, with a customer; ● identification of the performance obligations in the contract; ● determination of the transaction price, including the constraint on variable consideration; ● allocation of the transaction price to the performance obligations in the contract; and ● recognition of revenue when (or as) the Company satisfies a performance obligation. Most of the Company’s revenue is derived from real estate sales of condominiums and commercial properties in the PRC. The majority of the Company’s contracts contain a single performance obligation involving significant real estate development activities that are performed together to deliver a real estate property to its customers. Revenues arising from real estate sales are recognized when or as the control of the asset is transferred to the customer. The control of the asset may transfer over time or at a point in time. For the sales of individual condominium units in a real estate development project, the Company has an enforceable right to payment for performance completed to date, revenue is recognized over time by measuring the progress towards complete satisfaction of that performance obligation (“percentage completion method”). Otherwise, revenue is recognized at a point in time when the customer obtains control of the asset. For the years ended September 30, 2022 and 2021, the Company did not have any construction in progress meet the revenue recognition under percentage completion method. Under the percentage completion method, revenue and profit from the sales of long-term real estate development properties is recognized by the percentage of completion method on the sale of individual units when all the following criteria are met: a. Construction is beyond a preliminary stage. b. The buyer is committed to the extent of being unable to require a refund except for non-delivery of the unit or interest. c. Sufficient units have already been sold to assure that the entire property will not revert to rental property. d. Sale prices are collectible. e. Aggregate sales proceeds and costs can be reasonably estimated. If any of the above criteria are not met, proceeds shall be accounted for as deposits until the criteria are met. Under the percentage of completion method, revenues from individual real estate condominium units sold under development and related costs are recognized over the course of the construction period, based on the completion progress of a project. The progress towards complete satisfaction of the performance obligation is measured based on the Company’s efforts or inputs to the satisfaction of the performance obligation, by reference to the contract costs incurred up to the end of reporting period as a percentage of total estimated costs for each contract. In relation to any project, revenue is determined by calculating the ratio of incurred costs, including land use rights costs and construction costs, to total estimated costs and applying that ratio to the contracted sales amounts. Cost of sales is recognized by determining the ratio of contracted sales during the period to total estimated sales value and applying that ratio to the incurred costs. Current period amounts are calculated based on the difference between the life-to-date project totals and the previously recognized amounts. Any changes in significant judgments and/or estimates used in determining construction and development revenue could significantly change the timing or amount of construction and development revenue recognized. Changes in total estimated project costs or losses, if any, are recognized in the period in which they are determined. Revenue from the sales of previously completed real estate condominium units is recognized at the time of the closing of an individual unit sale. This occurs when the customer obtains the physical possession, the legal title, or the significant risks and rewards of ownership of the property and the Company has the right to payment and the collection of the consideration is probable. For municipal road construction projects, revenues are generally recognized at the time the projects are completed. Disaggregation of Revenues Disaggregated revenues are as follows: For the years ended September 30, 2022 2021 Revenue recognized for completed condominium real estate projects, net of sales taxes $ 9,071,753 $ 15,179,593 Revenue recognized for completed condominium real estate projects sold to government, net of sales taxes — 43,311,572 Total revenue, net of sales taxes $ 9,071,753 $ 58,491,165 Contract balances Timing of revenue recognition may differ from the timing of billing and cash receipts from customers. The Company records a contract asset when revenue is recognized prior to invoicing, or a contract liability when cash is received in advance of recognizing revenue. A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets include billed and billable receivables, which are the Company’s unconditional rights to consideration other than the passage of time. Contract liabilities include cash collected in advance and in excess of revenue recognized. Customer deposits are excluded from contract liabilities. The Company has elected to apply the optional practical expedient for costs to obtain a contract which allows the Company to immediately expense sales commissions (included under selling expenses) because the amortization period of the asset that the Company otherwise would have used is one year or less. The Company provides “mortgage loan guarantees” only with respect to buyers who make down-payments of 20%-50% of the total purchase price of the property. The period of the mortgage loan guarantee begins on the date the bank approves the buyer’s mortgage and we receive the loan proceeds in our bank account and ends on the date the “Certificate of Ownership” evidencing that title to the property has been transferred to the buyer. The procedures to obtain the Certificate of Ownership take six to twelve months (the “Mortgage Loan Guarantee Period”). If, after investigation of the buyer’s income and other relevant factors, the bank decides not to grant the mortgage loan, our mortgage-loan based sales contract terminates and there will be no guarantee obligation. If, during the Mortgage Loan Guarantee Period, the buyer defaults on his or her monthly mortgage payment for three consecutive months, we are required to return the loan proceeds back to the bank, although we have the right to keep the customer’s deposit and resell the property to a third party. Once the Certificate of Ownership has been issued by the relevant government authority, our loan guarantee terminates. If the buyer then defaults on his or her mortgage loan, the bank has the right to take the property back and sell it and use the proceeds to pay off the loan. The Company is not liable for any shortfall that the bank may incur in this event. To date, no buyer has defaulted on his or her mortgage payments during the Mortgage Loan Guarantee Period and the Company has not returned any loan proceeds pursuant to its mortgage loan guarantees. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, and disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates are used for, but not limited to, the assumptions and estimates used by management in recognizing development revenue under the percentage of completion method, the selection of the useful lives of property and equipment, provision necessary for contingent liabilities, revenue recognition, taxes and budgeted costs. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results could differ from these estimates. Changes of estimated gross profit margins related to revenue recognized under the percentage of completion method are made in the period in which circumstances requiring the revisions become known. For the year ended September 30, 2022 and 2021, the Company did not change the estimated revenue and related gross profit margin. |
