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RELATED PARTY TRANSACTIONS
6 Months Ended
Jun. 30, 2011
RELATED PARTY TRANSACTIONS
NOTE 9 – RELATED PARTY TRANSACTIONS

Linkwell Tech's wholly-owned subsidiary, LiKang Disinfectant, is engaged in business activities with three related parties: Shanghai ZhongYou Pharmaceutical High-Tech Co., Ltd., (“ZhongYou”), Shanghai Jiuqing Pharmaceuticals Company, Ltd. (“Shanghai Jiuqing”) and Linkwell International Trading Co., Ltd. (“Linkwell Trading”).
 
The Company’s Chairman and Chief Executive Officer, Xuelian Bian, and Vice President and Director, Wei Guan, own 90% and 10% respectively, of the capital stock of ZhongYou. In March 2007, Wei Guan sold his 10% ownership to Bing Chen, the President of LiKang Disinfectant. In August 2007, Xuelian Bian sold his 90% ownership 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, whose 100% owner is Shanghai Ajiao Shiye Co. Ltd. Mr. Bian is currently a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd.
 
For the six months ended June 30, 2011 and 2010, the Company recorded sales of $3,566,996 and $1,440,292 to ZhongYou, respectively.  For the three months ended June 30, 2011 and 2010, the Company recorded sales of $1,958,047 and $266,262 to ZhongYou, respectively.  At June 30, 2011 and December 31, 2010, accounts receivables from sales to ZhongYou were $7,303,259 and $6,701,229, respectively.

Shanghai Ajiao Shiye Co. Ltd. owns 100% of Shanghai Jiuqing. Xuelian Bian is a 60% shareholder of Shanghai Ajiao Shiye Co. Ltd. During the six months ended June 30, 2011 and 2010, the Company recorded sales of $0 and $1,483 to Shanghai Jiuqing, respectively.  During the three months ended June 30, 2011 and 2010, the Company recorded sales of $0 and $345 to Shanghai Jiuqing, respectively.  At June 30, 2011 and December 31, 2010, accounts receivable from sales to Shanghai Jiuqing were $90,339 and $88,278, respectively. 
  
 
As of June 30, 2011 and December 31, 2010, $1,102,131 and $2,100,204 were due from related parties, respectively, representing short-term advances and other receivables not including the receivables from sales. Wuhai Likang was a related party of the Company at December 31, 2010 due being in the process of acquiring a controlling position in Wuhai Likang. As of June 30, 2011 government approval for this acquisition has not occurred and is unable to be completed. During the six months ended June 30, 2011, the existing shareholders of Wuhai Likang contributed additional capital into Wuhai Likang, which resulted in a reduction of the Company’s ownership position in Wuhai Likang to approximately 7.65% of Wuhai Likang as of June 30, 2011. With this reduction in ownership, and reduction in influence over Wuhai Likang, the Company’s management has determined that Wuhai Likang is not deemed a related party (See note 7).

As of June 30, 2011, the Company owed its management $54,000 and other related parties $947,046.  As of December 31, 2010, the Company owed its management $54,000 and other related parties $1,326,628.