UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-K   xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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  SINO ASSURANCE INC. (Exact name of registrant as specified in its charter)  Delaware52-2175896(State or other jurisdiction of incorporation)(IRS Employer Identification Number)  17th Floor, 6009 Yitian Road, New World Center,
Futian District, Shenzhen, Peoples Republic of China(Address of principal executive office)Registrants telephone number, including area code:  86-0755-82520166 Securities registered pursuant to Section 12(b) of the Act:


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Securities to be registered under Section 12(g) of the Act:  Common Stock (Title of Class)  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  o Yes     x No  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  o Yes     x No   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.  x Yes   o No  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x  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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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o  No x  State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter:  0  APPLICABLE ONLY TO CORPORATE REGISTRANTS  Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date.  60,000,000 shares of the registrants common stock, $0.001 par value common stock outstanding as of March 26, 2010.  DOCUMENTS INCORPORATED BY REFERENCE  List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).   2   INDEX PART I 4 ITEM 1. BUSINESS 4 ITEM 1A. RISK FACTORS 10 ITEM 1B. UNRESOLVED STAFF COMMENTS 17 ITEM 2. PROPERTIES 17 ITEM 3. LEGAL PROCEEDINGS 18 ITEM 4. (REMOVED AND RESERVED) 18 PART II 18 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES18 ITEM 6. SELECTED FINANCIAL DATA 18 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS19 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS 27 ITEM 8. FINANCIAL STATEMENTS 28 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE50 ITEM 9A(T). CONTROLS AND PROCEDURES 50 ITEM 9B. OTHER INFORMATION 51 PART III 51 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 51 ITEM 11. EXECUTIVE COMPENSATION 53 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS54 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE55 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 55 PART IV 56 ITEM 15. EXHIBITS 56   3   PART I  DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS  Certain statements in this report, including statements in the following discussion, 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 10-Kand 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.   ITEM 1. BUSINESS    BACKGROUND  We were incorporated under the laws of the State of Delaware on August 19, 1997, under the name of Sheffield Products, Inc. We changed our name to Digital Network Alliance International, Inc. on November 30, 2004, and changed our name again to Sino Assurance Inc. (SNAS) on November 20, 2008.  We were formed as a "blind pool" or "blank check" company whose business plan was to seek to acquire a business opportunity through completion of a merger, exchange of stock, or other similar type of transaction. In furtherance of our business plan, we voluntarily elected to become subject to the periodic reporting obligations of the Securities Exchange Act of 1934 by filing a registration statement on Form 10-SB.  The registration statement on Form 10-SB became effective on or about November 11, 2002.  On July 21, 2004, we had a change of control as the first step in the business acquisition process. Strong Win Limited, a British Virgin Islands corporation, purchased 6,076,116 shares, (or approximately 90%) of our then issued and outstanding shares, from 4 of our major shareholders for a purchase price of $50,000.  On August 13, 2004, we completed the business acquisition process by acquiring all of the issued and outstanding common stock of Digital Network Alliance Holdings (BVI), Inc., in a share exchange transaction. We issued 13,248,760 shares of our common stock in the share  4   exchange transaction in exchange for all of the issued and outstanding stock of Digital Network Alliance Holdings (BVI) Inc.  On September 22, 2005, we effected a 1:2 reverse stock split of all issued and outstanding shares, which decreased the number of issued and outstanding shares of the Company without causing a reduction in the total number of authorized shares.  We issued one new share for every two shares held.  Before the reverse stock split, we had 22,200,000 shares issued and outstanding.  Immediately following the split, we had 11,100,000 shares issued and outstanding.  Except as otherwise specifically noted, all references in this Prospectus to the number of shares issued and outstanding have been revised to reflect the number issued and outstanding following completion of the reverse split.  Strong Win Limited was introduced to Sheffield Products, Inc. by First Asia Finance Group Limited, a Hong Kong registered investment advisor which presented Strong Win Limiteds business plan and financial statements to the board of directors of Sheffield.  First Asia also assisted Strong Win Limited in its negotiations related to the change of control and business combination transaction with Sheffield Products, Inc., and assisted it with completing certain restructuring prior to the change of control and business combination, including the formation of Digital Network Alliance Holdings (BVI), Inc., as a holding company for its operating subsidiaries.  Terence Yap participated in the negotiations on behalf of the Strong Win Limited.  The board of directors of Sheffield Products, Inc. participated in the negotiations on its behalf.  As a result of the share exchange transaction, Digital Network Alliance Holdings (BVI) Inc. became our wholly-owned subsidiary.  The former stockholders of Digital Network Alliance Holdings (BVI) Inc. acquired a majority of our issued and outstanding common stock as a result of completion of the share exchange transaction. Therefore, although Digital Network Alliance Holdings (BVI) Inc. became our wholly-owned subsidiary, the transaction was accounted for as a recapitalization of Digital Network Alliance Holdings (BVI) Inc., whereby it is deemed to be the accounting acquirer and is deemed to have adopted our capital structure.  On September 23, 2008, we entered into an Agreement for Share Exchange with Linking Target Limited, a British Virgin Islands corporation (LTL), and the individual shareholder of LTL, pursuant to which we acquired 1 share of LTL, representing 100% of its issued and outstanding common stock, in exchange for the issuance of 48,399,997 shares of our common stock.  As a result of completion of the share exchange transaction, LTL became our wholly-owned subsidiary.  LTL was founded in British Virgin Islands on January 23, 2008.  On August 1, 2008, LTL entered into an Exclusive Cooperation Agreement (the Agreement) with China Construction Guaranty Company Limited (CCG), a corporation incorporated in the Peoples Republic of China which is engaged in the business of the construction and employees guaranty, pursuant to which the parties have agreed, among other things, that LTL will provide various services to CCG, including consulting services, training services, human resources for business development and other related services.  5    Prior to completion of the share exchange transaction, we had 11,600,003 shares of common stock issued and outstanding.  Following completion of the share exchange transaction, we had 60,000,000 shares issued and outstanding, of which 11,600,003 or approximately 19.33%, were owned by persons who were previously our shareholders.  On October 30, 2008, we completed the sale of the subsidiary, Digital Network Alliance Holdings (BVI), Inc., a British Virgin Islands corporation (DNA BVI).  The sale was completed pursuant to the terms of an Agreement for Sale of Stock dated October 30, 2008.  DNA BVI was sold to Ms Au Wing Chi, Vicky, for a price of US$100.  The sale was accomplished by selling the 10,000 shares of DNA BVI held by the Company to the purchaser.  The entire purchase price was paid at closing.   We agreed to sell the interest in DNA BVI for a nominal price because it was unable to generate a profit through the operations of DNA BVI.  The decision to sell DNA BVI was made because we were unable to generate a profit through the operations of DNA BVI.  On August 27, 2008, the Company established a limited liability company namely Century Maker Limited in Hong Kong, for the purpose of holding 100% equity interest in Zhong Heng Jiang Investment Consulting (Shenzhen) Company Limited (Zhong Heng Jiang).  On October 21, 2009, the Company established a limited liability company namely Zhong Heng Jiang Investment Consulting (Shenzhen) Company Limited in the Peoples Republic of China (the PRC), which is mainly engaged in the provision of business consulting service.  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 PRC.  As a result of the change of control, we plans to change the focus of its business operations to concentrate on the business activities carried on by LTL.  CCG is headquartered in Shenzhen China, and is in the business of providing a guarantee service to corporations and individuals in issuing and obtaining surety or tendering guarantees for this business operations and/or personal use.  The types of guarantees CCG provides include i) various project guarantees such as Project Bidding Guarantee, Performance Bond Guarantee, and Advance Payment Guarantee; and ii) employees guaranteed services such as Employees Behaviour Guarantee, Employees Secrecy Guarantee, and Employees Credit Guarantee to corporations and individuals via its 19 branches located throughout China such as Beijing, Guangzhou, Dalian, Hangzhou, Nanjing, Chengdu, Ningbo, Qingdao, Chongqing, Changsha and Wuhan etc.  In exchange for CCGs guarantee services, customers pay CCG a certain percentage of the surety amount as an upfront fee.  CCG adapts the development of market economy, government policy need and the development of credit guarantee industry. CCG was born in 2004 and positioned itself as a commercial credit guarantee agent. Today it leads the emerging industries as the leader of engineering guarantee industry. As an originator of employee guarantee business, CCG shoulders the mission of  6   building a robust Chinas credit system, undertakes the employee guarantee business to provide enterprises and individuals with comprehensive credit services. It will be devoted to promoting the development of credit guarantee industry, setting up the standards for credit guarantee industry and quickening the construction of credit culture and social credit system.    PRINCIPAL PRODUCTS AND SERVICES  Bid guarantee: Before a bidder makes a tender, a guarantor strictly verifies the qualification of the bidder and provides the bidder with the tender guarantee so as to ensure that the bidder participates in bidding activity in accordance with the requirements stated in the bidding document. Once the bidder is awarded the tender, the guarantor will promptly conclude a construction contract with the bidder, and will provide the bidder with the required letter of guarantee for execution of contract and advance payment. If the bidder is in breach of the contract, the guarantor will compensate the bidders losses according to the sum insured.   Performance guarantee: It is provided by the guarantor for the construction party (applicant) and employer (beneficiary), ensuring the construction party fulfils the duties and obligations specified in the construction contract. If the contractor fails to execute the contract, the employer can request the guarantor to bear the liability for guarantee on the basis of the sum insured. Then the guarantor can make a claim to the contractor for compensation in conformity with the law. Generally, the performance guarantee provided by a guarantee company is conditional, which means the employer must submit the evidence of nonperformance of the contractor whenever the employer makes a claim. After verification, the guarantor shall accept the liability for guarantee. Performance guarantee is applicable to the performance of sub-contract and material supply contract.  Payment guarantee (including workers payment guarantee): The employer shall fulfill the payment requirement as stipulated under the construction contract. This guarantee made by the guarantor on behalf of the employer will ensure that the employer must make a payment guarantee for the contractor. While the employer is signing the construction contract, it must submit the payment guarantee to the contractor. Failing the submission of the payment guarantee, the construction funds will be deemed as unavailable.  Advance payment guarantee: The guarantor promises the contractor that it will fulfill the advance payment guarantee, so as to prevent the contractor from appropriating the advance or declaring bankruptcy. After the contractor has paid up all the prepayments within the agreed time, the employer needs to return the advance payment guarantee.  Performance guarantee of sub-contract: When a construction project involves a general contractor and sub-contractors, the general contractor shall take up sub-contractors responsibilities. The general contractor always requests the subcontractors to provide a guarantee by means of a guarantor with a view to protecting its own rights and interests and preventing the subcontractors from violating the contract or getting into debt.  Application for bank guarantee: A guarantor will apply to a bank for line of credit of bank on behalf of an applicant so as to handle the guarantee business. After the application is approved, when the applicant wants to make cooperation with the guarantor again, the guarantor can submit  7   some parts of the information to the bank on behalf of the applicant, and less information is needed and the bank guarantee can be obtained, which has eliminated the approval process for the applicants information before issuing the bank guarantee.  Performance bond: At the request of a labor party or a bidder (applicant), a guarantor will give a performance guarantee to the project owner (beneficiary). Once the bidder (applicant) is awarded the tender, the guarantor is able to continue giving the owner the performance bond on behalf of the winning bidder; otherwise, the guarantor will bear the liability for compensation for the beneficiary.  Credit certification: The background of credit certification: when a project needs open tender, the intended bidders will submit material for the tender. And sometimes, in view of various reasons, party A will conduct the prequalification, and only those builders who pass the prequalification can make the tender; when party A is conducting the prequalification, it will request those intended bidders to submit a lot of materials, and the credit certification is one of the materials that are often required to be submitted.  Guarantee of quality warranty: The guarantor gives the buyer (beneficiary) a guarantee to ensure the developer (applicant) fulfils the warranty obligation within the warranty period according to the Purchase Contract and Certificate of Quality. Unless it is the buyers reason or force majeure, if the developer fails to fulfill its warranty obligation agreed in the above document, the buyer has the right to require the guarantor to bear the contractual obligation or pay the damages.    DESCRIPTION OF INDUSTRY  Chinese guarantee industry was born with the reform in market economic structure and the increase in social credit demand. It is an indispensable part to Chinas market economy. Government promotes the development of this industry to accommodate the credit demand of small and medium-sized enterprise. It becomes an important part of Chinas policy-oriented financial framework. Those future commercial guarantee companies will have broad prospects and would be the leaders of segment market. A market scale effect is not formed between the current commercial guarantee companies, so a vertical and horizontal integration will be a general trend for this industry. The rapid growth of Chinese guarantee industry will become an important force to promote the establishment of Chinas credit system.  GOVERNMENT REGULATION  The headquarter and the branches of CCG are established within PRC jurisdiction, where Chinese laws and regulations apply. The development of guarantee industry can promote the growth of enterprise, increase fiscal revenue and expand employment, economies of scale and social benefit. For this purpose, the government has successively promulgated a series of laws (such as Guaranty Law) and regulations (the project construction guarantee system enforced by many provinces) and policies (such as tax policy) in order to support this industry and make the market and guarantee industry develop in a healthy way.   8   CCG complies with the requirements of state laws and legislations in connection with the market permit, business scope, business type, professional aptitudes, internal control systems for guarantee agencies and obtained relevant approvals.    CUSTOMERS AND MARKETING  CCG provides services for government, enterprises, institutions and individuals. The government includes political and legal system, financial and tax system, traffic control system etc. Enterprises include financial industry, real estate industry, telecommunication industry and retail. Institutions cover various scientific research institutions, medical system and sports system institutions. Individuals cover job seeker, security guard, accountant and house purchaser, etc.  Over 5 years, CCG has formed a strong and well-established client base including the real estate giant industry Vanke Group, Zhonghai Real Estate Development Co., Ltd., Shenzhen Zhenye Group Co., Ltd., Baoli Group and engineering giants containing each branch of China State Construction Engineering Corporation, China Railway Construction Engineering Group and China Huashi Enterprises Company Limited and other famous enterprises such as Wal-Mart, Midea Group, Exxon Mobil Group, Citic Group etc.   CCG has formed a long-term strategic cooperative relationship with four large state-owned banks and commercial banks including China Construction Bank, Shanghai Pudong Development Bank, Shenzhen Ping An Bank, Industrial Bank, etc.   CCG has formed a complementary and cooperative league with companies of the same profession such as Shenzhen High Tech Investment & Guarantee Co., Ltd., Changan Guarantee Co., Ltd. and Shenzhen Small & Medium Enterprises Credit Guarantee Center Co., Ltd.   CCG has 19 branches across 28 provinces and 660 cities in China. Its strong sales team will provide clients with the comprehensive and one-stop service from pre-sales, sales and after-sales service.   CCG is building its brand image and marketing its main products by means of network platform, newspaper, TV media and 400 national customer service lines and exhibitions.  As a leader and innovator in market segment, CCG has always been standing at the forefront. It owns professional research and development capacity and is leading the industry to set standards.    COMPETITION  Chinas guarantee industry is still at a premature stage. More than 60% of the guarantee companies belong to the type of financing guarantee. The construction project guarantee industry which was born in 2003 as a result of the 2003 governmental mandatory implementation is always in an unsaturated state. Now that the Chinese economic stimulus package of RMB 4 trillion, out of 86% will be allocated to infrastructure works. The central government allots RMB 70 billion to reconstruct the disaster area in Sichuan Province and to begin their urbanization construction in Chinese rural areas. CCG will seize these opportunities and is ready to meet challenges.  9    Guarantee industry demonstrates the regional features. At present, the major competitors of CCG are Shenzhen Small & Medium Enterprises Credit Guarantee Center Co., Ltd., Credit Orienwise Group Limited and Shenzhen High Tech Investment & Guarantee Co., Ltd., etc. These companies are mainly engaged in financing guarantee for small & medium enterprises. But the financing guarantee involves great risk, and currently the risk control for domestic guarantee industry is weak. There is no established law and regulation concerning the industry. CCG takes the engineering guarantee which is of low risk, light assets, documents against payment and good cash flow as its main product, leading this industry by virtue of its professional service and brand advantage. Meanwhile, CCG has formed a cooperative alliance with other competitors to share the resources and take the complementary advantages of this industry.     