-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FVx4Lh9EVnYKeXAB6M8YiwPl+hyRGZOBHkKITrwzmdbcwaxJLoVlJ2n0j9DzQbZ3 YeyqxctxB3TXGwvmoreijw== 0001144204-08-063517.txt : 20081113 0001144204-08-063517.hdr.sgml : 20081113 20081113172518 ACCESSION NUMBER: 0001144204-08-063517 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080930 FILED AS OF DATE: 20081113 DATE AS OF CHANGE: 20081113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Linkwell CORP CENTRAL INDEX KEY: 0001042463 STANDARD INDUSTRIAL CLASSIFICATION: SPECIALTY CLEANING, POLISHING AND SANITATION PREPARATIONS [2842] IRS NUMBER: 651053546 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24977 FILM NUMBER: 081186129 BUSINESS ADDRESS: STREET 1: NO. 476 HUTAI BRANCH ROAD STREET 2: BAOSHAN DISTRICT CITY: SHANGHAI STATE: F4 ZIP: 200436 BUSINESS PHONE: (86) 21-56689332 MAIL ADDRESS: STREET 1: NO. 476 HUTAI BRANCH ROAD STREET 2: BAOSHAN DISTRICT CITY: SHANGHAI STATE: F4 ZIP: 200436 FORMER COMPANY: FORMER CONFORMED NAME: KIRSHNER ENTERTAINMENT & TECHNOLOGIES INC DATE OF NAME CHANGE: 20030818 FORMER COMPANY: FORMER CONFORMED NAME: HBOA HOLDINGS INC DATE OF NAME CHANGE: 20001116 FORMER COMPANY: FORMER CONFORMED NAME: MIZAR ENERGY CO DATE OF NAME CHANGE: 19980923 10-Q 1 v132025_10q.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ________ to __________

Commission File Number: 000-24977

LINKWELL CORPORATION
(Exact name of small business issuer as specified in charter)

FLORIDA
  
65-1053546
(State or other jurisdiction of
  
(I.R.S. Employer
incorporation or organization)
  
Identification No.)

1104 Jiatong Road, Jiading District, Shanghai, China 201807
(Address of principal executive offices)

(86) 21-5566-6258
(Issuer's telephone number)

not applicable
(Former name, former address and former fiscal year,
if changed since last report)

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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “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 Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: at November 12, 2008 there were 77,955,475 shares of common stock issued and outstanding.
 
 
LINKWELL CORPORATION AND SUBSIDIARIES
FORM 10-Q
QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008

INDEX

     
Page
PART I - FINANCIAL INFORMATION
    
       
Item 1. 
Financial Statements.
  
 4
       
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
 26
       
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
 
 34
       
Item 4.
Controls and Procedures.
  
 34
       
PART II - OTHER INFORMATION
    
       
Item 1.
Legal Proceedings.
  
 35
       
Item 1A.
Risk Factors.
  
 35
       
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
  
 35
     
  
Item 3.
Defaults Upon Senior Securities.
  
 35
       
Item 4.
Submission of Matters to a Vote of Security Holders.
  
 35
       
Item 5.
Other Information.
  
 35
       
Item 6.
Exhibits.
  
 35
       
Signature
  
 37
 
2
 
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

Certain statements in this 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, the risk of doing business in the People's Republic of China, or the PRC, our ability to implement our strategic initiatives, our access to sufficient capital, the effective integration of our subsidiaries in the PRC into a U.S. public company structure, economic, political and market conditions and fluctuations, government and industry regulation, Chinese 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 herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety. 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 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

When used in this quarterly report, the terms:

“Linkwell”, the “Company”, “we” and “us” refers to Linkwell Corporation,
a Florida corporation, our subsidiaries;

“Linkwell Tech” refers to our formerly wholly-owned subsidiary Linkwell Tech Group, Inc.,
a Florida corporation, but only 90% owned after May 31, 2008;

“LiKang Disinfectant” refers to Shanghai LiKang Disinfectant High-Tech Company, Limited,
a wholly-owned subsidiary of Linkwell Tech; and

“LiKang International” refers to Shanghai LiKang International Trade Co., Ltd.,
formerly a wholly owned subsidiary of LiKang Disinfectant but 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 100% owner is Shanghai Ajiao Shiye Co. Ltd. Our officer Xuelian Bia is a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd.; and
 
“Biological” refers to Shanghai LiKang Biological High-Tech Co., Ltd.,
a company owned by our officer Xuelian Bian (60%) and ZhongYou (40%).

The information which appears on our web site at www.linkwell.us is not part of this report.
 
3
 
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
     
September 30,
2008
  
December 31,
2007
  
   
(unaudited)
  
 
  
ASSETS
          
           
CURRENT ASSETS:
          
Cash
  
$
1,916,693
  
$
782,727
  
Accounts receivable (net of allowance for doubtful accounts of $678,003 and $460,175 at September 30, 2008 and December 31, 2007 respectively)
    
3,464,112
   
2,759,745
 
Accounts receivable-related parties (net of allowance for doubtful accounts of $343,490 and $221,359 at September 30, 2008 and December 31, 2007 respectively)
    
3,053,606
   
1,992,233
 
Other receivable
    
196,685
   
270,910
 
Inventories (net of reserve for obsolete inventory of $145,012 and $136,287 at September 30, 2008 and December 31, 2007 respectively)
    
1,393,767
   
824,653
 
Prepaid expenses and other current assets
    
214,131
   
(17,105
)
Due from related parties
    
1,834,923
   
946,591
 
               
Total Current Assets
    
12,073,917
   
7,559,754
 
               
ASSETS PENDING FOR SALE
    
-
   
209,117
 
PROPERTY AND EQUIPMENT - Net
    
752,877
   
747,254
 
               
Total Assets
  
$
12,826,794
  
$
8,516,125
  
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Loans payable
  
$
743,972
  
$
699,210
  
Accounts payable and accrued expenses
    
1,510,578
   
1,209,228
 
Tax payable
    
233,061
   
92,933
 
Other payable
    
83,174
   
174,705
 
Due to related parties
    
272,452
   
16,581
 
Advances from customers
    
58,352
    
24,644
 
Total Current Liabilities
    
2,901,589
   
2,217,301
 
               
Derivative Payable
    
383,227
   
-
 
               
MINORITY INTEREST
    
2,047,547
   
527,244
 
               
STOCKHOLDERS' EQUITY:
              
Preferred stock (No Par Value; 10,000,000 Shares Authorized; No shares issued and outstanding)
    
