UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

(Mark One)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                   For the fiscal year ended December 31, 2006


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

                         Commission file number: 0-24977



                              Linkwell Corporation
                         ------------------------------
                 (Name of small business issuer in its charter)



            Florida                                      65-1053546
 ---------------------------------            -----------------------------
 (State or other jurisdiction              (I.R.S. Employer Identification No.)
 of incorporation or organization)



   No. 476 Hutai Branch Road, Baoshan District, Shanghai China       200436
   -----------------------------------------------------------       ------
           (Address of principal executive offices)                (Zip Code)


Issuer's telephone number: (86) 21-56689332


Securities registered under Section 12(b) of the Exchange Act:

    Title of each class               Name of each exchange on which registered
           None                                      not applicable


Securities registered under Section 12(g) of the Exchange Act:

                    common stock, par value $0.0005 per share
                                (Title of class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes[x] No[]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes [] No [X]

         State issuer's revenues for its most recent fiscal year. $ 7,745,378
for the fiscal year ended December 31, 2006.

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked prices of such common
equity, as of a specified date within the past 60 days. $7,200,000 on April 2,
2007


         State the number of shares outstanding of each of the issuer's class of
common equity as of the latest practicable date. 73,081,675 shares of common
stock are issued and outstanding as of April 2, 2007.


<page>



                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to security
holders; (2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) of the Securities Act of 1933 ("Securities Act"). The
listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1990). Not
Applicable.

   Transitional Small Business Disclosure Form (check one):  Yes      No   X
                                                                ----     -----

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

         Certain statements in this annual report contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to increase our revenues,
develop our brands, implement our strategic initiatives, economic, political and
market conditions and fluctuations, government and industry regulation, U.S. and
global competition, and other factors. Most of these factors are difficult to
predict accurately and are generally beyond our control.

         You should consider the areas of risk described in connection with any
forward-looking statements that may be made in this annual report. Readers are
cautioned not to place undue reliance on these forward-looking statements and
readers should carefully review this annual report in its entirety, including
the risks described in Part I, Item 1. Description of Business - Risk Factors.
Except for our ongoing obligations to disclose material information under the
Federal securities laws, we undertake no obligation to release publicly any
revisions to any forward-looking statements, to report events or to report the
occurrence of unanticipated events. These forward-looking statements speak only
as of the date of this annual report, and you should not rely on these
statements without also considering the risks and uncertainties associated with
these statements and our business.

                           OTHER PERTINENT INFORMATION

         All per share information contained in this annual report gives effect
to a one for ten (1:10) reverse stock split effective March 24, 2005.

         When used in this annual report, the terms "Linkwell" "we," and "us"
refers to Linkwell Corporation, a Florida corporation, our wholly-owned
subsidiary Linkwell Tech Group, Inc., a Florida corporation ("Linkwell Tech")
and Linkwell Tech's 90% owned subsidiary Shanghai Likang Disinfectant High-Tech
Company, Limited ("Likang"). The information which appears on our web site at
www.linkwell.us is not part of this annual report.

                                      -2-

<PAGE>



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

         We operate under a holding company structure and currently have one
operating subsidiary, Linkwell Tech Group Inc. ("Linkwell Tech") a Florida
Corporation.  Linkwell Tech owns 90% of Shanghai Likang Disinfectant High-Tech
Company, Limited ("Likang Disinfectant"). Likang Disinfectant owns 100% of
Shanghai Likang International Trade Company, Limited ("Likang International").
We regard Likang Disinfectant's business of hospital disinfectant products as
our primary business.

         Through our subsidiary, Likang Disinfectant, we are involved in the
development, manufacture, sale and distribution of disinfectant health care
products primarily to the medical industry in China. Likang Disinfectoant was
founded by the Second Military Medical University of the Chinese Army in
1988 and we believe that this affiliation provides us with certain marketing
advantages. We have made efforts to expand our customer base and penetrate the
civil disinfection, industrial disinfection, livestock and agricultural
disinfection markets of China. Currently we offer a variety of disinfectant
products for the following applications:


        |X|      Skin and mucous membrane disinfection
        |X|      Hand disinfectants (external)
        |X|      Environment and surface disinfectants
        |X|      Medical devices and equipment disinfectants
        |X|      Machine disinfectants

         We have been granted 26 hygiene licenses by the Ministry of Public
Health of the central government of China. We have filed two additional product
applications, and are presently developing three additional products. We also
sell products which have been developed and manufactured by third parties. These
parties manufacture disinfectant products which generated approximately 2.5% of
our revenues for the year ended December 31, 2006. Products which we manufacture
accounted for approximately 97.5% of our total net revenues for the year ended
December 31, 2006.

         We have a national marketing and sales presence throughout all 22
provinces as well as four autonomous regions and four municipalities in China.
We currently employ 19 full-time sales and marketing people based in Shanghai.
Shanghai Likang Pharmaceuticals Technology Company, an affiliate, also sells our
products using 72 independent sales representatives in other provinces of China.

Industry Background

         Likang Disinfectant is a member of the disinfectant industry in China.
According to a survey conducted by China Federation of Industrial Economics
(CFIC), the disinfectant market in China was approximately $6.25 billion (USD)
in 2004(1). While the disinfectant industry in China is an emerging industry,
and the industry is populated with small regional players, we estimate that
there are over 1,000 manufacturers and distributors of disinfectant products in
China and certain of our major competitors distribute products similar to ours,
including those which also prevent the spread of airborne viruses such as avian
flu and SARS. Currently we market our products to the medical industry in China
and we have recently made efforts to diversify and expand our reach to the
retail market.

          The Chinese market demand for biocides is expected to increase by
approximately 7.9% annually to 574,000 metric tons by the year 2010.(2)


------------------------------
(1)http://cfie.org.cn/main000.jsp
(2) http://www.researchandmarkets.com/reports/29788/chinese_markets_
for_biocides.htm

                                       -3-
<page>

         Recent Health Concerns in China

         China has witnessed a variety of public health crises in recent history
and has demonstrated the need for increased health standards in China. In
response, the Chinese government has taken initiatives to improve public health
and living standards, including the establishment by The Ministry of Public
Health in China for the disinfectant industry. The heightened public concerns
as well as these new public standards have led to a surge in interest for
disinfectant products in China with consumers maintaining stockpiles of
disinfectant products. This activity represented a surge in sales for the
industry. We believe that as the stockpiles decrease it may lead to an
additional surge in demand. There is no assurance as to the timing of this
surge; however, the increased public awareness and heightened national
standards, a growing population, and a higher standard of living, are just a
few factors which we believe support the growth in demand for disinfectant
products.

         The table illustrates recent health care crises in China

<table>

                     <c>                     <c>                  <c>
----------------------- ----------------------- --------------------- -----------------------------------------
    OUTBREAK TIME              LOCATION               DISEASE                        SITUATION
----------------------- ----------------------- --------------------- -----------------------------------------
January, 1988           Shanghai                Hepatitis A           310,000 reported cases of Hepatitis A,
                                                                      47 deaths
----------------------- ----------------------- --------------------- -----------------------------------------
April - May, 1998       Shengzhen               Sub- Tuberculosis     Shenzhen Woman and Children Hospital
                                                bacillus disease      reports an airborne infection. 168
                                                M. chelonae           patients infected, 46 severe cases
----------------------- ----------------------- --------------------- -----------------------------------------
November 2002           Throughout China        SARS                  8,000 reported cases, 800 deaths
----------------------- ----------------------- --------------------- -----------------------------------------
June 24 - August 20     Sichuan Province        Swine Streptococcus   204 reported cases of humans infected
2005                                            suis                  with the Swine streptococci in Sichuan,
                                                                      38 deaths
----------------------- ----------------------- --------------------- -----------------------------------------
April 2005              Throughout China        Pulmonary             Pulmonary tuberculosis, Hepatitis B
                                                tuberculosis,         remain top two priorities on the
                                                Hepatitis B           infectious disease list in China
----------------------- ----------------------- --------------------- -----------------------------------------
June, 2005              Tibet                   Bubonic plague        Five infected cases reported,  two
                                                                      deaths
----------------------- ----------------------- --------------------- -----------------------------------------
July-September 2005     Hunan, Fujian,          Cholera               638 cases reported, two deaths
                        Zhejiang provinces
----------------------- ----------------------- --------------------- -----------------------------------------
August, 2005            Guizhou, Ningxia,       Anthrax               140 cases reported, one death
                        Liaoning, Jilin
----------------------- ----------------------- --------------------- -----------------------------------------
October, 2005           Inner Mongolia ,        Avian Flu             Three confirmed cases reported, two
                        Hunan , Anhui ,                               deaths
                        Liaoning , and Hubei
                        provinces
----------------------- ----------------------- --------------------- -----------------------------------------
October, 2005           Zhejiang, Anhui         highly pathogenic     One confirmed case in each province
                        provinces               bird flu              reported
----------------------- ----------------------- --------------------- -----------------------------------------
March 24, 2006          Shanghai                highly pathogenic     One confirmed case reported
                                                bird flu
----------------------- ----------------------- --------------------- -----------------------------------------
June 16,2006            Guangdong Province      highly pathogenic     One confirmed case reported
                                                bird flu
----------------------- ----------------------- --------------------- -----------------------------------------
August 14, 2006         XinJiang Province       highly pathogenic     One confirmed case reported
                                                bird flu
----------------------- ----------------------- --------------------- -----------------------------------------
</table>



                                       -4-
<page>


During the year ended December 31, 2006 the following healthcare crises were
discovered in China:

         SARS - Severe Acute Respiratory Syndrome

         In recent years the Severe Acute Respiratory Syndrome (SARS) has
threatened the public community. SARS, which is a viral respiratory illness
caused by a corona virus, called SARS-associated corona virus (SARS-CoV), was
first reported in Asia in November 2002. Over the next few months, the illness
spread to more than two dozen countries in North America, South America, Europe,
and Asia before the SARS global outbreak of 2003 was contained. In April 2004,
the Chinese Ministry of Health reported several new cases of possible SARS
outbreaks in Beijing and the Anhui Province, which is located in east-central
China. In 2006, there were a number of confirmed cases of highly pathogenic bird
flu reported in China.

         According to the Center for Disease Control of the central government
of China, the common manner in which SARS seems to spread is by close
person-to-person contact. The virus that causes SARS is thought to be
transmitted most readily by respiratory droplets ("droplet spread") when an
infected person coughs or sneezes. Droplet spread occurs as germs from the cough
or sneeze of an infected person are propelled a short distance (generally up to
three feet) through the air and deposited on the mucous membranes of the mouth,
nose, or eyes of nearby persons. The virus also can spread when a person touches
a surface or object contaminated with infectious droplets and then touches his
or her mouth, nose, or eye(s). Ultimately there is much the global community
does not know about SARS, and it is possible that the SARS virus might spread
more broadly through the air (airborne spread) or by other ways that are not yet
known.

         Avian Influenza

         In 2005, the threat of a global pandemic as a result of the avian flu
began to capture the attention of the global community. The avian flu is a type
of the A strain virus that infects birds. Typically, it is not common for humans
to be infected with the virus via contact with birds, however bird-to-human
outbreaks have been reported and most have been in Asia. Humans were infected
when they came into contact with sick birds or contaminated surfaces. In most
cases, infected persons reported flu-like symptoms, but some had more serious
complications, including pneumonia and acute respiratory distress. The avian flu
has led to increased concerns for improved health conditions.

China Health Standards

         In July 2002, the Chinese Ministry of Public Health issued the 27th
order of Ministry of Health of the People's Republic of China establishing
national standards for the disinfection industry. The first criterion of the new
order stipulated that disinfectant manufacturers in China must obtain a license
to manufacture hygiene disinfectants. Secondly, prior to release, all
disinfectant instruments must obtain the official hygiene permit document of
both the local provincial hygiene administrative department and the Ministry of
Public Health.

         The process to obtain a manufacturing license, involves three stages:

           o  Manufacturers file application  materials  to  the  local
              public  health administrative department;

           o  The Local administrative department performs an inspection of the
              manufacturing facilities according to "qualified disinfection
              product manufacturing enterprise requirements"; and

           o  Upon satisfaction of "qualified disinfection product manufacturing
              enterprise requirements", the manufacturer will be issued a
              license.

                                       -5-
<page>

         The process to obtain the official hygiene permit for individual
disinfectants or instruments, the company must follow the steps listed below:

                1.     File the application;
                2.     Explain the disinfectant ingredient or instrument layout
                       and function;
                3.     The Hygiene administrative department will examine the
                       sample, and perform independent tests to verify industry
                       standards and benefits; and
                4.     If all the standards are met, the permit will be issued.

         The table below details the 26 licenses issued to Likang Disinfectant
by the Ministry of Public Health of the central government of China.

<table>

         <c>                                                                             <c>
----------- ------------------------------------------------------------------------------- ----------------
#           PRODUCTS                                                                        DATE
----------- ------------------------------------------------------------------------------- ----------------
1           An'erdian Skin Disinfectant                                                     2003.2.13
----------- ------------------------------------------------------------------------------- ----------------
2           An'erdian type 2nd skin disinfectant                                            2002.11.22
----------- ------------------------------------------------------------------------------- ----------------
3           An'erdian type 3rd skin and mucous membrane disinfectant                        2005.1.19
----------- ------------------------------------------------------------------------------- ----------------
4           Dian'erkang Aerosol Disinfectant                                                2004.3.22
----------- ------------------------------------------------------------------------------- ----------------
5           Dian'erkang 2% glutaraldehyde disinfectant                                      2002.11.22
----------- ------------------------------------------------------------------------------- ----------------
6           Aiershi disinfectant tablets                                                    2004.2.9
----------- ------------------------------------------------------------------------------- ----------------
7           Aiershi disinfectant                                                            2004.2.9
----------- ------------------------------------------------------------------------------- ----------------
8           Dian'erkang PVP-I disinfectant                                                  2005.3.30
----------- ------------------------------------------------------------------------------- ----------------
9           Dian'erkang Iodophor disinfectant                                               2004.2.19
----------- ------------------------------------------------------------------------------- ----------------
10          Jifro disinfectant gel                                                          2005.1.19
----------- ------------------------------------------------------------------------------- ----------------
11          Dian'erkang alcohol disinfectant                                                2003.12.23
----------- ------------------------------------------------------------------------------- ----------------
12          Jifro disinfectant                                                              2003.2.13
----------- ------------------------------------------------------------------------------- ----------------
13          JifroTaixin disinfectant                                                        2003.2.13
----------- ------------------------------------------------------------------------------- ----------------
14          Dian'erkang compound iodine disinfectant                                        2004.4.28
----------- ------------------------------------------------------------------------------- ----------------
15          Lvshaxing disinfectant granule                                                  2004.2.19
----------- ------------------------------------------------------------------------------- ----------------
16          Lvshaxing disinfectant tablets                                                  2004.3.29
----------- ------------------------------------------------------------------------------- ----------------
17          Likang test paper of chlorine                                                   2004.1.16
----------- ------------------------------------------------------------------------------- ----------------
18          Lvshaxing LKQG-1000 air disinfection machine                                    2004.3.10
----------- ------------------------------------------------------------------------------- ----------------
19          Jifro 4% Chlorhexidine gluconate surgical hand scrub                            2004.9.7
----------- ------------------------------------------------------------------------------- ----------------
20          JifroSongning disinfectant                                                      2004.9.7
----------- ------------------------------------------------------------------------------- ----------------
21          Lineng glutaraldehyde disinfectant                                              2005.2.17
----------- ------------------------------------------------------------------------------- ----------------
22          Likang 121 steam pressure sterilization chemical indicator                      2005.3.30
----------- ------------------------------------------------------------------------------- ----------------
23          Likang 132 steam pressure sterilization chemical indicator                      2005.3.30
----------- ------------------------------------------------------------------------------- ----------------
24          Likang steam pressure sterilization chemical indicator                          2005.4.1
----------- ------------------------------------------------------------------------------- ----------------
25          Likang 84 disinfectant                                                          2005.6.27
----------- ------------------------------------------------------------------------------- ----------------
26          Likang Glutaraldehyde Monitors (Strip)                                          2005.12.14
----------- ------------------------------------------------------------------------------- ----------------

</table>

                                       -6-
<page>


Product Lines

         We offer a diverse range of product offerings. We manufacture 38
disinfectant products and our product offerings come in six primary forms: Three
of these are new products for our Company.

        o        Liquids-gel
        o        Tablets-powder
        o        Aerosol
        o        Chemical indicator (new)
        o        Disinfectant appliance (new)
        o        Liquids-foam (new)

         Our disinfectant products range from air disinfection machines to hot
press bags, disinfection swabs, and disinfection indicators. We believe that
this wide product line has served as an advantage for our company in our efforts
to create a national audience for our products and services.

         Approximately 97.5% of our sales are derived from products we have
internally developed and produced and the remaining 2.5% of sales are produced
by outside companies. The tables below offer a summary of our current product
offerings:

         Skin and Mucous Membrane Disinfectants

         Skin and mucous membrane disinfectants target both exterior and
internal applications. Prior to operations, incisions, or injections; the
products are used to clean the skin surface. Mucous membrane disinfectants
target internal germs located in the mouth, eye, perineum and other internal
sources. This product group accounted for approximately 57% of our year ended
December 31, 2006 sales and approximately 57% of our year ended December 31,
2005 sales.


<table>

                                          <c>                    <c>                  <c>
--------------------------------------------- --------------------- ----------------------- -------------------------
PRODUCT NAMES                                 INGREDIENTS           APPLICATION             INDUSTRY STANDARD
--------------------------------------------- --------------------- ----------------------- -------------------------
An'erdian Skin Disinfectant                   iodine, alcohol       Skin Disinfectant       Q/SUVE 20-2003
--------------------------------------------- --------------------- ----------------------- -------------------------
An'erdian type 3rd skin and mucous membrane   iodine,               skin & mucous           Q/SUVE 22-2003
disinfectant                                  chlorhexidine         membrane disinfectant
--------------------------------------------- --------------------- ----------------------- -------------------------
Dian'erkang PVP-I disinfectant                Povidone-iodine       skin & mucous           Q/SUVE 28-2004
                                                                    membrane disinfectant
--------------------------------------------- --------------------- ----------------------- -------------------------
Dian'erkang alcohol disinfectant              alcohol               Skin disinfectant       Q/SUVE 08-2004
--------------------------------------------- --------------------- ----------------------- -------------------------
</table>


         Hand Disinfectants

         These disinfectants target the skin surface. Products are applied to
the skin prior to medical procedures. This product group accounted for
approximately 13.5% of our year ended December 31,2006 sales and approximately
10% of our year ended December 31, 2005 sales.

                                       -7-
<page>


<table>


                                         <c>                <c>                        <c>
-------------------------------------------- ------------------ --------------------------- -------------------------
PRODUCT NAMES                                INGREDIENTS        APPLICATION                 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 disinfectant  Q/SUVE 09-2004
hand scrub                                   gluconate
-------------------------------------------- ------------------ --------------------------- -------------------------
</table>


         Environment and Surface Disinfectants

         These disinfectants target a variety of surfaces, such as floors,
walls, tables, and medical devices. Additionally the products can be applied to
cloth materials including furniture and bedding. This product group accounted
for approximately 16.6% of our year ended December 31, 2006 sales and
approximately 15% of our year ended December 31, 2005 sales.


<table>

                         <c>                               <c>                          <c>
---------------------------- --------------------------------- ---------------------------- -------------------------
PRODUCT NAMES                INGREDIENTS                       APPLICATION                  INDUSTRY STANDARD
---------------------------- --------------------------------- ---------------------------- -------------------------
Aiershi disinfectant         Trichloroisocyanuric acid         Circumstance and surface     Q/SUVE 34-2004
tablets                                                        disinfection
---------------------------- --------------------------------- ---------------------------- -------------------------
Lvshaxing disinfectant       Dichloro dimethylhydantoin        Circumstance and surface     Q/SUVE 33-2003
tablets                                                        disinfection
---------------------------- --------------------------------- ---------------------------- -------------------------
Dian'erkang Aerosol          Benzethonium Chloride             Circumstance and surface     Q/SUVE 07-2004
Disinfectant                                                   disinfection, preventing
                                                               the spread of
                                                               airborne viruses
                                                               such as human
                                                               influenza virus,
                                                               SARS and the Bird
                                                               flu virus.
---------------------------- --------------------------------- ---------------------------- -------------------------
Lvshaxing disinfectant       Dichloro dimethylhydantoin        Circumstance and surface     Q/SUVE 32-2003
granule                                                        disinfection
---------------------------- --------------------------------- ---------------------------- -------------------------

</table>


                                       -8-
<page>


         Medical Devices and Equipment Disinfectants

         This line of disinfectants target medical equipment including the
sterilization of thermo sensitive instruments and endoscope equipment. This
product group accounted for approximately 11.5% of our year ended December 31,
2006 sales and approximately 12% of our year ended December 31, 2005 sales.

<table>

                                       <c>                     <c>                  <c>
------------------------------------------ ---------------------- ------------------------- -------------------------
PRODUCT NAMES                              INGREDIENTS            APPLICATION               INDUSTRY STANDARD
------------------------------------------ ---------------------- ------------------------- -------------------------
Dian'erkang 2% glutaraldehyde              Glutaraldehyde         Disinfection and          Q/SUVE 10-2003
disinfectant                                                      sterilization of device
------------------------------------------ ---------------------- ------------------------- -------------------------
Dian'erkang 2% glutaraldehyde              Glutaraldehyde         Disinfection and          Q/SUVE 10-2003
disinfectant (for the                                             sterilization of
                                                                  endoscopes
------------------------------------------ ---------------------- ------------------------- -------------------------
Dian'erkang multi-enzyme rapid detergents  Multi-Enzyme           Rinsing and               Q/SUVE 14-2004
                                                                  decontamination of
                                                                  device
------------------------------------------ ---------------------- ------------------------- -------------------------
</table>


         Machine Series

         This line of disinfectants targets air quality. These devices will
monitor and disinfect air quality. This product group accounted for
approximately 1.4% of our year ended December 31, 2006 sales and approximately
3% of our year ended December 31, 2005 sales.

<table>

                                          <c>                  <c>                      <c>
--------------------------------------------- -------------------- ------------------------ -------------------------
PRODUCT NAMES                                 INGREDIENTS          APPLICATION              INDUSTRY STANDARD
--------------------------------------------- -------------------- ------------------------ -------------------------
Lvshaxing LKQG-1000 air disinfection machine  Ozone, ultraviolet   Air disinfection         Q/SUPE 09-2003
                                              radiation,
                                              electrostatic
--------------------------------------------- -------------------- ------------------------ -------------------------
An'erdian disinfection swab                   An'erdian            Skin and disinfection    Q/NYMN07-2003
--------------------------------------------- -------------------- ------------------------ -------------------------
Dian'erkang hot press bag                     Iron powder,         Drive the "feng" Stop    Q/NYMN01-2001
                                              active carbon        the pain  Dispel the
                                                                   "han"
--------------------------------------------- -------------------- ------------------------ -------------------------
Likang test paper of chlorine                 reaction regent      Indicator of             Q/SUVE 40-2003
                                                                   disinfectant
                                                                   concentration
--------------------------------------------- -------------------- ------------------------ -------------------------
Likang 121 steam pressure sterilization       Indication oil       Indication of            Q/SUVE 16-2005
chemical indicator (card and adhesive tape)                        sterilization effect
--------------------------------------------- -------------------- ------------------------ -------------------------
Likang 132 steam pressure sterilization       Indication oil       Indication of            Q/SUVE 17-2005
chemical indicator (label)                                         sterilization effect
--------------------------------------------- -------------------- ------------------------ -------------------------
Likang steam pressure sterilization           Indication oil       Indication of            Q/SUVE 18-2005
chemical indicator                                                 sterilization effect
--------------------------------------------- -------------------- ------------------------ -------------------------
</table>

                                       -9-
<page>


         Retail products

         In 2005, we made efforts to expand our distribution reach to the retail
market. As a result, our products have gained access to hotels, schools,
supermarkets, and drugstores. We have repackaged commercial disinfectant
products for sale to the consumer market. Since October 1999, we redeveloped
four separate products for distribution to the retail market. Likang
Disinfectant redeveloped the following products:

        -        Jin Zhongda collutory (mouth wash)          October 1999
        -        antibacterial lubricant                     October 1999
        -        Likang 84 disinfectant                      August   2005
        -        Dian'erkang aerosol disinfectant            October  2005

         Customers

         We sell our products on a wholesale and retail basis to the medical
community in China. We have approximately 5,000 active and recurring customers
including hospitals, medical suppliers and distribution companies throughout
China. We maintain over 20 distribution contracts with wholesale dealers and
agents. We generally offer payment terms of four to six months before payment
for the products is due. For years ended December 31, 2006 and 2005 two
affiliated entities which are our customers, Shanghai Likang Pharmaceutical
Technology Company, Limited and Shanghai Likang Meirui Pharmaceuticals High-Tech
Co. Ltd., represented approximately 40% and less than 1%, respectively, of our
total net revenues. See Part III, Item 12. Certain Relationships and Related
Transactions, and Director Independence appearing later in this annual report.
We have contracts with all of our dealer and agent customers.

         Manufacturing

         We operate two factory facilities in Shanghai, one located in the
Shanghai Jiading district and one located in the Shanghai Jinshan district.
Products are manufactured primarily in liquid, tablet, and powder form, and
recently we introduced liquid foams, chemical indicators and disinfectant
appliances. Approximately 97.5% of Likang Disinfectant revenues for year ended
December 31, 2006 were derived from products manufactured in these two
factories.

         The Shanghai Jiading district factory is approximately 21,500 square
feet, all of which is used for production. This factory meets the good
manufacturing practice (GMP) standards established by the central government;
however, the equipment utilized in the factory is not GMP certified for the
production of medical and chemical products. As the equipment at this factory
could not be upgraded to GMP certification, rather than purchase new equipment
as described below we have been utilizing the contract manufacturing services of
a related party which has a GMP certified factory and GMP certified equipment to
manufacture certain of our disinfectant products. The main products produced at
the Shanghai Jiading district factory are liquid and index disinfectant devices.
The manufacturing facility has the capacity to produce approximately 9 million
liters of liquid disinfectant annually. The manufacturing cycle for the liquids,
from formulation to finish product, is one day.

         The Shanghai Jinshan district factory is approximately 4,300 square
feet and is used in the manufacture of the tablet and powder forms of
disinfectants. The manufacturing capacity is 300 metric tons of tablet and 180
metric tons of powder disinfectant annually. The average manufacturing cycle for
the tablets and powders, from formulation to finished product, is one day.

Products which represent the remaining 2.5% of our year ended December 31, 2006
revenues are manufactured by third parties as set forth below:

                                       -10-
<page>


<table>

                            <c>                                                         <c>
------------------------------- ----------------------------------------------------------- ---------------------------
PRODUCT                         MANUFACTURER                                                    % OF REVENUE
------------------------------- ----------------------------------------------------------- ---------------------------
Lvshaxing Air Disinfectant      Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd.
Machine
------------------------------- -----------------------------------------------------------           1%
Likang Surgery hand-washing     Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd.
Table
------------------------------- ----------------------------------------------------------- ---------------------------
Junle disinfectant              Shanghai JunLe Daily Chemicals Co., Ltd.
------------------------------- -----------------------------------------------------------
Jiewang disinfectant            Hangzhou JieWang Disinfectant Co., Ltd
------------------------------- -----------------------------------------------------------         1.5%
Shenle disinfectant             Shanghai ShenLe Daily Chemicals Co., Ltd.
------------------------------- -----------------------------------------------------------
Sterilized Q-tip (very small    Shanghai DiCheng Health Products Manufacturing Co., Ltd
quantity)
------------------------------- ----------------------------------------------------------- ---------------------------
</table>

         Shanghai  Likang Meirui  Pharmaceutical  High-Tech  Co., Ltd. is a
related  party.  See Part III, Item 12. Certain Relationships and Related
Transactions, and Director Independence appearing later in this annual report.

         During fiscal 2006, following an upgrade of its facilities resulting in
a GMP (good manufacturing processes) certification for both the factory and the
equipment, we began utilizing the services of Shanghai Likang Biological
High-Tech Company, Ltd., a related party, to manufacture certain of our products
including our An'erdian and Dian'erkang lines of disinfectants. See Part III,
Item 12. Certain Relationships and Related Transactions, and Director
Independence appearing later in this annual report.

         We believe that products which can be marketed as being manufactured at
a GMP certified facility utilizing GMP certified equipment can generally be sold
at higher prices than similar products manufactured in a non-GMP certified
facility. While our cost for these products increased we have been able to
increase our selling prices commensurately. We package our products in various
packages to meet different needs of the market. We package our liquid and gel
disinfectants in a variety of popular sizes ranging from 40 ml to 5 liter. Each
of our tablet disinfectants contains 500 ml of active chlorine and we package
these tablets in 50 tablet, 100 tablet and 200 tablet bottles. Finally, we
package our powder disinfectants in 250 gram and 500 gram containers.

         We maintain an inventory of finished products equal to approximately
1 month average sales. Currently, we are manufacturing at about 50% of full
capacity based upon our current product demand, and we have the ability to
produce at full capacity if demand continues to increase.

         We have an in-house fulfillment and distribution operation which is
used to manage the supply chain, beginning with the placement of the order,
continuing through order processing, and then fulfilling and shipping the
product to the customer. We maintain inventory and fill customer orders from
both Jiading factory and Jinshan factory.

