RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 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 remaining 90% ownership in ZhongYou to his mother, Xiuyue Xing. In October 2007, 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 years ended December 31, 2011 and 2010, the Company recorded sales of $9,272,860 and $6,987,576 to ZhongYou, respectively. At December 31, 2011 and December 31, 2010, accounts receivables from sales to ZhongYou (net of bad debt allowance) were $9,850,987 and $6,701,229, respectively.

During the years ended December 31, 2011 and 2010, the Company recorded sales of $0 and $1,801 to Shanghai Jiuqing, respectively. At December 31, 2011 and December 31, 2010, accounts receivable from sales to Shanghai Jiuqing were $92,725 and $88,278, respectively.

As of December 31, 2011 and December 31, 2010, $691,156 and $2,100,204 (including $1,567,337 to Wuhai Likang) were due from related parties such as Likang Trading Co. Ltd (Hong Kong) (“Likang Trading HK”), Shanghai Zhongyou Delivery Co., Ltd (“ZhongYou Delivery”), Shanghai Likang Pharmaceutical Co., Ltd (“Likang Pharmaceutical”), and Shanghai Lingkai International Trading Co., Ltd (“Lingkai Trading”), 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 to being in the process of acquiring a controlling position in Wuhai Likang (see Note 7).

As of December 31, 2011 and December 31, 2010, $1,834,582 and $1,380,628 were due to [related parties] including the Company’s management and officer. As of December 31, 2011, the Company owed its management $54,000, ZhongYou $1,553,215 and other related parties $227,367. As of December 31, 2010, the Company owed its management $54,000 and other related parties $1,326,628.