**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, 2006




[_]
      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
                  incorporation or organization)
              (I.R.S.
                  Employer Identification
                  No.)




**Julianna
      Lu, BSc. MSc.**


**Chief
      Executive Officer**


**101
      Convention Center Drive, Suite 700, Las Vegas, NV
      89107-2001**


(Address
      of principal executive offices) (Zip Code)


Issuer’s
      telephone Number: **1** **(877)
      883-0979**





**Mailing
      Address**


**Suite
      600 - 666 Burrard St., Park Place, Vancouver, British Columbia, Canada V6C
      2X8**


Issuer’s
      telephone Number: **1** **(604)
      608-6788**







Copies
      to:


Richard
      A. Friedman, Esq.


Sichenzia
      Ross Friedman Ference LLP


1065
      Avenue of the Americas


New
      York,
      New York 10018


Phone:
      (212) 930-9700


Fax:
      (212) 930-9725







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]


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





State
      issuer’s revenues for its most recent fiscal year. $0





The
      aggregate market value of the issued and outstanding common stock held by
      non-affiliates of China Health Holding, Inc. based upon the closing price of
      the
      Common Stock as quoted on the Over the Counter Bulleting Board (OTCBB) on March
      30, 2007, was approximately $ 789,545.55.





As
      of
      March 30, 2007, the issuer had 128,832,060 outstanding shares of Common Stock
      and 1,250,000 shares of Series “A” Preferred Stock.





**DOCUMENTS
      INCORPORATED BY REFERENCE: NONE**





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















**TABLE
      OF CONTENTS**







**Page****PART
                I**Item
                1. Description of Business
            3Item
                2. Description of Property
            23Item
                3. Legal Proceedings
            23Item
                4. Submission of Matters to a Vote of Security Holders
            23**PART
                II**Item
                5. Market for Common Equity and Related Stockholder
                Matters
            23Item
                6. Management’s Discussion and Analysis or Plan of
                Operation
            28Item
                7. Financial Statements
            36Item
                8. Changes In and Disagreements with Accountants on Accounting and
                Financial Disclosure
            36Item
                8A. Controls and Procedures
            37Item
                8B. Other Information
            37**PART
                III**Item
                9. Directors, Executive Officers, Promoters and Control
                Persons;Compliance
                With Section 16(a) of the Exchange Act
            37Item
                10. Executive Compensation
            38Item
                11. Security Ownership of Certain Beneficial Owners and
                Management
            40Item
                12. Certain Relationship and Related Transactions
            41Item
                13. Exhibits
            42Item
                14. Principal Accountant Fees and Services
            45**SIGNATURES**
            46







2
  **Forward
        Looking Statement**
  This
        annual report contains certain forward-looking statements within the meaning
        of
        Section 27A of the Securities Act of 1933, as amended, and Section 21E of
        the
        Securities Exchange Act of 1934, as amended. These include statements about
        our
        expectations, beliefs, intentions or strategies for the future, which we
        indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
        "will," "we believe," "our company believes," "management believes" and similar
        language. These forward-looking statements are based on our current expectations
        and are subject to certain risks, uncertainties and assumptions, including
        those
        set forth in the discussion under Item 1. Description of Business" and Item
        6.
        "Management's Discussion and Analysis", including under the heading "- Risk
        Factors" under Item 6. Our actual results may differ materially from results
        anticipated in these forward-looking statements. We base our forward-looking
        statements on information currently available to us, and we assume no obligation
        to update them. In addition, our historical financial performance is not
        necessarily indicative of the results that may be expected in the future
        and we
        believe that such comparisons cannot be relied upon as indicators of future
        performance.
 
 To
        the
        extent that statements in the annual report is not strictly historical,
        including statements as to revenue projections, business strategy, outlook,
        objectives, future milestones, plans, intentions, goals, future financial
        conditions, future collaboration agreements, the success of the Company's
        development, events conditioned on stockholder or other approval, or otherwise
        as to future events, such statements are forward-looking, All forward-looking
        statements, whether written or oral, and whether made by or on behalf of
        the
        company, are expressly qualified by the cautionary statements and any other
        cautionary statements which may accompany the forward-looking statements,
        and
        are made pursuant to the safe harbor provisions of the Private Securities
        Litigation Reform Act of 1995. The forward-looking statements contained in
        this
        annual report are subject to certain risks and uncertainties that could cause
        actual results to differ materially from the statements made. Other important
        factors that could cause actual results to differ materially include the
        following: business conditions and the amount of growth in the Company's
        industry and general economy; competitive factors; ability to attract and
        retain
        personnel; the price of the Company's stock; and the risk factors set forth
        from
        time to time in the Company's SEC reports, including but not limited to its
        annual report on Form 10-KSB; its quarterly reports on Forms 10-QSB; and
        any
        reports on Form 8-K. In addition, the company disclaims any obligation to
        update
        or correct any forward-looking statements in all the Company’s annual reports
        and SEC filings to reflect events or circumstances after the date
        hereof.
 
 **PART
        I**
 
 **Item
        1. Description of Business.**
 
  We
        are a
        development stage company, founded by our Chairman and Chief Executive Officer,
        Julianna Lu, in 2002 with the goal of becoming a leading manufacturer, marketer
        and distributor in the global natural medical and pharmaceutical industry.
        On
        April 3, 2002, we were incorporated under the laws of the State of Nevada
        under
        the name A E&E Pharma Corporation. On May 25, 2004, we changed our name to
        China Health Holding, Inc. Our common stock trades on the OTC Bulletin Board
        under the symbol “CHHH” since April 18, 2005.
  We
        intend
        to manufacture, market and distribute proprietary natural medicinal products.
        Our product lines include:
  1.  King
        of
        Herbs-based products;
  2.  Taoist
        Medicinal products; and
  3.  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. 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.
  **PRODUCTS**
  We
        intend
        to manufacture, 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 entire 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, our existing product line is not subject
        to
        stringent clinical testing to which pharmaceutical products are subjected.
        All
        of our products are manufactured in accordance with Good Manufacturing Practices
        rules and standards.
  We
        also
        plan to introduce a line of natural skin care and cosmetic products as well
        as
        to develop new products based on our knowledge of traditional Chinese medical
        practice.
   3
  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.
  **KING
        OF HERBS PRODUCT LINE**
   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 medical term for the human body's
        energy. Our product line is intended to improve immune system and
        cardio-vascular system, and improve and increase energy and endurance levels,
        sexual function and the health and wellness of the entire body. We have
        developed proprietary formulations that target certain physiological conditions
        which we intend to market and sell to the public.
  ·
              VG-KING.
                  A natural tonic for men's health, formulated specifically for the
                  male
                  genitor-urinary system.
 ·
              VG-QUEEN.
                  A natural product for women's health, formulated specifically for
                  the
                  female reproductive system.
 ·
              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.
 ·
              VG-CARDIOVASCULAR.
                  Designed to improve the function of the cardiovascular system,
                  thereby
                  improving overall health.
 ·
              VG-IMMUNE.
                  Enhances the body's immune system.
 ·
              VG-BRAIN
                  & MEMORY. Designed to increase blood flow to the brain and cerebral
                  system to enhance memory and cerebral
                  functions.
 ·
              VG-LIVER.
                  Enhances liver function and protects it from damage from inflammation
                  and
                  oxidation.
 ·
              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.
 ·
              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.
 ·
              VG-PANCREAS
                  HEALTH. A special formula designed to promote healthy blood glucose
                  levels.
 ·
              VG-HEALTH.
                  A formula designed to help maintain a healthy immune
                  system.
 ·
              VG-PROSTATE
                  HEALTH. Designed to help ensure a healthy
                  prostate.
 ·
              VG-WEIGHT
                  CONTROL. Formulated to assist individuals with their weight loss
                  goals.
  **TAOIST
        MEDICINAL PRODUCT LINE**
  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 treatments have been labeled "alternative medicine" or
        "holistic medicine." The products in our Taoist Medicinal product line are
        considered to be dietary supplements. They are based on the principles of
        traditional Chinese medicine and Taoist healing sciences. Taoism is an ancient
        worldview that acknowledges the movement towards balance inherent in all
        things.
  ·
              VG-NRP
                  (Nine Rare Pill). Formulated to enhance liver and kidney function
                  and
                  decrease lassitude in loin and
                  knee.
 ·
              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.
 ·
              VG-EPP
                  (Decoction of Eight Precious Products for Refreshing). Designed
                  to prevent
                  restlessness.
 ·
              VG-PFI
                  (Pill of Four Immortals). Designed to enhance kidney functions.
 ·
              VG-NWP
                  (Nine-Wei Powder for Strengthening Yang). Primarily for men, this
                  product
                  is designed to nourish marrow and promote flow of kidney qii.
 ·
              VG-FKB
                  (Five Kernel Bolus). Moistens the intestines.
 ·
              VG-LYZR
                  (Bolus of Longyan Aril and Wild Jujube Seed). Enriches the blood,
                  tranquilize the mind and tone the kidney.
 ·
              VG-ZMGQ
                  (Bolus of Sesame Seed and Wolfberry Fruit). Designed to invigorate
                  the
                  liver and kidney.
 ·
              VG-HTZM
                  (Bolus of Walnut and Sesame Seed). Designed to invigorate the liver,
                  tone
                  the kidney, promote healthy eyes and moisten the
                  intestines.
 ·
              VG-LZFL
                  (Cake of Lotus Seed and Poria). Designed to strengthen the spleen.
 
 
 **108
        100% NATURAL TAIOIST HERBAL MEDICINAL PRODUCTS**
 1.
        Fanxie
        Jianfei Yin
 FUNCTIONS:
        Purgation, removing stagnancy, obesity treatment
 INDICATION:
        Adiposis
 
 2.
        Qingshen Yishou Gao
 FUNCTIONS:
        Invigorating spleen and drying damp, obesity treatment, prolong
        life
 INDICATION:
        Adiposis with pathogenic damp
  4
  3.
        Jianfei Yannian San
 FUNCTIONS:
        Soothing the liver and regulating qi, removing blood stasis and postponing
        senescence
 INDICATIONS:
        Adiposis, hyperlipaemia, arteriosclerosis
 
 4.
        Juhua
        Jueming Yin
 FUNCTIONS:
        Clearing heat and dispelling wind, calming liver-yang and purging
        liver-fire
 INDICATIONS:
        Hypertension, hyperlipaemia
 
 5.
        Juhua
        Jiangya San
 FUNCTIONS:
        Dispelling wind and clearing heat, lowering qi and soothing the
        liver
 INDICATIONS:
        Hypertension, senile wind-heat common cold in spring
 
 6.
        Ershi
        San
 FUNCTION:
        Dispelling wind and relieving exterior syndrome
 INDICATIONS:Common
        cold, fever with chilliness, sore-throat, tonsillitis
 
 7.
        Qingre
        Sigen Yin
 FUNCTIONS:
        Clearing heat and cooling blood, dispelling wind and activating
        collaterals
 INDICATIONS:
        Fever, hyperthermia with lethargy, distortion of the face with crooked mouth
        and
        eye due to theoplegia
 
 8.
        Chaihu
        Gegen Yin
 FUNCTION:
        Expelling pathogenic factors from muscles and superficies
 INDICATION:
        Wind-cold common cold
 
 9.
        Yazhicao Yin
 FUNCTION:
        Clearing heat and removing toxic substance
 INDICATION:
        Summer-heat common cold
 
 10.
        Huoxiang Baizhi Yin
 FUNCTIONS:
        Relieving exterior syndrome to resolve damp, invigorating spleen and regulating
        stomach
 INDICATION:
        Enterogastric common cold
 
 11.
        Yesu
        Tianwang San
 FUNCTIONS:
        Reconciling and expelling pathogenic factors from the superficies, clearing
        heat
        and dredging orifices
 INDICATIONS:
        Common cold, malaria, pulmonary tuberculosis, hectic fever
 
 12.
        Tulianqiao Yin
 FUNCTIONS:
        Clearing heat and removing toxic substance, relieving the exterior syndrome
        with
        drugs of pungent taste and cool nature, relieving cough
 INDICATIONS:
        Wind-heat common cold, pharyngodynia, abundant expectoration, cough
 
 13.
        Ziyang Feiyin Gao
 FUNCTION:
        Nourishing yin and lung
 INDICATION:
        Tussis due to deficiency of lung-yin
 
 14.
        Ermu
        San
 FUNCTIONS:
        Moisturizing lung and resolving sputum, clearing heat and relieving
        cough
 INDICATION:
        Tussis due to lung-heat
 
 15.
        Shixiantao Yin
 FUNCTION:
        Clearing lung-heat to relieve cough
 INDICATION:
        Cough with thin sputum
 
 16.
        Baibu
        Donghua San
 FUNCTIONS:
        Clearing lung-heat and lowering qi, eliminating sputum and relieving
        cough
 INDICATIONS:
        Acute and chronic tussis with wind-heat or wind-cold or wind-dryness syndrome,
        abundant expectoration or not
 
 17.
        Xiangling Yin
 FUNCTION:
        Moisturizing lung to relieve cough
 INDICATIONS:
        Tussis due to lung-heat and lung-dryness, pulmonary tuberculosis
 
 18.
        Chuanbei Baiji San
 FUNCTIONS:
        Moisturizing lung and resolving sputum, clearing heat and relieving
        cough
 INDICATION:
        Hemoptysis due to tuberculosis
  5
  
 19.
        Didan
        San
 FUNCTION:
        Purging fire and clearing heat
 INDICATIONS:
        Laryngopharyngitis, chorditis vocalis, asthma due to acute and chronic
        bronchitis
 
 20.
        Qingguteng San
 FUNCTION:
        Clearing heat and removing toxic substance
 INDICATIONS:
        Acute bronchitis, hyperthermia, pectoralgia
 
 21.
        Juhua
        Sangye Yin
 FUNCTION:
        Dispelling wind and heat, moisturizing lung to relieve cough
 INDICATION:
        Acute bronchitis
 
 22.
        Qiupi
        Mahuang Yin
 FUNCTIONS:
        Clearing heat and removing toxic substance, moisturizing lung to relieve
        cough
 INDICATION:
        Chronic bronchitis with abundant expectoration and cough
 
 23.
        Shuanghua Lianqiao Yin
 FUNCTIONS:
        Clearing heat and dissipating sputum, relieving cough and asthma
 INDICATION:
        Chronic bronchitis
 
 24.
        Sanren Gao
 FUNCTIONS:
        Lowering qi and relieving asthma, removing sputum and resolving
        stasis
 INDICATIONS:
        Senile chronic bronchitis, pulmonary emphysema
 
 25.
        Baitan Doukou Yin
 FUNCTIONS:
        Promoting blood circulation to remove blood stasis, dredging meridians and
        activating collaterals
 INDICATIONS:
        Coronary heart disease, angina pectoris
 
 26.
        Danshen Honghua Yin
 FUNCTIONS:
        Promoting blood circulation to remove blood stasis, dredging meridians and
        activating collaterals
 INDICATIONS:
        Coronary heart disease, angina pectoris
 
 27.
        Huangqi Sanqi Yin
 FUNCTIONS:
        Promoting blood circulation to remove blood stasis, dredging meridians and
        activating collaterals
 INDICATION:
        Coronary heart disease with hypertension
 
 28.
        Duzhong Danshen Jiu
 FUNCTIONS:
        Promoting blood circulation to remove blood stasis, dredging meridians and
        activating collaterals
 INDICATIONS:
        Senile and middle-aged wind-cold-damp arthralgia, numbness of limbs due to
        sluggishness qi and blood stasis, hemiparalysis due to cerebral thrombosis,
        coronary heart disease
 
 29.
        Huoxue Tongluo San
 FUNCTIONS:
        Promoting qi and blood circulation, dispersing wind and dredging meridian
 INDICATIONS:
        Theoplegia premonitory with extremity-numbness,
        theoplegia sequel with hemiparalysis
 
 30.
        Xianling Mugua Jiu
 FUNCTIONS:
        Warming kidney and reinforcing yang, eliminating damp and dispelling
        cold, analgesia
 INDICATIONS:
        Arthralgia, numbness of limbs, lassitude in loin and legs due to deficiency
        of
        spleen-yang and kidney-yang, sexual hypoesthesia, sexual impotence,
        sterility
 
 31.
        Danggui Huoluo Jiu
 FUNCTIONS:
        Supplementing qi and nourishing blood, dispelling wind and removing damp,
        analgesia
 INDICATIONS:
        Lumbar muscle strain, scapulohumeral periarthritis, cervical spondylopathy,
        hemiparalysis due to cerebral thrombosis
 
 32.
        Baizhu Qufeng Jiu
 FUNCTIONS:
        Dispelling wind and removing damp, relaxing muscles and tendon, promoting
        blood
        circulation, reducing swelling and analgesia
 INDICATIONS:
        Rheumatic arthritis, rheumatoid arthritis, sciatica
 
 33.
        Qufeng Tongluo Jiu
 FUNCTIONS:
        Promoting qi and blood circulation, dispelling wind and dredging
        collaterals
 INDICATIONS:
        Rheumatic arthritis, rheumatoid arthritis, ischemic necrosis of femoral head
  6
  
 34.
        Sanqi
        Huoxue Jiu
 FUNCTIONS:
        Promoting qi and blood circulation, dispelling wind and removing
        damp
 INDICATIONS:
        Arthrotrauma, stagnation of blood and swelling pain due to traumatic injury,
        arthritis
 
 35.
        Xuelian Huoxue Tongluo Yin
 FUNCTIONS:Clearing
        heat and eliminating damp, promoting blood circulation and dredging
        collaterals
 INDICATION:
        Rheumatic arthritis
 
 36.
        Wuweizigen Yin
 FUNCTION:
        Dispelling wind and removing damp
 INDICATION:
        Wind-cold or damp-heat arthralgia
 
 37.
        Xianteng Shuangjian Yin
 FUNCTIONS:
        Removing damp, resolving phlegm, dredging collaterals
 INDICATION:
        Scapulohumeral periarthritis due to stagnation of phlegm-damp
 
 38.
        Jiuhua Kangshuai Dan
 FUNCTIONS:
        Regulating five zang-organs and six fu-organs, postponing senescence and
        prolong
        life
 INDICATION:
        Senilism
 
 39.
        Fuling Yanshuai Wan
 FUNCTIONS:
        Invigorating spleen to eliminate damp, postponing senescence and prolong
        life
 INDICATIONS:
        Food retention, marasmus, senilism
 
 40.
        Baiyun Yanshou Dan
 FUNCTION:
        Supplementing stomach-qi and spleen-qi
 INDICATIONS:
        Chronic sympyom of digestive tract with anorexia, senilism
 
 41.
        Buqi
        Yangxue Gao
 FUNCTION:
        Invigorating qi and nourishing blood
 INDICATIONS:
        Marasmus, lassitude, emaciation, anorexia due to deficiency of qi and
        blood
 
 42.
        Jianpi Xiaoshi San
 FUNCTIONS:
        Regulating qi and blood, relieving dyspepsia
 INDICATIONS:
        Anorexia and dyspepsia due to deficiency of qi and blood
 
 43.
        Jiedu
        Yinyang San
 FUNCTION:
        Clearing heat and removing toxic substance
 INDICATION:
        stomatocace due to damp-heat toxic substance
 
 44.
        Qinghuo Xuanmen Dan
 FUNCTION:
        Nourishing yin and clearing fire
 INDICATION:
        Chronic stomatocace due to deficiency of spleen-stomach-yin and flaring-up
        of
        fire of deficiency type
 
 45.
        Wenwei San
 FUNCTION:
        Drying damp and warming stomach
 INDICATION:
        Stomach-ache due to stomach deficiency-cold syndrome
 
 46.
        Zhiweihantong Fang
 FUNCTIONS:
        Warming stomachd, dispelling cold, analgesia
 INDICATIONS:
        Gastric ulcer, chronic gastritis, gastrospasm, stomach-ache due
        to
        stomach cold-syndrome
 
 47.
        Zhiweiretong Fang
 
 FUNCTIONS:
        Eliminating heat-accumulation, Promoting qi to relieve flatulence,
        analgesia
 INDICATIONS:
        Chronic gastritis due to Helicobacter pylori, gastric ulcer,
        stomach-ache due to accumulation of heat in intestine and stomach, abdominal
        distension and constipation
 7
 
 48.
        Zhiqizhi Weitong Fang
 FUNCTIONS:
        Regulating qi and promoting blood circulation, relieving pain
 INDICATION:
        Stomach distention and stomach ache due to sluggishness of qi and stasis
        of
        blood
 
 49.
        Zhidanshizheng Yin
 FUNCTION:
        Eliminating gallstones
 INDICATION:
        Cholelithiasis
 
 50.
        Yujin
        Jianghuang Tang
 FUNCTIONS:
        Eliminating damp and heat, promoting liver and bile secretion
 INDICATIONS:
        Cholecystitis, inflammation of biliary tract
 
 51.
        Luxian Sheshe Yin
 FUNCTIONS:
        Nourishing liver, promoting diuresis
 INDICATION:
        Ascites due to cirrhosis of liver
 
 52.
        Didan
        Baogan Yin
 FUNCTIONS:
        Purging excess-fire of liver and bile, clearing excess-heat of
        sanjiao
 INDICATION:
        Cirrhosis of liver
 
 53.
        Mabian Yangpi Yin
 FUNCTION:
        Relieving flatulence, analgesia, removing stasis, dredging
        meridians
 INDICATIONS:
        splenomegaly, enlarged ovarian cyst
 
 54.
        Liniao Xiaozhong Yin
 FUNCTION:
        Promoting diuresis to reduce edema
 INDICATION:
        Hydropsy
 
 55.
        Tinglizi Xiaozhong Yin
 FUNCTIONS:
        Warming and invigorating heart-yang and kidney-yang, reducing edema
 INDICATION:
        Hydropsy
 
 56.
        Dongguaren Xiaozhong Yin
 FUNCTION:
        Promoting diuresis to reduce edema
 INDICATION:
        Hydropsy due to acute and chronic nephritis
 
 57.
        Sheshe Qingre Jiedu San
 FUNCTIONS:
        Clearing heat and removing toxic substance, promoting diuresis to reduce
        edema,
        promoting blood circulation to analgesia
 INDICATION:
        Early lung cancer
 
 58.
        Sheshe Hujiao San
 FUNCTION:
        Clearing heat and removing toxic substance
 INDICATION:
        Mammary cancer
 
 59.
        ShuiHuo Jiji Dan
 FUNCTIONS:
        Regulating five zang-organs, clearing heat and removing toxic
        substance
 INDICATIONS:
        Early stomach cancer, atrophic gastritis, five kinds of strain and seven
        kinds
        of impairments, consumptive disease
 
 60.
        Shoushu Zihua Yin
 FUNCTION:
        Removing toxic substance
 INDICATIONS:
        Early carcinoma of esophagus, early carcinoma of cardia of stomach
 
 61.
        Kushi
        Muteng San
 FUNCTION:
        Removing toxic substance
 INDICATIONS:
        Early carcinoma of esophagus, Early stomach cancer
 
 62.
        Dangshen Sheshe Yin
 FUNCTIONS:
        Invigorating qi and blood, removing toxic substance
 INDICATION:
        Postoperative maintenance of late gastric cancer
 
 63.
        WuXing Yishou Dan
 FUNCTIONS:
        Invigorating qi and blood, regulating immunity, prolong life
 INDICATION:
        Tumor of digestive tract due to deficiency of qi-blood and yin-yang
 
   8
 64.
      Xungu Cilao Yin  FUNCTIONS:
        Removing toxic substance, nourishing liver, invigorating qi
 INDICATION:
        Early liver cancer
 
 65.
        Baidu
        Zhizhu Yin
 FUNCTIONS:
        Clearing heat and removing toxic substance, promoting qi to relieve dyspepsia,
        resolving mass and stagnation
 INDICATION:
        Early rectal cancer
 
 66.
        Dihuang Changshou Dan
 FUNCTION:
        Tonifying kidney and invigorating qi
 INDICATIONS:
        Diabetes, marasmus and thirst due to deficiency of kidney
 
 67.
        Erhuang Yannian San
 FUNCTIONS:
        Tonifying kidney-yin, replenishing essence and blood, strengthening
        qi
 INDICATION:
        Diabetes
 
 68.
        Meifa
        San
 FUNCTIONS:
        Nourishing kidney and brain, nourishing heart and hair
 INDICATION:
        Early graying of hair due to deficiency of blood
 
 69.
        Dihuang Meifa San
 FUNCTION:
        Nourishing kidney and hair
 INDICATION:
        Early graying of hair due to deficiency of kidney
 
 70.
        Huangjing Runfu Gao
 FUNCTION:
        Nourishing skin and prolong life
 
 71.
        Sanjing Meiyan Wan
 FUNCTIONS:
        Nourishing skin and prolong life, obesity treatment
 
 72.
        Yangyin Runbian San
 FUNCTIONS:
        Nourishing stomach-yin, lubricating bowel to relieve constipation, nourishing
        skin
 INDICATION:
        Constipation due to deficiency of stomach-yin and body fluid
 
 73.
        Pugong Shiwei Yin
 FUNCTION:Resolving
        damp and promoting diuresis
 INDICATION:
        Chronic prostatitis
 
 74.
        Yuanzhi Bujing Wan
 FUNCTIONS:
        Tonifying brain and kidney
 INDICATIONS:
        Sexual hypoesthesia, sexual impotence, sleeplessness, amnesia
 
 75.
        Fuling Huming Wan
 FUNCTION:
        Warming yang of heart and kidney
 INDICATION:
        Sexual impotence
 
 76.
        Shanyao Bushen Wan
 FUNCTION:
        Nourishing kidney-essence
 INDICATIONS:
        Sexual hypoesthesia, sexual impotence due to deficiency of
        kidney-essence
 
 77.
        Zhiyangwei Wan
 FUNCTION:
        Nourishing kidney-essence
 INDICATION:
        Sexual impotence
 
 78.
        Shijining San
 FUNCTION:
        Nourishing kidney-essence
 INDICATION:
        Sexual impotence
 
 79.
        Zishen wan
 FUNCTIONS:
        Nourishing yin and invigorating yang, nourishing kidney-essence
 INDICATIONS:
        Sexual impotence, acyesis
 
 80.
        Yanshuai Dan
 FUNCTIONS:
        Nourishing kidney-essence, regulating immunity, postponing senescence, prolong
        life
  9
  81.
        Yangxin Bushen Wan
 FUNCTIONS:
        Warming heart-yang, nourishing kidney-essence,
 INDICATIONS:
        Sexual impotence, phallocrypsis due to libertinism
 
 82.
        Xianren Huanshao Dan
 FUNCTIONS:
        Nourishing kidney-essence, postponing senescence, prolong life
 
 83.
        Yishou Dan
 FUNCTIONS:
        Nourishing heart and kidney, Nourishing skin, strengthen the bone and muscle,
        prolong life
 
 84.
        Yangshou Dan
 FUNCTIONS:
        Nourishing heart and kidney, Nourishing skin, replenishing bone marrow, prolong
        life
 
 85.
        Shenxian Yanshou Dan
 FUNCTIONS:
        Nourishing kidney-essence, invigorating heart-qi, postponing senescence,
        prolong
        life
 
 86.
        Zhibai Changshou Wan
 FUNCTIONS:
        Nourishing yin and invigorating yang, postponing senescence,prolong
        life
 
 87.
        Shouwu Changshou Dan
 FUNCTIONS:
        Nourishing kidney-essence, postponing senescence, prolong life
 INDICATIONS:
        Early graying of hair due to deficiency of kidney, Senilism
 
 88
        Baizi
        Changshou Dan
 FUNCTIONS:
        Nourishing heart and brain, postponing senescence, prolong life
 INDICATIONS:
        Senilism, hypomnesis
 
 89.
        Jusheng Changshou Dan
 FUNCTIONS:
        Invigorating yang and replenishing essence, nourishing brain and strengthen
        kidney, postponing senescence, prolong life
 INDICATIONS:
        Sexual impotence, premature ejaculation, hypomnesis, senilism
 
 90.
        Baijie Anshen Yin
 FUNCTION:
        Tranquilization
 INDICATION:
        Insomnia,
 
 91.
        Xinteng Anshen Yin
 FUNCTION:
        Tranquilization
 INDICATION:
        Insomnia
 
 92.
        Ruxiang Bibo San
 FUNCTION:
        Nourishing heart to calm the mind
 INDICATIONS:
        Neurasthenia, insomnia, amnesia
 
 93.
        Baimu
        Yangjing Wan
 FUNCTION:
        Nourishing heart and brain, arresting seminal emission
 INDICATIONS:
        hypomnesis, insomnia and dreamful sleep
 
 94.
        Changpu Tongqiao Wan
 FUNCTION:
        Nourishing heart and brain, dredging orifices
 INDICATIONS:
        Memory loss, precursory symptom of senile dementia
 
 95.
        Fushen Chenxiang Wan
 FUNCTION:
        Nourishing yin and heart
 INDICATIONS:
        hypomnesis, insomnia and dreamful sleep due to deficiency of qi-yin of
        heart
 
 96.
        Bushen Anshen Yin
 FUNCTION:
        Tonifying kidney to relieve mental strain
 INDICATION:
        Insomnia due to deficiency of kidney
 
 97.
        Fushen Xiangfu Wan
 FUNCTIONS:
        Restoring normal coordination between the heart (fire) and the kidney (water),
        regulating yin and yang
 INDICATIONS:
        Palpitation due to terror, insomnia and amnesia
 
   10
 98.
      Bunao Yangxin Wan  FUNCTION:Nourishing
        heart and brain, tranquilization
 INDICATION:
        Mental strain
 
 99.
        Manjun Yizhi San
 FUNCTION:
        Nourishing heart to calm the mind, invigorating brain to reinforce
 INDICATION:
        Neurasthenic syndrome
 
 100.
        Yangxin Anshen Wan
 FUNCTION:
        Nourishing brain and relieving mental stress.
 INDICATIONS(pound)(0)hypomnesis,
        insomnia and dreamful sleep
 
 101.
        Wushen Yangxin Wan
 FUNCTIONS:
        Nourishing qi and yin, dredging meridians and promoting
        bloodcirculation
 INDICATIONS:
        (1) insomnia, dreamful sleep and amnesia due to qi-yin deficiency and blockage
        of meridian (2) arrhythmia, viral myocarditis, rheumatic
        myocarditis
 
 102.
        Qingxin Zishen Wan
 FUNCTION:
        Clearing heart-fire and nourishing kidney
 INDICATIONS:
        Hyperactivity of fire due to yin deficiency, night sweating, nocturnal emission
        due to libertinism
 
 103.
        Xinshen Jiji Wan
 FUNCTION:
        Restoring normal coordination between the heart(fire) and the
        kidney(water)
 INDICATIONS:
        Hypomnesis, insomnia and dreamful sleep due to kidney deficiency and upward
        flaming of heart-fire, seminal emission, sexual impotence, premature
        ejaculation
 
