Lifetech Scientific Corporation provided earnings guidance for the year ended December 31, 2013. After preliminary review by the company's management based on the management accounts of the Group, the Board informed the shareholders of the company and potential investors that the Group is expected to record a net loss (after taking into account the fair value losses of convertible notes) for the year ended 31 December 2013 as compared to a net profit for the year ended 31 December 2012, primarily due to the following reasons: the record of the fair value loss of conversion option of the first tranche convertible notes issued on 30 January 2013 at the principal amount of HKD 152 million, which are convertible into 40,000,000 new shares at the initial conversion price of HKD 3.80 per conversion share (subject to adjustments). As at 31 December 2013, the change in fair value of conversion option was approximately RMB 66.8 million; the record of the fair value loss related to the secured convertible notes of Broncus Medical Inc. purchased by the company in September 2013; and the increase in administration expenses.

Based on the fact that the Group would have recorded profit for the year ended 31 December 2013 before taking into account the fair value losses of convertible notes, which are non-operating and non-cash in nature, the Board is of the view that the Group's operating and financial positions are healthy and the Board remains positive on the prospects of the Group.