SHANGHAI, China, April 15 /Xinhua-PRNewswire-FirstCall/ -- Linkwell
Corporation (Linkwell or the Company) (OTC Bulletin Board:
LWLL -
News), a leading
developer, manufacturer and distributor of healthcare related disinfectants
in China, announced today: financial results for the fiscal year ended
December 31, 2007 and provided guidance for 1st quarter 2008 and the entire
year 2008.
Net revenues for the fiscal year ended December 31, 2007 increased
$6,590,343, or approximately 85%, to $14,335,721, compared with $7,745,378 for
the fiscal year ended December 31, 2006. Net revenues for the Company's
subsidiary LiKang Disinfectant were $8,127,717 and $6,208,004 for its
subsidiary Shanghai LiKang International Trade Company Trade Co., Ltd (LiKang
International).
The majority of the increase in net revenues was attributable to its
subsidiary LiKang International, whose net revenues for the fiscal year ended
2007 increased approximately 761%, or $6,208,004 as compared to $720,996 for
the fiscal year ended 2006, an increase of $5,487,008.
Net revenues for Linkwell's subsidiary LiKang Disinfectant increased
approximately 16%, or $1,103,335 to $8,127,717 or for year end 2007. The
Company believes this increase in demand was due to an increase in its sales
staff and customer recognition of the Company's high-quality, competitively
priced disinfectant products.
Total operating expenses for 2007 were $3,852,398, which was an increase
of $1,548,905, or approximately 67%, from year end 2006 of $2,303,493. This
increase is primarily attributable to an increase in general and
administrative expenses, most of which was the result of a one-time write off
of $564,000 due to terminating a contract with China Direct Investments, Inc.,
which were expensed for the year ended December 31, 2007. A second cause of
increasing operating expenses was due to building out its sales and service
division to improve future growth.
Linkwell reported net income of $360,135 for the fiscal year ended
December 31, 2007, as compared to net income of $568,120 for the fiscal year
ended December 31, 2006. However, the net income for Linkwell's subsidiary,
LiKang Disinfectant, increased approximately 3%, with net income of $1,196,318
for 2007 compared to $1,161,828 for 2006.
The primary causes for the decrease in net income for the year ended 2007
were attributable to four key factors: (1) the increase in cost of sales;
(2) the low net income of our subsidiary LiKang International; (3) the
increase in doubtful accounts of $448,958; and (4) a one-time write off of
$564,000 as a result of terminating our contract with China Direct Investments,
Inc.
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS
2007 2006
CURRENT ASSETS:
Cash $1,222,128 $1,713,723
Accounts receivable (net of allowance for
doubtful accounts of $460,175 and
$144,639 in 2007 and 2006 respectively) 2,999,191 1,682,878
Accounts receivable-related parties
(net of allowance for doubtful accounts
of $221,359 and $87,937 in
2007 and 2006 respectively) 1,992,233 1,406,425
Other receivable 261,231 414,000
Inventories (net of reserve for obsolete
inventory of $136,287 and $127,160 in
2007 and 2006 respectively) 829,476 536,483
Prepaid expenses and other current assets 1,015,558 367,641
Due from related parties 946,591 --
Short term loan receivable -- 48,609
Total Current Assets 9,266,408 6,169,759
PROPERTY AND EQUIPMENT - net 749,073 774,733
Total Assets $10,015,481 $6,944,492
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable $699,210 $652,382
Loan payable - related party -- 165,471
Accounts payable and accrued expenses 1,246,943 1,301,131
Tax payable 92,815 --
Other payable 189,421 27,589
Due to related party 760,457 204,267
Advances from customers 713,578 254,434
Total Current Liabilities 3,702,424 2,605,274
MINORITY INTEREST 527,244 394,320
STOCKHOLDERS' EQUITY:
Preferred stock (No Par Value;
10,000,000 Shares Authorized;
No shares issued and outstanding)
Common Stock ($0.0005 Par Value; 150,000,000
Shares Authorized; 73,731,675 and
69,868,355 shares issued and outstanding in
2007 and 2006 respectively) 36,866 34,934
Common stock issuable 11 --
Additional paid-in capital 5,724,363 5,290,536
Accumulated deficit (510,921) (871,056)
Deferred compensation (51,389) (646,222)
Other comprehensive gain - foreign currency 586,883 136,706
Total Stockholders' Equity 5,785,813 3,944,898
Total Liabilities and Stockholders'
