Exhibit 99.1
FOR IMMEDIATE RELEASE
China Housing & Land Development Reports Third Quarter 2008 Results
Highlights of the Third Quarter 2008
| • | Substantial cash position of $15.24 million at quarter end was mainly due to the Tsining JunJing II project. The company expects additional cash from this project in the future quarters. |
| • | Total revenues in the third quarter 2008 increased 25.0 percent to $7,545,762 from $6,036,929 in the third quarter 2007. |
| • | Net income in the third quarter 2008 increased to $1,447,072 from $(71,237) in the third quarter 2007. |
| • | Diluted earnings per share in the third quarter increased to $0.04 per share from $0.00 per share in the third quarter 2007. |
| • | Net debt as a percent of total capital was 31.5 percent on September 30, 2008 compared with 27.8 percent on December 31, 2007. |
| • | Prax Capital has agreed to invest $30 million for 25% share in a joint venture with China Housing to develop 79 acres within China Housing’s 487-acre Baqiao project in Xi’an. The world-renowned Leo A Daly firm has been selected to create the architectural planning for the 79-acre site. Construction is expected to start as early as the second quarter 2009. |
Xi’an, China – November 13, 2008 – China Housing & Land Development, Inc., (“China Housing,” NASDAQ: CHLN) today reported that total revenues for the three months ended September 30, 2008 increased 25.0 percent to $7,545,762 from $6,036,929 in the three months ended September 30, 2007, net income increased to $1,447,072 in the third quarter 2008 from $(71,237) in the third quarter 2007, and earnings per diluted share increased to $0.04 per share in the third quarter 2008 from $0.00 per diluted share in the third quarter 2007.
Mr. Pingji Lu, Chairman & CEO of China Housing & Land Development, Inc., said, “Our financial performance in the third quarter was consistent with our long-term progress and with the periodic nature of the real estate development business. We continue to manage our business to deliver great performance in our operations and know that superior long-term financial performance will be the likely result.
“In our current construction project, Tsining JunJing II, we have been building the steel-reinforced concrete structure at about 4 floors per week on 16 middle-rise and high-rise buildings and one kindergarten in the first phase of this complex. We have pre-sold about 68% of all available units within this first phase.
“The second phase of Tsining JunJing II will have 12 middle-rise and high-rise buildings, with construction expected to start in the second half of 2009.
Tsining JunJing II is a multi-family and retail project on 18 acres with 2,119 apartments totaling about 2.5 million square feet. It is scheduled to be completed in 2010. We expect additional cash from this project in the future quarters.
“In late October, we selected the world-renowned Leo A Daly architectural firm to create the architectural planning for a 79.2-acre residential site within our 487-acre Baqiao project in Xi’an. This is the prime site within our Baqiao project, located directly on the Ba riverfront, across from western China’s largest wetland preserve. About 49 acres will be devoted to upper-income housing. The remaining 30 acres will be dedicated to riverfront walks, green land and sports parks, and infrastructure, all of which have already been funded by Xi’an’s Baqiao District government.
“In early November, we announced that we had completed an agreement to create a joint venture between China Housing and Prax Capital China Real Estate Fund I, Ltd. The joint venture will finance the development of the 79 acres within our Baqiao project. Prax Capital will invest $30 million for a 25 percent ownership in the joint venture, with China Housing owning the remaining 75 percent. The completion of the agreement is subject to us acquiring all necessary documents and approvals from the Chinese government.
“As you can imagine, the selection of Leo A Daly and the agreement for Prax Capital to be our joint venture partner for the 79 acres was one integrated plan, and I am very pleased that it has worked the way it did.
“By starting with these 79 acres that are the prime location, with the architectural vision of Leo A Daly and the financial and operational support of Prax Capital, we will dramatically increase the attractiveness of our entire Baqiao site and expect to increase the value of the land and future development there, which of course will also create substantial value for our shareholders. We are confident that this first Baqiao site will be a world-class residential community and that the whole Baqiao development will become the great success we envision.