Going Concern | Going Concern The Company’s financial statements are prepared assuming that the Company will continue as a going concern. The Company incurred operating losses of $106.9 million and had negative operating cash flows of $0.8 million and may continue to incur operating losses and generate negative cash flows as the Company implements its future business plan. In order to meet its working capital needs through the next twelve months and to fund the growth of the Company, the Company may consider plans to raise additional funds through the issuance of equity or debt. Although the Company intends to obtain additional financing to meet its cash needs, the Company may be unable to secure any additional financing on terms that are favorable or acceptable to it, if at all. The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. The Company is transforming itself from legacy business to a new energy corporation and has appointed a CEO in USA subsidiary to lead and operate the new business venture. |
Fair value of financial instruments | Fair value of financial instruments The Company follows the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures.” It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions or what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the accompanying consolidated balance sheets for cash, restricted cash and all other current assets, security deposits for land use rights, loans and all current liabilities approximate their fair value based on the short-term maturity of these instruments. The fair value of the customer, construction and security deposits approximate their carrying amounts because the deposits are received in cash. It was impractical to estimate the fair value of the amount due from the local government and the other payables. |
Foreign currency translation | Foreign currency translation The Company’s financial information is presented in U.S. dollars. The functional currency of the Company’s operating VIE is Renminbi (“RMB”), the currency of the PRC. The consolidated financial statements of the Company have been translated into U.S. dollars in accordance with ASC Topic 830-30 “Translation of Financial Statements”. The financial information is first prepared in RMB and then is translated into U.S. dollars at year-end exchange rates as to assets and liabilities and average exchange rates as to revenue,expenses and cash flows. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in stockholders’ equity. 2022 2021 Year end RMB : USD exchange rate 7.1135 6.4434 Annual average RMB : USD exchange rate 6.5532 6.5072 The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. |
Cash | Cash Cash includes cash on hand and demand deposits in accounts maintained with large reputable commercial banks within the PRC. The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. |
Restricted cash | Restricted cash The restricted cash is required by the banks as collateral for mortgage loans given to the home buyers before obtaining the certificates of ownership of the properties as collateral. In order to provide the banks with the certificates of ownership, the Company is required to complete certain procedures with the Chinese government, which normally takes six to twelve months. Because the banks provide the loan proceeds to the Company without obtaining certificates of ownership as loan collateral during this six to twelve month period, the mortgage banks require the Company to maintain, as restricted cash, 5% to 10% of the mortgage proceeds as security for the Company’s obligations under such guarantees. The restricted cash is released by the banks once they receive the certificate of ownership. These deposits are not covered by insurance. The Company has not experienced any losses in such accounts and management believes its restricted cash account is not exposed to any significant risks. |
Security deposits for land use rights | Security deposits for land use rights Security deposits for land use rights consist of deposits held by the PRC government for the purchase of land use rights and the deposits held by an unrelated party to transfer its land use rights to the Company. The deposits will be reclassified to real estate property under development upon the transfer of legal title. |
Real estate property development completed and under development | Real estate property development completed and under development Real estate property consists of finished residential unit sites, commercial offices and residential unit sites under development. The Company leases the land for the residential unit sites under land use right leases with various terms from the PRC government. The cost of land use rights is included in the development cost and allocated to each project. Real estate property development completed and real estate property under development are stated at the lower of cost or fair value. Expenditures for land development, including cost of land use rights, deed tax, pre-development costs, and engineering costs, exclusive of depreciation, are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales area of units to the estimated total sales area of the project (or phase of the project) multiplied by the total cost of the project (or phase of the project). Cost of amenities transferred to buyers is allocated to specific units as a component of total construction cost. The amenity cost includes landscaping, road paving, etc. Once the projects are completed, the amenities are under control of the property management companies. Real estate property development completed and under development are subject to valuation adjustments when the carrying amount exceeds fair value. An impairment loss is recognized only if the carrying amount of the assets is not recoverable and exceeds its fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated by the assets. The Company reviews all of its real estate projects for future losses and impairment by comparing the estimated future undiscounted cash flows for each project to the carrying value of such project. For the years ended September 30, 2022 and 2021, the Company recognized $73.6 million and nil impairment loss for its real estate properties, respectively. |
Capitalization of interest | Capitalization of interest Interest incurred during and directly related to real estate development projects is capitalized to the related real estate property under development during the active development period, which generally commences when borrowings are used to acquire real estate assets and ends when the properties are substantially complete or the property becomes inactive. Interest is capitalized based on the interest rate applicable to specific borrowings or the weighted average of the rates applicable to other borrowings during the period. Interest capitalized to real estate property under development is recorded as a component of cost of real estate sales when related units are sold. All other interest is expensed as incurred. For the years ended September 30, 2022 and 2021, the total interest capitalized in the real estate property development was $6,612,142 and $7,043,303, respectively. |
