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 September 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
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|Non-accelerated filer
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(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 September 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 OPERATIONS22 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 27 ITEM 4(T). CONTROLS AND PROCEDURES 27 ITEM 1. LEGAL PROCEEDINGS 28 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 28 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 28 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 28 ITEM 5. OTHER INFORMATION 28 ITEM 6. EXHIBITS 28     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 SEPTEMBER 30, 2009 AND DECEMBER 31, 2008 (Currency expressed in United States Dollars (US$), except for number of shares)  September 30, 2009December 31, 2008(Unaudited)(Audited)ASSETSCurrent assets:Cash and cash equivalents$1,038,870$90,158Restricted cash3,310,1603,367,033Guarantee fee receivable318,84917,553Income tax receivable-55,105Prepayments and other receivable162,981126,177Loan receivable1,053,4111,896,650Total current assets5,884,2715,552,676Non-current assets:Plant and equipment, net295,340361,293TOTAL ASSETS$6,179,611$5,913,969LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable, trade$18,583$70,752Advances from customers23,052-Customer collateral1,621,3992,102,665Deferred revenue264,791401,259Amount due to related parties59,57959,434Income tax payable91,613-Deferred tax liabilities6,673-Accrued liabilities and other payable553,140440,868Total current liabilities2,638,8303,074,978Commitments 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 September 30, 2009 and December 31, 200860,00060,000Additional paid-in capital2,915,1212,915,121Accumulated other comprehensive income171,227163,839Statutory reserve104,230104,230Retained earnings (accumulated deficit)290,203(404,199)Total stockholders equity3,540,7812,838,991TOTAL LIABILITIES AND STOCKHOLDERS EQUITY$6,179,611$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 THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (Currency expressed in United States Dollars (US$)) (Unaudited)  Three months ended September 30,Nine months ended September 30,2009200820092008REVENUES, NETGuarantee fee income$1,708,504$566,273$3,299,825$2,085,531Interest income25,62820,14090,17027,918Total revenues, net1,734,132586,4133,389,9952,113,449COST OF REVENUE420,271163,963870,701514,182GROSS PROFIT1,313,861422,4502,519,2941,599,267Operating expenses:Depreciation20,28417,82261,38644,148Selling, general and administrative576,298613,1971,430,6981,372,546Reserve for guarantee losses56,359238165,95622,153Total operating expenses652,941631,2571,658,0401,438,847INCOME (LOSS) FROM OPERATIONS660,920(208,807)861,254160,420Other income (expense):Other income--2,288-Other expense(1,589)(3,562)(15,093)(5,280)INCOME (LOSS) BEFORE INCOME TAXES659,331(212,369)848,449155,140Income tax expense(144,262)(14,825)(154,047)(65,786)NET INCOME (LOSS)$515,069$(227,194)$694,402$89,354Other comprehensive income:- Foreign currency translation gain3,53211,8717,388123,170COMPREHENSIVE INCOME (LOSS)$518,601$(215,323)$701,790$212,524Net income (loss) per share  basic and diluted$0.01$(0.00)$0.01$0.00Weighted average shares outstanding during the period  basic and diluted60,000,00060,000,00060,000,00060,000,000    See accompanying notes to condensed consolidated financial statements.


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SINO ASSURANCE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (Currency expressed in United States Dollars (US$)) (Unaudited)  Nine months ended September 30,20092008Cash flows from operating activities:Net income$694,402$89,354Adjustments to reconcile net income to net cash used in operating activities:Depreciation61,38644,148Loss on disposal of plant and equipment7,4901,852Reserve for guarantee losses165,956-Deferred tax expense6,669-Changes in operating assets and liabilities:Guarantee fee receivable(301,037)1,079Income tax receivable55,199-Prepayments and other receivable(36,472)(138,133)Accounts payable, trade(52,304)122,524Advances from customers23,035-Deferred revenue(137,342)192,458Income tax payable91,548(105,779)Accrued liabilities and other payable(54,833)25,128Net cash provided by operating activities523,697232,631Cash flows from investing activities:Change in restricted cash, net of customer collateral(421,022)(354,047)Repayment from (payment on) loan receivable847,233(1,143,037)Proceeds from disposal of plant and equipment835-Purchase of plant and equipment(2,929)(217,476)Net cash provided by (used in) investing activities424,117(1,714,560)Cash flows from financing activities:Advances from stockholders-2,042,322Net cash provided by financing activities-2,042,322Effect of exchange rate changes in cash and cash equivalents89820,498NET CHANGE IN CASH AND CASH EQUIVALENTS948,712580,891BEGINNING OF PERIOD90,158136,496END OF PERIOD$1,038,870$717,387SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for income taxes$3,116$171,565Cash paid for interest$-$-   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 NINE MONTHS ENDED SEPTEMBER 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 |  | Retained earnings/ (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               |  | -             |  |                            | -      |                                        |   | -                 |  |                                          | -       |                            |   | -       |  |   | 694,402   |  |   | 694,402  
|                                        |  |               |  |                            |        |                                        |   |                   |  |                                          |         |                            |   |         |  |   |           |  |   |          
|Foreign currency translation adjustment |  | -             |  |                            | -      |                                        |   | -                 |  |                                          | 7,388   |                            |   | -       |  |   | -         |  |   | 7,388    
|Balance as of September 30, 2009        |  | 60,000,000    |  | $                          | 60,000 |                                        | $ | 2,915,121         |  | $                                        | 171,227 |                            | $ | 104,230 |  | $ | 290,203   |  | $ | 3,540,781