-
   
-
 
Common Stock ($0.0005 Par Value; 150,000,000 Shares Authorized; 76,005,475 and 73,731,675 shares issued and outstanding at September 30, 2008 and December 31, 2007 respectively)
    
38,003
   
36,866
 
Common stock issuable
    
750
   
11
 
Additional paid-in capital
    
6,465,164
   
5,724,363
 
 
4
 
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)

     
June 30,
2008
    
December 31, 2007
  
     
(unaudited)
        
Accumulated profit (deficit)
    
334,789
   
(510,921
)
Deferred compensation
    
(360,764
)
  
(51,389
)
Other comprehensive gain - foreign currency
    
1,016,489
   
572,650
 
               
Total Stockholders' Equity
    
7,494,431
   
5,771,580
 
               
Total Liabilities and Stockholders' Equity
  
$
12,826,794
  
$
8,516,125
  

See notes to unaudited consolidated financial statements
 
5
 
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

     
For the Three Months
  
For the Nine Months
  
   
Ended September 30,
  
Ended September 30,
  
   
2008
  
2007
  
2008
  
2007
  
                   
NET REVENUES
                  
Non-affiliated companies
  
$
2,928,774
  
$
1,560,598
  
$
6,639,720
  
$
4,149,434
  
Affiliated companies
    
748,357
   
553,282
   
1,800,526
   
1,588,856
 
                           
Total Net Revenues
    
3,677,131
   
2,113,880
   
8,440,246
   
5,738,290
 
                           
COST OF SALES
    
(1,919,111
)
  
(1,133,986
)
  
(4,303,843
)
  
(3,044,408
)
                           
GROSS PROFIT
    
1,758,020
   
979,894
   
4,136,403
   
2,693,882
 
                           
OPERATING EXPENSES:
                          
Selling expenses
    
(262,600
)
  
(188,468
)
  
(809,301
)
  
(656,501
)
General and administrative
    
(669,822
)
  
(862,601
)
  
(1,590,691
)
  
(1,414,525
)
                           
Total Operating Expenses
    
(932,422
)
  
(1,051,069
)
  
(2,399,992
)
  
(2,071,026
)
                           
INCOME FROM OPERATIONS
    
825,598
   
(71,175
)
  
1,736,411
   
622,856
 
                           
OTHER INCOME (EXPENSE):
                          
Other income/(expense)
    
(59,876
)
  
(889
)
  
(61,251
)
  
117,149
 
Derivative expenses
    
-
    
-
    
(383,227
)
  
-
  
Interest income
    
1,662
   
848
   
3,972
   
2,658
 
Interest expense - related party
    
11,441
   
(4,411
)
  
-
   
(13,051
)
Interest expense
    
(16,823
)
  
(13,512
)
  
(47,829
)
  
(36,597
)
                           
Total Other Income/(Expense)
    
(63,596
)
  
(17,964
)
  
(488,335
)
  
70,159
 
                           
INCOME BEFORE DISCONTINUED OPERATIONS, INCOME TAXES AND MINORITY INTEREST
    
762,002
   
(89,139
)
  
1,248,076
   
693,015
 
                           
DISCONTINUED OPERATIONS(Note 7):
                          
Gain from discontinued operation (including gain on disposal of $43,123 at June 30, 2008 )
    
-
   
55,475
   
74,606
   
213,415
 
                           
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
    
762,002
   
(33,664
)
  
1,322,682
   
906,430
 
                           
INCOME TAXES
    
(126,315
)
  
-
   
(272,613
)
  
-
 
                           
INCOME BEFORE MINORITY INTEREST
    
635,687
   
(33,664
)
  
1,050,069
    
906,430
 
                           
MINORITY INTEREST
    
(30,773
)
  
(48,667
)
  
(78,082
)
  
(141,004
)
 
6
 
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Continued)

     
For the Three Months
  
For the Nine Months
  
   
Ended September 30,
  
Ended September 30,
  
   
2008
  
2007
  
2008
  
2007
  
                   
NET INCOME
  
$
604,914
  
$
(82,331
)
$
971,987
  
$
765,426
  
                           
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
                          
Basic
  
$
0.01
  
$
(0.00
)
$
0.01
  
$
0.01
  
Diluted
  
$
0.01
  
$
(0.00
)
$
0.01
  
$
0.01
  
                           
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                          
Basic
    
75,936,675
    
73,472,979
    
74,577,929
    
73,061,239
  
Diluted
    
76,135,491
    
73,472,979
    
74,839,223
    
75,442,390
  
 
See notes to unaudited consolidated financial statements
 
7
 
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

     
For the Nine Months
  
   
Ended September 30,
  
   
2008
  
2007
  
CASH FLOWS FROM OPERATING ACTIVITIES:
          
Income from continued operations
  
$
897,381
  
$
552,011
  
Income from discontinued operations
    
74,606
   
213,415
 
Net income
    
971,987
   
765,426
 
               
Adjustments to reconcile net income from operations to net cash provided by (used in) operating activities:
    
-
       
Depreciation
    
115,019
    
50,652
 
Minority interest
    
78,082
   
141,004
 
Allowance for doubtful accounts
    
217,827
   
(33,070
)
Allowance for doubtful accounts-related party
    
122,130
   
(87,937
)
Gain on discontinued operation
    
(74,606
)
  
(213,415
)
Stock-based compensation
    
110,625
   
558,175
 
Changes in assets and liabilities:
              
Accounts receivable
    
(922,195
)
  
(1,082,315
)
Accounts receivable - related party
    
(1,183,503
)
  
(867,035
)
Other receivable
    
74,225
   
(376,292
)
Inventories
    
(569,114
)
  
(132,621
)
Prepaid and other current assets
    
(4,234
)
  
(76,328
)
Other assets
    
(227,356
)
  
-
 
Derivative payable
    
383,227
    
-
  
Accounts payable, accrued expenses and other payables
    
209,820
    
79,427
 
Tax payable
    
140,128
   
(231
)
Advances from customers
    
33,708
   
(57,009
)
               
NET CASH USED IN OPERATING ACTIVITIES
    
(524,230
)
  
(1,331,569
)
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Collection of short-term loan receivable
    
-
   
48,609
 
Increase in due from related parties
    
(596,225
)
  
(824,731
)
Purchase of property, plant and equipment
    
(120,643
)
  
(45,010
)
Cash paid in acquisition
    
(399,057
)
  
-
 
purchase of Intangible Assets
    
-
    
(41,237
)
               
NET CASH USED IN INVESTING ACTIVITIES
    
(1,115,925
)
  
(862,369
)
               
