Linkwell CORP - FORM 10-K - April 15, 2010

Attached files

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EX-21 - Linkwell CORP	v179445_ex21.htm
EX-32.1 - Linkwell CORP	v179445_ex32-1.htm
EX-23.1 - Linkwell CORP	v179445_ex23-1.htm
EX-31.2 - Linkwell CORP	v179445_ex31-2.htm
EX-31.1 - Linkwell CORP	v179445_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-24977

Linkwell Corporation

(Exact name of registrant as specified in its charter)

Florida	65-1053546
(State of Incorporation)	(I.R.S. Employer Identification Number)

1104 Jiatang Road Jiading District Shanghai China	201807
(Address of Principal Executive Offices)	(Zip Code)

Securities registered under Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered

None	Not Applicable

Securities registered pursuant to Section 12(g) of the Act: common stock, par value $0.0005 per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨

Accelerated Filer ¨

Non-accelerated Filer ¨

(Do not check if a smaller

reporting company)

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2009, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $3,953,880.

The number of shares outstanding of capital stock as of March 31, 2010 was 86,605,475.

	TABLE OF CONTENTS

	Part I

Item 1.	Business.	4
Item 1A.	Risk Factors.	21
Item 1B.	Unresolved Staff Comments.	27
Item 2.	Properties.	27
Item 3.	Legal Proceedings.	27
Item 4.	Removed and Reserved.	27

	Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	28
Item 6.	Selected Financial Data.	28
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	37
Item 8.	Financial Statements and Supplementary Data.	37
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	37
Item 9A(T).	Controls and Procedures.	37
Item 9B.	Other Information.	38

	Part III

Item 10.	Directors, Executive Officers and Corporate Governance.	38
Item 11.	Executive Compensation.	40
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	41
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	42
Item 14.	Principal Accounting Fees and Services.	43

	Part IV

Item 15.	Exhibits, Financial Statement Schedules.	44

	Signatures	47

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this annual report contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to increase our revenues, develop our brands, implement our strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control.

You should consider the areas of risk described in connection with any forward-looking statements that may be made in this annual report. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this annual report in its entirety, including the risks described in Part I, Item 1A. Risk Factors. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this annual report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

As used herein, unless the context indicates otherwise, the terms:

“Linkwell”, the “Company”, “we” and “us” refers to Linkwell Corporation,

a Florida corporation;

“Linkwell Tech” refers to our 90% owned subsidiary Linkwell Tech Group, Inc.,

a Florida corporation;

“LiKang Disinfectant” refers to Shanghai LiKang Disinfectant High-Tech Company, Limited,

a wholly-owned subsidiary of Linkwell Tech;

“LiKang Biological” refers to Shanghai LiKang Biological High-Tech Co., Ltd.,

a wholly-owned subsidiary of LiKang Disinfectant;

“LiKang International” refers to Shanghai LiKang International Trade Co., Ltd.,

formerly a wholly-owned subsidiary of LiKang Disinfectant which was sold to Linkwell International Trading Co., Limited on May 31, 2008.

We also use the following terms when referring to certain related parties:

“Shanhai” refers to Shanghai Shanhai Group,a Chinese company which used to be the minority owner of LiKang Disinfectant;

“Meirui” refers to Shanghai LiKang Meirui Pharmaceuticals High-Tech Co., Ltd., a company of which Shanhai is a majority shareholder;

“ZhongYou” refers to Shanghai ZhongYou Pharmaceutical High-Tech Co., Ltd., a company owned by Shanghai Jiuqing Pharmaceuticals Company, Ltd., whose 65% owner is Shanghai Ajiao Shiye Co. Ltd. Our Chairman and Chief Executive Officer Xuelian Bian is a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd.

The People's Republic of China is herein referred to as China or the PRC.

The information which appears on our web site at www.linkwell.us is not part of this report.

PART I

ITEM 1. BUSINESS.

We operate under a holding company structure and currently have one direct operating subsidiary, Linkwell Tech Group Inc. (“Linkwell Tech”) a Florida corporation, of which we own 90%. On February 15, 2008, Linkwell Tech sold 10% of its issued and outstanding capital stock to Ecolab Inc., a Delaware corporation (“Ecolab”). Linkwell Tech owns 100% of Shanghai LiKang Disinfectant High-Tech Company, Limited (“LiKang Disinfectant”). We regard LiKang Disinfectant's business of hospital disinfectant products as our primary business. LiKang Disinfectant acquired 100% of LiKang Biological on March 5, 2009.

Linkwell Corporation, through LiKang Disinfectant, is engaged in the development, manufacture, sale and distribution of disinfectant health care products primarily to the medical industry in China. We have a national marketing and sales presence throughout all twenty-two provinces as well as four autonomous regions and four municipalities in China. We currently employ forty full-time sales and marketing people based in Shanghai. Shanghai ZhongYou Pharmaceutical High-Tech Co., Ltd, (“ZhongYou Pharmaceutical”) a company 65% owned by our Chairman and Chief Executive Officer, Xuelian Bian, also sells our products using seventy independent sales representatives in China.

We market our products to the medical industry in China, however we are making efforts to diversify and expand our reach to the retail market. We have made efforts to grow our customer base by expanding into the civil, industrial, livestock and agricultural disinfection markets of China. Currently we offer a variety of disinfectant products for the following applications:

Skin and mucous membrane disinfectants;

Hand disinfectants (external);

Environment and surface disinfectants;

Medical devices and equipment disinfectants;

Machine disinfectants; and

Animal disinfectants.

LiKang Disinfectant has fifty-six marketed products, fifty of which are certified by one or more government authorities; the Chinese Ministry of Health, State Food and Drug Administration, or Ministry of Agriculture. China’s Ministry of Health approves those products that require the highest level of licensing and have granted thirty hygiene licenses to Linkwell. We also sell products which have been developed and manufactured by third parties. These parties manufacture disinfectant products that generated approximately 1.0% of our revenue for the fiscal year ended December 31, 2009. Products that we manufacture account for approximately 99.0% of our total net revenues for the fiscal year ended December 31, 2009.

Prior to May 31, 2008, we owned 100% of Shanghai LiKang International Trade Co. Ltd., through our subsidiary LiKang Disinfectant. The primary business of LiKang International was the import and export of a variety of products and services ranging from small medical equipment and chemical products to computers. On May 31, 2008, LiKang Disinfectant sold 100% of the capital stock of LiKang International to Linkwell International Trading Co., Ltd. a company registered in Hong Kong which is 100% owned by Mr. Wei Guan our Vice President and Director.

Corporate Structure Chart

Industry Background

In 2007, Frost & Sullivan stated, “The Chinese healthcare industry has been one of the fastest growing healthcare industries in the world. It is expected to become the fifth largest by 2010. Its growth is mainly driven by the government’s initiatives to simplify regulatory procedures, enhance trade relations, and attract foreign investment through friendly policies.”

According to the China Federation of Industrial Economics, China’s disinfectant industry is estimated at well over $6.5 billion. Other experts believe the Chinese market demand for biocides will increase by approximately 7.9% annually to 574,000 metric tons by the year 2010.

The disinfectant industry in China may be characterized as an emerging industry, populated by approximately 1,000 small domestic manufacturers and distributors, and half a dozen large international companies with limited presence and products.

Major contributing factors responsible for the vigor of China’s disinfectant industry growth include the transition to a market economy, increasing health consciousness in the general population and increasing government health standards and education.

Increasing Domestic Demand

Since the shift to a market economy, the Chinese government has initiated several policies to improve public health and living standards and improve the Chinese healthcare industry. Consequently, these initiatives and traditional market forces have driven increasing demand for disinfectant products. According to Frost & Sullivan, China’s healthcare expenditures grew from 5.0% of GDP in 1999 to 6.7% in 2005, representing a growth rate of approximately 5%. During the same period, USA healthcare expenditures grew from 13.2% to 15.9%, representing a growth rate of approximately 3%.

After nearly 30 years of sustaining economic growth in China, both the Chinese government and the public have become more concerned about the quality and cost of healthcare in China. A greater public awareness of the health benefits of our products, as well as these new public concerns have led to a surge in interest for disinfectant products in China with consumers maintaining stockpiles of disinfectant products. Other factors that support the growth in demand for disinfectant products include:

· China’s population of 1.3 billion; a large and rapidly aging population base that require better sanitization standards to protect their health. According to a United Nations study released in 2005, the number of people aged 60 or over in China is expected to rise to more than 430 million people;

· Healthcare professionals and citizens want a healthcare system and hygienic standards as advanced as western countries;

· Ongoing government reforms in hospital sanitation, medical standards and disinfectant regulations;

· Government educational program to increase public awareness of public health and hygienic standards; and

· An increase in government investment in healthcare and medical services to achieve sustainable development of the disinfectant industry.

Recent Health Concerns in China

The most critical factors that triggered health concerns in China are the recent and recurring health crises that have led to several epidemics (see Table below) and potential pandemics. In response, the Chinese government has taken initiatives to improve public health and living standards, including the establishment of The Ministry of Public Health in China for the disinfectant industry in China.

Outbreak time	Location	Disease	Situation
January, 1988	Shanghai	Hepatitis A	310,000 reported cases of Hepatitis A, 47 deaths

April - May, 1998	Shenzhen	Sub-Tuberculosis bacillus disease M. chelonae	Shenzhen Woman and Children Hospital reports an airborne infection. 168 patients infected, 46 severe cases

November 2002	Throughout China	SARS	8,000 reported cases, 800 deaths

June 24 - August 20 2005	Sichuan Province	Streptococcus suis in swine and humans	204 reported cases of humans infected with the Swine streptococci in Sichuan, 38 deaths

April 2005	Throughout China	Pulmonary tuberculosis, Hepatitis B	Pulmonary tuberculosis, Hepatitis B remain top two priorities on the infectious disease list in China

June, 2005	Tibet	Bubonic plague	Five infected cases reported, two deaths

July-September 2005	Hunan, Fujian, Zhejiang provinces	Cholera	638 cases reported, two deaths

August, 2005	Guizhou, Ningxia, Liaoning, Jilin	Anthrax	140 cases reported, one death

October, 2005	Inner Mongolia , Hunan , Anhui , Liaoning , and Hubei provinces	Avian Flu	Three confirmed cases reported, two deaths

October, 2005	Zhejiang, Anhui provinces	highly pathogenic bird flu	One confirmed case in each province reported

March 24, 2006	Shanghai	highly pathogenic bird flu	One confirmed case reported

June 16,2006	Guangdong Province	highly pathogenic bird flu	One confirmed case reported

August 14, 2006	XinJiang Province	highly pathogenic bird flu	One confirmed case reported

January 9, 2007	Anhui provinces	highly pathogenic bird flu	One confirmed case reported

February 27, 2007	Fujian provinces	highly pathogenic bird flu	One confirmed case reported

March 28, 2007	Anhui provinces	highly pathogenic bird flu	One confirmed case reported

May 24, 2007	People’s Liberation Army X department	highly pathogenic bird flu	One confirmed case reported

December 2, 2007	Jiangsu provinces	highly pathogenic bird flu	One confirmed case reported

December 6, 2007	Jiangsu provinces	highly pathogenic bird flu	One confirmed case reported

January-February , 2008	Xinjiang municipality	Measles Virus	11,000 cases reported, 21 deaths

February, 2008	Guangdong, Guangxi and Hunan provinces	Avian Flu	Three cases reported, three deaths

April-May, 2008	Nationwide	Hand, Foot and Mouth Disease	176,321 cases reported, 40 deaths

January-September, 2008	Nationwide	HIV	44,839 cases reported, 6,897 deaths

October-November, 2008	Hainan province	Cholera	42 cases reported,

October-November, 2008	Hainan province	Diarrhea	351 cases reported

January, 2009	Nationwide	Avian Flu	Eight cases reported, five deaths

April, 2009	Worldwide	H1N1	12,220 deaths deaths

November, 2009	Ukraine	Flu	1.4 million infected and 328 deaths.

SARS - Severe Acute Respiratory Syndrome

In recent years, the Severe Acute Respiratory Syndrome (SARS) has threatened the public community. SARS, which is a viral respiratory illness caused by a corona virus, called SARS-associated corona virus (SARS-CoV), was first reported in Asia in November 2002. Over the next few months, the illness spread to more than two dozen countries in North America, South America, Europe, and Asia before the SARS global outbreak of 2003 was contained. In April 2004, the Chinese Ministry of Health reported several new cases of possible SARS outbreaks in Beijing and the Anhui Province, which is located in east-central China.

According to the Center for Disease Control of the central government of China, the common manner in which SARS seems to spread is by close person-to-person contact. The virus that causes SARS is thought to be transmitted most readily by respiratory droplets (“droplet spread”) when an infected person coughs or sneezes. Droplet spread occurs as germs from the cough or sneeze of an infected person are propelled a short distance (generally up to three feet) through the air and deposited on the mucous membranes of the mouth, nose, or eyes of nearby persons. The virus also can spread when a person touches a surface or object contaminated with infectious droplets and then touches his or her mouth, nose, or eye(s). Ultimately, there is much the global community does not know about SARS, and it is possible that the SARS virus might spread more broadly through the air (airborne spread) or by other ways that are not yet known.

Avian Influenza

In 2005, the threat of a global pandemic as a result of the avian flu began to capture the attention of the global community. The avian flu is a type of the A strain virus that infects birds. Typically, it is not common for humans to be infected with the virus via contact with birds, however a few bird-to-human outbreaks have been reported and most have been in Asia. Humans were infected when they came into contact with sick birds or contaminated surfaces. In most cases, infected persons reported flu-like symptoms, but some had more serious complications, including pneumonia and acute respiratory distress. The avian flu has led to increased concerns for improved health conditions.

Up to February 5, 2009, there were 405 confirmed cases of highly pathogenic bird flu reported throughout the world, that resulted in 254 deaths. Within China there were 11 confirmed cases resulting in eight deaths during 2008.

H1N1

HINI is an influenza virus that had never been identified as a cause of infections in people before the current H1N1 pandemic. Genetic analyses of this virus have shown that it originated from animal influenza viruses and is unrelated to the human seasonal H1N1 viruses that have been in general circulation among people since 1977.

Antigenic analysis has shown that antibodies to the seasonal H1N1 virus do not protect against the pandemic H1N1 virus. However, other studies have shown that a significant percentage of people age 65 and older do have some immunity against the pandemic virus. This suggests that some people in older age groups may have some cross protection from exposure to viruses that have circulated in the more distant past.

Unlike typical seasonal flu patterns, the new virus caused high levels of summer infections in the northern hemisphere, and then even higher levels of activity during cooler months in this part of the world. After early outbreaks in North America in April 2009 the new influenza virus spread rapidly around the world. To date, most countries in the world have confirmed infections from the new virus. As of December 27 2009, worldwide more than 208 countries and overseas territories or communities have reported laboratory confirmed cases of pandemic influenza H1N1 2009, including at least 12,220 deaths.

The new virus has also led to patterns of death and illness not normally seen in influenza infections. Most of the deaths caused by the pandemic influenza have occurred among younger people, including those who were otherwise healthy. Pregnant women, younger children and people of any age with certain chronic lung or other medical conditions appear to be at higher risk of more complicated or severe illness. Many of the severe cases have been due to viral pneumonia, which is harder to treat than bacterial pneumonias usually associated with seasonal influenza. Many of these patients have required intensive care.

H1N1 Flu viruses are spread mainly from person to person through coughing or sneezing by people with influenza. Sometimes people may become infected by touching something with flu viruses on it and then touching their eyes, mouth, or nose. Providing sufficient facilities for hand washing and alcohol-based hand sanitizers in common workplace areas such as lobbies, corridors, and rest rooms can reduce the chance of spread of the H1N1 virus. Studies have shown that influenza virus can survive on environmental surfaces and can infect a person for up to 2-8 hours after being deposited on the surface. Disinfecting commonly touched hard surfaces in the workplace, such as work stations, counter tops, door knobs, and bathroom surfaces by wiping them down with disinfectant can reduce the chance of spread of the H1N1 virus.

China Health Standards

In July 2002, the Chinese Ministry of Public Health issued the 27th order of Ministry of Health of the People's Republic of China establishing national standards for the disinfection industry. The first criterion of the new order stipulated that disinfectant manufacturers in China must obtain a license to manufacture hygiene disinfectants. Secondly, prior to release, all disinfectant instruments must obtain the official hygiene permit document of both the local provincial hygiene administrative department and the Ministry of Public Health.

In June 2009, the Chinese Ministry of Public Health issued the Hygiene Standard of Manufacturers of Disinfection Products (2009) (“Hygiene Standard”) which updated the previously issued 2004 version. It specifies plant layout, hygiene requirements for workplaces, requirements for production equipment, materials, warehouse and workers. The Hygiene Standard will go into effect on January 1, 2010 and will restrict market access of some small disinfectant companies due to the high Good Manufacturing Practice (“GMP”) standard which should prove to be beneficial for normalization of the disinfectant market.

The table below details the 30 licenses issued to LiKang Disinfectant by the Chinese Ministry of Public Health.

#	Products	Date
1	An’erdian Skin Disinfectant	2003.2.13
2	An’erdian-type 2nd skin disinfectant	2002.11.22
3	An’erdian-type 3rd skin and mucous membrane disinfectant	2005.1.19
4	Dian’erkang Aerosol Disinfectant	2004.3.22
5	Dian’erkang 2% glutaraldehyde disinfectant	2002.11.22
6	Aiershi disinfectant tablets	2004.2.9
7	Aiershi disinfectant	2004.2.9
8	Dian’erkang PVP-I disinfectant	2005.3.30
9	Dian’erkang Iodophor disinfectant	2004.2.19
10	Jifro disinfectant gel	2005.1.19
11	Dian’erkang alcohol disinfectant	2003.12.23
12	Dian’erkang compound iodine disinfectant	2004.4.28
13	Lvshaxing disinfectant granule	2004.2.19
14	Lvshaxing disinfectant tablets	2004.3.29
15	LiKang test paper of chlorine	2004.1.16
16	Jifro 4% Chlorhexidine gluconate surgical hand scrub	2004.9.7
17	JifroSongning disinfectant	2004.9.7
18	Lineng glutaraldehyde disinfectant	2005.2.17
19	LiKang 121 steam pressure sterilization chemical indicator	2005.3.30
20	LiKang 132 steam pressure sterilization chemical indicator	2005.3.30
21	LiKang steam pressure sterilization chemical indicator	2005.4.1
22	LiKang 84 disinfectant	2005.6.27
23	LiKang Glutaraldehyde Monitors (Strip)	2005.12.14
24	PuTai Skin Disinfectant	2007.1.11
25	PuTai washless surgical hand scrub	2007.1.11
26	PuTai washless surgical hand foam disinfectant	2007.1.11
27	LiKang disinfectant detergent	2007.4.19
28	JifroTaixin disinfectant	2007.6.4
29	Jifro surgical hand scrub	2009.12.22
30	Putai 2% Chlorhexidine gluconate disinfectant	2009.12.22

Product Lines

We market fifty-six products, which range from air disinfection machines to hot press bags, disinfection swabs, and disinfection indicators. Our products fall into five categories and six product types.

Five Product Categories:

Skin and Mucous Membrane Disinfectants – Eight Products

Hand Disinfectants – Eight Products

Environment and Surface Disinfectants – Ten Products

Medical Devices and Equipment Disinfectants – Five Products

Air disinfection equipment – Seven Products

Other products – Eighteen Products

Six Product Types:

Liquids - gel

Tablets - powder

Aerosol

Chemical indicator

Disinfectant appliance

Liquids - foam

We believe our varied product line gives us a marketing advantage to build a national customer base for our products and services. Approximately 99.0% of our sales are derived from products we have internally developed and produced and 1.0% of sales are produced by outside companies. The tables below offer a summary of our current product offerings:

Skin and Mucous Membrane Disinfectants

Skin and mucous membrane disinfectants target both external and internal applications. Prior to operations, incisions, or injections the products are used to clean the skin surface. Mucous membrane disinfectants target internal germs located in the mouth, eye, perineum, and other internal sources. This product group accounted for approximately 45.8% of our fiscal year 2009 sales, and approximately 51.7% of our fiscal year 2008 sales. The table below lists our skin and/or mucous membrane disinfectants.

Product Names	Ingredients	Application	Industry Standard
An’erdian Skin Disinfectant	iodine, alcohol	Skin disinfectant	Q/SUVE 20-2003
An’erdian-type 3rd skin and mucous membrane disinfectant	iodine, chlorhexidine	Skin & mucous membrane disinfectant	Q/SUVE 22-2003
Dian’erkang PVP-I disinfectant	Povidone-iodine	Skin & mucous membrane disinfectant	Q/SUVE 28-2004
Dian’erkang alcohol disinfectant	alcohol	Skin disinfectant	Q/SUVE 08-2004
PuTai Skin disinfectant	Chlorhexidine gluconate, alcohol	Skin disinfectant	Q/SUVE 37-2006

Hand Disinfectants

These disinfectants target the skin surface. Products are applied to the skin prior to medial procedures. This product group accounted for approximately 26.3% of our fiscal year 2009 sales and approximately 18.7% of our fiscal year 2008 sales. The table below lists our hand disinfectants.

