Newater Technology, Inc. Announces Year 2020 Audited Financial Results

NEW YORK,May 3,2021 --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 31,2020.

The year ended December 31,2020 Financial Highlights (all comparisons to the year ended December 31,2019):

Revenues increased by 36% from $37.6 million to $51.16 million in 2020,our revenue growth in the year 2020 resulted primarily from increased demand for our systems. These increases can be evidenced in the total revenue from project sales,number of end customers,and number of large-scale projects.

Cost of revenues increased by 43% from $21.7 million to $30.99 million in 2020,the increase in cost of revenues directly corresponded to the increase in revenue during the same year.

Gross profit increased by 27% from $15.9 million to $20.2 million in 2020,while the gross profit margin was 39% in 2020.

Net income (before currency translation loss) increased by 29% from $4.3 million to $5.6 million in 2020,and the net profit margin in 2020 was 11%.

Total assets increased by 19% from $78 million to $93 million in 2020 mainly driven by the purchasing of more inventories and prepayment made for a land use right.

Basic earnings per share was $0.51 in 2020,compared to $0. 40 in 2019 and $0. 67 in 2018.

Mr. Yuebiao Li,the Company's CEO,commented "We are pleased with our accomplishments in 2020,we overcame the impact of COVID-19 epidemic. In the depressed market,we overcame difficulties and exploited the huge market in coal mine drainage treatment by using the company's patented process package and we completed the construction and production of the project in the same year. We are pleased with the expansion of our business in the field of steel coking wastewater treatment as well."

In 2021,we will continue to make more efforts to skillfully apply our products to more wastewater treatment fields and undertake larger projects,in order to achieve company's eternal goal of "renewable resources (New Water) recycling."

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.,specializes in the development,manufacture and sale of DTRO (Disk Tube Reverse Osmosis) and DTNF (Disk Tube Nano-Filtration) membranes for waste water treatment,recycling and discharge. Newater provides integrated technical solutions in engineering support and installation,technical advice and services,and,and other project-related solutions to turn wastewater into valuable clean water. Newater also provides wastewater treatment services,such as landfill leachate treatment and purification services.

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

The Company's products can be used across a wide spectrum of industries,including:

Landfill leachate;

Wastewater from coal mines;

Industrial park common effluent; and

Briny 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 apply its products to more industries and obtain larger projects 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) 801-2997

Email: CFO@dtnewa.com

Victor Liu (Corporate Manager)

Phone: +86 150-6383-7878

Email: nliu@jinzhenghb.com

F1-2

NEWATER TECHNOLOGY,INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December31,

December31,

2020

2019

ASSETS

Current assets

Cash and cash equivalents

$

4,462,530

$

9,944,765

Restricted cash

-

4,021,177

Accounts receivable,net

18,038,582

11,293,625

Accounts receivable - related parties,net

8,806,238

2,392,087

Notes receivable

107,235

360,505

Inventories

21,737,156

13,715,369

Deferred cost of revenue

-

221,737

Advance to suppliers and other current assets,net

6,196,694

4,515,435

Advance to suppliers and other current asset - related parties

1,678,462

-

Total current assets

61,026,897

46,464,700

Retentions receivable,non-current

4,651

734,140

Property,plant and equipment,net

22,538,664

24,611,862

Land use rights,net

2,093,873

2,008,096

Intangible asset,net

151,677

-

Operating lease right-of-use assets,net

93,848

141,016

Deposit on loan agreement

-

918,643

Long-term investments

1,074,142

2,997,419

Long-term prepaid expenses

6,252,109

184,320

Total assets

$

93,235,861

$

78,060,196

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable and bank acceptance notes to vendors

$

8,922,232

$

8,099,529

Accounts payable - related parties

3,100,923

5,225,004

Loans due within one year

27,268,410

11,809,449

Due to related parties

5,785,045

-

Advances from customers

2,876,306

5,522,913

Advances from customers - related parties

23,898

7,254,968

Income tax payables

798,991

322,419

Accrued expenses and other payables

5,414,379

6,971,505

Operating lease liabilities,current

35,419

56,852

Deferred income,current

45,958

43,061

Total current liabilities

54,271,561

45,305,700

Deferred income,non-current

-

43,061

Deferred tax liabilities

75,204

288,687

Operating lease liabilities,non-current

37,604

68,420

Long-term loans,less current portion and unamortized debt issuance costs

-

1,377,217

Total non-current liabilities

112,808

1,777,385

Total liabilities

54,384,369

47,083,085

Shareholders' equity

Common shares ($0.001 par value,200,000,000 shares

authorized,10,000 shares issued and outstanding as of

December 31,2020 and December 31,2019)