EMPLOYEES  At the time of this report, SNAS had 121 employees, including 63 in sales and operations, and 58 in supporting and administrative functions.    REPORTS TO SECURITY HOLDERS  SNAS is subject to the reporting requirements of the Exchange Act and the rules and regulations promulgated thereunder, and, accordingly, files reports, information statements or other information with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, annual reports on Form 10-K, reports of current events on Form 8-K, and proxy or information statements with respect to shareholder meetings.  Although SNAS may not be obligated to deliver an annual report to its shareholders, it intends to voluntarily send such a report, including audited financial statements, to its shareholders each year.  The public may read and copy any materials SNAS files with the SEC at the SECs Public Reference Room at 450 Fifth Street, N.W. Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.  The address is http://www.sec.gov.   ITEM 1A. RISK FACTORS  Risks associated with our financial condition  Current conditions in the global economy and the major industries we serve might materially and adversely affect our business and results of operations  Our business and operating results might be adversely affected by worldwide economic conditions.  As a result of slowing global economic growth, the credit market crisis, declining consumer and business confidence, shifts in consumer spending patterns, increased unemployment, reduced levels of capital expenditures, fluctuating commodity prices, bankruptcies and other challenges currently affecting the global economy, our clients might experience deterioration of their businesses, cash flow shortages, and difficulty obtaining financing.  As a result, existing or potential clients might delay or cancel plans to purchase our  10   services.  If the global economic slowdown continues for a significant period or there is significant further deterioration in the global economy, our financial position and cash flows could be materially adversely affected.  We might require additional financing to fund operations or potential acquisitions.  If financing is not available, we might not be able to grow as we plan  At December 31, 2009, we had cash and cash equivalents $559,105. However, in the future, we might be required to seek additional financing to fund operations or potential acquisition opportunities.  The recent downturn in the capital markets and the general economic slowdown could prevent us from raising additional capital or obtaining additional financing on favorable terms, if at all.  If we cannot raise sufficient capital, our ability to operate and to grow through acquisitions or otherwise respond to competitive pressures would be significantly limited.  If we are able to raise capital, but not on favorable terms, existing stockholders might suffer dilution of their ownership interests or otherwise lose value in their securities  If we raise additional funds through the issuance of equity securities or debt convertible into equity securities, the percentage of stock ownership by existing stockholders would be reduced. In addition, such securities could have rights, preferences and privileges senior to those of our stockholders, which could substantially decrease the value of our securities owned by them.  Risks Associated with the Companys Primary Business  Limited Operating History  There is a limited relevant operating history upon which an evaluation of the Companys prospects and future performance can be based. There can be no assurance that the Company will be able to raise additional capital to develop its business plan, generate meaningful revenues or become a viable business. Because the Companys markets are relatively new and constantly changing, the Company may need to change its business model frequently.  Risk of Payment of Guarantees  The Company may be obligated to pay on its tender and surety guarantees if the underlying transactions fail to close. While the Company tries to minimize these risks by performing due diligence and financial assessments of its clients and by taking a security interest in the collateral of its clients, there can be no assurance that the Company will not have to pay on its guarantees. Furthermore, the Company cannot assure you that the collateral in which the Company has a security interest will be sufficient to cover all or a portion of the amount of the Companys guarantees. If the Companys clients fail to close the underlying transaction, the Companys business could be materially adversely affected.  Competition   11   Although the Company currently has few competitors, the Company expects competition to intensify in the future. The Companys current competitors have greater capabilities and resources than the Company has. Similarly, there can be no assurance that additional competitors with greater resources than that of the Company will not enter our market in the future. The State Economic and Trade Commission (SETC) SME Bureau in China may expand their existing services to SMEs and become the Companys competitor. If and when the Chinese government allows foreign financial institutions to enter into the financial guarantee industry in China, they may also become competitors of the Company. In the future, competitive pressures from competitors could cause the Companys services to lose market acceptance or result in significant price erosion, which would have a material adverse effect upon the Companys business, results of operations, or financial condition.  Risks associated with our officers, directors and employees  Any failure to adequately expand our direct sales force or to compensate sales personnel in appropriate ways will result in our being understaffed, which could reduce our sales and revenues  We expect to be substantially dependent on our direct sales force to obtain new customers. We believe that there is significant competition for direct sales personnel with advanced sales skills and technical knowledge. Our ability to achieve significant growth in revenue in the future will depend, in large part, on our success in recruiting, training and retaining sufficient direct sales personnel. New hires require significant training and, in some cases, might take more than a year before they achieve full productivity. Our existing personnel and planned hires might not become as productive as we would like, and we might not be able to hire sufficient numbers of qualified individuals in the future in the markets where we do business. We also must develop compensation packages that properly incentivize successful sales, including both selling to new customers and increasing sales to existing customers. If we are unable to hire and develop sufficient numbers of productive sales personnel, or develop compensation packages that properly incentivize successful sales, then we might not be able to maintain an adequate sales force, and the sales of our services could suffer.  Dependence on Key Personnel  The Company is highly dependent on the services of Guokang Tu, the Companys Chairman, Chief Executive Officer and director, Mengyou Tong, the Companys Chief Financial Officer, as well as other principal members of the Companys management team. The Companys executives not only manage the Companys day to day business operations but are essential to the Companys ability to establish and maintain relationships with its customers. The Company has no key man life insurance policies, although it may purchase such policies in the future. Continued growth and profitability will depend upon the Companys ability to maintain its current leadership infrastructure and recruit and retain qualified and experienced executive personnel. Competition in the Companys industry for executive-level personnel is strong and there can be no assurance that the Company will be able to hire, motivate and retain highly effective executive employees. If the Company fails to attract, integrate and retain the necessary personnel, its ability to maintain and build its business could suffer significantly.  12    Risks Related to Our Securities  Limited Public Market for the Companys Common Stock  There is currently a limited public market for the shares of the Companys common stock. There can be no assurances that such limited market will continue or that any shares of the Companys common stock may be sold without incurring a loss. The market price of the Companys common stock may not necessarily bear any relationship to the Companys book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for its common stock in the future. Further, the market price for the Companys common stock may be volatile depending on a number of factors, including business performance, industry dynamics, news announcements or changes in general economic conditions.  Low-Priced Stocks  The Companys common stock is currently listed for trading on the OTC Bulletin Board, which is generally considered to be a less efficient market than markets such as NASDAQ or other national exchanges, and which make it more difficult for the Companys shareholders to conduct trades. It may also make it more difficult for the Company to obtain future financing. Further, the Companys securities are subject to the penny stock rules adopted pursuant to Section 15 (g) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The penny stock rules apply to non-NASDAQ companies whose common stock trades at less than $5.00 per share or which have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). Such rules require, among other things, that brokers who trade penny stock to persons other than established customers complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. In the event that the Company remains subject to the penny stock rules for any significant period, there may develop an adverse impact on the market, if any, for the Companys securities. Because the Companys securities are subject to the penny stock rules, investors will find it more difficult to dispose of the Companys securities. Further, for companies whose securities are traded in the over-the-counter market, it is more difficult to obtain accurate quotations and to obtain coverage for significant news events because major wire services, such as the Dow Jones News Service, generally do not publish press releases about such companies.  No Dividends  The Company has not paid any dividends on its common stock to date and there are no plans for paying dividends on its common stock in the foreseeable future. The Company intends to retain earnings, if any, to provide funds for the execution of its business plan. The Company does not intend to declare or pay any dividends in the foreseeable future. Therefore, there can be no  13   assurance that holders of common stock will receive any additional cash, stock or other dividends on their shares of common stock until the Company has funds, which our board of directors determines can be allocated to dividends.  PRC laws and our corporate structure may restrict our ability to receive dividends and payments from, and transfer funds to, our PRC operating company, which may negatively affect our results of operations and restrict our ability to act in response to changing market conditions. Substantially all of our operations are conducted through our PRC operating company, CCG. The ability of our PRC operating company to make dividend and other payments to us may be restricted by factors such as changes in applicable foreign exchange and other laws and regulations. For example, under the State Administration of Foreign Exchange (SAFE) regulations discussed above, the foreign exchange activities of our present or prospective PRC subsidiaries are conditioned upon the compliance with the SAFE registration requirements by the shareholders of our offshore entities who are PRC residents. Failure to comply with these SAFE registration requirements may substantially restrict or prohibit the foreign exchange inflow to and outflow from our PRC subsidiaries, including, remittance of dividends and foreign currency denominated borrowings by these PRC subsidiaries. In addition, our PRC operating company is required, where applicable, to allocate a portion of its net profit to certain funds before distributing dividends, including at least 10% of its net profit to certain reserve funds until the balance of such fund has reached 50% of its registered capital. These reserves can only be used for specific purposes, including making-up cumulative losses of previous years, conversion to equity capital, and application to business expansion, and are not distributable as dividends. Our PRC operating company is also required, where applicable, to allocate an additional 5% to 10% of its net profits to a statutory common welfare fund. The net profit available for distribution from our PRC operating company is determined in accordance with generally accepted accounting principles in China, which may materially differ from a determination performed in accordance with U.S. GAAP. As a result, we may not receive sufficient distributions or other payments from this entities to enable us to make dividend distributions to our shareholders in the future, even if our U.S. GAAP financial statements indicate that our operations have been profitable.  Fluctuations in the stock market as well as general economic, market and industry conditions might harm the market price of our common stock  The market price of our common stock has been subject to significant fluctuation.  The stock market in recent years has experienced price and volume fluctuations that, at times, have been unrelated or disproportionate to the operating performance of companies.  These fluctuations might harm the market price of our common stock, regardless of our operating results.  Risks Related to Doing Business In China  Government control of currency conversion and exchange rate fluctuations may materially and adversely affect our business  All of our revenue and expenses are denominated in Renminbi, the currency of China. A portion of such revenue may be converted into other currencies to meet our foreign currency obligations.  14   In addition, we incur approximately 1% of our expenses in foreign currencies, mostly for professional services such as auditors, attorneys and other intermediaries. Foreign exchange transactions under our capital account, including principal payments with respect to foreign currency-denominated obligations, continue to be subject to significant foreign exchange controls and require the approval of the SAFE in China. These limitations could affect our ability to obtain foreign exchange through debt or equity financing or to obtain foreign exchange for capital expenditures.  The Renminbi is reported to be measured against a basket of currencies determined by the Peoples Bank of China. The Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the long term, depending on the fluctuation of the basket of currencies against which it is currently valued, or it may be permitted to enter into a full float, which may also result in a significant appreciation or depreciation of the Renminbi against the U.S. dollar. Because all of our earnings and cash assets are denominated in Renminbi and our financial reporting is denominated in U.S. dollars, fluctuations in the exchange rates between the U.S. dollar and the Renminbi will affect our financial results reported in U.S. dollars terms without giving effect to any underlying change in our business, financial condition or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars and earnings from, and the value of, any U.S. dollar denominated investments we make in the future.  Historically, we have not engaged in exchange rate hedging activities. Although we may implement hedging strategies to mitigate exchange rate risk, these strategies may not eliminate our exposure to foreign exchange rate fluctuations and may involve costs and risks of their own, such as ongoing management time and expertise, external costs to implement the strategy and potential accounting implications.  Chinas Economic, Political and Social Conditions  Substantially all of the Companys operations and assets are located in China, and substantially all of its net revenue is derived from its operations in China. Accordingly, the Companys results of operations and future prospects are subject to economic, political and social developments in China. In particular, the Companys results of operations may be adversely affected by:  l changes in Chinas political, economic and social conditions; l changes in policies of the government or changes in laws and regulations, or the interpretation of laws and regulations; l changes in foreign exchange regulations; l measures that may be introduced to control inflation, such as interest rate increases; and l changes in the rate or method of taxation  The PRCs economy has historically been a planned economy. The majority of productive assets in China are still owned by various levels of the PRC government. In recent years the government has implemented economic reform measures emphasizing decentralization, utilization of market forces in the development of the economy and a high level of management autonomy. Such economic reform measures may be inconsistent or ineffectual, and the Company  15   may not benefit from all such reforms. Furthermore, these measures may be adjusted or modified, possibly resulting in such economic liberalization measures being applied inconsistently from industry to industry, or across different regions of the country.  In the past twenty years, China has been one of the worlds fastest growing economies in terms of gross domestic product, or GDP. This growth may not be sustainable. Moreover, a slowdown in the economies of the United States, the European Union and certain Asian countries may adversely affect economic growth in China which depends on exports to those countries. The Companys financial condition and results of operations, as well as its future prospects, would be materially and adversely affected by an economic downturn in China.  The legal system in China has inherent uncertainties that may limit the legal protections available to you as an investor or to us in the event of any claims or disputes with third parties. The legal system in China is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the central government has promulgated laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. As Chinas foreign investment laws and regulations are relatively new and the legal system is still evolving, the interpretation of many laws, regulations and rules is not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit the remedies available to our shareholders and to us in the event of any claims or disputes with third parties. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.  Internal political risks  Changes in laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on the Companys business, results of operations and financial condition. Under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice. In addition, the Chinese government could enact laws which restrict or prohibit the Company from conducting its surety and loan guarantees.  Effecting Service of Legal Process and Enforcing Judgments Against Us and Our Management  Substantially all of our operations and assets are located in China. In addition, most of our directors and executive officers named in this document reside within China, and many of the assets of these persons are also located within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon these directors or executive officers or some of the experts named in this document, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, management has been advised by the companys PRC legal counsel that China does not have  16   treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of court judgments. As a result, recognition and enforcement in China of judgments of a court of the United States or any other jurisdiction, including judgments against us or our directors or executive officers, may be difficult or impossible.  