China Housing & Land
Development, Inc.
|
(Exact name of registrant as
specified in our
charter)
|
NEVADA
|
20-1334845
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer Identification
No.)
|
6 Youyi Dong Lu, Han Yuan 4
Lou
Xi'an, Shaanxi
Province
China
710054
|
(Address of principal executive
offices) (Zip Code)
|
(Registrant's telephone number,
including area code)
|
86-29-82582632
|
Title of each
class
|
Name of each exchange
on
which
registered
|
Common Stock, $ .001 par value per
share
|
NASDAQ
|
Large accelerated filer [_]
|
Accelerated filer [_]
|
|
Non-accelerated filer [_]
|
(Do not check if a smaller reporting company)
|
Smaller reporting company [X]
|
Class
|
Outstanding
at March
25,
2009
|
Common Stock, $ .001 par value per
share
|
30,948,340
shares
|
Document
|
Parts Into Which
Incorporated
|
None
|
Not
applicable
|
PART
I
|
||
ITEM
1
|
BUSINESS
|
1
|
ITEM
1A
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RISK
FACTORS
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18
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ITEM
2
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PROPERTIES
|
24
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ITEM
3
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LEGAL
PROCEEDINGS
|
25
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ITEM
4
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SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
25
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PART
II
|
||
ITEM
5
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
25
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ITEM
6
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SELECTED
FINANCIAL DATA
|
26
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ITEM
7
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MANAGEMENT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
27
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ITEM
7A
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QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
36
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ITEM
8
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FINANCIAL
STATEMENT AND SUPPLEMENTARY DATA
|
37
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ITEM
9
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
|
60
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ITEM
9A
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CONTROLS
AND PROCEDURES
|
60
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ITEM
9B
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OTHER
INFORMATION
|
61
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PART
III
|
||
ITEM
10
|
DIRECTORS
AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
62
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ITEM
11
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EXECUTIVE
COMPENSATION
|
65
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ITEM
12
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
67
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ITEM
13
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
67
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ITEM
14
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PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
67
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PART
IV
|
||
ITEM
15
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EXHIBITS
AND REPORTS ON FORM 10-K
|
68
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SIGNATURES
|
69
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▪
|
On
January 1, China Housing adopted the percentage of completion method of
accounting for building construction projects. Infrastructure construction
work and sales of land continue to be reported only at the completion of
each project, using the full accrual method of
accounting.
|
▪
|
In
January, the company issued $20 million in senior secured convertible
notes.
|
▪
|
In
May, China Housing became the first and only Chinese real estate
development company to trade on NASDAQ. Ticker symbol is
CHLN.
|
▪
|
In
July, the company received a RMB 1 billion construction line of credit
with the China Construction Bank Shaanxi Branch. In September, China
Housing also received a RMB 35 million infrastructure construction line of
credit with the Xi'an Commercial
Bank.
|
▪
|
In
October, the company selected the world- renowned U.S. architecture and
engineering firm of Leo A Daly to provide site planning and detailed
architectural designs for the first 79 acres within the Baqiao
project.
|
▪
|
In
November, China Housing agreed to form a joint venture with Prax Capital
Real Estate Holding Ltd., to finance the development of the first 79 acres
within the Baqiao project. As planned, the joint venture was formed in
late December, subject to certain conditions and approvals, which were
subsequently satisfied; the completion of the joint venture’s formation
was announced in January 2009.
|
Industry
Overview
China’s
economic growth
China
has experienced rapid economic growth in the last 20 years. According to
China’s Department of Commercial Affairs, China’s gross domestic product
(GDP) achieved an annual growth rate of 17.1 percent from 2004 to 2008.
According to the National Statistics Bureau of China, the GDP of China in
2008 was RMB 30.1 billion, up 9.0 percent over 2007. Despite the current
global economic crisis, China is expected to achieve relatively good
economic growth in the next several years, compared to many other major
economies in the world.
Sources:
World Economic Outlook database, IMF.
Xi’an:
economic growth higher than China
Xi’an
served as the capital of China during 13 dynasties (from West Zhou in 1066
BC to Tang in 907 AD) and is well known for its Terracotta Army and other
famous historic landmarks. It is now the largest metropolis in
northwestern China, and one of the ten largest nationwide. A new wave of
economic growth is occurring in tier two cities, and Xi’an has benefitted
from the government’s “Go West” policy, which plans to develop Xi’an into
a regional economic center.
With
this rich heritage as a foundation, today the city’s economic leadership
is based on its high-technology, pharmaceutical, military, aerospace,
tourism, and advanced education industries. Xi’an recorded a CAGR of 16.0
percent for GDP and a CAGR of 12.3 percent for GDP per capita between 2001
and 2007.
|
|
|
|
|
|
|
Annual
per capita
disposable
income and expenses (RMB)
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
Urban
per capita
|
||||||
Disposable
income of urban households
|
7703.00
|
8472.00
|
9422.00
|
10493.00
|
11759.45
|
13786.00
|
Consumption
expenditures of urban households
|
6030.00
|
6511.00
|
7182.00
|
7943.00
|
8696.55
|
9997.50
|
Net
increase in wealth, urban
|
1673.00
|
1961.00
|
2240.00
|
2550.00
|
3062.90
|
3788.50
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Rural
per capita
|
||||||
Net
income of rural households
|
2476.00
|
2622.00
|
2936.00
|
3255
|
3587.0
|
4140.36
|
Living
expenditures of rural households
|
1834.00
|
1943.00
|
2185.00
|
2555.00
|
2829
|
3223.85
|
Net
increase in wealth, rural
|
642.00
|
679.00
|
751.00
|
700.00
|
758.00
|
916.51
|
|
|
|
|
|
|
Sources: E-House China Real Estate Research Institute, Xi’an Branch. |
1.
|
Focus on continuing to serve the
greater Xi’an market and on expanding our real estate development business
into the leading urban markets in western China, because western China
--
|
|
▪
|
accounts
for about half the geographic area of China in total and a growing share
of the country’s population,
|
|
▪
|
has
substantial natural resources that are being mined and that are creating
jobs and higher incomes per capita,
|
|
▪
|
has
high potential GDP growth, creating higher disposable
incomes,
|
|
▪
|
has
high population growth due to --
|
|
▪
|
China’s
Go West policy that encourages people to move from the tier 1 cities to
smaller cities in the west,
|
|
▪
|
China’s
rural to urban migration, and
|
|
▪
|
the
emerging economies based on resource exploitation and plans for industry
diversification, and
|
|
▪
|
is
a market that is just emerging, so the development cost will be relatively
inexpensive but the potential price appreciation should be
attractive.
|
2.
|
Serve
the rapidly growing middle and upper income
families.
|
3.
|
Maintain modern cost control
systems to ensure cost-effective and efficient
operations.
|
5.
|
Use our access in the global
capital markets to expand our organic growth and increase our prudent
acquisitions and expansions.
|
1.
|
We are effectively positioned in
greater Xi’an and expect to be similarly positioned in our targeted
locations.
|
2.
|
We understand and serve our chosen
target market
segments (middle and
middle-upper income families) well and have a proven ability to
provide large-scale high-quality housing that our customers desire and will
cherish for many years to
come.
|
3.
|
We have extensive core
competencies, supplemented by training and development programs. Our
core competencies, listed below, are woven into every phase of our real
estate development business. Our staff works as one integrated team on
each phase. China Housing's core competencies
include:
|
|
▪
|
Land
analysis and acquisition,
|
|
▪
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Site
planning and development,
|
|
▪
|
Design,
architecture, engineering, and
construction,
|
|
▪
|
Environmental
awareness and actions,
|
|
▪
|
Project
management,
|
|
▪
|
Finance,
|
|
▪
|
Marketing
and sales,
|
|
▪
|
Joint
ventures and co-developments,
|
|
▪
|
Government
relations,
|
|
▪
|
Property
management,
|
|
▪
|
Demolition
and recycling, and
|
|
▪
|
Acquisition
integration.
|
|
▪
|
High-rise apartment buildings,
typically 12 to 28 stories high, usually of steel-reinforced concrete, that are
completed within about 24 months after securing all required
permits.
|
|
▪
|
Mid-rise apartment buildings,
typically 7 to 11 stories high, usually of steel-reinforced concrete, that
are completed within 12 to 18 months after securing all required
permits.
|
|
▪
|
Low-rise apartment buildings and
villas, typically 2 to 6 stories high, often of steel-reinforced concrete,
that are completed within about 12 months after securing all required
permits.