 104.
        Zishen Jianghuo Wan
 FUNCTION:
        Nourishing kidney-water and lowering heart-fire
 INDICATIONS:
        Hypomnesis, insomnia and dreamful sleep due to kidney deficiency and upward
        flaming of heart-fire, seminal emission, sexual impotence, premature
        ejaculation
 
 105.
        Songzhi Yangxin Dan
 FUNCTIONS:
        Nourishing brain and relieving mental stress, postponing
 senescence
        and prolong life
 
 106.
        Kaiqiao Ningshen Wan
 FUNCTION
        :Warming heart-yang, inducing resuscitation and eliminating damp, removing
        phlegm, tranquilization. INDICATION(pound)(0)Hypomnesis and neurasthenic
        due to
        deficiency of heart-yang, precursory symptom of senile dementia
 
 107.
        Xiexia Tongbian Yin
 FUNCTION:
        Relieving constipation by purgation
 INDICATION:
        Habitual constipation
 
 108.
        Runbian Wan
 FUNCTION:
        Lubricating bowel to relieve constipation.
 INDICATION:
        Senile constipation
  **MULTI-VITAMINS
        AND SUPPLEMENTS**
   This
        product line will offer a full compliment of 100% natural multi-vitamins
        and
        multi-mineral food supplements. These products are intended to support the
        immune system, increase energy, provide stress relief, strengthen bones,
        enhance
        mental clarity and support relaxation and overall vitality.
  **Vitamin
                  A Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Beta-Carotene
              TAB.
                  90033-U
              *Antioxidant*
              10,000IU
              TabletsCod
                  Liver Oil
              SGL.
                  500062
              *A
                  rich source of Omega 3 fatty acids*
              20min
              SoftGelsCod
                  Liver Oil
              SGL.
                  50060
              *A
                  rich source of Omega 3 fatty acids*
              10min
              SoftGelsHalibut
                  Liver Oil
              SGL.
                  500064
              *A
                  rich source of Vitamins A & D*
              5000iu
                  A 400iu D
              SoftGels
   11
  **Vitamin
                  B Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Folic
                  Acid
              TAB.
                  900021
              *An
                  essential prenatal nutrient.*
              1mg
              TabletsVitamin
                  B6
              TAB.
                  900027-U
              *Supports
                  energy & stress relief*
              100mg
              TabletsVitamin
                  B12
              
              
              250mcg
              TabletsVitamin
                  B Complex 50
              TAB.
                  900041-C
              *Supports
                  energy & stress relief*
              50mg
              TabletsVitamin
                  B-Complex 50 (TR)
              TAB.
                  900015-C
              *Supports
                  energy & stress relief*
              50mg
              TabletsB-Complex
                  with 300mg Vitamin C (TR)
              TAB.
                  90009-C
              *Supports
                  energy & stress relief*
              multi
              TabletsStress
                  B-Complex with 600mg Vitamin C
              TAB.
                  900013-C
              *Supports
                  energy & stress relief. Anti-Homocysteine*
              multi
              Tablets**Vitamin
                  C Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Vitamin
                  C
              TAB.
                  900035-C
              *Supports
                  immune system. Antioxidant*
              250mg
              TabletsVitamin
                  C
              TAB.
                  900029
              *Supports
                  immune system. Antioxidant*
              500mg
              TabletsVitamin
                  C
              TAB.
                  900047-C
              *Supports
                  immune system. Antioxidant*
              1000mg
              TabletsVitamin
                  C Chewable Orange
              TAB.
                  900017-U
              *Supports
                  immune system. Antioxidant*
              250mg
              TabletsVitamin
                  C Chewable Orange
              TAB.
                  900043-U
              *Supports
                  immune system. Antioxidant*
              500mg
              TabletsVitamin
                  C (TR)
              TAB.
                  900025-C
              *Supports
                  immune health*
              500mg
              TabletsVitamin
                  C (TR)
              TAB.
                  900019-C
              *Supports
                  immune health*
              1000mg
              TabletsVitamin
                  C with Rosehips
              TAB.
                  900039-C
              *Supports
                  immune health*
              500mg
              Tablets**Vitamin
                  E Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Vitamin
                  E Natural Source
              SGL.
                  500014
              *Nutritional
                  support for heart health*
              400IU
              SoftGels
   12
   Vitamin
                  E Natural Source
              SGL.
                  500056
              *Nutritional
                  support for heart health*
              800IU
              SoftGelsVitamin
                  E Synthetic
              SGL.
                  50002
              *Nutritional
                  support for heart health*
              400IU
              SoftGelsVitamin
                  E Synthetic
              SGL.
                  500058
              *Nutritional
                  support for heart health*
              800IU
              SoftGels**AntiOxidant
                  Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**ACES
                  Formula
              N/A
              *Antioxidant*
              Multi
              TabletsCoEnzyme
                  Q10
              CAP.
                  800045
              *Nutritional
                  support for heart health Antioxidant*
              30
                  mg
              Capsules**Calcium
                  Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Calcium
                  (Carbonate)
              TAB.
                  900081-C
              *Promotes
                  strong bones*
              1500mg
              TabletsCalcium
                  (Carbonate) with Vitamin D
              TAB.
                  900007-C
              *Promotes
                  strong bones*
              1500mg
              TabletsNatural
                  Source Calcium (Carbonate)
              TAB.
                  900077-C
              *Promotes
                  strong bones*
              500mg
              TabletsNatural
                  Source Calcium (Carbonate) w/D
              TAB.
                  9000003-C
              *Promotes
                  strong bones*
              500mg
              TabletsNatural
                  Source Calcium (Carbonate) w/D
              TAB.
                  9000003-C
              *Promotes
                  strong bones*
              500mg
              TabletsNatural
                  Source Calcium (Carbonate) w/D
              N/A
              *Promotes
                  strong bones*
              250mg
              TabletsCalcium
                  & Magnesium with Vitamin D
              TAB.
                  900057-C
              *Promotes
                  strong bones*
              333mg/166mg
              TabletsCalcium
                  Citrate w/D
              TAB.
                  900067-C
              *Promotes
                  strong bones*
              300mg
              TabletsVitamin
                  D
              TAB.
                  900105-U
              *Promotes
                  strong bones*
              1000iu
              TabletsVitamin
                  D
              TAB.
                  900103-U
              *Promotes
                  strong bones*
              400iu
              Tablets**Essential
                  Fatty Acid Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Evening
                  Primrose Oil
              SGL.
                  500026
              A
                  rich source of essential fatty acids
              500mg
              SoftGelEvening
                  Primrose Oil
              SGL.
                  500028
              *A
                  rich source of essential fatty acids*
              1000mg
              SoftGel
   13
   Flaxseed
                  Oil (Organic)
              SGL.
                  500052
              *A
                  rich source of essential fatty acids*
              1000
                  mg
              SoftGelLecithin
                  (Unbleached)
              SGL.
                  500040
              *Support
                  for mental function*
              1200mg
              SoftGelOmega
                  3-6-9
              SGL.
                  500012
              *Nutritional
                  support for heart health Essential Fatty acids*
              1200mg
              SoftGelSalmon
                  Oil - Wild
              SGL.
                  500054
              *Nutritional
                  support for heart health Essential Fatty acids*
              1000mg
              SoftGel**Herbal
                  Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Cranberry
                  Extract 18:1
              CAP.
                  800041
              Nutritional
                  support for the urinary tract
              100mg
              CapsulesDevil's
                  Claw
              CAP.
                  800037
              *Herbal
                  support for joint health*
              500mg
              CapsulesEchinacea
                  (Purpurea Herb/Angustifolia Herb & Root)
              CAP.
                  800029
              *Herbal
                  support for the immune system*
              400mg
              CapsulesEchinacea
                  Extract 4%
              CAP.
                  800029
              *Herbal
                  support for the immune system*
              400mg
              CapsulesFeverfew
                  Extract 0.5%
              CAP.
                  800051
              *Herbal
                  support for migraine headaches*
              125mg
              CapsulesGarlic
                  Oil (Odour Free)
              SGL.
                  500048
              *Supports
                  immune health*
              500mg
              SoftGelsGarlic
                  Pure / Allicin-Rich
              CAP.
                  800055
              *Herbal
                  support for health, vitality & immunity*
              500mg
              CapsulesGinkgo
                  Biloba 24/6
              CAP.
                  800033
              *Herbal
                  support for mental alertness*
              60mg
              CapsulesGinseng
                  (Panax) Root
              CAP.
                  800047
              *Herbal
                  support for energy & vitality*
              100mg
              CapsulesGrape
                  Seed Extract (MegaNatural Gold TM)
              CAP.
                  800035
              *A
                  rich source of antioxidants*
              50mg
              CapsulesMilk
                  Thistle Extract 80%
              CAP.
                  800043
              *Herbal
                  support for liver health*
              150mg
              CapsulesSaw
                  Palmetto
              SGL.
                  500050
              *Herbal
                  support to promote prostate health*
              160mg
              SoftGelsSt
                  John's Wort Extract 0.3%
              CAP.
                  800031
              *Herbal
                  support to promote relaxation*
              300mg
              Capsules**Joint
                  Support Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Glucosamine
                  Sulfate (Sodium Free)
              CAP.
                  800017
              *Nutritional
                  building blocks for joint health*
              500mg
              CapsulesGlucosamine
                  Sulfate (Sodium Free)
              CAP.
                  800017
              *Nutritional
                  building blocks for joint health*
              500mg
              CapsulesGlucosamine
                  Sulfate (Sodium Free)
              N/A
              *Nutritional
                  building blocks for joint health*
              1000mg
              CapsulesGlucosamine
                  (Sodium Free) & Chondroitin Sulfate
              CAP.
                  800039
              *Nutritional
                  building blocks for joint health*
              450mg
              Capsules
   14
   Glucosamine
                  (Sodium Free) & Chondroitin Sulfate
              CAP.
                  800115
              *Nutritional
                  building blocks for joint health*
              900mg
              CapsulesGlucosamine
                  (Sodium Free) & Chondroitin Sulfate
              CAP.
                  800115
              *Nutritional
                  building blocks for joint health*
              900mg
              CapsulesGlucosamine
                  Sulfate (Sodium Free) & OptiMSMTM
              CAP.
                  800053
              *Nutritional
                  building blocks for joint health*
              900mg
              CapsulesOptiMSMTMmethyl
                  sulfonyl methane
              CAP.
                  800049
              *Nutritional
                  support for joint health*
              500mg
              CapsulesOptiMSMTMmethyl
                  sulfonyl methane
              CAP.
                  800005
              *Nutritional
                  support for joint health*
              1000mg
              CapsulesShark
                  Cartilage
              CAP.
                  800057
              *Nutritional
                  building blocks for joint health*
              750mg
              Capsules**Mineral
                  Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Iron
                  (Ferrous gluconate)
              TAB.
                  900055-C
              *Nutritional
                  support for the prevention of anemia*
              300mg
              TabletsIron
                  (Ferrous sulphate)
              TAB.
                  900093-C
              *Nutritional
                  support for the prevention of anemia*
              300mg
              TabletsZinc
                  (Gluconate)
              TAB.
                  900037-C
              *Supports
                  immune health*
              50mg
              Tablets**Multi
                  Vitamin/Mineral Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Children's
                  Complete Chewable Multiple Vitamins & Minerals
              TAB.
                  90005-U
              *Provides
                  daily nutritional support*
              multi
              TabletsMultiple
                  Vitamins
              TAB.
                  900031-C
              *Provides
                  daily nutritional support*
              multi
              TabletsMultiple
                  Vitamins plus Iron
              TAB.
                  900023-C
              *Provides
                  daily nutritional support*
              multi
              TabletsMulit
                  Vitamin & Mineral
              TAB.
                  900091-C
              *Provides
                  daily nutritional support*
              multi
              TabletsMultiple
                  Vitamins & Minerals 50 + w/Lutien
              TAB.
                  900109-C
              *Provides
                  daily nutritional support*
              multi
              TabletsMultivitamin
                  Forte w/Lutein (25 Multiple Vitamins & Minerals)
              TAB.
                  900113-C
              *Provides
                  daily nutritional support*
              multi
              TabletsPrenatal
                  Vitamin
              TAB.
                  900089-C
              *Provides
                  daily nutritional support*
              multi
              Tablets**Other
                  Products****Product**
              **Product
                  Number**
              **Slogan**
              **Activity**
              **Form**Phasoelamine
              
              
              500
                  mg
              TabletsPhasoelamine
              
              
              500
                  mg
              Tablets
 15
 **Subsidiaries**
  In
        April
        2005, we formed two wholly owned subsidiaries pursuant to the laws of the
        State
        of Nevada: (1) China Health World Pharmaceutical Corporation; and (2) China
        Health World Trade Corporation. Our
        subsidiaries were formed to assist and support us with global development,
        manufacturing, commercialization, marketing, and distribution of our natural
        herbal products worldwide, in North America, in PR China and in
        Europe.
  **(1)**   **China
        Health World Pharmaceutical Corporation**
  We
        plan
        to conduct our proposed biopharmaceutical operations through China Health World Pharmaceutical Corporation, including
        the development,
        manufacture and commercialization of natural medications for epidemic diseases
        and conditions related to diabetes mellitus, cardio-vascular and
        cerebral-vascular system dysfunction and neurological disorders.
  **(2)**  **China
        Health World Trade Corporation**
  China
        Health World Trade Corporation will support us in the area of worldwide
        branding, marketing and distribution of our unique natural medicinal products
        produced by us. This will involve multi-media marketing and multi-channel
        distribution to global customers and markets in order to:
  ·
              Build
                  and maintain worldwide brand recognition of our products;
  ·
              Establish
                  global market penetration utilizing global infrastructure, distribution
                  and sales channels worldwide; and
  ·
              Employ
                  uniform market strategy to create worldwide market recognition
                  of our
                  brands.
  **Manufacturing**
 
 We
        have
        entered into agreements with two manufacturers, Canadian Phytopharmaceuticals
        Corp. ("Canadian Phyto") and GFR Pharma Ltd., (“GFR Pharma”) which will produce
        all of our requirements for our three product lines. Canadian Phyto will
        process
        the raw materials that go into our product lines. GFR Pharma 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.
 
 **Canadian
        Phytopharmaceuticals Corp. Manufacturing Agreement** .
        On
        December 18, 2005, our wholly owned subsidiary, China Health World Trade
        Corporation entered into a Manufacturing Agreement with Canadian Phyto, a
        British Columbia manufacturing company. This Agreement replaced the agreement
        dated February 9, 2004 which was entered into between us and Canadian Phyto
        with
        the same terms and conditions. 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 us 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 we provide to Canadian Phyto. The Manufacturing
        Agreement with Canadian Phyto does not contain any exclusivity provisions.
 
 Canadian
        Phyto has agreed to set the price for products to be manufactured from time
        to
        time through blanket purchase orders issued by us 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 us 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 us.
        Any formulas owned by us for products manufactured by GFR Pharma will remain
        our
        exclusive property. 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 our formulas and GFR Pharma'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
   16
  may
          vary
          for each product from one to ten weeks, depending on the type of product
          and the
          quantity ordered. We are responsible for any damages, directly or indirectly
          related to: (a) all formulas which we own; (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
          us; and
          (d) any breach of the Manufacturing Agreement. GFR Pharma warrants that
          the
          products manufactured by it will meet our 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.
          Each
          party is 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.
 
 **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.
 
 **US
        Dietary Supplements Markets (in millions) Consumer Sales, All
        Channels**
 **Category**
              **2000**
              **2001**
              **2002**
              **CAGR**
                **1997
                  - 2002**
              **Projected
                  Growth**
                **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%zeal
                  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)
  17
 **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.
 
 
 **Global
        Marketing and Sales Strategy**
 
 Our
        management recognizes that different markets offer different opportunities
        for
        growth in sales. The following are marketing and sales initiatives that we
        intend to implement to market our products:
 
 1.  Global
        E-Commerce Infrastructure - We
        intend to target customers through our e-commerce website. We intend to be
        able
        to offer our neutraceutical and pharmaceutical product lines on our e-commerce
        website in approximately six to twelve months. We are currently working to
        establish and enhance our website to be capable of handling retail transactions
        with multiple payment forms (i.e., credit card, check and alternative payment
        systems), in multiple currencies and in multiple languages. The E-Commerce
        Infrastructure will offer complete online selling features which are fully
        integrated with our global IT infrastructure that balances flexibility. Our
        website will offer both functionality and integration with global customers
        and
        trading partners.
 
 Our
        Online Shopping Portal will also provide cross-sell and upsell capabilities
        which we believe will increase incremental potential revenue. It will also
        offer
        the capability to offer industrial strength capacity for high volume of 100,000
        SKUs and numerous configuration. Our e-commerce website will also offer
        comprehensive features with online customer services, discounts offers and
        customer pricing features, aimed at creating customer satisfaction and
        loyalty.
 
 We
        believe that our E-Commerce Infrastructure addresses pressures to improve
        employee effectiveness and lower the total cost of ownership and increase
        productivity, increase customers services and satisfaction and improve employee
        satisfaction. In addition, we believe that our e-commerce infrastructure
        is the
        comprehensive way for us to market, distribute and commercialize our natural
        medicinal herbal product lines to the global markets and audiences. We believe
        that the site will allow us to reach consumers globally, effectively and
        efficiently, while we continue the development of our global retail and
        franchise infrastructures. We believe that E-Commerce has been proven to
        be a
        cost-effective way to reach large consumers audiences, and we plan to commence
        an aggressive global marketing and distribution and commercialization program
        once our site is operational. Our e-commerce strategy represents one of the
        important parts of our goal of becoming a leading global provider of
        neutraceutical and pharmaceutical products.
 
 2.  Global
        Retail and Wholesale Distribution - We
        believe 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 in negotiation with several
        distribution companies with a view to distributing our products.
 
 3.  Global
        Retail and Franchise Infrastructure and Storefronts - We
        intend to develop a proprietary enhanced Global Retail and Franchise IT Software
        Infrastructure and System to support the launch of our intended global retail
        and franchising operations. The System is expected to be fully operational
        within six (6) to twenty-four (24) months.
 
 The
        new
        Global Retail Infrastructure, known as “FUSION” will offer a fully integrated
        global retail solution. Its integration platform will take the uncertainty
        out
        of customer and inventory management, enabling our employees to perform global
        customer maintenance, process account payments and view a customer’s sales
        history right at the register to gain valuable insight into our customer’s
        purchasing habits, loyalty, and spending history to enhance our Global Customer
        Relationship Management (CRM).
 
 The
        Global Retail IT Infrastructure will have the comprehensive ability to provide
        and accommodate us with customer support for a single register at one location
        to a multi-register, multi-global retail chain of stores infrastructure.
        It will
        also offer us the comprehensive ability to offer integration, global pricing
        management, integrated global remote communication capability between stores,
        global multi-currency cash management and global shipping
        management.
  18
  We
        intend
        to leverage our planned global fusion retail solution to develop and expand
        throughout our global enterprise with strategic inventory control, efficient
        operations, streamlined communications and the overall management of our
        global
        retail and franchise business. Our planned new Global Retail and Franchise
        Infrastructure and System will enable us to support rapid global growth and
        allow us to have inventory management and CRM tools which will provide us
        with
        the competitive advantage to create efficiencies as we expand throughout
        North
        American and internationally.
 
 4.  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.
 
 5.  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.
 
 6.  Trade
        Shows and Seminars - We expect to participate in seminars related to
        neutraceuticals, alternative medicine and Chinese medicine.
  **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. We have established
        further research and development alliance with WangJing Hospital and WangJing
        Hospital of China Academy of Chinese Medical Sciences, BeiJing, PR China.
 On
        January 12, 2007, we entered into a binding Memorandum of Understanding with
        Beijing Jifatang Chinese Medicine Research Institute ("BJCMRI") and Beijing
        Jifatang Chinese Medicine Research & Development Institution ("BJCMRDI") for
        establishing a strategic partnership, collaboration and alliances for further
        research, development, manufacture and commercialization of new innovative
        pharmaceutical drugs for the treatment of diseases and conditions related
        to
        cancers, diabetes, cardiovascular disease, cerebral diseases and neurological
        disorders. The MOU provides that BJCMRI and BJCMRDI will grant to the Company
        first refusal rights and exclusive rights to acquire all rights to any new
        drugs
        and to any intellectual properties which BJCMRI and BJCMRDI may develop for
        a
        term of 10 years. As consideration for granting us such first refusal and
        exclusive rights, we agreed to issue an aggregate of 200,000 restricted shares
        of its common stock to BJCMRI and BJCMRDI. The MOU contemplates that the
        parties
        will enter into acquisition agreements for our acquisition of any rights
        to any
        new drugs developed by BJCMRI and BJCMRDI during the term of the MOU. The
        acquisition agreements will provide for such terms as the parties may agree
        and
        will be subject to our completion of satisfactory due diligence.
  **Intellectual
        Property**
 
 We
        own
        the rights to the 134 100% natural herbal medicinal products that comprise
        our
        King of Herbs and Taoist Medicine product lines.
  **Recent
        Developments**
  ***Acquisition
        Definitive Agreement with Beijing Boran Pharmaceuticals Co.
        Ltd.***
 
 On
        January 19, 2007, we entered into an Acquisition Definitive Agreement with
        Beijing Boran Pharmaceuticals Co. Ltd. pursuant to which we will acquire
        65% of
        the total issued and outstanding shares of Beijing Boran. In exchange for
        the
        shares of Beijin Boran we agreed to pay a consideration of USD $3,000,000.
        The
        consideration was determined based upon a total revenue of 32,000,000 RMB
        (approximately USD$4,118,000) and assets of 58,511,000 RMB (approximately
        USD$7,530,000) for the year ended December 31, 2006 and revenue of $30,000,000
        RMB (approximately USD$3,861,000 for the year ended December 31, 2005. The
        consideration shall be paid at the closing with USD$800,000 retained by us
        in
        the event that upon the completion of audited financial statements of Bejing
        Boran, the revenue target of Beijing Boran is not met. The consideration
        shall
        be reduced as agreed upon by the parties. The Agreement contemplates that
        the transaction will be completed at a closing to be held on the first business
        day after the closing conditions are met or waived, or on a date agreed upon
        by
        the parties. The closing conditions include, but are not limited to: (i)
        the
        satisfactory completion by each party of a review of the business operations,
        finances, assets and liabilities of each party, (ii) delivery of such
        certificates and closing documents as each party's counsel may request, (iii)
        the approval of 65% shareholders of Beijing Boran and (iv) for Beijing Boran
        has
        granted the Company exclusive first refusal rights until the closing date
        of the
        transaction.
 
 Beijing
        Boran was established in 2002 as a private pharmaceutical company in Beijing,
        PR
        China under Chinese Government Laws and Regulations. Beijing Boran engages
        in
        the businesses of developing, manufacturing and marketing various herbal-based
        pharmaceuticals drugs. Currently Beijing Boran has approximately260 employees.
        Beijing Boran owns China-SFDA certified GMP pharmaceutical drug manufacturing
        facilities, and a total of thirty-one (31) China -SFDA certifiedherbal-based
        pharmaceutical drugs. Beijing Boran owns two patents that were approved by
        PR
        China Government as Patents No.: CN1660403 and CN1833675A.Beijing Boran owns
        24,726 square meters lands
        in
        Beijing PR China. It also owns buildings occupying an additional 10,950 square
        meters. Beijing Boran also has12 new pharmaceutical drugs which are being
        processed for further China -SFDA approval as new pharmaceutical drugs and
        has a
        pending patent application.
  19
  ***Memorandum
        of Understanding with Beijing Jifatang Chinese Medicine Research Institute
        and
        Beijing Jifatang Chinese Medicine Research & Development
        Institution***
 
 On
        January 12, 2007, we entered into a binding Memorandum of Understanding with
        Beijing Jifatang Chinese Medicine Research Institute ("BJCMRI") and Beijing
        Jifatang Chinese Medicine Research & Development Institution ("BJCMRDI") for
        establishing the strategic partnership, collaboration and alliances for further
        research, development, manufacture and commercialization of new innovative
        pharmaceutical drugs for the treatment of diseases and conditions related
        to
        cancers, diabetes, cardiovascular disease, cerebral diseases and neurological
        disorders. The MOU provides that BJCMRI and BJCMRDI will grant to the Company
        first refusal rights and exclusive rights to acquire all rights to any new
        drugs
        and to any intellectual properties which BJCMRI and BJCMRDI may develop for
        a
        term of 10 years. As consideration for granting to us such first refusal
        and
        exclusive rights, we agreed to issue an aggregate of 200,000 restricted shares
        of its common stock to BJCMRI and BJCMRDI.
 
 The
        MOU
        contemplates that the parties will enter into acquisition agreements our
        acquisition of any rights to any new drugs developed by BJCMRI and BJCMRDI
        during the term of the MOU. The acquisition agreements will provide for such
        terms as the parties may agree and will be subject to our completion of
        satisfactory due diligence.
  
  ***Acquisition
        Definitive Agreement with Xi'An Meichen Pharmaceutical Co.
        Ltd.***
 
 On
        January 1, 2007, we executed an Acquisition Definitive Agreement with Xi'An
        Meichen Pharmaceutical Co. Ltd. to acquire all of the assets of Xi'An Meichen.
        Pursuant to the Agreement, the Company has agreed to acquire from Xi'An Meichen
        its pharmaceutical manufacturing facilities which are certified by the China
        State Food and Drug Administration, a total of 43 China- SFDA certified
        pharmaceutical drugs, and a total of 25 MU lands, which is approximately 16,000
        square meters. In consideration for the Assets, we have agreed to issue
        20,000,000 shares of restricted common stock and pay $12,000,000 RMB (USD
        $1,535,313) to Xi'An Meichen. The Agreement contemplates that the transaction
        will be completed at a closing to be held on the first business day after
        the
        closing conditions are met or waived, or on a date agreed upon by the parties.
        The closing conditions include, but are not limited to: (i) the satisfactory
        completion by each party of a review of the business operations, finances,
        assets and liabilities of the other party, (ii) delivery of such certificates
        and closing documents as each party's counsel may request, and (iii) the
        approval of all of the shareholders of Xi'An Meichen.
 
 Xi'An
        Meichen based in Shaanxi Province, PR China, is a drug manufacturer, developer
        and distributor with good manufacturing practices (GMP) certification from
        the
        China State Food and Drug Administration (China-SFDA). It manufactures and
        distributes a total of 43 China-SFDA certified herbal-based drugs and
        chemical-based drugs to China-SFDA Licensed Hospitals and drugstores across
        Shaanxi province and the People's Republic of China.
 
 ***Letter
        of Intent with with BeiJing Boran Pharmaceutical Co.,
        Ld.***
 
 On
        October 11, 2006, we executed a Letter of Intent with BeiJing Boran
        Pharmaceutical Co., Ld. ("BeiJing Boran") for the proposed acquisition by
        of 51%
        or more of BeiJing Boran. Pursuant to the letter of intent, both parties
        have
        expressed their intent and support for the cooperation and accomplishment
        of our
        acquisition of BeiJing Boran. Further, BeiJing Boran has agreed to offer
        us
        first refusal rights and legal exclusive rights for the acquisition of 51%
        or
        more of BeiJing Boran within nine months from the date of the Letter of Intent.
        BeiJing Boran has agreed to provide us with all necessary documentation and
        audited financial statements within 60 days, to enable us to commence our
        due
        diligence. The completion of the acquisition is subject to the negotiation
        and
        execution of a definitive acquisition agreement, as well as to the completion
        of
        full legal and financial due diligence.
 
 ***Acquisition
        Agreement with Henan Furen Huaiqingtang Pharmaceuticals Co.
        Ltd.***
 
 On
        August
        7, 2006 we entered into a Definitive Acquisition Agreement with Henan Furen
        Huaiqingtang Pharmaceuticals Co. Ltd. ("Henan Furen Co.") and Henan Furen
        Pharmaceutical Group Co. Ltd. and the shareholders of Henan Furen Co. Pursuant
        to the Agreement, we have agreed to acquire and the Sellers have agreed to
        sell,
        60% of the outstanding stock of Henan Furen Co. at an aggregate purchase
        price
        of $95,000,000 (RMB) a portion of which shall be paid on or before the closing
        of the Agreement and a portion to be paid three months after the Closing,
        upon
        the satisfaction of certain conditions.
 
 The
        parties have agreed to use their best efforts to complete the transactions
        contemplated by the Agreement within 60 business days from the execution
        of the
        Agreement. Prior to closing, however, all closing conditions, including,
        but not
        limited to, the completion of satisfactory legal and financial due diligence,
        as
        well as the delivery of stock certificates to us evidencing the ownership
        of the
        Sellers of the shares of Henan Furen Co. must be satisfied. The parties have
        further agreed to take all actions necessary to amend the Agreement to reflect
        their final agreement of the material terms.
  20
  Henan
        Furen Co. is a China FDA certified GMP standards pharmaceutical drug
        manufacturer based in Zhengzhou PR China. Henan Furen Co. which has a total
        list
        of forty-six China-FDA certified pharmaceutical drugs that are distributed
        to
        China-FDA Licensed Hospitals and drugs stores across Henan province and across
        PR China.
 
 ***Letter
        of Intent with Furen Pharmaceuticals Group Co., Ltd.***
 
 On
        June
        22, 2006, we entered into a Letter of Intent with Furen Pharmaceuticals Group
        Co., Ltd. for the proposed acquisition by the Company of 51% or more of Henan
        Furen Huaiqingtang Pharmaceuticals Co. Ltd., the wholly owned subsidiary
        of
        Furen Pharmaceuticals Group Co., Ltd. Pursuant to the letter of intent, both
        parties have expressed their intent and support for the cooperation and
        accomplishment of the acquisition of Henan Furen Huaiqingtang Pharmaceuticals
        Co. Ltd., by the Company. Further, Furen Pharmaceuticals Group Co., Ltd.
        has
        agreed to offer the Company first refusal rights and legal exclusive rights
        for
        the acquisition of 51% or more of Henan Furen Huaiqingtang Pharmaceuticals
        Co.
        Ltd. within nine months from the date of the Letter of Intent. Furen
        Pharmaceuticals Group Co., Ltd. has agreed to provide us with all necessary
        documentation and audited financial statements for us to commence our due
        diligence review. The completion of the acquisition is subject to the
        negotiation and execution of a definitive acquisition agreement, as well
        as to
        the completion of full legal and financial due diligence, including the
        determination of the valuation of Henan Furen Huaiqingtang Pharmaceuticals
        Co.
        Ltd.
 
