UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q  xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2009  or  oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____  Commission File Number: 0-50002


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|SINO ASSURANCE INC.                                   
|(Exact name of registrant as specified in its charter)




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|Delaware                                                       | 52-2175896                          
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)




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|17th Floor, 60009 Yitian Road, New World Center,
Futian District, Shenzhen, People Republic of China
|(Address of principal executive offices)                                                            




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|----------------------------------------------------
|86-0755-82520556                                    
|(Registrants telephone number, including area code)




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|None                                                                              
|(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                          Yes x   No o  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every  Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                      N/A  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.


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|Large accelerated filer
o                                             | Accelerated filer
o        
|Non-accelerated filer
o
(Do not check if a smaller reporting company) | Smaller reporting company
x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:   1    Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.                Yes o  No o  APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.  As of June 30, 2009, there were 60,000,000 shares of the registrants common stock, $0.001 par value, outstanding    2      TABLE OF CONTENTS  TABLE OF CONTENTS 3 PART 1 - FINANCIAL INFORMATION 4 ITEM 1.  FINANCIAL STATEMENTS 4 ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  20 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 25 ITEM 4(T). CONTROLS AND PROCEDURES 25  PART II - OTHER INFORMATION 26 ITEM 1. LEGAL PROCEEDINGS 26 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 26 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 26 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 26 ITEM 5. OTHER INFORMATION 26 ITEM 6. EXHIBITS 26     3    PART 1 - FINANCIAL INFORMATION    ITEM 1.  FINANCIAL STATEMENTS  The consolidated financial statements of Sino Assurance Inc. and subsidiaries (collectively, the "Company"), included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as included in the Company's Form 10-K for the year ended December 31, 2008.    4


SINO ASSURANCE INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2009 AND DECEMBER 31, 2008 (Currency expressed in United States Dollars (US$), except for number of shares)  June 30, 2009December 31, 2008(Unaudited)(Audited)ASSETSCurrent assets:Cash and cash equivalents$323,919$90,158Restricted cash2,811,5053,367,033Guarantee fee receivable46,91117,553Income tax refund receivable50,96755,105Prepayments and other receivable181,626126,177Loan receivable1,636,6881,896,650Total current assets5,051,6165,552,676Non-current assets:Plant and equipment, net316,613361,293TOTAL ASSETS$5,368,229$5,913,969LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable, trade$46,926$70,752Customer collateral1,574,4902,102,665Deferred revenue204,601401,259Amount due to related parties59,51659,434Deferred tax liability6,666-Accrued liabilities and other payable453,849440,868Total current liabilities2,346,0483,074,978Commitments and contingenciesStockholders equity:Common stock, $0.001 par value; 200,000,000 shares authorized; 60,000,000 and 60,000,000 shares issued and outstanding as of June 30, 2009 and December 31, 200860,00060,000Additional paid-in capital2,915,1212,915,121Accumulated other comprehensive income167,695163,839Statutory reserve104,230104,230Accumulated deficit(224,865)(404,199)Total stockholders equity3,022,1812,838,991TOTAL LIABILITIES AND STOCKHOLDERS EQUITY$5,368,229$5,913,969          See accompanying notes to condensed consolidated financial statements.


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SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Currency expressed in United States Dollars (US$)) (Unaudited)


|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|------------------------------------------------------------------------- |  | --------------------------- | ---------- | ------------------------- | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                                                          |  | Three months ended June 30, |            | Six months ended June 30,
|                                                                          |  | 2009                        |            | 2008                      |   | 2009       |  | 2008
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|REVENUES, NET                                                             |  |                             |            |                           |   |            |  |      |            |  |   |           
|Guarantee fee income                                                      |  | $                           | 880,039    |                           | $ | 917,981    |  | $    | 1,591,321  |  | $ | 1,519,258 
|Interest income                                                           |  |                             | 48,408     |                           |   | 5,652      |  |      | 64,542     |  |   | 7,778     
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|Total revenues, net                                                       |  |                             | 928,447    |                           |   | 923,633    |  |      | 1,655,863  |  |   | 1,527,036 
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|COST OF REVENUE                                                           |  |                             | 260,901    |                           |   | 169,280    |  |      | 450,430    |  |   | 350,219   
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|GROSS PROFIT                                                              |  |                             | 667,546    |                           |   | 754,353    |  |      | 1,205,433  |  |   | 1,176,817 
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|Operating expenses:                                                       |  |                             |            |                           |   |            |  |      |            |  |   |           
|Depreciation                                                              |  |                             | 20,520     |                           |   | 16,035     |  |      | 41,102     |  |   | 26,326    
|Selling, general and administrative                                       |  |                             | 411,714    |                           |   | 408,918    |  |      | 854,400    |  |   | 759,421   
|Reserve for guarantee losses                                              |  |                             | 54,825     |                           |   | -          |  |      | 109,597    |  |   | -         
|Total operating expenses                                                  |  |                             | 487,059    |                           |   | 424,953    |  |      | 1,005,099  |  |   | 785,747   
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|INCOME FROM OPERATIONS                                                    |  |                             | 180,487    |                           |   | 329,400    |  |      | 200,334    |  |   | 391,070   
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|Other income (expense):                                                   |  |                             |            |                           |   |            |  |      |            |  |   |           
|Other income                                                              |  |                             | 2,285      |                           |   | 72         |  |      | 2,288      |  |   | 72        
|Other expense                                                             |  |                             | (6,289)    |                           |   | (23,494)   |  |      | (13,504)   |  |   | (23,633)  
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|INCOME BEFORE INCOME TAXES                                                |  |                             | 176,483    |                           |   | 305,978    |  |      | 189,118    |  |   | 367,509   
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|Income tax expense                                                        |  |                             | (8,331)    |                           |   | (29,026)   |  |      | (9,784)    |  |   | (50,961)  
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|NET INCOME                                                                |  | $                           | 168,152    |                           | $ | 276,952    |  | $    | 179,334    |  | $ | 316,548   
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|Other comprehensive income:                                               |  |                             |            |                           |   |            |  |      |            |  |   |           
|- Foreign currency translation gain                                       |  |                             | 291        |                           |   | 59,743     |  |      | 3,856      |  |   | 111,299   
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|COMPREHENSIVE INCOME                                                      |  | $                           | 168,443    |                           | $ | 336,695    |  | $    | 183,190    |  | $ | 427,847   
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|Net income per share  basic and diluted                                  |  | $                           | 0.00       |                           | $ | 0.00       |  | $    | 0.00       |  | $ | 0.01      
|                                                                          |  |                             |            |                           |   |            |  |      |            |  |   |           
|Weighted average shares outstanding during the period  basic and diluted |  |                             | 60,000,000 |                           |   | 60,000,000 |  |      | 60,000,000 |  |   | 60,000,000

