WEB NEWS Comments & Business Outlook
CHINA SKYRISE DIGITAL SERVICE, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2010 AND DECEMBER 31, 2009
China Skyrise Digital Service Inc.
2010
2009
Revenues $
10,217,061
$
6,856,198
Cost of goods sold
6,269,940
4,698,295
Gross profit
3,947,121
2,157,903
Selling and marketing expenses
682,692
532,492
General and administrative expenses
1,470,068
792,001
Net income from operations
1,794,361
833,410
Other income (expenses)
Other income
1,582
3,672
Government grant
380,394
242,948
Interest expense
(30,080
)
(22,638
)
Total other income (expenses)
351,896
223,982
Income before provision for income taxes
2,146,257
1,057,392
Provision for income taxes
(299,770
)
(4,301
)
Net income
1,846,487
1,053,091
Other comprehensive income
Foreign currency translation gain
154,891
656
Comprehensive income $
2,001,378
$
1,053,747
Earnings per share
Basic
$
0.0872
$
0.0541
Diluted
$
0.0872
$
0.0541
CFO Trail
Change of Chief Financial Officer
On December 30, 2010, Dongmei Wu resigned as Chief Financial Officer of China Skyrise Digital Service Inc.
On December 30, 2010, the Board of Directors of the Company appointed Mr. Jiabo Fan as the Company’s new Chief Financial Officer, to fill the vacancy left by Mr. Wu’s departure.
Mr. Jiabo Fan, aged 31, was appointed to serve as the Company’s Chief Financial Officer on December 30, 2010. Prior to joining the Company, Mr. Fan served from August 2003 to November 2010 in various positions with PriceWaterhouseCoopers China, including Engagement Manager and Assurance Department Manager. As an Engagement Manager, Mr. Fan was in charge of auditing several PRC and Hong Kong listed companies, in accordance with Chinese Accounting Standards, as well as the auditing of subsidiaries of several multinational corporations in accordance with U.S. GAAP and International Financial Reporting Standards. Mr. Fan holds a Bachelor’s Degree in Finance from Shanghai Jiao Tong University.
On December 30, 2010, the Company entered into an employment agreement with Mr. Fan, effective as of December 1, 2010 in connection with his appointment as the Company’s Chief Financial Officer. Pursuant to the terms of the Agreement, Mr. Fan will be paid a base salary of RMB 33,000 (approximately $5,000) per month, and he is eligible to receive an annual performance bonus at the discretion of the Company’s Board of Directors. Either the Company or Mr. Fan may terminate the Agreement for any reason by giving the other party 30 days’ notice, however, if the Company terminates the Agreement without cause (as defined in the Agreement), the Company will be obligated to reimburse Mr. Fan for his relocation expenses. The foregoing description of the Agreement is qualified in its entirety by the full text of the Agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1
Mr. Fan is not related to any of the Company’s executive officers or directors, nor has he been a party to any transaction requiring disclosure pursuant to Item 404(a) of Regulation S-K.
Comments & Business Outlook
Third Quarter Financial Performance Highlights
The following are some financial highlights for the third quarter:
Revenues increased $30,049, or 1.27%, to $2,393,153 for the three months ended September 30, 2010, from $2,363,104 for the same period in 2009.
Gross margin 52.35% for the three months ended September 30, 2010, as compared to 15.96% for the same period in 2009.
Net income increased $699,953, or 1276.35%, to $754,793 for the three months ended September 30, 2010, from $54,840 for the same period in 2009.
Fully diluted earnings per share $0.04 for the three months ended September 30, 2010, as compared to $0.0031 for the same period in 2009.
Comments & Business Outlook
"We are delighted to see a continuing recovery of demand Revenues more than tripled in the first quarter, and our market share continued to expand ."
China Skyrise remains optimistic about China's security surveillance sector, and management estimates that the market for video surveillance is growing at an annual rate of 15% or greater . Management believes that the Company is set to continue to gain market share within its traditional strong foothold in China's residential real estate industry and further plans to grow revenues through offering systems-on-a-chip (SOCs) to analog intercom manufacturers and value-added services to consumers.
While the Company continues to gain market share with its low-end digital solutions displacing competitors' high-end analog solutions, management believes that China Skyrise also stands to benefit from analog-to-digital upgrades of existing residential neighborhoods, which represents a huge potential market.
"With continuous product innovation and strong brand recognition, we are optimistic about our financial performance in 2010 . The first quarter is usually the seasonally slowest due to a slowdown in residential construction around the Chinese Spring Festival. We are confident that our operating results and operating cash flows will continue to improve throughout the remainder 2010 . Therefore, we reaffirm our previous guidance:
Revenues of approximately $10.2 million
Net income of approximately $1.8 million in 2010," concluded Mr. Zhou.
