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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K /A

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

For the Fiscal Year EndedSeptember 30, 2008OR

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

Commission file number 333-127016

CHINA HEALTH CARE CORPORATION(Exact name of registrant as specified in its charter)

|Wyoming                                          | 98-0463119                          
|------------------------------------------------ | ------------------------------------
|(State or other Jurisdiction of Incorporation or | (I.R.S. Employer Identification No.)
|Organization)                                    |                                     
|                                                 |                                     
|T Plaza Center, Suite 400,                       |                                     
|15950 North Dallas Parkway, Dallas               | TX 75249                            
|(Address of Principal Executive Offices)         | (zip code)                          

Registrant's telephone number, including area code: (972)
361-8033

_______________________________________________________
  Former
name, former address and former fiscal year, if changed since last report: December

Securities registered pursuant to Section 12(b)
  of the Act:

|Title of Each Class | Name of Each Exchange On Which Registered
|------------------- | -----------------------------------------
|N/A                 | N/A                                      

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 the Securities Act. Yes [ 
 ]    No [X]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes
[   ]    No [X]

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 last 90 days. Yes
[X]    No [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[   ]

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Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definition of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

Large accelerated filer [ 
 ]      Accelerated filer [  
]      Non-accelerated filer [  
]       Smaller reporting company [X]

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

The aggregate market value of Common Stock held by
non-affiliates of the Registrant on May 12, 2009 was $1,685,360 based 
on a
$0.05 closing price for the Common Stock on May 12, 2009. For purposes of this
computation, all executive officers 
and directors have been deemed to be
affiliates. Such determination should not be deemed to be an admission that such 
executive officers and directors are, in fact, affiliates of the
Registrant.

Indicate the number of shares outstanding of each of the
registrants classes of common stock as of the latest practicable date.

50,148,000 Shares as of May 12, 2009

DOCUMENTS INCORPORATED BY REFERENCE

None.

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PART I

Item 1.      BUSINESS

Overview

The address of our principal executive office is T Plaza
Center, Suite 400, 15950 North Dallas Parkway, Dallas. Our telephone number is
(972) 361-8033.

Our common shares became listed on the OTC Bulletin Board on
March 22, 2007, under the symbol CVLG. Prior to this date, there was no public
market for our common shares.

On May 13, 2008, the Secretary of State of Wyoming effected a
change of name of our company from The Cavalier Group to China Health Care
Corporation, as approved by our shareholders. The name change became effective
with the Over-the-Counter Bulletin Board at the opening for trading on May 16,
2008 under the new stock symbol CNHL.

History

China Health Care Corporation (the Company) was incorporated
in the state of Wyoming on February 11, 2005 under the name of The Cavalier
Group. On May 13, 2008, the Secretary of State of Wyoming effected a change of
the Company to China Health Care Corporation, as approved by our shareholders.
On January 20, 2008, the Company entered into a share exchange agreement with
United Premier Medical Group Limited (UPMG) and its shareholders to acquire
all of the outstanding common shares of UPMG. The transaction closed on July 24,
2008.

The share exchange transaction has been accounted for as a
recapitalization of UPMG where the Company (the legal acquirer) is considered
the accounting acquiree and UPMG (the legal acquiree) is considered the
accounting acquirer. As a result of this transaction, the Company is deemed to
be a continuation of the business of UPMG.

Accordingly, the financial data included in the accompanying
consolidated financial statements for all periods prior to July 24, 2008 is that
of the accounting acquirer (UPMG). The historical stockholders equity of the
accounting acquirer prior to the share exchange has been retroactively restated
as if the share exchange transaction occurred as of the beginning of the first
period presented.

United Premier Medical Group Limited (UPMG) is a medical
consultancy service provider in the Peoples Republic of China (PRC) providing
services in the areas of hospital management and specialty medical consultancy.
UPMGs primary focus is the health care needs of women and children.

The business was founded in 2001, with UPMG as the ultimate
holding company. UPMG was organized under the laws of Cayman Island on March 28,
2003, whereas UPMG International Limited (UPMGI) was incorporated in the
British Virgin Islands on September 15, 2003. The intention is to build the
Company using a holding company structure, with a top-level entity owing
interests in operating entities. Separate operating entities are established in
each geographic region. At times, the company owns less than 100% of an
operating entity because this enables the use of resources and expertise of
local partners.

There were a number of restructuring events, which occurred
over the past several years. These events would include:

- On July 19, 2001, UPMGI acquired 50% of the operating entity Proactive
  Medicare Enterprise (Hong Kong) Limited (PME-HK). At the same time, PME-HK
  held 90% in equity interest of the operating entity Shanghai Proactive
  Medicare Health Education Center Limited (BK-SH).

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- On May 5, 2003, UPMG acquired 100% of UPMGI and hence UPMGI became a
  wholly-owned subsidiary of UPMG.
- On March 17, 2004, UPMGI increased its ownership of the operating entity
  PME-HK from 50% to 100% and hence PME-HK became a wholly-owned subsidiary of
  UPMGI.
- Pro-Innovative Holdings Limited (PHL), an investment holding company, was
  incorporated on January 22, 2004 with 51% in equity interest held by UPMG.
- On February 17, 2004, UPMG transferred all common shareholding in Ideamart
  Holdings Limited (Ideamart) to PHL. Ideamart, which incorporated on May 28,
  2003, is a dormant company.
- On March 19, 2004, UPMG International (Guangdong) Limited (UPMGIG)
  increased its ownership of UPMG (Guangdong) Company Limited (UPMGGC) from
  99% to 100%.
- On May 7, 2004, PHL transferred 100% of its ownership in UPMG (Hong Kong)
  Limited (UPMG-HK) and UPMG (US) Limited (UPMG-US) to UPMGI and hence
  UPMG-HK and UPMG-US became the wholly-owned subsidiaries of UPMGI.
- In April 2007, UPMG-HK disposed of its 100% interest in Broad Prosper
  Limited.

Current Structure & Basis of Presentation

The Company owned the following subsidiaries at September 30,
2008:

No.
      Company Code
      Company Name
      Place of Incorporation
      Date of Incorporation
      Remark0
      CHCC
      China Health Care Corporation
      Wyoming USA
      February 11, 2005
      Serves as the ultimate holding company of the
        Group1
      UPMG
      United Premier Medical Group Limited
      Cayman Islands
      March 28, 2003
      Ultimate Holding Company2
      UPMGI
      UPMG International Limited
      British Virgin Islands
      September 15, 2003
      Subsidiary of UPMG3
      PME-HK
      Proactive Medicare Enterprise (Hong Kong)
        Limited
      Hong Kong
      March 17, 2000
      Wholly-owned subsidiary of UPMGI4
      PME-SZ
      Proactive Medicare (Shenzhen) Company Limited
      Hong Kong
      September 24, 2004
      Wholly-owned subsidiary of UPMGI5
      PME-CS
      Proactive Medicare (Changsha) Company Limited
      Hong Kong
      July 2, 2004
      Wholly-owned subsidiary of UPMGI6
      PME-XIA
      Proactive Medicare (Xiamen) Company Limited
      Hong Kong
      December 22, 2004
      Wholly-owned subsidiary of UPMGI7
      PME-NAN
      Proactive Medicare (Nanjing) Company Limited
      Hong Kong
      September 24, 2005
      Wholly-owned subsidiary of UPMGI8
      PME-HZ
      Proactive Medicare (Hangzhou) Company Limited
      Hong Kong
      August 25, 2005
      Wholly-owned subsidiary of UPMGI


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No.
      **Company** Code
      Company Name
      Place of Incorporation
      Date of Incorporation
      Remark9
      PME-WX
      Proactive Medicare (Wuxi) Company Limited
      Hong Kong
      April 19, 2004
      Wholly-owned subsidiary of UPMGI10
      UPMG-SHA
      United Premier Medical Group (Shanghai) Limited
      Hong Kong
      February 25, 2004
      Wholly-owned subsidiary of UPMGI11
      PMS-HK
      Proactive Medicare Services (Hong Kong) Limited
      Hong Kong
      January 30, 2004
      Wholly-owned subsidiary of UPMGI12
      PME-BJ
      Proactive Medicare (Beijing) Company Limited
      Hong Kong
      March 27, 2000
      Wholly-owned subsidiary of UPMGI13
      UPMG-HK
      UPMG (Hong Kong) Limited
      British Virgin Islands
      August 8, 2003
      Wholly-owned subsidiary of UPMGI14
      UPMG-US
      UPMG (US) Limited
      British Virgin Islands
      November 23, 1993
      Wholly-owned subsidiary of UPMGI15
      HB-GZ
      Guangzhou Inno-Proactive Medicare Consultancy
        Ltd.
      PRC
      October 26, 2004
      Wholly-owned subsidiary of PMEHK16
      BK-SH
      Shanghai Proactive Medicare Health Education
        Center Limited
      PRC
      February 5, 2002
      90% of common shareholding held by PMEHK17
      UBK-SZ
      UPMG (Shenzhen) Limited
      PRC
      January 5, 2006
      Wholly-owned subsidiary of UPMG-18
      UPMG-MU
      UPMG (Macau) Company Limited
      Macau
      September 29, 2006
      50% of common shareholding held by UPMG-HK19
      PHL
      Pro-Innovative Holdings Limited
      British Virgin Islands
      January 22, 2004
      51% of common shareholding held by UPMG20
      PML
      Pro-Innovative Medical Limited
      Hong Kong
      December 8, 2003
      Wholly-owned subsidiary of PHL21
      Ideamart
      Ideamart Holdings Limited
      British Virgin Islands
      May 28, 2003
      Wholly-owned subsidiary of PHL22
      UPMGIG
      UPMG International (Guangdong) Limited
      British Virgin Islands
      August 29, 2003
      62% of common shareholding held by
        PHL23
      UPMGGC
      UPMG (Guangdong) Company Limited
      Hong Kong
      August 14, 2002
      Wholly-owned subsidiary of UPMGI


The consolidated financial statements include the accounts of
the Company and its consolidated subsidiaries. UPMG wholly owns UPMGI, which in
turn directly holds 12 wholly-owned subsidiaries and indirectly holds 4
subsidiaries including HB-GZ (100% in equity interest), BK-SH (90% in equity
interest), UBK-SZ (100% in equity interest) and UPMG-MU (50% in equity
interest). Besides, UPMG holds 51% in equity interest of PHL, which in turn,
wholly owns two direct subsidiaries and holds 62% in equity interest of UPMGIG,
which in turn wholly owns UPMGGC

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Business

The Company provides consultancy services to the VIP Maternity & Gynecological Centers (the VIP Birthing Centers) in the PRC. These services are provided in conjunction with Johns Hopkins International, LLC, a U.S. based healthcare
provider, and based upon a Consultancy Agreement with JHI..  The first VIP Birthing Center commenced operations in October 2002 at the International Peace Maternity & Child Health Hospital in Shanghai. Over the past six years, the Company has
signed co-operative agreements with a number of hospitals in Obstetrics / Gynecology (OB/GYN) across the PRC in cities including Beijing, Shanghai, Guangzhou, Foshan, Wuxi, Xiamen, Changsha and Hangzhou.  In 2006, the Company signed a
management agreement with the University Hospital at Macau University of Science and Technology (UH-MUST) whereby the Company provides general hospital management consultancy service.

The Company is currently under contracts to provide consultancy services to a total of five VIP Birthing Centers in the PRC and to manage a private hospital in Macau.  These centers are located in Wuxi (the Wuxi Center), Xiamen
(the Xiamen Center), Changsha (the Changsha Center), Foshan (the Foshan Center) and Hangzhou (the Hangzhou Center). The Wuxi Center, the Xiamen Center and the hospital in Macau are operated under our
service contracts, and the Company receives a monthly fee for our services.  The Company has had difficulty enforcing these contracts, and three of the VIP Birthing Centers have ceased complying with our payment terms (the Changsha Center, the
Foshan Center, and the Hangzhou Center). The Company engaged lawyers to negotiate with the host hospitals for settlement.  The Company also had a VIP Birthing Center in Shanghai (the Shanghai Center). The Company has not been paid by the
Shanghai Center since January 2006 and it has taken legal action against the host hospital for breach of contract.

The Company had an additional VIP Birthing Center in Guangzhou (the Guangzhou Center) which ceased its operation in March 2007. Our invested assets were sold back to its host hospital. Our net receipt on this asset sale amounted to
$1,296,944. For the abovementioned centers that the Company has difficulty enforcing our contracts, it has not accrued any revenue for the years ended September 30, 2007 and 2006.

Sales and Marketing

So far, most hospitals in China still rely heavily on referrals and repeat customers. Having established our UPMG brand awareness in China, we have the marketing strategy mainly based on the Words of Mouth from our patients,
medical professionals and industry expert in terms of three major directions.

|1) | Reaching the Right Targets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | We focus on the more affluent peers like high-end community groups, residential clubhouses, chambers of commerce and corporate clients and emphasize value added services like Patient Safety, Customer Service, Help Desk and
Healthcare Education.                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2) | Membership System                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Membership-based hospitals are very popular among the high-income community in affluent PRC cities like Shanghai. This system helps linking up our prenatal care program, postnatal care program, well women program and well baby
program. We offer membership to first-time patients who are then entitled to certain benefits like annual medical checkup and 24-hour house call. Other value-added services include computerized health records, which are accessible on the Internet,
hence making them possible to conduct long-distance joint consultation with experts in other parts of the world.

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|3) | Recruitment of Healthcare Professionals Through Wu Ji
      Ping Foundation                                                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                           
|   | The Wu Ji Ping Foundation has an extensive hospital
      network and great connections with the PRC government officials, which are
      of great help to recruit high quality medical professionals  an effective
      means to retain our customers.

Employees

The Company currently has three officers. Siew Man Pang is the
chief executive officer, Edwin Chan is the chief financial officer and Dr.
Kenneth Lee is the chief operating officer. UPMG also employs a total of 12
employees and consultant in Hong Kong and the PRC, including one deputy project
director, three managers, four assistants, three general staff and one
consultant. The Company is not a party to any collective bargaining agreement.
We believe our relations with the Company employees are satisfactory.

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Item 1A.   RISK FACTORS

Risks Related to our Business

Going Concern

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
had a net loss of $2,701,352 and a negative cash flow from operations of
$1,457,854 for the year ended September 30, 2008 and a working capital
deficiency of $4,812,117 and a shareholders deficit of $4,673,454 at September
30, 2008. These matters raise substantial doubt about the Companys ability to
continue as a going concern if the Company does not secure new outside
financing. The Company is currently and continues to make efforts to procure
outside financing to strengthen its financial position.

We have a limited operating history, and it is difficult
to evaluate our financial performance and prospects. There is no assurance that
we will achieve profitability or that we will not discover problems with our
business model.

We have a limited operating history. As such, it is difficult
to evaluate our future prospects and performance, and therefore we cannot ensure
that we will operate profitably in the future.

We have limited funds available for operating expenses.
If we do not obtain funds when needed, we will have to cease our
operations.

Currently, we have limited operating capital. As of September
30, 2008, our cash available was approximately $229,567. In the foreseeable
future, we expect to incur significant expenses when developing our business. We
may be unable to locate sources of capital or may find that capital is not
available on terms that are acceptable to us to fund our additional expenses.
There is the possibility that we will run out of funds, and this may affect our
operations and thus our profitability. If we cannot obtain funds when needed, we
may have to cease our operations.

We depend on attracting and retaining qualified
employees, the failure of which could result in a material decline in our
revenues.

We are a provider of healthcare consultancy services. Our
revenues and future growth depend on our ability to attract and retain qualified
employees. This is especially crucial to our business, as these employees will
generate revenue by providing the services that are the staple product that we
offer. We may face difficulties in recruiting and retaining sufficient numbers
of qualified employees because the market may not have enough of such personnel.
In addition, we compete with other companies for qualified employees. If we are
unable to retain such employees, we could face a material decline in our
revenue.

We derive most of our revenue from treatment facilities
rested with our host hospitals that are located in the Peoples Republic of
China, which makes us particularly sensitive to regulatory and economic
conditions in those cities where our facilities are, or will be
located.

For the year ended September 30, 2008, our facilities rested
with our host hospitals in the Peoples Republic of China, or the PRC, accounted
for most of our total revenue. If our treatment facilities are adversely
affected by changes in regulatory and economic conditions within China, our
revenue and profitability may decline.

We may have difficulty opening new medical facilities and
operating them profitably. We have limited experience in opening new treatment
facilities. If we are unable to execute our strategy, our growth may be
restrained and our operating results could be adversely affected.

Our growth strategy includes developing and opening new medical
facilities throughout the PRC, and, to date, we have limited experience in
opening new treatment facilities. Planning and opening new treatment facilities
can be complex and may be delayed, and, in some circumstances, prevented, by a
variety of forces, including local zoning

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and land use regulations, health facility licensing, community
opposition and other political issues. Healthcare laws and other rules and
regulations may also impede or increase the cost of opening new facilities. If
we are unable to open new treatment facilities on time and on budget, our rate
of growth and operating results may be adversely affected.

Even if we are able to open new treatment facilities, we may
not be able to staff them. In addition, there can be no assurance that, once
completed, new treatment facilities will be able to generate operating profits.
Developing new facilities involves significant upfront capital investment and
expense and, if we are unable to attract patients quickly and/or enter into
contracts or extend our existing contracts with third party payers for these
facilities, these facilities may not be profitable and our operating results
could be adversely affected.

If we fail to cultivate new or maintain established
relationships with patient referral sources, our revenue may
decline.

Our ability to grow or maintain our existing level of business
depends significantly on our ability to establish and maintain close working
relationships with patient referral sources. We may not be able to maintain our
existing referral source relationships or develop and maintain new relationships
in existing or new markets. If we lose existing relationships with our referral
sources, the number of patients we treat may decline, which may adversely affect
our revenue. If we fail to develop new referral relationships, our growth may be
restrained.

If we fail to implement our business strategy, our
business, financial condition and results of operations could be materially and
adversely affected.

Our future financial performance and success are dependent in
large part upon our ability to implement our business strategy successfully. We
may not be able to implement our business strategy successfully or achieve the
anticipated benefits of our business plan. If we are unable to do so, our
long-term growth and profitability may be adversely affected. Even if we are
able to implement some or all of the initiatives of our business plan
successfully, our operating results may not improve to the extent we anticipate,
or at all.

If we fail to use the brand of Johns Hopkins
International, our financial condition and results of operations could be
materially and adversely affected.

Our current performance and success are dependent in certain
extent upon the educational and consulting services provided by Johns Hopkins
International, LLC. If we are unable to receive such services, our profitability
may be adversely affected and our operating results may not improve to the
extent we anticipate.

Our success depends on our ability to manage growth
effectively. If we do not manage growth effectively, we may not be able to
maintain profitability.

Even if we are successful in generating new business, failure
to manage our growth could adversely affect our financial condition. We may
experience extended periods of very rapid growth. If we are not able to manage
our growth effectively, our business and financial condition could materially
suffer. Our growth may significantly strain our managerial, operational and
financial resources and systems. To manage our growth effectively, we will have
to continue to implement and improve our operational, financial and management
controls, reporting systems and procedures. In addition, we must effectively
expand, train and manage our employees. We will be unable to manage our
businesses effectively if we are unable to alleviate the strain on resources
caused by growth in a timely and successful manner. We may not be able to manage
our growth and a failure to do so could have a material adverse effect on our
business.

