CLPS Incorporation Reports Financial Results for the Second Half and Full Year of Fiscal 2020

HONG KONG,Oct. 23,2020 -- CLPS Incorporation (the "Company" or "CLPS") (Nasdaq: CLPS),today announced its financial results for the six months ended June 30,2020 and full year of fiscal year 2020.

Second Half of Fiscal 2020 Highlights (all results compared to the six months ended June 30,2019)

Revenues increased by 37.2% to $46.8 million from $34.1 million.

Gross profit increased by 25.1% to $15.7 million from $12.6 million.

Net income attributable to CLPS Incorporation's shareholders was $0.6 million,or $0.04 basic and diluted earnings per share,compared to net loss attributable to CLPS Incorporation's shareholders of $1.8 million,or $0.13 basic and diluted losses per share.

Non-GAAP net income attributable to CLPS Incorporation's shareholders1 increased by 200.9% to $3.5 million,or $0.23 basic and diluted earnings per share,compared to $1.2 million,or $0.08 basic and diluted earnings per share (See Use of Non-GAAP Financial Measures below for a discussion of such measures as used in this press release).

Fiscal Year 2020 Highlights (all results compared to the twelve months ended June 30,2019)

Revenues increased by 37.7% to $89.4 million from $64.9 million.

Gross profit increased by 31.0% to $31.1 million from $23.8 million.

Net income attributable to CLPS Incorporation's shareholders was $2.9 million,or $0.20 basic and diluted earnings per share,compared to net loss attributable to CLPS Incorporation's shareholders of $3.3 million,or $0.24 basic and diluted losses per share.

Non-GAAP net income attributable to CLPS Incorporation's shareholders1 increased by 85.3% to $6.9 million,or $0.47 basic and diluted earnings per share,compared to $3.7 million,or $0.27 basic and diluted earnings per share (See Use of Non-GAAP Financial Measures below for a discussion of such measures as used in this press release).

Mr. Raymond Lin,Co-Founder and Chief Executive Officer of CLPS,commented,"As the disruption from the COVID-19 pandemic persists,the health and safety of our employees and their families,as well as our customers and business partners,have been and will continue to be our top priority. Despite the current circumstances,we are pleased to see stable growth in the second half and full year of fiscal 2020 in both our international and local markets. This year,we acquired Ridik to further expand our business in the Southeast Asia; in addition,we opened CLPS California,which will support our U.S. market. Locally,we have invested in Shenzhen Huaqin Robotics and Guangdong Zhichuang Software Technology to further enrich our business services and to provide better service to our clients."

"Cultivating young talent has always been important to us. We are currently cooperating with Technological and Higher Education Institute of Hong Kong and its information technology program to maintain a robust applicant pool and recruit young talent to join our company."

"Going forward,we will continue to expand our business and grow our market share,both internationally and locally. We hope to achieve sustainable,high-quality growth for CLPS as we create long-term value for our shareholders."

Ms. Rui Yang,acting Chief Financial Officer of CLPS,"During the second half and full year of fiscal 2020,we are pleased to announce that our revenue increased by double digits year-over-year,by 37.2% and 37.7%,respectively. Net income attributable to CLPS Incorporation's shareholders was $0.6 million in the second half and $2.9 million in the full year of fiscal 2020. Our basic and diluted earnings per share in the second half of fiscal 2020 was $0.04,and $0.20 for the full-year fiscal 2020. Our non-GAAP basic and diluted earnings per share in the second half of fiscal year 2020 was $0.23,and $0.47 for the full year of fiscal 2020. With our strong balance sheet and outstanding services,we are fully confident in our ability to deliver sustainable value for our shareholders."

Second Half and Fiscal Year 2020 Financial Results

Revenues

In the second half of fiscal 2020,revenues increased by $12.7 million,or 37.2%,to $46.8 million from $34.1 million in the prior year period. For the year ended June 30,2020,revenues increased by $24.5 million,or 37.7%,to $89.4 million from $64.9 million in the prior year period. This increase in revenue was mainly due to an increase in revenue from IT consulting services.