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Repayment of loan payable
    
(378,358
)
   -  
Proceeds from loan payable
    
378,358
     -  
Proceeds from issuance of common stocks
    
2,000,000
   
86,625
 
Proceed from due to related party
    
255,871
   
332,926
 
Proceeds from Warrants Exercised
    
37,677
   
321,557
 
               
NET CASH PROVIDED BY FINANCING ACTIVITIES
    
2,293,548
   
741,108
 
               
EFFECT OF EXCHANGE RATE ON CASH
    
480,573
    
306,075
 
 
8
 
LINKWELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)

NET INCREASE IN CASH
    
1,133,966
   
(1,146,756
)
               
CASH - beginning of period
    
782,727
   
1,396,272
 
               
CASH - end of period
  
$
1,916,693
  
$
249,516
  
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
              
Cash paid for:
              
Interest
    
47,829
   
49,648
 
Income taxes
    
149,478
   
-
 
               
NON-CASH INVESTING AND FINANCING ACTIVITIES:
              
Issuance of stocks to buy 10% shares of Disinfectant
 
$
285,000
  
$
-
  

See notes to unaudited consolidated financial statements
 
9
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

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. The Company 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 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, we discontinued our entertainment division and our 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 our 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.

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.

In August 2006, LiKang Disinfectant incorporated a new subsidiary, Shanghai LiKang International Trade Co., Ltd (“LiKang International”). The primary business of LiKang International involves import and export activities relating to computer, computer components, small medical equipment and instruments, electromechanical devices, construction materials, metals, hardware, textile crafts, light weight construction materials and chemical raw materials, and business consulting services including investment consulting, graphics design, conference services, exhibition services, equipment leasing, and the import and export of technology.
 
10
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

On April 6, 2007, our wholly-owned subsidiary, Linkwell Tech, entered into two material stock purchase agreements. In one agreement (the “Biological Stock Purchase Agreement”), Linkwell Tech was to acquire 100% equity interest in Shanghai LiKang Biological (“Biological”), in a related party transaction with Xuelian Bian, Wei Guan, and Shanghai ZhongYou Pharmaceutical High-Tech Co., Ltd. (“ZhongYou”, formerly LiKang Pharmaceuticals). Mr. Bian is Linkwell Corporation's Chief Executive Officer, President and Chairman of the Board, and Wei Guan is Linkwell Corporation's Vice President, Secretary and Director. Mr. Bian and Mr. Guan own 90% and 10% of ZhongYou, respectively. Mr. Bian and ZhongYou owned 60% and 40% of LiKang Biological, respectively. Pursuant to the terms of the Biological Stock Purchase Agreement, Mr. Bian and ZhongYou, were to receive 1,000,000 shares of Linkwell Corporation restricted common stock. In the other agreement, 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 (“Shanhai”), a non-affiliated Chinese entity (the “Disinfectant Stock Purchase Agreement”). Pursuant to the terms of the Disinfectant Stock Purchase Agreement, Shanhai was to receive 3,000,000 shares of Linkwell Corporation restricted common stock.

Due to restrictions under PRC law that prohibited the form of consideration then contemplated by the Biological Stock Purchase Agreement and the Disinfectant Stock Purchase Agreement, neither of the respective transactions contemplated by those agreements closed in 2007. As a result, on March 25, 2008, the parties agreed to enter into an amendment to the Biological Stock Purchase Agreement (“Biological Amendment”) and an amendment to the Disinfectant Stock Purchase Agreement (“Disinfectant Amendment”) in an effort to complete the stock purchase transactions under those agreements. Pursuant to the terms of the Biological Amendment, the only material change to the Biological Stock Purchase Agreement relates to the consideration paid by Linkwell Tech to Xuelian Bian and ZhongYou, which was changed from 1,000,000 shares of the Company’s common stock (“Common Stock”) to $200,000 and 500,000 shares of common stock. Pursuant to the terms of the Disinfectant Amendment, the only material change to the Disinfectant Stock Purchase Agreement relates to the consideration paid by Linkwell Tech to Shanghai Shanhai Group for the remaining 10% equity interest, which was changed from 3,000,000 shares of Common Stock, to $380,000 in cash and 1,500,000 shares of Common Stock. Due to the fluctuation of the applicable exchange rate, consideration was changed to $399,057 in cash and 1,500,000 shares of common stock and the other terms of the Disinfectant Stock Purchase Agreement remain in full force and effect.

Linkwell Tech paid $395,800 to Shanhai 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, however, because of pending issues between Linkwell and Shanhai, the share issuance has been delayed. Therefore, the Company issued the 1,500,000 shares to Shanhai on October 20, 2008. The Company valued the acquisition using the fair value of common shares at $0.19 per share and recorded 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 accumulative minority interest of $126,278 was deducted from retained earnings as dividends to the 10% minority shareholder, Shanhai.

As a result of the closing of the Disinfectant Stock Purchase Agreement, as amended, as of March 25, 2008, our wholly-owned subsidiary Linkwell Tech owns 100% of the equity interest in LiKang Disinfectant. The Biological Stock Purchase Agreement is pending and requires further approval from the Ministry of Commerce, the People’s Republic of China. Due to the time consuming and complicated nature of the approval procedure, the parties agreed to enter into another 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 only material change to the Biological Stock Purchase Agreement relates to the purchaser, which was changed from Linkwell Tech to LiKang Disinfectant. Approval from Ministry of Commerce, the People’s Republic of China will not be necessary if LiKang Disinfectant acquires 100% of the equity interest in Shanghai LiKang Biological. This transaction was expected to close before the end of June 2008, but because of the complicated nature of the approval procedure, this transaction was delayed and is expected to close before the end of December 2008.
 
11
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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, 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 (“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 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, Secretary and Director. 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.
 
BASIS OF PRESENTATION

Certain reclassifications have been made to the prior year to conform to current year presentation. The unaudited consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The unaudited consolidated financial statements of the Company include the accounts of its 90% owned subsidiary, Linkwell Tech, and 100% owned subsidiary LiKang Disinfectant. 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 three and nine month period ended September 30, 2008 and 2007 include the allowance for doubtful accounts, stock-based compensation, the useful life of property and equipment, the inventory reserve and option value.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the unaudited consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, advances from customers, loans payable and amounts due from or to related parties approximate their fair market value based on the short-term maturity of these instruments.
 
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.
 