10,809

10,809

Additional paid-in capital

26,303,348

26,348

Statutory reserves

2,941,715

2,267,219

Retained earnings

8,834,286

3,946,021

Accumulated other comprehensive income (loss)

761,334

(1,550,286)

Total shareholders' equity

38,851,492

30,977,111

Total liabilities and shareholders' equity

$

93,196

The accompanying notes are an integral part of these consolidated financial statements

F-3

NEWATER TECHNOLOGY,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Years ended December 31,

2020

2019

2018

Net revenues

$

26,350,543

$

23,716,978

$

25,973,963

Net revenues from related parties

24,808,223

13,857,014

21,066,741

Total revenues

51,158,766

37,573,992

47,040,704

Cost of revenues

30,284,897

20,233,998

20,474,072

Cost of revenues from related parties

706,401

1,450,627

5,669,252

Total cost of revenues

30,991,298

21,684,625

26,143,324

Gross profit

20,167,468

15,889,367

20,897,380

Operating expenses:

Selling,general and administrative expenses

13,993

10,148,039

12,025,924

Total operating expenses

13,924

Income from operations

7,023,475

5,741,328

8,871,456

Interest expense

1,757,396

1,087,051

658,290

Interest income

(73,344)

(38,328)

(26,632)

Government grants

(1,985,061)

(946,164)

(627,748)

Loss from equity investments

560,969

17,023

-

Other expenses (income)

215,501

(153,546)

(1,162)

Total other expenses (income)

475,461

(33,964)

2,748

Income before income taxes provisions

6,548,014

5,775,292

8,868,708

Income tax provisions

985,253

1,463,745

1,657,279

Net income

5,562,761

4,311,547

7,211,429

Other comprehensive income (loss)

Foreign currency translation adjustment

2,620

(378,069)

(1,159,084)

Total comprehensive income

$

7,874,381

$

3,933,478

$

6,052,345

Earnings per common share

Basic

$

0.51

$

0.40

$

0.67

Diluted

$

0.51

$

0.40

$

0.67

Weighted average common shares outstanding

Basic

10,000

10,000

Diluted

10,000

The accompanying notes are an integral part of these consolidated financial statements

F-4

NEWATER TECHNOLOGY,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Number of Shares

Common Shares

Additional Paid-in Capital

Retained

Earnings

(Deficit)

Statutory Reserves

Accumulated Other Comprehensive Income

(Loss)

Total Shareholder's Equity

Balance,December 31,2017

10,000

$

10,809

$

15,059,181

$

5,228,733

$

705,698

$

(13,133)

$

20,288

Net income

7,429

7,429

Statutory reserves

(1,013)

1,013

-

Foreign currency translation adjustment

(1,084)

(1,084)

Balance,2018

10,181

$

11,380,149

$

1,765,711

$

(1,172,217)

$

27,043,633

Net income

4,547

4,547

Statutory reserves

(501,508)

501,508

-

Capital increase from retained earnings

11,244,167

(11,167)

-

Foreign currency translation adjustment

(378,069)

(378,069)

Balance,2019

10,809

$

26,348

$

3,021

$

2,219

$

(1,286)

$

30,111

Net income

5,761

5,761

Statutory reserves

(674,496)

674,496

-

Foreign currency translation adjustment

2,620

2,620

Balance,2020

10,348

$

8,286

$

2,715

$

761,334

$

38,492

The accompanying notes are an integral part of these consolidated financial statements

F-5

NEWATER TECHNOLOGY,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

2020

2019

2018

Cash flows from operating activities

Net income

$

5,761

$

4,547

$

7,429

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

Loss from equity method investments,net

560,023

-

Depreciation and amortization expense

2,715

1,549,296

558,327

Deferred income taxes

(220,332)

892,548

(118,199)

