Hebron Technology Co., Ltd. Reports Fiscal Year 2019 Financial Results

WENZHOU, China, April 24, 2020 /PRNewswire/ -- Hebron Technology Co., Ltd. ("Hebron" or the "Company") HEBT, a technology oriented enterprise group conducting business in the pharmaceutical equipment and engineering industry segment and financial service industry segment, today announced its financial results for the fiscal year ended December 31, 2019.

Fiscal Year 2019 Financial Highlights

	Year ended December 31,				Changes
		2019		2018	($)	(%)
Revenue	$	21,103,114	$	25,290,060	(4,186,946)	(17)	%
Installation service		10,490,191		17,297,212	(6,807,021)	(39)	%
Fluid equipment sales		8,087,399		7,992,848	94,551	1	%
Financial service – underwriting related		2,522,143		-	2,522,143	100	%
Financial service –recurring service		3,381		-	3,381	100	%

Gross profit		8,056,621		7,577,952	478,669	6	%
Income (loss) from operations		1,932,005		(5,329,410)	7,261,415	136	%
Net income		2,739,990		(5,144,715)	7,884,705	153	%
Basic and diluted EPS	$	0.17	$	(0.33)	0.50	151	%

Total revenues decreased by 17.0% to $21.10 million for the twelve months ended December 31, 2019.
Operating income increased by 136% to operation income of $1.93 million for the twelve months ended December 31, 2019 from operation loss of $5.33 million for the same period of the prior fiscal year, primarily due to a decrease of bad debt provision of $5.83 million for the twelve months ended December 31, 2019.
Net income was $2.74 million for the twelve months ended December 31, 2019, compared to net loss of $5.14 million for the same period of the prior fiscal year.

	Years ended December 31,						Changes	Changes
	2019	%		2018	%		($)	(%)
Installation service	3,851,460	37	%	6,356,004	37	%	(2,504,544)	(39)	%
Fluid equipment sales	1,699,429	21	%	1,221,948	15	%	477,481	39	%
Financial services	2,506,032	99	%	-	-	%	2,506,032	100	%
Gross profit	8,056,921	38	%	7,577,952	30	%	478,969	6	%

Revenues

Total revenues decreased by 17.0% to $21.10 million for the twelve months ended December 31, 2019 mainly due to a decrease in installation revenue. Revenue from installation service was $10.49 million for the year ended December 31, 2019, representing a 39% decrease from the prior fiscal year. Revenue from sales of our fluid equipment was $8.1 million, representing an 1% increase. Revenue from financial service was $2.5 million for year ended December 31, 2019, which was mainly generated from the underwriting related advisory service. The Company expects to continue to expand the revenue base in the financial service segment.

Cost of revenues and gross profit

Total cost of revenues decreased by $4.67 million to $13.05 million for the twelve months ended December 31, 2019, mainly due to a decrease in the cost of installation service in fiscal 2019. For fiscal 2019, cost of installation service was $6.64 million representing a decrease of $4.30 million from 2018 due to lower installation service revenue. Cost of our fluid equipment sales were $6.4 million representing a decrease of $0.4 million from 2018.

Overall gross profit increased by 6% or $0.48 million to $8.06 million for the twelve months ended December 31, 2019 from $7.58 million for the same period of the prior fiscal year. The increase was primarily a result of the high-margin financial services revenue in fiscal 2019.

Overall gross profit margin for fiscal 2019 was 38%, increased from 30% in fiscal 2018. The increase was primarily due to the high-margin financial service gross profit. The gross profit margin for the Company's equipment and engineering segment was 30%, approximately same as fiscal 2018.

Operating expenses

Total operating expenses decreased by $6.78 million, or 53%, to $6.12 million for the twelve months ended December 31, 2019. The significant decrease in operating expense was primarily due to a $5.83 million decrease in bad debt provision.

For fiscal 2019, the Company's general and administrative expenses were $2.57 million, representing an approximate decrease of $0.73 million compared to fiscal 2018. The decrease in general and administrative expenses was mainly due to the Company's lesser professional fees in fiscal 2019.

For fiscal 2019, the Company's research and development ("R&D") expenses were $0.49 million, representing an increase of $0.13 million from fiscal 2018. The increase in R&D expense was primarily due to R&D developments in our new segment - financial service segment.

