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8-K - FORM 8-K - SN Strategies Corp.form8k.htm

Exhibit 99.1

Company Contact:
Ms. Wenbin Zhu, Chief Financial
Officer
China SHESAYS Medical Cosmetology Inc.
Tel: +86-135-1816-1269
E-mail: zwb10305@126.com
Web Site: www.chinashesays.com

China SHESAYS Medical Cosmetology Inc. Announces 2010 Results

CHENGDU, China, April 4, 2010 – China SHESAYS Medical Cosmetology Inc. (OTC Bulletin Board: CSAY) (“China SHESAYS” or the “Company”), which operates a network of specialized medical cosmetology hospitals, clinics and skincare centers in Sichuan province, China, today announced financial results for full year ended December 31, 2010.

FY 2010 Financial Results

Full Year 2010 Results (audited)
  2010 2009 CHANGE
Net Sales $12.2 million $8.8 million +37.8%
Gross Profit $8.8 million $6.2 million +41.3%
Net Income $1.3 million $1.8 million -24.0%
GAAP EPS (Diluted) $0.08 $0.13 -38.5%

Revenue for the year ended December 31, 2010 totaled $12.2 million, up approximately 37.8% from $8.8 million for the year ended December 31, 2009. The revenue growth was driven by new outpatient clinics in Leshan, Yibin and Zigong launched in late 2010, and continued efforts to attract new customers in the headquarter hospital. The Company served approximately 25,682 customers in the headquarter hospital and three clinics in 2010 compared to approximately 20,514 customers in 2009. For 2010, revenues of the headquarter hospital increased by 33.0% to $11.7 million, compared to $8.8 million in 2009, while three new clinics contributed approximately $0.5 million in revenues.


"We are pleased to report our fiscal 2010 results with strong revenue growth. Our marketing strategy was successful and complemented by the expansion of our outpatient clinics, which enable us to gain additional market share in Sichuan province and achieve record sales for the year," commented Yixiang Zhang, Chairman and Chief Executive Officer of China SHESAYS. "Year 2010 is a very important milestone for our company as we achieved U.S. listing and closed a PIPE financing of $1.2 million. In addition, we expanded outside our home market of Chengdu and into other cities including Leshan, Yibin and Zigong in Sichuan province, which we believe will further improve our brand name and build toward a leading position in Sichuan province.”

Revenue generated from cosmetic surgery service increased by 28.1% from 2009 to $6.2 million, with a gross margin of 71.6% . Cosmetic surgery service represented approximately half of 2010 revenues. Revenue of professional medical beauty service was strong, growing by 64.7% to $4.9 million with a gross margin of 82.9% . Revenue of cosmetic dentistry services totaled $0.4 million in 2010, compared to $0.6 million in 2009. Revenue generated from sales of cosmetic goods in 2010 was approximately $0.6 million, an increase of 45.0% compared to $0.4 million in 2009.

Cost of revenue was $3.4 million for 2010, or 27.5% of revenues, compared to $2.6 million, or 29.3%, of revenues for 2009. The increase in cost of revenue was mainly due to the increase in revenues in 2010.

Gross profit for 2010 was $8.8 million, up 41.3% from $6.2 million for 2009. The increase in gross profit was mainly attributable to increased revenues in 2010. Gross margin for the year ended December 31, 2010 was approximately 72.5% as compared to gross margin of approximately 70.7% for the year ended December 31, 2009.

Operating expenses increased 129.1% to $6.8 million in 2010 from $4.2 million in 2009 mainly due to marketing and advertising expenses and professional and consultant fees relating to being a public company.

Operating Income increased 1.1% to $2.0 million for 2010 and operating margins were 16.7% compared to 22.7% in 2009.

Income tax was $0.6 million for 2010, as compared to $0.2 million for 2009, an increase of approximately 176.2%, with an effective tax rate of 32.1% and 11.4% in each respective period. The increase was mainly due to the expiration of the income tax rate which was calculated based on net income for income tax purposes assessed at 10% of services revenue with the applicable tax rate of 25% in 2009. From 2010 onwards, the Company has an income tax rate of 25%.

Net income was $1.3 million for the year ended December 31, 2010 as compared to $1.8 million for the year ended December 31, 2009, representing a decrease of approximately 24.0% . The decrease was due to the increase of operating expenses related to being a public company and change of tax rate in 2010. Earnings per share in 2010 amounted to $0.08, down 38.5% from $0.13 in 2009, based on weighted average shares outstanding of 16.2 million and 13.5 million respectively.

Balance Sheet and Cash Flow

As of December 31, 2010, cash and cash equivalents totaled $1.0 million compared to $1.4 million as of December 31, 2009. Stockholders’ equity was $5.0 million compared to $2.6 million as of December 31, 2009, with total assets of $9.1 million versus total liabilities of $3.9 million on December 31, 2010. For the twelve months of 2010, the Company generated $2.3 million in cash from operations, compared to $2.1 million for twelve months ended December 31, 2010.


