YANTAI, China, Dec. 18, 2020 /PRNewswire/ -- 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 unaudited financial results for the half-year ended
June 30, 2020.
Six Months Ended June 30, 2020
Financial Highlights (all comparisons to the six months ended
June 30, 2019 unless noted)
- Revenues increased by 16.80% from $8.73
million to $10.19 million,
which resulted from: 1) Greater sales force allocation into new
target markets and existing markets; 2) More project sales were
generated for the six months ended June 30,
2020.
- Cost of revenues increased by 6.13% from $4.50 million to $4.78
million due to the increase of revenues.
- Gross profit increased by 28.18% to $5.41 million compared to $4.22 million for the same period in 2019, while
the gross profit margin was 53.11%, compared to 48.39% for the same
period in 2019. The increase was due to higher revenue generated
per unit of waste water processed for certain projects related to
the treatment of leachate from landfill, where the Company believes
it possesses technology advantages in this specific field.
- Operation expense decreased by 16.79% from $5.45 million to $4.53
million, and the percentage of operation expense compared to
revenue decreased from 62.44% to 44.48%.
- Income from operations increased from loss from operations of
$1.23 million to income from
operations of $0.88 million, due to
the increase in gross margin and decrease in selling, general and
administrative expenses.
"2021 will be our year of management efficiency." commented Mr.
Yuebiao Li, the Company's Chairman and Chief Executive Officer, "
We plan to improve management efficiency and remain committed
to research and development of DTRO technology as well as expanding
the application of DTRO technology in new markets,we believe we
will soon see new revenue streams generating from those
markets."
Operating Results for Six Months Ended June 30, 2020
Revenues
We derive our revenues from (1) sale of products such as reverse
osmosis and nano-filtration membrane equipment and wastewater
treatment equipment ("product revenues"); (2) sale of wastewater
treatment projects ("project revenues"); and (3) providing
wastewater treatment services to landfill leachates, briny
wastewater from industrial parks and coal mines ("service
revenues"). Revenues consist of the invoiced value for the sales,
net of value-added tax ("VAT"), business tax, applicable local
government levies, rebates, discounts and returns.
For the six months ended June 30,
2020, revenues increased by $1.47
million, or 16.80%, to $10.19
million from $8.73 million for
the same period last year. This increase was mainly caused by the
increase in project sales.
Our project revenues are recognized when our performance
obligation under the terms of a contract with the customer are
satisfied and control of the products has been transferred to the
customer, which normally occurs (i) when customer-issued formal
acceptance is obtained or (ii) the Company has demonstrated
the equipment meets the agreed-upon criteria per the contract when
formal acceptance is not available.
Our service revenues are recognized as the performance
obligations are satisfied over time, because our customers
simultaneously receive and consume benefits as the services are
provided by us. Specifically, the revenues have been recognized
based on the volume of wastewater purified multiplied by negotiated
contract billing rates.
Cost of revenues
Cost of revenues consist primarily of (i) materials and
equipment costs, (ii) compensation and related overhead expenses
for personnel involved in the customization of our products,
delivery, installation and maintenance and services, (iii)
contractor costs, and (iv) depreciation of equipment used in
operations.
Cost of revenues increased by $0.28
million, or 6.13%, to $4.78
million for the six months ended June
30, 2020 from $4.50 million
for the same period last year. As a percentage of revenues, cost of
revenues was 46.89% for the six months ended June 30, 2020, compared to 51.61% for the same
period last year. The increase of cost of revenues was due to the
increase of revenues.
Gross profit and gross margin
Gross profit increased slightly by $1.19
million, or 28.18%, to $5.41
million for the six months ended June
30, 2020 from $4.22 million
for the same period last year. In addition, gross margin increased
to 53.11% for the six months ended June 30,
2020 from 48.39% for the same period last year. The increase
in gross margin was due to the facts that: (1) higher revenue
generated per unit of waste water processed for certain projects
related to the treatment of leachate from landfill, where the
Company believes it possesses technology advantages in this
specific field; (2) more membrane column products were sold for the
six months ended June 30, 2020, which
had a higher gross margin.
