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

                                   Form 10-KSB

(Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

[_]  TRANSITION  REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________  COMMISSION
     FILE NUMBER ________________________________

                           CHINA HEALTH HOLDING, INC.
                 (Name of small business issuer in its charter)

                 NEVADA                            98-0432681
(State or other jurisdiction of        (I.R.S. Employer Identification No.)
 incorporation or organization)

                 Julianna Lu, BSc. MSc., Chief Executive Officer
                    Suite 600 - 666 Burrard St., Park Place,
                  Vancouver, British Columbia, Canada V6C 2X8
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone Number: (604) 608-6788

                                   Copies to:
                            Richard A. Friedman, Esq.
                              David Schubauer, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                              Phone: (212) 930-9700
                               Fax: (212) 9309725

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: None

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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will 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-KSB
or any amendment to this Form 10-KSB. [X]

     State issuer's revenues for its most recent fiscal year. $7,305

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates, computed by reference to the average bid and asked price
of such common equity,  as of a specified date within the past 60 days. There is
currently no public trading market for the issuer's common equity.

     As of March 28,  2005,  the issuer  had  42,530,600  outstanding  shares of
Common Stock.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

     Transitional Small Business Disclosure Format (check one): Yes [_] No [X]



<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

                                                                                                      Page
                                     PART I

<S>  <C>                                                                                                 <C>
Item 1.   Description of Business......................................................................  1
Item 2.   Description of Property...................................................................... 15
Item 3.   Legal Proceedings............................................................................ 15
Item 4.   Submission of Matters to a Vote of Security Holders.......................................... 15

                                     PART II

Item 5.   Market for Common Equity and Related Stockholder Matters..................................... 15
Item 6.   Management's Discussion and Analysis or Plan of Operation.................................... 20
Item 7.   Financial Statements......................................................................... 23
Item 8.   Changes In and Disagreements with Accountants on Accounting and Financial Disclosure......... 23
Item 8A.  Controls and Procedures...................................................................... 23
Item 8B.  Other Information............................................................................ 23

                                    PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
               Compliance With Section 16(a) of the Exchange Act....................................... 24
Item 10.  Executive Compensation....................................................................... 25
Item 11.  Security Ownership of Certain Beneficial Owners and Management............................... 27
Item 12.  Certain Relationship and Related Transactions................................................ 28
Item 13.  Exhibits..................................................................................... 31
Item 14.  Principal Accountant Fees and Services....................................................... 32

SIGNATURES............................................................................................. 33

</TABLE>

<PAGE>
                                     PART I

Item 1.  Description of Business.

Organization

     We were founded by our Chairman  and Chief  Executive  Officer in 2002 with
the goal of becoming a leading manufacturer, marketer and distributor of natural
medicinal products. On April 3, 2002, we were incorporated under the laws of the
State of Nevada under the name AE & E Pharma  Corporation.  On May 25, 2004,  we
changed  our  name to China  Health  Holding,  Inc.  We  intend  to  market  and
distribute  proprietary  natural  medicinal  products.  Our  product  lines will
include King of Herbs-based  products and a line of natural  multi-vitamins  and
supplements.  All of our products are based on traditional  Chinese medicine and
the  principals  of  Taoism.  Taoist  philosophy  and Taoist  medicinal  healing
practices have been  incorporated into a broad spectrum of medical practices and
treatments  in the  People's  Republic  of China and are  collectively  known as
traditional  Chinese  medicine.  Traditional  Chinese  medicine  practices  have
generally  been  labeled  worldwide  as  "alternative   medicine"  or  "holistic
medicine" since they rely more on natural remedies versus chemical  remedies and
treatments.

Product Background

     We  intend  to  market  and  sell  proprietary   neutraceutical   products.
Neutraceuticals  are  products  isolated or purified  from plants or other foods
that are sold in dosage form.  These  products  are intended to provide  certain
physiological    benefits   and/or    protection    against   chronic   disease.
Neutraceuticals   are  commonly   referred  to  as  "dietary   supplements"   or
"nutritional  supplements."  Neutraceuticals  are generally viewed as preventive
supplements,  as opposed to drugs, which are active chemical  substances used to
treat  illnesses  or  symptoms  of  illnesses.   Neutraceuticals   represent  an
alternative approach to medicine,  based on nutrition and the health or wellness
of the whole body,  rather than  treating  the symptoms of a disease or illness.
Since most of our products are considered to be dietary supplements,  as opposed
to  pharmaceutical  products  or drugs,  the  products  are not  subject  to the
stringent clinical tests to which pharmaceutical products are subjected.

     Our product lines are based on two key  fundamentals - the healing power of
King of Herbs and the  thousands  of years of  history  that forms the basis for
traditional Chinese medicine and Taoist medicine.  In addition to being the name
of one of our product lines, King of Herbs is a term that we use to refer to the
main proprietary herbal  formulations that are essential to all of our products.
The herbs  that make up King of Herbs  have been  used in  Chinese  medicine  to
reinforce  what is called the  body's  vital  energy  source,  or qii.  Qii is a
Chinese medicine term for the human body's energy.

     Taoist  medicinal  healing  sciences  have been  incorporated  into a broad
spectrum of medical  practices and treatments in the People's  Republic of China
and are  collectively  known  as  Traditional  Chinese  Medicine.  From a global
perspective,  medical treatments are divided into two broad categories:  Western
Medicine  and  Traditional  Chinese  Medicine.  In the  United  States and other
Western  countries,  Traditional  Chinese Medicine  treatments have been labeled
"alternative  medicine" or "holistic  medicine." All of our product formulations
are proprietary and are protected as trade secrets to our business.

Purchase Agreement for 26 100% Natural Herbal Medicinal Products Formulas

     Pursuant to an agreement dated May 1, 2004 between A E&E Pharma Corporation
(n/k/a China Health Holding,  Inc.),  Julianna (Jenny) Lu and Xiao Fei Yu, Jenny
Lu,  our  founder  and  principal  executive  officer,  and Xiao Fei Yu sold all
proprietary  rights  and  formulas  to the "26  100%  natural  herbal  medicinal
products" (the  "Products")  that comprise the King of Herbs and Taoist Medicine
product lines (described below) to China Health Holding.  On August 8, 2004, the
parties signed an Amended and Restated Intellectual Property Purchase Agreement,
which  clarifies  the  terms of the  Purchase  Agreement  for the  Products.  In
consideration  for the  proprietary  rights and formulas to the Products,  China
Health Holding agreed to: (a) issue to Ms. Lu 2,000,000  shares of common stock;
(b) pay to Ms. Lu $150,000  cash;  (c) pay to Ms. Lu following  the closing date
and until May 1, 2029, a cash amount  equal to 4.8% of gross  revenue from sales
of the Products;  (d) issue to Mr. Yu 200,000 shares of common stock; (e) pay to
Mr. Yu $25,000 cash;  and (f) pay to Mr. Yu following the closing date and until
May 1, 2029,  a cash  amount  equal to 0.2% of gross  revenue  from sales of the
Products. We valued the aggregate value of the shares issued to Ms. Lu at $2,000
($.001 per share) and the aggregate value of the shares issued to Mr. Yu at $200
($.001 per share).  None of the required  cash  payments have been made to date.
The  outstanding  cash payments accrue interest at the rate of 10% per annum. As
of  November  11,  2004,  we owed  $156,250  to Ms. Lu and  $26,040  to Mr.  Yu,
including accrued interest.



                                       1
<PAGE>
Exclusive Licensing Agreement for 19 Cordyceps Products

     On March 9,  2004,  we  entered  into an  amended  and  restated  Exclusive
Licensing Agreement with Hotway  Nutraceuticals  Canada Co., Ltd. ("Hotway"),  a
British  Columbia  company.  Mr. David Woo,  our Vice  President of Research and
Development,  is the Chief  Executive  Officer of Hotway.  Under this  agreement
Hotway has granted us exclusive licenses to certain neutraceutical  products for
a term of  twenty  years in the  following  countries:  United  States,  Canada,
Argentina, Brazil, Columbia, Chile, Uruguay, Paraguay, England, France, Germany,
Italy, Spain, Holland, Poland, Switzerland,  Sweden, Australia,  Monaco, Norway,
Denmark,  Austria,  Ireland,  Israel,  Kuwait, Iran, Hong Kong, Japan,  Malaise,
Singapore,  India,  Indonesia and the People's  Republic of China. The Exclusive
Licensing  Agreement  grants  us:  (a)  the  exclusive  license  to  utilize  19
neutraceutical products and their raw materials in the above-listed territories;
(b) the exclusive rights to register the Trademarks/Trade  Names of the products
under  our  name in  each of the  above-listed  territories;  (c) the  exclusive
license to use, replicate,  copy, modify, adopt and manufacture the products for
the purpose of developing derivative products by modifying, refining, upgrading,
or improving the licensed property; and (d) the exclusive rights to the licensed
products' ingredients.  In addition,  Hotway granted us a right of first refusal
to acquire  any new  products  developed  by Hotway  after  March 9, 2004.  Upon
expiration of the Exclusive Licensing  Agreement,  Hotway will own the rights to
any modifications, upgrades or improvements made to the licensed products.

     In  consideration   for  rights  granted  under  the  Exclusive   Licensing
Agreement,  we agreed to pay Hotway $10,000 for each country listed above,  or a
total of  $330,000.  The  payments  must be paid to Hotway by March 9, 2005.  To
date,  we have not made any of these  payments.  We also  agreed  to: (a) sell a
minimum of 2,000 bottles/60 capsules of the licensed products within 6-12 months
after March 9, 2004;  (b) manage  marketing  programs for the licensed  products
within 3-6 months after March 9, 2004;  (c) maintain sales of a minimum of 6,000
bottles/60  capsules annually for each  above-listed  country within 6-12 months
after March 9, 2004;  and (d) sell a minimum of  200kg/month of raw materials in
Canada  within 6-12 months after March 9, 2004.  To date,  we have not satisfied
these  requirements.  We  expect  to begin  meeting  these  requirements  in the
upcoming six to eighteen  months.  In connection  with the  Exclusive  Licensing
Agreement,  we entered into a  Confidentiality  Agreement with Hotway,  by which
Hotway has agreed not to  disclose  any data,  records,  reports,  calculations,
documents  and any other  confidential  information  provide  to Hotway by China
Health Holding.

Exclusive Licensing Agreement for De-Daibe and Depressor Herbs

     On March 9, 2004,  we entered into an Exclusive  Licensing  Agreement  with
Hotway,  by which  Hotway has granted us  exclusive  licenses  to  De-Daibe  and
Depressor  Herbs  neutraceutical  products  for a term of  twenty  years  in the
following countries: United States, Canada, Argentina,  Brazil, Columbia, Chile,
Uruguay,  Paraguay,  England,  France, Germany,  Italy, Spain, Holland,  Poland,
Switzerland,  Sweden,  Australia,  Monaco, Norway,  Denmark,  Austria,  Ireland,
Israel, Kuwait, Iran, Hong Kong, Japan, Malaise, Singapore, India, Indonesia and
the People's Republic of China. The Exclusive Licensing Agreement grants us: (a)
the exclusive license to utilize the De-Daibe and Depressor Herbs neutraceutical
products  and their  raw  materials  in the  above-listed  territories;  (b) the
exclusive  rights to register the  Trademarks/Trade  Names of the products under
our name in each of the above-listed  territories;  (c) the exclusive license to
use, replicate, copy, modify, adopt and manufacture the products for the purpose
of  developing  derivative  products  by  modifying,   refining,  upgrading,  or
improving the licensed  property;  and (d) the exclusive  rights to the licensed
products' ingredients.  In addition,  Hotway granted us a right of first refusal
to acquire  any new  products  developed  by Hotway  after  March 9, 2004.  Upon
expiration of the Exclusive Licensing  Agreement,  Hotway will own the rights to
any modifications, upgrades or improvements made to the licensed products.

     In  consideration   for  rights  granted  under  the  Exclusive   Licensing
Agreement,  we agreed to pay Hotway $10,000 for each country listed above,  or a
total of $330,000. Under the terms of the two license agreements with Hotway, we
are required to pay Hotway an aggregate of $660,000.  The payments  must be paid
to Hotway by March 9, 2005. To date, we have not made any of these payments.  We
also agreed to: (a) sell a minimum of 2,000 bottles/60  capsules of the licensed
products within 6-12 months after March 9, 2004; (b) manage  marketing  programs
for the licensed  products  within 3-6 months after March 9, 2004;  (c) maintain
sales of a minimum of 6,000 bottles/60  capsules  annually for each above-listed
country  within  6-12  months  after  March 9,  2004;  and (d) sell a minimum of
200kg/month  of raw  materials in Canada within 6-12 months after March 9, 2004.
To date, we have not satisfied  these  requirements.  We expect to begin meeting
these requirements in the upcoming six to eighteen months.



                                       2
<PAGE>
November 2, 2004 Amendment to Hotway Exclusive Licensing Agreements

     On November 2, 2004, we entered into an agreement  with Hotway to amend the
Exclusive  Licensing  Agreements for the 19 Cordyceps  products and the De-Daibe
and Depressor Herbs products.  The agreement amended the  consideration  that we
owe to Hotway under the Exclusive Licensing  Agreements as follows: (1) we shall
issue to Hotway 760,000 shares of our common stock;  and (2) pay an aggregate of
$100,000  to  Hotway  no later  than 90 days  after  our  common  stock has been
approved for quotation on the OTC Bulletin Board. Other than this consideration,
we are not required to make any other royalty  payments to Hotway.  In the event
that we do not pay or issue this  consideration  to Hotway,  then the  Exclusive
Licensing  Agreements  will  terminate  and  all  other  obligations  under  the
Exclusive  Licensing  Agreements will terminate.  This amendment  supercedes the
previous  consideration  that we owed to Hotway  under the  Exclusive  Licensing
Agreements.  Accordingly,  we do not owe  Hotway an  aggregate  of  $660,000  as
described  above.  The amendment  also provides that we shall have the exclusive
licensing rights on any future improvements to the products that are licensed to
us under the Exclusive Licensing Agreements.

King of Herbs Product Line

     We currently market and sell proprietary natural medicinal products through
our King of Herbs product line. The products  described  below are considered to
be dietary  supplements and they are not subject to stringent  clinical tests to
which  pharmaceutical  products are subjected.  This product line is intended to
improve and increase energy and endurance levels, sexual function and the health
of the whole  body.  We have  developed  proprietary  formulations  that  target
certain physiological conditions. The core products of our King of Herbs product
line are outlined below.

     o    VG-KING. A natural tonic for men's health, formulated specifically for
          the male genitor-urinary system.
     o    VG-QUEEN.   A  natural   product   for  women's   health,   formulated
          specifically for the female reproductive system.
     o    VG-VITAL.   This  formula  acts  as  a  natural  energy  resource  and
          anti-oxidant.  This  product also is marketed as an  anti-fatigue  and
          anti-aging agent and as a supplement to restore qii.
     o    VG-CARDIOVASCULAR.   Designed   to  improve   the   function   of  the
          cardiovascular system, thereby improving overall health.
     o    VG-IMMUNE. Enhances the body's immune system.
     o    VG-BRAIN & MEMORY.  Designed to  increase  blood flow to the brain and
          cerebral system to enhance memory and cerebral functions.
     o    VG-LIVER.  Enhances  liver  function  and protects it from damage from
          inflammation and oxidation.
     o    VG-LUNG.  Designed to assist the functioning of the upper  respiratory
          tract and lungs. This product also is marketed to increase respiratory
          ventilation for athletes.
     o    VG-LONGEVITY.  A  special  formula  for  prolonging  people's  life by
          reducing the progress of aging. This product is designed to assist the
          body  at  multiple  system  levels,  including  the  immune,  nervous,
          cardiovascular and respiratory systems.
     o    VG-PANCREAS  HEALTH.  A special  formula  designed to promote  healthy
          blood glucose levels.
     o    VG-HEALTH.  A formula  designed  to help  maintain  a  healthy  immune
          system.
     o    VG-PROSTATE HEALTH. Designed to help ensure a healthy prostate.
     o    VG-WEIGHT CONTROL.  Formulated to assist individuals with their weight
          loss goals.

     Our  King  of  Herbs  product  line  combines  King  of  Herbs  with  other
traditional  herbs to produce  the desired  effect on the body.  These herbs are
mainly  traditional  Chinese  herbs  which may or may not have  been  previously
evaluated by the FDA. All herbs  marketed in dietary  supplements  in the United
States must be Generally  Recognized as Safe (GRAS). The FDA maintains a list of
problems herbs.  If any of the herbs in our products  appeared on FDA's list, or
if the agency determined there were issues concerning their safety, we would not
be able to market  the  products  containing  these  ingredients  in the  United
States.  We have not determined  whether any of the herbs in our products are on
the FDA's  list of problem  herbs and we have not  determined  whether  any such
herbs are Generally  Recognized as Safe. If any of the below herbs have not been
evaluated by the FDA and are not Generally Recognized as Safe, then we would not
be permitted to sell products  containing  them in the United  States.  Any such
prohibition  could  materially  adversely  affect our results of operations  and
financial  condition.  The following herbs used in Traditional  Chinese Medicine
are used in our product formulations.

                                       3
<PAGE>
<TABLE>
<CAPTION>
        ---------------------------- ----------------------------------------------------------------------------------
<S>              <C>                  <C>             <C>                                 <C>
                 Herb                         Nutritional Health Function
        ---------------------------- ----------------------------------------------------------------------------------
             Yu Jin                    o      Effects on immunity
                                       o      Anti-oxidation effect
                                       o      Effects on serum secretin
                                       o      Effects on central nervous system
                                       o      Effects on growth inhibitory factors
                                       o      Protecting the liver
                                       o      Protecting the heart
        ---------------------------- ----------------------------------------------------------------------------------
             He Shou Wu                o      Delaying the appearance of the aging process
                                       o      Enhancing immunity
                                       o      Enhancing adrenocortical function
                                       o      Promotes hematopoietic stem cells
                                       o      Protecting the liver
        ---------------------------- ----------------------------------------------------------------------------------
             Tian Ma                   o      Effects on cardiac muscles
                                       o      Effect on the cardiovascular system
                                       o      Anti-aging and anti-fatigue effects
                                       o      Effects on memory
        ---------------------------- ----------------------------------------------------------------------------------
             Du Zhong                  o      Effects on the heart
                                       o      Effects on immunity
                                       o      Anti-aging effects
        ---------------------------- ----------------------------------------------------------------------------------
             Rou Gui                   o      Effects on the cardiovascular system
                                       o      Effects on the immune system
                                       o      Effects on the central nervous system
        ---------------------------- ----------------------------------------------------------------------------------
             Lian Zi                   o      Anti-aging effects
                                       o      Increasing immunological effects
                                       o      Inhibiting contraction of smooth muscle
        ---------------------------- ----------------------------------------------------------------------------------
             Bai Mu Er                 o      Nourishment of lung & stomach
        ---------------------------- ----------------------------------------------------------------------------------
             Bai Ji                    o      Promote Contraction, healthy stomach and lung
                                       o      Engender Muscles
        ---------------------------- ----------------------------------------------------------------------------------
             Bai He                    o      Moisten lung, promotes healthy respiratory system
        ---------------------------- ----------------------------------------------------------------------------------
             Rx.Ginseng - Ren Shen     o      Tonifies the base qii,
                                              the lungs, the spleen and stomach,
                                              generates fluids, benefits the heart
                                              and calms the spirit
        ---------------------------- ----------------------------------------------------------------------------------
             Rx. Astragali             o      Tonifies digestion -
                                              spleen, raises yang qii of the spleen,
                                              stabilizes, strengthens the protective
                                              qii - immunity of surface, tonifies
                                              qii and blood, promotes healthy
                                              urinary system
        ---------------------------- ----------------------------------------------------------------------------------
             Cx. Cinamomi              o      Warms the kidneys, encourages the generation of qii and blood
        ---------------------------- ----------------------------------------------------------------------------------
             Fructus Ziziphi           o      Tonifies the spleen and augments the qii,  nourishes the blood and calms
             Jujubae                          the spirit, moderates and harmonizes other herbs
        ---------------------------- ----------------------------------------------------------------------------------
             Rx. Glcyrrhiziae          o      Tonifies digestion -
                                              spleen, moistens the lungs and
                                              promotes healthy respiratory sytem,
                                              clears heat and relieves fire
                                              toxicity, harmonizes other herbs in
                                              formulas.
        ---------------------------- ----------------------------------------------------------------------------------
             Rx. Polygoni              o      Tonifies liver and kidneys, nourishes the blood,
             multiflori                       augments the essence, moistens the intestines
        ---------------------------- ----------------------------------------------------------------------------------
             Rx. Angelicae sinensis    o      Tonifies the blood, regulates the menses,
                                              invigorates and harmonizes the blood,
                                              moistens the intestines
        ---------------------------- ----------------------------------------------------------------------------------
             Fructus Lycii             o      Nourishes the Liver and
                                              Kidneys, benefits the essence and
                                              brightens the eyes, and moistens the
                                              Lungs.
        ---------------------------- ----------------------------------------------------------------------------------

                                       4
<PAGE>
        ---------------------------- ----------------------------------------------------------------------------------
             Cornu Cervi parvum        o      Tonifies kidney yang, tonifies the governing vessel,
                                              augments essence and blood, regulates the penetrating and
                                              conception vessel, tonifies and nourishes the qii and the blood
        ---------------------------- ----------------------------------------------------------------------------------
             Herba Epimedii            o      Tonifies the kidneys
        ---------------------------- ----------------------------------------------------------------------------------
             Rx. Glehniae              o      Moistens the lungs,  nourishes the stomach,  generates fluids,  moistens
                                              the exterior - skin.
        ---------------------------- ----------------------------------------------------------------------------------
             Tuber Ophiopogonis        o      Moistens the lungs, generates fluids, moistens the Intestines.
        ---------------------------- ----------------------------------------------------------------------------------
             Plastrum Testudinis       o      Benefits the kidneys,  strengthens the bones, cools the blood, nourishes
                                              the blood and tonifies the heart
        ---------------------------- ----------------------------------------------------------------------------------
             Fructus Momordicae        o      Moistens and cools the lungs
        ---------------------------- ----------------------------------------------------------------------------------
             Ho-Shou-Wu                o      Tones the liver and kidneys as well as the blood.
                                       o      Nourishes the liver and kidney
                                       o      Anti-aging effects
        ---------------------------- ----------------------------------------------------------------------------------
</TABLE>
Taoist Medicine Product Line

     Within  the next  twelve  months we intend to launch  our  Taoist  Medicine
product line. The products in our Taoist Medicine product line are considered to
be dietary  supplements and they are not subject to stringent  clinical tests to
which pharmaceutical  products are subjected.  This line of products is based on
the principles of Traditional Chinese Medicine and Taoism Medicine. Taoism is an
ancient  worldview that  acknowledges  the movement  towards  balance (or "Tao")
inherent  in  all  things.  These  products  will  be  manufactured  under  Good
Manufacturing Practices rules and standards and regulations of Health Canada and
the Food and Drug Administration of the United States.

     o    VG-NRP  (Nine  Rare  Pill).  Formulated  to  enhance  liver and kidney
          function and decrease lassitude in loin and knee.
     o    VG-MP  (Motherwort  Pill with Ten Precious  Ingredients).  Designed to
          enhance  the  tonifying  qii and blood,  enhance  female  regeneration
          functions and enhance the body's energy and endurance levels.
     o    VG-EPP (Decoction of Eight Precious Products for Refreshing). Designed
          to prevent restlessness.
     o    VG-PFI (Pill of Four Immortals). Designed to enhance kidney functions.
     o    VG-NWP (Nine-Wei Powder for  Strengthening  Yang).  Primarily for men,
          this product is designed to nourish  marrow and promote flow of kidney
          qii.
     o    VG-FKB (Five Kernel Bolus). Moistens the intestines.
     o    VG-LYZR  (Bolus of Longyan  Aril and Wild Jujube  Seed).  Enriches the
          blood, tranquilize the mind and tone the kidney.
     o    VG-ZMGQ  (Bolus of  Sesame  Seed and  Wolfberry  Fruit).  Designed  to
          invigorate the liver and kidney.
     o    VG-HTZM (Bolus of Walnut and Sesame Seed).  Designed to invigorate the
          liver,  tone  the  kidney,   promote  healthy  eyes  and  moisten  the
          intestines.
     o    VG-LZFL  (Cake of Lotus Seed and Poria).  Designed to  strengthen  the
          spleen.

