PR Newswire | Feb 22, 2021 04:45PM EST

02/22 15:45 CST

China HGS Reports First Quarter of Fiscal Year 2021 Results HANZHONG, China, Feb. 22, 2021

HANZHONG, China, Feb. 22, 2021 /PRNewswire/ -- China HGS Real Estate Inc. (NASDAQ: HGSH) ("China HGS" or the "Company"), a leading regional real estate developer headquartered in Hanzhong City, Shaanxi Province, China, today reported its financial results for the first quarter of fiscal 2021 ended December 31, 2020 with the U.S. Securities and Exchange Commission. An electronic copy of the quarterly report on Form 10-Q can be accessed on the SEC's website at www.sec.gov

Highlights for the quarter

* Total revenues for the first quarter of fiscal 2021 were approximately $2.8 million, an increase of 19.6% from approximately $2.3 million in the same quarter of fiscal 2020 due to more gross floor area sold during the current quarter. * Net income for the first quarter of fiscal 2021 totaled approximately $0.3 million, significantly increased from net loss of approximately $0.3 million in the same period of last year. * Basic and diluted net loss per share ("EPS") attributable to shareholders for the first quarter of fiscal 2021 were $0.01, compared to net loss per share of $0.01 for the same quarter of the last year.

Safe Harbor StatementThis press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China HGS Real Estate Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: the uncertain market for the Company's business, macroeconomic, technological, regulatory, or other factors affecting the profitability of real estate business; and other risks related to the Company's business and risks related to operating in China. Please refer to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

About China HGS Real Estate, Inc.China HGS Real Estate, Inc. (NASDAQ: HGSH), founded in 1995 and headquartered in Hanzhong City, Shaanxi Province, is a leading real estate developer in the region and holds the national grade I real estate qualification. The Company focuses on the development of high-rise, sub-high-rise residential buildings and multi-building apartment complexes in China's Tier 3 and Tier 4 cities and counties with rapidly growing populations driven by increased urbanization. The Company provides affordable housing with popular and modern designs to meet the needs of multiple buyer groups. The Company's development activity spans a range of services, including land acquisition, project planning, design management, construction management, sales and marketing, and property management. For further information about China HGS, please go to www.chinahgs.com.

Company contact:

Randy Xiong, President of Capital MarketChina Phone: (86) 091-62622612Email: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, September 30,

2020 2020

ASSETS (Unaudited)

Cash $ 1,253,331 $ 457,699

Restricted cash 3,423,862 3,409,837

Contract assets 15,370,808 14,255,328

Real estate property development completed 96,628,716 94,671,258

Other assets 9,102,909 8,132,555

Property, plant and equipment, net 582,060 571,330

Security deposits 1,930,750 1,855,506

Real estate property under development 239,926,178 227,741,017

Due from local governments for real estate property development completed 2,985,991 2,869,623

Total Assets $ 371,204,605 $ 353,964,153

LIABILITIES AND STOCKHOLDERS' EQUITY

Construction loans $ 116,028,450 $ 109,937,408

Accounts payables 26,333,101 25,415,352

Other payables 4,424,032 4,028,048

Construction deposits 3,332,605 3,202,730

Contract liabilities 1,917,343 1,847,685

Customer deposits 21,939,636 19,405,528

Accrued expenses 1,971,086 1,920,370

Taxes payable 19,649,785 19,881,211

Total liabilities 195,596,038 185,638,332

Commitments and Contingencies

Stockholders' equity

Common stock, $0.001 par value, 50,000,000 shares authorized, 22,525,000 shares 22,525 22,525issued and outstanding December 31, 2020 and September 30, 2020

Additional paid-in capital 129,930,330 129,930,330

Statutory surplus 10,458,395 10,458,395

Retained earnings 35,245,648 34,954,061

Accumulated other comprehensive loss (48,331) (7,039,490)

Total stockholders' equity 175,608,567 168,325,821

Total Liabilities and Stockholders' Equity $ 371,204,605 $ 353,964,153

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

INCOME

(Unaudited)