“We expect to start excavating for the first buildings on the 79-acre site as early as the second quarter 2009 and begin signing up housing customers in pre-sale agreements probably starting in the fourth quarter of 2009. Construction of the buildings will be in phases, with the final buildings expected to be finished in 2014.
“So our Baqiao project is progressing nicely.
“We do have other projects, in addition to Tsining JunJing II and the Baqiao complex. JunJing III will be a multi-family and retail project with 570 apartments. It is in the planning stage and construction should be completed by 2010.
“In early September 2008, the central Chinese government and Xi’an municipal government together issued an improvement package that included tax cuts, down payment reductions, and interest rate cuts to boost homebuyers’ confidence and stimulate the housing market. This package, which is effective through December 2009, may be starting to have the desired effect in the Xi’an housing market at the moment.
“As you know, on November 9, 2008, China announced a stimulus package totaling about $587 billion. The categories of the potential boosts recipients are likely to include home buyers, support for rural citizens and their migration to urban areas, infrastructure improvements of a wide variety, more advanced technology development, education, health care for better health and longer lives, and others. The details of the package are not yet available, but it is reasonable to expect that greater Xi’an should receive major benefits within several of those categories. So it is likely to be a significant positive for China Housing, but the magnitude at this moment is unknown.
“All in all, within a toughened real estate market nationwide, Xi’an holds reasonably well. The housing market transaction volume is down somewhat but price still appreciated slightly. Our company’s planning, construction, and financing are on track, and are pleased with our progress.”
Third quarter 2008 results
Revenues
Total revenues for the third quarter 2008 increased 25.0% to $7,545,762 from $6,036,929 for the third quarter 2007. The increase was primarily due to the revenues from the Tsining JunJing II project currently under construction and in the pre-sale stage. The revenues were reported using the percentage of completion method of accounting and only recognized a portion of the pre-sales, since revenues are calculated based on our progress for each building project. As of September 30, 2008, we had about $12 million in advance payments from buyers who have signed pre-sales agreements, and we expect to recognize additional portions of those funds as revenues in the coming quarters.
Revenues by major projects
Project Tsining JunJing II’s revenues for the third quarter 2008 were $6,901,354 compared with no revenue for the third quarter 2007. In the second quarter of 2008, Tsining JunJing II began above-ground construction and currently has a total of 16 middle-rise and high-rise residential buildings and one kindergarten under construction simultaneously.
JunJing II phase one consists of those 16 residential buildings, with a gross floor area of about 1,409,690 square feet. The estimated total revenues from phase one are about $100 million. The company expects to complete the construction of phase one in the first half of 2009. As of quarter end, the company has pre-sold about 68% of all available units within phase one.
Phase two of JunJing II consists of 12 middle-rise and high-rise buildings and is expected to start construction during the second half of 2009 and should begin contributing revenue from fourth quarter of 2009 or the first quarter of 2010. The total revenues from phase two are expected to be about $94 million.
Revenues from Project Tsining-24G during the third quarter 2008 decreased 98.5 percent to $63,476 from $4,201,050 in the third quarter 2007, due to the project being completed in the second quarter 2007, when most of the revenues were recognized using the full accrual method of accounting. The revenues in the third quarter 2008 resulted from the sales of a few of the remaining retail and parking spaces in the project.
Revenues in the third quarter 2008 for Other projects decreased 95.9 percent to $64,720 from $1,572,265 in the third quarter 2007, mainly due to the completion and sale of Project Tsining JunJing I in the third quarter of 2007. All remaining units from the company’s previous projects that are not listed above are included in Other projects.
The Baqiao infrastructure construction project generated revenues of $357,866 for the third quarter 2008 compared with $263,814 for the third quarter 2007. The revenues in the third quarter 2008 consisted of the government’s allowance for interest on the company’s investments required to support the infrastructure construction, continued river management, and suburban planning for the entire Baqiao high-technology industrial park.