Vitamins and Supplements Product Line

     We also expect to launch a Vitamins and  Supplements  product line over the
next twelve months.  Through this line we will offer a full line of 100% natural
multi-vitamin  and multi-mineral  food  supplements.  Since the products in this
line are dietary  supplements,  they are not subject to stringent clinical tests
to which  pharmaceutical  products  are  subjected.  The vitamin and  supplement
products in this line are set forth below.

                                       5
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Vitamin A Products
---------------------------------------------------------------------------------------------------------------
<S>                                <C>                                                  <C>            <C>
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Beta-Carotene                    Antioxidant                                           10,000IU      Tablets
---------------------------------------------------------------------------------------------------------------
Cod Liver Oil                    A rich source of Omega 3 fatty acids                    20min      SoftGels
---------------------------------------------------------------------------------------------------------------
Cod Liver Oil                    A rich source of Omega 3 fatty acids                    10min      SoftGels
---------------------------------------------------------------------------------------------------------------
Halibut Liver Oil                A rich source of Vitamins A & D                       5000iu A     SoftGels
                                                                                        400iu D
---------------------------------------------------------------------------------------------------------------
Vitamin B Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Folic Acid                       An essential prenatal nutrient.                          1mg        Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin B6                       Supports energy & stress relief                         100mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin B12                                                                             250mcg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin B Complex 50             Supports energy & stress relief                         50mg        Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin B-Complex 50 (TR)        Supports energy & stress relief                         50mg        Tablets
---------------------------------------------------------------------------------------------------------------
B-Complex  with 300mg Vitamin C  Supports energy & stress relief                         multi       Tablets
(TR)
---------------------------------------------------------------------------------------------------------------
Stress B-Complex                 Supports energy & stress relief.                        multi       Tablets
with 600mg Vitamin C             Anti-Homocysteine

---------------------------------------------------------------------------------------------------------------
Vitamin C Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Vitamin C                        Supports immune system. Antioxidant                     250mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin C                        Supports immune system. Antioxidant                     500mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin C                        Supports immune system. Antioxidant                    1000mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin C Chewable Orange        Supports immune system. Antioxidant                     250mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin C Chewable Orange        Supports immune system. Antioxidant                     500mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin C (TR)                   Supports immune health                                  500mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin C (TR)                   Supports immune health                                 1000mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin C with Rosehips          Supports immune health                                  500mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin E Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Vitamin E Natural Source         Nutritional support for heart health                    400IU      SoftGels
---------------------------------------------------------------------------------------------------------------
Vitamin E Natural Source         Nutritional support for heart health                    800IU      SoftGels
---------------------------------------------------------------------------------------------------------------
Vitamin E Synthetic              Nutritional support for heart health                    400IU      SoftGels
---------------------------------------------------------------------------------------------------------------
Vitamin E Synthetic              Nutritional support for heart health                    800IU      SoftGels
---------------------------------------------------------------------------------------------------------------


                                       6
<PAGE>
---------------------------------------------------------------------------------------------------------------
AntiOxidant Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
ACES Formula                     Antioxidant                                             Multi       Tablets
---------------------------------------------------------------------------------------------------------------
CoEnzyme Q10                     Nutritional support for heart health Antioxidant        30 mg      Capsules
---------------------------------------------------------------------------------------------------------------
Calcium Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Calcium (Carbonate)              Promotes strong bones                                  1500mg       Tablets
---------------------------------------------------------------------------------------------------------------
Calcium (Carbonate) with         Promotes strong bones                                  1500mg       Tablets
Vitamin D
---------------------------------------------------------------------------------------------------------------
Natural Source Calcium           Promotes strong bones                                   500mg       Tablets
(Carbonate)
---------------------------------------------------------------------------------------------------------------
Natural Source Calcium           Promotes strong bones                                   500mg       Tablets
(Carbonate) w/D
---------------------------------------------------------------------------------------------------------------
Natural Source Calcium           Promotes strong bones                                   500mg       Tablets
(Carbonate) w/D
---------------------------------------------------------------------------------------------------------------
Natural Source Calcium           Promotes strong bones                                   250mg       Tablets
(Carbonate) w/D
---------------------------------------------------------------------------------------------------------------
Calcium & Magnesium with         Promotes strong bones                                333mg/166mg    Tablets
Vitamin D
---------------------------------------------------------------------------------------------------------------
Calcium Citrate w/D              Promotes strong bones                                   300mg       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin D                        Promotes strong bones                                  1000iu       Tablets
---------------------------------------------------------------------------------------------------------------
Vitamin D                        Promotes strong bones                                   400iu       Tablets
---------------------------------------------------------------------------------------------------------------
Herbal Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Cranberry Extract 18:1           Nutritional support for the urinary tract               100mg     Capsules
---------------------------------------------------------------------------------------------------------------
Devil's Claw                     Herbal support for joint health                         500mg     Capsules
---------------------------------------------------------------------------------------------------------------
Echinacea (Purpurea              Herbal support for the immune system                    400mg     Capsules
Herb/Angustifolia Herb & Root)
---------------------------------------------------------------------------------------------------------------
Echinacea Extract 4%             Herbal support for the immune system                    400mg     Capsules
---------------------------------------------------------------------------------------------------------------
Feverfew Extract 0.5%            Herbal support for healthy mind                         125mg     Capsules
---------------------------------------------------------------------------------------------------------------
Garlic Oil (Odor Free)           Supports immune health                                  500mg     SoftGels
---------------------------------------------------------------------------------------------------------------
Garlic Pure  / Allicin-Rich      Herbal support for health, vitality & immunity          500mg     Capsules
---------------------------------------------------------------------------------------------------------------
Ginkgo Biloba 24/6               Herbal support for mental alertness                     60mg      Capsules
---------------------------------------------------------------------------------------------------------------
Ginseng (Panax) Root             Herbal support for energy & vitality                    100mg     Capsules
---------------------------------------------------------------------------------------------------------------
Grape Seed                       A rich source of antioxidants                           50mg      Capsules
Extract
(MegaNatural Gold TM)
---------------------------------------------------------------------------------------------------------------
Milk Thistle Extract 80%         Herbal support for liver health                         150mg     Capsules
---------------------------------------------------------------------------------------------------------------
Saw Palmetto                     Herbal support to promote prostate health               160mg     SoftGels
---------------------------------------------------------------------------------------------------------------
St John's Wort Extract 0.3%      Herbal support to promote relaxation                    300mg     Capsules
---------------------------------------------------------------------------------------------------------------


                                       7
<PAGE>
---------------------------------------------------------------------------------------------------------------
Joint Support Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Glucosamine Sulfate              Nutritional building blocks for joint health            500mg     Capsules
(Sodium Free)
---------------------------------------------------------------------------------------------------------------
Glucosamine Sulfate              Nutritional building blocks for joint health            500mg     Capsules
(Sodium Free)
---------------------------------------------------------------------------------------------------------------
Glucosamine Sulfate              Nutritional building blocks for joint health           1000mg     Capsules
(Sodium Free)
---------------------------------------------------------------------------------------------------------------
Glucosamine (Sodium Free) &      Nutritional building blocks for joint health            450mg     Capsules
Chondroitin Sulfate
---------------------------------------------------------------------------------------------------------------
Glucosamine (Sodium Free) &      Nutritional building blocks for joint health            900mg     Capsules
Chondroitin Sulfate
---------------------------------------------------------------------------------------------------------------
Glucosamine (Sodium Free) &      Nutritional building blocks for joint health            900mg     Capsules
Chondroitin Sulfate
---------------------------------------------------------------------------------------------------------------
Glucosamine Sulfate (Sodium      Nutritional building blocks for joint health            900mg     Capsules
Free) & OptiMSMTM
---------------------------------------------------------------------------------------------------------------
OptiMSMTM                        Nutritional support for joint health                    500mg     Capsules
methyl sulfonyl methane
---------------------------------------------------------------------------------------------------------------
OptiMSMTM                        Nutritional support for joint health                   1000mg     Capsules
methyl sulfonyl methane
---------------------------------------------------------------------------------------------------------------
Shark Cartilage                  Nutritional building blocks for joint health            750mg     Capsules
---------------------------------------------------------------------------------------------------------------
Mineral Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
Iron (Ferrous gluconate)         Nutritional support to promote healthy blood            300mg       Tablets
                                 circulation
---------------------------------------------------------------------------------------------------------------
Iron (Ferrous sulphate)          Nutritional support to promote healthy blood            300mg       Tablets
                                 circulation
---------------------------------------------------------------------------------------------------------------
Zinc (Gluconate)                 Supports immune health                                  50mg        Tablets
---------------------------------------------------------------------------------------------------------------
Other Products
---------------------------------------------------------------------------------------------------------------
Product                          Slogan                                                Activity       Form
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Phasoelamine                     None                                                   500 mg       Tablets
---------------------------------------------------------------------------------------------------------------
Evening Primrose Oil             A rich source of essential fatty acids                  500mg       SoftGel
---------------------------------------------------------------------------------------------------------------
Evening Primrose Oil             A rich source of essential fatty acids                 1000mg       SoftGel
---------------------------------------------------------------------------------------------------------------
Flaxseed Oil (Organic)           A rich source of essential fatty acids                 1000 mg      SoftGel
---------------------------------------------------------------------------------------------------------------
Lecithin (Unbleached)            Support for mental function                            1200mg       SoftGel
---------------------------------------------------------------------------------------------------------------
Omega 3-6-9                      Nutritional support for heart health    Essential      1200mg       SoftGel
                                 Fatty acids
---------------------------------------------------------------------------------------------------------------
Salmon Oil - Wild                Nutritional support for heart health    Essential      1000mg       SoftGel
                                 Fatty acids
---------------------------------------------------------------------------------------------------------------
Children's Complete Chewable     Provides daily nutritional support                      multi       Tablets
Multiple Vitamins & Minerals
---------------------------------------------------------------------------------------------------------------
Multiple Vitamins                Provides daily nutritional support                      multi       Tablets
---------------------------------------------------------------------------------------------------------------
Multiple Vitamins plus Iron      Provides daily nutritional support                      multi       Tablets
---------------------------------------------------------------------------------------------------------------
Multi Vitamin & Mineral          Provides daily nutritional support                      multi       Tablets
---------------------------------------------------------------------------------------------------------------
Multiple Vitamins & Minerals     Provides daily nutritional support                      multi       Tablets
50 + w/Lutien
---------------------------------------------------------------------------------------------------------------
Multivitamin Forte w/Lutein      Provides daily nutritional support                      multi       Tablets
(25 Multiple Vitamins &
Minerals)
---------------------------------------------------------------------------------------------------------------
Prenatal Vitamin                 Provides daily nutritional support                      multi       Tablets
---------------------------------------------------------------------------------------------------------------
</TABLE>

                                       8
<PAGE>
Manufacturing

     We have entered into agreements with three  manufacturers  who will produce
all of our  requirements  for our three  product  lines.  Hotway  Nutraceuticals
Canada Co. Ltd. and  Canadian  Phytopharmaceuticals  Corp.  will process the raw
materials  that go into our  product  lines.  GFR Pharma  Ltd.  will  handle the
packaging of the final products for all of our product lines. Eventually we hope
to establish our own manufacturing facility in British Columbia, Canada. Once we
are able to manufacture  our own products,  we will be able to more  efficiently
control our costs and quality and better protect our trade secrets.

     Hotway  Nutraceuticals  Canada Co. Ltd. On June 8, 2004,  we entered into a
Manufacturing  Agreement with Hotway  Neutraceuticals Canada Co. Ltd. Hotway has
agreed to manufacture certain herbal ingredients and supplements for our private
label brand. The term of this Manufacturing Agreement is for five years, with an
option of both parties to renew for another five years upon written notice given
at least  ninety  days  before  expiration  of the term.  Hotway  has  agreed to
manufacture certain products for our three products lines at prices to be agreed
upon from time to time in the  future.  If the  parties are not able to agree on
prices and minimum  order  amounts for a  particular  product,  then we have the
right to have the  product  manufactured  by  another  company.  Hotway  has the
exclusive right to manufacture the products that Hotway has licensed to us under
the Exclusive Licensing Agreements. However this exclusivity shall only apply so
long as:  (a) the  parties  have  agreed on price and  Hotway has not served any
notice on us of any intended price  increase;  and (b) to the extent that Hotway
has limited  quantities,  we may obtain excess  quantities from other suppliers.
Notwithstanding the exclusivity  provision of the Manufacturing  Agreement,  the
final  packaging  will be completed by GFR Pharma Ltd., as described  below.  If
Hotway does not deliver an order  within ten weeks from receipt of the order and
Hotway  does not remedy the  failure to deliver  within 30 days of notice,  then
Hotway will no longer have the exclusive right to manufacture our products.

     China Health Holding is responsible for any damages, directly or indirectly
related to: (a) all  formulas  owned by China  Health  Holding;  (b) the design,
content,  description,  ingredient  listing and layout of all labels supplied by
China Health Holding;  (c) any patent  violations where the product  formulation
was provided by China Health  Holding;  and (d) any breach of the  Manufacturing
Agreement.  Hotway warrants that the products manufactured by it will meet China
Health  Holding's  specifications.  In addition,  Hotway is responsible  for any
damages,  directly or indirectly related to: (a) contamination of ingredients in
any products  manufactured  by Hotway beyond that permitted by applicable  laws;
(b) all formulas owned by Hotway; (c) non-compliance with any laws,  ordinances,
regulations  or  requirements  of any  federal,  provincial,  municipal or other
authority in the  manufacture of products by Hotway;  (d) incorrect  labeling of
ingredients contained in the products;  (e) violation of any patents in relation
to products where the formulation  was created by Hotway;  and (f) any breach of
the Manufacturing  Agreement.  Hotway and China Health Holding are each required
to maintain  comprehensive bodily injury,  property damage and product liability
insurance applying to their respective  operations and any of their employees or
agents for an amount of not less than  $2,000,000  per occurrence or such higher
amount that the other party  reasonably  requires,  with a deductible of no more
than $5,000, during the term of the Manufacturing Agreement.

     If either  party  materially  defaults  on the  terms of the  Manufacturing
Agreement,  the non-defaulting  party may give notice to the defaulting party to
remedy the default.  The defaulting  party  thereafter has 30 days to remedy the
default.  In the event the  defaulting  party does not remedy the default within
such  period,  the   non-defaulting   party  has  the  right  to  terminate  the
Manufacturing  Agreement upon seven days written notice to the defaulting party.
Notwithstanding  these  notice  provisions,   in  the  event  of  bankruptcy  or
insolvency of the  defaulting  party,  or the  assignment  of the  Manufacturing
Agreement  without the consent of the other party, the  Manufacturing  Agreement
may be terminated immediately.

     Canadian Phytopharmaceuticals Corp. Manufacturing Agreement. On February 9,
2004,   we   entered   into   a    Manufacturing    Agreement    with   Canadian
Phytopharmaceuiticals Corp. ("Canadian Phyto"), a British Columbia manufacturing
company.  Canadian  Phyto  uses  computerized  HP1100  High  Performance  Liquid
Chromatography   instruments,   to  produce   consistency  in  the  products  it
manufactures.  Canadian Phyto will procure components,  materials, equipment and
other supplies, and manufacture, assemble and test products pursuant to detailed
written  specifications  which are provided by China Health Holding and accepted
by  Canadian   Phyto.   Canadian  Phyto  is  required  to  keep  restricted  all
confidential  terms,   exclusive  rights,   patents,  trade  secrets  and  other
intellectual  property which has been provided to Canadian Phyto by China Health
Holding.  The  Manufacturing  Agreement with Canadian Phyto does not contain any
exclusivity provisions.

                                       9
<PAGE>
     The term of this  Manufacturing  Agreement is for one year.  Canadian Phyto
has agreed to set the price for  products to be  manufactured  from time to time
through  blanket  purchase orders issued by China Health Holding and accepted by
Canadian Phyto. Until the purchase price for manufactured products has been paid
to  Canadian  Phyto,  Canadian  Phyto  will  retain a security  interest  in the
products  that have been  delivered  to China  Health  Holding and any  proceeds
therefrom.  The Manufacturing Agreement with Canadian Phyto may be terminated by
either  party for any reason,  but if  terminated  by Canadian  Phyto we must be
provided at least 120 days prior written notice.  If we are notified promptly in
writing  and given  sole  control  of the  defense  and all  related  settlement
negotiations,  we must defend  Canadian  Phyto from any claim or action and must
indemnify Canadian Phyto from any loss, damage or injury, including death, which
arises from any alleged defect of any of our products.

     GFR Pharma Ltd. Manufacturing  Agreement. On April 8, 2004, we entered into
a Manufacturing  Agreement with GFR Pharma Ltd., a British Columbia company. GFR
Pharma is a full service  private  label,  Canadian Good  Manufacturing  Process
(GBP)  facility  that  specializes  in producing  over-the-counter  products and
natural source products. GFR Pharma provides formulating,  blending,  packaging,
product testing, technical support, market research, label design and regulatory
information  support to its  customers.  GFR Pharma  manufactures  and  supplies
products through its GFR Private Label Program to a variety of customers similar
to products  that GFR Pharma will supply to China Health  Holding.  Any formulas
owned by China  Health  Holding  for  products  manufactured  by GFR Pharma will
remain the exclusive  property of China Health Holding.  Further,  Neither party
may,  without the prior  consent of the other  party,  directly  or  indirectly,
disclose any  confidential or proprietary  information or intellectual  property
relating to the business  affairs of the other party,  including but not limited
to GFR Pharma's formulas and China Health Holding's formulas.  The Manufacturing
Agreement with GFR Pharma does not contain any exclusivity provisions.

     The term of this Manufacturing  Agreement is for five years, with an option
of both  parties to renew for another  five years upon  written  notice given at
least  ninety  days  before  expiration  of the term.  GFR  Pharma has agreed to
manufacture certain products for our three products lines at prices to be agreed
upon from time to time in the  future.  If the  parties are not able to agree on
prices and minimum  order  amounts for a  particular  product,  then we have the
right to have the product  manufactured by another  company.  The  manufacturing
time may vary for each product  from one to ten weeks,  depending on the type of
product and the quantity  ordered.  China Health Holding is responsible  for any
damages,  directly or  indirectly  related to: (a) all  formulas  owned by China
Health Holding;  (b) the design,  content,  description,  ingredient listing and
layout of all labels supplied by China Health Holding; (c) any patent violations
where the product formulation was provided by China Health Holding;  and (d) any
breach of the  Manufacturing  Agreement.  GFR Pharma  warrants that the products
manufactured by it will meet China Health Holding's specifications. In addition,
GFR Pharma is responsible  for any damages,  directly or indirectly  related to:
(a)  contamination  of  ingredients in any products  manufactured  by GFR Pharma
beyond that permitted by applicable  laws; (b) all formulas owned by GFR Pharma;
(c) non-compliance with any laws, ordinances, regulations or requirements of any
federal, provincial, municipal or other authority in the manufacture of products
by GFR Pharma; (d) incorrect labeling of ingredients  contained in the products;
(e) violation of any patents in relation to products where the  formulation  was
created by GFR Pharma;  and (f) any breach of the Manufacturing  Agreement.  GFR
Pharma and China  Health  Holding are each  required  to maintain  comprehensive
bodily injury, property damage and product liability insurance applying to their
respective  operations and any of their employees or agents for an amount of not
less than  $2,000,000  per occurrence or such higher amount that the other party
reasonably requires,  with a deductible of no more than $5,000,  during the term
of the Manufacturing Agreement.

     If either  party  materially  defaults  on the  terms of the  Manufacturing
Agreement,  the non-defaulting  party may give notice to the defaulting party to
remedy the default.  The defaulting  party  thereafter has 30 days to remedy the
default.  In the event the  defaulting  party does not remedy the default within
such  period,  the   non-defaulting   party  has  the  right  to  terminate  the
Manufacturing  Agreement upon seven days written notice to the defaulting party.
Notwithstanding  these  notice  provisions,   in  the  event  of  bankruptcy  or
insolvency of the  defaulting  party,  or the  assignment  of the  Manufacturing
Agreement  without the consent of the other party, the  Manufacturing  Agreement
may be terminated immediately.



                                       10
<PAGE>
Market Analysis

     According  to the Natural  Marketing  Institute,  which  monitors  consumer
trends in the  marketplace,  demand for dietary  supplements  corresponds with a
strategic shift in how consumers view health and wellness. Surveys find that the
majority of Americans rely on dietary  supplements to maintain good health. More
than ever before, consumers feel empowered to manage their health and are either
actively using  supplements or are researching  information  about them. This is
supported by research from the Dietary Supplement  Information Bureau that found
that three in five consumers (59%) take supplements on a regular basis.