 ***Letter
        of Intent with Henan Tiankang Pharmaceuticals Ltd.***
 
 On
        April
        16, 2006, we entered into a Letter of Intent with Henan Tiankang Pharmaceuticals
        Ltd. for the proposed acquisition by the Company of 51% or more of Henan
        Tiankang Pharmaceuticals Ltd. Pursuant to the letter of intent, both parties
        have expressed their intent and support for the cooperation and accomplishment
        of the acquisition and merger of Henan Tiankang Pharmaceuticals Ltd. by the
        Company. Further, Henan Tiankang Pharmaceuticals Ltd. has agreed to offer
        the
        Company with first refusal rights and legal exclusive rights for further
        acquisition of 51% or more of Henan Tiankang Pharmaceuticals Ltd. in the
        next 9
        months from the date of the signed Letter of Intent. The completion of the
        acquisition is subject to the negotiation and execution of a definitive
        acquisition agreement, as well as to the completion of full legal and financial
        due diligence, including the determination of the valuation of Henan Tiankang
        Pharmaceuticals Ltd., and the completion and delivery of audited financial
        statements of Henan Tiankang Pharmaceuticals Ltd.
 
 Henan
        Tiankang Pharmaceuticals Ltd., which was established under the laws of the
        Peoples Republic of China and is based in Henan, China, is a pharmaceutical
        manufacturer and research and development company that has been GMP certified
        (in 2004) by the Peoples Republic of China State Drug Administrative Department.
        Henan Tiankang Pharmaceuticals Ltd. was established in 2002 following the
        restructuring of Henan XinYuan Pharmaceuticals, which had 40 years of operating
        history and accomplishments in the Peoples Republic of China. Henan Tiankang
        Pharmaceuticals Ltd. also acquired Henen XinLuei Pharmaceuticals (formerly
        known
        as Henan Guishanshencao Pharmaceuticals) in 2005.
 
 ***Letter
        of Intent with Shaanxi WanAn Pharmaceutical Co. Ltd.***
 
 On
        February 19, 2006, we entered into a Letter of Intent, effective as of February
        28, 2006, with Shaanxi WanAn Pharmaceutical Co. Ltd. for the proposed
        acquisition by us of 51% or more of Shaanxi WanAn Pharmaceutical Co. Ltd.
        Pursuant to the letter of intent, Shaanxi WanAn Pharmaceutical Co. Ltd. has
        agreed to offer us first refusal rights and legal exclusive rights for the
        further acquisition of 51% or more Shaanxi WanAn Pharmaceutical Co. Ltd.
        in the
        next 12 months. The completion of the acquisition is subject to the negotiation
        and execution of a definitive acquisition agreement, as well as to the
        completion of full legal and financial due diligence, including the
        determination of the valuation of Shaanxi WanAn Pharmaceutical Co. Ltd.,
        and the
        completion and delivery of audited financial statements of Shaanxi WanAn
        Pharmaceutical Co. Ltd. Shaanxi Wanan Pharmaceutical Co., is a P.R. China
        State
        Drug Administrative Certified ISO13485 (1996) and ISO9001 (2000) pharmaceutical
        manufacturer and research & development company, based in Xian, Shaanxi,
        China.
 
 ***Letter
        of Intent with WangJing Hospital and WangJing Hospital of China Academy of
        Chinese Medical Sciences***
 
 On
        January 16, 2006, we entered into a Letter of Intent, effective as of January
        27, 2006, with WangJing Hospital and WangJing Hospital of China Academy of
        Chinese Medical Sciences, for the worldwide development of the China
        International University of Traditional Chinese Medicine and the University
        Hospital for Traditional Chinese Medical Sciences (the "Project"). WangJing
        Hospital and WangJing Hospital of China Academy of Chinese Medical Sciences
        consist of the Affiliated Hospital of Beijing College of Acupuncture and
        Orthopedics, the Orthopedic Department of Beijing College of Acupuncture
        and
        Orthopedics and the Institute of Orthopedics and Traumatology of China Academy
        of Traditional Chinese Medical Sciences.
 
 Pursuant
        to the Letter of Intent, the parties agreed to pursue the co-development
        of the
        China International University of Traditional Chinese Medicine and the
        University Hospital for Traditional Chinese Medical Sciences on a worldwide
        basis during the five year period following execution of the Letter of Intent.
        Further, WangJing Hospital and WangJing Hospital of China Academy of Chinese
        Medical Sciences have agreed to provide us with full intellectual and scientific
        and medical and technical support for further development of the Project,
        while
        we agreed to be responsible for further investment capital and business
        development for the Project.
 
 ***Definitive
        Acquisition Agreement with Shaanxi Meichen Pharmaceuticals Co.
        Ltd***
 
 On
        September 3 and September 7, 2006, we executed a Definitive Acquisition
        Agreement with Shaanxi Meichen Pharmaceuticals Co. Ltd ("SMCP"), Ms. Chen
        Meiying, President/CEO, and the shareholders of SMCP. Pursuant to the Agreement,
        we have agreed to acquire and the
        Sellers have agreed to sell, 100% of the issued and outstanding stock of
        SMCP at
        an aggregate purchase price of $24,800,000 (RMB). The purchase price is payable
        as follows: (i) 80% of the purchase price payable in shares of our common
        stock,
        based on the average closing price of our common stock, as reported on the
        OTCBB
        for the five (5) day period prior to the closing date of the acquisition
        transaction; and (ii) 20% of the purchase price payable in cash within 30
        days
        after the closing of the transaction.
  21
 
 The
        parties have agreed to use their best efforts to complete the transactions
        contemplated by the Agreement within 30 business days from the execution
        of the
        Agreement. Prior to closing, however, all closing conditions, including,
        but not
        limited to, the completion of satisfactory legal and financial due diligence,
        as
        well as the delivery of stock certificates to the Company evidencing the
        ownership of the Sellers of the shares of SMCP must be satisfied.
 
 Shannxi
        Meichen Pharmaceuticals, Ltd. is certified as a GMP Pharmaceutical Manufacturer
        by the Peoples Republic of China State Drug Administrative Agency. Shannxi
        Meichen Pharmaceuticals, Ltd. produces 69 different categories of pharmaceutical
        products, including, large capacity injection tablet, hard gelatin capsule,
        soft
        capsule, palletized granule for electric motor, tincture and eye drops and
        owns
        approximately 25 pharmaceutical drugs/products from the Peoples Republic
        of
        China State Drug Administrative Agency. Shannxi Meichen Pharmaceuticals Ltd.
        has
        been awarded the title of Good Product at the Municipal Level, Good Product
        and
        Famous Brand Product at Municipal Level in the PR of China. In addition,
        its
        large volume injection and small volume injection products have been awarded
        the
        GMP certificate by the Peoples Republic of China State Drug Administrative
        Agency. Shannxi Meichen Pharmaceuticals Ltd. is the surviving entity from
        the
        restructuring of Shannxi Meichen Bioscientific, Stock Co. Ltd. and Xianang
        Third
        Pharmaceutical Factory in January 2003.
 
 
 The
        Company had previously entered into a Letter of Intent with Xi'an Chunhui
        Pharmaceuticals Co. Ltd. but has determined not to proceed with this
        acquisition.
 
 **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.
 
 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.
  22
  
 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 four full time employees and thirty part-time
        employee/consultants. None of our employees are covered by a collective
        bargaining agreement. We consider relations with our employees to be good.
 
 **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. Effective January 2007, the monthly
        rent
        was increased to $2,000. Rent for subsequent terms will be at market
        rates.
 
 We
        also
        have entered into an agreement with Nevada Corporate Headquarters, Inc. for
        a
        term of one year. Pursuant to the Agreement, we maintain a business office
        address at 101 Convention Center Drive, Suite 700 Las Vegas, NV 89107-2001,
        telephone 1-877-883-0979. In addition, Nevada Corporate Headquarters has
        agreed
        to provide us with office support services, which includes telephone answering
        services, conference and meeting room facilities and mail and package handling
        services.
 
 **Item
        3. Legal Proceedings.**
 
 We
        are
        currently not involved in any litigation that we believe could have a material
        adverse effect on our financial condition or results of operations. There
        is no
        action, suit, proceeding, inquiry or investigation before or by any court,
        public board, government agency, self-regulatory organization or body pending
        or, to the knowledge of the executive officers of our company or any of our
        subsidiaries, threatened against or affecting our company, our common stock,
        any
        of our subsidiaries or of our companies or our subsidiaries' officers or
        directors in their capacities as such, in which an adverse decision could
        have a
        material adverse effect.
 
 **Item
        4. Submission of Matters to a Vote of Security Holders.**
 
 No
        matter
        was submitted to a vote of security holders during the fourth quarter of
        the
        fiscal year covered by this report.
 
 
 **PART
        II**
 
 **Item
        5. Market for Common Equity and Related Stockholder Matters.**
 
 **Market
        Information**
  23
  Commencing
        April 18, 2005, our common stock trades on the Over the Counter Bulletin
        Board
        (“OTCBB”) under the symbol “CHHH.” The aggregate market value of the voting and
        non-voting common equity held by our non-affiliates, based upon the average
        bid
        and asked price of such common equity on March 30, 2007 as reported by the
        OTCBB, was approximately $ 789,545.55 .
        This
        number excludes shares of common stock held by each officer and director
        of our
        Company and by each person who owns 5% or more of the outstanding common
        stock,
        as these persons may be deemed to be affiliates. This determination of affiliate
        status is not necessarily a conclusive determination for other
        purposes.
 
 Trading
        in our common stock has been limited and sporadic. The following table shows
        the
        range of high and low bid quotations reported by the OTCBB from April 18
        2005 to
        March 1 2006. Prior to
        April 18, 2005, there was no "public market" for shares of our common stock.
        T he
        OTCBB
        quotations reflect inter-dealer prices, without retail mark-up, mark-down
        or
        commission, and may not represent actual transactions.
  **2005**
                **High**
                **Low**First
                    Quarter ended March 31, 2005
                n/a
                n/aSecond
                    Quarter ended June 30, 2005
                n/a
                n/aThird
                    Quarter ended September 30, 2005
                $1.80
                $0.26Fourth
                    Quarter ended December 31, 2005
                0.495
                0.13**2006**
                **High**
                **Low**First
                    Quarter ended March 31, 2006
                $0.252
                0.10Second
                    Quarter ended June 30, 2006
                0.15
                0.08Third
                    Quarter ended September 30, 2006
                0.11
                0.04Fourth
                    Quarter ended December 31, 2006
                0.59
                0.03**2007**First
                    Quarter (1)
                0.18
                0.043(1)
                    As of March 30, 2006
   **Holders**
 
 As
        of
        March 30, 2007, there were 128,832,060 shares of our common stock issued
        and
        outstanding and 1,250,000 shares of Series “A” Preferred Stock outstanding.
        There are approximately 147 stockholders of record of our common stock and
        1
        holder of our Series “A” Preferred Stock.
 
 As
        of
        December 31, 2006, 6414,310 shares of our common stock were subject to
        outstanding options to purchase our common stock, 22,100,000 shares of our
        common stock were subject to outstanding warrants to purchase our common
        stock
        and 1,250,000 shares of our preferred stock are subject to outstanding warrants
        to purchase our preferred stock.
 
 **Dividends**
  On
        February 28, 2006, our Board of Directors declared a 25% stock dividend.
        Each
        shareholder of record at the close of business on February 28, 2006 received
        one
        share for every four shares held. The dividend was paid on March 17, 2006.
  Our
        proposed operations are capital intensive and we will require working capital.
        Therefore, we will be required to reinvest any future earnings in its
        operations. Our Board of Directors has no present intention of declaring
        any
        cash dividends, as we expect to re-invest all profits in the business for
        additional working capital for continuity and growth. **** 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.
 
 **Capital
        Structure**
 
 ****  Our
        authorized capital stock consists of 320,000,000 shares of capital stock,
        par
        value $.001 per share, of which 300,000,000 shares are common stock and
        20,000,000 shares are preferred stock that may be issued in one or more series
        at the discretion of the Board of Directors.
 
 Common
        Stock
 
 The
        holders of common stock are entitled to one vote for each share held of record
        on all matters to be voted on by the stockholders. The holders of common
        stock
        are entitled to receive dividends ratably, when, as and if declared by the
        Board
        of Directors, out of funds legally available therefor. In the event of a
        liquidation, dissolution or winding-up of the Registrant, the holders of
        common
        stock are entitled to share equally and ratably in all assets remaining
        available for distribution after payment of liabilities and after provision
        is
        made for each class of stock, if any, having preference over the common
        stock.
  24
   
 The
        holders of shares of common stock, as such, have no conversion, preemptive,
        or
        other subscription rights and there are no redemption provisions applicable
        to
        the common stock. All of the outstanding shares of common stock are validly
        issued, fully paid and non-assessable.
 
 Preferred
        Stock
 
 Shares
        of
        preferred stock may be issued from time to time in one or more series as
        may
        from time to time be determined by our Board of Directors. Our Board of
        Directors has authority, without action by the stockholders, to determine
        the
        voting rights, preferences as to dividends and liquidation, conversion rights
        and any other rights of such series. Any preferred shares, if and when issued
        in
        the discretion of the Board of Directors, may carry voting, conversion or
        other
        rights superior to those of the shares of common stock and may adversely
        affect
        the voting power and rights of the common stockholders.
 
 On
        February 21, 2006, we filed a Certificate of Designation, Powers Preferences
        and
        Rights of Series “A” Preferred Stock with the state of Nevada, which was amended
        on June 19, 2006 which authorizes the issuance of up to 2,500,000 shares
        of
        Series “A” Preferred Stock, par value $0.001 per share. The Series A Preferred
        Stock has a stated value of $0.15 and a liquidation preference over our common
        stock and any other class or series of capital stock whose terms expressly
        provide that the holders of Series A Preferred Stock should receive preferential
        payment. Holders of Series A Preferred Stock are entitled to vote on all
        matters
        submitted to our shareholders of and are entitled to two votes for each share
        of
        Series A Preferred Stock owned. Holders of shares of Series “A” Preferred Stock
        vote together with the holders of common stock on all matters and do not
        vote as
        a separate class.
 
 Beginning
        two years from the date of issuance of the Series A Preferred Stock, each
        one
        share of Series A Preferred Stock is convertible, at the option of the holder,
        into two shares of our common stock. However, holders cannot convert any
        share
        of Series A Preferred Stock if the market price of our common stock is below
        $1.00 per share. Notwithstanding the limitation on any conversions of the
        Series
        A Preferred Stock when our Common Stock is below $1.00 per share, if prior
        to
        two years from the date of issuance, there is a sale or other disposition
        of all
        or substantially all of our assets, a transaction or series of related
        transactions in which more than 50% of the voting power of the Company is
        disposed of, or upon a consolidation, merger or other business combination
        where
        we are not the survivor, then immediately prior to such event each holder
        of
        Series A Preferred Stock may convert any or all of such holder's shares of
        Series A Preferred Stock into common stock as described above. The Certificate
        of Designation also provides that the holders of Series A Preferred Stock
        shall
        be entitled to any distribution by us of our assets, which would have been
        payable to the holders of the Series A Preferred Stock with respect to the
        shares of Common Stock issuable upon conversion had such holders been the
        holders of such shares of Common Stock on the record date for the determination
        of shareholders entitled to such distribution. To date there are 1,250,000
        shares of Series “A” Preferred Stock outstanding.
 
 
 **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, 2006.
 
 **EQUITY
        COMPENSATION PLAN INFORMATION**
 **Plan
                  category**
              **Number
                  of securities**
                **to
                  be issued upon**
                **exercise
                  of**
                **outstanding
                  options,**
                **warrants
                  and rights**
              **Weighted
                  average**
                **exercise
                  price of**
                **outstanding
                  options,**
                **warrants
                  and rights**
              **Number
                  of securities**
                **remaining
                  available for future issuance under equity compensation plans (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-
 
 Our
        Board
        of Directors adopted the China Health Holding, Inc. 2005 Incentive Stock
        Plan
        (the “Plan”). We filed with the SEC, a registration statement on Form S-8
        Registration Statement, as amended to register up to 9,000,000 shares of
        Common
        Stock underlying options issuable pursuant to the Stock Plan. To date no
        options
        have been issued pursuant to the Plan.
  25
  
 Description
        of the China Health Holding, Inc. 2005 Incentive Stock Plan, as
        amended
 
 The
        2005
        Incentive Stock Plan has reserved 9,000,000 shares of common Stock for issuance.
        Under the 2005 Incentive Stock Plan, options may be granted which are intended
        to qualify as Incentive Stock Options ("ISOs") under Section 422 of the Internal
        Revenue Code of 1986 (the "Code") or which are not ("Non-ISOs") intended
        to
        qualify as Incentive Stock Options thereunder. In addition, direct grants
        of
        stock or restricted stock may be awarded.
 
 Purpose
 
 The
        primary purpose of the 2005 Incentive Stock Plan is to attract and retain
        the
        best available personnel in order to promote the success of our business
        and to
        facilitate the ownership of our stock by employees and others who provide
        services to us.
 
 Administration
 
 The
        2005
        Incentive Stock Plan is administered by our Board of Directors, as the Board
        of
        Directors may be composed from time to time. Notwithstanding the foregoing,
        the
        Board of Directors may at any time, or from time to time, appoint a committee
        of
        the Board of Directors, and delegate to the committee the authority of the
        Board
        of Directors to administer the 2005 Incentive Stock Plan. Upon such appointment
        and delegation, the committee shall have all the powers, privileges and duties
        of the Board of Directors, and shall be substituted for the Board of Directors,
        in the administration of the 2005 Incentive Stock Plan, subject to certain
        limitations.
 
 Eligibility
 
 Under
        the
        2005 Stock Incentive Plan, options may be granted to key employees, officers,
        directors or consultants of the Company, as provided in the 2005 Stock Incentive
        Plan.
 
 Terms
        of Options
 
 The
        term
        of each option granted under the 2005 Incentive Stock Plan shall be contained
        in
        a stock option agreement between the optionee and China Health Holdings,
        Inc.
        and such terms shall be determined by the Board of Directors consistent with
        the
        provisions of the 2005 Stock Incentive Plan, including the following:
 
 (a)
        Purchase Price. The purchase price of the common stock subject to each incentive
        stock option shall not be less than the fair market value (as set forth in
        the
        2005 Incentive Stock Plan), or in the case of the grant of an incentive stock
        option to a principal stockholder, not less that 110% of fair market value
        of
        such common stock at the time such option is granted. The purchase price
        of the
        common stock subject to each non-incentive stock option shall be determined
        at
        the time such option is granted, but in no case less than 85% of the fair
        market
        value of such common stock at the time such option is granted.
 
 (b)
        Vesting. The dates on which each option (or portion thereof) shall be
        exercisable and the conditions precedent to such exercise, if any, shall
        be
        fixed by the Board of Directors, in its discretion, at the time such option
        is
        granted. All options or grants which include a vesting schedule will vest
        in
        their entirety upon a change of control transaction as described in the 2005
        Incentive Stock Plan
 
 (c)
        Expiration. The expiration of each option shall be fixed by the Board of
        Directors, in its discretion, at the time such option is granted; however,
        unless otherwise determined by the Board of Directors at the time such option
        is
        granted, an option shall be exercisable for ten years after the date on which
        it
        was granted, or five years for grants to certain executive officers. Each
        option
        shall be subject to earlier termination or repurchase as expressly provided
        in
        the 2005 Incentive Stock Plan or as determined by the Board of Directors,
        in its
        discretion, at the time such option is granted.
 
 (d)
        Transferability. No option shall be transferable, except by will or the laws
        of
        descent and distribution, and any option may be exercised during the lifetime
        of
        the optionee only by such optionee. No option granted under the 2005 Incentive
        Stock Plan shall be subject to execution, attachment or other process.
 
 (e)
        Option Adjustments. The aggregate number and class of shares as to which
        options
        may be granted under the 2005 Incentive Stock Plan, the number and class
        shares
        covered by each outstanding option and the exercise price per share thereof
        (but
        not the total price), and all such options, shall each be proportionately
        adjusted for any increase decrease in the number of issued common stock
        resulting from split-up spin-off or consolidation of shares or any like Capital
        adjustment or the payment of any stock dividend.
 
 (f)
        Termination, Modification And Amendment. The 2005 Incentive Stock Plan (but
        not
        options previously granted under the plan) shall terminate ten years from
        the
        date of its adoption by the Board of Directors, and no option or shares shall
        be
        granted after termination of the 2005 Incentive Stock Plan. Subject to certain
        restrictions, the 2005 Incentive Stock Plan may at any time be terminated
        and
        from time to time be modified or amended by the affirmative vote of the holders
        of a majority of the outstanding shares of the capital stock of the China
        Health
        Holding, Inc. present, or represented, and entitled to vote at a meeting
        duly
        held in accordance with the applicable laws of the State of
        Nevada.
  26
  
 
 **Recent
        Sales of Unregistered Securities**
 
 We
        sold
        the following equity securities during the period from October 1, 2006 through
        December 31, 2006 that were not registered under the Securities Act of 1933,
        as
        amended (the "Securities Act").
 
 On
        October 4, 2006, we issued an aggregate of 4,690,000 shares of our common
        stock
        as follows:
 (A)
              250,000
                  shares of common stock to KPMG in consideration for consulting
                  services;
 (B)
              100,000
                  shares of common stock to Kjeld Werbes in consideration for consulting
                  services;
 (C)
              150,000
                  shares of common stock to Junshan Ding in consideration for consulting
                  services;
 (D)
              600,000
                  shares of common stock to Julianna Lu in consideration for management
                  services;
 (E)
              15,000
                  shares of common stock to Garth Evans in consideration for consulting
                  services;
 (F)
              600,000
                  shares of common stock to Dick Wu in consideration for reimbursement
                  of
                  auto expenses;
 (G)
              125,000
                  shares of common stock to DeCotiis Group International in consideration
                  for consulting services;
 (H)
              150,000
                  shares of common stock to Darroll Roberts in consideration for
                  consulting
                  services;
 (I)
              2,325,000
                  shares of common stock to Dahong Li in consideration for management
                  services;
 (J)
              100,000
                  shares of common stock to the Canadian Red Cross Association;
 (K)
              125,000
                  shares of common stock to Barrington Financial Inc. in consideration
                  for
                  consulting services; and
 (L)
              150,000
                  shares of common stock to Xiao Fei Yu in consideration for management
                  services.
 
 On
        October 4, 2006 we issued warrants to purchase shares of our common stock
        as
        follows:
 (A)
              warrants
                  to purchase 250,000 shares of our common stock to Kenneth Van Boeyen
                  which
                  warrants are exercisable at a price of $0.20 and expire on September
                  18,
                  2008;
 (B)
              warrants
                  to purchase 500,000 shares of common stock to Barrington Financial
                  Inc.
                  which warrants are exercisable at a price of $0.20 and expire on
                  September
                  18, 2008;
 (C)
              warrants
                  to purchase 1,000,000 shares of common stock to Dahong Li which
                  warrants
                  are exercisable at a price of $0.20 and expire on September 18,
                  2008;
 (D)
              warrants
                  to purchase 400,000 shares of common stock to Xia Fei Yu which
                  warrants
                  are exercisable at a price of $0.20 and expire on September 18,
                  20011;
 (E)
              warrants
                  to purchase 1,500,000 shares of common stock to Julianna Lu which
                  warrants
                  are exercisable at a price of $0.20 and expire on September 18,
                  20011;
 (F)
              warrants
                  to purchase 6,000,000 shares of common stock to Nick DeCotiis which
                  warrants are exercisable at a price of $0.20 and expire on December
                  23,
                  2007;
 (G)
              warrants
                  to purchase 10,000,000 shares of common stock to Julianna Lu which
                  warrants are exercisable at a price of $0.10 and expire on October
                  12,
                  2011; and
 (H)
              warrants
                  to purchase 10,000,000 shares of common stock to Julianna Lu which
                  warrants are exercisable at a price of $0.20 and expire on October
                  12,
                  2016.
  On
        October 24, 2006 we issued an aggregate of 13,450,000 shares of our common
        stock
        as follows:
 (A)
              10,000,000
                  shares of common stock to Julianna Lu as consideration for conversion
                  of
                  debt in the aggregate of $300,000;
 (B)
              3,000,000
                  shares of common stock to Investor Relations International in
                  consideration for investor relation services;
 (C)
              200,000
                  shares of common stock to Tom English in consideration for consulting
                  services;
 (D)
              200,000
                  shares of common stock to Xia Fei Yu as consideration for management
                  services; and
 (E)
              50,000
                  shares of common stock to Adam Cottle in consideration for consulting
                  services.
 
 On
        November 29, 2006 we issued an aggregate of 3,150,000 shares of our common
        stock
        as follows:
 (A)
              200,000
                  shares of common stock to Sung Fan in consideration for consulting
                  services;
 (B)
              500,000
                  shares of common stock to Charles Fu in consideration for legal
                  services;
 (C)
              700,000
                  shares of common stock to Dahong Li in consideration for consulting
                  services;
 (D)
              100,000
                  shares of common stock to Wei Xu in consideration for consulting
                  services;
 (E)
              1,500,000
                  shares of common stock to Julianna Lu in consideration for management
                  services; and
 (F)
              150,000
                  shares of common stock to Junshan Ding in consideration for consulting
                  services
 
 On
        December 20, 2006 we issued an aggregate of 2,450,000 shares of our common
        stock
        as follows:
 (A)
              2,000,000
                  shares of common stock to Richard Friedman in consideration for
                  legal
                  services;
 (B)
              150,000
                  shares of common stock to Michael Ference in consideration for
                  legal
                  services; and
 (C)
              300,000
                  shares of common stock to Ludlow China Fund, Inc. in consideration
                  for
                  services in connection with the Company’s listing on Ludlow Small CAP
                  China Index and research reports.
 
 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.
  27
   **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.
 
 **Critical
        Accounting Policies And Estimates**
 
 We
        have
        identified one policy area as critical to the understanding of our consolidated
        financial statements. The preparation of our consolidated financial statements
        requires management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and disclosure of contingent assets and
        liabilities at the date of the consolidated financial statements. In particular,
        management makes estimates concerning the valuation of stock based transactions.
        Stock based transactions include issuance of stock for services and for
        intangible assets such as technologies or licenses. Stock based transactions
        also include issuance of stock options and warrants for services and
        intangibles.
 
 We
        suggest that our significant accounting policies, as described in our
        consolidated financial statements in the Summary of Significant Accounting
        Policies, be read in conjunction with this Management's discussion and Analysis
        of Financial Condition and Results of Operations.
 
 **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
        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 will be 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.
  **Operations
        Plans**
   Our
        goal
        is to launch our King of Herbs and Taoist Medicinal product lines and our
        Vitamins and Supplement product line over the next six to twelve months,
        provided that we are successful in raising at least $5 million of financing
        during the next three to six months. However, there can be no assurance that
        we
        will be able to obtain financing in sufficient amounts or on acceptable terms,
        which could adversely affect our operating results and prospects. Debt financing
        must be repaid regardless of whether or not we generate profits or cash flows
        from our business activities. Equity financing may result in significant
        dilution to existing shareholders and may involve securities that have rights,
        preferences, or privileges that are senior to our common stock.
   All
        of
        the products for our three product lines are fully developed. We currently
        outsource our manufacturing to third parties. We anticipate that we will
        generate revenues from sales of our herbal supplement products (1) through our
        corporate website, www.chinahealthholding.com and our e-commerce website,
        www.thechinahealth.com that we anticipate launching in early 2008, (2) through
        the establishment of third party retail and wholesale distribution agreements;
        and (3) through the establishment of company-owned retail stores and franchises
        in major cities in North America and the People's Republic of China. Our
        management will attempt to work to negotiate and enter into retail and wholesale
        distribution agreements for our products over the next six to twelve months.
        We
        will also attempt to open 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 Beijing, Shanghai, Nanjing and Hong Kong in the People's Republic
        of China and New York, Los Angeles, San Francisco, Seattle, Las Vegas or
        other
        large cities in the United States. We anticipate that we will open our first
        retail storefront in the People's Republic of China and the United States
        within
        the next six to twelve months. We anticipate expanding and developing our
        operations and sales into the United States and the People's Republic of
        China,
        and thereafter, into regions of Europe and Asia as we continue to grow our
        business.
  In
        the
        next six to eighteen months, we intend to develop and establish our own
        worldwide distribution and marketing infrastructure as follows:
  Global
        E-Commerce: Management believes this is an immediate and low cost way to
        penetrate worldwide markets and enhance our brand recognition. Our e-commerce
        site will incorporate a wide variety of language, currency and payment options.
  28
  Global
        Retail: We plan to establish flagship stores in key cities in North America,
        Europe and the Peoples Republic of China, including, New York, Toronto,
        Vancouver, London and Beijing.
  Global
        Franchise: Leveraged on our brands, we intend to open franchise models in
        each
        of our key target territories including North America, Peoples Republic of
        China
        and Europe.
  Global
        Distribution: We are in the process of negotiating with several distribution
        companies with a view to distributing our products with the objective of
        lowering the cost of distribution in certain territories.
  **RESULTS
        OF OPERATIONS**
  **Year
        Ended December 31, 2006 Compared to Year Ended December 31,
        2005**
  We
        had a
        net loss of $3,197,076 for the year ended December 31, 2006 as compared to
        a net
        loss of $3,676,679 for the year ended December 31 2005. The net loss for
        the
        year ended December 31, 2006 consisted primarily of $1,018,937 of consulting
        fees, $1,004,948 of management fees, $259,130 of professional fees, $114,134
        of
        interest and bank charges, $21,327 in rent, $5,667 of travel expenses, $65,104
        of office expenses, $96,856 of investor relations related travel costs, $4,262
        in depreciation expenses, $6,046 of advertising and promotional expenses,
        and
        $18,099 of vehicle expenses. The decrease in net loss for the year ended
        December 31, 2006 was the result of the decrease research and development
        of
        $1,377,287 for the year ended December 31, 2005 as compared to $Nil in
        2006.
  Other
        Income (Expenses) was ($582,567) for the year ended December 31, 2006 as
        compared to $7,117 for the year ended December 31, 2005. The decrease is
        attributed primarily to a gain on settlement of debts through issuance of
        stock
        of $167,156 and stock based compensation of $762,865 for the year ended December
        31, 2006 compared to a loss of $14,728 on settlements of debt and $Nil for
        compensation of Stock for the year ended December 31, 2006.
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
  As
        of
        December 31, 2006, we had cash of $0. Our current liabilities as of December
        31,
        2006 aggregated $910,824. As of December 31, 2006, we had a working capital
        deficiency of $813,070 and an accumulated deficit of $9,193,377. To date,
        our
        operations have been funded through advances from our Chief Executive Officer,
        Julianna Lu and through issuances of shares of our common stock.
  As
        of
        December 31, 2006, we had outstanding loans to our CEO, Julianna Lu, in the
        amount of $700,184, Vice President, XiaoFei Yu, in the amount of $144,859
        and to James Simpson, one of the Company's consultant, in the amount of $30,123.
        There are no formal agreements for when repayment of the loans must be made.
        The
        loans accrue interest at the rate of 10% per annum.
  While
        we
        have raised capital to meet our working capital and financing needs in the
        past,
        additional financing is required within the next 12 months in order to meet
        our
        current and projected cash flow deficits from operations and development.
        We
        have sufficient funds to conduct our operations for several months, but not
        for
        12 months or more. Further, in order to expand our business, fund future
        development and begin marketing and selling our three product lines and pursue
        our acquisition strategy, we will need to raise at least $25 million over
        the
        next twelve to twenty-four months. There can be no assurance that financing
        will
        be available in amounts or on terms acceptable to us, if at all.
 