Revenues by project:
(US$ in millions)
| | Three months ended
September 30, 2008
| | Three months ended
September 30, 2007
| |
|---|
| | |
|---|
| Tsining JunJing II | | | | 6.9 | | | — | |
| Tsining-24G | | | | 0.0 | | | 4.2 | |
| Other projects | | | | 0.1 | | | 1.5 | |
| Baqiao infrastructure construction | | | | 0.4 | | | — | |
|
| |
| |
| Sales of properties | | | | 7.5 | | | 5.7 | |
|
| |
| |
Other income
Other income for the third quarter 2008 decreased 79.2 percent to $70,070 from $336,333 for the third quarter 2007, primarily due to lower rental income as the company continued to encourage the conversion from rentals to sales for older commercial properties not yet sold.
Cost of revenues
The cost of revenues for the third quarter 2008 increased 101.1 percent to $6,071,599 from $3,019,240 for the third quarter 2007.
The higher cost of revenues was primarily due to the costs recognized using the percentage of completion method of accounting for Tsining JunJing II project in the third quarter of 2008. The third quarter of 2007 included the cost of revenues using the full accrual method of accounting.
Gross profit and gross profit margin
Gross profit for the third quarter 2008 was $1,474,163, down 51.1 percent from $3,017,689 for the third quarter 2007. The gross profit margin in the third quarter 2008 was 19.5 percent compared with 50.0 percent for the third quarter 2007. The lower gross profit and gross profit margin were primarily due to the sale of residential buildings in the third quarter 2008 that had lower gross profit margins than the premium-priced retail and residential buildings sold in the third quarter of 2007. Most units sold in the third quarter 2008 were in the Tsining JunJing II residential project, which included the first units in the project that were negotiated in 2007 at attractive prices to create buyer and market interest and encourage future sales. Gross profit is defined as Total revenues minus Cost of revenues.
Selling, general, and administrative expenses
Selling, general, and administrative expenses for the third quarter 2008 increased 79.9 percent to $1,594,514 from $886,405 for the third quarter 2007. The higher selling, general, and administrative expenses were mainly due to higher selling and professional expenses. The higher selling expenses resulted from the company’s aggressive marketing campaign during the third quarter 2008 for Tsining JunJing II, which included showrooms where potential buyers could see possible layouts and decorative effects. These showrooms have attracted hundreds of potential buyers and continue to create buyer interest and result in additional pre-sales purchase agreements.
Higher professional expenses resulted from the company’s upgrade to NASDAQ where its common shares began trading in May 2008. The company believes its listing on NASDAQ will provide more liquidity and transparency for shareholders and additional financing flexibility for the company.
Stock-based compensation
The company recorded a $3 million noncash expense for restricted common shares during the third quarter of 2008, which was approved by board of directors on July 2, 2008 and related to the company’s incentive program for the performance achieved in 2007.
Operating profit and operating profit margin
Operating profit for the third quarter 2008 decreased to $(3,181,199) from $2,111,131 for the third quarter 2007 due primarily to lower gross profit on the residential portion of Tsining JunJing II, higher selling expenses in the third quarter 2008 associated with Tsining JunJing II, higher professional expenses associated with the listing on the NASDAQ stock market, and the stock-based incentive compensation. As a result, the operating profit margin was (42.2)% in the third quarter 2008 compared with 35.0% in the third quarter 2007. Operating profit is defined as Total revenues, minus Costs of revenues, minus Selling, general, and administrative expenses, minus Stock-based compensation, and minus Other expenses.
Interest expense
Interest expense for the third quarter 2008 decreased 43.0 percent to $638,228 from $1,120,150 for the third quarter 2007. The decrease was primarily due to repayments on the 2007 debt financing associated with the purchase of New Land that owned the exclusive rights to develop the Baqiao project and perform the related infrastructure construction. At September 30, 2008, the balance outstanding on the short-term debt to the original shareholders had decreased to about $8.5 million compared with $22.8 million at September 30, 2007.
