UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                [GRAPHIC OMITTED]

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

                                   FORM 10-QSB

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

                   For the First Quarter Ended March 31, 2006


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

                  For the Transition Period From _____ to _____

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




                        Commission File Number 333-119034
                           CHINA HEALTH HOLDING, INC.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

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

                             Julianna Lu, BSc. MSc.
                             Chief Executive Officer
        101 Convention Center Drive, Suite 700, Las Vegas, NV 89107-2001
               (Address of principal executive offices) (Zip Code)
                   Issuer's telephone Number: 1 (877) 883-0979

                                 Mailing Address
                    Suite 600 - 666 Burrard St., Park Place,
                  Vancouver, British Columbia, Canada V6C 2X8
                   Issuer's telephone Number: 1 (604) 608-6788

                                   Copies to:
                            Richard A. Friedman, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                              Phone: (212) 930-9700
                               Fax: (212) 930-9725


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

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

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [x] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

Yes [ ] No [x]

Total revenues for quarter ended March 31, 2006 were $0.

As of May 11, 2006 there were 60,764,551 shares of issuer's common stock issued
and outstanding.

<PAGE>


                           CHINA HEALTH HOLDING, INC.
                                   FORM 10-QSB
                   For the Fiscal Quarter Ended March 31, 2006
            --------------------------------------------------------



Part I                                                                  Page

Item 1.  Financial Statements.                                           3

Item 2.  Management's Discussion and Analysis or Plan of Operations.    22

Item 3.  Controls and Procedures                                        34

Part ll                                                                 Page

Item 1.  Legal Proceedings.                                             35

Item 2.  Unregistered Sale of Equity Securities and Use of Proceeds     35

Item 3.  Defaults Upon Senior Securities                                36

Item 4.  Submission of Matters to a Vote of Security Holders.           36

Item 5.  Other Information                                              36

Item 6. Exhibits.                                                       36

Signatures.                                                             37



                                       2
<PAGE>
                            CHINA HEALTH HOLDING INC.

                          (a development stage company)

                    CONSOLIDATED INTERIM FINANCIAL STATEMENTS


                                 MARCH 31, 2006

                                   (Unaudited)


    CONSOLIDATED BALANCE SHEETS

    INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

PART I

Financial Statements


                                       3
<PAGE>


                            CHINA HEALTH HOLDING INC.
                          (a development stage company)
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                              March 31,            December 31,
                                                                                                2006                  2005
                                                                                                  $                     $
                                                                                             (Unaudited)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                              <C>                  <C>
ASSETS

CURRENT ASSETS
    Cash                                                                                         14,014               14,887
    Prepaid expenses                                                                              7,476                5,126
                                                                                              ---------            ---------
Total current assets                                                                             21,490               20,013

PROPERTY AND EQUIPMENT, net (Note 4)                                                             13,627               14,631

INTANGIBLE ASSETS (Note 3)                                                                            3                    3
------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                                     35,120               34,647
====================================================================================================================================


LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
    Accounts payable and accrued liabilities                                                     20,623               33,785
     Due to shareholders (Note 5)                                                               764,165              584,639
                                                                                              ---------            ---------
Total current liabilities                                                                       784,788              618,424
                                                                                              ---------            ---------

COMMITMENTS (Notes 3 and 9)


       Preferred stock, $0.001 par value, 20,000,000 shares authorized,
          1,250,000 (December 31, 2005 - 1,000,000) shares issued and
          outstanding (Note 6)                                                                    1,250                1,000
       Common stock, $0.001 par value, 300,000,000 shares authorized
           60,464,551 (December 31, 2005 - 46,596,931) shares issued and
          outstanding (Note 6)                                                                   60,465               46,597
       Additional paid-in capital                                                             6,836,118            5,676,104
       Deferred Compensation (Note 7)                                                        (1,154,083)            (257,514)
       Deficit accumulated during the development stage                                      (6,425,420)          (5,996,301)
       Accumulated other comprehensive loss                                                     (67,998)             (53,663)
                                                                                              ---------            ---------
Total Stockholders' (Deficit)                                                                  (749,668)            (583,777)
------------------------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                    35,120               34,647
====================================================================================================================================

