Newater Technology, Inc. Announces Year 2017 Audited Financial Results

YANTAI, CHINA / ACCESSWIRE / April 30, 2018 / Newater Technology, Inc. (NASDAQ: NEWA) (”NEWA,” ”we,” ”our” or the ”Company”), a developer, service provider and manufacturer of membrane filtration products and related hardware and engineered systems that are used in the treatment, recycling and discharge of wastewater, today announced its financial results for the year ended December 31, 2017.

The year ended December 31, 2017 Financial Highlights (all comparisons to the year ended December 31, 2016)

Revenues increased by 106% from $12.28 million to $25.34 million, which resulted primarily from the increased demand for our projects and services, evidenced by a large increase in our project sales, an increased number of customers and larger scale projects, and service sales.
Cost of revenues increased by 121% from $7.74 million to $17.08 million, primarily due to the revenue growth in the same period.
Gross profit increased by 82% to $8.26 million in 2017 from $4.54 million in 2016, while the gross profit margin was 33%, compared to 37% for the same period in 2016.
Selling, general and administrative expenses (SG&A) increased by 77% from $3.15 million to $5.58 million, however, the percentage of SG&A compared to revenue decreased from 26% to 22%.
Operating income increased by 93% from $1.39 million to $2.69 million. Our operating income as a percentage of total revenues was 11% for both 2016 and 2017.
Basic earnings per share was $0.26 in 2017 compared to $0.28 in 2016.

Selected Consolidated Statements of Income and Comprehensive Income Data
in $ million

Year 2017

Year 2016

Change $

change %

Year 2015

Year 2014

Total Revenues

25.34

12.28

13.06

106
%

6.98

1.03

Total Cost of Revenues

17.08

7.74

9.34

121
%

3.76

0.67

Gross profit

8.26

4.54

3.72

82
%

3.21

0.36

Gross profit margin

33
%

37
%

46
%

35
%

SG&A

5.58

3.15

2.43

77
%

1.64

0.36

SG&A %

22
%

26
%

24
%

35
%

Operating income

2.69

1.39

1.29

93
%

1.57

0.00

Operation margin

11
%

23
%

0
%

Other Expenses (Income)

(0.38)

(1.59)

1.21

0.17

–

Income before tax

3.07

2.98

0.08

3
%

1.40

Income tax provision

0.48

0.55

0.45

0.00

Net income

2.59

2.43

0.16

6
%

0.95

(0.00)

Basic Earnings Per share

$
0.26

$
0.28

0.12

Basic Weighted average number of common shares outstanding

9,864,479

8,767,738

8,200,000

Mr. Yuebiao Li, the Company’s Chairman and Chief Executive Officer, commented ”2017 was an important and pivotal year for NEWA. Our company successfully completed its initial public offering and our common shares were listed on the Nasdaq Capital Market. We continued to have robust growth in our revenues and achieved strong operating results. We are excited about 2018, as our membrane technology was successfully selected as one of the advanced technologies to be promoted in China in 2018 by China’s Ministry of Water Resources in its proclamation ”2018 Guide to Promote Advanced Practical Technology.” In addition, Phase I of our new manufacturing complex in Yantai, China, is expected to be completed as scheduled. With our new manufacturing facilities, we expect to increase our production capacity significantly, making it possible to meet the increasing expected demand for our products. In addition, we believe our unwavering commitment to R&D will position NEWA for a long-term growth.”

About Newater Technology, Inc.

Founded in 2012 and headquartered in Yantai, China, Newater, operating its business through its wholly owned subsidiary Jinzheng, 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 water purification services, and other project-related solutions to turn wastewater into valuable clean water.

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

– Leachate from landfills
– Wastewater from oil fields
– High acid wastewater
– Power plant waste water
– Wastewater from gas production
– Desalination

More information about the Company can be found at: www.newater.cc.