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If the PRC government finds that the agreements that
establish the structure for operating our business operations within the PRC do
not comply with PRC governmental regulations on foreign investment in the
medical industry, we could be subject to penalties. Such penalties may impact
our ability to maintain profitability.

If we or our operating subsidiaries or affiliates are found to
be in violation of any existing or future PRC laws or regulations, we could be
subject to severe penalties, including but not limited to: (i) revocation of our
business and operating licenses; (ii) discontinuing or restricting our
operations; (iii) imposition of conditions or requirements with which we may not
be able to comply; (iv) requirement that we restructure the relevant ownership
structure or operation; and (v) restriction or prohibition on our use of the
proceeds of our business operations to further finance our operations in the
PRC.

We rely on contractual arrangements with PRC obstetric
and gynecologic hospitals, which may not be as effective in providing
operational control as direct ownership. If we cannot maintain these
arrangements, we may have to cease operations.

We rely on contractual arrangements with PRC obstetric and
gynecologic hospitals to operate our business. These contractual arrangements
may not be as effective in providing us with control over our operations as
direct ownership. Under the current contractual arrangements, if the PRC
obstetric and gynecologic hospitals fail to perform their respective obligations
under these contractual arrangements, we may have to incur substantial costs to
enforce such arrangements and rely on legal remedies available under PRC law,
which may not be effective to allow us to maintain our business operations.
Additionally, many of these contractual arrangements are governed by PRC law
and, accordingly, will be interpreted in accordance with PRC law, and any
disputes would be resolved according to PRC legal procedures. The legal
environment in the PRC is not as developed as in other jurisdictions, such as
the United States. As a result, uncertainties in the PRC legal system could
limit our ability to enforce these contractual arrangements. In the event we are
unable to enforce these contractual arrangements, we may not be able to exert
effective control over our operations, and our ability to conduct our business
may be negatively affected.

Contractual arrangements we have entered into among our
subsidiaries and affiliated entities may be subject to scrutiny by the PRC tax
authorities. Such scrutiny may lead to additional tax liability and fines, which
would hinder our ability to achieve or maintain profitability.

Risks Relating to the Peoples Republic of China

Substantially all of our assets are located in the PRC and
substantially all of our revenues are derived from our operations in the PRC.
Accordingly, our business, financial condition, results of operations, and
prospects are subject, to a significant extent, to economic, political and legal
developments in the PRC.

The PRCs economic, political and social conditions, as
well as governmental policies, could affect the financial markets in the PRC,
our liquidity and access to capital, and our ability to operate our business.

Our financial condition and results of operations may be
adversely affected by government control over capital investments or changes in
tax regulations that are applicable to us. The PRC economy differs from the
economies of most developed countries in many respects, including the amount of
government involvement, level of development, growth rate, control of foreign
exchange and allocation of resources. While the PRC economy has experienced
significant growth, growth has been uneven, both geographically and among
various sectors of the economy. The PRC government has implemented various
measures to encourage economic growth and to guide the allocation of resources.
The PRC economy has been transitioning from a planned economy to a more
market-oriented economy. Although the PRC government has implemented measures
since the late 1970s emphasizing the utilization of market forces for economic
reform, the reduction of state ownership of productive assets, and the
establishment of improved corporate governance in business enterprises, a
substantial portion of productive assets in the PRC are still owned by the PRC
government. In addition, the PRC government continues to play a significant role
in regulating

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industry development by imposing industrial policies. The PRC
government also exercises significant control over its economic growth through
the allocation of resources, controlling payment of foreign currency-denominated
obligations, setting monetary policy and providing preferential treatment to
particular industries or companies. Since late 2003, the PRC government has
implemented a number of measures, such as raising bank reserves against deposit
rates to place additional limitations on the ability of commercial banks to make
loans and raise interest rates, in order to slow down specific segments of the
PRCs economy. These actions, as well as future actions and policies of the PRC
government, could materially affect our liquidity and access to capital and our
ability to operate our business.

The PRC legal system embodies uncertainties which could
limit the legal protections available to us.

The PRC legal system is a civil law system based on written
statutes. Unlike common law systems, it is a system in which decided legal cases
have little precedential value. In 1979, the PRC government began to promulgate
a comprehensive system of laws and regulations governing economic matters in
general. The overall effect of legislation has been significantly enhanced
protections afforded to various forms of foreign investment in the PRC. However,
these laws, regulations and legal requirements change frequently, and their
interpretation and enforcement involve uncertainties. For example, we may have
to resort to administrative and court proceedings to enforce the legal
protection that we enjoy either by law or contract. However, because PRC
administrative and court authorities have significant discretion in interpreting
and implementing statutory and contractual terms, it may be more difficult to
evaluate the outcome of administrative and court proceedings and the level of
legal protection we enjoy than in more developed legal systems. In addition,
such uncertainties, including the inability to enforce our contracts, could
materially and adversely affect our business and operation. Also, intellectual
property rights and confidentiality protections in the PRC may not be as
effective as in the United States or other countries. Accordingly, we cannot
predict the effect of future developments in the PRC legal system, particularly
with regard to the medical industry, including the promulgation of new laws,
changes to existing laws or the interpretation or enforcement thereof, or the
preemption of local regulations by national laws. These uncertainties could
limit the legal protections available to us.

U.S. investors may experience difficulties in attempting
to enforce judgments based upon U.S. federal securities laws against us and our
non-U.S. resident directors.

All of our operations and our assets are located outside the
United States and some of our directors and officer are foreign citizens. As a
result, it may be difficult or impossible for U.S. investors to enforce
judgments of U.S. courts for civil liabilities against any of our individual
directors or officers.

Risks Relating to Our Common Shares

Trading on the OTC Bulletin Board may be volatile and
sporadic, which could depress the market price of our common shares and make it
difficult for our shareholders to resell their shares.

Our common shares are quoted on the OTC Bulletin Board service.
Trading in shares quoted on the OTC Bulletin Board is often thin and
characterized by wide fluctuations in trading prices, due to many factors that
may have little to do with our operations or business prospects. This volatility
could depress the market price of our common shares for reasons unrelated to
operating performance. Moreover, the OTC Bulletin Board is not a stock exchange,
and trading of securities on the OTC Bulletin Board is often more sporadic than
the trading of securities listed on a quotation system like Nasdaq or a stock
exchange like Amex. Accordingly, shareholders may have difficulty reselling any
of the shares.

Our share is a penny stock. Trading of our share may be
restricted by the SECs penny stock regulations which may limit a shareholders
ability to buy and sell our shares.

Our share is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an

---

exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customers account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules; the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the shares
that are subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common shares.

FINRA sales practice requirements may also limit a
shareholder's ability to buy and sell our share.

In addition to the penny stock rules promulgated by the
Securities and Exchange Commission, the Financial Industry Regulatory Authority,
or FINRA, has adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer. Prior to recommending speculative low
priced securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the FINRA believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The FINRA requirements make it more difficult for broker-dealers to
recommend that their customers buy our common shares, which may limit your
ability to buy and sell our share.

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our common shares.

Item 1B.   Unresolved Staff Comments

None.

Item 2.      Description of
Properties

Our principal office is located at T Plaza Center, Suite 400,
15950 North Dallas Parkway, Dallas. Our telephone number is (972) 361-8033. Our
principal office is held under a one year lease to expire on August 2009. We
rent this office space at a cost of $95 per month plus administrative expenses.
We believe that the condition of our principal office is satisfactory, suitable
and adequate for our current needs.

We also maintain our office in Hong Kong at Room 904, Tung Wai
Commercial Building, 109  111 Gloucester Road, Wan Chai, Hong Kong. Our
telephone number is (852) 2511-8008. Our Hong Kong office is held under a lease
with a term from August 1, 2008 to June 15, 2009 with rent of HK$30,000 per
month.

---

We also maintain an office in mainland China at Room 1601,
Building B, Tomson Center, 188 Zhangyang Road, Shanghai, the PRC. Our telephone
number is (86) 21-6225-1595. Our Shanghai office is held under a lease with a
term from June 20, 2008 to June 30, 2009 with rent of RMB16,700 per month.

ITEM 3.      Legal Proceedings

Other than as disclosed below, we know of no material, existing
or pending legal proceedings against us, nor are we involved as a plaintiff in
any material proceeding or pending litigation. There are no proceedings in which
any of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
company.

Proactive Medicare Enterprise (HK) Limited, a subsidiary of
UPMG, is a plaintiff of a legal proceeding regarding a civil claim against a
hospital in the PRC namely, International Peace Maternity & Child Health
Hospital of the China Welfare Institute (IPMCHH or the defendant) who
refused to pay consultancy fees to PME-HK since April 2005.

On April 10, 2007, Proactive Medicare Enterprise (HK) Limited
(PME-HK) brought a civil action to the Shanghai No. 1 Intermediate Peoples
Court (the Shanghai Court) in the PRC against IPMCCH for breach of contract. A
statement claim from PME-HK was sent to the Shanghai Court for acceptance of
review. The proposed claims regarding this civil action included: (i) To order
IPMCHH to honor the co-operative agreement signed between PME-HK and IPMCHH on
February 2, 2004; (ii) To order IPMCHH to pay the consultant fee amounted
$2,890,000 (equivalent to RMB22,677,123) in arrears owed to PME-HK, and (iii)
IPMCHH shall bear the cost of this action.

On April 12, 2007, the statement of claim was legally accepted
and filed by the Shanghai Court (Notification of Acceptance: (2007) Hu Yi Zhong
Min Wu (Shang) Chu Zi No. 93). On May 29, 2007, the first instance of the case
was held to establish the case. On January 23, 2008, the second instance of the
case was held to further negotiate a mutually accepted settlement plan. Through
the mediation of the Shanghai Court, PME-HK and IPMCHH, so far, have gone
through several rounds of negotiation for a mutually agreed settlement amount in
recent months but a final settlement amount has yet to be confirmed

We have also engaged a law firm in the PRC to negotiate with
another two hospitals in the PRC which are under contracts to pay us for the
consultancy services provided to their affiliated VIP Birthing Centers in Foshan
and Changsha in the PRC. The proposed claim in each case is about one million US
dollars. We have gone through several rounds of negotiation for an agreed
settlement amount in recent months and a final settlement amount has yet to be
confirmed. For the Hangzhou Center, we are identifying a suitable PRC lawyer to
negotiate with the host hospital for a mutually accepted settlement plan.

The results of these negotiations / claim cannot be predicted,
and it is possible that the ultimate resolution of these matters, individually
or in the aggregate, may have a material adverse effect on our business (either
in the near-term or in the long-term), financial position, results of
operations, or cash flows. Although our management believes a portion of our
investment in these affiliated VIP Birthing Centers may be recovered, we have
reasonably estimated the uncertain portion and have eliminated their revenue
contribution in 2007.

ITEM 4.      Submission of Matters
to a Vote of Security Holders

There were no matters submitted to a vote of our security
holders either through solicitation of proxies or otherwise in the fourth
quarter of the fiscal year ended September 30, 2008.

---

PART II

Item 5.      Market for
Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Our shares of common stock began trading on the OTC Bulletin
Board on March 21, 2007 under the symbol CVLG. Prior to this date, there was
no public market for our common shares. On May 13, 2008, we effected a change of
name of our company from The Cavalier Group to China Health Care Corporation.
The name change became effective with the OTC Bulletin Board at the opening for
trading on May 16, 2008 under the new stock symbol CNHL.

The following table reflects the high and low bid information
for our common stock obtained from Stockwatch and reflects inter-dealer prices,
without retail mark-up, markdown or commission, and may not necessarily
represent actual transactions.

The high and low bid prices of our common stock for the periods
indicated below are as follows:

National Association of Securities Dealers
        OTC Bulletin BoardQuarter Ended
      High
      LowSeptember 30,
        2008(1)
      $0.63
      $0.63June 30, 2008
        (2)
      $1.25
      $1.25March 31, 2008
      $3.60
      $3.50


| | (1) | This refers to the trade record on September 16, 2008.
      There was no trading record during the period from September 16, 2008 to
      September 30, 2008.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                
| | (2) | This refers to the trade record on May 30, 2008. There
      was no trading record during the period from May 30, 2008 to June 30,
      2008.                 

On May 12, 2009 , the closing price for the common stock as
reported by the quotation service operated by the OTC Bulletin Board was
$0.05.

As of May 12, 2009 , there were 133 holders of record of our
common stock. As of such date, 50,148,000 common shares were issued and
outstanding.

Our common shares are issued in registered form. The registrar
and transfer agent for our shares of common stock is Pacific Stock Transfer
Company (Telephone: 702-361-3033).

Item 6.      Selected Financial
Data

As a smaller reporting company, we are not required to
provide the information required by this Item.

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Item 7.      Managements
Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking
Statements

This quarterly report contains forward-looking statements as
that term is defined in section 27A of the United States Securities Act of 1933,
as amended, and section 21E of the United States Securities Exchange Act of
1934, as amended. These statements relate to future events or our future
financial performance. In some cases, you can identify forward-looking
statements by terminology such as "may", "should", "intends", "expects",
"plans", "anticipates", "believes", "estimates", "predicts", "potential", or
"continue" or the negative of these terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled
"Risk Factors" commencing on page 3 of this current report, which may cause our
or our industry's actual results, levels of activity or performance to be
materially different from any future results, levels of activity or performance
expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity or performance. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.

Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles. Unless otherwise specified, all dollar amounts are
expressed in United States dollars.

As used in this quarterly report, the terms "we", "us" and
"our" refer to China Health Care Corporation and our subsidiaries, unless
otherwise indicated. All references to "common shares" refer to the common
shares in our capital stock.

Overview

The following discussion should be read in conjunction with our
financial statements and the related notes included herein. The following
discussion contains forward-looking statements that reflect our plans, estimates
and beliefs. Our actual results could differ materially from those discussed in
the forward looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this report, particularly in the section entitled Risk Factors.

Our financial statements are stated in United States Dollars
and are prepared in accordance with United States generally accepted accounting
principles.

We were incorporated in the State of Wyoming on February 11,
2005 as The Cavalier Group with a fiscal year end of May 31. Since our
incorporation, we had been in the business of the exploration and development of
a mineral property approximately 1,320 acres in size in north-eastern Ontario.
Because we were not successful in implementing our business plan, we considered
various alternatives to ensure the viability and solvency of our company.

On January 20, 2008, we entered into a share exchange agreement
with United Premier Medical Group Limited, a Cayman corporation, and the
shareholders of United Premier Medical Group Limited, a company engaged in the
provision of premium medical services in the Peoples Republic of China. The
share exchange agreement contemplated our company acquiring all of the issued
and outstanding common shares in the capital of United

---

Premier Medical Group Limited in exchange for the issuance by our company of 42,658,000 shares of our common stock.

On July 24, 2008, we changed our fiscal year end from May 31 to September 30.

On September 15, 2008, we change our fiscal year end from September 30 to December 31. We intend to file a Form 10-K for our new fiscal year ended December 31, 2008 on or before March 31, 2009.

On September 15, 2008, we engaged Samuel H. Wong & Co., LLP as our principal independent accountant with the approval of our companys board of directors. Accordingly we dismissed Cordovano and Honeck LLP on September 15, 2008.

On October 1, 2008, Mr. Henry J. Macfarland resigned as our Chief Executive Officer.  Mr. Macfarland will continue to act as our Senior Group Advisor. As a result of Mr. Macfarlands resignation on October 1, 2008, we appointed Mr. Siew Man
Pang as our Chief Executive Officer.

As of the closing date of the share exchange agreement on July 24, 2008, we have contracts to provide consultancy services to a total of five VIP Birthing Centers in the PRC and to manage a private hospital in Macau. These centers are located in
Wuxi (the Wuxi Center), Xiamen (the Xiamen Center), Changsha (the Changsha Center), Foshan (the Foshan Center) and Hangzhou (the Hangzhou Center).

Our future business will typically consist of three major revenue drivers, namely, VIP Birthing Center, Satellite Health Center and Specialty Hospital.

VIP Birthing Center is typically a hotel-style integrated healthcare center consisting of 11 to 30 bedrooms. These centers are specialized in providing premium obstetric and gynecologic services to high-income locals and expatriates in the
PRC. We emphasize home-feel facilities and environment, professional clinical services, sophisticated clinical indicators and reviews, high-end customer services, effective pain management and infection control - all of them have attained the
stringent U.S. quality standards. More importantly, our customized and personalized services provide much flexibility and allow our patients to choose their own specialty medical services and surgery experts. To ensure service quality, safety and
patient privacy, our one-stop services is a continuous flow ranging from ultrasound diagnosis, laboratory analysis to dispensary.

Satellite Health Centerprovides full scope of premium outpatient services. Strategically, it is better than the VIP Birthing Centers in the sense that we own the operating license of the clinic and hence has full control of revenue received.
Such business model can substantially increase the flexibility in utilizing our resources in outpatient services. Besides, it will play an important role in the overall network development of our specialty hospitals by referring patients to
specialty hospitals.

Specialty Hospital Chain refers to a chain of medium size hospitals in the PRC providing specialty healthcare services primarily for women and children. For the coming years, we target to acquire a number of hospitals and convert them into
specialty hospitals with outpatient services, inpatient services and minor surgery services principally in the categories of Obstetrics, Gynecology, Pediatrics, Urology and Infertility.

---

Results of Operations for the Year Ended September 30,
  2008 as compared to the Year Ended September 30,2007

|                                              |  | Years ended September 30, |   |  | Increase (decrease) |  
|--------------------------------------------- |  | ------------------------- | - |  | ------------------- | -
|                                              |  | 2008                      |   |  | 2007                |  
|                                              |  | ($)                       |   |  | ($)                 |  
|                                              |  |                           |   |  |                     |  
|Revenue                                       |  | 545,884                   |   |  | 570,217             |  
|Cost of revenue                               |  | 168,112                   |   |  | 152,184             |  
|Gross profit                                  |  | 377,772                   |   |  | 418,033             |  
|                                              |  |                           |   |  |                     |  
|Other income (expenses)                       |  | (205,033                  | ) |  | (1,550,444          | )
|Selling expenses                              |  | (137,478                  | ) |  | (150,800            | )
|General & administrative expenses             |  | (2,660,829                | ) |  | (794,663            | )
|                                              |  |                           |   |  |                     |  
|Provision for income tax                      |  | (20,111                   | ) |  | (20,510             | )
|Minority interests in net income (loss)       |  | Nil                       |   |  | 499,950             |  
|Gain (loss) from discontinued operations, net |  |                           |   |  |                     |  
|of taxes                                      |  | (55,673                   | ) |  | 379,454             |  
|                                              |  |                           |   |  |                     |  
|Net loss attributable to common shareholders  |  | (2,701,352                | ) |  | (1,218,980          | )

Revenue

The Companys revenues are derived from its share of operating
profit from VIP Birthing Centers at hospitals where it has invested in capital
equipment, leasehold improvements, and human capital in the form of technical
training for hospital staff. The Companys share of operating profit from the
VIP Birthing Centers depends upon the contractual terms with each hospital.
Financial statements are provided by the hospitals each month to the Company for
review, verification, and approval. When the financial statements of the VIP
Birthing Centers have been approved, the Company recognizes revenue by recording
its portion of the total operating profit to its financial statements. Revenues
that have been both recognized in accordance to their respective contracts and
financial statements provided by the hospitals can be reasonably expected to be
collectible.