See accompanying notes to condensed consolidated financial statements.


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SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (Currency expressed in United States Dollars (US$)) (Unaudited)  Six months ended June 30,20092008Cash flows from operating activities:Net income$179,334$316,548Adjustments to reconcile net income to net cash used in operating activities:Depreciation41,10226,326Loss on disposal of plant and equipment6,040-Reserve for guarantee losses109,597-Deferred tax expense6,668-Changes in operating assets and liabilities:Guarantee fee receivable(29,341)(7,635)Prepayments and other receivable(85,682)(794,258)Income tax receivable4,214(89,839)Accounts payable, trade(23,929)41,016Deferred revenue(197,254)104,666Accrued liabilities and other payable(97,218)28,355Net cash used in operating activities(86,469)(374,821)Cash flows from investing activities:Change in restricted cash, net of customer collateral29,095(724,820)Repayment from loan receivable293,020-Proceeds from disposal of plant and equipment674-Purchase of plant and equipment(2,629)(160,198)Net cash provided by (used in) investing activities320,160(885,018)Cash flows from financing activities:Advances from stockholders-1,430,209Net cash provided by financing activities-1,430,209Effect of exchange rate changes in cash and cash equivalents7013,739NET CHANGE IN CASH AND CASH EQUIVALENTS233,761184,109BEGINNING OF PERIOD90,158136,123END OF PERIOD$323,919$320,232SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for income taxes$6,386$-Cash paid for interest$-$-      See accompanying notes to condensed consolidated financial statements.


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SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$), except for number of shares) (Unaudited)


|                                        |  |               |  |                            |        |                                        |   |                   |  |                     |         |                            |   |         |  |   |           |  |   |           | 
|--------------------------------------- |  | ------------- |  | -------------------------- | ------ | -------------------------------------- | - | ----------------- |  | ------------------- | ------- | -------------------------- | - | ------- |  | - | --------- |  | - | --------- | 
|                                        |  | Common Stock  |  | Additional paid-in capital |        | Accumulated other comprehensive income |   | Statutory reserve |  | Accumulated deficit |         | Total stockholders equity
|                                        |  | No. of shares |  | Amount                     |        |                                        |   |                   | 
|                                        |  |               |  |                            |        |                                        |   |                   |  |                     |         |                            |   |         |  |   |           |  |   |          
|Balance as of January 1, 2009           |  | 60,000,000    |  | $                          | 60,000 |                                        | $ | 2,915,121         |  | $                   | 163,839 |                            | $ | 104,230 |  | $ | (404,199) |  | $ | 2,838,991
|                                        |  |               |  |                            |        |                                        |   |                   |  |                     |         |                            |   |         |  |   |           |  |   |          
|Net income for the period               |  | -             |  |                            | -      |                                        |   | -                 |  |                     | -       |                            |   | -       |  |   | 179,334   |  |   | 179,334  
|                                        |  |               |  |                            |        |                                        |   |                   |  |                     |         |                            |   |         |  |   |           |  |   |          
|Foreign currency translation adjustment |  | -             |  |                            | -      |                                        |   | -                 |  |                     | 3,856   |                            |   | -       |  |   | -         |  |   | 3,856    
|Balance as of June 30, 2009             |  | 60,000,000    |  | $                          | 60,000 |                                        | $ | 2,915,121         |  | $                   | 167,695 |                            | $ | 104,230 |  | $ | (224,865) |  | $ | 3,022,181

