10-Q

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, 2009

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

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.  Yesx    No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). Yes ¨     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 16, 2009 there were 82,105,475 shares of common stock issued and outstanding.

LINKWELL CORPORATION AND SUBSIDIARIES

FORM 10-Q

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009

INDEX

		Page
PART I - FINANCIAL INFORMATION		4
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		35
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 90% owned subsidiary Linkwell Tech Group, Inc.,

a Florida corporation;

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

a 90% owned subsidiary of LinkwellTech;

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

a wholly owned subsidiary of LiKang Disinfectant on March 5, 2009 ;

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

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

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

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

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

“ZhongYou” refers to Shanghai ZhongYou Pharmaceutical High-Tech Co., Ltd., a company owned by Shanghai Jiuqing Pharmaceuticals Company, Ltd., whose 100% owner is Shanghai Ajiao Shiye Co. Ltd. Our Chairman and Chief Executive Officer Xuelian Bian is a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd.

The 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,		December 31,
	2009		2008
	(Unaudited)
Assets
CURRENT ASSETS:
Cash	$	2,291,771	$	2,072,687
Accounts receivable (net of allowance for doubtful accounts of $816,587 and $801,895 at September 30, 2009 and  December 31, 2008 respectively)		4,535,743		3,526,440
Accounts receivable-related parties (net of allowance for doubtful accounts of $377,351 and $376,437 at September 30, 2009 and December 31, 2008 respectively)		2,496,649		3,470,553
Other receivable		742,149		204,480
Inventories (net of reserve for obsolete inventory of $145,383 and $145,031  at September 30, 2009 and December 31, 2008 respectively)		1,688,901		1,207,352
Prepaid expenses and other current assets		656,265		339,378
Due from related parties		1,624,090		2,158,077
Total Current Assets		14,035,568		12,978,967
PROPERTY AND EQUIPMENT - Net		2,528,525		703,935
GOODWILL		468,501		-
Other intangible assets, net		797,673		-
Total Assets	$	17,830,267	$	13,682,902

4

LINKWELL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Continued)

	September 30,			December 31,
	2009			2008
	(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Loans payable	$	745,876		$	744,069
Accounts payable and accrued expenses		2,047,941			1,508,271
Tax payable		335,257			220,103
Other payable		409,372			368,690
Due to related parties		382,801			94,583
Advances from customers		230,399			91,326
Total Current Liabilities		4,151,646			3,027,042
Derivative Payable		(7,356	)		281,030
MINORITY INTEREST		2,407,356			2,118,970
STOCKHOLDERS' EQUITY:
Common Stock ($0.0005 Par Value; 150,000,000 Shares Authorized;  82,105,475 and 77,955,475 shares issued and outstanding at September 30, 2009 and December 31, 2008 respectively)		41,053			38,978
Common stock  issuable		250			-
Additional paid-in capital		7,736,398			6,512,346
Statutory surplus reserve		561,222			561,222
Accumulated deficit		2,718,100			430,849
Deferred compensation		(479,670	)		(318,556	)
Other comprehensive gain - foreign currency		701,268			1,031,021
Total Stockholders' Equity		11,278,621			8,255,860
Total Liabilities and Stockholders' Equity	$	17,830,267		$	13,682,902

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,
	2009			2008			2009			2008
NET REVENUES
Non-affiliated companies	$	2,930,306		$	2,928,774		$	7,125,602		$	6,639,720
Affiliated companies		1,146,139			748,357			3,325,863			1,800,526
Total Net Revenues		4,076,445			3,677,131			10,451,465			8,440,246
COST OF SALES		(1,900,775	)		(1,919,111	)		(4,475,389	)		(4,303,843	)
GROSS PROFIT		2,175,670			1,758,020			5,976,076			4,136,403
OPERATING EXPENSES:
Selling expenses		(53,799	)		(262,600	)		(977,365	)		(809,301	)
General and administrative		(1,131,216	)		(669,822	)		(2,203,113	)		(1,590,691	)
Total Operating Expenses		(1,185,015	)		(932,422	)		(3,180,478	)		(2,399,992	)
INCOME FROM OPERATIONS		990,655			825,598			2,795,598			1,736,411
OTHER INCOME (EXPENSE):
Other income/(expense)		407			323,351			16,664			(61,251	)
Put option expenses		111,548			(383,227	)		288,386			(383,227	)
Interest income		1,199			1,662			3,415			3,972
Interest expense		(13,100	)		(16,823	)		(42,838	)		(47,829	)
Total Other Income/(Expense)		100,054			(63,596	)		265,627			(488,335	)
INCOME BEFORE DISCONTINUED OPERATIONS, INCOME TAXES AND MINORITY INTEREST		1,090,709			762,002			3,061,225			1,248,076
DISCONTINUED OPERATIONS(Note 7):
Gain from discontinued operation (including gain on disposal of $43,123 at June 30, 2008 )		-			-			-			74,606
Gain from discontinued operations		-			-			-			74,606

