SHENZHEN, China, November 10, 2011 /PRNewswire-Asia-FirstCall/ -- Sino Assurance Inc. (OTCBB: SNAS) today reported third quarter 2011 Earnings.
Net revenue
Net revenue for the nine months ended September 30, 2011, was $6,963,539 as compared to $7,344,206 for the same period in 2010. The decrease of $380,667 or approximately 5% was due to the tightening control of bank loan supply in China during last two quarter and as a result reduce the demand of tender and surety guarantee business. The gross margin are remain the same as 82% for the nine months ended September 30, 2011, due to effective control of the cost of sales.
Net revenue for the three months ended September 30, 2011, was $1,373,686 as compared to $3,034,904 for the same period in 2010. The decrease of $1,661,218 or approximately 55% was due to the continuous tightening control of bank loan supply in China during this period and as a result reduce the demand of tender and surety guarantee business. The gross margin decreased to 69% from 83% for the three months ended September 30, 2011, due to the percentage of the guarantee fee income that without cost was decreased and the percentage of guarantee fee income that with cost was increased.
Net income before tax
Net income before tax for the nine months ended September 30, 2011 was $2,444,688 compared to $3,613,345 for the same period in 2010, a decrease in pre-tax income of $1,168,657, or approximately 32%. The decrease in pre-tax net income was mainly due to increase in selling, general and administrative expenses.
Operating expenses
Total operating expenses were $3,294,967 for the nine months ended September 30, 2011, as compared to $2,438,380 for the same period in 2010. The increase of $856,587 or 35% was primarily due to the increase in staff costs, rent and rate, audit fee and other professional fee.
Total operating expenses were $1,237,945 for the three months ended September 30, 2011, as compared to $897,004 for the same period in 2010. The increase of $340,941 or 38% was primarily due to the increase in staff costs, rent and rate, audit fee and other professional fee.
LIQUIDITY
As of September 30, 2011, guarantee fee receivable was $37,774, as compared to a December 31, 2010 balance of $18,003. As of September 30, 2011, customer collateral was $17,722,717, as compared to a December 31, 2010 balance of $8,830,517. These changes were due to the increase of the tender and surety guarantee business. As of September 30, 2011, marketable securities were $156,206 as compared to none in December 31, 2010. As of September 30, 2011, deferred revenue was $1,646,051, as compared to deferred revenue of $915,847 as of December 31, 2010.
For the nine months ended September 30, 2011, cash provided by operating activities totaled $3,032,359. This was primarily due to the net income for the period plus increase in deferred revenue, accrued liability and other payable, partially offset by the increase in guarantee fee receivables, prepayments and other receivable and decrease in income tax payable and accounts payable.
For the nine months ended September 30, 2011, cash used in investing activities amounted to $2,181,056. The use of funds was mainly due to the payment on loan receivable, purchase of marketable securities and purchase of plant and equipment, partially offset by the receipts from loans receivable and the change in restricted cash, net of customer collateral.
Safe Harbor Statement
This press release may include certain statements that are not descriptions of historical facts, but are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as 'will,' 'believes,' 'expects' or similar expressions. Such information is based upon expectations of our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and based upon premises with respect to future business decisions, which are subject to change. We do not undertake to update the forward-looking statements contained in this press release. For a description of the risks and uncertainties that may cause actual results to differ from the forward-looking statements contained in this press release, see our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ('SEC'), and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system at http://www.sec.gov.
SINO ASSURANCE INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2011 AND DECEMBER 31, 2010 (Currency expressed in United States Dollars ("US$"), except for number of shares) | ||||||
September 30, 2011 | December 31, 2010 | |||||
(Unaudited) | (Audited) | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 8,171,638 | $ | 7,074,893 | ||
Restricted cash | 20,861,834 | 13,050,117 | ||||
Marketable securities | 156,206 | - | ||||
Guarantee fee receivable | 37,774 | 18,003 | ||||
Loans receivable, unsecured | 5,998,310 | 2,842,001 | ||||
Prepayments and other receivable | 402,790 | 262,127 | ||||
Total current assets | 35,628,552 | 23,247,141 | ||||