 By
        adjusting our operations and development to the level of capitalization,
        we
        believe we have sufficient capital resources to meet projected cash flow
        deficits. However, if during that period or thereafter, we are not successful
        in
        generating sufficient liquidity from operations or in raising sufficient
        capital
        resources, on terms acceptable to us, this could have a material adverse
        effect
        on our business, results of operations liquidity and financial condition.
 
 Our
        registered independent certified public accountants have stated in their
        report
        that we have incurred operating losses in the last two years, and that we
        are
        dependent upon management's ability to develop profitable operations. These
        factors among others may raise substantial doubt about our ability to continue
        as a going concern.
 
 We
        presently do not have any available credit, bank financing or other external
        sources of liquidity. Due to our brief history and historical operating losses,
        our operations have not been a source of liquidity. We will need to obtain
        additional capital in order to expand operations and become profitable. We
        intend to pursue the building of a re-seller network outside the United States,
        and if successful, the re-seller agreements would constitute a source of
        liquidity and capital over time. In order to obtain capital, we may need
        to sell
        additional shares of our common stock or borrow funds from private lenders.
        There can be no assurance that we will be successful in obtaining additional
        funding and execution of re-seller agreements outside the Unites States.
 
 We
        will
        still need additional investments in order to continue operations to cash
        flow
        break even. Additional investments are being sought, but we cannot guarantee
        that we will be able to obtain such investments. Financing transactions may
        include the issuance of equity or debt securities, obtaining credit facilities,
        or other financing mechanisms. However, the trading price of our common stock
        and the downturn in the U.S. stock and debt markets could make it more difficult
        to obtain financing through the issuance of equity or debt securities. Even
        if
        we are able to raise the funds required, it is possible that we could incur
        unexpected costs and expenses, fail to collect significant amounts owed to
        us,
        or experience unexpected cash requirements that would force us to seek
        alternative financing. Further, if we issue additional equity or debt securities,
        stockholders may experience additional dilution or the new equity securities
        may
        have rights, preferences or privileges senior to those of existing holders
        of
        our common stock. If additional financing is not available or is not available
        on acceptable terms, we will have to curtail our
        operations.
  29
  **Future
        Development**
  We
        expect
        to focus our resources over the next six to twenty four months on expanding
        the
        scope of our three product lines, and expanding our business operations into
        the
        People's Republic of China, the United States and Europe. To expand our
        operations and business, we are implementing and developing our worldwide
        marketing and distribution strategy and infrastructures for our products
        and
        business development, and we are developing and implementing our worldwide
        e-commerce infrastructure, including our e-commerce website at
        www.thechinahealth.com. Our worldwide e-commerce website will have
        multi-language and multi-currency capabilities. Our worldwide e-commerce
        infrastructure is expected to also include media advertising and distribution
        agreements in multiple countries.
  We
        are
        developing a proprietary enhanced Global Retail and Franchise Infrastructure
        and
        System to support the launch of our global retail and franchising operations.
        The System is expected to be fully operational in about twenty four months.
        The
        new Global Retail Infrastructure will enable our employees to perform global
        customer maintenance, process account payments and view a customer's sales
        history.
  As
        we
        attempt to 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 marketing and sales consultants we will attempt to develop
        a
        marketing plan to promote our brand name and product lines worldwide. Currently,
        we do not have any agreements with retail or wholesale distributors. Our
        management will attempt to work to negotiate and enter into retail and wholesale
        distribution agreements for our products over the next six to twelve months.
        We
        will also attempt to open 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 anticipate that we will open our first
        retail storefront in the United States within the next six to twelve months.
  We
        are in
        the process of identifying merger and/or acquisitions candidates in the Peoples
        Republic of China and worldwide as part of our growth plan to secure a strong
        future. Our acquisition strategy highlights our updated growth strategy to
        accrete value to our shareholders through the strategic combination of assets
        and net income and natural medicinal products and technologies and established
        China market with major natural medical companies and pharmaceutical companies
        in China and throughout the world. Growth by acquisition is an important
        component of our updated business model. As the Chinese government policy
        continues to change and move towards privatization of businesses, our focus
        on
        the emerging opportunities in China will primarily focus on small and
        medium-sized enterprises. Management believes that our growth strategy will
        enable the company to secure a strong future and a powerful position in the
        global natural medicinal industry and pharmaceutical industry.
  If
        we are
        successful in raising $5 million of financing in order to expand our business
        and fund future development, we anticipate the following expenses over the
        next
        twelve months: (a) $150,000 to develop our Internet website and e-commerce
        system; (b) $150,000 for media advertising to promote our brand name; (c)
        $200,000 for our research and development program; (d) $2,000,000 to establish
        our first retail outlet in the United States, including an integrated inventory
        management/ manufacturing/sales computer system; (e) $200,000 for an investor
        relations program; (f) $500,000 for professional and consultant fees; and
        (g)
        $1,800,000 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.
  If
        we are
        only successful in raising $1 million of financing to sustain our current
        level
        of business operations, we anticipate the following expenses over the next
        twelve months: (a) $20,000 to develop our Internet website and e-commerce
        system; (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
        begin
        the process of establishing our first retail outlet in the United States;
        (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.
  *Acquisition
        of Plant and Equipment and Other Assets*
 
 We
        do not
        anticipate the sale of any material property, plant or equipment during the
        next
        12 months. We do not anticipate the acquisition of any material property,
        plant
        or equipment during the next 12 months.
 *Number
        of Employees*
 
 From
        our
        inception through the period ended December 31, 2006, we have principally
        relied
        on the services of outside consultants and part-time employees for services.
        We
        currently have four (4) full time
        employees and 30 part-time employees .
        In
        order for us to attract and retain quality personnel, we anticipate we will
        have
        to offer competitive salaries to future employees. We anticipate that it
        may
        become desirable to add additional full and or part time employees to discharge
        certain critical functions during the next 12 months. This projected increase
        in
        personnel is dependent upon our ability to generate revenues and obtain sources
        of financing. There is no guarantee that we will be successful in raising
        the
        funds required or generating revenues sufficient to fund the projected increase
        in the number of employees. As we continue to expand, we will incur additional
        cost for personnel.
  30
  
 **Research
        and Development**
  We
        expect
        to pay approximately $200,000 over the next six months ****** to
        scientific consultants in the People's Republic of China to identify and
        work
        with new product candidates held by third parties that we will ultimately
        attempt to acquire the rights to. Each of the formulations 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 to market and sell these products. Any delay could adversely
        affect our operations.
  As
        part
        of our growth strategy, we are currently in negotiations with respect to
        a
        number of product candidates that we intend to license or acquire for
        development and commercialization although no formal agreements with respect
        to
        any such proposed products have been entered into. Proposing, negotiating
        and
        implementing an economically viable product acquisition or license is a lengthy
        and complex process. Other companies, including those with substantially
        greater
        financial, marketing and sales resources, may compete with us for the
        acquisition or license of product candidates. We may not be able to acquire
        or
        license the rights to additional product candidates on terms that we find
        acceptable, or at all. If we are successful acquiring such product candidates,
        we will be required to raise additional capital for research and development,
        regulatory review and marketing efforts associated with such products. This
        will
        require substantial investment before our new product candidates could provide
        us with any revenue. We intend to seek outside debt and equity financing,
        to the
        extent that such funding is available under reasonable terms and conditions,
        in
        order to fund our research and development efforts. 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.
  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 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. We intend to seek outside debt and equity
        financing, to the extent that such funding is available under reasonable
        terms
        and conditions, in order to fund this process. 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.
        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 to market and sell these products to
        consumers.
  **Recently
        issued accounting pronouncements**
  In
        September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
        Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
        No. 87, 88, 106, and 132(R)”. This statement requires employers to recognize the
        overfunded or underfunded status of a defined benefit postretirement plan
        (other
        than a multiemployer plan) as an asset or liability in its statement of
        financial position and to recognize changes in that funded status in the
        year in
        which the changes occur through comprehensive income of a business entity
        or
        changes in unrestricted net assets of a not-for-profit organization. This
        statement also requires an employer to measure the funded status of a plan
        as of
        the date of its year-end statement of financial position, with limited
        exceptions. The provisions of SFAS No. 158 are effective for employers with
        publicly traded equity securities as of the end of the fiscal year ending
        after
        December 15, 2006. The adoption of this statement is not expected to have
        a
        material effect on the Company's future reported financial position or results
        of operations.
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
        objective of SFAS 157 is to increase consistency and comparability in fair
        value
        measurements and to expand disclosures about fair value measurements. SFAS
        157
        defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles, and expands disclosures about fair
        value measurements. SFAS 157 applies under other accounting pronouncements
        that
        require or permit fair value measurements and does not require any new fair
        value measurements. The provisions of SFAS No. 157 are effective for fair
        value
        measurements made in fiscal years beginning after November 15, 2007. The
        adoption of this statement is not expected to have a material effect on the
        Company's future reported financial position or results of
        operations.
 
 In
        June
        2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
        No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB
        Statements No. 109”. FIN 48 clarifies the accounting for uncertainty in income
        taxes by prescribing a two-step method of first evaluating whether a tax
        position has met a more likely than not recognition threshold and second,
        measuring that tax position to determine the amount of benefit to be recognized
        in the financial statements. FIN 48 provides guidance on the presentation
        of
        such positions within a classified statement of financial position as well
        as on
        derecognition, interest and penalties, accounting in interim periods,
        disclosure, and transition. FIN 48 is effective for fiscal years beginning
        after
        December 15, 2006. The adoption of this statement is not expected to have
        a
        material effect on the Company's future reported financial position or results
        of operations.
 
 In
        March
        2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
        Financial Assets, an amendment of FASB Statement No. 140, Accounting for
        Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities". This statement requires all separately recognized servicing
        assets and servicing liabilities be initially measured at fair value, if
        practicable, and permits for subsequent measurement using either fair value
        measurement with changes in fair value reflected in earnings or the amortization
        and impairment requirements of Statement
        No. 140. The subsequent measurement of separately recognized servicing assets
        and servicing liabilities at fair value eliminates the necessity for entities
        that manage the risks inherent in servicing assets and servicing liabilities
        with derivatives to qualify for hedge accounting treatment and eliminates
        the
        characterization of declines in fair value as impairments or direct
        write-downs. SFAS No. 156 is effective for an entity's first fiscal
        year beginning after September 15, 2006.  This adoption of this
        statement is not expected to have a significant effect on the Company’s future
        reported financial position or results of operations.
  In
        February 2007, the FASB issued SFAS No. 159,
 "The Fair Value Option for Financial Assets and Financial Liabilities."
        SFAS 159 permits entities to choose to measure many financial instruments,
        and
        certain other items, at fair value. SFAS 159 applies to reporting periods
        beginning after November 15, 2007. The adoption of SFAS 159 is not expected
        to
        have a material impact on the Company's financial condition or results of
        operations.
  31
   In
        February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
        Financial Instruments-an amendment of FASB Statements No. 133 and 140”, to
        simplify and make more consistent the accounting for certain financial
        instruments. SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative
        Instruments and Hedging Activities”, to permit fair value remeasurement for any
        hybrid financial instrument with an embedded derivative that otherwise would
        require bifurcation, provided that the whole instrument is accounted for
        on a
        fair value basis. SFAS No. 155 amends SFAS No. 140, “Accounting for the
        Impairment or Disposal of Long-Lived Assets”, to allow a qualifying
        special-purpose entity to hold a derivative financial instrument that pertains
        to a beneficial interest other than another derivative financial instrument.
        SFAS No. 155 applies to all financial instruments acquired or issued after
        the
        beginning of an entity's first fiscal year that begins after September 15,
        2006,
        with earlier application allowed. This standard is not expected to have a
        significant effect on the Company’s future reported financial position or
        results of operations.
 
 **Inflation**
 
 It
        is the
        opinion of the Company that inflation has not had a material effect on its
        operations.
  **Off-Balance
        Sheet Arrangements**
  We
        do not
        have any off-balance sheet arrangements.
  **RISK
        FACTORS**
  Our
        business involves a high degree of risk. Any of the following risks could
        materially and adversely affect our business, financial condition, and results
        of operations. This could cause the trading price of our common stock to
        decline, with the loss of part or all of an investment in our common
        stock.
 
 **RISKS
        RELATED TO OUR FINANCIAL CONDITION**
  **OUR
        FINANCIAL STATUS CREATES DOUBT WHETHER WE WILL CONTINUE AS A GOING CONCERN.**
  We
        reported net losses totaling of $3,197,076, $3,676,679, $2,098,276, December
        31,
        2006, December 31, 2005 and December 31, 2004, respectively. As of December
        31,
        2006 we had a working capital deficiency of $817,070 (current assets less
        current liabilities) and an accumulated deficit of $9,193,377. With our current
        resources we expect to be able to satisfy our cash requirements through March
        2008. In order to expand our current business operations, fund future
        development and market and sell our three existing product lines we will
        need to
        raise at least $5 million in financing over the next twelve months. There
        are no
        assurances that we will be able to achieve a level of revenues adequate to
        generate sufficient cash flow from operations or obtain additional financing
        through private placements, public offerings and/or bank financing necessary
        to
        support our working capital requirements. To the extent that funds generated
        from any private placements, public offerings and/or bank financing are
        insufficient, we will have to raise additional working capital. No assurance
        can
        be given that additional financing will be available, or if available, will
        be
        on acceptable terms. These conditions raise substantial doubt about our ability
        to continue as a going concern. If adequate working capital is not available
        we
        may be forced to discontinue operations, which would cause investors to lose
        the
        entire amount of their investment.
  **WE
        NEED SIGNIFICANT INFUSIONS OF ADDITIONAL CAPITAL, WHICH MAY RESULT IN DILUTION
        TO OUR SHAREHOLDERS' OWNERSHIP AND VOTING RIGHTS IN OUR COMPANY.**
  Based
        upon our current cash reserves and forecasted operations, we believe that
        we
        will need to obtain at least $1 million of outside funding in order to sustain
        our current business operations over the next twelve months, and at least
        $5
        million of outside funding in order to expand our business, fund future
        development and market and sell our three existing product lines. Our need
        for
        additional capital to finance our business strategy, operations, and growth
        will
        be greater should, among other things, revenue or expense estimates prove
        to be
        incorrect. If we fail to arrange for sufficient capital in the future, we
        may be
        required to reduce the scope of our business activities until we can obtain
        adequate financing. We may not be able to obtain additional financing in
        sufficient amounts or on acceptable terms when needed, which could adversely
        affect our operating results and prospects. Debt financing must be repaid
        regardless of whether or not we generate profits or cash flows from our business
        activities. Equity financing may result in dilution to existing shareholders
        and
        may involve securities that have rights, preferences, or privileges that
        are
        senior to our common stock.
   **THE
        ISSUANCE OF SHARES OF OUR COMMON STOCK TO FUND OUR OPERATIONS AND AS
        CONSIDERATION AT THE CLOSING OF OUR ACQUISITION TARGETS WILL RESULT IN
        SIGNIFICANT DILUTION TO OUR EXISTING SHAREHOLDERS.**  32
  To
        date
        our operations have been funded through cash advances from our Chief Executive
        Officer and through the issuance of shares of our common stock. There can
        be no
        assurance that our Chief Executive will continue to fund our operations.
        The
        issuance of shares of our common stock will result in dilution to our existing
        holders. Further, to proceed with the closing of our acquisition targets
        in
        China, we will be required to issue shares of our common stock as consideration,
        this will result in significant dilution to our existing shareholders. The
        amount of dilution will be dependent upon the terms on which we issue shares
        of
        our common stock.
  **RISKS
        RELATED TO OUR BUSINESS**
  **WE
        ARE A DEVELOPMENT STAGE COMPANY AND HAVE A LIMITED OPERATING HISTORY UPON
        WHICH
        AN EVALUATION OF OUR COMPANY CAN BE MADE. FOR THAT REASON, IT WOULD BE DIFFICULT
        FOR A POTENTIAL INVESTOR TO JUDGE OUR PROSPECTS FOR SUCCESS.**
  We
        were
        organized in April 2002 and have had limited operations since our inception
        from
        which to evaluate our business and prospects. There can be no assurance that
        our
        future proposed operations will be implemented successfully or that we will
        ever
        have profits. If we are unable to sustain our operations, our shareholders
        may
        lose their entire investments. We face all the risks inherent in a new business,
        including the expenses, difficulties, complications and delays frequently
        encountered in connection with conducting operations, including capital
        requirements and management's potential underestimation of initial and ongoing
        costs. As a new business, we may encounter delays and other problems in
        connection with the methods of product distribution that we implement. We
        also
        face the risk that we will not be able to effectively implement our business
        plan. In evaluating our business and prospects, these difficulties should
        be
        considered. If we are not effective in addressing these risks, we will not
        operate profitably and we may not have adequate working capital to meet our
        obligations as they become due.
  **IF
        WE FAIL TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS,
        COMPETITORS MAY PRODUCE AND MARKET PRODUCTS SIMILAR TO OURS. IN ADDITION,
        WE MAY
        BE SUBJECT TO INTELLECTUAL PROPERTY LITIGATION AND INFRINGEMENT CLAIMS BY
        THIRD
        PARTIES.**
  Our
        ability to compete effectively is dependent upon the proprietary nature of
        the
        designs, processes, technologies and materials owned by, used by or licensed
        to
        us. All of our intellectual property rights are based on common law and our
        license agreements with Hotway Nutraceuticals Canada Co., Ltd. and from rights
        to herbal supplement formulas that we obtained from our principal officers,
        Ms.
        Julianna Lu and Mr. Xiao Fei Yu. We do not own and have not applied for patents,
        trademarks or any other registrations of our intellectual properties. Although
        we attempt to protect such proprietary properties, both in the United States
        and
        in foreign countries through trade secret laws and non-disclosure agreements,
        these may be insufficient. In addition, because of the differences in foreign
        laws concerning proprietary rights, our products may not receive the same
        degree
        of protection in foreign countries as they would in the United States. We
        may
        not always be able to successfully protect or enforce our proprietary properties
        against competitors, which may materially adversely affect our business.
  In
        addition, although we do not believe that our products infringe the rights
        of
        others and while to date we have not been subject to such claims, in the
        future
        we may be subject to intellectual property litigation and infringement claims,
        which could cause us to incur significant expenses or prevent us from selling
        our products. A successful claim of trademark, patent or other intellectual
        property infringement against us could adversely affect our growth and
        profitability, in some cases materially. Others may claim that our proprietary
        or licensed products are infringing their intellectual property rights, and
        that
        our products may infringe those intellectual property rights. If we are found
        to
        have infringed on the intellectual property rights of another party,
        licenses for such intellectual property may not be available on favorable
        terms
        or at all. If someone claims that our technology or products infringe their
        intellectual property rights, any resulting litigation could be costly and
        time
        consuming and would divert the attention of management and key personnel
        from
        other business issues. The complexity of the technology involved and the
        uncertainty of intellectual property litigation increase these risks. We
        also
        may be subject to significant damages or injunctions preventing us from
        manufacturing, selling or using some aspect of our products in the event
        of a
        successful claim of patent or other intellectual property infringement. Any
        of
        these adverse consequences could have a material adverse effect on our business
        and profitability.
  **WE
        MAY INCUR MATERIAL PRODUCT LIABILITY COSTS.**
  We
        are in
        the business of formulating and selling nutritional supplements for human
        consumption. As a distributor of products designed for human consumption,
        we are
        subject to product liability claims if the use of our products is alleged
        to
        have resulted in injury. We may be subject to various product liability claims,
        including, among others, allegations that our products include inadequate
        instructions for use or inadequate warnings concerning possible side effects
        and
        interactions with other substances. In addition, although our manufacturers
        maintain quality controls and procedures with respect to products that we
        sell,
        our products could contain contaminated substances. All of the products we
        sell
        are produced by third-party manufacturers. As a distributor of products
        manufactured by third parties, we may also be liable for various product
        liability claims for products we do not manufacture even though we have no
        control over the manufacturing procedures used in connection with the production
        of these third-party products. We are in the process of applying for product
        liability insurance. Such insurance, once obtained, may not be available
        at a
        reasonable cost, or may not be adequate to cover liabilities.
  **IF
        WE ARE NOT ABLE TO MANAGE GROWTH OF OUR BUSINESS, OUR FINANCIAL CONDITION
        AND
        RESULTS OF OPERATIONS WILL BE NEGATIVELY AFFECTED.**
  Over
        the
        next six to eighteen months, we anticipate launching our King of Herbs, Taoist
        Medicinal and Vitamins and Supplements products lines upon the receipt of
        funding. We have not yet implemented any marketing and distribution strategies.
        Accordingly, we may experience
        a period of significant growth. While we have not experienced problems with
        growth of our business in the past, any future growth could cause significant
        strain on our managerial, operational, financial and other resources. Success
        in
        managing this expansion and growth will depend, in part, upon the ability
        of our
        senior management to effectively manage the growth of our business. Any failure
        to manage the proposed growth and expansion of our business could have a
        material adverse effect on our financial condition and results of operations.
   33
  **Our
        Strategy of Growth Through Acquisition is Inherently
        Risky.**
  We
        intend
        to seek to identify and develop merger and/or acquisitions candidates in
        the
        Peoples Republic of China and worldwide as part of our growth plan to secure
        a
        strong future.
  Our
        acquisition of companies and businesses and expansion of operations involve
        risks, including the following:
  ·
              the
                  potential inability to identify the companies best suited to our
                  business
                  plan;
 ·
              the
                  potential inability to successfully integrate acquired operations
                  and
                  businesses or to realize anticipated synergies, economics of scale
                  or
                  other expected value;
 ·
              the
                  potential need to restructure, modify or terminate customer relationships
                  of the acquired company; and
 ·
              loss
                  of key employees of acquired
                  operations.
 
 The
        occurrence of any one or more of these risks could result in a material adverse
        effect on our operations.
  **IF
        WE FAIL TO ACQUIRE AND DEVELOP OTHER PRODUCTS OR PRODUCT CANDIDATES, WE MAY
        BE
        UNABLE TO GROW OUR BUSINESS.**
  We
        license the rights to a majority of our products from outside third parties.
        As
        part of our growth strategy, we intend to license or acquire additional products
        and product candidates for development and commercialization. The success
        of
        this strategy depends upon our ability to identify, select and acquire the
        right
        product candidates. Any product candidate we license or acquire may require
        additional development efforts prior to commercial sale, including extensive clinical testing and approval by regulatory
        authorities. All product candidates are prone to the risks of failure inherent
        in product development, including the possibility that the product candidate
        will not be shown to be sufficiently safe and effective. In addition, we
        cannot
        assure you that any products that we license or acquire will be manufactured
        or
        produced economically, successfully commercialized or widely accepted in
        the
        marketplace. Proposing, negotiating and implementing an economically viable
        product acquisition or license is a lengthy and complex process. Other
        companies, including those with substantially greater financial, marketing
        and
        sales resources, may compete with us for the acquisition or license of product
        candidates. We may not be able to acquire or license the rights to additional
        products on terms that we find acceptable, or at all.
  **IF
        OUR RELATIONSHIPS WITH OUR MANUFACTURERS TERMINATE, OR THEIR FACILITIES ARE
        DAMAGED OR DESTROYED, WE MAY BE UNABLE TO DEVELOP OR COMMERCIALIZE OUR PRODUCTS.**
  Currently,
        only a limited number of companies manufacture our products. The number of
        contract manufacturers with the expertise, required regulatory approvals
        and
        facilities to manufacture our product candidates on a commercial scale is
        extremely limited, and it would take a significant amount of time to arrange
        for
        alternative manufacturers. If any of our manufacturers fail to deliver the
        required commercial quantities of bulk substance or finished product on a
        timely
        basis and at commercially reasonable prices, and we are unable to find one
        or
        more replacement manufacturers capable of production at a substantially
        equivalent cost, in substantially equivalent volumes and quality, and on
        a
        timely basis, we will likely be unable to meet customer demand as we begin
        to
        market and sell our existing product lines.
  **THE
        LOSS OF OUR CURRENT MANAGEMENT TEAM COULD HAVE A MATERIAL ADVERSE EFFECT
        ON OUR
        BUSINESS. IF WE ARE NOT ABLE TO RETAIN ADDITIONAL KEY PERSONNEL, OUR BUSINESS
        COULD SUFFER.**
  Our
        success depends to a large degree upon the skills of our current management
        team
        and advisors, including Ms. Julianna Lu and Mr. Xiao Fei Yu, and upon our
        ability to identify, hire, and retain additional senior management, sales,
        marketing, scientific, and financial personnel. Although, to date we have
        not
        experienced problems attracting and retaining key personnel, we may encounter
        such problems in the future as we grow and expand our operations. The loss
        of
        any of our current executives, employees, or advisors or the failure to attract,
        integrate, motivate, and retain additional key employees could have a material
        adverse effect on our business. To our knowledge, none of our key employees
        has
        plans to retire or leave us in the near future. We do not have "key person"
        insurance on the lives of any of our management team.
  **RISKS
        RELATED TO OUR INDUSTRY**
  **THE
        NUTRITIONAL SUPPLEMENTS INDUSTRY IS INTENSELY COMPETITIVE. WE HAVE MANY
        WELL-ESTABLISHED COMPETITORS WITH SUBSTANTIALLY GREATER FINANCIAL AND OTHER
        RESOURCES THAN US. THESE FACTORS MAY MAKE IT MORE DIFFICULT FOR US TO
        SUCCESSFULLY IMPLEMENT OUR BUSINESS PLAN AND MAY ADVERSELY AFFECT OUR RESULTS
        OF
        OPERATIONS.**
  The
        nutritional supplements industry is a large, highly fragmented and growing
        industry, with no single industry participant accounting for more than 10%
        of
        total industry retail sales. Participants include specialty retailers,
        supermarkets, drugstores, mass merchants (wholesalers), multi-level marketing organizations,
        mail order companies and a variety of other smaller participants. The market
        is
        also highly sensitive to the introduction of new products, including various
        prescription drugs, which may rapidly capture a significant share of the
        market.
        Increased competition from companies that distribute through retail or wholesale
        channels could have a material adverse effect on our financial condition
        and results of
     34
  operations.
        Some of the nutraceutical companies that
        we will compete with are Weider Nutrition International, Inc., USANA Health
        Sciences Inc., Nature's Sunshine Products, Inc. and Herbalife International,
        Inc. We are a development stage business and the only revenues we have received
        from product sales since inception were nominal and were generated during
        2004.
        Accordingly, we have not been operational long enough to experience any of
        the
        above problems. However, since we are a development stage business, most,
        if not
        all companies in our industry have greater financial and other resources
        available to them and possess manufacturing, distribution and marketing
        capabilities greater than ours. In addition, our competitors may be more
        effective and efficient in integrating new products. We may not be able to
        compete effectively and any of the factors listed above may cause price
        reductions, reduced margins and difficulties in gaining market share.
  **COMPLIANCE
        WITH GOVERNMENTAL REGULATIONS MAY IMPOSE ADDITIONAL COSTS, WHICH MAY ADVERSELY
        AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**
  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, the FDA, the
        Federal Trade Commission ("FTC"), the Consumer Product Safety Commission,
        the
        United States Department of Agriculture, the 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.
  The
        FDA
        may attempt to regulate any of our products that fall within its jurisdiction,
        and the FTC has jurisdiction to regulate the advertising of our products
        that
        fall within its jurisdiction. The FDA may not accept the evidence of safety
        for
        any new ingredients that we may want to market, may determine that a particular
        product or product ingredient presents an unacceptable health risk, may
        determine that a particular statement of nutritional support that we want
        to use
        is an unacceptable drug claim or an unauthorized version of a food "health
        claim," may determine that a particular product is an unapproved new drug,
        or
        the FDA or the FTC may determine that particular claims are not adequately
        supported by available scientific evidence. Such a determination would prevent
        us from marketing particular products or using certain statements of nutritional
        support on our products. One of the key areas of our development focus is
        the
        specialty supplements category, which includes products that are directed
        at
        particular nutritional concerns. The FDA may not agree with our statements
        of
        nutritional support as to a particular specialty supplement or permit us
        to
        promote our specialty supplements directed at particular nutritional concerns.
        We also may be unable to disseminate third-party literature in connection
        with
        our products if the third-party literature fails to satisfy certain
        requirements. In addition, the FDA could require us to remove a particular
        product from the market. Any future recall or removal would result in additional
        costs to us, including lost revenues from any products that we are required
        to
        remove from the market, any of which could be material. Any such product
        recalls
        or removals could lead to liability, substantial costs and reduced growth
        prospects.
  Although
        the regulation of dietary supplements is less restrictive than the regulation
        of
        drugs, dietary supplements may not continue to be subject to less restrictive
        regulation. Many of our dietary supplements contain 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 the 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 herbs in our products 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.
  Further,
        if more stringent statutes are enacted for dietary supplements, or if more
        stringent regulations are promulgated, we may not be able to comply with
        such
        statutes or regulations without incurring substantial expense, or at all.
        Legislation has been introduced in Congress to impose substantial new regulatory
        requirements for dietary supplements including adverse event reporting, post
        market surveillance requirements, FDA reviews of dietary supplement ingredients,
        safety testing and records inspection. If enacted, any of the proposed
        legislation may result in difficulty getting our products to the market and
        could raise our costs and hinder our business.
  In
        addition, we expect that the FDA soon will adopt the proposed rules on Good
        Manufacturing Practice in manufacturing, packaging, or holding dietary
        ingredients and dietary supplements, which will apply to the products we
        manufacture. These 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 may not be able to comply with the new rules without
        incurring additional expenses.
  Each
        of
        our products imported into the United States may be blocked at the border
        by
        U.S. Customs. The FDA could issue Import Alerts for any of our products if
        the
        agency considers them to be misbranded, adulterated and/or unapproved new
        drugs.
  The
        FTC
        exercises jurisdiction over the advertising of dietary supplements. In the
        past,
        the FTC has instituted numerous enforcement actions against dietary supplement
        companies for failure to have adequate substantiation for claims made in
        advertising or for the use of false or misleading advertising claims. These
        enforcement actions have often resulted in consent decrees and the payment
        of
        civil penalties by the companies involved.
  We
        are
        also subject to regulation under various state, local, and international
        laws
        that include provisions governing, among other things, the processing,
        formulation, manufacturing, packaging, labeling, advertising and distribution
        of
        our products that are deemed "dietary supplements" or "over-the-counter drugs."
        Government regulations in foreign countries may prevent or delay the
        introduction, or require the reformulation, of certain of our products. In
        addition, from time to time in the future, Congress, the FDA, the FTC or
        other
        federal, state, local or foreign legislative and regulatory authorities may
        impose additional laws or regulations that apply to us, repeal laws or
        regulations that we consider favorable to
 35
 us
        or impose more stringent interpretations of current laws or regulations.
        We are
        not able to predict the nature of such future laws, regulations, repeals
        or
        interpretations or to predict the effect additional governmental regulation,
        when and if it occurs, would have on our business in the future. Such
        developments could, however, require reformulation of certain products to
        meet
        new standards, recalls or discontinuance of certain products not able to
        be
        reformulated, additional record-keeping requirements, increased documentation
        of
        the properties of certain products, additional or different labeling, additional
        scientific substantiation, or other new requirements. Any such developments
        could have a material adverse effect on our business, financial condition
        and
        results of operations.
 **RISKS
        RELATED TO OUR COMMON STOCK**
  **THERE
        IS A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK. FAILURE TO DEVELOP OR MAINTAIN
        A TRADING MARKET COULD NEGATIVELY AFFECT THE VALUE OF OUR SHARES AND MAKE
        IT
        DIFFICULT OR IMPOSSIBLE FOR SHAREHOLDERS TO SELL THEIR SHARES.**
  On
        April
        18, 2005, our common stock was approved for quotation on the OTC Bulletin
        Board
        under the symbol "CHHH." To date there is a limited trading market in our
        common
        stock on the OTC Bulletin Board. Failure to develop or maintain an active
        trading market could negatively affect the value of our shares and make it
        difficult for our shareholders to sell their shares or recover any part of
        their
        investment in us. The market price of our common stock may be highly volatile.
        In addition to the uncertainties relating to our future operating performance
        and the profitability of our operations, factors such as variations in our
        interim financial results, or various, as yet unpredictable factors, many
        of
        which are beyond our control, may have a negative effect on the market price
        of
        our common stock.
  **OUR
        COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE TRADING
        MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR COMMON
        STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.**
  The
        Securities and Exchange Commission has adopted Rule 3a51-1 which establishes
        the
        definition of a "penny stock," for the purposes relevant to us, as any equity
        security that has a market price of less than $5.00 per share or with an
        exercise price of less than $5.00 per share, subject to certain exceptions.
        For
        any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:
  -
        that a
        broker or dealer approve a person's account for transactions in penny stocks;
        and
  -
        the
        broker or dealer receive from the investor a written agreement to the
        transaction, setting forth the identity and quantity of the penny stock to
        be
        purchased.
  In
        order
        to approve a person's account for transactions in penny stocks, the broker
        or
        dealer must:
  -
        obtain
        financial information and investment experience objectives of the person;
        and
  -
        make a
        reasonable determination that the transactions in penny stocks are suitable
        for
        that person and the person has sufficient knowledge and experience in financial
        matters to be capable of evaluating the risks of transactions in penny stocks.
  The
        broker or dealer must also deliver, prior to any transaction in a penny stock,
        a
        disclosure schedule prescribed by the SEC relating to the penny stock market,
        which, in highlight form:
  -
        sets
        forth the basis on which the broker or dealer made the suitability
        determination; and
  -
        that
        the broker or dealer received a signed, written agreement from the investor
        prior to the transaction.
  Generally,
        brokers may be less willing to execute transactions in securities subject
        to the
        "penny stock" rules. This may make it more difficult for investors to dispose
        of
        our common stock and cause a decline in the market value of our stock.
  Disclosure
        also has to be made about the risks of investing in penny stocks in both
        public
        offerings and in secondary trading and about the commissions payable to both
        the
        broker-dealer and the registered representative, current quotations for the
        securities and the rights and remedies available to an investor in cases
        of
        fraud in penny stock transactions. Finally, monthly statements have to be
        sent
        disclosing recent price information for the penny stock held in the account
        and
        information on the limited market in penny stocks.
 