Thenumber of clients increased by 53,or 30.5%,to 227 for the year ended June 30,2020 from 174 in the prior year period. Revenues from top five clients accounted for 47.3% and 50.7% of the Company's total revenues for fiscal 2020 and 2019,respectively,which reflects decreased in revenue dependence from major clients.

Revenues by Service

Revenue from IT consulting services increased by $13.5 million,or 42.3%,to $45.5 million and accounted for 97.2% of total revenue in the second half of fiscal 2020,up from $32.0 million,or 93.7% of total revenue,in the prior year period. For the year ended June 30,revenue from IT consulting services increased by $25.3 million,or 41.1%,to $87.1 million and accounted for 97.5% of total revenue,up from $61.8 million,or 95.1% of total revenue,in the prior year period. The increase was due to increased demand for the Company's IT consulting service from banks and other financial institutions,primarily from existing clients. For the twelve months ended June 30,2020 and 2019,40.0% and 47.5% of IT consulting services revenue were from international banks,respectively.

Revenue from customized IT solution services decreased by $1.0 million,or 45.4%,to $1.1 million in the second half of fiscal 2020 from $2.1 million. Revenue from customized IT solution services decreased by $1.2 million,or 39.3%,to $1.8 million for the year ended June 30,from $3.0 million in the same period of the previous year. The decrease was primarily due to decreasing demand from existing clients.

Revenue from other services increased to $0.2 million in the second half of fiscal year 2020 from $0.04 million in the prior year period. Revenue from other services increased by $0.3 million,or 219.0%,to $0.4 million for the year ended June 30,from $0.1 million in the prior year period.

Revenues by Operational Areas

Revenue from banking area increased by $11.4 million,or 34.3% to $44.5 million for the year ended June 30,from $33.1 million in the prior year period. Revenue from banking area accounted for 49.8% and 51.2% of total revenues in fiscal 2020 and fiscal 2019,respectively.

Revenue from wealth management area increased by $4.7 million,or 32.6% to $19.2 million for the year ended June 30,from $14.5 million in the prior year period. Revenue from wealth management area accounted for 21.5% and 22.4% of total revenues in fiscal 2020 and fiscal 2019,respectively.

Revenue from e-Commerce area increased by $2.4 million,or 27.8% to $11.1 million for the year ended June 30,from $8.7 million in the prior year period. Revenue from e-Commerce area accounted for 12.4% and 13.4% of total revenues in fiscal 2020 and fiscal 2019,respectively.

Revenue from automotive area increased by $1.6 million,or 77.3% to $3.6 million for the year ended June 30,from $2.0 million in the prior year period. Revenue from automotive area accounted for 4.1% and 3.2% of total revenues in fiscal 2020 and fiscal 2019,respectively.

Revenues by Geography

Revenue generated outside of mainland China increased by 110.0% to $6.3 million in the second half of fiscal year 2020 from $3.0 million in the prior year period. Revenue generated outside of mainland China increased by 133.2% to $10.6 million for the year ended June 30,2020 from $4.5 million in the prior year period,accounted for 11.8% of total revenue compared to 7.0% in the prior year period. The increase in revenue generated outside mainland China reflects the Company's successful and continuous global expansion strategy.

Gross Profit and Gross Margin

Gross profit increased by $3.2 million,or 25.1%,to $15.7 million in the second half of fiscal 2020 from $12.6 million in the prior year period. Gross margin in the second half of fiscal 2020 decreased to 33.6% compared to 36.9% in the prior year period. The decrease in gross margin was primarily due to the increase in epidemic prevention cost during the COVID-19 outbreak.

Gross profit increased by $7.3 million,or 31.0%,to $31.1 million for the year ended June 30,from $23.8 million in the prior year period. Gross margin decreased to 34.8% for the year ended June 30,compared to 36.6% in the prior year period. The decrease in gross margin was primarily due to the increase in epidemic prevention cost during the COVID-19 outbreak.

Operating Expenses

Selling and marketing expenses increased by $0.5 million,or 37.3%,to $1.7 million in the second half of fiscal 2020 from $1.2 million in the prior year period. Selling and marketing expenses increased by $0.9 million,or 40.4%,to $3.1 million for the year ended June 30,from $2.2 million in the prior year. The increase was due to the increase of salary expenses as new staffs were hired,enabling the implementation of the Company's global expansion strategy.