See accompanying notes to condensed consolidated financial statements  8


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   NOTE-1 BASIS OF PRESENTATION  The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed consolidated or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.  In the opinion of management, the consolidated balance sheet as of December 31, 2008 which has been derived from the audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended June 30, 2009 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2009 or for any future period.  These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2008.   NOTE-2 ORGANIZATION AND BUSINESS BACKGROUND  Sino Assurance Inc. (the “Company” or “SNAS) was incorporated in the State of Delaware on August 19, 1997 as Sheffield Products, Inc. On November 30, 2004, the Company changed its name to Digital Network Alliance International, Inc. On November 20, 2008, the Company further changed its current name to Sino Assurance Inc.  The Company, through its subsidiaries and variable interest entity, is principally engaged in the provision of surety and tendering guarantees service to corporations and individuals in the Peoples Republic of China (the PRC”).   NOTE-3 GOING CONCERN UNCERTAINTIES  These condensed consolidated financial statements have been prepared assuming that Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.  As of June 30, 2009, the Company has a negative operating cash flow of $86,469 with the accumulated deficits of $224,865. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability to obtain necessary additional financing to sustain operations and the attainment of profitable operations.  These factors raise substantial doubt about the Companys ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.   NOTE-4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  · Use of estimates


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)    In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.  · Basis of consolidation  The condensed consolidated financial statements include the financial statements of SNAS and its subsidiaries and variable interest entity (VIE). All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.  · Cash and cash equivalents  Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of six months or less as of the purchase date of such investments.  · Guarantee fee receivable  Guarantee fee receivable are fees owed to the Company for its guarantee services but not yet received from its customers. In the guarantee transactions, the Company will place funds on deposit with the banks to guaranty the completeness of performance obligation by the Companys customers. Fees received in advance under the guarantee transactions are recorded as deferred revenue and amortized as revenue over the term of the guarantee period on a straight-line basis.  The Company regularly monitors the guarantee activities to ensure that the performance obligation was completed in a timely manner and that the Company is allowed to receive its guarantee fee. If necessary, the Company charges against as a deduction in the customer collateral held to recover the guarantee fee receivable. Guarantee fee receivables are considered impaired if payment of the fee is not received by the Company in accordance with the terms of the guarantee agreement with each customer. When any receivable balances are determined to be uncollectible, these balances are written off immediately.  · Plant and equipment, net  Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:  Depreciable lifeLeasehold improvement5 yearsFurniture, fittings, office equipment5 yearsMotor vehicles10 years  Expenditure for maintenance and repairs is expensed as incurred. The gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the statement of operations.  Depreciation expenses for the three months ended June 30, 2009 and 2008 were $20,520 and $16,035, respectively.  Depreciation expenses for the six months ended June 30, 2009 and 2008 were $41,102 and $26,326, respectively.


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   · Impairment of long-life assets  Long-lived assets primarily include plant and equipment. In accordance with the Statement of Financial Accounting Standard ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company periodically reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value using a undiscounted cash flow analysis. There has been no impairment as of June 30, 2009.  · Revenue recognition  In accordance with the SECs Staff Accounting Bulletin No. 104, Revenue Recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price is fixed or determinable, and collectibility is reasonably assured.  (a) Guarantee revenue  The Company provides guarantees service to corporations and individuals in issuing and obtaining surety or tendering guarantees for their business operations and/or personal use. In exchange for the Companys guarantee services, the borrower pays the Company a certain percentage of the surety amount as an upfront guarantee fee. Maturities of surety and tendering guarantees will generally range from 2 days to 2 years, and are secured by bank deposits made by the Company. If a customer fails to fulfill its obligations to a lender, the bank will take possession of the Companys deposit.  The Company recognizes the guarantee fee income over the term of the contract on a straight line basis, net of business taxes, the price to the client is fixed or determinable, and collectibility of the resulting receivable is reasonably assured.  (b) Interest income  Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.  · Customer collateral  The Company maintains and safeguards cash deposits from certain customers in order to ensure the satisfaction of their performance obligations arising from the surety or tendering guarantees. The cash collateral assets are restricted under the caption of Restricted cash and are presented on the balance sheet.  · Deferred revenue  Guarantee fee received in advance from rendering of service are recorded as deferred revenue and are amortized into revenue ratably over the related contract period.  · Reserve for guarantee losses  In connection with the nature of its guarantor business, the Company regularly reviews actual guarantee loss claims experience to determine if any necessary adjustments may be recognized to the reserve in the period in which those differences arise or are identified. Reserve 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 June 30, 2009.