Revenue for the year ended September 30, 2008 was $545,884.
Revenue for the year ended September 30, 2007 was $570,217 . The decrease in
revenue of $24,333  for the year ended September 30, 2008 was primarily due to
the (i) absence of revenue contribution from the Changsha Center, (ii) revised
management fee of the Macau Center, and (iii) absence of a non-recurrent income
from trading of baby beds as incurred in 2007. The Changsha Center had ceased
paying us service fee since June 2007 and we agreed to revise the monthly
service fee of the Macau Center from about $12,820 (equivalent to HK$100,000) to
about $5,128 (equivalent to HK$40,000) effective from June 2007.

Cost of Revenue

Cost of revenue is primarily comprised of depreciation, wages,
and licensing fees that must be paid to JHI for facilities with continuing
operation. The Company believes that the depreciation of property and equipment
matches the substantial initial investment equipment and leasehold improvements
with revenues that are earned overtime. The Company charges wages paid to
doctors and medical personnel who provide the initial training and hospital
management expertise to the hospital when the VIP Birthing centers are initially
setup and on a non-fixed

---

on-going basis. Cost of revenue for the year ended September
  30, 2008 was $168,112 whilst cost of revenue for the year ended September
  30, 2007 was $152,184.

Selling Expenses

Selling expenses are comprised of client entertainment, commissions and salaries for sales personnel, marketing, and travel and lodging expenses. Selling and marketing expenses for the year ended September 30, 2008 was $137,478. Selling and
marketing expenses for the year ended September 30, 2007 was $150,800 . The decrease in selling expenses of $13,322 for the year ended September 30, 2008 as compared to 2007 was primarily due to the decrease in travel expenses related to
business development.

General and Administrative Expenses

General and administrative expenses include outside consulting services, research & development, executive compensation, quality control, and general overhead such as finance and administrative staff, and depreciation expense. General and
administrative expenses for the year ended September 30, 2008 was $2,660,829. Administrative expenses for the year ended September 30, 2007 was $794,663 . The increase in administrative expenses of $1,866,166  for the year ended September
30, 2008 as compared to 2007 was primarily due to the increase in consultancy fees and professional fees incurred in the public listing process of the Company.

Income Tax

The Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for 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. A valuation allowance is provided for deferred tax assets if it is more likely than not these items
will either, expire before the Company is able to realize their benefits, or future realization is uncertain. In accordance with the relevant tax laws and regulations of Hong Kong, the Corporate Income Tax (CIT) rate applicable to our
subsidiaries in Hong Kong is 17.5% of taxable income. On March 16, 2007, the National Peoples Congress of China approved the Corporate Income Tax Law of the Peoples Republic of China (the new CIT Law), effective from January
1, 2008. Under the new CIT Law, the corporate income tax rate applicable to our subsidiaries in the PRC starting from January 1, 2008 will be 25%, replacing the currently applicable tax rate of 33%. We recorded income tax expense amounted to
$20,111 and $20,510  for the years ended September 30, 2008 and 2007 respectively.

Minority Interest

Minority interest recorded an income of $Nil and $499,950 for the years ended September 30, 2008 and 2007 respectively. The decrease in minority interest of $499,950 for the year ended September 30, 2008 was primarily due to the decrease
in shared loss of a VIP Center.

Net Loss Attributable to Common Shareholders

For the year period ended September 30, 2008, the Company incurred a net loss attributable to common shareholders of $2,701,352 . The loss was primarily due to the decrease in revenue and the increase in general and administrative expenses. For the year ended September 30, 2007,
the Company incurred a loss of $1,218,980 . The loss was primarily due to the
dividends paid to the convertible preference shareholders.

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Liquidity and Capital Resources

As of September 30, 2008, our total assets were $1,499,720 and
our total liabilities were $5,313,451 and we had a working capital deficit of
$4,812,117. Our financial statements report a net loss of $2,701,352 for the
year ended September 30, 2008.

During the year ended September 30, 2008, the Company financed
its operation mainly through cash generated from its operations and the loans
from directors of the Company. During the year ended September 30, 2007, the
Company funded its operations mainly through two aspects 1) cash generated from
its operations, and 2) cash proceeds from issuance of securities such as
preferred stock. Cash from operations is only enough to fund its onsite
personnel. The sale of preferred stock has providing the funding for the
Companys investment in capital expenditures, and the cost of medical and
management expertise that are heavily involved in the early stages of building
out the VIP Birthing Centers and training of the personnel that staff those VIP
Birthing Centers.

The Company expects that with the expansion into new markets
and development of its business model, it can gain economies of scale on its
heavy investment medical and hospital management experts. Related parties and
directors have also provided the working capital during the most recent
operating periods in order to maintain the business a going concern. The Company
is actively seeking external financing to strengthen its financial position.

The following table sets forth the summary of the Companys
cash flows for the periods indicated:

Year
        Ended Sep 30,2008
      
      
      2007Net cash provided by (used in) operating
        activities
      
      (1,457,854
      )
      
      (856,219
      )Net cash provided by (used in) investing activities
      
      62,703
      
      
      935,049Net cash provided by financing activities
      
      1,129,323
      
      
      432,871Net increase (decrease) in cash and cash equivalents
      
      (265,828
      )
      
      511,701Cash and cash equivalents, beginning of year
      
      416,705
      
      
      35,513Effect of exchange rate changes on cash and cash
      
      78,690
      
      
      (165,821
      )equivalentsCash and cash equivalents, at end of year
      
      229,567
      
      
      416,705


Our cash requirement is mainly for daily working capital. As at
September 30, 2008, we had $229,567 in cash and cash equivalents and a working
capital deficiency of $4,812,117 , compared to $416,705 in cash and cash
equivalents and a working capital deficiency of $3,676,602 as of September 30,
2007.

Cash Flows from Operating Activities

For the year ended September 30, 2008, our operating activities
used cash of $1,457,854 . For the year ended September 30, 2007, our operating
activities used cash of $856,219 . The increase in cash used in operating
activities of $601,635  for the year ended September 30, 2008 was primarily due
to the increase in net loss resulting from the substantial increase in general
and administrative expenses.



---



Cash Flows from Investing Activities

For the year ended September 30, 2008, our investing activities
generated cash of $62,703. For the year ended September 30, 2007, our investing
activities generated cash of $935,049. The decrease in cash used in investing
activities of $872,346 for the year ended September 30, 2008 was primarily due
to the decrease in proceeds from disposals of assets.

Cash Flows from Financing Activities

For the year ended September 30, 2008, our financing activities
generated cash of $1,129,323. For the year ended September 30, 2007, our
financing activities generated cash of $432,871. The increase in cash generated
in financing activities of $696,452 for the year ended September 30, 2008 was
primarily due to the increase of proceeds from issuance of common stock and
short-term loans. We do not expect any more cash payment or accrued payment for
dividends in near term as the majority of the CPS has been converted. Innotech
(a shareholder of UPMG) loaned $384,615 (equivalent to HK$3,000,000) and
$512,820 (equivalent to HK$4,000,000) to UPMG on January 10, 2008 and January
25, 2008 respectively as the working capital of UPMG.

Capital Expenditures

During the years ended September 30, 2008 and 2007, the Company
did not incurred any capital expenditures. Depending the availability of equity
financing, over the next twelve months, we expect to spend about $5,000,000 on
capital expenditures, mainly for purchase of medical equipment, facilities and
operating licenses and center renovation in the future acquisition of specialty
hospitals, health centers and VIP birthing centers in the PRC.

Going Concern

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
has a net loss of $2,701,352  and a negative cash flow from operations of
$1,457,854  for the year ended September 30, 2008 and a working capital
deficiency of $4,812,117 , and a shareholders deficit of $4,673,454  at September
30, 2008. These matters raise substantial doubt about the Companys ability to
continue as a going concern if the Company does not secure new outside
financing. The Company is currently and continues to make efforts to procure
outside financing to strengthen its financial position.

Off-Balance Sheet Arrangements

The Company has no significant off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to shareholders.

Contractual Obligations

As a smaller reporting company, we are not required to
provide tabular disclosure obligations.

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Summary of Significant Accounting Policies

| | (a) | Method of Accounting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Company maintains its general ledger and journals
      with the accrual method of accounting for financial reporting purposes.
      The financial statements and notes are representations of management.
      Accounting policies adopted by the Company conform to generally accepted
      accounting principles in the United States of America and have been
      consistently applied in the presentation of financial statements, which
      are compiled on the accrual basis of accounting.                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (b) | Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Inter-company transactions, such as due to/due from
      balances, investment in subsidiaries, and subsidiaries capitalization
      have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (c) | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | In preparing the financial statements in conformity with
      accounting principles generally accepted in the United States of America,
      management makes estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the dates of the financial statements, as well as the
      reported amounts of revenues and expenses during the reporting years.
      These estimates and assumptions include, but are not limited to, the
      valuation of accounts receivable, inventories, deferred income taxes and
      the estimation of useful lives of property, plant, and equipment. Actual
      results could differ from these estimates.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (d) | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Company considers all cash and other highly liquid
      investments with initial maturities of three months or less to be cash
      equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (e) | Accounts Receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Accounts receivables are recognized and carried at the
      original invoice amount less allowance for any uncollectible amounts.
      Management regularly reviews the Companys outstanding receivables
      balance, and will provide allowance for doubtful accounts based on its
      assessment. Bad debts are charged against allowances when outstanding
      receivables have been determined to be uncollectible. See Note 3 
      Accounts Receivable.                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (f) | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Property and equipment are stated at cost less
      accumulated depreciation and any impairment write-downs related to assets
      held and used. Additions and improvements to equipment are capitalized at
      cost. Expenditures for maintenance and repairs are charged to expense as
      incurred. Depreciation of equipment is provided over their estimated
      useful lives, using the straight-line method. Estimated useful lives of
      the equipment are as follows:                                                                                                                                                                                                                                                          

| | Software               | 5 years     
| | ---------------------- | ------------
| | Center equipment       | 5 years     
| | Office equipment       | 5 years     
| | Furniture and fixtures | 5 years     
| | Leasehold improvement  | 5 - 10 years
| | Machinery              | 5 years     

| |     | The cost and related accumulated depreciation of assets
      sold or otherwise retired are eliminated from the accounts and any gain or
      loss is included in the statement of income. The cost of maintenance and
      repairs is charged to the statement of operations as incurred, whereas
      significant renewals and betterments are capitalized. See Note 6
      Equipment.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                              
| | (g) | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Companys revenues are derived from its share of
      operating profit from VIP Birthing Centers at hospitals where it has
      invested in capital equipment, leasehold improvements, and human capital
      in the                                                                                                                                                                  

---

| |     | form of technical training for hospital staff. The
      Companys share of operating profit from the VIP Birthing Centers depends
      upon the contractual terms with each hospital. The typical share of
      operating profit ranges between 70% and 80% of the total operating profit
      of the VIP Birthing Center. Financial statements are provided by the
      hospitals each month to the Company for review, verification, and
      approval. When the financial statements of the VIP Birthing Centers have
      been approved, the Company recognizes revenue by recording its portion of
      the total operating profit to its financial statements. Revenues that have
      been both recognized in accordance to their respective contracts and
      financial statements provided by the hospitals can be reasonably expected
      to be collectible.                                                                                                                                                            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (h) | Cost of Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Cost of revenue is primarily comprised of depreciation,
      wages, and licensing fees that must be paid to JHI for facilities with
      continuing operation. The Company believes that the depreciation of
      property and equipment matches the substantial initial investment
      equipment and leasehold improvements with revenues that are earned
      overtime. The Company charges wages paid to doctors and medical personnel
      who provide the initial training and hospital management expertise to the
      hospital when the VIP Birthing centers are initially setup and on a
      non-fixed on-going basis.                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (i) | Selling Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Selling expenses are comprised of client entertainment,
      commissions and salaries for sales personnel, marketing, and travel and
      lodging expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (j) | General & Administrative
  Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | General and administrative expenses include outside
      consulting services, research & development, executive compensation,
      quality control, and general overhead such as finance and administrative
      staff, and depreciation expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (k) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company uses the accrual method of accounting to
      determine and report its taxable income for the year. The Company has
      implemented Statement of Financial Accounting Standards (SFAS) No. 109,
      Accounting for Income Taxes. The Company also adopted FIN 48, Accounting
      for Uncertainty in Tax Positions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Income tax liabilities computed according to the United
      States, Peoples Republic of China (PRC), Hong Kong SAR and Macau SAR laws
      are provided for the tax effects of transactions reported in the financial
      statements and consists of taxes currently due plus deferred taxes related
      primarily to differences between the basis of fixed assets and intangible
      assets for financial and tax reporting. The deferred tax assets and
      liabilities represent the future tax return consequences of those
      differences, which will be taxable or deductible when the assets and
      liabilities are recovered of settled. Deferred taxes also are recognized
      for operating losses that are available to offset future income taxes. A
      valuation allowance is created to evaluate deferred tax assets if it is
      more likely than not that these items will either expire before the
      Company is able to realize that tax benefit, or that future realization is
      uncertain.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (l) | Earnings (Loss) Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company computers earnings per share (EPS) in
      accordance with Statement of Financial Accounting Standards No. 128,
      Earnings per Share (SFAS NO. 128), and SEC Staff Accounting Bulletin
      No. 98 (SAB 98). SFAS No. 128 requires companies with complex capital
      structures to present basic and diluted EPS. Basic EPS is measured as the
      income or loss available to common shareholders divided by the weighted
      average common shares outstanding for the period. Diluted EPS is similar
      to basic EPS but presents the dilutive effect on a per share basis of
      potential common shares (e.g., convertible securities, options, and
      warrants) as if they had been converted at the beginning of the periods
      presented, or issuance date, if later. Potential common shares that have
      an anti-dilutive effect (i.e., those that increase income per share or
      decrease loss per share) are excluded from the calculation of diluted
      EPS.                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (m) | Other Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Comprehensive income is defined to include all changes in
      equity except those resulting from investments by owners and distributions
      to owners. Among other disclosures, all items that are required to be
      recognized under current accounting standards as components of
      comprehensive income are required to be                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

| |     | reported in a financial statement that is presented with
      the same prominence as other financial statements. The Companys current
      component of other comprehensive income is the foreign currency
      translation adjustment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (n) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company maintains its financial statements in the
      functional currency, which is the Renminbi (RMB). Monetary assets and
      liabilities denominated in currencies other than the functional currency
      are translated into the functional currency at rates of exchange
      prevailing at the balance sheet dates. Transactions denominated in
      currencies other than the functional currency are translated into the
      functional currency at the exchanges rates prevailing at the dates of the
      transaction. Exchange gains or losses arising from foreign currency
      transactions are included in the determination of net income for the
      respective periods.                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | For financial reporting purposes, the financial
      statements of the Company, which are prepared using the functional
      currency, have been translated into United States dollars. Assets and
      liabilities are translated at the exchange rates at the balance sheet
      dates and revenue and expenses are translated at the average exchange
      rates and stockholders equity is translated at historical exchange rates.
      Translation adjustments are not included in determining net income but are
      included in foreign exchange adjustment to other comprehensive income, a
      component of stockholders equity.                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The accompanying consolidated financial statements are
      presented in United States dollars. The functional currency of the Company
      is Hong Kong dollars (¡§HK$¡ ̈). Equity accounts of the consolidated
      financial statements are translated into United States dollars from HK$ at
      their historical exchange rates when the capital transactions occurred.
      Assets and liabilities are translated at the exchange rates as of balance
      sheet date. Income and expenditures are translated at the average exchange
      rate of the year. Translation adjustments are not included in determining
      net income but are included in foreign currency translation adjustment in
      other comprehensive income, a component of stockholders
  equity.

| |                       | September 30, |  | September 30,
| | --------------------- | ------------- |  | -------------
| |                       | 2008          |  | 2007         
| | HKD-USD Year End Rate | 7.77010       |  | 7.77600      
| | HKD-USD Average Rate  | 7.79297       |  | 7.80367      
| | RMB-USD Year End Rate | 6.85510       |  | 7.51760      
| | RMB-USD Average Rate  | 7.11061       |  | 7.72569      

| | (o) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | In March 2008, the FASB issued SFAS No. 161, "Disclosures
      about Derivative Instruments and Hedging Activities, an amendment of FASB
      Statement No. 133" ("SFAS 161"). SFAS 161 applies to all derivative
      instruments and related hedged items accounted for under SFAS No. 133,
      "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
      133"). SFAS 161 requires entities to provide greater transparency about
      (a) how and why an entity uses derivative instruments, (b) how derivative
      instruments and related hedged items are accounted for under SFAS 133 and
      its related interpretations, and (c) how derivative instruments and
      related hedged items affect an entity's financial position, results of
      operations and cash flows. SFAS 161 is effective for financial statements
      issued for fiscal years and interim periods beginning after November 15,
      2008.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | In May 2008, the FASB issued SFAS No. 162, "The Hierarchy
      of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162
      identifies the sources of accounting principles and the framework for
      selecting the principles used in the preparation of financial statements
      of nongovernmental entities that are presented in conformity with
      generally accepted accounting principles (the GAAP hierarchy). Statement
      162 will become effective 60 days following the SEC's approval of the
      Public Company Accounting Oversight Board amendments to AU Section 411,
      "The Meaning of Present Fairly in Conformity With Generally Accepted
      Accounting Principles."                                                                                                                                                                                                                                    

---

In May 2008, the FASB issued FSP
Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)" ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain
convertible debt instruments that may be settled in cash (or other assets) on
conversion to separately account for the liability (debt) and equity (conversion
option) components of the instrument in a manner that reflects the issuer's
non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years
beginning after December 15, 2008 on a retroactive basis.

The Company is currently evaluating
the potential impact, if any, of the adoption of the above recent accounting
pronouncements on its consolidated results of operations and financial
condition.

---

ITEM 7A.   Quantitative and Qualitative
Disclosures About Market Risk

As a smaller reporting company, we are not required to
provide the information required by this Item.

ITEM 8.      Financial Statements
and Supplementary Data

Our consolidated audited financial statements are stated in
United States dollars (US$) and are prepared in accordance with United States
Generally Accepted Accounting Principles.

The following consolidated audited financials statements are
filed as part of this annual report:

| | Independent
      Auditors Report, dated December 24, 2008 of Samuel H. Wong & Co., LLP                                                                       
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                
| | Audited
      Consolidated Balance Sheets as at September 30, 2008 and September 30,
      2007                                                                
| |                                                                                                                                                                
| | Audited
      Consolidated Statements of Operations for the year ended September 30,
      2008 and for the year ended September 30, 2007                      
| |                                                                                                                                                                
| | Audited
      Consolidated Statements of Cash Flows for the year ended September 30,
      2008 and for the year ended September 30, 2007                      
| |                                                                                                                                                                
| | Audited
      Consolidated Statements of Changes in Stockholders Deficit for the year
      ended September 30, 2008 and for the year ended September 30, 2007
| |                                                                                                                                                                
| | Notes
      to the Consolidated Financial Statements                                                                                                           

---









China Health Care Corp

Audited Consolidated Financial Statements

September 30, 2008 and 2007



(Stated in US Dollars)

---

China Health Care Corp





|Contents                                                      | Pages       
|------------------------------------------------------------- | ------------
|                                                              |             
|Report
      of Registered Independent Public Accounting Firm | 1           
|                                                              |             
|Consolidated
      Balance Sheets                             | 2
      -3  
|                                                              |             
|Consolidated
      Statements of Operations                   | 4           
|                                                              |             
|Consolidated
      Statements of Stockholders Equity         | 5           
|                                                              |             
|Consolidated
      Statements of Cash Flows                   | 6           
|                                                              |             
|Notes
      to the Consolidated Financial Statements          | 7
       22

---

Board of Directors and Stockholders China Health Care Corp



Report of Registered Independent Public Accounting
Firm



We have audited the accompanying consolidated balance sheets of
China Health Care Corporation at September 30, 2008 and 2007, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the 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 financial statements referred to above
present fairly, in all material respects, the financial position of China Health
Care Corporation at September 30, 2008 and 2007, and the results of its
operations and its cash flows for each of the years then ended in conformity
with accounting principles generally accepted in the United States of America.