Selling, general and administrative expenses
Selling, general and administrative expenses ("SG&A")
decreased by $0.91 million, or
16.79%, to $4.53 million for the six
months ended June 30, 2020 from
$5.45 million for the same period
last year. The decrease was partially due to the decrease in
R&D expense, travelling expense, business and entertainment
expenses.
R&D expenses decreased by 46.78% for the six months ended
June 30, 2020 due to decreased
R&D investments into coal mine wastewater and municipal
wastewater. Research and development expenses accounted for 29.42%
of the selling, general and administrative expenses for the six
months ended June 30, 2020, compared
with 47.98% for the same period of 2019.
Operating income (loss) and operating margin
Income from operations increased by $2.11
million, to an income of $0.88
million for the six months ended June
30, 2020 from loss of $1.23
million for the same period last year. Operating margin was
positive 8.63% for the six months ended June
30, 2020, compared to negative 14.04% for the same period
last year.
The significant increase in operating income and operating
margin mainly resulted from the increase in revenues, the increase
in gross margin, and decrease in expenses for the six months ended
June 30, 2020.
Income Taxes
Provision for income taxes was $0.26
million for the six months ended June
30, 2020, an increase of $0.20
million, or 343.39%, from $0.06
million for the same period of last year. We were entitled
to a preferential enterprise income tax ("EIT") rate of 15% in 2020
and 2019. The standard enterprise income tax rate in China is 25%.
Net Income (loss)
Net income was $0.65 million for
the six months ended June 30, 2020,
compared to net loss of 0.98 million for the same period last year.
Earnings per basic and diluted share was $0.06 for the six months ended June 30, 2020, compared to a loss per share of
$0.09 for the same period last
year.
Financial Conditions
As of June 30, 2020, the Company
had cash of $9.47 million, compared
to $9.94 million at December 31, 2019. Total working capital was
$1.25 million as of June 30, 2020, compared to $1.34 million at the end of 2019.
Net cash used in operating activities was $3.92 million for the six months ended
June 30, 2020, compared to net cash
used in operating activities of $1.10
million for the same period last year. Net cash used in
investing activities was $2.83
million for the six months ended June
30, 2020, compared to $1.07
million for the same period last year. Net cash provided by
financing activities was $2.47
million for the six months ended June
30, 2020, compared to $0.93
million for the same period of last year.
Recent Developments
In January 2020, the Company and
Yantai Caijin Investment Holding Co., Ltd invested an additional
RMB 20,000,000 (approximately
$2,873,000) and RMB 30,000,000 (approximately $4,310,000), respectively, in Yantai Jincai
Environmental Protection Technology Co., Ltd. The equity interest
of Yantai Jincai Environmental Protection Technology Co., Ltd owned
by the Company remained at 40%.
On May 29, 2020, the Company and
Yantaishi Zhengda Urban Construction Progress Co., Ltd. established
Yantai Jinyu Eco-Technology Co., Ltd. ("Yantai Jinyu"), an
environmental technology development company. The Company holds 40%
equity interest in Yantai Jinyu and intends to invest RMB 20,000,000 (approximately $2,798,000) capital in Yantai Jinyu. The
investment was not paid as of June 30,
2020.
The outbreak of the COVID-19 pandemic in China starting from the end of 2019 has posed
limitations to the Company's normal operating routine. The Company
followed the restrictive measures implemented in China, by suspending onsite operation until
February 2020, when the Company
started to gradually resume normal operation. The Company has
experienced suspension of operations, interruption of supply chains
and decline in demand by the Company's customers. Currently, there
are still sporadic new COVID-19 pandemic cases in China, but the overall epidemic situation is
under control. Our Company has resumed to normal operations, Due to
the high uncertainty of the evolving situation, the Company has
limited visibility on the full impact brought upon by the COVID-19
pandemic and the related financial impact cannot be estimated at
this time.
About Newater Technology, Inc.
Founded in 2012 and headquartered in Yantai, China, Newater specializes in the development,
manufacture and sale of DTRO (Disk Tube Reverse Osmosis) and DTNF
(Disk Tube Nano-Filtration) membranes for wastewater 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. Newater
also provides wastewater treatment services, such as landfill
leachate treatment and purification services.
The Company's products can be used across a wide spectrum of
industries, including:
- Reuse of high quality reclaimed water;
- High-salt and high-polluting wastewater treatment and near
zero-liquid discharge;
- Highly efficient treatment of Landfill leachate; and
- Utilization of acid or alkali-containing wastewater as
resources.
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: 1) its ability to improve management efficiency; 2) its
ability to expand intp new markets and ability to generate revenue
therefrom; 3) the continued expansion of its research and
development; 4) the impact of COVID-19 on the Company's business
operations, financial condition and operating results; and 5) its
continued growth 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.
NEWATER
TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
June 30,
|
|
December 31,
|
|
2020
|
|
2019
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
9,467,193
|
|
$
|
9,944,765
|
Restricted cash,
current
|
|
154,046
|
|
|
4,021,177
|
Accounts receivable,
net
|
|
9,485,113
|
|
|
11,293,625
|
Accounts receivable -
related parties, net
|
|
4,447,452
|
|
|
2,392,087
|
Notes
receivable
|
|
-
|
|
|
360,505
|
Inventories
|
|
22,323,811
|
|
|
13,715,369
|
Deferred cost of
revenue
|
|
-
|
|
|
221,737
|
Advance to suppliers
and other current assets, net
|
|
13,122,292
|
|
|
4,699,755
|
Advance to suppliers
- related parties
|
|
393,325
|
|
|
-
|
Total current
assets
|
|
59,393,232
|
|
|
46,649,020
|
|
|
|
|
|
|
Retentions
receivable, non-current
|
|
12,662
|
|
|
734,140
|
Property, plant and
equipment, net
|
|
22,485,025
|
|
|
24,611,862
|
Land use rights,
net
|
|
1,955,035
|
|
|
2,008,096
|
Operating lease
right-of-use assets
|
|
124,547
|
|
|
141,016
|
Deposit on loan
agreement
|
|
905,464
|
|
|
918,643
|
Long-term
investments
|
|
5,683,006
|
|
|
2,997,419
|
Total
assets
|
$
|
90,558,971
|
|
$
|
78,060,196
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
bank acceptance notes to vendors
|
$
|
6,041,747
|
|
$
|
8,099,529
|
Accounts payable -
related parties
|
|
2,823,000
|
|
|
5,225,004
|
Loans due within one
year
|
|
10,373,418
|
|
|
11,809,449
|
Loans due within one
year - related party
|
|
4,757,930
|
|
|
-
|
Advances from
customers
|
|
7,853,001
|
|
|
5,522,913
|
Advances from
customers - related parties
|
|
22,265,709
|
|
|
7,254,968
|
Income tax
payables
|
|
218,512
|
|
|
322,419
|
Accrued expenses and
other payables
|
|
3,309,098
|
|
|
6,971,505
|
Operating lease
liabilities, current
|
|
64,981
|
|
|
56,852
|
Deferred
income
|
|
438,584
|
|
|
43,061
|
Total current
liabilities
|
|
58,145,980
|
|
|
45,305,700
|
|
|
|
|
|
|
Deferred Income,
non-current
|
|
417,362
|
|
|
43,061
|
Deferred tax
liabilities
|
|
284,544
|
|
|
288,687
|
Operating lease
liabilities, non-current
|
|
33,699
|
|
|
68,420
|
Long-term loans, less
current portion and unamortized debt issuance costs
|
|
429,260
|
|
|
1,377,217
|
Total non-current