Raw Materials

         We purchase raw materials from six primary suppliers, including a
related party, and we have signed purchase contracts with these suppliers in an
effort to ensure a steady supply of raw materials. We have maintained stable
business relations with these suppliers for over 10 years, and we believe that
our relationships with these primary suppliers will remain stable. In the event
the relationships falter, there are many suppliers with the capability to supply
our company. We purchase raw materials on payment terms of 30 days to three
months. Some of the suppliers import from foreign countries, as listed below,
and we purchase directly from these suppliers.

                                       -11-
<page>


The table below details the supply relationships for raw materials

<table>

                               <c>                                                              <c>
---------------------------------- --------------------------------------------------------------- -----------------
RAW MATERIALS                      SUPPLIERS                                                       ORIGIN
---------------------------------- --------------------------------------------------------------- -----------------
Iodine                             Shanghai Wenshui Chemical Co., Ltd                              USA
---------------------------------- --------------------------------------------------------------- -----------------
Potassium iodide                   Shanghai Wenshui Chemical Co., Ltd                              Holland
---------------------------------- --------------------------------------------------------------- -----------------
Glutaraldehyde                     Shanghai Jin an tang Hygienical Product Factory                 Germany
---------------------------------- --------------------------------------------------------------- -----------------
Triclosan                          Ciba Specialty Chemicals (China)LTD                             Domestic
---------------------------------- --------------------------------------------------------------- -----------------
Alcohol                            Shanghai Jangbo Chemical Co., L td                              Domestic
---------------------------------- --------------------------------------------------------------- -----------------
Trichloroisocyanuric acid          Xuzhou Keweisi Disinfectant Co., Ltd                            Domestic
---------------------------------- --------------------------------------------------------------- -----------------
Ozone producing device equipment   Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd.       Domestic
---------------------------------- --------------------------------------------------------------- -----------------
Ultraviolet radiation lamp light   Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd.       Domestic
---------------------------------- --------------------------------------------------------------- -----------------
</table>


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 advice. 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 solutions 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 our total sales.



New Product Development

         We are committed to research and development. Likang Disinfectant was
created as a research and development organization by the Second Military
Medical University of the Chinese Army in 1988. We develop our products
internally and own all rights associated with these products.

         In 2005, we developed two new disinfectant products. Our An'erdian Type
3 Skin and Mucous Membrane Disinfectant, a skin disinfectant, was honored as a
2005 National Key New Product by the Chinese Ministry of Science & Technology.
This product has numerous uses in gynecology, skin disease treatment as well as
daily hygiene. We are currently in the patent application process for this
product. We believe that another key new product will be Likang #84
Disinfectant, which was recently approved by the Chinese Public Health
Department. This product is a liquid chemical disinfectant that contains the
sodium hypochlorite and can be used in households on almost all surfaces. This
new formula carries a shelf life of two years versus the competitors' similar
products which have a limited shelf life of 90 days. As of the date of this Form
10K-SB we have not developed any new products for the year ended December
31,2006.

                                       -12-
<page>


         In addition, we are conducting research on additional products,
including the Lvshaxing Air Disinfectant Machine Type 1, Lvshaxing Air
Disinfectant Machine Type 2 and Likang 5% (chloride content) Disinfectant
Liquid. We are unable to predict at this time if our research will result in the
introduction of new products. As of the date of this report we are still in the
research and development stage regarding these new products.

         For the years ended December 31, 2006 and 2005, we spent approximately
$18,000 and approximately $36,000, respectively, on research and development.

Marketing and Sales

         We were formed in 1988 as a research and development organization by
the Second Military Medical University of the Chinese Army, our CEO, Mr. Xue
Lian Bian, was a member of the staff of the university. We believe that this
relationship provides us with certain marketing advantages. The university is a
well recognized, prestigious institution in China and many of its graduates work
at hospitals, medical suppliers and distribution companies throughout China in
senior positions which place them in the decision making process when it comes
to purchasing products such as ours. In addition, the students and faculty at
the university provide a pool of talent from which we draw, both as potential
employees or summer interns who go on to work at other companies, many of which
are customers or potential customers for our products. In marketing our
products, we seek to leverage these relationships.

         We have a national marketing and sales presence throughout all 22
provinces, as well as four autonomous regions, and four municipalities of China.
We currently employ 19 full-time sales and marketing people based in Shanghai.
Shanghai Likang Pharmaceuticals Technology Company, an affiliate, also sells our
products using 72 independent sales representatives in other provinces of China.
Approximately 30% of our sales are achieved by our proprietary sales force while
the remaining approximately 70% are outsourced to independent dealers and
agents. We compensate our proprietary salesman with a base salary and
commission. The sales representatives are located in provinces other than
Shanghai. The external sales network currently covers hospitals in 20 provinces
including: Beijing, Guangdong, Tianjin, Fujian, Yunnan, Hainan, Jiangsu,
Zhejiang, Anhui, Shandong, Henan, Hebei, Liaoning, Heilongjiang, Shanxi, Gansu,
Ningxia, Guizhou, Hunan, Sichuan, Xinjiang, Neimenggu. The independent sales
representatives sell directly to the end-users.

         We also have relationships with 23 independent distribution agents who
purchase products from us in larger quantities and then resell in smaller
quantities to smaller health care facilities. In January 2005 we signed a two
year agreement with Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd. to
market our products to the retail/consumer market. Shanghai Likang Meirui
Pharmaceutical High-Tech Co., Ltd., a company of which Shanghai Shanhai Group,
Likang's minority shareholder, owns a 68% interest, has a sales network which
covers certain sectors of the retail/consumer market in China.

         During fiscal 2007 we will seek to expand our distribution capability
in the PRC through the possible purchase of independent sales networks. While we
have allocated a portion of the proceeds from our recent private offering for
such use, we have not identified any potential targets and we may inevitably
choose not to pursue this strategy.

Recent Development - Disinfectant Educational Center

         On May 25, 2006, we entered into an agreement with China Pest
Infestation Control and Sanitation Association, an association governed by the
Chinese central government, to establish and operate a disinfectant educational
center in Beijing, China. We will be responsible for the establishment and
development of the disinfectant educational center, as well as its management
and funding. The China Pest Infestation Control and Sanitation Association will
be responsible for establishing a job training base in Beijing. We believe we
were selected to participate in this program based upon our reputation and
experience in the disinfectant industry.

                                       -13-
<page>


         While the specific details and timeline related to the establishment of
the disinfectant educational center are in the early planning stages, it is
anticipated that the disinfectant educational center will offer a job training
program to educate and train professionals to work as professionals in the
disinfectant field The disinfectant educational center will be a tuition based
education program for which graduates will receive a license from the China Pest
Infestation Control and Sanitation Association. After completion of the program,
it is envisioned that a personnel exchange service center of the Chinese central
government's Health Department will function much like a placement office and
assist the center's graduates in securing positions with companies seeking to
fill positions in the PRC. From time to time we may also recruit graduates from
the disinfectant educational center to join our company.

         In June 2006, we entered into an oral arrangement with Beijing
JinMeiHua Sterilizing Technology Development Company, Limited ("JinMeiHua"), an
unrelated party, to act as our agent to operate the disinfectant educational
center and to be responsible for the job training program specifics. While
JinMeiHua does not have any specific expertise in this area, we believe that
JinMeiHua's reputation and government contacts will benefit the establishment
and operation of the enterprise. Generally, JinMeiHua will be responsible for
operating the disinfectant educational center and we will be responsible for
providing the funding necessary therefore.

       It is expected that the China Pest Infestation Control and Sanitation
Association, JinMeiHua and Likang Disinfectant will share in profits of the
disinfectant educational center; however the precise revenue share has not been
determined. It is also expected that the China Pest Infestation Control and
Sanitation Association will receive at a maximum 50% of the profits from the
disinfectant educational center. JinMeiHua will also receive a to-be-determined
percentage of the profits for operating the disinfectant educational center. We
advanced JinMeiHua $249,797 to begin the development of the disinfectant
educational center. This project was abandoned in December, 2006. The investment
made by Likang Disinfectant of $249,797 to Beijing JinMeiHua was returned to
Likang Disinfectant in December 2006. Likang Disinfectant still plans to move
forward with the development of a training school. The company desires to
develop and training school in Shanghai, in closer proximity to the Company's
headquarters. At the present time we cannot predict the amount of money
necessary for this undertaking, and a timeframe to accomplish this has not been
set.


Intellectual Property


         We have received 9 patents and have 2 pending patent applications with
National Property Right Administration of the PRC. The patent approval process
can take up to 36 months. The following is a list of Likang Disinfectant's
patents and pending patent applications:


                                       -14-
<page>


<table>

                       <c>                                <c>                            <c>
PATENT CATEGORY           PATENT NAME                        PATENT NO                      NOTES
------------------------- ---------------------------------- ------------------------------ -----------------------
Product Improvement       Improved bottle                    ZL 03 2 29616.9                Approved, expires
                                                                                            March 2013
------------------------- ---------------------------------- ------------------------------ -----------------------
Appearance design         Bottle (with the wing stretch)     ZL 00 3 14391.0                Approved, expires
                                                                                            April 2010
------------------------- ---------------------------------- ------------------------------ -----------------------
Appearance design         Packaging bottle                   ZL 2003 3 0108274.5            Approved, expires
                                                                                            November 2013
------------------------- ---------------------------------- ------------------------------ -----------------------
Appearance design         Test paper box of chlorine         ZL 2004 3 0022740.2            Approved, expires May
                                                                                            2014
------------------------- ---------------------------------- ------------------------------ -----------------------
Product Improvement       High strength water sterilizer     ZL 03 2 10513.4                Approved, expires
                          with Model H ultraviolet lamp                                     September 2013
------------------------- ---------------------------------- ------------------------------ -----------------------
Product Improvement       Sewage application                 ZL 2004 2 0037013.8            Approved, expires
                                                                                            June 2014
------------------------- ---------------------------------- ------------------------------ -----------------------
Product Improvement       Bracket that supports hanging      ZL 200520039668.3              Approved, expires
                          bottles                                                           October 2016
------------------------- ---------------------------------- ------------------------------ -----------------------
Product Improvement       Container with the vacuum pump     ZL200420090682.1               Approved on 2006-06-07
                                                                                            expires in June 2016
------------------------- ---------------------------------- ------------------------------ -----------------------
New invention             Anti HP Gel                        Application # 200410099002-7   Pending. Applied on
                                                                                            2004-12-24
------------------------- ---------------------------------- ------------------------------ -----------------------
New invention             Low smell and stimulus contain     ZL200410068135.8               Approved on
                          chlorine disinfectant tablet,                                     2006-08-30 Expires on
                          powder etc                                                        2016
------------------------- ---------------------------------- ------------------------------ -----------------------
New invention             A new skin and mucous membrane     Application # 200410025305.4   Pending. Applied on
                          disinfectant including                                            2004-6-21
                          preparation methods
------------------------- ---------------------------------- ------------------------------ -----------------------
</table>


         We have four registered trademarks with the China State Administration
for industry and commerce trademark office for An'erdian, Jifro, Dian'erkang and
Lvshaxing. During the year ended December 31, 2006 we were granted 3 patents
which were pending. Two of the patents were based on product improvements and
one of the patents relates to a new invention. We currently have two patents
pending.

         We are not a party to any confidentiality or similar agreements with
any of our employees or any third parties regarding our intellectual property.
It is possible that a third party could, without authorization, utilize our
propriety technologies without our consent. We can give no assurance that our
proprietary technologies will not otherwise become known or independently
developed by competitors.

Competition

         We operate in a highly fragmented, competitive national market for
healthcare disinfectant products. According to a survey conducted in 2004 by the
China Federation of Industrial Economics (CFIC), the disinfectant market in the
PRC was approximately $6.25 billion (U.S.) The Chinese market demand for
biocides are expected to increase by approximately 7.9% annually to 574,000
metric tons by the year 2010.(3)

                                       -15-
<page>


      While the disinfectant industry in China is an emerging industry, and the
industry is populated with small regional players, we estimate that there are
over 1,000 manufacturers and distributors of disinfectant products in China and
certain of our major competitors distribute products similar to ours, including
those which also prevent the spread of airborne viruses such as avian flu and
SARS. We compete with foreign companies, including 3M, who are distributing a
full line of disinfectant products in China, as well as smaller, domestic
manufacturers. Most of these domestic competitors, however, offer a limited line
of products and there are few domestic companies with a nationwide presence. We
believe that our national marketing and sales presence throughout all 22
provinces, as well as four autonomous regions, and four municipalities of China
gives us a competitive advantage over many other disinfectant companies in
China. In addition, prior to the adoption of industry standards in July 2002 by
the central government of China, disinfectant products were generally marketed
and sold based on pricing factors. We believe the recent standards implemented
by the government will shift the customer demand from price to quality.

         Furthermore, we estimate the new government standards adopted in July
2002 have increased the barriers to entry and increased the requirements for
competitors in the disinfectant industry. We believe that the new standards may
lead to fewer competitors as companies falter in their efforts to adhere to the
new standards. The implementation of these improved production standards and
licenses has effectively decreased the competitiveness of small to medium sized
manufacturers. The new standards are especially difficult for companies with
limited product offerings and inferior technical content. As a result of this
heightened license and permit system, all disinfectant manufacturers must comply
with "qualified disinfectant product manufacturing enterprise requirements"
established by the Ministry of Public Health. The requirements include standards
for both hardware and software. Hardware would include facilities and machinery.
Software would include the technology to monitor the facilities. Furthermore,
the requirements will encompass the knowledge and capability of both the
production staff and quality control procedures.

         We believe that the following are the principal competitive strengths
that differentiate our company from the majority of our competition:

         o        Product selection and availability. A number of our
                  competitors are smaller, regional companies with a limited
                  number of product offerings. We offer our customers a wide
                  variety of disinfectant products and ability to ship products
                  to our customers on a timely basis throughout the PRC.

         o        Research and development. Our efforts to respond to market
                  demand for new products have resulted in the issuance to us of
                  26 hygiene licenses by the Ministry of Public Health of the
                  central government of China. Based upon our knowledge of our
                  competitors, we do not believe the majority of our competitors
                  have received as many licenses since the enactment of the
                  licensing standards in July 2002.

         o        Manufacturing capacity. Our Shanghai Jiading district factory,
                  which is devoted to liquid and index disinfectant devices, has
                  the capacity to produce 9 million liters of disinfectant
                  annually. Our Shanghai Jinshan district factory, which is
                  devoted to tablet and powder form disinfectants have the
                  capacity to manufacture 300 metric tons of tablet and 180
                  metric tons of powder annually. Both of our factories have
                  production cycles from formulation to finished product of one
                  day.

         o        Trained service personnel. We believe our sales personnel are
                  thoroughly educated in our product lines which enable them to
                  better meet the needs of our customers.

         o        Reliability and speed of delivery. We believe our products
                  have developed a reputation of good quality and effectiveness,
                  and our manufacturing capabilities enable us to produce and
                  ship products to our customers promptly thus allowing our
                  customers the ability to better manage their purchasing
                  budgets.


                                       -16-
<page>


         o        Customer service. Our customer service representatives
                  participate in ongoing product training programs and we strive
                  to respond to all customer inquiries within 24 hours.

         o        Price. We have developed relationships with a number of raw
                  material suppliers which enables us to keep our costs low and
                  thereby offer prices to our customers which are very
                  competitive.

         Our primary  competitors in the sale of chemical  disinfectants  are
3M and Ace Disinfection  Factory Co., Ltd.  The primary  competitors  for
instrument  disinfectants  are Chengdu  Kangaking  Instrument  Co.,  Ltd.  and
Hangzhou  Yangchi  Medicine  Article Co.,  Ltd. and the primary  competitors
for  chemical  indicators  are 3M and Shandong  Xinhua Medical  Instrument Co.,
Ltd.  Domestic  competition  comes from regional  companies which tend to
offer products in small geographic areas and do not distribute their product
lines throughout China.

         Our primary domestic competitors include:

     COMPETITOR                            PRODUCTS
  ----------------------  ----------------------------------------------
   3M Company            Hand disinfectant, skin and mucous disinfectant
  ----------------------  ----------------------------------------------
   Ace                   Skin and mucous disinfectant
  ----------------------  ----------------------------------------------
   Chengdu Kangaking     Medical equipment and devices
  ----------------------  ----------------------------------------------
   Hangzhou Yangchi      Sterilized Q-tip
  ----------------------  ----------------------------------------------
   Shandong Xinhua       Chemical indicators
  ----------------------  ----------------------------------------------

         Our primary foreign competitor is 3M Company which has had a presence
in China for more than 20 years. 3M Company entered the hand disinfection market
at the end of 2004 and primarily offers products in the areas of index and
control devices and disinfectant machines. At present, 3M Company has five
products for use in operating rooms and its products are found in provincial
capital cities of China such as Shanghai, Beijing, Guangzhou, Hangzhou, Nanjin,
Chengdu and Xi'an. 3M Company's product line in China is very narrow, with few
overlapping products between 3M Company and our company.

         Another foreign competitor is Johnson & Johnson, which established
operations in China in 1994. In China, Johnson & Johnson offers a variety of
skin, hand, and medical equipment disinfectants. Prior to the recent initiatives
by the government, disinfectant products were marketed based on pricing and
despite the brand awareness of Johnson & Johnson, its products did not have
widespread reception. Furthermore, Johnson & Johnson does not offer a wide
variety of disinfectant products in China. Due to the difficulties in attaining
a critical mass Johnson & Johnson recently withdrew from the surgical
disinfectant market in China and has refocused its efforts on
the disinfection of medical devices.

Government Regulations

         Our business and operations are located in the PRC. We are subject to
local food, drug, and environmental laws related to certification of
manufacturing and distributing of disinfectants. We are also licensed by the
Shanghai City Government to manufacture and distribute disinfectants. We are in
substantial compliance with all provisions of those licenses and have no reason
to believe that they will not be renewed as required by the applicable rules of
Shanghai. In addition, our operations must conform to general governmental
regulations and rules for private companies conducting business in China.

         Pursuant to the July 2002 Ministry of Public Health 27th Order of the
People's Republic of China, all disinfectant manufacturers in China must obtain
a license to manufacture hygiene disinfectants. Prior to release, all
disinfectant instruments must obtain the official hygiene permit document of the
Ministry of Public Health and the approval of the provincial hygiene
administrative department. The implementation of these improved production
standards and licenses have effectively decreased the competitiveness of small
to mid size manufacturers with single product and inferior technical content and
support. Presently we meet all standards initiated by this ordinance and we have
been granted 26 hygiene licenses by the Ministry of Public Health. We have filed
applications for two additional products which as of the date of this report are
still pending.


                                       -17-
<page>


         We are 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. We believe we are in material
compliance with all of the applicable regulations.

         PRC Legal System

         Since 1979, many laws and regulations addressing economic matters in
general have been promulgated in the PRC. Despite development of its legal
system, the PRC does not have a comprehensive system of laws. In addition,
enforcement of existing laws may be uncertain and sporadic, and implementation
and interpretation thereof inconsistent. The PRC judiciary system is relatively
inexperienced in enforcing the laws that exist, leading to a higher than usual
degree of uncertainty as to the outcome of any litigation. Even where adequate
law exists in the PRC, it may be difficult to obtain swift and equitable
enforcement of such law, or to obtain enforcement of a judgment by a court of
another jurisdiction. The PRC's legal system is based on written statutes and,
therefore, decided legal cases are without binding legal effect, although they
are often followed by judges as guidance. The interpretation of PRC laws may be
subject to policy changes reflecting domestic political changes. As the PRC
legal system develops, the promulgation of new laws, changes to existing laws
and the preemption of local regulations by national laws may adversely affect
foreign investors. The trend of legislation over the past 20 years has, however,
significantly enhanced the protection afforded foreign investors in enterprises
in the PRC. However, there can be no assurance that changes in such legislation
or interpretation thereof will not have an adverse effect upon our business
operations or prospects.

         Economic Reform Issues

         Since 1979, the Chinese government has reformed its economic systems.
Many reforms are unprecedented or experimental, and therefore, are expected to
be refined and improved. Other political, economic and social factors, such as
political changes, changes in the rates of economic growth, unemployment or
inflation, or the disparities in per capita wealth between regions within China,
could lead to further readjustment of the reform measures. We cannot predict if
this refining and readjustment process may negatively affect our operations in
future periods.

         Over the last few years, China's economy has registered a high growth
rate. Recently, there have been indications that rates of inflation have
increased. In response, the Chinese government recently has taken measures to
curb this excessively expansive economy. These measures have included
devaluations of the Chinese currency, the Renminbi ("RMB"), restrictions on the
availability of domestic credit, reducing the purchasing capability of certain
of its customers, and limiting re-centralization of the approval process for
purchases of some foreign products. These austerity measures alone may not
succeed in slowing down the economy's excessive expansion or control inflation,
and may result in severe dislocations in the Chinese economy. The Chinese
government may adopt additional measures to further combat inflation, including
the establishment of freezes or restraints on certain projects or markets.

         To date, reforms to China's economic system have not adversely impacted
our operations and are not expected to adversely impact operations in the
foreseeable future. However, there can be no assurance that the reforms to
China's economic system will continue or that we will not be adversely affected
by changes in China's political, economic, and social conditions and by changes
in policies of the Chinese government, such as changes in laws and regulations,
measures which may be introduced to control inflation, changes in the rate or
method of taxation, imposition of additional restrictions on currency conversion
and remittance abroad, and reduction in tariff protection and other import
restrictions.

                                       -18-
<page>


Employees

         Likang Disinfectant employs approximately 170 full time employees,
ncluding our executive officers, as follows:


                         DEPARTMENT                      NUMBER OF EMPLOYEES
         ------------------------------------------- --------------------------
         Administrative center                                    8
         ------------------------------------------- --------------------------
         Accounting                                              13
         ------------------------------------------- --------------------------
         Production                                              95
         ------------------------------------------- --------------------------
         Logistics                                               26
         ------------------------------------------- --------------------------
         Sales and Marketing  (Shanghai)                         19
         ------------------------------------------- --------------------------
         Research and development                                 9
         ------------------------------------------- --------------------------
                           Total                                170
         ------------------------------------------- --------------------------


U.S. Advisor

         On August 24, 2005, we engaged  China Direct  Investments,  Inc.,
whose staff  includes  Chinese-speaking individuals  with  experience in
operation and  regulatory  framework  applicable to U.S.  public  companies,
as a consultant to advise our management in areas related to marketing and
operational  support in the U.S.,  media and public relations,  mergers and
acquisitions,  financial advisory and SEC disclosure compliance.  In addition,
China Direct  Investments. Inc.,  also  provides us with  translation  services
for  both English and Chinese  documents.  China Direct Investments, Inc. is a
subsidiary of China Direct, Inc. (OTCBB: CHND).

         Under the terms of the one year agreement, which was extended through
December 2006, we issued China Direct Investments, Inc. 2,000,000 shares of our
common stock, valued at $160,000, as compensation for its services, and granted
China Direct Investments, Inc. three year warrants to purchase 2,125,000 shares
of our common stock at an exercise price of $0.20 per share commencing in
January 2006. We also agreed to pay China Direct Investments, Inc. additional
fees for its services as may be mutually agreed upon. Messrs. Xuejian (James)
Wang, Marc Siegel and David Stein are the officers, directors and shareholders
of China Direct Investments, Inc.

         On January 1, 2007, the Company entered into a three year agreement
with China Direct Investments, Inc. to provide business development and
management services. In connection with this agreement, the Company issued
4,700,000 shares of the Company's common stock for the service period from
January 1, 2006 to December 31, 2008. Accordingly, the Company recorded the
deferred consulting expense of $282,000.


History of our Company

            We were incorporated in the state of Colorado on December 11, 1996.
From our inception through December 28, 1999, we were involved in the business
of acquiring, developing and operating oil and gas properties. On December 28,
1999, we sold 60% of our issued and outstanding common stock to HBOA.Com, Inc.,
a District of Columbia corporation ("HBOA-DC"). Pursuant to this stock sale,
there was a change in our business and management team and we began to focus on
HBOA's business, which was related to the sale of products and services to the
owners of home based businesses through its Internet web site.

                                       -19-
<page>


            On May 31, 2000, HBOA-DC was merged with and into our wholly owned
subsidiary, HBOA.Com, Inc., a Florida corporation ("HBOA-FL"). In June 2000, we
began to develop our application service provider business, in addition to
HBOA's web site. We focused on development of an Internet portal through which
home based business owners, as well as commercial private label businesses,
obtain the products, services, and information necessary to start, expand and
profitably run their businesses. On November 10, 2000, our shareholders approved
our proposal to change our name from Mizar Energy Company to HBOA Holdings, Inc.
and to change our state of incorporation from Colorado to Florida and recorded a
loss of approximately $258,000. On December 28, 2000, we formed a new
subsidiary, Aerisys, Incorporated, a Florida corporation, to handle commercial
private business. Effective as of July 18, 2003, we changed our name to Kirshner
Entertainment & Technologies, Inc.

         On May 2, 2005, we closed a share exchange with all of the shareholders
of Linkwell Tech in which we acquired 100% of the issued and outstanding
shares of Linkwell Tech's common stock in exchange for 36,273,470 shares of our
common stock, which at closing represented approximately 87.5% of the issued and
outstanding shares of our common stock. As a result of the transaction, Linkwell
Tech became our wholly owned subsidiary. Linkwell Tech was founded in June 2004.
On June 30, 2004, Linkwell Tech acquired 90% of Likang Disinfectant 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. Shanghai Shanhai Group is owned
by Shanghai Shanhai Group Employee Share-holding Committee (16.25%) and Shanghai
Baoshan District Dachang Town South Village Economic Cooperation Club (83.75%).
Likang Disinfectant's officers and directors, Messrs. Xue Lian Bian and Wei
Guan, own Shanghai Likang Pharmaceuticals Technology Company, Limited, owning
90% and 10%, respectively, of that company. The transaction in which Linkwell
Tech acquired the 90% interest in Likang Disinfectant resulted in the formation
of a U.S. holding company by Messrs. Bian and Guan as it did not result in a
change in the underlying ownership interests of Likang.

         Our then officers and directors resigned at the closing of the share
exchange and Messrs. Wei Guan and Xue Lian Bian, who were the officers and
directors of Linkwell Tech, were appointed our officers and directors. In
connection with the share exchange and to satisfy all outstanding obligations
and indebtedness owed by our company to our former CEO and certain third
parties, Linkwell Tech provided us $175,000 which we provided to our former CEO
to be used by him to satisfy these obligations. We also issued our former CEO
1,400,000 shares of our common stock.

         In July 2005, we changed our name to Linkwell Corporation. As described
earlier in this Form 10K-SB under "Management's Discussion and Analysis or Plan
of Operation - Sale of Aerisys Incorporated" in February 2006 we sold our
interest in that subsidiary to our former CEO in exchange for the assumption of
all liabilities related to it.

         In February 2006, we sold 100% of the stock of Aerisys to Mr. Gary
Verdier, our former CEO, in exchange for the assumption of all liabilities and
obligations of Aerisys. Prior to the share exchange agreement with Linkwell Tech
in May 2005, Aerisys had represented our sole operations. Aerisys marketed and
sold the Aerisys Intelligent Community (TM), a web-based software program and
private, browser-based intranet product that allows schools to collaborate with
parents and faculty each day on classroom, homework assignments, critical dates,
team priorities and school news in a private forum, primarily to Kindergarten
through 12th grade private schools. We had not been able to improve sales or
business opportunities for Aerisys since May 2005.

                                       -20-
<page>


RISK FACTORS

         An investment in our common stock involves a significant degree of
risk. You should not invest in our common stock unless you can afford to lose
your entire investment. You should consider carefully the following risk factors
and other information in this annual report before deciding to invest in our
common stock.

RISKS RELATED TO OUR COMPANY

We engage in a number of material  transactions  with related  parties which
could result in a conflict of interest involving our management.

         We are materially dependent on certain related party transactions in
the ongoing conduct of our business. Sales to our affiliates Shanghai
Likang Pharmaceuticals Technology Company, Limited and Shanghai Likang Meirui
Pharmaceutical High-Tech Co., Ltd. represented approximately 41.8% of our total
net revenues for year ended December 31, 2006 and approximately 36% of our total
net revenues for year ended 2005. These related parties represented
approximately 45.5% and approximately 44.5% of our accounts receivable at
December 31, 2006 and 2005, respectively. In addition, we lease our principal
executive offices from Shanghai Shanhai Group, the minority shareholder of our
Likang subsidiary, and Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd,
an affiliated company of this minority shareholder, both of which supply us with
raw materials and acts as contract manufacturers for certain of our products. We
have also engaged in a number of other related party transactions including
extending working capital loans to Shanghai Likang Pharmaceuticals Technology
Company, Limited and Shanghai Likang Biological High-Tech Company, Ltd.,
purchasing real property from Shanghai Likang Pharmaceuticals Technology
Company, Limited and utilizing the services of Shanghai Likang Biological
High-Tech Company, Ltd. to process certain of our products. These affiliated
transactions may from time to time result in a conflict of interest for our
management. Because these transactions are not subject to the approval of our
shareholders, investors in our company are wholly reliant upon the judgment of
our management in these related party transactions.

The  management of our company is located in the PRC and we are materially
dependent  upon advisory  services of a U.S. company.