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: 1) its continued growth and business outlook, 2) completion of its manufacturing facility on schedule; and 3) abiltiy to increase its production capacity to meet the anticipated demand for its products 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:

Company

Zhuo Zhang CFO
NEWATER TECHNOLOGY INC.
Phone: +86 (535) 626-4177
Email: zhuozhang@newater.cc

Investor Relations

Y. Tracy Tang CFA, CPA
SINO-AMERICAN INVESTOR ADVISORY
Phone: +1 (646) 485-1040
Email: Tracy.tang@sino-UsInvestors.com

NEWATER TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 31,

2017

2016

ASSETS

Current assets

Cash and cash equivalents

3,118,080

1,484,762

Restricted cash, current

6,753,685

1,439,926

Accounts receivable, net

6,050,495

2,637,236

Accounts receivable from related party, net

–

1,060,977

Notes receivable

–

68,108

Inventories

10,279,397

4,840,234

Deferred cost of revenue

2,547,580

–

Advances to suppliers and other current assets, net

2,885,510

2,528,411

Due from related parties

–

3,563

Total current assets

31,634,747

14,063,217

Restricted cash, non-current

500,000

–

Property, plant and equipment, net

10,449,466

1,199,611

Land use rights, net

2,243,183

2,143,002

Deferred tax assets

518,251

181,003

Other non-current assets

–

4,591

Total assets

45,345,647

17,591,424

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Accounts payable and bank acceptance notes to vendors

4,903,058

1,844,077

Loans due within one year

9,020,697

2,879,853

Due to related parties

–

714,999

Deferred income

–

25,919

Advances from customers

1,408,208

833,742

Income tax payables

501,921

329,212

Accrued expenses and other payables

8,509,425

210,400

Total current liabilities

24,343,309

6,838,202

Long term loans

11,050

–

Total liabilities

24,354,359

6,838,202

Shareholders’ equity

Common shares ($0.001 par value, 200,000,000 shares authorized, 10,809,000 and 9,199,000 shares issued and outstanding as of December 31, 2017 and 2016, respectively)

10,809

9,199

Additional paid-in capital

15,059,181

7,949,466

Statutory reserves

705,698

382,802

Retained earnings

5,228,733

2,960,698

Accumulated other comprehensive loss

(13,133)

(548,943)

Total shareholders’ equity

20,991,288

10,753,222

Total liabilities and shareholders’ equity

45,345,647

17,591,424

NEWATER TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Years Ended December 31,

2017

2016

2015

Net revenues

25,339,497

11,985,055

3,318,833

Net revenues from related parties

–

294,666

3,659,421

Total revenues

25,339,497

12,279,721

6,978,254

Cost of revenues

17,077,129

7,182,081

778,903

Cost of revenues from related party

–

556,692

2,984,968

Total cost of revenues

17,077,129

7,738,773

3,763,871

Gross profit

8,262,368

4,540,948

3,214,383

Operating expenses:

Selling, general and administrative

5,575,086

3,146,521

1,643,313

Total operating expenses

5,575,086

3,146,521

1,643,313

Income from operations

2,687,282

1,394,427

1,571,070

Interest expense

242,707

155,553

164,613

Interest income

(112,592)

(5,091)

(2,612)

Government grants

(513,538)

(1,750,726)

–

Other expenses

3,956

12,534

10,642

Total other expense (income)

(379,467)

(1,587,730)

172,643

Income before income tax provisions

3,066,749

2,982,157

1,398,427

Income tax provisions

475,818

548,437

452,850

Net income

2,590,931

2,433,720

945,577

Other comprehensive income (loss)

Foreign currency translation adjustment

535,810

(383,947)

(166,349)

Total comprehensive income

3,126,741

2,049,773

779,228

Earnings per common share

Basic

0.26

0.28

0.12

Diluted

0.26

0.28

0.10

Weighted average number of common shares outstanding

Basic

9,864,479

8,767,738

8,200,000

Diluted

9,864,479

8,767,738

9,160,087

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 Shareholders’ Equity

Balance, January 1, 2015

8,200,000

8,200

787,151

(35,797)

–

1,353

760,907

Net income

–

945,577

–

945,577

Capital contribution from owners

–

2,212,796

–

2,212,796

Statutory reserves

–

(92,995)

92,995

–

Foreign currency translation adjustment

–

(166,349)

Balance, December 31, 2015

8,200,000

8,200

2,999,947

816,785

92,995

(164,996)