liabilities
|
|
1,164,865
|
|
|
1,777,385
|
Total
liabilities
|
|
59,310,845
|
|
|
47,083,085
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
Common shares ($0.001
par value, 200,000,000 shares authorized, 10,809,000 shares
issued and outstanding as of June 30, 2020 and December 31,
2019)
|
|
10,809
|
|
|
10,809
|
Additional paid-in
capital
|
|
26,303,348
|
|
|
26,303,348
|
Statutory
reserves
|
|
2,373,849
|
|
|
2,267,219
|
Retained
earnings
|
|
4,489,975
|
|
|
3,946,021
|
Accumulated other
comprehensive loss
|
|
(1,929,855)
|
|
|
(1,550,286)
|
Total
shareholders' equity
|
|
31,248,126
|
|
|
30,977,111
|
Total liabilities
and shareholders' equity
|
$
|
90,558,971
|
|
$
|
78,060,196
|
NEWATER
TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited)
|
|
|
For the Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
|
|
|
Net
revenues
|
$
|
7,028,849
|
|
$
|
4,349,931
|
Net revenues from
related parties
|
|
3,163,246
|
|
|
4,376,104
|
Total
revenues
|
|
10,192,095
|
|
|
8,726,035
|
Cost of
revenues
|
|
4,496,363
|
|
|
4,124,057
|
Cost of revenues from
related parties
|
|
282,700
|
|
|
379,014
|
Total cost of
revenues
|
|
4,779,063
|
|
|
4,503,071
|
Gross
profit
|
|
5,413,032
|
|
|
4,222,964
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative
|
|
4,533,523
|
|
|
5,448,482
|
Total operating
expenses
|
|
4,533,523
|
|
|
5,448,482
|
Income (loss) from
operations
|
|
879,509
|
|
|
(1,225,518)
|
Interest
expense
|
|
460,626
|
|
|
497,800
|
Interest
income
|
|
(45,890)
|
|
|
(16,488)
|
Government
grants
|
|
(497,006)
|
|
|
(844,352)
|
Other expense
(income)
|
|
(47,302)
|
|
|
59,554
|
Loss from equity
method investments
|
|
101,501
|
|
|
-
|
Total other
income
|
|
(28,071)
|
|
|
(303,486)
|
Net Income (loss)
before income tax provisions
|
|
907,580
|
|
|
(922,032)
|
Income tax
provision
|
|
256,996
|
|
|
57,961
|
Net Income
(loss)
|
|
650,584
|
|
|
(979,993)
|
Other
comprehensive income (loss)
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(379,569)
|
|
|
44,469
|
Total
comprehensive income (loss)
|
$
|
271,015
|
|
$
|
(935,524)
|
|
|
|
|
|
|
Earnings (loss)
per share
|
|
|
|
|
|
Basic
|
$
|
0.06
|
|
$
|
(0.09)
|
Diluted
|
$
|
0.06
|
|
$
|
(0.09)
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
Basic
|
|
10,809,000
|
|
|
10,809,000.00
|
Diluted
|
|
10,809,000
|
|
|
10,809,000.00
|
NEWATER
TECHNOLOGY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
For the Six
Months
Ended June 30,
|
|
2020
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
Net income
(loss)
|
$
|
650,584
|
|
$
|
(979,993)
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
Loss from equity
method investments
|
|
101,501
|
|
|
-
|
Depreciation and
amortization expense
|
|
1,028,343
|
|
|
452,175
|
Deferred income
taxes
|
|
-
|
|
|
(165,462)
|
Bad debt
expense
|
|
(49,059)
|
|
|
-
|
Amortization of debt
issuance costs
|
|
92,922
|
|
|
186,616
|
Noncash lease
expense
|
|
29,787
|
|
|
-
|
Loss (gain) on
disposal of property, plant and equipment
|
|
(14,242)
|
|
|
36,056
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts receivable,
net
|
|
1,703,935
|
|
|
(1,849,692)
|
Accounts receivable -
related parties, net
|
|
(2,100,320)
|
|
|
59,155
|
Notes
receivable
|
|
357,142
|
|
|
(339,314)
|
Inventories
|
|
(7,860,071)
|
|
|
(3,628,348)
|
Deferred cost of
revenue
|
|