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,
	2009			2008			2009			2008
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST		1,090,709			762,002			3,061,225			1,322,682
INCOME TAXES		(160,788	)		(126,315	)		(459,953	)		(272,613	)
INCOME BEFORE MINORITY INTEREST		929,921			635,687			2,601,272			1,050,069
MINORITY INTEREST		(111,548	)		(30,773	)		(288,386	)		(78,082	)
NET INCOME	$	818,372		$	604,914		$	2,312,886		$	971,987
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
Basic	$	0.01		$	0.01		$	0.03		$	0.01
Diluted	$	0.01		$	0.01		$	0.03		$	0.01
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		81,304,926			75,936,675			79,076,063			74,577,929
Diluted		81,460,073			76,135,491			79,076,063			74,839,223

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,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continued operations	$	2,312,885		$	897,381
Income from discontinued operations					74,606
Net income		2,312,885			971,987
Adjustments to reconcile net income from operations to net cash provided by (used in) operating activities:
Depreciation and amortization		136,401			115,019
Minority interest		288,386			78,082
Allowance for doubtful accounts		14,692			217,827
Allowance for doubtful accounts-related party		914			122,130
Gain on discontinued operation		-			(74,606	)
Stock-based compensation		(161,114	)		110,625
Accounts receivable		(1,155,496	)		(922,195	)
Accounts receivable - related party		972,990			(1,183,503	)
Other receivable		(416,289	)		74,225
Inventories		502,928			(569,114	)
Prepaid and other current assets		(556,515	)		(4,234	)
Other assets		239,628			(227,356	)
Derivative Payable		(288,386	)		383,227
Accounts payable and accrued expenses		(1,863,940	)		209,820
Tax payable		115,154			140,128
Advances from customers		139,073			33,708
Net Cash Generated (Used) in Operating Activities		281,311			(524,231	)
NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES		281,311			(524,231	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in due from related parties		241,829			(596,225	)
Purchase of property, plant and equipment		(877,514	)		(120,643	)
Cash paid in acquisition		-			(399,057	)
Cash assumed from acquisition		145,517			-
NET CASH USED IN INVESTING ACTIVITIES		(490,168	)		(1,115,925	)

8

LINKWELL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued)

	For the Nine Months
	Ended September 30,
	2009			2008
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable		(380,251	)		(378,358	)
Proceeds from loans payable		380,251			378,358
Proceeds from issurance of common stocks		-			2,000,000
Proceed from due to related party		288,218			255,871
Proceeds from Warrants Exercised					37,677
NET CASH PROVIDED BY FINANCING ACTIVITIES		288,218			2,293,548
EFFECT OF EXCHANGE RATE ON CASH		139,724			480,571
NET INCREASE IN CASH		219,084			1,133,964
CASH  - beginning of year		2,072,687			782,727
CASH - end of period	$	2,291,771		$	1,916,693
SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:
Cash paid for:
Interest	$	42,838		$	47,829
Income taxes	$	425,145		$	149,478

See notes to unaudited consolidated financial statements

9

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(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.

10

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

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

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

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

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

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

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

11

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

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

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

On February 15, 2008, 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, whereby both the Company and Ecolab are subject to, and beneficiaries of, certain pre-emptive rights, transfer restrictions and take along rights relating to the shares of Linkwell Tech that the Company and Ecolab each hold. As of May 31, 2008, the principal and accrued interest of $11,441 on the short-term $400,000 loan became part of Ecolab’s investment and does not need to be repaid.

