TIAN RUIXIANG Holdings Ltd Reports Fiscal Year 2021 Financial Results
TIAN RUIXIANG Holdings Ltd (Nasdaq: TIRX) (the “Company”), a China-based insurance broker conducting business through its variable interest entity in China, announced today its financial results for the fiscal year ended October 31, 2021.
Mr. Zhe Wang, Chairman of the board of the directors and Chief Executive Officer of the Company, commented, “In fiscal year 2021, our revenue was down by 14.1% to $2.79 million, which was primarily caused by a decrease in the commissions generated from individual accidental insurance of approximately $0.36 million and a decrease in the risk management services revenue of approximately $0.18 million. However, we are pleased with the establishment of our Yunnan Branch in November 2021, through which we were able to expand the geographic coverage of our insurance brokerage services. In the past year, we also hired more sales professionals to market and sell insurance products. We plan to focus on growing our property and group insurance business, as well as expanding our sales channels to enhance corporate client services, such as our risk management services. At the same time, we will continue to explore health insurance business opportunities. Looking forward, we remain confident in our business strategy to achieve growth and create long-term value for our shareholders.”
Fiscal Year 2021 Financial Highlights
For the Fiscal Years Ended October 31,
($ in millions, except per share data)
2021
2020
% Change
Revenue
2.79
3.25
-14.1%
Operating expenses
5.04
2.69
87.6%
(Loss) income from operations
(2.25)
0.56
NM
Operating margin
(80.8)%
17.2%
NM
Net (loss) income
(1.94)
0.63
NM
(Loss) income per share
(0.23)
0.13
NM
Note: NM refers to “Not Meaningful”
Revenue decreased by 14.1% to $2.79 million for fiscal year 2021, from $3.25 million for fiscal year 2020, primarily attributable to a decrease in commissions from individual accidental insurance of approximately $0.36 million resulting from the loss of an insurance company partner and a decrease in our risk management services revenue from the provision of insurance related risk management services of approximately $0.18 million.
Operating expenses increased by 87.6% to $5.04 million for fiscal year 2021, from $2.69 million for fiscal year 2020.
Operating margin was (80.8)% for fiscal year 2021, compared to 17.2% for fiscal year 2020.
Net loss was $1.94 million for fiscal year 2021, compared to net income of $0.63 million for fiscal year 2020.
Loss per share was $0.23 for fiscal year 2021, compared to income per share of $0.13 for fiscal year 2020.
Fiscal Year 2021 Financial Results
Revenue
Revenue decreased by $0.46 million, or 14.1%, to $2.79 million for fiscal year 2021, from $3.25 million for fiscal year 2020. This decrease was primarily attributable to a decrease in commissions from individual accidental insurance of approximately $0.36 million resulting from the loss of an insurance company partner and a decrease in our risk management services revenue from the provision of insurance-related risk management services of approximately $0.18 million.
Operating Expenses
Third-party and related-party selling and marketing expenses increased by $0.96 million, or 61.6%, to $2.52 million for fiscal year 2021, from $1.56 million for fiscal year 2020. The increase in selling and marketing expenses was mainly attributable to the increase in our marketing activities, the launch of aggressive advertising campaigns and the increase in the number of sales professionals to sell insurance products.
Third-party and related-party general and administrative expenses increased by $1.40 million, or 123.4%, to $2.53 million for fiscal year 2021, from $1.13 million for fiscal year 2020. The increase in general and administrative expenses was primarily attributable to increased professional fees, compensation and related benefits, rent and related utility expenses, directors’ and officers’ liability insurance premiums and travel and entertainment expenses.
Total operating expenses increased by $2.36 million, or 87.6%, to $5.04 million for fiscal year 2021, from $2.69 million for fiscal year 2020.
(Loss) Income from Operations
Loss from operations was $2.25 million for fiscal year 2021, compared to income from operations of $0.56 million for fiscal year 2020.
The operating margin was (80.8)% for fiscal year 2021, compared to an operating margin of 17.2% for fiscal year 2020.
Other Income (Expense)
Other income (expense) primarily included interest income from third-party and related-party notes receivable and bank deposits, interest expense incurred from our third-party and related-party borrowings, and miscellaneous income. Other income was $0.33 million for fiscal year 2021, compared to other income of $0.20 million for fiscal year 2020.
(Loss) Income before Income Tax
Loss before income tax was $1.92 million for fiscal year 2021, compared to income before income tax of $0.76 million for fiscal year 2020.