A slowdown in the Chinese economy may negatively affect our growth and profitability  The Chinese economy on average grew approximately 9% per year for more than 25 years. Due to several factors, including those affecting the global economy as a whole, Chinas economic growth may be less compared to its historical growth, which may have a negative effect on our business. The recent global economic recession, which began in early 2008 has caused the global financial markets to undergo pervasive and fundamental disruption and loss, has affected the Chinese economy. This global economic recession has led to an increased level of commercial and consumer delinquencies, decline in consumer confidence, increased market volatility and widespread reduction of business activity generally. Current global economic pressures may further negatively impact Chinas economy. A worsening of global economic conditions and/or reduced business activity would likely negatively affect the Chinese economy which may slow our growth and reduce or eliminate our profitability.  Operating risk on loan business  Given that the demand for SME loans in future years is expected to remain high, the Company will study to put effort in financing service segment to capture such growth opportunity. However, the Company will continue being conservative in developing new business in order to maintain the quality of the loan portfolio. The Company will seek to explore new business to provide full spectrum of financial services to customers. We believe that this will greatly enhance the level of service that we provide to our customers in China and further expand our market share financing services business. Now the Company commence few business related to the loan borrowing but the China government not yet approves it. The Company is consulting the application of such kind of business for the approval by China government. Both the extent to which we are able to implement and the timing of its implementation will depend, largely, on the availability of working capital and the application approval from the China Government. Because there is no assurance that working capital and application approval will be available to us, there is also no assurance regarding the extent to which we will be able to implement our plan within the foreseeable future.  ITEM 1B. UNRESOLVED STAFF COMMENTS  N/A ITEM 2. PROPERTIES  SNAS rents its facilities from companies owned by the third parties.  As of December 31, 2009, SNAS leased approximately 2,390 square meter of office space for its operations.  Its current leased properties are:  17    LocationSizeDescriptionShenzhen, China885 sq. mHeadquartersOthers, China1,505 sq. mBranches  SNASs current total rental payment for its facilities is approximately US$300,460 in the fiscal year 2009.  We intend to renew both of these leases upon their expiration.   ITEM 3. LEGAL PROCEEDINGS  SNAS is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.  None of SNASs directors, officers or affiliates, and no owner of record or owner of more than five percent (5%) of its securities, or any associate of any such directors, officer or security holder is a party adverse to SNAS or has a material interest adverse to it in reference to pending litigation.   ITEM 4. (REMOVED AND RESERVED)    PART II   ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  Our shares are approved for trading on the OTC Bulletin Board under the symbol SNAS, but there has been no trading activity in the shares and no trading market has been established.  There is no assurance as to when, or whether, an active trading market in our shares will be established.  None of SNASs common equities are subject to any outstanding options, warrants to purchase, or securities convertible into, common stock.  As of December 31, 2009, SNAS had 60,000,000 shares of common stock issued and outstanding.  The shares are held by 127 stockholders of record.  SNAS currently has no securities authorized for issuance under any equity compensation plans.  SNAS has never declared any cash dividends on its common stock and does not anticipate declaring dividends in the foreseeable future.    ITEM 6. SELECTED FINANCIAL DATA   18   N/A     ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PLAN OF OPERATIONS  I. Management Background of 2010  1. Project Assured Guarantee System has been implemented deeply in China. Governmental policies also show steady growing support of this industry. Held on 25 August 2009 in Beijing, the China Project Assured Guarantee Forum organized and undertaken by the China Construction Association and Managing and Administrating Committee of Construction Enterprises respectively, marked the highest standard and the largest scale of the kind. Such a move also evidenced the acceleration of introducing the Project Assured Guarantee to the Chinese construction market.  2. Based on the <<Global Construction Industry Forecast 2020>>, the construction industry will continue to boom in China, and China would surpass USA and become the worlds largest market leader in 2018. The forecast also indicated that the gross domestic product of the Chinas construction market would near 2.4 trillion, attributable for 19.1% of the global construction market shares.  3. Since the recent drought hits hard the southwestern and northwestern part of China, the ongoing South North Water Transfer Project would be injected with abundant funds, approximately 10 times of the total investment in the past 7 years.  4. The Four Trillion Stimulus Plan is still driving the infrastructure construction sector towards a higher phase. It is assumed that in the first half of 2010, the amount of issued contract by rail sector is expected to reach its peak again and the growth rate of rail infrastructure investment would be at 20%. According to the State and local planning materials, the highway construction will continue to expand in 2010. The biggest growth would come from the Urban Rail Transit sector. Following the plan, the total length of Urban Rail Transit system would exceed two thousand kilometers at over RMB 800 billion investment before 2015.  5. Economic recovery would lead to an increase of industrial fixed assets investment, thus helping the professional industrial engineering sector back to the ascending track.  II.   Market Opportunities  1. Enabled by the constant penetration of the Project Assured Guarantee System and the  19   accumulation of experience in the bank guarantee business of the Companys branches, the further business development will come along with the growing brand popularity.  2. South North Water Transfer Project would bring more revenue opportunities to the Companys northwestern branches.  3. According to the Strategic Development Plan published by the Ministry of Railways, the newly established branches in He Bei and Shaanxi would explore more market opportunities by placing extra attention to the railway bidding market.  4. Based on the existing domestic banking guarantee service, the Company would cooperate with China Construction Bank to explore the oversea construction project guarantee market. Such an attempt is being performed in Southeastern Asia and Africa. This new business initiative would be promoted along with the rapid expansion of Chinas construction industry into the global market.  5. Economic recovery attracts huge investment into fixed assets and information technology sectors. This would create new business model, for example: advance payment guarantee in materials purchase transactions, technological performance guarantee in the integrated information system construction projects would all be revenue growth engines for the Companys existing project guarantee business.  III. Expansion Plan and Safeguard Measures of 2010  Expansion Plan  1. Following the trends of governmental investment into the infrastructure, business teams shall be reorganized to perform specific business tracking.  2. To further strengthen the collaboration with China Construction Bank and Shanghai Pudong Development Bank, so that the existing business platform could be expanded, the credit facilities be increased and the steady and efficient business handling environments be ensured.  3. To conduct market surveys in more China regions, to penetrate the business into wider areas within China, and to establish more branch offices which can be conducive to business growth.  4. To expand the existing business coverage to a wider area by redefining the traditional project assured guarantee business to the comprehensive contract performance guarantee service. Benefiting from the quick recovery of the Chinese economy, more and more contractual parties start to concern about their contractual interests. This trend would result in an increase of contract performance guarantee service within the Companys business scope.  20    5. To take a close look at the China Construction Banks business expansion in the international construction market; to provide its clients with advance payment guarantee and the contract performance guarantee service to redefine the Companys business scope.  Safeguard Measures  1. Summarizing past experience in undertaking the engineering guarantee business for the self-learning within the Company to strengthen each branchs risk perceiving abilities.  2. Constantly perfecting the Companys risk control system, paying attention to the building of risk control team, further formalizing the standard procedure of project operation, offering training and practicing sessions for the risk control team members from each branch, and performing consequent monitoring and examining procedures for the ongoing guarantee projects.  3. Credit evaluating system shall be established for the Companys existing clients whereby the highest guarantee limit can be tailored for different clients of different client reference to prevent risks.  4. Irregular investigations shall be performed to evaluate different operational status, to collect any event of default among the peer industry and promptly send message to the Company group and therefore decline guarantee service to the clients concerned well in advance.  5. Regular experience exchange among cooperative partners shall be arranged regularly so that the Companys risk control standard could be improved.  We do not have any material off-balance sheet arrangements.  RESULTS OF OPERATIONS  Year Ended December 31, 2009 compared with 2008  Net revenue: Net revenue for the year ended December 31 2009, was $6,201,287 as compared to $2,626,380 for the same period in 2008. The increase of $3,574,907 or approximately 136% was due to achieved 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 77% from 73% for the year ended December 31, 2008, it was due to the percentage of the guarantee fee income without cost was increased, and tightening of control of our cost of sales.  Net income before tax: Net income before tax for the year ended December 31, 2009 was $2,602,750 compared to the net loss before tax $493,179 for the whole year of 2008. The increase was mainly due to increase in guarantee fee income by increasing bank referral business and employed more agents to promote guarantee business, and tightening of control of our selling, general and administrative expenses.  21    Operating expenses: Total operating expenses were $2,190,331 for year ended December 31, 2009, as compared to $2,389,789 for the same period in 2008.  The decrease of $199,458 or 8% was mainly due to decrease in reserve of guarantee losses, rent, travel expenses and listing related fee which partially offset by increase in staff cost and depreciation during the year. The reasons for the changes in the major items are as follows:  (1) Reserve of guarantee losses - decrease by $111,175 or 52% from $215,448 in 2008 to $104,273 in 2009. The decrease was mainly due to over-provision in prior year. (2) Rent - decrease by $80,183 or 21% from $380,643 in 2008 to $300,460 in 2009. The decrease was mainly due to reduction the no. of branches during the year 2009. (3) Travel expenses - decrease by $38,087 or 60 % from $63,090 in 2008 to $25,003 in 2009. The decrease was mainly because of the result of the imposition of limitations on travel in order to reduce operating expenses. (4) Audit fee and other professional fee to fulfill the obligation as a listing company -decrease by $15,179 or 7 % from $219,597 in 2008 to $204,418 in 2009.  The decrease was mainly due to the discount provided by the services provider. (5) Depreciation - increase by $20,127 or 32 % from $63,380 in 2008 to $83,507 in 2009. The increase was primarily due to the addition of fixed assets during the year 2009. (6) Staff costs - increase by $14,846 or 1 % from $1,048,725 in 2008 to $1,063,571 in 2009. The increase was mainly due to increase in headcounts and pay rates during the year of 2009.  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  Cash flow  For the year ended December 31, 2009, cash provided by operating activities totaled $2,658,199 compared to $40,631 for the fiscal year ended December 31, 2008. The receipt of funds was primarily due to net income for the year plus increase in income tax payable, accrued liabilities and other payable, decrease in guarantee fee receivable as well as increase in prepayment and other receivable and decrease in trade payable and deferred revenue.  For the year ended December 31, 2009, cash used in investing activities amounted to $2,189,731 compared to $2,122,287 for the fiscal year ended December 31, 2008. The use of funds was for the payment on loans receivable, as well as the change in restricted cash, net of customer collateral, which partially offset by the repayment from note receivable.  Assets and liabilities   22   For the year ended December 31, 2009, the Groups balance sheet reflects total current assets of $9,843,314 and total current liabilities $5,112,414. These items increase by $4,290,638 (or 77%) and $2,037,436 (or 66%) respectively as compared to the year ended December 31, 2008. The increase of total current assets was mainly due to increase of cash and cash equivalents, restricted cash, loans receivable, prepayment and other receivable partially offset by decrease in guarantee fee receivable, note receivable and income tax receivable. The increase in total current liabilities was mainly due to increase in customer collateral, income tax payable, deferred tax liabilities, accrued liabilities and other payable partially offset by decrease in trade payable and deferred revenue.  As of December 31, 2009, guarantee fee receivable was $790 as compared to $17,553 for the same period in 2009. The decrease was mainly due to the settlement from customers before year ended. As of December 31, 2009, customer collateral was $3,729,734, as compared to December 31, 2008 balances of $2,102,665. The increase was mainly due to the increase of the tender and surety guarantee business.  As of December 31, 2009, deferred revenue was $364,636 as compared to $401,259 for the same period in 2008.  The decrease was due to the increase of surety guarantee business with the associated cost also increased.  The Company maintained cash and cash equivalent $559,105 as of December 31, 2009. The Company has sufficient funds to satisfy its financial commitments and working capital requirements for 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 of December 31, 2009, The Company owed $59,582 to Mr. Guokang Tu, a director. The loan was unsecured, interest-free with no fixed repayment term.  As of December 31, 2009, The Company had surety and tendering guarantees outstanding resulting in restricted cash with approximately $3,729,734 from customer collateral and $2,087,457 for escrow deposits at the bank. 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.  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, 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%  23   per annum payable upon the maturity. The balance was fully received during the year ended December 31, 2009.  On October 31, 2009, the Company provided a loan sum of $877,552 (equivalent to RMB6,000,000) to Party A in a term of 12 months, receivable by October 30, 2010, with an interest rate of 2.52% per annum payable at its due date. The Company further provided installments loan on November 30 and December 31, 2009 under the same terms with the aggregate amount of $1,311,941 (equivalent to RMB8,970,000).  In December 2009, the Company also provided a loan sum of $1,073,539 (equivalent to RMB7,340,000) to Party B in a term of 12 months, receivable by December 31, 2010, with an interest rate of 2.52% per annum payable at its due date.  The aggregate loans and interest receivable as of December 31, 2009 amounted to $3,263,032 and $5,212, respectively.  For the year ended December 31, 2009, The Company had the total future lease commitments under non-cancellable operating leases are $305,754. The Company currently has working capital sufficient to fund these lease commitments.  As of December 31, 2009, The Company has contingent liabilities in respect of guarantees granted under the surety and tendering guarantee services business in the aggregate amount of $111,801,487. As of December 31, 2009, The Company has 822 surety and tendering guarantees outstanding. If all the Companys customers fail to complete their performance obligation in a timely manner so that he Company is obligated to pay on its guarantees, the Company would have the maximum potential amount of future payments of approximately $111,801,487 (RMB764,409,125) in total. The Company 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.  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 December 31, 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. The Company have no actual guarantee loss claims for the years ended December 31, 2009. For the years ended December, 2008, the Company experienced actual guarantee loss claims $22,378. At December 31, 2009, the Company has accrued $323,717 on the reserve for guarantee losses for any potential claims.  CRITICAL ACCOUNTING POLICIES  24    Critical Accounting Policies  We prepare financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of our assets and liabilities, (ii) the disclosure of our contingent assets and liabilities at the end of each fiscal period and (iii) the reported amounts of revenues and expenses during each fiscal period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.  When reviewing our financial statements, you should consider (i) our selection of critical accounting policies, (ii) the judgment and other uncertainties affecting the application of such policies, (iii) the sensitivity of reported results to changes in conditions and assumptions. We believe the following accounting policies involve the most significant judgment and estimates used in the preparation of our financial statements.  Revenue Recognition  The Company provides guarantee services 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 customers pay 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 performance obligations under surety or tendering guarantees, 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.  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.   25   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.  Income taxes  The Company adopts the ASC Topic 740, Income Taxes regarding accounting for uncertainty in income taxes which 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 periods reported, the Company did not have any interest and penalties associated with tax positions. As of year ended date, 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.  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 December 31, 2009.  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.   26   The reporting currency of the Company is the United States Dollars ("US$") and the accompanying consolidated financial statements have been expressed in US$. In addition, the Companys operating subsidiaries and VIE in the PRC maintains the books and records in their local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which its operation is conducted.  In general, for consolidation purposes, assets and liabilities of its operating entity whose functional currency is not US$ 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 statements of changes in stockholders equity.  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS N/A     27