Non-current assets: | ||||||
Plant and equipment, net | 520,104 | 410,807 | ||||
TOTAL ASSETS | $ | 36,148,656 | $ | 23,657,948 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable, trade | $ | 60,176 | $ | 130,209 | ||
Customer collateral | 17,722,717 | 8,830,517 | ||||
Deferred revenue | 1,646,051 | 915,847 | ||||
Amount due to a related party | 63,634 | 61,614 | ||||
Income tax payable | - | 529,447 | ||||
Deferred tax liabilities | 2,061,562 | 1,422,843 | ||||
Accrued liabilities and other payable | 2,051,827 | 1,455,009 | ||||
Total current liabilities | 23,605,967 | 13,345,486 | ||||
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Common stock, $0.001 par value; 200,000,000 shares authorized; | 60,200 | 60,200 | ||||
Additional paid-in capital | 2,970,045 | 2,970,045 | ||||
Accumulated other comprehensive income | 836,937 | 468,837 | ||||
Statutory reserve | 332,153 | 332,153 | ||||
Retained earnings | 8,343,354 | 6,481,227 | ||||
Total stockholders' equity | 12,542,689 | 10,312,462 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 36,148,656 | $ | 23,657,948 | ||
SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (Currency expressed in United States Dollars ("US$")) (Unaudited) | ||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
REVENUES, NET | ||||||||||||
Guarantee fee income | $ | 1,321,721 | $ | 2,981,863 | $ | 6,853,304 | $ | 7,230,368 | ||||
Interest income | 51,965 | 53,041 | 110,235 | 113,838 | ||||||||
Total revenues, net | 1,373,686 | 3,034,904 | 6,963,539 | 7,344,206 | ||||||||
COST OF REVENUE | 423,228 | 524,677 | 1,223,884 | 1,292,481 | ||||||||
GROSS PROFIT | 950,458 | 2,510,227 | 5,739,655 | 6,051,725 | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 1,150,598 | 733,317 | 2,887,546 | 2,037,497 | ||||||||
Provision for guarantee losses | 87,347 | 163,687 | 407,421 | 400,883 | ||||||||
| 1,237,945 | 897,004 | 3,294,967 | 2,438,380 | ||||||||
(LOSS) INCOME BEFORE INCOME TAXES | (287,487) | 1,613,223 | 2,444,688 | 3,613,345 | ||||||||
Income tax benefit (expense) | 83,999 | (376,984) | (582,561) | (847,947) | ||||||||
NET (LOSS) INCOME | $ | (203,488) | $ | 1,236,239 | $ | 1,862,127 | $ | 2,765,398 | ||||
Other comprehensive income: | ||||||||||||
- Foreign currency translation gain | 105,748 | 125,902 | 368,100 | 152,803 | ||||||||
COMPREHENSIVE (LOSS) INCOME | $ | (97,740) | $ | 1,362,141 | $ | 2,230,227 | $ | 2,918,201 | ||||
Net (loss) income per share - Basic and diluted | $ | (0.00) | $ | 0.02 | $ | 0.03 | $ | 0.05 | ||||
Weighted average common shares outstanding - Basic and diluted | 60,200,000 | 60,000,000 | 60,200,000 | 60,000,000 | ||||||||
SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (Currency expressed in United States Dollars ("US$")) (Unaudited) | |||||||||
Nine months ended September 30, | |||||||||
2011 | 2010 | ||||||||
Cash flows from operating activities: | |||||||||
Net income | $ | 1,862,127 | $ | 2,765,398 | |||||
Adjustments to reconcile net income to net cash provided | |||||||||
Depreciation | 113,112 | 82,043 | |||||||
Loss on disposal of plant and equipment | 5,310 | 1,183 | |||||||
Provision for guarantee losses | 407,421 | 400,883 | |||||||
Deferred tax expense | 582,561 | 554,876 | |||||||
Changes in operating assets and liabilities: | |||||||||
Guarantee fee receivable | (18,873) | (26,064) | |||||||
Prepayments and other receivable | (129,949) | (232,788) | |||||||
Accounts payable, trade | (73,114) | 15,185 | |||||||
Deferred revenue | 688,947 | 260,816 | |||||||
Income tax payable | (538,056) | 259,004 | |||||||
Accrued liabilities and other payable | 132,873 | (38,711) | |||||||
Net cash provided by operating activities | 3,032,359 | 4,041,825 | |||||||
Cash flows from investing activities: | |||||||||
Change in restricted cash, net of customer collateral | 1,199,375 | (949,296) | |||||||
Purchase of marketable securities | (153,704) | - | |||||||
Receipts from loans receivable | 2,888,213 | 283,968 | |||||||
Payment on loans receivable | (5,902,232) | (2,268,060) | |||||||
Proceeds from disposal of plant and equipment | 247 | 290 | |||||||
Purchase of plant and equipment | (212,955) | (145,947) | |||||||
Net cash used in investing activities | (2,181,056) | (3,079,045) | |||||||
Cash flows from financing activities: | |||||||||
Advance from a related party | - | 14,930 | |||||||
Net cash provided by financing activities | - | 14,930 | |||||||
Effect of exchange rate changes in cash | 245,442 | 28,616 | |||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 1,096,745 | 1,006,326 | |||||||
CASH AND CASH EQUIVALENT, BEGINNING OF | 7,074,893 | 559,105 | |||||||
CASH AND CASH EQUIVALENT, END OF PERIOD | $ | 8,171,638 | $ | 1,565,431 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW | |||||||||
Cash paid for income taxes | $ | 538,056 | $ | 32,368 | |||||
Cash paid for interest | $ | - | $ | - | |||||