Research and development expenses increased by $0.5 million,or 9.7%,to $5.4 million in the second half of fiscal 2020 from $4.9 million in the prior year period. Research and development expenses increased by $2.4 million,or 30.8%,to $10.4 million for the year ended June 30,2020 from $8.0 million in the prior year period. The increase primarily resulted from the establishment of four new research projects and the Company's continued R&D efforts in big data,blockchain,and artificial intelligence (AI).

General and administrative expenses increased by $0.2 million,or 2.7%,to $8.4 million in the second half of fiscal 2020 from $8.2 million in the prior year period. After excluding the impact of non-cash share-based compensation expenses,non-GAAP general and administrative expenses2increased by $0.4 million,or 8.0%,to $5.7 million in the second half of fiscal 2020 from $5.3 million in the same period of the previous year. The increase in non-GAAP administrative expenses was primarily due to an increase in administrative personnel and M&A related expenses as a result of business expansion.

General and administrative expenses decreased by $1.1 million,or 6.0%,to $16.3 million for the year ended June 30,from $17.4 million in the prior year period. The decrease was primarily due to the decrease of $3.2 million non-cash share-based compensation expenses. After the deduction of non-cash share-based compensation expenses,non-GAAP general and administrative expenses2increased by $2.1 million,or 20.5%,to $12.6 million for the year ended June 30,from $10.4 million in the same period of the previous year. The increase in non-GAAP administrative expenses was primarily due to an increase in administrative personnel and M&A related expenses as a result of business expansion.

Operating Income/Loss

Operating income increased by $1.82 million to $0.04 million in the second half of fiscal 2020 from a loss of $1.78 million in the same period of the previous year. Operating margin was 0.1% in the second half of fiscal 2020,compared to -5.2% in the prior year period.

Operating income increased by $5.1 million to $1.3 million for the year ended June 30,2020 from a loss of $3.8 million in the same period of the previous year. Operating margin was 1.4% for the year ended June 30,compared to -5.8% in the prior year period.

Other Income and Expenses

Total other income,net of other expenses increased to $1.1 million in the second half of fiscal 2020 from $0.1 million in the prior year period.

Total other income,net of other expenses increased to $2.4 million for the year ended June 30,from $0.7 million in the prior year period.

Provision (Benefits) for Income Taxes

Provision for income taxes increased by $0.5 million to $0.4 million in the second half of fiscal 2020 from $0.1 million income tax benefits in the same period of the previous year,mainly due to the reduction in recoverable losses for some of the Company's subsidiaries.

Provision for income taxes was $0.8 million for the year ended June 30,compared to $0.2 million in fiscal 2019,mainly due to the reduction in recoverable losses for some of the Company's subsidiaries.

Net Income/Loss and EPS

Net income for the second half of fiscal 2020 increased by $2.5 million to $0.8 million from a net loss of $1.7 million in the prior year period. After excluding the impact of non-cash share-based compensation expenses,non-GAAP net income3increased by $2.4 million,or 196.7%,to $3.7 million in the second half of fiscal 2020 from $1.3 million in the same period of the previous year. After excluding the impact of non-controlling interests,net income attributable to CLPS Incorporation's shareholders in the second half of fiscal 2020 was $0.6 million,or $0.04 basic and diluted earnings per share. After excluding the impact of non-cash share-based compensation expenses,non-GAAP net income attributable to CLPS Incorporation's shareholders1in the second half of fiscal 2020 was $3.5 million,or $0.23 basic and diluted earnings per share. This is compared to non-GAAP net income attributable to CLPS Incorporation's shareholders of $1.2 million,or $0.08 basic and diluted earnings per share,in the second half of fiscal 2019.