ITEM 8. FINANCIAL STATEMENTS        SINO ASSURANCE INC.   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS     PageReport of Independent Registered Public Accounting Firm29Consolidated Balance Sheets30Consolidated Statements of Operations And Comprehensive Income (Loss)31Consolidated Statements of Cash Flows32Consolidated Statements of Changes in Stockholders Equity33Notes to Consolidated Financial Statements34 - 49    28  [snas_10k2009v1zycpafinal3001.jpg]   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board of Directors and Stockholders of Sino Assurance Inc.  We have audited the accompanying consolidated balance sheets of Sino Assurance Inc. and its subsidiaries (the Company) as of December 31, 2009 and 2008 and the related consolidated statements of operations and comprehensive (loss) income, cash flows and changes in stockholders equity and for the years then ended. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of the Companys internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.  In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008 and the results of operations and cash flows for the years ended December 31, 2009 and 2008 in conformity with accounting principles generally accepted in the United States of America.      /s/ ZYCPA Company Limited   ZYCPA Company Limited Certified Public Accountants  Hong Kong, China March 31, 2010    29  [snas_10k2009v1zycpafinal3003.gif]29    SINO ASSURANCE INC. CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)  As of December 31,20092008ASSETSCurrent assets:Cash and cash equivalents$559,105$90,158Restricted cash5,817,1913,367,033Guarantee fee receivable79017,553Income tax receivable-55,105Prepayments and other receivable197,984126,177Loans receivable3,268,244-Note receivable-1,896,650Total current assets9,843,3145,552,676Non-current assets:Plant and equipment, net275,232361,293TOTAL ASSETS$10,118,546$5,913,969LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable, trade$7,004$70,752Customer collateral3,729,7342,102,665Deferred revenue364,636401,259Amount due to a related party59,58259,434Income tax payable29,113-Deferred tax liabilities345,577-Accrued liabilities and other payable576,768440,868Total current liabilities5,112,4143,074,978Commitments 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 December 31, 2009 and 200860,00060,000Additional paid-in capital2,915,1212,915,121Accumulated other comprehensive income172,065163,839Statutory reserve158,314104,230Retained earnings (accumulated deficit)1,700,632(404,199)Total stockholders equity5,006,1322,838,991TOTAL LIABILITIES AND STOCKHOLDERS EQUITY$10,118,546$5,913,969    See accompanying notes to consolidated financial statements.  30    SINO ASSURANCE INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$))