Property, plant and equipment, net | Property, plant and equipment, net Property, plant and equipment are recorded at cost less accumulated depreciation and any impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, less any estimated residual value. Estimated useful lives of the assets are as follows: Buildings 39 years Machinery and office equipment 5-10 years Vehicles 8 years Any gain or loss on disposal or retirement of a fixed asset is recognized in the profit and loss account and is the difference between the net sales proceeds and the net carrying amount of the asset. When property and equipment are retired or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting profit or loss is reflected in income (loss). Maintenance, repairs and minor renewals are charged directly to expense as incurred unless such expenditures extend the useful life or represent a betterment, in which case they are capitalized. |
Impairment of long-lived assets | Impairment of long-lived assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset’s expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There impairment of long-lived assets is $78.9 million and nil For contract assets and prepayment of uncompleted projects, the Company adopts aging analysis and discounted cash flow by attaching a percentage rate to calculate impair loss respecctively. |
Customer deposits | Customer deposits Customer deposits consist of amounts received from customers relating to the sale of residential units in the PRC. In the PRC, customers will generally obtain permanent financing for the purchase of their residential unit prior to the completion of the project. The lending institution will provide the funding to the Company upon the completion of the financing rather than the completion of the project. The Company receives these funds and recognizes them as a liability until the revenue can be recognized. |
Property warranties | Property warranties The Company provides its customers with warranties which cover major defects of the building structure and certain fittings and facilities of properties sold. The warranty period varies from two years to five years, depending on different property components the warranty covers. The Company continually estimates potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a property. Reserves are determined based on historical data and trends with respect to similar property types and geographical areas. The Company continually monitors the warranty reserve and makes adjustments to its pre-existing warranties, if any, in order to reflect changes in trends and historical data as information becomes available. The Company may seek further recourse against its contractors or any related third parties if it can be proved that the faults are caused by them. In addition, the Company also withholds up to 2% of the contract cost from sub-contractors for periods of two to five years. These amounts are included in construction deposits, and are only paid to the extent that there has been no warranty claim against the Company relating to the work performed or materials supplied by the subcontractors. For the years ended September 30, 2022 and 2021, the Company had not recognized any warranty costs in excess of the amount retained from subcontractors and therefore, no warranty reserve is considered necessary at the balance sheet dates. |
Construction deposits | Construction deposits Construction deposits are the warranty deposits the real estate contractors provide to the Company upon signing the construction contracts. The Company can use such deposits to reimburse customers in the event of customer claims due to construction defects. The remaining balance of the deposits are returned to the contractors when the terms of the after-sale property warranty expires, which normally occurs within two to five years after the date of the deposit. |
Income taxes | Income taxes In accordance with FASB ASC Topic 740 “Income Taxes,” deferred tax assets and liabilities are for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowances is established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. ASC 740-10-25 prescribes a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax positions taken (or expected to be taken) in a tax return. It also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, years open for tax examination, accounting for income taxes in interim periods and income tax disclosures. There are no material uncertain tax positions as of September 30, 2022 and September 30, 2021. The Company is a corporation organized under the laws of the State of Florida. However, all of the Company’s operations are conducted solely by its subsidiaries and VIE in the PRC. No income is earned in the United States and the management does not repatriate any earnings outside the PRC. As a result, the Company did not generate any U.S. taxable income for the years ended September 30, 2022 and 2021. As of September 30, 2022, the Chinese entities’ income tax returns filed in China for the years ended December 31, 2021, 2020, 2019, 2018, 2017 and 2016 are subject to examination by the Chinese taxing authorities. The parent Company, China HGS Real Estate Inc.’s both U.S. federal tax returns and Florida state tax returns are delinquent since 2009. Its tax years ended September 30, 2009 through September 30, 2021 remain open for statutory examination by U.S. federal and state tax authorities. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a U.S. corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. Due to the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded accrued amounts in our consolidated financial statements as of September 30, 2022 and 2021, including an approximately $2.3 million provision on the deemed repatriation of undistributed foreign earnings and an additional $0.8 million provision for delinquent U.S. and State tax fillings. The Company is in the process of engaging a tax professional to file its delinquent tax returns. Failure to furnish any income tax and information returns with respect to any foreign business entity required, within the time prescribed by the IRS, subjects the Company to civil penalties. |
Land appreciation tax (“LAT”) | Land appreciation tax (“LAT”) In accordance with the relevant taxation laws in the PRC, the Company is subject to LAT based on progressive rates ranging from 30% to 60% on the appreciation of land value, which is calculated as the proceeds of sales of properties less deductible expenditures including borrowing costs and all property development expenditures. LAT is exempted if the appreciation values do not exceed certain thresholds specified in the relevant tax laws. The whole project must be completed before the LAT obligation can be assessed. Accordingly, the Company should record the liability and the total related expense at the completion of a project unless the tax authorities impose an assessment at an earlier date. The methods to implement this tax law vary among different geographic areas. Hanzhong, where the projects Mingzhu Garden, Nan Dajie and Central Plaza are located, implements this tax rule by requiring real estate companies prepay the LAT based upon customer deposits received. The tax rate in Hanzhong is 1%. Yang County, where the Yangzhou Pearl Garden and Yangzhou Palace projects are located, has a tax rate of 0.5%. |
Comprehensive income (loss) | Comprehensive income (loss) In accordance with ASC 220-10-55, comprehensive income (loss) is defined as all changes in equity except those resulting from investments by owners and distributions to owners. The Company’s only components of comprehensive income (loss) for the years ended September 30, 2022 and 2021 were net income and foreign currency translation adjustments. |
Advertising expenses | Advertising expenses Advertising costs are expensed as incurred. For the years ended September 30, 2022 and 2021, the Company recorded advertising expenses of $4,593 and $59,481, respectively. |
Basic and diluted earnings (loss) per share | Basic and diluted earnings (loss) per share The Company computes earnings (loss) per share (“EPS”) in accordance with the FASB ASC Topic 260, “Earnings per share,” which requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of September 30, 2022, there were outstanding warrants to purchase approximately 30,741,366 shares of the Company’s common stock (September 30, 2021- nil |