3,752,931

Net income

–

2,433,720

–

2,433,720

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

–

5,323,026

Capital distribution in connection with acquisition of a subsidiary

–

(4,418,425)

–

(4,418,425)

Foreign currency translation adjustment

–

(383,947)

Balance, December 31, 2016

9,199,000

9,199

7,949,466

2,960,698

382,802

(548,943)

10,753,222

Net income

–

2,590,931

–

2,590,931

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

Balance, December 31, 2017

10,809,000

10,809

15,059,181

5,228,733

705,698

(13,133)

20,991,288

NEWATER TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

2017

2016

2015

Cash flows from operating activities

Net income

2,590,931

2,433,720

945,577

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

Depreciation and amortization expense

233,493

187,662

86,396

Bad debt expense

229,707

76,459

39,173

Deferred income taxes

(312,997)

(82,162)

(106,401)

Loss on disposal of property, plant and equipment

–

6,199

Gain on disposal of subsidiary

–

(789)

–

Changes in assets and liabilities:

Accounts receivable

(3,345,269)

(1,410,115)

(1,411,777)

Accounts receivable from related parties

1,090,465

3,645,922

(3,754,977)

Notes receivable

70,000

(56,139)

64,218

Inventories

(4,923,400)

(2,743,853)

(1,890,918)

Deferred cost of revenue

(2,453,097)

–

Advances to suppliers and other current assets

(412,955)

(2,289,933)

(540,737)

Advances to supplier – related party

–

793,106

Due from related parties

703

75,469

(1,023)

Other non-current assets

4,719

22,857

132,971

Accounts payable and bank acceptance notes to vendors

2,825,887

1,079,258

582,555

Accounts payable to related party

–

(2,140,504)

1,159,416

Deferred income

(26,639)

(30,102)

61,007

Advances from customers

499,067

425,736

(42,227)

Due to related parties

5,102

(28,257)

(68,302)

Income tax payables

144,944

(181,386)

550,163

Accrued expenses and other payables

589,638

352,502

437,151

Net cash used in operating activities

(3,189,701)

(663,655)

(2,958,430)

Cash flows from investing activities

Purchase of land use rights

–

(2,261,745)

–

Purchase of property, plant and equipment

(1,482,360)

(66,641)

(1,218,404)

Proceeds from disposal of property, plant and equipment

–

9,296

Advances to third parties

(1,236,490)

(301,019)

(40,136)

Repayments from third parties

1,236,490

338,646

–

Advances to related parties

–

(239,467)

(353,767)

Repayments from related parties

2,960

473,320

20,871

Net change in restricted cash

(5,712,407)

(922,380)

(621,567)

Cash received in connection with disposal of subsidiary

–

(1,209)

–

Net cash used in investing activities

(7,191,807)

(2,980,495)

(2,203,707)

Cash flows from financing activities

Proceeds from issuances of common shares

7,111,325

5,323,026

–

Capital contribution from shareholders

–

198,917

2,212,796

Capital distribution in connection with acquisition of a subsidiary

–

(4,418,4250)

–

Borrowings from related parties

–

2,558,661

478,969

Repayment to related parties

(739,973)

(1,982,733)

(799,590)

Proceeds from loans due within one year

8,805,683

11,613,289

4,013,614

Repayment of loans

(3,283,830)

(8,142,563)

(642,178)

Net cash provided by financing activities

11,893,205

5,150,172

5,263,611

Effect of foreign exchange rate changes on cash and cash equivalents

121,621

(156,412)

(3,080)

Net increase in cash and cash equivalents

1,633,318

1,349,610

98,394

Cash and cash equivalents, beginning of the year

1,484,762

135,152

36,758

Cash and cash equivalents, end of the year

3,118,080

1,484,762

135,152

Supplemental cash flow information

Cash paid for interest

244,753

307,797

8,354

Cash paid for income taxes

656,602

812,637

9,088

Non-cash investing and financing activities:

Stock issued for debt conversion

–

3,847,000

–

Properties acquired with loans

206,000

–

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

7,445,478

–

SOURCE: Newater Technology, Inc.

ReleaseID: 498067

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