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

During the quarter ended September 30, 2009, the LiKang Disinfectant uses the intangible assets to invest the Likang Biological.  The Likang Disinfectant intangible assets were valued at approximately $2,000,000 and accounted for approximately $800,000 as increase of registered capital for Likang Biological.

BASIS OF PRESENTATION

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

The Company has included all normal recurring adjustments considered necessary to give a fair presentation of operating results for the periods presented.  Interim results are not necessarily indicative of results for a full year.  The information included in this Form 10-Q should be read in conjunction with information included in the 2008 annual report filed on Form 10-K.

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, 2009 and 2008 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, 2009

(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, 2009 and December 31, 2008, the Company had established, based on a review of its third party accounts receivable outstanding balances, allowances for doubtful accounts in the amounts of $816,587 and $801,895, respectively. At September 30, 2009 and December 31, 2008, the Company had established, based on a review of its related party accounts receivable outstanding balances, allowances for doubtful accounts in the amounts of $377,351 and $376,437, respectively.

INVENTORIES

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method.  The valuation of inventory requires the Company to estimate obsolete or excess inventory based on analysis of future demand for our products. Due to the nature of the Company’s business and our target market, levels of inventory in the distribution channel, changes in demand due to price changes from competitors and introduction of new products are not significant factors when estimating the Company’s excess or obsolete inventory. If inventory costs exceed expected market value due to obsolescence or lack of demand, inventory write-downs may be recorded as deemed necessary by management for the difference between the cost and the market value in the period that impairment is first recognized. As of September 30, 2009 and December 31, 2008, the reserve for obsolete inventory amounted to $145,383 and $145,031, 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, 2009 and 2008.

13

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

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

ADVANCES FROM CUSTOMERS

As of September 30, 2009 and December 31, 2008, advances from customers were $230,399 and $91,326, respectively, which consisted of prepayments from third party customers to the Company for merchandise that had not yet been shipped by the Company. The Company will recognize the prepayments as revenue as customers take delivery of the goods, in compliance with its revenue recognition policy.

DISCONTINUED OPERATIONS

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

On May 31, 2008, LiKang Disinfectant entered into 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, 2009

(UNAUDITED)

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

The Company’s outstanding warrants as of September 30, 2009 and December 31, 2008 include the following:

	September 30, 2009		December 31, 2008
Warrants		33,469,795		33,469,795

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, 2009 and 2008, sales to related parties accounted for 32% and 21% of net revenues, respectively.

COMPREHENSIVE INCOME

The Company uses Statement of Financial Accounting Standards No.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, 2009

(UNAUDITED)

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

SHIPPING COSTS

Shipping costs are included in selling expenses and totaled $304,423 and $196,543 for the nine months ended September 30, 2009 and September 30, 2008, respectively.

ADVERTISING

Advertising is expensed as incurred and included in selling expenses. For the nine months ended September 30, 2009 and September 30, 2008, advertising expenses amounted to $102,105 and $2,927, respectively.

STOCK-BASED COMPENSATION

Effective October 1, 2005, the Company adopted Statement of Financial Accounting Standards (revised 2004), Share Based Payment. 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, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.

REGISTRATION RIGHTS AGREEMENTS

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

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, “Foreign Currency Translation” and are included in determining net income or loss.

16

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(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, 2009 and 2008 was $344,062 and $480,573, respectively. On September 30, 2009 and December 31, 2008, the exchange rate was 1 USD = 6.8376 RMB and 1 USD = 6.8542 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, 2009 and 2008 were approximately $164,107 and $44,680, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued revised business combinations guidance. The revised guidance retains the fundamental requirements of the previous guidance in that the acquisition method of accounting be used for all business combinations, that an acquirer be identified for each business combination and for goodwill to be recognized and measured as a residual. The revised guidance expands the definition of transactions and events that qualify as business combinations to all transactions and other events in which one entity obtains control over one or more other businesses. The revised guidance broadens the fair value measurement and recognition of assets acquired, liabilities assumed and interests transferred as a result of business combinations. The guidance applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company has adopted the guidance and believes that if the Company consummated a business combination transaction, the Company’s adoption of the guidance would have a material impact on the consolidated financial statements.

