-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HNqW9EhjtkF5N/UPXyST8CCqXJg2TdQkjH9FjSlE6rXaYHtqWK5QDhuh5kZ9wv0R 7mh7meycNg1CzAEkhQ3xeA== 0001282826-05-000053.txt : 20050719 0001282826-05-000053.hdr.sgml : 20050719 20050719170037 ACCESSION NUMBER: 0001282826-05-000053 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050502 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050719 DATE AS OF CHANGE: 20050719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIRSHNER ENTERTAINMENT & TECHNOLOGIES INC CENTRAL INDEX KEY: 0001042463 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 651053546 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24977 FILM NUMBER: 05962129 BUSINESS ADDRESS: STREET 1: 5200 NW 33RD AVENUE STREET 2: SUITE 215 CITY: FT LAUDERDALE STATE: FL ZIP: 33309 BUSINESS PHONE: 954-938-8010 MAIL ADDRESS: STREET 1: 5200 NW 33RD AVENUE STREET 2: SUITE 215 CITY: FT LAUDERDALE STATE: FL ZIP: 33309 FORMER COMPANY: FORMER CONFORMED NAME: HBOA HOLDINGS INC DATE OF NAME CHANGE: 20001116 FORMER COMPANY: FORMER CONFORMED NAME: MIZAR ENERGY CO DATE OF NAME CHANGE: 19980923 8-K/A 1 krsh07188k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 2, 2005 Kirshner Entertainment & Technologies, Inc. ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) Florida (State or Other Jurisdiction of Incorporation) 000-24977 65-1053546 - ------------------------------------- -------------------------------- (Commission File Number) (IRS Employer Identification No.) No. 476 Hutai Branch Road, Baoshan District, Shanghai, China 200436 (Address of Principal Executive Offices) (Zip Code) (86) 21-56689332 (Registrant's Telephone Number, Including Area Code) 5200 N.W. 33rd Avenue, Suite 215, Ft. Lauderdale, FL 33309 ------------------------------------------------------------ (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [__] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [__] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [__] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [__] Pre-commencement communications pursuant to Rule 133-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT Effective on May 2, 2005, Kirshner Entertainment & Technologies, Inc. (the "Company"), consummated its acquisition of Linkwell Tech Group, Inc. ("Linkwell"), and on May 6, 2005, filed a Current Report on Form 8-K to disclose completion of that acquisition. The purpose of this filing is to amend the Current Report on Form 8-K by filing certain financial statements and financial information required by Regulation S-X and identified in Item 9.01 below, provide the business description and other information and exhibits relating to Linkwell. ITEM 8.01 OTHER EVENTS As described above, as a result of the share exchange, Linkwell became a wholly owned subsidiary of our company. Overview of Linkwell Tech Group, Inc. Linkwell Tech Group, Inc. was founded on June 22, 2004, as a Florida corporation ("Linkwell"). When used in this report,the terms the "Company," "we", and "us" refers to Kirshner Entertainment & Technologies, Inc., a Florida corporation, our wholly-owned subsidiary Linkwell Tech Group, Inc., a Florida corporation ("Linkwell"), and Linkwell's 90% owned subsidiary Shanghai Likang Disinfectant High-Tech Company, Limited ("Likang"). Linkwell is a holding company. On June 30, 2004, Linkwell acquired 90% of Likang pursuant to a stock exchange. Likang was founded in 1993. Likang is involved in the development, manufacture and production, marketing and sale, and distribution of disinfectant health care products. Likang's products are utilized by the hospital and medical industry in China. Likang regards the hospital disinfecting products as the primary segment of its business. Likang was founded by the China Army Second Military Medical University in 1993. The company utilizes the capabilities of the Second Military Medical University's research and development unit. Currently the Company offers a variety of disinfectant products for the following applications: |X| Skin and mucous membrane disinfection |X| Hand disinfection |X| Environment and surface disinfection |X| Medical devices and equipment disinfection |X| Machine disinfection Likang has a national presence in more than 30 provinces across mainland China. Likang's products have gradually penetrated to the civil disinfection, industrial disinfection, livestock and agricultural disinfection and other types of specialized industries, providing the most specialized service for its customers. Primarily Likang is a domestic company; Likang will look for ways to expand its distribution network on the international stage. Likang has its own network of sales representatives. Likang has educated the sale network. The sales network currently covers hospitals in twenty provinces including: Shanghai, Beijing, Guangdong, Tianjin, Fujian, Yunnan, Hainan, Jiangsu, Zhejiang, Anhui, Shandong, Henan, Hebei, Liaoning, Heilongjiang, Shanxi, Gansu, Ningxia, Guizhou, Hunan, Sichuan, Xinjiang, Neimenggu. Industry Background The SARS outbreak created widespread recognition of the critical need for health standards. This concern has led to a surge in interest for disinfectant products. Furthermore the government created national standards to assure higher health standards. The Ministry of Public Health in China established national standards for the disinfectant industry. In July 2002, the Ministry of Public Health issued the 27th order of Ministry of Health of the People's Republic of China. This ordinance implemented new standards for the industry. The first criterion of the new order stipulates that disinfectant manufacturers in China must obtain a license to manufacture hygiene disinfectants. The new standards established guidelines for all disinfectant manufacturers. Prior to release all disinfectant instruments must obtain the official hygiene permit document of Ministry of Public Health. Prior to release all disinfectant hygiene products must receive approval of the provincial hygiene administrative department. The implementation of these improved production standards and licenses has effectively decreased the competitiveness of small to mid size manufacturers with single product and inferior technical content. To date, Likang has been granted 10 hygiene licenses by the Ministry of Public Health. The Company has filed applications for an additional four products, and the Company is currently preparing application documents for six additional products. Presently Likang meets all standards initiated by the ordinance recently imposed. Once again the SARS outbreak has resulted in an increased national awareness for health standards. Likang has witnessed a surge in demand for its products. According to "China TCM Newspaper", many households and companies maintained stockpiles of disinfectant products immediately following the SARS related events. While this stockpile represented a one-time surge in sales for the industry, as these stockpiles begin to decrease Likang expects to witness an additional surge in demand. There is no assurance as to the timing of this surge, however increased public awareness and heightened national standards are two factors, which support the growth of demand for disinfectant products. Recent Linkwell Transactions On June 30, 2004, Linkwell acquired 90% of Likang through a stock exchange with Shanghai Likang Pharmaceuticals Technology Company, Limited, the then 90% shareholder of Likang. Shanghai Shanhai Group, an unaffiliated third party, owns the remaining 10% of Likang. Likang's officers and directors, Messrs. Xuelian Bian and Wei Guan, own Shanghai Likang Pharmaceuticals Technology Company, Limited, owning 90% and 10%, respectively, of that company. Employees of Linkwell As of July 6, 2005, Likang employs 237 full time employees as follows: ---------------------------------- -------------------------- Department Number of Employees ---------------------------------- -------------------------- Management and Administration 24 ---------------------------------- -------------------------- Production Center 70 ---------------------------------- -------------------------- Research Professionals 9 ---------------------------------- -------------------------- Logistics Services Center 27 ---------------------------------- -------------------------- Sales and Marketing 91 ---------------------------------- -------------------------- Instrument Business Department 16 ---------------------------------- -------------------------- Total 237 ---------------------------------- -------------------------- The following table illustrates the nine research professionals.
-------------------------- -------- ----------------------- ----------------------- -------------------------- Name Age Title Specialty Education -------------------------- -------- ----------------------- ----------------------- -------------------------- Wang, Shuzhou 71 Professor Public health The second military medical university -------------------------- -------- ----------------------- ----------------------- -------------------------- Sun, Wensheng 38 graduate degree pharmacy The second military medical university -------------------------- -------- ----------------------- ----------------------- -------------------------- Zhang, Zhongmin 37 Junior professional Chemical industry Shanghai chemical industry professional training school -------------------------- -------- ----------------------- ----------------------- -------------------------- Zhang, Wanguo 38 doctor pharmacy The second military medical university -------------------------- -------- ----------------------- ----------------------- -------------------------- Jin, Xikui 37 undergraduate course Chemical industry Shanghai chemical industry professional training school -------------------------- -------- ----------------------- ----------------------- -------------------------- Zhou, Xiufang 33 undergraduate course Chemical industry Shanghai Science and Technology University -------------------------- -------- ----------------------- ----------------------- -------------------------- Su, Zhengyi 50 Undergraduate Mechanical engineering Shanghai Second Industry course College -------------------------- -------- ----------------------- ----------------------- -------------------------- Ni, Jinghai 54 Undergraduate Mechanical engineering Tongji university course -------------------------- -------- ----------------------- ----------------------- -------------------------- Kou, Zhenchao 53 Undergraduate Mechanical engineering Shanghai Industry College course -------------------------- -------- ----------------------- ----------------------- --------------------------
Product Lines Likang specializes in the production, sale, and distribution of disinfectant health care products. Likang manufactures and sells disinfectant liquid and tablet products as well as disinfectant instruments, devices, and materials such as the air disinfection machine, hot press bag, disinfection swab, and disinfection tampon. Likang's products are utilized by the hospital and medical industry in China. Likang developed and manufactures approximately 95% of the products it sells, and distributes approximate 5% of products developed and manufactured by third parties. As of July 6, 2005, Likang offers a variety of products: general skin disinfection series, hand sanitation series, environmental sanitation disinfectant series, medical instrument disinfectant series, antiseptic disinfection series and an air disinfection series. The tables below offer a summary of the current product offerings of the Company. Skin and mucous membrane - --------------------------------------------- --------------------- ----------------------- ------------------------- Product Names Ingredients Intended Use Industry Standard - --------------------------------------------- --------------------- ----------------------- ------------------------- Anerdian Skin Disinfectant iodine, alcohol Skin Disinfection Q/SUVE 20-2003 - --------------------------------------------- --------------------- ----------------------- ------------------------- Anerdian type 3rd skin and mucous membrane iodine, skin & mucous Q/SUVE 22-2003 disinfectant chlorhexidine membrane disinfectant - --------------------------------------------- --------------------- ----------------------- ------------------------- Dianerkang PVP-I disinfectant Povidone-iodine skin & mucous Q/SUVE 28-2004 membrane disinfectant - --------------------------------------------- --------------------- ----------------------- ------------------------- Dianerkang alcohol disinfectant alcohol Skin disinfection Q/SUVE 08-2004 - --------------------------------------------- --------------------- ----------------------- ------------------------- Hand Disinfection - -------------------------------------------- ------------------ -------------------- -------------------------------- Product Names Ingredients Intended Use Industry standard - -------------------------------------------- ------------------ -------------------- -------------------------------- Jifro antimicrobial hand washing chlorhexidine Hand washing Q/SUVE 04-2003 - -------------------------------------------- ------------------ -------------------- -------------------------------- Jifro disinfectant gel DP300 (Triclosan) Hand disinfectant Q/SUVE 02-2003 - -------------------------------------------- ------------------ -------------------- -------------------------------- Jifro 4% Chlorhexidine gluconate surgical Chlorhexidine surgical hand Q/SUVE 09-2004 hand scrub gluconate disinfection - -------------------------------------------- ------------------ -------------------- --------------------------------
Environment and Surface Disinfection - ---------------------------- --------------------------------- ----------------------- ------------------------------ Product name Ingredients Intended Use Industry standard - ---------------------------- --------------------------------- ----------------------- ------------------------------ Aiershi disinfectant trichloroisocyanuric acid Circumstance and Q/SUVE 34-2004 tablets surface disinfection - ---------------------------- --------------------------------- ----------------------- ------------------------------ Lvshaxing disinfectant Dichloro dimethylhydantoin Circumstance and Q/SUVE 33-2003 tablets surface disinfection - ---------------------------- --------------------------------- ----------------------- ------------------------------ Lvshaxing disinfectant Dichloro dimethylhydantoin Circumstance and Q/SUVE 32-2003 granule surface disinfection - ---------------------------- --------------------------------- ----------------------- ------------------------------