Product Names	Ingredients	Application	Industry Standard
Jifro antimicrobial hand washing	Chlorhexidine	Hand washing	Q/SUVE 04-2003
Jifro disinfectant gel	DP300 (Triclosan)	Hand disinfectant	Q/SUVE 02-2003
Jifro 4% Chlorhexidine gluconate surgical hand scrub	Chlorhexidine gluconate	Surgical hand disinfectant	Q/SUVE 09-2004
PuTai washless surgical hand scrub	Chlorhexidine gluconate, alcohol	Hand disinfectant	Q/SUVE 39-2006
PuTai washless surgical hand foam disinfectant	Chlorhexidine gluconate, alcohol	Hand disinfectant	Q/SUVE 38-2006

Environment and Surface Disinfectants

These disinfectants target a variety of surfaces, such as floors, walls, tables, and medical devices. Additionally, the products can be applied to cloth materials including furniture and bedding. This product group accounted for approximately 12.5% of our fiscal year 2009 sales and approximately 17.7% of our fiscal year 2008 sales. The table below lists our environment and surface disinfectants.

Product Names	Ingredients	Application	Industry Standard
Aiershi disinfectant tablets	Trichloroisocyanuric acid	Environment and surface disinfection	Q/SUVE 34-2004
Lvshaxing disinfectant tablets	Dichloro dimethylhydantoin	Environment and surface disinfection	Q/SUVE 33-2003
Dian’erkang aerosol disinfectant	Benzethonium Chloride	Environment and surface disinfection, preventing the spread of airborne viruses such as human influenza virus, SARS, and the Bird flu virus.	Q/SUVE 07-2004
Lvshaxing disinfectant granule	Dichloro dimethylhydantoin	Environment and surface disinfection	Q/SUVE 32-2003
LiKang disinfectant detergent	Sodium hypochlorite	Surface disinfectant	Q/SUVE 37-2006

Medical Devices and Equipment Disinfectants

This line of disinfectants targets medical equipment, including the sterilization of thermo sensitive instruments and endoscope equipment. This product group accounted for approximately 9.9% of our fiscal year 2009 sales and approximately 10.6% of our fiscal year 2008 sales. The table below lists our medical device and equipment disinfectants.

Product Names	Ingredients	Application	Industry Standard
Dian’erkang 2% glutaraldehyde disinfectant	Glutaraldehyde	Disinfection and sterilization of device	Q/SUVE 10-2003
Dian’erkang 2% glutaraldehyde disinfectant (sales to Olympus Corporation)	Glutaraldehyde	Disinfection and sterilization of endoscopes	Q/SUVE 10-2003
Dian’erkang multi-enzyme rapid detergents	Multi-Enzyme	Rinsing and decontamination of device	Q/SUVE 14-2004

Machine Series

The machine series is a line of disinfectants that target air quality. This product group accounted for approximately 1.3% of our fiscal year 2009 sales and approximately 1.1% of our fiscal year 2008 sales. The table below lists our machine series disinfectants.

Product Names	Ingredients	Application	Industry Standard
Lvshaxing LKQG-1000 air disinfection machine	Ozone, ultraviolet radiation, electrostatic	Air disinfection	Q/SUPE 09-2003
An’erdian disinfection swab	An’erdian	Skin and disinfection	Q/NYMN07-2003
LiKang test paper of chlorine	reagent	Indicates disinfectant concentration	Q/SUVE 40-2003
LiKang 121 steam pressure sterilization chemical indicator (card and adhesive tape)	Indication oil	Indicates sterilization effect	Q/SUVE 16-2005
LiKang 132 steam pressure sterilization chemical indicator (label)	Indication oil	Indicates sterilization effect	Q/SUVE 17-2005
LiKang steam pressure sterilization chemical indicator	Indication oil	Indicates sterilization effect	Q/SUVE 18-2005

Retail products

In 2005, we began to expand our distribution reach to the retail market. As a result, our products have gained access to hotels, schools, supermarkets, and drugstores. We have repackaged commercial disinfectant products for sale to the consumer market. Since October 1999, we redeveloped four separate products for distribution to the retail market. LiKang Disinfectant redeveloped the following products in the months and years listed:

·	Jin Zhongda collutory (mouthwash)	October 1999

·	Antibacterial lubricant	October 1999

·	LiKang Disinfectant 84	August 2005

·	Dian’erkang aerosol disinfectant	October 2005

Customers

We sell our products on a wholesale and retail basis to the medical community in China. We have approximately 6,000 active and recurring customers including hospitals, medical suppliers, and distribution companies throughout China. We maintain over 20 distribution contracts with wholesale dealers and agents. We generally offer payment terms of four to six months before payment for the products is due. For the fiscal year ended December 31, 2009 two affiliated entities that are our customers, ZhongYou Pharmaceutical and Shanghai Jiuqing Pharmaceuticals Co. Ltd., represented approximately 36.6% of our total net revenues.

Manufacturing

We operate two production facilities in Shanghai, one located in the Shanghai Jiading district and one located in the Shanghai Jinshan district. Products are manufactured primarily in liquid, tablet, and powder form. Approximately 99% of LiKang Disinfectant’s revenues for fiscal 2009 were derived from products manufactured in these two factories.

The Shanghai Jiading district factory is approximately 21,500 square feet, all of which is used for production. The main products produced at the Shanghai Jiading district factory are liquid and index disinfectant devices. The manufacturing facility has the capacity to produce approximately 9 million liters of liquid disinfectant annually. The manufacturing cycle for the liquids, from formulation to finished product, is one day.

The Shanghai Jinshan district factory is approximately 4,300 square feet and is used in the manufacture of the tablet and powder forms of disinfectants. The manufacturing capacity is 300 metric tons of tablet and 180 metric tons of powder disinfectant annually. The average manufacturing cycle for the tablets and powder, from formulation to finished product, is one day.

During fiscal 2007, following GMP certification for both the factory and the equipment; we began utilizing the services of LiKang Biological, a related party, to manufacture some of our products including our An'erdian and Dian'erkang lines of disinfectants. On March 25, 2008, Linkwell Tech purchased 100% of the issued and outstanding stock of LiKang Biological.

We have found in our experience that products manufactured at GMP certified facilities utilizing GMP certified equipment can be sold at higher prices than similar products manufactured at non- GMP certified facilities. While GMP certified products cost more to produce, we are able to increase our selling prices proportionally. Our product packaging varies to meet different needs of the market. We package our liquid and gel disinfectants in popular sizes ranging from 40 ml to 5 liters. We package these tablets in 50 tablet, 100 tablet and 200 tablet bottles. Finally, we package our powder disinfectants in 250 gram and 500 gram containers.

We maintain an inventory of finished products equal to approximately 1 month of average sales. Currently, we are manufacturing at about 50% of full capacity based upon our current product demand, and we have the ability to increase to full capacity if demand continues to increase.

We have an in-house fulfillment and distribution operation, which is used to manage our supply chain, beginning with the placement of the order, continuing through order processing, packaging and shipping the products to each customer. We maintain inventory and fill customer orders from both the Jiading factory and the Jinshan factory.

Raw Materials

We purchase raw materials from six primary suppliers, and we have signed purchase contracts with these suppliers in an effort to ensure a steady supply of raw materials. We have maintained stable business relations with these suppliers for over 10 years, and believe that our relationships with these primary suppliers will remain stable. In the event the relationships falter, there are many suppliers with the capability to supply our company. We purchase raw materials on payment terms of 30 days to three months. Some of the suppliers import from foreign countries, as listed below, and we purchase directly from these suppliers.

The table below details the supply relationships for raw materials

Raw materials	Suppliers	Origin
Iodine	Shanghai Wenshui Chemical Co., Ltd	USA
Potassium iodide	Shanghai Wenshui Chemical Co., Ltd	Holland
Glutaraldehyde	Shanghai Jin an tang Hygienical Product Factory	Germany
Triclosan	Ciba Specialty Chemicals (China) LTD	Domestic
Alcohol	Shanghai Jangbo Chemical Co., L td	Domestic
Trichloroisocyanuric acid	Xuzhou Keweisi Disinfectant Co., Ltd	Domestic

Customer Service and Support

We believe that a high level of customer service and support is critical in retaining and expanding our customer base. Customer care representatives participate in ongoing training programs under the supervision of our training managers. These training sessions include a variety of topics such as product knowledge and customer service tips. Our customer care representatives respond to customers’ e-mails and calls that are related to order status, prices and shipping. If our customer care representatives are unable to respond to a customer’s inquiry at the time of the call, we strive to provide an answer within 24 hours. We believe our customer care representatives are a valuable source of feedback regarding customer satisfaction. Our customer returns and credits average approximately 1% of total sales.

New Product Development

We are committed to research and development. LiKang Disinfectant was created as a research and development organization by the Second Military Medical University (SMMU) of the Chinese Army in 1988. We develop our products internally and own all rights associated with these products.

We commercialized four new disinfectant products in 2007, including PuTai Skin Disinfectant, PuTai washless surgical hand scrub, PuTai washless surgical hand foam disinfectant and LiKang disinfectant detergent, which is an environmental and surface disinfectant. In 2008, 8 products were in development and licensing applications were filed for 4 of these products. In 2009, we commercialized two new disinfectant products, Jifro surgical hand scrub and Putai 2% Chlorhexidine gluconate disinfectant.

For the fiscal years ended December 31, 2009 and 2008, we spent approximately $108,026 and approximately $63,552, respectively, on research and development.

Marketing and Sales

We were formed in 1988 as a research and development organization by the Second Military Medical University (SMMU) of the Chinese Army. Our CEO, Mr. Xuelian Bian, was a member of the staff of SMMU. We believe that his relationships with alumni and business persons associated with SMMU provide us with certain marketing advantages. The university is a well recognized, prestigious institution in China and many of its graduates work at hospitals, medical suppliers, and distribution companies throughout China in senior positions, which places them in the decision making process for purchasing the kind of products we sell. In addition, the students and faculty at the university provide a pool of talent from which we draw, both as potential employees or summer interns who go on to work at other companies, many of whom are customers or potential customers for our products. In marketing our products, we seek to leverage these relationships.

During the 2007 fiscal year, we expanded our distribution capability in the PRC. We have a national marketing and sales presence throughout all 22 provinces, as well as four autonomous regions, and four municipalities of China. We currently employ 40 full-time sales and marketing people based in Shanghai. ZhongYou Pharmaceutical, an affiliate, also sells our products using 70 independent sales representatives in other provinces of China.

Approximately 26.3% of our sales are achieved by our proprietary sales force, while the remaining 73.7% are outsourced to independent dealers and agents. We compensate our proprietary salesman with a base salary plus commission. The sales representatives are located in each of China’s provinces. The external sales network currently covers hospitals in the following 22 provinces including: Beijing, Guangdong, Tianjin, Fujian, Yunnan, Hainan, Jiangsu, Zhejiang, Anhui, Shandong, Henan, Hebei, Liaoning, Heilongjiang, Shanxi, Gansu, Ningxia, Guizhou, Hunan, Sichuan, Xinjiang, Neimenggu. The independent sales representatives sell directly to the end-users.

Disinfectant Educational Center

On May 25, 2006, we entered into an agreement with China Pest Infestation Control and Sanitation Association, an association governed by the Chinese central government, to establish and operate a disinfectant educational center in Beijing, China. We will be responsible for the establishment and development of the disinfectant educational center, as well as its management and funding. The China Pest Infestation Control and Sanitation Association will be responsible for establishing a job training base in Beijing. We believe we were selected to participate in this program based upon our reputation and experience in the disinfectant industry.

We anticipate that the disinfectant educational center will offer a job training program to educate and train professionals to work in the disinfectant field. The disinfectant educational center will be a tuition based education program for which graduates will receive a license from the China Pest Infestation Control and Sanitation Association. After completion of the program, it is envisioned that a personnel exchange service center of the Chinese central government's Health Department will function much like a placement office and assist the center's graduates in securing positions with companies seeking to fill positions in the PRC. From time to time we may also recruit graduates from the disinfectant educational center to join our company.

In 2006, LiKang Disinfectant entered into an agreement with the China Pest Infestation Control Association, the Ministry of Health and the Beijing Olympic Game Committee to establish and operate a disinfectant educational center in Beijing, China. In accordance with the agreement, LiKang Disinfectant is responsible for the establishment of the disinfectant educational center, as well as its management and funding. As of December 31, 2007, we had provided the text books and technical standards for training. In 2008, prior to the Bejing Olympic Games starting, we held the first class for training the 2008 Beijing Olympic Staff. There were 46 staff were qualified among total 51 participants

After the Wenchuan Earthquake occurred, LiKang Disinfectant entered into an agreement with the Ministry of Health, the National Patriot and Sanitation Committee, and the Dujiangyan National Disaster Headquarters to provide service to stricken areas. On June 6, 2008, Likang Disinfectant sent its own teams to Sichuan to provide sanitation technical training for over 270 staff as well as providing a qualification course and examinations to over 100 national disinfectors. On June 27, 2008, 76 national disinfectors had taken professional qualification exams and 67 national disinfectors were qualified. The passage rate was 88%.

In 2008, there were 325 participants that attended the Likang Disinfectant training course, of which 117 became qualified. In 2009, there were 2,320 participants that attended the Likang Disinfectant training course, of which 2,156 became qualified.

Intellectual Property

We have received eleven patents and have twenty-one pending patent application with National Property Right Administration of the PRC. The patent approval process can take up to thirty-six months. The following is a list of LiKang Disinfectant’s patents and pending patent applications:

Patent Category	Patent name	Patent No	Notes
New invention	Low smell and stimulus contain chlorine disinfectant tablet, powder etc	ZL 200410068135.8	Approved, expires August 2026
New invention	A new skin & mucous membrane disinfectant including preparation methods	Application # 200410025305.4	Pending. Applied on 2004-11-12
Appearance design	Bottle (with the wing stretch)	ZL 00 3 14391.0	Approved, expires April 2010
Appearance design	Packaging bottle	ZL 2003 3 0108274.5	Approved, expires November 2013
Appearance design	Bottle	ZL 200530034239.2	Approved, expires December 2015
Appearance design	Test paper box of chlorine	ZL 2004 3 0022740.2	Approved, expires May 2014
Product Improvement	Improved heavy duty bottle	ZL 03 2 29616.9	Approved, expires March 2013
Product Improvement	High strength water sterilizer with Model H ultraviolet lamp	ZL 03 2 10513.4	Approved, expires September 2013
Product Improvement	Sewage application	ZL 2004 2 0037013.8	Approved, expires June 2014
Product Improvement	Container with the vacuum pump	ZL 200420090682.1	Approved, expires June 2016
Product Improvement	Multifunctional air disinfectant	ZL 200420037010.4	Approved, expires August 2015
Product Improvement	Bracket for heavy duty bottle	ZL 200520039668.3	Approved, expires October 2016

We have nine product trademarks, of which four are registered trademarks with the China State Administration for industry and commerce trademark office. These trademarks cover our four major product lines, An’erdian, Jifro, Dian’erkang and Lvshaxing.

We are not a party to any confidentiality or similar agreement with any of our employees or any third parties regarding our intellectual property. It is possible that a third party could, without authorization, utilize our propriety technologies without our consent. We can give no assurance that our proprietary technologies will not otherwise become known or independently developed by competitors.

Competition

We operate in a fragmented, competitive national market for healthcare disinfectant products. According to a survey conducted in 2004 by the China Federation of Industrial Economics (CFIC), the disinfectant market in the PRC was approximately $6.25 billion (USD). While the disinfectant industry in China is an emerging industry, and the industry is populated with small regional players, we estimate that there are over 1,000 manufacturers and distributors of disinfectant products in China and certain of our major competitors distribute products similar to ours, including those which also prevent the spread of airborne viruses such as avian flu and SARS.

We compete with foreign companies, including 3M, who are marketing a limited line of disinfectant products in China, as well as smaller, domestic manufacturers. Most domestic competitors offer a limited line of products and there are few domestic companies with a nationwide presence. We believe that our national marketing and sales presence throughout all 22 provinces, as well as four autonomous regions, and four municipalities of China gives us a competitive advantage over many other disinfectant companies in China.

In addition, prior to the adoption of industry standards in July 2002 by the central government of China, disinfectant products were generally marketed and sold based on pricing factors. We believe the recent standards implemented by the government and a growing middle income class will shift the customer demand from price to quality.

As a result of this heightened license and permit system, all disinfectant manufacturers must comply with "qualified disinfection product manufacturing enterprise requirements” established by the Ministry of Public Health. The requirements include standards for both hardware and software. Hardware includes facilities and machinery and software includes the technology to monitor the facilities. Furthermore the requirements will encompass the knowledge and capability of both the production staff and quality control procedures.

Furthermore we estimate the new government standards adopted in July 2002 are increasing the barriers to entry in the disinfectant industry. We believe that the new standards may lead to fewer competitors as companies falter in their efforts to adhere to the new standards. The implementation of these improved production standards and licenses have effectively decreased the competitiveness of small and mid-size manufacturers. Compliance with the new standards is especially difficult for companies with limited product offerings and inferior technical content.

Competitive Advantages

We believe that the following are the principal competitive strengths that differentiate our company from the majority of our competition:

· Strong sales and distribution network in China – enables us to compete effectively with domestic competitors, as well as larger foreign-owned competitors;

· Product selection and availability – A number of our competitors are smaller, regional companies with a limited number of product offerings. We offer our customers a wide variety of disinfectant products and the ability to ship products to our customers on a timely basis throughout the PRC;

· Research and development – Our efforts to respond to market demand for new products have resulted in the issuance to us of 28 hygiene licenses by the Ministry of Public Health of the central government of China. Based upon our knowledge of our competitors, we do not believe any of our competitors have received as many licenses since the enactment of the licensing standards in July 2002;

· Strong product pipeline – We have a history of introducing 3 or 4 new products to the market each year. We have filed applications for 4 new products and have 8 additional products in development;

· Manufacturing capacity – We are operating at 91% capacity to produce GMP certified products and we have the ability to increase capacity significantly at moderate costs;

· Customer services – Our sales personnel are thoroughly educated about our products, which enable them to better understand the needs of our customers. Our customer service representatives strive to answer questions immediately and, at a minimum, no later than 24 hours after a customer’s inquiry;

· Reliability and speed of delivery. We believe our products have developed a reputation of good quality and effectiveness and our manufacturing capabilities enable us to produce and ship products to our customers promptly;

· Customer service – Our customer service representatives participate in ongoing product training programs and we strive to respond to all customer inquiries within 24 hours; and

· Price – We have developed relationships with a number of raw material suppliers which enables us to keep our costs low and thereby offer prices to our customers which are very competitive.

Our primary competitors in the sale of chemical disinfectants are 3M and Ace Disinfection Factory Co., Ltd. The primary competitors for instrument disinfectants are Chengdu Kangaking Instrument Co., Ltd. and Hangzhou Yangchi Medicine Article Co., Ltd. and the primary competitors for chemical indicators are 3M and Shandong Xinhua Medical Instrument Co., Ltd. Domestic competition comes from regional companies which tend to offer products in small geographic areas and do not distribute their product lines throughout China.

Our primary competitors include:

Competitor		Products

3M Company		Hand disinfectant, skin and mucous disinfectant
Ace		Skin and mucous disinfectant
Chengdu Kangaking		Medical equipment and devices
Hangzhou Yangchi		Sterilized Q-tip
Shandong Xinhua		Chemical indicators

Our primary foreign competitor is 3M Company which has had a presence in China for more than 20 years. 3M Company entered the hand disinfection market at the end of 2004 and primarily offers products in the areas of index and control devices and disinfectant machines. At present, 3M Company has five products for use in operating rooms and its products are found in provincial capital cities of China such as Shanghai, Beijing, Guangzhou, Hangzhou, Nanjin, Chengdu and Xi’an. 3M Company’s product line in China is relatively narrow, with few overlapping products between 3M Company and our company.

Another foreign competitor is Johnson & Johnson, established operations in China in 1994. In China, Johnson & Johnson offers a variety of skin, hand, and medical equipment disinfectants. Prior to the recent initiatives by the government, disinfectant products were marketed based on pricing and despite the brand awareness of Johnson & Johnson; its products did not have widespread reception among the community. Furthermore, Johnson & Johnson does not offer a wide variety of disinfectant products in China.

Government Regulations

Our business and operations are located in the PRC. We are subject to local food, drug, environmental laws related to certification of manufacturing and distributing of disinfectants. We are also licensed by the Shanghai City Government to manufacture and distribute disinfectants. We are in substantial compliance with all provisions of those licenses and have no reason to believe that they will not be renewed as required by the applicable rules of Shanghai. In addition, our operations must conform to general governmental regulations and rules for private companies conducting business in China.

Pursuant to the July 2002 Ministry of Public Health 27th Order of Ministry of Health of the People's Republic of China, all disinfectant manufacturers in China must obtain a license to manufacture hygiene disinfectants. Prior to release, all disinfectant instruments must obtain the official hygiene permit document of Ministry of Public Health and the approval of the provincial hygiene administrative department. The implementation of these improved production standards and licenses has effectively decreased the competitiveness of small to mid size manufacturers with single product and inferior technical content. Presently we meet all standards initiated by this ordinance and we have been granted 28 hygiene licenses by the Ministry of Public Health.

We are also subject to various other rules and regulations, including the People’s Republic of China Infectious Disease Prevention and Cure Law, Disinfection Management Regulation, Disinfection Technique Regulation, Disinfection Product Manufacturer Sanitation Regulation, and Endoscope Rinse and Disinfection Technique Manipulation Regulation. We believe we are in material compliance with all of the applicable regulations.