|
|
▪
|
Projects under construction, where
the building construction has started but has not yet been
completed;
|
|
▪
|
Projects in process, which include
developments where typically we have secured the development and land use rights, and where the site planning,
architecture, engineering, and infrastructure work is
progressing;
|
|
▪
|
Projects in planning, where we
have purchased the development and or land use rights for parcels of land
as part of our project development pipeline. The completion of projects on these
sites is subject to adequate financing, permits, licensing, and certain
market conditions;
and
|
|
▪
|
Completed projects, where the
construction has been finished and most of the units in the buildings have
been sold, leased, or rented.
|
Project
name
|
Type
of Projects
|
Actual
or Estimated Construction Period
|
Actual
or Estimated Pre-sale Commencement Date
|
Total
Site Area
(m2)
|
Total
GFA
(m2)
|
Sold
GFA by Dec. 31/2008
(m2)
|
||||||
JunJing
II
phase
one
|
|
Multi-Family
residential & Commercial
|
|
Q3/
2007
- Q3/2009
|
|
Q2/2008
|
|
39,524
|
136,012
|
57,098
|
||
JunJing
II
phase
two
|
|
Multi-Family
residential & Commercial
|
|
Q2/2009
- Q2/2011
|
|
Q3/2009
|
|
29,800
|
112,556
|
-
|
||
Project
name
|
Total
Number of Units
|
Number
of Units sold
|
Estimated
Revenue
(million)
|
Contracted
Revenue by Dec.31/2008
(million)
|
Recognized
Revenue by Dec.31 2008 (million)
|
|||||||
JunJing
II
phase
one
|
1,182
|
|
559
|
|
95.6
|
|
33.6
|
|
23.8
|
|||
JunJing
II
phase
two
|
1,015
|
|
-
|
|
94.1
|
-
|
-
|
Project
name
|
Type of
Projects
|
Estimated Construction
Period
|
Estimated Pre-sale Commencement
Date
|
Total Site
Area
(m2)
|
Total GFA
(m2)
|
Total
Number of Units
|
||||||
Baqiao New Development
Zone
|
Land Development
|
2009 - 2020
|
N/A
|
N/A
|
N/A
|
N/A
|
||||||
Puhua
|
|
Multi-Family residential &
Commercial
|
|
Q3/2009
- Q3/2014
|
|
Q4/2009
|
|
192,582
|
|
610,000
|
|
5,000
|
JunJing III
|
|
Multi-Family residential &
Commercial
|
|
Q3/2009
- Q3/2011
|
|
Q3/2009
|
|
8,094
|
|
51,470
|
|
570
|
Through its New Land subsidiary,
China Housing sold 18.4 acres to another developer in 2007 and generated
about $24.41 million in revenue.
In
2008, we established a joint venture with Prax Capital Real Estate
Holdings Limited (Prax Capital) to develop 79 acres within the Baqiao
project, which will be the first phase of the Baqiao project’s
development. Prax Capital invested $29.3 million cash in the joint
venture. The project is further described in Puhua section
below.
After
selling 18.4 acres and placing 79 acres in the joint venture, about 390
acres remain available for the Company to develop in the Baqiao
project.
Puhua: The Puhua project, the Company’s 79 acre joint
venture located
in Baqiao project, has a total land area of 192,582 square meters and
an
expected gross floor area of about 610,000 square meters.
In November 2008, the Company entered into
an agreement with Prax Capital China
Real Estate Fund I, Ltd., to form the joint venture. The joint venture was formed in
late 2008, subject to certain conditions and approvals, which were
satisfied, Prax
Capital Real Estate
Holdings Limited invested US$29.3 million cash in the joint venture, the joint venture acquired the
land use rights early
in the first quarter 2009, and the joint venture is proceeding with the
project.
JunJing
III: JunJing III is near our JunJing II project and the
city expressway. It
will have an expected total gross floor area of about 66,890 square
meters. The project will consist of 3 high rise
buildings,
each 28 to 30 stories
high. The project is targeting middle to high income customers who require a high quality living environment
and convenient
transportation to the city center. We
plan to start construction during the third quarter 2009 and
the pre-sales during the same quarter. The
total estimated revenue from this project is about $46.0
million.
|
|
Project
name
|
Type of
Projects
|
Completion
Date
|
Total Site
Area
(m2)
|
Total GFA
(m2)
|
Total
Number of Units
|
Number of Units sold by Dec.
31/2008
|
||||||
Tsining
Mingyuan
|
|
Multi-Family residential &
Commercial
|
|
Q2/2000
|
|
17,526
|
53,055
|
303
|
303
|
|||
Lidu
Mingyuan
|
|
Multi-Family residential &
Commercial
|
|
Q4/2001
|
|
5,289
|
8,284
|
56
|
56
|
|||
Tsining Hanyuan
|
Multi-Family residential &
Commercial
|
Q4/2003
|
|
3,026
|
32,229
|
238
|
238
|
|||||
Tsining Home
IN
|
Multi-Family residential &
Commercial
|
Q4/2003
|
|
8,483
|
30,072
|
215
|
213
|
|||||
Tsining
Gangwan
|
Multi-Family residential &
Commercial
|
Q4/2004
|
|
12,184
|
41,803
|
466
|
464
|
|||||
Tsining-24G
|
Hotel,
Commercial
|
Q2/2006
|
8,227
|
43,563
|
773
|
672
|
||||||
JunJing I
|
Multi-Family residential &
Commercial
|
Q3/2006
|
55,588
|
167,931
|
1,671
|
1,566
|
|
▪
|
Purchase by auction held by the
Land Consolidation and Rehabilitation Center;
|
|
▪
|
Purchase by auction held by court
under bankruptcy
proceedings;
|
|
▪
|
Merger with or acquisition of a
state-owned enterprise that controls developable
land.
|
Registered Capital
(million)
|
Experience
(years)
|
Developed Area
(square meters)
|
Other
|
Time for
license to
be
authorized
|
||||||
Level 1
|
US$6.250
|
5
|
300,119
|
No
|
||||||
Level 2
|
US$2.500
|
3
|
150,059
|
Severe
|
20 Days
|
|||||
Level 3
|
US$1.000
|
2
|
50,020
|
Accident
|
||||||
Level 4
|
US$0.125
|
1
|
N/A
|
Name of
project
|
Geographic
location
|
Subsistence
area
(square
meter)
|
||
Tsining JunJing
I
|
North Jinhua Road Xi'an
City
|
|
29,929
|
|
Tsining-24G
|
|
East Erhuan of Xi'an
City
|
|
8,999
|
Tsining JunJing II Phase one
|
|
Dongzhan Road of Xi'an
City
|
|
136,012
|
Tsining JunJing II Phase two
|
|
Dongzhan Road of Xi'an
City
|
|
112,556
|
Yijing Yuan
(Land)
|
|
South Erhuan of Xi'an
City
|
|
60,666
|
Other
Projects
|
|
|
4,218
|
|
Total
|
|
|
352,380
|
(1)
|
The
Company started the JunJing II phase one in the third quarter of 2007 and
expects to complete it in the third quarter 2009. Total GFA will be 136,012
square meters. As of December 31, 2008, we have sold 57,098
square meters, with 78,914
square meters remaining to be sold.
|
(2)
|
The
Company is planning to start the JunJing II phase two in the second
quarter of 2009 and expects to complete it in the second quarter of 2010
with total GFA of 112,556 square
meters.