 **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.**
 
 On
        January 19, 2007, the Board of Directors of China Health Holding, Inc. (the
        "Company") approved the Company's dismissal of Dale Matheson Carr-Hilton
        LaBonte
        ("DMCL") as independent auditors for the Company and its subsidiaries.
  36
  DMCL's
        report on the Company's financial statements for the fiscal years ended December
        31, 2005 and 2004 contained an explanatory paragraph indicating that there
        was
        substantial doubt as to the Company's ability to continue as a going concern.
        Other than such statement, no report of DMCL on the financial statements
        of the
        Company for either of the past two years contained an adverse opinion or
        disclaimer of opinion, or was qualified or modified as to uncertainty, audit
        scope or accounting principles.
 
 During
        the Company's two most recent fiscal years ended December 31, 2005 and 2004
        and
        the subsequent interim period through January 19, 2007: (i) there have been
        no
        disagreements with DMCL on any matter of accounting principles or practices,
        financial statement disclosure or auditing scope or procedure, which
        disagreements, if not resolved to the satisfaction of DMCL, would have caused
        it
        to make reference to the subject matter of the disagreement in connection
        with
        its reports; and (ii) DMCL did not advise the Company of any of the events
        requiring reporting in this Current Report on Form 8-K under Item
        304(a)(1)(iv)(B) of Regulation S-B.
 
 On
        January 19, 2007, the Board of Directors approved the Company's engagement
        of
        Russell Bedford Stefanou Mirchandani LLP ("Russell Bedford") as independent
        auditors for the Company and its subsidiaries. The Company engaged Russell
        Bedford on January 19, 2007. During the Company's two most recent fiscal
        years
        ended December 31, 2005 and 2004 and the subsequent interim period through
        January 19, 2007, neither the Company nor anyone on its behalf consulted
        Russell
        Bedford regarding (i) the application of accounting principles to a specific
        completed or contemplated transaction, (ii) the type of audit opinion that
        might
        be rendered on the Company's financial statements, (iii) or oral advice that
        was
        an important factor considered by us in reaching our decision as to any
        accounting, auditing or financial reporting issue or (iv) any matter that
        was
        the subject of a disagreement or event identified in response to Item
        304(a)(1)(iv) of Regulation S-B (there being none).
  **Item
        8A. Controls and Procedures.**
  (a)
        EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. As of the date of this
        report,
        the Company's management carried out an evaluation, under the supervision
        of the
        Company's Chief Executive Officer and the Chief Financial Officer of the
        effectiveness of the design and operation of the Company's system of disclosure
        controls and procedures pursuant to the Securities and Exchange Act, Rule
        13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation,
        the
        Chief Executive Officer and Chief Financial Officer concluded that the Company's
        disclosure controls and procedures were effective, as of the date of their
        evaluation, for the purposes of recording, processing, summarizing and timely
        reporting material information required to be disclosed in reports filed
        by the
        Company under the Securities Exchange Act of 1934.
  (b)
        CHANGES IN INTERNAL CONTROLS. There were no changes in internal controls
        over
        financial reporting that occurred during the period covered by this report
        that
        has materially affected, or is likely to materially effect, the Company's
        internal control over financial reporting.
  **Item
        8B. Other Information.**
 
 None.
 **PART
        III**
 
 **Item
        9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        With
        Section 16(a) of the Exchange Act.**
 
 The
        following are the names and certain information regarding or current Directors
        and Executive Officers:
 
 **Name**
              **Age**
              **Position**Julianna
                  Lu
              44
              Chief
                  Executive Officer, Principal Financial Officer, Principal Accounting
                  Officer, Treasurer and Chairman of the Board of
                  DirectorsXiao
                  Fei Yu
              44
              President
                  and DirectorZheng-lun
                  Fan
              62
              Vice
                  President of Research and Development and DirectorDahong
                  Li
              49
              Vice
                  President
 
 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
        Lu, Founder, BSc. & MSc., 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.
  37
  **Professor
        Xiao Fei Yu, President and Director.** Mr. Yu
        was appointed as our President on February 9, 2006. Mr. Yu has been a member
        of
        our Board of Directors since May 26, 2004 and our Vice President since October
        6, 2004. 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 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.
 
 **Dr.
        DaHong Li, Vice Vice President. Ph.D., MA,Sc.,** Dr.
        Li
        serves as our Vice President since February 1, 2006. From 1994 to present,
        Dr.
        Li has been the Principal of DLEX Enterprises Corporation and Vision Capital
        Partners, Ltd. Dr. Li has served as the senior consultant for Dames & Moore,
        Inc. for various complex engineering and construction projects Canada and
        overseas. Dr. Li has served as a senior consultant to international banks
        on
        debts financing for major infrastructure. Dr. Li graduated from University
        of
        Toronto, Toronto, Canada (1990).
 
 **Professor
        Zheng-lun Fan, Vice President** . **** Dr.
        Fan
        was appointed as our director on February 9, 2007 and has served as our Vice
        President of Research and Development since 2005. During the past five years,
        Mr. Fan has been a Research Fellow at Cui Yue-li Research Center of Traditional
        Chinese Medicine. Dr. Fan is also a MSC, Professor, Chief Physician Research
        Fellow at Cui Yue-li Research Center of Traditional Chinese Medicine, Beijing,
        P. R. China. Prof. Z. Fan is an expert in Chinese medicine at the national
        level
        in P. R. China and he has practiced Chinese medicine for more than 40
        years.
 
 **Scientific
        Advisory Board**
 
 The
        following comprises the Company’s Scientific Advisory Board:
 
 **Professor
        Yu, Edward (X.F.): Chief TCM Advisor**
 
 Instrumental
        in the development of numerous natural products for China Health Holding,
        Inc.,
        Professor Yu was elected to the Board and appointed Vice President in 2004.
        Past
        President and Director of Beijing's Taoist Tantric & Toltec Research &
Development Centre, he is currently a Research Scientific Consultant at the
        city's Central TCM ( Traditional Chinese Medicine) Research & Development
        Institute. Presently a professor in the Department of Philosophy, Professor
        Yu
        teaches Taoism, Taoist Medicine and Indian classical philosophy and religion
        at
        Beijing's University of CCCP.
 
 **Dr.
        Zhou, Joseph (J.R.) - Chief Medical Advisor**
 
 Dr.
        Zhou,
        Joseph (J.R.) is an Assistant Professor of Surgery at Harvard Medical School
        and
        the Director of Nutrition/Metabolism Laboratory at Beth Israel Deaconess
        Medical
        Center. Dr. Zhou received his Ph.D. in nutritional Sciences from University
        of
        Illinois in 1994 and his postdoctoral training in bio-nutrition and cancer
        prevention at Beth Israel deaconess Medical Center, Harvard Medical School.
        Dr.
        Zhou is a national and international known expert in nutrition and cancer
        prevention. Dr. Zhou also actively participates in several review panels
        and
        study sections in National Institutes of Health and other scientific
        foundations.
 
 **Dr.
        Ma, Yua-Chun : Chief Scientific Advisor**
 
 Dr.
        Ma,
        the President/CEO of Canadian Phytopharmceutical, specializes in Research
&
development and manufacturing of botanical and natural pharmaceutical products.
        He received an M.Sc. at HuBei University, PR China and Ph.D. in Pharmaceutical
        Science at the University of Portsmouth, England. He served as senior consultant
        for Health Canada and Agriculture Canada and also for the National Research
        Council of Canada in R&D on standardization for Natural Health Products in
        BC Canada.
  **Professor
        Fan, Zheng-lun : Chief Scientific Advisor**
 
 In
        1982,
        Professor Zheng-Lun Fan acquired his MSC in Liao-Ning College of Traditional
        Chinese Medicine. During the past five years, he has been a Research Fellow
        at
        Cui Yue-li Research Center of Traditional Chinese Medicine. Professor Fan
        also
        is a MSC, Professor, Chief Physician Research Fellow at Cui Yue-li Research
        Center of Traditional Chinese Medicine, Beijing, P.R. China. Prof. Fan is
        an
        expert of Chinese medicine at the national level in P. R. China and he has
        practiced Chinese medicine for more than 40 years.
 
 **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.
  38
  
 **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. 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, either to (a) our business address at 101 Convention Center
        Drive,
        Suite 700, Las Vegas, NV 89107, telephone (877) 883-0979 or (b) our mailing
        address at Suite 600 - 666 Burrard St., Park Place, Vancouver, British Columbia,
        Canada V6C 2X8, telephone (604) 608-6788. A copy of our Code of Ethics can
        also
        be obtained from our website www.chinahealthholding.com .
 
 **Item
        10. Executive Compensation.**
 
 **SUMMARY
        COMPENSATION TABLE**
 
 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, 2006 and 2005.
 
 Name
                  and
                Principal
                  Position
              Year
              Salary
                  ($) (1)
              Bonus
                  ($)
              Stock
                  Awards ($)
              Option
                  Awards ($)
              Non-Equity
                  Incentive Plan Compensation ($)
              Change
                  in Pension Value and Non-Qualified Deferred Compensation Earnings
                  ($)
              All
                  Other Compensation ($)
              Total
                  ($)Julianna
                  Lu, CEO,
              2006
              $240,000
              $138,800
              -
              -
              -
              -
              -
              $378,000principal
                  financial officer,
              2005
              $192,000
              $75,500
              -
              -
              -
              -
              -
              $267,500principal
                  accounting officer,Treasurer
                  and Chairmanof
                  the Board
  (1)  Ms.
        Lu’s
        salary for 2006 and 2005 has been accrued and is included in loans to our
        Company from Ms. Lu. Ms. Lu’s loans are described more fully below under Item 12
        Certain Relationship and Related Transactions. As of December 31, 2006, the
        Company owed an aggregate of $700,184. In
        addition, we have issued to Ms. Lu 500,000 shares of common stock at a fair
        value of $0.15 per share as a bonus in December 2005.
  **Outstanding
        Equity Awards at Fiscal Year-End Table.**
  No
        options were granted to our executive officers during the fiscal year ended
        December 31, 2006.
  **Director
        Compensation**
  Our
        directors did not receive any compensation for serving in their capacities
        as
        the Company’s directors.
  **Employment
        Agreements and Director Compensation**
 
 On
        June
        1, 2004, we entered into an employment agreement with Julianna 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.
  On
        April
        28, 2005, we entered into an agreement with Ms. Lu, updating the terms of
        the
        June 1, 2004 employment agreement. The term of the updated agreement commenced
        retroactively beginning May 1, 2004 and does not have an expiration term.
        As
        compensation under the updated agreement, we agreed to increase Ms. Lu's
        salary
        to $10,000 per month effective January 1, 2005. In addition, the agreement
requires
        us to pay Ms. Lu a 3% royalty of total gross sales of our products effective
        January 1, 2005. All other terms of the June 1, 2004 employment agreement
        remain
        in effect.
  39
  On
        January 9, 2007, we entered into a consulting services agreement with Julianna
        Lu pursuant to which Ms. Lu will serve as our Chief Executive Officer. The
        consulting services agreement provides for a compensation of $30,000 commencing
        on January 1, 2007. Ms. Lu agreed to accrue her compensation as a loan to
        the
        Company with interest payable at 10% per annum. In addition, the Company
        agreed
        to grant to Ms. Lu warrants to purchase 6,000,000 shares of common stock
        of the
        Company at a price of $0.25 which will be exercisable through February 8,
        2017
        or within 30 days after the termination of the consulting services agreement.
  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
        February 9, 2007, we entered into an agreement with Mr. Yu, pursuant to which
        Mr. Yu was appointed as our President. The agreement commenced on February
        9,
        2007 and is for a term of two years. We agreed to pay Mr. Yu a monthly
        compensation of $18,000 effective as of January 1, 2007. We also granted
        to Mr.
        Yu warrants to purchase 4,000,000 shares of our common stock, exercisable
        at a
        price of $0.20. The warrants expire the sooner of February 8, 2012 or thirty
        days after termination.
 
 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
        May 1,
        2005, we also entered into a consulting agreement with Dick Wu. Under the
        consulting agreement, Dick Wu will provide corporate governance and other
        management consulting services as our Vice President. The term of the consulting
        agreement began May 1, 2005 and continues for two years terminating on April
        30,
        2007. After a three-month probationary period, the consulting agreement may
        be
        terminated for any reason by either party. We also agreed to grant Mr. Wu
        options to purchase 150,000 shares of common stock at a price of $0.80 per
        share, exercisable until the earlier of April 30, 2007 or 30 days after
        termination of the consulting agreement.
 
 **Consulting
        Agreements**
  On
        January 17, 2007, we entered into a consultancy agreement with Shanghai Ogilvy
        & Mather Marketing Communications Consulting Co. Ltd. -Beijing Branch
        (“Shanghai Ogilvy”) pursuant to which Shanghai Ogilvy will provide us with
        investor relations and public relations services. The agreement is for a
        term of
        one year and can be terminated by either party by summary notice in the event
        of
        any serious breach and/or continuation of any breach by either party of their
        obligations under the Agreement or ten business days written notice. Upon
        termination of the agreement, the parties have agreed to settle outstanding
        invoices to each other, within 30 days from the date of termination. As
        compensation for Shanghai Ogilvy’s services, we have agreed to pay Shanghai
        Ogilvy $12,500 per month commencing February 1, 2007. In addition, we agreed
        to
        issue CEOcast 125,000 shares of common stock for its services during the
        initial
        three-month grace period. In February 2007, we agreed to issue 2,00,000 shares
        of common stock as additional compensation for advances public relations
        services.
  On
        October 19, 2006, we entered into an agreement with Investor Relations
        International (“IRI”) pursuant to which IRI will provide us with investor
        relations and financial communication services. The agreement is for a term
        of
        three years and can be terminated by us with or without cause. The agreement
        provides for a monthly retainer of $10,000 for the first three months and
        a
        monthly retainer of $15,000 commencing January 28, 2007. In addition, we
        agreed
        to issue to IRI 3,000,000 shares of common stock and an aggregate of 4,000,000
        warrants to purchase shares of our common stock. In addition, as compensation
        for advanced public relations services to us, we issued to Rourke Holdings,
        the
        parent company of IRI, 3,400,000 shares of our common stock. On
        May 9,
        2005, we entered into an agreement pursuant to which CEOcast, Inc., a New
        York
        corporation will provide us with investor relations services. The agreement
        is
        for a term of one year and has an initial three-month grace period. As
        compensation for CEOcast's services, we have agreed to pay CEOcast $7,500
        per
        month. In addition, we agreed to issue CEOcast 125,000 shares of common stock
        for its services during the initial three-month grace period. The agreement
        may
        be terminated by us at any time after delivering 15 business days' prior
        written
        notice of termination. If we deliver CEOcast a notice of termination during
        the
        initial three-month grace period, we agreed to compensate CEOcast for the
        entire
        three-month period. Thereafter, if we deliver a notice of termination, we
        will
        only be liable to CEOcast for services rendered through the date of termination.
        To date we have issued an aggregate of 265,375 shares to CEOcast pursuant
        to the
        agreement.
   40
   On
        May 1,
        2005, the Company entered into an agreement with Bevitor Holding Ltd. and
        James
        Simpson, individually, pursuant to which, Bevitor Holding Ltd. and Mr. Simpson
        will provide management consulting services and investor relations services
        to
        the Company. Mr. Simpson is the President of Bevitor Holding Ltd. In connection
        with this agreement, the November 16, 2004 agreement employing Mr. Simpson
        as
        the Company's Vice President of Corporate Development was terminated. The
        term
        of the consulting agreement commences retroactively as of June 16, 2004 and
        continues for a period of three years, terminating on June 16, 2007. The
        consulting agreement otherwise may be terminated for any reason by either
        party.
        Bevitor Holding Ltd. and Mr. Simpson collectively will be paid $3,500 per
        month
        for their services beginning May 1, 2005. Bevitor Holding Ltd. and Mr. Simpson,
        collectively, also will be granted an option to purchase 600,000 shares of
        the
        Company's common stock at a price of $0.30 per share, exercisable until the
        earlier of June 16, 2009 or 30 days after termination of the consulting
        agreement. In addition, Bevitor Holding Ltd. and Mr. Simpson, collectively,
        are
        entitled to a 10% finder's fee for any capital raising transactions introduced
        to the Company by them.
  **Item
        11. Security Ownership of Certain Beneficial Owners and Management and Related
        Stockholder Matters.**
 
 The
        following table sets forth certain information, as of March 30, 2007 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.
 
 Name
                  and address of Beneficial Owner(1)
              Common
                  Stock
                Beneficially
                  Owned(2)
              Percentage
                  of
                Common
                  Stock(3)
              Preferred
                  Stock
                Beneficially
                  owned
              Percentage
                  of
                Preferred
                  Stock(4)
              Percentage
                  of Total VoteJulianna
                  Lu (5)
              96,172,649
              54.22%
              2,500,000
              100%
              55.47%Xiao
                  Fei Yu (6)
              10,831,000
              8.30%
              -
              -
              7.99%Zhenge-Lun
                  Fan
              150,000
              *
              -
              -
              *Dahong
                  Li(7)
              5,350,000
              4.12%
              -
              -
              4.12%All
                  officers and directors as a group (3
                  persons)
              113,041,149
              67.17%
              2,500,000
              100%
              67.95
 
 
 *
        Less
        than 1%
 
 (1)
        Except as otherwise indicated, the address of each beneficial owner is c/o
        our
        business address at 101 Convention Center Drive, Suite 700, Las Vegas, NV
        89107,
        telephone (877) 883-0979 or (b) our mailing address at Suite 600 - 666 Burrard
        St., Park Place, Vancouver, British Columbia, Canada V6C 2X8, telephone (604)
        608-6788.
 (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 128,832,060 shares outstanding as of March 30, 2007.
 (4)
        Based
        on 2,500,000 shares outstanding as of March 30, 2007.Each share of Series
        A
        preferred stock is entitled to two votes.
 (5)
        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; (c) options
        to
        purchase 500,000 shares of common stock at $0.05 per share that expire on
        April
        30, 2008; (d) options to purchase 2,500,000 shares of common stock at $0.30
        per
        share that expire on December 31, 2010; (e) warrants to purchase 1,500,000
        shares of common stock at $0.20 per share; (f) warrants to purchase 10,000,000
        shares of common stock at $0.10 that expire on December 10, 2011; (g) 10,000,000
        warrants to purchase shares of common stock at $0.10 that expire on December
        10,
        2016; (h) 10,000,000 warrants to purchase shares of common stock at $0.l0
        that
        expire on March 11, 2012; (i) 10,000,000 warrants to purchase shares of common
        stock at a price of $0.20 that expire on March 11, 2017; (j) 1,250,000 warrants
        to purchase shares of preferred stock at $0.15 that expire on December 28,
        2008.
 (6)
        Includes (a) options to purchase 250,000 shares of common stock at $0.20
        per
        share that expire on July 9, 2007; (b) options to purchase 1,000,000 shares
        of
        common stock at $0.20 per share that expire on December 3, 2008; and (c)
        warrants to purchase 400,000 shares of common stock at $0.20 per share that
        expire on September 18, 2011
 (7)
        Includes options to purchase 1,000,000 shares of common stock at $0.20 per
        share
        that expire February 1, 2008.
 
 
 **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 Lu, our founder and principal executive
        officer, and Xiao Fei Yu. Ms. Lu and Mr. Yu sold to us all proprietary rights
        and formulas to the "26 100% natural herbal medicinal products" (the "Products")
        that comprise our King of Herbs and Taoist Medicine product lines. On August
        8,
        2004, the parties signed an Amended and Restated Intellectual Property Purchase
        Agreement, which clarifies the terms of the Purchase
    41
 Agreement for the Products. In consideration for the
      proprietary rights
      and formulas to the Products, we 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 Lu has extended numerous loans to China Health Holding.
        In addition, Ms. Lu’s salary for 2006, 2005 and 2004 have accrued and are
        carried as loans to the Company. The aggregate amount due to Ms. Lu as of
        December 31, 2006 totaled $716,573. 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.
  In
        December 2005, the Board of Directors agreed to issue 1,000,000 Series A
        preferred shares with a fair value of $0.15 per share to settle debt of $150,000
        owed to Ms. Lu. Each preferred share is convertible into two shares of common
        stock commencing two years from the date of issuance if the market price
        of the
        common stock is not below $1.00 per share Ms. Lu also received an option
        to
        purchase 1,000,000 shares of Series A preferred stock at a price of $.15
        per
        share.
 
 On
        October 12, 2006, as consideration for the forgiveness of $300,000 in debt
        owed
        to Ms. Lu, we issued to Ms. Lu 10,000,000 shares of common stock and warrants
        to
        purchase 10,000,000 shares of common stock at $0.10 which expire on December
        10,
        2011 and warrants to purchase 10,000,000 shares of common stock at $0.20
        which
        expire on December 10, 2016.
 
 On
        March
        12, 2007 as consideration for the forgiveness of $300,000 in debt owed to
        Ms.
        Lu, we issued to Ms. Lu 5,000,000 shares of common stock and warrants to
        purchase 10,000,000 shares of common stock at $0.10 which expire on March
        11,
        2012 and warrants to purchase 10,000,000 shares of common stock at $0.20
        which
        expire on March 11, 2017.
 
 As
        of
        December 31, 2006 China Health Holding owed an aggregate of $135,728 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, 2006 China Health Holding owed an aggregate of $30,130.80 to
        James
        Simpson from various loans and payments. 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.
 
 
 **Item
        13. Exhibits.**
 
 **Exhibit
                  Number**
              
              **Description**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 (Incorporated
                  by reference to the Company’s 10-QSB filed with the Securities and
                  Exchange Commission on May 12, 2005)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)3.05
              
              Certificate
                  of Designation, Powers, Preferences and Rights of Series A Preferred
                  Stock, filed with the State of Nevada on February 21, 2006. (Incorporated
                  by reference to Form 8-K filed with the Securities and Exchange
                  Commission
                  on March 28, 2006)3.06
              
              Amendment
                  to Certificate of Designation, Powers, Preferences and Rights of
                  Series A
                  Preferred Stock, filed with the State of Nevada on June 19, 2006.
                  (filed
                  herewith)10.01
              
              Purchase
                  Agreement, dated May 1, 2004, between A E&E Pharma Corporation,
                  Julianna 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)
   42
  10.02
              
              Amended
                  and Restated Intellectual Property Purchase Agreement, dated August
                  8,
                  2004, between China Health Holding, Inc., Julianna 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
              
              Amended
                  and Restated Intellectual Property Purchase Agreement dated as
                  of March
                  22, 2005 between China Health Holding, Inc., Xiao Fei Yu and Fei
                  Yu
                  (Incorporated by reference to Form 8-K filed with the Securities
                  and
                  Exchange Commission on March 28, 2005)10.04
              
              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)10.05
              
              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)10.06
              
              Manufacturing
                  Agreement, dated December 18, 2005, between Canadian Phytopharmaceuticals
                  Corp. and China Health World Trade Corporation (filed
                  herewith)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)10.9
              
              Executive
                  Management Services Agreement, dated June 1, 2004, between China
                  Health
                  Holding, Inc. and Julianna 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)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)
  43
  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)10.22
              
              Executive
                  Management Services Agreement dated April 28, 2005 with Julianna
                  Lu
                  (Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on May 11, 2005)10.23
              
              IR
                  Consulting Services Agreement dated May 1, 2005 with Bevitor Holding
                  Ltd.
                  and James Simpson (Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on May 11, 2005)10.24
              
              Consulting
                  Agreement dated May 1, 2005 with Dick Wu (Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on May 11, 2005)10.25
              
              Purchasing
                  Agreement for 108 100% Natural Taoist Herbal Medicinal Products,
                  Formulas
                  and Ownership entered into on March 22, 2005 between China Health
                  Holding,
                  Inc., Xiao Fei Yu and Fei Yu (Incorporated by reference to Form
                  8-K filed
                  with the Securities and Exchange Commission on March 28,
                  2005)10.26
              
              Consulting
                  Agreement dated June 9, 2005 with CEOcast, Inc. (Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on June 15, 2005)10.27
              
              The
                  China Health Holding, Inc. Incentive Stock Plan effective June
                  21, 2005.
                  (Incorporated
                  by reference to the Company’s Registration Station on Form S-8 filed with
                  the Securities and Exchange Commission on June 24,
                  2005)10.28
              
              Letter
                  of Intent entered into as of January 16, 2006 by and between China
                  Health
                  Holding, Inc. and with WangJing Hospital and WangJing Hospital
                  of China
                  Academy of Chinese Medical Sciences.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on February 2, 2006)10.29
              
              Letter
                  of Intent effective as of February 28, 2006 by and between China
                  Health
                  Holding, Inc. and Shaanxi WanAn Pharmaceutical Co. Ltd.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on February 28,
                  2006)10.30
              
              Letter
                  of Intent entered into as of April 16, 2006 by and between China
                  Health
                  Holding, Inc. and Henan Tiankang Pharmaceuticals Ltd.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on April 20, 2006)10.31
              
              Letter
                  of Intent dated as of May 2, 2006 by and between China Health Holding,
                  Inc. and Shannxi Meichen Pharmaceuticals, Ltd. (Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on May 15, 2006)10.32
              
              Letter
                  of Intent dated as of June 22, 2006 by and between China Health
                  Holding,
                  Inc. and Furen Pharmaceuticals Group Co., Ltd.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on June 27, 2006)10.33
              
              Acquisition
                  Definitive Agreement by and among Henan Furen Huaiqingtang Pharmaceuticals
                  Co. Ltd. and Henan Furen Pharmaceutical Group Co. Ltd. and the
                  shareholders of Henan Furen Huaiqingtang Pharmaceutical dated as
                  of August
                  7, 2006 (Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on August 14, 2006)10.34
              
              Acquisition
                  Definitive Agreement by and among China Health Holdings, Inc.,
                  Shaanxi
                  Meichen Pharmaceuticals Co. Ltd., Chen Meiying and the shareholders
                  of
                  Shaanxi Meichen Pharmaceutical Co. Ltd dated as of September 3
                  and
                  September 7, 2006 (Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on September 19,
                  2006)10.35
              
              Letter
                  of Intent dated as of October 11, 2006 by and between China Health
                  Holding, Inc. and BeiJing Boran Pharmaceutical Co. Ltd.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on October 16, 2006)10.36
              
              Letter
                  of Intent dated as of November 28, 2006 by and between China Health
                  Holding, Inc. and Xi'an Chunhui Pharmaceuticals Co. Ltd.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on December 6, 2006)10.37
              
              Acquisition
                  Definitive Agreement by and between China Health Holding, Inc.
                  and Xi'An
                  Meichen Pharmaceutical Co. Ltd. dated as of January 1, 2007(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on January 5,
                  2007)
   44
   10.38
              
              Binding
                  Memorandum of Understanding entered into as of January 12, 2007
                  by and
                  among China Health Holdings, Inc., Beijing Jifatang Chinese Medicine
                  Research Institute and Beijing Jifatang Chinese Medicine Research
&
                  Development Institution(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on January 19, 2007)10.39
              
              Corporate
                  Development Consulting Services Agreement by and between China
                  Health
                  Holding, Inc. and Julianna Lu dated as of January 9, 2007. (filed
                  herewith)10.40
              
              Corporate
                  Development Consulting Services Agreement by and between China
                  Health
                  Holding, Inc. and Xiao Fei Yu dated as of February 9, 2007.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on February 15,
                  2007)10.41
              
              Corporate
                  Development Consulting Services Agreement by and between China
                  Health
                  Holding, Inc. and Dr. Zheng -Lun Fan dated as of February 9,
                  2007.(Incorporated
                  by reference to the Company’s current report on Form 8-K filed with the
                  Securities and Exchange Commission on February 15,
                  2007)14.1
              
              Code
                  of Ethics31.1
              
              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 200232.1
              
              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
 
 
 **Item
        14. Principal Accountant Fees and Services.**
 
 T he
        following sets forth fees billed to us by our auditors during the fiscal
        years
        ended December 31, 2006 and 2005 for: (i) services rendered for the audit
        of our
        annual financial statements and the review of our quarterly financial
        statements, (ii) services by our auditor that are reasonably related to the
        performance of the audit or review of our financial statements and that are
        not
        reported as Audit Fees, (iii) services rendered in connection with tax
        compliance, tax advice and tax planning, and (iv) all other fees for services
        rendered.
  **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 $40,700
        and
        $22,000 for the years ended December 31, 2006 and December 31, 2005,
        respectively.
 