Sanitary Standard for Producing Disinfectant products Enterprises 2009

To strengthen supervision and management of disinfection products, standardize the behavior of disinfection products based on "Infectious Diseases Prevention Law" and "sterilization management approach," The People's Republic of China Ministry of Health have revised the old disinfectant manufacturing criteria and enacted the “Sanitary Standard for Producing Disinfectant products Enterprises 2009 ” and effective from January 1, 2010.

According to the new guideline, the compounding, mixing and subpackaging of Skin and mucous membrane disinfectants, and antibacterial preparation (except for hand-washing products), should be processed in a workshop with a 300,000 level of air purification.

PRC Legal System

Since 1979, many laws and regulations addressing economic matters in general have been promulgated in the PRC. Despite development of its legal system, the PRC does not have a comprehensive system of laws. In addition, enforcement of existing laws may be uncertain and sporadic, and implementation and interpretation thereof inconsistent. The PRC judiciary is relatively inexperienced in enforcing the laws that exist, leading to a higher than usual degree of uncertainty as to the outcome of any litigation. Even where adequate laws exist in the PRC, it may be difficult to obtain swift and equitable enforcement of such laws, or to obtain enforcement of a judgment by a court of another jurisdiction. The PRC's legal system is based on written statutes and, therefore, decided legal cases are without binding legal effect, although they are often followed by judges as guidance. The interpretation of PRC laws may be subject to policy changes reflecting domestic political changes. As the PRC legal system develops, the promulgation of new laws, changes to existing laws and the preemption of local regulations by national laws may adversely affect foreign investors. The trend of legislation over the past 20 years has, however, significantly enhanced the protection afforded foreign investors in enterprises in the PRC. However, there can be no assurance that changes in such legislation or interpretation thereof will not have an adverse effect upon our business operations or prospects.

Economic Reform Issues

Since 1979, the Chinese government has reformed its economic systems. Many reforms are unprecedented or experimental; therefore they are expected to be refined and improved. Other political, economic and social factors, such as political changes, changes in the rates of economic growth, unemployment or inflation, or in the disparities in per capita wealth between regions within China, could lead to further readjustment of the reform measures. We cannot predict if this refining and readjustment process may negatively affect our operations in future periods.

Over the last several years, China's economy has registered a high growth rate. Recently, there have been indications that rates of inflation have increased. In response, the Chinese government recently has taken measures to curb this excessively expansive economy. These measures have included devaluations of the Chinese currency as the result of inflation. This relative Renminbi (“RMB”) devaluation places some restrictions on the availability of domestic credit, reducing the purchasing capability of customers, and limiting re-centralization of the approval process for some foreign product purchases. These austerity measures alone may not succeed in slowing down the economy's excessive expansion or control inflation, and may result in severe dislocations in the Chinese economy. The Chinese government may adopt additional measures to further combat inflation, including the establishment of freezes or restraints on certain projects or markets.

To date reforms to China's economic system have not adversely impacted our operations and are not expected to adversely impact operations in the foreseeable future; however, there can be no assurance that the reforms toChina's economic system will continue or that we will not be adversely affected by changes in China's political, economic, and social conditions and by changes in policies of the Chinese government, such as changes in laws and regulations, measures which may be introduced to control inflation, changes in the rate or method of taxation, imposition of additional restrictions on currency conversion and remittance abroad, and reduction in tariff protection and other import restrictions.

Employees

The Company employs approximately 162 full time employees, including our executive officers, as follows:

Department		Number of Employees

Administrative center		15
Accounting		12
Production		54
Logistics		17
Sales and Marketing Staff in Shanghai		40
Training		9
Research and Development		15
Total		162

U.S. Advisors

In September 2006, we entered into a three-year agreement with a consultant to provide business development and management services. In connection with this agreement, we issued 500,000 shares of our common stock. We valued these services using the fair value of common shares on the grant date at $0.185 per share and recorded a deferred consulting expense of $92,500 to be amortized over the service period. For the year ended December 31, 2009, amortization of consulting compensation amounted to $20,556.

On November 20, 2007, we entered into a one year agreement with Segue Ventures LLC to provide various informal advisory and consulting services, including U.S. business methods and compliance with SEC disclosure requirements. In connection with this agreement, Segue Ventures LLC received $4,000 in cash and 16,000 shares of common stock per month. From November 20, 2007 to June 30, 2008, we recorded a total of 116,800 common shares issuable valued at $24,064 as stock-based consulting expense. On February 27, 2008, 70,000 shares of our common stock were issued to Segue Ventures LLC. We valued these 70,000 shares using the fair value of the common shares on the contract date at $0.19 per share and recorded consulting expense of $13,300, of which, $3,938 was allocated to the year ended December 31, 2007, and $9,362 was allocated to the six months ended June 30, 2008. On August 13, 2008, 68,800 shares of our common stock were issued to Segue Ventures LLC. We valued these 68,800 shares using the fair value of common shares on the grant date at $0.19 per share and recorded consulting expense of $13,072 in 2008. We terminated its services agreement with Segue Ventures LLC on September 11, 2008, and no shares are unissued.

In March 2008, we entered into a two month agreement with SmallCapVoice.Com, Inc. to provide us with financial public relations services. In connection with this agreement, we pay $3,500 per month and issues a total of 35,000 shares of our common stock. On March 11, 2008, we issued 35,000 shares to SmallCapVoice.Com, Inc. We valued these services using the fair value of common shares on the grant date at $0.19 per share.

On May 1, 2008, we entered into a two year agreement with China Health Capital Group, Inc. (“CHC”) to provide us with financial and investment services. In connection with this agreement, on June 24, 2008, we issued 2,000,000 shares of Common Stock valued at $0.21 per share to CHC and recorded $420,000 as deferred compensation. We amortized $210,000 as stock-based compensation for the year ended December 31, 2009.

On June 27, 2008, Monarch Capital Fund, Ltd. exercised a warrant to purchase 100,000 shares of Common Stock with price of $0.20 per share. We received proceeds from this warrant exercise of $20,000 on June 24, 2008.

On July 1, 2009, we entered into a two year agreement with First Trust. In connection with this agreement, we issued 1,800,000 shares of Common Stock valued at $0.09 per share to First Trust and recorded $162,000 as deferred compensation. We amortized $40,500 as stock-based compensation for the year ended December 31, 2009.

History of Our Company

Linkwell Corporation (formerly Kirshner Entertainment & Technologies, Inc. (“Kirshner”)) was incorporated in the State of Colorado on December 11, 1996. On May 31, 2000, we acquired 100% of HBOA.com, Inc. We focused on development of an internet portal through which home based business owners, as well as commercial private label businesses, obtain the products, services, and information necessary to start, expand and profitably run their businesses.

On May 2, 2005, we entered into and consummated a share exchange with all of the shareholders of Linkwell Tech Group, Inc. (“Linkwell Tech”). Pursuant to the share exchange, we acquired 100% of the issued and outstanding shares of Linkwell Tech's common stock, in exchange for 36,273,470 shares of our common stock, which at closing represented approximately 87.5% of the issued and outstanding shares of our common stock. As a result of the transaction, Linkwell Tech became our wholly-owned subsidiary. Linkwell Tech was founded on June 22, 2004, as a Florida corporation. On June 30, 2004, Linkwell Tech acquired 90% of Shanghai LiKang Disinfectant High-Tech Company, Ltd. (“LiKang Disinfectant”) through a share exchange. LiKang Disinfectant is a science and technology enterprise founded in 1988. LiKang Disinfectant is involved in the development, production, marketing and sale, and distribution of disinfectant health care products.

LiKang Disinfectant has developed a line of disinfectant product offerings which are utilized by the hospital and medical industry in China. LiKang Disinfectant regards hospital disinfectant products as the primary segment of its business and has developed and manufactured several series of products in the field of skin mucous disinfection, hand disinfection, surrounding articles disinfection, medical instruments disinfection and air disinfection.

On June 30, 2005, our Board of Directors approved an amendment of our Articles of Incorporation to change the name of the Company to Linkwell Corporation. The effective date of the name change was after close of business on August 16, 2005.

On April 6, 2007, Linkwell Tech entered into two material stock purchase agreements as follows:

i) Linkwell Tech entered into an agreement (the “Biological Stock Purchase Agreement”) to acquire a 100% equity interest in Shanghai LiKang Biological High-Tech Company, Ltd. (“LiKang Biological”), in a related party transaction with Mr. Xuelian Bian, our Chief Executive Officer, Mr. Wei Guan our Vice-President and Director, and Shanghai Likang Pharmaceuticals Technology Co., Ltd. (“LiKang Pharmaceutical”). Before the Biological Stock Purchase Agreement, Mr. Bian and Mr. Guan owned 90% and 10% of LiKang Pharmaceutical, respectively. Mr. Bian and LiKang Pharmaceutical owned 60% and 40% of LiKang Biological, respectively. Pursuant to the terms of the Biological Stock Purchase Agreement, Mr. Bian and LiKang Pharmaceutical were to receive 1,000,000 shares of our restricted common stock.

Due to restrictions under PRC law that prohibited the consideration contemplated by the Biological Stock Purchase Agreement, the agreement did not close. As a result, on March 25, 2008, the parties agreed to enter into an amendment to the Biological Stock Purchase Agreement (“Biological Amendment”) in an effort to complete the stock purchase transaction. Pursuant to the terms of the Biological Amendment, the only material change to the Biological Stock Purchase Agreement related to the consideration paid by Linkwell Tech to Xuelian Bian and LiKang Pharmaceutical, which was changed from 1,000,000 shares of our common stock to $200,000 and 500,000 shares of our common stock. As of December 31, 2008, the Biological Stock Purchase Agreement was pending and required further approval from the PRC Ministry of Commerce. Due to the time consuming and complicated nature of the approval procedure, the parties agreed to enter into a second amendment to the Biological Stock Purchase Agreement (“Second Biological Amendment”) in order to complete the purchase transactions timely and properly. Pursuant to the terms of the Second Biological Amendment, the purchaser was changed from Linkwell Tech to LiKang Disinfectant, in addition, the consideration was changed to RMB2,000,000 (approximately $291,792) and 500,000 shares of our common stock. After the Second Biological Amendment, approval from Ministry of Commerce, in the People’s Republic of China is not necessary because LiKang Disinfectant acquired 100% of the equity interest in LiKang Biological and both LiKang Disinfectant and LiKang Biological are companies registered in PRC. This transaction closed on March 5, 2009. We issued 500,000 shares of our common stock to LiKang Pharmaceutical on December 28, 2009; and

ii) Linkwell Tech, which already owned a 90% equity interest in LiKang Disinfectant, was to purchase the remaining 10% equity interest of LiKang Disinfectant from Shanghai Shanhai Group, a non-affiliated Chinese entity, pursuant to a stock purchase agreement (the “Disinfectant Stock Purchase Agreement”) whereby Shanghai Shanhai Group was to receive 3,000,000 shares of our common stock.

Due to restrictions under PRC law that prohibited the consideration then contemplated by the Disinfectant Stock Purchase Agreement, the transaction did not close. As a result of this, on March 25, 2008, the parties agreed to enter into an amendment to the Disinfectant Stock Purchase Agreement (“Disinfectant Amendment”) in an effort to complete the stock purchase transaction. Pursuant to the terms of the Disinfectant Amendment, the only material change to the Disinfectant Stock Purchase Agreement related to the consideration paid by Linkwell Tech to the Shanghai Shanhai Group for the remaining a 10% equity interest, which was changed from 3,000,000 shares of our common stock, to $380,000 and 1,500,000 shares of our common stock. Due to the fluctuation of the applicable exchange rate, the cash consideration was increased to $399,057. The other terms of the Disinfectant Stock Purchase Agreement were not changed.

Linkwell Tech paid $395,800 to the Shanghai Shanhai Group on February 21, 2008 and paid $3,257 on April 18, 2008. A total of 1,500,000 shares of our common stock were expected to be issued before the end of May 2008. The parties agreed to extend the share issuance date until October 20, 2008. The Company valued the acquisition using the fair value of common shares at $0.19 per share and recorded an investment of $285,000. Including the cash payment of $399,057, the total investment for acquiring 10% equity interest in LiKang Disinfectant was $684,057. The cumulative minority interest of 10% equity interest in LiKang Disinfectant at March 25, 2008, was approximately $557,779. The difference between the total investment and the cumulative minority interest of $126,278 was deducted from retained earnings as dividends to the 10% minority shareholder, Shanghai Shanhai Group. As a result of the closing of the Disinfectant Stock Purchase Agreement, as amended, as of March 25, 2008, our 90% owned subsidiary Linkwell Tech owns 100% of the equity interest in LiKang Disinfectant.

On February 15, 2008, we entered into a stock purchase agreement with Ecolab Inc., a Delaware corporation (“Ecolab”), pursuant to which Ecolab agreed to purchase 888,889 of shares of Linkwell Tech, or 10% of the issued and outstanding capital stock of Linkwell Tech, for $2,000,000. On March 28, 2008 and June 4, 2008, Linkwell Tech received $200,000 and $1,388,559, respectively from Ecolab. Including a $400,000 loan that Linkwell Tech received from Ecolab and accrued interest thereon of $11,441. On May 31, 2008, the Company, Linkwell Tech and Ecolab entered into a Linkwell Tech Group Inc. Stockholders Agreement, whereby both the Company and Ecolab are subject to, and beneficiaries of, certain pre-emptive rights, transfer restrictions and take along rights relating to the shares of Linkwell Tech that the Company and Ecolab each hold. As of May 31, 2008, the principal and accrued interest of $11,441 on the short-term $400,000 loan became part of Ecolab’s investment and does not need to be repaid.

On May 31, 2008, LiKang Disinfectant entered into a stock purchase agreement under which it sold 100% of the capital stock of its wholly-owned subsidiary, LiKang International, to Linkwell International Trading Co., Ltd, a company registered in Hong Kong which is 100% owned by Mr. Wei Guan, our Vice President and Director. Pursuant to the terms of the agreement, LiKang Disinfectant received $291,754 (RMB 2,000,000) once the agreement was approved by the PRC Ministry of Commerce with such approval occurring on March 27, 2008.

During the quarter ended September 30, 2009, LiKang Disinfectant invested certain of its intangible assets in Likang Biological. The Likang Disinfectant intangible assets were valued at approximately $2,000,000 and accounted for an approximately $800,000 increase in the registered capital of Likang Biological. Due to U.S. GAAP, a majority of this $800,000 has been eliminated as this patent has been generated internally.

On December 21, 2009, Linkwell entered into a stock purchase agreement with Inner Mongolia Wuhai Chengtian Chemical Co., Ltd., a corporation organized under the laws of China (“Wuhai Chengtian”) and Honglin Li, a stockholder of Wuhai Chengtian, pursuant to which Likang Disinfectant was to purchase 35% of the outstanding capital stock of Wuhai Chengtian from Honglin Li in exchange for approximately $463,235 (3,150,000 RMB) and 4,000,000 shares of our common stock. Prior to this transaction, Likang Disinfectant owned 16% of the capital stock of Wuhai Chengtian. When this transaction is consummated, LiKang Disinfectant shall own 51% of the capital stock of Wuhai Chengtian. Wuhai Chengtian manufactures materials we use to make certain of our disinfectant products.

We, along with Wuhai Chengtian, have been unable to obtain governmental tax approval of the transaction with Wuhai Chengtian and Honglin Li. As such, on February 26, 2010, the Company, Linkwell Tech, Likang Disinfectant, Wuhai Chengtian and Honglin Li entered into Amendment No. 1 to the Stock Purchase Agreement (the “Amendment”) whereby the Stock Purchase Agreement has been amended such that the Exchange is now contingent upon the parties receiving governmental approval of the transaction. This transaction has not closed as of the date of this report.

ITEM 1A. RISK FACTORS.

An investment in our common stock involves a significant degree of risk. You should not invest in our common stock unless you can afford to lose your entire investment. You should consider carefully the following risk factors and other information in this annual report before deciding to invest in our common stock.

RISKS RELATED TO OUR COMPANY

We engage in a number of material transactions with related parties which could result in a conflict of interest involving our management.

We are materially dependent on certain related party transactions in the ongoing conduct of our business. Sales to our related party represented approximately 21.9% of our total net revenues in the fiscal year of 2008 and approximately 36.6% of our total net revenues in fiscal 2009. This related party represented approximately 58.6% and approximately 49.6% of our accounts receivable at December 31, 2009 and 2008, respectively. These affiliated transactions may from time to time result in a conflict of interest for our management. Because these transactions are not subject to the approval of our shareholders, investors in our company are wholly reliant upon the judgment of our management in these related party transactions.

The management of our company is located in the PRC and we are materially dependent upon advisory services of U.S. advisors.

None of the current members of our management have any experience in U.S. public companies and these individuals are not fluent in English.

Until such time as we are able to expand our board of directors to include English-speaking individuals who have experience with the operation and regulatory framework applicable to U.S. public companies, we are materially dependent upon our relationship with our U.S. advisors. If for any reason our Advisors should fail to provide the contracted services at the anticipated levels or fails to extend its services and we have not added members to our board of directors with the requisite experience we may be unable to prepare and file reports as required by the Securities Exchange Act of 1934 on a timely basis which could lead to our common stock being removed from the OTCBB. In this event, your ability to liquidate your investment would be negatively impacted and you could lose your entire investment in our company.

As is customary in the PRC, we extend relatively long payment terms to our customers, including on sales to related parties, which can negatively impact our cash flows. Our terms of sale generally require payment within four to six months, which is considerably longer than customary terms offered in the United States. For fiscal 2009, the average time of payment on accounts receivable from non-related third parties was 121 days and the average time of payment on accounts receivable from related parties as 380 days, compared to 235 days from related parties in fiscal 2008; an increase of 145 days. The Company would like to control the average time of payment on accounts receivable from related parties within 120 days.

We occasionally offer established customers, including related parties, longer payment terms of up to 240 days on new products as an incentive to purchase these products, which has served to further increase the average days outstanding for accounts receivable. We maintain a relatively low reserve for doubtful accounts when compared to a company operating in the U.S. Our payment terms may have the effect of adversely impacting our cash flow and our ability to fund our operations out of our operating cash flow. Our ability to continue to implement our growth strategy could suffer if our cash flows are adversely impacted which will have the effect of limiting our ability to increase our revenues in the future.

Certain agreements to which we are a party and are material to our operations lack various legal protections, which are customarily contained in similar contracts prepared in the United States.

We are a Chinese company and all of our business and operations are conducted in China. We are a party to certain material contracts, including an agreement for the lease for our principal offices and manufacturing facility. While these contracts contain the basic business terms of the agreements between the parties, these contracts do not contain certain provisions which are customarily contained in similar contracts prepared in the U.S., such as representations and warranties of the parties, confidentiality and non-compete clauses, provisions outlining events of defaults, and termination and jurisdictional clauses. Because our material contracts omit these types of clauses, notwithstanding the differences in Chinese and U.S. laws we may not have the same legal protections as we would if the contracts contained these additional provisions. We anticipate that contracts we enter into in the future will likewise omit these types of legal protections. While we have not been subject to any adverse consequences as a result of the omission of these types of clauses, and we consider the contracts to which we are a party to contain all the material terms of our business arrangements with the other party, future events may occur which lead to a dispute under agreements which could have been avoided if the contracts were prepared in conformity with U.S. standards. Contractual disputes which may arise from this lack of legal protections will divert management's time from the operation of our business and require us to expend funds attempting in settling a possible dispute. This possible diversion of management time will limit the time our management would otherwise devote to the operation of our business, and the diversion of capital could limit the funds we have available to pay our ongoing operating expenses.

Each of our product groups operate in highly competitive businesses.

Each of our product groups is subject to competition from other manufacturers of similar products. There are approximately 1,000 manufacturers of similar disinfectant products in China, but only approximately 30 manufacturers, including our company, operate on a continuous basis with the remainder of other companies periodically entering the market in times of increased demand. While we believe we are one of the leading manufacturers of disinfectant products in the PRC, from time to time there is a sporadic oversupply of these products which can adversely impact our market share and competitive position in this product group. As a result, we may not be able to effectively compete in our product segments which could have the effect of limiting our ability to sustain our current level of operations or grow our revenues in future periods.

Because of the specialized, technical nature of the business, we are highly dependent on certain members of management, as well as our marketing, engineering and technical staff.

The loss of the services of our current management and skill employees could have a material and negative effect on our ability to effectively pursue our business strategy. In addition to manufacturing high volumes of our products and developing new products, we must attract, recruit and retain a sizeable workforce of technically competent employees, including additional skilled and experienced managerial, marketing, engineering and technical personnel. If we are unable to do so, our ability to grow our business and increase our revenues could be limited.

If we experience customer concentration, we may be exposed to all of the risks faced by our remaining material customers.

For the fiscal years ended December 31, 2009 and 2008 revenues from one customer, ZhongYou Pharmaceutical, an affiliate, represented approximately 21% and approximately 27%, respectively, of our total net revenues. Unless we maintain multiple customer relationships, it is likely that we will experience periods during which we will be highly dependent on a limited number of customers. Dependence on a few customers could make it difficult to negotiate attractive prices for our products and could expose us to the risk of substantial losses if a single dominant customer stops conducting business with us. Moreover, to the extent that we are dependent on any single customer, we are subject to the risks faced by that customer to the extent that such risks impede the customer's ability to stay in business and make timely payments to us.

We depend on factories to manufacture our products, which may be insufficiently insured against damage or loss.