|
High
& Low Stock Price
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
||||
2008
|
||||||||
High
|
6.10
|
5.65
|
4.25
|
2.33
|
||||
Low
|
3.30
|
3.80
|
1.85
|
0.75
|
||||
2007
|
||||||||
High
|
3.85
|
5.20
|
5.00
|
8.20
|
||||
Low
|
2.00
|
3.15
|
3.20
|
4.25
|
||||
2006
|
||||||||
High
|
N/A
|
4.25
|
3.75
|
3.10
|
||||
Low
|
N/A
|
3.50
|
1.70
|
1.55
|
Summary of
operations
(US$ in thousands, except per share amounts)
|
||||||||||||
As of December
31
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Total revenue
|
$ | 26,466 | $ | 73,913 | $ | 54,099 | ||||||
Cost of
sales
|
21,473 | 43,222 | 36,750 | |||||||||
Selling, general, and
administrative expenses
|
8,498 | 2,919 | 3,197 | |||||||||
Stock-based
compensation
|
3,079 | - | - | |||||||||
Income from
operations
|
(6,662 | ) | 27,771 | 13,851 | ||||||||
Net income
|
$ | 9,556 | $ | 16,686 | $ | 9,051 | ||||||
Net income per common
share -
Basic
|
0.31 | 0.62 | 0.45 | |||||||||
Net income per common
share -
Diluted
|
0.30 | 0.62 | 0.45 |
Financial data
(in
thousands)
|
||||||||
As of December
31
|
||||||||
2008
|
2007
|
|||||||
Total
assets
|
$ | 222,355 | $ | 155,707 | ||||
Total shareholders’ equity
|
84,626 | 66,178 | ||||||
Basic weighted average shares
outstanding
|
30,516 | 26,817 | ||||||
Diluted weighted average
shares
|
30,527 | 26,817 |
Revenues by
project:
|
2008
|
2007
|
2006
|
|||||||||
US$
|
||||||||||||
Project Under
Construction
|
||||||||||||
Tsining JunJing II Phase one
|
$ | 23,776,789 | $ | - | $ | - | ||||||
Projects
Completed
|
||||||||||||
Tsining JunJing
I
|
264,066 | 8,964,783 | 39,670,186 | |||||||||
Tsining-24G
|
27,243 | 25,198,128 | 13,000,694 | |||||||||
Tsining
Gangwan
|
58,427 | 2,368,602 | 318,338 | |||||||||
Tsining
Hanyuan
|
13,894 | 3,100 | 161,274 | |||||||||
Tsining Home
In
|
121,076 | 323,751 | - | |||||||||
Tsining
Mingyuan
|
44,567 | 247,298 | 352,199 | |||||||||
Lidu
Mingyuan
|
- | 303,124 | 144,483 | |||||||||
Infrastructure Project
|
||||||||||||
Baqiao infrastructure
construction
|
- | 10,790,610 | - | |||||||||
Project In
Process
|
||||||||||||
Baqiao
|
- | 24,405,717 | - | |||||||||
Revenues from the
sales of properties
|
$ | 24,306,062 | $ | 73,579,325 | $ | 53,647,174 |
Due Date
|
Outstanding
Amount
|
|||||
2009-09-14
|
$ | 3,371,198 | ||||
2009-12-25
|
$ | 5,130,084 | ||||
2010-08-29
|
$ | 5,130,084 | ||||
2011-08-27
|
$ | 21,986,076 |
(Millions of
dollars)
|
Balance
|
Interest
rate
|
Due date
|
||||||
Xi'an Rural Credit
Union
|
$ | 3.37 | 9.53 | % |
14-Sep-2009
|
||||
Commercial Bank
Weilai
|
$ | 5.13 | 9.47 | % |
25-Dec-2009
|
||||
Commercial Bank
Weilai
|
$ | 5.13 | 10.21 | % |
29-Aug-2010
|
||||
China Construction
Bank
|
$ | 22.00 | 6.14 | % |
28-Aug-2011
|
Obligations Due by
Period
|
1 year
|
1-3 years
|
3-5 years
|
|||||||||
(Millions of
dollars)
|
||||||||||||
Current
liabilities:
|
||||||||||||
Accounts
payable
|
$ | 10.53 | ||||||||||
Income and other taxes
payable
|
$ | 7.53 | ||||||||||
Other
payables
|
$ | 5.18 | ||||||||||
Advances (deposits) from
customers
|
$ | 9.26 | ||||||||||
Accrued
expenses
|
$ | 3.54 | ||||||||||
Long-term
liabilities:
|
||||||||||||
Warranties liabilities
|
$ | 1.12 | ||||||||||
Deferred
tax
|
$ | 11.50 | ||||||||||
Fair value of embedded
derivatives
|
$ | 0.76 | ||||||||||
Convertible
debt
|
$ | 13.62 | ||||||||||
Long-term
debt:
|
||||||||||||
Loans
payable
|
$ | 8.50 | $ | 27.13 | ||||||||
Payable to New Land’s previous shareholders
|
$ | 8.43 | ||||||||||
Loans from employees
|
$ | 1.52 |
Signed:
“MSCM
LLP”
MSCM LLP
Toronto, Canada
March 25, 2009
|
CHINA HOUSING &
LAND DEVELOPMENT, INC., AND SUBSIDIARIES
|
||||||||
Consolidated
Balance Sheets
|
||||||||
As
of December 31, 2008 and December 31, 2007
|
||||||||
December
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Cash
|
$ | 37,425,340 | $ | 2,351,015 | ||||
Cash
- restricted
|
805,012 | 101,351 | ||||||
Accounts
receivable, net of allowance for doubtful
|
||||||||
accounts
of $1,278,156 and $94,514, respectively
|
813,122 | 12,107,882 | ||||||
Other
receivables, prepaid expenses and other assets
|
446,497 | 567,308 | ||||||
Notes
receivable, net
|
811,695 | 947,918 | ||||||
Real
estate held for development or sale
|
60,650,011 | 40,986,931 | ||||||
Property
and equipment, net
|
12,391,501 | 5,707,012 | ||||||
Assets
held for sale
|
14,308,691 | 12,910,428 | ||||||
Advance
to suppliers
|
704,275 | 2,071,549 | ||||||
Deposits
on land use rights
|
47,333,287 | 29,694,103 | ||||||
Intangible
assets, net
|
46,043,660 | 48,205,697 | ||||||
Deferred
financing costs
|
622,118 | 55,451 | ||||||
Total
assets
|
222,355,209 | 155,706,645 | ||||||
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 10,525,158 | $ | 9,311,995 | ||||
Advances
from customers
|
9,264,385 | 5,258,351 | ||||||
Accrued
expenses
|
3,539,842 | 1,903,451 | ||||||
Payable
to New Land’s previous shareholders
|
8,429,889 | 11,413,229 | ||||||
Income
and other taxes payable
|
7,532,730 | 22,711,981 | ||||||
Other
payables
|
5,183,251 | 3,881,137 | ||||||
Loans
from employees
|
1,517,039 | 2,388,862 | ||||||
Loans
payable
|
35,617,442 | 14,120,034 | ||||||
Deferred
tax liability
|
11,510,915 | 15,907,880 | ||||||
Warrants
liability
|
1,117,143 | 2,631,991 | ||||||
Fair
value of embedded derivatives
|
760,398 | - | ||||||
Convertible
debt
|
13,621,934 | - | ||||||
Total
liabilities
|
108,620,126 | 89,528,911 | ||||||
MINORITY
INTEREST IN SUBSIDIARIES
|
29,109,350 | - | ||||||
SHAREHOLDERS'
EQUITY
|
||||||||
Common
stock: $.001 par value, authorized 100,000,000 shares issued and
outstanding 30,893,757 and 30,141,887, respectively
|
30,894 | 30,142 | ||||||
Additional
paid in capital
|
31,390,750 | 28,381,534 | ||||||
Statutory
reserves
|
3,541,226 | 2,885,279 | ||||||
Retained
earnings
|
39,265,062 | 30,365,156 | ||||||
Accumulated
other comprehensive income
|
10,397,801 | 4,515,623 | ||||||
Total
shareholders' equity
|
84,625,733 | 66,177,734 | ||||||
Total
liabilities and shareholders' equity
|
$ | 222,355,209 | $ | 155,706,645 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
CHINA
HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
|
||||||||||||
Consolidated
Statements of Income and Comprehensive Income
|
||||||||||||
For
The Years Ended December 31, 2008, 2007 and 2006
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
REVENUES
|
||||||||||||
Sale
of properties
|
$ | 24,306,062 | $ | 73,579,325 | $ | 53,647,174 | ||||||
Other
income
|
2,159,784 | 333,525 | 452,312 | |||||||||
Total
revenues
|
26,465,846 | 73,912,850 | 54,099,486 | |||||||||
COSTS
AND EXPENSES
|
||||||||||||
Cost
of properties and land
|
21,473,426 | 43,221,757 | 36,749,683 | |||||||||
Selling,
general, and administrative expenses
|
8,497,562 | 2,919,360 | 3,197,310 | |||||||||
Stock-based
compensation
|
3,078,600 | - | - | |||||||||
Other
expenses
|
295,595 | 57,416 | 301,158 | |||||||||
Interest
expense
|
1,346,183 | 1,652,349 | 289,083 | |||||||||
Accretion
expense on convertible debt
|
968,962 | - | - | |||||||||
Change
in fair value of embedded derivatives
|
(3,166,977 | ) | - | - | ||||||||
Change
in fair value of warrants
|
(4,932,961 | ) | 632,296 | - | ||||||||
Total
costs and expenses
|
27,560,390 | 48,483,178 | 40,537,234 | |||||||||
(Loss)
income before provision for income taxes and minority
interest
|
(1,094,544 | ) | 25,429,672 | 13,562,252 | ||||||||
(Recovery)
provision for income taxes
|
(10,490,833 | ) | 8,743,556 | 4,511,442 | ||||||||
Income
before minority interest
|
9,396,289 | 16,686,116 | 9,050,810 | |||||||||
Minority
interest in net loss of subsidiaries, net of tax