Net income for the year ended June 30,2020 increased by $6.5 million to $3.1 million from a net loss of $3.4 million in the prior year period. The increase in net income was due to the decrease in non-cash share-based compensation expenses. After the deduction of non-cash share-based compensation expenses,non-GAAP net income3increased by $3.5 million,or 97.7%,to $7.1 million for the year ended June 30,from $3.6 million in the same period of the previous year. After the deduction of non-controlling interests,net income attributable to CLPS Incorporation's shareholders for the year ended June 30,was $2.9 million,or $0.20 basic and diluted earnings per share. After excluding the impact of non-cash share-based compensation expenses,non-GAAP net income attributable to CLPS Incorporation's shareholders1for the year ended June 30,was $6.9 million,or $0.47 basic and diluted earnings per share. This is compared to non-GAAP net income attributable to CLPS Incorporation's shareholders of $3.7 million,or $0.27 basic and diluted earnings per share,in the prior year period.

Cash Flow

As of June 30,the Company had cash and cash equivalents of $12.7 million compared to $6.6 million as of June 30,2019.

Net cash provided by operating activities was approximately $5.9 million for the twelve months ended June 30,2020. Net cash provided by investing activities was approximately $0.2 million. Net cash provided by financing activities was approximately $0.1 million. The effect of exchange rate change on cash was approximately negative $0.2.The Company believes that its current cash position and cash flow from operations are sufficient to meet its anticipated cash needs for at least the next 12 months.

Financial Outlook

For fiscal year 2021,the Company expects,absent material acquisitions or non-recurring transactions,total sales growth in the range of approximately 30% to 35%,non-GAAP net income growth in the range of approximately 32% to 37% compared to fiscal year 2020 financial results.

This forecast reflects the Company's current and preliminary views,which are subject to change and are subject to risks and uncertainties,including,but not limited to,potential accounting adjustments attributable to Ridik Pte. Ltd. acquisition as well as various risks and uncertainties facing the Company's business and operations as identified in its public filings.

Exchange Rate

The balance sheet amounts with the exception of equity as of June 30,were translated at 7.0651 RMB to 1.00 USD compared to 6.8650 RMB to 1.00 USD as of June 30,2019. The equity accounts were stated at their historical rate. The average translation rates applied to the income statements accounts for the periods ended June 30,2020 and 2019 were 7.0309 RMB to 1.00 USD and 6.8211 RMB to 1.00 USD,respectively. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S,dollar terms without giving effect to any underlying change in our business or results of operation.

Conference Call Information

The Company will hold a conference call at 8:30 am ET on October 23,2020 to discuss second half and full year of fiscal 2020 results. Listeners may access the call by dialing:

U.S. Toll-Free:

+1-888-394-8218

U.S. Local /International:

+1-323-794-2588

Mainland China:

400 120 8590

Hong Kong:

800 961 384

To access the live webcast of the conference call,please visit this link. The live and archived webcast will also be available through the Company's investor relations website at http://ir.clpsglobal.com.

A replay of the call will be available through November 6,2020 by dialing:

U.S. Toll-Free:

+1-844-512-2921

U.S. Local/International:

+1-412-317-6671

Passcode:

1612001

About CLPS Incorporation

Headquartered in Hong Kong,CLPS Incorporation (the "Company") (Nasdaq: CLPS) is a global leading information technology ("IT"),consulting and solutions service provider focusing on the banking,insurance and financial sectors. The Company serves as an IT solutions provider to a growing network of clients in the global financial industry,including large financial institutions in the US,Europe,Australia,Southeast Asia and Hong Kong,and their PRC-based IT centers. The Company maintains 18 delivery and/or research & development centers to serve different customers in various geographic locations. Mainland China centers are located in Shanghai,Beijing,Dalian,Tianjin,Baoding,Chengdu,Guangzhou,Shenzhen,Hangzhou,and Suzhou. The remaining eight global centers are located in Hong Kong SAR,USA,UK,Japan,Singapore,Malaysia,and India. For further information regarding the Company,please visit: http://ir.clpsglobal.com/,or follow CLPS on Facebook,LinkedIn,and Twitter.

Forward-Looking Statements

Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as amended. Forward-looking statements include statements with respect to the Company's beliefs,plans,objectives,goals,expectations,anticipations,assumptions,estimates,intentions,and future performance,and involve known and unknown risks,uncertainties and other factors,which may be beyond the Company's control,and which may cause the actual results,performance,capital,ownership or achievements of the Company to be materially different from future results,performance or achievements expressed or implied by such forward-looking statements. All such statements attributable to us are expressly qualified in their entirety by this cautionary notice,without limitation,those risks and uncertainties related to the Company's financial and operational performance in the second half and full year of fiscal 2020,its expectations of the Company's future performance,its preliminary outlook and guidance offered in this presentation,as well as the risks and uncertainties described in the Company's most recently filed SEC reports and filings. Such reports are available upon request from the Company,or from the Securities and Exchange Commission,including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update,revise or correct any of the forward-looking statements after the date hereof,or after the respective dates on which any such statements otherwise are made.