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   For the three and six month ended June 30, 2009, the Company has recognized $54,825 and $109,597, respectively on the reserve for guarantee losses for any potential claims.  · Comprehensive income  SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying consolidated statements of stockholders equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.  l Net (loss) income per share  The Company calculates net (loss) income per share in accordance with SFAS No. 128,Earnings per Share. Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share reflects the potential dilution of securities by including common stock equivalents, such as stock options, stock warrants and convertible preferred stock, in the weighted average number of common shares outstanding for a period, if dilutive.  · Income taxes  The Company accounts for income tax using SFAS No. 109Accounting for Income Taxes, which requires the asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred income taxes are provided for the estimated future tax effects attributable to temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, and for the expected future tax benefits from loss carry-forwards and provisions, if any. Deferred tax assets and liabilities are measured using the enacted tax rates expected in the years of recovery or reversal and the effect from a change in tax rates is recognized in the statement of operations and comprehensive (loss) income in the period of enactment. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized.  The Company also adopts Financial Accounting Standards Board ("FASB") Interpretation No. (FIN) 48, "Accounting for Uncertainty in Income Taxes" and FSP FIN 48-1, which amended certain provisions of FIN 48. FIN 48 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted the policy of recognizing interest and penalties, if any, related to unrecognized tax positions as income tax expense. The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial condition or results of operations for the period ended June 30, 2009 and 2008.  The Company conducts major businesses in the PRC and is subject to tax in its own jurisdiction. As a result of its business activities, the Company files separate tax returns that are subject to examination by the foreign tax authorities.  · Foreign currencies translation  Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations.  The reporting currency of the Company is the United States dollars ("US$") and the accompanying consolidated financial statements have been expressed in US$. In addition, the Companys operating entity in the PRC maintains its books and records in its local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which its operation is conducted.  In general, for consolidation purposes, assets and liabilities of its operating entity whose functional currency is not US$ are translated into US$, in accordance with SFAS No. 52, Foreign Currency Translation, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign entities are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders equity.  Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective periods:


|                                        |  |  |  |               |  |              
|--------------------------------------- |  |  |  | ------------- |  | -------------
|                                        |  |  |  | June 30, 2009 |  | June 30, 2008
|Period end RMB : US$1 exchange rate     |  |  |  | 6.8448        |  | 6.8540       
|Average period RMB : US$1 exchange rate |  |  |  | 6.8432        |  | 7.0502       

· Related parties  Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.  · Segment reporting  SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information establishes standards for reporting information about operating segments on a basis consistent with the Companys internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in one reportable operating segment.  · Fair value measurement  Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (FAS 157), for all financial instruments and non-financial instruments accounted for at fair value on a recurring basis. Effective January 1, 2009, the Company adopted SFAS 157 for all non-financial instruments accounted for at fair value on a non-recurring basis. SFAS 157 establishes a new framework for measuring fair value and expands related disclosures. Effective April 1, 2009, the Company adopted FASB FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. Adoption of the FSP had an insignificant effect on the Companys financial statements.  FAS 157 establishes a new framework for measuring fair value and expands related disclosures. Broadly, FAS 157 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. FAS 157 establishes a three-level valuation hierarchy based upon observable and non-observable inputs. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly


13


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.  For financial assets and liabilities, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.  · Recent accounting pronouncements  The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.   In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, and Accounting Principles Board (APB) Opinion No. 28, Interim Financial Reporting. (FAS 107) This FSP requires publicly-traded entities to disclose in the body or in the accompanying notes of its summarized financial information for interim reporting periods and in its financial statements for annual reporting periods, the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position, as required by FAS 107. This FSP is effective for interim and annual reporting periods ending after June 15, 2009. The Company adopted FSP FAS 107-1 and APB 28-1 for the period ended June 30, 2009.  In May 2009, the FASB issued SFAS No. 165, Subsequent Events (FAS 165), which establishes general standards of accounting for, and requires disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company adopted the provisions of FAS 165 for the quarter ended June 30, 2009. The adoption of FAS 165 did not have a material effect on the consolidated financial statements.  In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140 (FAS 166). FAS 166 eliminates the concept of a qualifying special-purpose entity, changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entitys continuing involvement in and exposure to the risks related to transferred financial assets. FAS 166 is effective for fiscal years beginning after November 15, 2009. The Company will adopt FAS 166 in fiscal 2010 and is evaluating the impact it will have on the consolidated results of the Company.  In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (FAS 167). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. FAS 167 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt FAS 167 in fiscal 2010 and is evaluating the impact it will have on the consolidated results of the Company.  In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162” (“FAS 168”). FAS 168 replaces SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” and establishes the “FASB Accounting Standard Codification TM ” (“Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles in the United States. All guidance contained in the Codification carries an equal level of authority. On the effective date of FAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included


14


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   in the Codification will become nonauthoritative. FAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company has evaluated this new statement, and has determined that it will not have a significant impact on the determination or reporting of the financial results.   NOTE-5 RESTRICTED CASH  Restricted cash represents (i) fund received from customers for the purpose of trust deposits held at the banks by the Company to pledge against the surety and tendering guarantee under the contractual guarantee period and (ii) escrow deposits as security to the bank for the provision of banking surety guarantee service. Such restricted cash under item (i) is an asset of the Company and is recorded as customer collateral payable to the customers upon the expiry of the guarantee contracts.  As of June 30, 2009, the Company had surety and tendering guarantees outstanding resulting in restricted cash with approximately $1,574,490 from customer collateral and $1,237,015 for escrow deposits at the bank.   NOTE-6 PREPAYMENTS AND OTHER RECEIVABLE  Prepayments and other receivable consisted of the followings:  June 30, 2009December 31, 2008(Unaudited)(Audited)Prepayments$113,419$45,864Utility and rental deposits53,32466,466Advances to employees7,4304,145Other receivables7,4539,702$181,626$126,177   NOTE-7 LOAN RECEIVABLE  On May 13, 2008, the Company advanced $1,899,030 (equivalent to RMB13,000,000) to a third party in a term of 10 months, receivable by March 12, 2009, carried with an interest rate of 3.12% per annum payable at due date. On March 13, 2009 and March 23, 2009, the Company agreed with the extension of the repayment terms, whereas $1,168,634 (equivalent to RMB8,000,000) will be repayable on June 12, 2009 and the remaining balance of $730,396 (equivalent to RMB5,000,000) will be repayable on June 23, 2009, subject to the same interest rate of 3.12% per annum receivable upon the maturity. For the six months ended June 30, 2009, the Company recognized interest income of $30,395 on loan receivable.  In April, the Company received the partial repayment of $293,020 (RMB2,000,000). In June 2009, the Company renewed the note receivable of $1,636,688 (equivalent to RMB11,000,000) with the new repayment terms of the maturity due on September 30, 2009.