 **Audit
        Related Fees**
 
 We
        incurred fees of $0 and $12,500 for the years ended December 31, 2006 and
        December 31, 2005, 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, 2006 and December 31, 2005.
 
 **Audit
        Committee Pre-Approval Policies and Procedures**
  The
        Company currently does not have a designated Audit Committee, and accordingly,
        the Company’s Board of Directors’ policy is to pre-approve all audit and
        permissible non-audit services provided by the independent auditors. These
        services may include audit services, audit-related services, tax services
        and
        other services. Pre-approval is generally provided for up to one year and
        any
        pre-approval is detailed as to the particular service or category of services
        and is generally subject to a specific budget. The independent auditors and
        management are required
        to periodically report to the Company’s Board of Directors regarding the extent
        of services provided by the independent auditors in accordance with this
        pre-approval, and the fees for the services performed to date. The Board
        of
        Directors may also pre-approve particular services on a case-by-case
        basis.
   45
  
 **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.**Date: April
                2, 2007
              By:
              /s/ Julianna
                LuJulianna
                LuChief
                  Executive Officer, PrincipalFinancial
                  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*
                
                Julianna
                  Lu
              Chairman
                  of the Board of Directors
              April
                  2, 2007Chief
                  Executive Officer, and ChiefFinancial
                  Officer*/s/
                  Xiao Fei Yu*
                
                Xiao
                  Fei Yu
              President
                  and Director
              April
                  2, 2007*/s/
                  Zheng-lun Fan*
                Zheng-lun
                  Fan
              Director
              April
                  2,
                  2007
 
  
  46
  
 
 **CHINA
        HEALTH HOLDING, INC.**
 
 
 **INDEX
        TO FINANCIAL STATEMENTS**
 
 **Page**Reports
                  of Independent Registered Public Accounting Firm
              F-1Consolidated
                  Balance Sheet as of December 31, 2006
              F-3Consolidated
                  Statements of Losses for the years ended December 31, 2006 and
                  2005and
                  the period April 3, 2002 (date of inception) to December 31,
                  2006
              F-4Consolidated
                  Statement of Deficiency in Stockholders' Equity for the
                  periodApril
                  3, 2002 (date of inception) to December 31, 2006
              F-5Consolidated
                  Statements of Cash Flows for the years ended December 31, 2006
                  and 2005and
                  the period April 3, 2002 (date of inception) to December 31,
                  2006
              F-8Notes
                  to Consolidated Financial Statements
              F-9
 
 
 
 
 **R** **USSELL
        BEDFORD STEFANOU MIRCHANDANI LLP**
 **CERTIFIED
        PUBLIC ACCOUNTANTS**
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 Board
        of
        Directors
 China
        Health Holding, Inc.
 Vancouver,
        British Columbia
 
 We
        have
        audited the accompanying consolidated balance sheet of China Health Holding,
        Inc. (a development stage company) as of December 31, 2006 and the related
        consolidated statements of losses, deficiency in stockholders' equity, and
        cash
        flows for the year ended December 31, 2006. These financial statements are
        the
        responsibility of the company’s management. Our responsibility is to express an
        opinion on the financial statements based upon our audits.
 
 We
        have
        conducted our audit in accordance with auditing standards of the Public Company
        Accounting Oversight Board (United States of America). Those standards require
        that we plan and perform the audit to obtain reasonable assurance about whether
        the financial statements are free of material misstatement. An audit includes
        examining on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements. An audit also includes assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall financial statement presentation. We believe our audit
        provides a reasonable basis for our opinion.
 
 In
        our
        opinion, the financial statements referred to above present fairly, in all
        material respects, the financial position of China Health Holding, Inc. (a
        development stage company) at December 31, 2006 and the results of its
        operations and its cash flows for the year ended December 31, 2006 in conformity
        with accounting principles generally accepted in the United States of
        America. We
        express no opinion on the cumulative period from inception through December
        31,
        2006.
 
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As discussed in the Note 2 to the accompanying
        financial statements, the Company is in the development stage and has not
        established a source of revenues. This raises substantial doubt about the
        company's ability to continue as a going concern. The financial statements
        do
        not include any adjustments that might result from the outcome of this
        uncertainty.
 
 
 
 **/s/
        RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP**
 Russell
        Bedford Stefanou Mirchandani LLP
 
 
 New
        York,
        New York
 April
        2,
        2007
 
 
 F-1
 
  DALE
        MATHESON
 CARR-HILTON
        LABONTE
 CHARTERED
        ACCOUNTANTS
 
 
 
 
 REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
        the
        Stockholders and Board of Directors of China Health Holding, Inc.:
 
 We
        have
        audited the accompanying consolidated balance sheets of China Health Holding,
        Inc. (a development stage company) as of December 31, 2005 and 2004, and
        the
        consolidated statements of operations, stockholders' deficit and cash flows
        for
        the years ended December 31, 2005 and December 31, 2004 and for the period
        from
        April 3, 2002 (inception) to December 31, 2005. 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. The Company is not required
        to
        have, nor were we engaged to perform, an audit of its internal control over financial
        reporting. Our audits included consideration of internal control over financial
        reporting as a basis for designing audit procedures that are appropriate
        in the
        circumstances, but not for the purpose of expressing an opinion on the
        effectiveness of the Company's internal control over financial reporting.
        Accordingly, we express no such opinion. An audit also 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 consolidated financial statements present fairly in all material
        respects, the financial position of the Company as at December 31, 2005 and
        2004
        and the results of operations and its cash flows and the changes in
        stockholders' deficit for the years ended December 31, 2005 and December
        31,
        2004 and for the period from April 3, 2002 (inception) to December 31, 2005
        in accordance
        with accounting principles generally accepted in the United States of
        America.
 
 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
        as to
        the Company's ability to continue as a going concern. Management's plans
        in
        regard to these matters are described in Note 2(a). The financial statements
        do
        not include any adjustments that might result from the outcome of this
        uncertainty.
 
  SIGNED:
        "DALE MATHESON CARR-HILTON LABONTE"
 CHARTERED ACCOUNTANTS
 Vancouver,
        Canada.
 March
        15,
        2006
 
 
 
 F-2
 
 **CHINA
                    HEALTH HOLDING INC.****(a
                    development stage company)****CONSOLIDATED
                    BALANCE SHEET**December
                    31,
                
                December
                    31,2006
                
                2005**ASSETS****CURRENT
                      ASSETS**Cash
                
                $
                -
                
                $
                14,887Prepaid
                    expenses and other current assets
                
                
                97,759
                
                
                5,126Total
                    current assets
                
                
                97,759
                
                
                20,013**PROPERTY
                    AND EQUIPMENT**,
                    net**(Note
                    4)**
                
                
                10,369
                
                
                14,631**Intangible
                    Assets (Note 3)**
                
                
                3
                
                
                3**TOTAL
                    ASSETS**
                
                $
                108,131
                
                $
                34,647***LIABILITIES
                    AND STOCKHOLDERS’ (DEFICIT)*****CURRENT
                    LIABILITIES**Accounts
                    payable and accrued liabilities
                
                $
                35,007
                
                $
                33,785Due
                    to shareholders**(Note
                    5)**
                
                
                875,822
                
                
                584,639Total
                    current liabilities
                
                
                910,829
                
                
                618,424**COMMITMENTS
                    (Notes 3 and 9)**Preferred
                    stock, $0.001 par value, 20,000,000 shares authorized,1,250,000
                    (December 31, 2005 – 1,000,000) shares issued and outstanding**(Note
                    6)**
                
                
                1,250
                
                
                1,000Common
                    stock, $0.001 par value, 300,000,000 shares authorized106,747,060
                    (December 31, 2005 – 46,596,931) shares issued and outstanding**(Note 6)**
                
                
                106,747
                
                
                46,597Additional
                    paid-in capital
                
                
                8,496,543
                
                
                5,676,104Deferred
                    compensation**(Note
                    6 and 7)**
                
                
                (153,942
                )
                
                (257,514
                )Deficit
                    accumulated during the development stage
                
                
                (9,193,377
                )
                
                (5,996,301
                )Accumulated
                    other comprehensive loss
                
                
                (59,919
                )
                
                (53,663
                )Total
                    Stockholders’ Deficit
                
                
                (802,698
                )
                
                (583,777
                )**TOTAL
                    LIABILITIES AND STOCKHOLDERS’ (DEFICIT**)
                
                $
                108,131
                
                $
                34,647See
                    Notes to Consolidated Financial Statements
  
 F-3
 **CHINA
                    HEALTH HOLDING INC.****(a
                    development stage company)****CONSOLIDATED
                    STATEMENTS OF LOSSES AND COMPREHENSIVE LOSS**Culmulative
                    results ofFor
                    the Year
                
                For
                    the Year
                
                operations
                    fromEnded
                
                Ended
                
                April
                    3, 2002December
                    31
                
                December
                    31
                
                (Inception)2006
                
                2005
                
                to
                    December 31, 2006**SALES**
                
                
                
                
                $
                -
                
                $
                1,671
                
                $
                8,976Cost
                    of goods sold
                
                
                
                
                
                -
                
                
                245
                
                
                245-
                
                
                
                
                
                
                
                
                1,426
                
                
                8,731**EXPENSES**Advertising
                    and promotion
                
                
                
                
                
                6,045
                
                
                68,837
                
                
                121,892Amortization
                    of intangible assets
                
                
                
                
                
                -
                
                
                -
                
                
                7,125Consulting
                    fees**(Notes
                    6 and 7)**
                
                
                
                
                
                1,018,937
                
                
                1,491,753
                
                
                2,941,826Depreciation
                
                
                
                
                
                4,262
                
                
                3,894
                
                
                9,168Interest
                    and bank charges**(Note
                    8)**
                
                
                
                
                
                114,134
                
                
                47,344
                
                
                187,594Investor
                    relations
                
                
                
                
                
                96,856
                
                
                34,623
                
                
                131,479Management
                    fees**(Note
                    7)**
                
                
                
                
                
                1,004,948
                
                
                391,396
                
                
                2,205,344Office
                
                
                
                
                
                58,117
                
                
                12,913
                
                
                84,612Professional
                    fees**(Note
                    7)**
                
                
                
                
                
                259,130
                
                
                216,061
                
                
                801,235Rent
                
                
                
                
                
                21,327
                
                
                20,888
                
                
                74,896Research
                    and development**(Note
                    3)**
                
                
                
                
                
                -
                
                
                1,377,287
                
                
                1,743,593Travel
                
                
                
                
                
                12,654
                
                
                17,749
                
                
                38,824Vehicle
                
                
                
                
                
                18,099
                
                
                2,477
                
                
                25,791**TOTAL
                    EXPENSES**
                
                
                
                
                
                2,614,509
                
                
                3,685,222
                
                
                8,373,379**NET
                    LOSS FROM OPERATIONS**
                
                
                
                
                
                (2,614,509
                )
                
                (3,683,796
                )
                
                (8,364,648
                )**OTHER
                    INCOME**(**EXPENSES**)Foreign
                    exchange
                
                
                
                
                
                13,142
                
                
                21,845
                
                
                34,987Compensatory
                    element of Stock
                
                
                
                
                
                (762,865
                )
                
                -
                
                
                (762,865
                )Impairment
                    of licensing rights (Note 3)
                
                
                
                
                
                -
                
                
                -
                
                
                (182,874
                )Gain
                    (loss) on settlement of debts and issuance of shares (Notes 7
                    and
                    11)
                
                
                
                
                
                167,156
                
                
                (14,728
                )
                
                82,023**Other
                    Income (expenses)**
                
                
                
                
                
                (582,567
                )
                
                7,117
                
                
                (828,729
                )**NET
                    LOSS**
                
                
                
                
                $
                (3,197,076
                )
                $
                (3,676,679
                )
                $
                (9,193,377
                )**BASIC
                    NET LOSS PER SHARE**
                
                
                
                
                
                ($0.05
                )
                
                ($0.07
                )**WEIGHTED
                    AVERAGE NUMBER OF COMMON SHARES****OUTSTANDING**
                
                
                
                
                
                65,701,749
                
                
                52,596,919**NET
                    LOSS**
                
                
                
                
                $
                (3,197,076
                )
                $
                (3,676,679
                )Comprehensive
                    translation loss
                
                
                
                
                
                (6,256
                )
                
                (42,701
                )**Comprehensive
                    loss**
                
                
                
                
                $
                (3,203,332
                )
                $
                (3,719,380
                )See
                    Notes to Consolidated Financial Statements
 
 F-4
 
 **CHINA
                    HEALTH HOLDING
                    INC.****(a
                    development stage company)****CONSOLIDATD
                    STATEMENT OF DEFICENCY IN STOCKHOLDERS**
                  **EQUITY
                    FOR THE PERIOD APRIL 3, 2002 (DATE OF INCEPTION) THROUGH DECEMBER
                    31,
                    2006**
  **USD**DeficitDeferred
                
                
                AccumulatedAdditional
                
                
                Compensation
                
                
                During
                
                
                AccumulatedPreferred
                      Stock
                
                
                Common
                    Stock
                
                
                Paid-in
                
                
                (Restated)
                
                
                Development
                
                
                OtherNumber
                    of
                  Shares
                
                
                Amount$
                
                
                Number
                      ofShares
                
                
                Amount$
                
                
                Capital$
                
                
                (Note
                      2m)$
                
                
                Stage$
                
                
                Comp.Loss$
                
                
                Total$Issued
                    for cash at average of $0.0026 per share in June 2002
                
                
                -
                
                
                -
                
                
                22,895,000
                
                
                22,895
                
                
                35,805
                
                
                -
                
                
                -
                
                
                -
                
                
                58,700Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (71,673
                )
                
                -
                
                
                (71,673
                )Currency
                    translation adjustment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                532
                
                
                532Balance,
                    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 in November
                    2003
                
                
                -
                
                
                -
                
                
                2,530,000
                
                
                2,530
                
                
                29,770
                
                
                -
                
                
                -
                
                
                -
                
                
                32,300Issued
                    for debt at an average of $0.01 per share in November 2003
                
                
                -
                
                
                -
                
                
                3,650,000
                
                
                3,650
                
                
                32,850
                
                
                -
                
                
                -
                
                
                -
                
                
                36,500Issued
                    for consulting services at an average priceof
                    $0.076 per share in December 2003
                
                
                -
                
                
                -
                
                
                90,000
                
                
                90
                
                
                6,760
                
                
                -
                
                
                -
                
                
                -
                
                
                6,850Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (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
                
                
                -
                
                
                -
                
                
                -
                
                
                130,821Issued
                    for debt at $0.06 per share in February 2004
                
                
                -
                
                
                -
                
                
                310,000
                
                
                310
                
                
                18,490
                
                
                -
                
                
                -
                
                
                -
                
                
                18,800Issued
                    for consulting, professional and otherservices
                    at an average price of $0.25 per share in August 2004
                
                
                -
                
                
                -
                
                
                1,791,000
                
                
                1,791
                
                
                453,374
                
                
                (203,125
                )
                
                -
                
                
                -
                
                
                252,040Issued
                    for consulting, professional and otherservices
                    at an average price of $0.22 per share in October 2004
                
                
                -
                
                
                -
                
                
                375,000
                
                
                375
                
                
                80,625
                
                
                -
                
                
                -
                
                
                -
                
                
                81,000Issued
                    for consulting, professional and otherservices
                    at an average price of $0.21 per share in November 2004
                
                
                -
                
                
                -
                
                
                65,000
                
                
                65
                
                
                13,585
                
                
                -
                
                
                -
                
                
                -
                
                
                13,650Issued
                    for intellectual property (Note 3) in May 2004
                
                
                -
                
                
                -
                
                
                2,200,000
                
                
                2,200
                
                
                189,107
                
                
                -
                
                
                -
                
                
                -
                
                
                191,307Issued
                    for licensing rights (Note 3) in November 2004
                
                
                -
                
                
                -
                
                
                760,000
                
                
                760
                
                
                189,240
                
                
                -
                
                
                -
                
                
                -
                
                
                190,000Exercise
                    of options an average of $0.13 per share in August 2004
                
                
                -
                
                
                -
                
                
                500,000
                
                
                500
                
                
                64,500
                
                
                -
                
                
                -
                
                
                -
                
                
                65,000Stock
                    based compensation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,050,000
                
                
                (140,625
                )
                
                -
                
                
                -
                
                
                909,375Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,098,276
                )
                
                -
                
                
                (2,098,276
                )Currency
                    translation adjstment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,204
                )
                
                (1,204
                )Balance,
                    December 31, 2004
                
                
                -
                
                
                -
                
                
                36,522,700
                
                
                36,523
                
                
                2,293,570
                
                
                (343,750
                )
                
                (2,319,622
                )
                
                (11,262
                )
                
                (344,541
                )
  
 F-5
  Statement
                    of Changes in EquityDecember
                    31, 2006**USD**DeficitDeferred
                
                AccumulatedAdditional
                
                Compensation
                
                During
                
                AccumulatedPreferred
                    Stock
                
                Common
                    Stock
                
                Paid-in
                
                (Restated)
                
                Development
                
                OtherNumber
                    of
                
                Amount
                
                Number
                    of
                
                Amount
                
                Capital
                
                (Note
                    2m)
                
                Stage
                
                Comp.
                    Loss
                
                TotalShares
                
                $
                
                Shares
                
                $
                
                $
                
                $
                
                $
                
                $
                
                $Issued
                    for cash at average of $0.0026 per share in June 2002
                
                
                -
                
                
                -
                
                
                22,895,000
                
                
                22,895
                
                
                35,805
                
                
                -
                
                
                -
                
                
                -
                
                
                58,700Net
                    loss for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (71,673
                )
                
                -
                
                
                (71,673
                )Currency
                    translation adjustment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                532
                
                
                532Balance,
                    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 in November
                    2003
                
                
                -
                
                
                -
                
                
                2,530,000
                
                
                2,530
                
                
                29,770
                
                
                -
                
                
                -
                
                
                -
                
                
                32,300Issued
                    for debt at an average of $0.01 per share in November 2003
                
                
                -
                
                
                -
                
                
                3,650,000
                
                
                3,650
                
                
                32,850
                
                
                -
                
                
                -
                
                
                -
                
                
                36,500Issued
                    for consulting services at an average priceof
                    $0.076 per share in December 2003
                
                
                -
                
                
                -
                
                
                90,000
                
                
                90
                
                
                6,760
                
                
                -
                
                
                -
                
                
                -
                
                
                6,850Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (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
                
                
                -
                
                
                -
                
                
                -
                
                
                130,821Issued
                    for debt at $0.06 per share in February 2004
                
                
                -
                
                
                -
                
                
                310,000
                
                
                310
                
                
                18,490
                
                
                -
                
                
                -
                
                
                -
                
                
                18,800Issued
                    for consulting, professional and otherservices
                    at an average price of $0.25 per share in August 2004
                
                
                -
                
                
                -
                
                
                1,791,000
                
                
                1,791
                
                
                453,374
                
                
                (203,125
                )
                
                -
                
                
                -
                
                
                252,040Issued
                    for consulting, professional and otherservices
                    at an average price of $0.22 per share in October 2004
                
                
                -
                
                
                -
                
                
                375,000
                
                
                375
                
                
                80,625
                
                
                -
                
                
                -
                
                
                -
                
                
                81,000Issued
                    for consulting, professional and otherservices
                    at an average price of $0.21 per share in November 2004
                
                
                -
                
                
                -
                
                
                65,000
                
                
                65
                
                
                13,585
                
                
                -
                
                
                -
                
                
                -
                
                
                13,650Issued
                    for intellectual property (Note 3) in May 2004
                
                
                -
                
                
                -
                
                
                2,200,000
                
                
                2,200
                
                
                189,107
                
                
                -
                
                
                -
                
                
                -
                
                
                191,307Issued
                    for licensing rights (Note 3) in November 2004
                
                
                -
                
                
                -
                
                
                760,000
                
                
                760
                
                
                189,240
                
                
                -
                
                
                -
                
                
                -
                
                
                190,000Exercise
                    of options an average of $0.13 per share in August 2004
                
                
                -
                
                
                -
                
                
                500,000
                
                
                500
                
                
                64,500
                
                
                -
                
                
                -
                
                
                -
                
                
                65,000Stock
                    based compensation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,050,000
                
                
                (140,625
                )
                
                -
                
                
                -
                
                
                909,375Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,098,276
                )
                
                -
                
                
                (2,098,276
                )Currency
                    translation adjstment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (1,204
                )
                
                (1,204
                )Balance,
                    December 31, 2004
                
                
                -
                
                
                -
                
                
                36,522,700
                
                
                36,523
                
                
                2,293,570
                
                
                (343,750
                )
                
                (2,319,622
                )
                
                (11,262
                )
                
                (344,541
                )Issued
                    for cash at an average of $0.25 per share in February 2005
                
                
                -
                
                
                -
                
                
                1,080,000
                
                
                1,080
                
                
                268,920
                
                
                -
                
                
                -
                
                
                -
                
                
                270,000Issued
                    for intellectual rights at $0.30 per share in March 2005
                
                
                -
                
                
                -
                
                
                4,500,000
                
                
                4,500
                
                
                1,345,500
                
                
                -
                
                
                -
                
                
                -
                
                
                1,350,000Issued
                    for consulting at an average of $0.31 per share in May
                    2005
                
                
                -
                
                
                -
                
                
                400,000
                
                
                400
                
                
                123,600
                
                
                -
                
                
                -
                
                
                -
                
                
                124,000Issued
                    for consulting at an average of $0.31 per share in July
                    2005
                
                
                -
                
                
                -
                
                
                1,190,000
                
                
                1,190
                
                
                367,710
                
                
                (257,514
                )
                
                -
                
                
                -
                
                
                111,386Issued
                    for consulting at an average of $0.31 per share in September
                    2005
                
                
                -
                
                
                -
                
                
                786,690
                
                
                787
                
                
                243,087
                
                
                -
                
                
                -
                
                
                -
                
                
                243,874Issued
                    for consulting at an average of $0.31 per share in October
                    2005
                
                
                -
                
                
                -
                
                
                315,000
                
                
                315
                
                
                97,335
                
                
                -
                
                
                -
                
                
                -
                
                
                97,650Issued
                    for consulting at an average of $0.31 per share in December
                    2005
                
                
                -
                
                
                -
                
                
                1,876,210
                
                
                1,876
                
                
                560,565
                
                
                -
                
                
                -
                
                
                -
                
                
                562,441Issued
                    to settle debt at $0.15 per share in December 2005
                
                
                1,000,000
                
                
                1,000
                
                
                -
                
                
                -
                
                
                149,000
                
                
                -
                
                
                -
                
                
                -
                
                
                150,000Issued
                    to settle debt at $0.17 per share in December 2005
                
                
                -
                
                
                -
                
                
                277,753
                
                
                278
                
                
                46,940
                
                
                -
                
                
                -
                
                
                -
                
                
                47,218Exercise
                    of options at $0.10 per share in December 2005
                
                
                -
                
                
                -
                
                
                348,578
                
                
                348
                
                
                34,510
                
                
                -
                
                
                -
                
                
                -
                
                
                34,858Stock
                    based compensation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                344,667
                
                
                -
                
                
                -
                
                
                -
                
                
                344,667Finder's
                    fee paid
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (25,000
                )
                
                -
                
                
                -
                
                
                -
                
                
                (25,000
                )Shares
                    cancelled at $0.25 per share
                
                
                -
                
                
                -
                
                
                (700,000
                )
                
                (700
                )
                
                (174,300
                )
                
                175,000
                
                
                -
                
                
                -
                
                
                -Amortize
                    deferred compensation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                168,750
                
                
                -
                
                
                -
                
                
                168,750Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (3,676,679
                )
                
                -
                
                
                (3,676,679
                )Currency
                    translation adjustment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (42,401
                )
                
                (42,401
                )Balance,
                    December 31, 2005
                
                
                1,000,000
                
                
                1,000
                
                
                46,596,931
                
                
                46,597
                
                
                5,676,104
                
                
                (257,514
                )
                
                (5,996,301
                )
                
                (53,663
                )
                
                (583,777
                )Issued
                    for deferred ompensation at an average price $0.129 per share
                    in Janaury
                    2006
                
                
                -
                
                
                -
                
                
                1,134,710
                
                
                1,135
                
                
                146,030
                
                
                (147,165
                )Issued
                    for deferred ompensation at an average price $0.141 per share
                    in February
                    2006
                
                
                
                
                
                
                
                
                540,000
                
                
                540
                
                
                75,960
                
                
                (76,500
                )
                
                -
                
                
                -
                
                
                -Issued
                    for consulting, professional and other servicesat
                    an average price $0.137 per share in February 2006
                
                
                
                
                
                
                
                
                100,000
                
                
                100
                
                
                10,900
                
                
                
                
                
                
                
                
                
                
                
                11,000Stock
                    dividend 1 for 4 in February 2006
                
                
                250,000
                
                
                250
                
                
                12,170,419
                
                
                12,170
                
                
                (12,420
                )
                
                -
                
                
                -
                
                
                -
                
                
                -Issued
                    for consulting, professional and other servicesat
                    an average price $0.102 per share in April 2006
                
                
                -
                
                
                -
                
                
                950,000
                
                
                950
                
                
                96,300
                
                
                -
                
                
                -
                
                
                -
                
                
                97,250Issued
                    for consulting, professional and other servicesat
                    an average price $0.10 per share in May 2006
                
                
                -
                
                
                -
                
                
                250,000
                
                
                250
                
                
                24,750
                
                
                -
                
                
                -
                
                
                -
                
                
                25,000Issued
                    for consulting, professional and other servicesat
                    an average price $0.095 per share in June 2006
                
                
                -
                
                
                -
                
                
                750,000
                
                
                750
                
                
                70,500
                
                
                -
                
                
                -
                
                
                -
                
                
                71,250Stock
                    issued as donation at $0.03 per share in September 2006
                
                
                -
                
                
                -
                
                
                100,000
                
                
                100
                
                
                2,900
                
                
                -
                
                
                -
                
                
                -
                
                
                3,000
  F-6
  Stock
                    issued for deferred compensation$0.033
                    per share in September 2006
                
                
                -
                
                
                -
                
                
                3,150,000
                
                
                3,150
                
                
                120,225
                
                
                (123,375
                )
                
                -
                
                
                -
                
                
                -Issued
                    for consulting, professional and other servicesat
                    an average price $0.039 per share in September 2006
                
                
                -
                
                
                -
                
                
                2,665,000
                
                
                2,665
                
                
                98,785
                
                
                -
                
                
                -
                
                
                -
                
                
                101,450Issued
                    for prepaid expenses in September
                
                
                
                
                
                
                
                
                400,000
                
                
                400
                
                
                11,600
                
                
                
                
                
                
                
                
                
                
                
                12,000Stock
                    issued to settle debt at average price$0.03
                    per share in October 2006
                
                
                -
                
                
                -
                
                
                10,000,000
                
                
                10,000
                
                
                290,000
                
                
                -
                
                
                -
                
                
                -
                
                
                300,000Issued
                    for consulting, professional and other servicesat
                    an average price $0.036 per share in October 2006
                
                
                -
                
                
                -
                
                
                500,000
                
                
                500
                
                
                15,250
                
                
                -
                
                
                -
                
                
                -
                
                
                15,750Issyed
                    for prepaid expenses in October 2006
                
                
                
                
                
                
                
                
                3,000,000
                
                
                3,000
                
                
                108,000
                
                
                
                
                
                
                
                
                
                
                
                111,000Stock
                    issued to settle debt at average price$0.025
                    per share in November 2006
                
                
                -
                
                
                -
                
                
                1,750,000
                
                
                1,750
                
                
                42,000
                
                
                -
                
                
                -
                
                
                -
                
                
                43,750Issued
                    for consulting, professional and other servicesat
                    an average price $0.025 per share in November 2006
                
                
                -
                
                
                -
                
                
                7,585,000
                
                
                7,585
                
                
                182,040
                
                
                -
                
                
                -
                
                
                -
                
                
                189,625Stock
                    issued to settle debt at average price$0.025
                    per share in December 2006
                
                
                -
                
                
                -
                
                
                1,700,000
                
                
                1,700
                
                
                40,800
                
                
                -
                
                
                -
                
                
                -
                
                
                42,500Issued
                    for consulting, professional and other servicesat
                    an average price $0.025 per share in December 2006
                
                
                -
                
                
                -
                
                
                14,280,000
                
                
                14,280
                
                
                345,470
                
                
                -
                
                
                -
                
                
                -
                
                
                359,750Cancellation
                    of stock and associated dividend
                
                
                -
                
                
                -
                
                
                (875,000
                )
                
                (875
                )
                
                (174,125
                )
                
                -
                
                
                -
                
                
                -
                
                
                (175,000
                )Stock options
                    compensation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                562,609
                
                
                -
                
                
                -
                
                
                -
                
                
                562,609Amortization
                    of deferred expense
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                450,612
                
                
                
                
                
                
                
                
                450,612Issue
                    of warrants for services
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                762,865
                
                
                
                
                
                
                
                
                
                
                
                762,865Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (3,197,076
                )
                
                -
                
                
                (3,197,076
                )Currency
                    translation adjustment
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (6,256
                )
                
                (6,256
                )Balance,
                    December 31, 2006
                
                
                1,250,000
                
                
                1,250
                
                
                106,747,060
                
                
                106,747
                
                
                8,496,543
                
                
                (153,942
                )
                
                (9,193,377
                )
                
                (59,919
                )
                
                (802,698
                )See
                    Notes to Consolidated Financial Statements
 
 F-7
  **CHINA
                    HEALTH HOLDING INC.****(a
                    development stage company)****CONSOLIDATED
                    STATEMENTS OF CASH FLOWS**
  For
                    the Year
                
                For
                    the Year
                
                Culmulative
                    results ofEnded
                
                Ended
                
                operations
                    fromDecember
                    31
                
                December
                    31
                
                April
                    3, 2002 (Inception)2006
                
                2005
                
                to
                    December 31, 2006**OPERATING
                    ACTIVITIES**Net
                    loss
                
                $
                (3,197,076
                )
                $
                (3,676,679
                )
                $
                (9,193,377
                )Adjustments
                    to reconcile net loss to cash usedin
                    operating activities:Accrued
                    interest
                
                
                111,410
                
                
                45,307
                
                
                181,570Amortization
                    of intangible assets
                
                
                -
                
                
                -
                
                
                7,125Stock
                    options issued for services
                
                
                562,609
                
                
                -
                
                
                562,609Depreciation
                
                
                4,262
                
                
                3,894
                
                
                9,168Impairment
                    of licensing rights
                
                
                -
                
                
                -
                
                
                182,874License
                    rights
                
                
                -
                
                
                1,359,999
                
                
                1,359,999(Gain)
Loss
                    on settlement of debts and
                
                
                (175,000
                )
                
                14,071
                
                
                (90,524
                )issuance
                    of sharesNon
                    cash expenses paid with shares
                
                
                874,075
                
                
                1,467,121
                
                
                3,203,590Stock-based
                    compensation
                
                
                450,612
                
                
                344,667
                
                
                1,704,654Warrants
                  issued for compansation
                
                
                762,865
                
                
                -
                
                
                762,865Changes
                    in operating assets and liabilitiesPrepaid
                    expenses
                
                
                30,367
                
                
                23,841
                
                
                53,376Accounts
                    payable and accrued liabilities
                
                
                1,222
                
                
                8,952
                
                
                43,387Net
                    cash used in operating activities
                
                
                (574,654
                )
                
                (408,827
                )
                
                (1,212,684
                )**INVESTING
                    ACTIVITIES**Purchase
                    of property and equipment
                
                
                -
                
                
                (13,392
                )
                
                (19,536
                )Net
                    cash used in investing activities
                
                
                -
                
                
                (13,392
                )
                
                (19,536
                )**FINANCING
                    ACTIVITIES**Net
                    advances from shareholders
                
                
                566,023
                
                
                230,996
                
                
                778,442Net
                    cash provided by financing activities
                
                
                566,023
                
                
                475,996
                
                
                1,292,139**EFFECT
                    OF EXCHANGE RATE CHANGES**
                
                
                (6,256
                )
                
                (42,401
                )
                
                (59,919
                )**NET
                    (DECREASE) INCREASE IN CASH**
                
                
                (14,887
                )
                
                11,376
                
                
                0**CASH,
                    BEGINNING OF YEAR**
                
                
                14,887
                
                
                3,511
                
                
                -**CASH,
                    END OF YEAR**
                
                $
                0
                
                $
                14,887
                
                $
                0See
                    Notes to Consolidated Financial Statements
   F-8
 **CHINA
        HEALTH HOLDING INC.**
 **(a
        development stage company)**
 
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
        31, 2006
  **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 as defined by Statement of Financial
                  Accounting
                  Standards No. 7 ("SFAS No. 7") and is engaged in the development
                  of
                  potential merger and acquisition opportunities with major pharmaceutical
                  companies in PR China and ultimately the development of a pharmaceutical
                  drug pipeline and technology. (Note 9)
  To
        date,
        the Company has generated nominal sales revenues, has incurred expenses and
        has
        sustained losses. Consequently, its operations are subject to all the risks
        inherent in the establishment of a new business enterprise. For the period
        from
        inception through December 31, 2006, the Company has accumulated losses of
        $
        9,193,377.
 **2.**  **SIGNIFICANT
        ACCOUNTING POLICIES**
 
 a)  Basis
        of
        presentation
  These
        consolidated financial statements have been presented in U.S. dollars and
        prepared in accordance with generally accepted accounting principles in the
        United States. 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 a working capital deficiency
        of
        $813,070 and a stockholders’ deficit of $802,698 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 of its intellectual property, and marketing of its products.
        Such
        outside capital will include proceeds from the issuance of equity securities
        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.
 
