HANZHONG, China, Feb. 23, 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 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 Market
China Phone: (86) 091-62622612
Email: 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 issued and outstanding December 31, 2020 and September 30, 2020		22,525		22,525
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 common share
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

	Common Stock				Additional		Statutory		Retained		Accumulated 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 adjustments		–		–		–		–		–		4,380,862		4,380,862
Balance at December 31, 2019 (Unaudited)		22,525,000	$	22,525	$	129,930,330	$	10,360,251	$	33,813,386	$	(11,302,861)	$	162,823,631

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 adjustments		–		–		–		–		–		6,991,159		6,991,159
Balance at December 31,2020 (Unaudited)		22,525,000	$	22,525	$	129,930,330	$	10,458,395	$	35,245,648	$	(48,331)	$	175,608,567

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 cash		166,542		116,587
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		–