We have no direct business operation, other than our ownership of our subsidiaries located in China, and the results of operations and our financial condition are solely dependent on our subsidiaries' factories in China. We do not currently maintain insurance to protect against damage and loss to our facilities and other leasehold improvements. Therefore, any material damage to, or the loss of, any of our facilities due to fire, severe weather, flooding or other cause, would not be shared with an insurance company, and if large enough, would have a material and negative effect on our financial condition. If the damage was significant, we could be forced to stop operations until such time as the faculties could be repaired.

Our operations are subject to government regulation. If we fail to comply with the applicable regulations, our ability to operate in future periods could be in jeopardy.

We are subject to various state and local environmental laws related to our business. We are subject to local food, drug, environmental laws related to certification of manufacturing and distributing of any disinfectant. We are also licensed by the Shanghai City Government to manufacture and distribute disinfectants. While we are in substantial compliance with all provisions of those registrations, inspections and licenses and have no reason to believe that they will not be renewed as required by the applicable rules of the Central Government and the Shandong Province, any non-renewal of these authorities could result in the cessation of our business activities.

Due to recent incidents of pollution to milk powder by Melamine and increased medical accidents and disputes, the government will impose more stringent restrictions over the quality of products and distributions in markets, given tighter control over food, drug and disinfectant industries, which would add costs to our operations from compliance of all provisions of restrictions. Any incompliance with provisions of these restrictions would jeopardize our ability to operate in future.

We may not have sufficient protection of certain of our intellectual property.

We utilize certain technologies in the purification of raw material used in our products which are proprietary in nature. We are not a party to any confidentiality or similar agreements with employees and third parties including consultants, vendors and customers and it not likely that we will enter into these types of agreements in the future. It is possible that our employees or a third party could, without authorization, utilize our propriety technologies without our consent. The unauthorized use of this proprietary information by third parties could adversely affect our business and operations as well as any competitive advantage we may have in our market segment. We may not have adequate remedies for the protection of our proprietary technologies and these proprietary technologies could become known or independently developed by competitors, in which event our ability to effectively compete could be in jeopardy.

We have not voluntarily implemented various corporate governance measures, in the absence of which, shareholders may have reduced protections against interested director transactions, conflicts of interest and other matters.

We are not subject to any law, rule or regulation requiring that we adopt any of the corporate governance measures that are required by the rules of national securities exchanges such as independent directors and audit committees. It is possible that if we were to adopt some or all of the corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. Prospective investors should bear consider our current lack of corporate governance measures in formulating their investment decisions.

RISKS RELATED TO DOING BUSINESS IN CHINA

All of our assets and operations are located in the PRC and are subject to changes resulting from the political and economic policies of the Chinese government.

Our business operations could be restricted by the political environment in the PRC. The PRC has operated as a socialist state since 1949 and is controlled by the Communist Party of China. In recent years, however, the government has introduced reforms aimed at creating a "socialist market economy" and policies have been implemented to allow business enterprises greater autonomy in their operations. Changes in the political leadership of the PRC may have a significant effect on laws and policies related to the current economic reform programs, other policies affecting business and the general political, economic and social environment in the PRC, including the introduction of measures to control inflation, changes in the rate or method of taxation, the imposition of additional restrictions on currency conversion and remittances abroad, and foreign investment. Moreover, economic reforms and growth in the PRC have been more successful in certain provinces than in others, and the continuation or increases of such disparities could affect the political or social stability of the PRC.

Although we believe that the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic development of China, the future direction of these economic reforms is uncertain and the uncertainty may decrease the attractiveness of our company as an investment, which may in turn result in a decline in the trading price of our common stock.

The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.

The PRC only recently has permitted provincial and local economic autonomy and private economic activities. The government of the PRC has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions thereof. In such an event, we could be forced to cease operations.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

Because all of revenues are in the form of Renminbi, any future restrictions on currency exchanges may limit our ability to use revenue generated in Renminbi to fund any future business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the Renminbi for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies, after providing valid commercial documents, at those banks authorized to conduct foreign exchange business. In addition, conversion of Renminbi for capital account items, including direct investment and loans, is subject to government approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi, especially with respect to foreign exchange transactions.

We may be unable to enforce our rights due to policies regarding the regulation of foreign investments in China.

The PRC's legal system is a civil law system based on written statutes in which decided legal cases have little value as precedents, unlike the common law system prevalent in the United States. The PRC does not have a well-developed, consolidated body of laws governing foreign investment enterprises. As a result, the administration of laws and regulations by government agencies may be subject to considerable discretion and variation, and may be subject to influence by external forces unrelated to the legal merits of a particular matter. China's regulations and policies with respect to foreign investments are evolving. Definitive regulations and policies with respect to such matters as the permissible percentage of foreign investment and permissible rates of equity returns have not yet been published. Statements regarding these evolving policies have been conflicting and any such policies, as administered, are likely to be subject to broad interpretation and discretion and to be modified, perhaps on a case-by-case basis. The uncertainties regarding such regulations and policies present risks which may affect our ability to achieve our stated business objectives. If we are unable to enforce any legal rights we may have under our contracts or otherwise, our ability to compete with other companies in our industry could be limited which could result in a loss of revenue in future periods which could impact our ability to continue as a going concern.

Recent PRC regulations relating to acquisitions of PRC companies by foreign entities may create regulatory uncertainties that could restrict or limit our ability to operate, including our ability to pay dividends.

The PRC State Administration of Foreign Exchange, or SAFE, issued a public notice in January 2005 concerning foreign exchange regulations on mergers and acquisitions in China. The public notice states that if an offshore company controlled by PRC residents intends to acquire a PRC company, such acquisition will be subject to strict examination by the relevant foreign exchange authorities. The public notice also states that the approval of the relevant foreign exchange authorities is required for any sale or transfer by the PRC residents of a PRC company’s assets or equity interests to foreign entities for equity interests or assets of the foreign entities.

In April 2005, SAFE issued another public notice further explaining the January notice. In accordance with the April 2005 notice, if an acquisition of a PRC company by an offshore company controlled by PRC residents has been confirmed by a Foreign Investment Enterprise Certificate prior to the promulgation of the January 2005 notice, the PRC residents must each submit a registration form to the local SAFE branch with respect to their respective ownership interests in the offshore company, and must also file an amendment to such registration if the offshore company experiences material events, such as changes in the share capital, share transfer, mergers and acquisitions, spin-off transaction or use of assets in China to guarantee offshore obligations. The April 2005 notice also provides that failure to comply with the registration procedures set forth therein may result in restrictions on our PRC resident shareholders and our subsidiaries. Pending the promulgation of detailed implementation rules, the relevant government authorities are reluctant to commence processing any registration or application for approval required under the SAFE notices.

In addition, on August 8, 2006, the Ministry of Commerce (“MOFCOM”), joined by the State-Owned Assets Supervision and Administration Commission of the State Council, State Administration of Taxation, State Administration for Industry and Commerce, China Securities Regulatory Commission and SAFE, amended and released the Provisions for Foreign Investors to Merge and Acquire Domestic Enterprises, new foreign-investment rules which took effect September 8, 2006, superseding much, but not all, of the guidance in the prior SAFE circulars. These new rules significantly revise China’s regulatory framework governing onshore-offshore restructurings and how foreign investors can acquire domestic enterprises. These new rules signify greater PRC government attention to cross-border merger, acquisition and other investment activities, by confirming MOFCOM as a key regulator for issues related to mergers and acquisitions in China and requiring MOFCOM approval of a broad range of merger, acquisition and investment transactions. Further, the new rules establish reporting requirements for acquisition of control by foreigners of companies in key industries, and reinforce the ability of the Chinese government to monitor and prohibit foreign control transactions in key industries.

These new rules may significantly affect the means by which offshore-onshore restructurings are undertaken in China in connection with offshore private equity and venture capital financings, mergers and acquisitions. It is expected that such transactional activity in China in the near future will require significant case-by-case guidance from MOFCOM and other government authorities as appropriate. It is anticipated that application of the new rules will be subject to significant administrative interpretation, and we will need to closely monitor how MOFCOM and other ministries apply the rules to ensure its domestic and offshore activities continue to comply with PRC law. Given the uncertainties regarding interpretation and application of the new rules, we may need to expend significant time and resources to maintain compliance.

It is uncertain how our business operations or future strategy will be affected by the interpretations and implementation of the SAFE notices and new rules. Our business operations or future strategy could be adversely affected by the SAFE notices and the new rules. For example, we may be subject to more stringent review and approval process with respect to our foreign exchange activities.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

We may have difficulty establishing adequate management, legal and financial controls in the PRC.

PRC companies have historically not adopted a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and, computer, financial and other control systems. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our business.

RISKS RELATED TO OUR COMMON STOCK

We have not voluntarily implemented various corporate governance measures, in the absence of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors' independence, audit committee oversight, and the adoption of a code of ethics. Although we have adopted a Code of Ethics, we have not yet adopted any of these other corporate governance measures and, since our securities are not yet listed on a national securities exchange, we are not required to do so. We have not adopted corporate governance measures such as an audit or other independent committees of our board of directors as we presently do not have any independent directors. If we expand our board membership in future periods to include additional independent directors, we may seek to establish an audit and other committees of our board of directors. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

Provisions of our Certificate of Incorporation and bylaws may delay or prevent a takeover which may not be in the best interests of our stockholders.

Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our shareholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Florida Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested shareholders.

In addition, our articles of incorporation authorize the issuance of up to 10,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our Board of Directors, of which no shares are currently outstanding. Our Board of Directors may, without shareholder approval, issue preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock.

Our stock price will fluctuate and could subject our company to litigation.

The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond its control. These factors include:

· Quarterly variations in operating results;

· Changes in accounting treatments or principles;

· Additions or departures of key personnel;

· Stock market price and volume fluctuations of publicly-traded companies in general and Chinese-based companies in particular; and

· General political, economic and market conditions.

Because our stock currently trades below $5.00 per share and is quoted on the OTC Bulletin Board, our stock is considered a "penny stock" which can adversely affect its liquidity.

As a result of the trading price of our common stock being less than $5.00 per share, our common stock is considered a "penny stock," and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser's written consent prior to the transaction.

SEC regulations also require additional disclosure in connection with any trades involving a "penny stock," including the delivery of a disclosure schedule explaining the penny stock market and its associated risks prior to any penny stock transaction. These requirements severely limit the liquidity of securities in the secondary market because few brokers or dealers are likely to undertake these compliance requirements. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks include price fluctuations and the lack of a liquid market.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our facilities include our principal executive offices, located at 1104 Jiatang Road Jiading District, Shanghai China 201807. We lease our principal executive office building and warehouse space, which consists of approximately 1,860 square feet, from Shanghai Shanhai Group, an unaffiliated third party, under a lease that expires in December 2010 for approximately $32,000 annually. The amount due under the lease increased during the lease years beginning in 2008 by 8% to 10% annually.

Our other executive office is located at Room 701-704, No 11 Guotai Road, Shanghai, China under leases entered into on July 16, 2008 for approximately $111,462 annually. The lease agreement will expire on July 15, 2010.

Until August 2005, we leased approximately 21,500 square feet of manufacturing space from Shanghai LiKang Pharmaceutical Technology Company, Limited, an affiliate, under a lease originally expiring December 2006 for approximately $11,500 annually. In August 2005, we purchased this building, which includes an assignment of the land use permit for $333,675. See Part II, Item 12. Certain Relationships and Related Transactions, and Director Independence appearing later in this annual report.

We also leased approximately 2005 square feet of warehouse space from Shanghai Henglian Industrial Co. Limited, an unaffiliated third party, under a lease that we entered into on November 1, 2008 for $41,366 annually. The lease agreement expired on October 31, 2009. In July 2009, due to the completion of new warehouse in Jiading, we ended the lease agreement with Shanghai Henglian Industrial Co.Limited and ceased renting the warehouse.

ITEM 3. LEGAL PROCEEDINGS.

Please see the disclosure included in NOTE 16, “CONTINGENCY” in the notes to our financial statements included in Item 8 to this Form 10-K.

ITEM 4. (REMOVED AND RESERVED).

N/A.

PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is quoted on the Over The Counter Bulletin Board (“OTCBB”) under the symbol LWLL. The reported high and low closing prices for the common stock as reported on the OTCBB are shown below for the periods indicated. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not represent actual transactions.

	High		Low

Fiscal 2008

First quarter ended March 31, 2008	$	0.23	$	0.16
Second quarter ended June 30, 2008	$	0.28	$	0.19
Third quarter ended September 30, 2008	$	0.25	$	0.07
Fourth quarter ended December 31, 2008	$	0.09	$	0.04

Fiscal 2009

First quarter ended March 31, 2009	$	0.07	$	0.03
Second quarter ended June 30, 2009	$	0.22	$	0.04
Third quarter ended September 30, 2009	$	0.24	$	0.07
Fourth quarter ended December 31, 2009	$	0.19	$	0.13

On April 13, 2010, the last sale price of our common stock as reported on the OTCBB was $0.12. As of December 31, 2009, there were approximately 1,730 record owners of our common stock.

Dividend Policy

We have never paid cash dividends on our common stock. Payment of dividends will be made at the sole discretion of our Board of Directors and will depend, among other factors, upon our earnings, capital requirements and our operating and financial condition. At the present time, our anticipated financial capital requirements are such that we intend to follow a policy of retaining earnings in order to finance the development of our business.

While we have no current intention of paying dividends on our common stock, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.

Recent Sales of Unregistered Securities

None.

ITEM 6. SELECTED FINANCIAL DATA.

N/A.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion contains forward-looking statements. Forward looking statements are identified by words and phrases such as “anticipate”, “intend”, “expect” and words and phrases of similar import. We caution investors that forward-looking statements are only predictions based on our current expectations about future events and are not guarantees of future performance. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements due to risks, uncertainties and assumptions that are difficult to predict, including those set forth in our Form 10-K annual report for the fiscal year ended December 31, 2009. We encourage you to read those risk factors carefully along with the other information provided in this report and in our other filings with the SEC before deciding to invest in our stock or to maintain or change your investment. We undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law.

You should read this MD&A in conjunction with the Consolidated Financial Statements and related Notes in Item 8 hereof.

OVERVIEW

We operate under a holding company structure and currently have one direct 90% owned operating subsidiary, Linkwell Tech Group Inc. (“Linkwell Tech”) a Florida corporation. Linkwell Tech owns 100% of Shanghai LiKang Disinfectant High-Tech Company, Limited (“LiKang Disinfectant”). On May 31, 2008, LiKang Disinfectant sold 100% of Shanghai LiKang International Trade Company, Limited (“LiKang International”). On February 15, 2008, Linkwell Tech sold 10% of its issued and outstanding capital stock to Ecolab Inc., a Delaware corporation (“Ecolab”). On March 5, 2009, LiKang Disinfectant purchased 100% of LiKang Biological Company for approximately $291,792 (RMB 2,000,000), and 500,000 shares of our common stock.

Linkwell Corporation, through Linkwell Tech’s wholly-owned subsidiaries, LiKang Disinfectant and Likang Biological, is engaged in the development, manufacture, sale and distribution of disinfectant health care products primarily to the medical industry in China.

Since 1988 we have developed, manufactured and distributed disinfectant health care products primarily to the medical industry in China. In the last few years, China has witnessed a variety of public health crises, such as the outbreak of SARS, which demonstrated the need for increased health standards in China. In response, beginning in 2002, the Chinese government has undertaken various initiatives to improve public health and living standards, including continuing efforts to educate the public about the need for proper sanitation procedures and the establishment of production standards for the disinfectant industry in China. As a result of this heightened license and permit system, all disinfectant manufacturers must comply with “qualified disinfection product manufacturing enterprise requirements” established by the Ministry of Public Health. The requirements include standards for hardware, such as facilities and machinery, and software, including the technology to monitor the facilities, as well as the heightened knowledge and capability of the production staff regarding quality control procedures. Following the adoption of the industry standards in 2002, we have been granted thirty-one hygiene licenses by the Ministry of Public Health.

We believe that government standards adopted in July 2002 have increased the barriers to entry for competitors in the disinfectant industry in China. The implementation of these improved production standards and license requirements has effectively decreased the competitive landscape as it pertains to small to medium size manufacturers, since the new standards are especially difficult for companies with limited product offerings and inferior technical content. In addition, prior to the adoption of industry standards, disinfectant products were generally marketed and sold based on price as opposed to quality. We believe that as a result of the adoption of industry standards, the marketplace is evolving with a more stringent focus on product quality, which we believe will enable us to increase our base of commercial customers thereby increasing our revenues.

Historically, our focus has been on the commercial distribution of our products. Our customers include hospitals, medical suppliers and distribution companies throughout China. We have made efforts to expand our distribution reach to the retail market. We have repackaged certain of our commercial disinfectant products for sale to the consumer market and have commenced upon expanding our customer base to include hotels, schools, supermarkets and pharmacies. By virtue of the Chinese government's continuing focus on educating the Chinese population about the benefits of proper sanitation procedures, we believe that another key to increasing our revenues is the continued expansion of the retail distribution of our products.

The disinfectant industry in China is an emerging industry that is populated with small, regional companies. We estimate that there are in excess of 1,000 manufacturers and distributors of disinfectant products in China; however, most domestic competitors offer a limited line of products and there are only a few domestic companies with a nationwide presence. We believe that our national marketing and sales presence throughout all 22 provinces, as well as four autonomous regions, and four municipalities in China, gives us a competitive advantage over many other disinfectant companies in China, and will enable us to leverage the brand awareness for our products with commercial customers to the retail marketplace.

Our present manufacturing facilities and production capacities are sufficient for the foreseeable future, and we believe that we have the assets and capital available to us necessary to enable the increase of our revenues in future periods as the market for disinfectant products in China continues to increase. We will continue to focus our efforts on the retail market for our products, as well as expanding our traditional base of commercial customers. In addition, we may also consider the possible acquisition of independent sales networks, which could be used to increase our product distribution capacity and align our company with small, regional companies in the industry.

RESULTS OF OPERATIONS

The table below sets forth the results of operations for the year ended December 31, 2009, as compared to the year ended December 31, 2008 as a percentage of net sales

	2009						2008
	$			% of Sales			$			% of Sales
Net Revenues
Non-related companies		9,299,120						9,362,364
Related companies		5,367,662						2,623,560
Total Net Revenue		14,666,782		100		%		11,985,924		100		%
Cost of Sales		6,501,335			44.3	%		5,963,830			49.8	%
Gross Profit		8,165,447			55.7	%		6,022,094			50.2	%
Selling Expense		1,598,134			10.9	%		1,083,431			9.0	%
General and Administrative		2,409,104			16.4	%		2,432,327			20.3	%
Total Operating Expenses		4,007,238			27.3	%		3,515,758			29.3	%
Income from Operations		4,158,209			28.4	%		2,506,336			20.9	%
Other Income (Expenses), net		(121,897	)		(0.8	)%		(405,320	)		(3.4	)%
Income tax expense		594,078			4.1	%		387,324			3.2	%
Income from discontinued operations		-			-	%		65,083			0.5	%
Net Income including non-controlling interest		3,442,234			23.5	%		1,778,775			14.8	%
Less: net income attributable non-controlling interest		(381,441	)		2.6	%		(149,505	)		1.2	%
Net Income attributable to Linkwell Corp		3,060,793			20.9	%		1,629,270			13.6	%

NET REVENUES

Net revenues for the year ended December 31, 2009 were $14,666,782, as compared to net revenues of $11,985,924 for the year of 2008, an increase of $2,680,858 or approximately 22.4%. This increase in revenues was due to increased demand from end customers as a result of increased recognition of our high-quality, competitively priced disinfectant products. Of our total net revenues for the year ended December 31, 2009, $5,367,662 or approximately 36.6% were attributable to related parties as compared to net revenues of $2,623,560, or approximately 21.9% were attributable to related parties in 2008.

COST OF REVENUES

Cost of revenues includes raw materials and manufacturing costs, which includes labor, rent and an allocated portion of overhead expenses, such as utilities, directly related to product production. For the year ended December 31, 2009, cost of revenues amounted to $6,501,335 or approximately 44.3% of net revenues as compared to cost of revenues of $5,963,830, or approximately 49.8% of net revenues in 2008. The increase in cost of sales is attributed to the increase of production and sales volume in 2009; while the decrease in cost of revenue as a percentage of revenue was mainly due to the stable raw material cost compared to the cost in 2008, improved economies of scale on fixed costs as a result of increased production, and our continuous improvement on control of the manufacturing costs. We purchase raw materials from several primary suppliers and we have purchase contracts with these suppliers in an effort to ensure a steady supply of raw materials.

GROSS PROFIT

Gross profit for the year ended December 31, 2009 was $8,165,447, or approximately 55.7% of net revenues, as compared to $6,022,094, or approximately 50.2% of revenues for the year of 2008. The increase in our gross profits and gross profit margin was mainly due to the decrease of cost of revenue as a percentage of revenue while our sales activities increased.

OPERATING EXPENSES

Total operating expenses consisted of selling, general and administrative expenses; for the year ended December 31, 2009, total operating expenses were $4,007,238, an increase of $491,480, or approximately 14%, from total operating expenses of $3,515,758 for the year of 2008. The increase in operating expenses was mainly due to a proportional increase in selling expenses with our increased sales and production. In addition, we incurred non-cash consulting fees during the year ended December 31, 2009 of $408,014 as compared to $188,833 for the year of 2008, an increase of $219,181. Non-cash consulting fees represent the amortization of fees to consultants under agreements entered into during the year, which was paid by issuance of our common shares.

