Qilian International Holding Group Limited Reports Fiscal Year 2020 Financial Results Jiuquan, China

Qilian International

Holding Group Limited Reports Fiscal Year 2020 Financial Results

Jiuquan, China, February 11, 2021 -

Qilian International Holding Group Limited (Nasdaq: QLI) (the "Company"), a China-based pharmaceutical and chemical

products manufacturer, today announced its financial results for the fiscal year ended September 30, 2020.

Mr. Zhanchang Xin, Chairman and CEO of

the Company, commented: "We are pleased with our fiscal year 2020 financial results as we recorded revenue of US$50 million,

which was in line with our expectations. The past year was a difficult year for our Company due to the challenges of COVID-19 pandemic,

but we continued to grow our business, execute on our strategic priorities, and deliver value to our partners, customers and shareholders.

It demonstrates that we have the innovation, diversification, stability, resilience and national scale to perform well in this

challenging environment. While we believe the current market conditions will persist in the short-term, we expect to see demand

growth in the long run."

Mr. Xin continued: "We are proud

of the Company with over 50 years of history and in the pharmaceutical and chemical industry in China. Our successful initial public

offering in January 2021 was yet another milestone for the Company and we are pleased to be in a position to continue pursuing

the significant growth opportunities that lie ahead. We look forward to building on our momentum in 2021 and beyond, and we are

confident that we are well-positioned to continue driving significant long-term value for our shareholders."

Fiscal Year 2020 Financial Highlights

Fiscal Year 2020 Financial Results

Net revenue increased by $3.9 million,

or 9% to $50.0 million in fiscal year 2020, from $46.1 million in fiscal year 2019, which was primarily attributable

to a $2.5 million increase in sales from oxytetracycline products and licorice products, and a $1.3 million increase in sales from

heparin products and sausage casings.

Sales for oxytetracycline products, licorice

products and TCMD increased by $2.5 million, or 8% to $32.6 million in fiscal year 2020, from $30.1 million in fiscal

year 2019. The increase in sales in this segment is due to the following reasons: (1) we conducted our scheduled facility maintenance

from July 2019 to September 2019, which resulted in reduced oxytetracycline production by approximately 386 tons (a 16% decrease

compared to that of fiscal year 2020). Although the outbreak of COVID-19 in early 2020 had negative impact of the manufacturing,

we resumed production on February 27, 2020. Due to the production suspension in 2019, the quantity sold in 2019 was 16% less than

the sales quantity in 2020, which contributed to $3.9 million of increase in sales in 2020. (2) Sales price per unit decreased

by 5%, which is considered as normal in the course of business. The sales decreased by $0.6 million due to the price change. (3)

during the COVID-19 outbreak in China, we switched part of our production lines to manufacture disinfection products in light of

a shortage of such products, which contributed $148,000 in sales for the year ended September 30, 2020; (4) The sales increase

in this segment was offset to a certain degree by a decrease in sales of licorice products. The COVID-19 outbreak in China during

January to March had a significant impact on the sales of our licorice products. The sales volume of our licorice products decreased

by 16% due to the logistics restraint and delays caused by China's national lockdown during the COVID-19 outbreak. However,

the market price of our licorice products had increased by 9% compared to same period in the last year due to the market's

high demand. Overall, the sales from our licorice products decreased by $0.3 million. (5) Due to the exchange rates, the sales

for the year ended September 30, 2020 denominated in USD reduced by $0.6 million compared to that for the year ended September

Sales from heparin products increased by

$1.3 million, or 9%, to $16.7 million in fiscal year 2020, from $15.4 million in fiscal year 2019. The increase of our sales of

heparin products was mainly driven by the demand from our two long-term pharmaceutical customers. However, our sales of sausage

casing were decreased by $2.3 million due to the combined effect of COVID-19 outbreak and African Swine fever in China.