Allowance for credit losses

796,800

1,243,709

280,228

Amortization of debt issuance costs

161,911

324,221

103,772

Noncash lease expense

61,260

41,935

-

Loss on disposal of property,plant and equipment

35,587

1,367

13,256

Changes in operating assets and liabilities:

Accounts receivable,net

(6,683,358)

(1,509,728)

(5,327,278)

Accounts receivable - related parties,net

(5,915,753)

(1,103,104)

(1,427,078)

Notes receivable

262,542

(356,648)

(7,276)

Inventories

(3,791,230)

(2,923,465)

(5,762,750)

Deferred cost of revenue

223,880

117,910

383,382

Deferred cost of revenue – related party

-

-

1,856

Advances to suppliers and other current assets,net

(564,652)

(311,090)

(2,035,701)

Advances to suppliers and other current asset - related parties

(1,587,875)

-

-

Retentions receivable,non-current

736,837

(397,157)

(358,505)

Deposit - related party

-

10,134

(10,583)

Other non-current assets

-

-

-

Accounts payable and bank acceptance notes to vendors

247,588

2,839,752

996,619

Accounts payable - related parties

(2,341,946)

1,896,054

3,269,238

Deferred income

-

43,433

-

Advances from customers

(2,855,229)

2,630,143

2,420,363

Advances from customers - related parties

(7,302,490)

6,733,465

(125,099)

Deferred income,non-current

(43,478)

43,433

-

Operating lease liabilities

(111,195)

(76,752)

-

Income tax payables

430,333

(404,231)

267,988

Accrued expenses and other payables

(2,455,366)

(2,322,199)

(4,481,539)

Net cash provided by (used in) operating activities

(22,632,721)

13,291,596

(2,383,550)

Cash flows from investing activities

Cash paid for long-term investment

(2,873,522)

(3,015,119)

-

Proceeds from disposal of long-term investment

4,574,914

-

-

Purchase of intangible asset

(143,491)

-

Purchase of property,plant and equipment

(1,355,101)

(2,316,967)

(5,511,732)

Proceeds from sale of property,plant and equipment

40,805

427,261

22,072

Prepayment for property,plant and equipment

(5,862,026)

-

(73,227)

Deposit on acquisition of subsidiary

-

-

(200,000)

Net cash provided by (used in) investing activities

(5,618,421)

(4,904,825)

(5,887)

Cash flows from financing activities

Proceeds from related parties

5,386,618

-

-

Repayment to related parties

-

-

(9,703)

Deposit on loan agreements

-

(503,939)

(473,698)

Collection of deposits on loan agreements

911,809

-

-

Proceeds from loans due within one year

25,405,697

7,454,711

11,493,557

Repayment of loans due within one year

(7,601,156)

(8,046,350)

(11,952,224)

Proceeds from long-term loans

-

6,376,169

8,631,493

Payment of debt issuance costs

-

(335,938)

(284,219)

Repayment of long-term loans

(5,171)

(7,736,415)

(730,595)

Net cash provided by (used in) financing activities

18,340,797

(2,762)

6,674,611

Effect of foreign exchange rate changes on cash,cash equivalents and restricted cash

406,933

(124,050)

(404,956)

Net change in cash,cash equivalents and restricted cash

(9,503,412)

5,470,959

(1,782)

Cash,cash equivalents and restricted cash,beginning of the year

13,965,942

8,494,983

10,371,765

Cash,end of the year

$

4,530

$

13,942

$

8,983

Supplemental cash flow information

Cash paid for interest

$

1,555,485

$

608,431

$

689,867

Cash paid for income taxes

$

775,240

$

977,755

$

1,507,489

Non-cash investing and financing activities:

Properties acquired with loans

$

-

$

-

$

52,161

Liabilities assumed in connection with purchase of property,plant and equipment

$

158,806

$

2,980,582

$

2,636,770

Operating expenses paid by related parties

$

-

$

-

$

9,703

Property,plant and equipment transferred from inventories

$

548,058

$

2,339

$

1,566,314

Transfer from prepayments to property,plant and equipment

$

72,850

$

-

$

-

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

Cash and cash equivalents

$

4,765

$

2,461,501

Restricted cash

-

4,177

6,033,482

Total cash,cash equivalents and restricted cash

$

4,983

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