     A number of drivers  explain the overall growth of the industry,  including
consumers  looking  for more  natural  health  remedies,  Baby  Boomers  seeking
remedies to slow the aging process, a trend towards  self-medication rather than
a reliance on increasingly  expensive mainstream medicine, and a public that was
receptive to studies and other  information  that purported to show the benefits
of daily vitamin and mineral use.

     According to Health Strategy  Consulting LLC ("HSC"),  the global nutrition
market  exceeded  $170  billion in 2003.  Of the global  nutrition  market,  the
dietary  supplements  and  natural  remedies  represented   approximately  $60.1
billion,   or  35%   of   retail   sales   during   2003.   Within   the   U.S.,
vitamins/multi-vitamins  accounted for the largest piece of the market,  33%, or
$6.14 billion in 2002. The second largest segment, herbals/botanicals, accounted
for 23% of the US market in 2002 at $4.2 billion.

     Specialty  supplements,  along with sports nutrition and meal  supplements,
are the bright spots in the US dietary  supplement  market,  reports HSC. During
2002,  specialty  supplements  recognized  8% growth,  closely  followed by meal
supplements and sports nutrition,  each experiencing 7% growth during that year.
The US  specialty  supplements  market  was  valued at $2.3  billion  in 2002 or
roughly 12% of the US dietary supplement market.
<TABLE>
<CAPTION>
                               US Dietary Supplements Markets (in millions) Consumer Sales, All Channels
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S>                          <C>               <C>               <C>              <C>              <C>
      Category               2000              2001              2002              CAGR        Projected Growth
                                                                               1997 - 2002       2002 - 2005
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
      Vitamins              5,970             6,020             6,140               3%               1-3%
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
   Multi-Vitamins           3,100             3,190             3,254               4%               2-4%
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
 Herbals/ Botanicals        4,120             4,180             4,260               4%               1-2%
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
  Sports Nutrition          1,590             1,730             1,851               9%               6-9%
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
      Minerals              1,350             1,390             1,460               7%               4-6%
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
  Meal Supplements          2,070             2,310             2,472               8%               6-9%
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
  Specialty / Other         1,940             2,130             2,300              15%              6-10%
                            -----             -----             -----              ---              -----
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
        Total              17,040            17,760            18,482               6%               3-5%
                           ======            ======            ======              ===              =====
---------------------- ----------------- ----------------- ----------------- ----------------- -----------------
         CAGR - Capitalized Annual Growth Rate                         Source: Health Strategy Consulting LLC
                                                                       (http: //www.health-strategy.com)
</TABLE>
Competition

     The nutritional  supplements retail industry is a large,  highly fragmented
and growing industry,  with no single industry  participant  accounting for more
than 10% of total  industry  retail  sales.  Competition  is based  primarily on
price, quality and assortment of products,  customer service,  marketing support
and availability of new products.

     We compete with publicly  owned and privately  owned  companies,  which are
highly  fragmented  in  terms  of  geographical   market  coverage  and  product
categories.  We compete with  specialty  retailers,  including GNC  Corporation,
Vitamin World and Vitamin Shoppe(R),  supermarkets,  drugstores, mass merchants,
multi-level marketing organizations, mail order companies and a variety of other
smaller  participants.  In  addition,  the  market  is highly  sensitive  to the
introduction of new products,  including various  prescription  drugs, which may
rapidly capture a significant share of the market. In the United States, we also
compete with supermarkets, drugstores and mass merchants with heavily advertised
national brands manufactured by large pharmaceutical and food companies, as well
as with the Nature's  Bounty and Nature's  Wealth brands,  sold by Vitamin World
and  other  retailers.   Our   international   competitors  also  include  large
international pharmacy chains and major international supermarket chains as well
as other large U.S.-based companies with international operations. Our wholesale
and   manufacturing   operations   also  compete  with  other   wholesalers  and
manufacturers  of third-party  nutritional  supplements such as Tree of Life and
Leiner Health Products.



                                       11
<PAGE>
Marketing and Sales Strategy

     Our  management   recognizes   that  different   markets  offer   different
opportunities  for growth in sales. Our sales and marketing plan is based on the
following foundations:

  1. Online Retail - We intend to target customers  through our Internet website
at  www.chinahealthholding.com.  We are currently working to enhance our website
to be capable of handling retail transactions with multiple payment forms (i.e.,
credit card, cheque and alternative payment systems), in multiple currencies and
in multiple languages.

  2. Retail and Wholesale Distribution - Our management believes that one of the
fastest ways to penetrate the  neutraceuticals  market is to secure distribution
through an  established  system of retailers in order to take advantage of their
current client base. We are currently in the process of negotiating with several
distribution companies that we hope will distribute our products.

  3. Retail  Storefronts  - We hope to enter the  neutraceuticals  market in the
Peoples'  Republic  of China.  For this  large  market,  we intend to  establish
storefronts  advertising  our brand name.  This market is part of our  long-term
business  objectives and has not yet been  implemented  since our more immediate
focus is on the North American neutraceuticals market.

     The  following  are  marketing  and  sales  initiatives  that we  intend to
implement to market our products:

  1. Website  Development  -  We are  currently  working to  enhance  our online
shopping  store to help us establish a strong online  presence for our products.
We  are  working  to  make  our  online  shopping  store  easily   customizable,
expandable,  eye pleasing, easy to navigate and functional.  Our newest products
and best sellers will be featured on the site,  with feature  products  changing
periodically. A search feature will allow customers to enter the type of ailment
they are looking for help with, or a product  name,  in order to provide  direct
access to the information and/or products the customer is seeking.

  2. Establish  Regional  Sales  Teams -  As we grow,  we  intend  to  establish
regional   sales   teams  in   Canada,   the  United   States   and   ultimately
internationally. The role of these sales teams will be to work with distributors
and retailers in their regions.

  3. Media  Advertising  -  We  intend to  engage  in more  advertising  to help
establish our business in the neutraceuticals  market through an intensive North
American  media and  advertising  campaign.  We  expect  to spend  approximately
$200,000 on media and advertising over the next year to meet these objectives.

  4. Public  and  Investor  Relations  -  On August 8, 2004,  we entered  into a
Consulting Agreement with National Media Associates,  a California  corporation,
to  provide   national  media  consulting   services,   including  news  feature
development,  establishing  relations with financial advisory newsletter writers
and with other trade and advertising media.  National Media Associates will also
provide  an  investor  relations  program  of  communications  to United  States
institutional,   brokerage  and  retail  investor  communities.   We  agreed  to
compensate  National  Media  Associates  by: (a) issuing to it an  aggregate  of
1,000,000  shares of our common stock; and (b) issuing to it options to purchase
an aggregate of 1,000,000  shares of our common stock  exercisable for a term of
three  years at $0.10  per  share.  We valued  the  1,000,000  shares  issued to
National Media Associates at $250,000 ($0.25 per share).

  5. Trade Shows and Seminars - We expect to participate in seminars  related to
neutraceuticals,   alternative  medicine  and  Chinese  medicine.



                                       12
<PAGE>
Research and Development

     Our  research and  development  program is focused on the  development  and
commercialization  of  natural  medicinal  products  to  prevent  and help treat
epidemic   diseases  and   conditions   in  the  areas  of  diabetes   mellitus,
cardiovascular and cerebral-vascular system dysfunctions, neurological disorders
and  immunological  disorders.  We have  worked  in the  past  through  informal
research  and  development  alliances  with  ShangHai  Chinese  Western  Medical
Vascular Disease Research Institute,  ShangHai XiJiYe TCM Hospitals, Beijing TCM
Research  Institute  in the  People's  Republic  of China and  certain  Research
Institute scientists in the People's Republic of China.

Intellectual Property

     We own the rights to the 26 100% natural  herbal  medicinal  products  that
comprise our King of Herbs and Taoist  Medicine  product  lines.  (See "Purchase
Agreement for 26 100% Natural Herbal Medicinal  Products Formulas" on p. 12.) We
also have the exclusive rights to certain other neutraceutical  products through
two  license  agreements  with  Hotway  Nutraceuticals  Canada  Co.,  Ltd.  (See
"Exclusive  Licensing  Agreement  for  19  Cordyceps  Products"  and  "Exclusive
Licensing Agreement for De-Daibe and Depressor Herbs" on p. 13.)

     On August 20, 2004,  we filed a trademark  application  for the name "China
Health  Holding  Inc."  Otherwise,  we have not applied for or been  granted any
patents,  trademarks,  service marks or any other  intellectual  property rights
with any governmental body.

Government Regulation

     The   processing,   formulation,    manufacturing,   packaging,   labeling,
advertising and distribution of our products are subject to regulation by one or
more federal agencies,  including the Health  Protectorate Branch in Canada, and
in the United  States,  the Food and Drug  Administration  ("FDA"),  the Federal
Trade Commission  ("FTC"),  the Consumer Product Safety  Commission,  the United
States  Department of Agriculture,  United States Customs and Border  Protection
and the Environmental  Protection Agency. These activities are also regulated by
various  agencies of the states and  localities  in which our products are sold.
Our products  sold in other  foreign  countries  are also subject to  regulation
under various national,  local, and international  laws that include  provisions
governing,  among other  things,  the  processing,  formulation,  manufacturing,
packaging,  labeling,  advertising and  distribution of dietary  supplements and
over-the-counter  drugs. Government regulations in foreign countries may prevent
or delay the  introduction,  or  require  the  reformulation,  of certain of our
products.  Below is a summary of  government  regulation  of our products in the
United States,  which is where we intend to focus our marketing efforts over the
next twelve months.

     Pursuant to the Federal  Food,  Drug,  and Cosmetic Act  ("FDCA"),  the FDA
regulates the processing,  formulation, safety, manufacture, packaging, labeling
and distribution of dietary supplements,  (including vitamins,  minerals, herbs)
and over-the-counter drugs. The FTC has jurisdiction to regulate the advertising
of these  products.  The FDCA has been  amended  several  times with  respect to
dietary  supplements,  in  particular  by  the  Dietary  Supplement  Health  and
Education Act of 1994 ("DSHEA"). DSHEA established a new framework governing the
composition,  safety,  labeling and marketing of dietary  supplements.  "Dietary
supplements" are defined as vitamins,  minerals, herbs, other botanicals,  amino
acids and other dietary substances for human use to supplement the diet, as well
as  concentrates,  metabolites,  constituents,  extracts or combinations of such
dietary  ingredients.  Generally,  under DSHEA, dietary ingredients that were on
the market prior to October 15, 1994 may be used in dietary  supplements without
notifying the FDA. "New" dietary  ingredients  (i.e.,  dietary  ingredients that
were "not marketed in the United  States  before  October 15, 1994") must be the
subject of a new dietary ingredient notification submitted to the FDA unless the
ingredient  has been  "present in the food  supply as an article  used for food"
without being "chemically  altered." A new dietary ingredient  notification must
provide  the FDA  evidence  of a "history  of use or other  evidence  of safety"
establishing that use of the dietary  ingredient "will reasonably be expected to
be safe." A new dietary ingredient  notification must be submitted to the FDA at
least 75 days before the initial marketing of the new dietary ingredient.  There
is no certainty that the FDA will accept any  particular  evidence of safety for
any new dietary  ingredient.  The FDA's  refusal to accept such  evidence  could
prevent the marketing of such dietary ingredients.

                                       13
<PAGE>
     DSHEA  permits  "statements  of  nutritional  support"  to be  included  in
labeling for dietary supplements without FDA premarket approval. Such statements
must be  submitted  to FDA  within  30 days of  marketing  and must bear a label
disclosure  that "This  statement  has not been  evaluated  by the Food and Drug
Administration.  This  product is not  intended to  diagnose,  treat,  cure,  or
prevent any  disease."  Such  statements  may describe how a particular  dietary
ingredient affects the structure, function or general well-being of the body, or
the mechanism of action by which a dietary ingredient may affect body structure,
function or  well-being,  but may not expressly or implicitly  represent  that a
dietary supplement will diagnose, cure, mitigate, treat, or prevent a disease. A
company that uses a statement of  nutritional  support in labeling  must possess
scientific  evidence  substantiating  that the  statement  is  truthful  and not
misleading.  If the FDA  determines  that a particular  statement of nutritional
support is an unacceptable  drug claim or an  unauthorized  version of a disease
claim for a food product,  or if the FDA determines  that a particular  claim is
not adequately  supported by existing scientific data or is false or misleading,
we would be prevented from using the claim.

     In addition, DSHEA provides that so-called "third-party  literature," e.g.,
a reprint of a peer-reviewed scientific publication linking a particular dietary
ingredient with health  benefits,  may be used "in connection with the sale of a
dietary  supplement  to  consumers"  without  the  literature  being  subject to
regulation as labeling.  Such  literature  must not be false or misleading;  the
literature  may not  "promote"  a  particular  manufacturer  or brand of dietary
supplement;  and a balanced view of the available scientific  information on the
subject  matter must be presented.  If the  literature  fails to satisfy each of
these requirements,  we may be prevented from disseminating such literature with
our  products,  and any  dissemination  could  subject our product to regulatory
action as an illegal drug.

     We expect that the FDA will adopt in the near future the final regulations,
proposed  on  March  13,  2003,   regarding  Good   Manufacturing   Practice  in
manufacturing,  packing, or holding dietary ingredients and dietary supplements,
authorized  by DSHEA.  Good  Manufacturing  Practice  regulations  will  require
dietary supplements to be prepared,  packaged and held in compliance with strict
rules, and will require quality control  provisions similar to those in the Good
Manufacturing  Practice regulations for drugs. We or our third-party supplier or
vendors  may  not be  able to  comply  with  the  new  rules  without  incurring
substantial additional expenses.

     The  FDA  has  broad  authority  to  enforce  the  provisions  of the  FDCA
applicable to dietary  supplements,  including  powers to issue a public warning
letter to a company, to publicize information about illegal products, to request
a recall of illegal  products from the market,  and to request the Department of
Justice to  initiate  a seizure  action,  an  injunction  action,  or a criminal
prosecution in the United States courts.  The FDA may also issue an Import Alert
for any products it considers  misbranded,  adulterated  and/or  unapproved  new
drugs.  Customs would block the admission of these  products from entry into the
country.  The  regulation  of dietary  supplements  may  increase or become more
restrictive in the future.

     The FDA may also  make a  determination  that some of our  products  either
contain drug claims or that certain ingredients of our products are not dietary,
or even  new  dietary  ingredients,  but  unapproved  new  drugs.  Any of  these
determinations could block the marketing of these products in the United States.

     We cannot  determine  what  effect  additional  domestic  or  international
governmental  legislation,  regulations or  administrative  orders,  when and if
promulgated,  would have on our  business  in the  future.  New  legislation  or
regulations  may  require  the  reformulation  of certain  products  to meet new
standards,  require the recall or discontinuance of certain products not capable
of   reformulation,   impose  additional  record  keeping  or  require  expanded
documentation  of the  properties  of certain  products,  expanded or  different
labeling, or scientific substantiation.

Employees

     We  currently  employ  three  full  time  employees  and  twelve  part-time
employee/consultants.  None  of  our  employees  are  covered  by  a  collective
bargaining agreement. We consider relations with our employees to be good.


                                       14
<PAGE>
Item 2.  Description of Property.

     On October 20, 2004, we signed a lease for office space at 666 Burrard St.,
Suite 600, Park Place, Vancouver,  British Columbia,  Canada V6C 2X8. This lease
begins January 1, 2005 and is for a term of 12 months,  with automatic  renewals
for subsequent twelve-month terms unless a notice of termination is delivered in
writing  by  either  party  ninety  days  prior to the  anniversary  date of the
termination date of the lease agreement. The monthly rent for the first 12-month
term of the lease is $1,200  per  month.  Rent for  subsequent  terms will be at
market rates.

Item 3.  Legal Proceedings.

     We are not  currently a party to, nor is any of our property  currently the
subject of, any pending legal  proceeding.  None of our  directors,  officers or
affiliates is involved in a proceeding adverse to our business or has a material
interest adverse to our business.

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

     No matter was  submitted  to a vote of  security  holders  during the forth
quarter of the fiscal year covered by this report.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

Market Information


     There is currently no public trading market for our common stock.

     As of January 31, 2005,  6,600,000  shares of our common stock were subject
to  outstanding  options to purchase our common stock and 339,000  shares of our
common stock were subject to outstanding warrants to purchase our common stock.

     As of January 31, 2005  approximately  330,477  shares of our common  stock
were eligible to be sold pursuant to Rule 144 under the  Securities Act of 1933,
as amended and  4,048,788,  shares of our common stock have been  registered and
may be freely sold, subject to any prospectus delivery requirements.

Holders

     As of March 28,  2005,  there were  42,530,600  shares of our common  stock
issued and outstanding and approximately 63 stockholders of record of our common
stock.

Dividends

     Historically, we have not declared or paid any cash dividends on our common
stock. Any future determination to pay dividends on our common stock will depend
upon our results of operations,  financial  condition and capital  requirements,
applicable  restrictions  under  any  contractual  arrangements  and such  other
factors deemed relevant by the our Board of Directors. There are no restrictions
in our  articles  of  incorporation  or bylaws that  restrict us from  declaring
dividends.  The Nevada Revised Statutes,  however, do prohibit us from declaring
dividends where, after giving effect to the distribution of the dividend:

     (1)  we would not be able to pay our debts as they  become due in the usual
          course of business; or
     (2)  our total assets would be less that the sum of our total liabilities.


                                       15
<PAGE>
Securities Authorized for Issuance Under Equity Compensation Plans

     The  following  table  shows   information  with  respect  to  each  equity
compensation  plan under which the  Company's  common  stock is  authorized  for
issuance as of the fiscal year ended December 31, 2004.
<TABLE>
<CAPTION>
                      EQUITY COMPENSATION PLAN INFORMATION
------------------------------------ ------------------------ ----------------------- ---------------------------
<S>     <C>                                  <C>                      <C>                   <C>
Plan category                        Number of securities     Weighted average        Number of securities
                                     to be issued upon        exercise price of       remaining available for
                                     exercise of              outstanding options,    future issuance under
                                     outstanding options,     warrants and rights     equity compensation plans
                                     warrants and rights                              (excluding securities
                                                                                      reflected in column (a)
------------------------------------ ------------------------ ----------------------- ---------------------------
                                               (a)                     (b)                       (c)
------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans approved
by security holders                            -0-                     -0-                       -0-
------------------------------------ ------------------------ ----------------------- ---------------------------

------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans not
approved by security holders
                                               -0-                     -0-                       -0-
------------------------------------ ------------------------ ----------------------- ---------------------------

------------------------------------ ------------------------ ----------------------- ---------------------------
Total                                          -0-                     -0-                       -0-
------------------------------------ ------------------------ ----------------------- ---------------------------
</TABLE>

Recent Sales of Unregistered Securities

     On January 29, 2004, we issued an aggregate of 750,000 shares of our common
stock to Patrick Wang,  Dusica  Mladenovic,  Kent Ausburn,  Loren Currie and RAR
Consultant Ltd. in consideration  for $11,500 cash.  650,000 of such shares were
issued at $0.01 per share and  100,000 of such  shares  were issued at $0.05 per
share.  These issuances were exempt from registration  requirements  pursuant to
Regulation S.

     On January 29, 2004, we issued 15,000 shares of our common stock to Hua Zhu
as a consulting  fee for research and  development  services.  The value of such
services was estimated to be $38. These shares were issued at $0.0025 per share.
This issuance was exempt from registration  requirements  pursuant to Regulation
S.

     On January  29,  2004,  we issued  200,000  shares of our  common  stock to
Anthony  Garson as  repayment  of travel  expenses.  Such  shares were valued at
$2,000  ($0.01  per  share).   This   issuance  was  exempt  from   registration
requirements pursuant to Regulation S.

     On January 29,  2004,  we issued 6,000 shares of our common stock to Bohdan
Charyna and Jian Zhang as a consulting  fee for  marketing  services.  The total
value of such  services  was  estimated  to be $15.  These shares were issued at
$0.0025 per share.  These issuances were exempt from  registration  requirements
pursuant to Regulation S.

     On February  25,  2004,  we issued  110,000  shares of our common  stock to
Torben V.  Kristian as repayment of a loan in the amount of $8,380.  Such shares
were  issued at $0.08 per share.  This  issuance  was exempt  from  registration
requirements pursuant to Regulation S.

     On February  26,  2004,  we issued  310,000  shares of our common  stock to
Patrick Wang and Howard Lonsdale in consideration  for $22,000 cash.  100,000 of
such  shares were  issued at $0.05 per share,  200,000  were issued at $0.08 per
share and 10,000  were  issued at $0.10 per share.  The  issuance  of the 10,000
shares was exempt from registration requirements pursuant to Section 4(2) of the
Securities  Act. The other issuances were exempt from  registration  pursuant to
Regulation S.

     On April 18, 2004,  we issued (1) 80,000 shares of our common stock and (2)
warrants  to  purchase  80,000  shares of our  common  stock,  to Lin Le Quan in
consideration  for $20,000  cash.  Also on April 18, 2004, we issued (1) 120,000
shares of our common  stock and (2) warrants to purchase  120,000  shares of our
common stock, to Patrick Wang in consideration  for $30,000 cash. These warrants
are exercisable at $0.75 per share and expire on April 18, 2005. These issuances
were exempt from registration requirements pursuant to Regulation S.

                                       16
<PAGE>
     On May 1, 2004, we issued  2,000,000 shares of our common stock to Julianna
(Jenny) Lu and  200,000  shares of our common  stock to Xiao Fei Yu. Such shares
were issued at $0.001 per share in connection with the purchase of the rights to
26 100% natural  medicinal  products  that comprise our King of Herbs and Taoist
Medicine   product  lines.   These  issuances  were  exempt  from   registration
requirements pursuant to Regulation S.

     On May 1,  2004,  we issued  9,000  shares of our  common  stock to William
Robertson, Tony Perri and Ray Dumas. These shares were purchased by our founder,
Julianna Lu, for a purchase price of $0.0025 per share and were gifted by Ms. Lu
to the  above  shareholders.  These  purchases  were  exempt  from  registration
requirements pursuant to Regulation S.

     On May 1, 2004, we issued 35,000 shares of our common stock to Loren Currie
in  consideration  for $350($0.01 per share) cash. This issuance was exempt from
registration requirements pursuant to Regulation S.

     On May 2, 2004,  we issued  8,300 shares of our common stock to Fei Yu, Tao
Zhang,  Hao Zhang,  Yin Kai Zhang,  Ming Zhou, Wei Zhu, Yan Zhu Wei Chuen Lu and
Yan Lu. These shares were purchased by our founder,  Julianna Lu, for a purchase
price of $0.0025 per share and were gifted by Ms. Lu to the above  shareholders.
These  purchases  were  exempt  from  registration   requirements   pursuant  to
Regulation S.