The accompanying notes are an integral part of these interim financial statements
</TABLE>

                                       4
<PAGE>

                            CHINA HEALTH HOLDING INC.
                          (a development stage company)
                  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                   Cumulative results
                                                                                                   of operations from
                                                               Three Month        Three Month         April 3, 2002
                                                              Period ended       Period ended     (inception) to March
                                                             March 31, 2006     March 31, 2005             31,
                                                                    $                  $                  2006
                                                                                                            $
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>         <C>                           <C>
SALES                                                                      -                 -                8,976
Cost of goods sold                                                                           -                 (245)
                                                               -------------     -------------        -------------
                                                                           -                 -                8,731
                                                               -------------     -------------        -------------
EXPENSES
       Advertising and promotion                                           -             8,713              115,847
       Amortization of intangible assets                                   -                 -                7,125
       Consulting fees (Notes 6 and 7)                               117,104           212,452            2,039,993
       Depreciation                                                    1,052               538                5,958
       Interest and bank charges (Note 8)                             21,339            14,169               94,799
       Investor relations                                             34,479                 -               69,102
       Management fees (Note 7)                                      169,538            30,000            1,369,934
       Office                                                          8,794            14,482               35,289
       Professional fees (Note 7)                                     61,637           120,487              603,742
       Rent                                                            8,111             5,159               61,680
       Research and development (Note 3)                                   -                 -            1,743,593
       Travel                                                          3,556             2,990               29,726
       Vehicle                                                         3,106                 -               10,798
                                                               -------------     -------------        -------------
                                                                     428,716           408,990            6,187,586
                                                               -------------     -------------        -------------
------------------------------------------------------------------------------------------------------------------------------------
NET LOSS FROM OPERATIONS                                            (428,716)         (408,990)          (6,178,855)

OTHER INCOME (EXPENSES)
       Foreign exchange                                                 (403)                 -               21,442
       Impairment of licensing rights (Note 3)                             -        (1,359,999)            (182,874)
       Gain (Loss) on settlement of debts and issuance of
          shares (Notes 7 and 11)                                          -                 -              (85,133)
                                                               -------------     -------------        -------------
                                                                           -                 -
                                                                        (403)       (1,359,999)            (246,565)
                                                               -------------     -------------        -------------
------------------------------------------------------------------------------------------------------------------------------------
NET LOSS                                                            (429,119)       (1,768,989)          (6,425,420)
                                                               -------------     -------------        -------------
====================================================================================================================================

BASIC NET LOSS PER SHARE                                              $(0.01)           $(0.05)
====================================================================================================================================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING              51,931,000        37,652,521
====================================================================================================================================

The accompanying notes are an integral part of these interim financial statements
</TABLE>

                                       5
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                       of operations from
                                                                 Three Month          Three Month         April 3, 2002
                                                                Period ended         Period ended     (inception) to March
                                                                  March 31,         March 31, 2005             31,
                                                                    2006                   $                  2006
                                                                      $                                         $


------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>                  <C>
OPERATING ACTIVITIES
       Net loss                                                     (429,119)         (1,768,989)          (6,425,420)
       Adjustments to reconcile net loss to cash
       used in operating activities:
          Accrued interest                                            20,069               8,130               90,229
          Amortization of intangible assets                                -                   -                7,125
          Depreciation                                                 1,052                 538                5,958
          Impairment of licensing rights                                   -                                  182,874
          License rights                                                   -           1,359,999            1,359,999
          Loss on settlement of debts and
            issuance of shares                                             -                   -               84,476
          Non cash expenses paid with shares                         121,151             315,005            2,450,666
          Stock-based compensation                                   156,412                   -            1,410,454