Three months ended December 31,

2020 2019

Real estate sales $ 2,755,262 $ 2,304,244

Less: Sales tax (23,538) (39,233)

Cost of real estate sales (1,853,642) (1,705,612)

Gross profit 878,082 559,399

Operating expenses

Selling and distribution expenses 79,345 200,168

General and administrative expenses 305,925 588,839

Total operating expenses 385,270 789,007

Operating income (loss) 492,812 (229,608)

Interest income (expense), net 2,826 (17,253)

Other expense, net (105,858) -

Income (loss) before income taxes 389,780 (246,861)

Provision for income taxes 98,193 10,520

Net income (loss) 291,587 (257,381)

Other Comprehensive income (loss)

Foreign currency translation adjustment 6,991,159 4,380,862

Comprehensive income $ 7,282,746 $ 4,123,481

Basic and diluted income (loss) per commonshare

Basic and diluted $ 0.01 $ (0.01)

Weighted average common shares outstanding

Basic and diluted 22,525,000 22,525,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HGS REAL ESTATE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Accumulated Common Stock Additional Statutory Retained Other

Comprehensive

Shares Amount Paid-in Capital Surplus Earnings Loss Total

Balance at September 30, 2019 22,525,000 $ 22,525 $ 129,930,330 $ 10,360,251 $ 34,070,767 $ (15,683,723) $ 158,700,150

Net loss for the period - - - - (257,381) - (257,381)

Foreign currency translation - - - - - 4,380,862 4,380,862adjustments

Balance at December 31, 2019 22,525,000 $ 22,525 $ 129,930,330 $ 10,360,251 $ 33,813,386 $ (11,302,861) $ 162,823,631(Unaudited)

Balance at September 30, 2020 22,525,000 $ 22,525 $ 129,930,330 $ 10,458,395 $ 34,954,061 $ (7,039,490) $ 168,325,821

Net income for the period - - - - 291,587 - 291,587

Foreign currency translation - - - - - 6,991,159 6,991,159adjustments

Balance at December 31,2020 22,525,000 $ 22,525 $ 129,930,330 $ 10,458,395 $ 35,245,648 $ (48,331) $ 175,608,567(Unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three months ended December 31,

2020 2019

Cash flows from operating activities

Net income (loss) $ 291,587 $ (257,381)

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:

Deferred tax benefit - (56,480)

Depreciation 12,253 18,767

Changes in operating assets and liabilities:

Contract assets (529,410) 511,335

Advances to vendors - (213,038)

Real estate property development completed 1,853,642 1,472,443

Real estate property under development (1,297,396) (961,873)

Other current assets (631,040) (488,722)

Security deposit - 1,596,250

Accounts payables (111,208) 385,617

Other payables 229,180 (1,646)

Contract liabilities (5,191) (32,028)

Customer deposits 1,721,198 1,625,398

Construction deposits - (426)

Accrued expenses - (578,021)

Taxes payables (890,500) (534,574)

Net cash provided by operating activities 643,115 2,485,621

Cash flow from financing activities

Repayments of construction loans - (2,118,584)

Net cash provided by (used in) financing activities - (2,118,584)

Effect of changes of foreign exchange rate on cash and restricted 166,542 116,587cash

Net increase in cash and restricted cash 809,657 483,624

Cash and restricted cash, beginning of period 3,867,536 4,202,117

Cash and restricted cash, end of period $ 4,677,193 $ 4,685,741

Supplemental disclosures of cash flow information:

Interest paid $ 136,674 $ 1,743,380

Income taxes paid $ 63,765 $ 44,786

Representing:

Cash, end of period $ 1,253,331 $ 660,414

Restricted, end of period $ 3,423,862 $ 4,025,327

Total cash and restricted cash, end of period $ 4,677,193 $ 4,685,741

Cash, beginning of period 457,699 263,139

Restricted, beginning of period 3,409,837 3,938,978

Total cash and restricted cash, beginning of period 3,867,536 4,202,117

Non-cash financing activities:

Reclassification of interest payable to construction loan 1,608,606 -

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SOURCE China HGS Real Estate Inc.