|
159,564 | - | - | |||||||||
|
|
|
||||||||||
NET
INCOME
|
9,555,853 | 16,686,116 | 9,050,810 | |||||||||
Gain
on foreign exchange
|
5,882,178 | 3,617,405 | 655,435 | |||||||||
COMPREHENSIVE
INCOME
|
$ | 15,438,031 | $ | 20,303,521 | $ | 9,706,245 | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
||||||||||||
Basic
|
30,516,411 | 26,871,388 | 20,277,615 | |||||||||
Diluted
|
30,527,203 | 26,871,388 | 20,277,615 | |||||||||
9 | ||||||||||||
EARNINGS
PER SHARE
|
||||||||||||
Basic
|
$ | 0.31 | $ | 0.62 | $ | 0.45 | ||||||
Diluted
|
$ | 0.30 | $ | 0.62 | $ | 0.45 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
CHINA
HOUSING & LAND DEVELOPMENT INC., AND SUBSIDIARIES
|
|||||||||||
Consolidated
Statements of Cash Flows
|
|||||||||||
For
The Years Ended December 31, 2008, 2007 and
2006
|
2008
|
2007
|
2006
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|||||||||
Net
income
|
$ | 9,555,853 | $ | 16,686,116 | $ | 9,050,810 | ||||||
Adjustments
to reconcile net income to cash
|
|
|
|
|||||||||
provided
by (used in) operating activities:
|
||||||||||||
Minority
interest in subsidiaries
|
(159,564 | ) | - | - | ||||||||
Bad
debt expense
|
1,420,434 | - | 509,435 | |||||||||
Depreciation
|
454,728 | 423,932 | 354,444 | |||||||||
Gain
on disposal of fixed assets
|
15,167 | (48,347 | ) | (149,830 | ) | |||||||
Gain
on income tax settlement
|
(12,712,153 | ) | - | - | ||||||||
Amortization
of stock issued for investor relations fees
|
- | 131,400 | - | |||||||||
Amortization
of deferred financing costs
|
148,606 | - | - | |||||||||
Amortization
of intangible assets
|
- | 1,157,758 | - | |||||||||
Stock-based
compensation
|
3,078,600 | - | - | |||||||||
Change
in fair value of warrants
|
(4,932,961 | ) | 632,296 | - | ||||||||
Change
in fair value of embedded derivatives
|
(3,166,977 | ) | - | - | ||||||||
Accretion
expense on convertible debt
|
968,962 | - | - | |||||||||
Non-cash
proceeds from sales
|
(166,148 | ) | (10,783,201 | ) | - | |||||||
(Increase)
decrease in assets:
|
||||||||||||
Accounts
receivable
|
10,758,758 | (8,463,433 | ) | (431,805 | ) | |||||||
Real
estate
|
(23,463,229 | ) | 13,696,294 | 3,640,231 | ||||||||
Advances
to suppliers
|
1,600,308 | (1,480,596 | ) | 11,930,759 | ||||||||
Deposit
on land use rights
|
(15,387,541 | ) | (17,695,934 | ) | - | |||||||
Other
receivables and deferred charges
|
(114,638 | ) | 658,893 | (1,118,155 | ) | |||||||
Deferred
financing costs
|
202,888 | - | - | |||||||||
Increase
(decrease) in liabilities:
|
|
|
|
|||||||||
Accounts
payable
|
570,250 | 2,556,717 | 2,716,495 | |||||||||
Advances
from customers
|
3,576,253 | 2,066,546 | (28,428,381 | ) | ||||||||
Accrued
expense
|
1,607,634 | 42,522 | 1,625,843 | |||||||||
Other
payable
|
1,003,031 | (1,016,610 | ) | (266,309 | ) | |||||||
Income
and other taxes payable
|
(3,934,882 | ) | 10,047,030 | 6,909,809 | ||||||||
Net
cash provided by (used in) operating activities
|
(29,076,621 | ) | 8,611,383 | 6,343,346 | ||||||||
|
|
|
|
|||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Change
in restricted cash
|
(684,040 | ) | 1,039,410 | 591,312 | ||||||||
Purchase
of buildings, equipment and automobiles
|
(1,063,332 | ) | (244,355 | ) | (13,269,773 | ) | ||||||
Notes
receivable collected
|
364,313 | 1,272,541 | (2,246,025 | ) | ||||||||
Proceed
from sale of fixed assets
|
872,346 | - | 243,616 | |||||||||
Acquisition
of subsidiary
|
- | (27,087,844 | ) | - | ||||||||
Net
cash provided by (used in) investing activities
|
(510,713 | ) | (25,020,248 | ) | (14,680,870 | ) | ||||||
|
|
|
|
|||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net
proceeds from issuance of convertible debt
|
19,230,370 | - | - | |||||||||
Investment
and advances from minority shareholder
|
29,268,914 | - | - | |||||||||
Loans
from bank
|
46,054,761 | 3,944,359 | 13,835,303 | |||||||||
Payments
on loans
|
(25,905,804 | ) | (14,202,410 | ) | (7,905,887 | ) | ||||||
Loans
to or from employees, net
|
(1,018,357 | ) | 1,226,736 | 1,016,551 | ||||||||
Repayment
of loan from New Land previous shareholders
|
(3,704,820 | ) | 4,207,315 | - | ||||||||
Proceeds
from issuance of common stock and warrants
|
8,415 | 23,239,997 | 1,750,421 | |||||||||
Net
cash provided by financing activities
|
$ | 63,933,479 | $ | 18,415,997 | $ | 8,696,388 | ||||||
|
|
|
||||||||||
INCREASE
IN CASH
|
34,346,145 | 2,007,132 | 358,864 | |||||||||
|
|
|
|
|||||||||
Effects
on foreign current exchange
|
728,180 | (35,750 | ) | (9,976 | ) | |||||||
|
|
|
||||||||||
CASH,
beginning of year
|
2,351,015 | 379,633 | 30,745 | |||||||||
|
|
|
|
|||||||||
CASH,
end of year
|
$ | 37,425,340 | $ | 2,351,015 | $ | 379,633 |
CHINA
HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||||
Consolidated
Statements of Shareholders' Equity
|
||||||||||||||||||||||||||||||||
For
The Years Ended December 31, 2008, 2007 and 2006
|
||||||||||||||||||||||||||||||||
Additional
|
Capital
|
Other
|
||||||||||||||||||||||||||||||
Common
Stock
|
paid
in
|
Statutory
|
Retained
|
contribution
|
comprehensive
|
|||||||||||||||||||||||||||
Shares
|
Par
Value
|
capital
|
reserves
|
earnings
|
receivable
|
income
|
Totals
|
|||||||||||||||||||||||||
BALANCE,
December 31, 2005
|
20,000,000 | $ | 20,000 | $ | 5,442,798 | $ | 1,234,178 | $ | 6,279,331 | $ | - | $ | 242,783 | $ | 13,219,090 | |||||||||||||||||
Common
stock issued for cash at $3.25
|
619,223 | 619 | 1,749,802 | - | - | - | - | 1,750,421 | ||||||||||||||||||||||||
Net
Income
|
- | - | - | - | 9,050,810 | - | - | 9,050,810 | ||||||||||||||||||||||||
Adjustment
to statutory reserve
|
- | - | - | 915,960 | (915,960 | ) | - | - | - | |||||||||||||||||||||||
Capital
contribution receivable
|
- | - | - | - | - | (5,462,798 | ) | - | (5,462,798 | ) | ||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | - | - | 655,435 | 655,435 | ||||||||||||||||||||||||
BALANCE,
December 31, 2006
|
20,619,223 | $ | 20,619 | $ | 7,192,600 | $ | 2,150,138 | $ | 14,414,181 | $ | (5,462,798 | ) | $ | 898,218 | $ | 19,212,958 | ||||||||||||||||
Common
stock issued for consulting services
|
60,000 | 60 | 131,340 | - | - | - | - | 131,400 | ||||||||||||||||||||||||
Common
stock and warrants issued at $2.70
|
9,387,985 | 9,388 | 20,532,623 | - | - | - | - | 20,542,011 | ||||||||||||||||||||||||
Common
Stock issued from warrants conversion
|
74,679 | 75 | 524,971 | - | - | - | - | 525,046 | ||||||||||||||||||||||||
Net
Income
|
- | - | - | - | 16,686,116 | - | - | 16,686,116 | ||||||||||||||||||||||||
Adjustment
to statutory reserve
|
- | - | - | 735,141 | (735,141 | ) | - | - | - | |||||||||||||||||||||||
Capital
contribution receivable
|
- | - | - | - | - | 5,462,798 | - | 5,462,798 | ||||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | - | 3,617,405 | 3,617,405 | |||||||||||||||||||||||||
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
|
- | - | - | - | 9,555,853 | - | - | 9,555,853 | ||||||||||||||||||||||||
Adjustment
to statutory reserve
|
- | - | - | 655,947 | (655,947 | ) | - | - | - | |||||||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | - | - | 5,882,178 | 5,882,178 | ||||||||||||||||||||||||
BALANCE,
December 31, 2008
|
30,893,757 | $ | 30,894 | $ | 31,390,750 | $ | 3,541,226 | $ | 39,265,062 | $ | - | $ | 10,397,801 | $ | 84,625,733 | |||||||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
December
31, 2008
|
December
31, 2007
|
December
31, 2006
|
||||
Period end RMB/U.S. Dollar exchange
rate
|
6.8225
|
7.2946
|
7.8041
|
|||
Average RMB/U.S. Dollar exchange
rate
|
6.9483
|
7.6058
|
7.9723
|
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.
