Asia Cork 3Q Financials Show Steady Growth

XI’AN, China--(BUSINESS WIRE)--Asia Cork Inc. (OTCBB:AKRK) 3^rd quarter 10Q reports $11 million revenue, 8.29% growth compared to the same period of 2009. $2.1 million net income was reported, a significant growth of 75.57%. Quarterly EPS doubles from $0.03 to $0.06.

The high growth of net income is the result of the management’s successful endeavor to cut down expenses. Selling expenses were cut down by 60% compared to 3^rd quarter in 2009. R&D expenses and G&A expenses were also cut down by a large percentage. Supported by the full recovery the financial status of the company’s customers, bad debt expenses have been cut down by 75%.

For 9 months ended Sep. 30^th, the revenue reaches $22.4 million, up 31% compared to 9 months ended Sep. 30^th, 2009. Net income reaches $3,665,476, up 87% compared to $1,963,911 for 9 months ended Sep. 30^th, 2009.

Financial Summary
Q3 RESULTS OF ASIA CORK INC.
	Q3 2010	Q3 2009	Change
Revenues	$11,002,498	$10,151,002	+8.39%
Cost of Goods Sold	7,552,944	6,481,710	+16.53%
Gross Profit	3,449,554	3,669,292	-5.99%
Gross Profit Margin	31.35%	36.15%
Net Income	$2,146,216	$1,222,460	+75.57%
Basic EPS	$0.06	$0.03	+100.00%
Diluted EPS	$0.05	$0.03	+66.67%

Revenues by Products

Semi-finished products contributed 29.65% to total revenues, 16 points higher than that of Q3 2009. Revenue from semi-finished products reached $3.26 million, up 144% from Q3 last year. This increase results from the OEM contract with Sichuan Hanxin Cork Products Company Ltd., one of the major raw materials suppliers of Asia Cork. Sichuan Hanxin specializes in collecting cork raw materials and manufacturing primary cork products and is the key strategic partner of Asia Cork.

Percentage revenues from wall board and interlocking floorboard are rising, while percentage revenues from granules and glue-in-place floorboards are decreasing, which reflects the management’s strategy to shift from low profit margin goods to high-end finished decoration materials products. Because of the rise in raw materials prices gross profit margin has dropped 5 points.

Revs by Products Breakdown
Products	Q3 2010		Q3 2009
Semi-finished Cork Board	3,261,766.89	29.65%	1,334,157.63	13.14%
Wall Board	1,162,459.04	10.57%	702,241.47	6.92%
Cork Granule	648,504.36	5.89%	1,230,675.78	12.12%
Glue-in-place Floorboard	5,529,828.98	50.26%	6,295,997.80	62.02%
Interlocking Floorboard	399,938.73	3.63%	287,860.13	2.84%
Multilayer Floorboard	0.00	0.00%	300,069.19	2.96%
Total	11,002,498.00	100.00%	10,151,002.00	100.00%

Management staff believes that the company has fully recovered from the recess of 2008 and 2009. Revenues and net income have been rising steadily for the last three quarters of 2010. Management expects net income of 2010 to exceed $4 million.

Asia Cork Inc. is the leading cork products manufacturer in Asia, the business operation of which is mainly performed in China. Its major products include cork floor and wall board, sheets, rolls and crafts such as notepad and mouse pad, etc. It is listed on OTCBB with the symbol AKRK. See more information on www.hxrm.com.