See accompanying notes to condensed consolidated financial statements  8


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 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). 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 September 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 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  · Use of estimates  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.


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   · 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 three months or less as of the purchase date of such investments.  · Guarantee fee receivable  Guarantee fee receivables 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 September 30, 2009 and 2008 were $20,284 and $17,822, respectively.  Depreciation expenses for the nine months ended September 30, 2009 and 2008 were $61,386 and $44,148, respectively.  · Impairment of long-life assets  Long-lived assets primarily include plant and equipment. In accordance with the provisions of Accounting Standards Codification ("ASC") Topic 360-10-5, Impairment or Disposal of Long-Lived Assets, the


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   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 an undiscounted cash flow analysis. There has been no impairment as of September 30, 2009.  · Revenue recognition  In accordance with the ASC Topic 605, 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 follows ASC Topic 605-20-25-8, Fees for Guaranteeing a Loan and 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


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   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 September 30, 2009.  For the three and nine months ended September 30, 2009, the Company has recognized $56,359 and $165,956, respectively on the reserve for guarantee losses for any potential claims.  · Income taxes  The Company adopts the ASC Topic 740, Income Taxes regarding accounting for uncertainty in income taxes prescribes the recognition threshold and measurement attributes for financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. In addition, the guidance requires the determination of whether the benefits of tax positions will be more likely than not sustained upon audit based upon the technical merits of the tax position. For tax positions that are determined to be more likely than not sustained upon audit, a company recognizes the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not determined to be more likely than not sustained upon audit, a company does not recognize any portion of the benefit in the financial statements. The guidance provides for de-recognition, classification, penalties and interest, accounting in interim periods and disclosure.  For the nine months ended September 30, 2009 and 2008, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2009, the Company did not have any significant unrecognized uncertain tax positions.  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.  · Comprehensive income  ASC Topic 220, 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.  · Net (loss) income per share  The Company calculates net (loss) income per share in accordance with ASC Topic 260,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.


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   · Foreign currencies translation  Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations.  The reporting currency of the Company is the United States dollars ("US$") 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 ASC Topic 830-30, Translation of Financial Statement, 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:


|                                        |  |  |  |                    |  |                   
|--------------------------------------- |  |  |  | ------------------ |  | ------------------
|                                        |  |  |  | September 30, 2009 |  | September 30, 2008
|Period end RMB : US$1 exchange rate     |  |  |  | 6.8376             |  | 6.8551            
|Average period RMB : US$1 exchange rate |  |  |  | 6.8425             |  | 6.9989            

· 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  ASC Topic 280, Segment Reporting 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  ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), establishes a new framework for measuring fair value and expands related disclosures. Broadly, ASC 820 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a li


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   ability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 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 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.  · Financial instruments  Cash and cash equivalents, guarantee fee receivable, accounts payable, advances from customers, customer collateral, deferred revenue and amount due to related parties are carried at cost which approximates fair value. The estimated fair value of loan receivable was $1.1 million and $1.9 million as of September 30, 2009 and December 31, 2008, respectively, based on current market prices or interest rates. Any changes in fair value of assets or liabilities carried at fair value are recognized in other comprehensive income for each period.  · 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 September 2009, Accounting Standards Codification (ASC) became the source of authoritative U.S. GAAP recognized by the Financial Accounting Standards Board (FASB) for nongovernmental entities, except for certain FASB Statements not yet incorporated into ASC. Rules and interpretive releases of the SEC under federal securities laws are also sources of authoritative U.S. GAAP for registrants. The discussion below includes the applicable ASC reference.  The Company adopted ASC Topic 810-10, Consolidation (formerly SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51) effective January 2, 2009. Topic 810-10 changes the manner of presentation and related disclosures for the noncontrolling interest in a subsidiary (formerly referred to as a minority interest) and for the deconsolidation of a subsidiary. The adoption of these sections did not have a material impact on the Companys condensed consolidated financial statements.  ASC Topic 815-10, Derivatives and Hedging (formerly SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities) was adopted by the Company effective January 2, 2009. The guidance under ASC Topic 815-10 changes the manner of presentation and related disclosures of the fair values of derivative instruments and their gains and losses.