DISCONTINUED OPERATION

On May 31, 2008, LiKang Disinfectant entered into a stock purchase agreement under which it sold 100% of the capital stock of its wholly-owned subsidiary, LiKang International to Linkwell Trading. Pursuant to the terms of the agreement, LiKang Disinfectant will receive $291,754 (RMB 2,000 000) once the agreement is approved by the Ministry of Commerce, the People’s Republic of China.

As of May 31, 2008, the Company had classified LiKang International business as a discontinued operation. For the year ended December 31, 2008, gain from discontinued operations was $65,083.

NONCONTROLLING INTEREST

On February 15, 2008, we entered into a stock purchase agreement with Ecolab, pursuant to which Ecolab agreed to purchase and Linkwell Tech agreed to sell 888,889 of its shares, or 10% of the issued and outstanding capital stock of Linkwell Tech, for $2,000,000. On March 28, 2008 and June 4, 2008, Linkwell Tech received $200,000 and $1,388,559, respectively, from Ecolab. Including the $400,000 loan that Ecolab released to Linkwell Tech and accrued interest of $11,441, Linkwell Tech received a total of $2,000,000 from Ecolab. On May 31, 2008, the Company, Linkwell Tech and Ecolab entered into a Linkwell Tech Group Inc. Stockholders Agreement, whereby both the Company and Ecolab are subject to, and benefit by, certain pre-emptive rights, transfer restrictions and take along rights relating to the shares of Linkwell Tech that the Company and Ecolab each hold. As of May 31, 2008, the principal and accrued interest of $11,441 on the short-term $400,000 loan became part of Ecolab’s investment and no longer needed to be repaid. After this transaction, Ecolab became the 10% minority interest holder of Linkwell Tech. For the year ended December 31, 2009, we had a minority interest expense of $381,441 as compared to $149,505 for the year of 2008.

NET INCOME

Our net income for the year ended December 31, 2009 was $3,060,793 compared to $1,629,270 for 2008, an increase of $1,431,523 or 87.8%. Net income as a percentage of revenue was 20.9% in 2009 while it was 13.6% in 2008. This increase in net income was attributable to economies of scale combined with rapid growth in revenue and efficiency of operations. Our management believes that net income will continue to increase as we continue to increase our sales, offer better quality products and control our manufacturing costs.

LIQUIDITY AND CAPITAL RESOURCES

As shown in the accompanying financial statements, our working capital increased $2,154,726 or approximately 21.7% from $9,951,925 on December 31, 2008 to $12,106,651 on December 31, 2009. With the expansion of our businesses, we anticipate the need to utilize our capital resources in the near future. In addition to our working capital, we intend to obtain required capital through a combination of bank loans and the sale of our equity securities. Although we are not party to any commitments or agreements at this time to provide us with additional bank financing or to sell our securities, we are optimistic that we will be able to obtain additional capital resources to fund our business expansions.

We currently have no material commitments for capital expenditures. At December 31, 2009, we had a total of $380,774 in outstanding short term loans, which will mature on June 16, 2010. Other than our working capital and loans, we presently have no other alternative capital resources available to us. We plan to build additional product lines and upgrade our manufacturing facilities in order to expand our production capacity and improve the quality of our products. Based on our preliminary estimates, upgrades and expansion will require additional capital of approximately $1 million.

We need to raise additional capital resources to meet the demands described above. We may raise additional capital through the sale of equity securities. There can be no assurances that any additional debt or equity financing will be available to us on acceptable terms, if at all. The inability to obtain debt or equity financing could have a material adverse effect on our operating results, and as a result we could be required to cease or significantly reduce our operations, seek a merger partner or sell additional securities on terms that may be disadvantageous to shareholders.

The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2009 and 2008:

	2009			2008
Cash provided by (used in):
Operating Activities	$	1,670,710		$	204,377
Investing Activities		(1,317,186	)		(508,045	)
Financing Activities		(287,989	)		1,153,088

NET CASH FROM OPERATING ACTIVITES

Net cash provided by operating activities for the year ended December 31, 2009 was $1,670,710, as compared to $204,377 for the same period of 2008, an increase of $1,466,333 or approximately 717.5%. The increase in cash inflow in 2009 was mainly a result of increased sales with improved collection on accounts receivable.

NET CASH FROM INVESTING ACTIVITIES

Net cash used in investing activities for the year ended December 31, 2009 was $1,317,186 as compared to net cash used in investing activities of $508,045 for the same period in 2008, an increase of $809,144 or 159.3%. Cash used in investing activities mainly consisted payments of $1,170,150 for purchases of equipment; while in 2008, we paid $108,988 for acquisition of fixed assets, $399,057 for acquiring remaining 10% minority interest in LiKang Disinfectant.

NET CASH FROM FINANCING ACTIVITIES:

Net cash used in financing activities was $287,989 for the year ended December 31, 2009, as compared to net cash provided by financing activities of $1,153,088 in 2008. This was primarily a result of $380,618 in loan proceeds and a $746,596 repayment on short-term loans, while in 2008 we had $2 million in cash inflow from the issuance of shares of Linkwell Tech common stock to Ecolab despite the repayments to related party of $919,694.

CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities.

We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements, we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments: allowance for doubtful accounts; income taxes; stock-based compensation; asset impairment and option value.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

We maintain an allowance for doubtful accounts to reduce amounts to their estimated realizable value. A considerable amount of judgment is required when we assess the realization of accounts receivables, including assessing the probability of collection and the current credit-worthiness of each customer. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, an additional provision for doubtful accounts could be required. We initially record a provision for doubtful accounts based on our historical experience, and then adjust this provision at the end of each reporting period based on a detailed assessment of our accounts receivable and allowance for doubtful accounts. In estimating the provision for doubtful accounts, we consider: (i) the aging of the accounts receivable; (ii) trends within and ratios involving the age of the accounts receivable; (iii) the customer mix in each of the aging categories and the nature of the receivable; (iv) our historical provision for doubtful accounts; (v) the credit worthiness of the customer; and (vi) the economic conditions of the customer's industry as well as general economic conditions, among other factors.

REVENUE RECOGNITION

In general, our revenue recognition policies are in compliance with SEC Staff Accounting Bulletin (“SAB”) 104 (codified in FASB ASC Topic 480). We record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectibility is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company.

Our revenues from the sale of products to related parties are recorded when the goods are shipped to the customers from our related parties. Upon shipment, title passes, and collectibility is reasonably assured. We receive purchase orders from our related parties on an as need basis from the related party customers. Generally, the related party does not hold our inventory. If the related party has inventory on hand at the end of a reporting period, the sale is reversed and the inventory is included in our balance sheet.

INCOME TAXES

We account for income taxes in accordance with, Accounting for Income Taxes, which prescribes the use of the liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we establish a valuation allowance. To the extent we establish a valuation allowance, or increase or decrease this allowance in a period, we increase or decrease our income tax provision in our statement of operations. If any of our estimates of our prior period taxable income or loss prove to be incorrect, material differences could impact the amount and timing of income tax benefits or payments for any period. In addition, as a result of the significant change in our ownership, our future use of its existing net operating losses may be limited.

The Company currently operates in the PRC, however, our operations could change in the near future and we could be subject to tax liability involving a consideration of uncertainties in the application and interpretation of complex tax regulations in a multitude of jurisdictions across operations in other countries.

We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. The tax liabilities are reflected net of realized tax loss carry forwards. We adjust these reserves upon specific events; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is different from our current estimate of the tax liabilities. If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when the contingency has been resolved and the liabilities are no longer necessary.

Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact upon the amount of income taxes that we provide during any given year.

STOCK- BASED COMPENSATION

We account for share-based payments in accordance with, Share-Based Payment. Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Determining the fair value of share-based awards at the grant date requires judgment, including estimating expected volatility. In addition, judgment is also required in estimating the amount of share-based awards that are expected to be forfeited. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially impacted.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets, which include property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

FOREIGN CURRENTY TRANSLATION AND COMPREHENSIVE INCOME (LOSS)

Our functional currency is the Chinese yuan - renminbi (“RMB”). For financial reporting purposes, RMB was translated into United States dollars ("USD") as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of shareholders' equity as "Accumulated other comprehensive income." Gains and losses resulting from foreign currency transactions are included in income. There has been no significant fluctuation in exchange rate for the conversion of RMB to USD after the balance sheet date.

We use Statement of Financial Accounting Standards ("SFAS") No. 130, “Reporting Comprehensive Income” (codified in FASB ASC Topic 220). Comprehensive income is comprised of net income and all changes to the statements of shareholders’ equity, except those due to investments by shareholders, changes in paid-in capital and distributions to shareholders.

RECENT ACCOUNTING PRONOUNCEMENTS

In October 2009, the FASB issued an ASU regarding accounting for own-share lending arrangements in contemplation of convertible debt issuance or other financing. This ASU requires that at the date of issuance of the shares in a share-lending arrangement entered into in contemplation of a convertible debt offering or other financing, the shares issued shall be measured at fair value and be recognized as an issuance cost, with an offset to additional paid-in capital. Further, loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings-per-share calculation. This ASU is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In August 2009, the FASB issued an Accounting Standards Update (“ASU”) regarding measuring liabilities at fair value. This ASU provides additional guidance clarifying the measurement of liabilities at fair value in circumstances in which a quoted price in an active market for the identical liability is not available; under those circumstances, a reporting entity is required to measure fair value using one or more of valuation techniques, as defined. This ASU is effective for the first reporting period, including interim periods, beginning after the issuance of this ASU. The adoption of this ASU did not have a material impact on our consolidated financial statements.

On July 1, 2009, the Company adopted Accounting Standards Update (“ASU”) No. 2009-01, “Topic 105 - Generally Accepted Accounting Principles - amendments based on Statement of Financial Accounting Standards No. 168 , “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles” (“ASU No. 2009-01”). ASU No. 2009-01 re-defines authoritative GAAP for nongovernmental entities to be only comprised of the FASB Accounting Standards Codification™ (“Codification”) and, for SEC registrants, guidance issued by the SEC. The Codification is a reorganization and compilation of all then-existing authoritative GAAP for nongovernmental entities, except for guidance issued by the SEC. The Codification is amended to effect non-SEC changes to authoritative GAAP. Adoption of ASU No. 2009-01 only changed the referencing convention of GAAP in Notes to the Consolidated Financial Statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”), codified as FASB ASC Topic 810-10, which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. SFAS 167 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. SFAS 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also requires additional disclosures about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. SFAS 167 is effective for fiscal years beginning after November 15, 2009. The Company does not believe the adoption of SFAS 167 will have an impact on its financial condition, results of operations or cash flows.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”), codified as FASB Topic ASC 860, which requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe the adoption of SFAS 166 will have an impact on its financial condition, results of operations or cash flows.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”) codified in FASB ASC Topic 855-10-05, which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. SFAS 165 is effective for interim and annual periods ending after June 15, 2009, and accordingly, the Company adopted this pronouncement during the second quarter of 2009. SFAS 165 requires that public entities evaluate subsequent events through the date that the financial statements are issued.

In April 2009, the FASB issued FSP No. SFAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which is codified in FASB ASC Topic 825-10-50. This FSP essentially expands the disclosure about fair value of financial instruments that were previously required only annually to also be required for interim period reporting. In addition, the FSP requires certain additional disclosures regarding the methods and significant assumptions used to estimate the fair value of financial instruments. These additional disclosures are required beginning with the quarter ending June 30, 2009. This FSP had no material impact on our financial position, results of operations or cash flows.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” which is codified in FASB ASC Topic 320-10. This FSP modifies the requirements for recognizing other-than-temporarily impaired debt securities and changes the existing impairment model for such securities. The FSP also requires additional disclosures for both annual and interim periods with respect to both debt and equity securities. Under the FSP, impairment of debt securities will be considered other-than-temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). The FSP further indicates that, depending on which of the above factor(s) causes the impairment to be considered other-than-temporary, (1) the entire shortfall of the security’s fair value versus its amortized cost basis or (2) only the credit loss portion would be recognized in earnings while the remaining shortfall (if any) would be recorded in other comprehensive income. FSP 115-2 requires entities to initially apply the provisions of the standard to previously other-than-temporarily impaired debt securities existing as of the date of initial adoption by making a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The cumulative-effect adjustment potentially reclassifies the noncredit portion of a previously other-than-temporarily impaired debt security held as of the date of initial adoption from retained earnings to accumulate other comprehensive income. The Company adopted FSP No. SFAS 115-2 and SFAS 124-2 beginning April 1, 2009. This FSP had no material impact on our financial position, results of operations or cash flows.

In April 2009, the Financial Accounting Standards Board (“FASB”) issued FSP No. SFAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. SFAS 157-4”). FSP No. SFAS 157-4, which is codified in FASB ASC Topics 820-10-35-51 and 820-10-50-2, provides additional guidance for estimating fair value and emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. The Company adopted FSP No. SFAS 157-4 beginning April 1, 2009. This FSP had no material impact on our financial position, results of operations or cash flows.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our stock and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

N/A.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our financial statements are contained in pages F-1 through F-25 which appear at the end of this annual report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2009. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2009, our principal executive officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level.

Internal Control Over Financial Reporting

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based on our assessment, management concluded that, as of December 31, 2009, our internal control over financial reporting is not effective due to a material weakness. This material weakness is that all of our employees and accounting staff are located in the PRC and we do not presently have a chief financial officer, comptroller or similarly titled senior financial officer who is bilingual and experienced in the application of U.S. GAAP. We have taken the steps to eliminate this material weakness including the hiring of additional accounting consulting staff to review and oversee our application of generally accepted accounting principles in the United States to bring additional financial expertise to our organization and to facilitate the flow of information to our independent accountants. This accounting consulting staff has assisted us in implementing additional practices to ensure that we (i) properly accrue undeclared and unpaid dividends, (ii) properly record related party transactions, and (iii) properly account for changes in loans payable. However, until we expand our full time staff to include a bilingual senior financial officer who has the requisite experience necessary, as well as supplement the accounting knowledge of our staff, notwithstanding the guidance provided to us by the accounting consulting staff we could continue to have material weaknesses in our disclosure controls that may lead to restatements of our financial statements.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) that occurered during the fiscal quarter ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVRNANCE.

Directors and Executive Officers

Name	Age	Positions

Xuelian Bian	44	Chief Executive Officer, President and Chairman of the Board
Wei Guan	46	Vice President and Director

Mr. Xuelian Bian – has served as our Chairman of the Board, Chief Executive Officer and President since May 2, 2005. Simultaneously, he has served as Chief Executive Officer, President and a Director of Linkwell Tech since its inception in June 2004 and as General Manager of LiKang Disinfectant since 1993. From 1990 to 1993, he was a project assistant in charge of science and technology achievement application in the Second Military Medical University, Shanghai, China. From 1986 to 1990, Mr. Bian was a member of the technical staff in the Epidemiological Institute in the Second Military Medical University. Mr. Bian contributed to the compilation of "Disinfection - Antiseptic - Anticorrosion - Preservation" and "Modern Disinfection Study" of which the first book laid the foundation for Chinese disinfectant study. Mr. Bian started related research with his colleagues on the microbiology sterilization effect examination, high strength ultraviolet lamp tube and decontaminating apparatus prior to the inception of LiKang Disinfectant. Mr. Bian graduated from the China Army Second Military Medical University in 1990 with a bachelor degree in public health.

Mr. Wei Guan – has served as our Vice President and a member of our Board of Directors since May 2, 2005. He has served as Vice President of Linkwell Tech since its inception in June 2004 and Vice General Manager of Shanghai LiKang Disinfectant Company, Limited since 2002. From 1987 to 1990, Mr. Guan worked at Hunan Machinery Importing & Exporting Corporation as a member of management. From 1990 to 2002, he worked for the Division of Importing and Export at Worldbest Group as a general manager. Mr. Guan graduated from Hunan University in Changsha, Hunan Province with a bachelor degree in Industry Foreign Trading in 1987.

There are no family relationships between any of the executive officers and directors. Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified.

Key Employees

Mr. Chun Ming Huang, age 41, has served as Chief Operating Officer of Linkwell Corporation since 2005. From 2001 until joining Linkwell in 2005, Mr. Huang served as the Associate Director of the Analytical Department of WuXi Pharma Tech. Mr Huang received his master degree in pharmaceuticals from the Second Military Medical University in 1992.

Ms. Gendi Li, age 57, has served as LiKang Disinfectant's Controller since 2003. From 1996 to 2003, Ms. Li was employed as an Executive Accountant and Financial Manager for QiaoFu Construction Holding Company (Shanghai). From 1993 to 1996, Ms. Li was employed as an Executive Accountant and Head of the Finance Department at Shanghai Yuxin Machinery Co., Ltd. From 1968 to 1993, Ms. Li was employed in various financial positions, including Executive Accountant, and Head of the Finance Department at First Plastic Machinery Factory. Ms. Li graduated from the Shanghai Finance and Economics Institute.

Mr. Wensheng Sun, age 41, has been LiKang Disinfectant's Vice-General Manager for Production since 1995 and has held the same position at LiKang Disinfectant since 1995 following completion of his Masters degree in Medicine at the Second Military Medical University School of Pharmacy.

Mr. Rick Wang, age 34, currently serves as Linkwell Corporation's Secretary. Mr. Wang joined LiKang Disinfectant in 1999 and received his bachelor degree from the Public Health Department of Xinjiang Medical College in 1997.

Code of Business Conduct and Ethics

In December 2005, we adopted a Code of Business Conduct and Ethics applicable to our Chief Executive Officer, principal financial and accounting officers and persons performing similar functions. A Code of Business Conduct and Ethics is a written standard designed to deter wrongdoing and to promote:

· Honest and ethical conduct,

· Full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements, compliance with applicable laws, rules and regulations,

· The prompt reporting violation of the code, and

· Accountability for adherence to the Code.

We will provide a copy, without charge, to any person desiring a copy of the Code of Business Conduct and Ethics, by written request to, 1104 Jiatang Road Jiading District, Shanghai China 201807, Attention: Corporate Secretary.

Committees of the Board of Directors

Our Board of Directors has not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee or any committees performing a similar function. The functions of those committees are being undertaken by the entire board as a whole. Because we do not have any independent directors, our Board of Directors believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.

We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given that all of our operations are located in the PRC and our lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees.

None of our directors is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:

· Understands generally accepted accounting principles and financial statements,

· Is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

· Has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,

· Understands internal controls over financial reporting, and

· Understands audit committee functions.

Our Board of Directors is comprised of individuals who were integral to our formation and who are involved in our day to day operations. While we would prefer that one or more of our directors be an audit committee financial expert, none of these individuals who have been key to our development have professional backgrounds in finance or accounting. When we are able to expand our Board of Directors to include one or more independent directors, we intend to establish an Audit Committee. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor is our Board of Directors required to establish or maintain an Audit Committee or other committee.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table summarizes all compensation recorded by us in each of the last two completed fiscal years for our principal executive officer. Our principal executive officer also serves as our principal financial officer. No other executive officer received total annual compensation exceeding $100,000.

SUMMARY COMPENSATION TABLE

Name and principal

position (a)

Year

(b)

Salary

($)

(c)

Bonus

($)

(d)

Stock

Awards

($)

(e)

Option

Awards

($)

(f)

Non-Equity Incentive Plan Compensation

($)

(g)

Non-qualified Deferred Compensation Earnings

($)

(h)

All

Other Compensations

($)

(i)

Total

($)

(j)

Xuelian Bian

2009

12,800

Chief Executive Officer, principal executive officer, and principal financial officer

2008

12,800

Employment Agreements

We are not a party to any employment agreements.

Compensation of Directors

Our Board of Directors is presently comprised of our executive officers who do not receive compensation for their services as directors. At such time as we expand our Board of Directors to include independent members we will establish a policy for the compensation of those members.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Securities Authorized For Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under equity compensation plans, including individual compensation arrangements, by us under our Stock Option Plan and any compensation plans not previously approved by our stockholders as of December 31, 2009.

Number of

securities to be

issued upon

exercise of

outstanding

options,

warrants and

rights

Weighted

average exercise

price of

outstanding

options, warrants

and rights

Number of

securities

remaining

available for

future issuance

under equity

compensation

plans (excluding

securities

reflected in

column

Plan category

Plans approved by our stockholders:

2005 Equity Compensation Plan

2,000,000

0.21

8,000,000

Plans not approved by stockholders:

N/A

None

Security Ownership of Certain Beneficial Owners and Management

At March 31, 2010 we had 86,605,475 shares of our common stock issued and outstanding. The following table sets forth information regarding the beneficial ownership of our common stock as of March 31, 2010 by:

· Each person known by us to be the beneficial owner of more than 5% of our common stock;

· Each of our directors;

· Each of our executive officers; and

· Our executive officers, directors and director nominees as a group.