12
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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 September 30, 2008 and December 31, 2007, the Company had established, based on a review of its third party accounts receivable outstanding balances, allowances for doubtful accounts in the amounts of $678,003 and $460,175, respectively. At September 30, 2008 and December 31, 2007, the Company had established, based on a review of its related party accounts receivable outstanding balances, allowances for doubtful accounts in the amounts of $343,490 and $221,359, 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 September 30, 2008 and December 31, 2007, the reserve for obsolete inventory amounted to $145,012 and $136,287, respectively.
 
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

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charges during the nine months ended September 30, 2008 and 2007.
 
13
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ADVANCES FROM CUSTOMERS

As of September 30, 2008 and December 31, 2007, advances from customers were $58,352 and $24,644, 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 an 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.

INCOME TAXES

The Company files federal and state income tax returns in the United States for its domestic operations, and files separate foreign tax returns for the Company's Chinese subsidiaries. Income taxes are accounted for under Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns.

INCOME (LOSS) PER COMMON SHARE

The Company presents net income (loss) per share (“EPS”) in accordance with SFAS No. 128, “Earnings per Share”. 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. 
 
14
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company’ outstanding warrants as of September 30, 2008 and December 31, 2007 include the following:

     
September 30,
2008
  
December 31,
2007
  
           
Warrants  
   
33,499,795
   
33,921,545
 
 
REVENUE RECOGNITION

The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin 104 for revenue recognition. In general, 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.
 
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 nine months ended September 30, 2008 and 2007, sales to related parties accounted for 21% and 28% of net revenues, respectively.

COMPREHENSIVE INCOME

The Company uses Statement of Financial Accounting Standards No.130 (“SFAS 130”) “Reporting Comprehensive Income”. Comprehensive income is comprised of net income and all changes to the statements of stockholders' equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders.
 
15
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
SHIPPING COSTS

Shipping costs are included in selling expenses and totaled $196,543 and $10,754 for the nine months ended September 30, 2008 and September 30, 2007, respectively.

ADVERTISING

Advertising is expensed as incurred and included in selling expenses. For the nine months ended September 30, 2008 and September 30, 2007, advertising expenses amounted to $2,927 and $47,491, respectively.

STOCK-BASED COMPENSATION

Effective October 1, 2005, the Company adopted Statement of Financial Accounting Standards No.123 (revised 2004), Share Based Payment (“SFAS No. 123R”). SFAS No. 123R establishes the financial accounting and reporting standards for stock-based compensation plans. As required by SFAS No. 123R, the Company recognized the cost resulting from all stock-based payment transactions including shares issued under its stock option plans in the financial statements.

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 (“EITF”) 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF 96-18”).
 
REGISTRATION RIGHTS AGREEMENTS

The Company has adopted View C of EITF 05-4 “Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument Subject to EITF 00-19” (“EITF 05-4”). 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. Under View C of EITF 05-4, (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.
 
FOREIGN CURRENCY TRANSLATION

Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, “Foreign Currency Translation” and are included in determining net income or loss.
 
16
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
The functional and reporting currency is the U.S. dollar. The functional currency of the Company's Chinese subsidiary is Renminbi, the local currency, or sometimes referred to as the Chinese Yuan (“RMB”). The financial statements of the subsidiary are translated into United States dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations and were not material during the periods presented. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The effect of exchange rate changes on cash for the nine months ended September 30, 2008 and 2007 was $480,573 and $306,075, respectively. On September 30, 2008 and December 31, 2007, the exchange rate was 1 USD = 6.86 RMB and 1 USD = 7.00 RMB, respectively.
 
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 nine months ended September 30, 2008 and 2007 were approximately $44,680 and $8,006, respectively.
 
RECENT ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-including an amendment of FAS 115” (Statement 159). Statement 159 allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. Statement 159 is effective for fiscal years beginning after November 15, 2007. The Company’s adoption of Statement 159 has had no impact on its financial position or results of operations.

On May 2, 2007, the FASB issued FASB Staff Position FIN 48-1, or FSP FIN 48-1, “Definition of Settlement in FASB Interpretation No. 48.” FSP FIN 48-1 provides guidance on how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The Company retroactively adopted the provisions of FSP FIN 48-1 effective January 1, 2007, and has determined that it had no impact on its consolidated financial statements.

In June 2007, the EITF reached a consensus on EITF Issue No. 07-3 “Accounting for Advance Payments for Goods or Services to be Received for Use in Future Research and Development Activities” (“EITF 07-3”). EITF 07-3 provides clarification surrounding the accounting for non-refundable research and development advance payments, whereby such payments should be recorded as an asset when the advance payment is made and recognized as an expense when the research and development activities are performed. EITF 07-3 was effective for the Company on a prospective basis beginning January 1, 2008.
 
In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements”. This Statement amends ARB 51 to establish accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 is effective for the Company’s fiscal year beginning October 1, 2009. Management is currently evaluating the effect of this pronouncement on financial statements.
 
17
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This Statement replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company’s fiscal year beginning October 1, 2009. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after September 30, 2009.

In March 2008, FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the impact of adopting SFAS No.161 on our consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the unaudited consolidated financial statements upon adoption.
 
NOTE 2 – INVENTORIES

A summary of inventories by major category as of September 30, 2008 and December 31, 2007 are as follows:
 
     
September 30,
  
December 31,
  
   
2008 (Unaudited)
  
2007
  
Raw materials
 
$
710,948
  
$
420,797
  
Consumable
    
2,713
    
-
  
Work-in-process
   
40,062
    
31,012
  
Finished goods
   
785,056
    
509,131
  
     
1,538,779
    
960,940
  
Less: Reserve for obsolescence
    
(145,012
)
  
(136,287
)
Net inventories
 
$
1,393,767
  
$
824,653
  

The increase of reserve for obsolescence for the quarterly period ended September 30, 2008 is caused by fluctuation of the exchange rate.
 
18
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
 
NOTE 3 – PROPERTY AND EQUIPMENT

At September 30, 2008 and December 31, 2007, property and equipment consisted of the following:

     
Estimated
          
   
Useful Life
  
September 30,
  
December 31,
  
   
(In years)
  
2008
  
2007
  
           
 
 
Office equipment and furniture
    
3-7
  
$
157,575
  
$
140,240
  
Autos and trucks
    
5
    
199,028
    
157,179
  
Manufacturing equipment
    
2-10
    
289,825
    
263,021
  
Building
    
5-20
    
575,985
    
541,330
  
           
1,222,413
    
1,101,770
  
Less: Accumulated depreciation
          
(469,536
)
  
(354,517
)
Property and equipment, net
        
$
752,877
  
$
747,253
  

For the nine months ended September 30, 2008 and 2007, depreciation expenses amounted to $115,019 and $50,652, respectively.
 