|
Sales prices are
collectible.
|
e.
|
Aggregate sales proceeds and costs
can be reasonably estimated.
|
2008
|
2007
|
|||||||
Notes
receivable
|
$ | 859,682 | $ | 1,036,75 | ||||
Less: unamortized
interest
|
(47,988 | ) | (88,857 | ) | ||||
Notes receivable,
net
|
$ | 811,695 | $ | 947,918 |
Estimated Useful
Life
|
||
Head
office buildings and improvements
|
30
years
|
|
Income
producing properties
|
21
- 30 years
|
|
Vehicles
|
6
years
|
|
Electronic
equipment
|
5
years
|
|
Office
furniture
|
5years
|
|
Computer
software
|
3
years
|
Level
1
|
Quoted prices are
available in active markets for identical assets or liabilities as of the reporting
date. Active markets are those in which transactions for the asset
or liability occur in sufficient frequency and volume to
provide pricing information on an
ongoing basis. Level 1 primarily consists
of financial instruments such as exchange-traded derivatives,
listed equities and U.S. government treasury
securities.
|
Level
2
|
Pricing
inputsare other than
quoted prices in active markets included in Level 1, which are either
directly or indirectly observable as
of the reporting date. Level 2
includes those financial instruments that are valued using models or other valuation
methodologies. These
models are primarily industry-standard
models that consider various assumptions, including quoted
forward prices for commodities, time value, volatility factors, and
current market and contractual prices for the underlying instruments, as
well as other
relevant economic measures. Substantially all of
these assumptions are observable in the marketplace throughout the full
term of the instrument, can be
derived from observable data or are
supported by observable levels at which transactions are executed in the marketplace.
Instruments in this category include
non-exchange-traded derivatives such as over
the counter forwards, options and
repurchase agreements.
|
Level
3
|
Pricing inputs include
significant inputs that are generally less observable from objective sources. These
inputs may be used
with internally developed methodologies
that result in management's best estimate of fair
value from the perspective of a
market participant. Level 3 instruments include those
that may be more structured or otherwise tailored to customers'
needs. At each balance sheet date, the Company performs an
analysis of all instruments
subject to SFAS No. 157 and includes in Level 3
all of those whose fair value is based on significant unobservable
inputs.
|
Fair Value Measurements
Using
|
Assets/Liabilities
|
|||||||||||||||
Level 1
|
Level 2
|
Level3
|
At Fair
Value
|
|||||||||||||
Warrants
liabilities
|
- | $ | 1,117,143 | - | $ | 1,117,143 | ||||||||||
Derivative
liabilities
|
- | 760,398 | - | 760,398 | ||||||||||||
Total
|
- | $ | 1,877,541 | - | $ | 1,877,541 |
2008
|
2007
|
2006
|
||||||||||
(Recovery)
provision for China income and local tax
|
$ | (10,490,833 | ) | $ | 9,125,616 | $ | 4,511,442 | |||||
Provision
of deferred taxes
|
- | (382,060 | ) | - | ||||||||
Total
(recovery) provision for income taxes
|
$ | (10,490,833 | ) | $ | 8,743,556 | $ | 4,511,442 |
2008
|
2007
|
2006
|
||||||||||
(Loss)
income before provision for income
taxes
|
$ | (1,094,544 | ) | $ | 25,429,672 | $ | 13,562,252 | |||||
U.S.
statutory rate of
34%
|
(372,145 | ) | 8,646,088 | 4,611,166 | ||||||||
Foreign
loss (income)
not
recognized in USA
|
2,092,057 | (9,766,843 | ) | (4,611,166 | ) | |||||||
Non-taxable
income and non-deductible expense
|
(2,424,532 | ) | 819,055 | - | ||||||||
Foreign
(loss)
income
tax rate of 25%
(2007
and 2006
-33%)
|
(1,538,277 | ) | 9,541,001 | 4,511,442 | ||||||||
Favorable
foreign
income tax
settlement
|
(12,712,153 | ) | - | - | ||||||||
Tax
on favorable foreign
income tax settlement
|
3,170,407 | - | - | |||||||||
Tax
incentive on New Land and Hao Tai
|
- | (344,133 | ) | - | ||||||||
Recovery
of future income tax provision
|
(382,060 | ) | ||||||||||
Change
in valuation allowance
|
1,293,810
|
230,448 | - | |||||||||
(Recovery)
provision
for income taxes
|
(10,490,833 | ) | 8,743,556 | 4,511,442 |
2008
|
2007
|
|||||||
Deferred tax
asset
|
||||||||
Non-capital
losses
|
1,530,488
|
236,678
|
||||||
Valuation
allowance
|
(1,530,488
|
) |
(236,678
|
) | ||||
Net deferred tax
asset
|
- | - | ||||||
Deferred tax
liability
|
||||||||
Temporary difference related to
intangible asset
|
$ | 15,907,880 | $ | 15,907,880 | ||||
Foreign
exchange rate change
|
(4,396,965 | ) | ||||||
Net deferred tax
liability
|
$ | 11,510,915 | $ | 15,907,880 |
Purchase
Price
|
$
|
35,286,737
|
||
Value assigned to assets and
liabilities:
|
||||
Assets:
|
||||
Cash
|
$
|
50,390
|
||
Other
receivables
|
20,318
|
|||
Equipment
|
102,577
|
|||
Work in
progress
|
6,448,748
|
|||
Prepayment
|
224,597
|
|||
Intangible
assets
|
47,107,396
|
|||
Liabilities:
|
||||
Accounts
payable
|
(963,233)
|
|||
Other
payables
|
(2,100,310)
|
|||
Accrued
expenses
|
(58,304)
|
|||
Deferred
tax
|
(15,545,441)
|
|||
Total net
assets
|
$
|
35,286,637
|
2008
|
2007
|
|||||||
Finished
projects
|
$ | 10,181,827 | $ | 16,130,130 | ||||
Construction in
progress
|
50,468,184 | 24,856,801 | ||||||
Total real estate held for
development or sale
|
$ | 60,650,011 | $ | 40,986,931 |
2008
|
2007
|
|||||||
Accounts
receivable
|
$ | 2,691,278 | $ | 12,202,396 | ||||
Allowance for doubtful
accounts
|
(1,278,156 | ) | (94,514 | ) | ||||
Accounts receivable,
net
|
$ | 813,122 | $ | 12,107,882 |
2008
|
2007
|
|||||||
Other receivables
|
$ | 916,886 | $ | 749,890 | ||||
Allowance for bad
debts
|
(473,058 | ) | (190,372 | ) | ||||
Prepaid
expenses
|
2,669 | 7,790 | ||||||
Other receivables, prepaid expense
other assets
|
$ | 446,497 | $ | 567,308 |
2008
|
2007
|
|||||||
Head office buildings and
improvements
|
$ | 3,234,628 | $ | 1,018,494 | ||||
Income producing
properties
|
24,588,347 | 18,469,852 | ||||||
Electronic
equipment
|
238,422
|
195,244 | ||||||
Vehicles
|
71,140 | 87,740 | ||||||
Office
furniture
|
183,939
|
119,960 | ||||||
Computer
software
|
91,272 | 48,180 | ||||||
Totals
|
28,407,748
|
19,939,470 | ||||||
Accumulated
depreciation
|
(1,707,556 | ) | (1,322,030 | ) | ||||
Net book value of assets held for
sale
|
(14,308,691 | ) | (12,910,428 | ) | ||||
Property and equipment,
net
|
$ | 12,391,501 | $ | 5,707,012 |
2008
|
2007
|
|||||||
Intangible
acquired
|
$ | 47,334,342 | $ | 49,412,847 | ||||
Accumulated
amortization
|
(1,290,682 | ) | (1,207,150 | ) | ||||
Intangible assets,
net
|
$ | 46,043,660 | $ | 48,205,697 |
2008
|
2007
|
|||||||
Commercial Bank Weilai
Branch
|
||||||||
Due August 29, 2008, annual
interest rate is at 11.34 percent, secured by the Company's Xin Xing
Gangwan,
Xin Xing Tower and Ming Yuan Yuan
projects
|
$ | - | $ | 5,209,333 | ||||
Commercial Bank Weilai
Branch
|
||||||||
Due December 25, 2009, annual interest is at
9.47 percent, secured by the Company's
24G projects
|
5,130,084 | 5,483,508 | ||||||
Commercial Bank Weilai
Branch
|
||||||||
Due August 29, 2010, annual
interest is at 10.21 percent, guaranteed by Tsining and secured by the Company's
Xin Xing Tower
and part of the
JunJing II project
|
5,130,084 | - | ||||||
Xi'an Rural Credit union Zao Yuan
Rd. Branch
|
||||||||
Due September 14, 2009, annual
interest is at 9.527 percent, secured by the Company's Jun Jing Yuan I,
Han Yuan and Xin Xing Tower projects
|
3,371,198 | 3,427,193 | ||||||
China Construction Bank, Xi'an
Branch
|
||||||||
Due
August 27, 2011, annual interest is at floating interest rate based
on 110% of People’s Bank of China rate, secured by the Company's Jun Jing
Yuan II project
|
21,986,076 | - | ||||||
Total
|
$ | 35,617,442 | $ | 14,120,034 |
Minority
interest
|
||||
Minority
interest at November 5, 2008
|
$ | 29,268,914 | ||
Minority
interests’ share of loss for the year
|
(159,564 | ) | ||
Distributions
for the year
|
0 | |||
Minority Interest at December 31,
2008
|
$ | 29,109,350 |
2008
|
2007
|
|||||||
Accrued
expenses
|
$ | 855,270 | $ | 362,854 | ||||
Accrued
Interest
|
$ | 2,684,572 | 1,540,597 | |||||
Total
|
$ | 3,539,842 | $ | 1,903,451 |
(1)
|
On
June 28, 2006, the Company entered into securities purchase agreements
with accredited investors and completed the issue of $1,075,000 of the
Company’s common stock and common stock purchase warrants. The securities
sold were an aggregate of 330,769 shares of common stock and 99,231
warrants. Each warrant is exercisable for three years with an initial
exercise price of $3.60 per share. The exercise price was amended to $3.31
per share during 2007 with additional 8,770 warrants were
issued.