In January 2009, the FASB issued an accounting standard which amended the impairment model by removing its exclusive reliance on “market participant” estimates of future cash flows used in determining fair value. Changing the cash flows used to analyze other-than-temporary impairment from the “market participant” view to a holder’s estimate of whether there has been a “probable” adverse change in estimated cash flows allows companies to apply reasonable judgment in assessing whether an other-than-temporary impairment has occurred. The adoption of this accounting standard did not have a material impact on the Company’s consolidated financial statements because all of the investments in debt securities are classified as trading securities.

In April 2009, the FASB issued authoritative guidance related to the determination of fair value when the volume and level of activity for an asset or liability has significantly decreased, the identification of transactions that are not orderly, the recognition and presentation of other-than-temporary impairments, and the disclosure of the fair value of financial instruments on an interim basis. The adoption of the guidance did not have a material impact on the Company’s consolidated financial statements.

17

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

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

In April 2009, the FASB issued an accounting standard to make the other-than-temporary impairments guidance more operational and to improve the presentation of other-than-temporary impairments in the financial statements. This standard will replace the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired debt security until recovery with a requirement that management assert it does not have the intent to sell the security, and it is more likely than not it will not have to sell the security before recovery of its cost basis. This standard provides increased disclosure about the credit and noncredit components of impaired debt securities that are not expected to be sold and also requires increased and more frequent disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. Although this standard does not result in a change in the carrying amount of debt securities, it does require that the portion of an other-than-temporary impairment not related to a credit loss for a held-to-maturity security be recognized in a new category of other comprehensive income and be amortized over the remaining life of the debt security as an increase in the carrying value of the security. This standard became effective for interim and annual periods ending after June 15, 2009. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued an accounting standard that requires disclosures about fair value of financial instruments not measured on the balance sheet at fair value in interim financial statements as well as in annual financial statements. Prior to this accounting standard, fair values for these assets and liabilities were only disclosed annually. This standard applies to all financial instruments within its scope and requires all entities to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments. This standard does not require disclosures for earlier periods presented for comparative purposes at initial adoption, but in periods after the initial adoption, this standard requires comparative disclosures only for periods ending after initial adoption. The adoption of this standard did not have a material impact on the disclosures related to its consolidated financial statements.

In May 2009, the FASB an accounting standard which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. The standard also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. The standard is effective for interim and annual periods ending after June 15, 2009, and accordingly, the Company adopted this Standard during the second quarter of 2009. The standard requires that public entities evaluate subsequent events through the date that the financial statements are issued.

In June 2009, the FASB issued an accounting standard amending the accounting and disclosure requirements for transfers of financial assets. This accounting standard requires greater transparency and additional disclosures for transfers of financial assets and the entity’s continuing involvement with them and changes the requirements for derecognizing financial assets. In addition, it eliminates the concept of a qualifying special-purpose entity (“QSPE”). This accounting standard is effective for financial statements issued for fiscal years beginning after November 15, 2009. The Company has not completed its assessment of the impact this new standard will have on the Company’s financial condition, results of operations or cash flows.

In June 2009, the FASB issued an accounting standard which establishes the FASB Accounting Standards Codification™ (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. The Codification is effective for interim and annual periods ending after September 15, 2009, and as of the effective date, all existing accounting standard documents will be superseded. The Codification is effective for the Company in the third quarter of 2009, and accordingly, this Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 does, and all subsequent public filings made by the Company will, reference the Codification as the sole source of authoritative literature.

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

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

NOTE 2 – INVENTORIES

A summary of inventories by major category as of September 30, 2009 and December 31, 2008 are as follows:

	September 30,			December 31,
	2009 (Unaudited)			2008
Raw materials	$	695,144		$	592,380
Consumable		-			-
Work-in-process		47,819			47,621
Finished goods		1,091,321			712,382
Less: Reserve for obsolescence		(145,383	)		(145,031	)
Net inventories	$	1,688,901		$	1,207,352

The increase of reserve for obsolescence for the quarterly period ended September 30, 2009 is caused by fluctuation of the exchange rate.