Change in fair value of embedded derivative
The embedded derivative is related to the company’s $20 million convertible debt offering completed in January 2008. This was a periodic adjustment to the estimated cost to the company and was provided by the valuation model.
Change in fair value of warrants
In 2006, 2007, and 2008 the company issued warrants in conjunction with the issuance of common shares and convertible debt. In the third quarter 2008, shareholders did not exercise any warrants to buy common shares. In addition, for the third quarter 2008, the company also was required to estimate the fair value of its remaining warrants outstanding and adjust the value as needed, and it chose to use the Cox-Ross-Rubinstein Binomial Lattice valuation model to estimate their fair value.
The change in fair value of warrants of $(2,939,563) in the third quarter 2008 consisted of (a) the cost to the company of the warrants issued in 2008, (b) a result of the exercise of warrants during the quarter, of which there were none exercised, and (c) the periodic adjustment to the estimated cost to the company to provide the common shares, assuming that all the warrants will be exercised sometime in the future. The basis for estimating the cost to provide those common shares was provided by the valuation model.
Provision for income taxes
During the third quarter 2008, the company recomputed its provision for income taxes based on the tax paid in the first half of the year and its tax base in third quarter 2008. As a result, the company adjusted its provision for income taxes in the third quarter by $(388,308) compared with the $653,957 provision recorded in the third quarter 2007.
Net income
Net income for the third quarter 2008 increased to $1,447,072 from $(71,237) in the third quarter 2007. As explained above, the increase in net income was primarily due to higher revenues, the changes in the fair values of the warrants and the embedded derivative, lower interest expense, and a lower effective tax rate, all partly offset by higher cost of revenues, higher selling expenses, higher professional expenses, and the noncash incentive compensation.
Basic and diluted earnings per share
Basic earnings per share were $0.05 for the third quarter 2008, up from $0.00 for the third quarter 2007. Diluted earnings per share were $0.04 for the third quarter 2008, up from $0.00 for the third quarter 2007.
Gain on foreign exchange
The company operates in China and accounts for its operations using the Chinese renminbi. The company translates its operations results into U.S. dollars based on the exchange rates of the two currencies and reports its financial results in dollars. During the third quarter 2008, the renminbi appreciated in value against the dollar, which created the accrued gain on foreign exchange when translating the operating results and financial positions of the company and subsidiaries at different exchange rates.
Cash flow
Cash flow from operating activities for the first nine months of 2008 decreased 179.3 percent to $(14,884,371) from the first nine months of 2007, primarily due to the absence of projects completed in 2007 and the operating cash outflow associated with the development of Tsining JunJing II in the first nine months of 2008.
The use of cash in investing activities in the first nine months of 2008 was $(617,060), which was 129.5 percent less than in the first nine months of 2007, primarily due to the decrease of the restricted cash in the first nine months of 2008. The decrease was due to the strategic partnership agreement completed in July with the China Construction Bank Shaanxi Branch that reduced the restricted cash required to be held by the bank until the housing units have been completed and the titles transferred to the owners.
Cash flow from financing activities in the first nine months of 2008 provided $26,761,423, up 314.3 percent from the first nine months of 2007, primarily due to $19.2 million net proceeds from the issuance of convertible debt and warrants in the first quarter of 2008 and loans from banks totaling $32.2 million, partly offset by payments on loans totaling $23.7 million.
As a result of the above cash flow changes from operating, investing, and financing activities, the increase in cash for the first nine months of 2008 was $11,259,992 compared with an increase $3,223,069 for the first nine months of 2007.