       Changes in operating assets and liabilities
          Prepaid expenses                                            (2,350)                  -               20,659
          Accounts payable and accrued liabilities                   (13,165)                  -               29,000
                                                                   ---------           ---------            ---------
Net cash used in operating activities                               (145,950)            (85,317)            (783,980)
                                                                   ---------           ---------            ---------
INVESTING ACTIVITIES
       Purchase of property and equipment                                  -              (4,706)             (19,536)
                                                                   ---------           ---------            ---------
Net cash used in investing activities                                      -              (4,706)             (19,536)
                                                                   ---------           ---------            ---------
FINANCING ACTIVITIES
       Issuance of common stock                                            -             245,000              513,697
       Net  advances (repayment) from shareholders                   159,457             (39,847)             371,876
                                                                   ---------           ---------            ---------
Net cash provided by financing activities                            159,457             205,153              885,573
                                                                   ---------           ---------            ---------
EFFECT OF EXCHANGE RATE CHANGES                                      (14,380)             10,027              (68,043)
                                                                   ---------           ---------            ---------
NET (DECREASE) INCREASE IN CASH                                         (873)            125,157               14,014

CASH, BEGINNING OF YEAR                                               14,887               3,511                    -
------------------------------------------------------------------------------------------------------------------------------------
CASH, END OF YEAR                                                     14,014             128,668               14,014
====================================================================================================================================

SUPPLEMENTARY NON-CASH INFORMATION (Note 7)


The accompanying notes are an integral part of these interim financial statements
</TABLE>
                                       6
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006



1.   NATURE OF OPERATIONS AND BASIS OF PRESENTATION


     China Health Holding Inc. (the "Company") is a Nevada company incorporated
     on April 3, 2002 as A E&E Pharma Corporation. The Company changed its name
     to China Health Holding Inc. on May 25, 2004. The Company is a development
     stage company that is engaged in the acquisition, development, marketing
     and manufacturing of innovative enhanced traditional Chinese medicinal
     herbal supplement product lines. The Company's product lines include
     dietary food supplements that are helpful in strengthening the immune
     system and cardio-cerebral vascular function as well as promoting overall
     physical and mental health. The Company's three primary product lines
     include the King of Herbs-based products, the Taoist herbal medicinal
     products and a line of natural multi-vitamins and supplements. All of the
     Company's products are based on traditional Chinese medicine and the
     principals of Taoism (see Note 3).

     The Company plans to introduce a line of natural skin care and cosmetic
     products as well as to develop new products based on its knowledge of
     traditional Chinese medical practice.

     The Company completed a Form SB-2 registration statement with the United
     States Securities and Exchange Commission on February 11, 2005 and received
     approval from the NASD for the listing of the Company's shares for trading
     on the Over the Counter Bulletin Board ("OTCBB') on April 18, 2005.

     UNAUDITED INTERIM FINANCIAL STATEMENTS

     The accompanying unaudited interim financial statements have been prepared
     in accordance with United States generally accepted accounting principles
     for interim financial information and in accordance with the instructions
     to Form 10-QSB of Regulation S-B. They do not include all information and
     footnotes required by United States generally accepted accounting
     principles for complete financial statements. In the opinion of Management,
     all adjustments considered necessary for a fair presentation, consisting
     solely of normal recurring adjustments, have been made. Operating results
     for the three months ended March 31, 2006 are not necessarily indicative of
     the results that may be expected for the year ended December 31, 2006.


2.    SIGNIFICANT ACCOUNTING POLICIES


     a)   Basis of presentation

     These consolidated financial statements have been presented in U.S. dollars
     and prepared in accordance with generally accepted accounting principles in
     the United States. The Company's year end is December 31.

     The financial statements have been prepared on the basis of a going concern
     which contemplates the realization of assets and the satisfaction of
     liabilities in the normal course of business. The Company has a working
     capital deficiency of $763,298 and a stockholders' deficit of $749,668 has
     incurred significant losses since inception and further losses are
     anticipated in the development of its products raising substantial doubt as
     to the Company's ability to continue as a going concern.

