Ossen Innovation Announces 2010 Audited Financial Results

SHANGHAI, June 24, 2011 -- Ossen Innovation Co., Ltd. ("Ossen" or the "Company") (Nasdaq: OSN), a China-based manufacturer of galvanized pre-stressed steel wires used in the production of bridge cables as well as other pre-stressed steel materials, today announced audited financial results for the year ended December 31, 2010.

Highlights:

Revenue increased 16% to $117.5 million

Net income increased 83% to $14.6 million, with EPS of $0.73 based on 20 million shares outstanding

FY 2011 Guidance: Revenue of $138.5-$144.6 million, represents 18%-23% YOY growth, Net Income of $18.0-$18.8 million, represents 22%-28% YOY growth, with EPS of $0.90-$0.94 based on 20 million shares outstanding

Management will host a conference call to discuss results at 11:00 am ET on Friday, June 24th

Financial Summary

(in millions except EPS)	2H 2010	2H 2009	Chg.	FY 2010	FY 2009	Chg.
Revenue	$58.7	$60.7	(3%)	$117.5	$101.1	16%
Gross Profit	$13.0	$8.8	48%	$24.6	$13.4	83%
Net Income	$7.5	$5.8	31%	$14.6	$8.0	83%
EPS	$0.38	$0.38	-	$0.73	$0.53	37%
Shares Outstanding*	20.0	15.0	33%	20.0	15.0	33%

*20 million shares were outstanding as of December 31, 2010. The number includes the five million shares sold through Company’s initial public offering completed in December 2010.

Second Half 2010 Financial Results

Revenue for the second half of fiscal year 2010 totaled $58.7 million, with $27.3 million, or 46% generated from the sale of coated pre-stressed steel materials that are used in the construction of bridges. This represented an increase of $9.4 million, or 53% over $17.8 million in sales of coated pre-stressed steel products during the same period of 2009. In addition, among the $27.3 million sales of coated pre-stressed steel materials, $25.8 million, or 95% of the sales were contributed by sales of rare earth coated pre-stressed steel wires and strands.

Gross profit increased $4.2 million to $13.0 million, representing a gross margin of 22.0%. The primary reason for the increases in both gross profits and gross margin was increased sales of higher margin coated pre-stressed steel wires and strands, which on average generate a gross margin around 29.1% as compared to roughly 12.2% for the plain surface products.

Operating income was $11.8 million in the last six months of 2010, up from $8.0 million in the comparable period in 2009, with associated operating margins of 20.1% and 13.2%, for each respective period. Net income and EPS were $7.5 million and $0.38 for the second half of 2010 compared to $5.8 million and $0.38, respectively, in the second half of 2009.

“2010 was a key inflection point for Ossen.” stated Dr. Liang Tang, Chairman of Ossen Innovation. “We dramatically increased production of our coated products, which positively impacted our growth, margins and profitability. As the Chinese government continues to push forward on multiple high profile bridge projects around the country, demand for our products remain strong. We believe that once we complete our new coated products capacity expansion, we will further solidify our position as a market leader.”

Full Year 2010 Financial Results

Revenue for the year ended December 31, 2010 totaled $117.5 million, an increase of 16% year-over-year as compared to $101.1 million in 2009.

	Year ended December 31,
	2010					2009
	Revenue ($)		% of Total Revenue			Revenue ($)		% of Total Revenue			Change from 2009 to 2010
Products:
Plain surface PC strands		40,247,880		34	%		30,081,890		32	%		34	%
Zinc coated PC wires and PC strands		2,964,414		3	%		2,225,113		2	%		33	%
Stabilized PC wires		16,322,560		14	%		52,179,268		51	%		(69	%)
Rare earth coated PC wires and PC strands		57,729,470		49	%		16,601,524		15	%		248	%
Others		188,701		0.2	%		-		-			-
Total		117,453,024		100	%		101,087,795		100	%

Sales of rare earth coated PC wires and PC strands increased by $41.1 million to $57.7 million due to high demand and management’s deliberate strategy to increase sales of this high margin product. These products accounted for approximately 49% of sales in 2010 compared to 15% in 2009.

