Ossen Innovation Announces Unaudited Financial Results for the Six Months Ended June 30, 2020

SHANGHAI,Aug. 27,2020 -- Ossen Innovation Co.,Ltd. ("Ossen Innovation" or the "Company") (Nasdaq: OSN),a China-based manufacturer of an array of plain surface,rare earth and zinc coated pre-stressed steel materials,today announced its financial results for thesix months ended June 30,2020.

"Because of the COVID-19 pandemic and China's economicslowdown during the first half of 2020,our top line decreased slightly. Nonetheless,our gross margin increased to 18.7% as we managed to lower our cost," stated Dr.Liang Tang,Chairman of Ossen Innovation. "Looking ahead,with the anticipated recovery of China's infrastructure investment and economic rebound,we are cautiously optimistic to see recovery in infrastructure investment in the construction industry."

Six Months Ended June 30,2020Financial Results

For the Six Months Ended June 30,

($ millions,except per share data)

2020

2019

% Change

Revenues

$54.9

$65.1

-15.7%

Gross profit

$10.3

$10.1

1.4%

Gross margin

18.7%

15.6%

3.1%

Operating income

$7.8

$7.3

6.9%

Operating margin

14.3%

11.2%

3.1%

Net income attributable to Ossen Innovation

$5.3

$5.6

-6.7%

EPS

$0.27

$0.29

-6.9%

For the six months ended June 30,2020,revenues decreasedby $10.2 million,or 15.7%,to $54.9million from $65.1 million for the same period of last year. This decreasewas mainly attributable to the decreasein rare earth coated,zinc coated products and other products,partially offset by the increasein plain surface products.

Gross profitincreasedby $0.2million,or 1.4%,to $10.3million for the six months ended June 30,2020 from $10.1million for the same period of last year. Gross margin increasedby 3.1percentage pointsto 18.7% for the six months ended June 30,2020from 15.6% for the same period of last year. The increase of gross margin was due to the improvement of the profitability of almost all products in our portfolio.

Selling expenses increased by $38,512,or 29.4%,to $169,438 for the six months ended June 30,2020from $130,926 for the same period of last year. The increase was due to higher freight expenses. General and administrative expenses decreasedby $0.4million,or 14.7%,to $2.3million for the six months ended June 30,2020 from $2.7million for the same period of last year.

As a result,total operating expenses decreasedby $0.35million,or 12.6%,to $2.5 million for the six months ended June 30,2020from $2.8million for the same period of last year.

Operating income increasedby $0.5 million,or 6.9%,to $7.8million for the six months ended June 30,2020from $7.3 million for the same period of last year. The increasein operatingincome was primarily attributable to the increase in gross profitand the decreasein general and administrative expenses. Operating margin was 14.3% for the six months ended June 30,compared to 11.2% for the same period of last year.

Net income decreased by $0.3million,or 5.2%,to $5.9million for the six months ended June 30,2020from $6.2million for the same period of last year.

After deducting net income attributable to non-controlling interest,net income attributable to Ossen Innovation decreased by $0.4million,or 6.7%,to $5.3 million for the six months ended June 30,2020 from $5.7million for the same period of last year. Earnings per share,both basic and diluted,were $0.27for the six months ended June 30,compared to $0.29for the same period of last year.Basic and diluted earnings per ADS were $0.81 for the six months ended June 30,compared with $0.87 for the same period of 2019.

Balance Sheet and Cash Flows

As of June 30,the Company had cash and restricted cash of $11.9million,compared to$8.6 millionatDecember 31,2019. Accounts receivable were $64.3million as of June 30,compared to $72.5million as of December 31,2019. The average days of sales of outstanding ("DSO") were 225 days for the six months ended June 30,compared to 161days for the year of 2019. The increase in average DSO was primarily due to the slower payments from our customers during the first half of 2020 as a result of the impact fromthe pandemic.The balance of prepayment to suppliers for raw materials totaled $75.1million as of June 30,compared to $74.4million at December 31,2019,due to the expectation of increasing demand of raw materials in the second half of 2020. The Company had inventories of $27.2 million as of June 30,compared to $15.1 million at the end of 2019. Total working capital was $133.6million as of June 30,compared to $130.2million at December 31,2019.