Medical devices and equipment - ------------------------------------------ ---------------------- --------------------- ----------------------------- Product name Ingredients Intended Use Industry Standard - ------------------------------------------ ---------------------- --------------------- ----------------------------- Dianerkang 2% glutaraldehyde glutaraldehyde Disinfection and Q/SUVE 10-2003 disinfectant sterilization of device - ------------------------------------------ ---------------------- --------------------- ----------------------------- Dianerkang 2% glutaraldehyde glutaraldehyde Disinfection and disinfectant (for the sterilization of endoscopes - ------------------------------------------ ---------------------- --------------------- ----------------------------- Dianerkang multi-enzyme rapid detergents Multi-Enzyme Rinsing and decontamination of device - ------------------------------------------ ---------------------- --------------------- -----------------------------
Machine series - ----------------------------------------- ------------------ -------------------------- ------------------------- Product Name Ingredients Intended Use Industry standard - --------------------------------------------- ------------------ -------------------------- ------------------------- Lvshaxing LKQG-1000 air disinfection machine Ozone, Air disinfection ultraviolet radiation, electrostatic - --------------------------------------------- ------------------ -------------------------- ------------------------- An'erdian disinfection swab An'erdian Skin & disinfection - --------------------------------------------- ------------------ -------------------------- ------------------------- Dian'erkang hot press bag Iron powder, Drive the "feng" active carbon Stop the pain Dispel the "han" - --------------------------------------------- ------------------ -------------------------- ------------------------- Likang test paper of chlorine reaction regent Indicator of Q/SUVE 40-2003 disinfectant concentration - --------------------------------------------- ------------------ -------------------------- ------------------------- Likang 121 stream pressure sterilization Indication oil Indication of chemical indicator sterilization effect - --------------------------------------------- ------------------ -------------------------- ------------------------- Likang 132 stream pressure sterilization Indication oil Indication of chemical indicator sterilization effect - --------------------------------------------- ------------------ -------------------------- ------------------------- Likang stream pressure sterilization Indication oil Indication of chemical indicator sterilization effect - --------------------------------------------- ------------------ -------------------------- -------------------------
Customers We sell our products on a wholesale and retail basis to domestic hospitals, medical suppliers, and distribution companies. We have approximately 5,000 customers. For fiscal year ended December 31, 2004 we had only one customer, Shanghai Likang Machinery and Medicine Co., Ltd., who represented more than 10% of our total net revenues: it accounted for approximately 40% of our total revenue. We have contracts with all our dealer and agent customers. We do not have contracts with hospital customers or other retail customers. We generally offer payment terms of three to six months before payment for the products is due. Product Revenues For the fiscal year ended December 31, 2004, sales of product groups were as follows: Product 2004 USD Revenues (thousands) An'erdian skin disinfectant $2,055.2 Dianerkang 2% potentiated glutaraldehyde (medical equipment) 510.00 disinfectant Ai'ershi (environment) disinfection tablets 600.00 Jifro (hand) disinfectant gel 222.30 Lvshaxing LKQG-1000 air disinfection (machine) 36.20 - ------------------------------------------------------------ ------------------ Total $3,423.7 Manufacturing We manufacture 38 disinfectant products. Likang has two new production workshops according to Good Manufacturing Practice ("GMP") standards, established in 2002 and 2004, respectively, which include first-class production lines, and space for an advanced laboratory. Likang owns the machinery in its facility. The manufacturing facility has the capacity to annually produce approximately 30 million 300ml bottles of liquid disinfectant and approximately three million 100g bottles of tablet and powder disinfectant. The manufacture time for the liquids and tablets is approximately one day. We package our products in various packaging specs including, for the liquid and gel disinfectants: 40ml, 50ml, 60ml, 80ml, 500ml, 750ml, 1L, and 1.5L per bottle, and 2.5L and 5L per barrel; for the tablets: 50 piece, 100 piece and 200 piece per bottle; and the powder: 500g and 250g. We maintain an inventory of finished products equal to approximately two and one-half (2 1/2) months average sales. Shanghai Likang Meirui Pharmaceuticals High-Tech Co., Ltd., an affiliated entity, produces two products for Likang. Raw Materials We purchase most of our raw materials for our disinfectant products from six suppliers. To ensure the supply of raw materials, we acquire raw materials through contracts with our suppliers, however the raw materials are readily available from a number of other suppliers. We have not experienced any difficulty in obtaining the necessary raw materials for our products. We have maintained a good business relationship with our major suppliers for over 10 years. The table below outlines the suppliers and origin of raw materials used by Likang. --------------------------- ------------------------------------------------------- --------------- Raw materials Suppliers Origin --------------------------- ------------------------------------------------------- --------------- iodine Shanghai Wenshui Chemical Co., Ltd America --------------------------- ------------------------------------------------------- --------------- potassium iodide Shanghai Wenshui Chemical Co., Ltd Holland --------------------------- ------------------------------------------------------- --------------- glutaraldehyde Shanghai Jin an tang Hygienical Product Factory Germany --------------------------- ------------------------------------------------------- --------------- Triclosan Ciba Speciality Chemicals (China)LTD Domestic --------------------------- ------------------------------------------------------- --------------- alcohol Shanghai Jangbo Chemical Co., L td Domestic --------------------------- ------------------------------------------------------- --------------- trichloroisocyanuric acid Xuzhou Keweisi Disinfectant Co., Ltd Domestic --------------------------- ------------------------------------------------------- --------------- Ozone producing device Shanghai Likang Meirui Pharmaceutical High-Tech Co., Domestic equipment Ltd --------------------------- ------------------------------------------------------- --------------- ultraviolet radiation Shanghai Likang Meirui Pharmaceutical High-Tech Co., Domestic lamp light Ltd --------------------------- ------------------------------------------------------- ---------------
A small part of procurement need to pay instantly, other procurements usually pay after one or three months. Shanghai Shanhai Group, Likang's minority shareholder, is the principal shareholder of Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd. Warehousing and Shipping We inventory our products and fill all customer orders from our 21,500 square foot facility in Jiading District, Shanghai. We have an in-house fulfillment and distribution operation, which is used to manage the entire supply chain, beginning with the placement of the order, continuing through order processing, and then fulfilling and shipping of the product to the customer. Customer Service and Support We believe that a high level of customer service and support is critical in retaining and expanding our customer base. Customer care representatives participate in ongoing training programs under the supervision of our training managers. These training sessions include a variety of topics such as product knowledge and customer service tips. Our customer care representatives respond to customers' e-mails and calls that are related to order status, prices and shipping. If our customer care representatives are unable to respond to a customer's inquiry at the time of the call, we strive to provide an answer within 24 hours. We believe our customer care representatives are a valuable source of feedback regarding customer satisfaction. Our customer returns and credits average approximately 1% of total sales. New Product Development Likang was founded by the China Army Second Military Medical University in 1993. The company utilizes the capabilities of the Second Military Medical University's research and development unit. We pay for the use of these capabilities on an as needed basis and the costs are included in our new product development expenses. Relying on the research and development unit of the Second Military Medical University, Likang is committed to developing new products. Likang owns all rights to the research and formulas it develops utilizing the capabilities of the Second Military Medical University's research and development unit. New Products Working with the research and development unit of the Second Military Medical University, Likang is currently developing new products. The table below outlines a series of potential new product releases. ------- --------------------------- ------- ------------- Project Name Completion Sub sector Date ------- --------------------------- ------- ------------- 1 Glutaraldehyde Monitors 2005 chemical indicators ------- --------------------------- ------- ------------- 2 B-D test paper 2005 chemical indicators ------- --------------------------- ------- ------------- 3 B-D test standard test bag 2005 chemical indicators ------- --------------------------- ------- ------------- 4 88 brand disinfectant 2005 liquid chemical disinfectant ------- --------------------------- ------- ------------- B-D test paper and B-D test standard test bag are used in a B-D test in order to judge if one pre-vacuum steam sterilization apparatus is qualified to executing the sterilization cycle. The glutaraldehyde monitor is used to judge if the originally or in used glutaraldehyde disinfectant is qualified. The 88 brand disinfectant is a kind of liquid chemical disinfectant, contains the sodium hypochlorite. Its period of validity is almost two years, which is longer than for the same kind of product used now (which commonly is valid for three months) in daily disinfection, such as the dishware, fruit and vegetable, clothes and etc. Marketing and Sales Likang maintains a proprietary network of sales executives. Primarily 30% of Likang's sales are achieved by the company's sales force, and 70% of sales are achieved by independent salespersons, dealers and agents. Likang has a national presence in more than 30 provinces across mainland China. Likang's products have gradually penetrated to the civil disinfection, industrial disinfection, livestock and agricultural disinfection and other types of specialized industries, providing the most specialized customer service for its customers. Likang primarily markets and sells its products in China; it is looking for ways to expand its distribution network internationally. Headquartered in Shanghai, Likang has approximately 23 independent salespersons, dealers and agents located throughout the country who sell its products in nearly all provinces. The main sales method of Likang is point-to-point service through the independent salespersons, dealers and agents. Intellectual Property Likang has developed over 10 different products, and has received five patents and has three pending patent applications with National Property Right Administration of the PRC. The following is a list of Likang's patents and pending patent applications: - ---------------------------------- --------------------------------------------------- ------------------------------- Patent Category Patent name Patent No - ---------------------------------- --------------------------------------------------- ------------------------------- Practicality new pattern a kind of bottle can be open repeatedly easily ZL 03 2 29616.9 - ---------------------------------- --------------------------------------------------- ------------------------------- Appearance design Bottle (with the wing stretch) ZL 00 3 14391.0 - ---------------------------------- --------------------------------------------------- ------------------------------- Appearance design Test paper box of chlorine ZL 2003 3 0108274.5 - ---------------------------------- --------------------------------------------------- ------------------------------- Practicality new pattern Container with the vacuum pump ZL 2004 3 0022740.2 - ---------------------------------- --------------------------------------------------- ------------------------------- invention Anti the HP Gel ZL 03 2 10513.4 - ---------------------------------- --------------------------------------------------- ------------------------------- invention The device dealing with the sewage without the Application NO :200420090682.1 additional energy - ---------------------------------- --------------------------------------------------- ------------------------------- invention Low smell and stimulus contain chlorine Application NO :200410099002-7 disinfectant tablet, powder etc - ---------------------------------- --------------------------------------------------- ------------------------------- invention A kind of new skin &mucous membrane disinfectant Application NO :200420037013.8 and the preparation methods - ---------------------------------- --------------------------------------------------- -------------------------------
