SOURCE: Labwire, Inc.

June 06, 2007 09:00 ET

Labwire Announces First Quarter Results and Notification of Non-Reliance on Previously Issued Financial Statements

HOUSTON, TX--(Marketwire - June 6, 2007) - Labwire, Inc. (PINKSHEETS: LBWR), a leading provider of employee screening solutions, today announced results for the first quarter ended March 31, 2007 and notification of non-reliance on previously issued financial statements.

During the quarter ended March 31, 2007, total revenue increased 10.5% to $1,167,975, compared to $1,057,040 for the first quarter of 2006. The positive first quarter 2007 results can be attributed to growth in Labwire's employee screening services business, which increased $264,984 or 35.2% in the first quarter of 2007 over the same period in 2006. The Company experienced lower revenue within its canine, security, and surveillance business, which decreased $146,714 in the quarter ended March 31, 2007 compared to the same quarter a year earlier. This decrease, which was partially offset by increases in canine and surveillance, can be attributed entirely to the absence of non-recurring security revenue generated by the Company in the first quarter of 2006 in response to Hurricanes Katrina and Rita. The Company also experienced a decline in revenue from management fees, which decreased $7,336 in the quarter ended March 31, 2007 compared to the same quarter a year earlier.

Operating expenses decreased 12.0% from $337,779 in the first quarter of 2006 to $297,278 for the period ended March 31, 2007. This decrease can be attributed to lower payroll expenses, which decreased $58,302 or 31.5% and travel and entertainment expenses, which decreased $19,164 or 43.3% in same period comparisons.

For the three months ended March 31, 2007, earnings before interest, taxes, depreciation, and amortization, or EBITDA, totaled $80,970 compared to EBITDA of $37,668 for the first quarter of 2006, an increase of approximately $43,302 or 115%.

For the three months ended March 31, 2007, net income was $70,341 compared to net income of $23,979 for the first quarter of 2006, an increase of approximately $46,362 or 193%.

As of March 31, 2007, total assets were $2,057,891 and total liabilities were $1,264,218 resulting in stockholders' equity of $793,673. This is compared to total assets of $1,707,702, total liabilities of $1,095,129, and stockholders' equity of $612,573 as of March 31, 2006. This represents an increase in stockholders' equity of $181,100 or 30%.

According to the notes to the March 31, 2007 financial statements, due to depreciation timing differences between tax and GAAP financial statements, a $101,238 deferred tax asset and liability has been recognized for the year ended December 31, 2005. As a result, income tax expenses were lowered from $106,078 to $4,840, increasing net income by $101,238. The deferred tax asset and liability will be amortized as Labwire reports income on the tax depreciated assets. In 2006, $27,827 of the deferred tax asset was amortized.

On May 20, 2007, Labwire determined that certain items on the historical, unaudited financial statements of the Company included in the financial statements issued prior to March 31, 2007 should no longer be relied upon. The Company has restated its previously issued financial statements as described below, and in view of the restatements, cautions investors not to rely on the Company's historical financial statements issued prior to March 31, 2007. Due to the receipt of $174,631 in late billing invoices from collection companies dating back to the third quarter of 2006, management has elected to restate their financial reporting for the quarters ended September 30, 2006 and December 31, 2006. The changes to the income statement for each respective quarter are as follows:

            Sep' 06    Sep' 06    Change    Dec' 06    Dec' 06    Change
Description  prior    adjusted  incr/(decr)  prior     adjusted incr/(decr)
          ---------  ---------  ---------  ---------  ---------  ---------

Cost of
 Goods    $ 515,625  $ 567,948  $  52,323  $ 606,909  $ 717,515  $ 110,606
          ---------  ---------  ---------  ---------  ---------  ---------

Gross
 Profit     263,334    211,011   ( 52,323)   358,926    248,320   (110,606)
          ---------  ---------  ---------  ---------  ---------  ---------

Operating
 Income   $ (31,077) $ (83,400) $ (52,323) $  79,903  $ (30,703) $(110,606)
          ---------  ---------  ---------  ---------  ---------  ---------

Income Tax
 Provision    - 0 -      - 0 -      - 0 -     27,168      - 0 -    (27,168)
          ---------  ---------  ---------  ---------  ---------  ---------

Net
 Income   $ (31,077) $ (83,400) $ (52,323) $  52,735  $ (30,703) $ (83,438)
          ---------  ---------  ---------  ---------  ---------  ---------

To read the full report, refer to the Interim Financial Report that has been filed at www.pinksheets.com.

About Labwire, Inc.

Labwire, Inc. (http://www.labwire.com), headquartered in Houston, TX, provides secure and compliant employee drug screening and background checking services to Fortune 500 corporations via the Labwire™ Platform. Labwire™ is a proprietary, web-based application that streamlines the complex regulatory and record management activities associated with employee screening, delivering accurate timely results while eliminating service calls and paper trails. This comprehensive solution to managing employee screening services is the most efficient and cost-effective platform in the industry.

Forward-Looking Statements

This press release contains "forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. Statements in this release that are forward-looking statements are based on current expectations and assumptions that are subject to known and unknown risks, uncertainties, or other factors which may cause actual results, performance, or achievements of the company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Actual results could differ materially because of factors such as the effect of general economic and market conditions, entry into markets with vigorous competition, market acceptance of new products and services, continued acceptance of existing products and services, technological shifts, and delays in product development and related product release schedules, any of which may cause revenues and income to fall short of anticipated levels. All information in this release is as of the date of this release. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

Contact Information

  • Contact:
    S.D. Torrey Hills Capital, Inc.
    James Macdonald
    Investor Relations
    (858) 456-7300