Concentration risk | Concentration risk The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittances abroad, and rates and methods of taxation, among other things. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company’s cash and restricted cash were on deposit at financial institutions in the PRC, which the management believes are of high credit quality. In May, 2015, China’s new Deposit Insurance Regulation came into effect, pursuant to which banking financial institutions, such as commercial banks, established in China are required to purchase deposit insurance for deposits in RMB and in foreign currency placed with them. Such Deposit Insurance Regulation would not be effective in providing complete protection for the Company’s accounts, as its aggregate deposits are much higher than the compensation limit of RMB500,000 (approximately $77,599). However, the Company believes that the risk of failure of any of these Chinese banks is remote. Bank failure is uncommon in China and the Company believes that the Chinese banks that hold the Company’s cash and restricted cash are financially sound based on public available information. The Company has not experienced any losses in its bank accounts. For the year ended September 30, 2022, the Company had real estate sales revenue of $nil related to sales to the local government for residence reallocation purposes, representing 0% of the Company’s total real estate sales revenue for the year ended September 30, 2022. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses Codification Improvements to Topic 326, Financial Instruments — Credit Losses Codification Improvements to Topic 326, Financial Instruments — Credit Losses Derivatives and Hedging Financial Instruments Targeted Transition Relief In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The Board is issuing this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The specific areas of potential simplification in this Update were submitted by stakeholders as part of the Simplification Initiative. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this guidance on July 1, 2021 and the adoption of this ASU did not have a material impact on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06) In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which the amendments in this Update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.The amendments in this Update address how to determine whether a contract liability is recognized by the acquirer in a business combination. The ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period, for periods for which financial statements have not yet been issued. Management has considered all other recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Organization and Basis of Presentation [Abstract] | |
Schedule of variable interest entities | Balance as of September 30, September 30, 2022 2021 Total assets $ 280,939,924 $ 385,000,583 Total liabilities $ 183,674,040 $ 189,470,931 2022 2021 Impairment loss 78,889,475 — |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of disaggregated revenues | For the years ended September 30, 2022 2021 Revenue recognized for completed condominium real estate projects, net of sales taxes $ 9,071,753 $ 15,179,593 Revenue recognized for completed condominium real estate projects sold to government, net of sales taxes — 43,311,572 Total revenue, net of sales taxes $ 9,071,753 $ 58,491,165 |
Schedule of currency exchange rate | 2022 2021 Year end RMB : USD exchange rate 7.1135 6.4434 Annual average RMB : USD exchange rate 6.5532 6.5072 |
Schedule of estimated useful lives of the assets | Buildings 39 years Machinery and office equipment 5-10 years Vehicles 8 years |
Prepayment for Equipment (Table
Prepayment for Equipment (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of prepayment for energy equipment | As of September 30, 2022 2021 Energy Equipments 26,936,915 - Total $ 26,936,915 $ - |
Real Estate Property Complete_2
Real Estate Property Completed and Under Development (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Real Estate [Abstract] | |
Schedule of components of real estate property completed and under development | Balance as of: September 30, September 30, 2022 2021 Development completed: Hanzhong City Mingzhu Garden Phase II $ 20,672,000 $ 23,464,365 Hanzhong City Oriental Pearl Garden 17,425,514 19,435,711 Yang County Yangzhou Pearl Garden Phase II 2,039,912 2,250,388 Yang County Yangzhou Palace 34,635,104 42,995,377 Real estate property development completed $ 74,772,530 $ 88,145,841 Under development: Hanzhong City Liangzhou Road and related projects (a) $ 173,289,941 $ 180,389,654 Hanzhong City Hanfeng Beiyuan East (b) 786,954 868,796 Hanzhong City Beidajie (b) 31,144,446 34,763,987 Yang County East 2 nd 7,904,869 6,435,712 Real estate property under development $ 213,126,210 $ 222,458,149 Impairment (67,825,622 ) - Real estate property under development $ 145,300,588 $ 222,458,149 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | As of September 30, 2022 2021 Buildings $ 768,544 $ 848,471 Automobiles — — Total 768,544 848,471 Less: accumulated depreciation (285,325 ) (290,385 ) Property, plant and equipment, net $ 483,219 $ 558,086 |
Security Deposits (Tables)
Security Deposits (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Security Deposits For Land Use Rights Abstract | |
Schedule of security deposits | As of September 30, 2022 2021 Security deposit for land use right (1) $ 1,771,019 $ 1,955,202 |
Construction Loans (Tables)
Construction Loans (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Construction Loans [Abstract] | |
Schedule of construction loans | September 30, September 30, Loan A (i) $ 91,675,668 $ 101,209,744 Loan C (ii) 16,690,683 18,426,478 $ 108,366,351 $ 119,636,222 |
Other Payables (Tables)
Other Payables (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Other Payables | As of September 30, 2022 2021 Accrued interest expense 7,790,654 1,747,755 Maintenance Funds 2,002,289 2,214,360 Others 3,785,770 2,468,877 Total $ 13,578,713 $ 6,430,992 |
Contract Liabilities (Tables)
Contract Liabilities (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Contract Liabilities [Abstract] | |
Schedule of contract balances | As of September 30, 2022 2021 Contract liabilities 1,989,898 1,886,075 Total $ 1,989,898 $ 1,886,075 |
Customer Deposits (Tables)
Customer Deposits (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of customer deposits from pre-sale of residential units | As of September 30, 2022 2021 Customer deposits by real estate projects: Mingzhu Garden (Mingzhu Nanyuan and Mingzhu Beiyuan) $ 8,300,749 $ 8,210,839 Oriental Pearl Garden 3,015,526 2,780,917 Liangzhou road related projects 186,968 617,686 Yang County Pearl Garden 731,206 827,426 Yang County Eas t 2,108,667 2,327,964 Yangzhou Palace 5,499,652 5,039,085 Total $ 19,842,768 $ 19,803,917 |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of statutory rates to the Company’s effective tax rate | For the years ended 2022 2021 Chinese statutory tax rate 25.0 % 25.0 % Impairment (18.2 )% — % Valuation allowance change* (2.1 )% — % Net impact of tax exemption and other adjustments (4.7 )% 3.1 % Effective tax rate — % 28.1 % |
Schedule of statutory rates to the Company’s effective tax rate | For the years ended 2022 2021 Current tax provision $ — $ 2,486,546 Deferred tax provision — — Income tax expense $ — $ 2,486,546 |
Schedule of composition of deferred tax assets and liabilities | As of September 30, Deferred tax assets Impairment 19,722,369 Tax losses carried forward and other 7,308,802 27,031,171 Valuation allowance (27,031,171 ) Total deferred tax assets - |
