Hebron Technology Co., Ltd. Reports Financial Results for the First Half of 2018

WENZHOU,China,Dec. 10,2018 --Hebron Technology Co.,Ltd. ("Hebron" or the "Company") (Nasdaq: HEBT),a developer,manufacturer and installer of valves and pipe fittings for use in the pharmaceutical,biological,food and beverage,and other clean industries,today announced its financial results for the six months ended June 30,2018.

Mr. Anyuan Sun,Chairman and Chief Executive Officer of Hebron,commented,"With revenues increasing by 33% to $10.33 million,our first half financial results reflected the impact of more projects being completed for our installation services during the six months ended June 30,2018. With the multiple project wins and a growing project pipeline,we are confident about our near-term outlook and expect further growth to return in the near future."

Six Months Ended June 30,2018 Financial Results

Total revenues increased by 33% to $10.33 million for the six months ended June 30,2018,from $7.74 million for the six months ended June 30,2017. The increase in total revenues was because of an increase in the number of projects and average revenues per project for installation services and the increased sales in fluid equipment sales.

Gross and operating margins were 34% and (11)%,respectively,for the six months ended June 30,compared to 37% and 2%,for the same period of last year.

Net loss was $1.57 million,or a loss per share of $0.10 for the six months ended June 30,compared to net loss of $0.34 million,or loss per share of $0.02,for the same period of last year.

For the Six Months Ended June 30,

($ millions)

2018

2017

% Change

Revenues

Installation service

7.58

6.35

19%

Fluid equipment sales

2.75

1.39

98%

Gross profit

3.55

2.87

24%

Gross margin

34%

37%

(3)pp*

Installation service

43%

41%

2pp*

Fluid equipment sales

15%

21%

(6)pp*

Operating expenses

4.68

2.7

73%

Operating income (loss)

(1.12)

0.17

(779)%

Operating margin

(11)%

2%

13pp*

Net loss

(1.57)

(0.34)

362%

Net loss margin

(15)%

(4)%

(11)pp*

Basic and diluted loss per share

(0.10)

(0.02)

400%

*pp represents percentage points

Revenues

For the six months ended June 30,total revenues increased by $2.6 million,or 33%,to $10.3 million from $7.7 million for the same period of last year. The increase in total revenues was related to the increase in revenues from installation services as more works were completed during the six months ended June 30,and well as the increased sales in fluid equipment.

Revenues from installation services increased by $1.2 million,or 19.3%,to $7.6 million for the six months ended June 30,2018 from $6.4 million for the same period of last year. We provided installation services for 3 projects with an average project revenue of $2.5 million during the six months ended June 30,compared to 3 projects with an average project revenue of $2.1 million during the same period of last year. Revenues from fluid equipment sales increased by $1.4 million,or 98.0%,to $2.7 million for the six months ended June 30,2018 from $1.4 million for the same period of last year.

Cost of revenues and gross profit

Total cost of revenues increased by $1.9 million,or 39.1%,to $6.8 million for the six months ended June 30,2018 from $4.9 million for the same period of last year. Overall gross profit increased by $0.7 million,or 23.9%,to $3.6 million for the six months ended June 30,2018 from $2.9 million for the same period of last year. Overall gross margin was 34% for the six months ended June 30,down 3 percentage points from 37% for the same period of last year.

Cost of revenues for installation services increased by $0.5 million,or 13.2%,to $4.3 million for the six months ended June 30,2018 from $3.8 million for the same period of last year. The increase in cost of revenues was in line with the increase in revenues for installation services. Gross profit for installation services increased by $0.7 million,or 26.9%,to $3.3 million for the six months ended June 30,2018 from $2.6 million for the same period of last year. Gross margin for installation services was 43.4% for the six months ended June 30,compared to 40.6% for the same period of last year.

Cost of revenues for fluid equipment sales increased by $1.2 million,or 109.1%,to $2.3 million for the six months ended June 30,2018 from $1.1 million for the same period of last year. Gross profit for fluid equipment sales increased by $0.1 million,or 33.3%,to $0.4 million for the six months ended June 30,2018 from $0.3 million for the same period of last year. Gross margin for fluid equipment sales was 14.8% for the six months ended June 30,compared to 21.4% for the same period of last year. The decreased gross margin was due to the increased competition in equipment sales and because the Company sold more products with lower margin in this period.

Operating expenses

General and administrative expenses increased by $2.9 million,or 199.2%,to $4.4 million for the six months ended June 30,2018 from $1.5 million for the same period of last year. The increase was mainly due to higher salaries for the management,higher bad debt expense recorded for long aging advances to vendors and higher amortization expense recorded for the new facilities. Selling expenses were $0.3 million for the six months ended June 30,compared to $0.7 million for the same period of last year. Research and development expenses were $NIL for the six months ended June 30,compared to $0.5 million for the same period of last year. The decrease in research and development expenses was mainly due to the lack of new R&D projects for the six months ended June 30,while we had a R&D project for developing an intelligent valve controller system during the six months ended June 30,2017. As such,total operating expenses increased by $2.0 million,or 73.0%,to $4.7 million for the six months ended June 30,2018 from $2.7 million for the same period of last year.

Operating income (loss)

Operating loss was $1.1 million for the six months ended June 30,decreased by $1.3 million,or 779.5%,compared to an operating income of $0.2 million for the same period of last year because of the increase in general and administrative expenses. Operating margin was (11)% for the six months ended June 30,compared to 2% for the same period of last year.