As discussed in Note 1, the Company continued to incur losses
and working capital deficiencies that raise doubt over its ability to continue
as a going concern. The accompanying financial statements do not include any
adjustments to the financial statements that might be necessary should the
company be unable to continue as a going concern.



|South San Francisco, California | Samuel H. Wong & Co., LLP   
|------------------------------- | ----------------------------
|December 24, 2008               | Certified Public Accountants





---

China Health Care Corp

Consolidated Balance Sheets

At September 30, 2008 and 2007

(Stated in US Dollars)

|                                                                 |  |          |  |   | At            |  |   | At            | 
|---------------------------------------------------------------- |  | -------- |  | - | ------------- |  | - | ------------- | 
|                                                                 |  |          |  |   | September 30, |  |   | September 30, | 
|Assets                                                           |  | Note     |  |   | 2008          |  |   | 2007          | 
|                                                                 |  |          |  |   |               |  |   |               | 
|Current assets                                                   |  |          |  |   |               |  |   |               | 
|Cash                                                             |  | 2*(d)*   |  | $ | 229,567       |  | $ | 416,705       | 
|Accounts receivable                                              |  | 2*(e)*,3 |  |   | 193,050       |  |   | 220,557       | 
|Related party receivables                                        |  | 4        |  |   | -             |  |   | 330,068       | 
|Prepaid expenses                                                 |  | 5        |  |   | 78,717        |  |   | 2,161         | 
|Total current assets                                             |  |          |  |   | 501,334       |  |   | 969,491       | 
|                                                                 |  |          |  |   |               |  |   |               | 
|Non-current assets                                               |  |          |  |   |               |  |   |               | 
|Property and equipment                                           |  | 2*(f),*6 |  |   | 842,710       |  |   | 1,106,665     | 
|Goodwill                                                         |  | 7        |  |   | 154,809       |  |   | 154,692       | 
|Rent and utility deposits                                        |  |          |  |   | 867           |  |   | 79,677        | 
|                                                                 |  |          |  |   | 998,386       |  |   | 1,341,034     | 
|                                                                 |  |          |  |   |               |  |   |               | 
|Discontinued operations                                          |  |          |  |   |               |  |   |               | 
|Accounts receivable                                              |  |          |  |   | -             |  |   | -             | 
|Related party receivables                                        |  | 15       |  |   | -             |  |   | 179,540       | 
|Prepaid expenses                                                 |  |          |  |   | -             |  |   | 69,871        | 
|                                                                 |  |          |  |   | -             |  |   | 249,411       | 
|                                                                 |  |          |  |   |               |  |   |               | 
|Total assets                                                     |  |          |  | $ | 1,499,720     |  | $ | 2,559,936     | 
|                                                                 |  |          |  |   |               |  |   |               | 
|                                                                 |  |          |  |   |               |  |   |               | 
|Liabilities, Minority Interest, and
      Stockholders Deficit  |  |          |  |   |               |  |   |               | 
|                                                                 |  |          |  |   |               |  |   |               | 
|Current liabilities                                              |  |          |  |   |               |  |   |               | 
|Accounts payable                                                 |  |          |  |   | 1,148,030     |  |   | 847,182       | 
|Dividends payable                                                |  |          |  |   | 24,884        |  |   | 1,383,880     | 
|Related party payables                                           |  | 8        |  |   | 2,510,978     |  |   | 1,693,273     | 
|Accrued liabilities                                              |  | 9        |  |   | 126,333       |  |   | 721,758       | 
|Convertible preferred stock - $0 par value, 10,000 shares        |  |          |  |   |               |  |   |               | 
|authorized; 600 and 4,605 shares issued and
      outstanding at |  |          |  |   |               |  |   |               | 
|September 30, 2008 and 2007, respectively                        |  | 10       |  |   | 1,503,226     |  |   | -             | 
|Total current liabilities                                        |  |          |  |   | 5,313,451     |  |   | 4,646,093     | 
|                                                                 |  |          |  |   |               |  |   |               | 
|Non-current liabilities                                          |  |          |  |   |               |  |   |               | 
|Convertible preferred stock - $0 par value, 10,000 shares        |  |          |  |   |               |  |   |               | 
|authorized; 600 and 4,605 shares issued and
      outstanding at |  |          |  |   |               |  |   |               | 
|September 30, 2008 and 2007, respectively                        |  |          |  |   | -             |  |   | 10,172,376    | 

See Accompanying Notes to the Financial Statements and
Accountants Report.

1

---

China Health Care Corp

Consolidated Balance Sheets

At September 30, 2008 and 2007

(Stated in US Dollars)

|                                                                      |  |      |  |   | At                      |   |   | At            |  
|--------------------------------------------------------------------- |  | ---- |  | - | ----------------------- | - | - | ------------- | -
|                                                                      |  |      |  |   | **September
      30,** |   |   | September 30, |  
|                                                                      |  | Note |  |   | 2008                    |   |   | 2007          |  
|Liabilities of discontinued operations                                |  |      |  |   |                         |   |   |               |  
|Accounts payable                                                      |  |      |  |   | 839,219                 |   |   | 927,644       |  
|Accrued liabilities                                                   |  | 15   |  |   | 20,504                  |   |   | 22,085        |  
|                                                                      |  |      |  |   | 859,723                 |   |   | 949,729       |  
|                                                                      |  |      |  |   |                         |   |   |               |  
|Total liabilities                                                     |  |      |  | $ | 6,173,173               |   | $ | 15,768,198    |  
|                                                                      |  |      |  |   |                         |   |   |               |  
|Minority interest                                                     |  |      |  | $ | -                       |   | $ | -             |  
|                                                                      |  |      |  |   |                         |   |   |               |  
|                                                                      |  |      |  |   |                         |   |   |               |  
|Stockholders deficit                                                 |  |      |  |   |                         |   |   |               |  
|Common stock - $0.001 par value,
      200,000,000 shares             |  |      |  |   |                         |   |   |               |  
|authorized; 50,148,000 and 39,314,000 shares issued and               |  |      |  |   |                         |   |   |               |  
|outstanding at September 30, 2008 and 2007,
      respectively        |  |      |  |   | 50,148                  |   |   | 39,314        |  
|Additional paid in capital                                            |  |      |  |   | 21,632,697              |   |   | 10,477,823    |  
|Accumulated deficits                                                  |  |      |  |   | (26,310,851             | ) |   | (23,609,499   | )
|Accumulated other comprehensive income (loss)                         |  |      |  |   | (45,448                 | ) |   | (115,900      | )
|Total stockholders' deficit                                           |  |      |  |   | (4,673,454              | ) |   | (13,208,262   | )
|                                                                      |  |      |  |   |                         |   |   |               |  
|Total liabilities, minority interest, and
      stockholders' deficit |  |      |  | $ | 1,499,720               |   | $ | 2,559,936     |  

See Accompanying Notes to the Financial Statements and
Accountants Report.

**2**

---

China Health Care Corp

Statements of Operations

For the three months and six months ended June 30, 2008 and
2007

(Stated in US Dollars)

|                                                             |  |           |  |   | **Year ended** |   |   | Year ended    |  
|------------------------------------------------------------ |  | --------- |  | - | -------------- | - | - | ------------- | -
|                                                             |  |           |  |   | **September**  |   |   | **September** |  
|                                                             |  |           |  |   | 30,            |   |   | 30,           |  
|                                                             |  | Note      |  |   | 2008           |   |   | 2007          |  
|Revenue                                                      |  | 2*(g),*16 |  | $ | 545,884        |   | $ | 570,217       |  
|                                                             |  |           |  |   |                |   |   |               |  
|Cost of revenue                                              |  | 2*(h)*    |  |   | 168,112        |   |   | 152,184       |  
|Gross profit                                                 |  |           |  |   | 377,772        |   |   | 418,033       |  
|                                                             |  |           |  |   |                |   |   |               |  
|Selling expenses                                             |  | *2 (i)*   |  |   | 137,478        |   |   | 150,800       |  
|General and administrative expenses                          |  | *2(j)*    |  |   | 2,660,829      |   |   | 794,663       |  
|Total operating expenses                                     |  |           |  |   | 2,798,307      |   |   | 945,463       |  
|                                                             |  |           |  |   |                |   |   |               |  
|Other income (expenses)                                      |  |           |  |   |                |   |   |               |  
|Other income                                                 |  |           |  |   | 158,173        |   |   | -             |  
|Interest income                                              |  |           |  |   | 320            |   |   | 932           |  
|Interest expense                                             |  |           |  |   | (213,965       | ) |   | (935,012      | )
|Other expenses                                               |  |           |  |   | (149,561       | ) |   | (616,364      | )
|Total other income (expenses)                                |  |           |  |   | (205,033       | ) |   | (1,550,444    | )
|                                                             |  |           |  |   |                |   |   |               |  
|Loss before income tax and minority
      interest           |  |           |  |   | (2,625,568     | ) |   | (2,077,874    | )
|                                                             |  |           |  |   |                |   |   |               |  
|Provision for income tax (tax benefit)                       |  | 2*(k)*    |  |   | (20,111        | ) |   | (20,510       | )
|                                                             |  |           |  |   |                |   |   |               |  
|Loss before minority interest                                |  |           |  |   | (2,645,679     | ) |   | (2,098,384    | )
|                                                             |  |           |  |   |                |   |   |               |  
|less: Minority interest in net
      income (loss)           |  |           |  |   | -              |   |   | 499,950       |  
|                                                             |  |           |  |   |                |   |   |               |  
|Loss from continuing operations                              |  |           |  |   | (2,645,679     | ) |   | (1,598,434    | )
|                                                             |  |           |  |   |                |   |   |               |  
|Gain (loss) from discontinued operations,
      net of taxes |  | 15        |  |   | (55,673        | ) |   | 379,454       |  
|                                                             |  |           |  |   |                |   |   |               |  
|Net income (loss)                                            |  |           |  | $ | (2,701,352     | ) | $ | (1,218,980    | )
|                                                             |  |           |  |   |                |   |   |               |  
|Earnings (loss) per share                                    |  | 2*(l),*14 |  |   |                |   |   |               |  
|Basic and diluted                                            |  |           |  | $ | (0.0596        | ) | $ | (0.0311       | )
|                                                             |  |           |  |   |                |   |   |               |  
|Weighted average shares outstanding                          |  |           |  |   |                |   |   |               |  
|Basic and diluted                                            |  |           |  |   | 45,344,093     |   |   | 39,257,595    |  

See Accompanying Notes to the Financial Statements and
Accountants Report.

3

---

China Health Care Corp

Consolidated Statement of Operations

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|                                              |  |        |  |   | Year          |   |   | Year          |  
|--------------------------------------------- |  | ------ |  | - | ------------- | - | - | ------------- | -
|                                              |  |        |  |   | ended         |   |   | ended         |  
|Statement of Comprehensive                    |  | Note   |  |   | September 30, |   |   | September 30, |  
|Income
      (Loss):                          |  |        |  |   | 2008          |   |   | 2007          |  
|Net income (loss)                             |  |        |  | $ | (2,701,352    | ) | $ | (1,218,980    | )
|Other comprehensive income (loss)             |  | 2*(m)* |  |   |               |   |   |               |  
|Foreign currency translation
      adjustment |  | 2*(n)* |  |   | 70,452        |   |   | (130,510      | )
|Total comprehensive income (loss)             |  |        |  | $ | (2,630,900    | ) | $ | (1,349,490    | )

See Accompanying Notes to the Financial Statements and
Accountants Report.

**4**

---

China Health Care Corp

ConsolidatedStatementsofChangesinStockholdersDeficit

for the years endedSeptember30, 2008 and 2007

(Statedin USDollars)

|                                        |  | Common
        Stock |  |   | Paid   |  |   |            |  |   | Other       |   |   |               |  
|--------------------------------------- |  | -------------------- |  | - | ------ |  | - | ---------- |  | - | ----------- | - | - | ------------- | -
|                                        |  | Shares               |  |   | Par    |  |   | in         |  |   | Accumulated |   |   | Comprehensive |  
|                                        |  | Outstanding          |  |   | Amount |  |   | Capital    |  |   | Deficit     |   |   | Income (loss) |  
|Balance, October 1, 2006                |  | 38,856,000           |  | $ | 38,856 |  | $ | 10,177,028 |  | $ | (22,390,519 | ) | $ | 14,610        |  
|Issuance of common stock for cash       |  | 418,000              |  |   | 418    |  |   | 233,148    |  |   |             |   |   |               |  
|Issuance of common stock as             |  |                      |  |   |        |  |   |            |  |   |             |   |   |               |  
|compensation                            |  | 40,000               |  |   | 40     |  |   | 67,647     |  |   |             |   |   |               |  
|Net loss                                |  |                      |  |   |        |  |   |            |  |   | (1,218,980  | ) |   |               |  
|Foreign currency translation adjustment |  |                      |  |   |        |  |   |            |  |   |             |   |   | (130,510      | )
|Balance, September 30, 2007             |  | 39,314,000           |  | $ | 39,314 |  | $ | 10,477,823 |  | $ | (23,609,499 | ) | $ | (115,900      | )
|                                        |  |                      |  |   |        |  |   |            |  |   |             |   |   |               |  
|Balance, October 1, 2007                |  | 39,314,000           |  | $ | 39,314 |  | $ | 10,477,823 |  | $ | (23,609,499 | ) | $ | (115,900      | )
|Conversion of preferred stock           |  | 8,928,000            |  |   | 8,928  |  |   | 9,787,640  |  |   |             |   |   |               |  
|Issuance of common stock                |  | 1,906,000            |  |   | 1,906  |  |   | 1,367,234  |  |   |             |   |   |               |  
|Net loss                                |  |                      |  |   |        |  |   |            |  |   | (2,701,352  | ) |   |               |  
|Foreign currency translation adjustment |  |                      |  |   |        |  |   |            |  |   |             |   |   | 70,452        |  
|Balance, September 30, 2008             |  | 50,148,000           |  | $ | 50,148 |  | $ | 21,632,697 |  | $ | (26,310,851 | ) | $ | (45,448       | )

SeeAccompanyingNotes to theFinancialStatementsandAccountantsReport.

5

---

China Health Care Corp.

Consolidated Statement of Cash Flows

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)



|                                                                                  |   | Year          |   |   | Year          |  
|--------------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | -
|                                                                                  |   | ended         |   |   | Ended         |  
|                                                                                  |   | September 30, |   |   | September 30, |  
|                                                                                  |   | 2008          |   |   | 2007          |  
|Cash Flow from Operating Activities                                               |   |               |   |   |               |  
|Net income (loss)                                                                 | $ | (2,701,352    | ) | $ | (1,218,980    | )
|                                                                                  |   |               |   |   |               |  
|Adjustments to reconcile net loss to net cash used in
      operating activities: |   |               |   |   |               |  
|Preferred
      dividends included in interest                                    |   | -             |   |   | 560,268       |  
|Depreciation                                                                      |   | 279,944       |   |   | (384,074      | )
|Impairment of
      assets                                                        |   | -             |   |   | 391,825       |  
|Decrease/(Increase) in accounts
      receivable                                  |   | 27,507        |   |   | (66,967       | )
|Decrease/(Increase) in related party receivable                                   |   | 509,608       |   |   | (336,559      | )
|Decrease/(Increase) in prepaid
      expenses                                     |   | (6,685        | ) |   | (31,339       | )
|(Decrease)/Increase in accounts payables                                          |   | 212,424       |   |   | (712,980      | )
|(Decrease)/Increase in accrued
      liabilities                                  |   | (597,005      | ) |   | (317,451      | )
|(Decrease)/Increase in related party payable                                      |   | 817,705       |   |   | 1,290,847     |  
|(Decrease)/Increase in customer
      deposit                                     |   | -             |   |   | (30,806       | )
|Cash Sourced
      from/(Used in) operating activities                            |   | (1,457,854    | ) |   | (856,219      | )
|                                                                                  |   |               |   |   |               |  
|Cash Flows from Investing Activities                                              |   |               |   |   |               |  
|Rent and utility (deposits
      paid)/deposits refund                            |   | (15,989       | ) |   | (68,129       | )
|(Acquisition of
      minority interest at premium generating goodwill)           |   | (117          | ) |   | (292          | )
|Proceeds from sales of/(purchase
      of) equipment                              |   | 78,809        |   |   | 1,003,469     |  
|Cash Sourced
      from/(Used in) investing activities                            |   | 62,703        |   |   | 935,049       |  
|                                                                                  |   |               |   |   |               |  
|Cash Flows from Financing Activities                                              |   |               |   |   |               |  
|Proceeds from issuance of stock                                                   |   | -             |   |   | 301,253       |  
|Issuance of
      convertible preferred stock                                     |   | 1,129,323     |   |   | 131,618       |  
|Cash Sourced from/(Used in)
      Financing Activities                            |   | 1,129,323     |   |   | 432,871       |  
|                                                                                  |   |               |   |   |               |  
|Net Increase/(Decrease) in Cash & Cash Equivalents
      for the Period           |   | (265,828      | ) |   | 511,701       |  
|                                                                                  |   |               |   |   |               |  
|Effect of Currency Translation                                                    |   | 78,690        |   |   | (165,821      | )
|                                                                                  |   |               |   |   |               |  
|Cash & Cash Equivalents at Beginning of Period                                    |   | 416,705       |   |   | 35,513        |  
|                                                                                  |   |               |   |   |               |  
|Cash & Cash Equivalents at End of Period                                          | $ | 229,567       |   | $ | 416,705       |  
|                                                                                  |   |               |   |   |               |  
|Supplementary cash flow information:                                              |   |               |   |   |               |  
|Interest received                                                                 |   | 320           |   |   | 932           |  
|Interest paid                                                                     |   | (251,948      | ) |   | (374,743      | )
|Taxes paid                                                                        |   | 103           |   |   | 73            |  

See Accompanying Notes to the Financial Statements and
Accountants Report.