“We expect our three outpatient clinics to be profitable and start to contribute incremental growth to the Company in fiscal 2011. In addition, we will launch our new flagship hospital in Chengdu in June 2011, which will significantly increase our scale and meet the growing consumer demand for our services. We have established a solid foundation by building a recognized brand name in the cosmetology industry in the region to leverage the consumer’s desire to pursue their beauty of life and capitalize on the significant secular growth drivers." concluded Mr. Zhang.

About China SHESAYS Medical Cosmetology Inc.

China SHESAYS, founded in 2005, operates a chain of specialized medical cosmetology hospitals, clinics and skincare centers in Sichuan province. The Company has a full range of services including cosmetic surgery, cosmetic dermatology, cosmetic dentistry and cosmetic Traditional Chinese Medicine (“TCM”). Headquartered in Chengdu, China, China SHESAYS has become one of the most renowned cosmetology hospital chains in Sichuan province. Currently, the Company serves more than 20,000 patients each year. For more information about the Company, please visit the Company’s website at www.chinashesays.com.

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward looking statements are based upon the current plans, estimates and projections the Company’s management and are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from the forward looking statements. Such statements include, but are not limited to, those concerning the Company’s market and industry segment growth and penetration and demand; the acceptance of the Company’s cosmetic services and products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance, including earning ability; uncertainties related to conducting business in China, as well as all assumptions, expectations, hopes, beliefs, predictions, and intentions about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, the Company’s ability to maintain its competitive position as well as other relevant risks, including but not limited to risks outlined in the Company's periodic filings with the U.S. Securities and Exchange Commission. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. China SHESAYS does not assume any obligation to update the forward-looking information contained in this press release.


 
CHINA SHESAYS MEDICAL COSMETOLOGY INC.
("CHINA SHESAYS") AND SUBSIDIARIES
BALANCE SHEETS
 
ASSETS

    December 31,  
    2010     2009  
    Consolidated     Combined  
CURRENT ASSETS            
                             Cash and cash equivalents $  1,029,280   $  1,371,732  
                             Inventories, net   521,254     335,932  
                             Due from stockholders   52,821     -  
                             Other current assets and prepaid expenses   1,446,837     526,507  
                                                   Total Current Assets   3,050,192     2,234,171  
             
PROPERTY AND EQUIPMENT, NET   6,008,198     1,629,661  
             
DEFERRED TAX ASSETS   184,857     -  
             
TOTAL ASSETS $  9,243,247   $  3,863,832  
             
LIABILITIES AND STOCKHOLDERS' EQUITY   
             
CURRENT LIABILITIES            
                             Accounts payable $  725,386   $  508,643    
                             Notes payable   910,332     42,659  
                             Deferred revenue   24,441     24,254  
                             Other payables and accrued liabilities   1,554,162     655,913  
                             Income tax payable   706,450     54,428  
                             Sales tax payable and other taxes payable   13,487     7,260  
                             Due to a related company   -     20,555  
                                                   Total Current Liabilities   3,934,258     1,313,712  
             
COMMITMENTS AND CONTINGENCIES   -     -  
             
STOCKHOLDERS' EQUITY            
                             China Shesays Stockholders' equity            
                              Preferred stock, $0.001 par value, 5,000,000 shares
                              authorized, none issued or outstanding
                              as of December 31, 2010 and December
                              31, 2009
 

-
   

-
 
                              Common stock, $0.001 par value, 65,849,200 
                              shares authorized, 18,600,012 shares 
                              issued as of December 31, 2010 and 13,500,012 
                              shares issued as of December 31, 2009
 

18,600
   

13,500
 
                             Additional paid in capital   2,160,485     1,011,153  
                             Retained earnings            
                                                   Unappropriated   2,438,376     1,373,765  
                                                   Appropriated   429,566     151,284  
                             Accumulated other comprehensive income   130,349     418  
                                                   Total China Shesays Stockholders' Equity   5,177,376     2,550,120  
             
                             Noncontrolling interests   131,613     -  
                                                   Total Equity   5,308,989     2,550,120  
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $  9,243,247   $  3,863,832  



CHINA SHESAYS MEDICAL COSMETOLOGY INC.
("CHINA SHESAYS") AND SUBSIDIARIES
STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME

    Year ended December 31,  
    2010     2009  
    Consolidated     Combined  
             
REVENUE            
       Customer service revenue            
                             Cosmetic surgery service $  6,195,516   $  4,835,389  
                             Professional medical beauty service   4,940,433     2,998,806  
                             Cosmetic dentistry services   427,427     579,822  
       Sales of goods   609,855     420,656  
                             Total Revenue   12,173,231     8,834,673  
             