Income tax expense was $24,529 for fiscal year 2021, compared to income tax expense of $126,055 for fiscal year 2020.
Net (Loss) Income and (Loss) Income per Share
Net loss was $1.94 million for fiscal year 2021, compared to net income of $0.63 million for fiscal year 2020. After deduction of net loss attributable to non-controlling interest, net loss attributable to TIRX ordinary shareholders was $1.94 million, or loss per share of $0.23 for fiscal year 2021, compared to net income attributable to TIRX ordinary shareholders of $0.63 million, or income per share of $0.13 for fiscal year 2020.
Financial Conditions
As of October 31, 2021, the Company had cash and cash equivalents of $30.02 million, compared to cash and cash equivalents of $6.14 million as of October 31, 2020. Total working capital was $30.51 million as of October 31, 2021, compared to working capital of $8.27 million as of October 31, 2020.
Net cash used in operating activities was $1.36 million for fiscal year 2021, compared to net cash used in operating activities of $0.05 million for fiscal year 2020.
Net cash used in investing activities was $7,503,411 for fiscal year 2021, compared to net cash used in investing activities of $3,457 for fiscal year 2020.
Net cash provided by financing activities was $32.64 million for fiscal year 2021, compared to net cash used in financing activities of $0.48 million for fiscal year 2020.
|
TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES |
||||||
|
CONSOLIDATED BALANCE SHEETS |
||||||
|
(IN U.S. DOLLARS) |
||||||
|
As of October 31, |
||||||
|
2021 |
2020 |
|||||
|
ASSETS |
||||||
|
CURRENT ASSETS: |
||||||
|
Cash and cash equivalents |
$ |
30,024,372 |
$ |
6,137,689 |
||
|
Restricted cash |
819,269 |
785,806 |
||||
|
Accounts receivable |
320,848 |
1,247,059 |
||||
|
Deferred offering costs |
— |
895,567 |
||||
|
Prepaid expenses and other current assets |
465,650 |
494,476 |
||||
|
Total Current Assets |
31,630,139 |
9,560,597 |
||||
|
NON-CURRENT ASSETS: |
||||||
|
Note receivable |
7,500,000 |
— |
||||
|
Interest receivable |
113,014 |
— |
||||
|
Property and equipment, net |
11,265 |
15,097 |
||||
|
Intangible assets, net |
147,538 |
160,219 |
||||
|
Right-of-use assets, operating leases, net |
760,229 |
317,141 |
||||
|
Other non-current assets |
188,281 |
7,419 |
||||
|
Total Non-current Assets |
8,720,327 |
499,876 |
||||
|
Total Assets |
$ |
40,350,466 |
$ |
10,060,473 |
||
|
LIABILITIES AND EQUITY |
||||||
|
CURRENT LIABILITIES: |
||||||
|
Taxes payable |
$ |
493,196 |
$ |
548,630 |
||
|
Salary payable |
103,168 |
129,711 |
||||
|
Accrued liabilities and other payables |
95,664 |
180,394 |
||||
|
Due to related parties |
2,564 |
241,097 |
||||
|
Operating lease liabilities |
423,124 |
170,082 |
||||
|
Operating lease liabilities – related party |
— |
18,737 |
||||
|
Total Current Liabilities |
1,117,716 |
1,288,651 |
||||
|
NON-CURRENT LIABILITIES: |
||||||
|
Operating lease liabilities – noncurrent portion |
237,848 |
123,404 |
||||
|
Operating lease liabilities – related party – noncurrent portion |
— |
9,705 |
||||
|
Total Non-current Liabilities |
237,848 |
133,109 |
||||
|
Total Liabilities |
1,355,564 |
1,421,760 |
||||
|
Commitments and Contingencies – (Note 17) |
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EQUITY: |
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TIAN RUIXIANG Holdings Ltd Shareholders’ Equity: |
||||||
|
Ordinary shares: $0.001 par value; 50,000,000 shares authorized; |
||||||
|
Class A ordinary shares: $0.001 par value; 47,500,000 shares authorized; 10,100,000 and 3,750,000 shares issued |
10,100 |
3,750 |
||||
|
Class B ordinary shares: $0.001 par value; 2,500,000 shares authorized; 1,250,000 shares issued and outstanding at |
1,250 |
1,250 |
||||
|
Additional paid-in capital |
39,776,761 |
7,696,468 |
||||
|
(Accumulated deficit) retained earnings |
(1,090,060) |
884,076 |
||||
|
Statutory reserve |
199,653 |
170,066 |
||||
|
Accumulated other comprehensive income (loss) |