NOTE 4 – LOANS PAYABLE

Loans payable consisted of the following at September 30, 2008 and December 31, 2007:

     
September 30,
  
December 31,
  
   
2008
  
2007
  
Loans from Da Chang Credit Union due on June 16, 2009 with interest rate 7.74% per annum. Guaranteed by Shanhai (RMB 2,600,000)
  
$
379,280
  
$
356,460
  
               
Loans from Da Chang Credit Union due on December 10, 2008 with interest rate 7.29% per annum. Guaranteed by Shanhai and Mr. Bian, Chairman of the Company (RMB 2,500,000)
    
364,692
    
342,750
  
               
   
$
743,972
  
$
699,210
  

On February 15, 2008, the Company issued a Promissory Note to Ecolab Inc., a Delaware corporation (“Ecolab”), whereby Ecolab agreed to lend the Company $400,000. This short-term loan was due on April 5, 2008 with an interest rate of 8% per annum. On April 14, 2008, the Company and Ecolab Inc. agreed to extend the maturity date of this loan from April 5, 2008 to June 5, 2008 with the same interest rate.

On February 15, 2008, we entered into a stock purchase agreement with Ecolab, whereby 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. As part of this transaction, $400,000 was paid to Linkwell Tech as a short-term loan as described above. On May 31, 2008, the Company, Linkwell Tech and Ecolab signed “Stockholders Agreement” and the principal and accrued interest on the short-term loan were retained by the Company as partial proceeds of Ecolab’s $2,000,000 investment in Linkwell Tech. Deducting the accrued interest on the short-term loan of $400,000, which is $11,441, as of June 30, 2008, Linkwell received the rest of the investment amount of $1,588,559 from Ecolab.
 
19
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 5 – RELATED PARTY TRANSACTIONS

Linkwell Tech's 90% 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. (“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 is no longer a related party.

Our Chairman and Chief Executive Officer, Xuelian Bian, and our Vice President, Secretary 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 nine months ended September 30, 2008 and 2007, the Company recorded net revenues of $1,748,547 and $1,562,274 to ZhongYou respectively and made purchases of $86,009 and $84,599 from ZhongYou respectively. At September 30, 2008 and December 31, 2007, accounts receivable from sales to ZhongYou were $3,319,946 and $2,232,765, respectively and accounts payable were $27,394 and zero 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 LiKang Biological High-Tech Company, Ltd. (“Biological”), which is 60% owned by Xuelian Bian, the Company's officer and director, and 40%-owned by ZhongYou, sells biological products, cosmetic products and develops technology for third parties. The Company sells certain raw materials to Biological employed in its production process. For the nine months ended September 30, 2008 and 2007, the Company recorded net revenues of $0 and $842 to Biological respectively and made purchases of $118,835 and $124,073 from Biological, respectively. Additionally, the amount of $829,694 was loaned to Biological from LiKang Disinfectant for working capital purpose in 2007. In addition, the amount of $291,754 (RMB 2,000,000) and $145,877 (RMB 1,000,000) were loaned to Bioligical from LiKang Disinfectant for same purpose in 2008 and are reflected on the accompanying balance sheet as due from a related party. The loans were non-interest bearing. At September 30, 2008 and December 31, 2007, the remaining balance of accounts payable due to Biological of $125,058 and $58,347, respectively, was recorded in LiKang Disinfectant. In general, accounts payable due to Biological are payable in cash and are due within 4 to 6 months, which approximate normal business terms with unrelated parties.

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 nine months ended September 30, 2008, the Company recorded revenue of $11,221 and accounts receivable of $75,564 to Shanghai Jiuqing.

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 (“Linkwell Trading”), a company registered in Hong Kong and 100% owned by our Vice President, Secretary and Director, Wei Guan. 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, which is expected to occur before the end of December 2008. In addition, LiKang International owed Likang Disinfectant a total of $102,114 (RMB 700,000) as of May 31, 2008. Because Linkwell Trading acquired all the assets and assumed all the liabilities of LiKang International, LiKang Disinfectant records the balance of $102,114 (RMB 700,000) due from Linkwell Trading as of September 30, 2008.
 
20
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 5 – RELATED PARTY TRANSACTIONS (CONTINUED)

As of May 31, 2008, Linkwell Tech owes Likang International $120,000. On May 31, 2008, Likang International was sold to Linkwell Trading. Linkwell Trading acquired all assets and assumed all liabilities of LiKang International. Therefore, as of September 30, 2008, Linkwell Tech owes Linkwell Trading $120,000.

On March 17, 2008, Linkwell Tech transferred, as deposit for goods purchased, $41,780 to Feima Trading, an agent of LiKang International. Because Linkwell Trading acquired all the assets and assumed all the liabilities of LiKang International, including those of Likang International’s agents, as of September 30, 2008, Linkwell Trading owes Linkwell Tech $41,780.
 
NOTE 6 – DERIVATIVE PAYABLE

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 $400,000. Deducting the minority interest in June 2008 of $16,773, long term liability of derivative payable shown in the unaudited Balance Sheet is $383,227.
 
NOTE 7 - 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. Such agreement is currently awaiting approval from the Ministry of Commerce, the People’s Republic of China and such approval is expected to occur before the end of December 2008.
 
21
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 7 - DISCONTINUED OPERATION (CONTINUED)

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). During the nine months ended September 30, 2008, total gain from discontinued operation was $74,606 including gain from disposal of the operation amount to $43,123. The Company will receive $291,754 (RMB2,000,000) from Linkwell International Trading Co., Ltd.

NOTE 8 – SHAREHOLDER’S 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 nine months ended September 30, 2008, amortization of consulting compensation amounted to $23,125.

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 to the nine months ended September 30, 2008. As of September 30, 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 amortized $87,500 as stock-based compensation for the nine months ended September 30, 2008.

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.
 
COMMON STOCK WARRANTS

As described above, 100,000 warrants were exercised on June 27, 2008 at $0.20 per share. 321,750 warrants with exercise price range from $0.75 to $2.50, expired as of September 30, 2008.
 