Income (loss) before income taxes and income tax

Loss before income taxes was $1.2 million for the six months ended June 30,compared to income before income tax of $0.1 million for the same period of last year. Income tax provision was $0.4 million for the six months ended June 30,compared to $0.5 million for the same period of last year.

Net loss and loss per share

Net loss was $1.6 million,or loss per share of $0.10 for the six months ended June 30,compared to net loss of $0.3 million,or loss per share of $0.02 for the same period of last year. The decrease in net earnings was primarily related to the increase in operating expenses.

Recent Update

Acquisition of Xuzhou Weijia Bio-Tech Co.,Ltd.

On March 10,the Company entered into a share acquisition agreement (the "Agreement") with the sole shareholder of Xuzhou Weijia Bio-Tech Co.,Ltd. ("Weijia Bio-Tech") and Weijia Bio-Tech to acquire 49% of the equity in Weijia Bio-Tech. As consideration,the Company was obligated to issue 1,442,778 unregistered Class A common shares (based on an agreed value of $2.00 per share,totalling $$2,885,556) to the individuals designated by the selling shareholder of Weijia Bio-Tech. On or about April 11,the Company completed the process of acquiring 49% of the equity in Weijia Bio-Tech.On April 28,the Company completed the issuance of 1,778 unregistered Class A common shares pursuant to the Agreement,with an effective issuance date of April 9,2018.

About Hebron Technology Co.,Ltd.

Established in January 2005 and headquartered in Wenzhou City,Zhejiang Province,Hebron Technology Co.,Ltd. ("Hebron" or the "Company") engages in research,development,and manufacture of highly specialized valves and pipe fitting products for use in the pharmaceutical,and other clean industries. The Company also offers its customers comprehensive pipeline design,installation,construction,and ongoing maintenance services as holistic solution services. For more information about the Company,please visit www.xibolun.com.

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.

For more information,please contact:

In China:

Hebron Technology Co.,Ltd.

Ms. Yingping Chen

Secretary

Phone: +86-180-6776-129

Email: IR@china-xbl.com

In the United States:

Ascent Investor Relations LLC

Ms.Tina Xiao

Phone: +1-917-609-0333

Email:tina.xiao@ascent-ir.com

HEBRON TECHNOLOGY CO.,LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

December 31,

2018

2017

ASSETS

CURRENT ASSETS:

Cash

$

884,436

$

3,220,781

Restricted cash

1,475,918

55,322

Contracts receivable,net

20,995,991

16,904,972

Accounts receivable,net

723,124

1,419,305

Notes receivable

-

689,171

Retainage receivables,net

2,972,461

2,564,404

Inventories

5,424,902

1,582,501

Prepayments and advances to suppliers,net

9,755,071

11,107

Other receivables,net

229,898

240,284

TOTAL CURRENT ASSETS

42,461,801

38,580,847

Long-term investment

2,556

-

Property and equipment at cost,net of accumulated depreciation

14,009,154

14,588,262

Land use right,net of accumulated amortization

1,039,608

1,086,148

Deferred tax assets

454,591

46,101

Prepayment on property and equipment

-

247,324

TOTALASSETS

$

60,850,710

$

54,548,682

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Short-term loans

$

706,970

$

457,940

Accounts payable

5,191,560

1,332,106

Accrued expenses and other current liabilities

1,609,040

1,327,513

Other loan payable-current

-

179,182

Advances from customers

3,723,943

2,825,215

Taxes payable

7,574,611

7,067,593

TOTAL CURRENT LIABILITIES

18,806,124

13,189,549

Other loan payable - long term

176,139

411,683

Long-term loans

404,693

414,912

TOTAL LIABILITIES

19,386,956

14,016,144

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Common stock,$0.001 par value,50,000,000 shares authorized,16,269,577 and 14,695,347

shares issued and outstanding as of June 30,2018 and December 31,2017,respectively

16,269

14,695

Additional paid-in capital

13,270,947

10,237,965

Retained earnings

28,308,385

29,877,491

Accumulated other comprehensive gain (loss)

(131,847)

402,387

TOTAL SHAREHOLDERS' EQUITY

41,463,754

40,532,538

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

60,682

HEBRON TECHNOLOGY CO.,LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

For the Six Months Ended June 30,

2018

2017

REVENUE

Installation service

$

7,749

$

6,352,092

Fluid equipment sales

2,754,317

1,391,348

10,335,166

7,743,440

COST OF REVENUE

Cost of product and services

6,655,247

4,769,712

Business and sales related taxes

124,575

103,923

GROSS PROFIT

3,555,244

2,869,805

OPERATING EXPENSES

General and administrative expenses

4,396,710

1,469,722

Selling expenses

281,169

749,522

Research and development expenses

-

485,335

Total operating expenses

4,677,879

2,704,579

INCOME (LOSS) FROM OPERATIONS

(1,122,635)

165,226

OTHER INCOME (EXPENSE)

Other income,net

1,736

2,256

Interest expense

(56,314)

(23,518)

Total other expense,net

(54,578)

(21,262)

INCOME (LOSS) BEFORE INCOME TAXES

(1,177,213)

143,964

PROVISION FOR INCOME TAXES

391,892

487,298

NET LOSS

$

(1,569,105)

$

(343,334)

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation gain (loss)

(534,234)

800,457

COMPREHENSIVE INCOME (LOSS)

$

(2,103,339)

$

457,123

Basic and diluted loss per common share

Basic and diluted

$

(0.10)

$

(0.02)

Weighted average number of shares outstanding

Basic and diluted

15,427,622

14,347

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