96,709 |
(117,392) |
||||
|
Total TIAN RUIXIANG Holdings Ltd shareholders’ equity |
38,994,413 |
8,638,218 |
||||
|
Non-controlling interest |
489 |
495 |
||||
|
Total Equity |
38,994,902 |
8,638,713 |
||||
|
Total Liabilities and Equity |
$ |
40,350,466 |
$ |
10,060,473 |
||
|
TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES |
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|
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME |
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|
(IN U.S. DOLLARS) |
|||||||||
|
For the Years Ended October 31, |
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|
2021 |
2020 |
2019 |
|||||||
|
REVENUES |
|||||||||
|
Commissions |
$ |
2,675,611 |
$ |
2,954,798 |
$ |
2,002,217 |
|||
|
Risk management services |
115,006 |
294,546 |
— |
||||||
|
Total Revenues |
2,790,617 |
3,249,344 |
2,002,217 |
||||||
|
OPERATING EXPENSES |
|||||||||
|
Selling and marketing |
2,516,368 |
1,519,783 |
773,650 |
||||||
|
Selling and marketing – related parties |
1,129 |
38,426 |
23,922 |
||||||
|
General and administrative – professional fees |
1,011,053 |
94,363 |
123,512 |
||||||
|
General and administrative – compensation and related benefits |
948,900 |
743,062 |
651,490 |
||||||
|
General and administrative – related parties |
20,391 |
14,215 |
19,180 |
||||||
|
General and administrative – other |
546,580 |
279,353 |
307,793 |
||||||
|
Total Operating Expenses |
5,044,421 |
2,689,202 |
1,899,547 |
||||||
|
(LOSS) INCOME FROM OPERATIONS |
(2,253,804) |
560,142 |
102,670 |
||||||
|
OTHER INCOME (EXPENSE) |
|||||||||
|
Interest income |
315,070 |
88,948 |
275,168 |
||||||
|
Interest income – related party |
— |
102,074 |
— |
||||||
|
Interest expense |
(725) |
— |
(18,218) |
||||||
|
Interest expense – related parties |
— |
— |
(613) |
||||||
|
Other income |
19,411 |
8,991 |
54,988 |
||||||
|
Total Other Income, net |
333,756 |
200,013 |
311,325 |
||||||
|
(LOSS) INCOME BEFORE INCOME TAXES |
(1,920,048) |
760,155 |
413,995 |
||||||
|
INCOME TAXES |
24,529 |
126,055 |
238,208 |
||||||
|
NET (LOSS) INCOME |
$ |
(1,944,577) |
$ |
634,100 |
$ |
175,787 |
|||
|
LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST |
(28) |
(3) |
— |
||||||
|
NET (LOSS) INCOME ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD ORDINARY |
$ |
(1,944,549) |
$ |
634,103 |
$ |
175,787 |
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|
COMPREHENSIVE (LOSS) INCOME: |
|||||||||
|
NET (LOSS) INCOME |
(1,944,577) |
634,100 |
175,787 |
||||||
|
OTHER COMPREHENSIVE INCOME (LOSS) |
|||||||||
|
Unrealized foreign currency translation gain (loss) |
214,123 |
420,719 |
(70,429) |
||||||
|
COMPREHENSIVE (LOSS) INCOME |
$ |
(1,730,454) |
$ |
1,054,819 |
$ |
105,358 |
|||
|
LESS: COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NON-CONTROLLING |
(6) |
21 |
(4) |
||||||
|
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD |
$ |
(1,730,448) |
$ |
1,054,798 |
$ |
105,362 |
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|
NET (LOSS) INCOME PER ORDINARY SHARE ATTRIBUTABLE TO TIAN RUIXIANG |
|||||||||
|
Basic and diluted * |
$ |
(0.23) |
$ |
0.13 |
$ |
0.04 |
|||
|
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING: |
|||||||||
|
Basic and diluted * |
8,610,615 |
5,000,000 |
5,000,000 |
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|
* The shares and per share amounts are presented on a retroactive basis. |
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TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES |
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|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
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|
(IN U.S. DOLLARS) |
|||||||||
|
For the Years Ended October 31, |
|||||||||
|
2021 |
2020 |
2019 |
|||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||||
|
Net (loss) income |
$ |
(1,944,577) |
$ |
634,100 |
$ |
175,787 |
|||
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |
|||||||||
|
Depreciation expense and amortization of intangible assets |
