Newater Technology, Inc. Announces Year 2018 Audited Financial Results

YANTAI, China, April 30, 2019 /PRNewswire/ -- Newater Technology, Inc. (NASDAQ: NEWA) (''NEWA,'' ''we,'' ''our'' or the ''Company''), a leading company specializing in development, production and application of DTRO equipment and systems used in waste water filtration, today announced its financial results for the year ended December 31, 2018.

The year ended December 31, 2018 Financial Highlights (all comparisons to the year ended December 31, 2017):

Revenues increased by 86% from $25 million to $47 million in 2018, evidenced by a large increase in project sales, an increased number of customers and large-scale projects won.

Cost of revenues increased by 52% from $17 million to $26 million in 2018, due to the corresponding costs incurred in manufacturing for the equipment sold in the same period.

Gross profit increased by 157% from $8.1 million to $20.9 million in 2018, while the gross profit margin was 44% in 2018.

Net income (before currency translation loss) increased by 178% from $2.6 million to $7.2 million in 2018, and the net profit margin in 2018 was 15%.

Total assets increased by 36% from $45 million to $62 million in 2018 mainly driven by the new production facility and production line completed during the year.

Basic earnings per share was $0.67 in 2018, compared to $0.26 in 2017 and $0.28 in 2016.

Mr. Yuebiao Li, the Company's CEO, commented "In 2018, NEWA's flexible automated production line started operation in our new facility in Yantai. With more knowledge and experience accumulated, we expect to maximize the output quality and quantity while reducing costs. While fortifying our market leadership in our existing markets of landfill leachate and industrial waste water, NEWA also invested in technology innovation to apply DTRO technology in the municipal waste water field.

In 2019, we will focus on executing our business strategy and expand globally. We expect the company's operation results to continue to grow at the current speed, which will generate significant returns to our shareholders."

About Newater Technology, Inc.

Founded in 2012 and headquartered in Yantai, China, Newater, operating its business through its wholly owned subsidiary Yantai Jinzheng Eco-Technology Co., Ltd. ("Jinzheng"), is a service provider and manufacturer of membrane filtration equipment and related hardware and engineered systems that are used in the treatment, recycling and discharge of wastewater using DTRO (Disk Tube Reverse Osmosis) and DTNF (Disk Tube Nano-Filtration) membranes. Newater also provides integrated technical solutions in engineering support and installation, technical advice and wastewater treatment services, and other project-related solutions to turn wastewater into reusable water. More information about the Company can be found at www.dtnewa.com

The Company's core business includes:

    --  Wastewater treatment and reuse of high quality reclaimed water;
    --  Treatment of hypersaline and highly-polluted wastewater and achieve zero
        liquid discharge;
    --  Highly efficient treatment of landfill leachate;
    --  Process and recycle salts from acid or alkaline wastewater.

More information about the Company can be found at: www.dtnewa.com

Notice

Rounding amounts and percentages: Certain amounts and percentages included in this press release have been rounded for ease of presentation. Percentage figures included in this press release have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this press release may vary from those obtained by performing the same calculations using the figures in the financial statements. In addition, certain other amounts that appear in this press release may not sum due to rounding.

Forward-Looking Statements

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may", "will", "intend", "should", "believe", "expect", "anticipate", "project", "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Specifically, the Company's statements regarding its ability to: 1) maximize its output quality and quantity while reducing cost; 2) executing its business strategy to expand globally; 3) and growth of its operations and generation of returns to shareholders are forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; the growth of the water filtration industry in China; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

For more information, please contact:



     Newater Technology, Inc.



     Zhuo Zhang (CFO)          
     Ike Ma (Corporate Manager)


     Phone: +86 (535) 625-8200 
     Phone : +86 188-6551-5312


     Email:  CFO@dtnewa.com    
     Email : qlma@jinzhenghb.com


                                               
              
       NEWATER TECHNOLOGY, INC. AND SUBSIDIARIES

                                                      
         
            CONSOLIDATED BALANCE SHEETS




                                                                          December 31,                          December 31,
                                                                                  2018                                   2017

                                                                                                                         ---



                             
              
                ASSETS



     
                Current assets



     Cash and cash equivalents                                                           $
              2,461,501                          $
        3,118,080



     Restricted cash, current                                                                      6,033,482                                6,753,685



     Accounts receivable, net                                                                     10,064,847                                5,442,520


      Accounts receivable -related parties, net                                                     1,948,009                                  607,975



     Notes receivable                                                                                  6,999



     Inventories                                                                                  13,762,959                               10,279,397



     Deposit - related party                                                                          10,180



     Deferred cost of revenue                                                                        343,090                                  752,358