|                                                                        |  |                          |             |      |   |           
|----------------------------------------------------------------------- |  | ------------------------ | ----------- | ---- | - | ----------
|                                                                        |  | Years ended December 31,
|                                                                        |  | 2009                     |             | 2008
|                                                                        |  |                          |             |      |   |           
|REVENUES, NET                                                           |  |                          |             |      |   |           
|Guarantee fee income                                                    |  | $                        | 6,132,725   |      | $ | 2,595,424 
|Interest income                                                         |  |                          | 68,562      |      |   | 30,956    
|                                                                        |  |                          |             |      |   |           
|Total revenues, net                                                     |  |                          | 6,201,287   |      |   | 2,626,380 
|                                                                        |  |                          |             |      |   |           
|COST OF REVENUE                                                         |  |                          | (1,411,503) |      |   | (724,694) 
|                                                                        |  |                          |             |      |   |           
|GROSS PROFIT                                                            |  |                          | 4,789,784   |      |   | 1,901,686 
|                                                                        |  |                          |             |      |   |           
|Operating expenses:                                                     |  |                          |             |      |   |           
|Depreciation                                                            |  |                          | 83,507      |      |   | 63,380    
|Selling, general and administrative                                     |  |                          | 2,002,551   |      |   | 2,110,961 
|Reserve for guarantee losses                                            |  |                          | 104,273     |      |   | 215,448   
|Total operating expenses                                                |  |                          | 2,190,331   |      |   | 2,389,789 
|                                                                        |  |                          |             |      |   |           
|INCOME (LOSS) FROM OPERATIONS                                           |  |                          | 2,599,453   |      |   | (488,103) 
|                                                                        |  |                          |             |      |   |           
|Other income (expense):                                                 |  |                          |             |      |   |           
|Other income                                                            |  |                          | 3,297       |      |   | 95        
|Other expense                                                           |  |                          | -           |      |   | (5,171)   
|                                                                        |  |                          |             |      |   |           
|INCOME (LOSS) BEFORE INCOME TAXES                                       |  |                          | 2,602,750   |      |   | (493,179) 
|                                                                        |  |                          |             |      |   |           
|Income tax expense                                                      |  |                          | (443,835)   |      |   | (11,883)  
|                                                                        |  |                          |             |      |   |           
|NET INCOME (LOSS)                                                       |  | $                        | 2,158,915   |      | $ | (505,062) 
|                                                                        |  |                          |             |      |   |           
|Other comprehensive income:                                             |  |                          |             |      |   |           
|- Foreign currency translation gain                                     |  |                          | 8,226       |      |   | 102,715   
|                                                                        |  |                          |             |      |   |           
|COMPREHENSIVE INCOME (LOSS)                                             |  | $                        | 2,167,141   |      | $ | (402,347) 
|                                                                        |  |                          |             |      |   |           
|Net income (loss) per share  basic and diluted                         |  | $                        | 0.04        |      | $ | (0.01)    
|                                                                        |  |                          |             |      |   |           
|Weighted average shares outstanding during the year  basic and diluted |  |                          | 60,000,000  |      |   | 51,546,299