18

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

NOTE 3 – PROPERTY AND EQUIPMENT

At September 30, 2009 and December 31, 2008, property and equipment consisted of the following:

	Estimated
	Useful Life		September 30,			December 31,
	(In years)		2009			2008
Office equipment and furniture		3-7	$	291,380		$	158,187
Autos and trucks		5		294,148			201,723
Manufacturing equipment		2-10		1,402,809			346,420
Building		5-20		422,767			458,752
Construction in progress				801,755			-
Less: Accumulated depreciation				(684,334	)		(461,147	)
Property and equipment, net			$	2,528,525		$	703,935

For the nine months ended September 30, 2009 and 2008, depreciation expenses amounted to $136,401 and $115,019, respectively.

NOTE 4 – LOANS PAYABLE

Loans payable consisted of the following at September 30, 2009 and December 31, 2008:

	September 30,		December 31,
	2009		2008
Loans from Shanghai Rural Commercial Bank, Dachang Branch due on June 16, 2010 with interest rate at 6.90% per annum, Guaranteed by Shanhai Group (RMB 2,600,000)	$	380,251	$	379,329
Loans from Shanghai Rural Commercial Bank, Dachang Branch due on December 10, 2009 and December 11, 2008 with interest rate 7.29% per annum. Guaranteed by Shanhai Group and Mr. Bian, Chairman of the Company (RMB 2,500,000)		365,625		364,740
	$	745,876	$	744,069

19

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(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, 2009 and 2008, the Company recorded net revenues of $2,978,680 and $1,748,547 to ZhongYou respectively. At September 30, 2009 and December 31, 2008, accounts receivable from sales to ZhongYou were $2,602,649 and $2,114,681. 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 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, 2009, the Company recorded revenue of $4,805 and accounts receivable of $84,290 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, 2009

(UNAUDITED)

NOTE 5 – RELATED PARTY TRANSACTIONS (CONTINUED)

As of May 31, 2008, Linkwell Tech owed 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 a 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 2009 of $288,386, long term liability of derivative payables shown in the unaudited Balance Sheet is $7,356.

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.

21

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(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, 2009, amortization of consulting compensation amounted to $20,556.

On November 20, 2007, the Company entered into a one year agreement with Segue Ventures LLC to provide various informal advisory and consulting services, including U.S. business methods and compliance with SEC disclosure requirements. In connection with this agreement, Segue Ventures LLC received $4,000 in cash and 16,000 shares of common stock per month. From November 20, 2007 to June 30, 2008, the Company recorded a total of 116,800 common shares issuable valued at $24,064 as stock-based consulting expense. On February 27, 2008, 70,000 shares of the Company’s common stock were issued to Segue Ventures LLC. The Company valued these 70,000 shares using the fair value of common shares on the contract date at $0.19 per share and recorded consulting expense of $13,300, of which,  $3,938 was allocated to the year ended December 31, 2007, and $9,362 was allocated to the six months ended June 30, 2008. On August 13, 2008, 68,800 shares of the Company’s common stock were issued to Segue Ventures LLC. The Company valued these 68,800 shares using the fair value of common shares on the grant date at $0.19 per share and recorded consulting expense of $13,072 to the nine months ended 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 $157,500 as stock-based compensation for the nine months ended September 30, 2009.

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

On July 1, 2009, the Company entered into a two year agreement with First Trust. In connection with this agreement, the Company issued 1,800,000 shares of Common Stock valued at $0.09 per share to First Trust and recorded $162,000 as deferred compensation. The Company amortized $20,250 as stock-based compensation for the nine months ended September 30, 2009.

On August 1, 2009, the Company entered into a two year agreement with Shanghai Hai Mai. In connection with this agreement, the Company issued 2,350,000 shares of Common Stock valued at $0.10 per share to Hai Mai and recorded $235,000 as deferred compensation. The Company amortized $19,583 as stock-based compensation for the nine months ended September 30, 2009.

COMMON STOCK WARRANTS

During the nine months ended September 30, 2009, there were no warrants granted or exercised.