15


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   NOTE-8 ACCRUED LIABILITIES AND OTHER PAYABLE  Accrued liabilities and other payable consisted of following:  June 30, 2009December 31, 2008(Unaudited)(Audited)Business tax payable$14,465$10,191Reserve for guarantee losses328,717218,844Accrued payroll and employee welfare77,024123,068Accrued operating expenses23,74476,907Other tax payable9,0159,276Other payable8842,582$453,849$440,868    NOTE-9 INCOME TAXES  For the period ended June 30, 2009 and 2008, the local (United States) and foreign components of income from operations before income taxes were comprised of the following:  Six months ended June 30,20092008Tax jurisdictions from: Local$-$- Foreign189,118367,509Income before income taxes$189,118$367,509  The provision for income taxes consisted of the following:  Six months ended June 30,20092008Current: Local$-$- Foreign3,11650,961Deferred: Local-- Foreign6,668-Provision for income taxes$9,784$50,961  The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has operations in various countries: United States, BVI and the PRC that are subject to taxes in the jurisdictions in which they operate, as follows:


16


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   United States of America  SNAS is registered in the State of Delaware and is subject to United States of America tax law. No provision for income taxes have been made as SNAS has generated no taxable income during the period.  British Virgin Island  Under the current BVI law, LTL is not subject to tax on income.  The PRC  The Company generated substantially its net income from its VIE, CCG in the PRC. CCG is subject to the Corporate Income Tax governed by the Income Tax Law of the Peoples Republic of China with an unified statutory income tax rate of 25%.  CCG is registered and operates in Shenzhen City, the PRC and is recognized as Enterprise Located in Special Economic Zone. As a result, the Company is entitled to Corporate Income Taxes (CIT) at a preferential tax rate of 15%. During the period ended June 30, 2009, the Company has established various provincial and municipal branches, as well as representative offices in the PRC, which are generally subject to the statutory tax rate of 25% (2008: 25%).  CCG is registered and operates in Shenzhen City, the PRC and is recognized as Enterprise Located in Special Economic Zone. As a result, the Company is entitled to Corporate Income Taxes (CIT) at a preferential tax rate of 15%. Under a transitional policy under the CIT Law, CCG continues to enjoy the unexpired tax holiday in a special economic zone in Shenzhen City and its applicable tax rate is increased progressively to 25% over a 5-years period, starting from January 1, 2008.  The reconciliation of income tax rate to the effective income tax rate for the six months ended June 30, 2009 and 2008 is as follows:


|                                         |                           |           |      |   |         
|---------------------------------------- | ------------------------- | --------- | ---- | - | --------
|                                         | Six months ended June 30,
|                                         | 2009                      |           | 2008
|                                         |                           |           |      |   |         
|Income before income taxes               | $                         | 189,118   |      | $ | 367,509 
|Statutory income tax rate                |                           | 25%       |      |   | 25%     
|Income tax expense at statutory tax rate |                           | 47,280    |      |   | 91,877  
|                                         |                           |           |      |   |         
|Effect of tax holiday                    |                           | (2,096)   |      |   | (67,083)
|Effect of non-taxable items              |                           | (101,216) |      |   | (17,133)
|Effect of non-deductible items           |                           | 65,816    |      |   | 43,300  
|Income tax expense                       | $                         | 9,784     |      | $ | 50,961  

As of June 30, 2009, the Company has recognized a deferred tax liability of $6,666 relating to interest income from loan receivable.   NOTE-10 CONCENTRATIONS OF RISK  The Company is exposed to the following concentrations of risk:  (a) Major customers


17


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)    For the three and six months ended June 30, 2009 and 2008, there was no customer who accounts for 10% or more of the Company’s revenues.  (b) Major vendors  For the three and six months ended June 30, 2009 and 2008, there was no vendor who accounts for 10% or more of the Companys purchases.  (c) Political and country risk  The Companys operations are carried out in the PRC. Accordingly, the Companys business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, by the general state of the PRCs economy. The Companys business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.  (d) Guarantee default risk  The Company also has significant concentration risk related to its guarantees on potential loss if the customers fail to the completion of their performance obligation in a timely manner under the surety guarantees. To reduce these potential losses, the Company holds collateral in the form of cash equivalents, which are reflected in customer collateral on the balance sheets as they are held in restricted cash in the Companys name.  (e) Exchange rate risk  The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.   NOTE-11 COMMITMENTS AND CONTINGENCIES  (a) Operating lease commitments  The Company was committed under various non-cancelable operating leases with fixed monthly rentals, due through June 2010. Total rent expenses for the six months ended June 30, 2009 and 2008 was $148,739 and $130,079.  As of June 30, 2009, the Company has future minimum rental payments of $199,206 within the next 12 months, under these non-cancelable operating leases.  (b) Guarantees  As of June 30, 2009, the Company has 1,154 surety and tendering guarantees outstanding. If the Companys customers fail to complete their performance obligation in a timely manner so that the Company is obligated to pay on its guarantees, the Company would have the maximum potential amount of future payments of approximately $152,422,012 (RMB1,043,298,186) in total.