     On May 3, 2004, we issued 2,400 shares of our common stock to Guang Hua Yu,
Long Fa Chan, Guang Hua Wu, Yin Xa Xu, Mie Lie Chang,  Juan Feng Hua, Qi Wei and
Qiang Yu.  These  shares  were  purchased  by our  founder,  Julianna  Lu, for a
purchase  price of  $0.0025  per  share  and were  gifted by Ms. Lu to the above
shareholders.   These  purchases  were  exempt  from  registration  requirements
pursuant to Regulation S.

     On May 25, 2004,  we issued  18,000  shares of our common stock to Xing Zhu
Lu, Zhi Jian Lu, Zhi Fang Lu, Chi Hung Yung and Long Xiang  Weng.  These  shares
were purchased by our founder,  Julianna Lu, for a purchase price of $0.0025 per
share and were gifted by Ms. Lu to the above shareholders.  These purchases were
exempt from registration requirements pursuant to Regulation S.

     On July 8, 2004,  we issued  options to  purchase  2,500,000  shares of our
common stock to Julianna Lu, our principal  executive  officer,  pursuant to Ms.
Lu's employment agreement.  These options are exercisable at $0.10 and expire on
June 1, 2009. This issuance was exempt from registration  requirements  pursuant
to Regulation S.

     On July 8, 2004, we issued options to purchase 800,000 shares of our common
stock to Julianna Lu, our principal executive officer, in consideration for past
management  services.  These options are exercisable at $0.05 per share. 300,000
of these options expire on December 30, 2007 and 500,000 of these options expire
on April 30, 2008.  These issuances were exempt from  registration  requirements
pursuant to Regulation S.

     On July 8, 2004, we issued options to purchase 600,000 shares of our common
stock to James  Simpson,  our current Vice  President of Corporate  Development,
pursuant to a consulting  agreement for management  services.  These options are
exercisable  at $0.10 per share and expire on June 16, 2009.  This  issuance was
exempt from registration requirements pursuant to Regulation S.

     On July 8, 2004, we issued options to purchase 100,000 shares of our common
stock to Jock Chong for corporate development  consulting services. The value of
such services are expected to be $10,000. These options are exercisable at $0.10
per share and expire on July 8, 2004. This issuance was exempt from registration
requirements pursuant to Regulation S.

     On July 8, 2004, we issued options to purchase 350,000 shares of our common
stock to Xiao Fei Yu, our Vice President and one of our  Directors,  pursuant to
Mr. Yu's  employment  agreements.  These  options are  exercisable  at $0.10 per
share.  150,000  of these  options  expire on June 1, 2006 and  200,000 of these
options expire on May 26, 2006.  These  issuances were exempt from  registration
requirements pursuant to Regulation S.

                                       17
<PAGE>
     On July 8, 2004, we issued options to purchase 150,000 shares of our common
stock to Dick Wu, our current  Secretary and one of our  Directors,  pursuant to
his employment  agreement.  These options are exercisable at $0.10 per share and
expire on July 6, 2005. This issuance was exempt from registration  requirements
pursuant to Regulation S. All of these options were exercised on August 12, 2004
and August 16, 2004, as described below.

     On July 9, 2004, we issued options to purchase 600,000 shares of our common
stock at $0.10  per  share to  Kenneth  Douglas,  our  former  General  Counsel,
pursuant to his employment agreement. This issuance was exempt from registration
requirements  pursuant to Regulation S. 200,000 of these options were  exercised
on August 16, 2004 and August 18, 2004,  as described  below,  and the remaining
options were cancelled after Mr. Douglas' employment agreement was terminated.

     On August 8, 2004,  we issued  25,000 shares of our common stock to Kenneth
Douglas, our former General Counsel, in consideration for management  consulting
services. The value of such services was estimated to be $4,167. . This issuance
was exempt from registration requirements pursuant to Regulation S.

     Also on August 8, 2004, we issued (1) 25,000 shares of common stock and (2)
options to purchase  250,000 shares of our common stock,  to Walter Dean Gardner
II pursuant to a service contract for financial consulting services. The options
are  exercisable  at $0.10 per share and expire on August 7, 2005.  The value of
Mr. Gardner's  services was estimated to be $4,167.  These issuances were exempt
from registration requirements pursuant to Section 4(2) of the Securities Act.

     On August 12, 2004 we issued  60,000  shares of our common stock to Dick Wu
upon the exercise of options.  Such  options were  exercised at a price of $0.10
per share, for a total cash  consideration  of $6,000.  This issuance was exempt
from registration requirements pursuant to Regulation S.

     On August 16, 2004,  we issued 90,000 shares of common stock to Dick Wu and
50,000  shares of common stock to Kenneth  Douglas upon the exercise of options.
Such  options  were  exercised  at a price of $0.10 per share,  for a total cash
consideration  of  $14,000.   These  issuances  were  exempt  from  registration
requirements pursuant to Regulation S.

     On August 18, 2004, we issued (1) 1,000,000  shares of common stock and (2)
options to purchase 1,000,000 shares of common stock, to Michael Baybak pursuant
to a Consulting Agreement with National Media Associates,  dated August 8, 2004,
for investor relation  services.  The options are exercisable at $0.10 per share
and  expire on August 8,  2007.  The value of the  services  to be  provided  by
National  Media  Associates is estimated to be $250,000.  These  issuances  were
exempt from registration requirements pursuant to Section 4(2) of the Securities
Act.

     On August 18, 2004, we issued 1,000,000 shares of common stock to Sichenzia
Ross Friedman Ference LLP in consideration for certain legal services  performed
for us. The value of such services was  estimated to be $250,000.  This issuance
was exempt  from  registration  requirements  pursuant  to  Section  4(2) of the
Securities Act.

     On August 18, 2004, we issued 150,000 shares of our common stock to Kenneth
Douglas upon the exercise of options. These options were exercised at a price of
$0.10 per share for total cash  consideration  of  $15,000.  This  issuance  was
exempt from registration requirements pursuant to Regulation S.

     On August 22,  2004,  we issued 5,000 shares of our common stock to Anthony
Garson in  consideration  for  marketing  services  rendered.  The value of such
services was estimated to be $1,250.  This issuance was exempt from registration
requirements pursuant to Regulation S.

     On October 2, 2004,  we issued  5,000 shares of our common stock to Adam R.
Cotterill in consideration  for information  technology  services.  The value of
such  services  was  estimated  to be $1,250.  This  issuance  was  exempt  from
registration requirements pursuant to Regulation S.

     On October 3, 2004,  we issued  options to purchase  250,000  shares of our
common  stock  to Dick  Wu,  our  current  Secretary  and one of our  Directors,
pursuant to his employment  agreements.  These options are  exercisable at $0.20
per share and expire on July 9, 2007. This issuance was exempt from registration
requirements  pursuant to Regulation S. 150,000 of these options were  exercised
on October 19, 2004 and November 3, 2004, as described below.

                                       18
<PAGE>
     On October 6, 2004,  we issued  options to purchase  250,000  shares of our
common  stock  to  Xiao  Fei  Yu,  our  current  Vice  President  and one of our
Directors,  pursuant to his employment agreement.  These options are exercisable
at $0.20 per share and expire on July 9, 2007.  This  issuance  was exempt  from
registration requirements pursuant to Regulation S.

     On October 18, 2004, we issued  120,000  shares to Richard Hausig for EDGAR
filing  services.  The value of such shares was  estimated  to be $30,000.  This
issuance was exempt from registration  requirements  pursuant to Section 4(2) of
the Securities Act.

     On October 19, 2004, we issued  100,000  shares of common stock to Dick Wu,
our current  Secretary  and one of our  Directors,  pursuant to the  exercise of
options  at  $0.20  per  share.  This  issuance  was  exempt  from  registration
requirements pursuant to Regulation S.

     On November 2, 2004,  we issued  760,000  shares of common  stock to Hotway
Nutraceutical  Canada  Co.  Ltd.  pursuant  to an  amendment  to  our  Exclusive
Licensing  Agreements  with Hotway  Nutraceutical  Canada Co. Ltd.  The value of
these  shares is  estimated  to be  $190,000.  This  issuance  was  exempt  from
registration requirements pursuant to Regulation S.

     On November 3, 2004,  we issued  50,000  shares of our common stock to Dick
Wu, our current Secretary and one of our Directors,  pursuant to the exercise of
options  at  $0.20  per  share.  This  issuance  was  exempt  from  registration
requirements pursuant to Regulation S.

     On November 8, 2004, we issued  options to purchase  400,000  shares of our
common  stock  to  David  Woo,  our  current  Vice  President  of  Research  and
Development, pursuant to his employment agreement. These options are exercisable
at $0.20 per share and expire on November 7, 2007. This issuance was exempt from
registration requirements pursuant to Regulation S.

     On November 8, 2004, we issued  options to purchase  250,000  shares of our
common  stock  to Dick  Wu,  our  current  Secretary  and one of our  Directors,
pursuant to his employment  agreements.  These options are  exercisable at $0.20
and expire on  November 7, 2006.  This  issuance  was exempt  from  registration
requirements pursuant to Regulation S.

     On November 9, 2004, we issued 15,000 shares of our common stock to Kenneth
Douglas in consideration for management  consulting services.  The value of such
services was estimated to be $3,750.  This issuance was exempt from registration
pursuant to Regulation S.

     On November 11, 2004,  we issued (1) 20,000  shares of our common stock and
(2) warrants to purchase  20,000 shares of our common  stock,  to Bryan Holyk in
consideration  for $5,000 cash. The warrants are  exercisable at $0.75 per share
and expire  November  11,  2005.  This  issuance  was exempt  from  registration
requirements pursuant to Regulation S.

     All of the foregoing  issuances were exempt from registration under Section
4(2) of the  Securities  Act and/or  Regulation S,  promulgated  pursuant to the
Securities  Act. None of the purchasers who received  shares under  Regulation S
are U.S. persons as defined in Rule 902(k) of Regulation S, and no sales efforts
were  conducted in the U.S., in  accordance  with Rule 903(c).  Such  purchasers
acknowledged  that the securities  purchased must come to rest outside the U.S.,
and the  certificates  contain a legend  restricting the sale of such securities
until the Regulation S holding period is satisfied.


                                       19
<PAGE>
Item 6.  Management's Discussion and Analysis or Plan of Operation.

Forward-Looking Statements

     The information in this report contain  forward-looking  statements  within
the meaning of the Private  Securities  Litigation  Reform Act of 1995. This Act
provides a "safe harbor" for  forward-looking  statements to encourage companies
to provide  prospective  information  about  themselves so long as they identify
these statements as forward looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results.  All statements other than statements of historical fact made
in this  report are  forward  looking.  In  particular,  the  statements  herein
regarding  industry  prospects  and future  results of  operations  or financial
position are  forward-looking  statements.  Forward-looking  statements  reflect
management's  current  expectations  and are  inherently  uncertain.  Our actual
results may differ significantly from management's expectations.

Background

     China Health Holding,  Inc. is a development stage business that was formed
in 2002 for the purpose of manufacturing, marketing and distributing proprietary
natural medicinal products. We have had nominal revenues since our inception. We
currently  market and  distribute  products in Canada  through our King of Herbs
product line. We also plan on  developing a Taoist  Medicine  product line and a
Vitamins and  Supplements  product line over the next twelve months.  All of the
products for the three product lines are fully developed and we expect to launch
the Taoist Medicine and Vitamins and  Supplements  product lines within the next
twelve  months.  All of our  manufacturing  is  currently  outsourced  to  third
parties. We plan to generate revenues by sales of our herbal supplement products
(1) through a website that is currently under  construction,  (2) through retail
and wholesale  distributors,  and (3) through the establishment of retail stores
in major cities in North America.  While all of our current operations and sales
are in Canada, we anticipate expanding our sales into the United States over the
next six to twelve months and, thereafter, into regions of Europe and Asia.

Capital Resources

     As of December 31, 2004, we had cash of $3,511. Our current  liabilities as
of December 31, 2004 aggregated  $359,186.  With these resources we expect to be
able to satisfy our cash  requirements for approximately six months. In order to
commercialize  our Taoist Medicine product line and our Vitamins and Supplements
product  line we will need to raise at least $1  million in  financing  over the
next  twelve   months.   In  order  to  implement  our  plan  of  operation  and
commercialize our Taoist Medicine and Vitamins and Supplements product lines, we
intend to seek  outside  debt and  equity  financing,  to the  extent  that such
funding is available  under  reasonable  terms and  conditions.  We have not yet
sought any  commitments  for such  financing  and no assurance can be given that
additional financing will be available,  or if available,  will be on acceptable
terms.

Future Development

     We expect to focus our  resources  over the next twelve months on expanding
the scope of our product  offerings and expanding our business  operations  from
Canada into the United  States and  Europe.  Other than the  products  described
below under  "Research  and  Development"  we do not have any  current  plans to
expand our product lines.

     To expand our operations,  we will need to implement a worldwide  marketing
strategy  for our  products  and  develop  our  website  to allow  for  Internet
purchases of our products. A worldwide marketing strategy will involve a website
that has  multi-language  and  multi-currency  capabilities,  will involve media
advertising in multiple  countries and  distribution  agreements  throughout the
world.  We are  currently  constructing  a website that will feature an Internet
store  which  will  also be used to  market  our  products.  We plan to have our
website  operational  in April  2005,  with  multi-language  and  multi-currency
capabilities in 2006.

     As we grow,  we intend to  establish  regional  sales  teams in the  United
States  and  ultimately  internationally.  These  sales  teams  will  work  with
distributors  and  retailers in their  regions to promote and sell our products.
Also,   together  with  our  investor  relations   consultant,   National  Media
Associates,  we are currently  developing a marketing  plan to promote our brand
name and our products.  We do not currently have any  agreements  with retail or
wholesale  distributors.  Our  management  will work to negotiate and enter into
retail and  wholesale  distribution  agreements  for our products  over the next
twelve  months.  We also plan to begin opening retail outlets in large cities in
North  America,  Europe and the  People's  Republic  of China over the next five
years.  We have not yet located  any sites to  establish  retail  stores but are
initially  looking  for  locations  in New York,  Los  Angeles,  San  Francisco,
Seattle,  Las Vegas or other large cities in the United States.  We plan to open
our first retail storefront in the United States within the next twelve months.

                                       20
<PAGE>
     We anticipate  the  following  expenses  over the next twelve  months:  (a)
$20,000 to develop our Internet  website;  (b) $200,000 for media advertising to
promote our brand name;  (c) $60,000 for our research and  development  program;
(d) $250,000-$400,000 to establish our first retail outlet in the United States,
including  an  integrated  inventory   management/manufacturing/sales   computer
system; (e) $50,000 for an investor relations program; (f) $150,000-$250,000 for
professional and consultant fees; and (g)  $200,000-$300,000 for general working
capital,   including   product   development,   inventory,   and   general   and
administrative  expenses.  We do not  expect  to  purchase  or sell  significant
equipment or to significantly increase the number of our employees over the next
twelve months.

Research and Development

     We expect  to pay  approximately  $60,000  over the next  twelve  months to
scientific  consultants  in the  People's  Republic  of China for  research  and
development of certain products.  Each of the formulations described below would
be considered by the FDA to be unapproved new drugs and will require approval by
the FDA or foreign  regulators  before we can sell  them.  If  approval  of such
products by the FDA or foreign  regulators is delayed or cannot be obtained,  we
will be  forced  to delay  our plans  for  producing  the  products  for sale to
consumers.  While any delay could  adversely  affect our  operations,  we do not
expect such a delay to be material  since the great majority of our products are
considered  dietary  supplements  which  generally  do not  require FDA or other
regulatory  approval.  With the anticipated  $60,000 in research and development
expenses,  we expect to begin  commercial  development  of DFU898 and  undertake
development  efforts of other  product  candidates  as our  financial  and other
resources permit.  However, since we have not yet acquired the rights to DFU898,
no assurance can be given that such rights will be acquired and the  anticipated
research and development expenses may not be incurred.

     Our scientific  consultants  in the People's  Republic of China are helping
develop DFU 898, DVT 896 and ASO 989.  These  products are owned  jointly by two
parties: Dr. Xi JiYi and the Shanghai Chinese & Western Medical Vascular Disease
Research  Institute.  We currently do not have rights to these products,  but we
are currently in negotiations to acquire these rights.

     DFU898.  A treatment of Diabetic Foot Ulceration  ("DFU") and Diabetic Food
Gangrene  ("DFG").  DFU898 was first  discovered  by Dr. Xi JiYe at the Shanghai
Chinese & Western Medical Vascular  Disease  Research  Institute in the People's
Republic of China. This product candidate is based on more than fifteen years of
research and clinical  trials in the areas of DFU and DFG.  DFU898 has undergone
human  clinical  testing in the People's  Republic of China for the treatment in
certain  specialized  hospitals  of patients  who suffer  from DFU and DFG.  The
clinical  testing was performed in accordance with  regulatory  standards in the
People's Republic of China. The United States Food and Drug  Administration  was
not  consulted  in designing  the  clinical  tests.  Since  discovering  DFU898,
Shanghai Chinese & Western Medical  Vascular Disease Research  Institute and Dr.
Xi  JiYe  have  undertaken   detailed  research  and  conducted   doctor/patient
interviews to validate its  effectiveness.  The principal  validation factors at
this time include  positive human clinical  research  results,  research  awards
attributed  to DFU898  from  Chinese  medical  authorities  and the  current and
ongoing use of DFU898 in treating  DFU and DFG in  specialized  hospitals in the
People's  Republic of China.  This  product is  currently  available  for use in
certain  hospitals  in the  People's  Republic of China under  limited  clinical
licenses for special patients.

     Clinical Research of DFU898.  Dr. Xi JiYe undertook a formal clinical study
involving over 400 patients suffering from DFU and DFG. A repeat validation test
was performed in cooperation with the Hong Kong Chinese  University  Hospital to
validate the initial clinical results.  The clinical research revealed a DFU 898
efficacy  rate  greater than 95%, an  amputation  rate lower than 4% and a death
rate of 1.4%.  The test results were  positive for the  treatment of more severe
stages of DFU and DFG. The longer term curative  efficacy rate revealed a two to
three  year  recurrence  rate of  approximately  10% with  recurring  DFU  cured
immediately after a very short period of re-establishing  DFU898 treatment.  The
use of DFU898 has not been reviewed by any United  States or foreign  regulatory
agencies.  Statistical  analysis  of the DFU898  clinical  trials  provided  the
following p values. A p value indicates whether any difference in results of the
clinical  studies is due entirely to chance.  Biological  scientists are usually
willing  to  accept a 5%  probability  that  differences  are due to chance (p =
0.05). A p value of less than 5% (p < 0.05) suggests that the probability of any
differences seen are due to chance is less than 5%.

                                       21
<PAGE>
Observations of DFU898 Treatment                             P Value
--------------------------------                             -------
Reduce blood glucose                                         P < 0.01
Heighten level of C peptide                                  P < 0.05
Reduce levels of 3-lipid-glycerin, cholesterol and the       P < 0.01
     low-density lipid protein
Heighten the level of tPA                                    P < 0.01
Reduce the level of PAI                                      P < 0.05
Increase the value of tPa/PAI                                P < 0.01
Reduce the level of NOS                                      P < 0.05

     Even if the rights to this product are  obtained,  the product would not be
allowed to be marketed in the United States labeled for treatment of diabetes or
complications  thereof  unless a New Drug  Application  (NDA) is  submitted  and
approved by the FDA.  Since the clinical  trials were conducted in China without
consultation  with  the  FDA,  it is  unknown  if the  trials  would  be  deemed
acceptable by the agency as proof of the product's safety and  effectiveness for
use in the  treatment  of  diabetes.  If approval of this  product by the FDA or
foreign regulators is delayed or cannot be obtained,  we will be forced to delay
our plans for producing the product for sale to consumers. While any delay could
adversely  affect our  operations,  we do not expect such a delay to be material
since the great  majority of our products  are  considered  dietary  supplements
which generally do not require FDA or other regulatory approval.

     DVT896.  This product  candidate  has proven  effective in the treatment of
Deep Vein Thrombosis  ("DVT").  DVT is a formation of deep vein blood clots that
can lead to many serious  conditions,  ranging from cerebral  hemorrhage,  heart
disease,  and to what  has  been  popularized  in the  airline  industry  as the
"Economy Class Syndrome."  Clinical  research testing of DVT896 was performed by
Dr. Xi JiYi and the Shanghai Chinese & Western Medical Vascular Disease Research
Institute.  The clinical  testing was  performed in accordance  with  regulatory
standards in the  People's  Republic of China.  The United  States Food and Drug
Administration  was not consulted in designing the clinical tests.  The clinical
research testing indicated an efficacy rate of 99% in treating DVT patients. The
clinical research undertaken to date indicates that DVT896 has the potential for
treating other  conditions  such as  superficial  vein  inflammation,  traumatic
hematoma,  acute  periarthritis of the shoulder and synovitis of the knee joint.
However,  no statistical  analysis was performed of the DVT896 clinical  trials.
Accordingly,  it cannot be  determined  whether  the  results of the trials were
statistically  significant or the  probability of getting more extreme  results.
The use of  DVT896  has not  been  reviewed  by any  United  States  or  foreign
regulatory  agencies.  This  product is currently  available  for use in certain
hospitals in the People's  Republic of China under limited clinical licenses for
special patients.

     This product, if labeled for the specified indications, would be considered
an  unapproved  new  drug by the FDA,  and will  require  an  approved  New Drug
Application  before the product can be marketed in the United States.  Since the
clinical trials were conducted in China without consultation with the FDA, it is
unknown if the trials would be deemed  acceptable  by the agency as proof of the
product's  safety and  effectiveness  for use in the  treatment of diabetes.  If
approval of this product by the FDA or foreign  regulators  is delayed or cannot
be obtained,  we will be forced to delay our plans for producing the product for
sale to consumers.  While any delay could adversely affect our operations, we do
not expect such a delay to be material  since the great majority of our products
are considered  dietary  supplements which generally do not require FDA or other
regulatory approval.