Debt leverage
Total debt outstanding as of September 30, 2008 was $51,080,708 compared with $27,922,125 on December 31, 2007. Net debt outstanding (total debt less cash) as of September 30, 2008 was $35,810,744 compared with $25,469,759 on December 31, 2007. The company’s net debt as a percent of total capital (net debt plus shareholders’ equity) was 31.5 percent on September 30, 2008 and 27.8 percent on December 31, 2007. The increase in net debt as a percent of total capital was primarily due to the issuance of convertible debt and warrants and the increase in bank loans in the first nine months of 2008. Total debt consists of the sum of the balance sheet lines titled Payable to original shareholders, Loans from employees, Loans payable, and Convertible debt.
Conference call and webcast
China Housing & Land Development will webcast its third quarter conference call at 5:00 p.m. Eastern Standard Time (U.S.A.) on Thursday, November 13, 2008. The live conference call audio broadcast can be reached using the investor relations page of the company’s website at www.chldinc.com.
About China Housing & Land Development, Inc.
Based in Xi’an, the capital city of China’s Shaanxi province, China Housing & Land Development, Inc., is a leading developer of residential and commercial properties in northwest China. China Housing has been engaged in land acquisition, development, and management, including the sales of residential and commercial real estate properties through its wholly-owned subsidiary in China, since 1992.
China Housing & Land Development is the first and only Chinese real estate development company traded on NASDAQ.
Safe Harbor
This news release may contain forward-looking information about China Housing & Land Development, Inc., which is covered under the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as believe, expect, may, will, should, project, plan, seek, intend, or anticipate or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and China Housing & Land Development’s future performance, operations, and products.
Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Actual performance results may vary significantly from expectations and projections. Further information regarding this and other risk factors are contained in China Housing & Land Development, Inc.‘s public filings with the U.S. Securities and Exchange Commission. All information provided in this news release and in the attachments is as of the date of the release, and the Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.
# # #
China Housing & Land Development news releases, project information, photographs, and more are available on the internet at http://www.chldinc.com.
Contacts for investors and media
Jing Lu, Vice President & Board Secretary
+86 29.8258.2632 in Xi’an • jinglu@chldinc.com
William Xin, Chief Financial Officer
+86 150.9175.2090 in Xi’an
+1 917.371.9827 in San Francisco • william.xin@chldinc.com
Tom Myers, Christensen Investor Relations
+86 139.1141.3520 in Beijing • tmyers@christensenir.com
Kathy Li, Christensen Investor Relations
+1 212.618.1978 in New York • kli@christensenir.com
Financial statements follow.
CHINA HOUSING & LAND DEVELOPMENT, INC.
Consolidated Balance Sheets
As of September 30, 2008 and December 31, 2007
(Unaudited)
| September 30,
2008
| | December 31,
2007
| |
|---|
| | |
|---|
| ASSETS | | | | | | | | |
| Cash | | | $ | 14,384,044 | | $ | 2,351,015 | |