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)    In April 2009, the FASB issued an update to ASC Topic 820-10, Fair Value Measurements and Disclosures (ASC 820-10) (formerly FASB Staff Position No. SFAS 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). The standard provides additional guidance on estimating fair value in accordance with ASC 820-10 when the volume and level of transaction activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability have significantly decreased and includes guidance on identifying circumstances that indicate if a transaction is not orderly. The Company adopted this pronouncement effective April 1, 2009 with no impact on its condensed consolidated financial statements.  In April 2009, the FASB issued FSP SFAS No. 107-1, Disclosures about Fair Value of Financial Instruments (ASC 825-10). ASC 825-10 requires fair value of financial instruments disclosure for interim reporting periods of publicly traded companies as well as in annual financial statements. ASC 825-10 is effective for interim periods ending after June 15, 2009 and was adopted by the Company in the second quarter of 2009. There was no material impact to the Companys condensed consolidated financial statements as a result of the adoption of ASC 825-10.  In April 2009, the FASB issued FSP APB No. 28-1, Interim Financial Reporting (ASC 825-10). ASC 825-10 requires the fair value of financial instruments disclosure in summarized financial information at interim reporting periods. ASC 825-10 is effective for interim periods ending after June 15, 2009 and was adopted by the Company in the second quarter of 2009. There was no material impact to the Companys condensed consolidated financial statements as a result of the adoption of ASC 825-10.  The Company adopted, ASC Topic 855-10, Subsequent Events (formerly SFAS 165, Subsequent Events) effective April 1, 2009. This pronouncement changes the general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  In June 2009, the FASB finalized SFAS No. 167, Amending FASB interpretation No. 46(R), which was included in ASC Topic 810-10-05 Variable Interest Entities. The provisions of ASC Topic 810-10-05 amend the definition of the primary beneficiary of a variable interest entity and will require the Company to make an assessment each reporting period of its variable interests. The provisions of this pronouncement are effective January 1, 2010. The Company is evaluating the impact of the statement on its consolidated financial statements.  In July 2009, the FASB issued SFAS No. 168, The Hierarchy of Generally Accepted Accounting Principles. SFAS 168 codified all previously issued accounting pronouncements, eliminating the prior hierarchy of accounting literature, in a single source for authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. SFAS 168, now ASC Topic 105-10 Generally Accepted Accounting Principles, is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this pronouncement did not have an effect on the Companys condensed consolidated financial statements.  In August 2009, the FASB issued an update of ASC Topic 820, Measuring Liabilities at Fair Value. The new guidance provides clarification that in circumstances in which a quoted price in an active market for


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SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   the identical liability is not available, a reporting entity is required to measure fair value using prescribed techniques. The Company adopted the new guidance in the third quarter of 2009 and it did not materially affect the Companys financial position and results of operations.  In October 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (a consensus of the FASB Emerging Issues Task Force) which amends ASC 605-25, Revenue Recognition: Multiple-Element Arrangements. ASU No. 2009-13 addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how to allocate consideration to each unit of accounting in the arrangement. This ASU replaces all references to fair value as the measurement criteria with the term selling price and establishes a hierarchy for determining the selling price of a deliverable. ASU No. 2009-13 also eliminates the use of the residual value method for determining the allocation of arrangement consideration. Additionally, ASU No. 2009-13 requires expanded disclosures. This ASU will become effective for us for revenue arrangements entered into or materially modified on or after April 1, 2011. Earlier application is permitted with required transition disclosures based on the period of adoption. The Company is currently evaluating the application date and the impact of this standard on its condensed consolidated financial statements.   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 September 30, 2009, the Company had surety and tendering guarantees outstanding resulting in restricted cash with approximately $1,621,399 from customer collateral and $1,688,761 for escrow deposits at the bank.  NOTE-6 PREPAYMENTS AND OTHER RECEIVABLE  Prepayments and other receivable consisted of the followings:  September 30, 2009December 31, 2008(Unaudited)(Audited)Prepayments$94,206$45,864Utility and rental deposits53,92566,466Advances to employees5,1984,145Other receivables9,6529,702$162,981$126,177


