**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 **Form
        10-QSB**
 x QUARTERLY
        REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 FOR
        THE
        QUARTERLY PERIOD ENDED ***MARCH
        31, 2008***
 
 o TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF
        1934
 
 FOR
        THE
        TRANSITION PERIOD FROM __________ TO __________
 COMMISSION
        FILE NUMBER: **333-119034**
  **China
        Holdings, Inc.**
  (Name
        of
        Small Business Issuer in Its Charter)
  **Nevada**
                
                (State
                  or other jurisdiction of incorporation or organization)
              **98-0432681**
                
                (I.R.S.
                  Employer identification No.)
 **Julianna
        Lu, BSc. MSc.**
 **Chief
        Executive Officer**
 **101
        Convention Center Drive, Suite 700, Las Vegas, NV
        89109-2001**
 (Address
        of principal executive offices) (Zip Code)
 Issuer’s
        telephone Number: **86-10-6586-4770**
 
 **Mailing
        Address**
 **8E-C2,
        Global Trade Mansion, No.9A, GuangHua Rod,**
 **Chaovan
        District, Beijing PR China 100020**
 Issuer’s
        telephone Number: **86-10-6586-4770** and
        Facsimile **:
        86-10-6586-4790**
  (Former
        name, former address and former fiscal year,
 if
        changed since last report)
  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 o
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes
o
        No x
  As
        of May
        15, 2008, the issuer had a total of 185,057,060 outstanding shares of Common
        Stock and 1,250,000 shares of Series “A” Preferred Stock.
 
 Transitional
        Small Business Disclosure Format (check one): Yes o No x
  
 
 **CHINA
        HOLDINGS, INC.**
 **INDEX
        TO FORM 10-Q FILING**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008**
 
 **TABLE
        OF CONTENTS**
 
 **PART
        I**
 **FINANCIAL
        INFORMATION** **PAGE**
 **Page**
                  **Numbers****PART
                    I - FINANCIAL INFORMATION**Item 1.
                
                Condensed
                    Financial Statements (unaudited)Condensed
                    Balance Sheets
                
                F-1Condensed
                    Statements of Operations
                
                F-2Condensed
                    Statements of Cash Flows
                
                F-3Notes
                    to Condensed Financial Statements
                
                F-4
                        to F-7Item 2.
                
                Management
                    Discussion & Analysis of Financial Condition and Results of
                    Operations
                
                2Item 3.
                
                Controls
                    and Procedures
                
                34**PART
                    II - OTHER INFORMATION**Item 1.
                
                Legal
                    Proceedings
                
                36Item 1A
                
                Risk
                    FactorsItem 2.
                
                Unregistered
                    Sales of Equity Securities and Use of Proceeds
                
                36Item 3.
                
                Defaults
                    Upon Senior Securities
                
                36Item 4.
                
                Submission
                    of Matters to a Vote of Security Holders
                
                36Item 5
                
                Other
                    information
                
                36Item 6.
                
                Exhibits
                
                37**CERTIFICATIONS**Exhibit
                  31 -
                  Management certificationExhibit
                  32
                  - Sarbanes-Oxley Act


**CHINA
        HOLDINGS, INC.**
  **INDEX
        TO FINANCIAL STATEMENTS**
 
 **Page**Consolidated
                  Balance Sheets as of March 31, 2008 (unaudited) and December 31,
                  2007
              
              
              F-1Consolidated
                  Statements of Operations for the three months ended March 31, 2008
                  (unaudited) and 2007 (unaudited)and
                  the period from April 3, 2002  (inception of the development stage)
                  to March 31, 2008 (unaudited)
              
              
              F-2Consolidated
                  Statements of Cash Flows for the three months ended March 31, 2008
                  (unaudited)  and 2007 (unaudited)and
                  the period from April 3, 2002 (inception of the development stage) to
                  March 31, 2008 (unaudited)
              
              
              F-3Notes
                  to Consolidated Financial Statements
              
              
              F-4
                  to F-7
   
   CHINA
            HOLDING INC.
 (a
            development stage company)
 CONSOLIDATED
            BALANCE SHEET
 March
                    31,
                
                December
                    31,2008
                
                2007(unaudited)
                
                (unaudited)ASSETSCURRENT
                    ASSETSCash
                
                $
                2,459
                
                $
                9,958Prepaid
                    expenses and other current assets
                
                
                12,254
                
                
                6,723Total
                    current assets
                
                
                14,713
                
                
                16,681Property
                    and equipment, net
                
                
                10,768
                
                
                11,622Intangible
                    assets
                
                
                3
                
                
                3TOTAL
                    ASSETS
                
                $
                25,484
                
                $
                28,306LIABILITIES
                    AND STOCKHOLDERS’ DEFICITCURRENT
                    LIABILITIESAccounts
                    payable and accrued liabilities
                
                $
                46,349
                
                $
                72,110Due
                    to shareholders
                
                
                1,511,417
                
                
                1,271,932Total
                    current liabilities
                
                
                1,557,766
                
                
                1,344,042Commitments
                  and ContingenciesStockholders'
                    Deficit:Preferred
                    stock, $0.001 par value, 20,000,000 shares authorized,1,250,000
                    and 1,250,000 shares issued and outstanding
                
                
                1,250
                
                
                1,250Common
                    stock, $0.001 par value, 2,000,000,000 shares authorized185,267,060
                    and 180,607,060 shares issued and outstanding
                
                
                185,267
                
                
                180,607Additional
                    paid-in capital
                
                
                15,525,477
                
                
                15,363,037Deficit
                    accumulated during the development stage
                
                
                (17,181,095
                )
                
                (16,797,449
                )Accumulated
                    other comprehensive loss
                
                
                (63,181
                )
                
                (63,181
                )Total
                    Stockholders’ Deficit
                
                
                (1,532,282
                )
                
                (1,315,736
                )TOTAL
                    LIABILITIES AND STOCKHOLDERS’ DEFICIT
                
                $
                25,484
                
                $
                28,306See
                    Notes to Consolidated Financial
                    Statements.
  F-1
 CHINA
            HOLDING INC.
 (a
            development stage company)
 CONSOLIDATED
            STATEMENTS OF OPERATIONS
  For
                      the
                    Three
                      Months
                    Ended
                    March
                      31,
                    2008
                
                For
                      the
                    Three
                      Months
                    Ended
                    March
                      31,
                    2007
                
                Cumulativeresults
                        of
                      operations
                        from
                      April
                        3, 2002
                      (inception
                        of the development stage)
                      to
                        March 31, 2008(unaudited)
                
                (unaudited)
                
                (unaudited)Sales
                
                $
                -
                
                $
                -
                
                $
                8,976Cost
                    of goods sold
                
                
                -
                
                
                -
                
                
                245Gross
                    profit
                
                
                -
                
                
                -
                
                
                8,731Expenses:Advertising
                    and promotion
                
                
                11,018
                
                
                0
                
                
                178,348Amortization
                    of intangible assets
                
                
                -
                
                
                -
                
                
                7,125Consulting
                    fees
                
                
                31,100
                
                
                951,692
                
                
                4,184,400Stock
                    issued for failed acquisition
                
                
                0
                
                
                -
                
                
                1,415,000Depreciation
                
                
                854
                
                
                738
                
                
                13,470Interest
                    and bank charges
                
                
                35,485
                
                
                324,852
                
                
                325,884Investor
                    relations
                
                
                133,187
                
                
                41,990
                
                
                426,860Management
                    fees
                
                
                139,630
                
                
                118,194
                
                
                3,504,262Office
                
                
                3,733
                
                
                6,872
                
                
                104,682Professional
                    fees
                
                
                17,525
                
                
                18,585
                
                
                1,063,389Rent
                
                
                4,340
                
                
                8,772
                
                
                107,546Research
                    and development
                
                
                -
                
                
                -
                
                
                1,743,593Stock
                    based compensation
                
                
                -
                
                
                1,797,833
                
                
                3,977,322Travel
                
                
                3,733
                
                
                8,359
                
                
                56,445Vehicle
                
                
                
                
                
                2,911
                
                
                31,049Total
                    expenses
                
                
                380,605
                
                
                3,280,798
                
                
                17,139,375Net
                    loss from operations
                
                
                (380,605
                )
                
                (3,280,798
                )
                
                (17,130,644
                )Other
                    income (expenses)Foreign
                    exchange gain or loss
                
                
                (3,041
                )
                
                1,555
                
                
                36,000Impairment
                    loss-licensing rights
                
                
                0
                
                
                0
                
                
                (182,874
                )Debt
                    forgiveness income
                
                
                0
                
                
                0
                
                
                96,423Total
                    other income (expenses)
                
                
                (3,041
                )
                
                1,555
                
                
                (50,451
                )Net
                    loss
                
                $
                (383,646
                )
                $
                (3,279,243
                )
                $
                (17,181,095
                )Basic
                    net loss per share
                
                $
                (0.00
                )
                $
                (0.00
                )
                $Weighted
                    average number of commonbasic
                    and diluted shares outstanding
                
                
                164,446,008
                
                
                108,937,193
                
                $The
                    components of other comprehensive lossNet
                    loss
                
                $
                (383,646
                )
                $
                (3,279,243
                )Foreign
                    currency translation adjustment
                
                
                0
                
                
                (3,262
                )Comprehensive
                    loss
                
                $
                (383,646
                )
                $
                (3,282,505
                )See
                    Notes to Consolidated Financial
                    Statements.
 F-2
 CHINA
          HOLDING INC.
 (a
            development stage company)
 CONSOLIDATED
            STATEMENTS OF CASH FLOWS
 For
                      the
                    Three
                      Months
                    Ended
                    March
                      31,
                    2008
                
                For
                      the
                    Three
                      Months
                    Ended
                    March
                      31,
                    2007
                
                Cumulativeresults
                      of
                    operations
                      from
                    April
                      3, 2002
                    (Inception
                        of the development stage)to
                        March 31, 2008(unaudited)
                
                (unaudited)
                
                (unaudited)OPERATING
                    ACTIVITIESNet
                    loss
                
                $
                (383,646
                )
                $
                (3,279,243
                )
                $
                (17,181,095
                )Adjustments
                    to reconcile net loss to cash usedin
                    operating activities:Accrued
                    interest
                
                
                -
                
                
                30,265
                
                
                181,570Amortization
                    of intangible assets
                
                
                -
                
                
                -
                
                
                7,125Amortization
                    of Deferred
                    compensation
                
                
                
                
                
                
                
                
                153,942Stock
                    option expense
                
                
                31,100
                
                
                -
                
                
                931,889Depreciation
                
                
                854
                
                
                738
                
                
                13,470Impairment loss-licensing
                    rights
                
                
                -
                
                
                -
                
                
                182,874License
                    rights
                
                
                -
                
                
                -
                
                
                1,359,999(Gain)
                    loss on settlement of debt and issuance of shares
                
                
                -
                
                
                -
                
                
                (104,924
                )Issuance
                    of shares to settle debt and cover financing
                
                
                -
                
                
                -
                
                
                -Non
                    cash expenses paid with shares
                
                
                136,000
                
                
                -
                
                
                3,339,590Non
                    cash interest paid with shares
                
                
                -
                
                
                1,115,309
                
                
                326,360Stock-based
                    compensation
                
                
                0
                
                
                107,373
                
                
                3,319,191Warrant
                    issued for Compensation
                
                
                -
                
                
                1,797,833
                
                
                3,639,142Stock
                    issued for failed acquisition
                
                
                -
                
                
                -
                
                
                1,415,000Changes
                    in operating assets and liabilitiesPrepaid
                    expenses and other current assets
                