See accompanying notes to consolidated financial statements.  31    SINO ASSURANCE INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$))


|                                                                                  |  |                          |             |      |          |            
|--------------------------------------------------------------------------------- |  | ------------------------ | ----------- | ---- | -------- | -----------
|                                                                                  |  | Years ended December 31,
|                                                                                  |  | 2009                     |             | 2008
|                                                                                  |  |                          |             |      |          |            
|Cash flows from operating activities:                                             |  |                          |             |      |          |            
|Net income (loss)                                                                 |  | $                        | 2,158,915   |      | $        | (505,062)  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |             |      |          |            
|Depreciation                                                                      |  |                          | 83,507      |      |          | 63,380     
|Loss on disposal of plant and equipment                                           |  |                          | 7,492       |      |          | 2,971      
|Reserve for guarantee losses                                                      |  |                          | 104,273     |      |          | 215,448    
|Deferred tax expense                                                              |  |                          | 345,390     |      |          | -          
|Changes in operating assets and liabilities:                                      |  |                          |             |      |          |            
|Guarantee fee receivable                                                          |  |                          | 16,797      |      |          | (11,628)   
|Prepayments and other receivable                                                  |  |                          | (71,455)    |      |          | (61,597)   
|Accounts payable, trade                                                           |  |                          | (63,890)    |      |          | 69,654     
|Deferred revenue                                                                  |  |                          | (37,599)    |      |          | 325,411    
|Income tax payable                                                                |  |                          | 84,309      |      |          | (174,947)  
|Accrued liabilities and other payable                                             |  |                          | 30,460      |      |          | 117,001    
|                                                                                  |  |                          |             |      |          |            
|Net cash provided by operating activities                                         |  |                          | 2,658,199   |      |          | 40,631     
|                                                                                  |  |                          |             |      |          |            
|Cash flows from investing activities:                                             |  |                          |             |      |          |            
|Change in restricted cash, net of customer collateral                             |  |                          | (819,503)   |      |          | (32,459)   
|Net increase in loans receivable                                                  |  |                          | (3,266,476) |      |          | -          
|Payments on note receivable                                                       |  |                          | -           |      |          | (1,867,212)
|Repayments from notes receivable                                                  |  |                          | 1,900,335   |      |          | -          
|Proceeds from disposal of plant and equipment                                     |  |                          | 835         |      |          | 403        
|Purchase of plant and equipment                                                   |  |                          | (4,922)     |      |          | (223,019)  
|                                                                                  |  |                          |             |      |          |            
|Net cash used in investing activities                                             |  |                          | (2,189,731) |      |          | (2,122,287)
|                                                                                  |  |                          |             |      |          |            
|Cash flows from financing activities:                                             |  |                          |             |      |          |            
|Advances from related parities                                                    |  |                          | -           |      |          | 16,566     
|Capital contribution from stockholders                                            |  |                          | -           |      |          | 2,010,845  
|                                                                                  |  |                          |             |      |          |            
|Net cash provided by financing activities                                         |  |                          | -           |      |          | 2,027,411  
|                                                                                  |  |                          |             |      |          |            
|Effect of exchange rate changes in cash and cash equivalents                      |  | 479                      |             |      | 7,907   
|                                                                                  |  |                          |             |      |          |            
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                           |  | 468,947                  |             |      | (46,338)
|                                                                                  |  |                          |             |      |          |            
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                      |  |                          | 90,158      |      |          | 136,496    
|                                                                                  |  |                          |             |      |          |            
|CASH AND CASH EQUIVALENTS, END OF YEAR                                            |  | $                        | 559,105     |      | $        | 90,158     
|                                                                                  |  |                          |             |      |          |            
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                 |  |                          |            
|Cash paid for income taxes                                                        |  | $                        | 15,235      |      | $        | 186,829    
|Cash paid for interest                                                            |  | $                        | -           |      | $        | -          

See accompanying notes to consolidated financial statements.  32


SINO ASSURANCE INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)  Common StockAdditional paid-in capitalAccumulated other comprehensive incomeStatutory reserve(Accumulated deficit) retained earningsTotal stockholders equityNo. of sharesAmountBalance as of January 1, 200848,399,997$48,400$915,876$61,124$42,193$162,900$1,230,493Shares issued for reverse acquisition11,600,00311,600(11,600)----Capital contribution from stockholders--2,010,845---2,010,845Net loss for the year-----(505,062)(505,062)Foreign currency translation adjustment---102,715--102,715Appropriation to statutory reserve----62,037(62,037)-Balance as of December 31, 200860,000,00060,0002,915,121163,839104,230(404,199)2,838,991Net income for the year-----2,158,9152,158,915Foreign currency translation adjustment---8,226--8,226Appropriation to statutory reserve----54,084(54,084)-Balance as of December 31, 200960,000,000$60,000$2,915,121$172,065$158,314$1,700,632$5,006,132    See accompanying notes to consolidated financial statements  33


SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)   1. 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.  On August 27, 2008, the Company established a limited liability company namely Century Maker Limited in Hong Kong, for the purpose of holding 100% equity interest in Zhong Heng Jiang Investment Consulting (Shenzhen) Company Limited (ZHJ).  On October 21, 2009, the Company established a limited liability company namely Zhong Heng Jiang Investment Consulting (Shenzhen) Company Limited in the Peoples Republic of China (the PRC), which is mainly engaged in the provision of business consulting service.  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 PRC.  Recapitalization and reorganization  On September 23, 2008, the Company entered into a Share Exchange Agreement (the Agreement) with Linking Target Limited (LTL), which was registered as a BVI Business Company with limited liability in the British Virgin Islands (BVI) under the BVI Business Companies Act, 2004, on January 23, 2008. Pursuant to the Agreement, SNAS issued 48,399,997 shares of common stock of the Company in exchange for 100% of its issued and outstanding of LTL, thus causing LTL to become a direct wholly-owned subsidiary of SNAS.  Upon completion of the stock exchange and business restructuring transactions, LTL became a wholly-owned subsidiary of SNAS. The stock exchange transaction has been accounted for as a reverse acquisition and recapitalization of SNAS whereby LTL is deemed to be the accounting acquirer (legal acquiree) and SNAS to be the accounting acquiree (legal acquirer). The accompanying consolidated financial statements are in substance those of LTL, with the assets and liabilities, and revenues and expenses, of SNAS being included effective from the date of stock exchange transaction. SNAS is deemed to be a continuation of the business of LTL.  On August 1, 2008, LTL entered into an Exclusive Cooperation Agreement (the Agreement) with China Construction Guaranty Company Limited (CCG), together with a Plan of Reorganization. CCG is a limited liability company registered in Shenzhen City, the PRC on May 21, 2004. Its principal activity is engaged in the provision of surety and tendering guarantees to corporations and individuals in the PRC.  Through the contractual arrangement described above, CCG is a variable interest entity (VIE), as defined in the Financial Accounting Standards Board (FASB) Interpretation No. 46 (revised), "Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51" ("FIN 46R"), through designated equity owners who are PRC citizens and legally owned the VIE.  Details of subsidiaries and variable interest entity  34  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    NamePlace of incorporation
and kind of
legal entityPrincipal activities
and place of operationParticulars of issued/
registered capitalEffective interest
heldLinking Target Limited (LTL)British Virgin Island, a limited liability companyInvestment holding10,000 issued shares of US$1 each100%Century Maker Limited (CML)Hong Kong, a limited liability companyInvestment holding10,000 issued shares of HK$1 each100%Zhong Heng Jiang Investment Consulting (Shenzhen) Company Limited (ZHJ)The PRC, a limited liability companyProvision of business consulting service in the PRCRMB100,000100%China Construction Guaranty Company Ltd (CCG) #The PRC, a limited liability companyProvision of guarantee service in the PRCRMB50,000,000100%  # represents variable interest entity  SNAS and its subsidiaries including its variable interest entity are hereinafter collectively referred to as (the Company).   2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  l Basis of presentation  These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP).  l Use of estimates  In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.  l Basis of consolidation  The consolidated financial statements include the financial statements of SNAS and its subsidiaries and variable interest entity (VIE). All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.  35  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    The Company has adopted the Accounting Standards Codification ("ASC") ASC Topic 810-10-25 Variable Interest Entities (ASC 810-10-25). ASC 810-10-25 requires a variable interest entity or VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIEs or is entitled to receive a majority of the VIEs residual returns.  l Variable interest entity  The Company assesses the terms of its interest in the entity to determine if the Company is the primary beneficiary as prescribed by ASC 810-10-25. Variable interests are the ownership, contractual, or other pecuniary interests in an entity that change with changes in the fair value of the entity's net assets excluding variable interests. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity's expected losses, receives a majority of its expected residual returns, or both, as a result of holding variable interests. It is concluded that the Company demonstrates its ability to control CCG as the primary beneficiary and CCG is a VIE of the Company, in accordance with ASC 810-10-5-8. Accordingly, the Company has consolidated CCGs results of operations, assets and liabilities in the accompanying consolidated financial statements of the Company.  l 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.  l 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.  l Loans receivable  Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, are reported at their outstanding principal amount adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans.  Interest is accrued and credited to income based on the principal amount outstanding. The accrual of interest on impaired loans is discontinued when, in managements opinion, the borrower may be unable to  36  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)   meet payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed.  l Plant and equipment  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.  l 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 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 December 31, 2009 and 2008.  l 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.  37  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    (b) Interest income  Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.  l Cost of revenue  Cost of revenue mainly consists of service and handling fees charged by the banks.  l Customer collateral  The Company maintains and safeguards cash deposits received from certain customers as security 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 separately presented on the balance sheet.  l 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.  l Advertising expenses  Advertising costs are expensed as incurred under ASC Topic 720-35, Advertising Costs. The Company incurred $21,149 and $0 for the years ended December 31, 2009 and 2008, respectively.  l 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 December 31, 2009.  For the years ended December 31, 2009 and 2008, the Company has recognized $104,273 and $215,448 on the reserve for guarantee losses for any potential claims, respectively.  l Income taxes  The Company adopts the ASC Topic 740, Income Taxes regarding accounting for uncertainty in income taxes which prescribes the recognition threshold and measurement attributes for financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. In addition, the guidance requires the determination of whether the benefits of tax positions will be more likely than not sustained upon audit based upon the technical merits of the tax position. For tax positions that are determined to be more likely than not sustained upon audit, a company recognizes the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement in the  38  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)   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 years ended December 31, 2009 and 2008, the Company did not have any interest and penalties associated with tax positions. As of December 31, 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.  l 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 changes in 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 income (loss) per share  The Company calculates net income (loss) per share in accordance with ASC Topic 260,Earnings per Share. Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) 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.  l 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 subsidiaries and VIE in the PRC maintains the books and records in their 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$, in accordance with ASC Topic 830-30, Translation of  39  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)   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 statements of changes in stockholders equity.  Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective years:


|                                        |  |  |  |        |  |       
|--------------------------------------- |  |  |  | ------ |  | ------
|                                        |  |  |  | 2009   |  | 2008  
|Year end RMB : US$1 exchange rate       |  |  |  | 6.8372 |  | 6.8542
|Annual average RMB : US$1 exchange rate |  |  |  | 6.8409 |  | 6.9623

l Retirement plan costs  Contributions to retirement schemes (which are defined contribution plans) are charged to general and administrative expenses in the consolidated statements of operation and comprehensive income as and when the related employee service is provided.  l 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.  l 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 in the PRC.  l 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 liability (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  40  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)   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.  l Financial instruments  The carrying value of the Companys financial instruments include guarantee fee receivable, prepayments and other receivable, loans receivable, accounts payable, customer collateral, deferred revenue, amount due to a related party and income tax payable. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values.  l 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 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.  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 consolidated financial statements.   41  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)   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 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 consolidated financial statements as a result of the adoption of ASC 825-10.  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 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 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 consolidated financial statements.   42  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    3. 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 December 31, 2009, the Company had surety and tendering guarantees outstanding resulting in restricted cash with approximately $3,729,734 from customer collateral and $2,087,457 for escrow deposits at the bank.  4. PREPAYMENTS AND OTHER RECEIVABLE  Prepayments and other receivable consisted of the followings:  As of December 31,20092008Prepayments$108,438$45,864Utility and rental deposits68,86566,466Advances to employees8,9964,145Other receivables11,6859,702$197,984$126,177  5. PLANT AND EQUIPMENT  Plant and equipment consisted of the following:


|                                         |                    |           |      |   |         
|---------------------------------------- | ------------------ | --------- | ---- | - | --------
|                                         | As of December 31,
|                                         | 2009               |           | 2008
|                                         |                    |           |      |   |         
|Leasehold improvement                    | $                  | 89,232    |      | $ | 89,232  
|Furniture, fittings and office equipment |                    | 169,969   |      |   | 178,515 
|Motor vehicles                           |                    | 148,815   |      |   | 148,815 
|Foreign translation difference           |                    | 26,782    |      |   | 25,690  
|                                         |                    | 434,798   |      |   | 442,252 
|Less: accumulated depreciation           |                    | (156,557) |      |   | (78,212)
|Less: foreign translation difference     |                    | (3,009)   |      |   | (2,747) 
|                                         |                    |           |      |   |         
|Plant and equipment, net                 | $                  | 275,232   |      | $ | 361,293 

Depreciation expense for the years ended December 31, 2009 and 2008 was $83,507 and $63,380, respectively.  43  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    6. NOTE 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, 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. The balance was fully received during the year ended December 31, 2009.  7. LOANS RECEIVABLE, UNSECURED  During the year ended December 31, 2009, the Company provided the following loans:  On October 31, 2009, the Company provided a loan sum of $877,552 (equivalent to RMB6,000,000) to Party A, in a term of 12 months, receivable on October 30, 2010, with an interest rate of 2.52% per annum payable at its due date. The Company further provided installments of loan on November 30 and December 31, 2009 under the same terms with the aggregate amount of $1,311,941 (equivalent to RMB8,970,000).  In December 2009, the Company also provided a loan sum of $1,073,539 (equivalent to RMB7,340,000) to Party B,in a term of 12 months, receivable on December 31, 2010, with an interest rate of 2.52% per annum payable at its due date.  The aggregate loans and interest receivable as of December 31, 2009 amounted to $3,263,032 and $5,212, respectively.  8. AMOUNT DUE TO A RELATED PARTY  As of December 31, 2009 and 2008, amount due to a related party represented temporary advances made by Mr. Guokang Tu, chief executive officer of the Company, which were unsecured, interest-free with no fixed repayment term. Imputed interest is considered insignificant.  9. ACCRUED LIABILITIES AND OTHER PAYABLE  Accrued liabilities and other payable consisted of following:  As of December 31,20092008Business tax payable$80,294$10,191Reserve for guarantee losses323,717218,844Accrued payroll and employee welfare109,163123,068Accrued operating expenses41,95776,907Other tax payable16,1859,276Other payable5,4522,582$576,768$440,868  44  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)  10. INCOME TAXES  For the years ended December 31, 2009 and 2008, the local (United States) and foreign components of income (loss) from operations before income taxes were comprised of the following:  Years ended December 31,20092008Tax jurisdictions from: Local$-$- Foreign2,602,750(493,179)Income (loss) before income taxes$2,602,750$(493,179)  The provision for income taxes consisted of the following:


|                           |                          |         |      |   |       
|-------------------------- | ------------------------ | ------- | ---- | - | ------
|                           | Years ended December 31,
|                           | 2009                     |         | 2008
|Current:                   |                          |         |      |   |       
| Local                    | $                        | -       |      | $ | -     
| Foreign                  |                          | 98,445  |      |   | 11,883
|                           |                          |         |      |   |       
|Deferred:                  |                          |         |      |   |       
| Local                    |                          | -       |      |   | -     
| Foreign                  |                          | 345,390 |      |   | -     
|Provision for income taxes | $                        | 443,835 |      | $ | 11,883

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, Hong Kong 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 2009 and 2008 fiscal years.  British Virgin Island  Under the current BVI law, LTL is not subject to tax on income.  Hong Kong  45  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    The Companys subsidiary, CML is subject to Hong Kong Profits Tax at the statutory rate of 16.5% and 17.5% for the years ended December 31, 2009 and 2008 on the assessable income for its tax reporting years. For the years ended December 31, 2009 and 2008, CML has generated no operating income.  The PRC  The Company generated substantially its net income from its operating VIE in the PRC. [WFOE] and CCG are subject to the Corporate Income Tax governed by the Income Tax Law of the Peoples Republic of China (CIT Law), at a unified income tax rate of 25%, with effect from January 1, 2008.  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 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.  The reconciliation of income tax rate to the effective income tax rate for the years ended December 31, 2009 and 2008 is as follows:  Years ended December 31,20092008Income before income taxes$2,602,750$(493,179)Statutory income tax rate25%25%Income tax expense at statutory tax rate650,688(123,294)Effect of tax holiday(35,402)(1,934)Effect of utilizing net operating loss carryforwards(15,235)-Effect of non-taxable items(156,629)(17,405)Effect of non-deductible items413154,516Income tax expense$443,835$11,883  The following table sets forth the significant components of the aggregate deferred tax assets and liabilities of the Company as of December 31, 2009 and 2008:  As of December 31,20092008Deferred tax assets:Deferred revenue$(79,936)$-Deferred tax liabilities:Reserve on guarantee losses425,513-Deferred tax liabilities, net$345,577$-  46  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    11. NET INCOME (LOSS) PER SHARE  Basic net income (loss) per share is computed using the weighted average number of the ordinary shares outstanding during the year. Diluted net income (loss) per share is computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the year.  The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2009 and 2008: Years ended December 31,20092008Basis and diluted net income per share calculationNumerator:- Net income (loss) in computing basic net income per share$2,158,915$(505,062)Denominator:- Weighted average ordinary shares outstanding60,000,00051,546,299Basic and diluted net income (loss) per share$0.04($(0.01)  12. CHINA CONTRIBUTION PLAN  Under the PRC Law, full-time employees of the Companys subsidiary and VIE in the PRC, are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a China government-mandated multi-employer defined contribution plan. WFOE and CCG are required to accrue for these benefits based on certain percentages of the employees salaries. The total contributions made for such employee benefits were $82,988 and $90,134 for the years ended December 31, 2009 and 2008, respectively.  13. STATUTORY RESERVE  Under the PRC Law, the Companys subsidiary and VIE in the PRC are required to make appropriation to the statutory reserve based on after-tax net earnings and determined in accordance with generally accepted accounting principles of the Peoples Republic of China (the PRC GAAP). Appropriation to the statutory reserve should be at least 10% of the after-tax net income until the reserve is equal to 50% of the registered capital. The statutory reserve is established for the purpose of providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation.  For the years ended December 31, 2009 and 2008, the Company made an appropriation of $54,084 and $62,037 to the statutory reserve, respectively.  14. CONCENTRATIONS OF RISK  The Company is exposed to the following concentrations of risk:  47  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)    (a) Major customers  For the years ended December 31, 2009 and 2008, there was no customer who accounts for 10% or more of the Companys revenues.  (b) Major vendors  For the years ended December 31, 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.  15. COMMITMENTS AND CONTINGENCIES  (a) Operating lease commitments  The Company was committed under various non-cancelable operating leases with fixed monthly rentals, due through December 2012. Total rent expenses for the years ended December 31, 2009 and 2008 was $300,460 and $380,642, respectively.   48  SINO ASSURANCE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Currency expressed in United States Dollars (US$), except for number of shares)   As of December 31, 2009, future minimum rental payments due under these non-cancelable operating leases are as follows:


|                          |  |  |  |  |   |        
|------------------------- |  |  |  |  | - | -------
|                          |  |  |  |  |   |        
|Years ending December 31: |  |  |  |  |   |        
|2010                      |  |  |  |  | $ | 188,167
|2011                      |  |  |  |  |   | 57,360 
|2012                      |  |  |  |  |   | 60,227 
|                          |  |  |  |  |   |        
|Total                     |  |  |  |  | $ | 305,754