     ASO 989.  This  product  candidate  is intended  to treat  Arteriosclerotic
Obliteration  ("ASO").  ASO is the  hardening  of artery blood  vessels  causing
severe  conditions such as myocardial  infractions  and heart attacks.  Clinical
studies  of ASO 989 were  performed  by Dr. Xi JiYi and the  Shanghai  Chinese &
Western Medical Vascular Disease  Research  Institute.  The clinical testing was
performed in accordance  with regulatory  standards in the People's  Republic of
China.  The United  States Food and Drug  Administration  was not  consulted  in
designing the clinical tests. The clinical studies indicated an efficacy rate of
97% and an amputation rate of less than 1.5%. In addition, the clinical research
conducted to date  indicates that ASO 989 has the potential to treat ischemia of
extremities,  cerebral thrombosis,  cerebral arteriosclerosis and coronary heart
disease.  However, no statistical analysis was performed of the ASO 989 clinical
trials.  Accordingly,  it cannot be determined whether the results of the trials
were  statistically  significant  or the  probability  of getting  more  extreme
results. The use of DVT896 has not been reviewed by any United States or foreign
regulatory  agencies.  This  product is currently  available  for use in certain
hospitals in the People's  Republic of China under limited clinical licenses for
special patients.

                                       22
<PAGE>
     This product, if labeled for the specified indications, would be considered
an  unapproved  new  drug by the FDA,  and will  require  an  approved  New Drug
Application  before the product can be marketed in the United States.  Since the
clinical trials were conducted in China without consultation with the FDA, it is
unknown if the trials would be deemed  acceptable  by the agency as proof of the
product's  safety and  effectiveness  for use in the  treatment of diabetes.  If
approval of this product by the FDA or foreign  regulators  is delayed or cannot
be obtained,  we will be forced to delay our plans for producing the product for
sale to consumers.  While any delay could adversely affect our operations, we do
not expect such a delay to be material  since the great majority of our products
are considered  dietary  supplements which generally do not require FDA or other
regulatory approval.

     We also plan to add VG-ALLERGY, VG-EYE AND VG-ANTI-TUMOR to the products in
our King of Herbs Product Line. We acquired the rights to each of these products
under a  purchase  agreement  dated May 1, 2004 with  Julianna  (Jenny)  Lu, our
founder and principal executive officer,  and Xiao Fei Yu, our President and one
of our directors.  VG-ALLERGY is a product designed to reduce allergic reactions
of the human body.  VG-EYE is formulated to prevent  deterioration  of eyesight.
VG-ANTI-TUMOR is formulated specifically to prevent cancerous growths for cancer
patients who are undergoing chemotherapy treatment. Each of these products would
be considered an unapproved new drug by the FDA and will require an approved New
Drug  Application  before the products can be marketed in the United States.  No
clinical trials have been conducted for these products. The New Drug Application
process is expensive,  lengthy and rigorous requiring extensive  nonclinical and
clinical  trials  to  be  successfully  conducted.  Additionally,  there  is  no
guarantee  that  the  FDA  would  accept  the  data  or  approve  any  New  Drug
Applications  for these  products.  If approval of these  products by the FDA or
foreign regulators is delayed or cannot be obtained,  we will be forced to delay
our plans for  producing  the  products for sale to  consumers.  While any delay
could  adversely  affect our  operations,  we do not  expect  such a delay to be
material  since  the great  majority  of our  products  are  considered  dietary
supplements which generally do not require FDA or other regulatory approval.

Item 7.  Financial Statements.

     All financial  information  required by this Item is attached hereto at the
end of this report.

Item 8.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure.

     Not applicable.

Item 8A. Controls and Procedures.

     As of the  end of the  period  covered  by this  report,  we  conducted  an
evaluation,  under  the  supervision  and with the  participation  of our  chief
executive  officer/chief  financial  officer  of  our  disclosure  controls  and
procedures  (as defined in Rule  13a-15(e)  and Rule  15d-15(e)  of the Exchange
Act). Based upon this evaluation,  our chief executive  officer/chief  financial
officer  concluded that our disclosure  controls and procedures are effective to
ensure that  information  required to be  disclosed by us in the reports that we
file or submit under the Exchange Act is  recorded,  processed,  summarized  and
reported, within the time periods specified in the Commission's rules and forms.
There was no change in our  internal  controls  or in other  factors  that could
affect  these  controls  during  our last  fiscal  quarter  that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

Item 8B. Other Information.

     None.

                                       23
<PAGE>
                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act.

     The  following are the names and certain  information  regarding or current
Directors and Executive Officers:
<TABLE>
<CAPTION>
------------------------------- --------- --------------------------------------------------------
<S>           <C>                 <C>                              <C>
             Name                 Age                            Position
------------------------------- --------- --------------------------------------------------------
Julianna (Jenny) Lu                42     Chief Executive Officer, Principal Financial Officer,
                                          Principal Accounting Officer, Treasurer and Chairman
                                          of the Board of Directors
------------------------------- --------- --------------------------------------------------------
Xiao Fei Yu                        42     Vice President and Director
------------------------------- --------- --------------------------------------------------------
Dick Wu                            49     Secretary and Director
------------------------------- --------- --------------------------------------------------------
David Woo                          47     Vice President, Research and Development
------------------------------- --------- --------------------------------------------------------
James H. Simpson                   55     Vice President, Corporate Development
------------------------------- --------- --------------------------------------------------------
</TABLE>

     Pursuant to our bylaws,  our directors are elected at our annual meeting of
stockholders  and each director  holds office until his successor is elected and
qualified.  Officers are elected by our Board of Directors and hold office until
an officer's  successor has been duly appointed and qualified  unless an officer
sooner  dies,  resigns  or  is  removed  by  the  Board.  There  are  no  family
relationships among any of our directors and executive officers.

Background of Executive Officers and Directors

     Julianna (Jenny) Lu, Founder, Chief Executive Officer,  Principal Financial
Officer,  Principal  Accounting Officer,  Treasurer and Chairman of the Board of
Directors.  Ms. Lu founded China Health Holding, Inc. and has been our principal
executive  officer since our formation in 2002. From 2000 until 2002, Ms. Lu was
the President and Chief Executive Officer of AGPL Pharma Corporation.  From 1999
until 2003, Ms. Lu was the President and Chief  Executive  Officer of Auspicious
J.K. Enterprises, Ltd.

     Xiao Fei Yu, Vice  President and  Director.  Mr. Yu has helped China Health
Holding create and develop 26 natural  herbal product  formulas that make up our
King of Herbs and Taoist Medicine product lines. Mr. Yu has been a member of our
Board of Directors since May 26, 2004 and on October 6, 2004 he was appointed to
a  position  as Vice  President.  From  1997 to  Present,  Mr.  Yu has  been the
President  and  Director of Taoist  Tantric & Toltec  Research  and  Development
Centre located in Beijing, People's Republic of China. From 1998 to Present, Mr.
Yu has been a  Research  Scientific  Consultant  of  Central  TCM  Research  and
Development Institute located in Beijing,  People's Republic of China. From 1999
to  Present,  Mr.  Yu has been  teaching  Taoism,  Taoist  medicine  and  Indian
classical  philosophy & religion as a professor in the  Department of Philosophy
at the University of CCCP located in Beijing,  People's  Republic of China. From
1994 until 1999, Mr. Yu was an Associate  Professor in Taoism,  Taoist medicine,
Buddhism and  Scientific  Philosophy  in the  Department  of  Philosophy  at the
University of CCCP.

     Dick Wu,  Secretary and Director.  Mr. Wu has been a member of our Board of
Directors  since July 8, 2004 and was  appointed  Secretary  on October 3, 2004.
From May 2000 to Present,  Mr. Wu has been a Director of Apollo  Precise  Parts,
Inc.  From  September  1996 to Present,  Mr. Wu has been the President of Finest
Business Investment Development,  Inc. From May 1992 to Present, Mr. Wu has been
the President of New Way Refrigeration & Air  Conditioning,  Ltd. From July 1987
to Present, Mr. Wu has been the President of Consumer  Refrigeration & Appliance
Service, Ltd.

     David Woo, Vice President,  Research and Development. Mr. Woo was appointed
Vice  President of Research and  Development  on November 8, 2004.  From 2002 to
Present,  Mr. Woo has been  Executive  Director  of Tianjin  GMCC  Biotech  Ltd.
located  in  Tianjin,  China.  From 2002 to  Present,  Mr. Woo also has acted as
President of Beiging EcoMed Pharmaceutical Ltd., in Beijing, China. From 2001 to
Present,  Mr. Woo has been the Chief Executive  Officer of Hotway  Nutraceutical
Canada Co., Ltd., located in Vancouver,  Canada.  From 2000 to Present,  Mr. Woo
has been the Chief  Scientist of  GMCC-David  Laboratories  Inc.,  in Vancouver,
Canada. From 1998 until 2000, Mr. Woo was an Associate Professor at UBC Medicine
School in  Vancouver,  Canada.  From 1996 until 1998,  Mr. Woo was an  Assistant
Professor at UBC Agriculture School.


                                       24
<PAGE>
     James H. Simpson, Vice President,  Corporate  Development.  Mr. Simpson was
appointed  Vice President of Corporate  Development  on November 18, 2004.  From
1996 to Present, Mr. Simpson has been the President of Bevitor Holding Ltd.

Audit Committee Financial Expert

     We do not have an audit committee financial expert, as that term is defined
in Item 401 of  Regulation  S-B.  We have not been able to  identify  a suitable
nominee to serve as an audit committee financial expert.

Code of Ethics

     We have  adopted  our Code of Ethics and  Business  Conduct  for  Officers,
Directors  and  Employees  that applies to all of our  officers,  directors  and
employees. The Code of Ethics is filed herewith as Exhibit 14.1 Upon request, we
will provide to any person without charge a copy of our Code of Ethics. Any such
request should be made to Attn:  Julianna Lu, China Health  Holding,  Inc, Suite
600 - 666 Burrard St., Park Place, Vancouver,  British Columbia, Canada V6C 2X8.
Our telephone number is (604) 608-6788.

Item 10. Executive Compensation.

     The  following   table  sets  forth   information   concerning   the  total
compensation  that we have  paid or that has  accrued  on  behalf  of our  chief
executive  officer  and  other  executive  officers  with  annual   compensation
exceeding  $100,000  during the fiscal years ending  December 31, 2004, 2003 and
2002.

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
                                                                                                 Long-Term
                                                                                               Compensation
                                                                                ------------------------------ -------------
                                                  Annual Compensation                      Awards                Payouts
                                          ------------------------------------- ------------------------------ -------------
                                                                                                                               All
                                                                      Other                       Securities                  Other
                                                                     Annual     Restricted        Under-lying                Compen-
          Name and                         Salary ($)                Compen-    Stock Award(s)    Options/         LTIP      sation
     Principal Position          Year         (1)       Bonus ($)  sation ($)   ($)               SARs (#)     Payouts ($)      ($)
------------------------------ ---------- ------------- ---------- ------------ ----------------- ------------ -----------  --------
<S>                             <C>        <C>            <C>         <C>             <C>            <C>           <C>          <C>
Julianna (Jenny) Lu, CEO,       2004       $84,000        0           0               0              0             0            0
 principal financial officer,   2003       $60,000        0           0               0              0             0            0
 principal accounting officer,  2002       $45,000        0           0               0              0             0            0
 Treasurer and Chairman
 of the Board
</TABLE>

(1) Ms.  Lu's  salary for 2004,  2003 and 2002 has been  accrued and is included
loans to us from Ms. Lu. Ms.  Lu's loans are  described  more fully  below under
Item 12. Certain Relationship and Related Transactions.

Employment Agreements and Director Compensation

     On June 1, 2004,  we entered into an  employment  agreement  with  Julianna
(Jenny)  Lu,  pursuant  to which Ms. Lu has agreed to be  employed  as our Chief
Executive Officer, Treasurer,  Secretary,  Director and Chairman of our Board of
Directors.  The agreement commenced retroactively beginning May 1, 2004 and does
not have an expiration term. As compensation  under the agreement,  we agreed to
pay Ms. Lu  $8,000  per  month.  Every  six  months,  we will  review  Ms.  Lu's
management services and her monthly  compensation may increase 30% to 50% at the
discretion of the Board of Directors.  In addition, we granted Ms. Lu options to
purchase 2,500,000 shares of our common stock at a price of $0.10 per share. The
options  expire  the  sooner of (a) June 1, 2009 or (b)  thirty  days  after the
termination  of the  agreement.  Ms. Lu will also be  reimbursed  for any actual
out-of-pocket expenses incurred while performing her duties under the agreement.
Any individual expense items, other than telephone  invoices,  in excess of $200
must first be approved by us. Ms. Lu's employment agreement does not contain any
termination provisions

                                       25
<PAGE>
     On May 26, 2004, we entered into an agreement with Xiao Fei Yu, pursuant to
which Mr.  Yu has  agreed  to act as a member  of our  Board of  Directors.  The
agreement  commenced  on  May  26,  2004  and is for a  term  of two  years.  As
compensation, we granted Mr. Yu options to purchase 200,000 shares of our common
stock at a price of $0.10 per share. The options expire on sooner of (a) May 26,
2006 or (b) thirty days after the termination of the agreement. Mr. Yu will also
be reimbursed for any actual  out-of-pocket  expenses  incurred while performing
her  duties  under the  agreement.  Any  individual  expense  items,  other than
telephone  invoices,  in excess of $200 must first be approved  by China  Health
Holding.  Mr.  Yu's  employment  agreement  does  not  contain  any  termination
provisions.

     On October 6, 2004, we amended the  agreement  with Mr. Yu and added to his
responsibilities the position of Vice President.  Pursuant to the amendment,  we
granted Mr. Yu an option to  purchase  250,000  shares of our common  stock at a
price of $0.20.  The option expires the sooner of (a) July 9, 2007 or (b) thirty
days after termination of Mr. Yu's employment agreement, as amended.

     On June 8, 2004, we entered into another agreement with Mr. Yu, pursuant to
which  Mr.  Yu  is  responsible  for  new  products  research  and  development,
manufacturing  under GMP  standards,  the People's  Republic of China market and
public relations.  The agreement  commenced on June 1, 2004 and is for a term of
two years. As compensation under this agreement,  we agreed to pay Mr. Yu $1,000
per  month.  Mr.  Yu's  services  will be  reviewed  every 6  months  and may be
increased the discretion of our Board of Directors.  In addition, we granted Mr.
Yu options to purchase  150,000  shares of our common  stock at a price of $0.10
per share.  The options expire the sooner of (a) June 1, 2006 or (b) thirty days
after the  termination of the agreement.  Mr. Yu will also be reimbursed for any
actual  out-of-pocket  expenses  incurred while  performing her duties under the
agreement.  Any individual  expense items,  other than  telephone  invoices,  in
excess of $200 must first be approved by China Health Holding.

     On July 8, 2004,  we entered  into an agreement  with Dick Wu,  pursuant to
which Mr.  Wu has  agreed  to act as a member  of our  Board of  Directors.  The
agreement  commenced  retroactively  beginning July 6, 2004 and is for a term of
one year.  Mr. Wu's services will be reviewed  after a three month  probationary
period,  after which the agreement  may be  terminated by us for any reason.  As
compensation, we granted Mr. Wu options to purchase 150,000 shares of our common
stock at a price of $0.10 per share.  The options  expire the sooner of (a) July
6, 2005 or (b) thirty days after the termination of the agreement.

     On October 3, 2004, we amended the  agreement  with Mr. Wu and added to his
responsibilities  the  position  of  Secretary.  Pursuant to the  amendment,  we
granted Mr. Wu an option to  purchase  250,000  shares of our common  stock at a
price of $0.20.  The option expires the sooner of (a) July 7, 2007 or (b) thirty
days after the termination of Mr. Wu's employment agreement, as amended.

     On  November 8, 2004,  we agreed to extend the term of Mr. Wu's  employment
agreement for an additional  year to expire on July 6, 2006. In connection  with
the  extension,  we granted Mr. Wu an option to purchase  250,000  shares of our
common stock at a price of $0.20.  The option expires the sooner of (a) November
7,  2006 or (b)  thirty  days  after  the  termination  of Mr.  Wu's  employment
agreement.

     On November 8, 2004, we entered into an agreement with David Woo,  pursuant
to which Mr. Woo has agreed to be employed as our Vice President of Research and
Development.  The agreement  commenced on November 8, 2004 and terminates  after
two years. Mr. Woo's services will be reviewed after a three month  probationary
period,  after which the agreement  may be  terminated by us for any reason.  As
compensation,  we granted  Mr. Woo  options to  purchase  400,000  shares of our
common stock at a price of $0.20 per share. The options expire the sooner of (a)
November 7, 2007 or (b) thirty days after the termination of the agreement.

                                       26
<PAGE>

     On November 16, 2004,  we entered into an agreement  with James H. Simpson,
pursuant to which Mr. Simpson has agreed to be employed as our Vice President of
Corporate  Development.  The  agreement  commenced  on  November  18,  2004  and
terminates on November 17, 2007. Mr. Simpson's services will be reviewed after a
three month probationary  period, after which the agreement may be terminated by
us for any reason.  As  compensation,  we agreed to pay Mr.  Simpson  $3,000 per
month. In addition, we granted Mr. Simpson options to purchase 600,000 shares of
our common stock at a price of $0.20 per share. The options expire the sooner of
(a) November 17, 2009 or (b) thirty days after the termination of the agreement.
Mr.  Simpson  will also be  reimbursed  for any  actual  out-of-pocket  expenses
incurred while performing his duties under the agreement. Any individual expense
items, other than telephone  invoices,  in excess of $200 must first be approved
by us.

Item 11. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters.

     The following  table sets forth certain  information,  as of March 28, 2005
with respect to the beneficial  ownership of the outstanding common stock by (i)
any holder of more than five (5%) percent;  (ii) each of our executive  officers
and directors; and (iii) our directors and executive officers as a group. Except
as otherwise  indicated,  each of the stockholders  listed below has sole voting
and investment power over the shares beneficially owned.
<TABLE>
<CAPTION>
                           Common Stock Percentage of
  Name of Beneficial Owner (1)               Beneficially Owned (2)     Common Stock (3)
  ----------------------------------------- ------------------------- ---------------------
<S>                   <C>                          <C>                        <C>
  Julianna (Jenny) Lu (4)                          28,180,000                 61.5%

  Xiao Fei Yu (5)                                   4,500,000                 10.4%

  Dick Wu (6)                                       1,170,000                  2.7%

  David Woo (7)                                       400,000                     *

  James H. Simpson (8)                              3,800,000                  8.8%

  ----------------------------------------- ------------------------- ---------------------
  All  officers  and  directors as a group         38,500,000                 80.1%
  (5 persons)
</TABLE>
     * Less than 1%

     (1)  Except as otherwise indicated, the address of each beneficial owner is
          c/o China Health  Holding,  Inc.,  Suite 600 - 666 Burrard  St.,  Park
          Place, Vancouver, British Columbia, Canada V6C 2X8.
     (2)  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 the shares  shown.  Except  where
          indicated  by footnote and subject to  community  property  laws where
          applicable,  the  persons  named in the  table  have sole  voting  and
          investment power with respect to all shares of voting securities shown
          as beneficially owned by them.
     (3)  Based on 42,530,600 shares outstanding.
     (4)  Includes (a) options to purchase  2,500,000  shares of common stock at
          $0.10 per share that  expire on June 1, 2009;  (b) options to purchase
          300,000  shares of common  stock at $0.05  per  share  that  expire on
          December  30,  2007;  and (c)  options to purchase  500,000  shares of
          common stock at $0.05 per share that expire on April 30, 2008.
     (5)  Includes  (a) options to purchase  150,000  shares of common  stock at
          $0.10 per share that  expire on June 1, 2006;  (b) options to purchase
          200,000  shares of common  stock at $0.10 per share that expire on May
          26, 2006;  and (c) options to purchase  250,000 shares of common stock
          at $0.20 per share that expire on July 9, 2007.
     (6)  Includes  (a) options to purchase  150,000  shares of common  stock at
          $0.10 per share that  expire on July 6, 2005;  (b) options to purchase
          250,000  shares of common stock at $0.20 per share that expire on July
          9, 2007; and (c) options to purchase 250,000 shares of common stock at
          $0.20 per share that expire on November 7, 2006.
     (7)  Includes  options to purchase  400,000 shares of common stock at $0.20
          per share that expire on November 7, 2006.
     (8)  Includes  options to purchase  600,000 shares of common stock at $0.10
          per share that expire on June 16, 2009.



                                       27
<PAGE>
Item 12. Certain Relationships and Related Transactions.

     Pursuant to an agreement dated May 1, 2004 between A E&E Pharma Corporation
(n/k/a China Health Holding,  Inc.),  Julianna (Jenny) Lu and Xiao Fei Yu, Jenny
Lu,  our  founder  and  principal  executive  officer,  and Xiao Fei Yu sold all
proprietary  rights  and  formulas  to the "26  100%  natural  herbal  medicinal
products" (the  "Products")  that comprise the King of Herbs and Taoist Medicine
product lines (described below) to China Health Holding.  On August 8, 2004, the
parties signed an Amended and Restated Intellectual Property Purchase Agreement,
which  clarifies  the  terms of the  Purchase  Agreement  for the  Products.  In
consideration  for the  proprietary  rights and formulas to the Products,  China
Health Holding agreed to: (a) issue to Ms. Lu 2,000,000  shares of common stock;
(b) pay to Ms. Lu $150,000  cash;  (c) pay to Ms. Lu following  the closing date
and until May 1, 2029, a cash amount  equal to 4.8% of gross  revenue from sales
of the Products;  (d) issue to Mr. Yu 200,000 shares of common stock; (e) pay to
Mr. Yu $25,000 cash;  and (f) pay to Mr. Yu following the closing date and until
May 1, 2029,  a cash  amount  equal to 0.2% of gross  revenue  from sales of the
Products.  None of the  required  cash  payments  have  been  made to date.  The
outstanding cash payments under the Amended and Restated  Intellectual  Property
Agreement accrue interest at the rate of 10% per annum. Our management  believes
the terms of the Amended and Restated  Intellectual  Property  Agreement  are on
terms at least as favorable as could have been  obtained  from  unrelated  third
parties.

     Since April 22, 2002,  Julianna  (Jenny) Lu has extended  numerous loans to
China Health Holding. The aggregate amount due to Ms. Lu as of December 31, 2004
totaled $297,552. These loans bear interest at the rate of 10% per annum, are on
an unsecured basis and do not have any terms for repayment. These loans have not
been documented by any written agreement.  Our management  believes the terms of
these loans are at least as favorable as could have been obtained from unrelated
third parties.

     As of December 31, 2004 China  Health  Holding owed an aggregate of $34,014
to Xiao Fei Yu from various loans and payments made by Mr. Yu on behalf of China
Health Holding.  These loans bear interest at the rate of 10% per annum,  are on
an unsecured basis and do not have any terms for repayment. These loans have not
been documented by any written agreement.  Our management  believes the terms of
these loans are at least as favorable as could have been obtained from unrelated
third parties.

