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

WENZHOU,China,April 25,2020 --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 endedDecember 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

-

2,143

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

%

-

-

%

2,032

100

%

Gross profit

8,921

38

%

7,952

30

%

478,969

6

%

Revenues

Total revenues decreased by 17.0% to$21.10 millionfor the twelve months endedDecember 31,2019 mainly due to a decrease in installation revenue. Revenue from installation service was $10.49 million for the year ended December 31,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,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 millionfor the twelve months endedDecember 31,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 millionfor the twelve months endedDecember 31,2019 from$7.58 millionfor 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 millionfor the twelve months endedDecember 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,representing an increase of 136% fromoperating 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,compared to net loss of$5.14 million for fiscal 2018.

Financial Condition

As of December 31,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,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,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.comfor equipment and engineering segment and https://www.fintaike.comfor financial advisory service segment.

Forward-Looking Statements

This press release contains information aboutHebron'sview 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 inHebron'sregistration 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)

December31,

2019

December31,

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

5,264

969,339

Retainage receivables,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

10,483

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,10,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

13,447

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

36,351

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

84,676

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

$

10,191

$

17,212

$

23,748,141

Fluid equipment sales

8,848

5,304

Financial services

2,525,524

-

-

21,114

25,060

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

8,952

10,444,161

OPERATING EXPENSES:

General and administrative

2,566,831

3,298,188

3,594

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

6,616

12,907,362

6,844

INCOME (LOSS) FROM OPERATIONS

1,410)

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),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)

2,136,387

Net income (loss) attributable to non-controlling interests

-

-

-

NET INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS

2,387

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

$

2,243)

$

9,468

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

7,400

$

7,778

$

10,237,965

$

22,741,104

$

(1,846,694)

-

$

31,147,070

Net income

-

-

-

-

7,687

-

-

7,387

Foreign currency translation gain

-

-

-

-

-

-

2,081

-

2,081

Balance at December 31,947

6,400

7,778

10,965

29,491

402,387

-

40,532,538

Net (loss)

-

-

-

-

-

(5,715)

-

-

(5,715)

Foreign currency translation loss

-

-

-

-

-

-

(1,528)

-

(1,528)

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

-

-

2,113

-

-

-

2,885,556

Balance at December 31,2018

8,177

8,491

7,778

13,447

24,776

(1,141)

-

36,351

Net income

-

-

-

-

-

2,990

-

-

2,990

Foreign currency translation loss

-

-

-

-

-

-

(561,091)

-

(561,091)

Capital contribution by shareholder

-

-

-

-

3,582,781

-

-

-

3,781

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

(7,400)

(7,778)

-

-

-

-

-

Balance at December 31,2019

17,471

$

17,710

-

$

-

$

28,076

$

27,766

$

(1,232)

(9,807)

$

53,513

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)

$

2,990

$

(5,715)

$

7,387

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

2,715

Changes in operating assets and liabilities:

Contracts receivable

(5,801,693)

(8,850,502)

(2,867)

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)

(3,777)

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

3,781

-

-

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

$

3,243

$

3,103

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

-

-

Issuance of shares for business combination

$

11,289

$

-

$

-

Issuance of shares for consulting services

$

-

$

239,500

$

-

Issuance of shares for equity investment

$

-

$

2,556

$

-

CASH AND CASH EQUIVALENTS COMPRISE OF THE FOLLOWING:

Cash and cash equivalent

$

3,588

$

3,220,781

Restricted cash

959,655

55,322

Total cash,cash equivalents and restricted cash

$

4,103

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