PR Newswire | Aug 16, 2021 04:45PM EDT

08/16 15:45 CDT

China HGS Announces First Nine Months of Fiscal 2021 Financial Results HANZHONG, China, Aug. 16, 2021

HANZHONG, China, Aug. 16, 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, announced its interim financial results for the first nine months of fiscal 2021 ended June 30, 2021.

Third Quarter Fiscal 2021 Highlights

* Total revenues for the third quarter of fiscal 2021 were approximately $31.8 million, representing an increase of 944.6% from approximately $3.0 million in the same quarter of fiscal 2020 due to more gross floor area sold during the current quarter. * Net income for the third quarter of fiscal 2021 totaled approximately $3.6 million, significantly increased from net loss of approximately $2.6 million in the same period of last year. * Basic and diluted net income per share for the third quarter of fiscal 2021 increased to $0.14, compared to net loss per share of $0.11 for the same quarter of the last year.

First Nine Months of Fiscal 2021 Highlights

* Total revenues for the first nine months of fiscal 2021 were approximately $52.9 million, representing an increase of 630.0% from approximately $7.2 million in the same period of fiscal 2020. * Net income for the first nine months of fiscal 2021 totaled approximately $6.1 million, significantly increased from net loss of approximately $3.5 million in the same period of last year. * Basic and diluted net income per share for the first nine months of fiscal 2021 increased to $0.26, compared to net loss per share of $0.15 for the same period of the last year.

Safe Harbor Statement

This 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

(Unaudited)

June 30, September 30,

2021 2020

ASSETS (Unaudited)

Cash $ 324,497 $ 457,699

Restricted cash 3,382,086 3,409,837

Contract assets 12,645,871 14,255,328

Real estate property development completed 92,799,351 94,671,258

Other assets 9,250,111 8,132,555

Property, plant and equipment, net 563,086 571,330

Security deposits 1,951,204 1,855,506

Real estate property under development 263,416,787 227,741,017

Due from local governments for real estate property development completed 3,017,624 2,869,623

Total assets $ 387,350,617 $ 353,964,153

LIABILITIES AND STOCKHOLDERS' EQUITY

Construction loans $ 119,391,636 $ 109,937,408

Accounts payable 20,128,624 25,415,352

Other payables 4,659,605 4,028,048

Construction deposits 3,338,078 3,202,730

Contract liabilities 2,082,108 1,847,685

Customer deposits 22,814,868 19,405,528

Accrued expenses 1,879,321 1,920,370

Taxes payable 22,982,722 19,881,211

Total liabilities 197,276,962 185,638,332

Commitments and contingencies



Stockholders' equity

Common stock, $0.001 par value, 50,000,000 shares authorized, 25,617,807 and22,525,693 25,617 22,525shares issued and outstanding June 30, 2021 and September 30, 2020,respectively

Additional paid-in capital 136,522,128 129,930,330

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

Retained earnings 41,095,539 34,954,061

Accumulated other comprehensive income (loss) 1,971,976 (7,039,490)

Total stockholders' equity 190,073,655 168,325,821

Total Liabilities and Stockholders' Equity $ 387,350,617 $ 353,964,153

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three months ended June 30, Nine months ended June 30,

2021 2020 2021 2020

Real estate $ 31,824,097 $ 3,046,430 $ 52,857,471 $ 7,240,503sales

Less: Sales (197,537) (29,222) (336,241) (95,503)tax

Impairmentlosses on realestate - (2,703,031) - (2,703,031)propertydevelopmentcompleted

Cost of real (25,296,688) (1,728,217) (41,624,594) (4,900,210)estate sales

Gross profit 6,329,872 (1,414,040) 10,896,636 (458,241)

Operatingexpenses

Selling anddistribution 81,002 77,404 177,168 477,962expenses

General andadministrative 1,411,151 973,318 2,260,410 2,381,572expenses

Totaloperating 1,492,153 1,050,722 2,437,578 2,859,534expenses

Operating 4,837,719 (2,464,762) 8,459,058 (3,317,775)income (loss)

Interestincome 2,857 (16,171) 6,394 (49,010)(expense), net

Other expense (1,354) (58,380) (273,782) (155,109)

Income (loss)before income 4,839,223 (2,539,313) 8,191,671 (3,521,894)taxes

Provision(benefit) for 1,210,569 35,860 2,050,193 (65,319)income taxes

Net income 3,628,654 (2,575,173) 6,141,478 (3,456,575)(loss)

Othercomprehensiveincome (loss)