         None of the current members of our management team have any experience
in U.S. public companies and these individuals are not fluent in English. We
have engaged China Direct Investments, Inc. to provide us with various advisory
and consulting services, including U.S. business methods and compliance with SEC
disclosure requirements. We selected China Direct Investments, Inc. to provide
these services to us in part because its staff includes Chinese-speaking
individuals with experience in the operation and regulatory framework applicable
to U.S. public companies. Until such time as we are able to expand our board of
directors to include English-speaking individuals who have experience with the
operation and regulatory framework applicable to U.S. public companies, we are
materially dependent upon our relationship with China Direct Investments, Inc.
Our contract with this company expires in December 2006. If for any reason China
Direct Investments, Inc. should fail to provide the contracted services at the
anticipated levels or fails to extend its services and we have not added members
to our board of directors with the requisite experience we may be unable to
prepare and file reports as required by the Securities Exchange Act of 1934 on a
timely basis which could lead to our common stock being removed from the OTCBB.
In this event, your ability to liquidate your investment would be negatively
impacted and you could lose your entire investment in our company.

         On January 1, 2007, the Company entered into a three year agreement
with China Direct Investments, Inc. to provide business development and
management services. In connection with this agreement, the Company issued
4,700,000 shares of the Company's common stock for the service period from
January 1, 2006 to December 31, 2008. Accordingly, the Company recorded the
deferred consulting expense of $282,000.


                                       -21-
<page>


We extend relatively long payment terms for accounts receivable, including on
sales to related parties,  which can negatively impact our cash flows.

         As is customary in the PRC, we extend relatively long payment terms to
our customers, including on sales to related parties. Our terms of sale
generally require payment within four to six months, which is considerably
longer than customary terms offered in the United States. For the year ended
December 31, 2005, the average turn on accounts receivable from non-related
third parties was 127 days and the average turn on accounts receivable from
related parties was 106 days. For the year ended December 31, 2006, the
average turn on accounts receivable from non-related third parties was 30 days
and the average turn on accounts receivable from related parties was 33 days. We
also occasionally offer established customers, including related parties, longer
payment terms of up to 240 days on new products as an incentive to purchase
these products, which has served to further increase the average days
outstanding for accounts receivable. In addition, we maintain a relatively low
reserve for doubtful accounts when compared to a company operating in the U.S.
Our payment terms can have the effect of adversely impacting our cash flow and
our ability to fund our operations out of our operating cash flow. Our ability
to continue to implement our growth strategy could suffer if our cash flows are
adversely impacted which will have the effect of limiting our ability to
increase our revenues in the future.

Certain  agreements  to  which  we are a party  and  which  are  material  to
our  operations  lack  various  legal protections which are customarily
contained in similar contracts prepared in the United States.

         We are a Chinese company and all of our business and operations are
conducted in China. We are a party to certain material contracts, including an
agreement for the lease for our principal offices and manufacturing facility.
While these contracts contain the basic business terms of the agreements between
the parties, these contracts do not contain certain provisions which are
customarily contained in similar contracts prepared in the U.S., such as
representations and warranties of the parties, confidentiality and non-compete
clauses, provisions outlining events of defaults, and termination and
jurisdictional clauses. Because our material contracts omit these types of
clauses, notwithstanding the differences in Chinese and U.S. laws we may not
have the same legal protections as we would if the contracts contained these
additional provisions. We anticipate that contracts we enter into in the future
will likewise omit these types of legal protections. While we have not been
subject to any adverse consequences as a result of the omission of these types
of clauses, and we consider the contracts to which we are a party to contain all
the material terms of our business arrangements with the other party, future
events may occur which lead to a dispute under agreements which could have been
avoided if the contracts were prepared in conformity with U.S. standards.
Contractual disputes which may arise from this lack of legal protection will
divert management's time from the operation of our business and require us to
expend funds attempting to settle possible disputes. This possible diversion of
management time will limit the time our management would otherwise devote to the
operation of our business, and the diversion of capital could limit the funds we
have available to pay our ongoing operating expenses.

Each of our product groups operate in highly competitive businesses.

         Each of our product groups are subject to competition from other
manufacturers of similar products. There are approximately 1,000 manufacturers
of similar disinfectant products in China, but only approximately 30
manufacturers, including our company, operate on a continuous basis with the
remainder of the companies periodically entering the market in times of
increased demand. While we believe we are one of the leading manufacturers of
disinfectant products in the PRC, from time to time there is a sporadic
oversupply of these products which can adversely impact our market share and
competitive position in this product group. As a result, we may not be able to
effectively compete in our product segments which could have the effect of
limiting our ability to sustain our current level of operations or grow our
revenues in future periods.

                                       -22-
<page>


Because of the  specialized,  technical  nature of the  business,  we are
highly  dependent  on certain  members of management, as well as our marketing,
engineering and technical staff.

         The loss of the services of our current management and skilled
employees could have a material and negative effect on our ability to
effectively pursue our business strategy. In addition to manufacturing high
volumes of our products and developing new products, we must attract, recruit
and retain a sizeable workforce of technically competent employees, including
additional skilled and experienced managerial, marketing, engineering and
technical personnel. If we are unable to do so, our ability to grow our business
and increase our revenues could be limited.

If we experience customer concentration, we may be exposed to all of the risks
faced by our material customers.

         For the years ended December 31, 2006 and 2005 revenues from one
customer, Shanghai Likang Pharmaceuticals Technology Company, Limited, an
affiliate, represented approximately 40% and approximately 36%, respectively, of
our total net revenues. Unless we maintain multiple customer relationships, it
is likely that we will experience periods during which we will be highly
dependent on a limited number of customers. Dependence on a few customers could
make it difficult to negotiate attractive prices for our products and could
expose us to the risk of substantial losses if a single dominant customer stops
conducting business with us. Moreover, to the extent that we are dependent on
any single customer, we are subject to the risks faced by that customer to the
extent that such risks impede the customer's ability to stay in business and
make timely payments to us.

We depend on factories to manufacture our products, which may be insufficiently
insured against damage or loss.

         We have no direct business operation, other than our ownership of our
subsidiaries located in China, and our results of operations and financial
condition are currently solely dependent on our subsidiaries' factories in
China. We do not currently maintain insurance to protect against damage and loss
to our facilities and other leasehold improvements. Therefore, any material
damage to, or the loss of, any of our facilities due to fire, severe weather,
flooding or other cause, would not be shared with an insurance company, and if
large enough, would have a material and negative effect on our financial
condition. If the damage was significant, we could be forced to stop operations
until such time as the faculties could be repaired.

Our operations are subject to government regulation. If we fail to comply with
the applicable regulations, our ability to operate in future periods could be in
jeopardy.

         We are subject to various state and local environmental laws related to
our business. We are subject to local food, drug, environmental laws related to
certification of manufacturing and distributing of any disinfectant. We are also
licensed by the Shanghai City Government to manufacture and distribute
disinfectants. While we are in substantial compliance with all provisions of
those registrations, inspections and licenses and have no reason to believe that
they will not be renewed as required by the applicable rules of the Central
Government and the Shandong Province, any non-renewal of these authorities could
result in the cessation of our business activities.

                                       -23-
<page>


We may not have sufficient protection of certain of our intellectual property.

         We utilize certain technologies in the purification of raw material
used in our products which are proprietary in nature. We are not a party to any
confidentiality or similar agreements with employees and third parties including
consultants, vendors and customers and it is not likely that we will enter into
these types of agreements in the future. It is possible that our employees or a
third party could, without authorization, utilize our propriety technologies
without our consent. The unauthorized use of this proprietary information by
third parties could adversely affect our business and operations as well as any
competitive advantage we may have in our market segment. We may not have
adequate remedies for the protection of our proprietary technologies and these
proprietary technologies could become known or independently developed by
competitors, in which event our ability to effectively compete could be in
jeopardy.

We have not voluntarily  implemented various corporate governance measures,
in the absence of which,  shareholders may have reduced protections against
interested director transactions, conflicts of interest and other matters.

         We are not subject to any law, rule or regulation requiring that we
adopt any of the corporate governance measures that are required by the rules of
national securities exchanges such as independent directors and audit
committees. It is possible that if we were to adopt some or all of the corporate
governance measures, shareholders would benefit from somewhat greater assurances
that internal corporate decisions were being made by disinterested directors and
that policies had been implemented to define responsible conduct. Prospective
investors should consider our current lack of corporate governance measures in
formulating their investment decisions.

RISKS RELATED TO DOING BUSINESS IN CHINA

All of our assets and  operations  are located in the PRC and are subject to
changes  resulting  from the political and economic policies of the Chinese
government.

         Our business operations could be restricted by the political
environment in the PRC. The PRC has operated as a socialist state since 1949 and
is controlled by the Communist Party of China. In recent years, however, the
government has introduced reforms aimed at creating a "socialist market economy"
and policies have been implemented to allow business enterprises greater
autonomy in their operations. Changes in the political leadership of the PRC may
have a significant effect on laws and policies related to the current economic
reform programs, other policies affecting business and the general political,
economic and social environment in the PRC, including the introduction of
measures to control inflation, changes in the rate or method of taxation, the
imposition of additional restrictions on currency conversion and remittances
abroad, and foreign investment. Moreover, economic reforms and growth in the PRC
have been more successful in certain provinces than in others, and the
continuation or increases of such disparities could affect the political or
social stability of the PRC.

         Although we believe that the economic reform and the macroeconomic
measures adopted by the Chinese government have had a positive effect on the
economic development of China, the future direction of these economic reforms is
uncertain and the uncertainty may decrease the attractiveness of our company as
an investment, which may in turn result in a decline in the trading price of our
common stock.

                                       -24-
<page>

The  Chinese  government  exerts  substantial  influence  over the  manner in
which we must  conduct  our  business activities.

         The PRC only recently has permitted provincial and local economic
autonomy and private economic activities. The government of the PRC has
exercised and continues to exercise substantial control over virtually every
sector of the Chinese economy through regulation and state ownership.
Accordingly, government actions in the future, including any decision not to
continue to support recent economic reforms and to return to a more centrally
planned economy or regional or local variations in the implementation of
economic policies, could have a significant effect on economic conditions in the
PRC or particular regions thereof. In such an event, we could be forced to cease
operations.

Restrictions on currency exchange may limit our ability to receive and use our
revenues effectively.

         Because all of our revenues are in the form of Renminbi, any future
restrictions on currency exchanges may limit our ability to use revenue
generated in Renminbi to fund any future business activities outside China or to
make dividends or other payments in U.S. dollars. Although the Chinese
government introduced regulations in 1996 to allow greater convertibility of the
Renminbi for current account transactions, significant restrictions still
remain, including primarily the restriction that foreign-invested enterprises
may only buy, sell or remit foreign currencies, after providing valid commercial
documents, at those banks authorized to conduct foreign exchange business. In
addition, conversion of Renminbi for capital account items, including direct
investment and loans, is subject to government approval in China, and companies
are required to open and maintain separate foreign exchange accounts for capital
account items. We cannot be certain that the Chinese regulatory authorities will
not impose more stringent restrictions on the convertibility of the Renminbi,
especially with respect to foreign exchange transactions.

We may be unable to enforce our rights due to policies regarding the regulation
of foreign investments in China.

         The PRC's legal system is a civil law system based on written statutes
in which decided legal cases have little value as precedents, unlike the common
law system prevalent in the United States. The PRC does not have a
well-developed, consolidated body of laws governing foreign investment
enterprises. As a result, the administration of laws and regulations by
government agencies may be subject to considerable discretion and variation, and
may be subject to influence by external forces unrelated to the legal merits of
a particular matter. China's regulations and policies with respect to foreign
investments are evolving. Definitive regulations and policies with respect to
such matters as the permissible percentage of foreign investment and permissible
rates of equity returns have not yet been published. Statements regarding these
evolving policies have been conflicting and any such policies, as administered,
are likely to be subject to broad interpretation and discretion and to be
modified, perhaps on a case-by-case basis. These uncertainties regarding such
regulations and policies present risks which may affect our ability to achieve
our stated business objectives. If we are unable to enforce any legal rights we
may have under our contracts or otherwise, our ability to compete with other
companies in our industry could be limited which could result in a loss of
revenue in future periods which could impact our ability to continue as a going
concern.

                                       -25-
<page>


Recent PRC  regulations  relating to  acquisitions  of PRC  companies  by
foreign  entities  may create  regulatory uncertainties that could restrict or
limit our ability to operate, including our ability to pay dividends.

         The PRC State Administration of Foreign Exchange, or SAFE, issued a
public notice in January 2005 concerning foreign exchange regulations on mergers
and acquisitions in China. The public notice states that if an offshore company
controlled by PRC residents intends to acquire a PRC company, such acquisition
will be subject to strict examination by the relevant foreign exchange
authorities. The public notice also states that the approval of the relevant
foreign exchange authorities is required for any sale or transfer by the PRC
residents of a PRC company's assets or equity interests to foreign entities for
equity interests or assets of the foreign entities.

         In April 2005, SAFE issued another public notice further explaining the
January notice. In accordance with the April 2005 notice, if an acquisition of a
PRC company by an offshore company controlled by PRC residents has been
confirmed by a Foreign Investment Enterprise Certificate prior to the
promulgation of the January 2005 notice, the PRC residents must each submit a
registration form to the local SAFE branch with respect to their respective
ownership interests in the offshore company, and must also file an amendment to
such registration if the offshore company experiences material events, such as
changes in the share capital, share transfer, mergers and acquisitions, spin-off
transaction or use of assets in China to guarantee offshore obligations. The
April 2005 notice also provides that failure to comply with the registration
procedures set forth therein may result in restrictions on our PRC resident
shareholders and our subsidiaries. Pending the promulgation of detailed
implementation rules, the relevant government authorities are reluctant to
commence processing any registration or application for approval required under
the SAFE notices.

         In addition, on August 8, 2006, the Ministry of Commerce ("MOFCOM"),
joined by the State-Owned Assets Supervision and Administration Commission of
the State Council, State Administration of Taxation, State Administration for
Industry and Commerce, China Securities Regulatory Commission and SAFE, amended
and released the Provisions for Foreign Investors to Merge and Acquire Domestic
Enterprises, new foreign-investment rules which took effect September 8, 2006,
superseding much, but not all, of the guidance in the prior SAFE circulars.
These new rules significantly revise China's regulatory framework governing
onshore-offshore restructurings and how foreign investors can acquire domestic
enterprises. These new rules signify greater PRC government attention to
cross-border merger, acquisition and other investment activities, by confirming
MOFCOM as a key regulator for issues related to mergers and acquisitions in
China and requiring MOFCOM approval of a broad range of merger, acquisition and
investment transactions. Further, the new rules establish reporting requirements
for acquisition of control by foreigners of companies in key industries, and
reinforce the ability of the Chinese government to monitor and prohibit foreign
control transactions in key industries.

         These new rules may significantly affect the means by which
offshore-onshore restructurings are undertaken in China in connection with
offshore private equity and venture capital financings, mergers and
acquisitions. It is expected that such transactional activity in China in the
near future will require significant case-by-case guidance from MOFCOM and other
government authorities as appropriate. It is anticipated that application of the
new rules will be subject to significant administrative interpretation, and we
will need to closely monitor how MOFCOM and other ministries apply the rules to
ensure its domestic and offshore activities continue to comply with PRC law.
Given the uncertainties regarding interpretation and application of the new
rules, we may need to expend significant time and resources to maintain
compliance.

                                       -26-
<page>

         It is uncertain how our business operations or future strategy will be
affected by the interpretations and implementation of the SAFE notices and new
rules. Our business operations or future strategy could be adversely affected by
the SAFE notices and the new rules. For example, we may be subject to more
stringent review and approval process with respect to our foreign exchange
activities.

Failure to comply with the United  States  Foreign  Corrupt  Practices  Act
could subject us to penalties and other adverse consequences.

         We are subject to the United States Foreign Corrupt Practices Act,
which generally prohibits United States companies from engaging in bribery or
other prohibited payments to foreign officials for the purpose of obtaining or
retaining business. Corruption, extortion, bribery, pay-offs, theft and other
fraudulent practices occur from time-to-time in the PRC. We can make no
assurance, however, that our employees or other agents will not engage in such
conduct for which we might be held responsible. If our employees or other agents
are found to have engaged in such practices, we could suffer severe penalties
and other consequences that may have a material adverse effect on our business,
financial condition and results of operations.

We may have difficulty establishing adequate management, legal and financial
controls in the PRC.

         PRC companies have historically not adopted a Western style of
management and financial reporting concepts and practices, which includes strong
corporate governance, internal controls and, computer, financial and other
control systems. In addition, we may have difficulty in hiring and retaining a
sufficient number of qualified employees to work in the PRC. As a result of
these factors, we may experience difficulty in establishing management, legal
and financial controls, collecting financial data and preparing financial
statements, books of accounts and corporate records and instituting business
practices that meet Western standards. Therefore, we may, in turn, experience
difficulties in implementing and maintaining adequate internal controls. Any
such deficiencies, weaknesses or lack of compliance could have a materially
adverse effect on our business.

Revised tax structure proposed by the National  Peoples Congress could have a
material impact on our performance.

         On December 24, 2006, the Chinese government officially submitted a
draft of the new Enterprise Income Tax Law which seeks to unify China's dual tax
system. Presently China has a dual tax policy with different rates of taxation
for domestic enterprises as opposed to foreign investment enterprises. The new
unified tax rate is proposed to be 25% for all entities, which is higher than
the 15% rate currently applied to foreign investment entities, however low
profit enterprises, whether foreign investment enterprises or domestic
enterprises, may be subject to a lower tax rate of 20%. It is uncertain how this
new policy, if adopted, would impact our subsidiaries, as all the components of
the revised policy have not been determined.


                                       -27-
<page>

RISKS RELATED TO OUR COMMON STOCK

We have not voluntarily  implemented various corporate governance measures,  in
the absence of which,  stockholders may have more limited  protections  against
interested  director  transactions,  conflicts of interest and similar
matters.

         Recent Federal legislation, including the Sarbanes-Oxley Act of 2002,
has resulted in the adoption of various corporate governance measures designed
to promote the integrity of corporate management and the securities markets.
Some of these measures have been adopted in response to legal requirements.
Others have been adopted by companies in response to the requirements of
national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on
which their securities are listed. Among the corporate governance measures that
are required under the rules of national securities exchanges are those that
address board of directors' independence, audit committee oversight, and the
adoption of a code of ethics. Although we have adopted a Code of Ethics, we have
not yet adopted any of these other corporate governance measures and, since our
securities are not yet listed on a national securities exchange, we are not
required to do so. We have not adopted corporate governance measures such as an
audit or other independent committees of our board of directors as we presently
do not have any independent directors. If we expand our board membership in
future periods to include additional independent directors, we may seek to
establish an audit and other committees of our board of directors. It is
possible that if we were to adopt some or all of these corporate governance
measures, stockholders would benefit from somewhat greater assurances that
internal corporate decisions were being made by disinterested directors and that
policies had been implemented to define responsible conduct. For example, in the
absence of audit, nominating and compensation committees comprised of at least a
majority of independent directors, decisions concerning matters such as
compensation packages to our senior officers and recommendations for director
nominees may be made by a majority of directors who have an interest in the
outcome of the matters being decided. Prospective investors should bear in mind
our current lack of corporate governance measures in formulating their
investment decisions.

Provisions of our Certificate of  Incorporation  and bylaws may delay or prevent
a takeover which may not be in the best interests of our stockholders.

         Provisions of our articles of incorporation and bylaws may be deemed to
have anti-takeover effects, which include when and by whom special meetings of
our shareholders may be called, and may delay, defer or prevent a takeover
attempt. In addition, certain provisions of the Florida Revised Statutes also
may be deemed to have certain anti-takeover effects which include that control
of shares acquired in excess of certain specified thresholds will not possess
any voting rights unless these voting rights are approved by a majority of a
corporation's disinterested shareholders.

         In addition, our articles of incorporation authorize the issuance of up
to 10,000,000 shares of preferred stock with such rights and preferences as may
be determined from time to time by our Board of Directors, of which no shares
are currently outstanding. Our Board of Directors may, without shareholder
approval, issue preferred stock with dividends, liquidation, conversion, voting
or other rights that could adversely affect the voting power or other rights of
the holders of our common stock.

Our stock price will fluctuate and could subject our company to litigation.

         The market price of our common stock may fluctuate significantly in
response to a number of factors, some of which are beyond its control. These
factors include:

        o        quarterly variations in operating results;
        o        changes in accounting treatments or principles;
        o        additions or departures of key personnel;
        o        stock market  price and volume  fluctuations  of
                 publicly-traded  companies in general and  Chinese-based
                 companies in particular; and
        o        general political, economic and market conditions.

                                       -28-
<page>


Because our stock currently  trades below $5.00 per share,  and is quoted on
the OTC Bulletin  Board,  our stock is considered a "penny stock" which can
adversely affect its liquidity.

         As the trading price of our common stock is less than $5.00 per share,
our common stock is considered a "penny stock," and trading in our common stock
is subject to the requirements of Rule 15g-9 under the Securities Exchange Act
of 1934. Under this rule, broker/dealers who recommend low-priced securities to
persons other than established customers and accredited investors must satisfy
special sales practice requirements. The broker/dealer must make an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction.

         SEC regulations also require additional disclosure in connection with
any trades involving a "penny stock," including the delivery, prior to any penny
stock transaction, of a disclosure schedule explaining the penny stock market
and its associated risks. These requirements severely limit the liquidity of
securities in the secondary market because few broker or dealers are likely to
undertake these compliance activities. In addition to the applicability of the
penny stock rules, other risks associated with trading in penny stocks could
also be price fluctuations and the lack of a liquid market.

ITEM 2.           DESCRIPTION OF PROPERTY

         Our facilities include our principal executive offices, located at No.
476 Hutai Branch Road, Baoshan District, Shanghai, China, and our two
manufacturing facilities are located at 1104 Jiatang Road, Jiading District,
Shanghai, 201807 and 2058 Linqiao Road, Zhuhang Town, Jinshan District,
Shanghai, 201506. We own all of the manufacturing equipment in both of our
factories. We lease our principal executive office building and warehouse space,
which consists of approximately 22,800 square feet, from Shanghai Shanhai Group,
a related party, under leases expiring in December 2010 for an
annual rent of approximately $32,000, increasing during the lease years
beginning in 2008 in amounts ranging from 8% to 10% annually.

         Until August 2005 we leased approximately 21,500 square feet of
manufacturing space from Shanghai Likang Pharmaceutical Technology Company,
Limited, an affiliate, under a lease originally expiring in December 2006 for an
annual rent of approximately $11,500. In August 2005 we purchased this building,
which includes an assignment of the land use permit, for $333,675. See Part II,
Item 12. Certain Relationships and Related Transactions, and Director
Independence appearing later in this annual report.

         We lease approximately 4,300 square feet of manufacturing space from
Shanghai Jinshan Zhuhang Plastics Lamps Factory, an unaffiliated third party,
under a lease expiring in December 2006 for an annual rent of approximately
$3,125. We also lease approximately 1,480 square feet of warehouse space from
Shanghai Henglian Industrial Co. Limited, an unaffiliated third party, under two
leases which expire between September and October 2007 for an annual rental rate
of approximately $37,410. The Company leases its principal executive offices and
warehouse space from Shanghai Shanhai Group for approximately $36,000 per year.
Shanghai Shanhai Group also holds the land use permit for the principal
executive office building. For the years ended December 31, 2006 and 2005, rent
expense paid to this related party amounted to $38,462 and $31,664,
respectively.

                                       -29-
<page>

ITEM 3.           LEGAL PROCEEDINGS

         We are not a party to any pending legal proceedings and, to our
knowledge, none of our officers, directors or principal stockholders are party
to any legal proceeding in which they have an interest adverse to us.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is quoted on the OTCBB. On March 24, 2005 our symbol
was changed from KSHR to LWLL in connection with a 1:10 reverse split of our
common stock effective on that date. The reported high and low bid prices for
the common stock as reported on the OTCBB are shown below for the periods
indicated. The quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission, and may not represent actual transactions.

                                                         High             Low
Fiscal 2005

First quarter ended March 31, 2005                      $0.20             $0.01
Second quarter ended June 30, 2005                      $0.40             $0.11
Third quarter ended September 30, 2005                  $0.32             $0.04
Fourth quarter ended December 31, 2005                  $0.74             $0.148

Fiscal 2006

First quarter ended March 31, 2006                      $0.26             $0.151
Second quarter ended June 30, 2006                      $0.36             $0.221
Third quarter ended September 30, 2006                  $0.264            $0.15
Fourth quarter ended December 31, 2006                  $0.32             $0.17

         On April 2, 2007, the last sale price of our common stock as reported
on the OTCBB was $.21. As of April 2, 2007 there were approximately 148 record
owners of our common stock.

Dividend Policy

            We have never paid cash dividends on our common stock. Payment of
dividends will be within the sole discretion of our Board of Directors and will
depend, among other factors, upon our earnings, capital requirements and our
operating and financial condition. At the present time, our anticipated
financial capital requirements are such that we intend to follow a policy of
retaining earnings in order to finance the development of our business.

                                       -30-
<page>


         While we have no current intention of paying dividends on our common
stock, should we decide in the future to do so, as a holding company, our
ability to pay dividends and meet other obligations depends upon the receipt of
dividends or other payments from our operating subsidiaries. In addition, our
operating subsidiaries, from time to time, may be subject to restrictions on
their ability to make distributions to us, including as a result of restrictive
covenants in loan agreements, restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other regulatory restrictions.

Securities Authorized For Issuance Under Equity Compensation Plans

         The following table sets forth securities authorized for issuance under
equity compensation plans, including individual compensation arrangements, by us
under our Stock Option Plan and any compensation plans not previously approved
by our stockholders as of December 31, 2006.

<table>
<caption>


                                        Number of      Weighted average       Number of
                                      securities to     exercise price        securities
                                     be issued upon    of outstanding        remaining
                                       exercise of         options,         available for
                                       outstanding       warrants and      future issuance
                                        options,         rights (b)         under equity
                                      warrants and                          compensation
                                        rights (a)                        plans (excluding
                                                                            securities
                                                                          reflected in
                                                                           column (a)) (c)

                                    <c>            <c>             <c>
-------------------------------------- -------------  --------------- ---------------------
Plan category
-------------------------------------- -------------  --------------- ---------------------
Plans approved by our stockholders:
-------------------------------------- -------------  --------------- ---------------------
2005 Equity Compensation Plan              0               NA               3,000,000
-------------------------------------- -------------  --------------- ---------------------
Plans not approved by stockholders:     NONE               NA                  NONE
-------------------------------------- -------------  --------------- ---------------------
None
-------------------------------------- -------------  --------------- ---------------------
</table>


         A description of each of these plans is contained later in this report
under Part III, Item 10. Executive Compensation - Stock Option Plans.

Recent Sales of Unregistered Securities

         On January 1, 2007, the Company entered into a three year agreement
with China Direct Investments, Inc. to provide business development and
management services. In connection with this agreement, the Company issued
4,700,000 shares of the Company's common stock for the service period from
January 1, 2006 to December 31, 2008. Accordingly, the Company recorded the
deferred consulting expense of $282,000.


                                       -31-
<page>

     On July 21, 2006, the holders of 850,000 shares of the outstanding Series B
Preferred Stock converted those shares into 8,500,000 shares of common stock. On
November 1, 2006, the remaining 650,000 shares of Series B Preferred Stock
outstanding, together with accrued but unpaid dividends, were converted into
7,110,766 shares of common stock. Following the conversions on November 1, 2006,
there are no shares of Series B Convertible Preferred Stock remaining
outstanding. As of December 31, 2006, there are no accrued cumulative but
undeclared dividends in arrears related to the Company's Series B Preferred
Stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

In May 2005, we closed a share exchange agreement with all of the shareholders
of Linkwell Tech under which we acquired 100% of the issued and outstanding
shares of Linkwell Tech's common stock in exchange for 36,273,470 shares of our
common stock, which at closing represented approximately 87.5% of the issued and
outstanding shares of our common stock. As a result of the transaction, Linkwell
Tech became our wholly owned subsidiary. In June, 2004, prior to our share
exchange with Linkwell Tech, Linkwell Tech acquired 90% of Likang Disinfectant
through a stock exchange with Shanghai Likang Pharmaceuticals Technology
Company, Limited, the then 90% shareholder of Likang Disinfectanti(pound)
Shanghai Likang Pharmaceuticals Technology Company, Limited is owned by Messrs.
Xuelian Bian and Wei Guan, our officer, directors and principal shareholders.
Shanghai Shanhai Group, an unaffiliated third party, owns the remaining 10% of
Likang Disinfectant. The transaction in which Linkwell Tech acquired the
90% interest in Likang Disinfectant resulted in the formation of a U.S. holding
company by Messrs. Bian and Guan as it did not result in a change in the
underlying ownership interests of Likang Disinfectant. For financial accounting
purposes, the reverse merger transaction in which we acquired Linkwell Tech was
treated as a recapitalization of our company with the former shareholders of the
company retaining approximately 12.5% of the outstanding stock.

We regard Likang Disinfectant's business of disinfectant products for the
commercial medical industry as the primary segment of our business. Our
consolidated financials statements included elsewhere in this annual report for
the periods after the date of the stock exchange between our company and
Linkwell Tech reflect the change in the capital structure of our company due to
the recapitalization. In August 2006, the Company incorporated a new subsidiary,
Shanghai LiKang International Trade Co., Ltd. ("LiKang International"). The
consolidated financial statements for the fiscal year ended December 31, 2006
reflect the operations of our company including Linkwell Tech, Likang
Disinfectant and Likang International Trade Co. Ltd. for the periods presented
while the results of operations for the fiscal year ended December 31, 2005 are
those of Linkwell Tech and Likang Disinfectant.

