Exhibit 99.1

 

China HGS Reports Second Quarter of Fiscal Year 2020 Results


 

HANZHONG, CHINA – May 15, 2020

 – 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 second quarter of fiscal 2020 ended March 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

 

lTotal revenues for the second quarter of fiscal 2020 were approximately $1.9 million, a decrease of 79.8% from approximately $9.4 million in the same quarter of fiscal 2018 due to less gross floor area sold during the current quarter.

 

lNet loss for the second quarter of fiscal 2020 totaled approximately $0.6 million, a decrease of approximately $0.9 million from the net income of approximately $0.3 million in the same period of last year.

 

lBasic and diluted net loss per share (“EPS”) attributable to shareholders for the second quarter of fiscal 2020 were $0.01, compared to net earnings 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, 2019, 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

(Unaudited)

 

    March 31,   September 30, 
   2020   2019 
ASSETS          
Current assets:          
Cash  $658,313   $263,139 
Restricted cash   3,877,935    3,938,978 
Contract assets   214,057    12,668,925 
Real estate property development completed   13,913,109    100,817,944 
Other current assets   2,977,062    2,031,937 
Total current assets   21,640,476    119,720,923 
Property, plant and equipment, net   582,467    614,008 
Real estate property development completed, net of current portion   98,003,569    1,115,086 
Security deposits   4,882,739    7,972,117 
Real estate property under development   220,591,224    215,745,225 
Deferred tax assets   232,884    - 
Due from local government for real estate property development completed   2,751,608    2,725,854 
Total Assets  $348,684,967   $347,893,213 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Construction loans  $88,311,349   $77,332,569 
Accounts payables   27,715,544    27,368,510 
Other payables   5,449,409    5,289,176 
Construction deposits   1,830,949    1,814,232 
Contract liabilities   1,855,044    1,907,828 
Customer deposits   18,632,287    16,139,572 
Shareholder loans   2,132,129    2,129,114 
Accrued expenses   2,945,345    3,585,644 
Taxes  payable   12,687,474    13,882,875 
Total current liabilities   161,559,530    149,449,520 
Tax payable - long term   8,082,593    8,006,943 
Customer deposits, net of current portion   1,039,431    1,043,692 
Construction loans, less current portion   17,387,305    29,464,867 
Construction deposits, net of current portion   1,239,643    1,228,041 
Total liabilities   189,308,502    189,193,063 
           
Commitments and Contingencies          
Stockholders' equity          
Common stock, $0.001 par value, 100,000,000 shares authorized, 45,050,000 shares issued and outstanding March 31, 2020 and September 30, 2019   45,050    45,050 
Additional paid-in capital   129,907,805    129,907,805 
Statutory surplus   10,360,251    10,360,251 
Retained earnings   33,189,365    34,070,767 
Accumulated other comprehensive deficit   (14,126,006)   (15,683,723)
Total stockholders' equity   159,376,465    158,700,150 
           
Total Liabilities and Stockholders' Equity  $348,684,967   $347,893,213 

 

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 (LOSS)

(Unaudited)

  

   Three months ended March 31,   Six months ended March 31, 
   2020   2019   2020   2019 
Real estate sales  $1,889,829   $9,367,156   $4,194,073    17,104,352 
Less: Sales tax   (27,048)   (362,846)   (66,281)   (504,957)
Cost of real estate sales   (1,466,381)   (7,556,593)   (3,171,993)   (13,479,777 
Gross profit   396,400    1,447,717    955,799    3,119,618 
Operating expenses                    
Selling and distribution expenses   200,390    104,926    400,558    274,900 
General and administrative expenses   819,415    783,687    1,408,254    1,254,619 
Total operating expenses   1,019,805    888,613    1,808,812    1,529,519 
Operating income (loss)   (623,405)   559,104    (853,013)   1,590,099 
Interest expense, net   (15,586)   (35,611)   (32,839)   (140,842)
Other expense   (96,729)   (29,010)   (96,729)   (302,163)
Income (loss) before income taxes   (735,720)   494,483    (982,581)   1,147,094 
Provision (benefit) for income taxes   (111,699)   152,938    (101,179)   321,339 
Net income (loss)   (624,021)   341,545    (881,402)   825,755 
Other Comprehensive income                    
Foreign currency translation adjustment   (2,823,145)   4,083,473    1,557,717    3,904,715 
Comprehensive income (loss)  $(3,447,166)  $4,425,018   $676,315    4,730,470 
Basic and diluted income (loss) per common share                    
Basic and diluted  $(0.01)  $0.01   $(0.02)   0.02 
Weighted average common shares outstanding                    
Basic and diluted   45,050,000    45,050,000    45,050,000    45,050,000 

