SINO ASSURANCE INC. – 10-Q – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report, including statements in the following discussion, which are not statements of historical fact, are what are known as "forward-looking statements", which are basically statements about the future.
For that reason, these statements involve risk and uncertainty since no one can accurately predict the future. Words such as "plans," "intends," "will," "hopes," "seeks," "anticipates," "expects," and the like, often identify such forward-looking statements, but are not the only indication that a statement is a forward-looking statement. Such forward-looking statements include statements concerning our plans and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues, income or profits.
Numerous factors and future events could cause the Company to change such plans and objectives, or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits. Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this report on Form 10Q and in the Company's other filings with the
OVERVIEW
PLAN OF OPERATIONS
Management Team's 2012 Operational Plan
I. Operational Environment of Year 2012
1.
In terms of legal environment,
2.
With regard to the policy aspect, in order to regulate the assurance business while promoting the growth of this industry, relating governmental bodies have enacted a series of laws, regulations and policies such as the "Small to Medium Enterprises Promotion Law", the "Interim Administrative Rules Guiding the Risk Control Work of Small to Medium Enterprises Engaged in the Assurance Business", the "Notice Regarding the Establishment of Credit Assurance System for Small to
3.
As to the credit environment, the construction of social credit system of enterprises in relation to the man
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agement and customer credit information of the security industry merges into the existing banking and financial regulatory system. In 2011 the
II. Market Opportunity 1.
In the field of construction projects on 2012, the central government intends to invest
2.
As for the sector of railway material purchase, the
3.
As to the energy-saving and environmental protection aspects, in the central government's investment budget of 2012, to strengthen energy-saving, environmental protection and ecological construction amounts to RMB$48.8 billion.
III. 2012 Market Expansion Proposal and Safeguard Measures
Market Expansion Proposal 1.
The Company will accelerate the process of expansion by targeting new markets, 5 subsidiaries will be established in 2012 to make the sales network covering all major medium to large cities of
2.
The Company will further extend its business scope, by strengthening the existing relationship with China Construction Bank and Shanghai Pudong Development Bank, to acquire more favorable treatments for the company's existing business and broaden the business scope.
3.
The company will pay more attention to the development of new products: while continuing to promote the purchase and supply of such letter of guarantee business, we also target to promote the businesses of foreign letter of guarantees, develop new products such as litigation evidence preservation guarantees, expand the existing customer base in order to increase business revenue streams;
4.
Giving full support for application of new technologies: on the basis of the successful launching of e-commerce web site in 2011, the company looks for achieving double breakthrough in online products and on-line process, striving to line up to the platform data of banks, so as to ensure "safe, efficient, and accurate" process and to achieve the ultimate goal of total electronic processing.
Safeguard Measures 24
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In 2012, the company will focus in the building of a team of internal elites as the core of human resources, paying more attention to professional training and internal control management, in order to achieve all business objectives eventually.
1.
To build an elite team, emphasize in training and performance appraisal.
2.
To upgrade the existing services to customer in order to achieve high and fast business growth.
3.
The Company will develop an innovative risk control mechanism to reduce the business risk in 2012.
4.
The Company will strengthen the communication with business partners and regulatory bodies in order to acquire the most up-to-date information of the industry to make sure the Company can continue to be the leader in the industry.
RESULTS OF OPERATIONS
THREE MONTHS ENDED
Net revenue
Net revenue for the three months ended
Loss before income tax
Loss before income tax for the three months ended
Operating expenses
Total operating expenses were
The reasons for the increases in the major items are as follows:
(1)
Depreciation - increase by
(2)
Staff costs - increase by
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(3)
Rent and rates - increase by
(4)
Professional fee to fulfill the obligation as a listing company - increase by
We anticipate that our operating expenses will increase in future periods, as we increase sales and marketing operations, and fulfill our obligation as a listing company under the Exchange Act.
LIQUIDITY AND CAPITAL RESOURCES
As of
As of
For the three months ended
For the three months ended
As of
As of
As of
Due from Party A
Due from Party B 2,879,595
$ 11,643,734
The Company entered into loan agreements to provide financing to Party A and Party B as general working capital
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and both of these Parties are independent third parties of the Company.
The loan to Party A is unsecured, interest bearing at 2.52% per annum and payable on
The loan to Party B is unsecured, interest bearing at 2.52% per annum and payable on
The demand for loans to small and medium size enterprises in
We believe our existing cash, cash equivalents, and cash provided by operating activities will be sufficient to meet our working capital and capital expenditure needs over the next twelve months. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our marketing and sales activities, the expansion of our operating capacity, and the continuing market acceptance of our services.
As of
As of
Provision for guarantee losses reflects the Company's best projection of defaults and the Company believes that it is more likely as a result of loss events that have occurred through
OFF BALANCE SHEET ARRANGEMENTS
We do not have any material off-balance sheet arrangements.
RECENT ACCOUNTING PRONOUNCEMENTS
For information about new accounting pronouncements and the potential impact on our Condensed Consolidated Financial Statements, see Note 3 of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q and Note 2 of the Notes to Consolidated Financial Statements in our 2011 Form 10-K, and all amendments thereto.
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