     As of December 31, 2004 China Health Holding owed an aggregate of $3,448 to
James  Simpson,  one of the  Company's  major  shareholders,  from various loans
extended  by Mr.  Simpson  to  China  Health  Holding.  These  loans do not bear
interest,  are on an  unsecured  basis and do not have any terms for  repayment.
These loans have not been  documented by any written  agreement.  Our management
believes  the terms of these loans are at least as  favorable as could have been
obtained from unrelated third parties.

     We have entered into the following  agreements  with Hotway  Nutraceuticals
Canada Co., Ltd.  ("Hotway").  David Woo, the Chief Executive Officer of Hotway,
is our Vice President of Research and Development.

Exclusive Licensing Agreement for 19 Cordyceps Products

     On March 9,  2004,  we  entered  into an  amended  and  restated  Exclusive
Licensing  Agreement with Hotway.  Mr. David Woo, our Vice President of Research
and Development,  is the Chief Executive Officer of Hotway. Under this agreement
Hotway has granted us exclusive licenses to certain neutraceutical  products for
a term of  twenty  years in the  following  countries:  United  States,  Canada,
Argentina, Brazil, Columbia, Chile, Uruguay, Paraguay, England, France, Germany,
Italy, Spain, Holland, Poland, Switzerland,  Sweden, Australia,  Monaco, Norway,
Denmark,  Austria,  Ireland,  Israel,  Kuwait, Iran, Hong Kong, Japan,  Malaise,
Singapore,  India,  Indonesia and the People's  Republic of China. The Exclusive
Licensing  Agreement  grants  us:  (a)  the  exclusive  license  to  utilize  19
neutraceutical products and their raw materials in the above-listed territories;
(b) the exclusive rights to register the Trademarks/Trade  Names of the products
under  our  name in  each of the  above-listed  territories;  (c) the  exclusive
license to use, replicate,  copy, modify, adopt and manufacture the products for
the purpose of developing derivative products by modifying, refining, upgrading,
or improving the licensed property; and (d) the exclusive rights to the licensed
products' ingredients.  In addition,  Hotway granted us a right of first refusal
to acquire  any new  products  developed  by Hotway  after  March 9, 2004.  Upon
expiration of the Exclusive Licensing  Agreement,  Hotway will own the rights to
any modifications, upgrades or improvements made to the licensed products.

                                       28
<PAGE>
     In  consideration   for  rights  granted  under  the  Exclusive   Licensing
Agreement,  we agreed to pay Hotway $10,000 for each country listed above,  or a
total of  $330,000.  The  payments  must be paid to Hotway by March 9, 2005.  To
date,  we have not made any of these  payments.  We also  agreed  to: (a) sell a
minimum of 2,000 bottles/60 capsules of the licensed products within 6-12 months
after March 9, 2004;  (b) manage  marketing  programs for the licensed  products
within 3-6 months after March 9, 2004;  (c) maintain sales of a minimum of 6,000
bottles/60  capsules annually for each  above-listed  country within 6-12 months
after March 9, 2004;  and (d) sell a minimum of  200kg/month of raw materials in
Canada  within 6-12 months after March 9, 2004.  To date,  we have not satisfied
these  requirements.  We  expect  to begin  meeting  these  requirements  in the
upcoming six to eighteen  months.  In connection  with the  Exclusive  Licensing
Agreement,  we entered into a  Confidentiality  Agreement with Hotway,  by which
Hotway has agreed not to  disclose  any data,  records,  reports,  calculations,
documents  and any other  confidential  information  provide  to Hotway by China
Health Holding.

     Our management  believes the terms of the Exclusive Licensing Agreement are
on terms at least as favorable as could have been obtained from unrelated  third
parties.

Exclusive Licensing Agreement for De-Daibe and Depressor Herbs

     On March 9, 2004,  we entered into an Exclusive  Licensing  Agreement  with
Hotway,  by which  Hotway has granted us  exclusive  licenses  to  De-Daibe  and
Depressor  Herbs  neutraceutical  products  for a term of  twenty  years  in the
following countries: United States, Canada, Argentina,  Brazil, Columbia, Chile,
Uruguay,  Paraguay,  England,  France, Germany,  Italy, Spain, Holland,  Poland,
Switzerland,  Sweden,  Australia,  Monaco, Norway,  Denmark,  Austria,  Ireland,
Israel, Kuwait, Iran, Hong Kong, Japan, Malaise, Singapore, India, Indonesia and
the People's Republic of China. The Exclusive Licensing Agreement grants us: (a)
the exclusive license to utilize the De-Daibe and Depressor Herbs neutraceutical
products  and their  raw  materials  in the  above-listed  territories;  (b) the
exclusive  rights to register the  Trademarks/Trade  Names of the products under
our name in each of the above-listed  territories;  (c) the exclusive license to
use, replicate, copy, modify, adopt and manufacture the products for the purpose
of  developing  derivative  products  by  modifying,   refining,  upgrading,  or
improving the licensed  property;  and (d) the exclusive  rights to the licensed
products' ingredients.  In addition,  Hotway granted us a right of first refusal
to acquire  any new  products  developed  by Hotway  after  March 9, 2004.  Upon
expiration of the Exclusive Licensing  Agreement,  Hotway will own the rights to
any modifications, upgrades or improvements made to the licensed products.

     In  consideration   for  rights  granted  under  the  Exclusive   Licensing
Agreement,  we agreed to pay Hotway $10,000 for each country listed above,  or a
total of $330,000. Under the terms of the two license agreements with Hotway, we
are required to pay Hotway an aggregate of $660,000.  The payments  must be paid
to Hotway by March 9, 2005. To date, we have not made any of these payments.  We
also agreed to: (a) sell a minimum of 2,000 bottles/60  capsules of the licensed
products within 6-12 months after March 9, 2004; (b) manage  marketing  programs
for the licensed  products  within 3-6 months after March 9, 2004;  (c) maintain
sales of a minimum of 6,000 bottles/60  capsules  annually for each above-listed
country  within  6-12  months  after  March 9,  2004;  and (d) sell a minimum of
200kg/month  of raw  materials in Canada within 6-12 months after March 9, 2004.
To date, we have not satisfied  these  requirements.  We expect to begin meeting
these requirements in the upcoming six to eighteen months.

     Our management believes the terms of this Exclusive Licensing Agreement are
on terms at least as favorable as could have been obtained from unrelated  third
parties.

Amendment to Exclusive Licensing Agreements

     On November 2, 2004, we entered into an agreement  with Hotway to amend the
Exclusive  Licensing  Agreements for the 19 Cordyceps  products and the De-Daibe
and Depressor Herbs products.  The agreement amended the  consideration  that we
owe to Hotway under the Exclusive Licensing  Agreements as follows: (1) we shall
issue to Hotway 760,000 shares of our common stock;  and (2) pay an aggregate of
$100,000  to  Hotway  no later  than 90 days  after  our  common  stock has been
approved for quotation on the OTC Bulletin Board. Other than this consideration,
we are not required to make any other royalty  payments to Hotway.  In the event
that we do not pay or issue this  consideration  to Hotway,  then the  Exclusive
Licensing  Agreements  will  terminate  and  all  other  obligations  under  the
Exclusive  Licensing  Agreements will terminate.  This amendment  supercedes the
previous  consideration  that we owed to Hotway  under the  Exclusive  Licensing
Agreements.  Accordingly,  we do not owe  Hotway an  aggregate  of  $660,000  as
described  above.  The amendment  also provides that we shall have the exclusive
licensing rights on any future improvements to the products that are licensed to
us under  the  Exclusive  Licensing  Agreements.  Our  management  believes  the
amendments  to these  Exclusive  Licensing  Agreements  are on terms at least as
favorable as could have been obtained from unrelated third parties.


                                       29
<PAGE>
Manufacturing Agreement

     On June 8, 2004,  we entered  into a  Manufacturing  Agreement  with Hotway
Neutraceuticals  Canada Co. Ltd. Hotway has agreed to manufacture certain herbal
ingredients  and  supplements  for our  private  label  brand.  The term of this
Manufacturing  Agreement  is for five years,  with an option of both  parties to
renew for another  five years upon  written  notice  given at least  ninety days
before expiration of the term. Hotway has agreed to manufacture certain products
for our three  products  lines at prices to be agreed  upon from time to time in
the future.  If the  parties  are not able to agree on prices and minimum  order
amounts  for a  particular  product,  then we have the right to have the product
manufactured by another  company.  Hotway has the exclusive right to manufacture
the  products  that  Hotway has  licensed  to us under the  Exclusive  Licensing
Agreements.  However  this  exclusivity  shall  only  apply so long as:  (a) the
parties  have  agreed on price and Hotway has not served any notice on us of any
intended  price  increase;  and  (b) to  the  extent  that  Hotway  has  limited
quantities,   we  may   obtain   excess   quantities   from   other   suppliers.
Notwithstanding the exclusivity  provision of the Manufacturing  Agreement,  the
final  packaging  will be completed by GFR Pharma Ltd., as described  below.  If
Hotway does not deliver an order  within ten weeks from receipt of the order and
Hotway  does not remedy the  failure to deliver  within 30 days of notice,  then
Hotway will no longer have the exclusive right to manufacture our products.

     China Health Holding is responsible for any damages, directly or indirectly
related to: (a) all  formulas  owned by China  Health  Holding;  (b) the design,
content,  description,  ingredient  listing and layout of all labels supplied by
China Health Holding;  (c) any patent  violations where the product  formulation
was provided by China Health  Holding;  and (d) any breach of the  Manufacturing
Agreement.  Hotway warrants that the products manufactured by it will meet China
Health  Holding's  specifications.  In addition,  Hotway is responsible  for any
damages,  directly or indirectly related to: (a) contamination of ingredients in
any products  manufactured  by Hotway beyond that permitted by applicable  laws;
(b) all formulas owned by Hotway; (c) non-compliance with any laws,  ordinances,
regulations  or  requirements  of any  federal,  provincial,  municipal or other
authority in the  manufacture of products by Hotway;  (d) incorrect  labeling of
ingredients contained in the products;  (e) violation of any patents in relation
to products where the formulation  was created by Hotway;  and (f) any breach of
the Manufacturing  Agreement.  Hotway and China Health Holding are each required
to maintain  comprehensive bodily injury,  property damage and product liability
insurance applying to their respective  operations and any of their employees or
agents for an amount of not less than  $2,000,000  per occurrence or such higher
amount that the other party  reasonably  requires,  with a deductible of no more
than $5,000, during the term of the Manufacturing Agreement.

     If either  party  materially  defaults  on the  terms of the  Manufacturing
Agreement,  the non-defaulting  party may give notice to the defaulting party to
remedy the default.  The defaulting  party  thereafter has 30 days to remedy the
default.  In the event the  defaulting  party does not remedy the default within
such  period,  the   non-defaulting   party  has  the  right  to  terminate  the
Manufacturing  Agreement upon seven days written notice to the defaulting party.
Notwithstanding  these  notice  provisions,   in  the  event  of  bankruptcy  or
insolvency of the  defaulting  party,  or the  assignment  of the  Manufacturing
Agreement  without the consent of the other party, the  Manufacturing  Agreement
may be terminated immediately.

     Our  management  believes the terms of the  Manufacturing  Agreement are on
terms at least as favorable as could have been  obtained  from  unrelated  third
parties.

                                       30
<PAGE>
Item 13.          Exhibits.
<TABLE>
<CAPTION>
Exhibit Number
                                   Description
------------------ ------------------------------------------------------------------------------------------------
<C>                                                                    <C>
3.01               Articles of  Incorporation  of the A E&E Pharma  Corporation  (Incorporated by reference to the
                   Company's registration statement on Form SB-2 (File No. 333-119034),  filed with the Securities
                   and Exchange Commission on September 16, 2004)
3.02               Certificate of Amendment to Articles of  Incorporation,  changing name to China Health Holding,
                   Inc.  (Incorporated by reference to the Company's registration statement on Form SB-2 (File No.
                   333-119034), filed with the Securities and Exchange Commission on September 16, 2004)
3.03               Certificate  of Amendment to Articles of  Incorporation  increasing  the  Company's  authorized
                   shares of common stock
3.04               Bylaws  (Incorporated by reference to the Company's  registration  statement on Form SB-2 (File
                   No. 333-119034), filed with the Securities and Exchange Commission on September 16, 2004)
10.01              Purchase Agreement,  dated May 1, 2004, between A E&E Pharma  Corporation,  Julianna (Jenny) Lu
                   and Xiao Fei Yu  (Incorporated  by reference to the  Company's  registration  statement on Form
                   SB-2 (File No. 333-119034),  filed with the Securities and Exchange Commission on September 16,
                   2004)
10.02              Amended and Restated  Intellectual  Property Purchase Agreement,  dated August 8, 2004, between
                   China Health Holding,  Inc.,  Julianna (Jenny) Lu and Xiao Fei Yu (Incorporated by reference to
                   the  Company's  registration  statement  on Form SB-2  (File No.  333-119034),  filed  with the
                   Securities and Exchange Commission on September 16, 2004)
10.03              Exclusive Licensing  Agreement for 19 Cordyceps  Products,  dated March 9, 2004, between Hotway
                   Nutraceutical  Canada Co., Ltd. and A E&E Pharma Corporation  (Incorporated by reference to the
                   Company's registration statement on Form SB-2 (File No. 333-119034),  filed with the Securities
                   and Exchange Commission on September 16, 2004)
10.04              Exclusive  Licensing  Agreement for De-Daibe and Depressor Herbs,  dated March 9, 2004, between
                   Hotway Nutraceutical  Canada Co., Ltd. and A E&E Pharma Corporation  (Incorporated by reference
                   to the  Company's  registration  statement on Form SB-2 (File No.  333-119034),  filed with the
                   Securities and Exchange Commission on September 16, 2004)
10.05              Manufacturing  Agreement,  dated June 8, 2004,  between China Health  Holding,  Inc. and Hotway
                   Nutraceutical  Canada Co.,  Ltd.  (Incorporated  by  reference  to the  Company's  registration
                   statement  on Form  SB-2  (File  No.  333-119034),  filed  with  the  Securities  and  Exchange
                   Commission on September 16, 2004)
10.06              Manufacturing Agreement,  dated February 9, 2004, between Canadian  Phytopharmaceuticals  Corp.
                   and A  E&E  Pharma  Corporation  (Incorporated  by  reference  to  the  Company's  registration
                   statement  on Form  SB-2  (File  No.  333-119034),  filed  with  the  Securities  and  Exchange
                   Commission on September 16, 2004)
10.07              Manufacturing Agreement, dated April 8, 2004, between A
                   E&E Pharma Corporation and GFR Pharma, Ltd. (Incorporated
                   by reference to the Company's registration statement on
                   Form SB-2 (File No. 333-119034), filed with the Securities
                   and Exchange Commission on September 16, 2004)
10.08              Lease Agreement,  dated May 11, 2004,  between A E&E Pharma  Corporation and Insignia Corporate
                   Establishments  (Eight) Inc. (Incorporated by reference to the Company's registration statement
                   on Form SB-2 (File No.  333-119034),  filed with the  Securities  and  Exchange  Commission  on
                   September 16, 2004)
10.09              Executive  Management  Services  Agreement,  dated June 1, 2004,  between China Health Holding,
                   Inc.  and  Julianna  (Jenny)  Lu  (Incorporated  by  reference  to the  Company's  registration
                   statement  on Form  SB-2  (File  No.  333-119034),  filed  with  the  Securities  and  Exchange
                   Commission on September 16, 2004)
10.10              Director Services  Agreement,  dated May 26, 2004, between China Health Holding,  Inc. and Xiao
                   Fei Yu  (Incorporated by reference to the Company's  registration  statement on Form SB-2 (File
                   No. 333-119034), filed with the Securities and Exchange Commission on September 16, 2004)
10.11              Consulting Services Agreement,  dated June 8, 2004, between China Health Holding, Inc. and Xiao
                   Fei Yu  (Incorporated by reference to the Company's  registration  statement on Form SB-2 (File
                   No. 333-119034), filed with the Securities and Exchange Commission on September 16, 2004)
10.12              Director Consulting Services Agreement,  dated July 8, 2004, between China Health Holding, Inc.
                   and Dick Wu  (Incorporated  by reference to the Company's  registration  statement on Form SB-2
                   (File No. 333-119034), filed with the Securities and Exchange Commission on September 16, 2004)
10.13              Management  Services  Agreement,  dated July 9, 2004,  between China Health  Holding,  Inc. and
                   Kenneth  Douglas  (Incorporated  by reference to the Company's  registration  statement on Form
                   SB-2 (File No. 333-119034),  filed with the Securities and Exchange Commission on September 16,
                   2004)


                                       31
<PAGE>
10.14              Consulting  Agreement,  dated August 8, 2004,  between China Health Holding,  Inc. and National
                   Media  Associates  (Incorporated by reference to the Company's  registration  statement on Form
                   SB-2 (File No. 333-119034),  filed with the Securities and Exchange Commission on September 16,
                   2004)
10.15              Amendment  No. 1 to  Consulting  Agreement,  dated  September  6, 2004,  between  China  Health
                   Holding,  Inc. and  National  Media  Associates  (Incorporated  by  reference to the  Company's
                   registration  statement  on Form SB-2  (File No.  333-119034),  filed with the  Securities  and
                   Exchange Commission on September 16, 2004)
10.16              Letter Agreement,  dated November 2, 2004,  amending the Exclusive  Licensing  Agreement for 19
                   Cordyceps  Products and the Exclusive  Licensing  Agreement  for De-Daibe and  Depressor  Herbs
                   between Hotway  Nutraceutical  Canada Co., Ltd. and A E&E Pharma  Corporation  (Incorporated by
                   reference to the Company's  registration  statement on Form SB-2 (File No.  333-119034),  filed
                   with the Securities and Exchange Commission on November 22, 2004)
10.17              Lease  Agreement,  dated  October 20, 2004,  between  China Health  Holding,  Inc. and Insignia
                   Office  Centers  (Vancouver),  Inc.  (Incorporated  by reference to the Company's  registration
                   statement  on Form  SB-2  (File  No.  333-119034),  filed  with  the  Securities  and  Exchange
                   Commission on November 22, 2004)
10.18              Management  Consulting  Agreement,  dated November 8, 2004, between China Health Holding,  Inc.
                   and Dr. Wu,  Xiannan  (David Woo)  (Incorporated  by  reference to the  Company's  registration
                   statement  on Form  SB-2  (File  No.  333-119034),  filed  with  the  Securities  and  Exchange
                   Commission on November 22, 2004)
10.19              Amendment dated October 3, 2004 to Director Consulting  Agreement between China Health Holding,
                   Inc. and Dick Wu  (Incorporated  by reference to the Company's  registration  statement on Form
                   SB-2 (File No.  333-119034),  filed with the Securities and Exchange Commission on November 22,
                   2004)
10.20              Amendment  dated  October 6, 2004 to  Management  Consulting  Agreement  between  China  Health
                   Holding,  Inc.  and  Xiao Fei Yu  (Incorporated  by  reference  to the  Company's  registration
                   statement  on Form  SB-2  (File  No.  333-119034),  filed  with  the  Securities  and  Exchange
                   Commission on November 22, 2004)
10.21              Management  Consulting  Services  Agreement,  dated  November  16, 2004,  between  China Health
                   Holding,  Inc. and James H. Simpson  (Incorporated  by reference to the Company's  registration
                   statement  on Form  SB-2  (File  No.  333-119034),  filed  with  the  Securities  and  Exchange
                   Commission on November 22, 2004)
14.1               Code of Ethics
31.1               Certification by Chief Executive  Officer/Chief  Financial Officer,  required by Rule 13a-14(a)
                   or  Rule  15d-14(a)  of  the  Exchange  Act,   promulgated  pursuant  to  Section  302  of  the
                   Sarbanes-Oxley Act of 2002
32.1               Certification by Chief Executive Officer/Chief Financial
                   Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of
                   the Exchange Act and Section 1350 of Chapter 63 of Title
                   18 of the United States Code, promulgated pursuant to
                   Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>
Item 14.          Principal Accountant Fees and Services.

Audit Fees

     The  aggregate  fees  billed  for  professional  services  rendered  by our
principal accountants for the audit of our financial statements, for the reviews
of the financial  statements  included in our annual report on Form 10-KSB,  and
for other services  normally  provided in connection with statutory filings were
$10,000 and $7,500 for the years ended  December 31, 2004 and December 31, 2003,
respectively.

Audit Related Fees

     We incurred fees of $6,365 and $1,455 for the years ended December 31, 2004
and December 31, 2003,  respectively,  for professional services rendered by our
principal  accountants  that are  reasonably  related to the  performance of the
audit or review of our financial statements and not included in "Audit Fees."

All Other Fees

     We did not incur any other fees for professional  services  rendered by our
principal  accountants during the years ended December 31, 2004 and December 31,
2003.


Audit Committee Pre-Approval Policies and Procedures

     Not applicable.



                                       32
<PAGE>
                                   SIGNATURES

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

                                   CHINA HEALTH HOLDING, INC.


 Dated:   March 30, 2005           By: /s/ Julianna Lu
                                           -----------------------------------
                                           Julianna (Jenny) Lu
                                           Chief Executive Officer, Principal
                                           Financial Officer, Principal
                                           Accounting Officer, Treasurer and
                                           Chairman of the Board of Directors

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


SIGNATURE                 TITLE                                   DATE
---------                 -----                                   ----


/s/ Julianna Lu           Chairman of the Board of Directors      March 30, 2005
    -------------------
    Julianna (Jenny) Lu


/s/ Xiao Fei Yu           Director                                March 30, 2005
    -----------
    Xiao Fei Yu


/s/ Dick Wu               Director                                March 30, 2005
    -------
    Dick Wu



                                       33
<PAGE>

                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)

                          (a development stage company)

                              FINANCIAL STATEMENTS


                           DECEMBER 31, 2004 AND 2003







    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    BALANCE SHEETS

    STATEMENTS OF OPERATIONS

    STATEMENT OF STOCKHOLDERS' EQUITY

    STATEMENTS OF CASH FLOWS

    NOTES TO FINANCIAL STATEMENTS


                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the  Stockholders  and  Board of  Directors  of  China  Health  Holding  Inc.
(formerly A E & E Pharma Corporation):

We have audited the balance  sheets of China Health  Holding Inc. (a development
stage  company)  as at  December  31,  2004  and  2003,  and the  statements  of
operations, stockholders' equity and cash flows for the years ended December 31,
2004 and December 31, 2003 and for the period from April 3, 2002  (inception) to
December 31, 2004.  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  an audit to obtain  reasonable  assurance  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,  these  financial  statements  present  fairly in all  material
respects, the financial position of the Company as at December 31, 2004 and 2003
and the  results  of its  operations  and its  cash  flows  and the  changes  in
stockholders'  equity for the years ended  December  31, 2004 and  December  31,
2003, and for the period from April 3, 2002  (inception) to December 31, 2004 in
accordance with United States generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue as a going  concern.  As  discussed  in Note 2(a) to the
financial  statements,  the Company has a working capital deficiency,  a capital
deficiency,  has incurred  significant losses since inception and further losses
are anticipated in the  development of its products  raising  substantial  doubt
about the Company's ability to continue as a going concern.  Management's  plans
in regard to these  matters  are also  described  in Note  2(a).  The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.