                
                (5,531
                )
                
                36,369
                
                
                138,880Accounts
                    payable and accrued liabilities
                
                
                (25,761
                )
                
                (938
                )
                
                54,729Net
                    cash used in operating activities
                
                
                (246,984
                )
                
                (192,294
                )
                
                (2,222,258
                )INVESTING
                    ACTIVITIESPurchase
                    of equipment
                
                
                
                
                
                -
                
                
                (4,701
                )Purchase
                    deposit for acquisition of companies
                
                
                -
                
                
                -
                
                
                (19,536
                )Net
                    cash used in investing activities
                
                
                -
                
                
                -
                
                
                (24,237
                )FINANCING
                    ACTIVITIESProceeds
                    from issuance of common stock
                
                
                
                
                
                -
                
                
                50,000Net
                    advances from shareholders
                
                
                239,485
                
                
                211,495
                
                
                2,262,134Net
                    cash provided by financing activities
                
                
                239,485
                
                
                211,495
                
                
                2,312,134EFFECT
                    OF EXCHANGE RATE CHANGES
                
                
                -
                
                
                (3,261
                )
                
                (63,180
                )NET
                    (DECREASE) INCREASE IN CASH
                
                
                (7,499
                )
                
                15,940
                
                
                2,459CASH,
                    BEGINNING OF PERIOD
                
                
                9,958
                
                
                -
                
                
                -CASH,
                    END OF PERIOD
                
                $
                2,459
                
                $
                15,940
                
                $
                2,459Supplemental
                    disclosures of cash flows information:Interest
                    paid
                
                $
                
                
                $
                
                
                $Taxes
                    paid
                
                $
                
                
                $
                
                
                $Non-cash
                    financing activities:Settlement
                    of debt in common stock
                
                $
                
                
                $
                
                
                $
                320,000$
                
                
                $
                
                
                $
 See
                    Notes to Consolidated Financial
                    Statements.
 F-3
  **CHINA
          HOLDINGS INC.**
 **(a
          development stage company)**
 NOTES
          TO
          CONSOLIDATED AUDITED FINANCIAL STATEMENTS
 FOR
          THE
          THREE MONTHS ENDED MARCH 31, 2008 AND 2007
  **1.**
                **NATURE
                    OF OPERATIONS AND BASIS OF
                    PRESENTATION**
  China
          Holdings Inc. (the "Company") was incorporated in the States of
          Nevada in the United States of America on April 3, 2002 as AE&E
          Pharma Corporation. The Company's common stock trades on the US
          over-the-counter bulletin
          board under the symbol "CHHL".
 
 The
          Company changed its name on May 25, 2004, to China Health Holding, Inc.
  On
          May 1,
          2007, the Company changed its name to China Holdings, Inc. The Company's
          web
          site is www.chinaholding.net . However,
          information found on the Company’s website is not incorporated by reference into
          this report. The
          Company has had nominal revenues since its inception.
 
 The
          Company has three wholly-owned subsidiaries: (i) China Power, Inc., (ii)
          China
          Minerals Holdings, Inc., and (iii) China Health Holdings, Inc.
 
 On
          May 1,
          2007, the Company’s wholly owned subsidiary, China Health World Pharmaceutical
          Corporation, amended its Articles of Incorporation to change its name to
          China
          Health Holdings, Inc.
  On
          May 9,
          2007, the Company’s wholly owned subsidiary China Health World Trade Corporation
          amended its Articles of Incorporation to change its name to China Power,
          Inc.
  On
          January 7 th ,
          2008,
          the Company incorporated its third subsidiary as
          China Minerals Holdings, Inc., a Nevada corporation.
  The
          Company’s initial business plan was to engage in the manufacturing, marketing
          and distribution of proprietary natural medicinal products. The Company
          has
          since revised its business plan to not only focus on becoming a
          manufacturing, marketer and distributor of natural medicinal products,
          but also
          to focus on becoming a diversified global assets holding company.
 
 The
          Company and its subsidiaries intend to engage in multiple China-focused
          business activities including, energy, renewable energy, resources, utilities
          finance, real estate, and pharmaceutical ventures. Their objective is to
          achieve long-term capital appreciation through investment in companies
          and other
          entities with significant assets, investments, production activities, trading
          or
          other business interests in China or worldwide.
  **CONTROL
            BY PRINCIPAL STOCKHOLDERS**
 
 The
            chief
            executive officer owns beneficially and in the aggregate, the majority
            of the
            voting power of the outstanding shares of the common stock of the Company.
            Accordingly, the chief executive officer, has the ability to control
            the
            approval of most corporate actions, including increasing the authorized
            capital
            stock of the Company and the dissolution, merger or sale of the Company's
            assets
            or business.
  F-4
 
 **2.**
                **SIGNIFICANT
                    ACCOUNTING POLICIES**
 
 **Basis
            of presentation**
  These
            condensed interim consolidated financial statements have been prepared
            in
            accordance with generally accepted accounting principles in the United
            States of
            America (“US GAAP”).
 
 The
            interim results of operations are not necessarily indicative of the results
            to
            be expected for the fiscal year ending December 31, 2008. The Company’s
            financial statements contained herein are unaudited and, in the opinion
            of
            management, contain all adjustments (consisting only of normal recurring
            accruals) necessary for a fair presentation of financial position, results
            of
            operations and cash flows for the period presented. The Company’s accounting
            policies and certain other disclosures are set forth in the notes to
            the
            consolidated financial statements contained in the Company’s Annual Report on
            Form 10-KSB/A for the year ended December 31, 2007 filed on April 18,
            2008.
            These financial statements should be read in conjunction with the Company’s
            audited consolidated financial statements and notes thereto. The preparation
            of
            financial statements in conformity with US GAAP requires management to
            make
            estimates and assumptions that affect the reported amounts of assets
            and
            liabilities and disclosures of contingent assets and liabilities at the
            date of
            the financial statements and the reported amounts of revenues and expenses
            during the reporting period. Actual results could differ from those
            estimates.
 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
          $1,551,569 (and an accumulated deficit of $17,181,095 and a stockholders’
deficit of $1,532,282 as of March 31, 2008 and
          has incurred significant losses since inception. Further
          losses are anticipated in the development of its intended business plan.
          If the
          Company is unable to obtain financing in the amounts and on terms deemed
          acceptable, the business and future success may be adversely affected.
          Given the
          Company's limited operating history, lack of sales, and its operating losses,
          there can be no assurance that it will be able to achieve or maintain
          profitability. Accordingly, these factors raise substantial doubt about
          the
          Company’s ability to continue as a going concern.
  China
            Holdings is a development stage company as described by Statements of
            the
            Financial Accounting Standards Board No. 7 (“SFAS 7.”) SFAS 7 states that a
            business is considered to be in the development stage if it is devoting
            substantially all of its efforts to establishing a new business and either
            of
            the following conditions exists:
 
 1.
                  Planned
                      principal operations have not commenced.2.
                  Planned
                      operations have commenced, but there has been no significant
                      revenue
                      therefrom.
 
 The
            Company’s management believes the Company is a development stage entity as it
            is
            in the process of attempting to acquire assets, namely that of potential
            both
            identified and currently unidentified merger candidates, and is also
            exploring
            various forms of financing and capital structures in order to facilitate
            future
            acquisitions. The Company has considered SFAS 7 and has determined April
            3,
            2002, the inception date, to be the inception date of the development
            stage.
  The
          Company will depend almost exclusively on outside capital to complete the
          development of its intellectual property, completion of its proposed projects
          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.
  **Consolidation**
  The
          audited condensed consolidated financial statements include the accounts
          of the
          Company and its three (3) wholly-owned subsidiaries, China Power, Inc.,
          China
          Minerals Holdings, Inc. and China Health Holdings, Inc. Those subsidiaries
          have
          not yet commenced operations and have no significant assets, liabilities,
          revenues or expenses. All intercompany accounts have been eliminated in
          consolidation.
  F-5
  **Reclassifications**
 
 Certain
            reclassifications to the Company’s balance sheet and income statement have been
            made in 2007, in order for the 2008 financial statements to conform to
            the
            presentation of these financial statements.  These reclassifications did
            not impact the Company’s total assets, total liabilities, net loss or
            stockholders deficit for the three months ended March 31, 2008 and 2007,
            respectively.
 **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, who is a majority shareholder, proprietary rights
          and formulas to the 26 natural herbal medicinal products that comprise
          the King
          of Herbs and Taoist Medicine product lines. The Company recorded the cost
          of the
          proprietary rights and formulas as intangible assets at the historical
          cost
          basis of $1. The excess of the purchase price over the historical cost
          basis of
          the intangible assets of $366,306 was expensed as research and development
          costs during the year ended December 31, 2004.
  b)
                Licensing
                    rights agreement
 
 During
          the fiscal year 2004, the Company entered into various agreements with
          Hotway
          Nutraceuticals Canada Co., Ltd. (“Hotway”), a British Columbia company. The
          intengible assets acquired from Hotway were written down to $1 during
          2004.
  **Asset
            purchase agreement**
 
 Pursuant
          to an asset purchase agreement dated March 22, 2005, the Company acquired
          from
          the Company’s shareholders intellectual property rights to 108 “100%
          Natural Taoist Herbal Medicinal Products”. The Company has recorded the cost
          basis of these property rights at the historical cost basis of the shareholders
          of $1. The excess of the purchase price over the carrying value of the
          intangible assets totaling $1,359,999 was expensed as research and development
          costs during 2005.
  **3.**
                **PROPERTY
                    AND EQUIPMENT**
 
 March31,
                
                December
                    31,2008
                
                2007Computer
                    Equipment
                
                $
                20,846
                
                $
                20,846Furniture
                    & Fixtures
                
                
                3,392
                
                
                3,392Less:
                    accumulated depreciation
                
                
                (13,470
                )
                
                (12,616
                )$
                10,768
                
                $
                11,622
  Depreciation
            expense amounted to $854 and $738 for the three months ended March 31,
            2008 and
            2007, respectively.
 **4.**
                **DUE
                    TO SHAREHOLDERS**
 
 The
          Company has received advances from two shareholders which bear interest
          at 10%
          per annum with no specific repayment terms. The tables below detail transactions
          during the three months ended March 31, 2008 .
  The
            table
            below details transactions related to the loan payable to the Company's
            Chief
            Executive Officer during the three months ended March 31, 2008:
 Beginning
                      balance payable, as of December 31, 2007
                  
                  $
                  974,498Accrued
                      management fees
                  
                  
                  90,000Accrued
                      interest
                  
                  
                  27,327Advances
                      from Chief Executive Officer
                  
                  
                  84,171Ending
                      balance payable
                  
                  $
                  1,175,996
 
 
 The
            table
            below details transactions related to the loan payable to the Company's
            Vice
            Chairman during the three months ended March 31, 2008:
 Beginning
                      balance payable, as of December 31, 2007
                  
                  $
                  297,484Accrued
                      management fees
                  
                  
                  30,000Accrued
                      interest
                  
                  
                  7,937Advances
                      from Vice Chairman
                  
                  
                  -Ending
                      balance payable
                  
                  $
                  335,421
  F-6
 **6.**
                **CAPITAL
                    STOCK**
 
 The
          authorized capital of the Company consists of 2,000,000,000 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 increased the authorized common shares
          from 55,000,000 shares to 300,000,000 shares. On February 22, 2008 the
          Company
          increased the authorized common shares from 300,000,000 shares to 2,000,000,000
          shares.
 