18


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   Reserve 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 June 30, 2009. However, the uncertainty in macroeconomic factors and the uncertainty of the effect of any current or future government actions to the global economic crisis make forecasting of default rates increasingly imprecise. The Company regularly reviews actual guarantee loss claims experience to determine if any necessary adjustments may be recognized to the reserve in the period in which those differences arise or are identified. For the period ended June 30, 2009 and 2008, the Company experienced no actual guarantee loss claims. At June 30, 2009, the Company has accrued $328,717 on the reserve for guarantee losses for any potential claims.  ---


19    ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  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 Securities and Exchange Commission.  No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.  PLAN OF OPERATIONS  The Companys development has reached a critical moment. It aims to achieve steady growth in 2009 by getting its core employee guarantee business started on a clear commercial development pattern, by further elevating the market status of its engineering guarantee business as well as leading the whole Company at a relatively fast development stage.  Analysis of operation environment in 2009  (1) State policies will help to promote the development of the guarantee business.  (2) The economic stimulus package worth RMB 4 trillion (approximately US$600 billion) will promote infrastructure construction.  (3) The enterprises have increasing demand for employee guarantee and a large number of unemployed people directly stimulate the need for employee guarantee business.  Market opportunities  (1) The number of employees has reached 700 million in China. All of them are potential clients of our employee guarantee business.  (2) Tremendous market demand exists for the engineering guarantee business as a result of the national investment in infrastructure construction and post-disaster reconstruction (RMB 1 trillion, or approximately US$150 billion).  (3) Project teams have been set up for post-disaster reconstruction in Sichuan, which has opened market for post-disaster projects.  (4) The Company will continuously seek to establish additional branch offices in order to expand its coverage of the mainland PRC market.  Target safeguard measures  (1) Measures to achieve business target  (I) Employee guarantee:  - Developing new products as part of the employee guarantee business: These new products are designed for enterprises and individuals on the basis of the professional market researches. In addition, we will enlarge the product line and diversify the product design, to raise the unit price of product. The average unit price will increase from approximately RMB 30 last year to RMB 50.  20     - Further enlarging the target consumer group: New products are designed for enterprises on the basis of sales of individual job-seeker product in 2008, we will make every effort to enlarge the core consumer group (enterprises) of employee guarantee.  - Market promotion, Government public relations, rapid promotion by industry organization enhance the recognition of employee guarantee products and stimulate potential demand.  - Wide distribution channels: The triple sales mode integrated with direct sale, agency and cooperation will be adopted to broaden distribution channels at the quickest opportunity. Housekeeping companies, logistics companies, labor export companies, talent market and recent graduates are shortlisted as core consumers.  - We will cooperate with professional market research firms to deepen our research on the market and prepare market-oriented programs. We are discussing with AC Nielsen in contemplation of our cooperation.  (II) Project guarantee business  - We are applying for becoming the Shenzhen government specially backed small and medium-sized enterprise.  - We have formed strategic partnership with China Construction Bank and Shanghai Pudong Development Bank.  - We will participate in the construction works of post-disaster areas in Sichuan, and have established a special reconstruction team for post-disaster areas in Sichuan to undertake the project guarantee for post-disaster works.  - We will strengthen the cooperative relation with China State Construction Engineering Corporation, China Railway Construction Engineering Group, Jiangsu Construction Engineering Group Corporation Limited, Beijing Urban Construction Group, Yunnan Construction Engineering Group Co., Ltd., Hebei Construction Group Co., Ltd. and other senior clients.  - The customer service center specially designed by the company is building a nationwide call service platform and VIP customers management center.  - Based on our existing products such as tender guarantee, performance guarantee, advance payment guarantee and payment guarantee, we will further develop the new service products whose risks can be controlled, and start strategic cooperation with Shenzhen High Tech Investment & Guarantee Co., Ltd. and Shenzhen Small & Medium Enterprises Credit Guarantee Center Co., Ltd. to commence engineering guarantee business of huge sum and derivative house redemption business.  (2) Risk control measures  - Establishing a system for provisions of risk and increasing the amount of provisions of risk.  - Starting cooperation with Shenzhen High Tech Investment & Guarantee Co., Ltd. and Shenzhen Small & Medium Enterprises Credit Guarantee Center Co., Ltd. to transfer and minimize the risk.  - The appraisal department and project manager are entitled to exercise the right of veto in contemplation of the project appraisal.  (3) Management team  - In 2009, we will introduce experts and advisors and set up an advisory panel consisting of senior executives from former large state-owned guarantee companies and banking professionals.  - We will further enhance the professionalism of corporate marketing team, and expand our 23 branches to second and third level cities. The number of team members will reach 220, and the branches will be reshaped as the profit centers.  - We will enlarge the reserve of talents and plan to recruit 20 managers in 2009.    