                                           /s/ Dale Matheson Carr-Hilton Labonte
                                               --------------------------------
Vancouver, B.C.                                DALE MATHESON CARR-HILTON LABONTE
March 28, 2005                                             CHARTERED ACCOUNTANTS



                                      F-2
<PAGE>

                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

                                                                                               Dec 31,             Dec. 31,
                                                                                                2004                 2003
                                                                                                  $                    $
------------------------------------------------------------------------------------------------------------------------------------

                                     ASSETS
<S>                                                                                               <C>                    <C>
CURRENT ASSETS
    Cash                                                                                          3,511                  282
    Prepaid expenses (Note 6 and 7)                                                             349,750                  772
                                                                                                --------             --------
                                                                                                353,261                1,054

FIXED ASSETS, net of depreciation (Note 4)                                                        5,132                2,294

INTANGIBLE ASSETS (Note 3)                                                                            2                    -

                                                                                                358,395                3,348
                                   LIABILITIES

CURRENT LIABILITIES
    Accounts payable and accrued liabilities                                                     24,172               14,677
     Due to shareholders (Note 5)                                                               335,014               85,725
                                                                                                --------             --------
                                                                                                359,186              100,402
                                                                                                --------             --------
                            STOCKHOLDERS' DEFICIENCY

STOCKHOLDERS' EQUITY (Note 6 and 11)
       Common stock, $0.001 par value, 55,000,000 shares authorized
          36,522,700 (2003 - 29,165,000) shares
          issued and outstanding                                                                 36,523               29,165
       Preferred stock, $0.001 par value, 20,000,000 shares authorized,
          Nil shares issued and outstanding                                                           -                    -
       Additional paid-in capital                                                             2,293,570              105,185
       Deficit accumulated during the development stage                                      (2,319,622)            (221,346)
       Accumulated other comprehensive (loss) income                                            (11,262)             (10,058)
                                                                                                --------             --------
                                                                                                   (791)             (97,054)


                                                                                                358,395                3,348
</TABLE>
GOING CONCERN (Note 2(a))
COMMITMENTS (Note 3 and 9)


    The accompanying notes are an integral part of these financial statements

                                      F-3
<PAGE>

                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       April 3, 2002
                                                              Year ended            Year ended         (inception) to
                                                             Dec. 31, 2004         Dec. 31, 2003         Dec. 31, 2004
                                                                   $                    $                    $

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

<S>                                                                 <C>                                     <C>
SALES                                                               7,305                 -                 7,305
                                                                ----------           ----------         ----------

EXPENSES
       Advertising and promotion                                                        17,126             47,010
                                                                   17,968
       Amortization of intangible assets                            7,125                    -              7,125
       Consulting fees (Note 6 and 7)                                                    6,836            431,136
                                                                  424,300
       Depreciation of tangible assets                                                     129              1,012
                                                                      883
       Impairment of licensing rights (Note 3)                    182,874                    -            182,874
       Interest and bank charges (Note 8)                                                5,840             26,116
                                                                   19,973
       Loss on settlement of debts and issuance of shares
       (Notes 7 and 12)                                            29,297               41,108             70,405
       Management fees (Note 6)                                                         60,000            809,000
                                                                  704,000
       Office                                                                            2,156             13,582
                                                                    8,609
       Professional fees (Note 7)                                                        1,428            326,044
                                                                  319,206
       Rent                                                                             12,359             32,681
                                                                   15,595
       Research and development (Note 3)                          366,306                    -            366,306
       Travel                                                                              161              8,421
                                                                    8,060
       Vehicle                                                      1,385                2,530              5,215
                                                                ----------           ----------         ----------
                                                                2,105,581              149,673          2,326,927
                                                                ----------           ----------         ----------



NET LOSS FOR THE YEAR                                           2,098,276              149,673          2,319,622


BASIC NET LOSS PER SHARE                                            $0.06                $0.01


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING           33,176,051           23,621,384
</TABLE>


    The accompanying notes are an integral part of these financial statements

                                      F-4
<PAGE>

                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
       FOR THE PERIOD FROM APRIL 3, 2002 (INCEPTION) TO DECEMBER 31, 2004
<TABLE>
<CAPTION>
                                                                                          Deficit
                                                                                         Accumulated       Accumulated
                                                                        Additional         During            Other
                                               Common Stock              Paid in        Development      Comprehensive
                                          Number of       Amount         Capital           Stage          Income (loss)    Total
                                            shares          $               $                $                   $           $
------------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>            <C>            <C>               <C>           <C>
Issued for cash at average
of $0.0026 per share                        22,895,000       22,895         35,805                -               -        58,700

Net loss for the period                              -            -              -          (71,673)              -       (71,673)

Currency translation adjustment                      -            -              -                -             532           532

------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2002                  22,895,000       22,895         35,805          (71,673)            532       (12,441)

Issued for cash at an average of
$0.013 per share                             2,530,000        2,530         29,770                -               -        32,300
Issued for debt at an average of
$0.01 per share                              3,650,000        3,650         32,850                -               -        36,500
Issued for consulting services at
an average of per share $0.076                  90,000           90          6,760                -               -         6.850
Net loss for the year                                -            -              -         (149,673)              -      (149,673)
Currency translation adjustment                      -            -              -                -         (10,590)      (10,590)

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

Balance, December 31, 2003                  29,165,000       29,165        105,185         (221,346)        (10,058)      (97,054)

Issued for cash at an average of
$0.10 per share                              1,356,700        1,357        129,464                -               -       130,821
Issued for debt at $0.06 per share             310,000          310         18,490                -               -        18,800
Issued for consulting, professional
and other services at an average of
$0.25 per share                              2,231,000        2,231        547,584                -               -       549,815
Issued for intellectual property
(Note 3)                                     2,200,000        2,200        189,107                -               -       191,307
Issued for licensing rights (Note 3)           760,000          760        189,240                -               -       190,000
Exercise of options an average of
$0.13 per share                                500,000          500         64,500                -               -        65,000
Stock-based compensation                             -            -      1,050,000                -               -     1,050,000
Net loss for the year                                -            -              -       (2,098,276)              -    (2,098,276)
Currency translation adjustment                      -            -              -                -          (1,204)       (1,204)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2004                  36,522,700       36,523      2,293,570       (2,319,622)        (11,262)         (791)

</TABLE>

    The accompanying notes are an integral part of these financial statements

                                      F-5
<PAGE>
                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                       April 3, 2002
                                                                 Year ended           Year ended       (Inception) to
                                                                Dec 31, 2004        Dec. 31, 2003      Dec. 31, 2004
                                                                     $                     $                  $
                                                                 ------------         -----------         ------------
<S>                                                               <C>                   <C>                <C>
OPERATING ACTIVITIES
       Net loss                                                   (2,098,276)           (149,673)          (2,319,622)
       Items not affecting cash
          Accrued interest                                            19,734               5,119               24,853
          Amortization of intangible assets                            7,125                   -                7,125
          Depreciation of tangible assets                                883                 129                1,012
          Impairment of licensing rights                             182,874                   -              182,874
          Loss on settlement of debts and
            issuance of shares                                        29,297              41,108               70,405
          Non cash expenses                                          795,544              70,850              862,394
          Stock-based compensation                                   909,375                   -              909,375
                                                                 ------------         -----------         ------------
                                                                    (153,444)            (32,467)            (261,584)

       Changes in non-cash working capital
          Prepaid expenses                                               (60)               (138)                (832)
          Accounts payable                                            17,876              12,467               32,553
                                                                 ------------         -----------         ------------
                                                                    (135,628)            (20,138)            (229,863)
                                                                 ------------         -----------         ------------

INVESTING ACTIVITIES
       Purchase of fixed assets                                       (3,721)             (2,423)              (6,144)
                                                                 ------------         -----------         ------------
                                                                      (3,721)             (2,423)              (6,144)
                                                                 ------------         -----------         ------------

FINANCING ACTIVITIES
       Issuance of common stock                                      178,305              27,692              268,697
       Net (repayment) advances from shareholders                    (34,523)              5,600              (17,917)
                                                                 ------------         -----------         ------------
                                                                     143,782              33,292              250,780
                                                                 ------------         -----------         ------------

EFFECT OF EXCHANGE RATE CHANGES                                       (1,204)            (10,590)             (11,262)
                                                                 ------------         -----------         ------------

INCREASE IN CASH                                                       3,229                 141                3,511

CASH, BEGINNING OF YEAR                                                  282                 141                    -


CASH, END OF YEAR                                                      3,511                 282                3,511


</TABLE>
SUPPLEMENTARY NON-CASH INFORMATION (Note 7)


    The accompanying notes are an integral part of these financial statements

                                      F-6
<PAGE>
                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003


1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION


     China Health Holding Inc. (the "Company") is a Nevada company  incorporated
     on April 3, 2002 as A E&E Pharma Corporation.  The Company changed its name
     to China Health  Holding Inc. on May 25, 2004. The Company is a development
     stage company that was formed to market and distribute  proprietary natural
     medicinal products. The Company's product line includes King of Herbs-based
     products and a line of natural  multi-vitamins and supplements.  All of the
     Company's  products  are  based on  traditional  Chinese  medicine  and the
     principals of Taoism (see Note 3).

     Subsequent to the year end, the Company  completed a form SB2  registration
     statement with the United States Securities and Exchange Commission and has
     made an application  with the NASD for the listing of the Company's  shares
     for trading on the Over the Counter Bulletin Board ("OTCBB').


2. SIGNIFICANT ACCOUNTING POLICIES


     a)   Basis of presentation

     These financial statements have been presented in U.S. dollars and prepared
     in accordance with United States Generally Accepted  Accounting  Principles
     ("US GAAP"). The Company's year end is December 31.

     The financial statements have been prepared on the basis of a going concern
     which  contemplates  the  realization  of assets  and the  satisfaction  of
     liabilities  in the normal  course of  business.  The Company has  incurred
     significant  losses since  inception and further losses are  anticipated in
     the  development  of  its  products  raising  substantial  doubt  as to the
     Company's ability to continue as a going concern.

     The Company will depend almost  exclusively on outside  capital to complete
     the development and marketing of its  intellectual  property.  Such outside
     capital  will  include  the  sale  of  additional  stock  and  may  include
     commercial  borrowing.  There  can be no  assurance  that  capital  will be
     available as necessary to meet these  development  costs or, if the capital
     is  available,  that it will be on terms  acceptable  to the  Company.  The
     issuances of  additional  equity  securities by the Company may result in a
     significant  dilution in the equity interests of its current  stockholders.
     Obtaining commercial loans,  assuming those loans would be available,  will
     increase the  Company's  liabilities  and future cash  commitments.  If the
     Company is unable to obtain  financing  in the amounts and on terms  deemed
     acceptable, the business and future success may be adversely affected.

     Given the  Company's  limited  operating  history,  lack of sales,  and its
     operating losses, there can be no assurance that it will be able to achieve
     or maintain  profitability.  Accordingly,  these factors raise  substantial
     doubt about the Company's ability to continue as a going concern.

     b)   Use of estimates and assumptions

     Preparation of the Company's financial statements in conformity with United
     States generally accepted accounting principles requires management to make
     estimates  and  assumptions   that  affect  certain  reported  amounts  and
     disclosures. Accordingly, actual results could differ from those estimates.

                                      F-7
<PAGE>
                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



2.    SIGNIFICANT ACCOUNTING POLICIES - CONT'D


     c)   Prepaid expenses

     The Company records as prepaid  expenses  amounts paid in advance for which
     the associated expense will be incurred in a subsequent period.


     d)   Fixed assets

     Fixed assets are stated at cost.  Depreciation is computed at the following
     rates over the estimated useful lives of the assets:

                        Computer - 30% declining balance
                        Furniture and fixtures - 20% declining balance

     e)   Intangible assets

     The Company  has  adopted  the  provision  of the  Statement  of  Financial
     Accounting  Standards No. 142 ("SFAS  No.142"),  "Goodwill  and  Intangible
     Assets", which revises the accounting for purchased goodwill and intangible
     assets.  Under SFAS 142,  goodwill and  intangible  assets with  indefinite
     lives are no longer amortized and are to be tested for impairment  annually
     or whenever events or circumstances  indicate that the estimated fair value
     is less than the related  carrying  value as determined on a reporting unit
     basis.  The  determination  of any impairment would include a comparison of
     estimated future operating cash flows anticipated during the remaining life
     with the net  carrying  value of the asset as well as a  comparison  of the
     fair value to book value of the Company.

     As at December  31,  2004  management  has  determined  that the  Company's
     proprietary  rights and  formulas  described  in Note 3 a) have  indefinite
     lives and as such are not  subject  to  amortization  and  further  that no
     impairment of the carrying value of these intangible assets has occurred.

     Costs incurred in connection  with the licence  agreements  entered into as
     described in Note 3 b) would normally be amortized on a straight-line basis
     over the term of the  underlying  licence  agreements  and then  tested for
     impairment  annually  in  accordance  with  SFAS 144,  "Accounting  for the
     Impairment  on  Disposal  of  Long-Lived   Assets"   (SFAS   No.144).   The
     determination  of any  impairment  would  include a comparison of estimated
     future operating cash flows anticipated  during the remaining life with the
     net carrying  value of the asset.  As at December 31, 2004,  management has
     determined  that it is not  possible at this time to  estimate  future cash
     flows from this asset and has recorded an impairment  charge of $182,874 to
     reduce the carrying value of these intangible assets to $1.

     f)   Revenue Recognition

     The  Company's  revenue  is  primarily  derived  from  the  sale of  herbal
     medicinal  products  and natural  food  supplements.  The  Company  records
     revenue when the amount is fixed or determinable,  delivery has occurred or
     services  have  been  performed  and  both  title  and  risk of  loss  have
     transferred to the customer, and collection is reasonably assured.

                                      F-8
<PAGE>

                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



2.    SIGNIFICANT ACCOUNTING POLICIES - CONT'D


     g)   Fair value of financial instruments

     In  accordance  with the  requirements  of SFAS  No.107,  the  Company  has
     determined  the  estimated  fair  value  of  financial   instruments  using
     available market information and appropriate valuation  methodologies.  The
     fair  value of  financial  instruments  classified  as  current  assets  or
     liabilities  including cash,  prepaid expenses,  loans and accounts payable
     and  due  to  related  parties,  approximate  carrying  value  due  to  the
     short-term maturity of the instruments.

     h)   Foreign currency translation

     The  financial  statements  are  presented  in United  States  dollars.  In
     accordance with Statement of Financial Accounting Standards No.52, "Foreign
     Currency Translation" (SFAS No.52), foreign denominated monetary assets and
     liabilities are translated to their United States dollar  equivalents using
     foreign  exchange rates which prevailed at the balance sheet date.  Revenue
     and expenses are  translated at average rates of exchange  during the year.
     Related  translation  adjustments  are reported as a separate  component of
     stockholders'  equity,  whereas  gains or  losses  resulting  from  foreign
     currency transactions are included in results of operations.

     i)   Income taxes

     The Company  follows the liability  method of accounting  for income taxes.
     Under  this  method,   deferred  income  tax  assets  and  liabilities  are
     recognized for the estimated tax  consequences  attributable to differences
     between the financial statement carrying values and their respective income
     tax basis (temporary differences). The effect on deferred income tax assets
     and  liabilities  of a change in tax rates is  recognized  in income in the
     period that includes the enactment date. At December 31, 2004 full deferred
     tax asset  valuation  allowance has been provided and no deferred tax asset
     benefit has been recorded.

     j)   Net loss per common share

     Basic  earnings  (loss) per share  includes no dilution  and is computed by
     dividing income  available to common  stockholders by the weighted  average
     number of common  shares  outstanding  for the  period.  Dilutive  earnings
     (loss) per share  reflect the potential  dilution of securities  that could
     share in the earnings of the Company. The accompanying presentation is only
     of  basic  loss  per  share  as  the  potentially   dilutive   factors  are
     anti-dilutive to basic loss per share.

     k)   Stock-based compensation

     In December 2002, the Financial Accounting Standards Board issued Financial
     Accounting  Standard No. 148,  "Accounting for  Stock-Based  Compensation -
     Transition  and  Disclosure  ("SFAS No.  148"),  an  amendment of Financial
     Accounting  Standard  No. 123  "Accounting  for  Stock-Based  Compensation"
     ("SFAS No. 123). The purpose of SFAS No. 148 is to: (1) provide alternative
     methods of transition  for an entity that  voluntarily  changes to the fair
     value based method of accounting for stock-based employee compensation, (2)
     amend the disclosure  provisions to require prominent  disclosure about the
     effects on reported net income of an entity's  accounting  policy decisions
     with  respect  to  stock-based  employee  compensation,  and (3) to require
     disclosure  of  those  effects  in  interim  financial   information.   The
     disclosure  provisions  of SFAS No. 148 were  effective for the Company for
     the year ended December 31, 2002.

                                      F-9
<PAGE>


                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



2.    SIGNIFICANT ACCOUNTING POLICIES - CONT'D


     k)   Stock-based compensation - cont'd

     The Company has  elected to  continue to account for  stock-based  employee
     compensation  arrangements  in accordance with the provisions of Accounting
     Principles   Board  Opinion  No.  25,   "Accounting  for  Stock  Issued  to
     Employees", ("APB No.25") and comply with the disclosure provisions of SFAS
     No. 123 as amended by SFAS No. 148 as  described  above.  In  addition,  in
     accordance  with SFAS No. 123 the  Company  applies  the fair value  method
     using the  Black-Scholes  option-pricing  model in  accounting  for options
     granted  to  consultants.   Under  APB  No.  25,  compensation  expense  is
     recognized  based on the  difference,  if any, on the date of grant between
     the estimated fair value of the Company's  stock and the amount an employee
     must  pay  to  acquire  the  stock.   Compensation  expense  is  recognized
     immediately  for past  service and  pro-rata  for future  service  over the
     option-vesting period.

     In accordance  with SFAS No. 123, the Company applies the fair value method
     using the  Black-Scholes  option-pricing  model in  accounting  for options
     granted to consultants.

     The Company accounts for equity  instruments in exchange for the receipt of
     goods or services from other than employees in accordance with SFAS No. 123
     and the conclusions  reached by the Emerging Issues Task Force in Issue No.
     96-18,  "Accounting  for Equity  Instruments  That Are Issued to Other than
     Employees for Acquiring or in  Conjunction  with Selling Goods or Services"
     ("EITF  96-18").  Costs are measured at the estimated  fair market value of
     the  consideration  received  or the  estimated  fair  value of the  equity
     instruments  issued,  whichever is more reliably  measurable.  The value of
     equity instruments issued for consideration other than employee services is
     determined  on the earlier of a  performance  commitment  or  completion of
     performance by the provider of goods or services as defined by EITF 96-18.

     l)   Recent accounting pronouncements

     In May 2003, SFAS No. 150,  "Accounting for Certain  Financial  Instruments
     with  Characteristics  of both  Liabilities and Equity",  was issued.  This
     Statement  establishes  standards for how an issuer classifies and measures
     certain financial  instruments with characteristics of both liabilities and
     equity. It requires that an issuer classify a financial  instrument that is
     within its scope as a liability (or an asset in some  circumstances).  Many
     of those  instruments were previously  classified as equity.  Generally,  a
     financial instrument,  whether in the form of shares of otherwise,  that is
     mandatory  redeemable,  i.e.  that  embodies  an  unconditional  obligation
     requiring the issuer to redeem it by transferring its shares or assets at a
     specified or determinable  date (or dates) or upon an event that is certain
     to  occur,   must  be   classified   as  a  liability  (or  asset  in  some
     circumstances). In some cases, a financial instrument that is conditionally
     redeemable may also be subject to the same  treatment.  This Statement does
     not apply to features that are embedded in a financial  instrument  that is
     not a derivative  (as  defined) in its entity.  For public  entities,  this
     Statement is effective for financial  instruments  entered into or modified
     after  May 31,  2003.  The  adoption  of SFAS  No.150  did not  affect  the
     Company's financial position or results of operations.


                                      F-10
<PAGE>


                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



2.      SIGNIFICANT ACCOUNTING POLICIES - CONT'D


     l)   Recent accounting pronouncements - cont'd

     In January 2003, the FASB issued FASB Interpretation No.46,  "Consolidation
     of Variable Interest  Entities",  an interpretation of Accounting  Research
     Bulletins ("ARB") No.51,  Consolidated Financial Statements ("FIN 46"). FIN
     46 applies  immediately to variable interest entitles created after January
     31, 2003, and in the first interim period beginning after June 15, 2003 for
     variable   interest  entities  created  prior  to  January  31,  2003.  The
     interpretation  explains how to identify variable interest entities and how
     an enterprise assesses its interest in a variable interest entity to decide
     whether to consolidate that entity.  The  interpretation  requires existing
     unconsolidated  variable  interest  entities  to be  consolidated  by their
     primary  beneficiaries  if the entities do not  effectively  disperse risks
     among  parties  involved.   Variable  interest  entities  that  effectively
     disperse  risks will not be  consolidated  unless a single  party  holds an
     interest or combination of interests that effectively recombines risks that
     were  previously  dispersed.  The  adoption  of FIN 46 did not  affect  the
     Company's financial position or results of operations.

     In December  2003,  the FASB issued  FASB  Interpretations  No. 46 (Revised
     December   2003)   Consolidation   of  Variable   Interest   Entities,   an
     Interpretation  of ARB No. 51 ("FIN  46R").  FIN 46R is an update of FIN 46
     and contains different  implementation dates based on the types of entities
     subject to the  standard and based on whether a company has adopted FIN 46.
     The  Company  does not  expect  the  adoption  FIN 46R will have a material
     impact on the Company's financial position or results of operations.


