TIAN RUIXIANG Holdings Ltd Reports Fiscal Year 2021 Financial Results

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Mar 07, 2022, 09:00 ET

BEIJING, March 7, 2022 /PRNewswire/ -- TIAN RUIXIANG Holdings Ltd (Nasdaq: TIRX) (the "Company"), a China-based insurance broker conducting business through its variable interest entity in China, announced today its financial results for the fiscal year ended October 31, 2021.

Mr. Zhe Wang, Chairman of the board of the directors and Chief Executive Officer of the Company, commented, "In fiscal year 2021, our revenue was down by 14.1% to $2.79 million, which was primarily caused by a decrease in the commissions generated from individual accidental insurance of approximately $0.36 million and a decrease in the risk management services revenue of approximately $0.18 million. However, we are pleased with the establishment of our Yunnan Branch in November 2021, through which we were able to expand the geographic coverage of our insurance brokerage services. In the past year, we also hired more sales professionals to market and sell insurance products. We plan to focus on growing our property and group insurance business, as well as expanding our sales channels to enhance corporate client services, such as our risk management services. At the same time, we will continue to explore health insurance business opportunities. Looking forward, we remain confident in our business strategy to achieve growth and create long-term value for our shareholders."

Fiscal Year 2021 Financial Highlights

	For the Fiscal Years Ended October 31,
($ in millions, except per share data)	2021	2020	% Change
Revenue	2.79	3.25	-14.1%
Operating expenses	5.04	2.69	87.6%
(Loss) income from operations	(2.25)	0.56	NM
Operating margin	(80.8)%	17.2%	NM
Net (loss) income	(1.94)	0.63	NM
(Loss) income per share	(0.23)	0.13	NM

Note: NM refers to "Not Meaningful"

Revenue decreased by 14.1% to $2.79 million for fiscal year 2021, from $3.25 million for fiscal year 2020, primarily attributable to a decrease in commissions from individual accidental insurance of approximately $0.36 million resulting from the loss of an insurance company partner and a decrease in our risk management services revenue from the provision of insurance related risk management services of approximately $0.18 million.
Operating expenses increased by 87.6% to $5.04 million for fiscal year 2021, from $2.69 million for fiscal year 2020.
Operating margin was (80.8)% for fiscal year 2021, compared to 17.2% for fiscal year 2020.
Net loss was $1.94 million for fiscal year 2021, compared to net income of $0.63 million for fiscal year 2020.
Loss per share was $0.23 for fiscal year 2021, compared to income per share of $0.13 for fiscal year 2020.

Fiscal Year 2021 Financial Results

Revenue

Revenue decreased by $0.46 million, or 14.1%, to $2.79 million for fiscal year 2021, from $3.25 million for fiscal year 2020. This decrease was primarily attributable to a decrease in commissions from individual accidental insurance of approximately $0.36 million resulting from the loss of an insurance company partner and a decrease in our risk management services revenue from the provision of insurance-related risk management services of approximately $0.18 million.

Operating Expenses

Third-party and related-party selling and marketing expenses increased by $0.96 million, or 61.6%, to $2.52 million for fiscal year 2021, from $1.56 million for fiscal year 2020. The increase in selling and marketing expenses was mainly attributable to the increase in our marketing activities, the launch of aggressive advertising campaigns and the increase in the number of sales professionals to sell insurance products.

Third-party and related-party general and administrative expenses increased by $1.40 million, or 123.4%, to $2.53 million for fiscal year 2021, from $1.13 million for fiscal year 2020. The increase in general and administrative expenses was primarily attributable to increased professional fees, compensation and related benefits, rent and related utility expenses, directors' and officers' liability insurance premiums and travel and entertainment expenses.

Total operating expenses increased by $2.36 million, or 87.6%, to $5.04 million for fiscal year 2021, from $2.69 million for fiscal year 2020.

(Loss) Income from Operations

Loss from operations was $2.25 million for fiscal year 2021, compared to income from operations of $0.56 million for fiscal year 2020.

The operating margin was (80.8)% for fiscal year 2021, compared to an operating margin of 17.2% for fiscal year 2020.

Other Income (Expense)

Other income (expense) primarily included interest income from third-party and related-party notes receivable and bank deposits, interest expense incurred from our third-party and related-party borrowings, and miscellaneous income. Other income was $0.33 million for fiscal year 2021, compared to other income of $0.20 million for fiscal year 2020.

(Loss) Income before Income Tax

Loss before income tax was $1.92 million for fiscal year 2021, compared to income before income tax of $0.76 million for fiscal year 2020.

Income tax expense was $24,529 for fiscal year 2021, compared to income tax expense of $126,055 for fiscal year 2020.