Schedule of taxes payable | September 30, September 30, 2022 2021 CIT $ 13,279,845 $ 14,326,646 Business tax 4,144,254 5,660,149 Other taxes and fees 2,556,259 2,967,216 Total taxes payables $ 19,980,358 $ 22,954,011 |
Schedule I (Tables)
Schedule I (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of parent company balance sheets (unaudited) | September 30, 2022 2021 ASSETS Cash $ 1,074,440 — Other assets 161,700 — Prepayment for energy equipment 26,936,915 — Amount due from related party 2,000 — Investment in subsidiary and VIE $ 94,868,534 $ 194,262,711 Total assets $ 123,043,589 $ 194,262,711 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Accrued expenses $ 17,528 — Other payables 15,391 — Tax payable 3,565,000 $ 3,565,000 Total liabilities 3,597,919 3,565,000 Stockholders’ equity*: Commons stock,$0.001 par value,200,000,000 shares authorized;46,464,929 and 25,617,807 shares outstanding as at September 30, 2022 and September 30,2021 46,464 25,617 Additional paid-in capital 184,821,771 136,535,303 Statutory surplus 11,095,939 11,095,939 Retained earnings (67,432,727 ) 40,691,955 Accumulated other comprehensive income (loss) (9,085,777 ) 2,348,897 Total stockholders’ equity 119,445,670 190,697,711 Total Liabilities and Stockholders’ Equity $ 123,043,589 $ 194,262,711 |
Schedule of parent company statements of income and comprehensive income (loss) (unaudited) | 2022 2021 Equity in profit of subsidiary and VIE $ (87,959,503 ) $ 6,643,438 General and administrative expenses (20,164,709 ) — Interest expense (470 ) — (Loss) income before income taxes (108,124,682 ) 6,643,438 Provision for income taxes — 268,000 Net (loss) income (108,124,682 ) 6,375,438 Other comprehensive loss Foreign currency translation adjustment (11,434,674 ) 9,388,387 Comprehensive loss $ (119,559,356 ) $ 15,763,825 |
Schedule of parent company statements of cash flows (unaudited) | 2022 2021 Cash flows from operating activities Net (loss) income $ (108,124,682 ) $ 6,375,438 Adjustments to reconcile net income to net cash used in operating activities: Share based compensation 19,370,400 — Equity in profit of subsidiary and VIE 87,959,503 (6,643,438 ) Changes in assets and liabilities: Taxes payable — 268,000 Other assets (161,700 ) — Other payables 15,391 — Accrued expenses 17,528 — Interco (2,000 ) — Net cash used in operating activities (925,560 ) — Cash Flows from Investing Activities: Prepayment for energy equipment (26,936,915 ) — Net Cash Used in Investing Activities (26,936,915 ) — Cash flow from financing activities: Proceeds from private placements 28,936,915 — Net cash (used in) financing activities 28,936,915 — Net increase (decrease) in cash 1,074,440 — Cash, beginning of year — — Cash, end of year $ 1,074,440 $ — Supplemental disclosures of cash flow information: Interest paid $ — $ — Income taxes paid $ — $ — |
Organization and Basis of Pre_3
Organization and Basis of Presentation (Details) - Schedule of variable interest entities - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Variable Interest Entities Abstract | ||
Total assets | $ 280,939,924 | $ 385,000,583 |
Total liabilities | 183,674,040 | 189,470,931 |
Impairment loss | $ 78,889,475 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 9 Months Ended | 12 Months Ended | |||
Dec. 22, 2017 | Sep. 30, 2022 USD ($) shares | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 CNY (¥) | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Units available for sale to potential buyers | $ 74,800,000 | $ 74,800,000 | |||
Loan Payable maturity less than one year | 108,400,000 | 108,400,000 | |||
Incurred operating losses | 106,900,000 | 106,900,000 | |||
Negative operating cash flow | 800,000 | ||||
Total interest capitalized | 6,612,142 | $ 7,043,303 | |||
Impairment of long-lived assets | $ 78,900,000 | $ 78,900,000 | |||
Contract cost withholds, percentage | 2% | ||||
Repatriation of undistributed foreign earnings | $ 2,300,000 | ||||
Provision for delinquent | 800,000 | ||||
Advertising expense | 4,593 | 59,481 | |||
Warrants to purchase (in Shares) | shares | 30,741,366 | ||||
Payments for Repurchase of Warrants | 13,866,348 | ||||
Aggregate deposits | $ 77,599 | 77,599 | ¥ 500,000 | ||
Maximum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Cash and restricted cash | 4,370,000 | $ 4,370,000 | |||
Down-payments percentage | 50% | ||||
Percentage of mortgage | 10% | ||||
Corporate tax rate | 35% | ||||
Land appreciation tax rate | 60% | ||||
Minimum [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Cash and restricted cash | $ 3,500,000 | ||||
Down-payments percentage | 20% | ||||
Percentage of mortgage | 5% | ||||
Corporate tax rate | 21% | ||||
Land appreciation tax rate | 30% | ||||
Variable Interest Entity, Primary Beneficiary [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Accounts payable | $ 10,600,000 | $ 10,600,000 | |||
Hanzhong [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Land appreciation tax rate | 1% | ||||
Yang Country [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Land appreciation tax rate | 0.50% | ||||
Sales [Member] | |||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||
Sales revenue, percentage | 0% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of disaggregated revenues - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule of Disaggregated Revenues [Abstract] | ||
Revenue recognized for completed condominium real estate projects, net of sales taxes | $ 9,071,753 | $ 15,179,593 |
Revenue recognized for completed condominium real estate projects sold to government, net of sales taxes | 43,311,572 | |
Total revenue, net of sales taxes | $ 9,071,753 | $ 58,491,165 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of currency exchange rate | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule of Currency Exchange Rate [Abstract] | ||
Year end RMB : USD exchange rate | 7.1135 | 6.4434 |
Annual average RMB : USD exchange rate | 6.5532 | 6.5072 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets | 12 Months Ended |
Sep. 30, 2022 | |
Buildings [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Property, Plant and Equipment, Useful Life | 39 years |
Machinery and office equipment [Member] | Minimum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Machinery and office equipment [Member] | Maximum [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Vehicles [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Property, Plant and Equipment, Useful Life | 8 years |
Prepayment for Equipment (Detai
Prepayment for Equipment (Details) - Schedule of prepayment for energy equipment - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Prepayment For Energy Equipment Abstract | ||
Energy Equipments | $ 26,936,915 | |
Total | $ 26,936,915 |
Real Estate Property Complete_3
Real Estate Property Completed and Under Development (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jan. 20, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 MUR (₨) | |
Real Estate [Abstract] | ||||
Construction budget | $ 33 | |||
Land use rights (in Rupees) | ₨ | ₨ 394.5 | |||
Actual costs incurred | 173.3 | $ 180.4 | ||
Settlement payable | $ 28.2 | |||
Acquire real estate development | $ 28.2 | |||
Interest rate, percentage | 4.75% | 30% | 4.75% | |
Installment payment received | $ 2.1 |
Real Estate Property Complete_4
Real Estate Property Completed and Under Development (Details) - Schedule of components of real estate property completed and under development - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | ||
Development completed: | |||
Real estate property development completed | $ 74,772,530 | $ 88,145,841 | |
Under development: | |||