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


                                       7
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


2.   SIGNIFICANT ACCOUNTING POLICIES - CONT'D


     a)   Basis of presentation (continued)

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

     b)   Consolidation

     The consolidated financial statements include the accounts of the Company
     and its wholly-owned subsidiaries, China Health Pharmaceutical Corporation
     and China Health World Trade Corporation. Those subsidiaries have not yet
     commenced operations and have no significant assets, liabilities, revenues
     or expenses.

     c)   Use of estimates and assumptions

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


     d)   Property and equipment

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

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

     e)   Revenue recognition

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

     f)   Net loss per common share

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


                                       8
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006



2.   SIGNIFICANT ACCOUNTING POLICIES - CONT'D

     g)   Fair value of financial instruments

     In accordance with the requirements of SFAS No.107, "Disclosures about Fair
     Value of Financial Instruments", the Company has determined the estimated
     fair value of financial instruments using available market information and
     appropriate valuation methodologies. The fair value of financial
     instruments classified as current assets or liabilities including cash,
     accounts payable and amounts due to shareholders, approximate carrying
     value due to the short-term maturity of the instruments.

     h)   Intangible assets

     The Company has adopted the provision of the Statement of Financial
     Accounting Standards ("SFAS") No.142, "Goodwill and Intangible Assets",
     which revises the accounting for purchased goodwill and intangible assets.
     Under SFAS No. 142, goodwill and intangible assets with indefinite lives
     are no longer amortized and are to be tested for impairment annually or
     whenever events or circumstances indicate that the estimated fair value is
     less than the related carrying value as determined on a reporting unit
     basis. The determination of any impairment would include a comparison of
     estimated future operating cash flows anticipated during the remaining life
     with the net carrying value of the asset as well as a comparison of the
     fair value to book value of the Company. Management has determined that the
     Company's proprietary rights and formulas described in Note 3 a) have
     indefinite lives and as such are not subject to amortization and further
     that no impairment of the carrying value of these intangible assets has
     occurred.

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

     Management has determined that the Company's proprietary rights and
     formulas described in Note 3 c) have indefinite lives and as such are not
     subject to amortization. Management has, however, determined that it is not
     possible at this time to estimate future cash flows from these assets and
     has recorded an impairment charge of $1,359,999 in 2005 to reduce the
     carrying value to $1.

     i)   Foreign currency translation

     The Company's functional currency is the Canadian dollar. The financial
     statements are translated to United States dollars in accordance with SFAS
     No. 52, "Foreign Currency Translation", using period-end rates of exchange
     for assets and liabilities, and average rates of exchange for the year for
     revenues and expenses. Translation gains (losses) are recorded in
     accumulated other comprehensive income (loss) as a component of
     stockholders' deficit. Gains and losses arising on translation or
     settlement of foreign currency denominated transactions or balances are
     included in the determination of income. Foreign currency transactions are
     primarily undertaken in Canadian dollars. The Company has not, to the date
     of these consolidated financials statements, entered into derivative
     instruments to offset the impact of foreign currency fluctuations.



                                       9
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


2.   SIGNIFICANT ACCOUNTING POLICIES - CONT'D


     j)   Income taxes

     The Company follows SFAS No. 109, "Accounting for Income Taxes", using the
     liability method of accounting for income taxes. Under this method,
     deferred income tax assets and liabilities are recognized for the estimated
     tax consequences attributable to differences between the financial
     statement carrying values and their respective income tax basis (temporary
     differences). The effect on deferred income tax assets and liabilities of a
     change in tax rates is recognized in income in the period that includes the
     enactment date. At March 31, 2006, full deferred tax asset valuation
     allowance has been provided and no deferred tax asset benefit has been
     recorded.

     k)   Stock-based compensation

     Prior to January 1, 2006, the Company accounted for stock-based awards
     under the recognition and measurement provisions of Accounting Principles
     Board Opinion No. 25, "Accounting for Stock Issued to Employees" using the
     intrinsic value method of accounting, under which compensation expense was
     only recognized if the exercise price of the Company's employee stock
     options was less than the market price of the underlying common stock on
     the date of grant. Effective January 1, 2006, the Company adopted the fair
     value recognition provisions of SFAS No. 123R "Share Based Payments", using
     the modified retrospective transition method. There was no effect on the
     Company's reported loss from operations, cash flows or loss per share as a
     result of adopting SFAS No 123R.

