EX-99.1 2 v110807_ex99-1.htm
EXHIBIT 99.1
 
Linkwell Corporation Reports 2007 Fiscal Year-End Financial Results
 
Revenues Grow 85% in 2007; Anticipates 62% Growth in 2008
 
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.

Financial Tables
 
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
  
 
See notes to consolidated financial statements
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
  
 
See notes to consolidated financial statements
 
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 our 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

 
Source: Linkwell Corporation