For fiscal 2019, the Company's selling expenses were $0.99 million, representing a 26% decrease from fiscal 2018. The decrease was mainly due to the fact that the Company has established branding awareness in the market and therefore reduced marketing activities in fiscal 2019 and 2018.

Operating (loss) income

Operating income was $1.93 million for twelve months ended December 31, 2019, representing an increase of 136% from operating loss of $5.33 million in fiscal 2018, which was mainly due to significant decrease in bad debts provision during fiscal 2019.

Net income

Net income was $2.74 million for the twelve months ended December 31, 2019, compared to net loss of $5.14 million for fiscal 2018.

Financial Condition

As of December 31, 2019, the Company had cash and restricted cash balance of $4.41 million.

Net cash provided by operating activities was approximately $0.34 million for the twelve months ended December 31, 2019, compared to net cash used in operating activities of $0.73 million for the same period of the prior fiscal year.

Net cash used in investing activities was approximately $1.96 million for fiscal 2019, compared to approximately $0.12 million for fiscal 2018.

Net cash provided by financing activities was approximately $3.15 million for fiscal 2019, compared to approximately $0.73 million for fiscal 2018.

About Hebron Technology Co., Ltd.

Established in January 2005 and headquartered in Wenzhou City, Zhejiang Province, China, Hebron Technology Co., Ltd. engages in research, development, and manufacture of highly specialized valves and pipe fitting products for use in the pharmaceutical, biological, food and beverage, and other clean industries. The Company also offers its customers comprehensive pipeline design, installation, construction, and ongoing maintenance services as holistic solution services. Following the acquisition of NiSun International Enterprise Management Group (British Virgin Islands) Co., Ltd., and its subsidiaries in July 2019, the Company also engages in financial advisory services business through contractually controlled affiliates and subsidiaries of affiliates. For more information about the Company, please visit www.xibolun.com for equipment and engineering segment and https://www.fintaike.com for financial advisory service segment.

Forward-Looking Statements

This press release contains information about Hebron's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Hebron encourages you to review other factors that may affect its future results in Hebron's registration statement and in its other filings with the Securities and Exchange Commission.

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Stated In U.S. Dollars)

	December 31, 2019		December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,452,647	$	947,588
Restricted cash		959,672		2,124,655
Contracts receivable, net		30,120,533		24,669,365
Accounts receivable, net		3,024,531		2,655,845
Bank acceptance notes receivable		22,660		81,611
Inventories		635,989		365,480
Prepayments and advances to suppliers, net		2,526,056		3,568,003
Other receivables, net		516,607		767,681
Loans to third parties-current portion		2,434,715		-
Prepaid expenses and other current assets		18,348		94,539
TOTAL CURRENT ASSETS		43,711,758		35,274,767

NON-CURRENT ASSETS:
Property and equipment at cost, net		11,889,373		12,515,894
Intangible assets, net		5,124,264		969,339
Retainage receivables, net		2,408,070		3,146,986
Right of use assets		1,915,577		-
Rent and other deposits		85,999		43,633
Loans to third parties – long term portion		2,872,820		-
Long term investments		3,708,359		3,054,090
Goodwill		11,074,864		-
Deferred tax assets		2,008,173		1,648,967
TOTAL ASSETS	$	84,799,257	$	56,653,676

LIABILITIES
CURRENT LIABILITIES:
Short-term loans	$	861,846	$	1,698,058
Bank acceptance notes Payable		929,148		2,117,382
Accounts payable		2,386,061		1,361,687
Accrued expenses and other current liabilities		3,725,149		2,112,472
Operating lease liabilities		188,557		-
Loan payable - current		156,574		177,291
Advances from customers		1,311,004		3,131,338
Tax payable		10,915,483		9,085,746
Due to related party		7,759,443		-
TOTAL CURRENT LIABILITIES		28,233,265		19,683,974

