Sooner Holdings Inc. Reports Results for the Third Quarter of 2011

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Nov 15, 2011, 09:00 ET

NEW YORK and SHISHI, China, Nov. 15, 2011 /PRNewswire-Asia/ -- Sooner Holdings Inc. (OTCBB: SOON), a Fujian-based manufacturer and distributor of synthetic polyurethane synthetic leather (PU leather) for the shoe industry in China, today announced financial results and provided a business update for the third quarter of 2011.

Third Quarter 2011 Highlights

Revenue kept even at $7.0 million compared to $7.1 million for Q3 2010. Gross profit decreased 19% to $1.3 million versus $1.6 million for Q3 2010 due to the increasing costs. The decrease of gross margin was mainly due to an increase in raw materials and labor costs, and our sales of footwear had decreased approximately 34% during the three months ended September 30, 2011, compared to same period in 2010. Net income decreased 46.2% to $501 thousand versus $932 thousand for Q3 2010 due to the increased administrative expenses in this quarter and in 2011 the Company no longer enjoyed the preferential income tax holiday rate of 12.5% in 2010 and is paying the normal income tax rate of 25% in 2011.

Ang Kang Han, Chairman and President, commented, "The liquidity imbalance on the condensed consolidated balance sheet is primarily due to the fact that the Company is investing towards its future expansion plans. Overall, we believe we are extremely well positioned to capture market share due to insufficient local supply of PU leather and the high grade characteristics of our synthetic leather. We have a new facility in San Ming that we expected to commence operation by the end of 2011, which will increase our capacity dramatically, and allow us to capitalize on the growing demand and new opportunities from our customers."

About Sooner Holdings Inc.

Sooner Holdings Inc., located in Fujian province, is a leading producer of synthetic polyurethane leather ("PU leather") for the shoe industry in China. The company's primary business is to design, manufacture and distribute PU leather. Flying Eagle also manufactures flip-flops and slippers for sale in China and abroad. For its high performance series, Flying Eagle uses high-density nonwoven fabric as base cloth because of its superior hydrolysis resistance, peel and tear strength, durability and air and moisture permeability. High performance PU leather is mainly used to make high-grade athletic shoes. Flying Eagle is located in ShiShi City, Fujian, close to Quanzhou - China's largest production base for sports shoes, sneakers and casual shoes. In this one region alone, there are more than 3,000 shoe manufacturers producing over 1 billion shoes annually located in close proximity.

Company Contact:
Jacqueline Zhang
Cell: +86-187-0111-7213
Email: [email protected]

– Financial tables follow –

SOONER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
		September 30,		December 31,
		2011		2010
ASSETS
Current assets:
Cash	$	972,419	$	1,084,204
Restricted cash		702,927		137,688
Notes receivable		677,934		-
Accounts receivable		4,600,109		6,171,639
Prepaid expenses and other current assets		1,921,936		555,283
Related party receivable		-		1,334,545
Inventories		8,739,498		6,968,039
Total current assets		17,614,823		16,251,398

Deposit for construction in progress		15,598,118		8,074,441
Plant and equipment, net		15,198,629		11,589,924
Land use rights, net		1,812,885		1,793,496
Long-term investment		156,206		151,722
Total assets	$	50,380,661	$	37,860,981
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Short-term loans and notes payable	$	17,885,595	$	11,586,254
Related party payable		674,045		198,756
Accounts payable and other liabilities		3,313,770		2,447,151
Customer deposits		713,978		925,352
Tax payable		2,739,504		1,814,856
Total liabilities	$	25,326,892	$	16,972,369

Stockholders' equity:
Preferred stock, Series A, $0.0001 par value; 10,000,000 shares authorized; 19,200 and zero shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively		2
		2		-
Common stock, $0.001 par value; 100,000,000 shares authorized; 14,632,553 and 12,688,016 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively		14,633		12,688
		14,633		12,688
Additional paid-in capital		10,276,438		9,128,415
Retained earnings		12,947,568		10,607,267
Accumulated other comprehensive income		1,815,128		1,140,242
Total stockholders' equity		25,053,769		20,888,612
Total liabilities and stockholders' equity	$	50,380,661	$	37,860,981

SOONER HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		Three Months Ended			Nine Months Ended
		September 30,			September 30,
		2011		2010		2011		2010

Revenues	$	7,041,089	$	7,116,226	$	22,678,465	$	20,705,993

Cost of revenues		5,734,412		5,539,513		17,919,682		15,931,867

Gross profit		1,306,677		1,576,713		4,758,783		4,774,126

Operating expenses:
Selling		76,505		184,005		320,400		422,015
General and administrative		313,715		146,332		662,637		398,548

Total operating expenses		390,220		330,337		983,037		820,563

Income from operations		916,457		1,246,376		3,775,746		3,953,563

Other income (expense):
Interest expense and bank fees, net		(255,951)		(180,172)		(690,962)		(422,965)
Foreign exchange transaction loss		(3,538)		-		(9,443)		-
Subsidy income		-		-		38,044		-
Other income (expense), net		12,756		731		68,859		48,911

Total Other income (expense)		(246,733)		(179,441)		(593,502)		(374,054)

Income before provision for income taxes		669,724		1,066,935		3,182,244		3,579,509

Provision for income taxes		168,598		134,654		841,943		449,455
Net income	$	501,126	$	932,281	$	2,340,301	$	3,130,054
Net income per share–basic and dilutive	$	0.03	$	0.07	$	0.16	$	0.25
Shares used in computing net income
per share–basic and dilutive		14,632,553		12,688,016		14,390,376		12,688,016

SOONER HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		Nine Months Ended
		September 30,
		2011		2010
Cash flows from operating activities:
Net income	$	2,340,301	$	3,130,054
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization		440,910		370,961
Change in assets and liabilities:
Accounts receivable		1,725,837		(3,655,071)
Prepaid expenses and other current assets		(1,328,616)		(418,730)
Inventories		(1,540,451)		(1,184,748)
Accounts payable and other liabilities		781,574		(275,794)
Customer deposits		(234,899)		361,240
Tax payable		857,061		716,173
Net cash provided by (used in) operating activities		3,041,717	$	(955,915)

Cash flows from investing activities:
Net proceeds from bank notes receivable		(667,076)		-
Deposit for construction in progress		(7,168,366)		(1,032,425)
Purchase of plant and equipment		(3,631,092)		(361,645)
Additions to land use rights		-		(875,829)
Restricted cash for issuance of bank notes payable		(552,183)		287,028
Net cash used in investing activities		(12,018,717)	$	(1,982,871)

Cash flows from financing activities:
Net proceeds from issuance of short term loan		4,757,147		5,868,200
Net proceeds from issuance of notes payable		1,104,365		(1,224,253)
Related party receivable		1,351,981		(4,211,467)
Related party payable		461,897		(408,881)
Proceeds from capital contributions		1,149,970		2,998,328
Net cash provided by financing activities		8,825,360	$	3,021,927

Net (decrease) increase in cash		(151,640)		83,141
Effect of exchange rate changes		39,855		36,955
Cash at beginning of period		1,084,204		1,619,559
Cash at end of period	$	972,419	$	1,739,655