Likang has three registered trademarks with the China State Administration for industry and commerce trademark office for An'erdian, Jifro and Dian'erkang, and one pending application to register a trademark for Lvshaxing. In addition, to protect our proprietary rights, we rely generally on confidentiality agreements with employees, salespersons and third parties, and agreements with consultants, vendors and customers, although we have not signed such agreements in every case. Despite such protections, a third party could, without authorization, utilize our propriety technologies without our consent. We can give no assurance that our agreements with employees, consultants and others who participate in the production of our products will not be breached, or that we will have adequate remedies for any breach, or that our proprietary technologies will not otherwise become known or independently developed by competitors. Competition All of our product groups operate in highly competitive markets. We primarily compete with other manufacturers of disinfectant products. There are approximately over 1000 manufacturers and distributors of disinfectant products in China. Our principal competitors for sale of chemical disinfectants are: 3M and Ace Disinfection Factory Co., Ltd. Our principal competitors for disinfection instruments are Chengdu Kangaking Instrument Co., Ltd. and Hangzhou Yangchi Medicine Article Co., Ltd. Our principal competitors for chemical indicators are: 3M and Shandong Xinhua Medical Instrument Co., Ltd. We believe that the following are the principal competitive strengths that differentiate Likang from the competition: o Product selection and availability, o Advanced technology; o Research and development, o Manufacturing capacity, o Trained service personnel, o Reliability and speed of delivery, o Personalized service, and o Price. Government Regulations Pursuant to the July 2002 Ministry of Public Health 27th order of Ministry of Health of the People's Republic of China, all disinfectant manufacturers in China must obtain a license to manufacture hygiene disinfectants. The new standards established guidelines for all disinfectant manufacturers. Prior to release all disinfectant instruments must obtain the official hygiene permit document of Ministry of Public Health. Prior to release all disinfectant hygiene products must receive approval of the provincial hygiene administrative department. As of July 6, 2005, Likang has been granted 10 hygiene licenses by the Ministry of Public Health. Likang has filed applications for an additional four products, and Likang is currently preparing application documents for six additional products. As of July 6, 2005, Likang meets all standards initiated by the ordinance recently imposed. Likang is also subject to various other rules and regulations, including the People's Republic of China Infectious Disease Prevention and Cure Law, Disinfection Management Regulation, Disinfection Technique Regulation, Disinfection Product Manufacturer Sanitation Regulation, and Endoscope Rinse and Disinfection Technique Manipulation Regulation. Legal Proceedings We are not a party to any legal proceedings, nor are we aware of any contemplated proceedings. Property Our facilities include our principal executive offices, located at No. 476 Hutai Branch Road, Baoshan District, Shanghai, China, and our manufacturing facility located at 1104 Jiatang Road, Jiading District, Shanghai, 201807. We own our principal executive office building, which consists of approximately 14,000 square feet. We lease approximately 21,500 square feet of manufacturing space from Shanghai Likang Pharmaceutical Technology Company, Limited, an affiliate of Likang, under a lease expiring December 2006 for an annual rent of approximately $10, 890. Certain Relationships and Related Party Transactions Likang is engaged in business activities with two affiliated entities. Shanghai Likang Pharmaceuticals Technology Company, Limited, which is owned by Messrs. Xuelian Bian and Wei Guan, Likang's officers and directors, sells our products to third parties. At March 31, 2005, the amount owed to us by Shanghai Likang Pharmaceuticals Technology Company, Limited, was $390,289.78. Shanghai Likang Meirui Pharmaceuticals High-Tech Company, a company of which Shanghai Shanhai Group, Likang's minority shareholder, owns 68%, provides certain contract manufacturing of two products for Likang. At March 31, 2005, Likang owed Shanghai Likang Meirui Pharmaceuticals High-Tech Company $221,658.78. For the fiscal year ended December 31, 2004, Likang made distributions to its shareholders, Shanghai Likang Pharmaceuticals Technology Company, Limited and Shanghai Shanhai Group, in the aggregate amount of $559,633. Shanghai Likang Pharmaceuticals Technology Company, Limited is owned by Messrs. Bian and Guan, Likang's officers and directors. ITEM 9.01 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS (a) The following financial statements of Linkwell Tech Group, Inc. and subsidiary, for the periods specified in Rule 3-05(b) of Regulation S-K, are filed herewith: o Consolidated Balance Sheet at March 31, 2005 (unaudited) o Consolidated Statement of Operations for the three months ended March 31, 2005(unaudited) o Consolidated Statements of Cash Flows for the three months ended March 31, 2005 (unaudited) o Notes to Consolidated Financial Statements at March 31, 2003 (unaudited) o Report of Independent Registered Public Accounting Firm o Consolidated Balance Sheet at December 31, 2004 o Consolidated Statements of Operations for the years ended December 31, 2004 and 2003 o Consolidated Statements of Stockholders' Equity for the years ended December 31, 2004 and 2003 o Consolidated Statements of Cash Flows the years ended December 31, 2004 and 2003 o Notes to Consolidated Financial Statements at December 31, 2004 (b) The following pro forma financial information for Kirshner Entertainment & Technologies, Inc. and subsidiaries as required by Article 11 of Regulation S-X is filed herewith: o Pro Forma Consolidated Balance Sheet at March 31, 2005 (unaudited) o Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2005 (unaudited) o Notes to unaudited Pro Forma Financial Statements (c) Exhibits. 10.7 Stock Exchange Agreement dated May 2, 2005 by and among Kirshner Entertainment & Technologies, Inc., Gary Verdier, Linkwell Tech Group, Inc and the shareholders of Linkwell (1) 10.9 Stock Exchange Agreement dated June 30, 2004 by and among Linkwell Tech Group, Inc., Shanghai Likang Disinfectant High-Tech Company, Limited ("Likang") and the shareholder of Likang, Shanghai Likang Pharmaceuticals High-Tech Company, Limited. * 10.10 Form of agreement between Shanghai Likang Disinfectant High-Tech Company, Limited and its customers. * 10.11 Form of agreement between Shanghai Likang Disinfectant High-Tech Company,Limited and its suppliers. * 21 List of Subsidiaries * -------------------- * filed herewith (1) Incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed May 6, 2005. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized. KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC. By: /s/ Xuelian Bian ------------------------------------ Xuelian Bian, Chief Executive Officer DATED: July 18, 2005 LINKWELL TECH GROUP, INC. AND SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2005 (Unaudited) CONTENTS Consolidated Financial Statements: Consolidated Balance Sheet - March 31, 2005 (Unaudited)...................F-2 Consolidated Statement of Operations For the three months ended March 31, 2005 (Unaudited)...............F-3 Consolidated Statement of Cash Flows For the three months ended March 31, 2005 (Unaudited)...............F-4 Notes to Consolidated Financial Statements........................F-5 to F-8 F-1 LINKWELL TECH GROUP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET March 31, 2005 (Unaudited)
ASSETS CURRENT ASSETS: Cash $ 304,602 Accounts receivable, net of allowance for doubtful accounts of $37,050 1,156,906 Accounts receivable- related party 390,290 Inventories 1,030,749 Prepaid expenses and other 29,351 ------------------------ Total Current Assets 2,911,898 PROPERTY AND EQUIPMENT - Net 245,558 ------------------------- Total Assets $ 3,157,456 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of loans payable $ 398,551 Accounts payable and accrued expenses 1,239,875 Due to related party 221,659 Advances from customers 286,824 ------------------------- Total Current Liabilities 2,146,909 LOANS PAYABLE, less current portion 326,087 ------------------------- Total Liabilities 2,472,996 ------------------------- MINORITY INTEREST 152,923 ------------------------- STOCKHOLDERS' EQUITY: Common stock ($.001 Par Value; 200,000,000 Shares Authorized; 8,000,000 shares issued and outstanding) 8,000 Additional paid-in capital 595,865 Accumulated Deficit (72,328) ------------------------- Total Stockholders' Equity 531,537 ------------------------- Total Liabilities and Stockholders' Equity $ 3,157,456 =========================
See notes to consolidated financial statements F-2 LINKWELL TECH GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 2005 (Unaudited) NET REVENUES $ 947,925 COST OF SALES 754,637 -------------------- GROSS PROFIT 193,288 -------------------- OPERATING EXPENSES: Selling expenses 44,734 General and administrative 132,457 -------------------- Total Operating Expenses 177,191 -------------------- INCOME FROM OPERATIONS 16,097 OTHER INCOME (EXPENSE): Interest income 182 Interest expense (11,299) -------------------- Total Other Expense (11,117) -------------------- INCOME BEFORE INCOME TAXES 4,980 INCOME TAXES (1,401) -------------------- INCOME BEFORE MINORITY INTEREST 3,579 MINORITY INTEREST (358) -------------------- NET INCOME $ 3,221 ==================== See notes to consolidated financial statements F-3 LINKWELL TECH GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31,2005 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 3,221 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,599 Loss on disposal of property and equipment 124 Minority interest 359 Changes in assets and liabilities: Accounts receivable (57,752) Accounts receivable - related party (128,986) Inventories (89,438) Prepaid and other current assets 48,891 Accounts payable and accrued expenses 88,308 Due to related party (36,583) ------------------ NET CASH USED IN OPERATING ACTIVITIES (163,257) ------------------ NET DECREASE IN CASH (163,257) CASH - beginning of year 467,859 ------------------ CASH - end of period $ 304,602 ================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest $ 11,299 ================= Income taxes $ 15,484 ================== See notes to consolidated financial statements. F-4 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2005 (Unaudited) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Linkwell Tech Group, Inc. (the "Company" or "Linkwell")) was founded on June 22, 2004, as a Florida corporation. On June 30, 2004, Linkwell acquired 90% of Shanghai Likang Disinfectant Co., Ltd. ("Likang") through a stock exchange. The Stock Purchase Agreement has been accounted for as a reverse acquisition under the purchase method for business combinations." Accordingly, the combination of the two companies is recorded as a recapitalization of Likang, pursuant to which Linkwell is treated as the continuing entity. Likang is a science and technology enterprise founded in 1993. Likang is involved in the development, production, marketing and sale, and distribution of disinfectant health care products. Likang's products are utilized by the hospital and medical industry in China. Likang has developed a line of disinfectant product offerings. Likang regards the hospital disinfecting products as the primary segment of its business. Relying on the research and development strength, unique technology and the competitive advantages of the numerous professional staff rooms of Second Military Medical University, it has developed and manufactured several dozen kinds of products in the field of skin mucous disinfection, hand disinfection, surrounding articles disinfection, medical instruments disinfection and air disinfection. Basis of presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments have been included and all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the financial statements for the year ended December 31, 2004 and notes thereto contained herein. The results of operations for the three months ended March 31, 2005 are not necessarily indicative of the results for the full fiscal year ending December 31, 2005. The consolidated statements include the accounts of Linkwell Tech Group, Inc. and its 90% owned subsidiary. All significant inter-company balances and transactions have been eliminated. F-5 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2005 (Unaudited) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Inventories Inventories, consisting of raw materials and finished goods related to the Company's products are stated at the lower of cost or market utilizing the first-in, first-out method. Fair value of financial instruments The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, customer advances, loans and amounts due from related parties approximate their fair market value based on the short-term maturity of these instruments. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated economic lives of the assets, which are from five to ten years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Foreign currency translation Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation," and are included in determining net income or loss. The functional and reporting currency is the U.S. dollar. The functional currency of the Company's Chinese subsidiary is the local currency. The financial statements of the subsidiary are translated into United States dollars using year-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 because the Chinese dollar (RMB) fluctuates with the United States dollar. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The cumulative translation adjustment and effect of exchange rate changes on cash at December 31, 2004 was not material F-6 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2005 (Unaudited) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Revenue recognition The Company follows the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin 104 for revenue recognition. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues 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. F-7 LINKWELL TECH GROUP, INC. AND SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS CONTENTS Report of Independent Registered Public Accounting Firm....................F-9 Consolidated Financial Statements: Consolidated Balance Sheet...........................................F-10 Consolidated Statements of Operations................................F-11 Consolidated Statements of Stockholders' Equity......................F-12 Consolidated Statements of Cash Flows.................................F-13 Notes to Consolidated Financial Statements........................F-14 to F-22 F-8 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Linkwell Tech Group, Inc. Shanghai, China We have audited the accompanying consolidated balance sheet of Linkwell Tech Group, Inc. and Subsidiary as of December 31, 2004, and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended December 31, 2004 and 2003. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amount and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Linkwell Tech Group, Inc. and Subsidiary as of December 31, 2004, and the results of their operations and their cash flows for the years ended December 31, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America. /s/Sherb & Co., LLP Certified Public Accountants Boca Raton, FL July 5, 2005 F-9 LINKWELL TECH GROUP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET December 31, 2004 ASSETS CURRENT ASSETS: Cash $ 467,859 Accounts receivable, net of allowance for doubtful accounts of $37,050 1,099,154 Accounts receivable - related party 261,304 Inventories 941,311 Prepaid expenses and other 78,242 ------------------------- Total Current Assets 2,847,870 PROPERTY AND EQUIPMENT - Net 254,281 ------------------------- Total Assets $ 3,102,151 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of loans payable $ 301,933 Accounts payable and accrued expenses 1,191,554 Due to related party 258,242 Advances from customers 246,837 ------------------------- Total Current Liabilities 1,998,566 LOANS PAYABLE, less current portion 422,705 ------------------------- Total Liabilities 2,421,271 ------------------------- MINORITY INTEREST 152,564 ------------------------- STOCKHOLDERS' EQUITY: Common stock ($.001 Par Value; 200,000,000 Shares Authorized; 8,000,000 shares issued and outstanding) 8,000 Additional paid-in capital 595,865 Accumulated Defecit (75,549) ------------------------- Total Stockholders' Equity 528,316 ------------------------- Total Liabilities and Stockholders' Equity $ 3,102,151 =========================
See notes to consolidated financial statements F-10 LINKWELL TECH GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, -------------------------------------------- 2004 2003 -------------------- -------------------- NET REVENUES $ 4,422,522 $ 3,680,679 COST OF SALES 3,049,764 2,956,806 -------------------- -------------------- GROSS PROFIT 1,372,758 723,873 -------------------- -------------------- OPERATING EXPENSES: Selling expenses 258,148 204,281 General and administrative 426,532 227,226 -------------------- -------------------- Total Operating Expenses 684,680 431,507 -------------------- -------------------- INCOME FROM OPERATIONS 688,078 292,366 OTHER INCOME (EXPENSE): Other income 8,101 - Interest income 1,476 1,854 Interest expense (29,359) (25,474) -------------------- -------------------- Total Other Expense (19,782) (23,620) -------------------- -------------------- INCOME BEFORE INCOME TAXES 668,296 268,746 INCOME TAXES (109,732) (29,803) -------------------- -------------------- INCOME BEFORE MINORITY INTEREST 558,564 238,943 MINORITY INTEREST (55,856) (23,894) -------------------- -------------------- NET INCOME $ 502,708 $ 215,049 ==================== ====================
See notes to consolidated financial statements F-11 LINKWELL TECH GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended December 31, 2004 and 2003
Common Stock, $.001 Par Value ---------------------------------- Additional Total Number of Paid-in Retained Stockholders' Shares Amount Capital Earnings Equity ---------------- ----------------- ---------------- ------------------ ----------------- Balance, December 31, 2002 8,000,000 $ 8,000 $ 595,865 $ 51,461 $ 655,326 Distributions - - - (285,134) (285,134) Net income for the year - - - 215,049 215,049 ---------------- ----------------- ---------------- ------------------ ----------------- Balance, December 31, 2003 8,000,000 8,000 595,865 (18,624) 585,241 Distributions - - - (559,633) (559,633) Net income for the year - - - 502,708 502,708 ---------------- ----------------- ---------------- ------------------ ----------------- Balance, December 31, 2004 8,000,000 $ 8,000 $ 595,865 $ (75,549) $ 528,316 =============== ================= ================ ================== =================
See notes to consolidated financial statements F-12 LINKWELL TECH GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, ---------------------------------------- 2004 2003 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 502,708 $ 215,049 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 34,483 29,546 Loss on disposal of property and equipment 729 - Allowance for doubtful accounts 1,067 4,702 Minority interest 55,856 23,894 Changes in assets and liabilities: Accounts receivable (382,747) (102,879) Accounts receivable related party (261,304) Inventories (494,340) 166,330 Prepaid and other current assets 22,514 (51,109) Accounts payable and accrued expenses 751,893 (76,786) Due to related party 155,106 55,240 Advances to customers 106,528 64,170 ------------------ ------------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 492,493 328,157 ------------------ ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (103,724) (47,102) ------------------ ------------------ NET CASH FLOWS USED IN INVESTING ACTIVITIES (103,724) (47,102) ------------------ ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Shareholder distributions (559,633) (285,134) Proceeds from loans payable 241,546 217,392 ------------------ ------------------ NET CASH FLOWS USED IN FINANCING ACTIVITIES (318,087) (67,742) ------------------ ------------------ NET INCREASE IN CASH 70,682 213,313 CASH - beginning of year 397,177 183,864 ------------------ ------------------ CASH - end of year $ 467,859 $ 397,177 ================== ================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest $ 29,359 $ 25,474 ================== ================== Income taxes $ 91,146 $ 29,540 ================== ==================
See notes to consolidated financial statements. F-13 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Linkwell Tech Group, Inc. (the "Company" or "Linkwell")) was founded on June 22, 2004, as a Florida corporation. On June 30, 2004, Linkwell acquired 90% of Shanghai Likang Disinfectant Co., Ltd. ("Likang") through a stock exchange. The Stock Purchase Agreement has been accounted for as a reverse acquisition under the purchase method for business combinations. Accordingly, the combination of the two companies is recorded as a recapitalization of Likang, pursuant to which Linkwell is treated as the continuing entity. Likang is a science and technology enterprise founded in 1993. Likang is involved in the development, production, marketing and sale, and distribution of disinfectant health care products. Likang's products are utilized by the hospital and medical industry in China. Likang has developed a line of disinfectant product offerings. Likang regards the hospital disinfecting products as the primary segment of its business. Relying on the research and development strength, unique technology and the competitive advantages of the numerous professional staff rooms of Second Military Medical University, it has developed and manufactured several dozen kinds of products in the field of skin mucous disinfection, hand disinfection, surrounding articles disinfection, medical instruments disinfection and air disinfection. Basis of presentation The consolidated statements include the accounts of Linkwell Tech Group, Inc. and its 90% owned subsidiary. All significant inter-company balances and transactions have been eliminated. 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. Inventories Inventories, consisting of raw materials and finished goods related to the Company's products are stated at the lower of cost or market utilizing the first-in, first-out method. Fair value of financial instruments The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, customer advances, loans and amounts due from related parties approximate their fair market value based on the short-term maturity of these instruments. F-14 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated economic lives of the assets, which are from five to ten years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Foreign currency translation Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation," and are included in determining net income or loss. The functional and reporting currency is the U.S. dollar. The functional currency of the Company's Chinese subsidiary is the local currency. The financial statements of the subsidiary are translated into United States dollars using year-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 because the Chinese dollar (RMB) fluctuates with the United States dollar. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The cumulative translation adjustment and effect of exchange rate changes on cash at December 31, 2004 was not material F-15 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Comprehensive income The Company uses Statement of Financial Accounting Standards No. 130 (SFAS 130) "Reporting Comprehensive Income". Comprehensive income is comprised of net income and all changes to the statements of stockholders' equity, except those due to investments by stockholders', changes in paid-in capital and distributions to stockholders. 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. 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 short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. For the year ended December 31, 2004, one customer accounted for 40% of net revenues. Research and development Research and development costs are expensed as incurred. F-16 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition The Company follows the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin 104 for revenue recognition. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues 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. Advertising Advertising is expensed as incurred. Advertising expenses for the years ended December 31, 2004 and 2003 totaled approximately $54 and $13,340, respectively. Minority Interest Under generally accepted accounting principles when losses applicable to the minority interest in a subsidiary exceed the minority interest in the equity capital of the subsidiary, the excess is not charged to the majority interest since there is no obligation of the minority interest to make good on such losses. The Company, therefore, has included losses applicable to the minority interest against its interest since the minority owners have no obligation to make good on the losses. If future earnings do materialize, the Company shall be credited to the extent of such losses previously absorbed. Shipping and costs Shipping costs are included in selling and marketing expenses and totaled $76,908 and $79,617 for the years ended December 31, 2004 and 2003, respectively. F-17 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recent accounting pronouncements In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities." FIN 46 requires that if an entity has a controlling financial interest in a variable interest entity, the assets, liabilities and results of activities of the variable interest entity should be included in the consolidated financial statements of the entity. FIN 46 requires that its provisions are effective immediately for all arrangements entered into after January 31, 2003. The Company does not have any variable interest entities created after January 31, 2003. For those arrangements entered into prior to January 31, 2003, the FIN 46 provisions are required to be adopted at the beginning of the first interim or annual period beginning after June 15, 2003. The Company has not identified any variable interest entities to date and will continue to evaluate whether it has variable interest entities that will have a significant impact on its consolidated balance sheet and results of operations. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity." This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for the first interim period beginning after June 15, 2003, with certain exceptions. The adoption of SFAS No. 150 did not have a significant impact on our consolidated financial position or results of operations. NOTE 2 - INVENTORIES At December 31, 2004, inventories consisted of the following: Raw materials $ 172,102 Finished goods 769,209 -------------- $ 941,311 ============== F-18 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 3 - PROPERTY AND EQUIPMENT At December 31, 2004, property and equipment consisted of the following: Estimated Life Office Equipment 5-7 Years $ 58,357 Auto and Truck 10 Years 131,081 Manufacturing Equipment 7 Years 66,769 Building and Land 20 Years 105,889 Leasehold Improvements 5 Years 3,280 -------- 365,376 Less: Accumulated Depreciation (111,095) --------- $ 254,281 For the years ended December 31, 2004 and 2003, depreciation expense amounted to $34.483 and $29.546, respectively. NOTE 4 - LOANS PAYABLE Loans payable consisted of the following at December 31, 2004: Note to De Chang Credit Union due on March 12, 2006 with interest at 6.37% per annum. Secured by equipment $ 96,618 Note to De Chang Credit Union due on April 24, 2006 with interest 6.37% per annum. Secured by equipment 108,696 Note to De Chang Credit Union due on May 18, 2006 with interest at 6.37% per annum. Secured by equipment 217,391 Note to De Chang Credit Union due on September 16, 2005 with interest at 6.37% per annum. Secured by equipment 60,386 Note to De Chang Credit Union due on December 16, 2005 with interest at 6.96% per annum. Secured by equipment 241,547 -------------- 724,638 Total Less: current portion of loans payable (301,933) ------------- Loans payable, long-term $ 422,705 ============ F-19 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 4 - LOANS PAYABLE (continued) At December 31, 2004, annual future maturities of loans payable were as follows: 2005 $ 301,933 2006 422,705 --------------- $ 724,638 NOTE 5 - RELATED PARTY TRANSACTIONS The consolidated financial statements include balances and transactions with related parties. At December 31, 2004, the Company had an accounts receivable from a related party entity of $261,304 related to the sale of merchandise. At December 31, 2004, the Company had an accounts payable to a related party entity amounting to $258,242 related to the manufacture of certain products. The accounts payable bears no interest and ia payable on demand. NOTE 6 - INCOME TAXES The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" "SFAS 109". SFAS 109 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. SFAS 109 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The Company's subsidiaries in China are governed by the Income Tax Law of the People's Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws (the "PRC Income Tax Law"). Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carryforwards after a change in control (generally greater than a 50% change in ownership). The table below summarizes the differences between the Company's effective tax rate and the statutory federal rate as follows for years ended December 31, 2004: 2004 2003 --------------------- --------------------- Computed "expected" tax expense 34.0 % 34.0 % State income taxes 5.0 % 5.0 % Other permanent differences (39.0)% (39.0)% Foreign income taxes 16.0 % 11.0 % --------------------- --------------------- Effective tax rate 16.0 % 11.0 % ===================== ===================== F-20 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 7 - COMMITMENTS Operating Leases The Company leases office and manufacturing space under leases in Shanghai, China that expire through March 2007. Future minimum rental payments required under these operating leases are as follows: Period Ended December 31, 2005 $ 44,671 Period Ended December 31, 2006 $ 36,253 Period Ended December 31, 2007 $ 9,063 For the years ended December 31, 2004 and 2003, rent expense amounted to $46,535 and $9,300, respectively. NOTE 8 - LEGAL PROCEEDINGS The Company is not a party to any pending legal proceeding. No federal, state or local governmental agency is presently contemplating any proceeding against the Company. No director, executive officer or affiliate of the Company or owner of record or beneficially of more than five percent of the Company's common stock is a party adverse to the company or has a material interest adverse to the Company in any proceeding. NOTE 9 - OPERATING RISK (a) Country risk Currently, the Company's revenues are mainly derived from sale of herbs, beet sugar and veterinary products in the Peoples 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. (b) Products risk In addition to competing with other companies, the Company could have to compete with larger international companies who have greater funds available for expansion, marketing, research and development and the ability to attract more qualified personnel if access is allowed into the PRC market. If international companies do gain access to the PRC markets, they may be able to offer products at a lower price. There can be no assurance that the Company will remain competitive should this occur. F-21 LINKWELL TECH GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 NOTE 9 - OPERATING RISK (continued) (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 Chinese Remnibi 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, PRC is in a period of growth and is openly promoting business development in order to bring more business into PRC. Additionally PRC allows a Chinese corporation to be owned by a United States corporation. If the laws or regulations are changed by the PRC government, the Company's ability to operate the PRC subsidiaries could be affected. (e) Key personnel risk The Company's future success depends on the continued services of executive management in China. The loss of any of their services would be detrimental to the Company and could have an adverse effect on business development. The Company does not currently maintain key-man insurance on their lives. Future success is also dependent on the ability to identify, hire, train and retain other qualified managerial and other employees. Competition for these individuals is intense and increasing. (f) Performance of subsidiaries risk Currently, a majority of the Company's revenues are derived via the operations of the subsidiaries. Economic, governmental, political, industry and internal company factors outside of the Company's control affect each of the subsidiaries. If the subsidiaries do not succeed, the value of the assets and the price of our common stock could decline. Some of the material risks relating to the partner companies include the fact that three of the subsidiaries are located in China and have specific risks associated with that and the intensifying competition for the Company's products and services and those of the subsidiaries NOTE 10 - SUBSEQUENT EVENTS On May 2, 2005 the Company entered into and consummated a share exchange with Kirshner Entertainment & Technologies, Inc. ("Kirshner"). Pursuant to the share exchange, 100% of the Company's common stock was acquired in exchange for 36,273,470 shares of Kirshner's common stock, which at closing represented approximately 87.5% of the issued and outstanding shares of Kirshner's common stock. As a result of the transaction, the Company became a wholly-owned subsidiary of Kirshner. F-22 LINKWELL TECH GROUP, INC. AND SUBSIDIARY INDEX TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS CONTENTS Pro Forma Consolidated Financial Statements: Pro Forma Consolidated Balance Sheet..................................F-23 Pro Forma Consolidated Statements of Operations.......................F-24 Notes to Pro Forma Consolidated Financial Statements..............F-25 to F-26 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET March 31, 2005 (Unaudited)
Kirshner Entertainment & Technologies, Inc Linkwell Tech and Group, Inc. and Pro forma Adjustments Pro Forma Subsidiaries Subsidiary AJE Dr. AJE Cr. Balances --------------- --------------- ---------------------------------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,702 $ 304,602 $ - (1) $ 175,000 $ 135,304 Accounts receivable, net 6,517 1,156,906 - - 1,163,423 Accounts receivable -related party - 390,290 390,290 Inventories - 1,030,749 - - 1,030,749 Prepaid expenses and other - 29,351 - - 29,351 -- ------- -- -- ------ Total Current Assets 12,219 2,911,898 - 175,000 2,749,117 PROPERTY AND EQUIPMENT - Net - 245,558 - - 245,558 -- -------- -- -- ------- Total Assets $ 12,219 $ 3,157,456 $ - $ 175,000 $ 2,994,675 ========= ============ ==== ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Current portion of long-term debt $ - $ 398,551 $ - $ - $ 398,551 Note payable - related party 257,720 - (1) 257,720 - - Accounts payable 51,644 1,239,875 - - 1,291,519 Accrued expenses 50,000 - - - 50,000 Deferred revenues 22,302 22,302 Due to related party 221,659 221,659 Advances from customers - 286,824 - - 286,824 -- -------- -- -- ------- Total Current Liabilities 381,666 2,146,909 257,720 - 2,270,855 LONG-TERM DEBT, net of current portion - 326,087 - - 326,087 -- -------- -- -- ------- Total Liabilities 381,666 2,472,996 257,720 - 2,596,942 -------- ---------- -------- -- --------- MINORITY INTEREST - 152,923 - - 152,923 -- -------- -- -- ------- STOCKHOLDERS' EQUITY (DEFICIT): Common stock ($.001 Par Value; 200,000,000 Shares Authorized; 8,000,000 shares issued and outstanding) 1,813 8,000 (2) 8,000 (1)(2) 37,673 39,486 Additional paid-in capital 5,565,154 595,865 (2)(3) 5,963,200 (1)(2) 188,600 386,419 Accumulated deficit (5,923,914) (72,328)(1) 99,280 (2)(3) 5,926,927 (168,595) ----------- -------- ------- ---------- --------- (356,947) 531,537 6,070,480 6,153,200 257,310 Less: Treasury stock, 5,000 shares at cost (12,500) - - - (12,500) -------- -- -- -- -------- Total Stockholders' Equity (Deficit) (369,447) 531,537 6,070,480 6,153,200 244,810 --------- -------- ---------- ---------- ------- Total Liabilities and Stockholders' Equity (deficit) $12,219 $ 3,157,456 $ 6,328,200 $ 6,153,200 $ 2,994,675 ========= ============ ============ ============ ===========
See notes to pro forma consolidated financial statements F-23 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS For the Three Months ended March 31, 2005 (Unaudited)
Kirshner Entertainment & Technologies,Inc Linkwell Tech and Group, Inc. and Pro forma Adjustments Pro Forma Subsidiaries Subsidiary AJE Dr. AJE Cr. Balances -------------- -------------------------------------------------- ------------ NET REVENUES $ 22,302 $ 947,925 (3 )$ 22,302 $ - $ 947,925 COST OF SALES - 754,637 - - 754,637 -------------- --------------- ------------ ------------ ------------ GROSS PROFIT 22,302 193,288 22,302 - 193,288 -------------- --------------- ------------ ------------ ------------ OPERATING EXPENSES: Selling expenses - 44,734 - - 44,734 General and administrative 25,315 132,457 - (3) 25,315 132,457 -------------- --------------- ------------ ------------ ------------ Total Operating Expenses 25,315 177,191 - 25,315 177,191 -------------- --------------- ------------ ------------ ------------ INCOME (LOSS) FROM OPERATIONS (3,013) 16,097 22,302 25,315 16,097 OTHER INCOME (EXPENSE): Interest income - 182 - - 182 Interest expense - (11,299) (1) 99,280 - (110,579) -------------- --------------- ------------ ------------ ------------ Total Other Expense - (11,117) 99,280 - (110,397) -------------- --------------- ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (3,013) 4,980 121,582 25,315 (94,300) INCOME TAXES - (1,401) - - (1,401) -------------- --------------- ------------ ------------ ------------ INCOME (LOSS) BEFORE MINORITY INTEREST (3,013) 3,579 121,582 25,315 (95,701) MINORITY INTEREST - (358) (358) -------------- --------------- ------------ ------------ ------------ NET INCOME (LOSS) $ (3,013) $ 3,221 $ 121,582 $ 25,315 $ (96,059) ============== =============== ============ ============ ============
See notes to pro forma consolidated financial statements -F-24 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC AND SUBSIDIARIES PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2005 (UNAUDITED) The accompanying unaudited pro forma consolidated financial statements of Kirshner Entertainment & Technologies, Inc and Subsidiaries (the "Company") give effect to the recapitalization of the Company and the conversion of certain debt for common stock. These pro forma statements are presented for illustrative purposes only. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable. The Unaudited Pro Forma balance sheet as of March 31, 2005 and the Unaudited Pro Forma Statement of Operations for the three months ended March 31, 2005 does not purport to represent what the financial position or results of operations of the Company would actually have been if the transaction discussed above had in fact occurred on March 31, 2005, nor do they purport to project the results of operations or financial position of Kirshner Entertainment & Technologies, Inc and Subsidiaries for any future period or as of any date. F-25 KIRSHNER ENTERTAINMENT & TECHNOLOGIES, INC AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS The adjustments to the unaudited pro forma balance sheet as of March 31, 2005 reflects the settlement of a loan payable for 1,400,000 shares of common stock, and reflects the issuance of 24,625,000 shares of the Company's common stock for the acquisition of all of the outstanding capital stock of Linkwell Tech Group, Inc. and Subsidiary and that the transaction occurred as of March 31, 2005 and are as follows: (1) To reflect the settlement of notes payable - related party amounting to $257,720 for $175,000 and 1,400,000 shares of common stock. (2) To reflect the issuance of 36,273,470 shares of the Company's common stock for the acquisition of all of the outstanding capital stock of Linkwell Tech Group, Inc. and Subsidiary ("Linkwell"), a Florida corporation. For financial accounting purposes, the exchange of stock will be treated as a recapitalization of Kirshner with the former shareholders of the Company retaining 3,625,655 or approximately 12.5% of the outstanding stock. Unaudited pro Forma adjustments reflect the following transaction: Dr. Cr. 1) Loans payable 257,720 Interest Expense 99,280 Cash 175,000 Common stock 1,400 Paid-in capital 180,600 To reflect the payment of cash and issuance 1,400,000 of shares of common stock for debt 2) Paid-in capital 5,960,187 Retained earnings 5,923,914 Common stock 36,273 Common stock 8,000 Paid-in capital 8,000 To reflect the issuance of 36,273,470 shares of common stock in connection with reverse merger and the recapitalization of the Company. 3) Revenues 22,302 Paid-in Capital 3,013 General and Administrative Expense 25,315 To reflect reversal of subsidiary profit and loss prior to recapitalization F-26 EX-10 2 ex109.txt Exhibit 10.9 STOCK PURCHASE AGREEMENT by and among Linkwell Tech Group, Inc. as Acquiror Shanghai Likang Disinfectant High-Tech Company, Limited as Acquiree and Shanghai Likang Pharmaceuticals High-Tech Company, Limited the Shareholders of Shanghai Likang Disinfectant High-Tech Company, Limited June 30, 2004 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into this 30th day of June 2004 by and among Linkwell Tech Group, Inc., an Florida corporation (hereinafter referred to as "Linkwell"), Shanghai Likang Disinfectant High-Tech Company, Limited, a Chinese Limited Liability Company (hereinafter referred to as the "Company" or "Likang"), and Shanghai Likang Pharmaceuticals High-Tech Company, Limited, the shareholder of the Company (hereinafter referred to as the "Shareholder"). RECITALS: A. The Shareholder owns 90% of the issued and outstanding shares of the capital stock of the Company. B. Linkwell is willing to acquire 90% of the issued and outstanding capital stock of the Company, making the Company a subsidiary of Linkwell, and the Shareholders desire to exchange 90% of his shares of the Company's capital stock for shares of Linkwell authorized but unissued shares of Common Stock as hereinafter provided. C. The Company is doing business in China and related territories with an address of 476 Hutai Branch Road Baoshan District, Shanghai, China, 200436 Tel: 8621-56689332 Fax: 8621-65501425 Website: http://www.lkgk.com/ D. It is the intention of the parties hereto that: (i) Linkwell shall acquire 90% of the issued and outstanding capital stock of the Company in exchange solely for 8,000,000 shares of Linkwell authorized but unissued Common Stock set forth below (the "Exchange"); and (ii) the Exchange shall qualify as a transaction in securities exempt from registration or qualification under the Securities Act of 1933, as amended, (the "Act") and under the applicable securities laws of the state or jurisdiction where the Shareholders reside. NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties contained in this Agreement, the parties hereto agree as follows: SECTION 1. EXCHANGE OF SHARES 1.1 Exchange of Shares. Linkwell and the Shareholders hereby agree that the Shareholders shall, on the Closing Date on June 30, 2004, exchange 90% of his issued and outstanding shares of the capital stock of the Company (the "Likang Shares") for 8,000,000 newly issued shares of Linkwell Common Stock, $.001 par value (the "Linkwell Shares"). 