Net cash provided byoperating activities was $3.4 million for the six months ended June 30,compared to net cash used in operating activities of $13.5million for the same period of last year. This was primarily due to the decrease in account receivable and less advance to suppliers,partially offset by the increase in inventories. Net cash used in investing activities was $1,127 for the six months ended June 30,compared to $74,216 for the same period of last year. Net cash provided by financing activities was $2.9million for the six months ended June 30,compared to net cash provided by financing activities of $18.8 million for the same period of last year. This was primarily due to the increase in repayments of short-term bank loans.

Recent Developments

On July 24,the Company announced that Pujiang International Group Limited (the "Parent"),aCayman Islandscompany listed inHong Kongwhich indirectly owns 65.9% of the Company,entered into certain facility agreement (the "Agreement") with two financial institutions (the "Lenders"). Pursuant to the Agreement,the Lenders agreed to make a term loan (the "Loan") of up toUS$40 million(with a green shoe option of up toUS$30 million) to the Parent for 24 months for working capital and investment purposes.The Loan may be extended for another 12 months upon approval of the Lenders. The Loan is secured by,among others,the Parent's 65.9% beneficial ownership in the Company,and guaranteed by the Company,its affiliates and the Parent's affiliates,including Dr.Liang Tang,chairman of the board of directors of the Company.

AboutOssen Innovation Co.,Ltd.

Ossen Innovation Co.,Ltd.manufactures and sells a wide variety of plain surface pre-stressed steel materials and rare earth coated and zinc coated pre-stressed steel materials. The Company's products are mainly used in the construction of bridges,as well as in highways and other infrastructure projects. The Company has two manufacturing facilities located in Ma'anshan,Anhui Province,and Jiujiang,Jiangxi Province.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated,including risks outlined in the Company's public filings with theSecurities and Exchange Commission,including the Company's annual report on Form 20-F. All information provided in this press release is as of the date hereof. Except as required by law,the Company undertakes no obligation to update or revise publicly any forward-looking statements,whether as a result of new information,future events or otherwise,after the date on which the statements are made or to reflect the occurrence of unanticipated events.

For more information,please contact:

Ossen Innovation Co.,Ltd.

Wei Hua,Chief Executive Officer

Email: int.tr@ossengroup.com

Phone: +86-21-6888-8886

Investor Relations

GCI IR

Phone: +1-347-393-4230

Email: info@goldenir.com

June 30,

December 31,

2020

2019

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$

1,454,063

$

2,576,677

Restricted cash

10,403,397

6,025,718

Accounts receivable,net of allowance for doubtful accounts of

$705,731 and $ $1,253,571 at June 30,2020 and December 31,respectively

64,307,044

72,544,202

Inventories

27,204,367

15,100,328

Advance to suppliers

75,109,128

74,391,886

Other current assets

714,326

24,643

Accounts receivable - related parties

570,271

536,358

Total Current Assets

179,762,596

171,199,812

Property,plant and equipment,net

2,687,522

2,948,264

Land use rights,net

4,098,030

3,288,959

Deferred tax assets

148,063

206,002

TOTAL ASSETS

$

186,696,211

$

177,643,037

June 30,

2020

2019

(Unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Notes payable – bank acceptance notes

$

10,898,797

$

8,895,107

Short-term bank loans

17,622,081

17,072,867

Accounts payable

2,874,300

951,358

Customer deposits

6,226,397

3,131,916

Income tax payable

906,569

1,417,176

Other payables and accrued expenses

3,634,493

3,875,529

Customer deposits - related parties

1,377

3,358,897

Due to related parties

2,646,172

2,297,639

Total Current Liabilities

46,116,186

41,000,489

Long-term bank loans

6,015,570

6,097,453

TOTAL LIABILITIES

52,756

47,942

Shareholders' Equity

Ordinary shares,$0.01 par value: 100,000 shares authorized,

20,000 shares issued; 19,791,110 shares outstanding as of

June 30,respectively

200,000

200,000

Additional paid-in capital

33,971,455

33,455

Statutory reserve

9,661,185

9,043,010

Retained earnings

83,130,110

78,484,535

Treasury stock,at cost: 208,890 shares as both of June 30,2020

and December 31,2019

(192,153)

(192,153)

Accumulated other comprehensive loss

(7,624,205)

(5,789,815)

TOTAL SHAREHOLDERS' EQUITY

119,146,392

115,717,032

Non-controlling interest

15,418,063

14,828,063

TOTAL EQUITY

134,564,455

130,545,095

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

186,037

FOR THE SIX MONTHS ENDED JUNE 30,

2020

2019

REVENUES

$

54,850,700

$

65,078,854

COST OF GOODS SOLD

44,587,771

54,957,652

GROSS PROFIT

10,262,929

10,121,202

Operating Expenses:

Selling and distribution expenses

169,438

130,926

General and administrativeexpenses

2,276,815

2,678,356

Total Operating Expenses

2,446,253

2,809,282

INCOME FROM OPERATIONS

7,816,676

7,311,920

Other Income (Expenses):

Financial expenses,net

(1,570,173)

(731,974)

Other income,net

34,881

45,226

INCOME BEFORE INCOME TAXES

6,281,384

6,625,172

INCOME TAXES

(427,634)

(448,781)

NET INCOME

5,853,750

6,176,391

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

590,000

532,394

NET INCOME ATTRIBUTABLE TO OSSEN INNOVATION CO.,LTD

AND SUBSIDIARIES

5,263,750

5,997

OTHER COMPREHENSIVE LOSS

Foreign currency translation loss,net of tax

(1,834,390)

(252,155)

TOTAL OTHER COMPREHENSIVE LOSS

(1,390)

(252,155)

COMPREHENSIVE INCOME

3,429,360

5,842

EARNINGS PER ORDINARY SHARE

Basic and diluted

$

0.27

$

0.29

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING

Basic and diluted

$

19,110

$

19,110

Total Ossen Innovation Co.,Ltd. Shareholders' Equity

Ordinary Shares

$0.01 Par Value

Treasury Stock

Additional Paid-in

Capital

Accumulated Other

Comprehensive Income

Statutory Reserve

Retained

Earnings

Non Controlling

Interest

Total

Shares

Amount

Shares

Amount

Balance at December 31,2019

20,000

200,000

(208,890)

(192,153)

33,455

(5,815)

9,010

78,535

14,063

130,095

Net income

-

-

-

-

-

-

-

5,750

590,000

5,750

Transfer to statutory reserve

-

-

-

-

-

-

618,175

(618,175)

-

-

Foreign currency translation adjustment

-

-

-

-

-

(1,390)

-

-

-

(1,390)

Balance atJune 30,2020

20,000

$

200,890)

$

(192,153)

$

33,455

$

(7,205)

$

9,185

$

83,110

$

15,063

$

134,455

Six MonthsEnded June30,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

5,750

$

6,391

Adjustments to reconcile net income to net cash provided by/ (used in) operating activities:

Depreciation and amortization

275,652

309,983

Changes in operating assets and liabilities:

(Increase) Decrease In:

Accounts receivable

8,237,159

4,897,473

Inventories

(12,104,038)

7,599,204

Advance to suppliers

(717,242)

(31,704,863)

Other current assets

(689,684)

3,043

Accounts receivable - related parties

(33,913)

(801,511)

Deferred tax assets

57,939

5,814

Increase (Decrease) In:

Accounts payable

1,922,942

2,879,547

Customer deposits

3,094,481

353,627

Income tax payable

(510,606)

(277,676)

Other payables and accrued expenses

(241,036)

(99,840)

Customer deposits - related parties

(2,051,520)

(3,740,404)

Due to related parties

348,532

2,559,998

Due to shareholder

-

(1,695,259)

Net cash provided by/ (used in) operating activities

3,442,416

(13,534,473)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of plant and equipment

(1,127)

(74,216)

Net cash used in investing activities

(1,127)

(74,216)

Six MonthsEnded June30,

2020

2019

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loans

44,091,837

28,495,089

Repayments of short-term bank loans

(43,030)

(8,489,469)

Proceeds from notes payable-bank acceptance notes

3,567,301

1,476,429

Repayment of notes payable-bank acceptance notes

(1,426,920)

(2,657,573)

Net cash provided by financing activities

2,925,188

18,824,476

INCREASE (DECREASE) IN CASH,CASH EQUIVALENTS,AND RESTRICTED CASH

6,366,477

5,215,785

Effect of exchange rate changes on cash,cash equivalents,and restricted cash

(3,111,412)

(485,440)

Cash,cash equivalents and restricted cash at beginning of period

8,602,395

8,052

CASH,CASH EQUIVALENTS AND RESTRICTED CASHAT END OF PERIOD

$

11,857,460

$

12,397

SUPPLEMENTARY CASH FLOW INFORMATION

Cash paid during the periods:

Income taxes paid

$

867,580

$

1,102,556

Interest paid

$

1,798

$

735,675

Non-cash transactions:

Appropriation to statutory reserve

$

618,175

$

645,941

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