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"),except that the consolidated statement of changes in shareholders' equity,consolidated statements of cash flows,and the detailed notes have not been presented. The Company uses non-GAAP operating income,non-GAAP operating margin,non-GAAP net income attributable to CLPS Incorporation's shareholders,and basic and diluted non-GAAP net income per share,which are non-GAAP financial measures. Non-GAAP operating income is operating income excluding share-based compensation expenses. Non-GAAP operating margin is non-GAAP operating income as a percentage of revenues. Non-GAAP net income attributable to CLPS Incorporation's shareholders is net income attributable to CLPS Incorporation's shareholders excluding share-based compensation expenses. Basic and diluted non-GAAP net income per share is non-GAAP net income attributable to common shareholders divided by weighted average number of shares used in the calculation of basic and diluted net income per share. The Company believes that separate analysis and exclusion of the non-cash impact of share-based compensation expenses clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning,forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the effect of non-cash share-based compensation expenses,which have been and will continue to be significant recurring expenses in its business. However,the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company's net income for the period. In addition,because non-GAAP financial measures are not measured in the same manner by all companies,they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations,you should not consider non-GAAP financial measure in isolation from or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from,or as a substitute for,the financial information prepared and presented in accordance with U.S. GAAP. The Company encourages investors to carefully consider its results under GAAP,as well as its supplemental non-GAAP information and the reconciliation between these presentations,to more fully understand its business. For more information on these non-GAAP financial measures,please see the table captioned "Reconciliations of Non-GAAP and GAAP Results" near the end of this release.

Oct. 23,2020

Errata: “The effect of exchange rate change on cash was approximately negative $0.2.” should have been “The effect of exchange rate change on cash was approximately negative $0.2 million.”

Contact:

CLPS Incorporation

Rhon Galicha

Investor Relations Office

Phone: +86-182-2192-5378

Email:ir@clpsglobal.com

1 Non-GAAP net income attributable to CLPS Incorporation's shareholders is a non-GAAP financial measure,which is defined as net income attributable to the Company excluding share-based compensation expenses. Please refer to the section titled "Reconciliation of GAAP and Non-GAAP Results" for details.

2Non-GAAP general and administrative expenses is a non-GAAP financial measure,which is defined as general and administrative expenses excluding share-based compensation expenses. Please refer to the section titled "Reconciliation of GAAP and Non-GAAP Results" for details.

3Non-GAAP net income is a non-GAAP financial measure,which is defined as net income excluding share-based compensation expenses. Please refer to the section titled "Reconciliation of GAAP and Non-GAAP Results" for details.

CLPS INCORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in U.S. dollars ("$"),except for number of shares)

As of June 30,

As of December 31,

2020

(Audited)