22
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
NOTE 8 – SHAREHOLDER’S EQUITY (CONTINUED)

The following table summarizes the Company's Common Stock warrants outstanding at September 30, 2008:

          
Warrants Outstanding and Exercisable
  
Range of
  
Number
  
Weighted Average
  
Weighted Average
  
Exercise
  
Of
  
Remaining
  
Exercise
  
Price
  
Warrants
  
Exercise Life
  
Price
  
$
0.10
    
540,130
   
1.75
  
$
0.10
  
$
0.20
    
17,055,000
   
2.00
  
$
0.20
  
$
0.30
 
  
15,866,665
   
2.24
  
$
0.30
  
$
1.00
    
38,000
    
0.11
  
$
1.00
  
     
33,499,795
             

NOTE 9 - FOREIGN OPERATIONS

For the nine months ended September 30, 2008 and December 31, 2007, the Company derived all of its revenue from its subsidiaries located in the People's Republic of China. Identifiable assets by geographic areas as of September 30, 2008 and December 31, 2007 are as follows:

     
Identifiable Assets
  
   
September 30,
  
December 31,
  
   
2008
  
2007
  
United States
  
$
735,368
  
$
39,331
  
People's Republic of China
    
12,091,426
    
8,476,794
  
Total
  
$
12,826,794
  
$
8,516,125
  

NOTE 10 – SEGMENT INFORMATION

The following information is presented in accordance with SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information. For the nine months ended September 30, 2008 and 2007, the Company operated in two reportable business segments (1) the sale of commercial disinfectant products; and (2) import and export activities. The Company's reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. Condensed information with respect to these reportable business segments for the nine months ended September 30, 2008 and 2007 is as follows:
 
23
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)

NOTE 10 – SEGMENT INFORMATION (CONTINUED)

Nine months ended September 30, 2008:

         
Corporate
      
   
Disinfectant
  
And
      
   
Products
  
Other
  
Consolidated
  
               
Net revenue - Non-affiliated companies
 
$
6,639,720
  
$
-
  
$
6,639,720
  
Net revenue - Affiliated companies
  
$
1,800,526
  
$
-
  
$
1,800,526
  
Interest income (expenses)
  
$
(4,077
)
$
220
 
$
(43,857
)
Depreciation
  
$
115,019
  
$
-
  
$
115,019
  
Net income (loss)
  
$
1,591,852
  
$
(619,865
)
$
971,987
  
Long-lived asset expenditures
  
$
120,643
  
$
-
  
$
120,643
  
Segment Assets
  
$
12,091,426
  
$
735,368
  
$
12,826,794
  

Net revenues for the nine months ended September 30, 2008 were $8,440,246. Included in our net revenues for the nine months ended September 30, 2008 are $1,800,526 in related party sales and $6,639,720 in sales to independent third parties.

Nine months ended September 30, 2007 (Pro-forma):
 
         
Corporate
      
   
Disinfectant
  
And
      
   
Products
  
Other
  
Consolidated
  
               
Net revenue - Non-affiliated companies
  
$
4,149,434
  
$
-
  
$
4,149,434
  
Net revenue - Affiliated companies
  
$
1,588,856
  
$
-
  
$
1,588,856
  
Interest income (expenses)
  
$
(46,849
)
$
(141
)
$
(46,990
)
Depreciation
  
$
50,652
  
$
-
  
$
50,652
  
Net income (loss)
  
$
1,482,447
  
$
(717,021
)
$
765,426
  
Long-lived asset expenditures
  
$
45,010
  
$
-
  
$
45,010
  
Segment Assets
  
$
8,456,274
  
$
112,805
  
$
8,569,079
  
 
NOTE 11 – 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.
 
24
 
LINKWELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
(UNAUDITED)
 
NOTE 11 – OPERATING RISK (CONTINUED)

(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 can not 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.

NOTE 12 – SUBSEQUENT EVENTS

 
25
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF 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 Item 1A below. 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 1.

In August 2006, the Company incorporated a new subsidiary, Shanghai LiKang International Trade Co., Ltd. (“LiKang International”). Since its inception, LiKang International has primarily served as an agent for third parties who desire to export goods from China, including computers, computer components, small medical equipment and instruments, meters and electromechanical devices. In October 2006, LiKang International expanded its business to include light weight construction materials, textile crafts, furniture, and raw chemical materials.

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. Pursuant to the terms of the agreement, LiKang Disinfectant will receive RMB 2,000,000 once the agreement is approved by the Ministry of Commerce, the People’s Republic of China and such approval is expected to occur before the end of December 2008.

OVERVIEW

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 the 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.
 
26
 
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 otherwise have the assets and capital available to us necessary to enable us to increase our revenues in future periods as the market for disinfectant products in China continues to increase. During the remaining three months of 2008, 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 nine months ended September 30, 2008, as compared to the same period ended September 30, 2007, accompanied by the change amount and percentage of changes. We used pro forma number for the nine month ended September 30, 2007, which we subtracted operational results of LiKang International from nine month ended September 30, 2007, consolidated statement of operation to give truer and fairer presentation of comparative figures in the consolidated financial statements in 2008.
 
27
 
     
For the Nine Months
  
  
      
   
Ended September 30,
  
Change
  
Variance
  
   
2008
  
2007
  
2008 VS 2007
  
%
  
                   
NET REVENUES
                 
Non-affiliated companies
  
$
6,639,720
  
$
4,149,434
    
2,490,286
   
60
%
Affiliated companies
    
1,800,526
   
1,588,856
   
211,670
   
13
%
                           
Total Net Revenues
    
8,440,246
   
5,738,290
   
2,701,956
   
47
%
                           
COST OF SALES
    
(4,303,843
)
  
(3,044,408
)
  
(1,259,435
)
  
41
%
                           
GROSS PROFIT
    
4,136,403
   
2,693,882
   
1,442,521
   
54
%
                           
OPERATING EXPENSES:
                          
Selling expenses
    
(809,301
)
  
(656,501
)
  
(152,800
)
  
23
%
General and administrative
    
(1,590,691
)
  
(1,414,525
)
  
(176,166
)
  
12
%
                           
Total Operating Expenses
    
(2,399,992
)
  
(2,071,026
)
  
(328,966
)
  
16
%
                           
INCOME FROM OPERATIONS
    
1,736,411
   
622,856
   
1,113,555
   
179
%
                           
OTHER INCOME (EXPENSE):
                          
Other income/(expense)
    
(61,251
)
  
117,149
   
(178,400
)
  
-152
%
Derivative Expense
    
(383,227
)
  
-
    
(383,227
)
  
N/A
  
Interest income
    
3,972
   
2,658
   
1,314
   
49
%
Interest expense - related party
        
(13,051
)
  
13,051
   
-100
%
Interest expense
    
(47,829
)
  
(36,597
)
  
(11,232
)
  
-31
%
                           
Total Other Income/(Expense)
    
(488,335
)
  
70,159
   
(558,494
)
  
