Weikang Bio-Technology Group Co., Inc. Completes HQ Relocation After Purchasing Building for $14 Million and Answers Questions About Its Third Quarter Financials
Published: Dec 28, 2011
HARBIN, China, Dec. 28, 2011 /PRNewswire-Asia-FirstCall/ -- Weikang Bio-technology Group, Inc. (the "Company," "Weikang" or WKBT.PK) today announced that the Company has completed moving all of its management departments into the building it purchased last quarter for $14 million. Located at No.365 Chengde Street in the Daowai District of Harbin, the hub of northeast China, Weikang previously rented two floors of the building.
Mr. Yin Wang, the Chairman and CEO of Weikang commented, "We are very glad that finally we have our own headquarters building, which can accommodate all of our departments, instead of having to rent different places for different departments."
On a conference call on December 15, 2011, Mr. Wang explained to investors about the WKBT HQ building and its purchase. "The building has ten floors with 7,000 square meters (approximately 70,000 square feet) and I believe it will improve our management efficiency. Although the $14 million price tag of the building is a big number, it already came down from its peak asking price by its previous owner, which is a local credit union. We believe it is necessary to include this building at this moment as part of our business expansion plan for the next few years."
Mr. Wang also answered some additional investor questions regarding WKBT's third quarter financial statements from the list below:
Why did Net Sales increase 11% from the prior year yet Accounts Receivable increased 10 times from $650,000 to $6.5 million?
"The market for our products has been affected by the slowing down of the economy in China in the recent months. To cope with that, we extended credit terms to some large customers from 30 days to 60 days. As result, the AR increased to $6.5 million, the collection of which has been very good with no delays. Despite the increase in AR, percentage-wise, the amount is still under control," said Chairman Wang.
Advances to Suppliers and Other Receivable increased more than 20 times from $241,000 to $5.2 million. Please explain.
"The raw material price has been increased significantly during the last few months affected by the inflation of the whole economy in China. We believed the prices of raw materials would continue to increase. Therefore, we entered a large contract with a large supplier to lock down the price of raw material, for which we paid about $5 million as a down payment. We believe this is necessary to control the cost," Mr Wang said.
Income before tax was $8.4 million last year, but only $3.5 million this year. Yet, the income tax expense increased despite an almost 60% decline in taxable income. Please explain.
"This is because there was about $4.3 million in one-time, non-cash expenses in the G&A Expenses in the last quarter, which resulted from stock issuance to some consultants and a consulting firm, which we believe are necessary and critical for our long term business development. So the income before tax was $3.5 million down from $8.4 million but since the non-cash expenses was not deductible from the taxable income for tax purposes, the income tax expense still increased along with our revenue increase," clarified Mr. Wang.
About Weikang Bio-Technology Group Co., Inc.
Weikang Bio-Technology Group Co., Inc. is principally engaged in developing, manufacturing and distributing Traditional Chinese Medicine (TCM), and health and nutritional supplements in China, in compliance with requisite Chinese licenses and approvals. The Company is also expanding its business scope to develop, manufacture and distribute Chinese herbal extract products and GMP certified western prescription and OTC pharmaceuticals through its acquisition of Tianfang Pharmaceutical Co., Ltd. For more information, please visit http://www.weikangbio.com.
Yue Kang (Venus):
Safe Harbor Statement
Certain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
SOURCE Weikang Bio-Technology Group Co., Inc.