6

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|1. | ORGANIZATION AND PRINCIPAL ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | History                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | China Health Care Corporation (the Company (OTCBB:
      CHCC)) was incorporated in the state of Wyoming on February 11, 2005 under
      the name of The Cavalier Group. On May 13, 2008, the Secretary of State of
      Wyoming effected a change of Company name to China Health Care
      Corporation, as approved by our shareholders. On January 20, 2008, the
      Company entered into a share exchange agreement with United Premier
      Medical Group Limited (UPMG) and its shareholders to acquire all of the
      outstanding common shares of UPMG. The transaction closed on July 24,
      2008.                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The share exchange transaction has been accounted for as
      a recapitalization of UPMG where the Company CHCC (the legal acquirer) is
      considered the accounting acquiree and UPMG (the legal acquiree) is
      considered the accounting acquirer. As a result of this transaction, the
      Company is deemed to be a continuation of the business of UPMG.                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Accordingly, the financial data included in the
      accompanying consolidated financial statements for all periods prior to
      July 24, 2008 is that of the accounting acquirer (UPMG). The historical
      stockholders equity of the accounting acquirer prior to the share
      exchange has been retroactively restated as if the share exchange
      transaction occurred as of the beginning of the first period
    presented.                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | United Premier Medical Group Limited (UPMG) is a
      medical consultancy service provider in the Peoples Republic of China
      (PRC) providing services in the areas of hospital management and
      specialty medical consultancy. UPMGs primary focus is the health care
      needs of women and children.                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The business was founded in 2001, with UPMG as the
      ultimate holding company. UPMG was organized under the laws of Cayman
      Island on March 28, 2003, whereas UPMG International Limited (UPMGI) was
      incorporated in the British Virgin Islands on September 15, 2003. The
      intention is to build the Company using a holding company structure, with
      a top-level entity owning interests in operating entities. Separate
      operating entities are established in each geographic region. At times,
      the company owns less than 100% of an operating entity because this
      enables the use of resources and expertise of local partners.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | There were a number of restructuring events, which
      occurred over the past several years. These events would
  include:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | • | On July 19, 2001, UPMGI acquired 50% of the operating
      entity Proactive Medicare Enterprise (Hong Kong) Limited (PME-HK). At
      the same time, PME-HK held 90% in equity interest of the operating entity
      Shanghai Proactive Medicare Health Education Center Limited (BK-SH).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                 
| | • | On May 5, 2003, UPMG acquired 100% of UPMGI and hence
      UPMGI became a wholly-owned subsidiary of UPMG.                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                 
| | • | On March 17, 2004, UPMGI increased its ownership of the
      operating entity PME-HK from 50% to 100% and hence PME-HK became a
      wholly-owned subsidiary of UPMGI.                                                                                                                        

27

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

| | • | Pro-Innovative Holdings Limited (PHL), an investment
      holding company, was incorporated on January 22, 2004 with 51% in equity
      interest held by UPMG.                                                                      
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                         
| | • | On February 17, 2004, UPMG transferred all common
      shareholding in Ideamart Holdings Limited (Ideamart) to PHL. Ideamart,
      which incorporated on May 28, 2003, is a dormant company.                                        
| |   |                                                                                                                                                                                                                                         
| | • | On March 19, 2004, UPMG International (Guangdong) Limited
      (UPMGIG) increased its ownership of UPMG (Guangdong) Company Limited
      (UPMGGC) from 99% to 100%.                                                               
| |   |                                                                                                                                                                                                                                         
| | • | On May 7, 2004, PHL transferred 100% of its ownership in
      UPMG (Hong Kong) Limited (UPMG-HK) and UPMG (US) Limited (UPMG-US) to
      UPMGI and hence UPMG-HK and UPMG-US became the wholly- owned subsidiaries
      of UPMGI.
| |   |                                                                                                                                                                                                                                         
| | • | In April 2007, UPMG-HK disposed of its 100% interest in
      Broad Prosper Limited.                                                                                                                                                    

Current Structure & Basis of
Presentation

The Company owned the following
subsidiaries at September 30, 2008 and 2007:

No.
      **Company** **Code**
      Company **Name**
      Place of **Incorporation**
      Date of **Incorporation**
      Remark0
      CHCC
      China Heath Care Corporation
      Wyoming
      February 11, 2005
      Publicly Listed Holding Company1
    UPMG
    United Premier Medical Group Limited
    Cayman Islands
    March 28, 2003
    Intermediary Holding Company2
    UPMGI
    UPMG International Limited
    British Virgin Islands
    September 15, 2003
    Subsidiary of UPMG3
    PME-HK
    Proactive Medicare Enterprise (Hong Kong)
      Limited
    Hong Kong
    March 17, 2000
    Wholly-owned subsidiary of UPMGI4
    PME-SZ
    Proactive Medicare (Shenzhen) Company Limited
    Hong Kong
    September 24, 2004
    Wholly-owned subsidiary of UPMGI5
    PME-CS
    Proactive Medicare (Changsha) Company Limited
    Hong Kong
    July 2, 2004
    Wholly-owned subsidiary of UPMGI6
    PME-XIA
    Proactive Medicare (Xiamen) Company Limited
    Hong Kong
    December 22, 2004
    Wholly-owned subsidiary of UPMGI7
    PME-NAN
    Proactive Medicare (Nanjing) Company Limited
    Hong Kong
    September 24, 2005
    Wholly-owned subsidiary of UPMGI8
    PME-HZ
    Proactive Medicare (Hangzhou) Company Limited
    Hong Kong
    August 25, 2005
    Wholly-owned subsidiary of UPMGI9
    PME-WX
    Proactive Medicare (Wuxi) Company Limited
    Hong Kong
    April 19, 2004
    Wholly-owned subsidiary of UPMGI


28

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

No.
      **Company** Code
      Company Name
      Place of Incorporation
      Date of Incorporation  Remark10
    UPMG-SHA
    United Premier Medical Group (Shanghai) Limited
    Hong Kong
    February 25, 2004
    Wholly-owned subsidiary of UPMGI11
    PMS-HK
    Proactive Medicare Services (Hong Kong) Limited
    Hong Kong
    January 30, 2004
    Wholly-owned subsidiary of UPMGI12
    PME-BJ
    Proactive Medicare (Beijing) Company Limited
    Hong Kong
    March 27, 2000
    Wholly-owned subsidiary of UPMGI13
    UPMG-HK
    UPMG (Hong Kong) Limited
    British Virgin Islands
    August 8, 2003
    Wholly-owned subsidiary of UPMGI14
    UPMG-US
    UPMG (US) Limited
    British Virgin Islands
    November 23, 1993
    Wholly-owned subsidiary of UPMGI15
    HB-GZ
    Guangzhou Inno-Proactive Medicare Consultancy
      Ltd.
    PRC
    October 26, 2004
    Wholly-owned subsidiary of PMEHK16
    BK-SH
    Shanghai Proactive Medicare Health Education
      Center Limited
    PRC
    February 5, 2002
    90% of common shareholding held by PMEHK17
    UBK-SZ
    UPMG (Shenzhen) Limited
    PRC
    January 5, 2006
    Wholly-owned subsidiary of UPMG-US18
    UPMG-MU
    UPMG (Macau) Company Limited
    Macau
    September 29, 2006
    50% of common shareholding held by UPMG-HK19
    PHL
    Pro-Innovative Holdings Limited
    British Virgin Islands
    January 22, 2004
    51% of common shareholding held by UPMG20
    PML
    Pro-Innovative Medical Limited
    Hong Kong
    December 8, 2003
    Wholly-owned subsidiary of PHL21
    Ideamart
    Ideamart Holdings Limited
    British Virgin Islands
    May 28, 2003
    Wholly-owned subsidiary of PHL22
    UPMGIG
    UPMG International (Guangdong) Limited
    British Virgin Islands
    August 29, 2003
    62% of common shareholding held by PHL23
    UPMGGC
    UPMG
      (Guangdong) Company Limited
    Hong
      Kong
    August
      14, 2002
    Wholly-owned subsidiary of UPMGIG24
    BP
    Broad Prosper Limited
    British Virgin Islands
    September 25, 2003
    100% of common shareholding held by UPMG-HK
      (discontinued on April 30, 2007)


The consolidated financial statements
include the accounts of UPMG and its consolidated subsidiaries. UPMG wholly owns
UPMGI, which in turn directly holds 12 wholly-owned subsidiaries and indirectly
holds 4 subsidiaries including HB-GZ (100% in equity interest), BK-SH (90% in
equity interest), UBK-SZ (100% in equity interest), and UPMG-MU (50% in equity
interest). Besides, UPMG holds 51% in equity interest of PHL,

29

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

which in turn, wholly owns two direct
subsidiaries and holds 62% in equity interest of UPMGIG, which in turn wholly
owns UPMGGC

Business

The Company provides consultancy
services to the VIP Maternity & Gynecological Centers (the VIP Birthing
Centers) in the PRC. These services are provided in conjunction with Johns
Hopkins International, LLC, a U.S. based healthcare provider, and based upon a
Consultancy Agreement with JHI. (The Company and JHI are currently disputing
certain material terms of the consultancy agreement  see below, and note 14).
The first VIP Birthing Center commenced operations in October 2002 at the
International Peace Maternity & Child Health Hospital in Shanghai. Over the
past six years, the Company has signed co-operative agreements with a number of
hospitals in Obstetrics / Gynecology (OB/GYN) across the PRC in cities
including Beijing, Shanghai, Guangzhou, Foshan, Wuxi, Xiamen, Changsha, and
Hangzhou. In 2006, the Company signed a management agreement with the University
Hospital at Macau University of Science and Technology (UH-MUST) whereby the
Company provides general hospital management consultancy service.

The Company is currently under
contracts to provide consultancy services to a total of five VIP Birthing
Centers in the PRC and to manage a private hospital in Macau. These centers are
located in Wuxi (the Wuxi Center), Xiamen (the Xiamen Center), Changsha
(the Changsha Center), Foshan (the Foshan Center), and Hangzhou (the
Hangzhou Center). The Wuxi Center, the Xiamen Center, and the hospital in Macau
are operated under service contracts, and receive a monthly fee for the
services. The Company has had difficulty enforcing these contracts, and three of
the VIP Birthing Centers have ceased complying with our payment terms (the
Changsha Center, the Foshan Center, and the Hangzhou Center). The Company
engaged lawyers to negotiate with the host hospitals for settlement. The Company
also had a VIP Birthing Center in Shanghai (the Shanghai Center). The Shanghai
Center has not made any payment to the Company since January 2006; consequently,
the Company has taken legal action against the host hospital for breach of
contract.

The Company had an additional VIP
Birthing Center in Guangzhou (the Guangzhou Center) which ceased its operation
in March 2007. The invested assets were sold back to its host hospital. The net
sales proceeds of these assets amounted to $1,296,944. For the abovementioned
defaulting centers, the Company has not accrued any revenue for the years ended
September 30, 2008 and 2007.

Going Concern

The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going
concern. The Company has a net loss of $2,710,352 and a negative cash flow from
operations of $1,533,888 for the period ended September 30, 2008 and a working
capital deficiency of $4,812,117, and a shareholders deficit of $4,673,454 at
September 30, 2008. These matters raise substantial doubt about the Companys
ability to continue as a going concern if the Company does not secure adequate
new capitalization. The Company currently and continues to make efforts to
procure outside financing to strengthen its financial position.

30

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES
|-- | --------------------------------------------
|   |                                             
|   | (a)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (b)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (c)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (d)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (e)                                         
|   |                                             
|   |                                             
|   |                                             
|   | (f)                                         
|   |                                             
|   |                                             

31

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

Software
    5 yearsCenter equipment
    5 yearsOffice equipment
    5 yearsFurniture and fixtures
    5 yearsMachinery
    5 yearsLeasehold improvement based on lease term
    5 - 10 years


| |     | The cost and related accumulated depreciation of assets
      sold or otherwise retired are eliminated from the accounts and any gain or
      loss is included in the statement of income. The cost of maintenance and
      repairs is charged to the statement of operations as incurred, whereas
      significant renewals and betterments are capitalized. See Note 6
      Equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (g) | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Companys revenues are derived from its share of
      operating profit from VIP Birthing Centers at hospitals where it has
      invested in capital equipment, leasehold improvements, and human capital
      in the form of technical training for hospital staff. The Companys share
      of operating profit from the VIP Birthing Centers depends upon the
      contractual terms with each hospital. The typical share of operating
      profit ranges between 70% and 80% of the total operating profit of the VIP
      Birthing Center. Financial statements are provided by the hospitals each
      month to the Company for review, verification, and approval. When the
      financial statements of the VIP Birthing Centers have been approved, the
      Company recognizes revenue by recording its portion of the total operating
      profit to its financial statements. Revenues that have been both
      recognized in accordance to their respective contracts and financial
      statements provided by the hospitals can be reasonably expected to be
      collectible.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (h) | Cost of Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Cost of revenue is primarily comprised of depreciation,
      wages, and licensing fees that must be paid to JHI for facilities with
      continuing operation. The Company believes that the depreciation of
      property and equipment matches the substantial initial investment
      equipment and leasehold improvements with revenues that are earned
      overtime. The Company charges wages paid to doctors and medical personnel
      who provide the initial training and hospital management expertise to the
      hospital when the VIP Birthing centers are initially setup and on a
      non-fixed on-going basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (i) | Selling Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Selling expenses are comprised of client entertainment,
      commissions and salaries for sales personnel, marketing, and travel and
      lodging expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (j) | General & Administrative Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | General and administrative expenses include outside
      consulting services, research & development, executive compensation,
      quality control, and general overhead such as finance and administrative
      staff, and depreciation expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (k) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

32

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

| |     | The Company uses the accrual method of accounting to
      determine and report its taxable income for the year. The Company has
      implemented Statement of Financial Accounting Standards (SFAS) No. 109,
      Accounting for Income Taxes. The Company also adopted FIN 48, Accounting
      for Uncertainty in Tax Positions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Income tax liabilities computed according to the United
      States, Peoples Republic of China (PRC), Hong Kong SAR and Macau SAR laws
      are provided for the tax effects of transactions reported in the financial
      statements and consists of taxes currently due plus deferred taxes related
      primarily to differences between the basis of fixed assets and intangible
      assets for financial and tax reporting. The deferred tax assets and
      liabilities represent the future tax return consequences of those
      differences, which will be taxable or deductible when the assets and
      liabilities are recovered of settled. Deferred taxes also are recognized
      for operating losses that are available to offset future income taxes. A
      valuation allowance is created to evaluate deferred tax assets if it is
      more likely than not that these items will either expire before the
      Company is able to realize that tax benefit, or that future realization is
      uncertain.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (l) | Earnings (Loss) Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company computers earnings per share (EPS) in
      accordance with Statement of Financial Accounting Standards No. 128,
      Earnings per Share (SFAS NO. 128), and SEC Staff Accounting Bulletin
      No. 98 (SAB 98). SFAS No. 128 requires companies with complex capital
      structures to present basic and diluted EPS. Basic EPS is measured as the
      income or loss available to common shareholders divided by the weighted
      average common shares outstanding for the period. Diluted EPS is similar
      to basic EPS but presents the dilutive effect on a per share basis of
      potential common shares (e.g., convertible securities, options, and
      warrants) as if they had been converted at the beginning of the periods
      presented, or issuance date, if later. Potential common shares that have
      an anti-dilutive effect (i.e., those that increase income per share or
      decrease loss per share) are excluded from the calculation of diluted
      EPS.                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (m) | Other Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Comprehensive income is defined to include all changes in
      equity except those resulting from investments by owners and distributions
      to owners. Among other disclosures, all items that are required to be
      recognized under current accounting standards as components of
      comprehensive income are required to be reported in a financial statement
      that is presented with the same prominence as other financial statements.
      The Companys current component of other comprehensive income is the
      foreign currency translation adjustment.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (n) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company maintains its financial statements in the
      functional currency, which is the Renminbi (RMB). Monetary assets and
      liabilities denominated in currencies other than the functional currency
      are translated into the functional currency at rates of exchange
      prevailing at the balance sheet dates. Transactions denominated in
      currencies other than the functional currency are translated into the
      functional currency at the exchanges rates prevailing at the dates of the
      transaction. Exchange gains or losses arising from foreign currency
      transactions are included in the determination of net income for the
      respective periods.                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | For financial reporting purposes, the financial
      statements of the Company, which are prepared using the functional
      currency, have been translated into United States dollars. Assets and
      liabilities are translated at the exchange rates at the balance sheet
      dates and revenue and expenses are translated at the
  average                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

33

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

exchange rates and stockholders
equity is translated at historical exchange rates. Translation adjustments are
not included in determining net income but are included in foreign exchange
adjustment to other comprehensive income, a component of stockholders equity.

The accompanying consolidated
financial statements are presented in United States dollars. The functional
currency of the Company is Hong Kong dollars (HK$). Equity accounts of the
consolidated financial statements are translated into United States dollars from
HK$ at their historical exchange rates when the capital transactions occurred.
Assets and liabilities are translated at the exchange rates as of balance sheet
date. Income and expenditures are translated at the average exchange rate of the
year. Translation adjustments are not included in determining net income but are
included in foreign currency translation adjustment in other comprehensive
income, a component of stockholders equity.

| |                       | September 30, |  | September 30,
| | --------------------- | ------------- |  | -------------
| |                       | 2008          |  | 2007         
| | HKD-USD Year End Rate | 7.77010       |  | 7.77600      
| | HKD-USD Average Rate  | 7.79297       |  | 7.80367      
| | RMB-USD Year End Rate | 6.85510       |  | 7.51760      
| | RMB-USD Average Rate  | 7.11061       |  | 7.72569      

| | (o) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | In March 2008, the FASB issued SFAS No. 161, "Disclosures
      about Derivative Instruments and Hedging Activities, an amendment of FASB
      Statement No. 133" ("SFAS 161"). SFAS 161 applies to all derivative
      instruments and related hedged items accounted for under SFAS No. 133,
      "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
      133"). SFAS 161 requires entities to provide greater transparency about
      (a) how and why an entity uses derivative instruments, (b) how derivative
      instruments and related hedged items are accounted for under SFAS 133 and
      its related interpretations, and (c) how derivative instruments and
      related hedged items affect an entity's financial position, results of
      operations and cash flows. SFAS 161 is effective for financial statements
      issued for fiscal years and interim periods beginning after November 15,
      2008.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | In May 2008, the FASB issued SFAS No. 162, "The Hierarchy
      of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162
      identifies the sources of accounting principles and the framework for
      selecting the principles used in the preparation of financial statements
      of nongovernmental entities that are presented in conformity with
      generally accepted accounting principles (the GAAP hierarchy).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Statement 162 will become effective 60 days following the
      SEC's approval of the Public Company Accounting Oversight Board amendments
      to AU Section 411, "The Meaning of Present Fairly in Conformity With
      Generally Accepted Accounting Principles."                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | In May 2008, the FASB issued FSP Accounting Principles
      Board ("APB") 14-1 "Accounting for Convertible Debt Instruments That May
      Be Settled in Cash upon Conversion (Including Partial Cash Settlement)"
      ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain convertible
      debt instruments that may be settled in cash (or other assets) on
      conversion to separately account for the liability (debt)
  and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

34

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

equity (conversion option) components
of the instrument in a manner that reflects the issuer's non-convertible debt
borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after
December 15, 2008 on a retroactive basis.