|
(2)
|
Pursuant
to securities purchase agreements with accredited investors dated July 7,
2006, the Company received $124,975 and issued 38,454 shares of common
stock and 11,536 warrants. Each warrant is exercisable for three years at
an initial exercise price of $3.60 per share. The exercise price was
amended to $3.31 per share during 2007 with 1,020 warrants were
issued.
|
(3)
|
Pursuant
to securities purchase agreements with accredited investors dated August
21, 2006, the Company received $812,500 and issued 198,845 shares of
common stock and 75,000 warrants. Each warrant is exercisable for three
years at $3.60 per share. The exercise price was amended to $3.31 per
share during 2007 with 17,574 warrants were
issued.
|
(4)
|
On
January 15, 2007, the Company issued 60,000 shares of common stock to an
investor relations company in consideration for one year of consulting
service through December 31, 2007. The 60,000 shares of common stock have
been recorded at $2.19 per share or $131,400 based on the trading price of
the shares at January 12, 2007. This amount was included in prepaid
expenses and is being amortized over the service
period.
|
(5)
|
Pursuant
to securities purchase agreements with accredited investors dated May 7,
2007, the Company received $25,006,978 and issued 9,261,847 shares of
common stock and 2,778,554 warrants. Each warrant is exercisable for five
years at $4.50 per share. In connection with the offering, the Company
paid a 7% placement fee and $173,689 in legal
fees.
|
(6)
|
According
to Section 4.8, Anti-Dilute of the Share Purchase Agreements dated June
28, 2006, July 7, 2006 and August 21, 2006, the Company issued 126,138
shares of common stock and 27,364 warrants during 2007; additionally, the
Company reduced the exercise price of all related warrants from $3.60 to
$3.31.
|
Number
of
Warrants
Outstanding
|
Weighted
Average
Exercise
Price
|
|||||||
December
31, 2005
|
- | $ | - | |||||
Granted
|
309,612 | 3.31 | ||||||
December
31, 2006
|
309,612 | 3.31 | ||||||
Granted
|
2,805,918 | 4.49 | ||||||
Exercised
|
(169,147 | ) | 3.63 | |||||
December
31, 2007
|
2,946,383 | $ | 4.41 | |||||
Granted
|
1,437,467 | $ | 6.07 | |||||
Exercised
|
(1,870 | ) | $ | 4.50 | ||||
December
31, 2008
|
4,381,980 | $ | 4.96 |
Outstanding
Warrants
|
|||||
Exercise
Price
|
Number
|
Average
Remaining
Contractual
Life
|
|||
$3.31
|
213,131 |
0.53
years
|
|||
$4.50
|
2,731,382 |
3.34
years
|
|||
$6.07
|
1,437,467 |
4.16
years
|
2008
|
2007
|
2006
|
||||||||||
Numerator
|
||||||||||||
Income attributable to common
shareholders - basic
|
$ | 9,555,853 | $ | 16,686,115 | $ | 9,050,810 | ||||||
Effect of
dilutive securities
|
||||||||||||
Warrants
|
(536,480 | ) | - | - | ||||||||
Income
attributable to common shareholders - diluted
|
$ | 9,019,373 | $ | 16,686,115 | $ | 9,050,810 | ||||||
Denominator
|
||||||||||||
Weighted average shares
outstanding -
basic
|
30,516,411 | 26,871,388 | 20,277,615 | |||||||||
Effect of dilutive
securities
|
||||||||||||
Warrants
|
10,792 | - | - | |||||||||
Weighted average shares
outstanding -
diluted
|
30,527,203 | 26,871,388 | 20,277,615 | |||||||||
Earnings per
share
|
||||||||||||
Basic earnings per
share
|
$ | 0.31 | $ | 0.62 | $ | 0.45 | ||||||
Diluted earnings per
share
|
$ | 0.30 | $ | 0.62 | $ | 0.45 |
2008
|
2007
|
2006
|
||||||||||
Other interest
income
|
$ | 1,433,837 | $ | 42,380 | $ | 30,395 | ||||||
Other non-operating
income
|
339,568 | 89,439 | 58,543 | |||||||||
Rental income, net
|
369,798 | 153,359 | 213,544 | |||||||||
Gain on disposal of fixed assets and
inventory
|
16,581 | 48,347 | 149,830 | |||||||||
Total
|
$ | 2,159,784 | $ | 333,525 | $ | 452,312 |
•
|
pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the
Company;
|
•
|
provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with Generally Accepted Accounting Principles, and that
receipts and expenditures of the Company are being made only
in accordance with authorizations of
management and directors of the Company;
and
|
•
|
provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of
the Company's assets that could have a material effect on the financial
statements.
|
Name
|
Age
|
Title
(1)
|
||
Mr. Pingji
Lu
|
58
|
Chairman of the Board of
Directors
|
||
Mr. Xiaohong
Feng
|
44
|
Chief Executive Officer &
Managing Director
|
||
Ms. Jing Lu
|
29
|
Chief Operating Officer & Board
Secretary
|
||
Mr. GenXi’ang Xiao
|
46
|
Vice President & Managing
Director
|
||
Mr. Michael
Marks
|
37
|
Independent
Director
|
||
Mr. Albert
McLelland
|
50
|
Independent
Director
|
||
Ms. Carolina
Woo
|
69
|
Independent
Director
|
||
Mr. Suiyin Gao
|
55
|
Independent
Director
|
||
Mr. William
Xin
|
42
|
Chief Financial
Officer
|
(1)
|
In
early January 2009, executives in the Company changed positions. Mr.