     The following table illustrates the pro forma effect on net income and
     earnings per share as if the Company had accounted for its stock-based
     employee compensation using the fair value provisions of SFAS No. 123 using
     the assumptions as described in Note 6:
<TABLE>
<CAPTION>
                                                                                             Three Months Ended
                                                                                                 March 31,
                                                                                       2006                    2005
                                                                                         $                       $
<S>                                                                                 <C>                    <C>
         Net loss -- as reported                                                    (429,119)              (1,768,979)
         Add: Stock-based compensation expense included in net loss -- as
           reported                                                                        -                        -
         Deduct: Stock-based compensation expense determined under fair value
           method                                                                          -                        -
                                                                                -------------------------------------------

         Net loss -- pro forma                                                      (429,119)              (1,768,979)
                                                                                -------------------------------------------

         Net loss per share - basic and diluted -- as reported                         (0.01)                   (0.05)
         Net loss per share - basic and diluted -- pro forma                           (0.01)                   (0.05)
</TABLE>


                                       10
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


2.   SIGNIFICANT ACCOUNTING POLICIES - CONT'D


     l)   Recent accounting pronouncements

     In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
     Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and
     140", to simplify and make more consistent the accounting for certain
     financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for
     Derivative Instruments and Hedging Activities", to permit fair value
     remeasurement for any hybrid financial instrument with an embedded
     derivative that otherwise would require bifurcation, provided that the
     whole instrument is accounted for on a fair value basis. SFAS No. 155
     amends SFAS No. 140, "Accounting for the Impairment or Disposal of
     Long-Lived Assets", to allow a qualifying special-purpose entity to hold a
     derivative financial instrument that pertains to a beneficial interest
     other than another derivative financial instrument. SFAS No. 155 applies to
     all financial instruments acquired or issued after the beginning of an
     entity's first fiscal year that begins after September 15, 2006, with
     earlier application allowed. This standard is not expected to have a
     significant effect on the Company's future reported financial position or
     results of operations.

     In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
     Financial Assets, an amendment of FASB Statement No. 140, Accounting for
     Transfers and Servicing of Financial Assets and Extinguishments of
     Liabilities". This statement requires all separately recognized servicing
     assets and servicing liabilities be initially measured at fair value, if
     practicable, and permits for subsequent measurement using either fair value
     measurement with changes in fair value reflected in earnings or the
     amortization and impairment requirements of Statement No. 140. The
     subsequent measurement of separately recognized servicing assets and
     servicing liabilities at fair value eliminates the necessity for entities
     that manage the risks inherent in servicing assets and servicing
     liabilities with derivatives to qualify for hedge accounting treatment and
     eliminates the characterization of declines in fair value as impairments or
     direct write-downs. SFAS No. 156 is effective for an entity's first fiscal
     year beginning after September 15, 2006. This adoption of this statement is
     not expected to have a significant effect on the Company's future reported
     financial position or results of operations.



                                       11
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


3.   INTANGIBLE ASSETS


     a)   Asset purchase agreement

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

        - 2,200,000 common shares at a fair value of $0.87 per share    $191,307
        - Due to shareholders                                            175,000
                                                                        --------
                                                                        $366,307

     The amount due to shareholders bears interest at 10% per annum, is
     unsecured and has no specific terms of repayment. In addition, the Company
     agreed to pay the vendors a combined total royalty equal to 5% of annual
     gross sales of the products until May 1, 2009.

     For accounting purposes, the Company has recorded the cost of acquiring the
     proprietary rights and formulas as intangible assets at the related party
     vendor's carrying value of $1. The excess of the purchase price over the
     carrying value of the intangible assets totalling $366,306 has been
     expensed as research and development costs during the year ended December
     31, 2004.