1.2 Delivery of Likang Shares. On the Closing Date, the Shareholder will deliver to Linkwell the certificates representing 90% of the Likang Shares, duly endorsed (or with executed stock powers) so as to make Linkwell the 90% owner thereof. Linkwell shall deliver to the Shareholders 8,000,000 Linkwell Shares to be delivered to the Shareholders or as the shareholders direct so as to make the Shareholders or their nominee the sole owner thereof. 1.3 Investment Intent. 8,000,000 newly issued shares of Linkwell common stock have not been registered under the Securities Act of 1933, as Amended, and may not be resold unless the MAXZ Shares are registered under the Act or an exemption from such registration is available. The Shareholder represents and warrants that he is acquiring the Linkwell Shares for his own account, for investment, and not with a view to the sale or distribution of such Shares. Each certificate representing the Linkwell Shares will have a legend thereon incorporating language as follows: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"). The shares have been acquired for investment and may not be sold or transferred in the absence of an effective Registration Statement for the shares under the Act unless in the opinion of counsel satisfactory to the Company, registration is not required under the Act." 1.4. Conditions Precedent. Completion of the Exchange shall be conditional upon (a) the Shareholder completing a review of the financial, trading and legal position of Linkwell in respect of Linkwell; (b) Linkwell has obtained all the necessary consent, authorization and approval from the relevant regulatory authorities, its board of directors and/or its shareholders; (c) receipt by the Shareholder of a legal opinion that the Exchange qualifies as a tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDER The Company and the Shareholders hereby represent and warrant as follows: 2.1 Organization and Good Standing; Ownership of Shares. The Company and its subsidiary are corporations duly organized, validly existing and in good standing under the laws of China, and is entitled to own or lease its properties and to carry on its business as and in the places where such properties are now owned, leased or operated and such business is now conducted. The Company is duly licensed or qualified and in good standing as a Chinese company where the character of the properties owned by it or the nature of the business transacted by it make such licenses or qualifications necessary. There are no outstanding subscriptions, rights, options, warrants or other agreements obligating either the Company or the Shareholder to issue, sell or transfer any stock or other securities of the Company. 2.2 Ownership of Capital Stock. The Shareholders are the beneficial owner of record and beneficially of all of the shares of capital stock of the Company, all of which shares are free and clear of all rights, claims, liens and encumbrances, and have not been sold, pledged, assigned or otherwise transferred except pursuant to this Agreement. 2.3 Financial Statements, Books and Records. There has been previously delivered to Linkwell the unaudited balance sheet of the Company as of May 31, 2004 (the "Balance Sheet"). The Balance Sheet is true and accurate and fairly represents the financial position of the Company as at such date, and has been prepared in accordance with generally accepted accounting principles consistently applied. 2.4 No Material Adverse Changes. Since the date of the Balance Sheet there has not been: (i) any material adverse change in the assets, operations, condition (financial or otherwise) or prospective business of the Company; (ii) any damage, destruction or loss materially affecting the assets, prospective business, operations or condition (financial or otherwise) of the Company, whether or not covered by insurance; (iii) any declaration, setting aside or payment of any dividend or distribution with respect to any redemption or repurchase of the Company's capital stock; (iv) any sale of an asset (other than in the ordinary course of business) or any mortgage or pledge by the Company of any properties or assets; or (v) adoption of any pension, profit sharing, retirement, stock bonus, stock option or similar plan or arrangement. 2.5 Taxes. The Company has prepared and filed all appropriate tax returns for all periods prior to and through the date hereof for which any such returns have been required to be filed by it and has paid all taxes shown to be due by said returns or on any assessments received by it or has made adequate provision for the payment thereof. 2.6 Compliance with Laws. The Company has complied with all federal, state, county and local laws, ordinances, regulations, inspections, orders, judgments, injunctions, awards or decrees applicable to it or its business which, if not complied with, would materially and adversely affect the business of the Company. 2.7 No Breach. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not: (i) violate any provision of the Articles of Incorporation or By-Laws of the Company; (ii) violate, conflict with or result in the breach of any of the terms of, result in a material modification of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract or other agreement to which the Company is a party or by or to which it or any of its assets or properties may be bound or subject; (iii) violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, the Company, or upon the properties or business of the Company; or (iv) violate any statute, law or regulation of any jurisdiction applicable to the transactions contemplated herein which could have a materially adverse effect on the business or operations of the Company. 2.8 Actions and Proceedings. There is no outstanding order, judgment, injunction, award or decree of any court, governmental or regulatory body or arbitration tribunal against or involving the Company. 2.9 Brokers or Finders. No broker's or finder's fee will be payable by the Company in connection with the transactions contemplated by this Agreement, nor will any such fee be incurred as a result of any actions by the Company or the Shareholders. 2.10 Real Estate. The Company neither owns real property nor is a party to any leasehold agreement. 2.11 Tangible Assets. The Company has full title and interest in all machinery, equipment, furniture, leasehold improvements, fixtures, vehicles, structures, owned or leased by the Company, any related capitalized items or other tangible property material to the business of the Company (the "Tangible Assets"). The Company holds all rights, title and interest in all the Tangible Assets owned by it on the Balance Sheet or acquired by it after the date of the Balance Sheet, free and clear of all liens, pledges, mortgages, security interests, conditional sales contracts or any other encumbrances. All of the Tangible Assets are in good operating condition and repair taking into account the age of the tangible assets and subject to fair wear and tear, and are usable in the ordinary course of business of the Company and conform to all applicable laws, ordinances and governmental orders, rules and regulations relating to their construction and operation. 2.12 Liabilities. The Company does not have any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured, accrued or absolute, contingent or otherwise, including, without limitation, any liability on account of taxes, any other governmental charge or lawsuit (all of the foregoing collectively defined to as "Liabilities"), which were not fully, fairly and adequately reflected on the Balance Sheet. As of the Closing Date, the Company will not have any Liabilities, other than Liabilities fully and adequately reflected on the Balance Sheet, except for Liabilities incurred in the ordinary course of business. 2.13 Operations of the Company. From the date of the Balance Sheet on May 31, 2004 and through the Closing Date on June 30, 2004 hereof the Company has not and will not have: (i) incurred any indebtedness for borrowed money; (ii) declared or paid any dividend or declared or made any distribution of any kind to any shareholder, or made any direct or indirect redemption, retirement, purchase or other acquisition of any shares in its capital stock; (iii) made any loan or advance to any shareholder, officer, director, employee, consultant, agent or other representative or made any other loan or advance otherwise than in the ordinary course of business; (iv) except in the ordinary course of business, incurred or assumed any indebtedness or liability (whether or not currently due and payable); (v) disposed of any assets of the Company except in the ordinary course of business; or (vi) materially increased the annual rate of compensation of any executive employee of the Company; (vii) increased, terminated, amended or otherwise modified any plan for the benefit of employees of the Company; (viii) issued any equity securities or rights to acquire such equity securities; or (ix) except in the ordinary course of business, entered into or modified any contract, agreement or transaction. 2.14 Capitalization. Likang has a registered capital of 10,000,000 RMB. There are three shareholders as recorded. Mr. XueLian Bian owns 56.25%, Mr. Wei Guan owns 33.75%, and Shanghai Shanhai Group owns 10%. 2.15 Full Disclosure. No representation or warranty by the Company or the Shareholder in this Agreement or in any document or schedule to be delivered by them pursuant hereto, and no written statement, certificate or instrument furnished or to be furnished to Linkwell pursuant hereto or in connection with the negotiation, execution or performance of this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any fact necessary to make any statement herein or therein not materially misleading or necessary to a complete and correct presentation of all material aspects of the businesses of the Company. 2.16 Representations and Warranties on Closing Date. The representations and warranties contained in this Section 2 shall be true and complete on the Closing Date on June 30, 2004 with the same force and effect as though such representations and warranties had been made on and as of the Closing Date. SECTION 3. REPRESENTATIONS AND WARRANTIES OF LINKWELL Linkwell hereby represents and warrants to the Company and the Shareholders as follows: 3.1 Organization and Good Standing. Linkwell is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and is entitled to own or lease its properties and to carry on its business as and in the places where such properties are now owned, leased, or operated and such business is now conducted. The authorized capital stock of Linkwell consists of 200,000,000 shares of Common Stock, of which zero shares are presently issued and outstanding and 2,000,000 shares of preferred stock, of which none is issued and outstanding. Linkwell is duly licensed or qualified and in good standing as a foreign corporation where the character of the properties owned by Linkwell or the nature of the business transacted by it make such license or qualification necessary. Linkwell does not have any subsidiaries. 3.2 The Linkwell Shares. The Linkwell Shares to be issued to the Shareholders have been or will have been duly authorized by all necessary corporate and stockholder actions and, when so issued in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable. 3.3 Financial Statements; Books and Records. There has been previously delivered to the Company, the unaudited balance sheet of Linkwell as May 31, 2004 and the unaudited balance sheet as at May 31, 2004 (the " Balance Sheets") and the related statements of operations for the periods then ended (the "Financial Statements"). The Financial Statements are true and accurate and fairly represent the financial position of the Company as at such dates and the results of its operations for the periods then ended, and have been prepared in accordance with generally accepted accounting principles consistently applied. 3.4 No Material Adverse Changes. Since the date of the Linkwell Balance Sheet on May 31, 2004, there has not been: (i) any material adverse change in the assets, operations, condition (financial or otherwise) or prospective business of Linkwell; (ii) any damage, destruction or loss materially affecting the assets, prospective business, operations or condition (financial or otherwise) of Linkwell, whether or not covered by insurance; (iii) any declaration, setting aside or payment of any dividend or distribution with respect to any redemption or repurchase of Linkwell's capital stock; (iv) any sale of an asset (other than in the ordinary course of business) or any mortgage or pledge by Linkwell of any properties or assets; or (v) adoption of any pension, profit sharing, retirement, stock bonus, stock option or similar plan or arrangement. 3.5 Taxes. Linkwell has prepared and filed all appropriate federal, state and local tax returns of every kind and category (including, without limitation, income taxes, estimated taxes, excise taxes, sales taxes, inventory taxes, use taxes, gross receipt taxes, franchise taxes and property taxes) for all periods prior to and through the date hereof for which any such returns have been required to be filed by it or the failure to make such filings and resulting liability would not be material relative to the results of operations of Linkwell. Linkwell has paid all taxes shown to be due by the said returns or on any assessments received by it or has made adequate provision for the payment thereof. 