| Cash - restricted | | | | 885,920 | | | 101,351 | |
| Accounts receivable, net of allowance for doubtful | | |
| accounts of $101,539 and $94,514, respectively | | | | 14,495,310 | | | 12,107,882 | |
| Other receivables, prepaid expenses and other assets | | | | 647,200 | | | 567,308 | |
| Notes receivable, net | | | | 3,822,631 | | | 947,918 | |
| Real estate | | |
| Finished projects | | | | 13,168,394 | | | 16,130,130 | |
| Construction in progress | | | | 45,785,532 | | | 24,856,801 | |
| Total real estate held for development or sale | | | | 58,953,926 | | | 40,986,931 | |
| Property and equipment, net | | | | 7,812,838 | | | 5,707,012 | |
| Assets held for sale | | | | 13,929,462 | | | 12,910,428 | |
| Advance to suppliers | | | | 1,773,605 | | | 2,071,549 | |
| Deposits on land use rights | | | | 36,326,465 | | | 29,694,103 | |
| Intangible asset, net | | | | 51,788,874 | | | 48,205,697 | |
| Deferred financing costs | | | | 662,737 | | | 55,451 | |
|
| |
| |
| Total assets | | | $ | 205,483,012 | | $ | 155,706,645 | |
|
| |
| |
| LIABILITIES | | |
| Accounts payable | | | $ | 12,928,038 | | $ | 9,311,995 | |
| Advances from customers | | | | 11,762,061 | | | 5,258,351 | |
| Accrued expenses | | | | 2,593,777 | | | 1,903,451 | |
| Payable to original shareholders | | | | 8,499,819 | | | 11,413,229 | |
| Income and other taxes payable | | | | 24,272,724 | | | 22,711,981 | |
| Other payables | | | | 4,235,239 | | | 3,881,137 | |
| Loans from employees | | | | 1,547,951 | | | 2,388,862 | |
| Loans payable | | | | 27,688,184 | | | 14,120,034 | |
| Deferred tax liability | | | | 17,090,328 | | | 15,907,880 | |
| Warrants liability | | | | 2,154,489 | | | 2,631,991 | |
| Fair value of embedded derivatives | | | | 1,371,062 | | | — | |
| Convertible debt | | | | 13,344,754 | | | — | |
|
| |
| |
| Total liabilities | | | | 127,488,426 | | | 89,528,911 | |
|
| |
| |
| SHAREHOLDERS' EQUITY | | |
| Common stock: $.001 par value, authorized | | |
| 100,000,000 shares | | | | 30,894 | | | 30,142 | |
| issued and outstanding 30,893,757 and 30,141,887, | | |
| respectively | | |
| Additional paid in capital | | | | 31,390,750 | | | 28,381,534 | |
| Statutory reserves | | | | 2,885,279 | | | 2,885,279 | |
| Retained earnings | | | | 32,995,792 | | | 30,365,156 | |
| Accumulated other comprehensive income | | | | 10,691,871 | | | 4,515,623 | |
|
| |
| |
| Total shareholders' equity | | | | 77,994,586 | | | 66,177,734 | |
|
| |
| |
| Total liabilities and shareholders' equity | | | $ | 205,483,012 | | $ | 155,706,645 | |
|
| |
| |
The accompanying notes are an integral part of these consolidated financial statements
CHINA HOUSING & LAND DEVELOPMENT, INC.
Consolidated Statements of Income and Comprehensive Income
For the Three and Nine Months Ended September 30, 2008 and 2007
(Unaudited)
| Three months ended
| | Nine months ended
| |
|---|
| 2008
| | 2007
| | 2008
| | 2007
| |
|---|
| REVENUES | | | | | | | | | | | | | | |
| Sale of properties | | | $ | 7,475,692 | | $ | 5,700,596 | | $ | 25,054,867 | | $ | 24,881,984 | |
| Other income | | | | 70,070 | | | 336,333 | | | 482,022 | | | 1,369,732 | |
|
| |
| |
| |
| |
| Total revenues | | | | 7,545,762 | | | 6,036,929 | | | 25,536,889 | | | 26,251,716 | |
|
| |
| |
| |
| |
| COSTS AND EXPENSES | | |
| Cost of properties and land | | | | 6,071,599 | | | 3,019,240 | | | 19,691,432 | | | 17,585,887 | |