2019

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$

12,652,120

$

11,234,260

Short-term investments

636,934

-

Accounts receivable,net

25,753,856

20,857,441

Escrow receivable

-

200,000

Prepayments,deposits and other assets,net

1,280,967

1,998,499

Prepaid income tax

15,780

524,352

Amounts due from related parties

169,185

252,706

Total Current Assets

40,508,842

35,067,258

Property and equipment,net

452,472

471,886

Intangible assets,144,579

1,240,490

Goodwill

2,118,700

2,184,001

Long-term investments

680,131

1,102,691

Prepayments,net

244,387

220,661

Deferred tax assets,net

203,247

251,912

Total Assets

$

45,352,358

$

40,538,899

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Short-term bank loans

$

2,161,239

$

802,514

Accounts payable and other current liabilities

489,043

1,006,896

Tax payables

1,426,614

1,178,472

Contract liabilities

755,178

1,241,706

Salaries and benefits payable

11,522,268

10,789,713

Total Current Liabilities

16,354,342

15,019,301

Long-term bank loans

22,554

-

Deferred tax liabilities

163,163

192,127

Unrecognized tax benefits

194,939

-

TOTAL LIABILITIES

16,734,998

15,211,428

Commitments and Contingencies

Shareholders' Equity

Common stock,$0.0001 par value,100,000,000 shares authorized; 15,930,330

shares issued and outstanding as of June 30,2020; 13,913,201 shares

issued and outstanding as of June 30,2019. *

1,593

1,425

Additional paid-in capital

28,586,048

25,648,785

Statutory reserves

2,803,811

2,331,138

Retained earnings

(2,680,143)

(2,776,767)

Accumulated other comprehensive loss

(1,362,665)

(960,744)

Total CLPS Incorporation's Shareholders' Equity

27,348,644

24,243,837

Non-controlling Interests

1,268,716

1,083,634

Total Shareholders' Equity

28,617,360

25,327,471

Total Liabilities and Shareholders' Equity

$

45,899

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in U.S. dollars ("$"),except for number of shares)

For thesix months ended

June 30,

2020

2019

Revenues

$

46,847,534

$

34,137,189

Less: Cost of revenues (note 1)

(31,104,457)

(21,552,693)

Gross profit

15,743,077

12,584,496

Operating expenses:

Selling and marketing expenses (note 1)

1,655,650

1,206,153

Research and development expenses

5,416,455

4,939,522

General and administrative expenses (note 1)

8,446,840

8,223,126

Other operating expense

187,496

-

Total operating expenses

15,706,441

14,368,801

Income (loss) from operations

36,636

(1,784,305)

Subsidies and other income,163,956

156,352

Other expenses

(77,229)

(30,712)

Income (loss) before income tax and share of loss in equity

investees

1,123,363

(1,658,665)

Provision (benefits) for income taxes

446,601

(56,283)

Income (loss) before share of income in equity investees

676,762

(1,602,382)

Share of income in equity investees,net of tax

107,895

(145,329)

Net income (loss)

784,657

(1,747,711)

Less: Net income attributable to non-controlling interests

215,359

89,434

Net income (loss) attributable to CLPS Incorporation's

shareholders

$

569,298

$

(1,837,145)

Other comprehensive loss (income)

Foreign currency translation loss

$

(432,198)

$

(58,964)

Less: foreign currency translation (loss) gain attributable tonon-

controlling interest

(30,277)

2,052

Other comprehensive loss attributable to CLPS

Incorporation'sshareholders

$

(401,921)

$

(61,016)

Comprehensive income (loss) attributable to

CLPS Incorporation shareholders

$

167,377

$

(1,898,161)

Non-controlling interests

184,562

91,486

$

351,939

$

(1,806,675)

Basic earnings (loss) per common share*

$

0.04

$

(0.13)

Weighted average number of share outstanding – basic

15,169,655

13,889,460

Diluted earnings (loss) per common share*

$

0.04

$

(0.13)

Weighted average number of share outstanding – diluted (note 2)

15,212,010

13,460

Note:

(1) Includes share-based compensation expenses as follows:

Cost of revenues

9,042

9,472

Selling and marketing expenses

181,257

46,100

General and administrative expenses

2,132

2,946,803

(2)All dilutive potential common shares had anti-dilutive impact and were excluded in computation of diluted

earnings per share in the period when loss was reported.

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

RECONCILIATION OF NON-GAAP AND GAAP RESULTS

(Amounts in U.S. dollars ("$"),except for number of shares)

For thesix months ended

June 30,

2020

2019

Cost of revenues

$

(31,457)

$

(21,693)

Less: share-based compensation expenses

9,472

Non-GAAP cost of revenues

$

(31,095,415)

$

(21,543,221)

Selling and marketing expenses

$

1,650

$

1,153

Less: share-based compensation expenses

181,100

Non-GAAP selling and marketing expenses

$

1,474,393

$

1,160,053

General and administrative expenses

$

8,840

$

8,126

Less: share-based compensation expenses

2,803

Non-GAAP general and administrative expenses

$

5,699,708

$

5,276,323

Operating income (loss)

$

36,636

$

(1,305)

