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TriTech Holding Inc. Reports Operating Results (10-Q)

November 15, 2012 | About:
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10qk

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TriTech Holding Inc. (TRIT) filed Quarterly Report for the period ended 2012-09-30.

Tri-tech Holding Inc. has a market cap of $29.5 million; its shares were traded at around $3.37 with a P/E ratio of 4 and P/S ratio of 0.3.

Highlight of Business Operations:

Total cost of revenues for the nine months ended September 30, 2012 was $44,702,011, a decrease of 1.4%, compared to $45,351,139 for the same period in 2011. The cost for system integration category, totaling $42,303,768, had a decrease of $1,621,571, from $43,925,339 in the same period 2011, while the total hardware products cost increased from $1,424,055 in the same period last year to $2,398,243.

The selling and marketing expenses for the nine months ended September 30, 2012 totaled $2,806,453, an increase of $1,500,679 from $1,305,774 for the same period last year. This increase was mainly due to headcount increase in sales and rapid geographic expansion. Compensation-related costs increased from $487,668 for the nine-month period ended September 30, 2011 to $1,260,994 for the same period this year, an increase of $773,326. Travel expenses increased from $196,833 for the nine-month period ended September 30, 2011 to $381,168 for the same period this year, an increase of $184,335. Other selling expenses increased from $403,498 for the nine-month period ended September 30, 2011 to $851,312 for the same period this year, an increase of $447,814. Consisting mainly of employee benefits, business promotion, office expenses, vehicle maintenance and bidding expenses, the significant increase in other selling and marketing expenses came mainly from business promotion and bidding expenses. Entertainment expenses increased by $95,205 from $217,774 in the first nine months of 2011 to $312,979 for the same period of 2012.

In the first nine months of 2012, we strengthened our administrative support, including human resources and finance functions. Many highly qualified professionals joined us to support the revenue growth. Total general and administrative expenses for the nine months ended September 30, 2012 was $10,008,932, an increase of $3,665,870 from $6,343,062 for the same period last year. Of this increase, $1,006,622 was for compensation-related costs. Of other human resource expenses, endowment and other social insurance increased by 59.1% and 77.2% respectively, or $93,677 and $168,351, in the first nine months of 2012. Rent increased by 44.9% from $563,217 in the first nine months of 2011 to $816,350 in the same period of 2012. Professional fees increased 29.8%, from $603,666 in the first nine month of 2011 to $783,609 for the same period of 2012, mainly due to the exploration of new business. Amortization and depreciation increased by $174,910 and $55,732 respectively. Other general and administrative overhead increased by $1,733,675 for the first nine months of 2012 compared to the same period last year.

For the nine months ended September 30, 2012, our net income before provision for income taxes decreased by 70.4%, from $8,378,375 for the same period last year to $2,476,773. The provision for income taxes decreased by 55.3%, from $1,344,636 to $601,555. The net income attributable to the shareholders of TRIT was $2,131,990, a decrease of 60.5%, from $5,397,772 for the same period in 2011. The net income decreased because revenues did not increase whereas expenses grew quickly to meet increasing business demands. Moreover, we granted options in the second and third quarters which led to a non-cash option expense of $0.9 million.

Net cash used in operating activities was $17,011,378 for the nine months ended September 30, 2012, compared with $15,235,658 in the same period in 2011. The increase of $1,775,720 in operating cash outflow was mainly attributable to our rapid growth and aggressive expansion in new markets in forms of accounts receivables and unbilled receivables. Net accounts receivable increased from $19,888,084 on December 31, 2011 to $20,529,940 on September 30, 2012, an increase of $641,856. Current unbilled revenue increased from $7,254,830 on December 31, 2011 to $19,632,473 on September 30, 2012, an increase of $12,377,643.

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