22

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

NOTE 8 – SHAREHOLDER’S EQUITY (CONTINUED)

The following table summarizes the Company's Common Stock warrants outstanding at September 30, 2009:

				Warrants Outstanding and Exercisable
	Range of	Number		Weighted Average		Weighted Average
	Exercise	Of		Remaining		Exercise
	Price	Warrants		Exercise Life		Price
$	0.10		540,130		1.75	$	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, 2009 and December 31, 2008, 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, 2009 and December 31, 2008 are as follows:

	Identifiable Assets
	September 30,		December 31,
	2009		2008
United States	$	905	$	905
People's Republic of China		17,829,362		13,681,997
Total	$	17,830,267	$	13,682,902

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, 2009 and 2008, 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, 2009 and 2008 is as follows:

23

LINKWELL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(UNAUDITED)

NOTE 10 – SEGMENT INFORMATION (CONTINUED)

Nine months ended September 30, 2009:

				Corporate
	Disinfectant			And
	Products			Other		Consolidated
Net revenue - Non-affiliated companies	$	7,125,602		$	-	$	7,125,602
Net revenue - Affiliated companies	$	3,325,863		$	-	$	3,325,862
Interest income (expenses)	$	(39,464	)	$	41	$	(39,423	)
Depreciation	$	85,100		$	51,301	$	136,401
Net income (loss)	$	2,262,622		$	50,264	$	2,312,886
Long-lived asset expenditures		-			-		-
Segment Assets	$	14,771,233		$	3,059,034	$	17,830,267

Net revenues for the nine months ended September 30, 2009 were $10,451,465. Included in our net revenues for the nine months ended September 30, 2009 are $3,325,862 in related party sales and $7,125,602 in sales to independent third parties.

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		$	(3,857	)
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

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.

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 our Form 10-K annual report for the fiscal year ended December 31, 2008. 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 2009.

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 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 2009, 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, 2009, as compared to the same period ended September 30, 2008, accompanied by the change amount and percentage of changes.

27

LINKWELL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Continued)

	For the Nine Months						Change
	Ended September 30,						2009 VS			Variance
	2009			2008			2008			%
NET REVENUES
Non-affiliated companies	$	7,125,602		$	6,639,720			485,882		7	%
Affiliated companies		3,325,863			1,800,526			1,525,337		85	%
Total Net Revenues		10,451,465			8,440,246			2,011,219		24	%
COST OF SALES		(4,475,389	)		(4,303,843	)		(171,546	)	4	%
GROSS PROFIT		5,976,076			4,136,403			1,839,673		44	%
OPERATING EXPENSES:
Selling expenses		(977,365	)		(809,301	)		(168,064	)	21	%
General and administrative		(2,203,113	)		(1,590,691	)		(612,422	)	39	%
Total Operating Expenses		(3,180,478	)		(2,399,992	)		(780,486	)	33	%
INCOME FROM OPERATIONS		2,795,598			1,736,411			1,059,187		61	%
OTHER INCOME (EXPENSE):
Other income/(expense)		16,664			(61,251	)		77,915		-127	%
Put option expenses		288,386			(383,227	)		671,613		-175	%
Interest income		3,415			3,972			(557	)	-14	%
Interest expense		(42,838	)		(47,829	)		4,991		-10	%
Total Other Income/(Expense)		265,627			(488,335	)		753,962		-154	%
INCOME BEFORE DISCONTINUED OPERATIONS, INCOME TAXES AND MINORITY INTEREST		3,061,225			1,248,076			1,813,149		145	%
DISCONTINUED OPERATIONS (Note 7):
Gain from discontinued operation (including gain on disposal of $43,123 at June 30, 2008)		-			74,606			(74,606	)	-100	%
Gain from discontinued operations		-			74,606			(74,606	)	-100	%
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST		3,061,225			1,322,682			1,738,543		131	%
INCOME TAXES		(459,953	)		(272,613	)		(187,340	)	69	%
INCOME BEFORE MINORITY INTEREST		2,601,272			1,050,069			1,551,203		148	%
MINORITY INTEREST		(288,386	)		(78,082	)		(210,304	)	269	%
NET INCOME		2,312,886			971,987			1,340,899		138	%