Add: share-based compensation expenses

2,937,431

3,002,375

Non-GAAP operating income

$

2,974,067

$

1,218,070

Operating margin

0.1%

(5.2%)

Add: share-based compensation expenses

6.2%

8.8%

Non-GAAP operating margin

6.3%

3.6%

Net income (loss)

$

784,657

$

(1,711)

Add: share-based compensation expenses

2,375

Non-GAAP net income

$

3,722,088

$

1,254,664

Net income (loss) attributable to CLPS Incorporation's

shareholders

$

569,298

$

(1,145)

Add: share-based compensation expenses

2,375

Non-GAAP net income attributable to CLPS

Incorporation's shareholders

3,506,729

1,165,230

$

$

Weighted average number of share outstanding used

in computingGAAP and non-GAAP basic earnings

15,460

GAAP basic earnings (loss) per common share

$

0.04

$

(0.13)

Add: share-based compensation expenses

0.19

0.21

Non-GAAP basic earnings per common share

$

0.23

$

0.08

Weighted average number of share outstanding used

in computingGAAP diluted earnings

15,460

Add: effect of dilutive securities (note 1)

-

184,316

Weighted average number of share outstanding used

in computingnon-GAAP diluted earnings

15,010

14,073,776

GAAP diluted earnings (loss) per common share

$

0.04

$

(0.13)

Add: share-based compensation expenses

0.19

0.21

Non-GAAP diluted earnings per common share

$

0.23

$

0.08

Note:

(1) All dilutive potential common shares had anti-dilutive impact and were excluded in computation of

GAAP diluted earnings per share in the period when loss was reported.

CLPS INCORPORATION

AUDITED CONSOLIDATED BALANCE SHEETS

(Amounts in U.S. dollars ("$"),

2020

2019

ASSETS

Current assets

Cash and cash equivalents

$

12,120

$

6,601,335

Short-term investments

636,934

1,791,697

Accounts receivable,856

19,263,584

Escrow receivable

-

200,028,154

Prepaid income tax

15,780

630,790

Amounts due from related parties

169,185

230,540

Total Current Assets

40,842

29,746,100

Property and equipment,472

566,591

Intangible assets,579

427,769

Goodwill

2,700

447,790

Long-term investments

680,131

914,006

Prepayments,387

222,507

Deferred tax assets,247

338,221

Total Assets

$

45,358

$

32,662,984

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Short-term bank loans

$

2,239

$

2,996

Accounts payable and other current liabilities

489,043

196,832

Tax payables

1,614

915,629

Deferred subsidies

-

109,250

Deferred revenues

-

124,192

Contract liabilities

755,178

-

Salaries and benefits payable

11,268

7,735,487

Total Current Liabilities

16,342

11,266,386

Long-term bank loans

22,163

-

Unrecognized tax benefits

194,998

11,386

Commitments and Contingencies

Shareholders' Equity

Common stock,000 shares authorized;

15,330 shares issued and outstanding as of June 30,2020;

13,201 shares issued and outstanding as of June 30,391

Additional paid-in capital

28,048

24,622

Statutory reserves

2,811

1,833,802

Retained earnings

（2,143)

(4,509,729)

Accumulated other comprehensive loss

（1,665)

(813,650)

Total CLPS Incorporation's Shareholders' Equity

27,644

20,788,436

Non-controlling Interests

1,716

608,162

Total Shareholders' Equity

28,360

21,396,598

Total Liabilities and Shareholders' Equity

$

45,984

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

AUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in U.S. dollars ("$"),except for number of shares)

For the years ended

June 30,

2020

2019

Revenues

$

89,415,798

$

64,932,937

Less: Cost of revenues (note 1)

(58,296,097)

(41,356)

Gross profit

31,119,701

23,754,581

Operating expenses:

Selling and marketing expenses (note 1)

3,059,877

2,179,029

Research and development expenses

10,436,975

7,978,883

General and administrative expenses (note 1)

16,343,936

17,384,393

Total operating expenses

29,840,788

27,542,305

Income (loss) from operations

1,278,913

(3,787,724)

Subsidies and other income,net

2,535,868

779,508

Other expenses

(107,322)

(92,429)