 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 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 September 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.
  Quarter
          Ended March 31, 2008
 
 ·
                At
                      various times during the three months ended March31, 2008 the
                      Company
                      issued 4,660,000 shares of common stock for services rendered
                      at an
                      aggregate market value of $ 0.029 per share for a total value
                      of
                      $136,000.
  **7.
          STOCK** **OPTIONS
          AND STOCK WARRANTS**
 
 Quarter
          EndedMarch
          31,
          2008 :
 
 During
          the three months ended March 31, 2008 the Company did not grant warrants
          and
          options.
 
 Quarter
          EndedMarch
          31,
          2007 :
  At
          various times during the three months ended March 31, 2007 the Company
          granted warrants to various consultants, to purchase an aggregate of 28,000,000
          shares of the Company’s common stock at an aggregate exercise price of $0.17
          expiring in an aggregate 5 years from the date of grant for services rendered.
          These warrants were valued at aggregate of $1,797,833 using a Black-Scholes
          model with the following weighted average assumptions: dividend yield of
          0%;
          expected volatility of 269%; risk-free interest rate of 4.85%; an expected
          life
          of 5 years; stock trading price of $0.06 on the dates of grant. All of
          these
          warrants were vested immediately upon grant, and accordingly were expensed
          immediately for a total expense of $1,797,833.
 
 The
          following table summarizes all stock warrants and stock options granted,
          exercised and expired in the three months ended March 31,
          2008:
 Stock
                      Warrants
                  
                  Stock
                      OptionsShares
                      underlying
                    warrants
                  
                  Weighted
                      average
                    Exercise
                      Price
                  
                  Shares
                      underlying
                    Options
                  
                  Weighted
                      average
                    Exercise
                      PriceOutstanding
                      as of December 31, 2007
                  
                  
                  74,650,000
                  
                  $
                  0.19
                  
                  
                  10,351,422
                  
                  $
                  0.17Granted
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  -Exercised
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  -Expired
                      or cancelled
                  
                  
                  (1,000,000
                  )
                  
                  0.20
                  
                  
                  (3,000,000
                  )
                  
                  0.20Outstanding
                      as of March 31, 2008
                  
                  
                  73,650,000
                  
                  $
                  0.19
                  
                  
                  7,351,422
                  
                  $
                  0.16
   **8.**
                **RELATED
                    PARTY TRANSACTIONS**
 
 The
          Company has entered into the following related party transactions as
          of March 31, 2008.
 
 a)
                Recorded
                    management fees for the Chief Executive Officer and Vice Chairman
                    for the
                    three months ended March 31, 2008 and 2007 of $120,000 and $81,000
                    respectively.
  b)
                The
                    Chief Executive Officer and Vice Chairman routinely advance funds
                    to the
                    Company. These funds are unsecured and so not have a due date
                    of return.
                    The Company accrues interest at 10% per annum on all these advances.
                    Accrued interest expense to directors and shareholders for the three
                    months ended March 31, 2008 and 2007 was $35,264 and $22,349,
                    respectively.
  **5.**
                **COMMITMENTS
                    AND EMPLOYMENT
                    AGREEMENTS/CONSULTANTS**
  Pursuant
            to various management and consulting contracts the Company has committed
            to pay (i)
            a
            monthly management fee of $30,000 is payable to the Chief Executive Officer
            on
            January 1, 2008 (ii) a monthly management fee of $10,000 is payable to
            the Vice
            Chairman. However, these
            management fees have been loaned back to the Company, as
            discussed.
 
 **6.**
                **ACQUISITIONS**
 
 As
          of
          December 31, 2007 and through March 31, 2008, the Company has considered
          and
          negotiated numerous acquisition agreements, and business cooperation agreements,
          with many business entities and governmental entities in the People's Republic
          of China. As of December 31, 2007 and through March 31, 2008, the Company
          has
          not completed and finalized any of these acquisition and business cooperation
          agreements. The management of the Company believes that they do not have
          any
          liability with regards to these acquisition and business cooperation agreements
          unless they are completed and finalized. In addition, to the extent that
          the
          acquisition and business cooperation agreements require cash for them to
          be
          consummated, or commenced upon, the Company may not have adequate cash
          and/or
          financing resources, and the Company may not have the ability to obtain
          adequate
          cash and/or financing resources.
 F-7
  **Forward
          Looking Statement  -**
  This quarterly
        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 under the heading "Risk Factors". 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 quarterly report are 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-Q;
        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.
 
 *As
        used in this Annual Report, unless otherwise indicated, the terms “we,” “us,”
“our” and “the Company” refer to China Holdings, Inc. and its
        subsidiaries.*
  1
  **ITEM
        2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.**
  **Background**
  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 and changed our name on May 25, 2004, to
        China Health Holding, Inc. On May 1, 2007, we changed our name to China
        Holdings, Inc. Effective May 11, 2007, our stock has traded under the symbol
        CHHL on the OTC Bulletin Board. The Company maintains a website at www.chinaholding.net . However,
        information found on the Company’s website is not incorporated by reference into
        this report. We
        have
        had nominal revenues since our inception.
 
 We
        have
        three wholly-owned subsidiaries: (i) China Power, Inc. (ii)China Minerals
        Holdings Inc. and (iii) China Health Holdings, Inc.
 
 On
        May 1,
        2007, our wholly owned subsidiary, China Health World Pharmaceutical
        Corporation, amended its Articles of Incorporation to change its name to
        China
        Health Holdings, Inc and on May 9, 2007, our wholly owned subsidiary China
        Health World Trade Corporation amended its Articles of Incorporation to change
        its name to China Power, Inc. On January 7, 2008, the Company incorporated
        3rd
        subsidiary: China Minerals Holdings, Inc. under Nevada State Laws.
  2
 
 Our
        initial business plan was to engage in the manufacturing, marketing and
        distribution of proprietary natural medicinal products. We have since revised
        our business plan to not only focus on the manufacture, marketing and
        distribution of natural medicinal products but to also focus on becoming
        a
        diversified global assets holding company. We and our subsidiaries intend
        to
        engage in multiple China-focused business activities including, energy,
        renewable energy resources, finance, real estate, utilities and
        pharmaceutical. Our objective is to achieve long-term capital appreciation
        through investment in companies and other entities with significant assets,
        investments, production activities, trading or other business interests in
        China, and/or worldwide, and/or which derive a significant part of their
        revenue
        from China, and/or worldwide.
 
 ***Subsidiary
        Operations Plans***
  China
        Power, Inc. intends to capture China's growing energy, renewable energy,
        and
        environment protection projects domestically and worldwide. China Power intends
        to engage in business activities and investments in hydropower plants, biomass
        energy projects and companies in China and throughout the world primarily
        through mergers and acquisitions, joint-venture partnerships with hydro-power
        plants, biomass energy projects and companies in China and throughout the
        world.
        China Power’s advanced hydro-power renewable energy strategy and plan is
        expected to improve the technical, societal, and environmental benefits of
        hydropower, biomass energy and to exploit investment and business opportunities
        in the cost-competitive hydropower and biomass energy industries in China
        and
        throughout the world, with a focus towards building long-term shareholder
        value.
        China Power intends to seek financing to fund its hydropower and biomass
        energy
        projects.  Financing transactions may include the issuance of equity
        or debt securities, obtaining credit facilities, or other financing mechanisms.
        There can be no assurance that we will be successful in obtaining
        financing.
  China
        Minerals Holdings, Inc. is a exploration stage company, aiming to establish,
        expand, and diversify its presence in the mining resource industry in China
        and
        throughout the world. China Minerals Holdings intends to focus on precious
        and
        rare metals resources, properties with mining licenses in production and
        joint
        venture opportunities.   Furthermore, China Mineral Holdings’ mining
        projects and prospects will be based on rigorous economic evaluation,
        independent advancement and joint-ventures.
 
 China
        Health Holdings, Inc. is a development stage company with the goal of becoming
        a
        leading developer, manufacturer, marketer and distributor of pharmaceutical
        drugs and dietary supplements in China and throughout the world. Its main
        objective is to partner with CHINA -SFDA approved drug producers, GMP certified
        manufacturing facilities, research and development centers and universities
        in
        China. China Health’s goals include mergers and acquisitions with leading
        pharmaceutical companies in China. China Health’s strategy is to leverage
        synergies, integrate drug pipelines and distribution channels, and management
        expertise between pending pharmaceutical acquisitions. China Health intends
        to
        develop a Taoist Medicine product line and a Vitamins and Supplements product
        line. All of the products for these product lines are fully developed and
        China
        Health expects to launch the Taoist Medicine and Vitamins and Supplements
        product lines. All of China Health’s manufacturing will be outsourced to third
        parties. China Health plans to generate revenues by sales of its 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 in the past China
        Health’s current operations and sales were in Canada, China Health anticipates
        expanding its sales into the U.S. over the next six to twelve months and,
        thereafter, into regions of Europe and Asia.
  3
 ***RECENT
            DEVELOPMENTS***
 
 The
            Company, via its wholly owned subsidiary China Power, , has entered a
            total
            of  five (5) development, investment and construction agreements with
            local China Government in Hebei, Hunan, AnHui and Inner Mongolia Provinces,
            PR
            China to develop, invest and construct a total of  five (5) biomass
            energy power generation plants/projects with a total potential power
            capacity
            for 50MW x 5 = 250 MW in pipeline. The development and construction of
            the
            facilities will require approximately $78,000,000 for each 50MW biomass
            plant/project. The development and construction of the facilities are
            subject to
            the Company completing certain due diligence requirements and obtaining
            financing from third parties. In addition to the foregoing, according
            to the
            China Central Government’s currently alternative energy laws related to Biomass
            Energy Projects, under the All Construction Agreements, guaranteed (i)
            the
            financing for up to 65% of the 580 million Yuan China Power has committed
            to the
            development of all the power plants through local banks at a preferred
            interest
            rate, (ii) that 100% of the power generated by the Biomass Energy plants
            shall
            be purchased by the China State Grid at a purchase price of between 0.60
            and
            0.65 Yuan, or approximately $0.09 and $0.08, per kilowatt, (iii) All
            Biomass
            Energy Power Generation Plant/project (50MW) has designated with a total
            potential of 400 million KW/hr power generation capacity approximately
            annually,
            (iv) China Power’s rights under the Construction Agreements are all exclusive.
            The construction of the plant is estimated to take approximately two
            three
            years.
 
 ***Huaxian
            Biomass Energy Power/Plant ( 50MW) Investment Construction
            Agreement***
 
 On
            March 19, 2008, China Powerentered into a Development and Construction
            Agreement
            (the “ Construction
            Agreement ”)
            with Huaxian County Government (“Huaxian”), Hunan Province, People’s Republic of
            China, pursuant to which China Power was granted the exclusive right
            to develop
            and construct a 50 megawatt biomass energy power plant. Specifically, under
            the Construction Agreement, Huaxian has agreed to provide China Power
            with the
            land rights for up to 200 MU, or 133,400 square meters of land, to develop
            a
            biomass energy power plant. Conversely, China Power has committed to
            invest up
            to 580 million Yuan, or approximately $81,586,000 towards the development
            of the
            power plant.
 