Foreigncurrency 2,757,738 363,273 9,011,466 1,920,990translationadjustment

Comprehensive $ 6,386,392 $ (2,211,900) $ 15,152,944 $ (1,535,585)income (loss)

Basic anddiluted income(loss) percommon share

Basic and $ 0.14 $ (0.11) $ 0.26 $ (0.15)diluted

Weightedaverage commonsharesoutstanding

Basic and 25,102,455 22,525,693 23,378,298 22,525,693diluted

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

CHINA HGS REAL ESTATE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

Accumulated Common Stock Additional Statutory Retained Other

Comprehensive

Shares Amount Paid-in Capital Surplus Earnings Income (loss) Total

Balance at September 30, 2019 22,525,693 $ 22,525 $ 129,930,330 $ 10,360,251 $ 34,070,767 $ (15,683,723) $ 158,700150

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

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

Balance at December 31, 2019 22,525,693 22,525 129,930,330 10,360,251 33,189,365 (11,302,861 162,823,631

Net (loss) for the period - - - - (624,021) - (624,021)

Foreign currency translation adjustments - - - - - (2,823,145 (2,823,145

Balance at June 30,2020 22,525,693 22,525 129,930,330 10,360,251 33,189,365 (14,126,006) 159,376,465

Net (loss) for the period - - - - (2,575,173) - (2,575,173)

Foreign currency translation adjustments - - - - - 363,273 363,273

Balance at June 30, 2020 22,525,693 $ 22,525 $ 129,930,330 $ 10,360,251 $ 30,614,365 $ (13,762,733) $ 157,164,565

Balance at September 30, 2020 22,525,693 $ 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 adjustments - - - - - 6,991,159 6,991,159

Balance at December 31, 2020 22,525,693 22,525 129,930,330 $ 10,458,395 35,245,648 (48,331) 175,608,567

Net income for the period - - - - 2,221,237 - 2,221,237

Foreign currency translation adjustments - - - - - (737,431) (737,431)

Balance at June 30,2021 22,525,693 22,525 129,930,330 10,458,395 37,466,885 (785,762) 177,092,373

Issuance of stock for settlement of accounts 3,092,114 3,092 6,591,798 - - - 6,594,890payable

Net income for the period - - - - 3,628,654 - 3,628,654

Foreign currency translation adjustments - - - - - 2,757,738 2,757,738

Balance at June 30, 2021 25,617,807 $ 22,525 $ 136,522,128 $ 10,458,395 $ 41,095,539 $ 1,971,976 $ 190,073,655

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

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine months ended June 30,

2021 2020

Cash flows from operating activities

Net income (loss) $ 6,141,478 $ (3,456,575)

Adjustments to reconcile net income (loss) tonet cash provided by (used in) operatingactivities:

Deferred tax provision (benefit) - (266,319)

Depreciation 37,342 56,366

Impairment losses on real estate property - 2,703,031development completed

Changes in operating assets and liabilities:

Contract assets 2,321,807 12,600,352

Real estate property development completed 6,688,702 (7,549,755)

Real estate property under development (19,949,297) (4,393,458)

Other current assets (691,310) (1,170,228)

Security deposit 4,761,043

Accounts payables 61,717 (657,012)

Other payables 419,675 150,939

Contract liabilities 137,771 (139,990)

Customer deposits 2,385,004 1,785,335

Construction deposits (29,542) (426)

Accrued expenses (631,420)

Taxes payables 2,224,269 (1,979,971)

Net cash (used in) provided by operating (252,384) 1,811,912activities

Cash flow from financing activities

Repayments of construction loans - (2,405,349)

Net cash (used in) financing activities - (2,405,349)

Effect of changes of foreign exchange rate on 91,431 184,993cash and restricted cash

Net (decrease) in cash and restricted cash (160,953) (408,444)

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

Cash and restricted cash, end of period $ 3,706,583 $ 3,793,673

Supplemental disclosures of cash flowinformation:

Interest paid $ 2,014,791 $ 5,142,658

Income taxes paid $ 265,149 $ 504,064

Reconciliation to amounts on condensedconsolidated balance sheets:

Cash $ 324,497 $ 516,272

Restricted 3,382,086 3,277,401

Total cash and restricted cash $ 3,706,583 $ 3,793,673

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 $ 3,867,536 $ 4,202,117period

Non-cash financing activities:

Reclassification of interest payable to $ 3,269,932 $ -construction loan

Real estate sales for settlements in real $ (14,503,991) $ -estate property under development

Issuance of stock for settlement of accounts $ 6,594,890 $ -payable

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

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SOURCE China HGS Real Estate Inc.