Since 1988, we have developed, manufactured and distributed disinfectant health
care products primarily to the medical industry in China. In the last few years
China has witnessed a variety of public health crises, such as the outbreak of
SARS, which demonstrated the need for increased health standards in China. In
response, beginning in 2002 the Chinese government has undertaken various
initiatives to improve public health and living standards, including continuing
efforts to educate the public about the need for proper sanitation procedures
and the establishment of production standards for the disinfectant industry in
China. As a result of this heightened license and permit system, all
disinfectant manufacturers must comply with "qualified disinfection product
manufacturing enterprise requirements" established by the Ministry of Public
Health. The requirements include standards for both hardware; including
facilities and machinery, and software; including the technology to monitor the
facilities, as well as the knowledge and capability of both the production staff
and quality control procedures. Following the adoption of the industry standards
in 2002, we have been granted 26 hygiene licenses by the Ministry of Public
Health.

                                       -32-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

We believe that the government standards adopted in July 2002 have increased the
barriers to entry for competitors in the disinfectant industry in China. The
implementation of these improved production standards and license requirements
has effectively decreased the competitive landscape as it pertains to small to
mid size manufacturers since the new standards are especially difficult for
companies with limited product offerings and inferior technical content. In
addition, prior to the adoption of industry standards, disinfectant products
were generally marketed and sold based on price as opposed to quality. We
believe that as a result of the adoption of industry standards, the marketplace
is evolving with a more stringent focus on product quality which we believe will
enable us to increase our base of commercial customers thereby increasing our
revenues.

Historically, our focus has been on the commercial distribution of our products.
Our customers include hospitals, medical suppliers and distribution companies
throughout China. Recently we have made efforts to expand our distribution reach
to the retail market. We have repackaged certain of our commercial disinfectant
products for sale to the consumer market and have commenced upon expanding our
customer base to include hotels, schools, supermarkets, and drugstores. By
virtue of the Chinese government's continuing focus on educating the Chinese
population about the benefits of proper sanitation procedures, we believe that
another key to increase our revenues is the continued expansion of the retail
distribution of our products.

The disinfectant industry in China is an emerging industry which is
populated with small, regional companies. We estimate that there are in excess
of 1,000 manufacturers and distributors of disinfectant products in China;
however, most domestic competitors offer a limited line of products and there
are few domestic companies with a nationwide presence. We believe that our
national marketing and sales presence throughout all 22 provinces, as well as
four autonomous regions, and four municipalities in China gives us a competitive
advantage over many other disinfectant companies in China, and will enable us to
leverage the brand awareness for products with commercial customers to the
retail marketplace.

Our present manufacturing facilities and production capacities are sufficient
for the foreseeable future, and we believe that we otherwise have the assets and
capital available to us necessary to enable us to increase our revenues in
future periods as the overall market for disinfectant products in China
continues to increase. During the balance of fiscal 2007 we will continue to
focus our efforts on developing a retail market for our products, as well as
expanding our traditional base of commercial customers. In addition, we may also
consider the possible acquisition of independent sales networks which could be
used to increase our product distribution as well as aligning our company with
smaller, regional companies in our industry. We have not identified any
potential acquisition targets as of the date of this report.

In August 2006, the Company incorporated a new subsidiary, Shanghai LiKang
International Trade Co., Ltd. ("LiKang International"). Since its inception
LiKang International has primarily served as an agent for third parties who
desire to export goods from China, including computers, computer components,
small medical equipment and instruments, meters, scales electromechanical
devices. Since October 1, 2006, LiKang International expanded its scope of goods
to include light weight construction materials, textile crafts, furniture, and
chemical raw materials and took the ownership of the goods. For the year ended
December 31, 2006, revenues from LiKang International represented approximately
9.3% of our total revenues. In this regard, we have allocated approximately
$300,000 from our recent private offering to be used towards expanded marketing
of our products in the PRC and approximately $400,000 for costs associated with
investigating the feasibility of expanding our sales outside the PRC to the U.S.
In addition, we may also consider the possible acquisition of independent sales
networks which could be used to increase our product distribution as well as
smaller, regional companies in our industry. While we have allocated
approximately $400,000 of proceeds from our recent private offering, we have not
identified any potential acquisition targets.

                                       -33-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

Sale of Aerisys Incorporated

         Prior to the transaction with Linkwell, our wholly-owned subsidiary
Aerisys Incorporated had represented our sole operations. Aerisys marketed and
sold the Aerisys Intelligent Community (TM), a web-based software program and
private, browser-based intranet product that allows schools to collaborate with
parents and faculty each day on classroom homework, assignments, critical dates,
team priorities and school news in a private forum, primarily to K through 12
private schools. Revenues from Aerisys Incorporated represented slightly less
than 1% of our total net revenues for the year ended December 31, 2005, and we
were not able to improve sales or business opportunities for Aerisys since May
2005. In February 2006, we sold 100% of the stock of Aerisys Incorporated to Mr.
Gary Verdier, our former CEO, in exchange for assumption of all liabilities and
obligation of Aerisys Incorporated.

Results of Operations

Fiscal year ended December 31, 2006 ("Fiscal 2006") as compared to the fiscal
year ended December 31, 2005 ("Fiscal 2005")

<table>


                                          <c>                  <c>                     <c>                   <c>

                                                   Fiscal                     Fiscal                     $                  %
                                                    2006                        2005                   Change             Change
                                            --------------------- ------------------------ ---------------------- --------------
Net Revenues                                       $   7,745,378           $    5,465,933          $   2,279,445          41.7%

Cost of sales                                          4,609,557                3,329,444              1,280,113          38.4%

Selling expenses                                         573,315                  331,258                242,057          73.1%

General and administration (GA) expenses               1,731,496                  869,555                861,941            99%

Total operating expenses                               2,304,811                1,200,813              1,103,998             92%
Operating income                                         831,010                  935,676               (104,666)         -11.2%
Total other (expense)                                   (142,647)                (101,214)               (41,433)          40.9%
Gain(loss) from discontinued operations                   12,794                 (20,817)                 33,611         -161.5%
Income taxes                                                  -                (177,177)                 177,177           -100%
Minority interest                                      (133,037)                 (92,339)                (40,698)          44.1%
                                            --------------------- ------------------------ ---------------------- --------------
Net income                                          $    568,120          $      544,129           $     23,991           4.4%
                                            ===================== ======================== ====================== ==============

Net income (loss) attributable to
    common shareholders                             $    471,880          $   (1,267,387)          $   1,739,267        -137.2%
                                            ===================== ======================== ====================== ==============

</table>


Other key indicators:

<table>

                                                                        FISCAL 2006    FISCAL 2005     % OF CHANGE

                                                                    <c>           <c>           <c>
---------------------------------------------------------------------- ------------- -------------- ----------------
Cost of sales as a percentage of revenues                                     59.5%          60.9%            -1.4%
---------------------------------------------------------------------- ------------- -------------- ----------------
Gross profit margin                                                           40.5%          39.1%             1.4%
---------------------------------------------------------------------- ------------- -------------- ----------------
Selling expenses as a percentage of revenues                                   7.4%           6.1%             1.3%
---------------------------------------------------------------------- ------------- -------------- ----------------
G&A expenses as a percentage of revenues                                      22.3%          15.9%             7.4%
---------------------------------------------------------------------- ------------- -------------- ----------------
Total operating expenses as a percentage of revenues                          29.7%          22.0%             7.7%
---------------------------------------------------------------------- ------------- -------------- ----------------
</table>

                                       -34-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

Net revenues

Net revenues for fiscal year 2006 were $7,745,378 as compared to net
revenues of $5,465,933 for fiscal year 2005, an increase of $2,279,445 or
approximately 41.7%. Included in our net revenues for fiscal 2006 are $7,024,382
of revenues attributable to LiKang Disinfectant and $720,996 of revenues
attributable to LiKang International. Revenues attributable to LiKang
Disinfectant increased $1,558,449 for the fiscal year ended 2006 from the fiscal
year 2005, which included an increase of $1,280,169 in related party sales and
an increase of $278,280 in sales to third parties. As we incorporated LiKang
International in the fiscal year 2006 we did not have comparable revenues
during the fiscal year 2005.

We believe our increase in our net revenues from LiKang Disinfectant for the
fiscal year 2006 was attributable to a recent surge in demand for disinfectant
products. Recent health scares such as SARS and the avian flu have increased the
public awareness of health standards in China. In response the Chinese
government has implemented a series of initiatives to establish minimum health
standards. As a result, public demand for disinfectant products has increased.
In addition, during fiscal 2005 we raised our prices on some of our more popular
products, including our Ai'ershi disinfectant tablets and our An'erdian skin
disinfectant, in certain of our markets. Approximately 21% of the increase in
revenues we reported for the fiscal 2006 from the comparable period in fiscal
2005 is attributable to an increase in the volume of products sold, which
includes both new products introduced during fiscal 2006 as well as increased
sales of other products, and approximately 79% of the increase in revenues is
attributable to the increase in average selling prices. We cannot be assured
that demand will continue to increase. Additionally we introduced new products
such as Jifro 4% Chlorhexidine Gluconate, Dianerkang, 2% glutaraldehyde
disinfectant, and the revised 84' disinfectant. Initially, these products have
been received favorably by the public. There is no assurance that these products
will continue to witness increased public demand.

Of our total net revenues for the fiscal year 2006, approximately 42% were
attributable to sales to related parties and approximately 58% were attributable
to sales to third parties, as compared to approximately 36% and approximately
64%, respectively, for fiscal year 2005. Included in our net revenues for fiscal
year 2006 were revenues of $3,211,758 from sales of our products to Shanghai
LiKang Pharmaceuticals Technology Company, Limited, a related entity; this
represents an increase of $1,278,715, or approximately 66.2%, from the fiscal
year 2005. Also included in our net revenues for the year ended 2006 were
revenues of $21,668 from sales of our products to Shanghai LiKang Meirui
Pharmaceuticals High-Tech Co., Ltd., a related party; this represents a decrease
of $2,319 or approximately 9.7%, from Fiscal year 2005, as well as revenues of
$3,773 and $13,462 from sales of raw materials to Shanghai LiKang Biological
High-Tech Company, Ltd., a related party, for the fiscal year 2006 and 2005.

While we increased sales to non-related parties approximately 28.5% for the
Fiscal year 2006 from the comparable period in fiscal 2005, sales to related
parties increased $1,280,169, or approximately 65.4%, which accounts for our
significant increase in revenues for the fiscal year 2006 from the fiscal year
2005. Shanghai LiKang Pharmaceuticals Technology Company, Limited sells our
products using 72 independent sales representatives in other provinces of China.
We attribute this increase in related party sales primarily to the effects of
the overall demand for disinfectant products which has increased orders from
Shanghai LiKang Pharmaceuticals Technology Company, Limited's customers for our
products.

                                       -35-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

Cost of sales

Cost of sales includes raw materials and manufacturing costs, which includes
labor, rent and an allocated portion of overhead expenses such as utilities
directly related to product production. For the fiscal year 2006, cost of sales
amounted to $4,609,557 or approximately 59.5% of net revenues as compared to
cost of sales of $3,329,444 or approximately 60.9% of net revenues for the
fiscal year 2005. For the fiscal year 2006, cost of sales for LiKang
Disinfectant was $3,933,065, or approximately 56.0% of net revenues generated
from LiKang Disinfectant, as compared to $3,329,444 or approximately 60.9% of
net revenues for the fiscal year 2005. The decrease in cost of sales as a
percentage of net revenues for the fiscal 2006 as compared to the fiscal 2005 is
attributable to the effect of price changes implemented during the latter part
of fiscal 2005.

Historically, LiKang Disinfectant's cost of sales is comprised of approximately
65% for raw material costs and approximately 35% for manufacturing costs. We
purchase raw materials from six primary suppliers and we have purchase contracts
with these suppliers in an effort to ensure a steady supply of raw materials. We
also purchase raw materials and finished products from Shanghai LiKang Meirui
Pharmaceutical High-Tech Co. Ltd., a related party. These purchases totaled
$1,094 and $6,788 for the fiscal year 2006 and fiscal year 2005, respectively.
We have not historically experienced a fluctuation in raw material prices and do
not anticipate that the prices will vary much during fiscal 2007.

Included in LiKang Disinfectant's manufacturing costs are rent on our
manufacturing facilities which included a building we leased from Shanghai
LiKang Pharmaceuticals Technology Company, Limited, a related party, for
approximately $11,500 annually, which we purchased during the later part of
fiscal 2005. This served to reduce certain of our overhead expenses; however,
during the latter part of fiscal 2005 we leased additional warehouse facilities
under agreements which provide for annual rental of approximately $37,000 which
are reflected in our overhead expenses for the fiscal year 2006. We experienced
an increase in overhead costs such as utilities and rent during the fiscal year
2006 as compared to the fiscal year 2005.

During the fiscal year 2006 LiKang International's reported net revenues from
August to September 30, 2006. Since October 1, 2006, LiKang International took
the ownership and the risks of the products , therefore, the Company reported
gross revenue and cost of goods sold accordingly. For the fiscal year ended
December 31, 2006, LiKang International reported $676,492 in the cost of goods
sold.

Gross profit

Gross profit for the year ending December 31, 2006 was $3,135,821 or
approximately 40.5% of net revenues, as compared to $2,136,489 or approximately
39.1% of revenues for the year ending December 31, 2005. The gross profit
reflects an overall increase in our sales prices as we expand into new markets.
For example, our Ai'ershi disinfectant tablets are sold in Shanghai for
approximately $.83 per bottle. However in newer markets such as DongBei
Province, Ai'ershi disinfectant tablets are sold at approximately $1.64 per
bottle. An'erdian skin disinfectant sold for approximately $.36 per bottle in
BeiJing and Shanghai. We currently sell this product in western cities such as
ChongQing and XiAn at approximately $.49 per bottle, an increase of 36%.

Operating expenses

Total operating expenses for the fiscal 2006 were $2,304,811, an increase of
$1,103,998, or approximately 91.8%, from total operating expenses for the fiscal
year 2005 of $1,200,813. This increase included the following:

For the fiscal year 2006, selling expenses were $573,315 as compared to $331,258
for the fiscal year 2005, an increase of $242,057, or approximately 73.1%. The
increase is primary attributable to the following reasons:

                                       -36-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

         o Selling expenses incurred LiKang International which were $110,587
for the fiscal year 2006 as compared to $0 for the fiscal year 2005;

         o Consulting fees paid to third parties for the marketing of certain of
our products in our LiKang Disinfectant operating segment. In 2006, we
employed the resources of an external marketing professional for the sale of our
line of 84 disinfectant liquid and disinfectant tablets. For the fiscal year
2006, we paid consulting fees for marketing of $45,863 compared to $36,015 for
the fiscal year 2005 an increase of $9,848 or 27.3%. We anticipate that we will
incur similar consulting expenses in future periods as we develop additional
products and as we seek to introduce these products to market;

         o For the fiscal year 2006, advertising costs amounted to $21,323
compared to $6,461 for the fiscal 2005, an increase of $14,862 or 230%. This
increase is attributable to increased marketing efforts in our LiKang
Disinfectant operating segment;

         o For the fiscal year 2006, we incurred repairs and maintenance costs
of $38,861 as compared to $20,016 for the fiscal year 2005, an increase of
$18,845. Repairs and maintenance costs included machinery maintenance costs; and

         o For the fiscal year 2006, we incurred travel expenses of $76,509 for
our LiKang Disinfectant operating segment as compared to traveling expenses of
$30,036 for the fiscal year 2005, an increase of approximately $46,473. This
increase is attributable to increased travel expenses related to the travel of
our salespersons.

        o For the fiscal year 2006, we incurred costs of approximately of
$55,000 in connection with sales training conferences as compared to $14,000
for the fiscal year 2005, an increase of approximately $41,000. This increase
is attributable to increased marketing expenses. We expect selling expenses to
increase as our revenues increase and we anticipate increased costs related to
marketing, advertising, as well as sales training.

For the year ended December 31, 2006, general and administrative expenses were
$1,731,496 as compared to $869,555 for the fiscal year 2005, an increase of
$861,941, or approximately 98.9% and included the following:

        o General and administrative expenses incurred LiKang International
which were $31,428 for the fiscal year 2006 as compared to $0 for the fiscal
year 2005;

       o We incurred consulting fees of stock based compensation during the
fiscal year 2006 of $398,945 as compared to $53,333 of consulting fees of stock
based compensation for the fiscal year 2005, an increase of $345,612. We expect
these costs to increase in 2007 due to our business development efforts in the
United States;

        o For the fiscal year 2006, we incurred salaries, wages and related
benefits of $426,465 as compared to $191,935 for the fiscal 2005, an increase of
approximately $234,530. For the fiscal year 2006, labor related benefits
amounted to $77,785 compared to $25,340 for the fiscal 2005, an increase of
$52,445 or 207%. These labor related benefits include but are not limited
to pension related expenses, unemployment funds, and other labor related benefit
costs;

       o For the fiscal year 2006, we incurred rental expenses of $81,159 as
compared to $65,455 for the fiscal year 2005, an increase of approximately
$15,704. Of our reported total rent expense of $81,159, approximately $38,462 is
paid to Shanghai Shanhai Group, a related party, under lease agreements for
various properties;

       o For the fiscal year 2006, we incurred travel, meals and entertainment
expenses of $130,640 as compared to $104,349 for the fiscal year 2005, an
increase of approximately $26,291. We expect the same cost level in 2007 due to
our business development efforts in the United States;


                                       -37-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

      o We recorded an increase in bad debt expense of approximately $198,015
due to an increase in the allowance for doubtful accounts based on our current
analysis of accounts receivable.

      o We incurred additional operating expenses of approximately $9,043 from
the comparable period in fiscal 2005 which were associated with an increase in
our operations.

Income from Operations

We reported income from operations of $831,010 for the fiscal year 2006 as
compared to income from operations of $935,676 for the fiscal year 2005, a
decrease of $104,666 or approximately 11%. The decrease was primarily
attributable to the increased operating expenses as we discussed above.

Other Income (Expense)

For the fiscal year 2006, total other expenses amounted to $142,647 as compared
to $101,214 for the fiscal year 2005, an increase of $41,433. This increase is
primarily attributable to:

         o An increase in registration rights penalty expenses of $32,000
incurred due to the fact that our registration statement was not declared
effective by May 28, 2006. We accrued comparable expense of $44,000 for the
fiscal year 2005. The registration statement was declared effective on November
8, 2006 at which time we ceased recording the registration rights penalty;

         o An increase in interest income of $4,114;

         o An increase in other expense of $14,203 which represents
miscellaneous expenses;

          o We recorded interest expense of $41,589 for the fiscal year 2006 as
compared to $42,720 for the fiscal year 2005, a decrease of $1,131 and

         o We also recorded interest expense - related party of $26,132 as
compared to interest expense of $25,657 for the fiscal year 2005,an increase of
$475. This interest expense - related party reflects interest due to Shanghai
Shanhai Group, LiKang Disinfectant's minority shareholder, on a demand loan in
the principal amount of $165,471 made to LiKang Disinfectant for working
capital, together with $9,398 of fixed return due it on its initial investment
in LiKang Disinfectant.

INCOME BEFORE DISCONTINUED OPERATIONS, INCOME TAXES AND MINORITY INTEREST

For the fiscal year 2006, our income before discontinued operations, income
taxes and minority interest is $688,363 as compared to $834,462 for the fiscal
year 2005, a decrease of $146,099 primarily as a result of decreased income from
operations.

Discontinued Operations

         In January 2006, we sold 100% of the capital stock of our Aerisys
subsidiary to its former CEO in exchange for an assumption of all liabilities
related to it. The gain from discontinued operations of $12,794 for the year
ended December 31, 2006 represents the gain on disposal of this subsidiary. For
the year ending December 31, 2005, we had a loss from discontinued operations of
$20,817.

Minority interest

          For the year ending December 31, 2006, we reported a minority
interest expense of $133,037 as compared to $92,399 for the year ended December
31, 2005. The minority interest is attributable to Likang Disinfectant's
minority shareholder, and had the effect of reducing our net income.


                                       -38-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

Net income

         We reported net income of $568,120 for the year ending December 31,
2006 as compared to net income of $544,129 for the year ending December 31,
2005.

Preferred stock dividends

              During the fiscal year 2006, we recorded a preferred stock
dividend of $96,240 which relates accrued but undeclared and unpaid dividends on
our Series B 6% Cumulative Convertible Preferred Stock and the reversal of
accrued and unpaid dividends on our Series A Preferred Stock which was converted
to common stock in June 2006. In November 2006 the holders of the outstanding
shares of Series B 6% Cumulative Convertible Preferred Stock converted those
shares, together with accrued but unpaid dividends, into shares of our common
stock. For fiscal 2005 we recorded a preferred stock dividend of $11,240 which
represents accrued but undeclared and unpaid dividends on our Series A
Convertible Preferred Stock and our Series B 6% Cumulative Preferred Stock.

Deemed preferred stock dividends

             During fiscal 2005, we recorded a deemed preferred stock dividend
of $1,800,276 which relates to our Series A Convertible Preferred Stock
($300,276) and our Series B 6% Cumulative Preferred Stock ($1,500,000). This
non-cash expense related to the beneficial conversion features of those
securities and is recorded with a corresponding credit to paid in capital.



Net income (loss) attributable to common shareholders

             We reported net income attributable to common shareholders of
$471,880 for the Fiscal year 2006 as compared to net loss attributable to common
shareholders of $(1,267,387) for the fiscal year 2005. This translates to
overall per-share income available to shareholders of $.01 for the fiscal year
2006 compared to per-share loss of $(.03) for the fiscal year 2005.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current
and future operations, satisfy its obligations and otherwise operate on an
ongoing basis. The following table provides certain selected balance sheet
comparisons between December 31, 2006 and December 31, 2005:

                                       -39-
<page>


MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)


<table>

          
                           <c>               <c>             <c>                  <c>
                                           December 31,    December 31,           $ of               % of
                                               2006            2005              Change             Change
                                          --------------- ---------------- -------------------- ----------------
                         Working capital     $ 3,564,485     $  2,412,757       $    1,151,728            47.7%
                                    Cash       1,713,723        1,460,078              253,645            17.4%
                Accounts receivable, net       1,682,878        1,347,163              335,715            24.9%
             Accounts receivable-related       1,406,425          872,370              534,055            61.2%
                        Other receivable         414,000                0              414,000           100.0%
                             Inventories         536,483          968,224            (431,741)           -44.6%
                        Prepaid expenses         367,641           81,750              285,891           349.7%
                         Loan receivable          48,609          100,000             (51,391)           -51.4%
                    Total current assets       6,169,759        4,839,541            1,330,218            27.5%
             Property and equipment, net         774,733          686,234               88,499            12.9%
                            Other assets               0              734                (734)          -100.0%
                           Loans payable         652,382          628,869               23,513             3.7%
                  Loans Payable -related         165,471          161,533                3,938             2.4%
   Accounts payable and accrued expenses       1,328,720        1,411,944             (83,224)            -5.9%
                    Due to related party         204,267                0              204,267           100.0%
                      Income tax payable               0           75,489             (75,489)          -100.0%
                 Advances from customers         254,434          126,199              128,235           101.6%
               total current liabilities       2,605,274        2,426,784              178,490             7.4%
                       Total liabilities       2,605,274        2,426,784              178,490             7.4%


</table>

At December 31, 2006, we had a cash balance of $1,713,723. As of December 31,
2006, our cash position by geographic area is as follows:

         United States                                         $    1,091
         China                                                  1,712,632
                                                               ----------
         Total                                                 $1,713,723
                                                               ==========

Our working capital position increased $1,151,728 to $3,564,485 at December 31,
2006 from $2,412,757 at December 31, 2005. This increase in working capital is
primarily attributable to an increase of approximately $414,000 in other
receivable, an increase of approximately $621,992 in accounts receivable due us
from related parties as discussed below, an increase of approximately $247,778
in accounts receivable due from third parties which was offset by decreases in
inventories (approximately $431,741). The increase in accounts receivable due
from both related parties and third parties and corresponding decreases in
inventories reflects the effects of increased sales during the year ended
December 31, 2006 and the corresponding receivables generated by those sales.

The increase in our current assets of $1,330,218 at December 31, 2006 as
compared to December 31, 2005 was offset by an increase in our current
liabilities of $178,490 at December 31, 2006 as compared to December 31, 2005.
The increase in our current liabilities is primarily attributable to advances
from customers as discussed later in this section which were offset by a
decrease in accounts payable.

                                       -40-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)


At December 31, 2006, our inventories of raw materials, work in process and
finished goods, before a reserve for obsolete inventory totaled $536,483, a
decrease of $431,741, or approximately 44.6%, from December 31, 2005. At
December 31, 2006 we have reserved $127,160 for possible obsolescence of
inventories which represents a minimal increase from inventory reserves of
$122,577 at December 31, 2005. Our management determined the reserve was
appropriate based upon its internal analysis of our sales and anticipated
customer demand. We expect to maintain our inventory at these December 31, 2006
levels in future periods.

At December 31, 2006, allowance for doubtful accounts of accounts receivable
from  third parties was $144,639 as compared to $13,343 at December 31, 2005 and
reflects our best estimate of probable losses. As is customary in the PRC, we
extend relatively long payment terms to our customers. Our terms of sale
generally require payment within four to six months, which is considerably
longer than customary terms offered in the United States, however, we believe
that our terms of sale are customary amongst our competitors for a company our
size within our industry. For fiscal 2005, the average turn on accounts
receivable from non-related third parties was 127 days and the average turn on
accounts receivable from related parties as 106 days. For the year ended
December 31, 2006, the average turn on accounts receivable from non-related
third parties was 30 days and the average turn on accounts receivable from
related parties was 33 days. The average accounts receivable increased from
related third parties from $566,702 for the year ended December 31, 2005 to
$1,139,398 for the year ended December 31, 2006. This increase caused our
account receivable turnover from related parties to decrease from 3.45 to 2.74.
Furthermore this caused the average turn on accounts receivable from related
third parties to decrease from 106 days for the year ended 2005 to 33 days for
the year ended 2006. For the year 2006, We reserved an allowance for doubtful
accounts related to accounts receivable due from related parties of 87,937. Of
the $1,406,425 accounts receivable due from related parties at December 31,
2006, $1,390,822, or approximately 98.9%, is due from Shanghai Likang
Pharmaceuticals Technology Company, Limited which buys products from us for
resale to non-related third party customers which are primarily hospitals,
clinics and schools with which Shanghai Likang Pharmaceuticals Technology
Company, Limited has maintained long standing business relationships and have
demonstrated an excellent payment history. In addition, our officers and
directors as the owners of Shanghai Likang Pharmaceuticals Technology Company,
Limited and have orally guaranteed payment on all accounts receivable due our
company from this related party.

We also occasionally offer established customers, including related parties,
longer payment terms on new products as an incentive to purchase these products,
which has served to further increase the average days outstanding for accounts
receivable. As the market for these new products is established, we will
discontinue offering this sales incentive.

At December 31, 2006 we have net accounts receivable due from a related party in
the amount of $1,406,425 which included:

         o $1,390,822 in net accounts receivable due from Shanghai LiKang
Pharmaceuticals Technology Company, Limited for the purchase of products from
us; and

         o $15,603 accounts receivable due from Shanghai LiKang Meirui
Pharmaceutical High-Tech Co. Ltd. for the purchase of products from us.

                                       -41-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)


As described earlier in this section, we sell products to three related parties.
Our terms of sale and settlement on sales to Shanghai LiKang Meirui
Pharmaceutical High-Tech Co. Ltd. are the same as we offer third party
customers. Shanghai LiKang Pharmaceuticals Technology Company, Limited purchases
products from us on an as needed basis in order to fill customer orders they
have received and do not maintain an inventory of our products. They tender
payment to us upon receipt of payment from their customer. The accounts
receivable from Shanghai LiKang Pharmaceuticals Technology Company, Limited are
historically paid within approximately four to six months, which is the same
receivable turn as we experience with our third party customers. Sales of
product to Shanghai LiKang Biological High-Tech Company, Ltd. are made on a
limited basis and consist of certain raw materials used in their manufacturing
process. At December 31, 2006 Shanghai LiKang Biological High-Tech Company, Ltd.
had no balance owing.

Generally, a customer will prepay for an order prior to shipment. At December
31, 2006, our balance sheet reflected advances from customers of $254,434, an
increase of $128,235, or approximately 101.6%, from December 31, 2005. At
December 31, 2006 we recorded advances from customers related to LiKang
Disinfectant of $113,223 and advances from customers related to LiKang
International of $141,211. The advances from customers at December 31, 2005 of
$126,199 were solely for LiKang Disinfectant. Advances from customers consist of
prepayments from third party customers to us for merchandise that had not yet
shipped. We will recognize the deposits as revenue as customers take delivery of
the goods, in compliance with its revenue recognition policy.

Our balance sheet at December 31, 2006 also reflects a loan payable to a related
party of $165,471 which is a working capital loan made to us by Shanghai Shanhai
Group in January 2005. This loan bears interest at 10% per annum and is due on
demand. At December 31, 2006 our balance sheet also reflects $204,267 due to a
related party. This amount includes $156,697 which was advanced to us during the
fiscal year 2006 by Messrs. Bian and Guan, our officers and directors, and
represents the registered capital for LiKang International. Under the applicable
rules of the PRC the registered capital for this new subsidiary was required to
be funded by individuals. Also included in the amount due to related parties at
December 31, 2006 is $47,570 which is due to Shanghai LiKang Biological High
Tech Company which represents accounts payable.