 In
            addition to the foregoing, according to the China Central Government’s currently
            alternative energy laws related to Biomass Energy Projects, under the
            Construction Agreement, Huaxian has guaranteed (i) the financing for
            up to 65%
            of the 580 million Yuan China Power has committed to the development
            of the
            power plant through a local bank at a preferred interest rate, (ii) that
            100% of
            the power generated by the Biomass Energy plant shall be purchased by
            the China
            State Grid at a purchase price of between 0.60 and 0.65 Yuan, or approximately
            $0.09 and $0.08, per kilowatt, (iii) this Huaxian Biomass Energy Power
            Generation Plant/project has designated with a total potential of 400
            million
            KW/hr power generation capacity approximately annually, (iv) China Power’s
            rights under the Construction Agreement are exclusive.
 
 The
            Construction Agreement also provides that Huaxian  shall be
            responsible for securing all necessary government approvals and ensuring
            the
            supply of all required utilities, such as electricity, water, communications
            and
            roadways, and China Power shall be responsible for obtaining all required
            financing for the plant and operating the plant with the most advanced
            technology available. The construction of the plant is estimated to take
            approximately two years. Management believes that they have no liabilities
            with
            regards to these transactions if the acquisitions can not be
            completed.
  4
 ***Ongniute
            Biomass Energy Power/Plant ( 50MW) Investment Construction
            Agreement***
 
 On
            March 3, 2008, China Power entered into a Development and Construction
            Agreement
            (the “Construction Agreement”) with Ongniute County Government (“Ongniute”),
            Inner Mongolia Province, People’s Republic of China, pursuant to which China
            Power was granted the exclusive right to develop and construct a 50
            megawatt biomass energy power plant. Specifically, under the Construction
            Agreement, Ongniute agreed to provide China Power with the land rights
            for up to
            200 MU, or 133,400 square meters of land, to develop a biomass energy
            power
            plant, together with an additional 500,000 MU, or 333,500,000 square
            meters of
            land, rich in straw resources to support the power plant. Conversely,
            China
            Power has committed to invest up to 580 million Yuan, or approximately
            $81,586,000, towards the development of the power plant, including the
            payment to Ongniute of 56,000 Yuan, or approximately $7,877, for every 667
            square meters of land provided by Ongniute.
 
 In
            addition to the foregoing, under the Construction Agreement, Ongniute
            has
            guaranteed (i) the financing for up to 65% of the 580 million Yuan China
            Power
            has committed to the development of the power plant through a local bank
            at a
            preferred interest rate, (ii) that 100% of the power generated by the
            biomass
            energy plant shall be purchased by the China State Grid at a purchase
            price of
            between 0.60 and 0.65 Yuan, or approximately $0.09 and $0.08, per kilowatt
            and
            (iii) the payment of 13.2 million Yuan, or approximately $1,856,797,
            to China
            Power once construction of the power plant is completed.
 
 The
            Construction Agreement also provides that Ongniute shall be responsible
            for
            securing all necessary government approvals and ensuring the supply of
            all
            required utilities, such as electricity, water, communications and roadways,
            and
            China Power shall be responsible for obtaining all required financing
            for the
            plant and operating the plant with the most advanced technology available.
            The
            construction of the plant is estimated to take approximately two
            years.
 
 China
            Power’s rights under the Construction Agreement are exclusive, such that
            Ongniute may not allow the development of any other biomass energy power
            plants
            in Ongniute County for three years. In addition, Ongniute has agreed
            to ensure
            that the plant is not subject to income taxes for its first three years
            of
            operation and then subject to a tax rate of no more than 12.5% for the
            following
            three years.
 
 Development
            of the plant shall be done through Ongniute America-China Green Energy
            Co. Ltd.,
            which incorporated under PRC laws which is wholly owned by our subsidiary
            of
            China Power. China Power, Inc. will complete for the biomass fuel analysis
            report and the technical feasibilities for further development of the
            construction for Ongniute Biomass Energy Power/Plant ( 50MW) shortly.
            Management
            believes that they have no liabilities with regards to these transactions
            if the
            transactions can not be completed.
  ***China
            Power completed the Fuel Analysis on******Ongniute
            Biomass Energy Power/Plant (
            50MW)******。***
 ***China
            Power is working on FEASIBILITIES STUDY currently
            on************Ongniute
            Biomass Energy Power/Plant ( 50MW)***
 
 ***Acquisition
            Transaction Agreement with Tong Ren KaiYu Minerals Co.
            Ltd.***
 
 On
            November 30, 2007, the Company entered in a transaction agreement which
            provides
            for the acquisition by the Company of 100% of the issued and outstanding
            shares
            of Tong Ren KaiYu Minerals Co. Ltd. This agreement provides the comprehensive
            terms of the acquisition and expands on the parties’ agreement dated October 27,
            2007.
 
 In
            consideration for the shares, the Company agreed to pay (A) RMB $100
            million
            (approximately USD $13,500,000) in cash; (B) RMB $50 million (approximately
            USD
            $6,750,000) in shares of common stock valued at a price of $0.05 per
            shares; (C)
            RMB $150 million (approximately USD $20 million) in shares of common
            stock
            valued at the average of closing price of the Company’s common stock in the 5
            day period prior to closing and the 5 day period after the closing.
 
 5
 The
            agreement provides for a closing when all of the conditions set forth
            in the
            agreement have been fulfilled. Ton Ren KaiYu owns three mineral exploration
            licenses and two **** mining **** exploration
            licenses. ****
 
 Tong
            Ren KaiYu has agreed to provide the Company with legal exclusive/first
            refusal
            rights for this acquisition. The parties have agreed to provide each
            other with
            all documentation necessary to complete their due diligence investigation
            of
            each company’s business.
 
 The
            Company has issued 7,000,000 shares of its common stock as a security
            deposit to
“Tong Ren Kai Yu” and its beneficiary nominee already. The parties agreed that
            if Tong Ren KaiYu meets its obligation under the financials and the Company
            does
            not consummate the transaction, then, Tong Ren KaiYu shall have the right
            to
            retain the shares. However, if Tong Ren KaiYu does not complete its obligations
            under this agreement the Company will be permitted to place stop transfer
            restrictions on the shares.
  The
            Company intends to form a subsidiary in China or Hong Kong to complete
            the
            acquisition withg Ton Ren KaiYu.
 
 The
            acquisition is subject to the Company completing certain duel diligence
            requirements and obtaining financing from third parties. As of December
            31 2007,
            the transaction has not closed. Management has not determined if it can
            complete
            this transaction. Management believes that they have no liabilities with
            regards
            to this transaction if the acquisition can not be completed.
 
 
 ***TaiHu
            Biomass Energy Power/Plant (50MW) Investment Construction
            Agreement***
 
 On
            October 28, 2007, China Power entered into a Development and Construction
            Agreement (the “ Construction
            Agreement ”)
            with TaiHu County Government (“TaiHu”), AnHui Province, People’s Republic of
            China, pursuant to which China Power was granted the exclusive right
            to develop
            and construct a 50 megawatt biomass energy power plant. Specifically, under
            the Construction Agreement, TaiHu has agreed to provide China Power with
            the
            land rights for up to 200 MU, or 133,400 square meters of land, to develop
            a
            biomass energy power plant. Conversely, China Power has committed to
            invest up
            to 580 million Yuan, or approximately $81,586,000 towards the development
            of the
            power plant.
 
 In
            addition to the foregoing, according to the China Central Government’s currently
            alternative energy laws related to Biomass Energy Projects, under the
            Construction Agreement, TaiHu has guaranteed (i) the financing for up
            to 65% of
            the 580 million Yuan China Power has committed to the development of
            the power
            plant through a local bank at a preferred interest rate, (ii) that 100%
            of the
            power generated by the Biomass Energy plant shall be purchased by the
            China
            State Grid at a purchase price of between 0.60 and 0.65 Yuan, or approximately
            $0.09 and $0.08, per kilowatt, (iii) this TaiHu Biomass Energy Power
            Generation
            Plant/project has designated with a total potential of 400 million KW/hr
            power
            generation capacity approximately annually, (iv) China Power’s rights under the
            Construction Agreement are exclusive.
 
 The
            Construction Agreement also provides that TaiHu shall be responsible
            for
            securing all necessary government approvals and ensuring the supply of
            all
            required utilities, such as electricity, water, communications and roadways,
            and
            China Power shall be responsible for obtaining all required financing
            for the
            plant and operating the plant with the most advanced technology available.
            The
            construction of the plant is estimated to take approximately two
            years.
 
 Development
            of the plant shall be done through America-China (TaiHu) Energy Co. Ltd.,
            incorporated under PRC laws by our subsidiary China Power. China Power
            will
            complete for the biomass fuel analysis report and the technical feasibilities
            for further development of the construction for TaiHu Biomass Energy
            Power/Plant
            ( 50MW) shortly. Management believes that they have no liabilities with
            regards
            to these transactions if the transactions can not be completed.
 
 6
 ***China
            Power completed the Fuel Analysis on******TaiHu Biomass
            Energy Power/Plant ( 50MW).***
 ***China
            Power has completed THE FEASIBILITIES STUDY on TaiHu Biomass Energy Power/Plant
            ( 50MW).***
 
  ***LongHua
            Biomass Energy Power Plant/ Project(50MW) Investment and Construction
            Agreement***
 
 On
            October 10, 2007, China Power entered into an agreement with LongHua
            Government
            and BeiJing JinRenTaiHe Trade Ltd.  Government to develop and
            construct a biomass energy power generation plant with a power capacity
            of 50MW.
            The parties estimate that it will take 2 years to complete the construction
            of
            the biomass energy generation plant at a cost of  RMB $580million
            (approximately USD$78 million) comprising of a cash investment of 35%
            and bank
            loans of 65%. The biomass energy power plant will be located at LongHua
            county
            in the town of TangTouGou village of LuoYing on a total of 200 MU lands.
            The
            Agreement provides that the LonHua Government will pay for the cost of
            the land
            and shall grant China Power the right to use the land for a term of 50
            years in
            accordance with the State’s land use policy.
 
  Pursuant
            to the terms of the agreement, the LongHua government will be responsible
            for
            (A) the coordination with the state, provincial and city governments;
            (B)
            registration of the project with the required governmental bodies; (C)
            providing
            tax incentives to China Power upon completion of the project; (D) assisting
            the
            Company with obtaining an additional 10-15 MU lands for the cultivation
            of the
            necessary biomass resources; and (E) allowing the Company to construct
            a well to
            provide water for construction of the plant.
 
 The
            Company agreed to provide the LongHua government with RMB$1.65 million
            (approximately USD$222,000) in connection with the documentation and
            approval
            process necessary for the construction permits for the biomass
            plant.  The LongHua government has agreed to provide the Company will
            legal exclusive rights for the construction and operation of the plant
            and
            agreed not to engage in the construction of a similar biomass
            plant.
 
 On
            January 23 2008, China Power executed an Amended Agreement with BeiJing
            JinRenTaiHe Trade Ltd. and Long-Hua Local Government that the 100% development
            rights of LongHua County Biomass Energy Power Plant/ Project (50MW) for
            further
            Investment and Construction Agreement will be fully legally 100% Development
            Rights transfer to China Power.
 
 China
            Power will complete the biomass fuel analysis report and the technical
            feasibilities for further development of the construction for Long-Hua
            Biomass
            Energy Power/Plant ( 50MW) shortly. Management believes that they have
            no
            liabilities with regards to these transactions if the transactions can
            not be
            completed.
 