Net (Loss) Income and (Loss) Income per Share

Net loss was $1.94 million for fiscal year 2021, compared to net income of $0.63 million for fiscal year 2020. After deduction of net loss attributable to non-controlling interest, net loss attributable to TIRX ordinary shareholders was $1.94 million, or loss per share of $0.23 for fiscal year 2021, compared to net income attributable to TIRX ordinary shareholders of $0.63 million, or income per share of $0.13 for fiscal year 2020.

Financial Conditions

As of October 31, 2021, the Company had cash and cash equivalents of $30.02 million, compared to cash and cash equivalents of $6.14 million as of October 31, 2020. Total working capital was $30.51 million as of October 31, 2021, compared to working capital of $8.27 million as of October 31, 2020.

Net cash used in operating activities was $1.36 million for fiscal year 2021, compared to net cash used in operating activities of $0.05 million for fiscal year 2020.

Net cash used in investing activities was $7,503,411 for fiscal year 2021, compared to net cash used in investing activities of $3,457 for fiscal year 2020.

Net cash provided by financing activities was $32.64 million for fiscal year 2021, compared to net cash used in financing activities of $0.48 million for fiscal year 2020.

About TIAN RUIXIANG Holdings Ltd

TIAN RUIXIANG Holdings Ltd, headquartered in Beijing, China, is an insurance broker operating in China through its China-based variable interest entity. It distributes a wide range of insurance products, which are categorized into two major groups: (1) property and casualty insurance, such as automobile insurance, commercial property insurance, liability insurance; and (2) life insurance, such as individual and group life insurance. Additionally, the Company also provides risk management services to institutional customers. For more information, visit the company's website at http://ir.tianrx.com/.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review risk factors that may affect its future results in the Company's registration statement and in its other filings with the SEC.

For investor and media enquiries, please contact:

TIAN RUIXIANG Holdings Ltd
Investor Relations Department
Email: [email protected]

Ascent Investor Relations LLC
Tina Xiao
Phone: +1 917-609-0333
Email: [email protected]

TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)

	As of October 31,
	2021		2020
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	30,024,372	$	6,137,689
Restricted cash		819,269		785,806
Accounts receivable		320,848		1,247,059
Deferred offering costs		—		895,567
Prepaid expenses and other current assets		465,650		494,476

Total Current Assets		31,630,139		9,560,597

NON-CURRENT ASSETS:
Note receivable		7,500,000		—
Interest receivable		113,014		—
Property and equipment, net		11,265		15,097
Intangible assets, net		147,538		160,219
Right-of-use assets, operating leases, net		760,229		317,141
Other non-current assets		188,281		7,419

Total Non-current Assets		8,720,327		499,876

Total Assets	$	40,350,466	$	10,060,473

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Taxes payable	$	493,196	$	548,630
Salary payable		103,168		129,711
Accrued liabilities and other payables		95,664		180,394
Due to related parties		2,564		241,097
Operating lease liabilities		423,124		170,082
Operating lease liabilities - related party		—		18,737

Total Current Liabilities		1,117,716		1,288,651

NON-CURRENT LIABILITIES:
Operating lease liabilities - noncurrent portion		237,848		123,404
Operating lease liabilities - related party - noncurrent portion		—		9,705

Total Non-current Liabilities		237,848		133,109

Total Liabilities		1,355,564		1,421,760

Commitments and Contingencies - (Note 17)

EQUITY:
TIAN RUIXIANG Holdings Ltd Shareholders' Equity:
Ordinary shares: $0.001 par value; 50,000,000 shares authorized;
Class A ordinary shares: $0.001 par value; 47,500,000 shares authorized; 10,100,000 and 3,750,000 shares issued and outstanding at October 31, 2021 and 2020, respectively		10,100		3,750
Class B ordinary shares: $0.001 par value; 2,500,000 shares authorized; 1,250,000 shares issued and outstanding at October 31, 2021 and 2020		1,250		1,250
Additional paid-in capital		39,776,761		7,696,468
(Accumulated deficit) retained earnings		(1,090,060)		884,076
Statutory reserve		199,653		170,066
Accumulated other comprehensive income (loss)		96,709		(117,392)
Total TIAN RUIXIANG Holdings Ltd shareholders' equity		38,994,413		8,638,218
Non-controlling interest		489		495

Total Equity		38,994,902		8,638,713

Total Liabilities and Equity	$	40,350,466	$	10,060,473

TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(IN U.S. DOLLARS)

	For the Years Ended October 31,
	2021		2020		2019

REVENUES
Commissions	$	2,675,611	$	2,954,798	$	2,002,217
Risk management services		115,006		294,546		—

Total Revenues		2,790,617		3,249,344		2,002,217

OPERATING EXPENSES
Selling and marketing		2,516,368		1,519,783		773,650
Selling and marketing - related parties		1,129		38,426		23,922
General and administrative - professional fees		1,011,053		94,363		123,512
General and administrative - compensation and related benefits		948,900		743,062		651,490
General and administrative - related parties		20,391		14,215		19,180
General and administrative - other		546,580		279,353		307,793