Our balance sheet at December 31, 2006 reflects prepaid expenses and other
current assets of $367,641, an increase of $285,891, or approximately 349.7%,
from December 31, 2005. At December 31, 2006 we recorded prepaid expenses and
other current assets related to LiKang Disinfectant of $105,260 and advances
from customers related to LiKang International of $262,381. The prepaid expenses
and other assets at December 31, 2005 of $81,750 were solely for LiKang
Disinfectant. Prepaid expenses and other current assets consist of prepayments
to third party customers from us for merchandise that had not yet shipped. We
will recognize the payments as expenses as the Company takes delivery of the
goods.

As described elsewhere herein, during the year fiscal year 2006, we established
a new subsidiary, LiKang International, which primarily operates as an import
and export company. As for the trading business, LiKang International sources
goods from a variety of manufacturers in the PRC. Initially, prior to
establishing a credit history, LiKang International will collect a 100% deposit
on all purchase orders at the time of purchase. The deposit will include a fee
LiKang International collects as an export/import service fee. The deposit is
forwarded to the supplier to initiate the order. As the relationship develops
and LiKang International is able to evaluate the creditworthiness of the
customer, LiKang International may elect to reduce the level of the deposit due
from the customer. Eventually, Likang International may waive the deposit
altogether depending on the credit worthiness of the customer. At December 31,
2006, our balance sheet includes $262,381 in prepaid orders from LiKang
International's customers.

                                       -42-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

Likang International, as an exporter of goods, receives incentives from the
central government, to encourage the export of goods from China. The central
government will pay a cash incentive of up to 17% of the gross amount of goods
exported to the exporter. As a result of this government incentive, from time to
time LiKang International may export goods at its cost or at a loss up to the
amount of the government incentive. At December 31, 2006, our balance sheet
includes other receivables of $414,000 which represents funds due from the
central government of China for export incentives.

Furthermore, LiKang International will receive payment from the customer in the
form of advances from customers and LiKang International may pay out to
suppliers in the form of Prepaid Expense in excess of the advances from
customers. The company will do this with the understanding that the government
will provide incentives in the amount of up to 17% of the amount of advances
from customers to encourage the export of goods.

Net cash provided by operating activities for the year ended December 31, 2006
was $135,560 as compared to net cash used in operating activities of $512,873
for the year ended December 31, 2005. For the year ended December 31, 2006, we
used cash provided by operations to fund a net increase in accounts receivable
of $983,378, including an increase of $621,992 in accounts receivables from
related parties, and an increase in prepaid and other current assets $285,891.
These increases were offset by our net income, a decrease in inventory and an
increase in advances from customers, together with an add back of non-cash items
of $854,985. For the year ended December 31, 2005, we used cash to fund a net
increase in accounts receivable of $1,163,612, including an increase in accounts
receivable - related parties of $944,741 in accounts receivables from related
parties Additionally, we funded an increase in inventories of $26,913,
repayments in amounts due to a related party of $258,242 and an increase in
advances from customers of $135,506 which was offset by our net income of
$544,129, the add back of non-cash items of $176,007 and an increase in accounts
payable and accrued expenses of $259,200.

Net cash used in investing activities for the fiscal year 2006 was $97,948 as
compared to $245,593 for the fiscal year 2005, a decrease of $147,645. This
change is attributable to the purchase of additional manufacturing equipment
during the fiscal year 2006 of $149,339 as compared to an expenditure of
$148,053 on the purchase of manufacturing equipment during the fiscal year 2005.
Additionally, the cash received in acquisition for the fiscal year 2006 was $0
as compared to $2,460 for the fiscal year 2005.

Net cash provided by financing activities was $204,267 for the fiscal year ended
December 31, 2006 as compared to net cash provided by financing activities of
$1,738,040 for the fiscal year 2005, a decrease of $1,533,773. During the fiscal
year 2006, we received advanced funds from a related party of $204,267. We
repaid loans payable of $63,157 to a Commercial Bank and received proceeds from
loan payable of $63,157 from Da Chang Credit Union. For fiscal 2005, we received
net proceeds from preferred stock offerings of approximately $1,672,000 and
proceeds from loans payable of approximately $488,000 which was offset by a loan
repayment of $422,705.

After giving effect to the effect of the exchange rate on our cash which
provided a benefit of $11,766 for the fiscal year 2006, we reported a net
increase in cash for the year ended December 31, 2006 of $253,645 as compared to
a net increase in cash of $992,219 for the fiscal year ended 2005.

                                       -43-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

We currently have no material commitments for capital expenditures. As of
December 31, 2006, we had approximately $652,000 in short term loans maturing
during fiscal 2007. We plan on renewing these loans when they become due at term
comparable to current terms. Other than our working capital and loans, we
presently have no other alternative source of working capital available to us.
We want to build an additional manufacturing line and upgrade our manufacturing
facilities and technologies, in order to expand our disinfection products. Based
upon our preliminary estimates this will require capital and other expenditures
of approximately $1 million. Although at December 31, 2006 we had cash on hand
of approximately $1,713,000, these funds are not sufficient to fund the
additional line and upgrade our manufacturing facilities and technologies as
well as providing working capital necessary for our ongoing operations and
obligations. We will need to raise additional working capital to complete this
project. We may seek to raise additional capital through the sale of equity
securities. No assurances can be given that we will be successful in obtaining
additional capital, or that such capital will be available in terms acceptable
to our company. At this time, we have no commitments to obtain additional
capital.

Critical Accounting Policies

        The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these consolidated financial statements
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates based on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

       A summary of significant accounting policies is included in Note 1 to the
audited consolidated financial statements included in this annual report.
Management believes that the application of these policies on a consistent basis
enables us to provide useful and reliable financial information about the
company's operating results and financial condition.

       We record property and equipment 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 40 years. Expenditures for major renewals and
improvements which extend the useful lives of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense as
incurred. We review the carrying value of long-lived assets for impairment at
least annually or whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of long-lived
assets is measured by a comparison of its carrying amount to the undiscounted
cash flows that the asset or asset group is expected to generate. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the property, if any, exceeds its
fair market value.


                                       -44-
<page>


MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)


Recent accounting pronouncements

In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No.48, "Accounting for Uncertainty in Income Taxes--an
interpretation of FASB Statement No.109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions. FIN 48 requires that entities
recognize the impact of a tax position in their financial statements, if that
position is more likely than not to be sustained on audit, based on the
technical merits of the position. The provisions of FIN 48 are effective for
fiscal years beginning after December 15, 2006. The Company believes that the
adoption of FIN 48 will not have a material effect on the Company's financial
statements.

In September 2006, the Staff of the SEC issued SAB No. 108: "Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements". SAB No. 108 provides guidance on the consideration
of the effects of prior year misstatements in quantifying current year
misstatements for the purpose of determining whether the current year's
financial statements are materially misstated. The SEC staff believes
registrants must quantify errors using both a balance sheet and income statement
approach and evaluate whether either approach results in quantifying a
misstatement that, when all relevant quantitative and qualitative factors are
considered, is material. This Statement is effective for fiscal years ending
after November 15, 2006. The adoption of SAB No. 108 did not have a significant
impact on the company's consolidated financial statements.

In March 2006, the FASB issued SFAS No. 156: "Accounting For Servicing of
Certain Financial Instruments- an amendment of SFAS No. 140". This statement
establishes, among other things, the accounting for all separately recognized
servicing assets and servicing liabilities. This statement amends SFAS No. 140
to require that all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable. SFAS No. 156
permits, but does not require, the subsequent measurement of separately
recognized servicing assets and servicing liabilities at fair value. An entity
that uses derivative instruments to mitigate the risks inherent in servicing
assets and servicing liabilities is required to account for those derivative
instruments at fair value. Under SFAS No. 156, an entity can elect subsequent
fair value measurement to account for it's separately recognized servicing
assets and servicing liabilities. By electing that option, an entity may
simplify its accounting because this statement permits income statement
recognition of the potential offsetting changes in fair value of those servicing
assets and servicing liabilities and derivative instruments in the same
accounting period. SFAS No. 156 is effective for financial statements for fiscal
years beginning after September 15, 2006. Earlier adoption of SFAS No. 156 is
permitted as of the beginning of an entity's fiscal year, provided the entity
has not yet issued any financial statements for that fiscal year. The adoption
of SFAS No 156 is not expected have a significant impact on the company's
consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"). This Statement defines fair
value as used in numerous accounting pronouncements, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosure related to the use of fair value measures in financial statements.
The Statement is to be effective for the Company's financial statements issued
in 2008; however, earlier application is encouraged. The Company is currently
evaluating the timing of adoption and the impact that adoption might have on its
financial position or results of operations.


                                       -45-
<page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the consolidated financial
statements upon adoption.

ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements are contained in pages F-1 through F-28, which
appear at the end of this annual report.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


ITEM 8A. CONTROLS AND PROCEDURES


         As required by Rule 13a-15 under the Securities Exchange Act of 1934,
as of December 31, 2006, the end of the period covered by this annual report,
our management concluded its evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures. Disclosure controls and
procedures are controls and procedures designed to reasonably assure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, such as this report, is recorded, processed, summarized
and reported within the time periods prescribed by SEC rules and regulations,
and to reasonably assure that such information is accumulated and communicated
to our management, including our Chief Executive Officer who also serves as our
principal financial and accounting officer, to allow timely decisions regarding
required disclosure.

         Our management does not expect that our disclosure controls and
procedures will prevent all error and all fraud. A control system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance
that the control system's objectives will be met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. The design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions.

                                       -46-
<page>

         Based on this evaluation, our Chief Executive Officer has concluded
that (i) our controls and procedures are not effective to ensure that
information required to be disclosed in the reports that we file or submit under
the Securities Exchange Act of 1934, as amended, is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer, to allow timely decisions regarding required disclosure, and
(ii) our controls and procedures are not effective in providing reasonable
assurance that the information required to be disclosed in this report has been
recorded, processed, summarized and reported as of the end of the period covered
by this report.


         During fiscal 2006 we restated various of our financial statements as
follows:

         o On May 8, 2006 our Board of Directors determined that our financial
statements for the fiscal year ended December 31, 2005 should no longer be
relied upon. The Board of Directors has concluded that $333,675 reflected on our
balance sheet at December 31, 2005 was improperly recorded as Deposit - Related
party when it should have been included in accounts receivable - related
parties. This error was related to the accounting for a transaction recorded in
the fourth quarter of fiscal 2005 in which Likang Disinfectant purchased a
building from a related party, Shanghai Likang Pharmaceuticals Technology
Company, Limited, and

         o On November 2, 2006 our Board of Directors determined that our
restated financial statements for the fiscal year ended December 31, 2005, and
our financial statements for the periods ended March 31, 2006 and June 30, 2006
should no longer be relied upon. With respect to our restated financial
statements for the fiscal year ended December 31, 2005 and our financial
statements for the period ended March 31, 2006 our Board of Directors has
concluded that we had not (i) properly accrued undeclared and unpaid cumulative
dividends on our Series A Convertible Preferred Stock and Series B 6% Cumulative
Convertible Preferred Stock, (ii) properly accounted for an annual fixed return
of $9,375 paid to a minority shareholder of the company's operating subsidiary,
and (iii) properly accounted for reduction in the amount of $422,705 in the
current portion of loans payable at December 31, 2005. With respect to our
financial statements for the period ended June 30, 2006 our Board of Directors
concluded that we had not (i) properly accrued undeclared and unpaid cumulative
dividends on our Series A Convertible Preferred Stock and Series B 6% Cumulative
Convertible Preferred Stock, (ii) properly accounted for an annual fixed return
of $9,375 paid to a minority shareholder of the company's operating subsidiary,
and (iii) properly recorded the minority interest attributable to our subsidiary
Likang's minority shareholder.


         All of our employees and accounting staff are located in the PRC and we
do not presently have a chief financial officer, comptroller or similarly titled
senior financial officer who is bilingual and experienced in the application of
U.S. GAAP. Subsequent to these restatements, we have taken the steps to
eliminate the material weakness related to financial disclosure controls
including the hiring of additional accounting consulting staff to review and
oversee our application of generally accepted accounting principles in the
United States to bring additional financial expertise to our organization and to
facilitate the flow of information to our independent accountants. Since these
restatements, this accounting consulting staff has assisted us in implementing
additional practices to ensure that we (i) properly accrue undeclared and unpaid
dividends, (ii) properly record related party transactions, and (iii) properly
account for changes in loans payable. However, until we expand our full time
staff to include a bilingual senior financial officer who has the requisite
experience necessary, as well as supplement the accounting knowledge of our
staff, notwithstanding the guidance provided to us by the accounting consulting
staff we could continue to have material weaknesses in our disclosure controls
that may lead to restatements of our financial statements in future periods.


                                       -47-
<page>

         Other than the changes discussed above, there have been no changes in
our internal control over financial reporting during our fourth fiscal quarter
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.


ITEM 8B. OTHER INFORMATION

         None.



                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

Directors and Executive Officers

           NAME             AGE              POSITIONS
    ----------------------- --------- -----------------------------------------
    Xue Lian Bian           41        Chief Executive Officer, President
                                      and Chairman of the Board
    ----------------------- --------- -----------------------------------------
    Wei Guan                43        Vice President, Secretary and director
    ----------------------- --------- -----------------------------------------

         Xue Lian Bian. Mr. Bian has served as our Chief Executive Officer,
President and director since May 2, 2005, Chief Executive Officer, President and
director of Linkwell Tech since its inception in June 2004 and General Manager
of Shanghai Likang Disinfectant Company, Limited since 1993. From 1990 to 1993,
he was a project assistant in charge of science and technology achievement
application in the Second Military Medical University, Shanghai, China. From
1986 to 1990, Mr. Bian was a member of the technical staff in the
Epidemiological Institute in the Second Military Medical University. Mr. Bian
contributed to the compilation of "Disinfection - Antiseptic - Anticorrosion -
Preservation" and "Modern Disinfection Study" of which the first book laid the
foundation of the Chinese disinfectant study. Mr. Bian started related research
with his colleagues on the microbiology sterilization effect examination, high
strength ultraviolet lamp tube and decontaminating apparatus prior to the
inception of Likang. Mr. Bian graduated from the China Army Second Military
Medical University in 1990 with a bachelor degree in public health.

         Wei Guan. Mr. Guan has served as our Vice President and a member of our
Board of Directors since May 2, 2005. He has served as Vice President of
Linkwell Tech since its inception in June 2004 and vice General Manager of
Shanghai Likang Disinfectant Company, Limited since 2002. From 1987 to 1990, Mr.
Guan worked Hunan Machinery Importing & Exporting Corporation as a member of
management. From 1990 to 2002, Mr. Guan worked for Division of Importing and
Export at Worldbest Group as a general manager. Mr. Guan graduated from Hunan
University in Changsha, Hunan Province with a bachelor degree in Industry
Foreign Trading in 1987.

            There are no family relationship between any of the executive
officers and directors. Each director is elected at our annual meeting of
stockholders and holds office until the next annual meeting of stockholders, or
until his successor is elected and qualified.


                                       -48-
<page>

Key Employees

         Guoqiang  Fan. Mr. Fan, 43, has been our  Vice-General  Manager in
charge of marketing  since May 2005 and has held the same  position  at Likang
since  1997.  From 1987 to 1997,  Mr. Fan was  employed  at the  Population
College  of  Jiangsu  Province  as a teacher.  Prior to his work as a  teacher,
Mr. Fan worked at Second  Military Medical  University's  Shanghai  Hospital as
a  pharmacist.  Mr. Fan  graduated  from the Second  Military  Medical
University School of Pharmacy with a degree in medicine.

         Gendi Li . Ms. Li, 55,  has  served as  Likang's  Controller  since
2003.  From 1996 to 2003,  Ms. Li was employed as an Executive  Accountant and
Financial  Manager for QiaoFu  Construction  Holding  Company  (Shanghai). From
1993 to 1996, Ms. Li was employed as an Executive  Accountant  and Head of the
Finance  Department at Shanghai Yuxin  Machinery  Co.,  Ltd.  From 1968 to 1993,
Ms. Li was  employed in various  financial  positions,  including Executive
Accountant,  and Head of the Finance  Department at First Plastic  Machinery
Factory.  Ms. Li graduated from the Shanghai Finance and Economics Institute.

          Wensheng  Sun. Mr. Sun, 39, has been  Likang's  Vice-General  Manager
for  Production  since 1995 and has held the same position at Likang since 1995
following  completion of his Masters  degree in Medicine at the Second
Military Medical University School of Pharmacy.


Compliance With Section 16(a) of the Exchange Act

         Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to us under Rule 16a-3(d) of the Securities Exchange Act during the
fiscal year ended December 31, 2006 and Forms 5 and amendments thereto furnished
to us with respect to the fiscal year ended December 31, 2006, as well as any
written representation from a reporting person that no Form 5 is required, we
are aware that the above Board members failed to file on a timely basis, as
disclosed in the aforementioned Forms, reports required by Section 16(a) of the
Securities Exchange Act during the fiscal year ended December 31, 2006, except
as set forth below:

Code of Business Conduct and Ethics

         In December 2005, we adopted a Code of Business Conduct and Ethics
applicable to our Chief Executive Officer, principal financial and accounting
officers and persons performing similar functions. A Code of Business Conduct
and Ethics is a written standard designed to deter wrongdoing and to promote:

        o        honest and ethical conduct,
        o        full, fair, accurate, timely and understandable disclosure in
                 regulatory filings and public statements, compliance with
                 applicable laws, rules and regulations,
        o        the prompt reporting violation of the code, and
        o        accountability for adherence to the Code.

         A copy of our Code of Business Conduct and Ethics has been filed with
the Securities and Exchange Commission as an exhibit to this annual report. We
will provide a copy, without charge, to any person desiring a copy of the Code
of Business Conduct and Ethics, by written request to, No. 476 Hutai Branch
Road, Baoshan District, Shanghai China 200436, Attention: Corporate Secretary.

Committees Of The Board Of Directors

         Our Board of Directors has not established any committees, including an
Audit Committee, a Compensation Committee or a Nominating Committee, any
committee performing a similar function. The functions of those committees are
being undertaken by the entire board as a whole. Because we do not have any
independent directors, our Board of Directors believes that the establishment of
committees of the Board would not provide any benefits to our company and could
be considered more form than substance.

                                       -49-
<page>

         We do not have a policy regarding the consideration of any director
candidates which may be recommended by our stockholders, including the minimum
qualifications for director candidates, nor has our Board of Directors
established a process for identifying and evaluating director nominees. We have
not adopted a policy regarding the handling of any potential recommendation of
director candidates by our stockholders, including the procedures to be
followed. Our Board has not considered or adopted any of these policies as we
have never received a recommendation from any stockholder for any candidate to
serve on our Board of Directors. Given that all of our operations are located in
the PRC and our lack of directors and officers insurance coverage, we do not
anticipate that any of our stockholders will make such a recommendation in the
near future. While there have been no nominations of additional directors
proposed, in the event such a proposal is made, all members of our Board will
participate in the consideration of director nominees.

         None of our directors is an "audit committee financial expert" within
the meaning of Item 401(e) of Regulation S-B. In general, an "audit committee
financial expert" is an individual member of the audit committee or Board of
Directors who:

         o        understands generally accepted accounting principles and
                  financial statements,
         o        is able to assess the general  application of such  principles
                  in connection  with accounting for estimates, accruals and
                  reserves,
         o        has experience  preparing,  auditing,  analyzing or evaluating
                  financial statements comparable to the breadth and complexity
                  to our financial statements,
         o        understands internal controls over financial reporting, and
         o        understands audit committee functions.


         Our Board of Directors is comprised of individuals who were integral to
our formation and who are involved in our day to day operations. While we would
prefer that one or more of our directors be an audit committee financial expert,
none of these individuals who have been key to our development have professional
backgrounds in finance or accounting. When we are able to expand our Board of
Directors to include one or more independent directors, we intend to establish
an Audit Committee of our Board of Directors. It is our intention that one or
more of these independent directors will also qualify as an audit committee
financial expert. Our securities are not quoted on an exchange that has
requirements that a majority of our Board members be independent and we are not
currently otherwise subject to any law, rule or regulation requiring that all or
any portion of our Board of Directors include "independent" directors, nor are
we required to establish or maintain an Audit Committee or other committees of
our Board of Directors.

                                       -50-
<page>


ITEM 10. EXECUTIVE COMPENSATION

                           Summary Compensation Table

         The following table summarizes all compensation recorded by us in each
of the last two completed fiscal years for our principal executive officer, each
other executive officer serving as such whose annual compensation exceeded
$100,000 and up to two additional individuals for whom disclosure would have
been made in this table but for the fact that the individual was not serving as
an executive officer of our company at December 31, 2006.


                                                   SUMMARY COMPENSATION TABLE

<table>
<caption>


                                                                              Non-Equity  Non-qualified
                                                                              Incentive    Deferred         All
                                                          Stock      Option      Plan     Compensation     Other
                          Year      Salary      Bonus     Awards     Awards  Compensation   Earnings     Compensation    Total

                     <c>        <c>        <c>      <c>        <c>         <c>          <c>         <c>            <c>
Name and principal                   ($)        ($)       ($)        ($)            ($)       ($)           ($)           ($)
position (a)              (b)        (c)        (d)       (e)        (f)            (g)       (h)           (i)           (j)
------------------------- ------ ---------- --------- ---------- ------------ ----------- ----------- ------------- -------------
Xue Lian Bian (1)         2006      10,250         0          0            0           0           0             0        10,250
------------------------- ------ ---------- --------- ---------- ------------ ----------- ----------- ------------- -------------
                          2005      10,250         0          0            0           0           0             0        10,250
------------------------- ------ ---------- --------- ---------- ------------ ----------- ----------- ------------- -------------

</table>

1  Mr. Bian has served as our Chief Executive Officer, President and director
since May 2, 2005.


Employment Agreements

         We are not a party to any employment agreements


                  Outstanding Equity Awards at Fiscal Year-End

        The following table provides information concerning unexercised
options, stock that has not vested and equity incentive plan awards for each
named executive officer outstanding as of December 31, 2006:


                                       -51-
<page>


                                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END


<table>
<caption>

                                   OPTION AWARDS                                                     STOCK AWARDS

------------------------------------------------------------------------------------ -------------------------------------------

           <c>             <c>               <c>          <c>      <c>           <c>        <c>       <c>        <c>
                                                                                                                      Equity
                                                                                                          Equity      Incentive
                                                                                                          Incentive   Plan
                                                                                                Market    Plan        Awards:
                                                                                                Value     Awards:     Market or
                                                Equity                                Number    of        Number of   Payout
                                                Incentive                             of        Shares    Unearned    Value of
                                                Plan Awards:                          Shares    or        Shares,     Unearned
                                                Number of                             or        Units     Units or    Shares,
                Number of      Number of        Securities                            Units     of        Other       Units or
                Securities     Securities       Underlying                            of        Stock     Rights      Other
                Underlying     Underlying       Unexercised                           Stock     That      that Have   Rights
                Unexercised    Unexercised      Unearned       Option                 That      Have      Not         That Have
                Options        Options          Options        Exercise   Option      Have      Not       Vested (#)  Not Vested
Name            (#)            (#)              (#)            Price      Expiration  Not       Vested    (i)         (#)
                Exercisable    Unexercisable    (d)            ($)        Date        Vested    ($)                   (j)
(a)             (b)            (c)                             (e)        (f)         (#)       (h)
--------------- -------------- ---------------- -------------- ---------- ----------- --------- --------- ----------- ------------
Xue Lian Bian         0               0               0            0          0          0         0          0            0
--------------- -------------- ---------------- -------------- ---------- ----------- --------- --------- ----------- ------------
OTHERS                 NA            NA                  NA          NA       NA         NA        NA         NA          NA

</table>


Stock Option Plans

Year 2000 Equity Compensation Plan

         On October 10, 2000, our Board of Directors adopted our Year 2000
Equity Compensation Plan under which a total of 540,000 shares of common stock
are made available for the granting of awards, a portion or all of which may
qualify as incentive stock options, non-incentive stock options and restricted
stock grants. The purpose of the plan, which was approved by our shareholders on
November 10, 2000, is to encourage stock ownership by our officers, directors,
key employees and consultants, and to give such persons a greater personal
interest in the success of our business and an added incentive to continue to
advance and contribute to us. If any option or restricted stock grant expires or
terminates before it has been exercised in full, the shares of common stock
allocable to the unexercised portion of such option or restricted stock grant
may again be subject to an option or restricted stock grant under the 2000
Equity Compensation Plan. The number of shares available and subject to options,
option prices and, to the extent applicable, the number of shares subject to any
restricted stock grant will be adjusted upward or downward, as the case may be,
in the event of any subdivision or consolidation of shares or other capital
readjustment, stock dividend, merger, consolidation or similar transaction
affecting the shares. At December 31, 2006 we did not have any options to
purchase shares of our common stock outstanding under the plan. The 2000 Equity
Compensation Plan is administered by our Board of Directors who have the sole
authority to determine which eligible employees of our company receive options
and restricted stock grants under the plan, the times when options and
restricted stock grants are granted, the number of shares covered by the option
and restricted stock grant, the provisions of any agreement and when options may
be exercised or when restricted stock grants become vested. In addition, the
Board has the power and authority to construe and interpret the Plan.

                                       -52-
<page>


         Stock options may be granted by the Board at prices determined in the
discretion of the Board, provided that the option price must be at least equal
to the fair market value of the common stock on the date of the grant. The
option price is payable in cash, common stock or such other form of payment as
may be determined by the Board. The exercise price of an incentive stock option
must be at least equal to the fair market value of our common stock on the date
of grant or 110% of such value in the case of options granted to an individual
who is a 10% or greater shareholder of our company.

         An optionee generally may exercise an option only while an employee of
our company. If an optionee becomes disabled or dies while in the employ of our
company, the option may be exercised within one year of the optionee's death or
termination due to disability. The expiration date of an option will be
determined by the Board at the time of the grant, but in no event will an
incentive stock option be exercisable after the expiration of 10 years from the
date of grant or five years in the case of incentive options granted to a 10% or
greater shareholder. The Board may grant to an eligible individual shares of our
common stock subject to specified restrictions on transferability and vesting as
provided in a written grant agreement or resolutions in which the restricted
stock grant is adopted and approved by the Board. Restricted stock grants may be
made in lieu or cash compensation or as additional compensation. The Board may
also make restricted stock grants contingent on pre-established performance
goals determined by the Board. Except for certain transfers that may be
permitted by the Board, no option or restricted stock grant may be transferred
by an eligible individual other than by will or the laws of descent or
distribution.

         The 2000 Equity Compensation Plan terminates on October 10, 2010. The
Board of Directors may at any time amend, suspend or discontinue the plan,
except that no amendment may be made without the approval of the shareholders
which would increase the number of shares subject to the plan, materially change
the designation of the class of employees eligible to receive options, remove
the administration of the plan from the Board or a committee of the Board or
materially increase the benefits accruing to participants under the plan.

Non-Qualified Stock Option Plan

         On December 21, 2000 our Board of Directors adopted our Non-Qualified
Stock Option Plan under which a total of 200,000 shares of common stock are made
available for granting of non-qualified stock options to officers, directors,
employees and key advisors or consultants. The purpose of the plan is to
encourage the participants to contribute materially to our growth. If any option
expires or terminates before it has been exercised in full, the shares of common
stock allocable to the unexercised portion of such option may again be subject
to an option under the Non Qualified Stock Option Plan. The number of shares
available and subject to options and option prices will be adjusted upward or
downward, as the case may be, in the event of any subdivision or consolidation
of shares or other capital readjustment, stock dividend, merger, consolidation
or similar transaction affecting the shares. At December 31, 2006 we did not
have any options to purchase shares of our common stock outstanding under the
plan.

         The Non-Qualified Stock Option Plan is administered by our Board of
Directors who have the sole authority to determine which who is eligible to
receive grants of non-qualified options under the plan, the times when options
are granted, the number of shares covered by the option, the provisions of any
agreement and when options may be exercised. In addition, the Board has the
power and authority to construe and interpret the Plan.


                                       -53-
<page>

         Stock options may be granted by the Board at prices determined in the
discretion of the Board and the exercise price of the option may be greater
than, or less than, the fair market value of our common stock. The option price
is payable in cash, common stock or such other form of payment as may be
determined by the Board. An optionee generally may exercise an option only while
the grantee is employed by us or otherwise providing our company services. If an
optionee becomes disabled or dies while in the employ of our company or while
otherwise providing services to us, the option may be exercised within 90 days
after optionee's death or termination due to disability. The expiration date of
an option will be determined by the Board at the time of the grant, but in no
event will a stock option be exercisable after the expiration of 10 years from
the date of grant. Except for certain transfers that may be permitted by the
Board, no option may be transferred by an eligible individual other than by will
or the laws of descent or distribution.

         The 2000 Equity Compensation Plan terminates on December 21, 2010. The
Board of Directors may at any time amend, suspend or discontinue the plan,
except that no amendment may be made without the approval of the shareholders
which would increase the number of shares subject to the plan, materially change
the designation of the class of employees eligible to receive options, remove
the administration of the plan from the Board or a committee of the Board or
materially increase the benefits accruing to participants under the plan.