Unless otherwise indicated, the business address of each person listed is in care of 1104 Jiatang Road Jiading District, Shanghai China 201807. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage of Class 1

Xuelian Bian		20,420,919		23.6	%
Wei Guan		13,602,551		15.7	%
All officers and directors as a group (two persons)		34,023,470		39.3	%

1 Calculated based on 86,605,475 shares outstanding as March 31, 2010.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Linkwell Tech's wholly-owned subsidiary, LiKang Disinfectant, is engaged in business activities with four related parties: Shanghai ZhongYou Pharmaceutical High-Tech Co., Ltd., (“ZhongYou”), Shanghai LiKang Biological High-Tech Co., Ltd. (“Likang Biological”), Shanghai Jiuqing Pharmaceuticals Company, Ltd (“Shanghai Jiuqing”) and Linkwell International Trading Co., Ltd (“Linkwell Trading ”). Shanghai LiKang Meirui Pharmaceuticals High-Tech Co., Ltd (“Meirui”), a company of which Shanhai is a majority shareholder, and had owned 68% of its Meirui equity shares used to be a related party. However due to the fact that Linkwell Tech acquired Shanghai Shanhai’s 10% equity interest in LiKang Disinfectant for total consideration of $684,057 which included the cash payment of $399,057 and 1,500,000 common shares at value of $0.19 per share. As a result of this transaction, Meirui was no longer a related party. Likang Disinfectant completed its acquisition of Likang Biological on March 3, 2009; therefore, Likang Biological was no longer a related party of the Company since then, all the sales and purchase with Likang Biological were eliminated for the consolidation.

Shanghai ZhongYou Pharmaceutical High-Tech Co., Limited.

Our Chairman and Chief Executive Officer, Xuelian Bian, and Vice President and Director, Wei Guan, own 90% and 10% respectively, of the capital stock of ZhongYou. In March 2007, Wei Guan sold his 10% interest to Bing Chen, President of LiKang Disinfectant. In August 2007, Xuelian Bian sold his 90% shares to his mother, Xiuyue Xing. In October, 2007, the two new shareholders, Bing Chen (10%) and Xiuyue Xing (90%) sold all of their shares in ZhongYou to Shanghai Jiuqing Pharmaceuticals Company, Ltd., whose 100% owner is Shanghai Ajiao Shiye Co. Ltd. Mr. Bian is a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd. For the years ended December 31, 2009 and 2008, we recorded net revenues of $4,983,962 and $1,748,547 to ZhongYou respectively. At December 31, 2009 and 2008, accounts receivable from sales to ZhongYou were $3,322,044 and $2,114,681, respectively. In general, accounts receivable due from ZhongYou are payable in cash and are due within 4 to 6 months, which approximate normal business terms with independent third parties.

Shanghai Jiuqing Pharmaceuticals Company, Limited.

Shanghai Ajiao Shiye Co. Ltd. owns 100% of Shanghai Jiuqing Pharmaceuticals Company, Ltd (“Shanghai Jiuqing”). Xuelian Bian is a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd. For the years ended December 31, 2009 and 2008, the Company recorded net revenues of $3,222 and $18,255 to Shanghai Jiuqing, respectively. At December 31, 2009 and 2008, accounts receivable from sales to Shanghai Jiuqing were $85,451 and $81,112, respectively. As of December 31, 2009, accounts receivable from sales to other related parties was $2,300,860.

Shanghai LiKang Biological Hi-Tech Company, Ltd.

As of December 31, 2008, we loaned and were due $1,764,157 from LiKang Biological, and were due $393,920 from Linkwell International Trading for the proceeds from the disposition of Likang International.

As of December 31, 2009, LinkTech owed Linkwell Trading $78,220, Zhongyou $96,837 and other related parties of $42,670. As of December 31, 2008, the Company owed to LiKang Biological, $93,707, and owed to LiKang Pharmaceuticals, $876.

Other related party transactions

There were no other related party transactions.

Director Independence

None of the members of our Board of Directors are “independent” as defined by Rule 4200(a)(14) of the Financial Industry Regulatory Authority (FINRA) Rules.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Sherb & Co., LLP served as our independent registered public accounting firm for fiscal 2009 and 2008. The following table shows the fees that were billed for the audit and other services provided by the firm for fiscal 2009 and 2008.

	Fiscal 2009		Fiscal 2008

Audit Fees	$	80,000	$	67,500
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	80,000	$	67,500

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Form 10-Q Quarterly Reports and services that are normally provided by the independent auditors in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees — This category consists of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC and other accounting consulting.

Tax Fees — This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees — This category consists of fees for other miscellaneous items.

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by the our independent auditors. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to fiscal year 2008 were pre-approved by the entire Board of Directors.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

Exhibit No.		Description
2.1		Stock Purchase Agreement between HBOA.Com, Inc., Philip J. Davis and John C. Lee dated November 17, 1999 (1)
2.2		Amendment No. 1 to the Stock Purchase Agreement between HBOA.Com, Inc., Phillip J. Davis and John C. Lee dated December 28, 1999 (1)
2.3		Stock Exchange Agreement dated May 2, 2005 by and among Kirshner Entertainment & Technologies, Inc., Gary Verdier, Linkwell Tech Group, Inc. and the shareholders of Linkwell (2)
3.1		Articles of Incorporation (3)
3.2		Articles of Amendment to Articles of Incorporation (4)
3.3		Articles of Amendment to Articles of Incorporation (5)
3.4		Articles of Amendment to Articles of Incorporation (6)
3.5		Articles of Amendment to the Articles of Incorporation (11)
3.6		Bylaws (3)
3.7		Articles of Amendment to the Articles of Incorporation (12)
4.1		Form of common stock purchase warrant (7)
4.2		Form of Class A and Class B Common Stock Purchase Warrants (11)
10.1		HBOA Holdings, Inc. - Year 2000 Equity Compensation Plan (8)
10.2		HBOA Holdings, Inc. - Non Qualified Stock Option Plan (9)
10.3		Linkwell Corporation 2005 Equity Compensation Plan (10)
10.4		Consulting and Management Agreement dated August 24, 2005 between Linkwell Corporation and China Direct Investments, Inc. (20)
10.5		Form of Subscription Agreement for $1,500,000 unit offering (11)
10.6		Form of agreement between Shanghai LiKang Disinfectant High-Tech Company, Limited and its customers (12)
10.7		Form of agreement between Shanghai LiKang Disinfectant High-Tech Company, Limited and its suppliers (12)
10.8		Sales Agreement dated as of January 1, 2005 between Shanghai LiKang Disinfectant High-Tech Co., Ltd. and Shanghai LiKang Meirui Pharmaceutical High-Tech Co., Ltd. (20)
10.9		Lease Agreement effective January 1, 2005 between Shanghai LiKang Disinfectant High-Tech Co., Ltd. and Shanghai Shanhai Group for principal executive offices (20)
10.10		Lease Agreement effective January 1, 2002 between Shanghai LiKang Pharmaceuticals Co., Ltd. and Shanghai LiKang Disinfectant High-Tech Co. Ltd. (20)
10.11		Lease Agreement effective January 1, 2005 between Shanghai Jinshan Zhuhang Plastic Lamp Factory, Ltd. and Shanghai LiKang Disinfectant High-Tech Co. Ltd. (20)
10.12		Manufacturing Agreement dated as of January 1, 2005 between Shanghai LiKang Disinfectant High-Tech Co., Ltd. and Shanghai LiKang Meirui Pharmaceutical High-Tech Co., Ltd. (20)

10.13		Stock Purchase Agreement effective February 6, 2006 between Linkwell Corporation, Aerisys Incorporated and Gary Verdier (13)
10.14		Transfer Agreement dated August 5, 2005 between Shanghai LiKang Disinfectant High-Tech Company, Limited, Shanghai LiKang Pharmaceuticals Technology Company and Xuelian Bian (20)
10.15		Contract Management Agreement dated January 1, 2005 between Shanghai Shanhai Group and Shanghai LiKang Disinfectant High-Tech Co., Ltd. (20)
10.16		Lease Agreement dated December 15, 2004 between Shanghai Shanhai Group and Shanghai LiKang Disinfectant High-Tech Co., Ltd. (20)
10.17		Lease Agreement dated August 11, 2005 between Shanghai Henglain Industrial Co., Ltd. and Shanghai LiKang Disinfectant High-Tech Co., Ltd. (20)
10.18		Lease Agreement dated September 16, 2005 between Shanghai Henglain Industrial Co., Ltd. and Shanghai LiKang Disinfectant High-Tech Co., Ltd. (20)
10.19		Disinfection Education Center Agreement dated May 25, 2006 between Shanghai LiKang Disinfectant High-Tech Co., Ltd. and China Pest Infestation Control and Sanitation Association (20)
10.20		Agreement between Linkwell Corporation and China Direct Investments, Inc. (21)
10.21		Stock Purchase Agreement, dated April 6, 2007, by and among the Company, Linkwell Tech, Xuelian Bian and LiKang Pharmaceutical (22)
10.21(a)		Amendment to Stock Purchase Agreement, dated March 25, 2008 by and among the Company, Linkwell Tech, Xuelian Bian and LiKang Pharmaceutical (23)
10.22		Stock Purchase Agreement, dated April 6, 2007, by and among the Company, Linkwell Tech, Xuelian Bian and LiKang Pharmaceutical (22)
10.22(a)		Amendment to Stock Purchase Agreement, dated March 25, 2008, by and among the Company, Linkwell Tech and Shanghai Shanhai (23)
10.23		Loan agreement between LiKang Disinfectant and LiKang Biological, as translated, dated January 2, 2007 (24)
10.24		Consulting agreement dated September 8, 2006 between Linkwell Corp and Zhiyan Shi (24)
10.25		Stock Purchase Agreement dated February 15, 2008, among Linkwell Corporation, Linkwell Tech Group, Inc., and Ecolab Inc. (25)
10.26		Linkwell Tech Group, Inc. Stockholders Agreement, dated May 30, 2008, by and among Linkwell Tech Group, Inc., Linkwell Corp. and Ecolab Inc. (26)
10.27		Registration Rights Agreement, dated May 30, 2008, by and among Ecolab Inc. and Linkwell Corp.(26)
10.28		Stock Purchase Agreement dated May 29, 2008, by and between Shanghai Likang Disinfectant Hi-Tech Co., Ltd, and Hong Kong Linkwell International Trading Company (27)
10.29		Amended and Restated Stock Purchase Agreement, dated March 5, 2009, by and among the Linkwell Corp., Linkwell Tech Group, Inc., Shanghai Likang Biological High-Tech Co., Ltd., Shanghai Likang Disinfectant Hi-Tech Co., Ltd., Xuelian Bian and Shanghai Likang Pharmaceutical Technology Co., Ltd. (28)
10.30		Stock Purchase Agreement, dated December 21, 2009, by and among Linkwell Corp., Linkwell Tech Group Inc., Shanghai Likang Disinfectant Hi-Tech Co., Ltd., Inner Mongolia Wuhai Chengtian Chemical Co., Ltd. and Honglin Li. (29)
10.31		Amendment No. 1 to the Stock Purchase Agreement, dated February 26, 2010, by and among Linkwell Corp., Linkwell Tech Group Inc., Shanghai Likang Disinfectant Hi-Tech Co., Ltd., Inner Mongolia Wuhai Chengtian Chemical Co., Ltd. and Honglin Li. (30)
14.1		Code of Business Conduct and Ethics (20)
21.1		Subsidiaries of the small business issuer *
23.1		Consent of Sherb & Co., LLP*
31.1		Section 302 Certificate of Chief Executive Officer *
31.2		Section 302 Certificate of principal financial and accounting officer *
32.1		Section 906 Certificate of Chief Executive Officer *

* filed herewith

(1)	Incorporated by reference to the Form 10-SB as filed on June 17, 1999.
(2)	Incorporated by reference to the Report on Form 8-K as filed on December 3, 1999.
(3)	Incorporated by reference to the Report on Form 8-K as filed on December 8, 1999.
(4)	Incorporated by reference to the Report on Form 8-K as filed on December 27, 2001.
(5)	Incorporated by reference to the annual report on Form 10-KSB for the fiscal year ended December 31, 2002.
(6)	Incorporated by reference to the Report on Form 8-K as filed on March 17, 2005.
(7)	Incorporated by reference to the Report on Form 8-K as filed on April 15, 2005.
(8)	Incorporated by reference to the Report on Form 8-K as filed on January 31, 2002.
(9)	Incorporated by reference to the Report on Form 8-K as filed on February 1, 2005.
(10)	Incorporated by reference to the Report on Form 8-K as filed on August 17, 2006.
(11)	Incorporated by reference to the Report on Form 8-K as filed on August 22, 2006.
(12)	Incorporated by reference to the Report on Form 8-K as filed on September 15, 2006.
(13)	Incorporated by reference to the Report on Form 8-K as filed on October 14, 2006.
(14)	Incorporated by reference to the Report on Form 8-K as filed on October 27, 2006.
(15)	Incorporated by reference to the Report on Form 8-K as filed on October 27, 2006.
(16)	Incorporated by reference to the registration statement on Form S-8, SEC File No. 333-138297 as filed on October 30, 2006.
(17)	Incorporated by reference to the registration statement on Form SB-2, SEC File No. 333-139752, as amended, as initially filed on December 29, 2006.
(18)	Incorporated by reference to the registration statement on Form S-8, SEC File No. 333-125871, as filed on June 16, 2005.
(19)	Incorporated by reference to the registration statement on Form S-8, SEC File No. 333-121963, as filed on January 11, 2005.
(20)	Incorporated by reference to the registration statement on Form SB-2, SEC File No. 333-131666, as amended, as initially filed on February 8, 2006.
(21)	Incorporated by reference to the by reference to the annual report on Form 10-KSB for the fiscal year ended December 31, 2006.
(22)	Incorporated by reference to the Report on Form 8-K as filed on April 14, 2007.
(23)	Incorporated by reference to the Report on Form 8-K as filed on March 28, 2008
(24)	Incorporated by reference to the by reference to the quarterly report on Form 10-QSB for the quarter ended March 31, 2007.
(25)	Incorporated by reference to the annual report on Form 10-KSB as filed on April 15, 2008
(26)	Incorporated by reference to the Report on Form 8-K as filed on June 5, 2008.
(27)	Incorporated by reference to the by reference to the quarterly report on Form 10-QSB for the quarter ended August 26, 2008.
(28)	Incorporated by reference to the Report on Form 8-K as filed on March 10, 2009.
(29)	Incorporated by reference to the Report on Form 8-K as filed on December 28, 2009.
(30)	Incorporated by reference to the Report on Form 8-K/A as filed on March 4, 2010.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Linkwell Corporation

By: /s/ Xuelian Bian

Xuelian Bian

CEO, President,

principal executive officer,

principal financial and accounting officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Xuelian Bian	CEO, President, Chairman, principal executive	April 15, 2010
Xuelian Bian	officer, principal financial and accounting officer

/s/ Wei Guan	Vice President and Director	April 15, 2010
Wei Guan

LINKWELL CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Financial Statements:

Consolidated Balance Sheets	F-3

Consolidated Statements of Income and Comprehensive Income	F-4

Consolidated Statements of Stockholders' Equity	F-5

Consolidated Statements of Cash Flows	F-6

Notes to Consolidated Financial Statements.	F-7 to F-25

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Linkwell Corporation and Subsidiaries

Shanghai, China

We have audited the accompanying consolidated balance sheets of Linkwell Corporation and Subsidiaries as of December 31, 2009 and 2008 and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years ended December 31, 2009 and 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amount and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Linkwell Corporation and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years ended December 31, 2009 and 2008, in conformity with accounting principles generally accepted in the United States of America.

/s/ Sherb & Co., LLP

Certified Public Accountants

New York, NY

March 31, 2010

F-2

LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	AS OF DECEMBER 31,
	2009			2008
ASSETS

CURRENT ASSETS
Cash and cash equivalent	$	2,144,360		$	2,072,687
Accounts receivable, net		4,033,718			3,526,440
Accounts receivable - related parties, net		5,798,368			3,470,553
Other receivables		254,166			204,480
Inventories, net		2,055,986			1,207,352
Prepaid expenses and other current assets		263,643			339,378
Deposits		1,103,445			-
Due from related parties		-			2,158,077

Total current assets		15,653,686			12,978,967

NON-CURRENT ASSETS
Property, plant and equipment - net		2,057,758			703,935
Intangible assets, net		513,648			-

Total Non-current assets		2,571,406			703,935

Total assets	$	18,225,092		$	13,682,902

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Loans payable	$	380,774		$	744,069
Accounts payable and accrued expenses		2,092,995			1,508,271
Advances from customers		142,138			91,326
Taxes payable		257,824			220,103
Other payables		154,673			368,690
Due to related parties		518,631			94,583

Total current liabilities		3,547,035			3,027,042

Put option liability		2,400,000			2,281,030

Total liabilities		5,947,035			5,308,072

STOCKHOLDERS' EQUITY
Preferred Stock (No par value; 10,000,000 authorized, no shares issued and outstanding at December 31, 2009 and 2008, respectively)		-			-
Common Stock ($.0005 par value, 150,000,000 authorized, 86,605,475 and 77,955,475 shares issued and outstanding at December 31, 2009 and 2008, respectively)		43,303			38,978
Additional paid-in capital		7,474,021			6,512,346
Statutory surplus reserve		802,749			561,222
Retained earnings		3,250,115			430,849
Deferred compensation		(307,542	)		(318,556	)
Accumulated other comprehensive income		633,970			1,031,021

Total company stockholders' equity		11,896,616			8,255,860

NONCONTROLLING INTEREST		381,441			118,970

TOTAL EQUITY		12,278,057			8,374,830

TOTAL LIABILITIES AND EQUITY	$	18,225,092		$	13,682,902

F-3

LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

	YEARS ENDED DECEMBER 31,
	2009			2008
NET SALES
Non-related companies	$	9,299,120		$	9,362,364
Related companies		5,367,662			2,623,560
Total Net Sales		14,666,782			11,985,924

COST OF SALES		(6,501,335	)		(5,963,830	)

GROSS PROFIT		8,165,447			6,022,094

OPERATING EXPENSES
Selling expenses		1,598,134			1,083,431
General and administrative		2,409,104			2,432,327
Total Operating Expenses		4,007,238			3,515,758

INCOME FROM OPERATIONS		4,158,209			2,506,336

OTHER INCOME (EXPENSES)
Other income expenses		(71,451	)		(66,554	)
Put option expenses		-			(281,030	)
Interest income		4,752			6,455
Interest expense		(55,198	)		(64,191	)
Total Other Expenses, net		(121,897	)		(405,320	)

INCOME FROM CONTINUING OPERATION, BEFORE TAX		4,036,312			2,101,016

INCOME TAX EXPENSE		(594,078	)		(387,324	)

INCOME FROM CONTINUING OPERATION, NET OF TAX		3,442,234			1,713,692

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		-			65,083

NET INCOME INCLUDING NONCONTROLLING INTEREST		3,442,234			1,778,775

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		(381,441	)		(149,505	)

NET INCOME ATTRIBUTABLE TO LINKWELL CORP		3,060,793			1,629,270

OTHER COMPREHENSIVE INCOME
Foreign currency translation		(397,051	)		444,138

COMPREHENSIVE INCOME	$	2,663,742		$	2,073,408

BASIC AND DILUTED INCOME PER COMMON SHARE
Basic earnings per shares from continuing operation	$	0.04		$	0.02
Basic earnings per shares including discontinued operation	$	-		$	0.02
Diluted earnings per shares from continuing operation	$	0.04		$	0.02
Diluted earnings per shares including discontinued operation	$	-		$	0.02

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		79,275,338			75,339,667
Diluted		79,324,441			75,549,558

F-4

LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2009 AND 2008
											Additional										Other			Total
	Common Stock				Common Stock Issuable						Paid-in		Statutory		Accumulated			Deferred			Comprehensive			Stockholders'
	Shares		Amount		Shares			Amount			Capital		Reserve		Deficit			Compensation			Loss			Equity

Balance at January 1, 2008		73,731,675	$	36,866		21,280		$	11		$	5,724,363	$	319,036	$	(829,956	)	$	(51,389	)	$	586,883		$	5,785,814

Grant of common stock for services		2,623,800		1,312		(21,280	)		(11	)		483,783		-		-			(456,000	)		-			29,084
Common stock issued for acquisitions		1,500,000		750		-			-			284,250		-		-			-			-			285,000
Amortization of deferred compensation		-		-								-				-			188,833			-			188,833
Warrants exercised		100,000		50		-			-			19,950		-		-			-			-			20,000
Adjustment to statutory reserve		-		-		-			-			-		242,186		(242,186	)		-			-			-
Deemed Dividend for 10% minority interest acquisition		-		-		-			-			-		-		(126,278	)		-			-			(126,278	)
Net income for the year		-		-		-			-			-		-		1,629,270			-			-			1,629,270
Foreign currency translation adjustment		-		-		-			-			-		-		-			-			444,138			444,138

Balance, December 31, 2008		77,955,475		38,978		-			-			6,512,346		561,222		430,849			(318,556	)		1,031,021			8,255,860

Common stock issued for services		4,150,000		2,075		-			-			394,925		-		-			(397,000	)		-			-
Common stock issued for acquisitions		4,500,000		2,250		-			-			566,750		-		-			-			-			569,000
Amortization of deferred compensation		-		-		-			-			-		-		-			408,014			-			408,014
Adjustment to statutory reserve		-		-		-			-			-		241,527		(241,527	)		-			-			-
Net income for the year		-		-		-			-			-		-		3,060,793			-			-			3,060,793
Foreign currency translation adjustment		-		-		-			-			-		-		-			-			(397,051	)		(397,051	)

Balance at December 31, 2009		86,605,475	$	43,303		-			-		$	7,474,021	$	802,749	$	3,250,115		$	(307,542	)	$	633,970		$	11,896,616

F-5

LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	YEARS ENDED DECEMBER 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Income including noncontrolling interest	$	3,442,234		$	1,778,775
Adjustments to reconcile income including noncontrolling
interest to net cash provided by operating activities:
Deferred compensation		408,014			188,833
Depreciation and amortization		160,447			123,666
Allowance for doubtful accounts		(328,323	)		427,561
Allowance for doubtful accounts-related party		(58,646	)		155,078
Gain from disposal of discontinued operation		-			(25,322	)
Stock-based compensation		-			29,084
Expense from derivative liabilities		-			281,030
Increase(decrease) in current assets
Accounts receivable		(435,660	)		(1,108,415	)
Accounts receivable - related party		(1,343,194	)		(1,633,398	)
Other receivables		72,720			(46,645	)
Inventories		143,350			(391,443	)
Prepaid and other current assets		(13,001	)		(339,378	)
Deposits		276,029			-
Increase(decrease) in current liabilities
Accounts payable and accrued expenses		(527,362	)		299,043
Advances from customers		50,443			66,682
Taxes payable		123,276			127,170
Other payables		(299,616	)		193,986
Changes in assets of discontinued operation		-			(69,237	)
Changes in liabilities of discontinued operation		-			147,307

NET CASH PROVIDED BY OPERATING ACTIVITIES		1,670,710			204,377

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Likang Biological - related party		(292,783	)		-
Cash acquired from acquisition of Likang Biological		145,747			-
Purchase of property, plant and equipment		(1,170,150	)		(108,988	)
Cash paid for minority interest		-			(399,057	)

NET CASH USED IN INVESTING ACTIVITIES		(1,317,186	)		(508,045	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due to related party		77,989			52,782
Increase in due from related parties		-			(919,694	)
Proceeds from loans payable		380,618			732,517
Repayment for loans payable		(746,596	)		(732,517	)
Proceeds from issuance of Linkwell Tech shares		-			2,000,000
Proceeds from Warrants Exercised		-			20,000

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(287,989	)		1,153,088

EFFECT OF EXCHANGE RATE ON CASH		6,138			440,540

NET INCREASE IN CASH AND CASH EQUIVALENTS		71,673			1,289,960

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		2,072,687			782,727

CASH AND CASH EQUIVALENTS, END OF YEAR	$	2,144,360		$	2,072,687


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:
Interest	$	54,520		$	64,191
Income taxes	$	595,612		$	278,367

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stocks to buy minority interest	$	-		$	285,000
Receivable from sale of discontinued operation	$	-		$	291,792
Dividends for minority interest acquisition	$	-		$	126,278

F-6

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009 and 2008

(AUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Linkwell Corporation (formerly Kirshner Entertainment & Technologies, Inc.) (the “Company”) was incorporated in the state of Colorado on December 11, 1996. On May 31, 2000, the Company acquired 100% of HBOA.com, Inc. On December 28, 2000, the Company formed a new subsidiary, Aerisys Incorporated (“Aerisys”), a Florida corporation, to handle commercial private business. In June 2003, the Company formed its entertainment division and changed its name to reflect this new division. Effective as of March 31, 2003, the Company discontinued their entertainment division and their technology division, except for the Aerisys operations that continues on a limited basis.