     In December  2003,  the United States  Securities  and Exchange  Commission
     issued Staff Accounting Bulletin No. 104, "Revenue  Recognition" (SAB 104),
     which supersedes SAB 101,  "Revenue  Recognition in Financial  Statements."
     The primary purpose of SAB 104 is to rescind accounting  guidance contained
     in SAB 101  related to multiple  element  revenue  arrangements,  which was
     superseded  as a result of the  issuance  of EITF  00-21,  "Accounting  for
     Revenue Arrangements with Multiple  Deliverables." While the wording of SAB
     104 has  changed  to  reflect  the  issuance  of EITF  00-21,  the  revenue
     recognition  principles of SAB 101 remain largely unchanged by the issuance
     of SAB 104. The  adoption of SAB 104 did not have a material  impact on the
     Company's financial statements

     In  December  2004,  the FASB  issued  Statement  of  Financial  Accounting
     Standards  ("SFAS")  No.  123R,   Share-Based  Payment,  which  establishes
     standards for the accounting for  transactions in which an entity exchanges
     its equity  instruments  for goods or  services.  A key  provision  of this
     statement  is the  requirement  of a public  entity to measure  the cost of
     employee services  received in exchange for an award of equity  instruments
     (including  stock options) based on the grant date fair value of the award.
     That cost will be  recognized  over the period  during which an employee is
     required to provide service in exchange for the award (i.e.,  the requisite
     service period or vesting period).  This standard becomes effective for the
     Company  for  the  interim  period   beginning  after  December  15,  2005.
     Management  is  currently  evaluating  the impact of this  standard  on the
     Company's financial condition and results of operations.


     In December 2004, the FASB issued SFAS No. 153,  Exchanges of  Non-monetary
     Assets,  an amendment of APB Opinion No. 29,  Accounting  for  Non-monetary
     Transactions  ("SFAS 153") SFAS 153 requires that exchanges of non-monetary
     assets are to be measured  based on fair value and eliminates the exception
     for  exchanges of  non-monetary,  similar  productive  assets,  and adds an
     exemption for non-monetary exchanges that do not have commercial substance.
     SFAS 153 will be  effective  for fiscal  periods  beginning  after June 15,
     2005.  Management  does not believe that the adoption of this standard will
     have a material impact on the Company's  financial  condition or results of
     operations.

                                      F-11

<PAGE>



                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



3.   INTANGIBLE ASSETS


     a)   Asset purchase agreement

     Pursuant  to an asset  purchase  agreement  dated May 1, 2004,  the Company
     acquired  from  the  Company's  President  and  a  significant  shareholder
     proprietary rights and formulas to the 26 natural herbal medicinal products
     that  comprise  the King of Herbs and Taoist  Medicine  product  lines.  In
     exchange for the  proprietary  rights and formulas to these  products,  the
     Company agreed to pay total consideration as follows:

           - 2,200,000 common shares at a fair value
              of $0.087 per share                                  $191,307
           -  Promissory notes payable to shareholders (Note 5)     175,000
                                                                   --------
                                                                   $366,307
                                                                   ========

     In addition, the Company agreed to pay the vendors a combined total royalty
     equal to 5% of annual gross sales of the products until May 1, 2009.

     For accounting purposes, the Company has recorded the cost of acquiring the
     proprietary  rights and formulas as intangible  assets at the related party
     vendor's  carrying  value of $1. The excess of the purchase  price over the
     carrying  value  of the  intangible  assets  totalling  $366,306  has  been
     expensed as incurred during the year as research and development costs.

     b)   Licensing rights agreement

     On March 9, 2004, the Company entered into an initial  licensing  agreement
     with Hotway Nutraceuticals Canada Co., Ltd. ("Hotway"),  a British Columbia
     company  (the  "Cordyceps  Agreement").  Under  this  agreement  Hotway has
     granted the Company exclusive  licenses to 19 cordyceps products for a term
     of  twenty  years  in  the  following  countries:  United  States,  Canada,
     Argentina,  Brazil, Columbia,  Chile, Uruguay,  Paraguay,  England, France,
     Germany, Italy, Spain, Holland,  Poland,  Switzerland,  Sweden,  Australia,
     Monaco, Norway, Denmark, Austria, Ireland, Israel, Kuwait, Iran, Hong Kong,
     Japan, Malaise,  Singapore,  India,  Indonesia and the People's Republic of
     China. The licensing agreement grants the Company (a) the exclusive license
     to  utilize  19  neutraceutical  products  and their raw  materials  in the
     above-listed  territories;   (b)  the  exclusive  rights  to  register  the
     Trademarks/Trade  Names of the products under the Company's name in each of
     the above-listed territories;  (c) the exclusive license to use, replicate,
     copy,  modify,  adopt and  manufacture  the  products  for the  purpose  of
     developing  derivative  products  by  modifying,  refining,  upgrading,  or
     improving  the  licensed  property;  and (d) the  exclusive  rights  to the
     licensed products' ingredients.  In addition,  Hotway granted the Company a
     right of first  refusal to acquire  any new  products  developed  by Hotway
     after  January 9, 2004.  In  consideration  for  rights  granted  under the
     licensing  agreement,  the  Company  agreed to pay Hotway  $10,000 for each
     country listed above, for a total of $330,000,  originally due to Hotway by
     March 9,  2005.  The  Company  also  agreed to: (a) sell a minimum of 2,000
     bottles/60 capsules of the licensed products within 6-12 months after March
     9, 2004; (b) manage marketing programs for the licensed products within 3-6
     months  after  March 9,  2004;  (c)  maintain  sales of a minimum  of 6,000
     bottles/60  capsules  annually for each  above-listed  country  within 6-12
     months after March 9, 2004;  and (d) sell a minimum of  200kg/month  of raw
     materials in Canada within 6-12 months after March 9, 2004.

                                      F-12

<PAGE>



                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



3.    INTANGIBLE ASSETS - CONT'D


     b)      Licensing rights agreement - cont'd

     On March 9, 2004,  the  Company  entered  into a licensing  agreement  with
     Hotway (the  "De-Daibe  Agreement"),  which  grants the  Company  exclusive
     licenses to De-Daibe and Depressor Herbs neutraceutical products for a term
     of  twenty  years  in  the  following  countries:  United  States,  Canada,
     Argentina,  Brazil, Columbia,  Chile, Uruguay,  Paraguay,  England, France,
     Germany, Italy, Spain, Holland,  Poland,  Switzerland,  Sweden,  Australia,
     Monaco, Norway, Denmark, Austria, Ireland, Israel, Kuwait, Iran, Hong Kong,
     Japan, Malaise,  Singapore,  India,  Indonesia and the People's Republic of
     China.  This  licensing  agreement  grants the  Company  (a) the  exclusive
     license to utilize the De-Daibe and Depressor Herbs neutraceutical products
     and their raw materials in the above-listed territories;  (b) the exclusive
     rights to register the  Trademarks/Trade  Names of the  products  under the
     Company's name in each of the above-listed  territories;  (c) the exclusive
     license to use, replicate, copy, modify, adopt and manufacture the products
     for the purpose of developing  derivative products by modifying,  refining,
     upgrading, or improving the licensed property; and (d) the exclusive rights
     to the licensed  products'  ingredients.  In addition,  Hotway  granted the
     Company a right of first  refusal to acquire any new products  developed by
     Hotway after March 9, 2004. In consideration  for rights granted under this
     licensing  agreement,  the  Company  agreed to pay Hotway  $10,000 for each
     country listed above,  for a total of $330,000  originally due to Hotway by
     March 9,  2005.  The  Company  also  agreed to: (a) sell a minimum of 2,000
     bottles/60 capsules of the licensed products within 6-12 months after March
     9, 2004; (b) manage marketing programs for the licensed products within 3-6
     months  after  March 9,  2004;  (c)  maintain  sales of a minimum  of 6,000
     bottles/60  capsules  annually for each  above-listed  country  within 6-12
     months after March 9, 2004;  and (d) sell a minimum of  200kg/month  of raw
     materials in Canada within 6-12 months after March 9, 2004.

     Under  the  terms  of  the  original  Cordyceps  and  De-Daibe   agreements
     ("Exclusive Licensing Agreements"), if the Company fails to meet any of the
     licensing  commitments,  the  license  agreements  will  terminate  and all
     obligations  under  the  agreements  terminate.   Upon  expiration  of  the
     Exclusive   Licensing   agreements  Hotway  will  own  the  rights  to  any
     modifications, upgrades or improvements made to the licensed products.

     On November 2, 2004,  the Company  entered into an agreement with Hotway to
     amend the Exclusive Licensing  Agreements (the "Amending  Agreement").  The
     Amending  Agreement  amended  certain  payment  terms  under the  Exclusive
     Licensing  Agreements  as follows:  (1) the  Company  shall issue to Hotway
     760,000  shares of common  stock;  and (2) pay an  aggregate of $100,000 to
     Hotway no later  than 90 days  after the  Company's  common  stock has been
     approved  for  quotation  on  the  OTC  Bulletin  Board.  Other  than  this
     consideration,  the Company is not  required  to make  royalty or any other
     payments  of any kind to  Hotway  in  respect  of the  Exclusive  Licensing
     agreements.  In the  event  that the  Company  does  not pay or issue  this
     consideration  to Hotway,  then the  Exclusive  Licensing  Agreements  will
     terminate  and  all  other  obligations   under  the  Exclusive   Licensing
     Agreements   will  terminate.   This  amendment   supercedes  the  previous
     consideration that the Company owed to Hotway under the Exclusive Licensing
     Agreements.  The  amendment  also  provides that the Company shall have the
     exclusive  licensing rights on any future improvements to the products that
     are licensed to the Company under the Exclusive Licensing Agreements.


                                      F-13

<PAGE>



                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



3.    INTANGIBLE ASSETS - CONT'D


     b) Licensing rights agreement - cont'd

     On November 2, 2004,  760,000 common shares with a fair value of $0.25 each
     were issued to Hotway  representing total consideration of $190,000 paid in
     respect of these licences.  The Company recorded  amortization of $7,125 to
     December 31, 2004.  Management  has  determined  that it is not possible at
     this time to estimate future cash flows to be generated from these licences
     and accordingly an impairment  charge equal to the  unamortized  balance of
     $182,874 has been recorded leaving a carrying value of $1.



4.   FIXED ASSETS



                                                     Dec. 31,         Dec.31,
                                                       2004            2003
                                                         $               $
                                                    ----------    ----------
           Computer
                                                        5,766         2,423
           Furniture and Fixtures
                                                          378             -
                                                    ----------    ----------
                                                        6,144         2,423


           Less:  accumulated depreciation             (1,012)         (129)
                                                    ----------    ----------


                                                        5,132          2,294
                                                    ==========    ==========




5.   DUE TO SHAREHOLDERS


     The  amount  due to  shareholders  bears  interest  at 10%  per  annum,  is
     unsecured  and has no specific  terms of  repayment  (Note 8). Of the total
     amount due, $175,000 is supported by promissory notes.


                                      F-14


<PAGE>




                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



6.   CAPITAL STOCK


     The authorized  capital of the Company consists of 55,000,000 voting common
     shares with $0.001 par value and 20,000,000  voting  preferred  shares with
     $0.001 par value (see Note 11- Subsequent Events).

     The Company has granted stock options as follows:

<TABLE>
<CAPTION>
<


                                                                                           Weighted  Average
                                                        Number of      Weighted Average       Remaining
                                                         Options        Exercise price     Contractual Life

<S>                                                            <C>             <C>                <C>
         Balance December 31, 2003                                    -              -             -

         Issued during the year                             7,500,000             0.11             -
         Exercised during the year                           (500,000)            0.10             -
         Cancelled during the year                           (400,000)            0.10             _
                                                     ------------------------------------------------------

         Balance, December 31, 2004                         6,600,000             0.11    3.33 years
                                                     ======================================================
</TABLE>


Details concerning stock options granted in 2004 are provided below:

     a)   the Company granted 3,300,000 stock options to the Company's President
          with  exercise  prices  of  ranging  from  $0.05 to $0.10  subject  to
          immediate vesting. The intrinsic value of these options at the date of
          grant was estimated to be $535,000 and was recorded as management fees
          and is in respect of services provided to the Company by the President
          from inception on April 3, 2002 to December 31, 2004.

     b)   the Company granted 2,050,000 stock options to consultants,  directors
          and  officers  with an exercise  price of $0.10  subject to  immediate
          vesting. The intrinsic value of these options at the date of grant was
          estimated to be $307,500 of which  $255,000 was recorded as consulting
          fees and $52,500 was recorded as management fees.

     c)   the Company  granted  1,000,000  stock options to a consultant with an
          exercise price of $0.10 per share subject to immediate vesting.  These
          options were granted in respect of a contract that  required  services
          to be performed  over a two year term.  The  intrinsic  value of these
          options at the date of grant was  estimated  to be  $150,000  of which
          $9,375 was recorded as a consulting fee and $140,625 was recorded as a
          prepaid expense.

     d)   the Company granted 1,150,000 stock options to consultants,  directors
          and  officers  with an exercise  price of $0.20  subject to  immediate
          vesting. The intrinsic value of these options at the date of grant was
          estimated to be $57,500 of which  $25,000 was  recorded as  consulting
          fees and $32,500 was recorded as management fees.

     e)   the Company cancelled 400,000 stock options issued to an officer.

                                      F-15
<PAGE>



                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



6.   CAPITAL STOCK - CONT'D


     In connection with the granting of the above options,  the Company expensed
     the  fair  value of the  options  which  was  limited  to  their  estimated
     intrinsic values.  The Company determined that there was no additional fair
     value  resulting from  application of the fair value method using the Black
     Scholes option pricing model as there was no established market for trading
     in the  Company's  shares  and,  as such,  the  volatility  factor  was 0%.
     Accordingly,  with respect to options  granted to  employees,  officers and
     directors,   no  additional  pro-forma  fair  value  information  has  been
     provided.

     The Company has issued share purchase warrants as follows:

                                                Number of       Weighted Average
                                                 Warrants        Exercise Price

         Balance, April 3, 2002                         -             $    -

         Issued during the period (i)              19,000               0.75
                                                 --------           --------

         Balance, December 31, 2002                19,000               0.75

         Issued during the year (ii)              100,000               0.11
                                                 --------           --------

         Balance, December 31, 2003               119,000               0.22

         Issued during the year (iii)             220,000               0.75
                                                 --------           --------

         Balance, December 31, 2004               339,000              $0.56
                                                 ========           ========


     i)   During 2002, the Company  issued 19,000 units at $0.10 per unit.  Each
          unit  consisted  of one common share and one share  purchase  warrant.
          Each  warrant  entitles  the holder to purchase an  additional  common
          share for $0.75 and must be  exercised  within  six months of the date
          the  Company's  shares  commence  trading  on a  United  States  Stock
          exchange.

     ii)  During 2003, the Company issued 100,000 units at $0.08 per unit.  Each
          unit  consisted  of one common share and one share  purchase  warrant.
          Each  warrant  entitles  the holder to purchase an  additional  common
          share for $0.11 and must be exercised within two years of the date the
          Company's shares commence trading on a United States Stock exchange.

     iii) During 2004, the Company issued 220,000 units at $0.25 per unit.  Each
          unit  consisted  of one common share and one share  purchase  warrant.
          Each  warrant  entitles  the holder to purchase an  additional  common
          share for $0.75 and must be exercised  within one year of the date the
          Company's shares commence trading on a United States Stock exchange.

                                      F-16
<PAGE>



                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



7.   SUPPLEMENTARY NON-CASH INFORMATION


     The Company entered into the following non-cash transactions:

     a.   During 2004,  the Company  issued  760,000  common  shares with a fair
          value of $0.25 per share as partial  consideration for the purchase of
          intangible  assets  of 19  Cordyceps  products  and the  De-Daibe  and
          Depressor Herbs products from Hotway (see Note 3 (b)).

     b.   During 2004,  the Company issued  2,200,000  common shares with a fair
          value of $0.087 per share and a $175,000  promissory  note  payable as
          consideration  for the purchase of intangible  assets and research and
          development  services (see Note 3 (a)). As at December 31, 2004, notes
          payable included accrued interest of $10,206.

     c.   During 2004,  the Company issued  1,000,000  common shares with a fair
          value of $0.25 per share  pursuant to a two-year  services  agreement.
          For the  year  ended  December  31,  2004,  $46,875  was  recorded  as
          consulting fees and $203,125 was recorded as prepaid expenses.

     d.   During 2004,  the Company issued  1,000,000  common shares with a fair
          value of $0.25 per share for legal  services.  For the ended  December
          31, 2004, $250,000 was recorded as professional fees.

     e.   During 2004, the Company issued 231,000 common shares with fair values
          ranging  from  $0.001 to $0.25 for a total value of $49,815 to pay for
          consulting services.

     f.   During 2004,  the Company  issued  310,000  common  shares with a fair
          value of $18,800  to settle  debt with a face  value of  $10,380.  The
          difference  between the face value of the amount payable and the total
          fair  value of the  shares  issued,  which  amounted  to  $8,420,  was
          recorded as loss on debt settlement and issuance of shares.

     g.   During 2004,  70,064 stock options were  exercised at a price of $0.25
          per share for a total  subscription price of $17,516 which was settled
          by cancelling a debt owed to the subscriber in the amount of $17,516.

     h.   During 2004,  the Company issued  1,336,700  common shares with a fair
          value of $125,821 in consideration for cash and debt totalling $84,944
          and consulting fees of $20,000. The difference of $20,877 was recorded
          as loss on debt settlement and issuance of shares.

     i.   During 2003,  the Company issued 90,000 common shares with fair values
          ranging  from $0.01 to $0.08 as payment  for  consulting  services  of
          $6,850.

     j.   During 2003,  the Company issued  3,650,000  common shares with a fair
          value of $36,500  to settle  debt with a face  value of  $14,000.  The
          difference  between the face value of the amount payable and the total
          fair  value of the shares  issued,  which  amounted  to  $22,500,  was
          recorded as loss on debt settlement and issuance of shares.

     k.   During 2003,  the Company issued  2,530,000  common shares with a fair
          value  of  $32,300  for  total  cash  consideration  of  $13,692.  The
          difference  between the cash  received and the total fair value of the
          shares issued, which amounted to $18,608, was recorded as loss on debt
          settlement and issuance of shares.

                                      F-17

<PAGE>



                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



8.    RELATED PARTY TRANSACTIONS


    The Company has entered into the following related party transactions:

     a)   Accrued  management and  consulting fee to directors and  shareholders
          totalling $96,649 (2003 - $60,000);

     b)   Accrued  interest  expense to  directors  and  shareholders  totalling
          $19,734 (2003 - $5,119);

     c)   Recorded sales to directors and shareholders  totalling $7,571 (2003 -
          $Nil);

     d)   Acquired intellectual property and paid research and development costs
          to directors and shareholders  with a total cost of $366,307 (see Note
          3and 7).



9.    COMMITMENTS


     Pursuant to various  management  and  consulting  contracts the Company has
     committed to pay fees and issue common stock as follows:

     -    pay a monthly management fee of $8,000 to the Company's President from
          April 1, 2004 to April 30, 2009;

     -    pay a monthly consulting fee of $1,000 to a shareholder of the Company
          up to February  28, 2005 at which time it is  increased  to $3,000 per
          month.

     (See also Note 3)



10.    INCOME TAXES


     The  Company  has net  operating  loss  carry  forwards  for  income  taxes
     amounting  to  approximately  $855,000  as  at  December  31,  2004  (2003-
     $174,000)  which may be available to reduce future years'  taxable  income.
     These carry  forwards  will expire,  if not  utilized,  commencing in 2008.
     Management  believes that the realization of the benefits from these losses
     appears  uncertain  due to the  Company's  limited  operating  history  and
     continuing  losses.  Accordingly,  a full,  deferred  tax  asset  valuation
     allowance  has been  provided  and no deferred  tax asset  benefit has been
     recorded.

                                      F-18
<PAGE>



                            CHINA HEALTH HOLDING INC.
                       (formerly A E&E Pharma Corporation)
                          (a development stage company)

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2004 AND 2003



11.  SUBSEQUENT EVENTS


     Subsequent  to the  December  31, 2004 period end the Company  executed the
     following stock transactions:

     a)   granted a total of 300,000 stock  options to officers and  consultants
          with an exercise price of $0.30 per share.

     b)   issued  427,900  common shares with prices ranging from $0.25 to $0.30
          per share as  compensation  for  consulting  services  provided to the
          Company.

     c)   issued  4,500,000  common shares pursuant to an intellectual  property
          purchase agreement signed on March 22, 2005.

     d)   issued  1,080,000  units at $0.25 per unit for total cash  proceeds of
          $270,000.  Each  unit  consisted  of one  common  share  and one share
          purchase warrant entitling the holder to purchase an additional common
          share for $0.75 for a one year period.

     On March 22, 2005, the Company entered a purchase agreement to acquire from
     an officer  of the  Company,  who is also the  significant  shareholder  as
     described in Note 3(a), and a relative of this officer,  proprietary rights
     to 108 Taoist Herbal medicinal formulas. As noted above, the Company issued
     a total of 4,500,000  common shares and also agreed to pay $100,000 in cash
     for research and development services.  In addition,  the Company agreed to
     pay the vendors a total annual royalty equal to 5% of annual gross sales of
     the formulas.

     On March 22, 2005,  the Company  amended its Articles of  Incorporation  to
     increase  its   authorized   voting  common   shares  from   55,000,000  to
     300,000,000.



12.  LOSS ON SETTLEMENT OF DEBTS AND ISSUANCE OF SHARES


     In 2003 and the 2004 the company issued shares to settle outstanding debts.
     At the time of  issuing  these  shares  the fair  value of the  shares  was
     greater  than the face  amount of the debt being  settled.  The  difference
     between  the fair value of these  shares and the face value of the debt was
     recorded as a loss on settlement of debt which  amounted to $22,500 in 2003
     and $8,420 in 2004 (see Note 7).

     In 2003  and the  2004  the  company  issued  shares  for  cash  and  other
     consideration  when,  at the time of issuing the shares,  the fair value of
     the  shares was  greater  than the  consideration  received.  In 2003,  the
     difference   between   the  fair  value  of  these   shares  and  the  cash
     consideration  received which amounted to $18,608 was recorded as a loss on
     issuance of shares.  In 2004 the  difference  amounted to $20,877 which was
     recorded as a loss on issuance of shares (see Note 7).

     The total loss on  settlement of debt and issuance of shares as reported in
     the statement of operations was $41,108 in 2003 and $29,297 in 2004


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