2005 Equity Compensation Plan

         On June 28, 2005, our Board of Directors adopted our 2005 Equity
Compensation Plan under which 5,000,000 shares of our common stock have been
reserved for issuance upon the exercise of options or stock grants under the
plan. Our officers, directors, key employees and consultants are eligible to
receive stock grants and non-qualified options under the Plan. Only our
employees are eligible to receive incentive options. The purpose of the 2005
Equity Compensation Plan is to encourage stock ownership by our officers,
directors, key employees and consultants, and to give such persons a greater
personal interest in the success of our business and an added incentive to
continue to advance and contribute to us. Shares used for stock grants and plan
options may be authorized and unissued shares or shares reacquired by us,
including shares purchased in the open market. Shares covered by plan options
which terminate unexercised will again become available for grant as additional
options, without decreasing the maximum number of shares issuable under the
plan, although such shares may also be used by us for other purposes. As of
December 31, 2006 we had no outstanding options or stock grants under the plan
and there were 3,000,000 shares available for issuance under the 2005 Equity
Compensation Plan.

         Our Board of Directors, or a committee of the Board, administers the
2005 Equity Compensation Plan including, without limitation, the selection of
the persons who will be awarded stock grants and granted options, the type of
options to be granted, the number of shares subject to each option and the
exercise price. Plan options may either be options qualifying as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified options. In addition, the plan allows for the inclusion of a
reload option provision, which permits an eligible person to pay the exercise
price of the option with shares of common stock owned by the eligible person and
receive a new option to purchase shares of common stock equal in number to the
tendered shares. Any incentive option granted under the Plan must provide for an
exercise price of not less than 100% of the fair market value of the underlying
shares on the date of grant, but the exercise price of any incentive option
granted to an eligible employee owning more than 10% of our outstanding common
stock must not be less than 110% of fair market value on the date of the grant.
The exercise price of non-qualified options shall be determined by the Board of
Directors, but shall not be less than the par value of our common stock on the
date the option is granted.

                                       -54-
<page>

         The term of each plan option and the manner in which it may be
exercised is determined by the Board of Directors or the committee, provided
that no option may be exercisable more than 10 years after the date of its grant
and, in the case of an incentive option granted to an eligible employee owning
more than 10% of the common stock, no more than five years after the date of the
grant. The plan provides that, with respect to incentive stock options, the
aggregate fair market value (determined as of the time the option is granted) of
the shares of common stock, with respect to which incentive stock options are
first exercisable by any option holder during any calendar year shall not exceed
$1,000,000. Unless the plan is approved by our shareholders within one year of
the effective date, no incentive stock options may be granted and all incentive
stock options that may have been previously granted shall automatically be
converted into non-qualified stock options. As of the date of this prospectus we
have not submitted the 2005 Equity Compensation Plan to our shareholders for
approval.

         The plan provides that, if our outstanding shares are increased,
decreased, exchanged or otherwise adjusted due to a share dividend, forward or
reverse share split, recapitalization, reorganization, merger, consolidation,
combination or exchange of shares, an appropriate and proportionate adjustment
shall be made in the number or kind of shares subject to the plan or subject to
unexercised options and in the purchase price per share under such options. Any
adjustment, however, does not change the total purchase price payable for the
shares subject to outstanding options. In the event of our proposed dissolution
or liquidation, a proposed sale of all or substantially all of our assets, a
merger or tender offer for our shares of common stock, the Board of Directors
may declare that each option granted under the plan shall terminate as of a date
to be fixed by the Board of Directors; provided that not less than 30 days
written notice of the date so fixed shall be given to each participant holding
an option, and each such participant shall have the right, during the period of
30 days preceding such termination, to exercise the participant's option, in
whole or in part, including as to options not otherwise exercisable.

         Plan options are exercisable by delivery of written notice to us
stating the number of shares with respect to which the option is being
exercised, together with full payment of the purchase price therefor. Payment is
to be in the form of cash, checks, certified or bank cashier's checks,
promissory notes secured by the shares issued through exercise of the related
options, shares of common stock or in such other form or combination of forms
which may be acceptable to the Board of Directors, provided that any loan or
guarantee by us of the purchase price may only be made upon resolution of the
Board that such loan or guarantee is reasonably expected to benefit us.

         All plan options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution, and during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee shall die while
our employee or within three months after termination of employment by us
because of disability, or retirement or otherwise, such options may be
exercised, to the extent that the optionee shall have been entitled to do so on
the date of death or termination of employment, by the person or persons to whom
the optionee's right under the option pass by will or applicable law, or if no
such person has such right, by his executors or administrators.

         In the event of termination of employment because of death while an
employee or because of disability, the optionee's options may be exercised not
later than the expiration date specified in the option or one year after the
optionee's death, whichever date is earlier, or in the event of termination of
employment because of retirement or otherwise, not later than the expiration
date specified in the option or one year after the optionee's death, whichever
date is earlier. If an optionee's employment by us terminates because of
disability and such optionee has not died within the following three months, the
options may be exercised, to the extent that the optionee shall have been
entitled to do so at the date of the termination of employment, at any time, or
from time to time, but not later than the expiration date specified in the
option or one year after termination of employment, whichever date is earlier.


                                       -55-
<page>

         If an optionee's employment terminates for any reason other than death
or disability, optionee may exercise the options to the same extent that the
options were exercisable on the date of termination, for up to three months
following such termination, or on or before the expiration date of the options,
whichever occurs first. In the event that the optionee was not entitled to
exercise the options at the date of termination or if the optionee does not
exercise such options (which were then exercisable) within the time specified
herein, the options will terminate. If an optionee's employment terminates for
any reason other than death, disability or retirement, all right to exercise the
option terminate not later than 90 days following the date of such termination
of employment.

         The Board of Directors may amend, suspend or terminate the plan at any
time. Unless the plan shall have been earlier suspended or terminated by the
Board of Directors, the 2005 Equity Compensation Plan terminates on June 28,
2015.


                            Compensation of Directors


            Our Board of Directors is presently comprised of our executive
officers who do not receive compensation for their services as directors. At
such time as we expand our Board of Directors to include independent members we
will establish a policy for the compensation of those members.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS


         At April 2, 2007 we had 73,081,675 shares of our common stock issued
and outstanding. The following table sets forth information regarding the
beneficial ownership of our common stock as of April 2, 2007 by:

         o      each person known by us to be the beneficial owner of more than
                5% of our common stock;
         o      each of our directors;
         o      each of our executive officers; and
         o      our executive officers, directors and director nominees
                as a group.

         Unless otherwise indicated, the business address of each person listed
is in care of No. 476 Hutai Branch Road, Baoshan District Shanghai, China
200436. The percentages in the table have been calculated on the basis of
treating as outstanding for a particular person, all shares of our common stock
outstanding on that date and all shares of our common stock issuable to that
holder in the event of exercise of outstanding options, warrants, rights or
conversion privileges owned by that person at that date which are exercisable
within 60 days of that date. Except as otherwise indicated, the persons listed
below have sole voting and investment power with respect to all shares of our
common stock owned by them, except to the extent that power may be shared with a
spouse.


                                       -56-
<page>

<table>

                                                     
                     

                                                           Amount and Nature of     Percentage of
Name of Beneficial Owner                                   Beneficial Ownership         Class
-------------------------------------------------------- ------------------------- ----------------
Xue Lian Bian                                                  [17,580,919]           [25.2]%
------------------------------------------------------- ------------------------- ----------------
Wei Guan                                                       [13,802,551]           [19.8]%
------------------------------------------------------- ------------------------- ----------------
All officers and directors as a group (two persons)            [31,383,470]           [44.9]%
------------------------------------------------------- ------------------------- ----------------

OTHER 5% OR GREATERS                                               NA                  NA
------------------------------------------------------- ------------------------- ----------------
</table>




ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE


         Likang Disinfectant is engaged in business activities with four
related parties:

Shanghai Likang Pharmaceuticals Technology Company, Limited

         Messrs. Xue Lian Bian and Wei Guan, our officer, directors and
principal shareholders, are the shareholders of Shanghai Likang Pharmaceuticals
Technology Company, Limited, owning 90% and 10%, respectively. Shanghai Likang
Pharmaceuticals Technology Company, Limited distributes our products to the
commercial medical industry. For the fiscal year ended December 31, 2006 we
recorded net revenues of $3,211,758 from sales to that related party. At
December 31, 2006 Shanghai Likang Pharmaceuticals Technology Company, Limited
owed us $1,406,425 as a related party receivable for products purchased from us.

         In December 2005 we loaned Shanghai Likang Pharmaceuticals Technology
Company, Limited $100,000 for working capital purposes. The loan bears interest
at the rate of 3% per annum. The principal and interest were paid in April 2006.

Shanghai Likang Meirui Pharmaceutical High-Tech Co., Limited.

         Shanghai  Likang  Meirui  Pharmaceutical  High-Tech  Co.,  Ltd.  is a
supplier of both raw  materials  and finished  products to Likang  Disinfectant
and it  purchases  products from us which it resells to the  retail/consumer
market in  the PRC.  Shanghai  Shanhai Group is the majority  owner of Shanghai
Likang  Meirui  Pharmaceutical  High-Tech Co., Ltd., owning a 68% interest.

         Specifically  Shanghai  Likang  Meirui  Pharmaceutical  High-Tech  Co.,
Ltd.  provides Likang Disinfectant with Ozone producing  device equipment and
Ultraviolet radiation lamp lights. In addition,  under the terms of a two year
agreement  entered into in January 2005  Shanghai  Likang  Meirui
Pharmaceuticals  High-Tech  Co.,  Ltd. produces the Lvshaxing Air Disinfectant
Machine and Likang Surgery  hand-washing  table for Likang. For the fiscal
year ended December 31, 2006 we purchased  products from this affiliate
totaling $ 1,094.  At December 31, 2006 we owed Shanghai Likang Meirui
Pharmaceutical High-Tech Co., Ltd. $ 0 for purchases of products.

         In January 2005 Likang Disinfectant signed a two year agreement with
Shanghai Likang Meirui Pharmaceutical High-Tech Co., Ltd. to market its
products to the retail/consumer market using Shanghai Likang Meirui
Pharmaceutical High-Tech Co. Ltd.'s proprietary sales network which caters to
the retail/consumer market in China. For the fiscal year ended December 31, 2006
we recorded net revenues on sales to this affiliate of $ 21,668. At December 31,
2006, Shanghai Likang Meirui Pharmaceuticals High-Tech Company owed us $15,603.

                                       -57-
<page>

Shanghai Shanhai Group.

         Shanghai Shanhai Group, which is the minority shareholder of our Likang
Disinfectant subsidiary, is owned by Shanghai Shanhai Group Employee
Share-holding Committee (16.25%) and Shanghai Baoshan District Dachang Town
South Village Economic Cooperation Club (83.75%). These two entities are owned
by the employees of Shanghai Shanhai Group. We lease our principal executive
offices and warehouse space from Shanghai Shanhai Group. For fiscal year ended
December 31, 2006 we paid rent expense to Shanghai Shanhai Group of $38,462.

            In January 2005, Likang Disinfectant borrowed $161,533 from Shanghai
Shanhai Group for working capital purposes. The loan bears interest at 10% per
annum and is payable on demand. For the year ended December 31, 2006, interest
expense related to this note amounted to $16,734.

         In January 2005, Likang Disinfectant also entered into a five year
agreement with Shanghai Shanhai Group whereby it agreed to pay Shanghai Shanhai
Group a fixed amount of $9,375 annually a return on its original investment in
Likang of RMB 500,000 (approximately $62,500 U.S.). We have recorded interest
expense of $ 9,398 for the fiscal year ended December 31, 2006 for this
obligation.


Shanghai Likang Biological Hi-Tech Company, Ltd.

         Shanghai  Likang  Biological  High-Tech  Company,  Ltd is owned by
Messrs.  Xue Lian Bian,  an  executive officer and director of our company,
and Shanghai Likang  Pharmaceuticals  Technology  Company,  Limited,  another
affiliate  which is owned by Messrs.  Bian and Wei Guan,  who is also an
executive  officer  and  director  of our company.  Shanghai Likang Biological
High-Tech Company, Ltd.  manufactures and sells biological products,  cosmetic
products and develops  technology for third parties.  The transactions  with
Shanghai Likang  Biological  High-Tech Company, Ltd. included:

         o  From  time to time we sell  Shanghai  Likang  Biological
High-Tech  Company,  Ltd.  certain  raw materials.  For the fiscal year ended
December 31, 2006 we recorded  sales of $3,773 on sales of raw  materials to
Shanghai  Likang  Biological  High-Tech  Company,  Ltd. At December 31, 2006
Shanghai Likang  Biological  High-Tech  Company, Ltd. owed us $0,

         o  In May 2006,  we advanced  Shanghai  Likang  Biological
High-Tech  Company,  Ltd.  $124,899  for working capital purposes. The advance
was non-interest bearing and was repaid in July 2006, and

         o From time to time, since June 2005 we have utilized the services of
Shanghai Likang Biological High-Tech Company, Ltd. as a contract manufacturer
for small portions of certain of our products. For the fiscal year ended
December 31, 2006 we have paid $78,946 to Shanghai Likang Biological High-Tech
Company, Ltd. for the processing of certain products on our behalf.

Other related party transactions

         In May 2005 in connection with our acquisition of Linkwell Tech, we
issued an aggregate of 1,855,000 shares of common stock for services related to
share exchange agreement. China Direct Investments, Inc. received 955,000 shares
of our common stock as compensation for their services in negotiating the terms
of the share exchange and it assigned CIIC Investment Banking Services
(Shanghai) Company, Limited the remaining 900,000 shares of our common stock as
a finder's fee for the identification of Linkwell Tech. China Direct
Investments, Inc. and CIIC Investment Banking Services (Shanghai) Company,
Limited are affiliates. These shares were valued at $240,000 based upon the fair
market value of our common stock which was approximately $0.13 per share.


                                       -58-
<page>

            In August 2005, we engaged China Direct Investments, Inc. as a
consultant to advise the our management in areas related to marketing and
operational support in the U.S., media and public relations, mergers and
acquisitions, financial advisory and SEC disclosure compliance, in addition to
providing us with translation services for both English and Chinese documents.
Under the terms of one year agreement, we issued China Direct Investments, Inc.
2,000,000 shares of the our common stock, valued at $160,000, as compensation
for its services, and granted it three year warrants to purchase 2,125,000
shares of our common stock at an exercise price of $0.20 per share commencing in
January 2006.

         There were no other related party transactions.

Director Independence

            None of the members of our Board of Directors are "independent"
within the meaning of Marketplace Rule 4200 of the National Association of
Securities Dealers, Inc.

ITEM 13. EXHIBITS

         The following documents are filed as a part of this report or are
incorporated by reference to previous filings, if so indicated:


EXHIBIT NO.         DESCRIPTION

 2.1  Stock Purchase Agreement between HBOA.Com, Inc., Philip J. Davis and John
      C. Lee dated November 17, 1999 (1)
 2.2  Amendment No. 1 to the Stock Purchase Agreement between HBOA.Com, Inc.,
      Phillip J. Davis and John C. Lee dated December 28, 1999 (1)
 2.3  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 (2)
 3.1  Articles of Incorporation (3)
 3.2  Articles of Amendment to Articles of Incorporation (4)
 3.3  Articles of Amendment to Articles of Incorporation (5)
 3.4  Articles of Amendment to Articles of Incorporation (6)
 3.5  Articles of Amendment to the Articles of Incorporation (11)
 3.6  Bylaws (3)
 3.7  Articles of Amendment to the Articles of Incorporation (12)
 4.1  Form of common stock purchase warrant (7)
 4.2  Form of Class A and Class B Common Stock Purchase Warrants (11)
10.1  HBOA Holdings, Inc. - Year 2000 Equity Compensation Plan (8)
10.2  HBOA Holdings, Inc. - Non Qualified Stock Option Plan (9)
10.3  Kirshner Entertainment & Technologies, Inc. 2005 Equity Compensation
      Plan (10)
10.4  Consulting and Management Agreement dated August 24, 2005 between Linkwell
      Corporation and China Direct Investments, Inc. (20)
10.5  Form of Subscription Agreement for $1,500,000 unit offering (11)
10.6  Form of agreement between Shanghai Likang Disinfectant High-Tech Company,
      Limited and its customers (12)
10.7  Form of agreement between Shanghai Likang Disinfectant High-Tech Company,
      Limited and its suppliers (12)
10.8  Sales Agreement dated as of January 1, 2005 between Shanghai Likang
      Disinfectant High-Tech Co., Ltd. and Shanghai Likang Meirui Pharmaceutical
      High-Tech Co., Ltd. (20)
10.9  Lease Agreement effective January 1, 2005 between Shanghai Likang
      Disinfectant High-Tech Co., Ltd. and Shanghai Shanhai Group for
      principal executive offices (20)
10.10 Lease Agreement effective January 1, 2002 between Shanghai Likang
      Pharmaceuticals Co., Ltd. and Shanghai Likang Disinfectant High-Tech Co.
      Ltd. (20)
10.11 Lease Agreement effective January 1, 2005 between Shanghai Jinshan
      Zhuhang Plastic Lamp Factory, Ltd. and Shanghai Likang Disinfectant
      High-Tech Co. Ltd. (20)
10.12 Manufacturing Agreement dated as of January 1, 2005 between Shanghai
      Likang Disinfectant High-Tech Co., Ltd. and Shanghai Likang Meirui
      Pharmaceutical High-Tech Co., Ltd. (20)
10.13 Stock Purchase Agreement effective February 6, 2006 between Linkwell
      Corporation, Aerisys Incorporated and Gary Verdier (13)

                                       -59-
<page>


10.14 Transfer Agreement dated August 5, 2005 between Shanghai Likang
      Disinfectant High-Tech Company, Limited, Shanghai Likang Pharmaceuticals
      Technology Company and Xue Lian Bian (20)
10.15 Contract Management Agreement dated January 1, 2005 between Shanghai
      Shanhai Group and Shanghai Likang Disinfectant High-Tech Co., Ltd. (20)
10.16 Lease Agreement dated December 15, 2004 between Shanghai Shanhai Group
      and Shanghai Likang Disinfectant High-Tech Co., Ltd. (20)
10.17 Lease Agreement dated August 11, 2005 between Shanghai Henglain Industrial
      Co., Ltd. and Shanghai Likang Disinfectant High-Tech Co., Ltd. (20)
10.18 Lease Agreement dated September 16, between Shanghai Henglain Industrial
      Co., Ltd. and Shanghai Likang Disinfectant High-Tech Co., Ltd. (20)
10.19 Disinfection Education Center Agreement dated May 25, 2006 between
      Shanghai Likang Disinfectant  High-Tech Co., Ltd. and China Pest
      Infestation Control and Sanitation Association (20)
10.20 Agreement between Linkwell Corporation and China Direct Investments, Inc.*
14.1  Code of Business Conduct and Ethics (20)
21.1  Subsidiaries of the small business issuer (20)
23.1  Consent of Sherb & Co., LLP*
31.1  Section 302 Certificate of Chief Executive Officer
31.2  Section 302 Certificate of principal financial and accounting officer *
32.1  Section 906 Certificate of Chief Executive Officer *


*        filed herewith

(1)  Incorporated by reference to the Form 10-SB as filed on June 17, 1999.
(2)  Incorporated by reference to the Report on Form 8-K as filed on December
     3, 1999.
(3)  Incorporated by reference to the Report on Form 8-K as filed on December
     8, 1999.
(4)  Incorporated by reference to the Report on Form 8-K as filed on December
     27, 2001.
(5)  Incorporated by reference to the annual report on Form 10-KSB for the
     fiscal year ended December 31,2002.
(6)  Incorporated by reference to the Report on Form 8-K as filed on March
     17, 2005.
(7)  Incorporated by reference to the Report on Form 8-K as filed on April 15,
     2005.
(8)  Incorporated by reference to the Report on Form 8-K as filed on January
     31, 2002.
(9)  Incorporated by reference to the Report on Form 8-K as filed on February
     1, 2005.
(10) Incorporated by reference to the Report on Form 8-K as filed on August 17,
     2006.
(11) Incorporated by reference to the Report on Form 8-K as filed on August 22,
     2006.
(12) Incorporated by reference to the Report on Form 8-K as filed on September
     15, 2006.
(13) Incorporated by reference to the Report on Form 8-K as filed on October 14,
     2006.
(14) Incorporated by reference to the Report on Form 8-K as filed on October 27,
     2006.
(15) Incorporated by reference to the Report on Form 8-K as filed on October 27,
     2006.
(16) Incorporated by reference to the registration statement on Form
     S-8, SEC File No. 333-138297 as filed on October 30, 2006.
(17) Incorporated by reference to the registration statement on Form
     SB-2, SEC File No. 333-139752, as amended, as initially filed on
     December 29, 2006.
(18) Incorporated by reference to the registration statement on Form
     S-8, SEC File No. 333-125871, as filed on June 16, 2005.
(19) Incorporated by reference to the registration statement on Form
     S-8, SEC File No. 333-121963, as filed on January 11, 2005.
(20) Incorporated by reference to the registration statement on Form
     SB-2, SEC File No. 333-131666, as amended, as initially filed on
     February 8, 2006.
(21) Incorporated by reference to the registration statement on Form SB-2,
     SEC File No. 333-131666, as amended on November 2, 2006.
(22) Incorporated by reference to the Current Report on Form 8-K as filed on
     August 10, 2006.
(23) Incorporated by reference to the Registration Statement on Form S-8 as
     filed on December August 23, 2005.
(24) Incorporated by reference to the Current Report on Form 8-K as filed on
     November 7, 2006.
(25) Incorporated by reference to the Current Report on Form 8-K as filed on
     February 13, 2007.



                                       -60-
<page>

ITEM 14.          PRINCIPAL ACCOUNTANT FEES AND SERVICES


         Sherb & Co., LLP served as our independent registered public accounting
firm for fiscal 2006 and 2005. The following table shows the fees that were
billed for the audit and other services provided by the firm for fiscal 2006 and



                                          FISCAL 2006         FISCAL 2005
-------------------------------------- --------------------- -----------------
Audit Fees                                   $75,000           $65,000
Audit-Related Fees                                -                   -
Tax Fees                                          -                  -
All Other Fees                                    -                  -
                                            ---------         --------
Total                                        $75,000           $65,000
                                            =========        =========


         Audit Fees - This category includes the audit of our annual financial
statements, review of financial statements included in our Form 10-QSB Quarterly
Reports and services that are normally provided by the independent auditors in
connection with engagements for those fiscal years. This category also includes
advice on audit and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.

         Audit-Related Fees - This category consists of assurance and related
services by the independent auditors that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported above under "Audit Fees." The services for the fees disclosed under
this category include consultation regarding our correspondence with the SEC and
other accounting consulting.

         Tax Fees - This category consists of professional services rendered by
our independent auditors for tax compliance and tax advice. The services for the
fees disclosed under this category include tax return preparation and technical
tax advice.

         All Other Fees - This category consists of fees for other
miscellaneous items.

         Our Board of Directors has adopted a procedure for pre-approval of all
fees charged by the our independent auditors. Under the procedure, the Board
approves the engagement letter with respect to audit, tax and review services.
Other fees are subject to pre-approval by the Board, or, in the period between
meetings, by a designated member of Board. Any such approval by the designated
member is disclosed to the entire Board at the next meeting. The audit and tax
fees paid to the auditors with respect to year ended December 31, 2006 were
pre-approved by the entire Board of Directors.


                                       -61-
<page>


                                   SIGNATURES


         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                            Linkwell Corporation

                            By: /s/ Xue Lian Bian
                            ---------------------------
                            Xue Lian Bian, CEO, President,
                            Principal executive officer principal financial and
                            accounting officer

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.


   Signature                       Title                               Date


/s/ Xue Lian Bian    CEO, President, Chairman, Principal          April 2, 2007
-----------------    executive officer principal financial
Xue Lian Bian        and accounting officer



/s/ Wei Guan         Vice President, Secretary and director      April 2, 2007
------------
Wei Guan



                                       -62-
<page>












                      LINKWELL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

















<PAGE>





                      LINKWELL CORPORATION AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS









                                    CONTENTS


       Report of Independent Registered Public Accounting Firm...............F-2

       Consolidated Financial Statements:

           Consolidated Balance Sheet........................................F-3

           Consolidated Statements of Operations.............................F-4

           Consolidated Statements of Stockholders' Equity...................F-5

           Consolidated Statements of Cash Flows.............................F-6

       Notes to Consolidated Financial Statements....................F-7 to F-28











                                       F-1


<PAGE>







             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Linkwell Corporation and Subsidiaries
Shanghai, China


         We have audited the accompanying consolidated balance sheet of Linkwell
Corporation and Subsidiaries as of December 31, 2006 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 2006 and 2005. 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 Corporation and Subsidiaries as of December 31, 2006, and the results
of their operations and their cash flows for the years ended December 31, 2006
and 2005, in conformity with accounting principles generally accepted in the
United States of America.



/s/ Sherb & Co., LLP


Certified Public Accountants
Boca Raton, Florida
February 16, 2007





                                       F-2


<PAGE>
                                  LINKWELL CORPORATION AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEET
                                            December 31, 2006
<table>



                                                                                          <c>
                                                  ASSETS

CURRENT ASSETS:
    Cash                                                                                           $ 1,713,723
    Accounts receivable, net of allowance for doubtful accounts of $144,639                          1,682,878
    Accounts receivable - related parties, net of allowance for doubtful accounts of $87,937         1,406,425
    Other receivable                                                                                   414,000
    Inventories, net                                                                                   536,483
    Prepaid expenses and other current assets                                                          367,641
    Short term loan receivable                                                                          48,609
                                                                                               ----------------

        Total Current Assets                                                                         6,169,759

PROPERTY AND EQUIPMENT - Net                                                                           774,733
                                                                                                ---------------

        Total Assets                                                                               $ 6,944,492
                                                                                                ================


                                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Loans payable                                                                                    $ 652,382
    Loan payable - related party                                                                       165,471
    Accounts payable and accrued expenses                                                            1,328,720
    Due to related party                                                                               204,267
    Advances from customers                                                                            254,434
                                                                                               ----------------
        Total Current Liabilities                                                                    2,605,274

MINORITY INTEREST                                                                                      394,320
                                                                                               ----------------

STOCKHOLDERS' EQUITY:
    Preferred stock (No Par Value; 10,000,000 Shares Authorized;
        No shares issued and outstanding)                                                                    -
    Common Stock ($0.0005 Par Value; 150,000,000 Shares Authorized;
        69,868,355 shares issued and outstanding)                                                       34,934
    Additional paid-in capital                                                                       5,290,536
    Accumulated deficit                                                                               (871,056)
    Deferred compensation                                                                             (646,222)
    Other comprehensive gain - foreign currency                                                        136,706
                                                                                               ----------------

        Total Stockholders' Equity                                                                   3,944,898
                                                                                               ----------------

        Total Liabilities and Stockholders' Equity                                                 $ 6,944,492
                                                                                               ================

</table>


                 See notes to consolidated financial statements
                                       F-3

<page>

            LINKWELL CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS

<table>
<caption>
                                                                         For the Year
                                                                      Ended December 31,
                                                              ----------------------------------
                                                                   2006              2005
                                                              ---------------   ----------------

                                                           <c>              <c>
NET REVENUES
     Non-affiliated companies                                    $ 4,508,179        $ 3,508,903
     Affiliated companies                                          3,237,199          1,957,030
                                                              ---------------   ----------------
     Total Net Revenues                                            7,745,378          5,465,933

COST OF SALES                                                      4,609,557          3,329,444
                                                              ---------------   ----------------

GROSS PROFIT                                                       3,135,821          2,136,489
                                                              ---------------   ----------------

OPERATING EXPENSES:
     Selling expenses                                                573,315            331,258
     General and administrative                                    1,730,178            869,555
                                                              ---------------   ----------------
        Total Operating Expenses                                   2,303,493          1,200,813
                                                              ---------------   ----------------

INCOME FROM OPERATIONS                                               832,328            935,676
                                                              ---------------   ----------------

OTHER INCOME (EXPENSE):
     Other income                                                     (4,367)             9,836
     Registration rights penalty                                     (76,000)           (44,000)
     Interest income                                                   5,441              1,327
     Interest expense - related party                                (26,132)           (25,657)
     Interest expense                                                (41,589)           (42,720)
                                                              ---------------   ----------------

        Total Other Expense                                         (142,647)          (101,214)
                                                              ---------------   ----------------

INCOME BEFORE DISCONTINUED OPERATIONS, INCOME TAXES
      AND MINORITY INTEREST                                          689,681            834,462

DISCONTINUED OPERATIONS:
 Gain ( Loss) from discontinued operations                            12,794            (20,817)
                                                              ---------------   ----------------

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                     702,475            813,645

INCOME TAXES                                                          (1,318)          (177,177)
                                                              ---------------   ----------------

INCOME BEFORE MINORITY INTEREST                                      701,157            636,468

MINORITY INTEREST                                                   (133,037)           (92,339)
                                                              ---------------   ----------------

NET INCOME                                                           568,120            544,129

CUMULATIVE PREFERRED DIVIDENDS                                       (96,240)           (11,240)
DEEMED PREFERRED STOCK DIVIDENDS                                           -         (1,800,276)
                                                              ---------------   ----------------

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS            $   471,880        $(1,267,387)
                                                              ===============   ================

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
   Income (loss) from continuing operations                      $      0.01        $     (0.03)
   Loss from discontinued operations                                    0.00              (0.00)
                                                              ---------------   ----------------

   Net income (loss) per common share available to
   common shareholders                                           $      0.01        $     (0.03)
                                                              ===============   ================


