Three months ended September 30, 2010 highlights:
- Net revenue increased $1,239,561 or 410% to $1,541,752 for the three months ended September 30, 2010 from $302,191 for the three months ended June 30, 2010. The increase in revenues is mainly due to cancelling our traditional sales agent operation model and establishing an insurance B2C e-commerce trade platform named "Vantone Insurance Online Shop" (Vantone Shop) in April 2010 and starting to distribute commodities on the Vantone Shop in June 2010.
- Revenue of VIP membership fees and Network service fees is our new profit center. Our Vantone shop attracted 20,707 VIP Memberships and 741 Network Service Memberships for the six months ended September 30, 2010. Therefore we received $1,048,664 in VIP membership and Network service fees. Based on the fact that the VIP memberships have a one year term and Network Service Memberships are permanent, we recognized $261,059 and $1,008 in revenue, respectively, for the six months ended September 30, 2010. And we deferred the remainder for recognition during the remainder of the terms of the memberships and over the remaining life of Kang Ping Vantone.
- Gross profit increased 287% to $974,595 for the three months ended September 30, 2010 from $251,720 for the three months ended June 30, 2010. Gross profit increased, due to the significant recent changes in our business operations, the new products which we distribute on our Vantone shop involve low cost and high gross margin, and this product sales revenue constituted 97% of our revenue for the three months ended September 30, 2010.
- Our operating expenses declined $166,248 to ($13,636) for the three months ended September 30, 2010 from $152,612 for the three months ended June 30, 2010. The decrease primarily due to reverse a bad debt expense of $256,882 taken in a prior period when we collected the receivable against which we had reserved.
- Net income increased $776,445 to $840,225 for the three months ended September 30, 2010 from $63,780 for the three months ended June 30, 2010, mainly due to large amount of products sales in this quarter, and we continue controlling our cost and operating expenses.
- Basic and diluted earnings per common share increased $0.03 to $0.03 per share for the three months ended September 30, 2010 from $0.00 per share for the three months ended June 30, 2010. Our higher net income causes the increase of basic and diluted earnings per common share.
Mr. Honggang Yu, the founder and chief executive officer of Vantone International, said, "Our strong increases in net income for the three months ended September 30, 2010 reflect a success in the operation of our innovative business model of '2 + E' ('2' includes development, manufacturing and distribution of purifying equipment, and the insurance agency service; 'E' stands for e-commerce marketing channel and commodities sold through e-commerce, we distribute many other commodities on e-commerce Vantone Shop flexibly according to our customers' demand and competitor situation, such commodities like household appliances, feminine hygiene products, cosmetics and skin care products, healthcare food). Also indicate a big demand of insurance agent and their clients towards the flexibility sales policy of 'buy commodity, exchange for insurance, gift, commodities or cash.' We continue to bring in talents to strengthen our financial structure and corporate governance."
- The Company's cash ended September 30, 2010 was approximately $9.50 million.
- The Company's current liability and total liability as of September 30, 2010 was $1.89 million and $1.92 million as compared to $1.4 million and $1.4 million as of March 31, 2010, respectively.
Mr. Yu continued, "I believe our results for the three months ended September 30, 2010 represent a very good performance in a higher growth quarter. The consistency of our operating performance results from our established business model and effective execution. On April 1, 2010, we went into the e-commerce business, by which we conduct all our businesses including the functional purification equipment, insurance agency service and commodities distribution. With the online insurance agent marketing system and distributors' management system, we approve insurance agent's registration and give memberships. Thereafter, agents can lay out the text and graphics of 'E' commodity according to the actual demand of their clients in blog space on websites, do exchange ordering for clients and fund settlement according to 'buy commodity, exchange for insurance, gift, commodities or cash.' For every successful transaction, company will return bonus points to the member. We control their purchase, sales, fund settlement on e-commerce platform and return bonus points to them. We believe our '2 + E' business model can achieve a complement advantages between insurance and commodities client base, so as to the insurance and commodities sales channel to build a insurance agent sales force of '2 + E' businesses in Chinese insurance market."
Mr. Yu concluded, "For next step, we will set up a few insurance branches to enhance our agents' management, at the same time, turn insurance agents or members into our distributors by attracting their investment and lending to them as well, to set up a marketing channel composed by e-commerce and entity shop. Then we control our insurance agents, insurance branches, and distributors depending on Vantone Shop online management platform and the electronic information technology.
"China's economic outlook continues to be encouraging, and replying on the experienced sales skills, marketing ideas and clients base of insurance agent, the sales performance of 'E' commodity should increase. With the first foreign-owned enterprise business license of small financing company obtained from China on September 27, 2010, our '2 + E' becomes '3 + E' and continue to enhance our insurance agent sales force, increase the quantity of distributors, and make a channel competitive advantages consisted by small financing
Mr. Honggang Yu, the founder and chief executive officer of Vantone International, said, "Our strong increases in net income for the three months ended September 30, 2010 reflect a success in the operation of our innovative business model of '2 + E' ('2' includes development, manufacturing and distribution of purifying equipment, and the insurance agency service; 'E' stands for e-commerce marketing channel and commodities sold through e-commerce, we distribute many other commodities on e-commerce Vantone Shop flexibly according to our customers' demand and competitor situation, such commodities like household appliances, feminine hygiene products, cosmetics and skin care products, healthcare food). Also indicate a big demand of insurance agent and their clients towards the flexibility sales policy of 'buy commodity, exchange for insurance, gift, commodities or cash.' We continue to bring in talents to strengthen our financial structure and corporate governance."
- The Company's cash ended September 30, 2010 was approximately $9.50 million.
- The Company's current liability and total liability as of September 30, 2010 was $1.89 million and $1.92 million as compared to $1.4 million and $1.4 million as of March 31, 2010, respectively.
Mr. Yu continued, "I believe our results for the three months ended September 30, 2010 represent a very good performance in a higher growth quarter. The consistency of our operating performance results from our established business model and effective execution. On April 1, 2010, we went into the e-commerce business, by which we conduct all our businesses including the functional purification equipment, insurance agency service and commodities distribution. With the online insurance agent marketing system and distributors' management system, we approve insurance agent's registration and give memberships. Thereafter, agents can lay out the text and graphics of 'E' commodity according to the actual demand of their clients in blog space on websites, do exchange ordering for clients and fund settlement according to 'buy commodity, exchange for insurance, gift, commodities or cash.' For every successful transaction, company will return bonus points to the member. We control their purchase, sales, fund settlement on e-commerce platform and return bonus points to them. We believe our '2 + E' business model can achieve a complement advantages between insurance and commodities client base, so as to the insurance and commodities sales channel to build a insurance agent sales force of '2 + E' businesses in Chinese insurance market."
Mr. Yu concluded, "For next step, we will set up a few insurance branches to enhance our agents' management, at the same time, turn insurance agents or members into our distributors by attracting their investment and lending to them as well, to set up a marketing channel composed by e-commerce and entity shop. Then we control our insurance agents, insurance branches, and distributors depending on Vantone Shop online management platform and the electronic information technology.
"China's economic outlook continues to be encouraging, and replying on the experienced sales skills, marketing ideas and clients base of insurance agent, the sales performance of 'E' commodity should increase. With the first foreign-owned enterprise business license of small financing company obtained from China on September 27, 2010, our '2 + E' becomes '3 + E' and continue to enhance our insurance agent sales force, increase the quantity of distributors, and make a channel competitive advantages consisted by small financing
