Restricted Net Assets

6 Months Ended

Dec. 31, 2011

Restricted Assets Disclosure [Text Block]

NOTE 16 – RESTRICTED NET ASSETS

Schedule I of Article 5-04 of Regulation S-X requires the condensed financial information of a registrant shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender, regulatory agency, foreign government, etc.).

The parent company financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the subsidiaries of Gold Horse International, Inc. exceed 25% of the consolidated net assets of Gold Horse International, Inc. The ability of our Chinese operating affiliates to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balances of the Chinese operating subsidiaries. Because a significant portion of all of our operations and revenues are conducted and generated in China through the Jin Ma Companies, all of our revenues being earned and currency received are denominated in RMB. RMB is subject to the exchange control regulation in China, and, as a result, we may be unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into U.S. dollars.

The following condensed parent company financial statements have been prepared using the same accounting principles and policies described in the notes to the consolidated financial statements, with the only exception being that the parent company accounts for its subsidiaries using the equity method. Refer to the consolidated financial statements and notes presented above for additional information and disclosures with respect to these financial statements.

GOLD HORSE INTERNATIONAL, INC. CONDENSED PARENT COMPANY BALANCE SHEETS (UNAUDITED)
	As of December 31,		As of June 30,
	2011		2011
ASSETS
Cash and cash equivalents	$	1,372	$	1,886
Prepaid expenses		58		1,000
Total Current Assets		1,430		2,886
Investments in subsidiaries at equity		53,220,586		49,776,712
Due from subsidiaries		698,004		749,638
Total Assets	$	53,920,020	$	50,529,236
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	12,875	$	21,171
Derivative liabilities		52,494		84,713
Accrued liabilities		-		20,833
Total Current Liabilities		65,369		126,717
Stockholders' equity:
Common stock ($0.0001 par value; 300,000,000 shares authorized; 2,195,033 and 2,158,244 shares issued and outstanding at December 31, 2011 and June 30, 2011
respectively)		220		216
Additional paid-in capital		7,488,664		7,464,917
Non-controlling interest in variable interest entities		7,642,344		7,642,344
Retained earnings		29,876,182		27,343,397
Statutory reserve		3,111,443		3,066,583
Other comprehensive income		5,735,798		4,885,062
Total Stockholders' Equity		53,854,651		50,402,519
Total Liabilities and Stockholders' Equity	$	53,920,020	$	50,529,236

GOLD HORSE INTERNATIONAL, INC.
CONDENSED PARENT COMPANY STATEMENTS OF INCOME (UNAUDITED)
	For the Three Months Ended December 31,						For the Six Months Ended December 31,
	2011			2010			2011			2010
REVENUES	$	-		$	-		$	-		$	-
OPERATING EXPENSES:
Salaries and employee benefits		5,625			70,408			36,250			145,211
General and administrative		1,063			97,035			11,462			254,204
Total Operating Expenses		6,688			167,443			47,712			399,415

LOSS FROM OPERATIONS		(6,688	)		(167,443	)		(47,712	)		(399,415	)
OTHER INCOME:
Gain on change in fair value of derivative liabilities		8,417			121,612			32,219			157,092

INCOME (LOSS) ATTRIBUTABLE TO PARENT ONLY		1,729			(45,831	)		(15,493	)		(242,323	)

EQUITY INCOME EARNINGS OF SUBSIDIARIES		1,727,844			1,941,661			2,593,138			3,052,418

NET INCOME	$	1,729,573		$	1,895,830		$	2,577,645		$	2,810,095

GOLD HORSE INTERNATIONAL, INC.
CONDENSED PARENT COMPANY STATEMENTS OF CASH FLOWS (UNAUDITED)
	For the Three Months Ended December 31,						For the Six Months Ended December 31,
	2011			2010			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,729,573		$	1,895,830		$	2,577,645		$	2,810,095
Adjustments to reconcile net income to net cash used in operating activities:
Equity in earnings of subsidiary		(1,727,844	)		(1,941,661	)		(2,593,138	)		(3,052,418	)
Stock-based compensation		5,625			116,094			11,250			116,094
Warrants issued for services		-			-			-			31,188
Gain on change in fair value of derivative liabilities		(8,417	)		(121,612	)		(32,219	)		(157,092	)
Changes in assets and liabilities:
Prepaid expenses		942			90,001			942			180,001
Accounts payable		3,367			(2,897	)		4,205			(19,583	)
Accrued expenses		(25,001	)		(45,686	)		(20,833	)		41,617
NET CASH USED IN OPERATING ACTIVITIES		(21,755	)		(9,931	)		(52,148	)		(50,098	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment from subsidiaries		21,634			-			51,634			50,000
NET CASH PROVIDED BY INVESTING ACTIVITIES		21,634			-			51,634			50,000
CASH FLOWS FROM FINANCING ACTIVITIES:		-			-			-			-
NET DECREASE IN CASH		(121	)		(9,931	)		(514	)		(98	)
CASH - beginning of period		1,493			10,876			1,886			1,043
CASH - end of period	$	1,372		$	945		$	1,372		$	945

GOLD HORSE INTERNATIONAL, INC. 10-Q