On May 2, 2005, the Company entered into and consummated a share exchange with all of the shareholders of Linkwell Tech Group, Inc. (“Linkwell Tech”). Pursuant to the share exchange, the Company acquired 100% of the issued and outstanding shares of Linkwell Tech's common stock, in exchange for 36,273,470 shares of our common stock, which at closing represented approximately 87.5% of the issued and outstanding shares of the Company’s common stock. As a result of the transaction, Linkwell Tech became our wholly-owned subsidiary. For financial accounting purposes, the exchange of stock was treated as a recapitalization of Kirshner with the former shareholders of the Company retaining 7,030,669 or approximately 12.5% of the outstanding stock. The consolidated financial statements reflect the change in the capital structure of the Company due to the recapitalization and in the operations of the Company and its subsidiaries for the periods presented.

Linkwell Tech was founded on June 22, 2004, as a Florida corporation. On June 30, 2004, Linkwell Tech acquired 90% of Shanghai LiKang Disinfectant High-Tech Company, Ltd. (“LiKang Disinfectant”) through a stock exchange. This transaction resulted in the formation of a U.S. holding company by the shareholders of LiKang Disinfectant as it did not result in a change in the underlying ownership interest of LiKang Disinfectant. LiKang Disinfectant is a science and technology enterprise founded in 1988. LiKang Disinfectant is involved in the development, production, marketing and sale, and distribution of disinfectant health care products.

LiKang Disinfectant has developed a line of disinfectant product offerings which are utilized by the hospital and medical industry in China. LiKang Disinfectant has developed a line of disinfectant product offerings. LiKang Disinfectant regards hospital disinfectant products as the primary segment of its business and has developed and manufactured several series of products in the field of skin mucous disinfection, hand disinfection, surrounding articles disinfection, medical instruments disinfection and air disinfection.

F-7

On June 30, 2005, the Company's Board of Directors approved an amendment of its Articles of Incorporation to change the name of the Company to Linkwell Corporation. The effective date of the name change was after close of business on August 16, 2005.

On April 6, 2007, the Company’s subsidiary, Linkwell Tech, entered into two material stock purchase agreements as follows:

i) Linkwell Tech entered into an agreement (the “Biological Stock Purchase Agreement”) to acquire a 100% equity interest in Shanghai LiKang Biological High-Tech Company, Ltd. (“LiKang Biological”), a Chinese company, in a related party transaction with Mr. Xuelian Bian, the Company’s Chief Executive Officer, Mr. Wei Guan, the Company’s Vice-President and Director, and Shanghai Likang Pharmaceuticals Technology Co., Ltd. (“LiKang Pharmaceutical”). Before the Biological Stock Purchase Agreement, Mr. Bian and Mr. Guan owned 90% and 10% of LiKang Pharmaceutical, respectively. Mr. Bian and LiKang Pharmaceutical owned 60% and 40% of LiKang Biological, respectively. Pursuant to the terms of the Biological Stock Purchase Agreement, Mr. Bian and LiKang Pharmaceutical were to receive 1,000,000 shares of Linkwell Corporation restricted common stock.

Due to restrictions under PRC law that prohibited the consideration contemplated by the Biological Stock Purchase Agreement, the agreement did not close. As a result, on March 25, 2008, the parties agreed to enter into an amendment to the Biological Stock Purchase Agreement (“Biological Amendment”) in an effort to complete the stock purchase transaction. Pursuant to the terms of the Biological Amendment, the only material change to the Biological Stock Purchase Agreement related to the consideration paid by Linkwell Tech to Xuelian Bian and LiKang Pharmaceutical, which was changed from 1,000,000 shares of the Company’s common stock to $200,000 and 500,000 shares of common stock. As of December 31, 2008, the Biological Stock Purchase Agreement was pending and required further approval from the PRC Ministry of Commerce. Due to the time consuming and complicated nature of the approval procedure, the parties agreed to enter into a second amendment to the Biological Stock Purchase Agreement in order to complete the purchase transactions timely and properly. Pursuant to the terms of the Biological Amendment, the purchaser was changed from Linkwell Tech to LiKang Disinfectant, in addition, the consideration changed to RMB 2, 000,000, approximately $292,500 and 500,000 shares of common stock. Approval from Ministry of Commerce, in the People’s Republic of China will not be necessary if LiKang Disinfectant acquires 100% of the equity interest in LiKang Biological, because both companies are companies registered in PRC. This transaction closed on March 5, 2009. During the quarter ended September 30, 2009, the LiKang Disinfectant increased its investment into Likang Biological by injecting RMB 2.5 million cash and intangible assets (patents) of RMB 5.5 million. Likang Biological is mainly engaged in producing the disinfectant concentrate.

ii) Linkwell Tech, which already owned a 90% equity interest in LiKang Disinfectant, was to purchase the remaining 10% equity interest of LiKang Disinfectant from Shanghai Shanhai Group, a non-affiliated Chinese entity (the “Disinfectant Stock Purchase Agreement”). Pursuant to the terms of the Disinfectant Stock Purchase Agreement, Shanghai Shanhai Group was to receive 3,000,000 shares of Linkwell Corporation restricted common stock.

Due to restrictions under PRC law that prohibited the consideration then contemplated by the Disinfectant Stock Purchase Agreement, the agreement did not close. As a result of this, on March 25, 2008, the parties agreed to enter into an amendment to the Disinfectant Stock Purchase Agreement (“Disinfectant Amendment”) in an effort to complete the stock purchase transaction. Pursuant to the terms of the Disinfectant Amendment, the only material change to the Disinfectant Stock Purchase Agreement related to the consideration paid by Linkwell Tech to the Shanghai Shanhai Group for the remaining 10% equity interest, which was changed from 3,000,000 shares of Common Stock, to $380,000 and 1,500,000 shares of Common Stock. Due to the fluctuation of the applicable exchange rate, the cash consideration was increased to $399,057. The other terms of the Disinfectant Stock Purchase Agreement remained in full force and effective.

F-8

Linkwell Tech paid $395,800 to the Shanghai Shanhai Group on February 21, 2008 and paid $3,257 on April 18, 2008. A total of 1,500,000 shares were expected to be issued before the end of May, 2008. The parties agreed to extend the share issuance date until October 20, 2008. The Company valued the acquisition using the fair value of common shares at $0.19 per share and recorded an investment of $285,000. Including the cash payment of $399,057, the total investment for acquiring 10% equity interest in LiKang Disinfectant was $684,057. The cumulative minority interest of 10% equity interest in LiKang Disinfectant at March 25, 2008, was approximately $557,779. The difference between the total investment and the cumulative minority interest of $126,278 was deducted from retained earnings as dividends to the 10% minority shareholder, Shanghai Shanhai Group. As a result of the closing of the Disinfectant Stock Purchase Agreement, as amended, as of March 25, 2008, our 90% owned subsidiary Linkwell Tech owns 100% of the equity interest in LiKang Disinfectant.

On February 15, 2008, the Company entered into a stock purchase agreement with Ecolab Inc., a Delaware corporation (“Ecolab”), pursuant to which Ecolab agreed to purchase 888,889 of shares of Linkwell Tech, or 10% of the issued and outstanding capital stock of Linkwell Tech, for $2,000,000. On March 28, 2008 and June 4, 2008, Linkwell Tech received $200,000 and $1,388,559, respectively from Ecolab. Including a $400,000 loan that Linkwell Tech received from Ecolab and accrued interest thereon of $11,441, Linkwell Tech received a total investment of $2,000,000 from Ecolab. On May 31, 2008, the Company, Linkwell Tech and Ecolab entered into a Linkwell Tech Group Inc. Stockholders Agreement, whereby both the Company and Ecolab are subject to, and beneficiaries of, certain pre-emptive rights, transfer restrictions and take along rights relating to the shares of Linkwell Tech that the Company and Ecolab each hold. As of May 31, 2008, the principal and accrued interest of $11,441 on the short-term $400,000 loan became part of Ecolab’s investment and does not need to be repaid.

On May 31, 2008, LiKang Disinfectant entered into a stock purchase agreement under which it sold 100% of the capital stock of its wholly-owned subsidiary, LiKang International, to Linkwell International Trading Co., Ltd, a company registered in Hong Kong which is 100% owned by Mr. Wei Guan, the Company’s Vice President, and Director. Pursuant to the terms of the agreement, LiKang Disinfectant received $291,754 (RMB 2,000,000) once the agreement was approved by the PRC Ministry of Commerce with such approval occurring on March 27, 2008.

BASIS OF PRESENTATION

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are expressed in US dollars. All material intercompany transactions and balances have been eliminated in the consolidation.

Certain reclassifications have been made to the prior year to conform to current year presentation. The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The consolidated financial statements of the Company include the accounts of its 90% owned subsidiary, Linkwell Tech, and 100% owned subsidiaries LiKang Disinfectant and Likang Biological. All significant inter-company balances and transactions have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates in the year ended December 31, 2009 and 2008 include the allowance for doubtful accounts, stock-based compensation, useful life of property and equipment, inventory reserve and option value.

NON-CONTROLLING INTEREST

Effective January 1, 2009, the Company adopted Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” which established new standards governing the accounting for and reporting of noncontrolling interests (NCIs) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs (previously referred to as minority interests) be treated as a separate component of equity, not as a liability (as was previously the case), that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements. Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to be attributed its share of losses even if that attribution results in a deficit NCI balance.

F-9

FAIR VALUE OF FINANCIAL INSTRUMENTS

For certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, advances from customers, short-term loans payable and amounts due from or to related parties, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

As of December 31, 2009, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.

ACCOUNTS RECEIVABLE

The Company has a policy of reserving for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At December 31, 2009 and 2008, the Company had established, based on a review of its third party accounts receivable outstanding balances, allowances for doubtful accounts in the amounts of $476,491 and $801,895, respectively. At December 31, 2009 and 2008, the Company had established, based on a review of its related party accounts receivable outstanding balances, allowances for doubtful accounts in the amounts of $319,200 and $376,437, respectively.

INVENTORIES

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. The valuation of inventory requires the Company to estimate obsolete or excess inventory based on analysis of future demand for our products. Due to the nature of the Company’s business and our target market, levels of inventory in the distribution channel, changes in demand due to price changes from competitors and introduction of new products are not significant factors when estimating the Company’s excess or obsolete inventory. If inventory costs exceed expected market value due to obsolescence or lack of demand, inventory write-downs may be recorded as deemed necessary by management for the difference between the cost and the market value in the period that impairment is first recognized. As of December 31, 2009 and 2008, the reserve for obsolete inventory amounted to $0 and $145,031, respectively.

F-10

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation is provided using the straight-line method over the estimated economic lives of the assets, which are from five to twenty years. The cost of repairs and maintenance are expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.

IMPAIRMENT OF LONG-LIVED ASSETS

ADVANCES FROM CUSTOMERS

As of December 31, 2009 and 2008, advances from customers were $142,137 and $91,326, respectively, which consisted of prepayments from third party customers to the Company for merchandise that had not yet been shipped by the Company. The Company will recognize the prepayments as revenue as customers take delivery of the goods, in compliance with its revenue recognition policy.

DISCONTINUED OPERATIONS

The Company records discontinued operations if both of the following conditions are met: (a) the operations and cash flows of the component have been (or will be) eliminated from the ongoing operations of the Company as a result of the disposal transaction and (b) the Company will not have any significant continuing involvement in the operations of the component after the disposal transaction. In a period in which a component of the Company either has been disposed of or is classified as held for sale, the income statement of the Company for current and prior periods shall report the results of operations of the component, including any gain or loss recognized in accordance with “Disposal of Long-Lived Assets,” in discontinued operations. The results of operations of a component classified as held for sale shall be reported in discontinued operations in the period(s) in which they occur. The results of discontinued operations, less applicable income taxes (benefit), shall be reported as a separate component of income before extraordinary items and the cumulative effect of accounting changes (if applicable).

On May 31, 2008, LiKang Disinfectant entered into a stock sale agreement under which it sold 100% shares of its wholly-owned subsidiary, LiKang International to Linkwell International Trading Co., Ltd, a company registered in Hong Kong. For the period before May 31, 2008, the income statement of the Company reported the results of operations of LiKang International as discontinued operations.

F-11

INCOME TAXES

The Company utilizes Statement of Financial Accounting Standards ("SFAS") No. 109, “Accounting for Income Taxes,” (codified in Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“ASC” Topic 740), which requires recognition of deferred tax assets and liabilities for expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of the Financial Accounting Standards Board's ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740) on January 1, 2007. As a result of the implementation of FIN 48, the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by FIN 48. As a result of the implementation of Interpretation 48, the Company recognized no material adjustments to liabilities or shareholders’ equity. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified as selling, general and administrative expense in the statements of income. The adoption of FIN 48 did not have a material impact on the Company’s financial statements.

BASIC AND DILUTED EARNINGS PER SHARE

The Company presents net income (loss) per share (“EPS”) in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share” (codified in FASB ASC Topic 740). Accordingly, basic income (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares outstanding, without consideration for common stock equivalents. Diluted net income per share is computed by dividing the net income by the weighted-average number of common shares outstanding as well as common share equivalents outstanding for the period determined using the treasury-stock method for stock options and warrants and the if-converted method for convertible notes. The Company has made an accounting policy election to use the if-converted method for convertible securities that are eligible to participate in common stock dividends, if declared. If the if-converted method was anti-dilutive (that is, the if-converted method resulted in a higher net income per common share amount than basic net income per share calculated under the two-class method), then the two-class method was used to compute diluted net income per common share, including the effect of common share equivalents. Diluted earnings per share reflects the potential dilution that could occur based on the exercise of stock options or warrants, unless such exercise would be anti-dilutive, with an exercise price of less than the average market price of the Company’s common stock.

F-12

The following table presents a reconciliation of basic and diluted earnings per share:

	2009		2008
Net income	$	3,060,793	$	1,629,270

Weighted average shares outstanding - basic		79,275,338		75,339,667
Effect of dilutive securities:
Unexercised warrants		49,103		209,891
Weighted average shares outstanding - diluted		79,324,441		75,549,558

Earnings per share from continuing operation - basic	$	0.04	$	0.02
Earnings per share from continuing operation - diluted	$	0.04	$	0.02
Earnings per share from discontinued operation - basic	$	-	$	0.02
Earnings per share from discontinued operation - diluted	$	-	$	0.02

The Company’s outstanding warrants as of December 31, 2009 and 2008 include the following:

	December 31, 2009		December 31, 2008

Warrants		33,469,795		33,469,795

REVENUE RECOGNITION

In general, the Company's revenue recognition policies are in compliance with SEC Staff Accounting Bulletin (“SAB”) 104 (codified in FASB ASC Topic 480). The Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectibility is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company. The Company's revenues from the sale of products are recorded when the goods are shipped, title passes, and collectibility is reasonably assured.

The Company's revenues from the sale of products to related parties are recorded when the goods are shipped to the customers from our related parties. Upon shipment, title passes, and collectibility is reasonably assured. The Company receives purchase orders from our related parties on an as need basis from the related party customers. Generally, the related party does not hold the Company’s inventory. If the related party has inventory on hand at the end of a reporting period, the sale is reversed and the inventory is included on the Company’s balance sheet.

F-13

STATEMENT OF CASH FLOWS

In accordance with SFAS No. 95, “Statement of Cash Flows,” codified in FASB ASC Topic 230, cash flows from the Company's operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company places its cash with high credit quality financial institutions in the U.S. and in China. Almost all of the Company's sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally wide distribution of our products and shorter payment terms than customary in the PRC. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. For the years ended at December 31, 2009 and 2008, sales to related parties accounted for 37% and 22% of net revenues, respectively.

FOREIGN CURRENCY TRANSLATION AND COMPREHENSIVE INCOME

The accounts of the Company’s Chinese subsidiaries are maintained in the Chinese Yuan Renminbi (RMB) and the accounts of the U.S. parent company are maintained in the U.S. Dollar (USD). The accounts of the Chinese subsidiaries were translated into USD in accordance with SFAS No. 52, "Foreign Currency Translation," (codified FASB ASC Topic 830), with the RMB as the functional currency for the Chinese subsidiaries. According to the Statement, all assets and liabilities were translated at the exchange rate on the balance sheet date, stockholders’ equity are translated at the historical rates and statement of operations items are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive Income” (codified in FASB ASC Topic 220).

SHIPPING COSTS

Shipping costs are included in selling expenses and totaled $441,950 and $269,518 for the years ended December 31, 2009 and 2008, respectively.

ADVERTISING

Advertising is expensed as incurred and included in selling expenses. For the years ended December 31, 2009 and 2008, advertising expenses amounted to $108,026 and $64,773 respectively.

STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation in accordance with SFAS No. 123R, “Share-Based Payment, an Amendment of FASB Statement No. 123” (codified in FASB ASC Topics 718 & 505). The Company recognizes in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

F-14

NON-EMPLOYEE STOCK BASED COMPENSATION

The cost of stock-based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Emerging Issues Task Force Issue, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.

REGISTRATION RIGHTS AGREEMENTS

The Company accounts for payment arrangements under registration rights agreement in accordance with FASB Staff Position EITF 00-19-2 (codified in FASB ASC Topic 815), which requires the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies (codified in FASB ASC Topic 450).

The Company has adopted “Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument. Accordingly, the Company classifies as liability instruments, the fair value of registration rights agreements when such agreements (i) require it to file, and cause to be declared effective under the Securities Act, a registration statement with the SEC within contractually fixed time periods, and (ii) provide for the payment of liquidating damages in the event of its failure to comply with such agreements. Accordingly, (i) registration rights with these characteristics are accounted for as derivative financial instruments at fair value and (ii) contracts that are (a) indexed to and potentially settled in an issuer's own stock and (b) permit gross physical or net share settlement with no net cash settlement alternative are classified as equity instruments.

RESEARCH AND DEVELOPMENT COST

Research and development costs are expensed as incurred. These costs primarily consist of cost of materials used and salaries paid for the development department of the Company and fees paid to third parties. Research and development costs for the years ended at December 31, 2009 and 2008 were $108,026 and $63,552, respectively.

SEGMENT REPORTING

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" (codified in FASB ASC Topic 280) requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

SFAS 131 has no effect on the Company's financial statements as substantially all of the Company's operations are conducted in one industry segment. All of the Company's assets are located in the PRC.