                                       12
<PAGE>
                           CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


3.   INTANGIBLE ASSETS - CONT'D


     b)   Licensing rights agreement

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

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



                                       13
<PAGE>
                           CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


3.   INTANGIBLE ASSETS - CONT'D


     b)   Licensing rights agreement - cont'd

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

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

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

     During 2005, this licensing agreement was cancelled and the 760,000 shares
     issued in 2004 are to be returned to the Company and cancelled.

     c)   Asset purchase agreement

     Pursuant to an asset purchase agreement dated March 22, 2005, the Company
     acquired from the Company's shareholders intellectual rights to 108 "100%
     Natural Taoist Herbal Medicinal Products" that comprise the Company's
     Taoist Medicine product lines. In exchange for the rights, the Company
     agreed to pay total consideration as follows:

       - 4,500,000 common shares at a fair value of $0.30 per share   $1,350,000
       - Payable to shareholders                                          10,000
                                                                      ----------
                                                                      $1,360,000

     In addition, the Company agreed to pay the vendors a combined total royalty
     equal to 5% of annual gross sales of the products until March 22, 2039.

     For accounting purposes, the Company has recorded the cost of acquiring the
     intellectual rights as intangible assets at the related party vendor's
     carrying value of $1. The excess of the purchase price over the carrying
     value of the intangible assets totalling $1,359,999 has been expensed as
     research and development costs during the year ended December 31, 2005.


                                       14
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


4.   PROPERTY AND EQUIPMENT

Property and equipment consists of the following:
                                                        March 31,   December 31,
                                                          2006         2005
                                                            $            $

           Computer                                       16,729        16,688
           Furniture and Fixtures                          2,856         2,849
                                                        --------      --------
                                                          19,585        19,537

           Less:  accumulated depreciation                (5,958)       (4,906)
                                                        --------      --------
                                                          13,627        14,631
                                                        ========      ========


5.   DUE TO SHAREHOLDERS

     The amount due to shareholders bears interest at 10% per annum, is
     unsecured and has no specific terms of repayment (Note 8).

6.   CAPITAL STOCK

     The authorized capital of the Company consists of 300,000,000 voting common
     shares with $0.001 par value and 20,000,000 voting preferred shares with
     $0.001 par value. On March 28, 2005, the Company increased the authorized
     common shares from 55,000,000 shares to 300,000,000 shares.

     The preferred stock has a stated value of $0.15 per share and a liquidation
     preference over the Company's common stock. Holders of Series A preferred
     stock are entitled to two votes for each share of Series A preferred stock
     owned. Each share of Series A preferred stock is convertible, at the option
     of the holder, into two shares of common stock, commencing two years after
     the date of issuance, provided the market price of the common stock is not
     below $1.00 per share. Additionally, if prior to two years from the date of
     issue, there is a sale or other disposition of all or substantially all of
     the Company's assets, a transaction or series of related transactions in
     which more than 50% of the voting power of the Company is disposed of, or
     upon a consolidation, merger or other business combination where the
     Company is not the survivor, then immediately prior to such event each
     holder of Series A preferred stock may convert any or all of such holder's
     shares of Series A preferred stock into common stock.

     During the quarter ended March 31, 2006, the Company issued a total of
     1,640,000 common shares for services at an average of $0.13 per share for
     total consideration of $218,500.

     During the quarter ended March 31, 2006, the Company issued a total 134,710
     common shares for corporate expenses at $0.12 per share for a total of
     $16,165.

     On February 16, 2006, the Company declared a stock dividend on the basis of
     one new share of common stock for every four shares of common stock
     outstanding resulting in 12,092,910 shares of common stock being issued,
     and one share of Series A preferred stock for every four shares of Series A
     preferred stock outstanding resulting in 250,000 preferred shares being
     issued. The record date is February 28, 2006 and the payment date is March
     17, 2006.