Loan payable – long-term		54,726		212,351
Operating lease liabilities – long term		1,769,927		-
Deferred tax liabilities		805,826		-
TOTAL LIABILITIES		30,863,744		19,896.325
Commitments and contingencies
EQUITY:
Class A common stock, $0.001 par value, 40,000,000 shares authorized, 17,710,471 and 8,491,177 shares issued and outstanding as of December 31, 2019 and 2018 respectively.		17,710		8,491
Class B common stock, $0.001 par value, 10,000,000 shares authorized, nil and 7,778,400 shares issued and outstanding as of December 31, 2019 and 2018 respectively.		-		7,778
Additional paid-in capital		28,369,076		13,361,447
Retained earnings		27,472,766		24,732,776
Accumulated other comprehensive income (loss)		(1,914,232)		(1,353,141)
TOTAL SHAREHOLDERS' EQUITY		53,945,320		36,757,351
Non-controlling interests		(9,807)		-
TOTAL EQUITY		53,935,513		36,757,351

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	84,799,257	$	56,653,676

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

	For the Years Ended December 31,
	2019		2018		2017
REVENUE:
Installation service	$	10,490,191	$	17,297,212	$	23,748,141
Fluid equipment sales		8,087,399		7,992,848		5,452,304
Financial services		2,525,524		-		-
		21,103,114		25,290,060		29,200,445
COST OF REVENUE
Cost of revenue		12,882,094		17,458,252		18,080,777
Business and sales related taxes		164,399		253,856		675,507
GROSS PROFIT		8,056,621		7,577,952		10,444,161

OPERATING EXPENSES:

General and administrative		2,566,831		3,298,188		3,683,594
Selling and marketing		985,252		1,337,321		2,187,253
Bad debt		2,079,837		7,913,442		187,715
Research and development		492,696		358,411		508,282
Total operating expenses		6,124,616		12,907,362		6,566,844
INCOME (LOSS) FROM OPERATIONS		1,932,005		(5,329,410)		3,877,317

OTHER INCOME (EXPENSE):
Other income, net		1,255,149		(426,585)		377,174
Interest expense		(158,119)		(208,306)		(56,953)
Income from investments		153,554		168,534		-
Total other income (expense), net		1,250,584		(466,357)		320,221

INCOME (LOSS) BEFORE INCOME TAXES		3,182,589		(5,795,767)		4,197,538
PROVISION (BENEFIT) FOR INCOME TAXES		442,599		(651,052)		(2,938,849)

NET INCOME(LOSS)		2,739,990		(5,144,715)		7,136,387
Net income (loss) attributable to non-controlling interests		-		-		-
NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS		2,739,990		(5,144,715)		7,136,387

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation (loss) income		(561,091)		(1,755,528)		2,249,081
COMPREHENSIVE INCOME (LOSS)		2,178,899	$	(6,900,243)		9,385,468
Total comprehensive loss attributable to non-controlling interests		-		-		-
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS	$	2,178,899	$	(6,900,243)	$	9,385,468

Basic and diluted earnings (loss) per common share	$	0.17	$	(0.33)	$	0.49

Weighted average number of shares outstanding-basic and diluted		16,269,577		15,760,633		14,695,347

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

												Accumulated
	Class A			Class B				Additional				Other
	Common Stock			Common Stock				paid in		Retained		Comprehensive	Non-controlling
	Shares		Amount	Shares		Amount		capital		Earnings		Income (Loss)	Interests		Total
Balance at January 1, 2017	6,916,947	$	6,917	7,778,400	$	7,778	$	10,237,965	$	22,741,104	$	(1,846,694)	-	$	31,147,070
Net income	-			-		-		-		7,136,687		-	-		7,136,387
Foreign currency translation gain	-		-	-		-		-		-		2,249,081	-		2,249,081
Balance at December 31, 2017	6,916,947		6,917	7,778,400		7,778		10,237,965		29,877,491		402,387	-		40,532,538

Net (loss)	-		-	-		-		-		(5,144,715)		-	-		(5,144,715)
Foreign currency translation loss	-		-	-		-		-		-		(1,755,528)	-		(1,755,528)
Issuance of class A common stock for consulting services	131,452		131	-		-		239,369		-		-	-		239,500
Issuance of common stock for equity investment	1,442,778		1,443	-		-		2,884,113		-		-	-		2,885,556
Balance at December 31, 2018	8,491,177		8,491	7,778,400		7,778		13,361,447		24,732,776		(1,353,141)	-		36,757,351