3.6 Compliance with Laws. Linkwell has complied with all federal, state, county and local laws, ordinances, regulations, inspections, orders, judgments, injunctions, awards or decrees applicable to their businesses, including Federal and State securities laws, which, if not complied with, would materially and adversely affect the business of Linkwell or the trading market for the shares of Linkwell Common Stock. 3.7 No Breach. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not: (i) violate any provision of the Articles of Incorporation or By-Laws of Linkwell; (ii) violate, conflict with or result in the breach of any of the terms of, result in a material modification of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract or other agreement to which Linkwell is a party or by or to which it or any of its assets or properties may be bound or subject; (iii) violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, Linkwell or upon the properties or business of Linkwell; or (iv) violate any statute, law or regulation of any jurisdiction applicable to the transactions contemplated herein which could have a material adverse effect on the business or operations of Linkwell. 3.8 Actions and Proceedings. There is no outstanding order, judgment, injunction, award or decree of any court, governmental or regulatory body or arbitration tribunal against or involving Linkwell. 3.9 Brokers or Finders. No broker's or finder's fee will be payable by Linkwell in connection with the transactions contemplated by this Agreement, nor will any such fee be incurred as a result of any actions by Linkwell. 3.10 Assets The Company has full title and interest in all machinery, equipment, furniture, leasehold improvements, fixtures, vehicles, structures, owned or leased by the Company, any related capitalized items or other tangible property material to the business of the Company (the "Tangible Assets"). The Company holds all rights, title and interest in all the Tangible Assets owned by it on the Balance Sheet or acquired by it after the date of the Balance Sheet, free and clear of all liens, pledges, mortgages, security interests, conditional sales contracts or any other encumbrances. All of the Tangible Assets are in good operating condition and repair taking into account the age of the tangible assets and subject to fair wear and tear, and are usable in the ordinary course of business of the Company and conform to all applicable laws, ordinances and governmental orders, rules and regulations relating to their construction and operation. 3.11 Liabilities. Linkwell does not have any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured, accrued or absolute, contingent or otherwise, including, without limitation, any liability on account of taxes, any other governmental charge or lawsuit (all of the foregoing collectively defined to as "Liabilities"), which were not fully, fairly and adequately reflected on the Balance Sheet. As of the Closing Date, Linkwell will not have any Liabilities, other than Liabilities fully and adequately reflected on the Linkwell Balance Sheet or Linkwell balance sheet dated May 31, 2004, except for Liabilities incurred in the ordinary course of business. 3.12 Operations of Linkwell. Except as set forth on Schedule 3.11 (i) incurred any indebtedness for borrowed money; (ii) declared or paid any dividend or declared or made any distribution of any kind to any shareholder, or made any direct or indirect redemption, retirement, purchase or other acquisition of any shares in its capital stock; (iii) made any loan or advance to any shareholder, officer, director, employee, consultant, agent or other representative or made any other loan or advance otherwise than in the ordinary course of business; (iv) except in the ordinary course of business, incurred or assumed any indebtedness or liability (whether or not currently due and payable); (v) disposed of any assets of Linkwell except in the ordinary course of business; or (vi) materially increased the annual level of compensation of any executive employee of Linkwell; (vii) increased, terminated amended or otherwise modified any plan for the benefit of employees of Linkwell; (viii) issued any equity securities or rights to acquire such equity securities; or (ix) except in the ordinary course of business, entered into or modified any contract, agreement or transaction. 3.13 Authority to Execute and Perform Agreements. Linkwell has the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement and to perform fully their obligations hereunder. This Agreement has been duly executed and delivered and is the valid and binding obligation of Linkwell, enforceable in accordance with its terms, except as may be limited by bankruptcy, moratorium, insolvency or other similar laws generally affecting the enforcement of creditors' rights. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and the performance by Linkwell of this Agreement, in accordance with its respective terms and conditions will not: (i) require the approval or consent of any governmental or regulatory body, the Stockholders of Linkwell, or the approval or consent of any other person; (ii) conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with any notice or lapse of time or both would constitute) a default under, any order, judgment or decree applicable to Linkwell, or any instrument, contract or other agreement to which Linkwell is a party or by or to which Linkwell is bound or subject; or (iii) result in the creation of any lien or other encumbrance on the assets or properties of Linkwell. 3.14 Delivery of Periodic Reports; Compliance with 1934 Act. Linkwell has provided the Company and the Shareholder with financial statements. All reports filed pursuant to such Act are complete and correct in all material respects. All material contracts relative to MAXZ are included in the Periodic Reports. All material contracts and commitments for the provision or receipt of services or involving any obligation on the part of Linkwell are included as exhibits to such periodic reports or are listed on Schedule 3.13 hereto. 3.15 Capitalization. The authorized capital stock of Linkwell consists of 200,000,000 shares of common stock, $.001 par value, of which zero shares are presently issued and outstanding and 2,000,000 shares of preferred stock, of which none is issued and outstanding. Except as indicated in Schedule 3.14 hereto, Linkwell has not granted, issued or agreed to grant, issue or make available any warrants, options, subscription rights or any other commitments of any character relating to the issued or unissued shares of capital stock of Linkwell. 3.16 Full Disclosure. No representation or warranty by Linkwell in this Agreement or in any document or schedule to be delivered by it pursuant hereto, and no written statement, certificate or instrument furnished or to be furnished to the Company or the Shareholders pursuant hereto or in connection with the execution or performance of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state any fact necessary to make any statement herein or therein not materially misleading or necessary to a complete and correct presentation of all material aspects of the business of Linkwell. 3.17 Representations and Warranties on Closing Date. The representations and warranties contained in this Section 3 shall be true and complete on the Closing Date with the same force and effect as through such representations and warranties had been made on and as of the Closing Date on June 30, 2004. SECTION 4. COVENANTS OF COMPANY AND SHAREHOLDER The Company and the Shareholders covenant to Linkwell as follows: 4.1 Conduct of Business. From the date hereof through the Closing Date, the Shareholders and The Company shall conduct its business in the ordinary course. 4.2 Preservation of Business. From the date May 31, 2004 through the Closing Date, the Shareholder and the Company shall use its best efforts to preserve its business organization intact, keep available the services of its present employees, consultants and agents, maintain its present suppliers and customers and preserve its goodwill. 4.3 Litigation. The Company shall promptly notify Linkwell of any lawsuits, claims, proceedings or investigations which after the date hereof are threatened or commenced against the Company or against any officer, director, employee, consultant, agent, shareholder or other representative with respect to the affairs of the Company. 4.4 Continued Effectiveness of Representations and Warranties. From the date hereof through the Closing Date, the Shareholder and the Company shall conduct its business in such a manner so that the representations and warranties contained in Section 2 shall continue to be true and correct on and as of the Closing Date and as if made on and as of the Closing Date, and shall: (i) promptly give notice to Linkwell of any event, condition or circumstance occurring from the date hereof through the Closing Date which would render any of the representations or warranties materially untrue, incomplete, insufficient or constitute a violation or breach of this Agreement; and (ii) supplement the information contained herein in order that the information contained herein is kept current, complete and accurate in all material respects. SECTION 5. COVENANTS OF LINKWELL MAXZ covenants to the Company and the Shareholder as follows: 5.1 Conduct of Business. From the date hereof through the Closing Date, Linkwell shall conduct its business in the ordinary course and, without the prior written consent of the Company, shall ensure that Linkwell does not undertake any of the actions specified in Section 3.12 hereof. 5.2 Preservation of Business. From the date hereof through the Closing Date, Linkwell shall preserve its business organization intact and use its best efforts to preserve Linkwell goodwill. 5.3 Litigation. Linkwell shall promptly notify the Company of any lawsuits, claims, proceedings or investigations that after the date hereof are threatened or commenced against Linkwell or against any officer, director, employee, consultant, agent, or stockholder with respect to the affairs of Linkwell. 5.4 Continued Effectiveness of Representations and Warranties. From the date hereof through the Closing Date, Linkwell shall conduct its business in such a manner so that the representations and warranties contained in Section 3 shall continue to be true and correct on and as of the Closing Date and as if made on and as of the Closing Date, and shall: (i) promptly give notice to the Company of any event, condition or circumstance occurring from the date hereof through the Closing Date which would render any of the representations or warranties materially untrue, incomplete, insufficient or constitute a violation or breach of this Agreement; and (ii) supplement the information contained herein in order that the information contained herein is kept current, complete and accurate in all material respects. 5.5 No Other Negotiations. From the date hereof until the earlier of the termination of this Agreement or consummation of this Agreement, Linkwell will not permit and will not authorize any officer or director of Linkwell or any other person on its behalf to, directly or indirectly, solicit, encourage, negotiate or accept any offer from any party concerning the possible disposition of all or any substantial portion of the capital stock by merger, sale or any other means or any other transaction that would involve a change in control of Linkwell, or any transaction in which Linkwell contemplates issuing equity or debt securities. SECTION 6. COVENANTS 6.1 Corporate Examinations and Investigations. Prior to the Closing Date, the parties acknowledge that they have been entitled, through their employees and representatives, to make such investigation of the assets, properties, business and operations, books, records and financial condition of the other as they each may reasonably require. No investigation by a party hereto shall, however, diminish or waive in any way any of the representations, warranties, covenants or agreements of the other party under this Agreement. 6.2 Expenses. Each party hereto agrees to pay its own costs and expenses incurred in negotiating this Agreement and consummating the transactions described herein. 6.3 Further Assurances. The parties shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby. Each such party shall use its best efforts to fulfill or obtain the fulfillment of the conditions to the Closing on Jun 30, 2004, including, without limitation, the execution and delivery of any documents or other papers, the execution and delivery of which are necessary or appropriate to the Closing. 6.4 Confidentiality. In the event the transactions contemplated by this Agreement are not consummated, each of the parties hereto agree to keep confidential any information disclosed to each other in connection therewith for a period of one (1) year from the date hereof; provided, however, such obligation shall not apply to information which: (i) at the time of disclosure was public knowledge; (ii) after the time of disclosure becomes public knowledge (except due to the action of the receiving party); (iii) the receiving party had within its possession at the time of disclosure. (iv) the disclosure of which is required by law, the SEC or other competent authority; (v) which at the time of disclosure by one party written consents have been obtained from the other parties. SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATION OF LINKWELL TO CLOSE The obligation of Linkwell to enter into and complete the Agreement is subject, at the option of Linkwell, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by Linkwell in writing. 7.1 Representations and Covenants. The representations and warranties of the Company and the Shareholders contained in this Agreement shall be true in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. The Company and the Shareholders shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by the Company and the Shareholders on or prior to the Closing Date. The Company and the Shareholders shall have delivered to Linkwell, if requested, a certificate, dated the Closing Date, to the foregoing effect. 7.2 Governmental Permits and Approvals; Corporate Resolutions. Any and all permits and approvals from any governmental or regulatory body required for the lawful consummation of the Closing shall have been obtained. The Board of Directors of the Company shall have approved the transactions contemplated by this Agreement and the Company shall have delivered to Linkwell, if requested by Linkwell, resolutions by its Board of Directors, certified by the Secretary of the Company, authorizing the transactions contemplated by this Agreement. 