 ***Con
            Yang Biomass Energy Power Plant/ Project(50MW) Investment and Construction
            Agreement***
 
 On
            October 29, 2007, China Power entered into an agreement to cooperate
            with the
            Con Yang Government. Pursuant to the agreement the Con Yang Government
            agreed to
            provide the Company with 200 MU lands in the Con Yang economic industry
            zone to
            develop and construct a biomass energy generation plant. The agreement
            contemplates the entry into a Lands Rights Agreement with the Con Yang
            Government Land & Resources Department for a term of 50 years. The parties
            anticipate that the total cost of the project to be RMB $580 million
            (approximately USD$78 million) comprising of a cash investment of 35%
            and bank
            loans of 65% and anticipate completion in 2010. The Agreement provides
            that the
            Con Yang Government will provide the Company will the lands for the cultivation
            of the straw and raw materials necessary for the project for a term of
            50 years.
            In addition, the Agreement provides that it will be effective in 6 months
            until
            China provides a biomass projects feasibility study and contemplates
            the entry
            into a further agreement for execution of the biomass energy
            projects.
 
 Management
            believes that they have no liabilities with regards to this transaction
            if the
            transaction can not be completed.
  7
 ***Acquisition
            Agreement with Hunan Zhangjiajie Chalinhe Electric Power Co., Ltd to
            Acquiring
            100% Interest of Chalinhe Hydropower Station (54
            MW-72MW)***
 
 On
            July 27 2007, China Power, Inc. entered into an acquisition definitive
            agreement
            for the acquisition of Hunan Zhangjiajie Chalinhe Electric Power Co.,
            Ltd and
            its Chalinhe Hydropower Station (54 MW-72MW). The purchase price
            for the assets shall consist of (i) a cash payment in the amount of 380
            million
            RMB (approximately USD$50 million), and (ii) the assumption of a bank
            loan in
            the amount of 300 million RMB ($USD40 million).The
            Chalinhe Hydropower Station comprises a reservoir with a dam 95 meters
            high and a total land position of 90,064 square meters. Specifications
            for the
            dam consi st
            of a dead water level of 77 meters, design flood level of 88.31 meters,
            check
            flood level of 92.81 meters and a total power generation capacity of
            72,000 kW
            (4×18,000 kW).
 
 Upon
            completion of the first stage of the power station, Chalinhe Electric
            Power Co.
            anticipates the total installed power production capacity will be approximately
            54,000 kW. However, implementation of the first stage of the project
            is
            dependent on Hunan Zhangjiajie Chalinhe Electric Power raising sufficient
            funds.
            Hunan Zhangjiajie Chalinhe Electric Power does not currently have any
            financing
            commitments and there is no guarantee that they will be able to raise
            any funds
            to implement their plans.
 
 The
            electricity sale price is expected to be RMB 0.316 Yuan/kWh (or approximately
            USD $0.042/kWh) pursuant to an existing contract with the China State
            Grid. In
            addition, the Chalinhe Hydropower Station has full legal approved rights
            to CDM
            (Clean Development Mechanism) projects and full legal rights for development
            of
            an additional 18,000 kW capacity to bring the total power generation
            capacity to
            72,000 kW.
 
 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 Hunan Zhangjiajie
            Chalinhe Electric Power Co., Ltd.
 
 The
            acquisition is subject to the Company completing certain due diligence
            requirements and obtaining financing from third parties. As of December
            31 2007,
            the transaction has not closed. Management has not determined if it can
            complete
            this transaction. Management believes that they have no liabilities with
            regards
            to this transaction if the acquisition can not be completed.
  ***Future
            Development***
 
 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
            of energy and renewable energy projects (such as hydropower plant and
            biomass
            energy projects, etc), mineral resources and natural medicinal
            products  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 assets holding company.
  If
            we are successful in raising $150 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 in multi-languages; (b) $200,000 for media advertising
            to
            promote our brand name; (c) $200,000 for our research and development
            program;
            (d) $400,000 for an investor relations program; (f) $500,000 for professional
            and consultant fees; (g) $1,800,000 for general working capital, including
            product development, inventory, and general and administrative expenses;
            and (h)
            $146,750,000 for merger and acquisitions and joint-ventures.
  If
            the Company ise only successful in raising $3 million of financing to
            sustain
            itscurrent level of business operations, we anticipate the following
            expenses
            over the next twelve months: (a) $150,000 to develop its Internet website
            and
            e-commerce system in multi-languages; (b) $200,000 for media advertising
            to
            promote our brand name; (c) $200,000 for its research and development
            program;
            (d) $400,000 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.
  8
  **RESULTS
        OF OPERATIONS**
  **Quarter
        Ended March 31, 2008 Compared to Quarter Ended March 31,
        2007**
 
 We
        had a
        net loss of $383,646 for the three months ended March 31, 2008 as
        compared to a net loss of $3,279,243 for the three
        months ended
        March 31, 2007 .
        The
        decrease in net loss for the three months ended
        March 31, 2008 was the result of decreased consulting fees from $951,692
        for the three
        months ended
        March 31, 2007 as compared to $31,100 in the comparable period in 2008 and
        decreased stockbased compensation, from $1,797,833 for the three months ended
        March 31, 2007 as compared to $0 for the three
        months ended
        March 31, 2008.
 
 Other
        Income (Expenses) was ($3,041) for the three months ended
        March 31, 2008 as compared to $1555 for the three months ended
        March 31, 2007. The decrease is attributed to foreign exchange gain or
        loss of ($3,041) for the three months ended
        March 31, 2008 compared to foreign exchange gain or loss of $1,555 for the
        three
        months ended
        March 31, 2007.
  The
        company intends on keeping it's expenses low as it
        seeks out it's acquisition targets. The company will likely use stock as
        a means
        of compensationn for certain expenses such as consulting, investor relations
        and
        other services management has determined it has to incur.
  **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 As
        of
        March 31, 2008, we had cash of $2,459 . Our current liabilities as of March
        31,
        2008 aggregated $1,557,766. As of March 31, 2008, we had a working capital
        deficiency of $1,551,569 and an accumulated deficit of $17,181,095. To date,
        our
        operations have been funded through advances from our Chief Executive Officer,
        Julianna Lu, and our Vice Chairman, XiaoFei Yu, and through issuances of
        shares
        of our common stock.
  As
        of
        March 31, 2008, we had outstanding loans to our CEO, Julianna Lu, in the
        amount
        of $1,175,996 and to our Vice Chairman, XiaoFei Yu, in the amount of
        $335,421. As of March 31, 2007, we had outstanding loans to our CEO, Julianna
        Lu, in the amount of $573,582, Vice Chairman, XiaoFei Yu, in the amount of
        $212,197. These
        amounts increased as the result of  Ms. Lu's and Mr. Yu's cash loans to the
        company as well as accrued compensation and interest charged on the loans.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.
  9
 
 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 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.
 
 These
        conditions raise substantial doubt about our ability to continue as a going
        concern.
  10
 
 **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 Form
        10-KSB/A filed for the year ended December 31, 2007 on April 18, 2008, be
        read
        in conjunction with this Management's discussion and Analysis of Financial
        Condition and Results of Operations.
 
  11
  **Inflation**
 
 It
        is our
        opinion that inflation has not had a material effect on our operations and
        we do
        not anticipate it will in the future.
 
 **Off-Balance
        Sheet Arrangements**
 
 We
        do not
        have any off-balance sheet arrangements.
  12
 
 **ITEM
                1A**
              **RISK
                  FACTORS.**
 
 ***Risks
        Related to our Company***
  ***We
        have limited history of operations and we cannot assure you that our business
        model will be successful in the future or that our operations will be
        profitable.***
 
 We
        began
        operations in 2002 and commenced trading as a public company on the OTC Bulletin
        Board in the middle of 2005. Our operating results for future periods will
        include significant expenses, including mergers and acquisition, marketing
        costs, and administrative and general overhead expenses as we implement our
        business model to expand our operations. As a result, we are unable to predict
        whether we will report profitable operations in the future. There can be
        no
        assurances whatsoever that we will be able to successfully implement our
        business model, identify and close acquisitions of operating companies,
        penetrate our target markets or attain a wide following for our services.
        We are
        subject to all the risks inherent in an early stage enterprise which has
        experienced rapid growth through acquisitions and our prospects must be
        considered in light of the numerous risks, expenses, delays, problems and
        difficulties frequently encountered in those businesses.
  ***The
        success of our business model is dependent upon our ability to identify and
        close acquisitions of operating companies in China. The acquisition of new
        businesses is costly and such acquisitions may not enhance our financial
        condition.***
 
 Our
        primary business strategy is to acquire companies and identify and acquire
        assets and technologies from businesses in China that have services, products,
        technologies, industry specializations or geographic coverage that extend
        or
        complement our existing business. The process to undertake a potential
        acquisition is time-consuming and costly. We expect to expend significant
        resources to undertake business, financial and legal due diligence on our
        potential acquisition targets, and there is no guarantee that we will acquire
        the company after completing due diligence. The process of identifying and
        consummating an acquisition could result in the use of substantial amounts
        of
        cash, potentially dilutive issuances of equity securities and exposure to
        undisclosed or potential liabilities of acquired companies. We have not
        consummated any acquisitions at this time and there can be no assurance that
        the
        addition of targeted businesses will enhance shareholder value.
  13
  ***Acquisition
        efforts in future periods may be dilutive to our then current
        stockholders.***
 
 Our
        business model depends upon the issuance of our securities to consummate
        acquisitions in the future. As a result, the percentage ownership of our
        company
        held by existing stockholders will be reduced and those stockholders may
        experience significant dilution. In addition, new securities may contain
        certain
        rights, preferences or privileges that are senior to those of our common stock.
        As we will generally not be required to obtain the consent of our stockholders
        before entering into acquisition transactions, stockholders are dependent
        upon
        the judgment of our management in determining the number of, and characteristics
        of stock issued as consideration in an acquisition.
  ***We
        will need additional financing which we may not be able to obtain on acceptable
        terms. Additional capital raising efforts in future periods may be dilutive
        to
        our then current stockholders or result in increased interest expense in
        future
        periods.***
 
 We
        will
        need to raise additional working capital to continue to implement our business
        model. While our business model contemplates the potential for the issuance
        of
        equity securities for the stock of acquired companies, capital may be needed
        for
        the acquisition of these companies. Capital will also be needed for the
        effective integration, operation and expansion of these businesses. Our future
        capital requirements, however, depend on a number of factors, including our
        operations, the financial condition of an acquisition target and its needs
        for
        capital, our ability to grow revenues from other sources, our ability to
        manage
        the growth of our business and our ability to control our expenses. If we
        raise
        additional capital through the issuance of debt, this will result in increased
        interest expense. If we raise additional funds through the issuance of equity
        or
        convertible debt securities, the percentage ownership of our company held
        by
        existing stockholders will be reduced and those stockholders may experience
        significant dilution. In addition, new securities may contain certain rights,
        preferences or privileges that are senior to those of our common stock. We
        cannot assure you that we will be able to raise the working capital as needed
        in
        the future on terms acceptable to us, if at all. If we do not raise funds
        as
        needed, we will be unable to fully implement our business model, fund our
        ongoing operations or grow our company.
  14
  ***Our
          financial status creates doubt whether we will continue as a going
          concern.***
 