Real estate property under development | 213,126,210 | 222,458,149 | |
Impairment | (67,825,622) | ||
Real estate property under development | 145,300,588 | 222,458,149 | |
Hanzhong City Mingzhu Garden Phase II [Member] | |||
Development completed: | |||
Real estate property development completed | 20,672,000 | 23,464,365 | |
Hanzhong City Oriental Pearl Garden [Member] | |||
Development completed: | |||
Real estate property development completed | 17,425,514 | 19,435,711 | |
Yang County Yangzhou Pearl Garden Phase II [Member] | |||
Development completed: | |||
Real estate property development completed | 2,039,912 | 2,250,388 | |
Yang County Yangzhou Palace [Member] | |||
Development completed: | |||
Real estate property development completed | 34,635,104 | 42,995,377 | |
Hanzhong City Liangzhou Road and related projects [Member] | |||
Under development: | |||
Real estate property under development | [1] | 173,289,941 | 180,389,654 |
Hanzhong City Hanfeng Beiyuan East [Member] | |||
Under development: | |||
Real estate property under development | [2] | 786,954 | 868,796 |
Hanzhong City Beidajie [Member] | |||
Under development: | |||
Real estate property under development | [2] | 31,144,446 | 34,763,987 |
Yang County East 2nd Ring Road [Member] | |||
Under development: | |||
Real estate property under development | [3] | $ 7,904,869 | $ 6,435,712 |
[1]In September 2013, the Company entered into an agreement (“Liangzhou Agreement”) with the Hanzhong local government on the Liangzhou Road reformation and expansion project (Liangzhou Road Project”). Pursuant to the agreement, the Company is contracted to reform and expand the Liangzhou Road, a commercial street in downtown Hanzhong City, with a total length of 2,080 meters and a width of 30 meters and to resettle the existing residences in the Liangzhou road area. The government’s original road construction budget was approximately $33 million in accordance with the Liangzhou Agreement. The Company, in return, is being compensated by the local government to have an exclusive right on acquiring at least 394.5 Mu land use rights in a specified location of Hanzhong City. The Liangzhou Road Project’s road construction started at the end of 2013. In 2014, the original scope and budget on the Liangzhou road reformation and expansion project was extended, because the local government included more area and resettlement residences into the project, which resulted in additional investments from the Company. In return, the Company is authorized by the local government to develop and manage the commercial and residential properties surrounding the Liangzhou Road project. The Company launched the construction of the Liangzhou Road related projects in December 2020. As of September 30, 2022, the main Liangzhou road construction is substantially completed. The Company’s development cost incurred on Liangzhou Road Project is treated as the Company’s deposit on purchasing the related land use rights, as agreed by the local government. As of September 30, 2022, the actual costs incurred by the Company were approximately $173.3 million (September 30, 2021 - $180.4 million) and the incremental cost related to residence resettlements approved by the local government. The Company determined that the Company’s Investment in the Liangzhou Road Project in exchange for interests in future land use rights is a barter transaction with commercial substance.[2]In September 2012, the Company was approved by the Hanzhong local government to construct four municipal roads with a total length of approximately 1,192 meters. The project was deferred and then restarted during the quarter ended June 30, 2014. As of September 30, 2021, the local government has not completed the budget for these projects therefore the delivery for these projects for the government’s acceptance and related settlement were extended to 2022. Due to delays in the government approval and slow development progress, in January 2021, the Company disposed of certain construction properties in the Beidajie project at carrying value to Hanzhong Guangsha Real Estate Development Inc. (“Hanzhong Guangsha”) an entity controlled by the Company’s former chairman and Chief executive officer, Mr. Xiaojun Zhu to settle the payable of approximately $28.2 million related to Hanzhong Guangsha in connection with the acquisition of the Hanzhong Nanyuan II Project disclosed below. On January 20, 2021, the Company entered into agreement with Hanzhong Guangsha, an entity controlled by Mr. Xiaojun Zhu, to acquire certain real estate under development in the Hanzhong Nanyuan II Project in the amount of approximately $28.2 million, for the local government’s residence reallocation related to the Liangzhou road and affiliated project. All the real estate property in Hanzhong Nanyuan II project was completed and sold to the local government for residence reallocation purposes by September 30, 2021.[3]The Company was engaged by the Yang County local government to construct the East 2nd Ring Road with a total length of 2.15 km. The local government is required to repay the Company’s project investment costs within 3 years with interest at the interest rate based on the commercial borrowing rate with the similar term published by the China Construction Bank (September 30, 2022 and 2021 - 4.75%). The local government has approved a refund to the Company by reducing local surcharges or taxes otherwise required in the real estate development. The road construction was substantially completed as of September 30, 2021 and is in process of the government’s review and approval. For the year ended September 30, 2022, the Company received the local government’s installment payments of approximately $2.1 million, which was included in the Company’s customer deposits as of September 30, 2022. |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 24,201 | $ 43,510 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details) - Schedule of property, plant and equipment - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items] | ||
Property, plant and equipment, gross | $ 768,544 | $ 848,471 |
Less: accumulated depreciation | (285,325) | (290,385) |
Property, plant and equipment, net | 483,219 | 558,086 |
Buildings [Member] | ||
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items] | ||
Property, plant and equipment, gross | 768,544 | 848,471 |
Automobiles [Member] | ||
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items] | ||
Property, plant and equipment, gross |
Receivable From Local Governm_2
Receivable From Local Government (Details) | 12 Months Ended | |
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | |
Receivables [Abstract] | ||
Number of municipal road construction | 2 | |
Receivable balance | $ 3,023,806 | $ 2,738,960 |
Government contract receivable | $ 43,311,572 | |
Amount of Deferred Costs Related to Long-Term Contracts | 39,620,027 | |
Previous depreciated translated amount | 43,311,572 | |
Due from local government | $ 43,311,572 |
Security Deposits (Details)
Security Deposits (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Security Deposits For Land Use Rights Abstract | ||
Prepaid | $ 1,771,019 | $ 1,955,202 |
Security Deposits (Details) - S
Security Deposits (Details) - Schedule of security deposits - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Security Deposits Abstract | |||
Security deposit for land use right | [1] | $ 1,771,019 | $ 1,955,202 |
[1]In May 2011, the Company entered into a development agreement with the Hanzhong local government. Pursuant to the agreement, the Company prepaid $1,771,019 and $1,955,202 to Hanzhong Urban Construction Investment Development Co., Ltd to acquire certain land use rights through public bidding as of September 30, 2022 and 2021, respectively. The Company currently expects to make payment of the remaining development cost as the government’s work progresses. |
