Newater Technology, Inc. Announces Year 2018 Audited Financial Results

YANTAI,China,April 30,2019 -- 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,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)

Phone: +86 (535) 625-8200

Email: CFO@dtnewa.com

Ike Ma (Corporate Manager)

Phone: +86 188-6551-5312

Email: qlma@jinzhenghb.com

NEWATER TECHNOLOGY,INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December31,

2018

December31,

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

18,340

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

4,889

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

15,181

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

$

61,647

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

12,721

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

17,738,773

Gross profit

20,897,380

8,139,631

4,540,948

Operating expenses:

Selling,general and administrative

12,025,924

5,452,349

3,521

Total operating expenses

12,521

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

3,749

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

10,000

9,864,479

8,767,738

Diluted

10,738

NEWATER TECHNOLOGY,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Number of Shares

Common Shares

Additional Paid-in Capital

Retained Earnings

Statutory Reserves

Accumulated Other Comprehensive Loss

Total Shareholder's Equity

Balance,January 1,2016

8,000

$

8,200

$

2,999,947

$

816,785

$

92,995

$

(164,996)

$

3,931

Net income

2,720

2,720

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

5,026

Capital distribution in connection with acquisition of a subsidiary

(4,418,425)

(4,425)

Foreign currency translation adjustment

(383,947)

(383,947)

Balance,December 31,2016

9,000

$

9,199

$

7,949,466

$

2,960,698

$

382,802

$

(548,943)

$

10,222

Net income

2,931

2,931

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,2017

10,000

$

10,809

$

15,181

$

5,733

$

705,698

$

(13,133)

$

20,288

Net income

7,429

7,429

Statutory reserves

(1,060,013)

1,013

-

Foreign currency translation adjustment

(1,084)

(1,084)

Balance,2018

10,181

$

11,149

$

1,711

$

(1,217)

$

27,633

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

$

7,720

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

(5,750)

(4,923,400)

(2,743,853)

Deferred cost of revenue

383,382

(657,875)

-

Deferred cost of revenue - related party

1,856

(1,222)

-

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

-

1,490

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)

(1,479,058,115)

Cash flows from financing activities

Proceeds from issuances of common shares

-

7,325

5,026

Capital contribution from shareholders

-

-

198,917

Capital distribution in connection with acquisition of a subsidiary

-

-

(4,425)

Borrowings from related parties

-

-

2,558,661

Repayment to related parties

(9,703)

(739,973)

(1,733)

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,end of the year

$

8,494,983

$

10,765

$

2,688

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

$

-

$

-

$

3,000

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

$

2,080

$

1,484,762

Restricted cash

6,482

7,253,685

1,439,926

Total cash,cash equivalents and restricted cash

$

8,688

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