-796
%
                           
INCOME BEFORE DISCONTINUED OPERATIONS, INCOME TAXES AND MINORITY INTEREST
    
1,248,076
    
693,015
   
555,061
    
80
%
                           
DISCONTINUED OPERATIONS(Note 7):
                          
Gain from discontinued operation (including gain on disposal of $43,123 at June 30, 2008 )
    
74,606
    
213,415
   
(138,809
)
  
-65
%
                           
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
    
1,322,682
    
906,430
   
416,252
    
46
%
                           
INCOME TAXES
    
(272,613
)
  
-
   
(272,613
)
  
N/A
  
 
                        
INCOME BEFORE MINORITY INTEREST
    
1,050,069
    
906,430
   
143,639
    
16
%
                           
MINORITY INTEREST
    
(78,082
)
  
(141,004
)
  
62,922
    
-45
%
                           
NET INCOME
  
$
971,987
  
$
765,426
    
206,561
    
27
%
 
28
 
Other Key Indicators:
  
For the Nine months ended 
      
   
September 30,
      
(Percent of Net Revenues)
  
2008
  
2007
  
Change
  
               
Cost of Revenues
   
51
%
  
53
%
  
(2
)%
Selling Expenses
   
10
%
  
11
%
  
(1
)%
General and Administrative Expenses
    
19
%
  
25
%
  
(6
)%
Income from Operations
    
21
%
  
11
%
  
10
%

NET REVENUES

Net revenues for the nine months ended September 30, 2008 were $8,440,246, as compared to net revenues of $5,738,290 for the nine months ended September 30, 2007, an increase of $ 2,701,956 or approximately 47%. We believe this increase in revenues was due to an increase in our sales staff and customer recognition of our high-quality, competitively priced disinfectant products. Of our total net revenues for the nine months ended September 30, 2008, $1,800,526 or approximately 21% were attributable to related parties as compared to net revenues of $1,588,856, or approximately 28%, of our total net revenues for the comparable period in fiscal 2007.

Of the $1,800,526 of revenues derived from related parties during the nine months ended September 30, 2008, $1,748,547, or approximately 97%, was from ZhongYou, compared to $1,562,274 for the same period of fiscal 2007, an increase in revenues from ZhongYou of $186,273, or approximately 12%, from the same period in fiscal 2007.

The revenue associated with third parties increased $2,490,286, or approximately 60% for the nine months ended September 30, 2008, as compared with the same period ending September 30, 2007.

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 nine months ended September 30, 2008, cost of revenues amounted to $4,303,843, or approximately 51%, of net revenues as compared to cost of revenues of $3,044,408, or approximately 53%, of net revenues for the same period in fiscal 2007.

100% of the cost of revenues is from LiKang Disinfectant. Historically, LiKang Disinfectant's cost of sales is comprised of approximately 65% for raw material costs and approximately 35% for manufacturing costs. The increase in cost of revenues for the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007, is attributable, partially, to price increases of raw materials during the nine months ended September 30, 2008. We also experienced an increase in overhead costs, including utilities and rent during the nine months ended September 30, 2008, as compared to the nine months ended September 30, 2007. We absorbed the majority of these increased costs in order to increase our market share in the disinfectant industry. 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. During the nine months ended September 30, 2008, we successfully made some large quantity sales to government agents with slightly higher selling prices which resulted in an increase in gross margin.

GROSS PROFIT

Gross profit for the nine months ended September 30, 2008 was $4,136,403, or approximately 49% of net revenues, as compared to $2,693,882, or approximately 47% of revenues, for the nine months ended September 30, 2007.
 
OPERATING EXPENSES

Total operating expenses for the nine months ended September 30, 2008 were $2,399,992, an increase of $328,966, or approximately 16%, from total operating expenses of $2,071,026 for the nine months ended September 30, 2007. This increase included the following:
 
29
 
Selling Expenses

For the nine months ended September 30, 2008, selling expenses were $809,301 as compared to $656,501 for the same period in 2007, an increase of $152,800, or approximately 23%.

100% and 83% of the selling expenses are attributable to LiKang Disinfectant for the periods ended September 30, 2008 and September 30, 2007, respectively. For the nine months ended September 30, 2008, the increase in selling expenses from LiKang Disinfectant is primarily attributable to increases in expenses of $13,988 attributable to attending sales conferences, publicity expenses of $53,812, salaries, wages and staff benefits directly related to the sales efforts of $34,255, shipping and freight expenses of $52,123, travel expenses of $47,606, telephone expense of $2,928, rent of $11,714, repair and maintenance expenses of $533, material consumable expenses of $65,744 and sales promotion $70,656, which were offset by decreases in advertising expenses of $85,552, office expenses of $9,688 and sales efforts and testing expenses of $449.

General and Administrative Expenses

For the nine months ended September 30, 2008, general and administrative expenses were $1,590,691 as compared to $1,414,525 for the same period in 2007, an increase of $176,166, or approximate 12%.

We incurred non-cash consulting fees during the nine months ended September 30, 2008 of $139,709 as compared to $645,025 for the nine months ended September 30, 2007, a decrease of $505,316 or approximately 78%. Non-cash consulting fees represent the amortization of fees to consultants under agreements entered into during the nine months ended September 30, 2008, which we pay in shares of our common stock.

OTHER INCOME (EXPENSE)

For the nine months ended September 30, 2008, total other expenses amounted to $488,335 as compared to other income of $70,159 for the nine months ended September 30, 2007. This change in other income is primarily the result of a increase of $1,314, or approximately 49% in interest income and a decrease of $1,819, or approximately 13% in interest expense. The expenses for put option and call option of $383,227 were also included in other expenses.

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 nine months ended September 30, 2008, gain from discontinued operations was $74,606 compared to $213,415 for the same period in 2007.

MINORITY 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 (“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 does not need to be repaid. After this transaction, Ecolab became the 10% minority interest holder of Linkwell Tech. For the nine months ended September 30, 2008, we reported a minority interest expense of $78,082 as compared to $141,004 for the nine months ended September 30, 2007.
 
30
 
LIQUIDITY AND CAPITAL RESOURCES

As shown in the accompanying financial statements, our working capital increased $3,535,437 or approximately 66% from $5,342,453 on December 31, 2007 to $8,877,890 on September 30, 2008. 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 purchase 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 September 30, 2008, we had a total of $743,972 outstanding short term debt of which, $364,692 will mature on December 10, 2008 and $379,280 will mature on June 16, 2009. 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.