COST OF REVENUE            
       Cost of service revenue            
                             Cosmetic surgery service   (1,762,733 )   (1,536,779 )
                             Professional medical beauty service   (847,827 )   (517,428 )
                             Cosmetic dentistry services   (164,928 )   (168,547 )
       Cost of goods sold   (228,078 )   (162,705 )
       Depreciation   (349,328 )   (206,831 )
                             Total Cost of Revenue   (3,352,894 )   (2,592,290 )
             
GROSS PROFIT   8,820,337     6,242,383  
             
OPERATING EXPENSES            
       Selling, general and administrative expenses   2,862,664     2,680,577  
       Advertising costs   3,014,871     1,290,545  
       Professional and consultant fees   716,910     138,292  
       Depreciation   197,071     125,768  
                             Total Operating Expenses   6,791,516     4,235,182  
             
INCOME FROM OPERATIONS   2,028,821     2,007,201  
             
OTHER INCOME (EXPENSES)            
       Other income   4,574     52,714  
       Interest income   5,128     3,383  
       Interest expenses   (48,852 )   (3,224 )
       Imputed interest   (250 )   (1,027 )
       Other expenses   (41,530 )   (66,489 )
                             Total Other Expenses, net   (80,930 )   (14,643 )
             
INCOME FROM OPERATIONS BEFORE TAXES   1,947,891     1,992,558  
       Add (less):            
       Income tax expenses   (624,605 )   (226,116 )
       Net loss attributable to noncontrolling interests   19,607     -  
NET INCOME ATTRIBUTABLE TO CHINA SHESAYS COMMON STOCKHOLDERS   1,342,893     1,766,442  
             
OTHER COMPREHENSIVE INCOME (LOSS)            
       Total foreign currency translation gain   129,429     1,073  
       Add: foreign currency translation loss attributable to            
       noncontrolling interests   502     -  
       Foreign currency translation gains attributable to China            
       Shesays common stockholders   129,931     1,073  
COMPREHENSIVE INCOME ATTRIBUTABLE TO CHINA SHESAYS COMMON STOCKHOLDERS $  1,472,824   $  1,767,515  
             
Net income per share-basic and diluted $  0.08   $  0.13  
             
Weighted average number of shares outstanding during the year        
       - basic and diluted   16,170,417     13,500,012  



CHINA SHESAYS MEDICAL COSMETOLOGY INC.
("CHINA SHESAYS") AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS

    Year ended December 31,  
    2010     2009  
    Consolidated     Combined  
             
CASH FLOWS FROM OPERATING ACTIVITIES            
       Net income $  1,342,893    1,766,442    
       Adjusted to reconcile net income to cash provided by operating activities:
                       Depreciation - cost of service revenue   349,328     206,831  
                       Depreciation - operating expenses   197,071     125,768  
                       Deferred income taxes   (180,240 )   -  
                       Impairment losses on other receivable   146,873     -  
                       Loss on disposal of property and equipment   14,613     -  
                       Imputed interest   250     1,027  
                       Minority interest   (19,607 )   -  
       Changes in operating assets and liabilities            
       (Increase) decrease in:            
                       Inventories   (168,458 )   (199,053 )
                       Other current assets and prepaid expenses   (1,026,158 )   (273,935 )
       Increase (decrease) in:            
                       Accounts payable   192,802     86,277  
                       Deferred revenue   (701 )   21,860  
                       Other payables and accrued liabilities   853,873     380,886  
                       Income tax payable   633,748     34,079  
                       Sales tax payable and other taxes payable   5,806     (27,839 )
                       Net cash provided by operating activities   2,342,093     2,122,343  
             
CASH FLOWS FROM INVESTING ACTIVITIES            
       Purchase of property and equipment   (4,770,795 )   (753,334 )
       Due from stockholders   (52,821 )   -  
                       Net cash used in investing activities   (4,823,616 )   (753,334 )
             
CASH FLOWS FROM FINANCING ACTIVITIES            
       Bank loan borrowed   887,587     73,090  
       Bank loan repaid   (43,146 )   (30,454 )
       Due to related companies   (20,790 )   (85,603 )
       Due to stockholders   -     (726,434 )
       Net proceeds from stock issuance in private placement   1,104,000     -  
       Contribution by stockholders   50,182     731,294  
       Contribution by minority stockholder   151,722     -  
                        Net cash provided by (used in) financing activities   2,129,555     (38,107 )
             
EFFECT OF EXCHANGE RATES ON CASH   9,516     419  
             
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (342,452 )   1,331,321  
             
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR   1,371,732     40,411  
             
CASH AND CASH EQUIVALENTS AT END OF YEAR $  1,029,280   $  1,371,732  
             
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION            
       Cash paid for interest expenses $  48,852   $  3,224  
       Cash paid for income tax $  175,714   $  192,037