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

WENZHOU, China, April 24, 2020 /PRNewswire/ -- Hebron Technology Co., Ltd. ("Hebron" or the "Company") (Nasdaq: 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                                 10,490,191                   17,297,212     (6,807,021) (39)
      service                                                                                              %


     Fluid equipment                               8,087,399                    7,992,848          94,551     1
      sales                                                                                                %


     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)                      1,932,005                  (5,329,410)      7,261,415   136
                 from operations

                                                                                                           %


                Net income                         2,739,990                  (5,144,715)      7,884,705   153


                                                                                                           %


                Basic and           $
           
              0.17         $
         
          (0.33)           0.50   151
                 diluted EPS

                                                                                                           %
    --  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 3,851,460                      37             6,356,004               37                 (2,504,544)      (39)
      service
                                                 %                                    %                                    %


     Fluid        1,699,429                      21             1,221,948               15
      equipment                                                                                                            %
      sales                                      %                                    %                    477,481         39


     Financial    2,506,032                      99                                          %             2,506,032        100
      services
                                                 %                                                                         %


                              38    30
                                                                                                                           %



     Gross profit 8,056,921                       %            7,577,952                %                    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,                          December 31,
                                                                             2019                                   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.