 F-9
 
 **CHINA
        HEALTH HOLDING INC.**
 **(a
        development stage company)**
 
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
        31, 2006
 
  
 **2.**  **SIGNIFICANT
        ACCOUNTING POLICIES - CONT’D**
 
 
 a)  Basis
        of
        presentation (continued)
 
 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)  Consolidation
  The
        consolidated financial statements include the accounts of the Company and
        its
        wholly-owned subsidiaries, China Health Pharmaceutical Corporation and China
        Health World Trade Corporation. Those subsidiaries have not yet commenced
        operations and have no significant assets, liabilities, revenues or expenses.
 
 c)  Use
        of
        estimates and assumptions
  Preparation
        of the Company’s consolidated financial statements in conformity with accounting
        principles generally accepted in the United States requires management to
        make
        estimates and assumptions that affect certain reported amounts and disclosures.
        Accordingly, actual results could differ from those estimates.
 
 
 d)  Property
        and equipment
 
 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)  Revenue
        recognition
 
 The
        Company’s revenue in accordance with the guidance of the SEC’s staff Accounting
        Bulletin SAB No 104 (SAB104) which supersedes SAB No 101 I order to encompass
        EITF No 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21)
        .
        The Company ‘primarily derives its revenue 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)  Net
        loss
        per common share
 
 Basic
        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 loss per share reflects 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.
 
 
 F-10
 
  
 **CHINA
        HEALTH HOLDING INC.**
 **(a
        development stage company)**
 
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
        31, 2006
   **2.**  **SIGNIFICANT
        ACCOUNTING POLICIES - CONT’D**
 
 g)  Fair
        value of financial instruments
 
 In
        accordance with the requirements of SFAS No.107, **“** Disclosures
        about Fair Value of Financial Instruments”, 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, accounts payable
        and
        amounts due to shareholders, approximate carrying value due to the short-term
        maturity of the instruments.
 
 h)  Intangible
        assets
 
 The
        Company has adopted the provision of the Statement of Financial Accounting
        Standards (“SFAS”) No.142, “Goodwill and Intangible Assets”, which revises the
        accounting for purchased goodwill and intangible assets. Under SFAS No. 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. 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 No. 144, “Accounting for the Impairment on Disposal of
        Long-Lived Assets”. 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. Management has
        determined that it is not possible at this time to estimate future cash flows
        from these assets and has recorded an impairment charge of $182,874 in 2004
        to
        reduce the carrying value of these intangible assets to $1.
 
 Management
        has determined that the Company’s proprietary rights and formulas described in
        Note 3 c) have indefinite lives and as such are not subject to amortization.
        Management has, however, determined that it is not possible at this time
        to
        estimate future cash flows from these assets and has recorded an impairment
        charge of $1,359,999 in 2005 to reduce the carrying value to $1.
 
 i)  Foreign
        currency translation
 
 The
        Company’s functional currency is the Canadian dollar. The financial statements
        are translated to United States dollars in accordance with SFAS No. 52, “Foreign
        Currency Translation”, using period-end rates of exchange for assets and
        liabilities, and average rates of exchange for the year for revenues and
        expenses. Translation gains (losses) are recorded in accumulated other
        comprehensive income (loss) as a component of stockholders’ deficit. Gains and
        losses arising on translation or settlement of foreign currency denominated
        transactions or balances are included in the determination of income. Foreign
        currency transactions are primarily undertaken in Canadian dollars. The Company
        has not, to the date of these consolidated financials statements, entered
        into
        derivative instruments to offset the impact of foreign currency
        fluctuations.
 
 
 
 F-11
 
  **CHINA
        HEALTH HOLDING INC.**
 **(a
        development stage company)**
 
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
        31, 2006
 
   
 **2.**  **SIGNIFICANT
        ACCOUNTING POLICIES - CONT’D**
 
 j)  Income
        taxes
 
 The
        Company follows SFAS
        No.
        109 ,
        “Accounting for Income Taxes”, using 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, 2006, full deferred tax asset valuation allowance has been provided
        and no deferred tax asset benefit has been recorded.
 
 k)  Stock-based
        compensation
 
 Prior
        to
        January 1, 2006, the Company accounted for stock-based awards under the
        recognition and measurement provisions of Accounting Principles Board Opinion
        No. 25, “Accounting for Stock Issued to Employees” using the intrinsic value
        method of accounting, under which compensation expense was only recognized
        if
        the exercise price of the Company’s employee stock options was less than the
        market price of the underlying common stock on the date of grant. Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS No. 123R “Share Based Payments”, using the modified retrospective
        transition method. There was no effect on the Company’s reported loss from
        operations, cash flows or loss per share as a result of adopting SFAS No
        123R.
  December
                    31, 2005Net
                    Loss as reported
                
                
                ($3,676,679
                )Add;
                    Stock based compensation expense included inNet
                    loss as reported
                
                
                344,667Deduct
                    Stock based compensation expense determined underFair
                    value method
                
                
                (
                    581,264
                )Net
                    loss proforma
                
                
                $3,913,276Net
                    loss per share -basic and diluted as reported
                
                
                (.0.07
                )Net
                    loss per share -basic and diluted as proforma
                
                
                (.0.07
                )
 The
        Company accounts for equity instruments in exchange for the receipt of goods
        and
        services from other than employees in accordance with SFAS 123 and the
        conclusions reached by the Emerging Issues Task Force (EITF) in Issue No
        96-18,
“accounting for Equity Instruments That Are Issued to Other than Employees
        for
        Acquiring or in Conjunction with Selling Goods and or Services”. Costs are
        measured at the estimated fair market value of the consideration received
        or the
        estimated fair market value of the equity instruments issued, whichever is
        more
        reliably measurable. The value of the equity instruments issued for
        consideration other than employee services is determined on the earlier of
        the
        performance commitment or completion of performance by the provider of goods
        or
        services as defined by EITF No 96-18.
 
 F-12
 
  **CHINA
        HEALTH HOLDING INC.**
 **(a
        development stage company)**
 
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
        31, 2006
 
  
 **2.**  **SIGNIFICANT
        ACCOUNTING POLICIES - CONT’D**
  
 l)  Recent
        accounting pronouncements
  In
        September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
        Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
        No. 87, 88, 106, and 132(R)”. This statement requires employers to recognize the
        over funded or under funded status of a defined benefit postretirement plan
        (other than a multiemployer plan) as an asset or liability in its statement
        of
        financial position and to recognize changes in that funded status in the
        year in
        which the changes occur through comprehensive income of a business entity
        or
        changes in unrestricted net assets of a not-for-profit organization. This
        statement also requires an employer to measure the funded status of a plan
        as of
        the date of its year-end statement of financial position, with limited
        exceptions. The provisions of SFAS No. 158 are effective for employers with
        publicly traded equity securities as of the end of the fiscal year ending
        after
        December 15, 2006. The adoption of this statement is not expected to have
        a
        material effect on the Company's future reported financial position or results
        of operations.
  In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
        objective of SFAS 157 is to increase consistency and comparability in fair
        value
        measurements and to expand disclosures about fair value measurements. SFAS
        157
        defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles, and expands disclosures about fair
        value measurements. SFAS 157 applies under other accounting pronouncements
        that
        require or permit fair value measurements and does not require any new fair
        value measurements. The provisions of SFAS No. 157 are effective for fair
        value
        measurements made in fiscal years beginning after November 15, 2007. The
        adoption of this statement is not expected to have a material effect on the
        Company's future reported financial position or results of
        operations.
  In
        June
        2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
        No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB
        Statements No. 109”. FIN 48 clarifies the accounting for uncertainty in income
        taxes by prescribing a two-step method of first evaluating whether a tax
        position has met a more likely than not recognition threshold and second,
        measuring that tax position to determine the amount of benefit to be recognized
        in the financial statements. FIN 48 provides guidance on the presentation
        of
        such positions within a classified statement of financial position as well
        as on
        derecognition, interest and penalties, accounting in interim periods,
        disclosure, and transition. FIN 48 is effective for fiscal years beginning
        after
        December 15, 2006. The adoption of this statement is not expected to have
        a
        material effect on the Company's future reported financial position or results
        of operations.
  In
        March
        2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
        Financial Assets, an amendment of FASB Statement No. 140, Accounting for
        Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities". This statement requires all separately recognized servicing
        assets and servicing liabilities be initially measured at fair value, if
        practicable, and permits for subsequent measurement using either fair value
        measurement with changes in fair value reflected in earnings or the amortization
        and impairment requirements of Statement No. 140. The subsequent measurement
        of
        separately recognized servicing assets and servicing liabilities at fair
        value
        eliminates the necessity for entities that manage the risks inherent in
        servicing assets and servicing liabilities with derivatives to qualify for
        hedge
        accounting treatment and eliminates the characterization of declines in fair
        value as impairments or direct write-downs. SFAS No. 156 is effective
        for an entity's first fiscal year beginning after September 15,
        2006.  This adoption of this statement is not expected to have a
        significant effect on the Company’s future reported financial position or
        results of operations.
  In
        February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
        Financial Instruments-an amendment of FASB Statements No. 133 and 140”, to
        simplify and make more consistent the accounting for certain financial
        instruments. SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative
        Instruments and Hedging Activities”, to permit fair value remeasurement for any
        hybrid financial instrument with an embedded derivative that otherwise would
        require bifurcation, provided that the whole instrument is accounted for
        on a
        fair value basis. SFAS No. 155 amends SFAS No. 140, “Accounting for the
        Impairment or Disposal of Long-Lived Assets”, to allow a qualifying
        special-purpose entity to hold a derivative financial instrument that pertains
        to a beneficial interest other than another derivative financial instrument.
        SFAS No. 155 applies to all financial instruments acquired or issued after
        the
        beginning of an entity's first fiscal year that begins after September 15,
        2006,
        with earlier application allowed. This standard is not expected to have a
        significant effect on the Company’s future reported financial position or
        results of operations.
  In February 2007, the FASB issued SFAS No. 159,
 "The Fair Value Option for Financial Assets and Financial
          Liabilities."
          SFAS 159 permits entities to choose to measure many financial instruments,
          and
          certain other items, at fair value. SFAS 159 applies to reporting periods
          beginning after November 15, 2007. The adoption of SFAS 159 is not expected
          to
          have a material impact on the Company's financial condition or results
          of
          operations.
 
 
 F-13
 
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
 
 
 
 (m)
          Research and Development
 
 Research
          and development costs consist of expenditures for the present and future
          patents
          and technology, which are not capitalizable.
 
 **(**n)
          Advertising
 
 We
          charge
          the costs of advertising to expense as incurred. for the years ended December
          31, 2006 and 2005, advertising costs were $6,045 and $68,837,
          respectively.
 F-14
  
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
  
 **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-
                      Due to shareholders
                  
                  
                  -175,000$
                  366,307
 The
          amount due to shareholders bears interest at 10% per annum, is unsecured
          and has
          no specific terms of repayment. 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
          research and development costs during the year ended December 31,
          2004.
 
 
 F-15
 
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
 
 **3.**  **INTANGIBLE
          ASSETS - CONT’D**
 
 
 b)
                Licensing
                    rights agreement
 On
                    March 9, 2004, the Company entered into an initial licensing
                    agreement
                    (the “Cordyceps Agreement”) with Hotway Nutraceuticals Canada Co., Ltd.
                    (“Hotway”), a British Columbia company. 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 Cordyceps 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 Cordyceps 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.
 
 On
          March
          9, 2004, the Company entered into another licensing agreement (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 the De-Daibe 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-16
  
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
  
 **3.**  **INTANGIBLE
          ASSETS - CONT’D**
 
 
 b)
                Licensing
                    rights agreement - cont’d
 
 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 supersedes 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.
 
 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
          the Exclusive Licensing Agreements. The Company charged amortization of
          $7,125
          to operations for the year ended 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 during the year ended
          December
          31, 2004 leaving a carrying value of $1.
 
 During
          2005, this licensing agreement was cancelled and the 760,000 shares issued
          in
          2004 are to be returned to the Company and cancelled.
 
 c)
                Asset
                    purchase agreement
 
 Pursuant
          to an asset purchase agreement dated March 22, 2005, the Company acquired
          from
          the Company’s shareholders intellectual rights to 108 “100% Natural Taoist
          Herbal Medicinal Products” that comprise the Company’s Taoist Medicine product
          lines. In exchange for the rights, the Company agreed to pay total consideration
          as follows:
 -
                      4,500,000 common shares at a fair value of $0.30 per share
                  
                  
                  
                  
                  $
                  1,350,000-Payable
                      to shareholders
                  
                  
                  -
                  
                  
                  10,000$
                  1,360,000
 In
          addition, the Company agreed to pay the vendors a combined total royalty
          equal
          to 5% of annual gross sales of the products until March 22, 2039.
 
 For
          accounting purposes, the Company has recorded the cost of acquiring the
          intellectual rights 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 $1,359,999 has been expensed as research and
          development costs during the year ended December 31, 2005.
 F-17
  **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
 
 
 **4.**  **PROPERTY
          AND EQUIPMENT**
 
 
 Property
          and equipment consists of the following:
 
 December
                    31,
                
                December
                    31,2006
                  $
                
                2005
                  $Computer
                
                
                16,688
                
                
                16,688Furniture
                    and Fixtures
                
                
                2,849
                
                
                2,84919,537
                
                
                19,537Less:
                    accumulated depreciation
                
                
                (9,168
                )
                
                (4,906
                )10,369
                
                
                14,631
  
 **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).
  
 **6.**  **CAPITAL
          STOCK**
 
 
 The
          authorized capital of the Company consists of 300,000,000 voting common
          shares
          with $0.001 par value and 20,000,000 voting preferred shares with $0.001
          par
          value. On March 28, 2005, the Company had increased the authorized common
          shares
          from 55,000,000 shares to 300,000,000 shares.
 
 The
          preferred stock has a stated value of $0.15 per share and a liquidation
          preference over the Company's common stock. Holders of Series A preferred
          stock
          are entitled to two votes for each share of Series A preferred stock owned.
          Each
          share of Series A preferred stock is convertible, at the option of the
          holder,
          into two shares of common stock, commencing two years after the date of
          issuance, provided the market price of the common stock is not below $1.00
          per
          share. Additionally, if prior to two years from the date of issue, there
          is a
          sale or other disposition of all or substantially all of the Company's
          assets, a
          transaction or series of related transactions in which more than 50% of
          the
          voting power of the Company is disposed of, or upon a consolidation, merger
          or
          other business combination where the Company is not the survivor, then
          immediately prior to such event each holder of Series A preferred stock
          may
          convert any or all of such holder's shares of Series A preferred stock
          into
          common stock.
 
 On
          February 21, 2006, the Company filed a Certificate of Designation, Powers
          Preferences and Rights of Series A preferred stock which authorized the
          Company
          to issue up to 1,000,000 shares of Series A preferred stock with a par
          value of
          $0.001 per share. On June 16, 2006 the Company approved an increase in
          the
          number of authorized Series A Preferred stock to 2,500,000 with the same
          par
          value.
  During
              the period ended December 31, 2006, the Company issued a total of 27,180,000
              common shares for services at an average of $0.032 per share for a
              total
              consideration of $871,075.
 
 On
          February 16, 2006, the Company declared a stock dividend on the basis of
          one new
          share of common stock for every four shares of common stock outstanding,
          and one
          share of Series A preferred stock for every four shares of Series A preferred
          stock outstanding. The record date was February 28, 2006 and the payment
          date
          was March 17, 2006.
  During
          the year the year ended December 31, 2006 the Company issued 4,824,710
          common
          shares at an average price of $0.072 for deferred compensation for
          $347,040.
  During
          the year ended December 31, 2006 the Company issued 13,450,000 common shares
          against the issuances of debt and accounts payable at an average rate of
          $0.029
          for cosultation services of $386,250.
  During
          the year the Company issued 3,400,000 common shares at an average rate
          of $0.036
          applied against pre-paid expenses of $123,000
  F-18
  **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
  
 **6.**
                **CAPITAL
                    STOCK - CONT’D**
 
 
 The
          Company has granted stock options as follows:
 **Number
                    of Options**
                
                **Weighted
                    Average Exercise price**
                  **$**
                
                **Weighted
                    Average Remaining Contractual Life**Balance,
                    December 31, 2004
                
                6,600,000
                
                0.11
                
                3.33
                    yearsIssued
                    during the period
                
                3,727,7530
                
                0.63
                
                -Exercised
                    during the period
                
                (348,578
                )
                0.10Cancelled
                    during the period
                
                (1,650,000
                )
                0.13
                
                -Expired
                    during the period
                
                (350,000
                )
                0.10
                
                -Balance
                    December 31, 2005
                
                
                7,979,175
                
                
                0.15
                
                
                2.81
                      yearsIssued
                    during the period
                
                
                6,650,000
                
                
                0.20
                
                
                -Cancelled
                    during the period
                
                
                (1,000,000
                )
                
                0.20
                
                
                -Expired
                    during the period
                
                
                (900,000
                )
                
                0.30
                
                
                -Balance,
                    December 31, 2006
                
                
                12,729,175
                
                
                0.19
                
                
                2.22
                    years
 
 a)
                On
                    June 12, 2006, the Company increased the number of shares of
                    common stock
                    of the Company subject to the Company’s 2005 stock Incentive plan from
                    3,900,000 to 9,000,000.
 
 b)
                On
                    January 22, 2006, the Company granted 1,000,000 stock options
                    to a
                    consultant with an exercise price of $0.20 per share subject
                    to immediate
                    vesting. Stock-based compensation of $54,850 was recorded as
                    consulting
                    expense and $57,031as deferred compensation during the year ended
                    December
                    31, 2006. The fair value of the stock options was estimated by
                    application
                    of the fair value method using Black Scholes option pricing model.
                    Assumptions used in this model were as
                    follows:
 
 Risk-free
                    interest rate
                4.26%Dividend
                    yield
                0%Volatility
                    factor
                272%Expected
                    option life
                2
                    years
 
 c)
                On
                    January 22, 2006, the Company granted 1,000,000 stock options
                    to a
                    consultant with an exercise price of $0.20 per share subject
                    to immediate
                    vesting. Stock-based compensation of $36,158 was recorded as
                    consulting
                    expense and $75,295 as deferred compensation during the year
                    ended
                    December 31, 2006. The fair value of the stock options was estimated
                    by
                    application of the fair value method using Black Scholes option
                    pricing
                    model. Assumptions used in this model were as
                    follows:
 
 Risk-free
                    interest rate
                4.26%Dividend
                    yield
                0%Volatility
                    factor
                272%Expected
                    option life
                2.92
                    years
 
  F-19
  **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
  
 **6.**
                **CAPITAL
                    STOCK - CONT’D**
 
 
 d)
                On
                    January 22, 2006, the Company granted 2,500,000 stock options
                    to the
                    President of the Company with an exercise price of $0.20 per
                    share subject
                    to immediate vesting. Stock-based compensation of $276,191 was
                    recorded as
                    consulting during the year ended December 31, 2006. The fair
                    value of the
                    stock options was estimated by application of the fair value
                    method using
                    Black Scholes option pricing model. Assumptions used in this
                    model were as
                    follows:
 
 Risk-free
                    interest rate
                4.21%Dividend
                    yield
                0%Volatility
                    factor
                272%Expected
                    option life
                4
                    years
 
 e)
                On
                    January 28, 2006, the Company granted 1,000,000 stock options
                    to a
                    consultant with an exercise price of $0.20 per share subject
                    to immediate
                    vesting. Stock-based compensation of $83,342 was recorded as
                    consulting
                    expense and $95,689 as deferred compensation during the year
                    ended
                    December 31, 2006. The fair value of the stock options was estimated
                    by
                    application of the fair value method using Black Scholes option
                    pricing
                    model. Assumptions used in this model were as
                    follows:
 
 Risk-free
                    interest rate
                4.38%Dividend
                    yield
                0%Volatility
                    factor
                270%Expected
                    option life
                2
                    years
 
 f)
                On
                    February 1, 2006, the Company granted 1,000,000 stock options
                    to a
                    consultant with an exercise price of $0.20 per share subject
                    to immediate
                    vesting. Stock-based compensation of $109,453 was recorded as
                    consulting
                    expense and $127,178 as deferred compensation during the year
                    ended
                    December 31, 2006. The fair value of the stock options was estimated
                    by
                    application of the fair value method using Black Scholes option
                    pricing
                    model. Assumptions used in this model were as
                    follows:
 
 Risk-free
                    interest rate
                4.47%Dividend
                    yield
                0%Volatility
                    factor
                269%Expected
                    option life
                2
                    years
 
 g)
                On
                    February 7, 2006, the Company granted 150,000 stock options to
                    a
                    consultant with an exercise price of $0.30 per share subject
                    to immediate
                    vesting. Stock-based compensation of $12,959 was recorded as
                    consulting
                    expense and $7,783 as deferred compensation during the year ended
                    December
                    31, 2006. The fair value of the stock options was estimated by
                    application
                    of the fair value method using Black Scholes option pricing model.
                    Assumptions used in this model were as
                    follows:
 
 Risk-free
                    interest rate
                4.55%Dividend
                    yield
                0%Volatility
                    factor
                266%Expected
                    option life
                1
                    year
 
 F-20
  **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
  **6.**
                **CAPITAL
                    STOCK - CONT’D**
  
 h)
                During
                    the year ended December 31, 2006, the Company decreased the exercise
                    price
                    of 100,000 stock options granted to a consultant during the year
                    ended
                    December 31, 2005, from $1.00 per share to $0.30 per share. Stock-based
                    compensation of $1625 was recorded as consulting expense and
                    $976 as
                    deferred compensation during year ended December 31, 2006. The
                    fair value
                    of the stock options was estimated by application of the fair
                    value method
                    using Black Scholes option pricing model. Assumptions used in
                    this model
                    were as follows:
 
 Risk-free
                    interest rate
                4.55%Dividend
                    yield
                0%Volatility
                    factor
                266%Expected
                    option life
                1
                    year
 
 i)
                During
                    the year ended December 31, 2006, the Company decreased the exercise
                    price
                    of 100,000 stock options granted to a consultant during the year
                    ended
                    December 31, 2005, from $1.00 per share to $0.30 per share. Stock-based
                    compensation of $1,221 was recorded as consulting expense and
                    $755 as
                    deferred compensation during the year ended December 31, 2006.
                    The fair
                    value of the stock options was estimated by application of the
                    fair value
                    method using Black Scholes option pricing model. Assumptions
                    used in this
                    model were as follows:
 
 Risk-free
                    interest rate
                4.59%Dividend
                    yield
                0%Volatility
                    factor
                269%Expected
                    option life
                1
                    year
 
 j)
                On
                    May 1, 2006, the Company increased the exercise price of 250,000
                    stock
                    options granted to a consultant from $0.30 to $0.50 per share
                    for 125,000
                    stock options and $1.00 per share for the remaining 125,000 stock
                    options.
 
 The
          Company has issued share purchase warrants as follows:
 2006
                
                2005Number
                
                Weighted
                    Average Exercise Price
                
                Number
                
                Weighted
                    Average Exercise PriceOutstanding
                    at beginning of year
                
                
                1,180,000
                
                $
                0.70
                
                
                339,000
                
                $
                0.56Issued
                    during the year
                
                
                31,650,000
                
                
                0.15
                
                
                1,080,000
                
                
                0.75Expired
                    during the year
                
                
                0
                
                
                0.15
                
                
                239,000
                
                
                0.75Balance
                    at End of Year
                
                
                31,750,000
                
                $
                0.15
                
                
                1,180,000
                
                $
                0.70
 
 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 nine months of the date the Company's
                    shares
                    commence trading on a United States Stock exchange. These warrants
                    were
                    not exercised, and expired in full during fiscal 2005.
 
 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.
 
 F-21
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
 **7.**
                **SUPPLEMENTARY
                    NON-CASH INFORMATION**
 
 
 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. These warrants were not exercised,
                    and
                    expired in full during fiscal 2005.
 
 iv)
                During
                    2005, the Company issued 1,080,000 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. These warrants
                    were
                    not exercised, and expired in full during fiscal the period ended
                    September 30, 2006.
 
 v)
                During
                    2006, the Company issued 21,650,000 warrants at $0.20 per unit.
                    Each
                    warrant entitles the holder to purchase an additional common
                    share for
                    $0.20 and must be exercised within two years of the date of issuance.
                    The
                    Company issued 10,000,000 warrants at $0.10 per unit. Each warrant
                    entitles the holder to purchase an additional common share for
                    $0.10 and
                    must be exercised within two years of the date of issuance.
 