The Company is currently evaluating
the potential impact, if any, of the adoption of the above recent accounting
pronouncements on its consolidated results of operations and financial
condition.

|3. | ACCOUNTS RECEIVABLE
|-- | -------------------

| |                                       |   | At            |  |   | At            |  
| | ------------------------------------- | - | ------------- |  | - | ------------- | -
| |                                       |   | September 30, |  |   | September 30, |  
| |                                       |   | 2008          |  |   | 2007          |  
| | Total Accounts
      Receivable-Trade | $ | 193,050       |  | $ | 220,557       |  
| | Less: Allowance for Bad Debt          |   | -             |  |   | -             |  
| |                                       | $ | 193,050       |  | $ | 220,557       |  
| |                                       |   |               |  |   |               |  
| | Allowance for Bad
      Debts         |   |               |  |   |               |  
| | Beginning Balance                     | $ | -             |  | $ | (16,285       | )
| | Allowance Provided                    |   | -             |  |   | -             |  
| | Less:Reversal                         |   | -             |  |   | (16,285       | )
| | Ending Balance                        | $ | -             |  | $ | -             |  

|4. | RELATED PARTY
RECEIVABLE
|-- | ------------------------

| |                       |   | At            |  |   | At            | 
| | --------------------- | - | ------------- |  | - | ------------- | 
| |                       |   | September 30, |  |   | September 30, | 
| |                       |   | 2008          |  |   | 2007          | 
| | Yuen Yee Wong         | $ | -             |  | $ | 181,148       | 
| | Robert Yao Wing Wong  |   | -             |  |   | 291,661       | 
| | Burt Ahrens           |   | -             |  |   | 18            | 
| | Employee compensation |   | -             |  |   | 36,781        | 
| |                       | $ | -             |  | $ | 509,608       | 

|5. | PREPAID EXPENSES                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------
|   |                                                                                                            
|   | The prepaid expenses at September 30, 2008 and September
      30, 2007 are shown in the following table: -

| |                        |   | At            |  |   | At            | 
| | ---------------------- | - | ------------- |  | - | ------------- | 
| |                        |   | September 30, |  |   | September 30, | 
| |                        |   | 2008          |  |   | 2007          | 
| | Purchases of baby beds | $ | 74,689        |  | $ | -             | 
| | Various miscellaneous  |   | 4,028         |  |   | -             | 
| | Medical insurance      |   | -             |  |   | 2,043         | 
| | Employee compensation  |   | -             |  |   | 118           | 
| |                        | $ | 78,717        |  | $ | 2,161         | 

35

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|6. | PROPERTY AND EQUIPMENT                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------
|   |                                                                                                             
|   | Property and equipment, which are stated at cost less
      depreciation, were comprised of the following:
-

| |                                     |   | At            |  |   | At            | 
| | ----------------------------------- | - | ------------- |  | - | ------------- | 
| |                                     |   | September 30, |  |   | September 30, | 
| |                                     |   | 2008          |  |   | 2007          | 
| | Category of
      Asset             |   |               |  |   |               | 
| | Furniture & fixtures                | $ | 492,631       |  | $ | 561,582       | 
| | Office equipment                    |   | 8,738         |  |   | 1,911         | 
| | Computer software                   |   | 42,470        |  |   | 42,438        | 
| | Leasehold improvement               |   | 241,208       |  |   | 241,025       | 
| | Center equipment                    |   | 925,468       |  |   | -             | 
| | Machinery                           |   | -             |  |   | 847,568       | 
| |                                     |   | 1,7101,515    |  |   | 1,694,524     | 
| | Less:Accumulated
      Depreciation |   |               |  |   |               | 
| | Furniture & fixtures                |   | 214,668       |  |   | 192,423       | 
| | Office equipment                    |   | 1,503         |  |   | 142           | 
| | Computer software                   |   | 18,661        |  |   | 10,519        | 
| | Leasehold improvement               |   | 94,474        |  |   | 70,299        | 
| | Center equipment                    |   | 538,499       |  |   | -             | 
| | Machinery                           |   | -             |  |   | 314,476       | 
| |                                     |   | 867,805       |  |   | 587,859       | 
| |                                     |   |               |  |   |               | 
| | Equipment, net                      | $ | 842,710       |  | $ | 1,106,665     | 

|7. | GOODWILL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Goodwill amounting to $154,810 and $154,692 as of
      September 30, 2008 and September 30, 2007 are related to the acquisition
      of the minority interest of PME-WX, for which the companys subsidiary,
      UMPGI, purchased the remaining 20% of interest from other stockholder in
      2004. Management annually reviews the carrying value of goodwill using the
      sum of the undiscounted cash flows generated by PME-WX to determine if an
      impairment charge is necessary. The Company has determined no impairment
      to the goodwill as of date.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8. | RELATED PARTY PAYABLES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The following table presents the balances the Company
      owed to related parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

36

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

| |                                       |  |   | At            |  |   | At            | 
| | ------------------------------------- |  | - | ------------- |  | - | ------------- | 
| |                                       |  |   | September 30, |  |   | September 30, | 
| |                                       |  |   | 2008          |  |   | 2007          | 
| | Due to Director: Yuen Yee Wong        |  | $ | -             |  | $ | 891,631       | 
| | Due to Director: Robert Yao Wing Wong |  |   | 854,892       |  |   | 18,749        | 
| | Autoscale                             |  |   | -             |  |   | 612           | 
| | Loan from Innotech                    |  |   | 1,656,086     |  |   | 782,281       | 
| |                                       |  | $ | 2,510,978     |  | $ | 1,693,273     | 

Due to Director

Payables to the Companys directors are
non-interest-bearing and, payable on demand. There is no impact to the statement
of operations as result of the payables to the directors.

Loan from Innotech

On June 20, 2007, Inno-Tech Holdings
Limited (Innotech), a shareholder of United Premier Medical Group Limited
(UPMG), loaned $772,777 (equivalent to HK$6,000,000) to UPMG for use as
working capital. The repayment date was originally June 22, 2008, but was
subsequently extended to December 22, 2008.

On January 10, 2008, Innotech loaned
$384,615 (HK$3,000,000) to UPMG with the original repayment date on January 9,
2009. On January 25, 2008, Innotech loaned another $512,820 (HK$4,000,000) to
UPMG with the original repayment date on January 24, 2009. These loan repayment
dates have been extended. During the period ended June 30, 2008 and 2007, the
Company incurred interest expense of $45,860 and $1,517 respectively.

The following table summarizes the loan
from related party: -

AtSeptember 30,2007Loan principal amount
    $
    1,670,212Accrued interest payable
    
    65,713Repayment, net
    
    (93,360
    )Translation difference
    
    13,521Balance at June 30, 2008
    $
    1,656,086


On April 29, 2008, the loan from
related party was extended as below:

Date of Loan
    
    Loan Principal
    
    Loan Principal
    
    Original
    
    NewAgreement
    
    Amount (USD)
    
    Amount (HKFD)
    
    Repayment Date
    
    Repayment DateJune 20, 2007
    
    772,777
    
    (HK$6,000,000)
    
    June 22, 2008
    
    December 22, 2008January 10, 2008
    
    384,615
    
    (HK$3,000,000)
    
    January 9, 2009
    
    July 9, 2009January 25, 2008
    
    512,820
    
    (HK$4,000,000)
    
    January 24, 2009
    
    July 24, 2009$1,670,212


37

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|9. | ACCRUED LIABILITIES
|-- | -------------------

| |                                        |   | At            |  |   | At            | 
| | -------------------------------------- | - | ------------- |  | - | ------------- | 
| |                                        |   | September 30, |  |   | September 30, | 
| |                                        |   | 2008          |  |   | 2007          | 
| | Henry J. Macfarland (Regular operating |   |               |  |   |               | 
| | expenses)                              | $ | -             |  | $ | 158,590       | 
| | Johns Hopkins (JHI)                    |   | -             |  |   | 550,000       | 
| | Alice Kramer                           |   | -             |  |   | -             | 
| | Income taxes                           |   | 40,799        |  |   | 20,585        | 
| | Business taxes                         |   | 14,686        |  |   | -             | 
| | General operating expense              |   | 91,353        |  |   | 14,668        | 
| |                                        | $ | 146,838       |  | $ | 743,843       | 

|    | PMEI was once in negotiation with JHI concerning the
      amount owed to JHI for services and the use of the JHI trademarks for the
      period June 2005 through March 2006. JHI has invoiced a total of $550,000
      for these services. As PMEI was dissolved in November 2007, the amount to
      be paid to JHI ultimately becomes a liability of the Company, and the
      Company has accrued the amount of $550,000 and subsequently paid $100,213
      resulting in outstanding balance of $449,787.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10. | CONVERTIBLE PREFERRED STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | From June 30, 2005 to September 30, 2007, UPMG entered
      into a continuous securities subscription agreement with private investors
      for the sale of UPMG Convertible Preferred Stock. UPMG issued a total of
      4,605 shares of Convertible Preferred Stock at a subscription price of
      $2,500 per shares for aggregate net proceeds of $10,225,269, after
      accounting for issuance costs and professional fees. The shares bear an 8%
      per annum preferred dividend payable semi-annually. The terms of the
      subscription agreement call for a conversion ratio of one Convertible
      Preferred Stock to one common share of UPMG, which in turn can be
      exchanged for 2,000 shares of the Company. The shares of Convertible
      Preferred Stock have no voting rights. Under the subscription agreement,
      mandatory conversion of the shares would be triggered by UPMG listing its
      shares in a public market. Should no public listing occur within three
      years (subject to extension under certain conditions), the Convertible
      Preferred Stock would be mandatorily redeemable at a price of $2,500 per
      share plus a premium of 2%. The Company believes the conversion feature of
      the Convertible Preferred Stock is not a beneficial conversion feature. At
      the time of their issuance, the UPMG was not a publicly traded
      corporation. The Company believes that based on the characteristics of the
      security, such as the mandatory redemption feature, liquidation preference
      ahead of common stockholders, and cumulative dividends are characteristics
      akin to liabilities. Accordingly, the Company recognizes the convertible
      preferred stock as a liability. Any corresponding preferred dividends are
      regularly accrued according to the terms of the agreement and
  the

38

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|    | redemption features are booked when the securities are
      issued. The Company typically books the entries by recording a debit to
      interest expense and an offsetting credit to credit to preferred dividends
      payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On December 4, 2007, the Board of Directors of the UPMG
      resolved and notified the holders of the Convertible Preferred Stock that
      UPMG intended to force conversion of all the shares into common shares
      because the Company was to subsequently undertake a reverse merger
      transaction, which would transform the company into a public company. All
      the preferred shares have been subsequently converted except for 600
      shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In December 2007, UPMG agreed to issue an additional 459
      of Convertible Preferred Stock in lieu of paying out dividends in cash,
      which UPMG had accrued under dividends payable. The additional 459 shares
      of Convertible Preferred Stock were equivalent to $1,060,086 of
      dividends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | From February to September 30, 2008, 4,463 shares of
      Convertible Preferred Stock were converted to 4,464 shares of UPMG common
      stock. The outstanding number of shares of Convertible Preferred Stock at
      September 30, 2008 was 600. The converted shares were subsequently
      exchanged for shares in the Company pursuant to the share exchange
      agreement detailed in Note 12  Subsequent Events. Since the
      Company accounted for the share exchange transaction as a recapitalization
      transaction, the equity of the Company has been retroactively restated to
      the first period presented. The shares that had been converted at
      September 30, 2008 have been included in the Companys common stock. The
      remaining 600 shares of convertible preferred stock at September 30, 2008
      have been accounted for as a current liability, because during the three
      months ended September 30, 2008, the Company re-examined the
      characteristics of the Convertible Preferred Stock. The Company concluded
      the mandatory redemption feature, liquidation preference to common
      stockholders, and cumulative dividends were characteristics akin to
      liabilities. The Company has booked the redemption premium as interest
      expense for the period.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company is currently in arbitration with the holders
      of the remaining 600 shares of Convertible Preferred Stock over the
      Companys intension to force conversion of their shares into common
      shares. The Company has retained counsel to represent it in
      arbitration.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The related outstanding dividends payable for the
      Convertible Preferred Stock at September 30, 2008 and 2007 was $24,884 and
      $1,587,328.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|11. | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | In accordance with the relevant tax laws and regulations
      of Hong Kong, the corporate income tax rate applicable to the subsidiaries
      of the Company in Hong Kong is 17.5% of taxable income. On March 16, 2007,
      the National Peoples Congress of China approved the Corporate Income Tax
      Law of the Peoples Republic of China (the New CIT Law), effective from
      January 1, 2008. Under the New CIT Law, the corporate income tax rate
      applicable to the subsidiaries of the Company in the PRC starting from
      January 1, 2008 is 25%, replacing the previously applicable tax rate of
      33%. The New CIT Law has an impact on the deferred tax assets and
      liabilities of the Company. Effects arising from the enforcement of New
      CIT law have been reflected into the accounts by applying the new tax
      rate. The Company was not liable for U.S. Income Tax for the years ended
      September 30, 2008 and 2007 since the Company continued to incur net
      operating losses during these years and prior
years.                                                                                                                                                                                                                                                         

39

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|12. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | China Health Care Corporation appointed Mr. Siew Man Pang
      as Chief Executive Officer effective October 1, 2008. Mr. Pang replaced
      Mr. Henry J. Macfarland who will stay on as Senior Group Advisor. See the
      Form 8- K filed by the Company on October 10, 2008 for further
    details.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|13. | STOCK COMPENSATION EXPENSE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | During the twelve months ended September 30, 2008 and
      2007 UPMG issued 953 shares and 20 shares of its common stock as
      compensation, respectively. The 953 shares and 20 shares of UPMG were
      equivalent to 1,906,000 shares and 40,000 shares of the Companys common
      stock. The values of the 953 shares and 20 shares of common stock that
      were expensed to the companys statements of operations were $1,369,140
      and $67,687. The valuation of these shares was determined by using price
      similar to that used for the sale of common shares to other UPMG
      stockholders. As a result of the lack of secondary market at the time of
      issuance of UPMGs common stock as compensation, the Company believes that
      the use of a price that other investors had paid was a reasonable measure
      of fair market value.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company, including any of its subsidiaries, did not
      grant options or rights at any time to create any stock related
      liabilities at September 30, 2008 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

40

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|14. | EARNINGS PER SHARE                                                       
|--- | -------------------------------------------------------------------------
|    |                                                                          
|    | Components of basic and diluted earnings per share were
      as follows:

| |                                                                          |  | Year          |   |  | Year          |  
| | ------------------------------------------------------------------------ |  | ------------- | - |  | ------------- | -
| |                                                                          |  | ended         |   |  | ended         |  
| |                                                                          |  | September 30, |   |  | September 30, |  
| |                                                                          |  | 2008          |   |  | 2007          |  
| | Loss from continuing operations                                          |  | (2,645,679    | ) |  | (1,598,434    | )
| |                                                                          |  |               |   |  |               |  
| | Net Loss                                                                 |  | (2,701,352    | ) |  | (1,218,980    | )
| | Loss attributable to common stockholders                                 |  | (2,701,352    | ) |  | (1,218,980    | )
| |                                                                          |  |               |   |  |               |  
| | Original shares                                                          |  | 39,257,594    |   |  | 38,856,000    |  
| |  Addition to common stock from issuances                                |  | 6,086,499     |   |  | 401,594       |  
| | Basic weighted average shares outstanding                                |  | 45,344,093    |   |  | 39,257,594    |  
| |                                                                          |  |               |   |  |               |  
| | Dilutive Shares:                                                         |  |               |   |  |               |  
| |  Addition to common stock if preferred
      stock had been converted * |  | -             |   |  | -             |  
| | Diluted Weighted Average Shares Outstanding:                             |  | 45,344,093    |   |  | 39,257,594    |  
| |                                                                          |  |               |   |  |               |  
| | Earnings (Loss) Per Share                                                |  |               |   |  |               |  
| |  basic                                                                  |  | (0.0596       | ) |  | (0.0311       | )
| |  diluted                                                                |  | (0.0596       | ) |  | (0.0311       | )
| | Weighted average shares outstanding                                      |  |               |   |  |               |  
| |  basic                                                                  |  | 45,344,093    |   |  | 39,257,594    |  
| |  diluted                                                                |  | 45,344,093    |   |  | 39,257,594    |  
| |                                                                          |  |               |   |  |               |  
| | Supplemental Data                                                        |  |               |   |  |               |  
| | Earnings (loss) per share from continuing operations                     |  | (0.0583       | ) |  | (0.0407       | )

* If the preferred stock had been
converted it would have been antidilutive, accordingly there was no potentially
dilutive effect from them.

41

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|15. | DISCONTINUED
OPERATIONS
|--- | -----------------------

| | Results of Operations               |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | ----------------------------------- |  | -------- | - |  | ------------ | - |  | ------- | - |  | -------- | - |  | ----------------- | - | - | ------- | -
| | for the year ended                  |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | September 30, 2008                  |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| |                                     |  | Changsha |   |  | **Hangzhou** |   |  | Foshan  |   |  | Shanghai |   |  | **Guangzho****u** |   |   | Total   |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Revenue                             |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   | $ | -       |  
| | Cost of revenue                     |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   |   | -       |  
| | Gross profit                        |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   |   | -       |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Selling expenses                    |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   |   | -       |  
| | General and administrative expenses |  | 2,689    |   |  | 27           |   |  | 27,994  |   |  | -        |   |  | 24,963            |   |   | 55,673  |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Total operating expenses            |  | 2,689    |   |  | 27           |   |  | 27,994  |   |  | -        |   |  | 24,963            |   |   | 55,673  |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Other income                        |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   |   | -       |  
| | Other expense                       |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   |   | -       |  
| | Taxes                               |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   |   | -       |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Net income (loss)                   |  | (2,689   | ) |  | (27          | ) |  | (27,994 | ) |  | -        |   |  | (24,963           | ) | $ | (55,673 | )
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | VIP Birthing Centers                |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Results of Operations               |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | for the year ended                  |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | September 30, 2007                  |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| |                                     |  | Changsha |   |  | **Hangzhou** |   |  | Foshan  |   |  | Shanghai |   |  | **Guangzho****u** |   |   | Total   |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Revenue                             |  | 62,954   |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   | $ | 62,954  |  
| | Cost of revenue                     |  | -        |   |  | -            |   |  | 88,915  |   |  | -        |   |  | -                 |   |   | 88,915  |  
| | Gross profit                        |  | 62,954   |   |  | -            |   |  | (88,915 | ) |  | -        |   |  | -                 |   |   | (25,961 | )
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Selling expenses                    |  | 401      |   |  | 1,888        |   |  | 158     |   |  | 1,134    |   |  | -                 |   |   | 3,581   |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | General and administrative expenses |  | 192,040  |   |  | 1,493        |   |  | 6,751   |   |  | 152,744  |   |  | 204,938           |   |   | 557,966 |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Total operating expenses            |  | 192,441  |   |  | 3,381        |   |  | 6,909   |   |  | 153,878  |   |  | 204,938           |   |   | 561,547 |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Other income                        |  | -        |   |  | -            |   |  | -       |   |  | 2        |   |  | 969,366           |   |   | 969,368 |  
| | Other expense                       |  | (243     | ) |  | (38          | ) |  | (379    | ) |  | (1,491   | ) |  | (255              | ) |   | (2,406  | )
| | Taxes                               |  | -        |   |  | -            |   |  | -       |   |  | -        |   |  | -                 |   |   | -       |  
| |                                     |  |          |   |  |              |   |  |         |   |  |          |   |  |                   |   |   |         |  
| | Net income (loss)                   |  | (129,730 | ) |  | (3,419       | ) |  | (96,203 | ) |  | (155,367 | ) |  | 764,173           |   | $ | 379,454 |  

42

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

The Company did not accrue additional
allowance for doubtful accounts for the accounts receivable for discontinued
operations.