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Other Key Indicators:	For the Nine months ended
	September 30,
(Percent of Net Revenues)	2009			2008			Change
Cost of Revenues		43	%		51	%		(8	)%
Selling Expenses		9	%		10	%		(1	)%
General and Administrative Expenses		21	%		19	%		2	%
Income from Operations		27	%		21	%		6	%

NET REVENUES

Net revenues for the nine months ended September 30, 2009 were $10,451,465, as compared to net revenues of $8,440,246 for the nine months ended September 30, 2008, an increase of $2,011,219 or approximately 24%. 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, 2009, $3,325,863 or approximately 32% were attributable to related parties as compared to net revenues of $1,800,526, or approximately 21%, of our total net revenues for the comparable period in fiscal 2008.

Of the $3,325,863 of revenues derived from related parties during the nine months ended September 30, 2009, $2,978,680 or approximately 90%, was from ZhongYou, compared to $1,748,547 for the same period of fiscal 2008, an increase in revenues from ZhongYou of $1,230,133, or approximately 70%, from the same period in fiscal 2008.

The revenue associated with third parties increased $485,882, or approximately 7% for the nine months ended September 30, 2009, as compared with the same period ending September 30, 2008.

COST OF REVENUES

Cost of revenues includes raw materials and manufacturing costs, which includes labor, rent and an allocated portion of overhead expenses, such as utilities, directly related to product production. For the nine months ended September 30, 2009, cost of revenues amounted to $4,475,389, or approximately 43%, of net revenues as compared to cost of revenues of $4,303,843, or approximately 51%, of net revenues for the same period in fiscal 2008.

100% of the cost of revenues is from LiKang Disinfectant. Historically, 65% of LiKang Disinfectant's cost of sales is attributable to raw material costs and approximately 35% is attributable manufacturing costs. The increase in cost of revenues for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008, is attributable, partially, to price increases of raw materials during the nine months ended September 30, 2009. We also experienced an increase in overhead costs, including utilities and rent during the nine months ended September 30, 2009, as compared to the nine months ended September 30, 2008. 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, 2009, 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, 2009 was $5,976,076, or approximately 57% of net revenues, as compared to $4,136,403, or approximately 49% of revenues, for the nine months ended September 30, 2008.

OPERATING EXPENSES

Total operating expenses for the nine months ended September 30, 2009 were $3,180,478, an increase of $780,486, or approximately 33%, from total operating expenses of $2,399,992 for the nine months ended September 30, 2008. This increase included the following:

29

Selling Expenses

For the nine months ended September 30, 2009, selling expenses were $977,365 as compared to $809,301 for the same period in 2008, an increase of $168,064, or approximately 21%.

General and Administrative Expenses

For the nine months ended September 30, 2009, general and administrative expenses were $2,203,113 as compared to $1,590,691 for the same period in 2008, an increase of $612,422, or approximate 39%.

We incurred non-cash consulting fees during the nine months ended September 30, 2009 of $235,886 as compared to $139,709 for the nine months ended September 30, 2008, an increase of $96,177 or approximately 69%. Non-cash consulting fees represent the amortization of fees to consultants under agreements entered into during the nine months ended September 30, 2009, which we pay in shares of our common stock.

OTHER INCOME (EXPENSE)

For the nine months ended September 30, 2009, total other incomes amounted to $265,627 as compared to other expenses of $488,335 for the nine months ended September 30, 2008. This change in other income is primarily the result of a decrease of $557, or approximately 14% in interest income, a decrease of $4,991, or approximately 10% in interest expense and a decrease of $671,613, or approximately 175% in put option 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, whereby both the Company and Ecolab are subject to, and benefit by, certain pre-emptive rights, transfer restrictions and take along rights relating to the shares of Linkwell Tech that the Company and Ecolab each hold. As of May 31, 2008, the principal and accrued interest of $11,441 on the short-term $400,000 loan became part of Ecolab’s investment and no longer needs to be repaid. After this transaction, Ecolab became the 10% minority interest holder of Linkwell Tech. For the nine months ended September 30, 2009, we reported a minority interest expense of $288,386 as compared to $78,082 for the nine months ended September 30, 2008.

