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China Linen Textile Industry, Ltd. (CTXIF.OB) Signs Lease on 23,000-Square Foot Production Facility

China Linen Textile Industry, Ltd., a China-based business engaged in the production and sale of linen yarn and various types of linen fabric, recently announced that the company has signed a lease on a new 23,000-square foot production facility. This new facility will allow the company to expand its linen yarn production capacity and add the capability to bleach linen fabric. The lease term is for a period of 12 months, which commenced on July 1, 2010.

In addition, the leased facility includes a spinning production line with 3,000 spindles, bleaching machines and other equipment, which is expected to increase the China Linen’s annual capacity of linen yard by approximately 39 percent to 620 tons and linen fabric by 26 percent to 2.1 million meters. These production increases are forecast to improve annual revenue by approximately $4.9 million and gross profit by $1.5 million. China Linen has commenced operation at the leased facility and expects to generate approximately $1.4 million in net income in the second half of 2010 from its new facility.

Mr. Gao Ren, chairman and president of China Linen, stated, “We are pleased to sign this lease agreement, which enables us to address our short-term capacity constraints while providing an option to acquire the facility. We have seen an increase in demand from domestic and international customers this year, and this lease agreement enables us to fulfill more of those orders and improve our 2010 financial performance.” Mr. Ren continued, “We also believe the bleaching facility will add a downstream vertical component to our value chain and further increase our gross margin. We plan to pursue more orders with the goal of full utilization of the leased facility and increasing our profit further for 2010 and 2011.”

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