Sales of stabilized PC wires were $16.3 million compared to $52.2 million in 2009 as a result of the Company allocating production capacity away from commodity products to rare earth coated products, which commenced production in the second half of 2009.

For the fiscal year 2010, cost of goods sold was $92.9 million, with gross profit of $24.6 million. Gross margin was 20.9% for 2010 compared to 13.3% in 2009.

Operating expenses for fiscal year 2010 were approximately $1.9 million, consisting of $0.7 million in selling expenses and $1.2 million in general and administrative expenses. Operating income totaled $22.7 million, with operating margins of approximately 19.3%, compared to $11.8 million and 11.7% in fiscal year 2009.

Net income attributable to common stockholders for the full year 2010 was $14.6 million with corresponding earnings per share of $0.73 based on 20 million shares outstanding. The Company generated $8.0 million of net income and $0.53 earnings per share in fiscal year 2009.

Balance Sheet and Cash Flows

Ossen had approximately $26.1 million of cash and restricted cash as of December 31, 2010 compared to $20.2 million as of December 31, 2009. Total net accounts receivable declined from $15.2 million at the end of 2009 to $13.3 million as of December 31, 2010. The Company has collected approximately 96% of the $13.3 million year-end receivables. The average accounts receivable days sales outstanding were 44 days and 36 days in 2010 and 2009, respectively.

For fiscal year 2010, the Company had a net cash outflow from operations of approximately $25 million. Inventories increased by approximately $18 million to $27.9 million as a result of increasing demand and higher sales. Total advances to suppliers were $25.1 million, 98% of which were within 60 days. The Company raised approximately $20.3 million from its initial public offering in December 2010, which is being used to fund its additional 30,000-ton rare earth coated production facility expansion. Through December 31, 2010, Ossen has spent $7.6 million for equipment purchases related to this expansion.

Financial Outlook for 2011

Management has reiterated its financial forecast for fiscal year 2011 as follows:

Revenue:	$138.5 million to $144.6 million
Net Income:	$18.0 to $18.8 million
EPS:	$0.90 to $0.94

Conference Call

The Company will conduct a conference call at 11:00a.m. ET on June 24, 2011. Interested participants should call 1-800-706-7748 when calling within the United States or 1-617-614-3473 when calling internationally (passcode 11055479).

This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on this link: http://ir.osseninnovation.com

About Ossen Innovation Co., Ltd.

Ossen Innovation Co., Ltd. manufactures and sells galvanized pre-stressed steel wires used in the production of bridge cables as well as other pre-stressed materials. The Company's products are mainly used in the construction of bridges and other infrastructure projects. Ossen has two manufacturing facilities located in Maanshan, Anhui Province, and Jiujiang, Jiangxi Province in China.

Safe Harbor Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks outlined in the Company's public filings with the Securities and Exchange Commission, including the Company's annual report on Form 20-F. All information provided in this press release is as of the date hereof. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

For more information, please contact:

Ossen Innovation Co., Ltd.

Alan Jin, Chief Financial Officer

Email: alanjin@osseninnovation.com

Phone: +86 (21) 6888-8886

Web: www.osseninnovation.com

Investor Relations

HC International

Ted Haberfield, Executive Vice President

Phone: +1-760-755-2716

Email: thaberfield@hcinternational.net

Web: www.hcinternational.net

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2010 AND 2009

	December 31,
	2010		2009
ASSETS
Current Assets
Cash and cash equivalents	$	12,322,982	$	8,409,467
Restricted cash		13,799,018		11,824,214
Notes receivable – bank acceptance notes		17,636,928		150,208
Accounts receivable, net of allowance for doubtful accounts of $37,347 and $42,487 at December 31, 2010 and 2009, respectively		13,332,492		15,157,087
Inventories		27,949,781		10,206,861
Advance to suppliers		25,072,350		19,833,561
Other current assets		3,343,302		964,876
Notes receivable from related party – bank acceptance notes		3,024,895		1,828,234
Account receivable from related party		707,487		-
Total Current Assets		117,189,235		68,374,508
Property, plant and equipment, net		12,029,612		13,088,809
Land use rights, net		4,306,091		4,254,270
Prepayment for plant and equipment		7,562,237		-
TOTAL ASSETS	$	141,087,175	$	85,717,587