 We
          reported net losses totaling of $7,604,072  and $3,197,076 for the
          year ended December 31, 2007 and 2006, respectively. As of March 31, 2008,
          we
          had a working capital deficiency of $1,551,569 (Current assets less current
          liabilities) and an accumulated deficit of $17,181,095. With our current
          resources, such as shareholder loans, we expect to be able to satisfy our
          cash
          requirements through March 31, 2009. 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 $50 million of outside funding in order to
          sustain
          our current business operations over the next twelve months, and at least
          $150
          million of outside funding in order to expand our business, fund future
          development and complete our acquisition projects. We have not in the past
          raised any funds and our operations have been funded primarily through
          loans
          from our officers and the issuance of shares of our common stock. Our need
          for
          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, terminate our acquisition
          agreements and curtail plans to construct the biomass plants. In addition,
          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.
  15
 ***Our
        management may be unable to effectively integrate our acquisitions and to
        manage
        our growth and we may be unable to fully realize any anticipated benefits
        of
        these acquisitions.***
 
 We
        are
        subject to various risks associated with our growth strategy, including the
        risk
        that we will be unable to identify and recruit suitable acquisition candidates
        in the future or to integrate and manage the acquired companies. We face
        particular challenges in that our acquisition strategy is based on companies
        located in and operating within China. Acquired companies' histories, the
        geographical  location, business models and business cultures will be
        different from ours in many respects. Even if we are successful in identifying
        and closing acquisitions of companies, our directors and senior management
        will
        face significant challenges in their efforts to integrate the business of
        the
        acquired companies or assets and to effectively manage our continued growth.
        Any
        future acquisitions will be subject to a number of challenges,
        including:
  ·
              the
                  diversion of management time and resources and the potential disruption
                  of
                  our ongoing business;
  ·
              difficulties
                  in maintaining uniform standards, controls, procedures and
                  policies;
  ·
              potential
                  unknown liabilities associated with acquired
                  businesses;
  ·
              the
                  difficulty of retaining key alliances on attractive terms with
                  partners
                  and suppliers; and
  ·
              the
                  difficulty of retaining and recruiting key personnel and maintaining
                  employee morale.
  There
        can
        be no assurance that our efforts to integrate the operations of any acquired
        assets or companies will be successful, that we can manage our growth or
        that
        the anticipated benefits of these proposed acquisitions will be fully
        realized.
  ***We
        are dependent upon our management and our ability to hire key
        personnel.***
  The
        success of our company is largely dependent on the personal efforts of Julianna
        Lu and Xiaofei Yu. Although we have employment agreements with these officers,
        the loss of the services of either of them would have a material adverse
        effect
        on our business and prospects. In addition, in order for us to undertake
        our
        operations as contemplated, it will be necessary for us to locate and hire
        experienced personnel who are bilingual and knowledgeable in the U.S. capital
        markets, China and generally accepted accounting principles applicable to
        U.S.
        companies. Our failure to attract and retain such experienced personnel on
        acceptable terms will have a material adverse impact on our ability to grow
        our
        business.
  16
  ***Certain
        agreements to which we are a party and which are material to our operations
        lack
        various legal protections which are customarily contained in similar contracts
        prepared in the United States.***
 
 Much
        of
        our business and operations are located in China. In addition, we are a party
        to
        certain contracts related to our operations. While these contracts contain
        the
        basic business terms of the agreements between the parties, these contracts
        do
        not contain certain provisions which are customarily contained in similar
        contracts prepared in the U.S., such as representations and warranties of
        the
        parties, confidentiality and non-compete clauses, provisions outlining events
        of
        defaults, and termination and jurisdictional clauses. Because these contracts
        omit these types of clauses, notwithstanding the differences in Chinese and
        U.S.
        laws, we may not have the same legal protections as we would if the contracts
        contained these additional provisions. We anticipate that our Chinese
        subsidiaries will likely enter into contracts in the future which will likewise
        omit these types of legal protections. While we have not been subject to
        any
        adverse consequences as a result of the omission of these types of clauses,
        and
        we consider the contracts to which we are a party to contain all the material
        terms of our business arrangements with the other party, future events may
        occur
        which lead to a dispute under agreements which could have been avoided if
        the
        contracts were prepared in conformity with U.S. standards. Contractual disputes
        which may arise from this lack of legal protection will divert management’s time
        from the operation of our business and require us to expend funds attempting
        to
        settle a possible dispute. This possible diversion of management time will
        limit
        the time our management would otherwise devote to the operation of our business,
        and the diversion of capital could limit the funds we have available to pay
        our
        ongoing operating expenses.
 
 ***Intensive
        competition for our subsidiaries will substantially affect our operating
        performance.***
 
 Each
        of
        our subsidiaries are development stage businesses. As such, the operations
        are
        subject to all the risks inherent in launching a new business enterprise,
        in
        developing and marketing a new product or service, and in establishing a
        name
        and a business reputation. The likelihood of our success must be considered
        in
        light of problems, expenses, difficulties and delays frequently encountered
        in
        converting prototype designs into viable production designs, and in achieving
        market acceptance with a new type of product or service. Each of the newly
        formed entities have had no product revenues to date, have operated at a
        loss
        since inception, and will likely sustain operating losses for an indeterminate
        time period. There can be no assurance that we will ever generate material
        revenues or that we will ever be profitable.
  17
 
 ***Because
        of the speculative nature of exploration of mineral properties, there is
        a
        substantial risk that our business will fail.***
 
 The
        search for valuable minerals as a business is extremely risky. Exploration
        for
        minerals is a speculative venture necessarily involving substantial risk.
        The
        expenditures to be made by us in the exploration of the optioned mineral
        properties may not result in the discovery of commercial quantities of minerals.
        Problems such as unusual or unexpected formations and other conditions are
        involved in mineral exploration and often result in unsuccessful exploration
        efforts. In such a case, we would be unable to complete our business
        plan.
 
 ***Because
        of the inherent dangers involved in mineral exploration, there is a risk
        that we
        may incur liability or damages as we conduct our
        business.***
 
 The
        search for valuable minerals involves numerous hazards. As a result, we may
        become subject to liabilities for such hazards, including pollution, cave-ins
        and other hazards against which we cannot insure or against which we may
        elect
        not to insure. The payment of such liabilities may have a material adverse
        effect on our financial position.
  ***Our
        targeted industries are heavily regulated and we may not be able to remain
        in
        compliance with all such regulations and we may be required to incur substantial
        costs in complying with such regulation.***
 
 Our
        business of acquiring mining projects, properties and companies in China
        is
        subject to extensive regulation by China's Mining Ministry, and by other
        provincial, county and local authorities in jurisdictions in which products
        are
        processed or sold, regarding the processing, storage, and distribution of
        mineral products. In addition, processing facilities are subject to periodic
        inspections by government agencies. We may not be able to comply with current
        laws and regulations, or any future laws and regulations. To the extent that
        new
        regulations are adopted, we will be required to conform our activities in
        order
        to comply with such regulations. We may be required to incur substantial
        costs
        in order to comply. Our failure to comply with applicable laws and regulations
        could subject us to civil remedies, including fines, injunctions, recalls
        or
        seizures, as well as potential criminal sanctions which could have a material
        and adverse effect on our business operations and finances. Changes in
        applicable laws and regulations may also have a negative impact on our
        sales.
  18
  Our
        business of acquiring China based pharmaceutical companies is also subject
        to
        extensive regulation by China's Health Ministry, and by other provincial,
        county
        and local authorities in jurisdictions in which pharmaceutical drugs/products
        are processed or sold, regarding the processing, storage, and distribution
        of
        such products. In addition, processing facilities are subject to periodic
        inspection by government agencies. We may not be able to comply with current
        laws and regulations, or any future laws and regulations. To the extent that
        new
        regulations are adopted, we will be required to conform our activities in
        order
        to comply with such regulations. We may be required to incur substantial
        costs
        in order to comply. Our failure to comply with applicable laws and regulations
        could subject us to civil remedies, including fines, injunctions, recalls
        or
        seizures, as well as potential criminal sanctions which could have a material
        and adverse effect on our business operations and finances. Changes in
        applicable laws and regulations may also have a negative impact on our
        sales.
 
 ***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 China Health’s 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 China Health’s 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’s ingredient present 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 potential 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
        China Health’s statements of nutritional support as to a particular specialty
        supplement or permit China Health to promote its specialty supplements directed
        at particular nutritional concerns. China Health also may be unable to
        disseminate third-party literature in connection with its potential products
        if
        the third-party literature fails to satisfy certain requirements. In addition,
        the FDA could require China Health 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 potential products that China Health is
        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.
  19
  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 China Health’s 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 China Health’s products appeared on the FDA's list, or if the
        agency determined there were issues concerning their safety, China Health
        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 China Health’s
        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
        China Health’s products have not been evaluated by the FDA and are not Generally
        Recognized as Safe, then China Health 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, China Health 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 China Health’s
        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. China Health may not be able to comply with the new
        rules
        without incurring additional expenses.
 
 Each
        of
        China Health’s 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.
  20
  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 China Health, repeal
        laws or
        regulations that we consider favorable to China Health 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 China Health’s 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.
 
 ***The
        nutritional supplements industry is intensely competitive. China Health has
        many
        well-established competitors with substantially greater financial and other
        resources than it. These factors may make it more difficult for China Health
        to
        successfully implement its business plan and may adversely affect its 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 operations. Some of the neutraceutical
        companies that we will compete with are Weider Nutrition International, Inc.,
        USANA Health Sciences Inc., Nature's Sunshine Products, Inc. and Herbalife
        International, Inc. China Health is a development stage business and the
        only
        revenues it has received from product sales since inception were nominal
        and
        were generated during 2004. Accordingly, China Health has not been operational
        long enough to experience any of the above problems. However, since China
        Health
        is 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 China
        Health’s. In addition, China Health’s competitors may be more effective and
        efficient in integrating new products. China Health 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.
  21
  ***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.***
 
 To
        date
        our operations have been funded through cash advances from our officers and
        through the issuance of shares of our common stock. There can be no assurance
        that our officers 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 o 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.
  22
  ***We
        may incur material product liability costs.***
 
 If
        our
        subsidiary, China Health, were to be engaged 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.***
 
 We
        have
        expanded our business into renewable energy resources and have entered into
        agreements to cooperate to construct a number of biomass energy power plants.
        We
        also entered into an agreement to acquire Chalinhe Hydropower station. In
        addition, we have entered into an agreement to acquire Tong Ren KaiYu Minerals
        which owns 3 minerals licenses. We have not completed any of these planned
        acquisitions and expansion projects. If and when we consummate one or more
        of
        these transactions, we may experience a period of significant growth. 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.
 