43

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

| | VIP Birthing Centers        |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | --------------------------- | - | -------- | - | - | -------- | - | - | -------- | - | - | -------- | - | - | --------- | - | - | -------- | -
| | Financial Position          |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | At September 30, 2008       |   | Changsha |   |   | Hangzhou |   |   | Foshan   |   |   | Shanghai |   |   | Guangzhou |   |   | Total    |  
| | Current assets              |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Accounts receivable         | $ | -        |   | $ | -        |   | $ | -        |   | $ | -        |   | $ | -         |   | $ | -        |  
| | Related party receivables   |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| | Prepaid expenses            |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| | Total current assets        |   | -        |   |   | -        |   |   |          |   |   | -        |   |   | -         |   |   | -        |  
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Non-current assets          |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Property and equipment, net |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| | Total assets                |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Current liabilities         |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Accounts payable            |   | 2,401    |   |   | -        |   |   | 60,713   |   |   | 776,105  |   |   | -         |   |   | 839,219  |  
| | Related party payable       |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| | Accrued liabilities         |   | 1,287    |   |   | 772      |   |   | 1,287    |   |   | 12,960   |   |   | 4,198     |   |   | 20,504   |  
| | Total current liabilities   |   | 3,688    |   |   | 772      |   |   | 62,000   |   |   | 789,065  |   |   | 4,198     |   |   | 859,723  |  
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Total liabilities           |   | 3,688    |   |   | 772      |   |   | 62,000   |   |   | 789,065  |   |   | 4,198     |   |   | 859,723  |  
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Net assets                  | $ | (3,688   | ) | $ | (772     | ) | $ | (62,000  | ) | $ | (789,065 | ) | $ | (4,198    | ) | $ | (859,723 | )
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | VIP Birthing Centers        |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Financial Position          |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | At September 30, 2007       |   | Changsha |   |   | Hangzhou |   |   | Foshan   |   |   | Shanghai |   |   | Guangzhou |   |   | Total    |  
| | Current assets              |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Accounts receivable         |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| | Related party receivables   |   | -        |   |   | -        |   |   | -        |   |   | 179,540  |   |   | -         |   |   | 179,540  |  
| | Prepaid expenses            |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | 69,871    |   |   | 69,871   |  
| | Total current assets        |   | -        |   |   | -        |   |   |          |   |   | 179,540  |   |   | 69,871    |   |   | 249,411  |  
| | Non-current assets          |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Property and equipment, net |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Total assets                |   | -        |   |   | -        |   |   | -        |   |   | 179,540  |   |   | 69,871    |   |   | 249,411  |  
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Current liabilities         |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Accounts payable            |   | 2,400    |   |   | -        |   |   | 123,072  |   |   | 802,172  |   |   | -         |   |   | 927,644  |  
| | Related party payable       |   | -        |   |   | -        |   |   | -        |   |   | -        |   |   | -         |   |   | -        |  
| | Accrued liabilities         |   | 2,071    |   |   | 772      |   |   | 1,652    |   |   | 13,395   |   |   | 4,195     |   |   | 22,085   |  
| | Total current liabilities   |   | 4,471    |   |   | 772      |   |   | 124,724  |   |   | 815,567  |   |   | 4,195     |   |   | 949,729  |  
| | Total liabilities           |   | 4,471    |   |   | 772      |   |   | 124,724  |   |   | 815,567  |   |   | 4,195     |   |   | 949,729  |  
| |                             |   |          |   |   |          |   |   |          |   |   |          |   |   |           |   |   |          |  
| | Net assets                  |   | (4,471   | ) |   | (772     | ) |   | (124,724 | ) |   | (636,027 | ) |   | 65,676    |   |   | (700,318 | )

44

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

|16. | RISKS                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Doing Business in the PRC                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Companys operations are conducted in the Peoples
      Republic of China (the PRC). Accordingly, the Companys business,
      financial condition, and results of operations may be influenced by the
      political, economic, and legal environment in the PRC, and by the general
      state of the PRC economy.                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Concentrations                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | For the year ended September 30, 2008, the Company
      derived its revenue from three VIP Birthing Centers. Each VIP Birthing
      Center unto itself can be considered single customers, and, as such, by
      virtue of there were only three centers, there was a concentration of risk
      in the Companys revenues. The following provides a table of each centers
      contribution by amount and percentage for the nine months
  presented.

| |           |  |   | September
      30, 2008 |  |  | September
      30, 2007 | 
| | --------- |  | - | ------------------------ |  |  | ------------------------ | 
| | Operating |  |   |                          |  |  |                          | 
| | VIP       |  |   |                          |  |  | Percentage               | 
| | Birthing  |  |   |                          |  |  | Contribution             | 
| | Centers   |  |   | Amount                   |  |  | to Revenue               | 
| |           |  |   |                          |  |  |                          | 
| | Xiamen    |  | $ | 100,948                  |  |  | 18.49%                   | 
| | Wuxi      |  |   | 377,509                  |  |  | 69.16%                   | 
| | Macau     |  |   | 61,593                   |  |  | 11.29%                   | 
| | Others    |  |   | 5,833                    |  |  | 1.06%                    | 
| |           |  |   |                          |  |  |                          | 
| |           |  | $ | 545,884                  |  |  | 100.00%                  | 

|17. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | A. Legal proceeding against IPMCHH                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Proactive Medicare Enterprise (HK) Limited, a subsidiary
      of UPMG, is a plaintiff of a legal proceeding regarding a civil claim
      against a hospital in the PRC namely, International Peace Maternity &
      Child Health Hospital of the China Welfare Institute (IPMCHH or the
      defendant) who refused to pay consultancy fees to PME-HK since April
      2005, which may aggregate to $2,890,000                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | On April 10, 2007, Proactive Medicare Enterprise (HK)
      Limited (PME-HK) brought a civil action to the Shanghai No. 1
      Intermediate Peoples Court (the Shanghai Court) in the PRC against
      IPMCCH for breach of contract. A statement of claim from PME-HK was sent
      to the Shanghai Court for acceptance of review. The proposed claims
      regarding this civil action included: (i) To order IPMCHH to honor the
      co-operative agreement signed between PME-HK and IPMCHH on February 2,
      2004; (ii) To order IPMCHH to pay the consultant fee amounted $2,890,000
      (equivalent to RMB22,677,123) in arrears owed to PME-HK, and (iii) IPMCHH
      shall bear the cost of this action.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | On April 12, 2007, the statement of claim was legally
      accepted and filed by the Shanghai Court (Notification of Acceptance:
      (2007) Hu Yi Zhong Min Wu (Shang) Chu Zi No. 93). On May 29, 2007, the
      first instance of the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

45

---

China Health Care Corp

Notes to Financial Statements

for the years ended September 30, 2008, and 2007

(Stated in US Dollars)

case was held to establish the case. On
January 23, 2008, the second instance of the case was held to further negotiate
a mutually accepted settlement plan. Through the mediation of the Shanghai
Court, PME-HK and IPMCHH, so far, have gone through several rounds of
negotiation for a mutually agreed settlement amount in recent months but a final
settlement amount has yet to be confirmed.

The result of this claim cannot be
predicted, and it is possible that the ultimate resolution of the matters,
individually or in the aggregate, may have a material adverse effect on the
Companys business (either in the near-term or in the long-term), financial
position, results of operations, or cash flows. Though the management of the
Company believes a portion of this claim may be recovered, the Company has
reasonably estimated the uncertain portion and has eliminated their revenue
contribution in 2008 and 2007.

B. Contingent claims against other
three hospitals in the PRC

The Company has also engaged a law firm
in the PRC to negotiate with another two hospitals in the PRC, which are under
contract to pay the Company for the consultancy services provided to their
affiliated VIP Birthing Centers in Foshan and Changsha in the PRC. The proposed
claim in each case is about one million US dollars. The Company has gone through
several rounds of negotiation for an agreed settlement amount in recent months
and a final settlement amount has yet to be confirmed.

For the Hangzhou Center, the Company is
identifying a suitable PRC lawyer to negotiate with its host hospital for a
mutually accepted settlement plan.

C. Contingent relationship with JHI

The Company is currently in dispute
with JHI mainly on the fee structure, outstanding fee owed to JHI and use of
JHI brand in future, and the Company is actively negotiating with JHI for
settlement. As indicated in an email from JHI dated April 22, 2008, the Company
believes that JHI is willing to provide limited support depending on JHIs
receiving advance payment for any services requested. The Company also believes
that JHI is willing to proceed with settlement negotiations with the Company as
long as the Company commits to pay a lump sum of $300,000 as the settlement of
consulting services provided before. Given the positive attitude of JHI, the
Company believes the negotiation outcome would be positive and constructive. The
amount to be paid to JHI will ultimately be a liability of the Company, and the
Company has accrued the amount of $550,000 during the year ended September 30,
2006. This amount appears as Accrued Liabilities on the Companys balance sheet
at September 30, 2008 and 2007.

46

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ITEM 9.      Changes in and
Disagreements With Accountants on Accounting and Financial Disclosure

There were no disagreements related to accounting principles or
practices, financial statement disclosure, internal controls or auditing scope
or procedure during the two fiscal years and interim periods, including the
interim period up through the date the relationship ended.

ITEM 9A.   Controls and Procedures

Managements Report on Disclosure Controls and
Procedures

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our acting chief
executive officer and acting chief financial officer (who is acting as our
principal executive officer, principal financial officer and principle
accounting officer) to allow for timely decisions regarding required
disclosure.

As of September 30, 2008, the year end covered by this report,
we carried out an evaluation, under the supervision and with the participation
of our acting chief executive officer and acting chief financial officer (who is
acting as our principal executive officer, principal financial officer and
principle accounting officer), of the effectiveness of the design and operation
of our disclosure controls and procedures. Based on the foregoing, our acting
chief executive officer and acting chief financial officer (who is acting as our
principal executive officer, principal financial officer and principle
accounting officer) concluded that our disclosure controls and procedures were
not effective as of the end of the period covered by this annual report.

Managements Report on Internal Control over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company.

Internal control over financial reporting includes those
policies and procedures that: (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of its
management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in
the effectiveness of any system of internal control, and accordingly, even
effective internal control can provide only reasonable assurance with respect to
financial statement preparation and may not prevent or detect material
misstatements. In addition, effective internal control at a point in time may
become ineffective in future periods because of changes in conditions or due to
deterioration in the degree of compliance with our established policies and
procedures.

A material weakness is a significant deficiency, or combination
of significant deficiencies, that results in there being a more than remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected.

27

---

Under the supervision and with the participation of our
president, management conducted an evaluation of the effectiveness of our
internal control over financial reporting, as of September 30, 2008, based on
the framework set forth in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based
on our evaluation under this framework, management concluded that our internal
control over financial reporting was not effective as of the evaluation date due
to the factors stated below.

Management assessed the effectiveness of the Companys internal
control over financial reporting as of evaluation date and identified the
following material weaknesses:

Insufficient Resources:We have an inadequate number of
personnel with requisite expertise in the key functional areas of finance and
accounting.

Inadequate Segregation of Duties: We have an inadequate
number of personnel to properly implement control procedures.

Lack of Audit Committee:We do not have a functioning
audit committee, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures.

Management is committed to improving its internal controls and
will (1) continue to use third party specialists to address shortfalls in
staffing and to assist the Company with accounting and finance responsibilities,
(2) increase the frequency of independent reconciliations of significant
accounts which will mitigate the lack of segregation of duties until there are
sufficient personnel and (3) may consider appointing audit committee members in
the future.

Management, including our acting chief executive officer, have
discussed the material weakness noted above with our independent registered
public accounting firm. Due to the nature of this material weakness, there is a
more than remote likelihood that misstatements which could be material to the
annual or interim financial statements could occur that would not be prevented
or detected.

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the our
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report in this annual report.

Changes in Internal Control over Financial
Reporting

There have been no changes in our internal controls over
financial reporting that occurred during our year ended September 30, 2008 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.

Item 9B.   Other Information

None.

PART III

Item 10.   Directors, Executive Officers and
Corporate Governance

The following individuals serve as the directors and executive
officers of our company as of the date of this annual report. All directors of
our company hold office until the next annual meeting of our shareholders or
until their

28

---

successors have been elected and qualified. The executive
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office.

Name
      Position Held with Our Company
      Age
      Date First Elected or AppointedFaith Lam
    Director of Accounting and Procurement
      Interim Chief Executive Officer and Interim Chief Financial
      Officer
    41
    July 24, 2008 February 1, 2009Wong Yuen Yee
    Director
    46
    July
      24, 2008Gerald Lau
    Director
    51
    March 11, 2009Andrew B. Kramer
    Director
    46
    July 24, 2008


Faith Lam, Interim Chief Executive Officer and Interim Chief
Financial Officer

Faith Lam has had a long career in Auditing since 1990. In
1994, he joined Deloitte Touche Tohmatsu, one of top four auditing firms in Hong
Kong. Prior to joining our group, Mr. Lam was a government qualified accountant
of a public company listed on the main board of the Stock Exchange of Hong Kong.
Mr. Lam graduated from Hong Kong Shue Yan College (the predecessor of Hong Kong
Shue Yan University) in 1990 majoring in Accounting. He is a Certified Public
Accountant of the Hong Kong Institute of Certified Public Accountants and a
fellow member of The Association of Chartered Certified Accountants.

Wong Yuen Yee, Director

Ms. Y. Y. Wong has over fifteen years of practical business
experience in the PRC. She is responsible for the overall strategic planning and
development of UPMG. In addition to the position held at UPMG, Ms. Wong founded
Inno-tech Holdings Ltd. (8202.HK), which was successfully listed in the Hong
Kong Growth Enterprise Market (GEM) market in 2002. Ms. Wong is the Chairman
of Inno-Tech Holdings Ltd. - a listed company on the Share Exchange of Hong Kong
focusing on sales and marketing of innovative smart home products in the PRC and
also the acquisition, development and management of budget hotels in the PRC.
Ms. Wong graduated from the University of Hong Kong with a Bachelor of Social
Science degree and a Masters degree in Business Administration. She is
enthusiastic about the welfare of Chinas women and children. Ms. Wong is a
Director of the Shanghai Soong Ching Ling Foundation. The foundation is
dedicated to developing the welfare of Chinese women and children.

Gerald Lau, Director

Mr. Gerald Lau is a Chief Executive Officer and Director of
Biopack Environmental Solutions Inc. (a publicly listed OTC Bulletin Board
company) since March 27, 2007, where he is responsible for accounting functions,
as well as overall financial planning and management. During the period of
November 2004 to June 2006, Mr. Lau served as a director for Good Value
International Limited, Good Value Galaxy Limited and Joint Eagle Investment
Limited. From November 2002 to October 2004, he served as an executive director
of GIN International Limited, a Hong Kong based company specializing in SMS text
messaging services. While with GIN International Limited, Mr. Lau was
responsible for the general administration and accounting matters. Mr. Lau was
awarded a bachelors degree in Business Administration majoring in Business
Economics & Quantitative Methods at University of Hawaii at Manoa in August
1981.

29

---

Andrew B. Kramer, Director

Mr. Andrew Kramer is a Registered Investment Advisor. He is
President and Portfolio Manager at Kramer Capital Management an investment firm
managing over 100 million dollars. Mr. Kramer has been an investment
professional for over twenty years the last 15 he has been associated with Third
Avenue Management, the value investment firm founded by the legendary value
investor Martin J. Whitman. In addition to Kramers duties at Kramer Capital he
chairs The Board of Trustees of a 12 million dollar annual budget non profit
organization and is a board member of various private companies. He was a
graduate of Colgat University 1984 with a double major in English and History.

Involvement in Certain Legal Proceedings

None of our directors, executive officers, promoters or control
persons has been involved in any of the following events during the past five
years:

|1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                               
|2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding, excluding traffic violations and other
      minor offences;                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                               
|3. | being subject to any order, judgment or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
|   |                                                                                                                                                                                                                                                                                                                               
|4. | being found by a court of competent jurisdiction in a
      civil action, the Securities and Exchange Commission or the Commodity
      Futures Trading Commission to have violated a federal or state securities
      or commodities law, and the judgment has not been reversed, suspended, or
      vacated.              

Compliance with Section 16(a) of the Securities Exchange Act
of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers and directors and persons who own more than 10% of our
common stock to file with the Securities and Exchange Commission initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our common stock and other equity
securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and
greater than 10% shareholders are required by the SEC regulations to furnish us
with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that during fiscal year ended September 30, 2008, all filing requirements
applicable to our officers, directors and greater than 10% percent beneficial
owners were complied with, with the exception of the following:

Name
      Number of Late
      Reports
      Number of Transactions Not Reported
      on a Timely Basis
      Failure to File Required
      FormsFaith Lam
    1(3)
    1(3)
    1Wong Yuen Yee
    1(3)
    1(3)
    N/AWong Yao Wing
    1(3)
    1(3)
    1Andrew B. Kramer
    1(3)
    1(3)
    1


30

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(3) The named executive officer or
director filed a late Form 3  Initial Statement of Beneficial Ownership of
Securities.

Code of Ethics

Our board of directors on April 30, 2005 adopted a formal
written Code of Business Conduct and Ethics and Compliance Program for all
officers, directors and senior employees. Our Code of Business Conduct and
Ethics and Compliance Program was filed as an exhibit to our annual report on
10-KSB filed with the Securities and Exchange Commission on August 28, 2007.

Audit Committee and Audit Committee Financial Expert

Our board of directors has determined that it does not have a
member of its audit committee that qualifies as an "audit committee financial
expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent"
as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.

We believe that the members of our board of directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. We
believe that retaining an independent director who would qualify as an "audit
committee financial expert" would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the
fact that we have not generated any material revenues to date. In addition, we
currently do not have nominating, compensation or audit committees or committees
performing similar functions nor do we have a written nominating, compensation
or audit committee charter. Our board of directors does not believe that it is
necessary to have such committees because it believes the functions of such
committees can be adequately performed by our board of directors.

Director Independence

We currently act with three directors, consisting of Wong Yuen
Yee, Gerald Lau and Andrew B. Kramer. We have determined that Wong Yuen Yee,
Gerald Lau and Andrew B. Kramer are independent directors as defined in NASDAQ
Marketplace Rule 4200(a)(15).

Committees of the Board

All proceedings of our board of directors were conducted by
resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the corporate laws of the state of Wyoming and the
bylaws of our company, as valid and effective as if they had been passed at a
meeting of the directors duly called and held.

Our company currently does not have nominating, compensation or
audit committees or committees performing similar functions nor does our company
have a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
our directors.

Our company does not have any defined policy or procedure
requirements for shareholders to submit recommendations or nominations for
directors. The directors believe that, given the early stage of our development,
a specific nominating policy would be premature and of little assistance until
our business operations develop to a more advanced level. Our company does not
currently have any specific or minimum criteria for the election of nominees to
the board of directors and we do not have any specific process or procedure for
evaluating such nominees. Our directors assess all candidates, whether submitted
by management or shareholders, and make recommendations for election or
appointment.