16


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   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 payable upon the maturity. For the nine months ended September 30, 2009, the Company recognized interest income of $29,638 on loan receivable.  In April and September 2009, the Company received the partial repayment of $293,020 (RMB2,000,000) and $585,000 (RMB4,000,000) respectively. In October 2009, the Company restructured the note receivable of $1,023,773 (equivalent to RMB7,000,000) with the extension of the repayment terms, subject to interest rate of 3.12% per annum payable upon the maturity due December 31, 2009.   NOTE-8 ACCRUED LIABILITIES AND OTHER PAYABLE  Accrued liabilities and other payable consisted of following:  September 30, 2009December 31, 2008(Unaudited)(Audited)Business tax payable$44,446$10,191Reserve for guarantee losses385,451218,844Accrued payroll and employee welfare94,460123,068Accrued operating expenses13,79576,907Other tax payable13,1159,276Other payable1,8732,582$553,140$440,868    NOTE-9 INCOME TAXES  For the period ended September 30, 2009 and 2008, the local (United States) and foreign components of income from operations before income taxes were comprised of the following:  Nine months ended September 30,20092008Tax jurisdictions from: Local$-$- Foreign848,449155,140Income before income taxes$848,449$155,140


17


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)      The provision for income taxes consisted of the following:  Nine months ended September 30,20092008Current: Local$-$- Foreign147,37865,786Deferred: Local-- Foreign6,669-Provision for income taxes$154,047$65,786  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:  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 September 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%). Under a transitional policy under the CIT Law, CCG will continue to enjoy the unexpired tax holiday in a special economic zone in Shenzhen City and its applicable tax rate will be increased progressively to 25% over a 5-years period, starting from January 1, 2008.


18


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2009 and 2008 is as follows:  Nine months ended September 30,20092008Income before income taxes$848,449$155,140Statutory income tax rate25%25%Income tax expense at statutory tax rate212,11238,785Effect of tax holiday(26,226)(10,709)Operating loss carry forward-16,501Effect of non-taxable items(35,076)-Effect of non-deductible items3,23721,209Income tax expense$154,047$65,786  As of September 30, 2009, the Company has recognized a deferred tax liability of $6,673 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  For the three and nine months ended September 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 nine months ended September 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.


19


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)   (d) Guarantee default risk  The Company also has significant concentration risk related to its guarantees on potential loss if the customers fail to the completion of their performance obligation in a timely manner under the surety guarantees. To reduce these potential losses, the Company holds collateral in the form of cash equivalents, which are reflected in customer collateral on the balance sheets as they are held in restricted cash in the Companys name.  (e) Exchange rate risk  The reporting currency of the Company is US$, 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 September 2010. Total rent expenses for the nine months ended September 30, 2009 and 2008 was $230,574 and $247,606.  As of September 30, 2009, the Company has future minimum rental payments of $153,809 within the next 12 months, under these non-cancelable operating leases.  (b) Guarantees  As of September 30, 2009, the Company has 908 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 $127,895,428 (RMB874,497,781) in total.  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 September 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 September 30, 2009 and 2008, the Company experienced no actual guarantee loss claims. At September 30, 2009, the Company has accrued $385,451 on the reserve for guarantee losses for any potential claims.


20


SINO ASSURANCE INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 (Currency expressed in United States Dollars (US$)) (Unaudited)      NOTE-12 SUBSEQUENT EVENTS  The Company evaluated subsequent events through November 13, 2009, the date the financial statements were issued, and there were no subsequent events which impacted the Company’s financial position or results of operations as of September 30, 2009 or which required disclosure.