      Deferred cost of revenue -related party                                                                                 1,795,222


      Advances to suppliers and other current assets,
       net                                                                                          4,904,290                                2,885,510




     
                Total current assets                                                            39,535,357                               31,634,747





     Restricted cash, non-current                                                                                              500,000



     Retentions receivable, non-current                                                              344,856



     Property, plant and equipment, net                                                           18,753,340                               10,449,466



     Land use right, net                                                                           2,078,240                                2,243,183



     Deferred tax assets                                                                             604,064                                  518,251



     Deposit on loan agreement                                                                       436,275




     
                Total assets                                                          $
              61,752,132                         $
        45,345,647

                                                                                                                                                    ===



                   LIABILITIES AND SHAREHOLDERS' EQUITY



     
                Current liabilities


      Accounts payable and bank acceptance
       notes to vendors                                                                   $
              5,353,538                          $
        4,644,784



     Accounts payable - related parties                                                            3,389,148                                  258,274



     Loans due within one year                                                                    10,867,111                                9,020,697



     Advances from customers                                                                       2,953,595                                  660,944


      Advances from customers -related parties                                                        586,719                                  747,264



     Income tax payables                                                                             732,699                                  501,921



     Accrued expenses and other payables                                                           6,375,800                                8,509,425




     
                Total current liabilities                                                       30,258,610                               24,343,309




      Long term loans, less current portion and
       unamortized debt issuance costs                                                              4,449,889                                   11,050




     
                Total liabilities                                                               34,708,499                               24,354,359





     
                Shareholders' equity


      Common shares ($0.001 par value, 200,000,000
       shares authorized,10,809,000 shares issued and
       outstanding as of December 31, 2018 and 2017)                                                   10,809                                   10,809



     Additional paid-in capital                                                                   15,059,181                               15,059,181



     Statutory reserves                                                                            1,765,711                                  705,698



     Retained earnings                                                                            11,380,149                                5,228,733



     Accumulated other comprehensive loss                                                        (1,172,217)                                (13,133)



                   Total shareholders' equity                                                      27,043,633                               20,991,288



                   Total liabilities and shareholders'
                    equity                                                               $
              61,752,132                         $
        45,345,647

                                                                                                                                                    ===


                                              
              
                NEWATER TECHNOLOGY, INC. AND SUBSIDIARIES

                                     
              
                CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME




                                                                            
              
                For the Years ended December 31,



                                                                       2018                                  2017                                2016

                                                                                                                                                ---




     Net revenues                                                            $
              25,973,963                             $
           16,192,503          $
            6,425,338



     Net revenues from related parties                                                 21,066,741                                       9,146,994                    5,854,383




     
                Total revenues                                                       47,040,704                                      25,339,497                   12,279,721



     Cost of revenues                                                                  20,474,072                                      17,199,866                    7,182,081


      Cost of revenues from related parties                       5,669,252                                                                           556,692




     
                Total cost of revenues                                               26,143,324                                      17,199,866                    7,738,773



     
                Gross profit                                                         20,897,380                                       8,139,631                    4,540,948



     Operating expenses:



     Selling, general and administrative                                               12,025,924                                       5,452,349                    3,146,521



                   Total operating expenses                                             12,025,924                                       5,452,349                    3,146,521



     
                Income from operations                                                8,871,456                                       2,687,282                    1,394,427



     Interest expense                                                                     658,290                                         242,707                      155,553



     Interest income                                                                     (26,632)                                      (112,592)                     (5,091)



     Government grants                                                                  (627,748)                                      (513,538)                 (1,750,726)



     Other expenses (income)                                                              (1,162)                                          3,956                       12,534




     Total other expenses (income)                                                          2,748                                       (379,467)                 (1,587,730)



                   Income before income taxes provisions                                 8,868,708                                       3,066,749                    2,982,157



     Income tax provisions                                                              1,657,279                                         475,818                      548,437




     
                Net income                                                  $
              7,211,429                              $
           2,590,931          $
            2,433,720

                                                                                                                                                                            ---


     Other comprehensive income (loss)


      Foreign currency translation adjustment                                          (1,159,084)                                        535,810                    (383,947)



                   Total comprehensive income                                  $
              6,052,345                              $
           3,126,741          $
            2,049,773

                                                                                                                                                                            ===



                   Earnings per common share



     Basic                                                                         $
              0.67                                 $
             0.26             $
              0.28

                                                                                                                                                                            ===


     Diluted                                                                       $
              0.67                                 $
             0.26             $
              0.28

                                                                                                                                                                            ===

                   Weighted average common shares outstanding



     Basic                                                                             10,809,000                                       9,864,479                    8,767,738