RECENT ACCOUNTING PRONOUNCEMENTS

F-15

In April 2009, the FASB issued FSP No. SFAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which is codified in FASB ASC Topic 825-10-50. This FSP essentially expands the disclosure about fair value of financial instruments that were previously required only annually to also be required for interim period reporting. In addition, the FSP requires certain additional disclosures regarding the methods and significant assumptions used to estimate the fair value of financial instruments. These additional disclosures are required beginning with the quarter ending June 30, 2009. This FSP had no material impact on the Company’s financial position, results of operations or cash flows.

F-16

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” which is codified in FASB ASC Topic 320-10. This FSP modifies the requirements for recognizing other-than-temporarily impaired debt securities and changes the existing impairment model for such securities. The FSP also requires additional disclosures for both annual and interim periods with respect to both debt and equity securities. Under the FSP, impairment of debt securities will be considered other-than-temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). The FSP further indicates that, depending on which of the above factor(s) causes the impairment to be considered other-than-temporary, (1) the entire shortfall of the security’s fair value versus its amortized cost basis or (2) only the credit loss portion would be recognized in earnings while the remaining shortfall (if any) would be recorded in other comprehensive income. FSP 115-2 requires entities to initially apply the provisions of the standard to previously other-than-temporarily impaired debt securities existing as of the date of initial adoption by making a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The cumulative-effect adjustment potentially reclassifies the noncredit portion of a previously other-than-temporarily impaired debt security held as of the date of initial adoption from retained earnings to accumulate other comprehensive income. The Company adopted FSP No. SFAS 115-2 and SFAS 124-2 beginning April 1, 2009. This FSP had no material impact on the Company’s financial position, results of operations or cash flows.

In April 2009, the Financial Accounting Standards Board (“FASB”) issued FSP No. SFAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP No. SFAS 157-4”). FSP No. SFAS 157-4, which is codified in FASB ASC Topics 820-10-35-51 and 820-10-50-2, provides additional guidance for estimating fair value and emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. The Company adopted FSP No. SFAS 157-4 beginning April 1, 2009. This FSP had no material impact on the Company’s financial position, results of operations or cash flows.

NOTE 2 – INVENTORIES

A summary of inventories by major category as of December 31, 2009 and 2008 are as follows:

	December 31		December 31,
	2009		2008
Raw materials	$	870,559	$	592,380
Work-in-process		2,604		47,621
Finished goods		1,182,823		712,382

Less: Reserve for obsolescence		-		(145,031)

Net inventories	$	2,055,986	$	1,207,352

F-17

NOTE 3 – PROPERTY AND EQUIPMENT

At December 31, 2009 and 2008, property and equipment consisted of the following:

	Estimated
	Useful Life		December 31,		December 31,
	(In years)		2009		2008

Office equipment and furniture		3-7	$	356,950	$	158,187
Autos and trucks		5		294,554		201,723
Manufacturing equipment		2-10		637,910		346,420
Building		5-20		1,528,404		458,752
						-
Less: Accumulated depreciation				(760,060)		(461,147)
Property and equipment, net			$	2,057,758	$	703,935

For the years ended December 31, 2009 and 2008, depreciation expenses amounted to $160,447 and $82,583, respectively.

NOTE 4 - INTANGIBLE ASSETS

At December 31, 2009, intangible assets consisted of customers lists arising from the acquisition of Likang Biological, amortizing over 5 years. Intangible assets as of December 31, 2009 totaled $513,648. Annual amortization expense for the next five years is expected to be as follows

Year 2010	2011	2012	2013	2014
$ 102,730	102,730	102,730	102,730	102,728

NOTE 5 - DEPOSIT

Deposit represented prepaid application fee of $559,445 for acquiring the land use right and $544,000 deposit for purchasing an acquisition target in China.

NOTE 6 – LOANS PAYABLE

Loans payable consisted of the following at December 31, 2009 and 2008:

	December 31,		December 31,
	2009		2008
Loans from Shanghai Rural Commercial Bank, Dachang Branch due on June 16, 2010 with interest rate at 6.90% per annum, Guaranteed by Shanhai Group (RMB 2,600,000)	$	380,774	$	379,329

Loans from Shanghai Rural Commercial Bank, Dachang Branch due on December 10, 2009 with interest rate 6.70% per annum. Guaranteed by Shanhai Group and Mr. Bian, Chairman of the Company (RMB 2,500,000)		-		364,740

	$	380,774	$	744,069

F-18

NOTE 7 – RELATED PARTY TRANSACTIONS

Linkwell Tech's wholly-owned subsidiary, LiKang Disinfectant, is engaged in business activities with four related parties: Shanghai ZhongYou Pharmaceutical High-Tech Co., Ltd., (“ZhongYou”), Shanghai LiKang Biological High-Tech Co., Ltd. (“Likang Biological”), Shanghai Jiuqing Pharmaceuticals Company, Ltd (“Shanghai Jiuqing”) and Linkwell International Trading Co., Ltd (“Linkwell Trading ”). Shanghai LiKang Meirui Pharmaceuticals High-Tech Co., Ltd (“Meirui”), a company of which Shanhai is a majority shareholder, and had owned 68% of its Meirui equity shares used to be a related party，however due to the fact that Linkwell Tech acquired Shanhai’s 10% equity interest in LiKang Disinfectant for total consideration of $684,057 which included the cash payment of $399,057 and 1,500,000 common shares at value of $0.19 per share.As a result of this transaction, Meirui was no longer a related party. Likang Disinfectant completed its acquisition of Likang Biological on March 3, 2009; therefore, Likang Biological was no longer a related party of the Company since then, all the sales and purchase with Likang Biological were eliminated during the consolidation.

The Company’s Chairman and Chief Executive Officer, Xuelian Bian, and Vice President and Director, Wei Guan, own 90% and 10% respectively, of the capital stock of ZhongYou. In March 2007, Wei Guan sold his 10% shares to Bing Chen, President of LiKang Disinfectant. In August 2007, Xuelian Bian sold his 90% shares to his mother, Xiuyue Xing. In October, 2007, the two new shareholders, Bing Chen (10%) and Xiuyue Xing (90%) sold all of their shares in ZhongYou to Shanghai Jiuqing Pharmaceuticals Company, Ltd., whose 100% owner is Shanghai Ajiao Shiye Co. Ltd. Mr. Bian is a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd.

For the years ended December 31, 2009 and 2008, the Company recorded net revenues of $4,983,962 and $1,748,547 to ZhongYou respectively. At December 31, 2009 and 2008, accounts receivable from sales to ZhongYou were $3,322,044 and $2,114,681, respectively.

As of December 31 2008, the Company loaned LiKang Biological $1,764,157, and had due from Linkwell International Trading for $393,920 for the proceeds of disposal of Likang International.

As of December 31, 2009, the Company owed its management $54,000, Zhongyou $175,520 and other related parties of $78,220. As of December 31, 2008, the Company had due to LiKang Biological for $93,707, and due to LiKang Pharmaceuticals of $876.

F-19

NOTE 8 – TAXES PAYABLE

Taxes payable consisted of the following at December 31, 2009 and 2008, respectively:

	2009		2008
Income tax payable	$	136,823	$	125,527
Value added tax payable		114,720		102,718
Other taxes payable		6,281		1,885
	$	257,824	$	220,103

NOTE 9 –PUT OPTION LIABILITY

On February 15, 2008, we entered into a stock purchase agreement with Ecolab pursuant to which Ecolab agreed to purchase and Linkwell Tech agreed to sell 888,889 of its shares, or 10% of the issued and outstanding capital stock of Linkwell Tech, for $2,000,000. On May 31, 2008, the Company, Linkwell Tech and Ecolab entered into a Stockholders Agreement (“Stockholders Agreement”), whereby both the Company and Ecolab are subject to, and benefit by, certain pre-emptive rights, transfer restrictions and take along rights relating to the shares of Linkwell Tech, the Company and Ecolab each hold.

Pursuant to the terms of the Stockholders Agreement, Ecolab has an option (“Put Option”) to sell the 888,889 shares (“Shares”) of common stock, par value $0.001, of Linkwell Tech that Ecolab purchased under the Stock Purchase Agreement, back to Linkwell Tech in exchange for, as determined by Linkwell, cash in the amount of $2,400,000 or the lesser of (a) 10,000,000 shares of Linkwell common stock, or (b) such number of shares of Linkwell common stock as is determined by dividing (i) 3,500,000 by (ii) the average daily closing price of Linkwell common stock for the twenty days on which Linkwell shares of common stock were traded on the OTC Bulletin Board prior to the date the Put Option is exercised (“Put Shares”). The Put Option is exercisable during the period between the second and fourth anniversaries of May 30, 2008, or upon the occurrence of certain events including material breach by Linkwell Tech or its subsidiaries, of the Consulting Agreement, Distributor Agreements or Sales Representative Agreement entered into in connection with the Stock Purchase Agreement.

Under the Stockholders Agreement, Ecolab also has a call option (“Call Option”), exercisable if Linkwell is subject to a change of control transaction, to require Linkwell to sell to Ecolab all of the equity interests in Linkwell Tech, or any of Linkwell Tech’s subsidiaries, then owned by Linkwell. The Company recognized the maximum expenses of the put option and the call option described above as $2,400,000 put option liability.

F-20

NOTE 10 - DISCONTINUED OPERATION

Due to losses and uncertainty about future profitability, on May 31, 2008, LiKang Disinfectant entered into a stock purchase agreement pursuant to which it sold 100% of the equity interest of its wholly-owned subsidiary, LiKang International to Linkwell Trading.

As of May 31, 2008, the Company has classified the LiKang International business as discontinued operation. The initial investment to LiKang International was $291,754 (RMB 2,000,000). For the fiscal year ended December 31, 2008, the total gain from discontinued operations was $65,083 including a gain from the disposal of the operation amounting to $39,761. The Company will receive $291,792 (RMB2, 000,000) from Linkwell International Trading Co., Ltd.

NOTE 11 - INCOME TAXES

The Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

Linkwell Corp and Linkwell Tech were incorporated in the US and have net operating losses (NOL) for income tax purposes. Linkwell Corp and Linkwell Tech had net operating loss carry forwards for income taxes of approximately $1,807,000 at December 31, 2009 which may be available to reduce future years’ taxable income as NOL’s can be carried forward up to 20 years from the year the loss is incurred. Under IRC section 382, certain of these loss carryforward amounts may be limited due to the more than 50% change in ownership which took place during 2004. Management believes the realization of benefits from these losses uncertain due to the Company’s limited operating history and continuing losses. Accordingly, a 100% valuation allowance has been provided on the deferred tax asset of approximately $690,000.

Likang Disinfectant and Likang Biological are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriated tax adjustments. Likang Disinfectant is subject to preferential income tax rate of 12.5% for 2009 and 2008; Likang Bio is subject preferential income tax rate of 20% for 2009.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended December 31, 2009 and 2008:

	2009			2008
US statutory rates		34.0	%		34.0	%
State income tax, net of federal benefit		4.0	%		4.0	%
Permanent difference on deferred tax					4.1	%
Tax rate difference		(14.8)	%		(19.8)	%
Effect of tax holiday on PRC taxable income		(12.4)	%		(15.4)	%
Other		(1.3)	%		-	%
Valuation allowance on US NOL		5.2	%		11.5	%
Tax per financial statements		14.7	%		16.9	%

NOTE 12 - STATUTORY RESERVES

Pursuant to the corporate law of the PRC effective January 1, 2006, the Company is now only required to maintain one statutory reserve by appropriating from its after-tax profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.

F-21

Surplus Reserve Fund

The Company is now only required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50% of the Company’s registered capital.

The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

The Company made reserve allocations of $241,527 and $242,186 to this fund for the years ended December 31, 2009 and 2008, respectively.

Common Welfare Fund

The common welfare fund is a voluntary fund that provides that the Company can elect to transfer 5% to 10% of its net income to this fund. This fund can only be utilized on capital items for the collective benefit of the Company’s employees, such as construction of dormitories, cafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than upon liquidation. The Company did not make any reserve to this fund during 2009 and 2008.

NOTE 13 – STOCKHOLDERS’ EQUITY

Common Stock

In September 2006, the Company entered into a three-year agreement with a consultant to provide business development and management services. In connection with this agreement, the Company issued 500,000 shares of the Company’s common stock. The Company valued these services using the fair value of common shares on grant date at $0.185 per share and recorded deferred consulting expense of $92,500 to be amortized over the service period. For the year ended December 31, 2009, amortization of consulting compensation amounted to $20,556.

On November 20, 2007, the Company entered into a one year agreement with Segue Ventures LLC to provide various informal advisory and consulting services, including U.S. business methods and compliance with SEC disclosure requirements. In connection with this agreement, Segue Ventures LLC received $4,000 in cash and 16,000 shares of common stock per month. From November 20, 2007 to June 30, 2008, the Company recorded a total of 116,800 common shares issuable valued at $24,064 as stock-based consulting expense. On February 27, 2008, 70,000 shares of the Company’s common stock were issued to Segue Ventures LLC. The Company valued these 70,000 shares using the fair value of common shares on the contract date at $0.19 per share and recorded consulting expense of $13,300, of which, $3,938 was allocated to the year ended December 31, 2007, and $9,362 was allocated to the six months ended June 30, 2008. On August 13, 2008, 68,800 shares of the Company’s common stock were issued to Segue Ventures LLC. The Company valued these 68,800 shares using the fair value of common shares on the grant date at $0.19 per share and recorded consulting expense of $13,072 in 2008. The Company terminated its services agreement with Segue Ventures LLC on September 11, 2008, and no shares are unissued.

In March 2008, the Company entered into a two month agreement with SmallCapVoice.Com, Inc. to provide the Company with financial public relations services. In connection with this agreement, the Company pays $3,500 per month and issues a total of 35,000 shares of the Company’s common stock. On March 11, 2008, the Company issued 35,000 shares to SmallCapVoice.Com, Inc. The Company valued these services using the fair value of common shares on the grant date at $0.19 per share.

On May 1, 2008, the Company entered into a two year agreement with China Health Capital Group, Inc. (“CHC”) to provide the Company with financial and investment services. In connection with this agreement, on June 24, 2008, the Company issued 2,000,000 shares of Common Stock valued at $0.21 per share to CHC and recorded $420,000 as deferred compensation. The Company fully amortized $280,000 and $140,000 as stock-based compensation for the year ended December 31, 2009 and 2008, respectively.

F-22

On June 27, 2008, Monarch Capital Fund, Ltd. exercised a warrant to purchase 100,000 shares of Common Stock with price of $0.20 per share. The Company received proceeds from this warrant exercise of $20,000 on June 24, 2008.

On July 1, 2009, the Company entered into a two year agreement with First Trust. In connection with this agreement, the Company issued 1,800,000 shares of Common Stock valued at $0.09 per share to First Trust and recorded $162,000 as deferred compensation. The Company amortized $40,500 as stock-based compensation for the year ended December 31, 2009. This agreement has a penalty to the stock recipient for non-compliance to its terms.

On August 1, 2009, the Company entered into a two year agreement with Shanghai Hai Mai Law Firm. In connection with this agreement, the Company issued 2,350,000 shares of Common Stock valued at $0.10 per share to Shanghai Hai Mai Law Firm and recorded $235,000 as deferred compensation. The Company amortized $48,958 as stock-based compensation for the year ended December 31, 2009. This agreement has a penalty to the stock recipient for non-compliance to its terms.

On December 30, 2009, the Company issued 4,000,000 shares of common stock for acquiring an acquisition target in China for $544,000 accounted for as a deposit as of December 31, 2009. The Company is in the process of closing the acquisition.

On December 30, 2009, the Company issued 500,000 shares of common stock for paying the stock consideration portion of the acquisition price for Likang Biological.

Common Stock Warrants

During the year ended December 31, 2009, there were no warrants granted or exercised.

The following table summarizes the Company's Common Stock warrants outstanding at December 31, 2009:

				Warrants Outstanding and Exercisable
	Range of	Number		Weighted Average		Weighted Average
	Exercise	Of		Remaining		Exercise
	Price	Warrants		Exercise Life		Price
$	0.10		540,130		1.50	$	0.10
$	0.20		17,055,000		1.75	$	0.20
$	0.30		15,866,665		1.99	$	0.30
$	1.00		8,000		-	$	1.00
			33,469,795

NOTE 14 - COMMITMENTS

On March 1, 2008, the Company entered a three-year lease agreement for its warehouse with expiration date on March 31, 2011, for monthly rent of $3,830 (RMB 26,158) up to May of 2009, the monthly rent increased to $5,255 (RMB 35,892) after May of 2009. The Company ceased this lease in July of 2009.

F-23

On July 16, 2008, the Company entered a two-year lease agreement for its administrative office with expiration date on July 15, 2010, for monthly rent of $4,400 (RMB 30,237) until April of 2009, the monthly rent increased to $9,470 (RMB 64,669) after April of 2009, the Company has the option to renew this lease upon the expiration.

On November 1, 2008, the Company entered another two-year lease agreement for its branch office with expiration date on October 31, 2010, for monthly rent of $3,500 (RMB 24,000), the Company has the option to renew this lease upon the expiration.

Future minimum rental payments required under these operating leases are as follows:

Year Ended December 31,

2010	$	96,542

For the years ended December 31, 2009 and 2008, rent expense amounted to $226,325 and $ 123,964, respectively.

NOTE 15 – ACQUISITION OF LIKANG BIOLOGICAL

On March 5, 2009, the Company closed the acquisition of all the outstanding capital stock of Likang Biological. The purchase price for Likang Biological was RMB2, 000,000 (approximately $292,500) and 500,000 shares of common stock equivalent to approximately US$25,000, which was determined by multiplying the 500,000 shares by the average stock price of Linkwell Corp. two days before and two days after the closing date . This acquisition was a related party transaction. Mr. Xuelian Bian, the Company’s Chief Executive Officer, owned 90% of LiKang Pharmaceutical. Mr. Bian and LiKang Pharmaceutical owned 60% and 40% of LiKang Biological, respectively.

For convenience of reporting the acquisition for accounting purposes, March 1, 2009 was designated as the acquisition date.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition. The purchase price exceeded the fair value of the net assets acquired by approximately $469,000, which was recorded as intangible assets, customer list.

Cash	$	145,749
Other receivables		121,573
Inventory		986,043
Property and equipment		340,542
Construction in progress		834,401
Intangible assets		469,084
Accounts payable		(970,235	)
Other current liabilities		(1,609,657	)
Purchase price	$	317,500

The following unaudited pro forma consolidated results of operations of the Company for the years ended December 31, 2009 and 2008 presents the operations of the Company and Likang Biological as if the acquisition of Likang Biological occurred on January 1, 2009 and 2008, respectively. The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisitions been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results.

F-24

	For the Years Ended December 31,
	2009		2008
Net revenue	$	14,806,452	$	12,103,665
Cost of revenue		6,625,574		6,093,369
Gross profit		8,180,878		6,010,296
Selling expense		1,598,134		1,083,431
General & administrative expense		2,436,968		2,491,269
Total operating expenses		4,035,102		3,574,700
Income from operations		4,145,776		2,435,596
Non-operating (expenses), net		(121,964)		(654,493)
Income from discontinued operations		-		65,083
Income before income tax		4,023,812		1,846,186
Income tax expense		594,078		389,257
Net income including noncontrolling interest		3,429,734		1,456,929
Less: noncontrolling interest		381,440		149,505
Net income attributable to Linkwell Corp	$	3,048,294	$	1,307,424

NOTE 16 – CONTINGENCY

The Company is a defendant in a lawsuit filed in November 2009 in the Supreme Court of the State of New York, County of New York, by two warrant holders of the Company, seeking damages of as at least $800,000. As of December 31, 2009 and April 15, 2010, the Company is vigorously defending its position in this litigation matter and has not made for a provision with regards to this lawsuit in the event of an unfavorable outcome. The Company has filed a motion to dismiss the complaint and proceedings relating to the motion to dismiss are ongoing.

NOTE 17 – OPERATING RISK

(a)	Country risk

Currently, the Company’s revenues are primarily derived from the sale of a line of disinfectant product offerings to customers in the People’s Republic of China (PRC). The Company hopes to expand its operations to countries outside the PRC, however, such expansion has not been commenced and there are no assurances that the Company will be able to achieve such an expansion successfully. Therefore, a downturn or stagnation in the economic environment of the PRC could have a material adverse effect on the Company’s financial condition.

(b)	Products risk

In addition to competing with other domestic manufacturers of disinfectant product offerings, the Company competes with larger U.S. companies who have greater funds available for expansion, marketing, research and development and the ability to attract more qualified personnel. These U.S. companies may be able to offer products at a lower price. There can be no assurance that the Company will remain competitive should this occur.

(c)	Exchange risk

The Company cannot guarantee that the current exchange rate will remain steady, therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of a fluctuating exchange rate actually post higher or lower profit depending on exchange rate of Renminbi converted to US dollars on that date. The exchange rate could fluctuate depending on changes in the political and economic environments without notice.

(d)	Political risk

Currently, the PRC is in a period of growth and is openly promoting business development in order to bring more business into the PRC. Additionally, the PRC currently allows a Chinese corporation to be owned by a United States corporation. If the laws or regulations relating to ownership of a Chinese corporation are changed by the PRC government, the Company's ability to operate the PRC subsidiaries could be affected.

F-25

Attached files

Linkwell CORP Reports

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