219,668
|
|
|
(425,936)
|
Advances to suppliers
and other current assets, net
|
|
(8,840,247)
|
|
|
(1,745,404)
|
Advances to suppliers
- related parties
|
|
(395,327)
|
|
|
-
|
Retentions receivable,
non-current
|
|
714,565
|
|
|
-
|
Deposit - related
party
|
|
-
|
|
|
10,319
|
Accounts payable and
bank acceptance notes to vendors
|
|
(1,966,468)
|
|
|
1,995,676
|
Accounts payable -
related parties
|
|
(2,338,893)
|
|
|
1,917,626
|
Deferred
income
|
|
398,157
|
|
|
-
|
Advances from
customers
|
|
2,421,585
|
|
|
2,900,143
|
Advances from
customers - related parties
|
|
15,191,766
|
|
|
2,070,275
|
Due to related
parties
|
|
-
|
|
|
737,039
|
Deferred income,
non-current
|
|
376,827
|
|
|
-
|
Operating lease
liabilities
|
|
(85,451)
|
|
|
-
|
Income tax
payables
|
|
(99,787)
|
|
|
(742,689)
|
Accrued expenses and
other payables
|
|
(3,460,645)
|
|
|
(1,587,558)
|
Net cash used in
operating activities
|
|
(3,923,728)
|
|
|
(1,099,316)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Cash paid for equity
method investment
|
|
(2,873,522)
|
|
|
-
|
Purchase of property,
plant and equipment
|
|
(3,404)
|
|
|
(1,172,508)
|
Proceeds from sale of
property and equipment
|
|
42,660
|
|
|
106,625
|
Net cash used in
investing activities
|
|
(2,834,266)
|
|
|
(1,065,883)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Proceeds from related
party
|
|
4,951,756
|
|
|
-
|
Repayment to related
party
|
|
(193,826)
|
|
|
(4,606)
|
Deposit on loan
agreement
|
|
-
|
|
|
(503,939)
|
Proceeds from loans
due within one year
|
|
3,972,532
|
|
|
1,196,073
|
Repayment of loans due
within one year
|
|
(4,191,687)
|
|
|
(2,600,489)
|
Proceeds from
long-term loans
|
|
-
|
|
|
6,376,169
|
Payment of debt
issuance costs
|
|
-
|
|
|
(335,938)
|
Repayment of long-term
loans
|
|
(2,073,093)
|
|
|
(3,195,888)
|
Net cash provided
by financing activities
|
|
2,465,682
|
|
|
931,382
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes on cash, cash equivalents and restricted
cash
|
|
(52,391)
|
|
|
(51,484)
|
|
|
|
|
|
|
Net change in
cash, cash equivalents and restricted cash
|
|
(4,344,703)
|
|
|
(1,285,301)
|
Cash, cash
equivalents and restricted cash, beginning of the
period
|
|
13,965,942
|
|
|
8,494,983
|
Cash, cash
equivalents and restricted cash, end of the period
|
$
|
9,621,239
|
|
$
|
7,209,682
|
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
|
|
Cash paid for
interest
|
$
|
294,959
|
|
$
|
538,764
|
Cash paid for income
taxes
|
$
|
349,819
|
|
$
|
966,113
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
Liabilities assumed
in connection with purchase of property, equipment and
plant
|
$
|
140,821
|
|
$
|
216,064
|
Property, plant and
equipment transferred from inventories
|
$
|
989,956
|
|
$
|
847,956
|
Operating expenses
paid by related parties
|
$
|
-
|
|
$
|
4,606
|
|
|
|
|
|
|
Reconciliation of
cash, cash equivalents and restricted cash to the consolidated
balance sheets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
9,467,193
|
|
$
|
2,676,097
|
Restricted
cash
|
|
154,046
|
|
|
4,533,585
|
Total cash, cash
equivalents and restricted cash
|
$
|
9,621,239
|
|
$
|
7,209,682
|
View original
content:http://www.prnewswire.com/news-releases/newater-technology-inc-announces-half-year-2020-unaudited-financial-results-301195789.html
SOURCE Newater Technology, Inc.