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
   Basic                                                          53,098,047         41,617,176
                                                              ===============   ================
   Diluted                                                        57,539,614         41,617,176
                                                              ===============   ================

</table>


                 See notes to consolidated financial statements
                                       F-4

<page>

                  LINKWELL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 For the Years Ended December 31, 2006 and 2005

<table>
<caption>

                                          Series A Preferred Stock  Series B Preferred Stock      Common Stock
                                            ---------------------- ------------------------ -------------------------
                                             Number of              Number of                Number of
                                              Shares      Amount     Shares       Amount       Shares       Amount
                                            ----------- ---------- -----------  ----------- ------------ ------------


                                        <c>           <c>       <c>         <c>         <c>            <c>
Balance, December 31, 2004                           -   $      -           -   $       -   36,273,470     $ 18,138

Recapitalization of company                          -          -           -            -    7,030,669        3,514

Sales of Series A preferred stock              375,345    277,276           -            -            -            -

Sales of Series B preferred stock                    -          -   1,500,000    1,395,000            -            -

Common stock issued for services                     -          -           -            -    2,000,000        1,000

Deemed preferred stock dividends                     -          -           -            -            -            -

Cumulative preferred stock dividend                  -          -           -            -            -            -

Comprehensive loss:
    Net income for the year

    Foreign currency translation
    adjustment                                       -          -           -            -            -            -
                                            ----------- ---------- -----------  ----------- ------------ ------------

Balance, December 31, 2005                     375,345    277,276   1,500,000    1,395,000   45,304,139       22,652

Conversion of Series A preferred stock        (375,345)  (277,276)          -            -    3,753,450        1,877

Conversion of Series B preferred stock               -          -  (1,500,000)  (1,395,000)  15,000,000        7,500

Common stock issued for services                     -          -           -            -    5,200,000        2,600

Common stock issued for preferred stock
dividends                                            -          -           -            -      610,766          305

Cumulative preferred stock dividend                  -          -           -            -            -            -

Amortization of deferred compensation                -          -           -            -            -            -

Comprehensive loss:
    Net income for the year                          -          -           -            -            -            -

    Foreign currency translation
    adjustment                                       -          -           -            -            -            -
                                            ----------- ---------- -----------  ----------- ------------ ------------

Balance, December 31, 2006                           -   $      -           -   $        -   69,868,355    $  34,934
                                            =========== ========== ===========  =========== ============ ============

</table>

                 See notes to consolidated financial statements
                                      F-5/A
<page>



                      LINKWELL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 For the Years Ended December 31, 2006 and 2005


<table>


                                              Additional                                  Other         Total
                                               Paid-in     Accumulated    Deferred     Comprehensive Stockholders'
                                               Capital       Deficit     Compensation      Loss         Equity
                                             ------------ ------------- -------------- ------------- --------------


                                          <c>          <c>           <c>         <c>              <c>
Balance, December 31, 2004                   $   585,727   $   (75,549)   $        -     $       -    $   528,316

Recapitalization of company                       39,559             -             -             -         43,073

Sales of Series A preferred stock                      -             -             -             -        277,276

Sales of Series B preferred stock                      -             -             -             -      1,395,000

Common stock issued for services                 159,000                    (106,667)            -         53,333

Deemed preferred stock dividends               1,800,276    (1,800,276)            -             -              -

Cumulative preferred stock dividend                    -       (11,240)            -             -        (11,240)

Comprehensive loss:
    Net income for the year                                    544,129             -                      544,129

    Foreign currency translation
    adjustment                                         -             -             -        20,668         20,668
                                             ------------ ------------- ------------- ------------- --------------

Balance, December 31, 2005                     2,584,562    (1,342,936)     (106,667)       20,668      2,850,555

Conversion of Series A preferred stock           275,399             -             -             -              -

Conversion of Series B preferred stock         1,387,500             -             -             -              -

Common stock issued for services                 935,900             -      (938,500)            -              -

Common stock issued for preferred stock
dividends                                        107,175                           -             -        107,480

Cumulative preferred stock dividend                    -       (96,240)            -             -        (96,240)

Amortization of deferred compensation                  -             -       398,945             -        398,945

Comprehensive loss:
    Net income for the year                            -       568,120             -             -        568,120

    Foreign currency translation
    adjustment                                         -             -             -       116,038        116,038
                                             ------------ ------------- ------------- ------------- --------------

Balance, December 31, 2006                   $ 5,290,536   $  (871,056)   $ (646,222)    $ 136,706    $ 3,944,898
                                             ============ ============= ============= ============= ==============

</table>


                 See notes to consolidated financial statements
                                       F-5/B
<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<table>
<caption>

                                                                  For the Year
                                                                 Ended December 31,
                                                            -----------------------------

                                                        <c>            <c>
                                                                2006           2005
                                                            -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                 $   568,120   $    544,129
   (Gain)Loss from discontinued operations                        (12,794)        20,817
                                                            -------------- --------------
   Income from continuing operations                              555,326        564,946

   Adjustments to reconcile net income from operations to
     net cash provided by (used in) operating activities:
     Depreciation and amortization                                 91,657         42,373
     Minority interest                                            145,150         96,606
     Allowance for doubtful accounts                              131,296        (23,707)
     Allowance for doubtful accounts-related party                 87,937              -
     Loss on disposal of property and equipment                         -          7,402
     Stock-based compensation                                     398,945         53,333
   Changes in assets and liabilities:
     Accounts receivable                                         (361,386)      (218,871)
     Accounts receivable - related party                         (621,992)      (944,741)
     Other receivable                                            (414,000)             -
     Inventories                                                  431,741        (26,913)
     Prepaid and other current assets                            (285,891)        (3,508)
     Other assets                                                     734           (734)
     Accounts payable and accrued expenses                        (71,984)       259,200
     Accounts payable - related party                                   -       (258,242)
     Tax payable                                                  (75,489)        75,489
     Advances from customers                                      123,516       (135,506)
                                                            -------------- --------------

   Net Cash Provided by (Used in) Operating Activities            135,560       (512,873)

   Net Cash Used in Discontinued Operations                             -         (8,023)
                                                            -------------- --------------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES               135,560       (520,896)
                                                            -------------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Cash received in acquisition                                       -          2,460
     Increase in loan receivable                                  (48,609)      (100,000)
     Proceeds from loan receivable                                100,000              -
     Purchase of property, plant and equipment                   (149,339)      (148,053)
                                                            -------------- --------------

NET CASH USED IN INVESTING ACTIVITIES                             (97,948)      (245,593)
                                                            -------------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from loans payable                                   63,157        326,936
     Repayment of loans payable                                   (63,157)      (422,705)
     Proceeds from loan payable - related party                   204,267        161,533
     Gross proceeds from sale of preferred stock                        -      1,800,276
     Placement fees and other fees paid                                 -       (128,000)
                                                            -------------- --------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                         204,267      1,738,040
                                                            -------------- --------------

EFFECT OF EXCHANGE RATE ON CASH                                    11,766         20,668
                                                            -------------- --------------

NET INCREASE IN CASH                                              253,645        992,219

CASH  - beginning of year                                       1,460,078        467,859
                                                            -------------- --------------

CASH - end of year                                            $ 1,713,723    $ 1,460,078
                                                            ============== ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:
   Cash paid for:
       Interest                                               $    67,721    $   68,377
                                                            ============== ==============
       Income taxes                                           $     1,318    $  101,688
                                                            ============== ==============

   Non-cash investing and financing activities:

       Accounts receivable - related party
       exchanged for building                                 $         -    $ 333,675
                                                            ============== ==============

       Series A preferred stock converted to common stock     $   277,276    $       -
                                                            ============== ==============

       Series B preferred stock converted to common stock     $ 1,395,000    $       -
                                                            ============== ==============

       Common stock issued for preferred stock dividends      $   107,480    $       -
                                                            ============== ==============

       Cumulative preferred stock dividends                   $    96,240    $   11,240
                                                            ============== ==============

</table>
                 See notes to consolidated financial statements.
                                      F-6
<page>




                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Linkwell Corporation (formerly Kirshner Entertainment & Technologies, Inc.) (the
"Company") was incorporated in the state of Colorado on December 11, 1996. On
May 31, 2000, the Company acquired 100% of HBOA.Com, Inc. The Company focused on
development of an Internet portal through which home based business owners, as
well as commercial private label businesses, obtain the products, services, and
information necessary to start, expand and profitably run their businesses. On
December 28, 2000, the Company formed a new subsidiary, Aerisys Incorporated
("Aerisys"), a Florida corporation, to handle commercial private business. In
June 2003, the Company formed its entertainment division and changed its name to
reflect this new division. Effective as of March 31, 2003, we discontinued our
entertainment division and our technology division, except for the Aerisys
operations that continue on a limited basis.

On May 2, 2005, the Company entered into and consummated a share exchange with
all of the shareholders of Linkwell Tech Group, Inc. ("Linkwell"). Pursuant to
the share exchange, the Company acquired 100% of the issued and outstanding
shares of Linkwell's common stock, in exchange for 36,273,470 shares of our
common stock, which at closing represented approximately 87.5% of the issued and
outstanding shares of our common stock. As a result of the transaction, Linkwell
became our wholly owned subsidiary. For financial accounting purposes, the
exchange of stock was treated as a recapitalization of Kirshner with the former
shareholders of the Company retaining 7,030,669 or approximately 12.5% of the
outstanding stock. The consolidated financials statements reflect the change in
the capital structure of the Company due to the recapitalization and the
consolidated financial statements reflect the operations of the Company and its
subsidiaries for the periods presented.

Linkwell was founded on June 22, 2004, as a Florida corporation. On June 30,
2004, Linkwell acquired 90% of Shanghai LiKang Disinfectant High-Tech Company,
Ltd. ("Likang Disinfectant") through a stock exchange. The transaction on which
Linkwell acquired its 90% interest in LiKang Disinfectant resulted in the
formation of a U.S. holding company by the shareholders of LiKang as it did not
result in a change in the underlying ownership interest of LiKang Disinfectant .
LiKang Disinfectant is a science and technology enterprise founded in 1988.
LiKang Disinfectant is involved in the development, production, marketing and
sale, and distribution of disinfectant health care products.

LiKang Disinfectant's products are utilized by the hospital and medical industry
in China. LiKang Disinfectant has developed a line of disinfectant product
offerings. Likang Disinfectant regards the hospital disinfecting products as the
primary segment of its business. LiKang Disinfectant has developed and
manufactured several series products in the field of skin mucous disinfection,
hand disinfection, surrounding articles disinfection, medical instruments
disinfection and air disinfection.

On June 30, 2005, the Company's Board of Directors approved an amendment of its
Articles of Incorporation to change the name of the Company to Linkwell
Corporation. The effective date of the name change was after close of business
on August 16, 2005.

In August 2006, LiKang incorporated a new subsidiary, Shanghai LiKang
International Trade Co., Ltd ("LiKang International"). The primary business of
LiKang International involves import and export activities relating to computer,
computer components, instruments and meters, electromechanical devices,
constructional materials, metallic material, hardware, handiwork, knitting
textile, furniture, chemical raw materials, and business consulting service,
investment consulting, graphics design, conference services, exhibition
services, equipment lease, import and export of technology.

LiKang International is 100% owned by Shanghai LiKang Disinfection High-Tech
Co., Ltd. and conducts business in the same building with LiKang Disinfectant.


                                       F-7

<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Basis of presentation

Certain reclassifications have been made to the prior year to conform to current
year presentation.

The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America ("US GAAP"). The
consolidated financials statements of the Company include the accounts of its
wholly-owned subsidiary, Linkwell Tech Group, Inc., and its 90%-owned
subsidiary, Likang. All significant inter-company balances and transactions have
been eliminated.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates. Significant estimates in 2006 and 2005 include the allowance for
doubtful accounts, stock-based compensation, the useful life of property and
equipment and inventory reserve, and the valuation of derivative liabilities.

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.

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.

Accounts receivable

The Company has a policy of reserving for uncollectible accounts based on its
best estimate of the amount of probable credit losses in its existing accounts
receivable. The Company periodically reviews its accounts receivable to
determine whether an allowance is necessary based on an analysis of past due
accounts and other factors that may indicate that the realization of an account
may be in doubt. Account balances deemed to be uncollectible are charged to the
allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. At December 31, 2006, the Company has
established, based on a review of its third party accounts receivable
outstanding balances, an allowance for doubtful accounts in the amount of
$144,639. At December 31, 2006, the Company has established, based on a review
of its related party accounts receivable outstanding balances, an allowance for
doubtful accounts in the amount of $87,937.

Other Receivable

Other receivable consists of incentive earned or accrued that is not due to be
received until after the balance sheet date. Likang International, as an
exporter of goods, receives incentives from the central government, to encourage
the export of goods from China. The central government will pay a cash incentive
of up to 17% of the gross amount of goods exported to the exporter. As a result
of this government incentive, from time to time, LiKang International may export
goods at its cost or at a loss up to the amount of the government incentive. At
December 31, 2006, our balance sheet includes other receivables of $414,000
which represents funds due from the central government of China for export
incentives

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
weighted average method.



                                       F-8

<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)


Property and equipment

Property and equipment are carried 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 20 years. The cost of repairs and maintenance is
expensed as incurred; major replacements and improvements are capitalized. When
assets are retired or disposed of, the cost and accumulated depreciation are
removed from the accounts, and any resulting gains or losses are included in
income in the year of disposition. In accordance with Statement of Financial
Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets", the Company examines the possibility of decreases in the
value of fixed assets when events or changes in circumstances reflect the fact
that their recorded value may not be recoverable.

Impairment of long-lived assets

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". The Company
periodically reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may not
be fully recoverable. The Company recognizes an impairment loss when the sum of
expected undiscounted future cash flows is less than the carrying amount of the
asset. The amount of impairment is measured as the difference between the
asset's estimated fair value and its book value. The Company did not consider it
necessary to record any impairment charges during the year ended December 31,
2006.

Advances from customers

Advances from customers at December 31, 2006 of $254,434 consist of prepayments
from third party customers to the Company for merchandise that had not yet
shipped. The Company will recognize the deposits as revenue as customers take
delivery of the goods, in compliance with its revenue recognition policy.

Income taxes

The Company files federal and state income tax returns in the United States for
its domestic operations, and files separate foreign tax returns for the
Company's Chinese subsidiaries. Income taxes are accounted for under Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which
is an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns.

Income (loss) per common share

The Company presents net income (loss) per share ("EPS") in accordance with SFAS
No. 128, "Earnings per Share." Accordingly, basic income (loss) per share is
computed by dividing income (loss) available to common shareholders by the
weighted average number of shares outstanding. The Company has made an
accounting policy election to use the if-converted method for convertible
securities that are eligible to participate in common stock dividends, if
declared; however, the two-class method must be used if the effect is more
dilutive. Since the two-class method was not more dilutive, the Company used the
if-converted method. Diluted earnings per share reflects the potential dilution
that could occur based on the exercise of stock options or warrants, unless such
exercise would be anti-dilutive, with an exercise price of less than the average
market price of the Company's common stock.

                                       F-9


<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Income (loss) per common share (Continued)

The Company's common stock equivalents at December 31, 2006 and 2005 include
the following:

                                     2006                    2005
                               ------------------    ---------------
Convertible preferred stock              -               18,753,450
             Warrants           37,134,865               35,009,865
                               ------------------    ---------------
                                37,134,865               53,763,315
                               =================    ====================

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 collectibility 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.

The Company's revenues from the sale of products to related parties are recorded
when the goods are shipped which correlates with the shipment by the related
parties to its customers, at which time title passes, and collectibility is
reasonably assured. The Company receives sales order on a just-in-time basis
from the related party. Generally, the related party does not hold the Company's
inventory. If the related party has inventory on hand at the end of a reporting
period, the sale is reversed and the inventory is included on the Company's
balance sheet.

Prior to October 1, 2006, LiKang International follows the guidance of EITF99-19
"Reporting Revenue Gross as a Principal versus Net as an agent". LiKang
International records the net revenue when the supplier is the primary obligor
in the arrangement. Since October 1, 2006, Likang International has become the
primarly obligator for providing products to its customers and takes ownership
of its inventory. Accordingly, effective October 1, 2006, Likang International
records gross revenue when persuasive evidence of an arrangement exists,
services have been  rendered or product delivery has occurred, the sales price
to the customer is  fixed or determinable, and collectibility is reasonably
assured.

Concentrations of credit risk

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and trade accounts receivable. The
Company places its cash with high credit quality financial institutions in the
US and in China. Almost all of the Company's sales are credit sales which are
primarily to customers whose ability to pay is dependent upon the industry
economics prevailing in these areas; however, concentrations of credit risk with
respect to trade accounts receivables is limited due to generally 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, 2006 and 2005,
sales to related parties accounted for 42% and 36% of net revenues,
respectively.

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.


                                      F-10


<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)


Shipping costs

Shipping costs are included in selling and marketing expenses and totaled
$173,840 and $101,205 for the years ended December 31, 2006 and 2005,
respectively.

Advertising

Advertising is expensed as incurred. For the years ended December 31, 2006 and
2005, advertising expenses amounted to $21,323 and $6,461, respectively.

Stock-based compensation

Effective October 1, 2005, the Company adopted Statement of Financial Accounting
Standards No.123 (revised 2004), Share Based Payment ("SFAS No. 123R"). SFAS
No.123R establishes the financial accounting and reporting standards for
stock-based compensation plans. As required by SFAS No. 123R, the Company
recognized the cost resulting from all stock-based payment transactions
including shares issued under its stock option plans in the financial
statements.

Non-employee stock based compensation

The cost of stock based compensation awards issued to non-employees for services
are recorded at either the fair value of the services rendered or the
instruments issued in exchange for such services, whichever is more readily
determinable, using the measurement date guidelines enumerated in Emerging
Issues Task Force Issue ("EITF") 96-18, "Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services" ("EITF 96-18").

Registration rights agreements

The Company has adopted View C of EITF 05-4 "Effect of a Liquidated Damages
Clause on a Freestanding Financial Instrument Subject to EITF 00-19" ("EITF
05-4"). Accordingly, the Company classifies as liability instruments, the fair
value of registration rights agreements when such agreements (i) require it to
file, and cause to be declared effective under the Securities Act, a
registration statement with the SEC within contractually fixed time periods, and
(ii) provide for the payment of liquidating damages in the event of its failure
to comply with such agreements. Under View C of EITF 05-4, (i) registration
rights with these characteristics are accounted for as derivative financial
instruments at fair value and (ii) contracts that are (a) indexed to and
potentially settled in an issuer's own stock and (b) permit gross physical or
net share settlement with no net cash settlement alternative are classified as
equity instruments. At December 31, 2006, the Company has accrued a registration
rights penalty payable of $120,000, which has been included on the accompanying
consolidated balance sheet in accounts payable and accrued expenses. The Company
has recorded a registration rights penalty which is reflected in its financial
statements, this penalty is a reflection of the liquidating rights penalty
provisions solely and does not reflect the increase in the dividend rate from 6%
to 20%.




                                      F-11

<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


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, 2006 was $11,766.

Research and development

Research and development costs are expensed as incurred. These costs primarily
consist of cost of material used and salaries paid for the development of the
Company's products and fees paid to third parties. Research and development
costs for the years ended December 31, 2006 and 2005 were approximately $18,000
and $36,000, respectively, and are included in cost of sales.

Recent accounting pronouncements

In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No.48, "Accounting for Uncertainty in Income Taxes--an
interpretation of FASB Statement No.109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions. FIN 48 requires that entities
recognize the impact of a tax position in their financial statements, if that
position is more likely than not to be sustained on audit, based on the
technical merits of the position. The provisions of FIN 48 are effective for
fiscal years beginning after December 15, 2006. The Company believes that the
adoption of FIN 48 will not have a material effect on the Company's financial
statements.

In September 2006, the Staff of the SEC issued SAB No. 108: "Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements". SAB No. 108 provides guidance on the consideration
of the effects of prior year misstatements in quantifying current year
misstatements for the purpose of determining whether the current year's
financial statements are materially misstated. The SEC staff believes
registrants must quantify errors using both a balance sheet and income statement
approach and evaluate whether either approach results in quantifying a
misstatement that, when all relevant quantitative and qualitative factors are
considered, is material. This Statement is effective for fiscal years ending
after November 15, 2006. The adoption of SAB No. 108 did not have a significant
impact on the company's consolidated financial statements.



                                      F-12

<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Recent accounting pronouncements (continued)

In March 2006, the FASB issued SFAS No. 156: "Accounting For Servicing of
Certain Financial Instruments- an amendment of SFAS No. 140". This statement
establishes, among other things, the accounting for all separately recognized
servicing assets and servicing liabilities. This statement amends SFAS No. 140
to require that all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable. SFAS No. 156
permits, but does not require, the subsequent measurement of separately
recognized servicing assets and servicing liabilities at fair value. An entity
that uses derivative instruments to mitigate the risks inherent in servicing
assets and servicing liabilities is required to account for those derivative
instruments at fair value. Under SFAS No. 156, an entity can elect subsequent
fair value measurement to account for it's separately recognized servicing
assets and servicing liabilities. By electing that option, an entity may
simplify its accounting because this statement permits income statement
recognition of the potential offsetting changes in fair value of those servicing
assets and servicing liabilities and derivative instruments in the same
accounting period. SFAS No. 156 is effective for financial statements for fiscal
years beginning after September 15, 2006. Earlier adoption of SFAS No. 156 is
permitted as of the beginning of an entity's fiscal year, provided the entity
has not yet issued any financial statements for that fiscal year. The adoption
of SFAS No 156 is not expected have a significant impact on the company's
consolidated financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("FAS 157"). This Statement defines fair
value as used in numerous accounting pronouncements, establishes a framework for
measuring fair value in generally accepted accounting principles and expands
disclosure related to the use of fair value measures in financial statements.
The Statement is to be effective for the Company's financial statements issued
in 2008; however, earlier application is encouraged. The Company is currently
evaluating the timing of adoption and the impact that adoption might have on its
financial position or results of operations.

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the consolidated financial
statements upon adoption.

NOTE 2 - INVENTORIES

At December 31, 2006, inventories consisted of the following:

         Raw materials                                $   294,977
         Work in process                                   43,567
         Finished goods                                   325,099
                                                    --------------
                                                          663,643
         Less: reserve for obsolescence                  (127,160)
                                                    --------------
                                                       $  536,483
                                                    ==============




                                      F-13

<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 3 - PROPERTY AND EQUIPMENT

At December 31, 2006, property and equipment consist of the following:

                                    Useful Life
                                  ---------------
 Office equipment and furniture     5-7 Years                   $   111,685
 Autos and trucks                    10 Years                       178,287
 Manufacturing equipment              7 Years                       209,293
 Building and land                   20 Years                       505,077
                                                          ------------------
                                                                  1,004,342

 Less: accumulated depreciation                                    (229,609)
                                                          ------------------
                                                                 $  774,733
                                                         ===================

For the years ended December 31, 2006 and 2005, depreciation expense amounted to
$91,657 and $42,373, respectively.


NOTE 4 - LOANS PAYABLE


Loans payable consisted of the following at December 31, 2006:

Note to De Chang Credit Union due on May 17, 2007
with interest at 7.02% per annum. Guaranteed by
Shanghai Shanhai                                                  $     332,587

Note to De Chang Credit Union due on December 3, 2007
with interest 7.34% per annum. Guaranteed by Shanghai
Shanhai and Chairman Bian                                               319,795
                                                                 ---------------

     Total                                                              652,382

Less: current portion of loans payable                                 (652,382)
                                                                ----------------

Loans payable, long-term                                          $           -
                                                                 ===============



                                      F-14


<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 5 - DISCONTINUED OPERATIONS

In January 2006, the Company sold 100% of the stock of its subsidiary, Aerisys
Incorporated to Mr. Gary Verdier, the Company's former CEO, in exchange for
assumption of all liabilities and obligation of Aerisys Incorporated.
Accordingly, Aerisys is reported as a discontinued operation, and prior periods
have been restated in the Company's financial statements and related footnotes
to conform to this presentation. The Company did not acquire Aerisys until May
3, 2005. The operations of Aerisys were not material to the consolidated
operations of the Company.

NOTE 6 - RELATED PARTY TRANSACTIONS

The Company's 90% owned subsidiary, LiKang Disinfectant, is engaged in business
activities with four related parties. Shanghai LiKang Meirui Pharmaceuticals
High-Tech Company, Ltd. ("Meirui"), a company of which Shanghai Shanhai Group,
LiKang Disinfectant's minority shareholder, owns 68%, provides certain contract
manufacturing of two products for LiKang Disinfectant. Specifically, Meirui
provides LiKang Disinfectant with ozone producing device equipment and
ultraviolet radiation lamp lights. In addition, under the terms of a two year
agreement entered into in January 2005, Meirui produces the Lvshaxing Air
Disinfectant Machine and LiKang Surgery hand-washing table for LiKang
Disinfectant. In January 2005, LiKang Disinfectant signed a two year agreement
with Meirui to market its products to the retail consumer market using Meirui's
proprietary sales network which caters to the retail/consumer market in China.
For the years ended December 31, 2006 and 2005, the Company recorded net
revenues of $21,668 and $23,987 to Meirui, respectively. Additionally, for the
years ended December 31, 2006 and 2005, the Company purchased product from
Meirui amounting to $1,094 and $48,489 respectively. At December 31, 2006,
Meirui owed LiKang Disinfectant $15,603. In general, accounts receivable due
from Meirui are payable in cash and are due within 4 to 6 months, which
approximate normal business terms with unrelated parties.

Shanghai LiKang Pharmaceuticals Technology Company, Limited, which is owned by
Messrs. Xuelian Bian (90%) and Wei Guan (10%), the Company's officers and
directors, sells the Company's products to third parties. For the years ended
December 31, 2006 and 2005, the Company recorded net revenues of $3,211,758 and
$1,917,038 to Shanghai LiKang Pharmaceuticals Technology Company, Limited,
respectively. At December 31, 2006, accounts receivable from sales due from
Shanghai LiKang Pharmaceuticals Technology Company, Limited net of allowance for
doubtful accounts was $1,406,425. In general, accounts receivable due from
Shanghai LiKang Pharmaceuticals Technology Company, Limited are payable in cash
and are due within 4 to 6 months, which approximate normal business terms with
unrelated parties.

Shanghai Shanhai Group, who is the minority shareholder of LiKang Disinfectant,
is owned by Group Employee Share-holding Commission (16.25%) and Baoshan
District Dachang Town South Village Economic Cooperation Club (83.75%). The
Company leases its principal executive offices and warehouse space from Shanghai
Shanhai Group for approximately $36,000 per year. Shanghai Shanhai Group also
holds the land use permit for the principal executive office building. For the
years ended December 31, 2006 and 2005, rent expense paid to this related party
amounted to $38,462 and $31,664, respectively. Additionally, in January 2005,
the Company borrowed $165,471(RMB 1,310,000) from Shanghai Shanhai Group for
working capital purposes, which is reflected on the accompanying balance sheet
as loans payable - related party. The loan bears interest at 10% per annum and
is payable on demand. For the year ended December 31, 2006, interest expense
related to this note amounted to $16,734.




                                      F-15

<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 6 - RELATED PARTY TRANSACTIONS (CONTINUED)

Shanghai LiKang Biological High-Tech Company, Ltd. ("Biological"), which is 60%
owned by Messrs. Xuelian Bian, the Company's officer and director, and 40%-owned
by Shanghai LiKang Pharmaceuticals Technology Company, Limited (owned by Messrs.
Xuelian Bian (90%) and Wei Guan (10%), the Company's officers and directors)
sells biological products, cosmetic products and develops technology for third
parties. Additionally, the Company sells certain raw materials to Biological
employed in the Biological production process. For the years ended December 31,
2006 and 2005, the Company recorded net revenues of $3,773 and $13,462 to
Biological, respectively. Additionally, during the year ended December 31, 2006
and 2005, the Biological processed certain products on behalf of the Company for
the $78,946 and $74. At December 31, 2006, the Company owed Biological $47,570.
In general, accounts payable due to Biological are payable in cash and are due
within 4 to 6 months, which approximate normal business terms with unrelated
parties.

The Company's two officers and directors, from time to time, provided advances
to the Company for working capital purposes. These advances are short-term in
nature and non-interest bearing. The amount due to the executive officers at
December 31, 2006 was $156,697, which were made to the LiKang International
during the year and is included in due to related party on the accompanying
balance sheet. The advances of $156,697 were contributed by XueLian Bian, our
CEO and Chairman, and Wei Guan our Vice President and director. The advances
were related to the registered capital commitment of our new subsidiary, LiKang
International.

NOTE 7 -  SHAREHOLDERS' EQUITY

Preferred Stock

a) Series A Convertible Preferred Stock

On May 11, 2005, the Company's Board of Directors approved the creation of
500,000 shares of Series A Convertible Preferred Stock having the following
rights, preferences and limitations: (a) each share has a stated value of $.80
per share and no par value; (b) each share ranks equally with any other series
of preferred stock designated by the Company and not designated as senior
securities or subordinate to the Series A Convertible Preferred Stock,; (c) each
share entitles the holder to receive a six percent (6%) per annum cumulative
dividend when, as and if, declared by the Board of Directors of the Company; (d)
these shares are convertible into shares of the company's Common Stock at a per
share value of $.08 per share,; (e) the shares have no voting rights, and (f)
the shares are not subject to redemption.