21    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   22    (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.  - Further enlarging the target consumer group: New products are designed for enterprises on the basis of sales of individual job-seeker product in 2009, 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 &  23    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.   (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.  RESULTS OF OPERATIONS  NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2008 AND THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2008  Net revenue: Net revenue for the nine months ended September 30, 2009, was $3,389,995 as compared to $2,113,449 for the same period in 2008. The increase of $1,276,546 or approximately 60% 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 74% from 76% for the nine months ended September 30, 2009, due to  a decrease in the percentage of guarantee fee income that was  received without cost.  .  Net revenue for the three months ended September 30, 2009, was $1,734,132 as compared to $586,413 for the same period in 2008. The increase of $1,147,719 or approximately 196% 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 increased to 76% from 72% for the three months ended September 30, 2009, due to the tightening of control of our cost of sales.  Net income before tax: Net income before tax for the nine months ended September 30, 2009 was $848,449 compared to $155,140 for the same period in 2008. The increase in the pre-tax profit was mainly due to increase in guarantee fee income from increasing business referral by banks.  Net income before tax for the three months ended September 30, 2009 was $659,331 compared to a loss of $212,369 for the same period in 2008. The increase in the pre-tax profit was mainly due to an increase in guarantee  24    fee income from increasing business referral by banks.  Operating expenses: Total operating expenses for the nine months and three months ending September 30, 2009 were $1,658,040 and $652,941, as compared to $1,438,847 and $631,257 for the nine and three months period ended September 30, 2008 respectively. The increase of $219,193 (or approximately 15%) and $21,684 (or approximately 3%) was mainly due to the following factors:  (1) Reserve for guarantee losses increased $143,803 or 649% for the nine months ended and $56,121 or 23,580% for the three months ended September 30, 2009. The increase due to increase of guarantee fee income for the same period. (2) Depreciation expenses increased $17,238 or 39% for the nine months ended and $2,462 or 14% for the three months ended September 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 $36,877 or 5% for the nine months ended was mainly due to increases in employee of headcounts and pay rates as a result of expansion of our business. Wages, salaries and staff pension decreased $19,747 or 6% for the three months ended September 30, 2009 was mainly due to tightening of control in employee of headcounts and pay rates. (4) Rent decreased $17,032 or 7% for the nine months ended and decreased $37,706 or 32% for the three months ended September 30, 2009. The decrease in rent for the nine months and three months ended September 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 September 30, 2009, guarantee fee receivable was $318,849 as compared to $17,553 for the year ended December 31, 2008. As of September 30, 2009, customer collateral was $1,621,399, 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 September 30, 2009, deferred revenue was $264,791 as compared to $401,259 for the year ended December 31, 2008.  For the nine months ended September 30, 2009, cash provided by operating activities totaled $523,697. This was primarily due to increase in net income for the period plus an increase in advance from customers and income tax payable which was partially offset by the increase in guarantee fee receivable, prepayment and other receivable and the decrease in trade payables, deferred revenue, accrued liabilities and other payable.    For the nine months ended September 30, 2009, cash provided by investing activities amounted to $424,117. The receipt of funds was mainly due to the repayment from loan receivable and partially offset by the increase of change in restricted cash, net of customer collateral.  For the nine months ended September 30, 2009, we owed $59,579 to Mr. Mengyu Tong, a director. These loans are unsecured, interest-free, and have no fixed repayment terms.  For the nine months ended September 30, 2009, our balance sheet reflects total assets of $6,179,611 and total liabilities of $2,638,830. We had cash and cash equivalents of approximately $1,038,870 as of September 30, 2009.  For the nine months ended September 30, 2009, we had surety and tendering guarantees outstanding resulting in restricted cash of approximately $1,621,399 from customer collateral and $1,688,761 for escrow deposits at the bank. Restricted cash represents (i) funds received from customers for the purpose of trust deposits held at the  25    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. 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 payable upon the maturity. For the nine months ended September 30, 2009, the Company recognized interest income of $29,638 on loan receivable.  In April and September 2009, the Company received the partial repayment of $293,020 (RMB2,000,000) and $585,000 (RMB4,000,000) respectively. In October 2009, the Company restructured the note receivable of $1,023,773 (equivalent to RMB7,000,000) with the extension of the repayment terms, subject to interest rate of 3.12% per annum payable upon the maturity due December 31, 2009.  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.  For the nine months ended September 30, 2009, we had total future lease commitments under non-cancellable operating leases of $153,809. We currently have working capital sufficient to fund these lease commitments.  For the nine months ended September 30, 2009, we had contingent liabilities in respect of guarantees granted under the surety and tendering guarantee services business in the aggregate amount of $127,895,428. As of September 30, 2009, we had 908 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 $127,895,428 (RMB874,497,781).  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 September 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 September 30, 2009 and 2008, the Company experienced no actual guarantee loss claims. At September 30, 2009, the Company has accrued $385,451 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 3 of the Notes to Financial Statements in this Form 10-Q and Note 3 of the Notes to  26    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) (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 September 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 September 30, 2009, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.   27    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.    28    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:  November 13, 2009   By: /s/ Mengyou Tong, Chief Financial Officer  Date:  November 13, 2009   By: /s/ Beiquan Ling, Chief Operating Officer  Date:  November 13, 2009   29