Construction Loans (Details)
Construction Loans (Details) | 1 Months Ended | 12 Months Ended | ||||||
Mar. 10, 2016 CNY (¥) | Sep. 30, 2017 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2017 CNY (¥) | Dec. 31, 2016 USD ($) | Dec. 31, 2016 CNY (¥) | Jun. 26, 2015 USD ($) | |
Construction Loans (Details) [Line Items] | ||||||||
Borrow amount | ¥ 775,000,000 | $ 118,800,000 | ||||||
Long term loan interest percentage | 4.75% | |||||||
Credit line borrowed amount | $ 91,675,668 | $ 101,209,744 | ||||||
Carrying value | 34,635,104 | 42,995,377 | ||||||
Interest amount | $ 6,066,302 | 6,488,162 | ||||||
Interest description | The interest is 1.2% and due on June 20, 2031. | |||||||
Equal annual principal repayments | $ 3,300,000 | |||||||
Debt instrument, face amount | 173,289,941 | |||||||
Total interest | 220,935 | 224,700 | ||||||
Hantai District Urban [Member] | ||||||||
Construction Loans (Details) [Line Items] | ||||||||
Borrow amount | $ 18,400,000 | ¥ 119,000,000 | ||||||
Construction Loans [Member] | ||||||||
Construction Loans (Details) [Line Items] | ||||||||
Borrow amount | ||||||||
Debt instrument, face amount | $ 27,100,000 | ¥ 175,000,000 | ||||||
Urban Development Center Co., Ltd [Member] | ||||||||
Construction Loans (Details) [Line Items] | ||||||||
Long term loan interest percentage | 1.20% | |||||||
Equal annual principal repayments | $ 5,000,000 | |||||||
Construction Loans [Member] | ||||||||
Construction Loans (Details) [Line Items] | ||||||||
Total interest | $ 324,905 | $ 330,441 |
Construction Loans (Details) -
Construction Loans (Details) - Schedule of construction loans - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 | |
Construction Loans (Details) - Schedule of construction loans [Line Items] | |||
Total construction loans | $ 108,366,351 | $ 119,636,222 | |
Loan A [Member] | |||
Construction Loans (Details) - Schedule of construction loans [Line Items] | |||
Total construction loans | [1] | 91,675,668 | 101,209,744 |
Loan C [Member] | |||
Construction Loans (Details) - Schedule of construction loans [Line Items] | |||
Total construction loans | [1] | $ 16,690,683 | $ 18,426,478 |
[1]On June 26, 2015 and March 10, 2016, the Company signed phase I and Phase II agreements with Hanzhong Urban Construction Investment Development Co., Ltd, a state-owned Company, to borrow up to approximately $118.8 million (RMB775,000,000) for a long term loan with interest at 4.75% to the develop Liangzhou Road Project. As of September 30, 2022, the Company borrowed $91,675,668 under this credit line (September 30, 2021 - $101,209,744). Due to the local government’s delay in the reallocation of residences in the Liangzhou Road Project and related area, the Hanzhong Urban Construction Investment Development Co., Ltd has not released all the funds available to the Company and additional withdrawals will be based on the project’s development progress and the Company expects the loan will be extended upon maturity. The loan is guaranteed by Hanzhong City Hantai District Municipal Government and pledged by the Company’s Yang County Yangzhou Palace project with a carrying value of $34,635,104 as of September 30, 2022 (September 30, 2021 - $42,995,377). For the year ended September 30, 2022, the interest was $6,066,302 (September 30, 2021 - $6,488,162), which was capitalized into the development cost of the Liangzhou Road Project. |
Other Payables (Details) - Sche
Other Payables (Details) - Schedule of Other Payables - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Other Payables Abstract | ||
Accrued interest expense | $ 7,790,654 | $ 1,747,755 |
Maintenance Funds | 2,002,289 | 2,214,360 |
Others | 3,785,770 | 2,468,877 |
Total | $ 13,578,713 | $ 6,430,992 |
Contract Liabilities (Details)
Contract Liabilities (Details) - Schedule of contract balances - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Schedule of Contract Balances [Abstract] | ||
Contract liabilities | $ 1,989,898 | $ 1,886,075 |
Total | $ 1,989,898 | $ 1,886,075 |
Customer Deposits (Details)
Customer Deposits (Details) | 12 Months Ended |
Sep. 30, 2022 | |
Minimum [Member] | |
Customer Deposits (Details) [Line Items] | |
Customer deposit percentage | 10% |
Selling price percentage | 30% |
Maximum [Member] | |
Customer Deposits (Details) [Line Items] | |
Customer deposit percentage | 20% |
Selling price percentage | 50% |
Customer Deposits (Details) - S
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units [Line Items] | ||
Total | $ 19,842,768 | $ 19,803,917 |
Mingzhu Garden (Mingzhu Nanyuan and Mingzhu Beiyuan) [Member] | ||
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units [Line Items] | ||
Total | 8,300,749 | 8,210,839 |
Oriental Pearl Garden [Member] | ||
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units [Line Items] | ||
Total | 3,015,526 | 2,780,917 |
Liangzhou road related projects [Member] | ||
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units [Line Items] | ||
Total | 186,968 | 617,686 |
Yang County Pearl Garden [Member] | ||
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units [Line Items] | ||
Total | 731,206 | 827,426 |
Yang County East 2nd Ring Road [Member] | ||
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units [Line Items] | ||
Total | 2,108,667 | 2,327,964 |
Yangzhou Palace [Member] | ||
Customer Deposits (Details) - Schedule of customer deposits from pre-sale of residential units [Line Items] | ||
Total | $ 5,499,652 | $ 5,039,085 |
Taxes (Details)
Taxes (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2018 | |
Taxes (Details) [Line Items] | |||
Percentage of value added tax | 5% | ||
VAT tax payable | $ 4,144,254 | $ 5,660,149 | |
Federal corporate income tax rate | 25% | 25% | |
Tax payable | $ 13,279,845 | $ 14,326,646 | |
Valuation allowance | 25,411,557 | ||
Foreign tax credits deduction percentage | 50% | ||
Toll tax amount | $ 2,300,000 | ||
Additional provision | $ 800,000 | 800,000 | |
Progressive tax rates | 1% | ||
Payable balance | |||
Maximum [Member] | |||
Taxes (Details) [Line Items] | |||
Federal corporate income tax rate | 35% | ||
Progressive tax rates | 60% | ||
Minimum [Member] | |||
Taxes (Details) [Line Items] | |||
Federal corporate income tax rate | 21% | ||
Progressive tax rates | 30% | ||
People’s Republic of China [Member] | |||
Taxes (Details) [Line Items] | |||
Tax payable | $ 9,714,844 | 10,761,646 | |
Yang County [Member] | |||
Taxes (Details) [Line Items] | |||
Local tax authority rate | 0.50% | ||
GILTI [Member] | |||
Taxes (Details) [Line Items] | |||
Tax payable |
Taxes (Details) - Schedule of s
Taxes (Details) - Schedule of statutory rates to the Company’s effective tax rate | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | ||
Schedule statutory rates to the Company’s effective tax rate [Abstract] | |||
Chinese statutory tax rate | 25% | 25% | |
Impairment | (18.20%) | ||
Valuation allowance change | [1] | (2.10%) | |
Net impact of tax exemption and other adjustments | (4.70%) | 3.10% | |
Effective tax rate | 28.10% | ||
[1]Valuation allowance change for the year ended September 30, 2020 were primarily related to valuation allowance changes on historical losses. For years ended September 30, 2022 and 2021, the change in valuation allowance of $25,411,557 and $nil, respectively. |
Taxes (Details) - Schedule of i
Taxes (Details) - Schedule of income tax expense - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule of income tax expense [Abstract] | ||
Current tax provision | $ 2,486,546 | |
Deferred tax provision | ||
Income tax expense | $ 2,486,546 |
Taxes (Details) - Schedule of c
Taxes (Details) - Schedule of composition of deferred tax assets and liabilities | Sep. 30, 2022 USD ($) |
