OTHER RECEIVABLES

12 Months Ended

Dec. 31, 2011

OTHER RECEIVABLES

NOTE 7 - OTHER RECEIVABLES

At December 31, 2011 and December 31, 2010, the Company had other receivables of $3,926,230 (including $3,753,432 to Wuhai Likang) and $152,337, respectively. Wuhai Likang was a related party of the Company in 2010 due to the Company being in the process of acquiring a controlling position in Wuhai Likang. On December 30, 2009, the Company issued 4,000,000 shares (pre-reverse split) of common stock (valued for $544,000) and cash RMB 3.15 million ($499,929) together with a previous capital contribution of patent of RMB 1.44 million ($228,538) in exchange for acquiring a 51% equity interest in Wuhai Likang in China which was accounted for as a deposit. However, the acquisition target has increased its registered capital to RMB 50 million by the contribution of new investors in April 2010, which resulted in a decrease of the equity interest owned by Linkwell to 9.18%. 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.

Wuhai Likang is a major supplier and strategic partner to the Company. The Company has a large demand for a raw material which is produced from Wuhai Likang’s waste recycling project. Due to the need for this raw material, the Company made advances to Wuhai LiKang’s to support its waste recycling project which ultimately benefits the Company. As of December 31, 2010, the Company has made advances totaling $1,567,337 to provide operating funds to Wuhai Likang. The portion of such advances to provide operating funds to Wuhai Likang was classified as due from related party as of December 31, 2010 pending approval of the acquisition.

As of December 31, 2011, government approval for this acquisition had not occurred and is unable to be completed. Due to the existing shareholders of Wuhai Likang increased capital contribution, the Company’s ownership in Wuhai Likang decreased to approximately 9.18% and influence over Wuhai Likang has been reduced, the Company’s management has determined that Wuhai Likang is not deemed a related party. Accordingly, the due from related party of $1,567,337 as of December 31, 2010 (of which, $728,467 has been reclassified into investment in 2011) and the additional approximately $2.84 million advances made during the year ended December 31, 2011, have been classified as other receivables as of December 31, 2011. The advance to Wuhai Likang was guaranteed by Wuhai LiKang’s 52,249 square meters land, 22,360 square meters building and RMB 4.73 million (US$750,686) equipment.