 ***Our
        strategy of growth through acquisitions is inherently
        risky.***
 
 Our
        strategy is to identify and target merger and/or acquisition candidates in
        China
        and throughout the world. Although we have signed a number of acquisition
        agreements to date, there can be no assurance that any or all of such
        acquisitions will be completed. Even if these acquisitions are completed,
        the
        final terms of the acquisition agreements may vary substantially from the
        terms
        described in the agreements. We have also entered into agreements to cooperate
        to construct a number of biomass energy power plants in China. These agreements
        require the investment of significant capital and require the approval of
        the
        appropriate administrative and regulatory bodies in China.
  23
  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.***
 
 China
        Health licenses the rights to a majority of its neutraceutical products from
        outside third parties. As part of China Health’s 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 China Health’s products. The
        number of contract manufacturers with the expertise, required regulatory
        approvals and facilities to manufacture China Health’s 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 China Health’s
        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, China Health will likely be unable
        to meet customer demand as it begins to market and sell its existing product
        lines.
  24
  ***Risks
          Related to Doing Business in the People’s Republic of
          China***
 
 ***We
          face the risk that changes in the policies of the government of the People’s
          Republic of China could have a significant impact upon our business and
          profitability.***
 
 The
          economy of the People’s Republic of China is in a transition from a planned
          economy to a market oriented economy subject to five-year and annual plans
          adopted by the government that set national economic development goals.
          Policies
          of the People’s Republic of China can have significant effects on the economic
          conditions of the People’s Republic of China. The government of the People’s
          Republic of China has confirmed that economic development will follow the
          model
          of a market economy. Under this direction, we believe that the People’s Republic
          of China will continue to strengthen its economic and trading relationships
          with
          foreign countries and business development in the People’s Republic of China
          will follow market forces. While we believe that this trend will continue,
          there
          can be no assurance that this will be the case. A change in policies by
          the
          government of the People’s Republic of China could adversely affect our
          interests by, among other factors:
 
 ·
                
                changes
                    in laws,
  ·
                
                imposition
                    of new regulations or the interpretations of such
                    regulations,·
                
                confiscatory
                    taxation,·
                
                restrictions
                    on currency conversion, imports or sources of supplies,
                    or·
                
                the
                    expropriation or nationalization of private
                    enterprises.
  Although
          the government of the People’s Republic of China has been pursuing economic
          reform policies for more than two decades, there is no assurance that the
          government will continue to pursue such policies or that such policies
          may not
          be significantly altered, especially in the event of a change in leadership,
          social or political disruption, or other circumstances affecting political,
          economic and social life in the People’s Republic of China.
  25
  ***The
          laws and regulations of the People’s Republic of China governing our current
          business operations are sometimes vague and uncertain. Any changes in these
          laws
          and regulations may have a material and adverse effect on our
          business.***
  There
          are
          substantial uncertainties regarding the interpretation and application
          of laws
          and regulations of the People’s Republic of China, including but not limited to,
          the laws and regulations governing our business, or the enforcement and
          performance of our arrangements with customers in the event of the imposition
          of
          statutory liens, death, bankruptcy and criminal proceedings. The laws and
          regulations are sometimes vague and may be subject to future changes, and
          their
          official interpretation and enforcement may involve substantial uncertainty.
          The
          effectiveness of newly enacted laws, regulations or amendments may be delayed,
          resulting in detrimental reliance by foreign investors. New laws and regulations
          that affect existing and proposed future businesses may also be applied
          retroactively. We cannot predict what effect the interpretation of existing
          or
          new laws or regulations of the People’s Republic of China may have on our
          businesses.
  ***A
          slowdown or other adverse developments in the economy of the People’s Republic
          of China may materially and adversely affect our customers, demand for
          our
          products and our business.***
  Much
          of
          our operations are conducted in the People’s Republic of China. Although the
          economy of the People’s Republic of China has grown significantly in recent
          years, we cannot assure investors that such growth will continue. The renewable
          energy industry in the People’s Republic of China is relatively new and growing,
          and we therefore do not know how sensitive it is to a slowdown in economic
          growth or other adverse changes in the economy of the People’s Republic of
          China. A slowdown in overall economic growth, an economic downturn or recession
          or other adverse economic developments in the People’s Republic of China could
          materially reduce the demand for our products and materially and adversely
          affect our business.
  26
  ***Inflation
          in the People’s Republic of China could negatively affect our profitability and
          growth.***
  While
          the
          People’s Republic of China economy has experienced rapid growth, such growth has
          been uneven among various sectors of the economy and in different geographical
          areas of the country. Rapid economic growth can lead to growth in the money
          supply and rising inflation. If prices for our products rise at a rate
          that is
          insufficient to compensate for the rise in the costs of supplies, it may
          have an
          adverse effect on profitability. In order to control inflation in the past,
          the
          People’s Republic of China has imposed controls on bank credits, limits on loans
          for fixed assets and restrictions on state bank lending. Such an austere
          policy
          can lead to a slowing of economic growth. On October 28, 2004, the People’s Bank
          of China, the People’s Republic of China’s central bank, raised interest rates
          for the first time in nearly a decade and indicated in a statement that
          the
          measure was prompted by inflationary concerns. Repeated rises in interest
          rates
          by the central bank would likely slow economic activity in the People’s Republic
          of China, which could, in turn, materially increase our costs and also
          reduce
          demand for our products.
  ***Any
          recurrence of severe acute respiratory syndrome, or SARS, or another widespread
          public health problem, could adversely affect our
          operations.***
  A
          renewed
          outbreak of SARS or another widespread public health problem in the People’s
          Republic of China, where much of our revenue is derived, could have an
          adverse
          effect on our operations. Our operations may be impacted by a number of
          health-related factors, including quarantines or closures of some of our
          offices
          that would adversely disrupt our operations. Any of the foregoing events
          or
          other unforeseen consequences of public health problems could adversely
          affect
          our operations.
 ***Our
            principal assets and management are located outside the United States,
            which
            could make it difficult to enforce laws or judgments against
            us.***
  Because
          our principal assets are located outside of the U.S. and all of our directors
          and officers reside outside of the U.S., it may be difficult for investors
          to
          enforce their rights based on U.S. federal securities laws against us and
          our
          officers and directors in the U.S. or to enforce a U.S. court judgment
          against
          us or them in the People’s Republic of China.
  All
          of
          our directors and officers reside outside of the U.S. In
          addition, China Power, Inc. and China Minerals
          Holdings, Inc., our subsidaries (Nevada Corporations), which have
          alternative energy projects and mining projects in China, and are located
          in the People’s Republic of China and substantially all of their assets are
          located outside of the U.S. It may therefore be difficult or impossible
          for
          investors in the U.S. to enforce their legal rights based on the civil
          liability
          provisions of the U.S. federal securities laws against us in the courts
          of
          either the U.S. or the People’s Republic of China and, even if civil judgments
          are obtained in U.S. courts, to enforce such judgments in the People’s Republic
          of China courts. Further, it is unclear if extradition treaties now in
          effect
          between the U.S. and the People’s Republic of China would permit effective
          enforcement against us or our officers and directors of criminal penalties,
          under the U.S. federal securities laws or otherwise.
  27
  ***We
          may have difficulty establishing adequate management, legal and financial
          controls in the People’s Republic of China.***
  The
          People’s Republic of China historically has not adopted a western style of
          management and financial reporting concepts and practices, as well as in
          modern
          banking, computer and other control systems. We may have difficulty in
          hiring
          and retaining a sufficient number of qualified employees to work in the
          People’s
          Republic of China. As a result of these factors, we may experience difficulty
          in
          establishing management, legal and financial controls, collecting financial
          data
          and preparing financial statements, books of account and corporate records
          and
          instituting business practices that meet western standards.
 
 ***The
          legal system in China has inherent uncertainties that may limit the legal
          protections available in the event of any claims or disputes with third
          parties.***
 
 The
          legal
          system in China is based on written statutes. Prior court decisions may
          be cited
          for reference but have limited precedential value. Since 1979, the central
          government has promulgated laws and regulations dealing with economic matters
          such as foreign investment, corporate organization and governance, commerce,
          taxation and trade. As China’s foreign investment laws and regulations are
          relatively new and the legal system is still evolving, the interpretation
          of
          many laws, regulations and rules is not always uniform and enforcement
          of these
          laws, regulations and rules involve uncertainties, which may limit the
          remedies
          available in the event of any claims or disputes with third parties. In
          addition, any litigation in China may be protracted and result in substantial
          costs and diversion of resources and management attention.
  ***Restrictions
          on currency exchange may limit our ability to receive and use our revenues
          effectively.***
 
 Because
          a
          substantial portion of revenues in future periods will be in the form of
          Renminbi, any future restrictions on currency exchanges may limit our ability
          to
          use revenue generated in Renminbi to fund any future business activities
          outside
          China or to make dividend or other payments in U.S. dollars. Although the
          Chinese government introduced regulations in 1996 to allow greater
          convertibility of the Renminbi for current account transactions, significant
          restrictions still remain, including primarily the restriction that
          foreign-invested enterprises may only buy, sell or remit foreign currencies,
          after providing valid commercial documents, at those banks authorized to
          conduct
          foreign exchange business. In addition, conversion of Renminbi for capital
          account items, including direct investment and loans, is subject to government
          approval in China, and companies are required to open and maintain separate
          foreign exchange accounts for capital account items. We cannot be certain
          that
          the Chinese regulatory authorities will not impose more stringent restrictions
          on the convertibility of the Renminbi, especially with respect to foreign
          exchange transactions.
  28
 
 ***We
          may be unable to enforce our rights due to policies regarding the regulation
          of
          foreign investments in China.***
 
 China’s
          legal system is a civil law system based on written statutes in which decided
          legal cases have little value as precedents, unlike the common law system
          prevalent in the United States. China does not have a well-developed,
          consolidated body of laws governing foreign investment enterprises. As
          a result,
          the administration of laws and regulations by government agencies may be
          subject
          to considerable discretion and variation, and may be subject to influence
          by
          external forces unrelated to the legal merits of a particular matter. China's
          regulations and policies with respect to foreign investments are evolving.
          Definitive regulations and policies with respect to such matters as the
          permissible percentage of foreign investment and permissible rates of equity
          returns have not yet been published. Statements regarding these evolving
          policies have been conflicting and any such policies, as administered,
          are
          likely to be subject to broad interpretation and discretion and to be modified,
          perhaps on a case-by-case basis. The uncertainties regarding such regulations
          and policies present risks which may affect our ability to achieve our
          stated
          business objectives. If we are unable to enforce any legal rights we may
          have
          under our contracts or otherwise, our ability to compete with other companies
          in
          our industry could be limited which could result in a loss of revenue in
          future
          periods which could impact our ability to continue as a going
          concern.
 
 ***Recent
          regulations relating to acquisitions of Chinese companies by foreign entities
          may create regulatory uncertainties that could restrict or limit our ability
          to
          operate, including our ability to pay dividends.***
 
 The
          State
          Administration of Foreign Exchange, or SAFE, issued a public notice in
          January
          2005 concerning foreign exchange regulations on mergers and acquisitions
          in
          China. The public notice states that if an offshore company controlled
          by
          Chinese residents intends to acquire a Chinese company, such acquisition
          will be
          subject to strict examination by the relevant foreign exchange authorities.
          The
          public notice also states that the approval of the relevant foreign exchange
          authorities is required for any sale or transfer by the Chinese residents
          of a
          Chinese company's assets or equity interests to foreign entities for equity
          interests or assets of the foreign entities.
  In
          April
          2005, SAFE issued another public notice further explaining the January
          notice.
          In accordance with the April 2005 notice, if an acquisition of a Chinese
          company
          by an offshore company controlled by Chinese residents has been confirmed
          by a
          Foreign Investment Enterprise Certificate prior to the promulgation of
          the
          January 2005 notice, the Chinese residents must each submit a registration
          form
          to the local SAFE branch with respect to their respective ownership interests
          in
          the offshore company, and must also file an amendment to such registration
          if
          the offshore company experiences material events, such as changes in the
          share
          capital, share transfer, mergers and acquisitions, spin-off transaction
          or use
          of assets in China to guarantee offshore obligations. The April 2005 notice
          also
          provides that failure to comply with the registration procedures set forth
          therein may result in restrictions on our Chinese resident shareholders
          and our
          subsidiaries. Pending the promulgation of detailed implementation rules,
          the
          relevant government authorities are reluctant to commence processing any
          registration or application for approval required under the SAFE
          notices.
  29
 
 In
          addition, on August 8, 2006, the Ministry of Commerce ("MOFCOM"), joined
          by the
          State-Owned Assets Supervision and Administration Commission of the State
          Council, State Administration of Taxation, State Administration for Industry
          and
          Commerce, China Securities Regulatory Commission and SAFE, amended and
          released
          the Provisions for Foreign Investors to Merge and Acquire Domestic Enterprises,
          new foreign-investment rules which took effect September 8, 2006, superseding
          much, but not all, of the guidance in the prior SAFE circulars. These new
          rules
          significantly revise China's regulatory framework governing onshore-offshore
          restructurings and how foreign investors can acquire domestic enterprises.
          These
          new rules signify greater Chinese government attention to cross-border
          merger,
          acquisition and other investment activities, by confirming MOFCOM as a
          key
          regulator for issues related to mergers and acquisitions in China and requiring
          MOFCOM approval of a broad range of merger, acquisition and investment
          transactions. Further, the new rules establish reporting requirements for
          acquisition of control by foreigners of companies in key industries, and
          reinforce the ability of the Chinese government to monitor and prohibit
          foreign
          control transactions in key industries.
 