                                       15
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


6.   CAPITAL STOCK - CONT'D
<TABLE>
<CAPTION>
     The Company has granted stock options as follows:
                                                               -------------------- -------------------- --------------------
                                                                                    Weighted Average       Weighted Average
                                                                Number of Options    Exercise price      Remaining Contractual
                                                                                           $                     Life
                                                               -------------------- -------------------- --------------------
<S>                           <C>                                       <C>                   <C>             <C>
         Balance, December 31, 2005                                      7,979,175             0.20            2.53 years

         Issued during the period                                        6,650,000             0.20                -
         Expired during the period                                       (300,000)             0.30                -
                                                               -------------------- -------------------- --------------------
         Balance, March 31, 2006                                        14,329,175             0.19            2.69 years
                                                               ==================== ==================== =====================
         Balance, December 31, 2004                                      6,600,000             0.11            3.33 years

         Issued during the period                                          300,000             0.30                -

         Balance March 31, 2005                                          6,900,000             0.12            2.99 years
                                                               ==================== ==================== =====================
</TABLE>
     a)   On January 22, 2006, the Company granted 1,000,000 stock options to a
          consultant with an exercise price of $0.20 per share subject to
          immediate vesting. Stock-based compensation of $10,719 was recorded as
          consulting expense and $99,803 as deferred compensation during the
          three month period ended March 31, 2006. The fair value of the stock
          options was estimated by application of the fair value method using
          Black Scholes option pricing model. Assumptions used in this model
          were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.26%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 272%
               ----------------------------------------- -------------
               Expected option life                           2 years
               ----------------------------------------- -------------

     b)   On January 22, 2006, the Company granted 1,000,000 stock options to a
          consultant with an exercise price of $0.20 per share subject to
          immediate vesting. Stock-based compensation of $7,066 was recorded as
          consulting expense and $103,417 as deferred compensation during the
          three month period ended March 31, 2006. The fair value of the stock
          options was estimated by application of the fair value method using
          Black Scholes option pricing model. Assumptions used in this model
          were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.26%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 272%
               ----------------------------------------- -------------
               Expected option life                        2.92 years
               ----------------------------------------- -------------

     c)   On January 22, 2006, the Company granted 2,500,000 stock options to
          the President of the Company with an exercise price of $0.20 per share
          subject to immediate vesting. Stock-based compensation of $102,279 was
          recorded as consulting expense and $168,146 as deferred compensation
          during the three month period ended March 31, 2006. The fair value of
          the stock options was estimated by application of the fair value
          method using Black Scholes option pricing model. Assumptions used in
          this model were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.21%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 272%
               ----------------------------------------- -------------
               Expected option life                           4 years
               ----------------------------------------- -------------

                                       16
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


6.   CAPITAL STOCK - CONT'D


     d)   On January 28, 2006, the Company granted 1,000,000 stock options to a
          consultant with an exercise price of $0.20 per share subject to
          immediate vesting. Stock-based compensation of $15,114 was recorded as
          consulting expense and $161,882 as deferred compensation during the
          three month period ended March 31, 2006. The fair value of the stock
          options was estimated by application of the fair value method using
          Black Scholes option pricing model. Assumptions used in this model
          were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.38%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 270%
               ----------------------------------------- -------------
               Expected option life                           2 years
               ----------------------------------------- -------------

     e)   On February 1, 2006, the Company granted 1,000,000 stock options to a
          consultant with an exercise price of $0.20 per share subject to
          immediate vesting. Stock-based compensation of $18,791 was recorded as
          consulting expense and $215,071 as deferred compensation during the
          three month period ended March 31, 2006. The fair value of the stock
          options was estimated by application of the fair value method using
          Black Scholes option pricing model. Assumptions used in this model
          were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.47%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 269%
               ----------------------------------------- -------------
               Expected option life                           2 years
               ----------------------------------------- -------------