Equity $10,015,481 $6,944,492
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year
Ended December 31,
2007 2006
NET REVENUES
Non-affiliated companies $11,694,030 $4,508,179
Affiliated companies 2,641,691 3,237,199
Total Net Revenues 14,335,721 7,745,378
COST OF SALES 10,071,991 4,609,557
GROSS PROFIT 4,263,730 3,135,821
OPERATING EXPENSES:
Selling expenses 1,099,266 573,315
General and administrative 2,753,132 1,730,178
Total Operating Expenses 3,852,398 2,303,493
INCOME FROM OPERATIONS 411,332 832,328
OTHER INCOME (EXPENSE):
Other income 146,945 (4,367)
Registration rights penalty -- (76,000)
Interest income 3,649 5,441
Interest expense - related party -- (26,132)
Interest expense (68,867) (41,589)
Total Other Income (Expense) 81,727 (142,647)
INCOME BEFORE DISCONTINUED OPERATIONS,
INCOME TAXES AND MINORITY INTEREST 493,059 689,681
DISCONTINUED OPERATIONS:
Gain from discontinued operations -- 12,794
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 493,059 702,475
INCOME TAXES -- (1,318)
INCOME BEFORE MINORITY INTEREST 493,059 701,157
MINORITY INTEREST (132,924) (133,037)
NET INCOME $360,135 $568,120
CUMULATIVE PREFERRED DIVIDENDS -- (96,240)
NET INCOME ATTRIBUTABLE
TO COMMON SHAREHOLDERS $360,135 $471,880
BASIC AND DILUTED INCOME PER COMMON SHARE:
Basic earnings per share from
continued operation $0.00 $0.01
Basic earnings per share including
discontinued operation $0.00 $0.01
Diluted earnings per share from
continued operation $0.00 $0.01
Diluted earnings per share including
discontinued operation $0.00 $0.01
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 73,195,593 53,098,047
Diluted 73,455,345 57,539,614
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years
Ended December 31,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $360,135 $568,120
(Gain) Loss from discontinued operations -- (12,794)
Income from continuing operations 360,135 555,326
Adjustments to reconcile net income from
operations to net cash provided by
(used in) operating activities:
Depreciation and amortization 126,295 91,657
Minority interest 132,924 145,150
Allowance for doubtful accounts 315,536 131,296
Allowance for doubtful accounts-related
party 133,422 87,937
Stock-based compensation 709,271 398,945
Changes in assets and liabilities:
Accounts receivable (1,631,849) (361,386)
Accounts receivable - related party (719,230) (621,992)
Other receivable 152,769 (414,000)
Inventories (292,993) 431,741
Prepaid and other current assets (647,917) (285,891)
Other assets -- 734
Accounts payable and accrued expenses 107,644 (71,984)
Tax payable 92,815 (75,489)
Advances from customers 459,144 123,516
NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES (702,034) 135,560
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in loan receivable 48,609 (48,609)
Increase in loan receivable - related
party (946,591) --
Increase in deposit on investment -- 100,000
Purchase of property, plant and
equipment (99,349) (149,339)
NET CASH USED IN INVESTING ACTIVITIES (997,331) (97,948)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable 699,210 63,157
Proceeds from loans payable-related
party 556,190 204,267
Repayment of loan payable (699,210)
Repayment of loan payable - related
party (165,471) (63,157)
Proceeds from Warrants Exercised 321,332 --
NET CASH PROVIDED BY FINANCING ACTIVITIES 712,051 204,267
EFFECT OF EXCHANGE RATE ON CASH 495,719 11,766
NET (DECREASE) INCREASE IN CASH (491,595) 253,645
CASH - beginning of year 1,713,723 1,460,078
CASH - end of year $1,222,128 $1,713,723
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $68,867 $67,721
Income taxes $-- $1,318
Financial Projections for the first quarter 2008 (in 000s)
1st Qtr 2008
Estimate 1st Qtr 2007 Change
Total Revenues $3,814 $2,846 + 34%
Gross Profit $1,489 $993 + 50%
Net Income $400 $497 - 19.5%
Guidance for the first quarter 2008
"We believe our anticipated increase in revenues and gross profit for 1st
quarter 2008 compared to 2007 validates our recently implemented growth
strategy," commented Linkwell Chairman and CEO, Mr. Xuelian Bian, "Our
projected total revenue growth of 34% in 1st quarter continues at a strong
pace in what is historically our weakest quarter, plus this year we had to
deal with a horrible winter storm." Management estimates that while LiKang
Disinfectant's revenues and net income increased slightly, LiKang
International's revenues rose substantially, but its profits decreased.