Total Operating Expenses		5,044,421		2,689,202		1,899,547

(LOSS) INCOME FROM OPERATIONS		(2,253,804)		560,142		102,670

OTHER INCOME (EXPENSE)
Interest income		315,070		88,948		275,168
Interest income - related party		—		102,074		—
Interest expense		(725)		—		(18,218)
Interest expense - related parties		—		—		(613)
Other income		19,411		8,991		54,988

Total Other Income, net		333,756		200,013		311,325

(LOSS) INCOME BEFORE INCOME TAXES		(1,920,048)		760,155		413,995

INCOME TAXES		24,529		126,055		238,208

NET (LOSS) INCOME	$	(1,944,577)	$	634,100	$	175,787

LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		(28)		(3)		—

NET (LOSS) INCOME ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD ORDINARY SHAREHOLDERS	$	(1,944,549)	$	634,103	$	175,787

COMPREHENSIVE (LOSS) INCOME:
NET (LOSS) INCOME		(1,944,577)		634,100		175,787
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized foreign currency translation gain (loss)		214,123		420,719		(70,429)
COMPREHENSIVE (LOSS) INCOME	$	(1,730,454)	$	1,054,819	$	105,358
LESS: COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST		(6)		21		(4)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD ORDINARY SHAREHOLDERS	$	(1,730,448)	$	1,054,798	$	105,362

NET (LOSS) INCOME PER ORDINARY SHARE ATTRIBUTABLE TO TIAN RUIXIANG HOLDINGS LTD ORDINARY SHAREHOLDERS:
Basic and diluted *	$	(0.23)	$	0.13	$	0.04

WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
Basic and diluted *		8,610,615		5,000,000		5,000,000

* The shares and per share amounts are presented on a retroactive basis.

TIAN RUIXIANG HOLDINGS LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)

	For the Years Ended October 31,
	2021		2020		2019

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(1,944,577)	$	634,100	$	175,787
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation expense and amortization of intangible assets		27,447		27,829		34,713
Amortization of right-of-use assets		227,661		199,709		—
Impair loss		696		—		—
Changes in operating assets and liabilities:
Accounts receivable		969,374		(1,021,727)		91,432
Security deposit		(43,750)		2,837		(3,963)
Prepaid expenses and other current assets		(74,120)		(8,582)		(356,117)
Interest receivable		(113,014)		—		16,745
Due from related parties		—		—		447,778
Insurance premiums payable		—		—		(198,717)
Taxes payable		(78,932)		204,532		(56,272)
Accrued liabilities and other payables		(123,052)		108,765		40,826
Due to related parties		12,025		(6,970)		36,841
Operating lease liabilities - related party		(29,355)		(25,834)		—
Operating lease liabilities		(194,341)		(162,828)		—

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(1,363,938)		(48,169)		229,053

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(3,411)		(3,457)		(12,012)
Purchase of intangible asset		—		—		(183,115)
Investment in note receivable		(7,500,000)		—		—
Payments of notes receivable - related party		—		(17,158,967)		—
Proceed received from repayments of notes receivable - related party		—		17,158,967		232,133

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(7,503,411)		(3,457)		37,006

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from note payable		75,581		—		—
Repayment of note payable		(75,581)		—		—
Repayments made for borrowings		—		—		(369,483)
Proceeds received from related parties' borrowings		1,893,932		1,987,256		—
Repayments made for related parties' borrowings		(2,272,145)		(2,099,420)		(8,400)
Proceeds received from initial public offering		12,300,000		—		—
Disbursements for initial public offering costs		(1,489,388)		—		—
Proceeds received from the June 2021 public offering		24,562,500		—		—
Disbursements for the June 2021 public offering costs		(2,352,418)		(371,081)		(493,899)
Capital contribution from shareholders		—		5,000		464

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		32,642,481		(478,245)		(871,318)

EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH		145,014		486,780		(55,593)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		23,920,146		(43,091)		(660,852)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning of year		6,923,495		6,966,586		7,627,438

CASH, CASH EQUIVALENTS AND RESTRICTED CASH - end of year	$	30,843,641	$	6,923,495	$	6,966,586

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	725	$	—	$	33,675
Income taxes	$	2,251	$	—	$	283,267

NON-CASH INVESTING AND FINANCING ACTIVITIES
Payments made by related parties on the Company's behalf	$	119,886	$	141,449	$	—

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of year	$	6,137,689	$	6,243,029	$	6,712,880
Restricted cash at beginning of year		785,806		723,557		914,558
Total cash, cash equivalents and restricted cash at beginning of year	$	6,923,495	$	6,966,586	$	7,627,438

Cash and cash equivalents at end of year	$	30,024,372	$	6,137,689	$	6,243,029
Restricted cash at end of year		819,269		785,806		723,557
Total cash, cash equivalents and restricted cash at end of year	$	30,843,641	$	6,923,495	$	6,966,586