Sales from fertilizer increased by $0.2

million, or 28%, to $0.7 million in fiscal year 2020, from $0.5 million in fiscal year 2019. The increase in our sales of fertilizer

products was due to our newly developed customers and regulatory policy of decreasing use of non-organic fertilizer and pesticide. Our

fertilizer products are mainly organic and more environmental friendly.

Cost of Revenue and Gross Profit

Cost of revenue increased by $6.1 million,

or 17%, to $42.5 million in fiscal year 2020, from $36.4 million in fiscal year 2019. Gross profit decreased by

$2.2 million, or 22%, to $7.5 million in fiscal year 2020, from $9.7 million in fiscal year 2019. Gross margin decreased

by 5.9 percentage points to 15.1% in fiscal year 2020, compared with 21.0% in fiscal year 2019.

Selling, General and Administrative

Selling, general and administrative expenses

decreased by $0.8 million, or 22%, to $2.7 million in fiscal year 2020, from $3.5 million in fiscal year 2019.

The decrease was mainly attributable to the decrease of approximately $0.7 million in consulting and professional fees related

to our effort to go public which were not eligible to be capitalized in accordance with the U.S. GAAP. As 2019 was the first year

we prepared the public listing and filing, the majority filing cost were incurred in 2019.

Interest expenses are primarily generated

from bank borrowings including bank loans and banknotes payable. Interest expenses were $243,000 in fiscal year 2020, compared

with $224,000 in fiscal year 2019.

Other income was $1.2 million in fiscal

year 2020 as compared to $1.0 million in fiscal year 2019, which was primarily consists of government grants and other non-operating

Income taxes Provision

Provision for income taxes decreased by

$0.2 million, or 16%, to $0.8 million in fiscal year 2020, from $1.0 million in fiscal year 2019, as a result of the decreased

income before income tax provision. Income before income tax provision was $5.8 million in fiscal year 2020, compared to $6.9 million

in fiscal year 2019.

Net Income Attributable to the Company's

Net income attributable to the Company's

shareholders decreased by $0.3 million, or 5%, to $5.0 million in fiscal year 2020, from $5.3 million in fiscal year

Basic and diluted earnings per ordinary

share were $0.17 in fiscal year 2020, compared with basic and diluted earnings per ordinary share of $0.18 in

EBITDA decreased by $1.2 million, or 14%,

to $7.2 million in fiscal year 2020, from $8.4 million in fiscal year 2019.

As of September 30, 2020, the Company

had cash of $11.9 million, compared with $4.6 million as of September 30, 2019.

Net cash provided by operating activities

was $5.1 million in fiscal year 2020, compared with net cash used in operating activities of $0.6 million in fiscal

Net cash used in investing activities was

$0.4 million in fiscal year 2020, compared with $0.7 million in fiscal year 2019.

Net cash used provided by financing activities

was $2.1 million in fiscal year 2020, compared with $0.4 million in fiscal year 2019.

Non-GAAP Financial Measures

The Company's management uses certain financial measures

to evaluate its operating performance which is calculated and presented on the basis of methodologies other than in accordance

with GAAP ("Non-GAAP"). These measures should not be considered a substitute for, or superior to, measures of financial

performance prepared in accordance with GAAP, and the Company's calculations thereof may not be comparable to similarly entitled

measures reported by other companies. The Company believes that EBITDA is a useful performance measure and can be used to facilitate

a comparison of its operating performance on a consistent basis from period to period and to provide for a more complete understanding

of factors and trends affecting its business than GAAP measures alone can provide. The Company's management believes that

EBITDA is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges

and more reflective of other factors that affect its operating performance. The Company's management believes that the use

of these Non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and

trends and in comparing our financial measures with the companies in the same industry, many of which present similar Non-GAAP

financial measures to investors. The Company presents EBITDA in order to provide supplemental information that Management considers

relevant for the readers of its consolidated financial statements included elsewhere in this annual report, and such information

is not meant to replace or supersede U.S. GAAP measures.