21    (4) Marketing strategy  - The focus strategy will be implemented in 2009. The Company will implement professional operation for employee guarantee business. At the same time, further professional development in all aspects will be prepared for tender guarantee business of project construction guarantee and project performance guarantee business.  We have entered into cooperation with Baidu.com, over which we will promote our brand and business, further enhancing our brand recognition.  We do not have any material off-balance sheet arrangements.   22    RESULTS OF OPERATIONS  SIX MONTHS ENDED JUNE 30, 2009 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2008 AND THREE MONTHS ENDED JUNE 30, 2009 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2008  Net revenue: Net revenue for the six months ended June 30, 2009, was $1,655,863 as compared to $1,527,036 for the same period in 2008. The increase of $128,827 or approximately 8% was due to significant year-over-year growth of our customer base in the tender and surety guarantee business and market share in China. The gross margin decreased to 73% from 77% for the six months ended June 30, 2009, 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 revenue for the three months ended June 30, 2009, was $928,447 as compared to $923,633 for the same period in 2008. The increase of $4,814 or approximately 0.5% was due to significant year-over-year growth of our customer base in the tender and surety guarantee business and market share in China. The gross margin decreased to 72% from 82% for the three months ended June 30, 2009, 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 six months ended June 30, 2009 was $189,118 compared to $367,509 for the same period in 2008. The decrease in the pre-tax profit was primarily due to the provision of guarantee loss, increases in wages and salaries and other operating expenses incurred in conjunction with the expansion of business operations.  Net income before tax for the three months ended June 30, 2009 was $176,483 compared to $305,987 for the same period in 2008. The decrease in the pre-tax profit was primarily due to the provision of guarantee loss, increases in wages and salaries and other operating expenses incurred in conjunction with the expansion of business operations.  Operating expenses: Total operating expenses for the six months and three months ended June 30, 2009 were $1,005,099 and $487,059, as compared to $785,747 and $424,953 for the six and three months period ended June 30, 2008 respectively. The increase of $219,352 (or approximately 28%) and $62,106 (or approximately 15%) was mainly due to the following factors:  (1) Reserve for guarantee losses $109,597 for the six months ended and $54,825 for the three months ended June 30, 2009 and none for the same period in 2008. (2) Depreciation expenses increased $14,776 or 56% for the six months ended and $4,485 or 28% for the three months ended June 30, 2009. The increase was due to our acquisition of additional fixed assets during the year of 2008. (3) Wages, salaries and staff pension increased $62,443 or 16% for the six months ended and $10,393 or 5% for the three months ended June 30, 2009. The increase in wages, salaries and staff pension was mainly due to increases in employee of headcounts and pay rates as a result of expansion of our business. (4) Rent increased $18,660 or 14% for the six months ended and decreased $ 6,478 or 9% for the three months ended June 30, 2009. The increase in rent for the six months ended June 30, 2009 was mainly due to expansion of the business and which was related to revenue growth. The decrease in rent for the three months ended June 30, 2009 was mainly due to some branches rent was reduced because of the macroeconomic factors.  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 June 30, 2009, guarantee fee receivable was $46,911 as compared to $17,553 for the year ended December 31, 2008. As of June 30, 2009, customer collateral was $1,574,490, as compared to the year ended December 31, 2008 balances of $2,102,665. These changes were due to the increase of the tender and surety guarantee business.  As of June 30, 2009, deferred revenue was $204,601 as compared to $401,259 for the year ended December 31, 2008.  For the six months ended June 30, 2009, cash used in operating activities totaled $86,469. This was primarily due to the decreases in deferred revenue, accounts payable, and increases in accounts receivable, prepayments and other receivables.  For the six months ended June 30, 2009, cash provided by investing activities amounted to $320,160. The receipt of funds was mainly due to the decrease of change in restricted cash, net of customer collateral, and the repayment from loan receivable.  For the six months ended June 30, 2009, we owed $59,516 to Mr. Mengyu Tong, a director. These loans are unsecured, interest-free, and have no fixed repayment terms.  23     For the six months ended June 30, 2009, our balance sheet reflects total assets of $5,368,229 and total liabilities of $2,346,048. We had cash and cash equivalents of approximately $323,919 as of June 30, 2009.  For the six months ended June 30, 2009, we had surety and tendering guarantees outstanding resulting in restricted cash of approximately $1,574,490 from customer collateral and $1,237,015 for escrow deposits at the bank. Restricted cash represents (i) funds received from customers for the purpose of trust deposits held at the banks by the Company to pledge against the surety and tendering guarantee during the contractual guarantee period and (ii) escrow deposits as security to the bank for the provision of banking surety guarantee service. Such restricted cash under item (i) is an asset of the Company and is recorded as customer collateral payable to the customers upon the expiry of the guarantee contracts.  On May 13, 2008, the Company advanced $1,899,030 (equivalent to RMB13,000,000) to a third party in a term of 10 months, receivable by March 12, 2009, carried with an interest rate of 3.12% per annum payable at due date. This was a loan made in the ordinary course of the Companys business.  