Pingji Lu continued as Chairman of the Board of Directors and his CEO
responsibilities were assumed by Mr. Xiaohong Feng, who was previously
Chief Operating Officer. Ms. Jing Lu, previously Vice President, was
elected Chief Operating Officer.
|
Name and
|
Base
|
Bonus
(2)
|
Stock
|
Option
|
Non-Equity
Incentive
Plan
|
Nonqualified
Deferred
Compensation
|
All
Other
|
|||||||||||||||||||||||||||||||
Principal
Position
|
Year
|
Salary
($) (1)
|
Cash
($)
|
Stock
($)
|
Awards
($) (3)
|
Awards
($)
|
Compensation
($)
|
Earnings
($)
|
Compensation
($)
|
Total
($)
|
||||||||||||||||||||||||||||
Pingji Lu (4)
|
2008
|
$ | 3,868 | 30,066 | N/A | N/A | N/A | 0 | 0 | 0 | 33,934 | |||||||||||||||||||||||||||
Chairman
of the Board of Directors
|
2007
|
$ | 2,174 | 17,111 | 1,641,626 | 1,641,626 | N/A | 0 | 0 | 0 | 1,660,911 | |||||||||||||||||||||||||||
2006
|
$ | 1,769 | 15,015 | N/A | N/A | N/A | 0 | 0 | 0 | 16,784 | ||||||||||||||||||||||||||||
2005
|
$ | 1,561 | 15,326 | N/A | N/A | N/A | 0 | 0 | 0 | 16,887 | ||||||||||||||||||||||||||||
GenXi’ang
Xiao
|
2008
|
$ | 3,516 | 16,670 | N/A | N/A | N/A | 0 | 0 | 0 | 20,186 | |||||||||||||||||||||||||||
Vice
President & Managing Director
|
2007
|
$ | 2,174 | 9,729 | 348,730 | 348,730 | N/A | 0 | 0 | 0 | 360,633 | |||||||||||||||||||||||||||
2006
|
$ | 1,769 | 11,994 | N/A | N/A | N/A | 0 | 0 | 0 | 13,763 | ||||||||||||||||||||||||||||
2005
|
$ | 1,561 | 12,286 | N/A | N/A | N/A | 0 | 0 | 0 | 13,847 | ||||||||||||||||||||||||||||
Xiaohong
Feng
|
2008
|
$ | 3,516 | 21,928 | N/A | N/A | N/A | 0 | 0 | 0 | 25,444 | |||||||||||||||||||||||||||
Chief
Executive Officer & Managing Director
|
2007
|
$ | 2,174 | 16,647 | 427,006 | 427,006 | N/A | 0 | 0 | 0 | 445,827 | |||||||||||||||||||||||||||
2006
|
$ | 1,769 | 13,507 | N/A | N/A | N/A | 0 | 0 | 0 | 15,276 | ||||||||||||||||||||||||||||
2005
|
$ | 1,561 | 13,809 | N/A | N/A | N/A | 0 | 0 | 0 | 15,370 | ||||||||||||||||||||||||||||
Yulong
Wan
|
2008
|
$ | N/A | N/A | N/A | N/A | N/A | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
Former
Chief Financial Officer
|
2007
|
$ | 1,777 | N/A | 73,815 | 73,815 | N/A | 0 | 0 | 0 | 75,592 | |||||||||||||||||||||||||||
Notes:
Working Period (Jan to Apr, 2007)
|
2006
|
$ | 1,385 | 5,853 | N/A | N/A | N/A | 0 | 0 | 0 | 7,238 | |||||||||||||||||||||||||||
2005
|
$ | 1,190 | 6,093 | N/A | N/A | N/A | 0 | 0 | 0 | 7,283 | ||||||||||||||||||||||||||||
Zhiyong
Shi
|
2008
|
$ | 3,516 | 12,756 | N/A | N/A | N/A | 0 | 0 | 0 | 16,272 | |||||||||||||||||||||||||||
Former
Vice President, Chief Legal
|
2007
|
$ | 725 | 757 | N/A | N/A | N/A | 0 | 0 | 0 | 1,482 | |||||||||||||||||||||||||||
Counsel,
and Board Member
|
2006
|
$ | 1,769 | 6,962 | N/A | N/A | N/A | 0 | 0 | 0 | 8,731 | |||||||||||||||||||||||||||
Notes:
Working Period (Jan to Apr, 2007)
|
2005
|
$ | 1,561 | 7,224 | N/A | N/A | N/A | 0 | 0 | 0 | 8,785 | |||||||||||||||||||||||||||
William
Xin (5)
|
2008
|
$ | 36,000 | 0 | 0 | 43,000 | 0 | 0 | 0 | 0 | 79,000 | |||||||||||||||||||||||||||
Chief
Financial Officer
|
2007
|
$ | N/A | N/A | N/A | N/A | N/A | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
2006
|
$ | N/A | N/A | N/A | N/A | N/A | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
2005
|
$ | N/A | N/A | N/A | N/A | N/A | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Jing
Lu
|
2008
|
$ | 2,813 | 8,626 | N/A | N/A | N/A | 0 | 0 | 0 | 11,439 | |||||||||||||||||||||||||||
Chief
Operating Officer & Board Secretary
|
2007
|
$ | 6,957 | 6,957 | 312,082 | 312,082 | N/A | 0 | 0 | 0 | 325,996 | |||||||||||||||||||||||||||
2006
|
$ | 4,615 | 4,615 | N/A | N/A | N/A | 0 | 0 | 0 | 9,230 | ||||||||||||||||||||||||||||
2005
|
$ | N/A | N/A | N/A | N/A | N/A | 0 | 0 | 0 | 0 |
1. |
The
Company pays salaries in RMB to all executive officers every month. The
RMB amount is translated into US$ when the Company files SEC documents.
The exchange rates used were the average rates of 2008, 2007 and 2006.
They were 0.1439, 0.1315 and 0.12557 respectively. The stock awards were
valued based on the closing price of our common stock on the NASDAQ on
July 2, 2008.
|
2.
|
The
Company’s bonus has been mostly in cash. Whether the bonus can be issued
in stock is discretionary with the Compensation Committee. Other than the
stocks issued under the 2007 Stock Incentive Plan, we have not issued any
stock bonus. The dollar value of stock is based on the stock price of
$3.99 per share.
|
3.
|
The
stock awards column shows all stocks paid to our executives, which
includes the stocks paid in 2008 for their 2007 performance. The stock
awards amount is based on the stock price of
$3.99.
|
4.
|
Since
June 1st, 2008, Chairman Mr. Lu’s salary increased to US$ 200,000, which
was approved by compensation committee on June 1,
2008.
|
5.
|
William
Xin’s compensation package includes base salary and a total of 100,000
shares of the Company’s common stock which will be vested equally over the
three year employment period by 33.33% each year and are not based on the
performance evaluation at the year end. For 2008, the stock amount he
received as part of his compensation is based on the stock price of
$1.29.
|
Name
and
|
Salary
|
Option
|
Non-Equity
Incentive
Plan
|
Change
in
Pension
Value
and
Nonqualified
Deferred
|
All
Other
|
|||||||||||||||||||||
Principal
Position
|
Year
|
Cash
($)
|
Stock
($)
|
Awards
($)
|
Compensation
($)
|
Compensation
Earnings ($)
|
Compensation
($)
|
|||||||||||||||||||
Carolina
Woo
|
2008
|
$ | 20,000 | 9,675 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Independent
director of the Board
|
2007
|
$ | 3,333 | N/A | 0 | 0 | 0 | 0 | ||||||||||||||||||
2006
|
$ | N/A | N/A | 0 | 0 | 0 | 0 | |||||||||||||||||||
Edward
Meng
(1)
|
2008
|
$ | 20,000 | 4,838 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Independent
director of the Board
|
2007
|
$ | 3,333 | N/A | 0 | 0 | 0 | 0 | ||||||||||||||||||
2006
|
$ | N/A | N/A | 0 | 0 | 0 | 0 | |||||||||||||||||||
Michael
Marks
|
2008
|
$ | 15,000 | 6,450 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Independent
director of the Board
|
2007
|
$ | 2,500 | N/A | 0 | 0 | 0 | 0 | ||||||||||||||||||
2006
|
$ | N/A | N/A | 0 | 0 | 0 | 0 | |||||||||||||||||||
Suiyin
Gao
|
2008
|
$ | 15,000 | 6,450 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Independent
director of the Board
|
2007
|
$ | 2,500 | N/A | 0 | 0 | 0 | 0 | ||||||||||||||||||
2006
|
$ | N/A | N/A | 0 | 0 | 0 | 0 |
Name
|
Title
|
Shares
ownership
|
Percentage of
Owned
|
|||
Mr. Pingji
Lu
|
Chairman
|
3,950,935
|
12.77%
|
|||
Mr. Xiaohong
Feng
|
CEO & Managing
Director
|
707,019
|
2.28%
|
|||
Mr. GenXi’ang Xiao
|
Vice President
& Managing Director
|
552,401
|
1.78%
|
|||
Mr. William Xin
(3)
|
CFO
|
33,333
|
0.11%
|
|||
Ms. Jing Lu
|
COO & Board
Secretary
|
578,216
|
1.87%
|
|||
Mr. Michael
Marks(3)
|
Independent
Director
|
5,000
|
0.02%
|
|||
Ms. Carolina
Woo(3)
|
Independent
Director
|
7,500
|
0.02%
|
|||
Mr. Suiyin
Gao(3)
|
Independent
Director
|
5,000
|
0.02%
|
|||
Mr. Edward Meng (3)(4)
|
Independent
Director
|
3,750
|
0.01%
|
|||
Total
|
5,843,154
|
18.88%
|
(1)
|
Except as otherwise indicated, the
address of each beneficial owner is c/o Xi’an Tsining Housing
Development CO.,
Ltd., 6 Youyi Dong Lu, Han Yuan 4 Lou, Xi’an, Shaanxi Province, China
710054.