30

LIQUIDITY AND CAPITAL RESOURCES

As shown in the accompanying financial statements, our working capital increased $1,198,171 or approximately 12% from $9,951,925 on December 31, 2008 to $11,150,096 on September 30, 2009. With the expansion of our businesses, we anticipate the need to utilize our capital resources in the near future. In addition to our working capital, we intend to obtain required capital through a combination of bank loans and the sale of our equity securities. Although we are not party to any commitments or agreements at this time to provide us with additional bank financing or to 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, 2009, we had a total of $745,876 outstanding short term debt of which, $380,251 will mature on June 16, 2010 and $365,625 will mature on December 10, 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 provided by (used in) operating activities for the nine months ended September 30, 2009 was $281311, as compared to $524,230 for the same period ended September 30, 2008, a decrease of $805,541 or approximately 154%. For the nine months ended September 30, 2009, we used cash to fund a net increase in accounts receivable of $182,506, an increase of $556,515 in prepaid expenses and other current assets, an increase of $416,289 in other receivables, a decrease of $1,863,940 in accounts payable, accrued expenses and other payables, and a decrease of 288,386 in derivative payables. These decreases were off set by our net income, including a decrease of $972,990 in accounts receivables from related parties, an increase in advances from customers of $139,073, a decrease of $ 502,928 in inventories, and an increase of $115,154 in taxes payable.

NET CASH FROM INVESTING ACTIVITIES

Net cash used in investing activities for the nine months ended September 30, 2009 was $490,168 as compared to net cash used in investing activities of $1,115,925 for the same period in 2008, a decrease of $625,756 or approximately 56%. This change is attributable to an increase of $145,517 cash assumed from acquisition of LiKang Biological, and payments of $877,514 for purchases of property, plant and equipment.

NET CASH FROM FINANCING ACTIVITIES:

Net cash provided by financing activities was $685,218 for the nine months ended September 30, 2009, as compared to net cash provided by financing activities of $2,293,548 for the nine months ended September 30, 2008, a decrease of $1,608,330 or approximately 70%. The decreased cash flow from financing activities is primarily the result of $288,218 being due to related parties.

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, Accounting for Income Taxes, which prescribes the use of the liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we establish a valuation allowance. To the extent we establish a valuation allowance, or increase or decrease this allowance in a period, we increase or decrease our income tax provision in our statement of operations. If any of our estimates of our prior period taxable income or loss prove to be incorrect, material differences could impact the amount and timing of income tax benefits or payments for any period. In addition, as a result of the significant change in 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, 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, 2009, 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, 2009. 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 July 1, 2009, the Company issued 1,800,000 shares of common stock to FirstTrust Group, Inc. The Company valued these 1,800,000 shares using the fair value of common shares on the grant date at $0.09 per share.

On August 1, 2009, the Company issued 2,350,000 shares of common stock to Shanghai HaiMai. The Company valued these 2,350,000 shares using the fair value of common stock on the grant date of $0.10 per share.

   The offers and sales of common stock described above have not been registered under the Securities Act of 1933, as amended (“the Securities Act”) or any state securities laws, and such shares may not be offered or sold in the United States in the absence of an effective registration statement or an exemption from the registration requirements of the Securities Act. The Company has relied on the exemption from the registration requirements of the Securities Act set forth under Section 4(2) thereof.

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 Certification of Chief Executive Officer *
31.2	Section 302 Certification of Principal Financial and Accounting Officer *
32.1	Section 906 Certification of Chief Executive Officer and Principal Financial and Accounting 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 16, 2009	By: /s/ Xuelian Bian
	Xuelian Bian,
	Chief Executive Officer
	President and Principal
	Executive Officer

37

EX-31.1

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, 2009 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 16, 2009	By: /s/ Xuelian Bian
	Xuelian Bian,
	Chief Executive Officer,
	President and Principal
	Executive Officer

EX-31.2

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, 2009 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 16, 2009	By: /s/ Xuelian Bian
	Xuelian Bian,
	Principal Financial and Accounting Officer

EX-32.1

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, 2009 as filed with the Securities and Exchange Commission (the “Report”), the undersigned, certifies, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to Section 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 16, 2009	By: /s/ Xuelian Bian
	Xuelian Bian
	Chief Executive Officer,
	Principal Financial and Accounting Officer