NET CASH FROM OPERATING ACTIVITES

Net cash used in operating activities for the nine months ended September 30, 2008 was $524,230, as compared to $1,331,569 for the same period ended September 30, 2007, a decrease of $807,339 or approximately 61%. For the nine months ended September 30, 2008, we used cash to fund a net increase in accounts receivable of $2,105,698, including an increase of $1,183,503 in accounts receivables from related parties, an increase of $569,114 in inventories, an increase of $4,234 in prepaid expenses and other current assets. These decreases were offset by our net income, an increase in advances from customers of $33,708, a decrease of $74,225 in other receivables, an increase of $209,820 in accounts payable, accrued expenses and other payables, an increase of 383,227 in derivative payable, and an increase of $140,128 in taxes payable.

NET CASH FROM INVESTING ACTIVITIES

Net cash used in investing activities for the nine months ended September 30, 2008 was $1,115,925 as compared to net cash used in investing activities of $862,369 for the same period in 2007, an increase of $253,556 or approximately 29%. This change is attributable to an increase of $120,643 in purchase of property, plant and equipment and an increase of $399,057 in cash paid in acquisition.

NET CASH FROM FINANCING ACTIVITIES:

Net cash provided by financing activities was $2,293,548 for the nine months ended September 30, 2008, as compared to net cash provided by financing activities of $741,108 for the nine months ended September 30, 2007, an increase of $1,552,440 or approximately 209%. The increased cash flow from financing activities primarily is the result of proceeds from the issuance of common stocks of Linkwell Tech of $2,000,000 and an increase in due to related parties of $255,871.

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.
 
31
 
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.

INCOME TAXES

We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. SFAS 109 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 the Company's ownership, the Company's 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 SFAS No. 123(R), 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.
 
32
 
ASSET IMPAIRMENT

We periodically evaluate the carrying value of other long-lived assets, including, but not limited to, property and equipment and intangible assets, when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flows from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Significant estimates are utilized to calculate expected future cash flows utilized in impairment analyses. We also utilize judgment to determine other factors within fair value analyses, including the applicable discount rate.

OFF-BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to investors.
 
33
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.
 
ITEM 4. CONTROLS AND PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of September 30, 2008, the end of the period covered by this quarterly report, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this quarterly report, is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management, including our Chief Executive Officer who also serves as our principal financial and accounting officer, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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. Currently, we are searching for an appropriate candidate who can fill such a position; however, we are unable to predict when such a person will be hired. We have also begun providing additional training to our accounting staff in the application of U.S. GAAP. As a result of these matters, our management believes that a deficiency in our internal controls continues to exist. Based upon historical accounting errors and lack of a Chief Financial Officer and sufficient trained accounting staff, our management has determined that there is a deficiency in our internal controls over financial reporting and that our disclosure controls and procedures were ineffective at September 30, 2008. Until we expand our staff to include a bilingual senior financial officer who has the requisite experience necessary, as well as supplement the accounting knowledge of our staff, it is likely that we will continue to have material weaknesses in our disclosure controls.

There have been no changes in our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
34
 
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On August 13, 2008, the Company issued 68,800 shares of common stock to Segue Ventures LLC for providing investor relations consulting services to the Company. The Company valued these 68,800 shares using the fair value of common shares on the grant date at $0.19 per share. The issuance was made in reliance upon and exemption from the Securities Act of 1933, as amended, set forth in Section 4(2) relating to issuances not involving any public offering.

On October 20, 2008, the Company issued 1,500,000 shares of common stock to Shanhai as part consideration relating to the purchase of the remaining 10% interest in LiKang Disinfectant from Shanhai, pursuant to the terms of the Disinfectant Stock Purchase Agreement and the Disinfectant Amendment. The issuance was made in reliance upon and exemption from the Securities Act of 1933, as amended, set forth in Section 4(2) relating to issuances not involving any public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS. 

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

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
3.1
 
Articles of Incorporation (1)
3.2
 
Articles of Amendment to Articles of Incorporation (2)
3.3
 
Articles of Amendment to Articles of Incorporation (3)
3.4
 
Articles of Amendment to Articles of Incorporation (4)
3.5
 
Articles of Amendment to the Articles of Incorporation (5)
3.6
 
Bylaws (1)
3.7
 
Articles of Amendment to the Articles of Incorporation (6)
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 *
 
35
 
* filed herewith
 
(1) Incorporated by reference to the Report on Form 8-K as filed on December 8, 1999.
(2) Incorporated by reference to the Report on Form 8-K as filed on December 27, 2001.
(3) Incorporated by reference to the annual report on Form 10-KSB for the fiscal year ended December 31, 2002.
(4) Incorporated by reference to the Report on Form 8-K as filed on March 17, 2005.
(5) Incorporated by reference to the Report on Form 8-K as filed on August 22, 2006.
(6) Incorporated by reference to the Report on Form 8-K as filed on September 15, 2006.
 
36
 
LINKWELL CORPORATION

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

   
Linkwell Corporation
   
   
Date: November 13, 2008
By: /s/ Xuelian Bian
   
 
Xuelian Bian,
 
Chief Executive Officer
 
President and Principal
 
Executive Officer
 
37
 EX-31.1 2 v132025_ex31-1.htm
 
EXHIBIT 31.1
 
CERTIFICATIONS

I, Xuelian Bian, certify that:

1.
I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2008 of Linkwell Corporation;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.
The small business issuer's other certifying officer(s) and I are responsible for establishing for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
b.
Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under our supervision,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 principles;

 
c.
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions after the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d.
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5.
The small business issuers other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
 
Date: November 13, 2008
By: /s/ Xuelian Bian
 
Xuelian Bian,
 
Chief Executive Officer,
 
President and Principal
 
Executive Officer
 
 EX-31.2 3 v132025_ex31-2.htm
 
EXHIBIT 31.2

CERTIFICATIONS

I, Xuelian Bian, certify that:

1.
I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2008 of Linkwell Corporation;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this quarterly report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.
The small business issuer's other certifying officer(s) and I are responsible for establishing for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
b.
Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designed under our supervision,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 principles;

 
c.
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions after the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d.
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internalcontrol over financial reporting; and

5.
The small business issuers other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: November 13, 2008
By: /s/ Xuelian Bian
 
Xuelian Bian,
 
Principal Financial Officer
 
 EX-32.2 4 v132025_ex32-1.htm
 
EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Linkwell Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2008 as filed with the Securities and Exchange Commission (the “Report”), I, Xuelian Bian, CEO and President of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 13, 2008
By: /s/ Xuelian Bian
 
Xuelian Bian
 
Chief Executive Officer,
 
Principal Financial Officer
 
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