  

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

  

 

 

CHINA HGS REAL ESTATE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

 

   Common Stock   Additional   Statutory   Retained  

Accumulated
Other

Comprehensive

     
   Shares   Amount   Paid-in Capital   Surplus   Earnings   Income (loss)   Total 
Balance at September 30, 2018   45,050,000   $45,050   $129,907,805   $9,925,794   $30,803,052   $(9,003,865)  $161,677,836 
Net income for the period   -    -    -    -    484,210    -    484,210 
Foreign currency translation adjustments   -    -    -    -    -    (178,758)   (178,758)
Balance at December 31, 2018   45,050,000   $45,050   $129,907,805   $9,925,794   $31,287,262   $(9,182,623)  $161,983,288 
Net income for the period   -    -    -    -    341,545    -    341,545 
Foreign currency translation adjustments   -    -    -    -    -    4,083,473    4,083,473 
Balance at March 31, 2019   45,050,000   $45,050   $129,907,805   $9,925,794   $31,628,807   $(5,099,150)  $166,408,306 
                                    
Balance at September 30, 2019   45,050,000   $45,050   $129,907,805   $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   45,050,000   $45,050   $129,907,805   $10,360,251   $33,813,386   $(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 March 31, 2020   45,050,000   $45,050   $129,907,805   $10,360,251   $33,189,365   $(14,126,006)  $159,376,465 

 

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)

  

   Six  months ended March 31, 
   2020   2019 
Cash flows from operating activities          
Net income (loss)  $(881,402)  $825,755 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Deferred tax provision (benefit)   (235,179)   321,339 
Depreciation   37,710    40,073 
Changes in assets and liabilities:          
Contract assets   651,289    264,661 
Real estate property development completed   2,937,724    807,172 
Real estate property under development   (2,835,288)   8,646,320 
Other current assets   (935,053)   (147,825)
Security deposit   3,195,887    - 
Accounts payables   89,325    (937,339)
Other payables   111,347    577,196 
Contract liabilities   (71,507)   1,256,887 
Customer deposits   2,349,028    (2,950,683)
Construction deposits   (428)   8,594 
Accrued expenses   (675,478)   (57,874)
Taxes payables   (1,379,060)   (1,189,102)
Net cash provided by operating activities   2,358,915    7,465,174 
           
Cash flow from financing activities          
Repayments of construction loans   (2,128,585)   (9,227,072)
Net cash used in financing activities   (2,128,585)   (9,227,072)
           
Effect of changes of foreign exchange rate on cash and restricted cash   103,801    127,062 
Net increase (decrease) in cash and restricted cash   334,131    (1,634,836)
Cash and restricted cash , beginning of period   4,202,117    6,775,577 
Cash and restricted cash, end of period  $4,536,248   $5,140,741 
Supplemental disclosures of cash flow information:          
Interest paid  $3,416,592   $3,614,641 
Income taxes paid  $375,601   $209,392 
           
Reconciliation to amounts on condensed consolidated balance sheets:          
Cash  $658,313   $1,133,688 
Restricted  $3,877,935   $4,007,053 
Total cash and restricted cash  $4,536,248   $5,140,741 

  

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

 

 

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