See accompanying notes to the consolidated financial statements

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2010 AND 2009

	December 31,
	2010		2009
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Notes payable – bank acceptance notes	$	26,014,096	$	19,744,925
Short-term bank loans		38,325,414		27,350,377
Accounts payable		2,493,665		240,275
Customer deposits		833,768		5,189,759
Income tax payable		662,585		110,493
Other payables and accrued expenses		94,510		32,473
Due to shareholder		-		12,869,939
Total Current Liabilities		68,424,038		65,538,241
TOTAL LIABILITIES		68,424,038		65,538,241

EQUITY
Shareholders' Equity
Ordinary shares, $0.01 par value: 100,000,000 shares authorized, 20,000,000 and 15,000,000 shares issued and outstanding as of December 31, 2010 and 2009, respectively		200,000		150,000
Additional paid-in capital		33,338,096		100,000
Statutory reserve		2,674,457		1,093,331
Retained earnings		25,887,113		12,819,901
Accumulated other comprehensive income		2,192,996		543,036
TOTAL SHAREHOLDERS’ EQUITY		64,292,662		14,706,268
Non-controlling interest		8,370,475		5,473,078
TOTAL EQUITY		72,663,137		20,179,346
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	141,087,175	$	85,717,587

See accompanying notes to the consolidated financial statements

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

	Year Ended December 31,
	2010			2009			2008
REVEUNUES	$	117,453,024		$	101,087,796		$	82,742,310
COST OF GOODS SOLD		92,893,796			87,659,925			70,532,733
GROSS PROFIT		24,559,228			13,427,871			12,209,577
Selling expenses		660,934			503,724			4,326,491
General and administrative expenses		1,201,518			1,143,672			1,316,606
Total Operating Expenses		1,862,452			1,647,396			5,643,097

INCOME FROM OPERATIONS		22,696,776			11,780,475			6,566,480
Financial expenses, net		(2,437,426	)		(1,496,712	)		(1,891,671	)
Other income, net		151,757			183,495			380,766
INCOME BEFORE INCOME TAX		20,411,107			10,467,258			5,055,575
INCOME TAX		(2,865,372	)		(740,053	)		(291,520	)
NET INCOME		17,545,735			9,727,205			4,764,055
LESS: NET INCOME ATTRIBUTABLE
TO NON-CONTROLLING INTEREST		2,897,397			1,714,670			809,437
NET INCOME ATTRIBUTABLE TO
CONTROLLING INTEREST		14,648,338			8,012,535			3,954,618
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain		1,649,960			31,146			420,883
TOTAL OTHER COMPREHENSIVE INCOME		1,649,960			31,146			420,883
COMPREHENSIVE INCOME	$	16,298,298		$	8,043,681		$	4,375,501

EARNINGS PER ORDINARY SHARE
Basic and diluted	$	0.97		$	0.53		$	0.29
WEIGHTED AVERAGE ORDINARY
SHARES OUTSTANDING
Basic and diluted		15,150,685			15,000,000			15,000,000