Income (loss) before income tax and share of income (loss) in

equity investees

3,707,459

(3,645)

Provision for income taxes

835,444

186,615

Income (loss) before share of income (loss) in equity investees

2,872,015

(3,287,260)

Share of income (loss) in equity investees,net of tax

207,363

(145,329)

Net income (loss)

3,079,378

(3,432,589)

Less: Net income (loss) attributable to non-controlling interests

141,139

(162,813)

Net income (loss) attributable to CLPS Incorporation's

shareholders

$

2,938,239

$

(3,269,776)

Other comprehensive loss

Foreign currency translation loss

$

(571,943)

$

(429,348)

Less: foreign currency translation loss attributable tonon-

controlling interests

(22,928)

(17,375)

Other comprehensive loss attributable to CLPS

Incorporation'sshareholders

$

(549,015)

$

(411,973)

Comprehensive income (loss) attributable to

CLPS Incorporation shareholders

$

2,389,224

$

(3,681,749)

Non-controlling interests

118,211

(180,188)

$

2,507,435

$

(3,861,937)

Basic earnings (loss) per common share*

$

0.20

$

(0.24)

Weighted average number of share outstanding – basic

14,689,224

13,843,764

Diluted earnings (loss) per common share*

$

0.20

$

(0.24)

Weighted average number of share outstanding – diluted (note 2)

14,692,299

13,764

Note:

(1) Includes share-based compensation expenses as follows:

Cost of revenues

14,110

9,472

Selling and marketing expenses

211,573

46,100

General and administrative expenses

3,778,397

6,960,517

(2)All dilutive potential common shares had anti-dilutive impact and were excluded in computation of diluted

earnings per share in the period when loss was reported.

* The shares and per share data are presented on a retroactive basis to reflect the nominal share issuance.

CLPS INCORPORATION

RECONCILIATION OF NON-GAAP AND GAAP RESULTS

(Amounts in U.S. dollars ("$"),except for number of shares)

For theyears ended

June 30,

2020

2019

Cost of revenues

$

(58,097)

$

(41,356)

Less: share-based compensation expenses

14,472

Non-GAAP cost of revenues

$

(58,281,987)

$

(41,168,884)

Selling and marketing expenses

$

3,877

$

2,029

Less: share-based compensation expenses

211,100

Non-GAAP selling and marketing expenses

$

2,848,304

$

2,132,929

General and administrative expenses

$

16,936

$

17,393

Less: share-based compensation expenses

3,517

Non-GAAP general and administrative expenses

$

12,565,539

$

10,423,876

Operating income (loss)

$

1,913

$

(3,724)

Add: share-based compensation expenses

4,004,080

7,016,089

Non-GAAP operating income

$

5,282,993

$

3,228,365

Operating Margin

1.4%

(5.8%)

Add: share-based compensation expenses

4.5%

10.8%

Non-GAAP operating margin

5.9%

5.0%

Net income (loss)

$

3,378

$

(3,589)

Add: share-based compensation expenses

4,089

Non-GAAP net income

$

7,458

$

3,583,500

Net income (loss) attributable to CLPS Incorporation's

shareholders

$

2,239

$

(3,776)

Add: share-based compensation expenses

4,089

Non-GAAP net income attributable to CLPS

Incorporation's shareholders

$

6,942,319

$

3,313

Weighted average number of share outstanding used in

computingGAAP and non-GAAP basic earnings

14,764

GAAP basic earnings (loss) per common share

$

0.20

$

(0.24)

Add: share-based compensation expenses

0.27

0.51

Non-GAAP basic earnings per common share

$

0.47

$

0.27

Weighted average number of share outstanding used in

computingGAAP diluted earnings

14,764

Add: effect of dilutive securities (note 1)

-

194,824

Weighted average number of share outstanding used in

computingnon-GAAP diluted earnings

14,299

14,038,588

GAAP diluted earnings (loss) per common share

$

0.20

$

(0.24)

Add: share-based compensation expenses

0.27

0.51

Non-GAAP diluted earnings per common share

$

0.47

$

0.27

Note:

(1) All dilutive potential common shares had anti-dilutive impact and were excluded in computation of

GAAP diluted earnings per share in the period when loss was reported.

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