On March 13, 2009 and March 23, 2009, the Company agreed with the extension of the repayment terms, whereas $1,168,634 (equivalent to RMB8,000,000) will be repayable on June 12, 2009 and the remaining balance of $730,396 (equivalent to RMB5,000,000) will be repayable on June 23, 2009, subject to the same interest rate of 3.12% per annum receivable upon the maturity. For the six months ended June 30, 2009, the Company recognized interest income of $30,395 on loan receivable.  In April, the Company received the partial repayment of $293,020 (RMB2,000,000). In June 2009, the Company renewed the note receivable of $1,636,688 (equivalent to RMB11,000,000) with the new repayment terms of the maturity due on September 30, 2009. At August 11, 2009, we received a repayment confirmation signed by the independent third party promise to repay the loan and accumulated interest before the end of September 30, 2009.  The management has confidence that the loan will be settled before the end of third quarter..  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 discussed in Note 3 to the Companys financial statements for the six months ended June 30, 2009,  the Company has a negative operating cash flow of $86,469, and as of June 30, 2009, it had an  accumulated deficit of $224,865. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability to obtain necessary additional financing to sustain operations and the attainment of profitable operations.  Although uncertainties continue to exist, Management believes it is taking the steps necessary to insure that the Company will continue as a going concern, and believes that the Companys financial condition is improving.  For example, the negative operating cash flow of $86,469 for the six months ended June 30, 2009, reflects a reduction of $288,352, or approximately 77%, as compared to negative operating cash flow of $323,919 for the six months ended June 30, 2008.  In addition, the accumulated deficit of $224,865 as of June 30, 2009, reflects a reduction of $179,334, or approximately 44%, as compared to the accumulated deficit of $404,199 as of December 31, 2008.  .  For the six months ended June 30, 2009, we had total future lease commitments under non-cancellable operating leases of $199,206. We currently have working capital sufficient to fund these lease commitments.  For the six months ended June 30, 2009, we had contingent liabilities in respect of guarantees granted under the surety and tendering guarantee services business in the aggregate amount of $152,422,012. As of June 30, 2009, we had 1,154 surety and tendering guarantees outstanding. If all our customers fail to complete their performance obligation in a timely manner so that we are obligated to pay on our guarantees, we would have a maximum potential liability of an aggregate of approximately $152,422,012 (RMB1,043,298,186).  We have significant concentration of risk related to our guarantees of potential loss if our customers fail to complete their performance obligations under the surety guarantees in a timely manner.  To reduce these potential losses, we hold collateral in the form of cash equivalents, which are reflected in customer collateral on the balance sheets as they are held in restricted cash in our name.  Reserve 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 June 30, 2009. However, the uncertainty in macroeconomic factors and  24    the uncertainty of the effect of any current or future government actions to the global economic crisis make forecasting of default rates increasingly imprecise. The Company regularly reviews actual guarantee loss claims experience to determine if any necessary adjustments may be recognized to the reserve in the period in which those differences arise or are identified. For the period ended June 30, 2009 and 2008, the Company experienced no actual guarantee loss claims. At June 30, 2009, the Company has accrued $328,717 on the reserve for guarantee losses for any potential claims.  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 Consolidated Financial Statements, see Note 4 of the Notes to Financial Statements in this Form 10-Q and Note 3 of the Notes to Consolidated Financial Statements in our 2008 Form 10-K.   ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Not applicable.   ITEM 4(T). CONTROLS AND PROCEDURES  Evaluation of Disclosure Controls and Procedures  The Securities and Exchange Commission defines the term disclosure controls and procedures to mean the  controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.  As of the end of the period covered by this report, The Company's management, with the participation of the chief executive officer and the chief financial officer, carried out an evaluation of the effectiveness of the design and operation of the Company's "disclosure, controls and procedures" (as defined in the Exchange Act Rules 13a-15(3) and 15-d-15(3) as of the end of the period covered by this annual report (the "Evaluation Date").  Based on that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, the Companys disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified.  Our chief executive office and chief financial officer also concluded that our disclosure controls and procedures were effective as of June 30, 2009 to provide reasonable assurance of the achievement of these objectives.  Changes in Internal Controls Over Financial Reporting  There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) or any other factors during the quarter ended June 30, 2009, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.    25    PART II - OTHER INFORMATION    ITEM 1. LEGAL PROCEEDINGS  None.     ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  None.    ITEM 3. DEFAULTS UPON SENIOR SECURITIES  Not applicable.    ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  Not applicable.    ITEM 5. OTHER INFORMATION  None   ITEM 6. EXHIBITS  The following exhibits are filed herewith:  3.1 Articles of Incorporation (herein incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on September 12, 2002).  3.2 Bylaws (herein incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on September 12, 2002).  31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.    26    SIGNATURES  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  SINO ASSURANCE INC. (Registrant)    By: /s/ Guokang Tu, Chief Executive Officer and Chairman  Date:  August 15, 2009   By: /s/ Mengyou Tong, Chief Financial Officer  Date:  August 15, 2009   By: /s/ Beiquan Ling, Chief Operating Officer  August 15, 2009  27