Financial Performance - Revenue for the year ended December 31, 2019, was $21,103,114, a decrease of 16.5% from $25,290,060 in 2018 and a decrease of 28.0% from $29,200,445 in 2017[21] - Gross profit for 2019 was $8,056,621, representing a gross margin of approximately 38.2%, compared to 29.9% in 2018 and 35.7% in 2017[21] - Net income for 2019 was $2,739,990, a significant recovery from a net loss of $5,144,715 in 2018[21] Assets and Liabilities - Total assets increased to $84,799,257 in 2019 from $56,653,676 in 2018, reflecting a growth of 49.7%[22] - Total liabilities rose to $30,863,744 in 2019, up from $19,896,325 in 2018, indicating an increase of 55.2%[22] - Total shareholders' equity increased to $53,945,320 in 2019, compared to $36,757,351 in 2018, marking a growth of 46.7%[22] Research and Development - Research and development expenses for 2019 were $492,696, an increase of 37.3% from $358,411 in 2018[21] Customer Concentration - Three customers accounted for 24%, 21%, and 16% of total revenue in 2019, highlighting a reliance on a limited customer base[32] Debt and Financial Obligations - The company has approximately $0.9 million in bank loans outstanding as of December 31, 2019, down from $1.7 million in 2018, indicating a reduction in debt[30] - The company recorded a tax liability of $10,915,483 as of December 31, 2019, up from $9,085,746 in 2018, indicating a potential increase in tax obligations[24] Operational Risks - Rapid expansion could strain resources and operational infrastructure, potentially impairing the ability to meet increased demand[47] - The COVID-19 pandemic has resulted in significant operational challenges, including potential reductions in customer budgets and delays in project progress[51] - The company relies heavily on senior management and key personnel for operations and product development, with intense competition for qualified candidates[60][62] Intellectual Property - The company controls 34 patents in China related to valve production technology, with potential future royalty payments that could increase operational costs[70][71] - The company is dependent on intellectual property licenses from its Chief Executive Officer, which could be terminated, impacting commercialization efforts[67][68] Financial Services Segment - The financial services segment recorded a profit of approximately $1.5 million in 2019, but future profitability is uncertain due to potential increases in operating expenses[90] - The company relies on a limited number of third-party financial product providers, which significantly impacts revenue; losing a major provider could substantially reduce profitability[88] - The financial services segment operates in a highly competitive environment, with competitors potentially having more resources and better market adaptability[87] - The company has a limited operating history in the financial services market, making it difficult to evaluate future prospects and customer acquisition[80] - The financial services segment's success depends on maintaining strategic relationships with commercial banks and other financial institutions, which are crucial for growth[99] Regulatory and Legal Risks - The regulatory framework for local financial exchanges is evolving, and any restrictions could adversely affect the company's advisory services[84] - The company faces risks related to intellectual property infringement, which could disrupt operations and negatively impact financial results[78] - The company operates through contractual arrangements with variable interest entities (VIEs) to comply with PRC laws, which may not provide the same level of control as direct ownership[105] - There are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations, which could adversely affect the company's operations[106] - The company may face material adverse tax consequences if the PRC tax authorities determine that its contractual arrangements were not entered into on an arm's length basis[121] Market and Economic Conditions - Recent scrutiny of U.S.-listed Chinese companies could harm the company's reputation and business operations, potentially impacting stock value[123] - Adverse changes in PRC government policies could negatively impact overall economic growth and reduce demand for the company's products[126] - The company’s business operations are primarily conducted in China, making it susceptible to economic, political, and legal developments in the region[127] - The PRC government has implemented policy measures to stimulate economic growth in response to recent downturns, which could impact the company's growth rate and strategy[127] Labor and Compliance - The Labor Contract Law in China imposes greater liabilities on employers, potentially increasing labor costs and affecting workforce management decisions[128] - The company incurs significant legal, accounting, and compliance costs as a public entity, which could negatively impact net income and liquidity[167] - The company has faced compliance issues with Nasdaq Listing Rules, including a minimum bid price requirement[196] Shareholder and Corporate Structure - The principal shareholder holds a majority of the voting power, allowing the company to potentially exempt itself from certain corporate governance requirements[182] - The Chief Executive Officer, Mr. Anyuan Sun, beneficially owns all 7,778,400 Class B common shares[219] Currency and Foreign Exchange - The company receives substantially all of its revenues in RMB, and any restrictions on currency conversion may affect its ability to pay dividends in foreign currencies[154] - For the years ended December 31, 2019, 2018, and 2017, the company reported foreign currency translation losses of $(0.6) million and $(1.8) million, and a gain of $2.2 million, respectively[157] - The company has not entered into any hedging transactions to mitigate exposure to exchange rate fluctuations, which may be limited in availability and effectiveness[157] Corporate History and Structure - Hebron Technology was established on May 29, 2012, as a holding company under the laws of the British Virgin Islands[206] - The company underwent two major corporate reorganizations, including the IPO Reorganization and the acquisition of financial advisory services in 2019[207] - The Xibolun Subsidiary Group focuses on the research, development, and manufacture of fluid equipment, particularly intelligent valves for clean industries in China[209] - The financial services segment began operations in July 2019, providing underwriting advisory services and banking product distribution[210] Stock and Shareholder Information - The trading price of Class A common shares has fluctuated between $0.72 and $9.00 per share for the year ended December 31, 2019[193] - The company does not intend to pay dividends for the foreseeable future, opting to retain earnings for business expansion[198] - Being a public company incurs additional expenses estimated between $500,000 and $1 million per year compared to when it was private[199] - The market price of Class A common shares may be volatile and could decline regardless of operating performance[192]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Symbol Name of each exchange on which registered Class A common shares, par value $0.001 per share HEBT Nasdaq FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECU ...