China HGS Announces First Nine Months of Fiscal 2021 Financial Results

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

September 30,

2021

2020

ASSETS

(Unaudited)

Cash

$

324,497

$

457,699

Restricted cash

3,382,086

3,409,837

Contract assets

12,645,871

14,255,328

Real estate property development completed

92,799,351

94,671,258

Other assets

9,250,111

8,132,555

Property, plant and equipment, net

563,086

571,330

Security deposits

1,951,204

1,855,506

Real estate property under development

263,416,787

227,741,017

Due from local governments for real estate property development completed

3,017,624

2,869,623

Total assets

$

387,350,617

$

353,964,153

LIABILITIES AND STOCKHOLDERS' EQUITY

Construction loans

$

119,391,636

$

109,937,408

Accounts payable

20,128,624

25,415,352

Other payables

4,659,605

4,028,048

Construction deposits

3,338,078

3,202,730

Contract liabilities

2,082,108

1,847,685

Customer deposits

22,814,868

19,405,528

Accrued expenses

1,879,321

1,920,370

Taxes payable

22,982,722

19,881,211

    Total liabilities

197,276,962

185,638,332

Commitments and contingencies

Stockholders' equity

Common stock, $0.001 par value, 50,000,000 shares authorized, 25,617,807 and 22,525,693

shares issued and outstanding June 30, 2021 and September 30, 2020, respectively

25,617

22,525

Additional paid-in capital

136,522,128

129,930,330

Statutory surplus

10,458,395

10,458,395

Retained earnings

41,095,539

34,954,061

Accumulated other comprehensive income (loss)

1,971,976

(7,039,490)

Total stockholders' equity

190,073,655

168,325,821

Total Liabilities and Stockholders' Equity

$

387,350,617

$

353,964,153

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three months ended June 30,

Nine months ended June 30,

2021

2020

2021

2020

Real estate sales

$

31,824,097

$

3,046,430

$

52,857,471

$

7,240,503

Less: Sales tax

(197,537)

(29,222)

(336,241)

(95,503)

Impairment losses on real estate property development completed

-

(2,703,031)

-

(2,703,031)

Cost of real estate sales

(25,296,688)

(1,728,217)

(41,624,594)

(4,900,210)

Gross profit

6,329,872

(1,414,040)

10,896,636

(458,241)

Operating expenses

Selling and distribution expenses

81,002

77,404

177,168

477,962

General and administrative expenses

1,411,151

973,318

2,260,410

2,381,572

Total operating expenses

1,492,153

1,050,722

2,437,578

2,859,534

Operating income (loss)

4,837,719

(2,464,762)

8,459,058

(3,317,775)

Interest income (expense), net

2,857

(16,171)

6,394

(49,010)

Other expense

(1,354)

(58,380)

(273,782)

(155,109)

Income (loss) before income taxes

4,839,223

(2,539,313)

8,191,671

(3,521,894)

Provision (benefit) for income taxes

1,210,569

35,860

2,050,193

(65,319)

Net income (loss)

3,628,654

(2,575,173)

6,141,478

(3,456,575)

Other comprehensive income (loss)

Foreign currency translation adjustment

2,757,738

363,273

9,011,466

1,920,990

Comprehensive income (loss)

$

6,386,392

$

(2,211,900)

$

15,152,944

$

(1,535,585)

Basic and diluted income (loss) per common share

Basic and diluted

$

0.14

$

(0.11)

$

0.26

$

(0.15)

Weighted average common shares outstanding

Basic and diluted

25,102,455

22,525,693

23,378,298

22,525,693

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

Common Stock

Additional

Statutory

Retained

Accumulated
Other

Comprehensive

Shares

Amount

Paid-in Capital

Surplus

Earnings

Income (loss)

Total

Balance at September 30, 2019

22,525,693

$

22,525

$

129,930,330

$

10,360,251

$

34,070,767

$

(15,683,723)

$

158,700150

Net (loss) for the period

-

-

-

-

(257,381)

-

(257,381)

Foreign currency translation adjustments

-

-

-

-

-

4,380,862

4,380,862

Balance at December 31, 2019

22,525,693

22,525

129,930,330

10,360,251

33,189,365

(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 June 30,2020

22,525,693

22,525

129,930,330

10,360,251

33,189,365

(14,126,006)

159,376,465

Net (loss) for the period

-

-

-

-

(2,575,173)

-

(2,575,173)

Foreign currency translation adjustments

-

-

-

-

-

363,273

363,273

Balance at June 30, 2020

22,525,693

$

22,525

$

129,930,330

$

10,360,251

$

30,614,365

$

(13,762,733)

$

157,164,565

Balance at September 30, 2020

22,525,693

$

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

22,525,693

22,525

129,930,330

$

10,458,395

35,245,648

(48,331)

175,608,567

Net income for the period

-

-

-

-

2,221,237

-

2,221,237

Foreign currency translation adjustments

-

-

-

-

-

(737,431)

(737,431)

Balance at June 30,2021

22,525,693

22,525

129,930,330

10,458,395

37,466,885

(785,762)

177,092,373

Issuance of stock for settlement of accounts
payable

3,092,114

3,092

6,591,798

-

-

-

6,594,890

Net income for the period

-

-

-

-

3,628,654

-

3,628,654

Foreign currency translation adjustments

-

-

-

-

-

2,757,738

2,757,738

Balance at June 30, 2021

25,617,807

$

22,525

$

136,522,128

$

10,458,395

$

41,095,539

$

1,971,976

$

190,073,655

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)

Nine months ended June 30,

2021

2020

Cash flows from operating activities

Net income (loss)

$

6,141,478

$

(3,456,575)

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

Deferred tax provision (benefit)

-

(266,319)

Depreciation

37,342

56,366

Impairment losses on real estate property development completed

-

2,703,031

Changes in operating assets and liabilities:

Contract assets

2,321,807

12,600,352

Real estate property development completed

6,688,702

(7,549,755)

Real estate property under development

(19,949,297)

(4,393,458)

Other current assets

(691,310)

(1,170,228)

Security deposit

4,761,043

Accounts payables

61,717

(657,012)

Other payables

419,675

150,939

Contract liabilities

137,771

(139,990)

Customer deposits

2,385,004

1,785,335

Construction deposits

(29,542)

(426)

Accrued expenses

(631,420)

Taxes payables

2,224,269

(1,979,971)

Net cash (used in) provided by operating activities

(252,384)

1,811,912

Cash flow from financing activities

Repayments of construction loans

-

(2,405,349)

Net cash (used in) financing activities

-

(2,405,349)

Effect of changes of foreign exchange rate on cash and restricted cash

91,431

184,993

Net (decrease) in cash and restricted cash

(160,953)

(408,444)

Cash and restricted cash, beginning of period

3,867,536

4,202,117

Cash and restricted cash, end of period

$

3,706,583

$

3,793,673

Supplemental disclosures of cash flow information:

Interest paid

$

2,014,791

$

5,142,658

Income taxes paid

$

265,149

$

504,064

Reconciliation to amounts on condensed consolidated balance sheets:

Cash

$

324,497

$

516,272

Restricted

3,382,086

3,277,401

Total cash and restricted cash

$

3,706,583

$

3,793,673

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

$

3,269,932

$

-

Real estate sales for settlements in real estate property under development 

$

(14,503,991)

$

-

Issuance of stock for settlement of accounts payable

$

6,594,890

$

-

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