| Selling, general, and administrative | | |
| expenses | | | | 1,594,514 | | | 886,405 | | | 4,161,865 | | | 2,007,351 | |
| Stock-based compensation | | | | 3,000,000 | | | — | | | 3,000,000 | | | — | |
| Other | | | | 60,848 | | | 20,153 | | | 76,758 | | | 190,404 | |
| Interest | | | | 638,228 | | | 1,120,150 | | | 1,736,344 | | | 1,501,105 | |
| Accretion on convertible debt | | | | 266,541 | | | — | | | 691,782 | | | — | |
| ��Change in fair value of embedded derivatives | | | | (2,101,825 | ) | | — | | | (2,556,313 | ) | | — | |
| Change in fair value of warrants | | | | (2,939,563 | ) | | 408,261 | | | (3,895,615 | ) | | 419,465 | |
| Foreign exchange loss | | | | (103,344 | ) | | — | | | — | | | — | |
|
| |
| |
| |
| |
| Total costs and expense | | | | 6,486,998 | | | 5,454,209 | | | 22,906,253 | | | 21,704,212 | |
|
| |
| |
| |
| |
| | | | | |
| Income before provision for income taxes | | | | 1,058,764 | | | 582,720 | | | 2,630,636 | | | 4,547,504 | |
| | | | | |
| (Recovery) Provision for income taxes | | | | (388,308 | ) | | 653,957 | | | — | | | 1,995,359 | |
|
| |
| |
| |
| |
| Net income | | | | 1,447,072 | | | (71,237 | ) | | 2,630,636 | | | 2,552,145 | |
| | | | | |
| Gain (Loss) on foreign currency exchange | | | | 911,996 | | | 786,813 | | | 6,176,248 | | | 1,745,926 | |
|
| |
| |
| |
| |
| Comprehensive income | | | $ | 2,359,068 | | $ | 715,576 | | $ | 8,806,884 | | $ | 4,298,071 | |
| | | | | |
| Weighted average shares outstanding | | |
| Basic | | | | 30,877,453 | | | 30,090,699 | | | 30,389,712 | | | 25,723,046 | |
|
| |
| |
| |
| |
| Diluted | | | | 30,882,483 | | | 30,257,923 | | | 30,436,461 | | | 25,838,126 | |
|
| |
| |
| |
| |
| Earnings per share | | |
| Basic | | | $ | 0.05 | | $ | (0.00 | ) | $ | 0.09 | | $ | 0.10 | |
|
| |
| |
| |
| |
| Diluted | | | $ | 0.04 | | $ | (0.00 | ) | $ | 0.07 | | $ | 0.10 | |
|
| |
| |
| |
| |
The accompanying notes are an integral part of these consolidated financial statements
CHINA HOUSING & LAND DEVELOPMENT, INC.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2008 and 2007
(Unaudited)
| 2008
| | 2007
| |
|---|
| | |
|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
| Net income | | | $ | 2,630,636 | | $ | 2,552,145 | |
| Adjustments to reconcile net income to cash | | |
| provided by (used in) operating activities: | | |
| Allowance for bad debt | | | | — | | | 20,661 | |
| Depreciation | | | | 233,915 | | | 365,560 | |
| Exchange (gain) loss | | | | (103,344 | ) | | 134,197 | |
| Gain on disposal of fixed assets and inventory | | | | 15,088 | | | (707,451 | ) |
| Amortization of stock issued for investor | | |
| relations fees | | | | 107,987 | | | 98,500 | |
| Accrued interest on loan to shareholders | | | | — | | | 905,770 | |
| Stock-based compensation | | | | 3,000,000 | | | — | |
| Change in fair value of warrants | | | | (3,895,615 | ) | | 419,465 | |
| Change in fair value of embedded derivatives | | | | (2,556,313 | ) | | — | |
| Accretion expense on convertible debt | | | | 691,782 | | | — | |
| Non-cash proceeds from sales | | | | (2,904,172 | ) | | — | |
| (Increase) decrease in assets: | | |
| Accounts receivable | | | | (1,444,437 | ) | | (91,148 | ) |
| Real estate | | | | (16,437,686 | ) | | (1,545,058 | ) |
| Advance to suppliers | | | | 486,434 | | | (7,831,904 | ) |
| Deposit on land use rights | | | | (4,386,535 | ) | | — | |