Net income	-		-	-		-		-		2,739,990		-	-		2,739,990
Foreign currency translation loss	-		-	-		-		-		-		(561,091)	-		(561,091)
Capital contribution by shareholder	-		-	-		-		3,582,781		-		-	-		3,582,781
Shares to be issued for acquisition	1,440,894		1,441	-		-		11,424,848		-		-	-		11,426,289
Non-controlling interests arising from business combination	-		-	-		-		-		-		-	(9,807)		(9,807)
Reclassification of common stock	7,778,400		7,778	(7,778,400)		(7,778)		-		-		-	-		-
Balance at December 31, 2019	17,710,471	$	17,710	-	$	-	$	28,369,076	$	27,472,766	$	(1,914,232)	(9,807)	$	53,935,513

HEBRON TECHNOLOGY CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2019		2018		2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	2,739,990	$	(5,144,715)	$	7,136,387
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,225,977		1,195,161		939,995
Loss on disposition of property and equipment		-		283,487		12,179
Deferred tax (benefit) expense		(418,131)		(1,471,938)		11,526
Equity investment income		(153,554)		(168,534)		-
Bad debt expense		2,079,837		7,913,442		187,715
Changes in operating assets and liabilities:
Contracts receivable		(5,801,693)		(8,850,502)		(2,992,867)
Accounts receivable		(1,141,352)		(1,383,452)		(950,850
Bank acceptance notes receivable		58,390		593,674		(378,205)
Retainage receivables		(489,283)		(748,903)		(80,360)
Prepayment and advances to suppliers		1,392,426		93,149		(7,127,018)
Inventories		(277,176)		1,177,956		788,000
Other receivables		341,339		(598,764)		(156,074)
Accounts payable		822,461		146,546		26,450
Bank acceptance notes Payable		(1,171,013)		2,148,292		53,272
Advances from customers		(1,828,259)		429,217		(370,964)
Deferred revenue		-		-		(1,071,355)
Taxes payable		1,933,516		2,770,253		(2,365,120)
Accrued expenses and other current liabilities		1,021,758		890,551		240,505
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		335,233		(725,080)		(6,096,784)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment		(394,988)		(74,210)		(3,126,777)
Loans to third parties		(3,611,682)		-		-
Payments for intangible assets		-		(41,000)		-
Cash acquired from business acquisitions		2,043,176		-		-
NET CASH (USED IN) INVESTING ACTIVITIES		(1,963,494)		(115,210)		(3,126,777)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loans		911,968		1,995,763		295,954
Repayment of short-term bank loans		(1,733,462)		(1,088,667)		-
Capital contribution		3,582,781		-		-
Proceeds from long-term loans		-		-		173,873
Repayment of long-term loans		-		-		(47,353)
(Repayment) proceeds from loan		(174,861)		(176,427)		560,748
Advances from and (repayments to) related parties		566,360		-		(66,582)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		3,152,786		730,669		916,640

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENT		(184,449)		(94,239)		(292,869)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENT		1,340,076		(203,860)		(8,599,790
CASH AND CASH EQUIVALENT AND RESTRICTED CASH-beginning of year		3,072,243		3,276,103		11,875,893

CASH AND CASH EQUIVALENT AND RESTRICTED CASH-end of year	$	4,412,319	$	3,072,243	$	3,276,103

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes	$	5,158	$	42,250	$	-
Cash paid for interest	$	147,900	$	91,917	$	75,704

Non-cash financing activities
Warrants issued to placement agent in connection with the Company's IPO	$	-	$	-	$	-
Payment payable to a related party for NiSun BVI acquisition	$	7,000,000		-		-
Issuance of shares for business combination	$	11,426,289	$	-	$	-
Issuance of shares for consulting services	$	-	$	239,500	$	-
Issuance of shares for equity investment	$	-	$	2,885,556	$	-

CASH AND CASH EQUIVALENTS COMPRISE OF THE FOLLOWING:
Cash and cash equivalent	$	3,452,647	$	947,588	$	3,220,781
Restricted cash		959,672		2,124,655		55,322
Total cash, cash equivalents and restricted cash	$	4,412,319	$	3,072,243	$	3,276,103

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SOURCE Hebron Technology Co., Ltd.

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Hebron Technology Co., Ltd. Reports Fiscal Year 2019 Financial Results

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