 The
          Company entered into the following non-cash transactions:
   a.
                On
                    December 30, 2006, the Company issued 2,000,000 shares of common
                    stock
                    with a fair value of $.025 per share for consulting services;
                    $50,000 is
                    included in consulting services for
                    2006.
  b.
                On
                    December 30, 2006, the Company issued 1,000,000 shares of common
                    stock
                    with a fair value of $.025 per share for consulting services;
                    $25,000 is
                    included in consulting services for
                    2006.
  c.
                On
                    December 30, 2006, the Company issued 300,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $7,500
                    is
                    included in consulting services for
                    2006.
  d.
                On
                    December 30, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $3,750
                    is
                    included in consulting services for
                    2006.
  e.
                On
                    December 30, 2006, the Company issued 800,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $20,000
                    is
                    included in consulting services for
                    2006.
  f.
                On
                    December 29, 2006, the Company cancelled 875,000 shares of common
                    stock
                    with a fair value of $.025 per share due to cancellation of
                    services.
  g.
                On
                    December 29, 2006, the Company issued 880,000 shares of common
                    stock with
                    a fair value of $.025 per share to settle $22,000 of
                    debt.
  h.
                On
                    December 28, 2006, the Company issued 3,800,000 shares of common
                    stock
                    with a fair value of $.025 per share to settle $95,000 of
                    debt.
  i.
                On
                    December 28, 2006, the Company issued 700,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $17,500
                    is
                    included in consulting services for
                    2006.
  j.
                On
                    December 28, 2006, the Company issued 1,000,000 shares of common
                    stock
                    with a fair value of $.025 per share for consulting services;
                    $25,000 is
                    included in consulting services for
                    2006.
  k.
                On
                    December 18, 2006, the Company issued 300,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $7,500
                    is
                    included in consulting services for
                    2006.
  F-22
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
  
   l.
                On
                    December 18, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services ; $7,500
                    is
                    included in consulting services for
                    2006.
  m.
                On
                    December 18, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $7,500
                    is
                    included in consulting services for
                    2006.
  n.
                On
                    December 14, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.026 per share for Legal services; $3,900 is
                    included in
                    professional fees for 2006.
  o.
                On
                    December 12, 2006, the Company issued 300,000 shares of common
                    stock with
                    a fair value of $.026 per share for consulting services; $7,800
                    is
                    included in consulting services for
                    2006.
  p.
                On
                    December 12, 2006, the Company issued 300,000 shares of common
                    stock with
                    a fair value of $.026 per share for consulting services; $7,800
                    is
                    included in consulting services for
                    2006.
  q.
                On
                    December 12, 2006, the Company issued 1,000,000 shares of common
                    stock
                    with a fair value of $.026 per share for Legal services; $26,000
                    is
                    included in professional fees for
                    2006.
  r.
                On
                    December 12, 2006, the Company issued 1,000,000 shares of common
                    stock
                    with a fair value of $.026 per share for consulting services
                    ; $26,000 is
                    included in consulting services.
  s.
                On
                    December 1, 2006, the Company issued 2,000,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $50,000
                    is
                    included in consulting fees for
                    2006.
  t.
                On
                    November 27, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share for Legal services; $3,750 is
                    included in
                    professional fees for 2006.
  u.
                On
                    November 27, 2006, the Company issued 100,000 shares of common
                    stock with
                    a fair value of $.025 per share for Legal services; $2,500 is
                    included in
                    professional fees for 2006.
  v.
                On
                    November 26, 2006, the Company issued 1,500,000 shares of common
                    stock
                    with a fair value of $.025 per share to settle debt of $37,500
                    in
                    2006.
  w.
                On
                    November 26, 2006, the Company issued 550,000 shares of common
                    stock with
                    a fair value of $.025 per share for Legal services; $13,750 is
                    included in
                    professional fees for 2006.
  x.
                On
                    November 21, 2006, the Company issued 450,000 shares of common
                    stock with
                    a fair value of $.025 per share for Legal services; $11,250 is
                    included in
                    professional fees for 2006.
  y.
                On
                    November 21, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share for management services; $3,750
                    is
                    included in management fee for
                    2006.
  z.
                On
                    November 21, 2006, the Company issued 125,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $3,750
                    is
                    included in consulting fees for
                    2006.
  aa.
                On
                    November 21, 2006, the Company issued 250,000 shares of common
                    stock with
                    a fair value of $.025 per share to settle debt of $6,250 in
                    2006.
  bb.
                On
                    November 20, 2006, the Company issued 1,400,000 shares of common
                    stock
                    with a fair value of $.025 per share for consulting services;
                    $35,000 is
                    included in consulting services for
                    2006.
  cc.
                On
                    November 17, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share for Legal services; $3,750 is
                    included in
                    professional fees for 2006.
  F-23
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
  dd.
                On
                    November 17, 2006, the Company issued 100,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $2,500
                    is
                    included in professional fees for
                    2006.
  ee.
                On
                    November 17, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share for PR services; $3,750 is included
                    in
                    consulting services for 2006.
  ff.
                On
                    November 17, 2006, the Company issued 500,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $12,500
                    is
                    included in consulting services for
                    2006.
  gg.
                On
                    November 17, 2006, the Company issued 200,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $5,000
                    is
                    included in consulting services for
                    2006.
  hh.
                On
                    November 17, 2006, the Company issued 800,000 shares of common
                    stock with
                    a fair value of $.025 per share to settle $20,000 of
                    debt.
  ii.
                On
                    November 17, 2006, the Company issued 500,000 shares of common
                    stock with
                    a fair value of $.025 per share for PR services; $12,500 is included
                    in
                    consulting services for 2006.
  jj.
                On
                    November 17, 2006, the Company issued 150,000 shares of common
                    stock with
                    a fair value of $.025 per share to settle $3,750 of
                    debt.
  kk.
                On
                    November 17, 2006, the Company issued 500,000 shares of common
                    stock with
                    a fair value of $.025 per share for consulting services; $12,500
                    is
                    included in consulting services for
                    2006.
  ll.
                On
                    November 16, 2006, the Company issued 800,000 shares of common
                    stock with
                    a fair value of $0.25 per share for PR services; $20,000 is included
                    in
                    consulting fees for 2006.
  mm.
                On
                    November 17, 2006, the Company issued 810,000 shares of common
                    stock with
                    a fair value of $.025 per share to settle $20,250 of
                    debt.
  nn.
                On
                    November 16, 2006, the Company granted warrants to acquire 2,000,000
                    shares of common stock exercisable at $0.20 per share for 5 years
                    as
                    compensation to the Companies current
                    president.
  oo.
                On
                    October 19, 2006, the Company issued 50,000 shares of common
                    stock with a
                    fair value of $.035 per share to settle $4,000 of
                    debt.
  pp.
                On
                    October 18, 2006, the Company issued 3,250,000 shares of common
                    stock in
                    consideration for consulting
                    services.
  qq.
                On
                    October 12, 2006 the Company granted warrants to acquire 11,650,000
                    shares
                    of common stock in consideration for consulting and management
                    services.
  rr.
                On
                    October 12, 2006, the Company issued 10,000,000 shares and granted
                    warrants to acquire 10,000,000 shares of common stock exercisable
                    at $0.10
                    per share for five years and warrants to acquire 10,000,000 shares
                    of
                    common stock exercisable at $0.20 for ten years to settle $300,000
                    of
                    debt.
  ss.
                On
                    October 4, 2006, the Company issued 200,000 common shares with
                    a fair
                    value of $0.03 per share to settle $6,000 of services
                    provided..
  tt.
                On
                    September 27, 2006, the Company issued 200,000 common shares
                    with a fair
                    value of $0.03 per share for a loss on shares issued for lease
                    payments.
  uu.
                On
                    September 27, 2006, the Company issued 400,000 common shares
                    with a fair
                    value of $0.03 per share for auto expenses, of which $12,00 is
                    included in
                    prepaid expenses.
  vv.
                On
                    September 27, 2006, the Company issued 125,000 common shares
                    with a fair
                    value of $0.045 per share for $5,625 of consulting services included
                    in
                    deferred compensation.
  ww.
                On
                    September 27, 2006, the Company issued 4,525,000 common shares
                    with a fair
                    value of $0.04 per share for $181,000 of consulting services
                    of which
                    $101,204 is included in deferred
                    compensation.
  xx.
                On
                    September 27, 2006, the Company issued 100,000 common shares
                    with a fair
                    value of $0.03 per share for $3,000 of charitable
                    donations.
  yy.
                On
                    September 27, 2006, the Company issued 965,000 common shares
                    with a fair
                    value of $0.03 per share for $28,950 of consulting services of
                    which
                    $13,221 is included in deferred
                    compensation.
  zz.
                On
                    June 16, 2006, the Company issued 250,000 common shares with
                    a fair value
                    of $0.105 per share for $26,250 of consulting
                    services.
  aaa.
                On
                    June 1, 2006, the Company issued 500,000 common shares with a
                    fair value
                    of $0.09 per share for $45,000 of consulting services.
  bbb.
                On
                    May 4, 2006, the Company issued 250,000 common shares with a
                    fair value of
                    $0.10 per share for $25,000 of legal
                    services.
  ccc.
                On
                    April 16, 2006, the Company issued 500,000 common shares with
                    a fair value
                    of $0.10 per share for $50,000 of management consulting
                    services.
  ddd.
                On
                    April 12, 2006, the Company issued 300,000 common shares with
                    a fair value
                    of $0.105 per share for $31,500 of consulting
                    services.
  eee.
                On
                    April 12, 2006, the Company issued 150,000 common shares with
                    a fair value
                    of $0.105 per share for $15,750 of management consulting
                    services.
  fff.
                On
                    February 21, 2006, the Company issued 300,000 shares with a fair
                    value of
                    $0.12 per share for $36,000 of consulting services. is included
                    in
                    deferred compensation.
  ggg.
                On
                    February 21, 2006, the Company issued 150,000 shares with a fair
                    value of
                    $0.12 per share for $18,000 of filing services. At September
                    30, 2006,
                    $7,685 is included in deferred
                    compensation.
  hhh.
                On
                    February 16, 2006, the Company declared a stock dividend on the
                    basis of
                    one new share of common stock for every four shares of common
                    stock
                    outstanding, and one new share of Series A preferred stock for
                    every four
                    shares of Series A preferred stock outstanding. The record date
                    was
                    February 28, 2006 and the payment date was March 17,
                    2006.
  F-24
  **CHINA
          HEALTH HOLDING INC.**
  **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
  
 **7.**
                **SUPPLEMENTARY
                    NON-CASH INFORMATION-
                    CONT’D**
 
 
  jjj.
                On
                    February 14, 2006, the Company issued 100,000 common shares with
                    a fair
                    value of $0.11 per share for $11,000 of consulting services,
                    included in
                    deferred compsnation.
  kkk.
                On
                    February 2, 2006, the Company issued 90,000 common shares with
                    a fair
                    value of $0.25 per share for $22,500 of consulting services included
                    in
                    deferred compensation..
  lll.
                On
                    January 28, 2006, the Company issued 200,000 common shares with
                    a fair
                    value of $0.19 per share for $38,000 of consulting services is
                    included as
                    a deferred compensation.
  mmm.
                On
                    January 22, 2006, the Company issued 134,710 common shares with
                    a fair
                    value of $0.12 per share for $16,165 of consulting services is
                    included in
                    deferred compensation.
  nnn.
                On
                    January 22, 2006, the Company issued 150,000 common shares with
                    a fair
                    value of $0.12 per share for $18,000 of consulting services is
                    included as
                    a deferred compensation.
  ooo.
                On
                    January 22, 2006, the Company issued 100,000 common shares with
                    a fair
                    value of $0.12 per share for $12,000 of consulting services included
                    in
                    deferred compensation.
  ppp.
                On
                    January 18, 2006, the Company issued 300,000 common shares with
                    a fair
                    value of $0.11 per share for $33,000 of consulting services is
                    included in
                    deferred compensation.
  qqq.
                On
                    January 17, 2006, the Company issued 100,000 common shares with
                    a fair
                    value of $0.12 per share for $12,000 of consulting services is
                    included in
                    deferred compensation.
  rrr.
                On
                    January 17, 2006, the Company issued 150,000 common shares with
                    a fair
                    value of $0.12 per share for $18,000 of consulting services is
                    included in
                    deferred compensation.
  sss.
                During
                    the quarter ended September 30, 2005, the Company issued 5,625,000
                    common
                    shares with a fair value of $0.24 per share as partial consideration
                    for
                    the purchase of licensing rights. (See Note 3
                    (c)).
  ttt.
                During
                    the year ended December 31, 2005, the Company issued 534,875
                    common shares
                    with fair values ranging from $0.20 to $0.24 for a total value
                    of $125,725
                    of which $50,725 was recorded as consulting expenses and $75,000
                    was
                    recorded as professional fees.
   
 
 **8.**  **RELATED
          PARTY TRANSACTIONS**
 
 
 The
          Company has entered into the following related party transactions:
 
 a)
                Recorded
                    management and consulting fees to directors and shareholders
                    totalling
                    $2,023,884
 
 b)
                Accrued
                    interest expense to directors and shareholders totalling $111,410
 
 F-25
   **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
  
 **9.**  **COMMITMENTS**
 
 
  
  a)
                On
                    December 12, 2006, the Board of Directors of China Health Holdings,
                    Inc.
                    terminated, Nick DeCotiis as President of the Company. The Company's
                    Board
                    of Directors appointed Julianna Lu, as President of the Company.
                    Ms. Lu is
                    the Founder, Chief Executive Officer and Chairman.
 
 b)
                On
                    November 28, 2006, China Health Holdings, Inc (the "Company")
                    executed a
                    binding Acquisition Letter of Intent with Xi'an Chunhui Pharmaceuticals
                    Co. Ltd. ("Xi'an Chunhui") for the proposed acquisition of 51%
                    or more
                    ownership of Xi'an Chunhui. Pursuant to the letter of intent,
                    both parties
                    have expressed their intent and support for the cooperation and
                    accomplishment of the acquisition of Xi'an Chunhui, by the Company.
                    Further, Xi'an Chunhui has agreed to offer the Company first
                    refusal
                    rights and legal exclusive rights for the acquisition of 51%
                    or more
                    ownership of Xi'an Chunhui within twelve months from the date
                    of the
                    Letter of Intent. Xi'an Chunhui has agreed to provide the Company
                    with all
                    necessary documentation and audited financial statements within
                    60days, to
                    enable the Company to conduct its due diligence. The completion
                    of the
                    acquisition is subject to the negotiation and execution of a
                    definitive
                    acquisition agreement, as well as to the completion of full legal
                    and
                    financial due diligence.
  c)
                On
                    October 19, 2006, the Company entered into a letter of engagement
                    and work
                    authorization with an investor relations firm who will provide
                    investor
                    relations services for a term of one to three years in exchange
                    for
                    $10,000 a month for three month and $15,000 a month after that,
                    3,000,000
                    common shares and 4,000,000 warrants exercisable for 3 years
                    at prices
                    ranging from $0.25 per share to $3.50 per share.
  d)
                On
                    October 11, 2006, the Company entered into a letter of intent,
                    with
                    BeiJing Boran Pharmaceutical Co., Ltd. (“BeiJing Boran”), for the proposed
                    acquisition by the Company of 51% or more of Beijing Boran. Pursuant
                    to
                    the Letter of Intent, the Company has first refusal rights and
                    legal
                    exclusive rights to acquire 51% or more of BeiJing Boran for
                    a period of
                    nine months from the date of letter.
  e)
                On
                    September 19, 2006, the Company entered into a consulting agreement
                    with
                    the President of the Company who will provide consulting services
                    for two
                    years in consideration for 250,000 shares of the Company’s common stock
                    (issued) and warrants to purchase 6,000,000 shares of the Company’s stock
                    at $0.20 for one year (issued
                    subsequently).
  f)
                On
                    September 19, 2006, the Company entered into a consulting agreement
                    with a
                    company related by a common president and an independent company
                    (the
                    “Consultants”) for the provision of consulting services in exchange for
                    250,000 common shares of the Company and a cash finders’ fee of 10% of any
                    corporate financing raised by the Consultants, and two year warrants
                    to
                    purchase common stock equal to 10% of the number of securities
                    sold by the
                    Consultants.
  g)
                On
                    June 22, 2006, the Company entered into a letter of intent with
                    Henan
                    Furen Pharmaceuticals Group Co., Ltd. (“Furen”), China, for the proposed
                    acquisition by the Company of 51% or more of Furen’s subsidiary Henan
                    Furen Huaiqingtang Pharmaceuticals Co. Ltd. (“Huiaqingtang “) Pursuant to
                    the Letter of Intent, the Company has first refusal rights and
                    legal
                    exclusive rights to acquire 51% or more of Furen for a period
                    of nine
                    months from the date of letter. On August 7, 2006, the Company
                    entered
                    into a definitive acquisition agreement with Furen and Huiaqingtang
                    to
                    acquire 60% of the outstanding stock of Huiaqingtang at an aggregate
                    purchase price of $95,000,000 RMB, a portion of which shall be
                    paid by the
                    Company on or before the closing of the agreement and a portion
                    to be paid
                    three months after closing.
  h)
                On
                    June 16, 2006, the Company entered into an engagement agreement
                    with a
                    placement agent who will market the Company’s proposed debt/equity
                    offering (the “Offering”) in consideration for 250,000 common shares
                    (issued) and a cash fee equal to 10% of the gross proceeds of
                    the Offering
                    and warrants to purchase 10% of the total number of shares, or
                    underlying
                    shares to be purchased by the investor exercisable at a price
                    equal to the
                    purchase price or conversion price paid by the investor. The
                    term of the
                    agreement is one year.
  i)
                On
                    May 27, 2006, the Company entered into a consulting agreement
                    with
                    consulting firm that will provide marketing, investor relations
                    and public
                    relations services for one year in consideration for 1,500,000
                    shares of
                    the Company’s common stock. At September 30, 2006, the Company had issued
                    500,000 shares of common stock. Subsequent to the period the
                    Company
                    cancelled the consulting agreement and will not issue any more
                    shares.
  F-26
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
  
 **9.**  **COMMITMENTS
          - CONT’D**
 
 
  j)
                On
                    May 2, 2006, the Company entered into a letter of intent, with
                    Shannxi
                    Meichen Pharmaceuticals Co. Ltd. (“Shannxi”), China, for the proposed
                    acquisition by the Company of 51% or more of Shannxi. Pursuant
                    to the
                    Letter of Intent, the Company has first refusal rights and legal
                    exclusive
                    rights to acquire 51% or more of Shannxi for 9 months from the
                    date of
                    letter. In September 2006 the Company executed a definitive acquisition
                    agreement with Shaanxi to acquire 100% of the issued and outstanding
                    stock
                    of Shaanxi for an aggregate purchase price of $24,800,000 RMB.
                    The
                    purchase price is payable as follows: i) 80% of the purchase
                    price is
                    payable in shares of common stock of the Company, based on the
                    average
                    closing price of the Company’s common stock, as reported on the OTCBB for
                    the five day period prior to the closing date of the acquisition
                    and ii)
                    20% of the purchase price payable in cash within 30 days of closing
                    the
                    transaction.
  k)
                On
                    April 16, 2006, the Company entered into a letter of intent,
                    with Henan
                    Tiankang Pharmaceuticals Co. ltd. (“Henan”), located in Henan, China, for
                    the proposed acquisition by the Company of 51% or more of Henan.
                    Pursuant
                    to the Letter of Intent, the Company has first refusal rights
                    and legal
                    exclusive rights to acquire 51% of Henan for a period of nine
                    months from
                    the date of letter.
  l)
                On
                    February 19, 2006, the Company entered into a letter of intent
                    effective
                    February 28, 2006, with Shaanxi WanAn Pharmaceutical Co. Ltd.
                    For the
                    proposed acquisition by the Company of 51% or more of Shaanxi
                    WanAn
                    Pharmaceutical Co. Ltd. Pursuant to the letter of intent the
                    Company has
                    first refusal rights and legal exclusive rights for further acquisition
                    of
                    51% of Shaanxi WanAn for the next 12 months.
  F-27
  **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
  
 **9.**  **COMMITMENTS
          - CONT’D**
 
 m)
                On
                    February 21, 2006, the Company filed a Certificate of Designation,
                    Powers
                    Preferences and Rights of Series A preferred stock which authorized
                    the
                    Company to issue up to 1,000,000 shares of Series A preferred
                    stock with a
                    par value of $0.001 per share. The Series A preferred stock has
                    a stated
                    value of $0.15 per share and a liquidation preference over the
                    Company’s
                    common stock. Holders of Series A preferred stock are entitled
                    to two
                    votes for each share of Series A preferred stock owned. Each
                    share of
                    Series A preferred stock is convertible, at the option of the
                    holder, into
                    two shares of common stock, commencing two years after the date
                    of
                    issuance, provided the market price of the common stock is not
                    below $1.00
                    per share. Additionally, if prior to two years from the date
                    of issue,
                    there is a sale or other disposition of all or substantially
                    all of the
                    Company’s assets, a transaction or series of related transactions in
                    which
                    more than 50% of the voting po
                    wer of the Company is disposed of, or upon a consolidation,
                    merger
                    or other business combination where the Company is not the survivor,
                    then
                    immediately prior to such event each holder of Series A preferred
                    stock
                    may convert any or all of such holder's shares of Series A preferred
                    stock
                    into common stock.
  n)
                On
                    January 16, 2006, the Company entered into a letter of intent,
                    effective
                    January 27, 2006, with WangJing Hospital and WangJing Hospital
                    of China
                    Academy of Chinese Medical Sciences, located in Beijing, China,
                    for the
                    worldwide development of the China International University of
                    Traditional
                    Chinese Medicine and the University Hospital for Traditional
                    Chinese
                    Medical Sciences (the “Project”). Pursuant to the Letter of Intent, the
                    parties agreed to pursue the co-development of the Project on
                    a worldwide
                    basis for a five (5) year period following execution of the Letter
                    of
                    Intent. Further, WangJing Hospital and WangJing Hospital of China
                    Academy
                    of Chinese Medical Sciences have agreed to provide the Company
                    with full
                    intellectual and scientific and medical and technical support
                    for further
                    development of the Project, while the Company has agreed to be
                    responsible
                    for further investment capital and business development for the
                    Project.
                    The parties have agreed to further discuss and negotiate the
                    detailed
                    terms for the development of the Project, and expect that any
                    such
                    agreement shall be made in a formal agreement to be entered into
                    between
                    the parties.
  o)
                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 $20,000 to the Company’s Chief Executive
                    Officer starting on January 1, 2006 and pay a 3% royalty on gross
                    sales of
                    the Company.
 -
                pay
                    a monthly consulting fee of $10.000 to a shareholder and officer
                    of the
                    Company.
 -
                pay
                    a monthly consulting fee of $5,000 to a shareholder and officer
                    of the
                    Company, but cancelled effective October 1,
                    2006.
 
 
  
 **10.**  **SUBSEQUENT
          EVENTS**
 
 
 a)
                On
                    January 1, 2007, China Health Holdings, Inc. (the "Company")
                    executed an
                    Acquisition Definitive Agreement (the "Agreement") with Xi'An
                    Meichen
                    Pharmaceutical Co. Ltd. ("Xi'An Meichen") to acquire all of the
                    assets of
                    Xi'An Meichen. Pursuant to the Agreement, the Company has agreed
                    to
                    acquire from Xi'An Meichen its pharmaceutical manufacturing facilities
                    which are certified by the China State Food and Drug Administration
                    ("China -SFDA"), a total of 43 China-SFDA certified pharmaceutical
                    drugs,
                    and a total of 25 MU lands, which is approximately 16,000 square
                    meters
                    (collectively the "Assets"). In consideration for the Assets,
                    the Company
                    has agreed to issue 20,000,000 shares of restricted common stock
                    and pay
                    $12,000,000 RMB (USD $1,535,313) to Xi'An Meichen. The Agreement
                    contemplates that the transaction will be completed at a closing
                    to be
                    held on the first business day after the closing conditions are
                    met or
                    waived (the "Closing Conditions"), or on a date agreed upon by
                    the
                    parties. The closing conditions include, but are not limited
                    to: (i) the
                    satisfactory completion by each party of a review of the business
                    operations, finances, assets and liabilities of the other party,
                    (ii)
                    delivery of such certificates and closing documents as each party's
                    counsel may request, and (iii) the approval of all of the shareholders
                    of
                    Xi'An Meichen.
 
 b)
                On
                    January 12, 2007, China Health Holdings, Inc. (the "Company")
                    entered into
                    a binding Memorandum of Understanding ("MOU") with Beijing Jifatang
                    Chinese Medicine Research Institute ("BJCMRI") and Beijing Jifatang
                    Chinese Medicine Research & Development Institution ("BJCMRDI") for
                    establishing the strategic partnership, collaboration and alliances
                    for
                    further research, development, manufacture and commercialization
                    of new
                    innovative pharmaceutical drugs for the treatment of diseases
                    and
                    conditions related to cancers, diabetes, cardiovascular disease,
                    cerebral
                    diseases and neurological disorders. The MOU provides that BJCMRI
                    and
                    BJCMRDI will grant to the Company first refusal rights and exclusive
                    rights to acquire
 
 F-28
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
  **10.**  **SUBSEQUENT
          EVENTS - CONT’D**
 
 
 c)
                all
                    rights to any new drugs and to any intellectual properties which
                    BJCMRI
                    and BJCMRDI may develop for a term of 10 years. As consideration
                    for
                    granting to the Company such first refusal and exclusive rights,
                    the
                    Company agreed to issue an aggregate of 200,000 restricted shares
                    of its
                    common stock to BJCMRI and BJCMRDI.
 
 d)
                On
                    January 19, 2007, China Health Holdings, Inc. (the "Company")
                    executed an
                    Acquisition Definitive Agreement (the "Agreement") with Beijing
                    Boran
                    Pharmaceuticals Co. Ltd. ("Beijing Boran") pursuant to which
                    the Company
                    will acquire 65% of the total issued and outstanding shares of
                    Beijing
                    Boran (the "Shares"). In exchange for the Shares the Company
                    shall pay a
                    consideration of USD $3,000,000. The consideration was determined
                    based
                    upon a total revenue of 32,000,000 RMB ( " China Currency") (approximately
                    USD$4,118,000) (the "Revenue Target") and assets of 58,511,000
                    RMB
                    (approximately USD$7,530,000) for the year ended December 31,
                    2006 and
                    revenue of $30,000,000 RMB (approximately USD$3,861,000 for the
                    year ended
                    December 31, 2005. The consideration shall be paid at the closing
                    with
                    USD$800,000 retained by the Company in the event that upon the
                    completion
                    of audited financial statements of Bejing Boran, the Revenue
                    Target is not
                    met. The consideration shall be reduced as agreed upon by the
                    Company and
                    Bejing Boran.
 
 e)
                On
                    February 9, 2007, China Health Holdings, Inc. appointed Xiao
                    Fei Yu as
                    President of the Company. Mr. Yu has served as a Director of
                    the Company
                    since May 26, 2004 and was appointed as our Vice President on
                    October 6,
                    2004. Mr. Yu has helped the Company create and develop 26 natural
                    herbal
                    product formulas that make up our King of Herbs and Taoist Medicine
                    product lines. 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.
 
 The
          Company has also entered into a Consulting Agreement with Mr. Yu pursuant
          to
          which Mr. Yu will provide global corporate development consulting services
          to
          the Company, including, advising the company with respect to global corporate
          development, strategic planning, global strategic partnership, business
          development and to assist the Company with identifying suitable acquisition
          candidates in the PR of China. The consulting agreement provides for a
          term of
          two years with an initial review after six months and annual reviews thereafter,
          at which time, the terms of the consulting agreement, including compensation,
          may be amended upon the mutual agreement of the parties. In consideration
          for
          the consulting services, the Company agreed to a monthly compensation of
          $18,000
          USD which will accrue as a loan to the Company until as such time as the
          Company
          shall have closed a financing. In addition, the Company agreed to issue
          to Mr.
          Yu warrants to purchase 4,000,000 shares of common stock of the Company
          exercisable at a price of $0.20 per shares which shall be exercisable through
          February 8, 2012 or within 30 days of the termination of the Consulting
          Agreement.
 
 Also
          on
          February 9, 2007, the Company appointed Dr. Zheng-Lun Fan as a director
          of the
          Company. Dr. Fan has served as the Company's Vice President of Research
&
Development since 2005. Over the past five years, Dr. Fan has been a research
          fellow at Beijing's Cui Yue-li Research Center of Traditional Chinese Medicine,
          where he is also Professor. Dr. Fan is nationally known as an expert in
          Chinese
          traditional medicine, which he has practiced for more than 40
          years.
  Dr.
          Fan
          was also appointed to serve as a member of the Company's Nominating Committee
          and Corporate Governance Committee.
  There
          are
          no understandings or arrangements between Dr. Fan and any other person
          pursuant
          to which Dr. Fan was selected as a director. Dr. Fan does not have any
          family
          relationship with any director, executive officer or person nominated or
          chosen
          by us to become a director or executive officer.
 
 
 F-29
 
 **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
  **10.**  **SUBSEQUENT
          EVENTS - CONT’D**
 
  The
          Company has also entered into a Consulting Agreement with Dr. Fan pursuant
          to
          which Dr. Fan will provide global corporate development consulting services
          to
          the Company, including, advising the company with respect to global corporate
          development, strategic planning, global strategic partnership, business
          development and to assist the Company with identifying suitable acquisition
          candidates in the PR of China. The consulting agreement provides for a
          term of
          two years with an initial review after six months and annual reviews thereafter,
          at which time, the terms of the consulting agreement, including compensation,
          may be amended upon the mutual agreement of the parties. In consideration
          for
          the consulting services, the Company agreed to issue to Dr. Fan 500,000
          shares
          of common stock pursuant to Section 4(2) of the Securities Act of 1933,
          as
          amended. In addition, the Company agreed to issue to Dr. Fan warrants to
          purchase 1,000,000 shares of common stock of the Company exercisable at
          a price
          of $0.20 per shares which shall be exercisable through February 8, 2012
          or
          within 30 days of the termination of the Consulting Agreement.
  In
          addition, on February 9, 2007, the shareholders of the Company holding
          2/3 of
          the outstanding voting stock of the Company voter to remove DaHong Li as
          a
          director of the Company. Mr. Li will serve as a Vice-President of the Company
          on
          a consultancy basis.
  f)
                On
                    January 12, 2007, the Company issued 5,000,000 shares of common
                    stock with
                    a fair value of $.026 per share for initial deposit for acquisition
                    of a
                    subsidiary.
  g)
                On
                    January 12, 2007, the Company issued 200,000 shares of common
                    stock with a
                    fair value of $.026 per share for a Binding memorandum of
                    understanding.
  h)
                On
                    January 12, 2007, the Company issued 120,000 shares of common
                    stock with a
                    fair value of $.025 per share for Legal services in
                    2007.
  i)
                On
                    February 9, 2007, the Company issued 150,000 shares of common
                    stock with a
                    fair value of $.026 per share for Legal services in
                    2007.
  j)
                On
                    February 9, 2007, the Company issued 500,000 shares of common
                    stock with a
                    fair value of $.026 per share for Director Services in
                    2007.
  k)
                On
                    February 9, 2007, the Company issued 4,000,000 shares of common
                    stock with
                    a fair value of $.026 per share to settle $104,000 of shareholder
                    debt.
  l)
                On
                    February 9, 2007, the Company issued 980,000 shares of common
                    stock with a
                    fair value of $.026 per share for management
                    services.
  m)
                On
                    February 9, 2007, the Company issued 900,000 shares of common
                    stock with a
                    fair value of $.026 per share for consulting
                    services.
  n)
                On
                    February 9, 2007, the Company issued 800,000 shares of common
                    stock with a
                    fair value of $.026 per share for management
                    services.
  o)
                On
                    February 9, 2007, the Company issued 500,000 shares of common
                    stock with a
                    fair value of $.026 per share for management
                    services.
  p)
                On
                    February 9, 2007, the Company issued 2,000,000 shares of common
                    stock with
                    a fair value of $.026 per share for PR
                    services.
   F-30
 
  **CHINA
          HEALTH HOLDING INC.**
 **(a
          development stage company)**
 
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
          31, 2006
 
  **10.**  **SUBSEQUENT
          EVENTS - CONT’D**
 
  q)
                On
                    February 20, 2007, the Company entered into a consulting agreement,
                    where
                    this Company will pay consultant $5,000 and issue 50,000 shares
                    of common
                    stock for consulting services.
  r)
                On
                    February 28, 2007, the Company issued 8,000,000 shares of common
                    stock
                    with a fair value of $.026 per share for acquisition of
                    subsidiary.
  s)
                On
                    March 12, 2006, the Company issued 5,000,000 shares and granted
                    warrants
                    to acquire 5,000,000 shares of common stock exercisable at $0.10
                    per share
                    for five years and warrants to acquire 5,000,000 shares of common
                    stock
                    exercisable at $0.20 for ten years to settle $300,000 of
                    debt.
  t)
                On
                    March 16, 2007, the Company issued 45,000 shares of common stock
                    for
                    consulting services.
  u)
                On
                    March 16, 2007, the Company issued 150,000 shares of common stock
                    with a
                    fair value of $.025 per share for Legal services in
                    2007.
  v)
                On
                    March 16, 2007, the Company issued 250,000 shares of common stock
                    with a
                    fair value of $.025 per share for Legal services
  w)
                On
                    March 16, 2007, the Company issued 200,000 shares of common stock
                    for
                    consulting services.




F-31