| Other receivable and deferred charges | | | | 24,339 | | | 1,302,366 | |
| Deferred Financing Costs | | | | 162,269 | | | — | |
| Increase (decrease) in liabilities: | | | | — | |
| Accounts payable | | | | 2,852,863 | | | (2,291,251 | ) |
| Advances from customers | | | | 5,981,215 | | | 915,265 | |
| Accrued expense | | | | 740,465 | | | (1,539,723 | ) |
| Other payable | | | | 40,646 | | | (486,759 | ) |
| Income and other taxes payable | | | | (123,908 | ) | | 2,449,306 | |
|
| |
| |
| Net cash provided by (used in) operating | | | | (14,884,371 | ) | | (5,330,059 | ) |
| activities | | |
|
| |
| |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | |
| Change in restricted cash | | | | (755,376 | ) | | 199,275 | |
| Purchase of property and equipment | | | | (868,817 | ) | | (194,423 | ) |
| Notes receivable collected | | | | 139,327 | | | 2,037,505 | |
| Proceed from sale of property and equipment | | | | 867,806 | | | — | |
| Cash from acquisition | | | | — | | | 51,433 | |
|
| |
| |
| Net cash provided by (used in) investing | | | | (617,060 | ) | | 2,093,790 | |
| activities | | |
|
| |
| |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | |
| Net Proceeds from issuance of convertible debt | | | | 19,230,370 | | | — | |
| Loan from bank | | | | 32,213,727 | | | 3,919,200 | |
| Payments on loans | | | | (20,044,097 | ) | | (13,179,053 | ) |
| Payments to original shareholders | | | | (3,656,905 | ) | | (8,099,680 | ) |
| (Payments) loans to / from employees | | | | (990,087 | ) | | 782,733 | |
| Proceeds from issuance of common stock and warrants | | | | 8,415 | | | 23,036,138 | |
|
| |
| |
| Net cash provided by financing activities | | | | 26,761,423 | | | 6,459,338 | |
|
| |
| |
| INCREASE IN CASH | | | | 11,259,992 | | | 3,223,069 | |
| | | | | |
| EFFECTS ON FOREIGN CURRENCY EXCHANGE | | | | 773,037 | | | 143,168 | |
| | | | | |
| CASH, beginning of period | | | | 2,351,015 | | | 379,633 | |
|
| |
| |
| CASH, end of period | | | $ | 14,384,044 | | $ | 3,745,870 | |
|
| |
| |
The accompanying notes are an integral part of these consolidated financial statements
China Housing & Land Development, Inc.
Consolidated Statements of Shareholders' Equity
For the nine months ended September 30, 2008
(unaudited)
| Common Stock
| | Additional
paid in | | Statutory | | Retained | | Accumulated
other
comprehensive | | | |
|---|
| Shares
| | Par Value
| | capital
| | reserves
| | earnings
| | income
| | Totals
| |
|---|
| Balance, December 31, 2007 | | | | 30,141,887 | | $ | 30,142 | | $ | 28,381,534 | | $ | 2,885,279 | | $ | 30,365,156 | | $ | 4,515,623 | | $ | 66,177,734 | |
| | | | | |
| Common stock issued from warrants conversion | | | | 1,870 | | | 2 | | | 9,966 | | | — | | | — | | | — | | | 9,968 | |
| | | | | |
| Stock-based compensation | | | | 750,000 | | | 750 | | | 2,999,250 | | | — | | | — | | | — | | | 3,000,000 | |
| | | | | |
| Net Income | | | | — | | | — | | | — | | | — | | | 2,630,636 | | | — | | | 2,630,636 | |
| | | | | |
| Foreign currency translation adjustment | | | | — | | | — | | | — | | | — | | | — | | | 6,176,248 | | | 6,176,248 | |
|
| |
| |
| |
| |
| |
| |
| |
| Balance, September 30, 2008 | | | | 30,893,757 | | $ | 30,894 | | $ | 31,390,750 | | $ | 2,885,279 | | $ | 32,995,792 | | $ | 10,691,871 | | $ | 77,994,586 | |
|
| |
| |
| |
| |
| |
| |
| |
The accompanying notes are an integral part of these consolidated financial statements.