31

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Item 11.   Executive Compensation

The particulars of the compensation paid to the following
persons:

| | (a) | our principal executive officer;                                                                                                                                                                                                                  
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                   
| | (b) | each of our two most highly compensated executive
      officers who were serving as executive officers at the end of the years
      ended September 30, 2008 and 2007; and                                                                      
| |     |                                                                                                                                                                                                                                                   
| | (c) | up to two additional individuals for whom disclosure
      would have been provided under (b) but for the fact that the individual
      was not serving as our executive officer at the end of the years ended
      September 30, 2008 and 2007,

who we will collectively refer to as the named executive
officers of our company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer,
other than our principal executive officers, whose total compensation did not
exceed $100,000 for the respective fiscal year:

SUMMARY
        COMPENSATION TABLEName and Principal Position
      Year
      **Salary****($)**
      **Bonus****($)**
      ShareAwards($)
      Option**Awards**($)
      Non-Equity**Incentive**PlanCompensation($)
      Nonqualified**Deferred**CompensationEarnings($)
      AllOther**Compen**
        sation($)
      **Total****($)**Gerald W. Williams 
        Former President, Chief 
        Executive Officer, Chief 
        Financial Officer, Secretary, 
        Treasurer and Director (1)
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        NilHenry J. Macfarland 
        Former Chief Executive 
        Officer(1)(2)
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      127,733 
        Nil
      127,733 
        NilPang Siew Man 
        Former Chief Executive 
        Officer(5)(6)
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        NilEdwin Chan 
        Former Chief Financial 
        Officer(4)(6)
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      49,336 
        Nil
      49,336 
        NilDr. Kenneth Lee 
        Former Chief Operating Officer (3)(6)
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      135,010 
        102,657
      135,010 
        102,657Faith Lam 
        Interim Chief Executive Officer 
        and Interim Chief Financial 
        Officer(6)
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil


| | (1) | Mr. Williams resigned as our president, chief executive
      officer, secretary and treasurer on July 24, 2008 when Henry J. Macfarland
      was appointed as chief executive officer of our company following the
      closing of the share exchange agreement.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

32

---

| | (2) | On October 15, 2007, United Premier Medical Group Limited
      and Stonebridge Healthcare Consulting, LLC entered into a consulting
      agreement concerning the engagement of Mr. Henry J. Macfarland as the
      Chief Executive Officer of United Premier Medical Group Limited and its
      subsidiaries and provision of related consulting services. An hourly fee
      of $150 but not to exceed a maximum of $1,200 per day is paid as the sole
      compensation for these consulting services. There is no arrangement or
      plan in which pension, retirement or similar benefits under this
      agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (3) | On October 26, 2006, United Premier Medical Group (Hong
      Kong) Limited and American-Sino Human Resources Consulting &
      Management (Shanghai) Ltd. entered into a management service agreement
      concerning the appointment of Dr. Kenneth K. Lee as the Chief Operating
      Officer of United Premier Medical Group Limited and its subsidiaries and
      provision of related consulting services. A combined management and
      clinical service fee of about $10,355 will be paid per month as the sole
      compensation for these consulting services. There is no arrangement or
      plan in which pension, retirement or similar benefits under this
      agreement. On June 1, 2007, United Premier Medical Group International
      Limited and American-Sino Internationalization Consulting & Management
      Limited entered into a management agreement for the renewal of the
      agreement dated October 26, 2006 for the appointment of Dr. Kenneth Lee as
      the Chief Operating Officer of United Premier Medical Group Limited and
      its subsidiaries and provision of related consulting services. A combined
      management and clinical service fee of about $10,355 is paid per month as
      the sole compensation for these consulting services. There is no
      arrangement or plan in which pension, retirement or similar benefits under
      this agreement.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (4) | On November 1, 2007, UPMG (International) Limited and
      Asset Spring Investments Ltd. entered into a consulting agreement
      concerning the engagement of Mr. Chan Kam-fai, Edwin as the Chief
      Financial Officer of United Premier Medical Group Limited and its
      subsidiaries and provision of related consulting services. A monthly
      consulting fee of about $4,493 is paid as the sole compensation for these
      consulting services. There is no arrangement or plan in which pension,
      retirement or similar benefits under this agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (5) | On October 1, 2008, the Company entered into an
      employment agreement with Mr. Pang Siew-man as the Chief Executive Officer
      of the Company and its subsidiaries with a monthly compensation of $15,384
      plus two months salary as the bonus. Mr. Pang is also entitled to a total
      of 500,000 share options of the Company exercisable at $0.70 after the
      first anniversary of his employment with the Company. These options
      terminated upon Mr. Pangs resignation on February 1, 2009. There is no
      arrangement or plan in which pension, retirement or similar benefits under
      this agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (6) | On February 1, 2009, Mr. Siew Man Pang resigned as our
      Chief Executive Officer, Mr. Edwin Chan resigned as our Chief Financial
      Officer and Mr. Kenneth Lee resigned as our Chief Operating Officer. As a
      result of these resignations, Mr. Faith Lam was appointed as our Interim
      Chief Executive Officer and Interim Chief Financial
  Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

We have not entered into any employment agreement or consulting
agreements with our directors. There are no arrangements or plans in which we
provide pension, retirement or similar benefits for directors or executive
officers. Our directors and executive officers may receive share options at the
discretion of our board of directors in the future. We do not have any material
bonus or profit sharing plans pursuant to which cash or non-cash compensation is
or may be paid to our directors or executive officers, except that share options
may be granted at the discretion of our board of directors.

Stock Option Plan

We do not have any other stock option plan in favor of our
directors, other officers, consultants or employees of our company.

Stock Options/SAR Grants

We did not grant any options or stock appreciation rights
during our fiscal year ended September 30, 2008.

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Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Values

There were no options exercised during our fiscal year ended
September 30, 2008 by any officer or director of our company.

Compensation of Directors

We do not have any agreements for compensating our directors
for their services in their capacity as directors, although such directors are
expected in the future to receive stock options to purchase shares of our common
stock as awarded by our board of directors.

Our board of directors has determined that it does not have a
member of its audit committee that qualifies as an "audit committee financial
expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent"
as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.

We believe that the members of our board of directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. We
believe that retaining an independent director who would qualify as an "audit
committee financial expert" would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the
fact that we have not generated any material revenues to date. In addition, we
currently do not have nominating, compensation or audit committees or committees
performing similar functions nor do we have a written nominating, compensation
or audit committee charter. Our board of directors does not believe that it is
necessary to have such committees because it believes the functions of such
committees can be adequately performed by our board of directors.

We have determined that Wong Yuen Yee, Wong Yao Wing and Andrew
B. Kramer are independent directors, as that term is used in Item 7(d)(3)(iv)(B)
of Schedule 14A under the Securities Exchange Act of 1934, as amended,
and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

Indebtedness of Directors, Senior Officers, Executive
Officers and Other Management

None of our directors or executive officers or any associate
  or affiliate of our company during the last two fiscal years, is or has been
  indebted to our company by way of guarantee, support agreement, letter of credit
  or other similar agreement or understanding currently outstanding.

Family Relationships

There are no family relationships between any of our directors,
executive officers or directors.

Item 12.   Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of May 19, 2008, certain
information with respect to the beneficial ownership of our common shares by
each shareholder known by us to be the beneficial owner of more than 5% of our
common shares, as well as by each of our current directors and executive
officers as a group. Each person has sole voting and investment power with
respect to the shares of common stock, except as otherwise indicated. Beneficial
ownership consists of a direct interest in the shares of common stock, except as
otherwise indicated.

As of May 19, 2009, we had 50,148,000 shares of Common Stock
outstanding.

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Name and Address of
      Beneficial Owner
      Title of Class
      Amount and Nature of
      Beneficial Ownership
      Percentage of Class(1)Faith Lam Rm 2303, Po Shan House, Po Pui
      Court, Kwun Tong, Hong Kong
    Common Share
    178,800
    0.36%Andrew B. Kramer 622 Third Avenue
      32nd Floor New York, NY 10017
    Common Share
    262,000
    0.52%Wong Yuen Yee Flat E, 12/F, Monticello,
      48 Kennedy Road, Wanchai, Hong Kong
    Common Share
    0
    0%Gerald Lau Rm 903, Tung Wai Commercial
      Building 109  111 Gloucester Road Wan Chai, Hong Kong
    Common Share
    0
    0%Directors and Executive Officers as a Group
    Common Share
    440,800
    0.88%Autoscale Resource Ltd. Rm 903, Tung Wai
      Commercial Building 109  111 Gloucester Road Wan Chai, Hong Kong
    Common Share
    12,000,000
    23.9%Gerald W. Williams 5728  125A Street
      Surrey, BC V3X 3G8
    Common Share
    4,000,000
    7.8%


(1)Based on 50,148,000 shares of Common
Stock outstanding as of May 19, 2009. Except as otherwise indicated, we believe
that the beneficial owners of the Common Stock listed above, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to options or
warrants currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage ownership of the person
holding such option or warrants, but are not deemed outstanding for purposes of
computing the percentage ownership of any other person.

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Equity Compensation Plans

We do not have any other stock option plan in favor of our
directors, other officers, consultants or employees of our company.

Changes in Control

We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change of control of our
company.

Item 13.   Certain Relationships and Related
Transactions, and Director Independence

Except as disclosed herein, no director, executive officer,
shareholder holding at least 5% of shares of our common stock, or any family
member thereof, had any material interest, direct or indirect, in any
transaction, or proposed transaction since the year ended February 28, 2007, in
which the amount involved in the transaction exceeded or exceeds the lesser of
$120,000 or one percent of the average of our total assets at the year end for
the last three completed fiscal years.

Director Independence

We currently act with three directors, consisting of Wong Yuen
Yee, Gerald Lau and Andrew B. Kramer. We have determined that Wong Yuen Yee,
Gerald Lau and Andrew B. Kramer are independent directors as defined in NASDAQ
Marketplace Rule 4200(a)(15).

Loan from Companies Associated with United Premier Medical
Group Limited

On June 20, 2007, Inno-Tech Holdings Limited (Innotech), a
shareholder of the Company, loaned $772,777 (equivalent to HK$6,000,000) to UPMG
for use as working capital and the repayment date is June 22, 2008. Pursuant to
an agreement dated April 29, 2008 signed between Innotech and UPMG for the
extension of loan repayment, it is agreed that repayment of full amount of the
above-mentioned loans is extended as scheduled below:

Date of Loan
        Agreement
      Loan Amount ($)
      Original Repayment Date
      New Repayment DateJune 20, 2007
    $772,777 (HK$ 6,000,000)
    June 22, 2008
    June 22, 2009


On January 10, 2008, Innotech loaned $384,615 (equivalent to
HK$3,000,000) to UPMG with the repayment date on January 9, 2009. On January 25,
2008, Innotech loaned another $512,820 (equivalent to HK$4,000,000) to UPMG with
the repayment date on January 24, 2009. Pursuant to an agreement dated April 29,
2008 signed between Innotech and UPMG for the extension of loan repayment, it is
agreed that repayment of full amount of the above-mentioned loans is extended as
scheduled below:

Date of Loan
        Agreement
      Loan Amount ($)
      Original Repayment Date
      New Repayment DateJanuary 10, 2008
    $384,615 (HK$3,000,000)
    January 9, 2009
    July 9, 2009January 25, 2008
    $512,820 (HK$4,000,000)
    January 24, 2009
    July 24, 2009


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Item 14.   Principal Accounting Fees and Services

The aggregate fees billed for the fiscal years ended September
30, 2008 and 2007 for professional services rendered by the principal accountant
for the audit of our annual financial statements included in our annual reports
on Form 10-KSB and services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for these fiscal
periods were as follows:

Year
        EndedSeptember 30, 2008
      September 30, 2007Audit Fees
      $75,000
      $25,000Audit Related Fees
      0
      0Tax Fees
      0
      0All Other Fees
      0
      0Total
      $75,000
      $25,000


Our board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.

Our board of directors has considered the nature and amount of
fees billed by our independent auditors and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
our independent auditors independence.

PART IV

Item 15.    Exhibits, Financial Statement
Schedules

Exhibit No.
    Description(2)
    Plan of Purchase, Sale, Reorganization, Arrangement,
      Liquidation or Succession2.1
    Share Exchange Agreement dated January 20, 2008, among
      our company, United Premier Medical Group and the selling shareholders of
      United Premier Medical Group as set forth in the share exchange agreement
      (incorporated by reference from our Current Report on Form 8-K filed on
      January 28, 2008)(3)
    Articles of Incorporation and By-laws3.1
    Articles of Incorporation (incorporated by reference from
      our Registration Statement on Form SB- 2 filed on July 29, 2005)3.2
    Bylaws (incorporated by reference from our Registration
      Statement on Form SB-2 filed on July 29, 2005)


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Exhibit No.
    Description(10)
    Material Contracts10.1
    Option To Purchase And Royalty Agreement between The
      Cavalier Group and Larry Gervais of Timmins, Ontario, dated April 25, 2005
      to acquire a 100% interest in the Casa Claim Block, Porcupine Mining
      Division, Ontario.( incorporated by reference from our Registration
      Statement on Form SB-2 filed on July 29, 2005)10.2
    Code Of Business Conduct & Ethics and Compliance
      Program(incorporated by reference from our Annual Report on Form
      10-KSB filed on August 28, 2008)10.3
    Educational and Consulting Services Agreement between JHI
      and PMEHK dated June 15, 2002.10.4
    Licensing Agreement between JHI and PMEHK dated June 15,
      2002.10.5
    Novation and Assignment Agreement for Education and
      Consulting Services Agreement between PMEHK, PMEUS and JHI.10.6
    Novation and Assignment for Licensing Agreement between
      PMEHK, PMEUS and JHI dated April 11, 2003.10.7
    Amendment to Licensing Agreement between JHI and PMEUS
      dated August 8, 2003.10.8
    Second Amendment to Licensing Agreement between JHI and
      PME dated June 10, 2004.10.9
    First Amendment to Educational And Consulting Services
      Agreement between JHI and PME dated June 10, 2004.10.10
    Description of Co-operative Agreement between IPMCHH and
      UPMG (U.S.) Limited dated March 31, 2005.10.11
    Description of Co-operative Agreement between IPMCHH and
      PMEHK dated February 2, 2004.10.12
    Description of Co-operative Agreement between IPMCHH and
      PMEHK dated March 21, 2003.10.13
    Description of Technical Exchange and Cooperative
      Agreement between Xiamen Maternity and Child Health Care Hospital and
      Proactive Medicare (Xiamen) Company Limited dated March 6, 2005.10.14
    Description of Co-operative Agreement between Jinan
      Maternity and China Care Hospital and Proactive Medicare Enterprise
      (Jinan) Limited dated February 5, 2004.10.15
    Description of Co-operative Agreement between Beijing
      Obstetrics & Gynecology Hospital and Proactive Medicare (Beijing)
      Company Limited dated April 25, 2004.10.16
    Co-operative Agreement between Foshan Maternal and
      Childrens Hospital and Proactive Medicare Services (Hong Kong) Limited
      dated February 27, 200410.17
    Description of Supplemental Agreement to the Co-operative
      Agreement between Foshan Maternal and Childrens Hospital and Proactive
      Medicare Services (Hong Kong) Limited dated February 27, 2004


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Exhibit No.
    Description10.18
    Description of Co-operative Agreement betweenThe Second
      Affiliated Hospital of Guangzhou Medical College and UPMG (Guangdong)
      Company Limited dated November 18, 2003.10.19
    Description of Co-operative Agreement between Changsha
      Maternity and Child Hospital and Proactive Medicare (Changsha) Company
      Limited dated July 7, 2004.10.20
    Supplemental Agreement to the Co-operative Agreement
      between Changsha Maternity and Child Hospital and Proactive Medicare
      (Changsha) Company Limited dated July 7, 2004.10.21
    Description of Co-operative Agreement between Wuxi
      Maternity and Children Hospital and Proactive Medicare (Wuxi) Company
      Limited dated April 19, 2004.10.22
    Description of Supplemental Agreement to the Co-operative
      Agreement between Wuxi Maternity and Children Hospital and Proactive
      Medicare (Wuxi) Company Limited dated April 19, 2004.10.23
    Technical Exchange and Co-operative Agreement between
      Hangzhou Tin Mu Shan Hospital Limited and Proactive Medicare (Hangzhou)
      Company Limited dated August 20, 2005.10.24
    Description of Technical Exchange and Co-operative
      Agreement between Proactive Medicare (Jiangsu) Company Limited and Jiangsu
      Province Women and Children Hygiene and Health Center/the Auxiliary Ward
      of the Jiangsu Province Peoples Hospital dated September 29, 2005.10.25
    Agreement between Data Pacific Medical Group Limited and
      UPMG (Hong Kong) Limited dated June 28, 2006.10.26
    Hospital Management, Hospital Services Development and
      Related Consulting Services Agreement between The University Hospital of
      Macau University of Science and Technology Foundation and UPMG (Macau)
      Limited dated October 1, 2006.10.27
    Amendment Agreement to the Hospital Management, Hospital
      Services Development and Related Consulting Services Agreement between The
      University Hospital of Macau University of Science and Technology
      Foundation and UPMG (Macau) Limited dated June 27, 2007.10.28
    Management Services Agreement between UPMG (Hong Kong)
      Limited and American-Sino Human Resources Consulting and Management
      (Shanghai) Ltd. Dated October 26, 2006.10.29
    Services Agreement PMEHK and PMEUS dated March 28, 2004.10.30
    Project Consultancy Agreement between PMEHK and PMEUS
      dated March 28, 2004.(21)
    Subsidiaries of the Small Business IssuerUPMG International LimitedProactive Medicare Enterprise (Hong Kong) LimitedProactive Medicare (Shenzhen) Company LimitedProactive Medicare (Changsha) Company LimitedProactive Medicare (Xiamen) Company LimitedProactive Medicare (Nanjing) Company Limited


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Exhibit No.
      DescriptionProactive Medicare (Hangzhou) Company LimitedProactive Medicare (Wuxi) Company LimitedUnited Premier Medical Group (Shanghai) LimitedProactive Medicare Services (Hong Kong) LimitedProactive Medicare (Beijing) Company LimitedUPMG (Hong Kong) LimitedUPMG (US) LimitedGuangzhou Inno-Proactive Medicare Consultancy LimitedShanghai Proactive Medicare Health Education Center LimitedUPMG (Shenzhen) LimitedBroad Prosper LimitedUPMG (Macau) Company Limited(31)
      Section 302 Certifications31.1*
      Section 302 Certification of Principal Executive
        Officer.(32)
      Section 906 Certification32.1*
      Section 906 Certification of Principal Executive
        Officer.


*filed herewith

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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.

CHINA HEALTH CARE CORPORATION

/s/ Faith LamBy:Faith
Lam Interim Chief Executive Officer, Interim Chief Financial
Officer Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer 
Dated: May 27, 2009

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.

/s/ Faith LamBy:Faith
Lam Interim Chief Executive Officer, Interim Chief Financial
Officer Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer 
Dated: May 27, 2009

/s/ Wong Yuen
YeeBy: Wong Yuen
Yee Director 
Dated: May 27, 2009

/s/ Gerald LauBy: Gerald Lau
Director 
Dated: May 27, 2009

/s/ Andrew B.
KramerBy: Andrew B.
Kramer Director 
Dated: May 27, 2009



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