 These
          new
          rules may significantly affect the means by which offshore-onshore
          restructurings are undertaken in China in connection with offshore private
          equity and venture capital financings, mergers and acquisitions. It is
          expected
          that such transactional activity in China in the near future will require
          significant case-by-case guidance from MOFCOM and other government authorities
          as appropriate. It is anticipated that application of the new rules will
          be
          subject to significant administrative interpretation, and we will need
          to
          closely monitor how MOFCOM and other ministries apply the rules to ensure
          its
          domestic and offshore activities continue to comply with Chinese law. Given
          the
          uncertainties regarding interpretation and application of the new rules,
          we may
          need to expend significant time and resources to maintain
          compliance.
 
 It
          is
          uncertain how our business operations or future strategy will be affected
          by the
          interpretations and implementation of the SAFE notices and new rules. Our
          business operations or future strategy could be adversely affected by the
          SAFE
          notices and the new rules. For example, we may be subject to more stringent
          review and approval process with respect to our foreign exchange
          activities.
  ***Revised
          tax structure proposed by the National People’s Congress could have a material
          impact on our performance.***
 
 On
          December 24, 2006, the Chinese government officially submitted a draft
          of the
          new Enterprise Income Tax Law which seeks to unify China's dual tax system.
          Presently China has a dual tax policy with different rates of taxation
          for
          domestic enterprises as opposed to foreign investment enterprises. The
          new
          unified tax rate is proposed to be 25% for all entities, which is higher
          than
          the 15% rate currently applied to foreign investment entities. However
          low
          profit enterprises, whether foreign investment enterprises or domestic
          enterprises, may be subject to a lower tax rate of 20%. It is uncertain
          how this
          new policy, if adopted, would impact our subsidiaries, as all the components
          of
          the revised policy have not been determined.
  30
 
 ***Failure
          to comply with the United States foreign corrupt practices act could subject
          us
          to penalties and other adverse consequences.***
 
 We
          are
          subject to the United States Foreign Corrupt Practices Act, which generally
          prohibits United States companies from engaging in bribery or other prohibited
          payments to foreign officials for the purpose of obtaining or retaining
          business. Corruption, extortion, bribery, pay-offs, theft and other fraudulent
          practices occur from time-to-time in China. We can make no assurance, however,
          that our employees or other agents will not engage in such conduct for
          which we
          might be held responsible. If our employees or other agents are found to
          have
          engaged in such practices, we could suffer severe penalties and other
          consequences that may have a material adverse effect on our business, financial
          condition and results of operations.
  **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."  In May 2007 our trading symbol was changed
        to CHHL. To date there has been 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.
  ***The
          majority of our outstanding shares are controlled by our Chief Executive
          Officer
          and Chairman.***
 
 Our
          Chief
          Executive Officer and Chairman, Julianna Lu, beneficially owns the majority
          of
          our outstanding shares of common stock and all of our outstanding shares
          or
          preferred stock. Accordingly, Ms. Lu controls the voting of our stock and
          has
          the ability to control the approval of most corporate actions, including
          increasing our authorized capital stock and the dissolution, merger or
          sale of
          our assets or business. Other stockholders will have limited or no ability
          to
          influence the outcome of stockholder votes on these or other
          matters.
 ***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
        SEC
        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:
  31
  ·
              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.
  32
  ***We
        have not voluntarily implemented various corporate governance measures, in
        the
        absence of which, stockholders may have more limited protections against
        interested director transactions, conflicts of interest and similar
        matters.***
 
 Recent
        Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted
        in
        the adoption of various corporate governance measures designed to promote
        the
        integrity of the corporate management and the securities markets. Some of
        these
        measures have been adopted in response to legal requirements. Others have
        been
        adopted by companies in response to the requirements of national securities
        exchanges, such as the NYSE or the Nasdaq Stock Market, on which their
        securities are listed. Among the corporate governance measures that are required
        under the rules of national securities exchanges are those that address board
        of
        directors' independence, audit committee oversight, and the adoption of a
        code
        of ethics. Although we have adopted a Code of Ethics, we have not yet adopted
        any of these other corporate governance measures and, since our securities
        are
        not yet listed on a national securities exchange, we are not required to
        do so.
        We have not adopted corporate governance measures such as an audit or other
        independent committees of our board of directors as we presently do not have
        any
        independent directors. If we expand our board membership in future periods
        to
        include additional independent directors, we may seek to establish an audit
        and
        other committees of our board of directors. It is possible that if we were
        to
        adopt some or all of these corporate governance measures, stockholders would
        benefit from somewhat greater assurances that internal corporate decisions
        were
        being made by disinterested directors and that policies had been implemented
        to
        define responsible conduct. For example, in the absence of audit, nominating
        and
        compensation committees comprised of at least a majority of independent
        directors, decisions concerning matters such as compensation packages to
        our
        senior officers and recommendations for director nominees may be made by
        a
        majority of directors who have an interest in the outcome of the matters
        being
        decided. Prospective investors should bear in mind our current lack of corporate
        governance measures in formulating their investment decisions.
  33
 
 ***Provisions
        of our certificate of incorporation and bylaws may delay or prevent a takeover
        which may not be in the best interests of our
        stockholders.***
 
 Provisions
        of our certificate of incorporation and bylaws may be deemed to have
        anti-takeover effects, which include when and by whom special meetings of
        our
        stockholders may be called, and may delay, defer or prevent a takeover attempt.
        In addition, certain provisions of Nevada law also may be deemed to have
        certain
        anti-takeover effects which include that control of shares acquired in excess
        of
        certain specified thresholds will not possess any voting rights unless these
        voting rights are approved by a majority of a corporation's disinterested
        stockholders.
 
 In
        addition, our certificate of incorporation authorizes the issuance of up
        to
        20,000,000 shares of preferred stock with such rights and preferences as
        may be
        determined by our board of directors. Our board of directors may, without
        stockholder approval, issue preferred stock with dividends, liquidation,
        conversion or voting rights that could adversely affect the voting power
        or
        other rights of our common stockholders.
   **ITEM
                3.**
              **CONTROLS
                  AND PROCEDURES**
  *(a)
        Evaluation of Disclosure Controls and Procedures.* Our
        management, with the participation of our principal executive and principal
        financial officer, evaluated the effectiveness of our disclosure controls
        and
        procedures as of the end of the period covered by this report. Based on that
        evaluation, our principal executive and principal financial officer concluded
        that our disclosure controls and procedures as of the end of the period covered
        by this report were effective such that the information required to be disclosed
        by us in reports filed under the Securities Exchange Act of 1934 is
        (i) recorded, processed, summarized and reported within the time periods
        specified in the SEC’s rules and forms and (ii) accumulated and
        communicated to our management, including our principal executive and principal
        financial officer, as appropriate to allow timely decisions regarding
        disclosure.
  34
   (b) *Changes
        in Internal Control over Financial Reporting.* There
        were no changes in our internal control over financial reporting, as defined
        in
        Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently
        completed fiscal quarter that have materially affected,
        or are reasonably likely to materially affect, our internal control over
        financial reporting.
 (c) *Inherent
          Limitations on Effectiveness of Controls.* Our
          management, including our principal executive and financial officer, does
          not
          expect that our disclosure controls and procedures or our internal control
          will
          prevent all errors and all fraud. A control system, no matter how well
          conceived
          and operated, can provide only reasonable, not absolute, assurance that
          the
          objectives of the control system are met. Further, the design of a control
          system must reflect the fact that there are resource constraints, and the
          benefits of controls must be considered relative to their costs. Because
          of the
          inherent limitations in all control systems, no evaluation of controls
          can
          provide absolute assurance that all control issues and instances of fraud,
          if
          any, within the company have been detected.
  35
  **PART
        II - OTHER INFORMATION**
  **ITEM
        1. 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
        2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
        SECURITIES**
 During
          the quarter during the year ended March 31, 2008, the
          Company issued 4,660,000 shares of common stock for services rendered at
          an
          aggregate market value of $0.029 per share for a total value of
          $136,000.
 The
        offer
        and sale of such shares of our common stock were effected in reliance on
        the
        exemptions for sales of securities not involving a public offering, as set
        forth
        in Rule 506 promulgated under the Securities Act and in Section 4(2) of the
        Securities Act. A legend was placed on the certificates representing each
        such
        security stating that it was restricted and could only be transferred if
        subsequent registered under the Securities Act or transferred in a transaction
        exempt from registration under the Securities Act.
 
 **ITEM
        3.  DEFAULTS UPON SENIOR SECURITIES**
  There
        were no defaults upon senior securities during the period ended March 31,
        2008.
  **ITEM
        4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
 
 There
        were no matters submitted to the vote of securities holders during the period
        ended March 31, 2008.
  **ITEM
        5.  OTHER INFORMATION**
 On
          February 22, 2008 we amended our Certificate of Incorporation to increase
          the
          number of authorized shares of common stock from 300,000,000 to 2,000,000,000.
 36
  **ITEM
        6.**  **EXHIBITS**
 **Exhibit
                    Number**
                
                **Description**3.01
                
                Articles
                    of Incorporation of the AE&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, 2006.3.07
                
                Certificate
                    of Amendment to Articles of Incorporation increasing the Company’s
                    authorized shares of common stock to 2,000,000,000, filed with
                    the State
                    of Nevada on February 22, 2008. (filed herewith).31.1
                
                Certification
                    of Chief Executive and Principal Financial Officer Pursuant to
                    Section 302
                    of the Sarbanes-Oxley Act.32.1
                
                Certification
                    of Chief Executive and Principal Financial  Officer Pursuant to
                    Section 906 of the Sarbanes-Oxley
                    Act.
   37
 **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
                  HOLDINGS, INC.**Date: May
                  20,
                  2008
              By:
              /s/ Julianna
                  LuChief
                  Executive Officer, Principal Financial Officer, Principal Accounting
                  Officer, Treasurer and Chairman of the Board of
                  Directors
  38




EXHIBIT
      INDEX **Exhibit
                    Number**
                
                **Description**3.01
                
                Articles
                    of Incorporation of the AE&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, 2006.3.07
                
                Certificate
                    of Amendment to Articles of Incorporation increasing the Company’s
                    authorized shares of common stock to 2,000,000,000, filed with
                    the State
                    of Nevada on February 22, 2008. (filed herewith).31.1
                
                Certification
                    of Chief Executive and Principal Financial Officer Pursuant to
                    Section 302
                    of the Sarbanes-Oxley Act.32.1
                
                Certification
                    of Chief Executive and Principal Financial Officer Pursuant to
                    Section 906 of the Sarbanes-Oxley
                    Act.