     Diluted                                                                           10,809,000                                       9,864,479                    8,767,738


                                                                                                                
       
                NEWATER TECHNOLOGY, INC. AND SUBSIDIARIES

                                                                                                              
       
          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY




                                                                          Number of Shares Common                   Additional Paid-                                        Retained    Statutory                       Accumulated          Total
                                                                                            Shares                      in Capital                                           Earnings    Reserves                          Other         Shareholder's
                                                                                                                                                                                                                       Comprehensive         Equity
                                                                                                                                                                                                                            Loss




     
                Balance, January 1, 2016                                      8,200,000          $
      8,200                                                     $
              2,999,947              $
            816,785                  $
              92,995   $
             (164,996)  $
            3,752,931



     Net income                                                                                                                                                                                          2,433,720                                                                      2,433,720



     Capital contribution from owners                                                                                                                                        198,917                                                                                                      198,917



     Statutory reserves                                                                                                                                                                                  (289,807)                            289,807



     Issuance of common shares for debt conversion                                999,000                999                                                                 3,846,001                                                                                                    3,847,000



     Issuance of common shares for cash                                                                                                                                    5,323,026                                                                                                    5,323,026


      Capital distribution in connection with acquisition of a subsidiary                                                                                                 (4,418,425)                                                                                                 (4,418,425)



     Foreign currency translation adjustment                                                                                                                                                                                                                      (383,947)            (383,947)




     
                Balance, December 31, 2016                                    9,199,000          $
      9,199                                                     $
              7,949,466            $
            2,960,698                 $
              382,802   $
             (548,943) $
            10,753,222



     Net income                                                                                                                                                                                          2,590,931                                                                      2,590,931



     Statutory reserves                                                                                                                                                                                  (322,896)                            322,896



     Issuance of common shares for cash                                         1,610,000              1,610                                                                 7,109,715                                                                                                    7,111,325



     Foreign currency translation adjustment                                                                                                                                                                                                                        535,810               535,810




     
                Balance, December 31, 2017                                   10,809,000         $
      10,809                                                    $
              15,059,181            $
            5,228,733                 $
              705,698    $
             (13,133) $
            20,991,288



     Net income                                                                                                                                                                                          7,211,429                                                                      7,211,429



     Statutory reserves                                                                                                                                                                                (1,060,013)                          1,060,013



     Foreign currency translation adjustment                                                                                                                                                                                                                    (1,159,084)          (1,159,084)




     
                Balance, December 31, 2018                                   10,809,000         $
      10,809                                                    $
              15,059,181           $
            11,380,149               $
              1,765,711 $
             (1,172,217) $
            27,043,633


                                                                          
              
                NEWATER TECHNOLOGY, INC. AND SUBSIDIARIES

                                                                            
              
                CONSOLIDATED STATEMENTS OF CASH FLOWS




                                                                                                                                  
              
                For the Years Ended December 31,



                                                                                                                              2018                                 2017                                   2016

                                                                                                                                                                                                         ---


     
                Cash flows from operating activities



     Net income                                                                                                                     $
              7,211,429                                $
            2,590,931                  $
             2,433,720



     Adjustments to reconcile net income to net cash used in operating activities:



     Depreciation and amortization expense                                                                                                      558,327                                            233,493                               187,662



     Deferred income taxes                                                                                                                    (118,199)                                         (312,997)                             (82,162)



     Bad debt expense                                                                                                                           280,228                                            229,707                                76,459



     Amortization of debt issuance costs                                                                                  103,772



     Loss on disposal of property, plant and equipment                                                                     13,256



     Gain on disposal of subsidiary                                                                                                                                                                                 (789)



     Changes in assets and liabilities:



     Accounts receivable, net                                                                                                               (5,327,278)                                       (5,076,425)                            2,148,124



     Accounts receivable - related parties, net                                                                                             (1,427,078)                                         2,821,621                                87,683



     Notes receivable                                                                                                                           (7,276)                                            70,000                              (56,139)



     Inventories                                                                                                                            (5,762,750)                                       (4,923,400)                          (2,743,853)



     Deferred cost of revenue                                                                                                                   383,382                                          (657,875)



     Deferred cost of revenue - related party                                                                                                 1,765,856                                        (1,795,222)



     Advances to suppliers and other current assets, net                                                                                    (2,108,928)                                         (412,955)                          (2,289,933)



     Due from related parties                                                                                                                                                    703                                75,469



     Retentions receivable, non-current                                                                                 (358,505)



     Deposit - related party                                                                                             (10,583)



     Other non-current assets                                                                                                                                                  4,719                                22,857