See accompanying notes to the consolidated financial statements

OSSEN INNOVATION CO., LTD AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

	Total Ossen Innovation Co., Ltd. Shareholders’ Equity
	$0.01 Par Value				Additional Paid-in Capital		Accumulated Other Comprehensive Income		Statutory Reserve		Retained Earnings			Non Controlling Interest		Total
	Shares		Amount
Balance at January 1, 2008		15,000,000	$	150,000	$	100,000	$	91,007	$	238,676	$	1,707,403		$	2,948,971	$	5,236,057
Net income		-		-		-		-		-		3,954,618			809,437		4,764,055
Transfer to statutory reserve		-		-		-		-		422,921		(422,921	)		-		-
Foreign currency translation
adjustment		-		-		-		420,883		-		-			-		420,883
Balance at December 31, 2008		15,000,000		150,000		100,000		511,890		661,597		5,239,100			3,758,408		10,420,995
Net income		-		-		-		-				8,012,535			1,714,670		9,727,205
Transfer to statutory reserve		-		-		-		-		431,734		(431,734	)		-		-
Foreign currency translation
adjustment		-		-		-		31,146		-		-			-		31,146
Balance at December 31, 2009		15,000,000		150,000		100,000				1,093,331		12,819,901			5,473,078		20,179,346
Net income		-		-		-		-		-		14,648,338			2,897,397		17,545,735
Transfer to statutory reserve		-		-		-		-		1,581,126		(1,581,126	)		-		-
Issuance of ordinary shares		5,000,000		50,000		20,295,000		-		-		-			-		20,345,000
Share-based compensation to
employee		-		-		19,096		-		-		-			-		19,096
Debt forgiven by shareholder		-		-		12,924,000		-		-		-			-		12,924,000
Foreign currency translation
adjustment		-		-		-		1,649,960		-		-			-		1,649,960
Balance at December 31, 2010		20,000,000	$	200,000	$	33,338,096	$	2,192,996	$	2,674,457	$	25,887,113		$	8,370,475	$	72,663,137

See accompanying notes to the consolidated financial statements

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

	Year Ended December 31,
	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	17,545,735		$	9,727,205		$	4,764,055
Adjustments to reconcile net income to net cash provided
by/ (used in) operating activities:
Depreciation and amortization		1,838,794			1,457,784			1,555,624
Share-based compensation expense		19,096			-			-
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable		1,824,595			(10,443,599	)		1,002,464
Inventories		(17,742,920	)		(906,600	)		(2,112,944	)
Advance to suppliers		(5,238,789	)		(562,867	)		(12,408,746	)
Other current assets		(2,378,426	)		(671,517	)		9,504
Notes receivable - bank acceptance notes		(17,486,720	)		(150,208	)		-
Notes receivable from related party - bank acceptance notes		(1,196,661	)		(1,828,234	)		-
Account receivable from related party		(707,487	)		-			-
Due from and advance to related party		-			-			3,846,600
Increase (Decrease) In:
Accounts payable		2,253,390			(188,166	)		(35,011	)
Customer deposits		(4,355,991	)		2,253,492			2,749,301
Income tax payable		552,092			104,028			(134,501	)
Other payables and accrued expenses		62,037			(1,442,999	)		(1,616,329	)
Due to shareholder		-			(117,649	)		145,896
Net cash used in operating activities		(25,011,255	)		(2,769,330	)		(2,234,087	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant and equipment		(73,466	)		(209,511	)		(2,666,665	)
Prepayment for purchases of plant and equipment		(7,562,237	)		-			-
Net cash used in investing activities		(7,635,703	)		(209,511	)		(2,666,665	)

See accompanying notes to the consolidated financial statements

OSSEN INNOVATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

	Year Ended December 31,
	2010			2009			2008
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash		(1,974,804	)		(1,847,122	)		(5,465,258	)
Proceeds from short-term bank loans		57,578,620			35,687,123			22,322,080
Repayments of short-term bank loans		(46,603,583	)		(27,789,153	)		(21,446,704	)
Proceeds from notes payable-bank acceptance notes		50,216,280			50,771,789			18,236,993
Repayment of notes payable-bank acceptance notes		(43,947,109	)		(49,263,858	)		(10,937,778	)
Cash dividend paid to a shareholder		-			-			(2,364,274	)
Proceeds from issuance of ordinary shares to public, net of
issuance cost		20,345,000			-			-
Net cash provided by financing activities		35,614,404			7,558,779			345,059

INCREASE IN CASH AND CASH EQUIVALENTS		2,967,446			4,579,938			(4,555,693	)
Effect of exchange rate changes on cash		946,069			68,214			1,581,392
Cash and cash equivalents at beginning of period		8,409,467			3,761,315			6,735,616
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	12,322,982		$	8,409,467		$	3,761,315

SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid during the periods:
Income taxes paid	$	2,355,451		$	637,267		$	441,029
Interest paid	$	1,949,982		$	1,492,404		$	1,514,114
Non-cash transactions:
Appropriation to statutory reserve	$	1,581,126		$	431,734		$	422,921
Debt forgiven by shareholder	$	12,924,000		$	-		$	-

See accompanying notes to the consolidated financial statements