|
(2)
|
Applicable percentage ownership is
based on 30,948,340 shares of common stock outstanding as of March 24, 2009. Beneficial ownership is determined
in accordance with
the rules of the Securities and Exchange Commission and generally includes
voting or investment power with respect to
securities.
|
(3)
|
On Feb. 29, 2009, the Company
issued shares to certain officer and independent directors according to
their respective
contract as part of their 2008
compensation.
|
(4)
|
Edward
Meng resigned as independent director on October 10,
2008.
|
Fiscal year 2007
|
Fiscal year 2008
|
|||||||||||||||
Item
|
RMB
|
USD
|
RMB
|
USD
|
||||||||||||
The
largest aggregate amount of principal outstanding
|
19,909,569 | 2,729,602 | 12,770,236 | 1,880,769 | ||||||||||||
Principal
paid
|
5,963,716 | 784,101 | 2,645,236 | 389,584 | ||||||||||||
Interest
Paid
|
768,786 | 101,079 | 215,350 | 31,716 | ||||||||||||
Total
Amount of Loans Outstanding
|
17,424,230 | 2,388,862 | 10,350,000 | 1,517,039 |
Tsining (As of December 31, 2008)
|
||||||||||
First
|
Last
|
Ex rate: 6.8225
|
||||||||
Name
|
Name
|
Amount (RMB)
|
Amount (USD)
|
|||||||
Zhongbiao
|
Wang
|
200,000 | 29,315 | |||||||
Qiang
|
Tong
|
75,000 | 10,993 | |||||||
Zhiyong
|
Shi
|
160,000 | 23,452 | |||||||
Fang
|
Shen
|
140,000 | 20,520 | |||||||
Lijun
|
Lu
|
80,000 | 11,726 | |||||||
Fengrong
|
Jiao
|
330,000 | 48,369 | |||||||
Ming
|
Hui
|
70,000 | 10,260 | |||||||
Yan
|
Huang
|
30,000 | 4,397 | |||||||
Weiping
|
Fu
|
335,000 | 49,102 | |||||||
Enhu
|
Fan
|
100,000 | 14,657 | |||||||
LieXi’ang
|
Chen
|
500,000 | 73,287 | |||||||
Yongan
|
Chang
|
200,000 | 29,315 | |||||||
Yuewu
|
Bian
|
400,000 | 58,630 | |||||||
Zhongquan
|
Yang
|
370,000 | 54,232 | |||||||
|
|
|
|
|||||||
Total
|
2,990,000 | 438,256 |
New Land (As of December 31, 2008)
|
||||||||||
First
|
Last
|
Ex rate: 6.8225
|
||||||||
Name
|
Name
|
Amount (RMB)
|
Amount (USD)
|
|||||||
Jiaqun
|
Zhou
|
100,000 | 14,657 | |||||||
Chenyang
|
Zhang
|
200,000 | 29,315 | |||||||
Ganming
|
Yi
|
200,000 | 29,315 | |||||||
Qian
|
Xue
|
150,000 | 21,986 | |||||||
Xiuqin
|
Wang
|
110,000 | 16,123 | |||||||
Shangyuan
|
Wan
|
320,000 | 46,904 | |||||||
Qiang
|
Tong
|
10,000 | 1,466 | |||||||
Xijing
|
Tao
|
300,000 | 43,972 | |||||||
Yan
|
Tao
|
130,000 | 19,055 | |||||||
Zhiyong
|
Shi
|
300,000 | 43,972 | |||||||
Fang
|
Shen
|
110,000 | 16,123 | |||||||
Junfeng
|
Qiao
|
100,000 | 14,657 | |||||||
Meng
|
Luo
|
200,000 | 29,315 | |||||||
Lijun
|
Lu
|
20,000 | 2,931 | |||||||
Runsheng
|
Lu
|
45,000 | 6,596 | |||||||
Pengfei
|
Liu
|
10,000 | 1,466 | |||||||
Wen
|
Liu
|
20,000 | 2,931 | |||||||
Jine
|
Li
|
210,000 | 30,781 | |||||||
Xuesong
|
Li
|
670,000 | 98,204 | |||||||
Lanqiu
|
Kang
|
400,000 | 58,630 | |||||||
Fengrong
|
Jiao
|
2,045,000 | 299,743 | |||||||
Yuan
|
Jiao
|
70,000 | 10,260 | |||||||
Aiguo
|
Fu
|
1,200,000 | 175,889 | |||||||
Delin
|
Chen
|
250,000 | 36,643 | |||||||
Yuewu
|
Bian
|
190,000 | 27,849 | |||||||
|
|
|
|
|||||||
Total
|
7,360,000 | 1,078,783 |
(a)
|
AUDIT
FEES
|
(b)
|
AUDIT-RELATED
FEES
|
(c)
|
TAX
FEES
|
(d)
|
ALL OTHER
FEES
|
EXHIBIT NO.
|
DESCRIPTION OF
EXHIBIT
|
3.1
|
Articles of Incorporation
(incorporated by reference to the exhibits to Registrants Form SB-2 filed
on October 27, 2004)
|
3.2
|
Registrant's By-Laws (incorporated by
reference to the exhibits to Registrants Form SB-2 filed on October 27,
2004)
|
10.1
|
Securities Purchase Agreement
(incorporated by reference to the exhibits to Registrant's Form 8-K filed
on January 30, 2008).
|
10.2
|
Form of Convertible Note (incorporated
by reference to the exhibits to Registrant's Form 8-K filed on January 30,
2008).
|
10.3
|
Form of Warrant (incorporated by
reference to the exhibits to Registrant's Form 8-K filed on January 30,
2008).
|
10.4
|
Form of Pledge Agreement (incorporated by
reference to the exhibits to Registrant's Form 8-K filed on January 30,
2008).
|
10.5
|
Form of Registration Rights
Agreement (incorporated by reference to the exhibits to Registrant's Form
8-K filed on January 30, 2008).
|
10.6
|
Framework
Agreement, dated November 5, 2009, by and between the Registrant and Prax
Capital China Real Estate Fund I, Ltd.*
|
10.7 |
Deed
of Guarantee, dated November 5, 2008, made by the Registrant in favor of
Success Hill Investments Limited and Prax Capital Real Estate Holding
Limited (incorporated by reference to the exhibit to Registrant's Form 8-K
filed on January 28, 2009).
|
21.1
|
List of
subsidiaries.*
|
23.1
|
Consent of Moore Stephens Wurth
Frazer and Torbet, LLP. *
|
23.2
|
Consent of MSCM
LLP*
|
31.1
|
Certification of Chief Executive
Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act.*
|
31.2
|
Certification of Principal
Financial and Accounting Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act.*
|
32.1
|
Certification of Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act.*
|
32.2
|
Certification of Chief Accounting
Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act.*
|
CHINA HOUSING AND LAND DEVELOPMENT, INC. | ||
|
||
March 25,
2009
|
By: |
/s/ Feng
Xiaohong
|
Name:
Feng Xiaohong
Title: Chief Executive
Officer
|
||
March 25,
2009
|
By: | /s/ William Xin |
Name: William Xin
Title: Chief
Financial Officer
(Principal
Financial and Accounting
Officer)
|
SIGNATURE
|
TITLE
|
DATE
|
/s/ Lu Pingji
Lu Pingji
/s/ Feng
Xiaohong
Feng Xiaohong
/s/
Xiao GenXi’ang
Xiao GenXi’ang
/s/ Mr. William
Xin
Mr. William
Xin
/s/ Albert S.
McLelland
Mr. Albert S.
McLelland
/s/ Mr. Michael
Marks
Mr. Michael
Marks
/s/ Mr. Carolina
Woo
Mr. Carolina
Woo
/s/ Mr. Gao
Suiyi
Mr. Gao
Suiyi
|
Chairman of the
Board
Chief Executive Officer
& Managing
Director
Vice President & Managing
Director
Chief Financial
Officer
Independent
Director
Independent
Director
Independent
Director
Independent
Director
|
March 25, 2009
March 25, 2009
March 25, 2009
March 25, 2009
March 25, 2009
March 25, 2009
March 25, 2009
March 25,
2009
|