     Accounts payable and bank acceptance notes to vendors                                                                                      996,619                                          2,577,192                             1,079,258



     Accounts payable - related parties                                                                                                       3,269,238                                            248,695                           (2,140,504)



     Deferred income                                                                                                                                                        (26,639)                             (30,102)



     Advances from customers                                                                                                                  2,420,363                                          (220,483)                              425,736



     Advances from customers - related parties                                                                                                (125,099)                                           719,550



     Due to related parties                                                                                                                                                    5,102                              (28,257)



     Income tax payables                                                                                                                        267,988                                            144,944                             (181,386)



     Accrued expenses and other payables                                                                                                    (4,481,539)                                           589,638                               352,502




     
                Net cash used in operating activities                                                                                     (2,456,777)                                       (3,189,701)                            (663,655)



     
                Cash flows from investing activities



     Purchase of land use right                                                                                                                                                                               (2,261,745)



     Purchase of property, plant and equipment                                                                                              (5,511,732)                                       (1,482,360)                             (66,641)



     Proceeds from disposal of property, plant and equipment                                                               22,072



     Advances to related parties                                                                                                                                                                                (239,467)



     Advances to third parties                                                                                                                                           (1,236,490)                            (301,019)



     Repayments from third parties                                                                                                                                         1,236,490                               338,646



     Repayments from related parties                                                                                                                                           2,960                               473,320



     Cash received in connection with disposal of subsidiary                                                                                                                                                      (1,209)



     Deposit on acquisition of subsidiary                                                                               (200,000)




     
                Net cash used in investing activities                                                                                     (5,689,660)                                       (1,479,400)                          (2,058,115)



     
                Cash flows from financing activities



     Proceeds from issuances of common shares                                                                                                                              7,111,325                             5,323,026



     Capital contribution from shareholders                                                                                                                                                                       198,917



     Capital distribution in connection with acquisition of a subsidiary                                                                                                                                      (4,418,425)



     Borrowings from related parties                                                                                                                                                                            2,558,661



     Repayment to related parties                                                                                                               (9,703)                                         (739,973)                          (1,982,733)



     Deposit on loan agreement                                                                                          (473,698)



     Proceeds from loans due within one year                                                                                                 11,493,557                                          8,805,683                            11,613,289



     Repayment of loans due within one year                                                                                                (11,952,224)                                       (3,283,830)                          (8,142,563)



     Proceeds from long-term loans                                                                                      8,631,493



     Payment of debt issuance costs                                                                                     (284,219)



     Repayment of long-term loans                                                                                       (730,595)




     
                Net cash provided by financing activities                                                                                   6,674,611                                         11,893,205                             5,150,172


                   Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash                                       (404,956)                                           222,973                             (235,260)




     
                Net change in cash, cash equivalents and restricted cash                                                                  (1,876,782)                                         7,447,077                             2,193,142



     
                Cash, cash equivalents and restricted cash, beginning of the year                                                          10,371,765                                          2,924,688                               731,546




     
                Cash, cash equivalents and restricted cash, end of the year                                                       $
              8,494,983                               $
            10,371,765                  $
             2,924,688

                                                                                                                                                                                                                                              ===




     
                Supplemental cash flow information



     Cash paid for interest                                                                                                           $
              689,867                                  $
            244,753                    $
             307,797

                                                                                                                                                                                                                                              ===


     Cash paid for income taxes                                                                                                     $
              1,507,489                                  $
            656,602                    $
             812,637

                                                                                                                                                                                                                                              ===




     
                Non-cash investing and financing activities:



     Stock issued for debt conversion                                                                                
              $                                       
              $                                        $
             3,847,000




     Properties acquired with loans                                                                                                    $
              52,161                                  $
            206,000   
              $

                                                                                                                                                                                                                                              ===


     Liabilities assumed in connection with purchase of property, plant and equipment                                               $
              2,636,770                                $
            7,445,478   
              $

                                                                                                                                                                                                                                              ===


     Operating expenses paid by related parties                                                                                         $
              9,703                
              $                         
              $                      -




     Property, plant and equipment transferred from inventories                                                                     $
              1,566,314                
              $                         
              $                      -



                   Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets



     Cash and cash equivalents                                                                                                      $
              2,461,501                                $
            3,118,080                  $
             1,484,762



     Restricted cash                                                                                                                          6,033,482                                          7,253,685                             1,439,926




     Total cash, cash equivalents and restricted cash                                                                               $
              8,494,983                               $
            10,371,765                  $
             2,924,688

                                                                                                                                                                                                                                              ===

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SOURCE Newater Technology, Inc.