(b) Guarantees  As of December 31, 2009, the Company has 822 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 $111,801,487 (RMB764,409,125) 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 December 31, 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 years ended December 31, 2009 and 2008, the Company experienced actual guarantee loss claims of $0 and $22,378, respectively. At December 31, 2009, the Company has accrued $323,717 on the reserve for guarantee losses for any potential claims.  ---        49    ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  None.   ITEM 9A(T). CONTROLS AND PROCEDURES  Management's Annual Report on Internal Control over Financial Reporting  The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.  The Companys internal control over financial reporting is designed to provide reasonable assurance for the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.  Because of its inherent limitations (further discussed in next paragraphs below), internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  The Companys management assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2009.  In this assessment, the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework were used.  Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2009.  Inherent Limitations in Control Systems  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations  50    in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.  As a result, our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal control over financial reporting, will prevent all error and all fraud.  Evaluation of Disclosure on Controls and Procedures  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 upon 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 within the time periods specified.  Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of December 31, 2009 to provide reasonable assurance of the achievement of these objectives.  This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.  Changes in Internal Control 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 of the fiscal year ended December 31, 2009,that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.    ITEM 9B. OTHER INFORMATION  None  PART III   ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  DIRECTORS AND OFFICERS  The directors and executive officers currently serving SNAS are as follows:   51     NameAgePositionDirector/Officer SinceGuokang Tu46Chairman, Chief Executive Officer and Director2008Mengyou Tong41Chief Financial Officer and Director2008Beiquan Ling
(Removed on
January 10, 2010)35Chief Operating Officer and Director2008Zhiqun Li39Director2008Jiashou Zeng
(Removed on
January 10, 2010)56Director2008  BIOGRAPHICAL INFORMATION  Guokang TuMr. Tu became our Chief Executive Officer and a Director on or about November 20, 2008.  He has been the vice president of China Construction Guaranty, Inc. since 2007.  From 2001 to 2006, he served as the general manager of Jiangxi Jiuding Digital Technology Limited Company.  He held the position of the general manager of Jiangxi Jiuding Health Products Limited Company during the period 1996 and 2000.  He received a bachelor degree from the Medicine School of Soochow University and is studying Master of Business Management Zhongnan University at Economics and Law.  Mengyou Tong Mr. Tong became our Chief Financial Officer and a Director on or about November 20, 2008. Mr. Tong has been the vice president and chief financial officer of China Construction Guaranty, Inc. since 2007.  He was the assistant to the president of a US listed company during 2006 and 2007.  He was the financial manager of Asia Plastic Limited Company (Nigeria) from 2005 to 2006 and the chief budget officer of Financial Bureau in Lusong District, Zhuzhou City, Hunan Province from 1990 to 2000.  He is a graduate of the Master of Business Administration of Ateneo De Manila University.  Beiquan Ling    Mr. Ling became our Chief Operating Officer and a Director on or about November 20, 2008.  He has been the president of China Construction Guaranty, Inc.  He was the assistant branch manager of Guangdong Development Bank (Sungang Branch) from 2003 to 2004.  From 2002 to 2003, he was the manager of Shenzhen Commercial Bank (Fuhua Branch).  Mr. Ling graduated from the International Business School of Hunan University.  Zhiqun LiMs. Li  was appointed as a Director on or about November 20, 2008.  She has been serving Jiangxi Jiuding Digital Technology Limited Company since 1995.  She received a bachelor degree from Wuxi University of Light Industry.   52    Jiashou ZengMr. Zeng was appointed as a Director on or about November 20, 2008.  He has been serving for China Construction Guaranty, Inc. since 2007. Ms. Zeng served for the State Grid, Jiangxi Electric Power Corporation and its subsidiary, Jiangxi Electric Power Equipments Corporation from 1975 to 2007. From 1972 to 1975, he was a soldier in Fengxin squadron, Jiangxi military.  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT  Section 16(a) of the Securities Exchange Act of 1934, as amended, requires each of our officers and directors and each person who owns more than 10% of a registered class of our equity securities to file with the SEC an initial report of ownership and subsequent reports of changes in such ownership.  Such persons are further required by SEC regulation to furnish us with copies of all Section 16(a) forms (including Forms 3, 4 and 5) that they file.  Based solely on our review of the copies of such forms received by us with respect to fiscal year 2009, or written representations from certain reporting persons, we believe all of our directors and executive officers met all applicable filing requirements.   ITEM 11. EXECUTIVE COMPENSATION  The following table provides summary information concerning compensation awarded to, earned by, or paid to any of SNASs officers and directors for all services rendered to SNAS and its consolidated subsidiaries, in all capacities for the fiscal years ended December 31, 2007, 2008 and 2009.


|                            |         |            |            |                  |                   |                                            |                                                                         |                            |                       
|--------------------------- | ------- | ---------- | ---------- | ---------------- | ----------------- | ------------------------------------------ | ----------------------------------------------------------------------- | -------------------------- | ----------------------
|Name and Principal Position | Year    | Salary ($) | Bonus  ($) | Stock Awards ($) | Option Awards ($) | Non-equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total Compensation ($)
|                            |         |            |            |                  |                   |                                            |                                                                         |                            |                       
|Guokang
Tu
CEO              | 2007    | --         | --         | --               | --                | --                                         | --                                                                      | --                         | --                    
|2008                        | $59,770 | $4,309     | --         | --               | --                | --                                         | --                                                                      | $64,079                   
|2009                        | $81,729 | --         | --         | --               | --                | --                                         | --                                                                      | $81,729                   
|Mengyou
Tong
CFO            | 2007    | $9,141     | --         | --               | --                | --                                         | --                                                                      | --                         | $9,141                
|2008                        | $39,612 | $2,873     | --         | --               | --                | --                                         | --                                                                      | $42,485                   
|2009                        | $57,719 | --         | --         | --               | --                | --                                         | --                                                                      | $57,719                   
|Beiquan
Ling
COO            | 2007    | $9,128     | --         | --               | --                | --                                         | --                                                                      | --                         | $9,128                
|2008                        | $66,059 | $5,745     | --         | --               | --                | --                                         | --                                                                      | $71,804                   
|2009                        | $72,034 | --         | --         | --               | --                | --                                         | --                                                                      | $72,034                   

53    Director Compensation  The following table provides summary information concerning compensation awarded to, earned by, or paid to any of our directors for all services rendered to the Company in all capacities for the fiscal year ended December 31, 2009.


|             |                                        |                  |                   |                                            |                                                                         |                            |                   
|------------ | -------------------------------------- | ---------------- | ----------------- | ------------------------------------------ | ----------------------------------------------------------------------- | -------------------------- | ------------------
|Name         | Salary/Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total Compensation
|             |                                        |                  |                   |                                            |                                                                         |                            |                   
|Guokang Tu   | $81,729                                | --               | --                | --                                         | --                                                                      | --                         | $81,729           
|Mengyou Tong | $57,719                                | --               | --                | --                                         | --                                                                      | --                         | $57,719           
|Beiquan Ling | $72,034                                | --               | --                | --                                         | --                                                                      | --                         | $72,034           

We do not have employment agreements with any of our officers.  We did not award any stock, stock options, or other equity-based award to any of our officers during the fiscal years ended December 31, 2007, 2008, and 2009.  There are no outstanding equity awards as of December 31, 2009.  We have no agreements for providing compensation of any kind to officers after their retirement or resignation.     ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS  The following table sets forth, as of the date of this report, the stock ownership of each executive officer of SNAS, of all the executive officers and directors of SNAS as a group, and of each person known by SNAS to be a beneficial owner of 5% or more of its Common Stock.  Except as otherwise noted, each person listed below is the sole beneficial owner of the shares and has sole investment and voting power as to such shares.  No person listed below has any options, warrant or other right to acquire additional securities of SNAS, except as may be otherwise noted.   54


|                                                                                                                                           |               |                 
|------------------------------------------------------------------------------------------------------------------------------------------ | ------------- | ----------------
|Name                                                                                                                                       | No. of shares | Percent of Class
|Beiquan Ling, Chief Operating Officer and Director (1)
9WN LnBan Office Building
Hong Li Xi Road, Futian District,
Shenzhen P.R.C.         | 9,600,000     | 15.95%          
|Zhiqun Li, Director (1)
9WN LnBan Office Building
Hong Li Xi Road, Futian District,
Shenzhen P.R.C.                                        | 11,068,000    | 18.39%          
|Guokang Tu, Chairman, Chief Executive Officer and Director (1)
9WN LnBan Office Building
Hong Li Xi Road, Futian District,
Shenzhen P.R.C. | 6,600,000     | 10.96%          
|                                                                                                                                           |               |                 
|Mengyou Tong, Chief Financial Officer and Director (1)
9WN LnBan Office Building
Hong Li Xi Road, Futian District,
Shenzhen P.R.C.         | 1,000,000     | 1.67%           
|All Officers and Directors as a group (4 in number)                                                                                        | 28,268,000    | 46.97%          

(1) The person named is an officer, director, or both.    ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE  No officer, director, promoter, or affiliate of SNAS has, or proposes to have, any direct or indirect material interest in any asset proposed to be acquired by SNAS through security holdings, contracts, options, or otherwise.    ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES  Audit-Related Fees  (1) The aggregate fees billed by ZYCPA Company Limited (ZYCPA) for audit of the Companys annual financial statements and reviews of the Companys financial statements included in its quarterly reports on Form 10-Q were $42,000 and $72,000 for the fiscal year ended December 31, 2008 and December 31, 2009 respectively.  (2) ZYCPA did not bill the Company any amounts for assurance and related services that were related to its audit or review of the Companys financial statements during the fiscal year ended 2009.  Tax Fees  (3) ZYCPA did not bill the Company for tax compliance, tax advice and tax planning services for the fiscal year ended December 31, 2009.  All Other Fees   55    (4) ZYCPA did not bill the Company for any products and services other than the foregoing during the fiscal year ended December 31, 2009.  Audit Committees Pre-approval policies and procedures  (5) SNAS, which is not yet publicly traded, does not have an audit committee.  The current board of directors functions as the audit committee.   PART IV    ITEM 15. EXHIBITS  The Exhibits listed below are filed as part of this Annual Report.  2.1 Agreement for Share Exchange dated September 23, 2008, by and among DIGITAL NETWORK ALLIANCE INTERNATIONAL, INC., a Delaware corporation, LINKING TARGET LIMITED (LTL), a British Virgin Islands corporation, and the Shareholders of LTL (herein incorporated by reference from report on Form 8-K for report dated September 23, 2008 and filed with the Securities and Exchange Commission on September 26, 2008).  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 pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.  31.2 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.  32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       56       SIGNATURES  Pursuant to the requirements of Section 13 or 15(d) 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, CEO and Chairman Date: March 31, 2010   Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.  By: /s/ Guokang Tu, Chief Executive Officer and Chairman Date:  March 31, 2010  By: /s/ Mengyou Tong, Chief Financial Officer Date:  March 31, 2010   57