7.3 Satisfactory Business Review. Linkwell shall have satisfied itself, after Linkwell and its representatives have completed the review of the business of the Company contemplated by this Agreement, that none of the information revealed thereby or in the Balance Sheet has resulted in, or in the reasonable opinion of Linkwell may result in, a material adverse change in the assets, properties, business, operations or condition (financial or otherwise) of the Company. 7.4 Certificate of Good Standing. Linkwell shall receive a certificate of good standing dated 10 business days after the Closing Date to the effect that the Company is in good standing under the laws of its jurisdictions of incorporation. 7.5 Stock Certificates: At the Closing, the Shareholder will deliver the certificates representing the Likang Shares, duly endorsed (or with executed stock powers) so as to make Linkwell the 90% owner thereof within 10 business days. 7.8 Other Documents. The Company and the Shareholder shall have delivered such other documents, instruments and certificates, if any, as are required to be delivered pursuant to the provisions of this Agreement or which may be reasonably requested in furtherance of the provisions of this Agreement. SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY AND SHAREHOLDERS TO CLOSE The obligation of the Company and the Shareholders to enter into and complete the agreement is subject, at the option of the Company and the Shareholders, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived in writing by the Company. 8.1 Representations and Covenants. The representations and warranties of Linkwell contained in this Agreement shall be true in all material respects on the Closing Date with the same force and effect as though made on and as of the Closing Date. Linkwell shall have performed and complied with all covenants and agreements required by the Agreement to be performed or complied with by Linkwell on or prior to the Closing Date. Linkwell will deliver to the Company and the Shareholders, if requested, a certificate, dated the Closing Date and signed by an executive officer of Linkwell, to the foregoing effect within 10 business days after the closing. 8.2 Governmental Permits and Approvals; Corporate Resolutions. Any and all permits and approvals from any governmental or regulatory body required for the lawful consummation of the Agreement shall have been obtained. The Board of Directors of Linkwell shall have approved the transactions contemplated by this Agreement, and Linkwell will deliver to the Company and the Shareholder, if requested, resolutions by their Board of Directors certified by the Secretary of Linkwell authorizing the transactions contemplated by this Agreement within 10 business days after the closing. 8.3 Legal Opinion. Draong is to provide to the Company and the Shareholders a legal opinion that the Exchange qualifies as a tax-free reorganization under Section 368(1)(1)(B) of the Internal Revenue Code of 1986, as amended. 8.4 Third Party Consents. All consents, permits and approvals from parties to any contracts, loan agreements or other agreements with Linkwell which may be required in connection with the performance by Linkwell of their obligations under such contracts or other agreements after the Closing shall have been obtained. 8.5 Satisfactory Business Review. The Company and the Shareholders shall have satisfied themselves, after the Company, the Shareholders and their representatives and advisers have completed the review of business of Linkwell and the information provided hereby or in connection herewith, or following any discussions with management or representatives of Linkwell that none of the information revealed thereby has resulted in or in the reasonable opinion of the Company may result in a material adverse change in the assets, properties, business, operations or condition (financial or otherwise) of Linkwell. 8.6 Litigation. No action, suit or proceeding shall have been instituted before any court or governmental or regulatory body or instituted or threatened by any governmental or regulatory body to restrain, modify or prevent the carrying out of the transactions contemplated hereby or to seek damages or a discovery order in connection with such transactions, or which has or may in the reasonable opinion of the Company and the Shareholder, have a materially adverse effect on the assets, properties, business, operations or condition (financial or otherwise) of Linkwell. 8.7 Certificate of Good Standing. The Company and the Shareholders shall receive a certificate of good standing within 10 business days after the Closing Date to the effect that the Company is in good standing under the laws of its jurisdictions of incorporation. 8.8 Stock Certificates. At the Closing, the Shareholder shall receive certificates representing the Linkwell Shares to be received pursuant hereto and subject to the conditions previously described within 10 business days. 8.9 Other Documents. Linkwell shall have delivered such other instruments, documents and certificates, if any, as are required to be delivered pursuant to the provisions of this Agreement or which may be reasonably requested in furtherance of the provisions of this Agreement. SECTION 9. INDEMNIFICATION 9.1 Obligation of Linkwell to Indemnify. Subject to the limitations on the survival of representations and warranties contained in Section 9, Linkwell hereby agrees to indemnify, defend and hold harmless the Company and the Shareholder from and against any losses, liabilities, damages, deficiencies, costs or expenses (including interest, penalties and reasonable attorneys' fees and disbursements) (a "Loss") based upon, arising out of or otherwise due to any inaccuracy in or any breach of any representation, warranty, covenant or agreement of Linkwell contained in this Agreement or in any document or other writing delivered pursuant to this Agreement. 9.2 Obligation of the Company and the Shareholder to Indemnify. Subject to the limitations on the survival of representations and warranties contained in Section 10, the Company and the Shareholder agree to indemnify, defend and hold harmless Linkwell from and against any Loss, based upon, arising out of or otherwise due to any inaccuracy in or any breach of any representation, warranty, covenant or agreement made by any of them and contained in this Agreement or in any document or other writing delivered pursuant to this Agreement. SECTION 10. THE CLOSING The Closing shall take place not later than June 30, 2004. At the Closing, the parties shall provide each other with such documents as may be necessary or appropriate in order to consummate the transactions contemplated hereby including evidence of due authorization of the Agreement and the transactions contemplated hereby. SECTION 11. MISCELLANEOUS 11.1 Waivers. The waiver of a breach of this Agreement or the failure of any party hereto to exercise any right under this Agreement shall in no event constitute waiver as to any future breach whether similar or dissimilar in nature or as to the exercise of any further right under this Agreement. 11.2 Amendment. This Agreement may be amended or modified only by an instrument of equal formality signed by the parties or the duly authorized representatives of the respective parties. 11.3 Assignment. This Agreement is not assignable except by operation of law. 11.4 Notices. Until otherwise specified in writing, the mailing addresses of both parties of this Agreement shall be a follows: Linkwell Linkwell Tech Group, Inc. 9858 Glades Road, #213 Boca Raton, FL 33428 Likang: Shanghai Likang Disinfectant High-Tech Company, Limited 476 Hutai Branch Road Baoshan District, Shanghai, China, 200436 Shareholder: Shanghai Likang Pharmaceuticals High-Tech Company, Limited C/O Xuelian Bian 476 Hutai Branch Road Baoshan District, Shanghai, China, 200436 Any notice or statement given under this Agreement shall be deemed to have been given if sent by registered mail addressed to the other party at the address indicated above or at such other address that shall have been furnished in writing to the addressor. 11.5 Governing Law. This Agreement shall be construed, and the legal relations be the parties determined, in accordance with the laws of the State of Florida, thereby precluding any choice of law rules which may direct the applicable of the laws of any other jurisdiction. 11.6 Publicity. No publicity release or announcement concerning this Agreement or the transactions contemplated hereby shall be issued by either party hereto at any time from the signing hereof without advance approval in writing of the form and substance thereof by the other party except as required to stay in compliance with the Linkwell reporting obligations under the Securities Exchange Act of 1934. 11.7 Entire Agreement. This Agreement and the collateral agreements executed in connection with the consummation of the transactions contemplated herein contain the entire agreement among the parties with respect to the purchase and issuance of the Linkwell Shares and the Linkwell Shares and related transactions, and supersede all prior agreements, written or oral, with respect thereto. 11.8 Headings. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 11.9 Severability of Provisions. The invalidity or unenforceability of any term, phrase, clause, paragraph, restriction, covenant, agreement or other provision of this Agreement shall in no way affect the validity or enforcement of any other provision or any part thereof. 11.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed, shall constitute an original copy hereof, but all of which together shall consider but one and the same document. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. Linkwell Tech Group, Inc. By: -- Name: Its: Shanghai Likang Disinfectant High-Tech Company, Limited By: --------------------- Name: Its: President Shanghai Likang Pharmaceuticals High-Tech Company, Limited ------------------- Name: Its: President 6217-0100 324437.1 EX-10 3 ex1010.txt EXHIBIT 10.10 Shanghai Likang High Tech Co., Ltd. Contract Ref No:# Date:Mon/Day/Year Address: - ------------------------------------------------------------------------------- I. Product Name and Price: - ------------------------------------------------------------------------------- Name & Specification Unit Unit Price Quantity Amount Note - -------------------------- ------- ---------- ---------- ------- ------- - -------------------------- ------- ---------- ---------- ------- ------- - -------------------------- ------- ---------- ---------- ------- ------- - -------------------------- ------- ---------- ---------- ------- ------- - -------------------------- ------- ---------- ---------- ------- ------- - -------------------------- ------- ---------- ---------- ------- ------- - -------------------------- ------- ---------- ---------- ------- ------- - -------------------------- ------- ---------- ---------- ------- ------- Total Amount(in Caps) USD $: - ------- ----------------------------------------------------------------------- II. Shipping Method and Payment terms: ----------------------------------------------------------------------- - ------------------------------------------------------------------------------- III. Payment ----------------------------------------------------------------------- - ------------------------------------------------------------------------------- IV. Liabilities and Obligations ----------------------------------------------------------------------- - ------------------------------------------------------------------------------- V. Both parties have agreed:Shanghai Local Law applies to this contract in case of dispute. - -------------------------------------------------------------------------------
Supplier Buyer - --------------- ----------------------------------------- ------------ ------------------------------------- address No 476 Hu Tai Sub Zip 200436 address Zip Rd, Shanghai code code - --------------- ---------------------- ------- ---------- ------------ ----------------- ------- ----------- Tel 021-56681126 56687547 Tel - --------------- ----------------------------------------- ------------ ------------------------------------- Tax ID Tax ID - --------------- ----------------------------------------- ------------ ------------------------------------- Account Name Account Name - --------------- ----------------------------------------- ------------ ------------------------------------- Account # Account # - --------------- ----------------------------------------- ------------ ------------------------------------- Representative Representative - --------------- ----------------------------------------- ------------ -------------------------------------
EX-10 4 ex1011.txt EXHIBIT 10.11 Date:MM/DD/YYYY Contract No: Contract Buyer: Supplier: Product Name: Specification: Unit Price: Quantity: Inspection Standard: Payment Method: Date of Delivery: Packing: Condition of Delivery: Place of Delivery: Total Amount(pound)(0) Liability in case of violation (pound)(0) Notes(pound)(0) Shanghai Likang High Tech Co., Ltd Supplier Buyer Date Date Notes: The content of Value-added Invoice is as follows(pound)(0) Name of Buyer: Shanghai Likang High Tech Co., Ltd. Address: No 476 Hu Tai Sub Rd, Shanghai, 200436 Tel: (021)56681126 Tax ID #:____________________ Fax: (021)66501425 Bank Account No:__________________________ Bank Name: Credit Agency of Baoshan Dachang EX-21 5 ex21.txt EXHIBIT 21 SUBSIDIARIES - -------------------------- -------------------------------- -------------------------------------------- Name of Subsidiary Jurisdiction of Organization Ownership Interest - -------------------------- -------------------------------- -------------------------------------------- Linkwell Tech Group, Inc. Florida 100% owned by Kirshner Entertainment & Technologies, Inc. - -------------------------- -------------------------------- -------------------------------------------- Shanghai Likang Disinfectant Peoples Republic of China 90% owned by Linkwell Tech Group, High-Tech Company, Limited Inc. - -------------------------- -------------------------------- ---------------------------------------------
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