On June 30, 2005, the Company completed $277,276 (net of fees of $23,000)
financing consisting of 375,345 shares of its 6% Series A Preferred Stock, and
common stock purchase warrants to purchase an additional 3,753,450 shares. Each
warrant entitles the holder to purchase one share of common stock for a period
of five years, at an exercise price of $.10 per share, subject to adjustment.
The net proceeds from the transaction will be used for general working capital
purposes.

The Company granted the holders piggy back registration rights covering the
shares of its common stock underlying the preferred stock and warrants.




                                      F-16


<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 7 -  SHAREHOLDERS' EQUITY (CONTINUED)

Preferred Stock (Continued)

a) Series A Convertible Preferred Stock (Continued)

On the date of issuance of the Series A Convertible Preferred Stock, the
effective conversion price was at a discount to the price of the common stock
into which it was convertible. In accordance with Emerging Issues Task Force
("EITF") 98-5 and EITF 00-27, the Series A Convertible Preferred Stock was
considered to have an embedded beneficial conversion feature because the
conversion price was less than the fair value of the Company's common stock.
This beneficial conversion feature is calculated after the warrants have been
valued with proceeds allocated on a relative value basis. This Series A
Convertible Preferred Stock was fully convertible at the issuance date,
therefore the full amount of proceeds allocated to the Series A Convertible
Preferred Stock was determined to be the value of the beneficial conversion
feature and was recorded as a deemed dividend with a corresponding credit to
additional paid-in capital in the amount of $300,276 in fiscal 2005.

On June 15, 2006, the holders of the Company's outstanding Series A Convertible
Preferred Stock converted 375,345 shares of such stock into 3,753,450 shares of
common stock. Following the conversions on June 15, 2006, no shares of Series A
Convertible Preferred Stock remaining outstanding. As of date of conversion, the
Company's board of directors had not declared a dividend on its Series A
Convertible Preferred Stock. Accordingly, all previously accrued and unpaid
Series A Convertible Preferred Stock dividends were reversed. As of December 31,
2006, there are no accrued cumulative but undeclared dividends in arrears
related to the Company's Series A Convertible Preferred Stock.

b) Series B 6% Cumulative Convertible Preferred Stock

On December 28, 2005, the Company closed on a private placement with a group of
accredited investors, for the sale of an aggregate of 1,500,000 shares of Series
B 6% Cumulative Convertible Preferred Stock of the Company ("Series B Preferred
Stock") at a purchase price of $1.00 per share of Series B Preferred Stock along
with warrants to purchase additional shares of the Company's common stock. The
Series B Preferred Stock was priced at $1.00 per share, and the Company received
gross proceeds of $1,500,000. The Company paid a due diligence fee of $65,000 in
cash and Class B Warrants to purchase 866,665 shares of its common stock to
certain of the investors who purchased securities in this offering. Each share
of Series B Preferred Stock, as well as the value of all accrued by unpaid
dividends, is convertible at the option of the holder into shares of the
Company's common stock at a conversion price of $0.10 per share, provided that
no holder has the right to convert his shares of Series B Preferred Stock if by
virtue of such conversion the holder would become the beneficial owner of than
4.99% of the Company's common stock. This ownership limitation can be waived by
the holder upon 61 days notice to the Company. The conversion price is subject
to adjustment in the event of stock splits, reclassifications or stock
dividends.

In connection with the sale of 1,500,000 shares of the Company's Series B
Preferred Stock, the Company issued Class A Common Stock Purchase Warrants to
purchase 15,000,000 shares of the Company's common stock at an exercise price of
$0.20 per share and Class B Common Stock Purchase Warrants to purchase
15,866,665 (including 866,665 granted to as a due diligence fee) shares of its
common stock at an exercise price of $0.30 per share. The Class A and Class B
warrant exercise prices are subject to adjustment pursuant to anti-dilution
provisions on either a cash or cashless exercise basis. The warrants expire five
years from the date of issuance.


                                      F-17


<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 7 -  SHAREHOLDER' EQUITY (continued)

Preferred Stock (continued)

b) Series B 6% Cumulative Convertible Preferred Stock (Continued)

The Series B Preferred Stock ranks ahead of the common stock of the Company upon
liquidation of the Company. The Series B Preferred Stock also ranks ahead of the
common stock with respect to the payment of dividends. The shares pay cumulative
dividends of 6% per annum beginning on October 31, 2006, which increases to 20%
per annum if an "event of default", as defined in the agreement, has occurred.
The dividends are payable in cash or at the Company's option shares of
registered common stock. If the Company elects to pay dividends in the form of
shares of its common stock, for purposes of the calculation the shares are
valued at the average closing price of our common stock for the 10 trading days
preceding the date of the dividend.

On July 21, 2006, the holders of 850,000 shares of the outstanding Series B
Preferred Stock converted those shares into 8,500,000 shares of common stock. On
November 1, 2006 the remaining 650,000 shares of Series B Preferred Stock
outstanding, together with accrued but unpaid dividends, were converted into
7,110,766 shares of common stock. Following the conversions on November1, 2006,
there are no shares of Series B Convertible Preferred Stock remaining
outstanding. As of December 31, 2006, there are no accrued cumulative but
undeclared dividends in arrears related to the Company's Series B Preferred
Stock.

In accordance with Emerging Issues Task Force ("EITF") 98-5 and EITF 00-27, the
Series B Preferred was considered to have an embedded beneficial conversion
feature because the conversion price was less than the fair value of the
Company's common stock. This beneficial conversion feature is calculated after
the warrants have been valued with proceeds allocated on a relative value basis.
This Series B Convertible Preferred was fully convertible at the issuance date,
therefore the full amount of proceeds allocated to the Series B Preferred was
determined to be the value of the beneficial conversion feature and was recorded
as a deemed dividend with a corresponding credit to additional paid-in capital
in the amount of $1,500,000 in fiscal 2005. In 2005, the Company computed the
fair value of the warrants using the Black-Scholes valuation model. The
Black-Scholes model was developed for use in estimating the fair value of traded
options that have no vesting restrictions and are fully transferable. In
addition, option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility. The assumptions used
in this model to estimate fair value of the warrants granted are as follows:

                                                              Warrants
Exercise/Conversion Price                                 $  0.20 to $0.30
Fair Value of the Company's Common Stock                  $          0.153
Expected life in years                                                 5.0
Expected volatility                                                    330%
Expected dividend yield                                                0.0%
Risk free rate                                                        3.93%
Calculated fair value per share                           $          0.153






                                      F-18

<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 7 -  SHAREHOLDER' EQUITY (continued)

Common Stock

On May 2, 2005, the Company issued 36,273,470 shares of its common stock to two
individuals under the terms of a Share Exchange Agreement dated May 2, 2005.
This transaction, which resulted in Linkwell becoming a wholly owned subsidiary
of the Company, was exempt from registration under the Securities Act of 1933,
as amended in reliance on an exemption provided by Section 4(2) of that Act. The
participants were either accredited investors or non-accredited investors who
had such knowledge and experience in financial, investment and business matters
that they were capable of evaluating the merits and risks of the prospective
investment in our securities.

On August 24, 2005 and effective September 1, 2005, the Company entered into a
one-year agreement with China Direct Investments, Inc. to provide business
development and management services. In connection with this agreement, the
Company issued 2,000,000 shares of the Company's common stock. The Company
valued these services using the fair value of common shares on grant date at
$.08 per share and recorded deferred consulting expense of $160,000 to be
amortized over the service period. For the year ended December 31, 2006, the
consulting expense was $106,667 and the deferred consulting compensation has
been fully amortized.

On January 1, 2007, the Company entered into a three year agreement
with China Direct Investments, Inc. to provide business development and
management services. In connection with this agreement, the Company issued
4,700,000 shares of the Company's common stock for the service period from
January 1, 2006 to December 31, 2008. Accordingly, the Company recorded the
deferred consulting expense of $282,000.
..

On September, 2006, the Company entered into a three-year agreement with an
consultant to provide business development and management services. In
connection with this agreement, the Company issued 500,000 shares of the
Company's common stock. The Company valued these services using the fair value
of common shares on grant date at $.185 per share and recorded deferred
consulting expense of $92,500 to be amortized over the service period. For the
year ended December 31, 2006, amortization of consulting compensation amounted
to $10,278.

Stock Options

Year 2000 Equity Compensation Plan

On October 10, 2000, the Company's Board of Directors adopted its Year 2000
Equity Compensation Plan under which a total of 540,000 shares of common stock
are made available for the granting of awards, a portion or all of which may
qualify as incentive stock options, non-incentive stock options and restricted
stock grants. The purpose of the plan, which was approved by the Company's
shareholders on November 10, 2000, is to encourage stock ownership by its
officers, directors, key employees and consultants, and to give such persons a
greater personal interest in the success of its business and an added incentive
to continue to advance and contribute to us. If any option or restricted stock
grant expires or terminates before it has been exercised in full, the shares of
common stock allocable to the unexercised portion of such option or restricted
stock grant may again be subject to an option or restricted stock grant under
the 2000 Equity Compensation Plan. The number of shares available and subject to
options, option prices and, to the extent applicable, the number of shares
subject to any restricted stock grant will be adjusted upward or downward, as
the case may be, in the event of any subdivision or consolidation of shares or
other capital readjustment, stock dividend, merger, consolidation or similar
transaction affecting the shares. At December 31, 2006, the Company did not have
any options to purchase shares of its common stock outstanding under the plan.

                                      F-19


<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006


NOTE 7 -  SHAREHOLDER' EQUITY (continued)

Stock Options (Continued)

Year 2000 Equity Compensation Plan (Continued)

The 2000 Equity Compensation Plan is administered by the Company's Board of
Directors who have the sole authority to determine which eligible employees of
the company receive options and restricted stock grants under the plan, the
times when options and restricted stock grants are granted, the number of shares
covered by the option and restricted stock grant, the provisions of any
agreement and when options may be exercised or when restricted stock grants
become vested. In addition, the Board has the power and authority to construe
and interpret the Plan.

Stock options may be granted by the Board at prices determined in the discretion
of the Board, provided that the option price must be at least equal to the fair
market value of the common stock on the date of the grant. The option price is
payable in cash, common stock or such other form of payment as may be determined
by the Board. The exercise price of an incentive stock option must be at least
equal to the fair market value of the Company's common stock on the date of
grant or 110% of such value in the case of options granted to an individual who
is a 10% or greater shareholder of the company.

An optionee generally may exercise an option only while an employee of the
Company. If an optionee becomes disabled or dies while in the employ of our
company, the option may be exercised within one year of the optionee's death or
termination due to disability. The expiration date of an option will be
determined by the Board at the time of the grant, but in no event will an
incentive stock option be exercisable after the expiration of 10 years from the
date of grant or five years in the case of incentive options granted to a 10% or
greater shareholder. The Board may grant to an eligible individual shares of the
Company's common stock subject to specified restrictions on transferability and
vesting as provided in a written grant agreement or resolutions in which the
restricted stock grant is adopted and approved by the Board. Restricted stock
grants may be made in lieu or cash compensation or as additional compensation.
The Board may also make restricted stock grants contingent on pre-established
performance goals determined by the Board. Except for certain transfers that may
be permitted by the Board, no option or restricted stock grant may be
transferred by an eligible individual other than by will or the laws of descent
or distribution.

The 2000 Equity Compensation Plan terminates on October 10, 2010. The Board of
Directors may at any time amend, suspend or discontinue the plan, except that no
amendment may be made without the approval of the shareholders which would
increase the number of shares subject to the plan, materially change the
designation of the class of employees eligible to receive options, remove the
administration of the plan from the Board or a committee of the Board or
materially increase the benefits accruing to participants under the plan.

Non-Qualified Stock Option Plan

On December 21, 2000 the Company's Board of Directors adopted our Non-Qualified
Stock Option Plan under which a total of 200,000 shares of common stock are made
available for granting of non-qualified stock options to officers, directors,
employees and key advisors or consultants. The purpose of the plan is to
encourage the participants to contribute materially to its growth. If any option
expires or terminates before it has been exercised in full, the shares of common
stock allocable to the unexercised portion of such option may again be subject
to an option under the Non Qualified Stock Option Plan. The number of shares
available and subject to options and option prices will be adjusted upward or
downward, as the case may be, in the event of any subdivision or consolidation
of shares or other capital readjustment, stock dividend, merger, consolidation
or similar transaction affecting the shares. At December 31, 2006, the Company
did not have any options to purchase shares of our common stock outstanding
under the plan.


                                      F-20


<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 7 -  SHAREHOLDER' EQUITY (continued)

Stock Options (continued)

Non-Qualified Stock Option Plan (Continued)

The Non-Qualified Stock Option Plan is administered by our Board of Directors
who have the sole authority to determine which who is eligible to receive grants
of non-qualified options under the plan, the times when options are granted, the
number of shares covered by the option, the provisions of any agreement and when
options may be exercised. In addition, the Board has the power and authority to
construe and interpret the Plan.

Stock options may be granted by the Board at prices determined in the discretion
of the Board and the exercise price of the option may be greater than, or less
than, the fair market value of our common stock. The option price is payable in
cash, common stock or such other form of payment as may be determined by the
Board. An optionee generally may exercise an option only while the grantee is
employed by us or otherwise providing our company services. If an optionee
becomes disabled or dies while in the employ of our company or while otherwise
providing services to us, the option may be exercised within 90 days after
optionee's death or termination due to disability. The expiration date of an
option will be determined by the Board at the time of the grant, but in no event
will a stock option be exercisable after the expiration of 10 years from the
date of grant. Except for certain transfers that may be permitted by the Board,
no option may be transferred by an eligible individual other than by will or the
laws of descent or distribution.

2005 Equity Compensation Plan

Effective June 28, 2005, the Company's Board of Directors authorized, approved
and adopted its 2005 Equity Compensation Plan. The purpose of the plan is to
encourage stock ownership by our officers, directors, key employees and
consultants, and to give these persons a greater personal interest in the
success of our business and an added incentive to continue to advance and
contribute to us. The Company has currently reserved 5,000,000 of its authorized
but unissued shares of common stock for issuance under the plan, and a maximum
of 5,000,000 shares may be issued, unless the plan is subsequently amended
(subject to adjustment in the event of certain changes in our capitalization),
without further action by its Board of Directors and stockholders, as required.
Subject to the limitation on the aggregate number of shares issuable under the
plan, there is no maximum or minimum number of shares as to which a stock grant
or plan option may be granted to any person. Shares used for stock grants and
plan options may be authorized and unissued shares or shares reacquired by the
Company, including shares purchased in the open market. Shares covered by plan
options which terminate unexercised will again become available for grant as
additional options, without decreasing the maximum number of shares issuable
under the plan, although such shares may also be used by the Company for other
purposes.

The plan is administered by the Company's Board of Directors or an underlying
committee. The Board of Directors or the committee determines from time to time
those officers, directors, key employees and consultants to whom stock grants or
plan options are to be granted, the terms and provisions of the respective
option agreements, the time or times at which such options shall be granted, the
type of options to be granted, the dates such plan options become exercisable,
the number of shares subject to each option, the purchase price of such shares
and the form of payment of such purchase price. All other questions relating to
the administration of the plan, and the interpretation of the provisions thereof
and of the related option agreements are resolved by the Board or committee.



                                      F-21


<page>



                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 7 -  SHAREHOLDER' EQUITY (continued)

Stock Options (continued)

2005 Equity Compensation Plan(Continued)


Plan options may either be options qualifying as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended or non-qualified
options. The Company's officers, directors, key employees and consultants are
eligible to receive stock grants and non-qualified options under the plan; only
the Company's employees are eligible to receive incentive options. In addition,
the plan allows for the inclusion of a reload option provision which permits an
eligible person to pay the exercise price of the option with shares of common
stock owned by the eligible person and receive a new option to purchase shares
of common stock equal in number to the tendered shares. Furthermore,
compensatory stock grants may also be issued.

Any incentive option granted under the plan must provide for an exercise price
of not less than 100% of the fair market value of the underlying shares on the
date of grant, but the exercise price of any incentive option granted to an
eligible employee owning more than 10% of our outstanding common stock must not
be less than 110% of fair market value on the date of the grant. The term of
each plan option and the manner in which it may be exercised is determined by
the Board of Directors or the committee, provided that no option may be
exercisable more than ten years after the date of its grant and, in the case of
an incentive option granted to an eligible employee owning more than 10% of the
common stock, no more than five years after the date of the grant. The exercise
price of non-qualified options shall be determined by the Board of Directors or
the Committee, but shall not be less than the par value on the date the option
is granted. The per share purchase price of shares issuable upon exercise of a
Plan option may be adjusted in the event of certain changes in our
capitalization, but no such adjustment shall change the total purchase price
payable upon the exercise in full of options granted under the Plan. Unless the
plan has been previously suspended or terminated by the Board of Directors, the
plan, as it relates to grants of incentive stock options, terminates on June 28,
2015.

During the year ended December 31, 2006, the Company did not grant any stock
options.

As of December 31, 2006, there are no unrecognized compensation costs since all
options granted under the stock option plans are completely vested.

Common Stock Warrants

In June 2005, in connection with the preferred stock Series A Preferred Stock
funding, the Company granted warrants to purchase 3,753,450 shares of its common
stock at $0.10. The Warrants are exercisable for five years after the issue
dates of the Warrants.

In December 2005, in connection with the Company's Series B Preferred Stock
funding, the Company granted warrants to purchase 15,000,000 shares of its
common stock at $0.20 and 15,866,665 at $.30. The warrants are exercisable for
five years after the issue dates of the Warrants.

In January 2006, the Company granted common stock purchase warrants to purchase
2,125,000 shares of our common stock at an exercise price of $0.20 per share to
China Direct Investments, Inc. as consideration for its services associated with
the preferred stock offerings in December 2005. Accordingly, such warrants have
been accounted for as offering costs.



                                      F-22

<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 7 -  SHAREHOLDER' EQUITY (continued)

Common Stock Warrants (continued)

Stock warrant activity for the year ended December 31, 2006 is summarized as
follows:

                                          Number of          Weighted average
                                           shares             exercise price
                                          ---------          ----------------
    Outstanding at December 31, 2004        389,750             $    1.88
       Granted                           34,620,115                   .24
       Exercised                                  -                     -
                                       ------------            -----------

   Outstanding at December 31, 2005      35,009,865             $    0.25

       Granted                            2,125,000                   .20
       Exercised                                  -                     -
                                       ------------            -----------

   Outstanding at December 31, 2006      37,134,865              $   0.25
                                       ============             ===========

     Weighted-average fair value
     of warrants Granted
     during the year                   $      0.16
                                       ===========


The following table summarizes the Company's stock warrants outstanding at
December 31, 2006:

<table>
<caption>

                                                   Warrants outstanding and exercisable
                                                 -------------------------------------------
                                                                Weighted
                                                                average
                                                               remaining       Weighted
           Range of                                              exercise       average
         exercise price                     Number                life           price
        ----------------        ----------------------------   ---------------  -----------
      
                       <c>                           <c>               <c>
         $      0.10                      3,753,450                 3.48            $0.10
         $      0.20                     17,155,000                 3.75            $0.20
         $      0.30                     15,866,665                 4.00            $0.30
         $ 0.75-2.50                        359,750                 1.55            $2.02
                                --------------------------
                                         37,134,865
                                -------------------------

</table>


NOTE 8 - INCOME TAXES


The Company's parent and their US subsidiaries are subject top applicable
Federal, State and Local tax statues. The Company's subsidiaries in China are
governed by the Income Tax Law of the Peoples Republic of China concerning
Foreign Investment Enterprises and Foreign Enterprises and local income tax
laws (the "PRC Income Tax Law"). Pursuant to the PRC Income Tax Law, wholly-
owned foreign enterprises are subject to tax at a statutory rate of
approximately 33% (30% state income tax plus 3% local income tax).

The components of income (loss) before income tax consist of the following:



                                           Year Ended December 31,

                                          2006                 2005
                                   ------------------     -----------------
US Operations                        $   (520,000)        $  (266,000)
Chinese Operations                      1,210,000           1,100,000
                                   -------------------     -----------------
                                      $   690,000         $   834,000
                                   ===================     =================

The provision (benefit) for income taxes is composed of the following:




                                          Year Ended December 31,

                                          2006                   2005
                                     -------------------     -----------------
Federal                                 $           -           $          -
State                                               -                      -
Chinese Operations                                  -                177,000
                                      ------------------     -----------------
                                        $           -         $      177,000
                                     ===================     =================

The table below summarizes the reconciliation of the Company's income tax
provision computed at the federal statutory rate and the actual tax provision
as follows:

<table>
<caption>

                                                                                 Year Ended December 31,
                                                                         -----------------------------------------
                                                                               2006                    2005
                                                                         ------------------      -----------------

                                                                     <c>                    <c>
Income tax provision at Federal statutory rate                            $        241,000           $    292,000
State income taxes, net of Federal benefit                                          32,000                 39,000
Permanent Differences                                                               30,000                      -
US operating loss not available against foreign                                    (80,000)               (73,000)
Abatement of foreign income taxes                                                 (399,000)              (186,000)
Increase in valuation allowance                                                    176,000                105,000
                                                                         ------------------      -----------------
                                                                           $             -          $     177,000
                                                                         ==================      =================
</table>



Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. 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 carry forwards.  SFAS 109 additionally requires the establishment of a
valuation allowance to reflect the likelihood of realization of deferred tax
assets.


                                      F-23


<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 8 - INCOME TAXES (Continued)



For their US Operations the Company has not recorded any net deferred tax
assets, due to the uncertainty of recoverability on such assets. The Company's
Chinese Operations are governed by the Income Tax Law of the Peoples Republic
of China concerning Foreign Investment Enterprises and Foreign Enterprises and
local income tax laws (the "PRC Income Tax Law").  Pursuant to the PRC Income
Tax Law, foreign owned enterprises are subject to tax at a statutory rate of
approximately 33% (30% state income tax plus 3% local income tax).  The Company
obtained approval from the Peoples Republic of China to have their state income
taxes abated. Such approval is in effect for the year ended December 31, 2006.

The Company has net operating loss ("NOL") carryforwards for United States
income tax purposes at December 31, 2006 expiring through the year 2026.
Management estimates the NOL as of December 31, 2006 to be approximately
$700,000. The utilization of the Company's NOL's may be limited because of a
possible change in ownership as defined under Section 382 of Internal Revenue
Code. The Company has recorded a valuation allowance for benefit available from
these NOL's, as it is more likely than not that realization will not occur.

   NOL carryforwards                                   $      281,000
   Valuation allowance                                       (281,000)
                                                         --------------

   Deferred tax asset, net of allowance with
   regards to NOL's                                     $          -
                                                        ==============



                                      F-24

<page>


NOTE 9 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases office and manufacturing space under leases in Shanghai,
China that expire through February 2011.

Future minimum rental payments required under these operating leases are as
follows:

                         Year Ended December 31,
                         ------------------------
                                  2007                      $ 64,367
                                  2008                        31,703
                                  2009                        31,916
                                  2010                        31,916
                                  2011                         2,874
                                                        ----------------

                Total minimum lease payments                $162,776
                                                        ================

For the years ended December 31, 2006 and 2005, rent expense amounted to $81,159
and $56,080, respectively.

Litigation
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.




                                      F-25


<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 10 - FOREIGN OPERATIONS

For the year ended December 31, 2006 and 2005, the Company derived all of its
revenue from its subsidiaries located in the People's Republic of China.

Identifiable assets by geographic areas as of December 31, 2006 are as follows:

         Identifiable Assets at December 31, 2006
         United States                                $  101,091
         China                                         6,843,401
                                                     -----------
         Total                                        $6,944,492
                                                     ===========
NOTE 11 - SEGMENT INFORMATION

The following information is presented in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related Information. For the year
ended December 31, 2006 and 2005, the Company operated in two reportable
business segments - (1) the sale of commercial disinfectant products and (2)
trading company that involves import and export activities. The Company's
reportable segments are strategic business units that offer different products.
They are managed separately based on the fundamental differences in their
operations. Condensed information with respect to these reportable business
segments for the year ended December 31, 2006 and 2005 is as follows:

Year Ended December 31, 2006:

<table>
<caption>

                                                  Import and       Corporate
                                   Disinfectant     Export            and
                                     Products       Business         Other     Consolidated
                                   ------------    -----------     ----------   ------------

                               <c>             <c>           <c>            <c>
Net revenue-non affiliated company  $ 3,787,183   $   720,996    $        -    $ 4,508,179
Net Revenue-related party company     3,237,199             -             -      3,237,199
Interest expense (income)                62,496          (216)            -         62,280
Depreciation and amortization            91,657             -             -         91,657
Net income (loss)                     1,161,828       (86,220)     (507,488)       568,120
Long-lived asset expenditures           149,339             -             -        149,339
Segment Assets                        5,794,144     1,049,257       101,091      6,944,492

</table>

Net revenues for fiscal 2006 were  $7,745,378.  Included in our net revenues
2006 are  $3,237,199 in related party sales and $4,508,179 in third party sales.
Included in our net revenues for fiscal 2006 are $7,024,382 of revenues
attributable to LiKang Disinfectant and $720,996 of revenues attributable to
LiKang International.

The Segment Assets related to the Import and Export Business are comprised of
cash of $317,451, accounts receivables $54,755other receivables $414,000,
advances on purchases of $262,381 and inventory of $670.


Year Ended December 31, 2005:

<table>
<caption>

                                                   Import and      Corporate
                                     Disinfectant     Export          and
                                       Products     Business         Other     Consolidated
                                    ------------   -----------    ----------   ------------

                                 <c>           <c>            <c>           <c>
Net revenue-non affiliated company   $ 3,508,903     $    -     $         -     $ 3,508,903
Net Revenue-related party company      1,957,030          -               -       1,957,030
Interest expense (income)                 67,050          -               -          67,050
Depreciation and amortization             42,373          -               -          42,373
Net income (loss)                        831,053          -        (286,924)        544,129
Long-lived asset expenditures            148,053          -               -         148,053
Segment Assets                         4,190,660          -        1,335,849      5,526,509

</table>

Net revenues for fiscal 2005 were  $5,465,933.Included  in our net revenues 2005
are  $1,957,030 in related party sales and  $3,507,903 in third party sales.
As we organized LiKang  International  during the fiscal year 2006 we did not
have comparable revenues during the fiscal year 2005.


                                      F-26

<page>

                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - OPERATING RISK

(a) Country risk

Currently, the Company's revenues are primarily derived from the sale of line of
disinfectant product offerings to customers 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 manufacturers of disinfectant product
offerings, the Company competes with larger US companies who have greater funds
available for expansion, marketing, research and development and the ability to
attract more qualified personnel. These US companies may be able to offer
products at a lower price. There can be no assurance that the Company will
remain competitive should this occur.

(c) Exchange risk

The Company can not guarantee that the current exchange rate will remain steady,
therefore there is a possibility that the Company could post the same amount of
profit for two comparable periods and because of a fluctuating exchange rate
actually post higher or lower profit depending on exchange rate of Renminbi
converted to US dollars on that date. The exchange rate could fluctuate
depending on changes in the political and economic environments without notice.

(d) Political risk

Currently, 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.


NOTE 13 SUBSEQUENT EVENTS

In January, 2007, Likang Disinfectant entered into a loan agreement to loan
$640,000 to Likang Biological High-Tech Company, Ltd. The note is due on April
2, 2007 and bears a monthly interest rate of 0.558%.

As of the date of this report Linkwell Corporation a 90% owner Likang
Disinfectant has commenced discussion and is in later stage negotiations with
Likang Disinfectant's minority shareholder, Shanghai Shanhai Group. Shanghai
Shanhai Group, which is the minority shareholder of our Likang subsidiary, is
owned by Shanghai Shanhai Group Employee Share-holding Committee (16.25%) and
Shanghai Baoshan District Dachang Town South Village Economic Cooperation Club
(83.75%). These two entities are owned by the employees of Shanghai Shanhai
Group.

Presently a final purchase price for the remaining 10% stake of Likang
Disinfectant held by Shanghai Shanhai Group has not been determined. Linkwell
Corporation expects to finalize the terms and close the transaction in April
2007.

As of the date of this report Linkwell Corporation and Shanghai Likang
Biological High-Tech Company, Ltd., a company which is owned by Messrs. Xue Lian
Bian, an executive officer and director of our company, and Shanghai Likang
Pharmaceuticals Technology Company, Limited, another affiliate which is owned by
Messrs. Bian and Wei Guan, are in negotiation to purchase all of the outstanding
stock in both Shanghai Likang Biological High-Tech Company, Ltd. and Shanghai
Likang Pharmaceutical Technology Company. It is contemplated that upon
consummation of an agreement, Likang Pharmaceuticals' sales force will be
trained and managed by Likang Disinfectant's management team. Presently a final
purchase price has not been determined. Linkwell Corporation expects to finalize
the terms and close the transaction in April 2007.


                                      F-27


<page>


                      LINKWELL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 13 SUBSEQUENT EVENTS (Continued)

On January 15, 2007 Linkwell Corporation received proceeds of $321,332 for the
exercise of warrants to purchase 3,213,320 shares of Linkwell Common Stock at
$0.10 per share.

On January 31, 2007 Linkwell Corporation entered into a non-binding letter of
intent with a Fortune 500 company under which it will acquire a 10% equity
interest in Linkwell's subsidiary Shanghai Likang Disinfectant High-Tech
Company, Limited ("Likang"). The closing of the transaction is subject to
certain conditions including the completion of satisfactory due diligence,
approval by management of the acquiring company, approval, as required, by the
Chinese government and execution of definitive agreements by the parties.


                                      F-28

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