Financial Projections for the full year 2008 (in 000s)
12/31/2008
Estimate 12/31/ 2007 Change
Total Revenues $23,180 $14,335 + 62%
Gross Profit $7,000 $4,767 + 47%
Net Income $2,000 $360 + 455%
Projected Net Revenues for the full year 2008
Linkwell's management believes that financial projections for 2008 are
conservative, based on reasonable direct growth and cost estimates. However,
the Company has set higher goals for itself than projected, which are based on
anticipated indirect benefits from potential developments based on support to
the Beijing Olympics; introduction of new products to the market; management's
increasing prestige and influence in the disinfectant industry; and strategic
ventures or agreements.
For the full year 2008, Linkwell projects total revenue to grow
approximately 62% to $23.2 million from $14.3 million in 2007. Specifically,
estimated revenue from LiKang Disinfectant is expected to rise approximately
$3.95 million or 49%, to $12.05 million in 2008, compared to $8.1 million in
2007. Also, management estimates that revenue from LiKang International will
increase approximately 15%, to $7.13 million in 2008, compared to $6.2 million
in 2007.
Of the estimated $3.95 million increase in total revenue from LiKang
Disinfectant in 2008, the Company estimates $10.25 million will come from
sales of current and new products; $0.5 million from training disinfection and
pest control professionals and sales of An'erdian at the 2008 Beijing Olympic
Games; $0.3 million from implementing China's new disinfection vocational
training and licensing program; and $1.0 million from Ecolab related
agreements.
In addition, Linkwell anticipates revenues of $4.0 million in 2008 from
strategic acquisitions as part of the disinfectant industry's consolidation in
China.
Chairman and CEO's Comments on Guidance for the full year 2008
"In general for 2008, we expect stronger demand for our products due to
increased marketing and branding and from our associations with the Beijing
Olympic Games and Ecolab. We are making good progress on our 10 new products
in various stages of development and are on track to launch 3 new products
this year. We also believe that government administered health facilities and
the general public will increase consumption of our products due to increased
health education of the importance of disinfection and continued awareness of
health dangers, such as highly pathogenic bird flu, hepatitis, sexually
transmitted diseases and other potentially epidemic and pandemic outbreaks."
Our vision for Linkwell is to be the consolidation leader of the estimated
$6.25 billion disinfectant industry in China. We believe China is on the
leading edge of a massive consolidation from over 1000 small disinfectant
manufacturing companies now, to less than 200 in the next five years.
Regarding our continued market penetration and the condition of our
competition, we believe the factors previously described, increases barriers
to entry and puts us in a very good position to lead consolidation of the
disinfectant industry."
"Last, but certainly not least, we believe good corporate governance
measures and practices are very important to Linkwell and our investors. I am
dedicated to implementing and maintaining these measures as described in
appropriate SEC and stock exchange rules and regulations, including the
establishment of an independent board of directors, hiring a qualified CFO,
and reliable disclosure and internal control procedures."
About Linkwell Corporation
Linkwell develops, manufactures and distributes disinfectant healthcare
products in China through its subsidiary LiKang Disinfectant. Linkwell's
disinfectant healthcare products are a nationally recognized domestic Chinese
brand in this market segment. Linkwell products include disinfectants in
liquid, tablet, powder and aerosol form. Through LiKang, Linkwell has a
national marketing and sales presence throughout all 22 provinces,
5 autonomous regions, and 4 special municipalities of China. For more
information, please visit http://www.linkwell.us .
Safe Harbor Statement
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-
looking statements are based on current expectations or beliefs, including,
but not limited to, statements concerning the Company's operations, financial
performance and condition. For this purpose, statements that are not
statements of historical fact may be deemed to be forward-looking statements.
The Company cautions that these statements by their nature involve risks and
uncertainties, and actual results may differ materially depending on a variety
of important factors, including, but not limited to, the impact of competitive
products; pricing and new technology; changes in consumer preferences and
tastes; effectiveness of marketing; changes in laws and regulations;
fluctuations in costs of production; and other factors as those discussed in
the Company's reports filed with the Securities and Exchange Commission from
time to time. In addition, the Company disclaims any obligation to update any
forward-looking statements to reflect events or circumstances after the date
hereof.
For more information, please contact:
Investor Relations
Craig Bird
Segue Ventures LLC
Tel: +1-215-885-4981
Email: chbird@segue.biz