Deferred tax assets | |
Impairment | $ 19,722,369 |
Tax losses carried forward and other | 7,308,802 |
Total | 27,031,171 |
Valuation allowance | (27,031,171) |
Total deferred tax assets |
Taxes (Details) - Schedule of t
Taxes (Details) - Schedule of taxes payable - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Schedule of taxes payable [Abstract] | ||
CIT | $ 13,279,845 | $ 14,326,646 |
Business tax | 4,144,254 | 5,660,149 |
Other taxes and fees | 2,556,259 | 2,967,216 |
Total taxes payables | $ 19,980,358 | $ 22,954,011 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, ¥ in Millions | 1 Months Ended | 12 Months Ended | ||||||||
Sep. 06, 2022 USD ($) $ / shares | Aug. 10, 2022 $ / shares shares | Dec. 10, 2021 USD ($) $ / shares shares | Mar. 16, 2022 USD ($) $ / shares shares | Apr. 19, 2021 USD ($) $ / shares shares | Apr. 19, 2021 CNY (¥) shares | Aug. 19, 2020 | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) $ / shares | Sep. 25, 2012 shares | |
Stockholders' Equity (Details) [Line Items] | ||||||||||
Reverse stock split, description | The Company had a total of 45,050,000 shares of common stock issued and outstanding prior to the Reverse Stock Split. | |||||||||
Shares issued | 3,092,114 | 3,092,114 | 500,000 | |||||||
Equity acquisition agreement amount | $ 6,600,000 | ¥ 43 | ||||||||
Conversion price | $ / shares | $ 2.13 | |||||||||
Aggregate units | 10,247,122 | 4,600,000 | ||||||||
Common stock par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Initial exercise price | $ / shares | 2.375 | |||||||||
Price per unit | $ / shares | $ 2.375 | |||||||||
Aggregate purchase price | $ | $ 24,300,000 | $ 4,600,000 | ||||||||
Reserved shares of common stock | 1,000,000 | |||||||||
Share price | $ / shares | $ 2.27 | $ 3.23 | ||||||||
Share based compensation shares | 19,347,700 | |||||||||
Number of independent director | 1 | |||||||||
Common shares granted | $ | $ 10,000 | |||||||||
Share-based compensation amount | $ | $ 22,700 | $ 19,370,400 | ||||||||
Statutory surplus reserve percentage | 10% | |||||||||
Registered capital percentage | 50% | |||||||||
Conversion percentage | 25% | |||||||||
Net profits statutory surplus reserve percentage | 10% | |||||||||
Statutory surplus reserve balance | $ | $ 11,095,939 | $ 11,095,939 | ||||||||
Common Stock [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Common stock shares | 1 | |||||||||
Share based compensation shares | 6,000,000 | |||||||||
Warrant [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Common stock shares | 3 | |||||||||
Initial exercise price | $ / shares | $ 2.375 | |||||||||
Board of Directors [Member] | ||||||||||
Stockholders' Equity (Details) [Line Items] | ||||||||||
Aggregate units | 5,990,000 |
Contingencies and Commitments (
Contingencies and Commitments (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Contingencies and Commitments [Abstract] | ||
Percentage of mortgage proceeds as security | 5% | |
Mortgage loan | $ 24,870,000 | $ 66,000,000 |
Restricted cash | 3,000,000 | $ 3,300,000 |
Execution amount | 3,373,867 | |
Settlement amount | 131,498 | |
Plaintiff amount | 127,979 | |
Contingency liabilities | $ 9,351,344 |
Subsequent Events (Details)
Subsequent Events (Details) | Oct. 05, 2023 USD ($) $ / shares shares | Jan. 23, 2023 USD ($) shares | Sep. 30, 2022 $ / shares | Aug. 10, 2022 $ / shares | Mar. 16, 2022 $ / shares | Dec. 10, 2021 $ / shares | Sep. 30, 2021 $ / shares |
Subsequent Events (Details) [Line Items] | |||||||
Commons stock, par value (in Dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||
Subsequent Event [Member] | |||||||
Subsequent Events (Details) [Line Items] | |||||||
Aggregate cost | $ 9,288,339 | ||||||
Number of shares | 1 | ||||||
Commons stock, par value (in Dollars per share) | $ / shares | $ 0.001 | ||||||
Number of warrant shares (in Shares) | shares | 3 | ||||||
Common stock aggregate purchase price | $ 5,200,000 | ||||||
Forecast [Member] | |||||||
Subsequent Events (Details) [Line Items] | |||||||
Cash compensation | $ 40,000 | ||||||
Share compensation (in Shares) | shares | 40,000 |
Schedule I (Details) - Schedule
Schedule I (Details) - Schedule of parent company balance sheets (unaudited) - Reportable Legal Entities [Member] - Parent Company [Member] - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | ||
ASSETS | |||
Cash | $ 1,074,440 | ||
Other assets | 161,700 | ||
Prepayment for energy equipment | 26,936,915 | ||
Amount due from related party | 2,000 | ||
Investment in subsidiary and VIE | 94,868,534 | 194,262,711 | |
Total assets | 123,043,589 | 194,262,711 | |
LIABILITIES | |||
Accrued expenses | 17,528 | ||
Other payables | 15,391 | ||
Tax payable | 3,565,000 | 3,565,000 | |
Total liabilities | 3,597,919 | 3,565,000 | |
Commons stock,$0.001 par value,200,000,000 shares authorized;46,464,929 and 25,617,807 shares outstanding as at September 30, 2022 and September 30,2021 | [1] | 46,464 | 25,617 |
Additional paid-in capital | [1] | 184,821,771 | 136,535,303 |
Statutory surplus | [1] | 11,095,939 | 11,095,939 |
Retained earnings | [1] | (67,432,727) | 40,691,955 |
Accumulated other comprehensive income (loss) | [1] | (9,085,777) | 2,348,897 |
Total stockholders’ equity | 119,445,670 | 190,697,711 | |
Total Liabilities and Stockholders’ Equity | $ 123,043,589 | $ 194,262,711 | |
[1]Adjusted to give retroactive effect to a one-for-two reverse stock split effective on August 20, 2020. |
Schedule I (Details) - Schedu_2
Schedule I (Details) - Schedule of parent company balance sheets (unaudited) (Parentheticals) - Reportable Legal Entities [Member] - Parent Company [Member] - $ / shares | Sep. 30, 2022 | Sep. 30, 2021 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Commons stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Commons stock, shares authorized | 200,000,000 | 200,000,000 |
Commons stock, shares outstanding | 46,464,929 | 25,617,807 |
Schedule I (Details) - Schedu_3
Schedule I (Details) - Schedule of parent company statements of income and comprehensive income (loss) (unaudited) - Reportable Legal Entities [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Statement of Income Captions [Line Items] | ||
Equity in profit of subsidiary and VIE | $ (87,959,503) | $ 6,643,438 |
General and administrative expenses | (20,164,709) | |
Interest expense | (470) | |
Income before income taxes | (108,124,682) | 6,643,438 |
Provision for income taxes | 268,000 | |
Net income | (108,124,682) | 6,375,438 |
Other comprehensive loss | ||
Foreign currency translation adjustment | (11,434,674) | 9,388,387 |
Comprehensive loss | $ (119,559,356) | $ 15,763,825 |
Schedule I (Details) - Schedu_4
Schedule I (Details) - Schedule of parent company statements of cash flows (unaudited) - Reportable Legal Entities [Member] - Parent Company [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net income | $ (108,124,682) | $ 6,375,438 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Share based compensation | 19,370,400 | |
Equity in profit of subsidiary and VIE | 87,959,503 | (6,643,438) |
Changes in assets and liabilities: | ||
Taxes payable | 268,000 | |
Other assets | (161,700) | |
Other payables | 15,391 | |
Accrued expenses | 17,528 | |
Interco | (2,000) | |
Net cash used in operating activities | (925,560) | |
Cash Flows from Investing Activities: | ||
Prepayment for energy equipment | (26,936,915) | |
Net Cash Used in Investing Activities | (26,936,915) | |
Cash flow from financing activities: | ||
Proceeds from private placements | 28,936,915 | |
Net cash (used in) financing activities | 28,936,915 | |
Net increase (decrease) in cash | 1,074,440 | |
Cash, beginning of year | ||
Cash, end of year | 1,074,440 | |
Supplemental disclosures of cash flow information: | ||
Interest paid | ||
Income taxes paid |