27,447 |
27,829 |
34,713 |
||||||
|
Amortization of right-of-use assets |
227,661 |
199,709 |
— |
||||||
|
Impair loss |
696 |
— |
— |
||||||
|
Changes in operating assets and liabilities: |
|||||||||
|
Accounts receivable |
969,374 |
(1,021,727) |
91,432 |
||||||
|
Security deposit |
(43,750) |
2,837 |
(3,963) |
||||||
|
Prepaid expenses and other current assets |
(74,120) |
(8,582) |
(356,117) |
||||||
|
Interest receivable |
(113,014) |
— |
16,745 |
||||||
|
Due from related parties |
— |
— |
447,778 |
||||||
|
Insurance premiums payable |
— |
— |
(198,717) |
||||||
|
Taxes payable |
(78,932) |
204,532 |
(56,272) |
||||||
|
Accrued liabilities and other payables |
(123,052) |
108,765 |
40,826 |
||||||
|
Due to related parties |
12,025 |
(6,970) |
36,841 |
||||||
|
Operating lease liabilities – related party |
(29,355) |
(25,834) |
— |
||||||
|
Operating lease liabilities |
(194,341) |
(162,828) |
— |
||||||
|
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |
(1,363,938) |
(48,169) |
229,053 |
||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||||
|
Purchase of property and equipment |
(3,411) |
(3,457) |
(12,012) |
||||||
|
Purchase of intangible asset |
— |
— |
(183,115) |
||||||
|
Investment in note receivable |
(7,500,000) |
— |
— |
||||||
|
Payments of notes receivable – related party |
— |
(17,158,967) |
— |
||||||
|
Proceed received from repayments of notes receivable – related party |
— |
17,158,967 |
232,133 |
||||||
|
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES |
(7,503,411) |
(3,457) |
37,006 |
||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||||||
|
Proceeds received from note payable |
75,581 |
— |
— |
||||||
|
Repayment of note payable |
(75,581) |
— |
— |
||||||
|
Repayments made for borrowings |
— |
— |
(369,483) |
||||||
|
Proceeds received from related parties’ borrowings |
1,893,932 |
1,987,256 |
— |
||||||
|
Repayments made for related parties’ borrowings |
(2,272,145) |
(2,099,420) |
(8,400) |
||||||
|
Proceeds received from initial public offering |
12,300,000 |
— |
— |
||||||
|
Disbursements for initial public offering costs |
(1,489,388) |
— |
— |
||||||
|
Proceeds received from the June 2021 public offering |
24,562,500 |
— |
— |
||||||
|
Disbursements for the June 2021 public offering costs |
(2,352,418) |
(371,081) |
(493,899) |
||||||
|
Capital contribution from shareholders |
— |
5,000 |
464 |
||||||
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
32,642,481 |
(478,245) |
(871,318) |
||||||
|
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
145,014 |
486,780 |
(55,593) |
||||||
|
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
23,920,146 |
(43,091) |
(660,852) |
||||||
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – beginning of year |
6,923,495 |
6,966,586 |
7,627,438 |
||||||
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – end of year |
$ |
30,843,641 |
$ |
6,923,495 |
$ |
6,966,586 |
|||
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|||||||||
|
Cash paid for: |
|||||||||
|
Interest |
$ |
725 |
$ |
— |
$ |
33,675 |
|||
|
Income taxes |
$ |
2,251 |
$ |
— |
$ |
283,267 |
|||
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|||||||||
|
Payments made by related parties on the Company’s behalf |
$ |
119,886 |
$ |
141,449 |
$ |
— |
|||
|
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|||||||||
|
Cash and cash equivalents at beginning of year |
$ |
6,137,689 |
$ |
6,243,029 |
$ |
6,712,880 |
|||
|
Restricted cash at beginning of year |
785,806 |
723,557 |
914,558 |
||||||
|
Total cash, cash equivalents and restricted cash at beginning of year |
$ |
6,923,495 |
$ |
6,966,586 |
$ |
7,627,438 |
|||
|
Cash and cash equivalents at end of year |
$ |
30,024,372 |
$ |
6,137,689 |
$ |
6,243,029 |
|||
|
Restricted cash at end of year |
819,269 |
785,806 |
723,557 |
||||||
|
Total cash, cash equivalents and restricted cash at end of year |
$ |
30,843,641 |
$ |
6,923,495 |
$ |
6,966,586 |
|||
Source: TIAN RUIXIANG Holdings Ltd