China HGS Reports Full Year Financial Results for the Fiscal Year 2020

HANZHONG,China,Jan. 14,2021 -- January 13,China HGS Real Estate Inc. (NASDAQ: HGSH) ("China HGS" or the "Company"),a leading regional real estate developer headquartered in Hanzhong City,Shaanxi Province,today filed its Annual Report on Form 10-K for the fiscal year 2020 ended September 30,2020 with the U.S. Securities and Exchange Commission. An electronic copy of the Annual Report on Form 10-K can be accessed on the SEC's website atwww.sec.gov.

Highlights for the Fiscal 2020

Total revenues for the fiscal 2020 were approximately $13.0 million,a decrease of approximately 67.5% from approximately $40.0 million in fiscal 2019.

Net income for the fiscal 2020 totaled approximately $1.0 million,a decrease of approximately 73.5% from the net income of approximately $3.7 million in fiscal 2019.

Basic and diluted net earnings per share attributable to shareholders for the fiscal 2020 were $0.04,compared to $0.16 for the fiscal 2019.

SafeHarborStatement

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,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 Market

China Phone: (86) 091-62622612

Email: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE INC.

CONSOLIDATED BALANCE SHEETS

September30,

September30,

2020

2019

ASSETS

Cash

$

457,699

$

263,139

Restricted cash

3,409,837

3,938,978

Contract assets

14,255,328

12,668,925

Real estate property development completed

94,671,258

101,933,030

Other assets

8,132,555

2,031,937

Property,plant and equipment,net

571,330

614,008

Security deposits

1,855,506

7,972,117

Real estate property under development

227,741,017

215,745,225

Due from local government for real estate property development completed

2,869,623

2,725,854

Total Assets

$

353,964,153

$

347,893,213

LIABILITIES AND STOCKHOLDERS' EQUITY

Construction loans

$

109,937,408

$

106,797,436

Accounts payables

25,415,352

27,368,510

Other payables

4,028,048

5,289,176

Construction deposits

3,202,730

3,042,273

Contract liabilities

1,847,685

1,907,828

Customer deposits

19,405,528

17,183,264

Shareholder loans

-

2,129,114

Accrued expenses

1,920,370

3,585,644

Taxes payable

19,881,211

21,889,818

Total liabilities

185,638,332

189,193,063

Commitments and Contingencies

Stockholders' equity

Common stock,$0.001 par value,50,000,000 shares authorized,22,525,000* shares issued and outstanding September30,2020 and 2019

22,525

22,525

Additional paid-in capital*

129,930,330

129,330

Statutory surplus

10,458,395

10,360,251

Retained earnings

34,954,061

34,070,767

Accumulated other comprehensive loss

(7,039,490)

(15,683,723)

Total stockholders' equity

168,325,821

158,700,150

Total Liabilities and Stockholders' Equity

$

353,213

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED SEPTEMBER 30,2020 and 2019

2020

2019

Real estate sales

$

12,979,227

$

39,556

Less:Sales tax

193,719

389,406

Impairment losses on real estate property development completed

2,703,031

-

Cost of real estate sales

9,369,820

30,253,511

Gross profit

712,657

9,321,639

Operating expenses

Selling and distribution expenses

580,639

494,646

General and administrative expenses

2,324,057

2,661,578

Total operating expenses

2,904,696

3,156,224

Operating income

(2,192,039)

6,165,415

Interest expense,net

(65,535)

(131,270)

Other income (expense),net

4,080,945

(309,930

Income before income taxes

1,823,371

5,724,215

Provision for income taxes

841,933

2,022,043

Net income

981,438

3,702,172

Other comprehensive loss

Foreign currency translation adjustment

8,644,233

(6,679,858)

Comprehensive income (loss)

$

9,625,671

$

(2,977,686)

Basic and diluted income per common share

Basic and diluted

$

0.04

$

0.16

Weighted average common shares outstanding

Basic and diluted*

22,000

22,000

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED SEPTEMBER 30,2020 AND 2019

Common Stock

Additional

Statutory

Retained

Accumulated

Other

Comprehensive

Shares*

Amount

Paid-inCapital

Surplus

Earnings

Loss

Total

Balance at September30,2018

22,000

$

22,525

$

129,330

$

9,925,794

$

30,803,052

$

(9,003,865)

$

161,677,836

Appropriation of statutory reserve

434,457

(434,457)

-

Net income for the year

3,172

3,172

Foreign currency translation adjustments

(6,858)

(6,858)

Balance at September30,2019

22,330

$

10,251

$

34,767

$

(15,723)

$

158,150

Appropriation of statutory reserve

-

-

-

Net income for the year

981,438

981,438

Appropriation of statutory reserve

98,144

(98,144)

-

Foreign currency translation adjustments

8,233

8,233

Balance at September30,2020

22,395

$

34,061

$

(7,490)

$

168,821

CHINA HGS REAL ESTATE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30,2020 and 2019

2020

2019

Cash flows from operating activities

Net income

$

981,438

$

3,172

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

Deferred tax provision

-

1,302,606

Depreciation

72,748

79,270

Impairment losses on real estate property development completed

2,031

-

Gain on settlement of shareholder loan and payables with suppliers

(4,998,762)

-

Changes in assets and liabilities:

Advances to vendors

-

20,395

Security deposits

6,335,525

-

Contract assets

(889,901)

(601,265)

Real estate property development completed

9,820

(45,818,735)

Real estate property under development

(7,511,989)

50,974,817

Other assets

(398,747)

(725,508)

Accounts payables

(1,498,176)

7,967,500

Other payables

23,918

609,156

Contract liabilities

(155,809)

(3,854,568)

Customer deposits

1,275,401

(4,261,166)

Construction deposits

-

8,538

Accrued expenses

(474,420)

700,527

Taxes payables

(2,616,813)

(1,166,158)

Net cash provided by operating activities

2,217,264

8,581

Cash flow from financing activities

Proceeds from construction loans

-

488,307

Repayment of construction loans

(2,924)

(11,825,666)

Repayment of shareholder loans

-

-

Net cash (used in) financing activities

(2,337,359)

Effect of changes of foreign exchange rate on cash

(135,921)

(173,682)

Net (decrease) in cash

(334,581)

(2,573,460)

Cash,restricted cash,beginning of year

4,117

6,775,577

Cash,end of year

$

3,867,536

$

4,117

Supplemental disclosures of cash flow information:

Interest paid

$

6,515

$

7,199,086

Income taxes paid

$

782,836

$

347,675

Representing

Cash

$

457,139

Restricted cash

$

3,837

$

3,978

$

3,117

Non-cash financing activities:

Settlement of shareholder loan and related accrued interest

$

(3,402,313)

-

Settlement of payables with suppliers

(3,572)

-

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