     f)   On February 7, 2006, the Company granted 150,000 stock options to a
          consultant with an exercise price of $0.30 per share subject to
          immediate vesting. Stock-based compensation of $2,032 was recorded as
          consulting expense and $18,396 as deferred compensation during the
          three month period ended March 31, 2006. The fair value of the stock
          options was estimated by application of the fair value method using
          Black Scholes option pricing model. Assumptions used in this model
          were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.55%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 266%
               ----------------------------------------- -------------
               Expected option life                            1 year
               ----------------------------------------- -------------

     g)   During the three month period ended March 31, 2006, the Company
          decreased the exercise price of 100,000 stock options granted to a
          consultant during the year ended December 31, 2005, from $1.00 per
          share to $0.30 per share. Stock-based compensation of $255 was
          recorded as consulting expense and $2,306 as deferred compensation
          during the three month period ended March 31, 2006. The fair value of
          the stock options was estimated by application of the fair value
          method using Black Scholes option pricing model. Assumptions used in
          this model were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.55%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 266%
               ----------------------------------------- -------------
               Expected option life                            1 year
               ----------------------------------------- -------------


                                       17
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


6.   CAPITAL STOCK - CONT'D


     h)   During the three month period ended March 31, 2006, the Company
          decreased the exercise price of 100,000 stock options granted to a
          consultant during the year ended December 31, 2005, from $1.00 per
          share to $0.30 per share. Stock-based compensation of $156 was
          recorded as consulting expense and $1,789 as deferred compensation
          during the three month period ended March 31, 2006. The fair value of
          the stock options was estimated by application of the fair value
          method using Black Scholes option pricing model. Assumptions used in
          this model were as follows:

               ----------------------------------------- -------------
               Risk-free interest rate                          4.59%
               ----------------------------------------- -------------
               Dividend yield                                      0%
               ----------------------------------------- -------------
               Volatility factor                                 269%
               ----------------------------------------- -------------
               Expected option life                            1 year
               ----------------------------------------- -------------

     The Company has issued share purchase warrants as follows:
<TABLE>
<CAPTION>
                                                                               Number of     Weighted Average
                                                                                Warrants       Exercise Price
<S>                        <C>                                                <C>                 <C>
         Balance, December 31, 2004                                              339,000             0.56

         Issued during the period (iv)                                         1,080,000             0.75
                                                                               ---------             ----

         Balance, March 31, 2005                                               1,419,000             0.70
                                                                               =========             ====

         Balance, December 31, 2005                                            1,180,000             0.70

         Expired during the year                                              (1,080,000)            0.75
                                                                               ---------             ----

         Balance, March 31, 2006                                                 100,000             0.15
                                                                               =========             ====

</TABLE>
          i)   During 2002, the Company issued 19,000 units at $0.10 per unit.
               Each unit consisted of one common share and one share purchase
               warrant. Each warrant entitles the holder to purchase an
               additional common share for $0.75 and must be exercised within
               six months of the date the Company's shares commence trading on a
               United States Stock exchange. These warrants were not exercised,
               and expired in full during fiscal 2005.

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

          iii) During 2004, the Company issued 220,000 units at $0.25 per unit.
               Each unit consisted of one common share and one share purchase
               warrant. Each warrant entitles the holder to purchase an
               additional common share for $0.75 and must be exercised within
               one year. These warrants were not exercised, and expired in full
               during fiscal 2005.

          iv)  During 2005, the Company issued 1,080,000 units at $0.25 per
               unit. Each unit consisted of one common share and one share
               purchase warrant. Each warrant entitles the holder to purchase an
               additional common share for $0.75 and must be exercised within
               one year of the date the Company's shares commence trading on a
               United States Stock exchange. These warrants were not exercised,
               and expired in full during fiscal the period ended March 31,
               2006.


                                       18
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


7.   SUPPLEMENTARY NON-CASH INFORMATION


   The Company entered into the following non-cash transactions:

     a.   On January 17, 2006, the Company issued 250,000 common shares with a
          fair value of $0.12 per share for $30,000 of consulting services. At
          March 31, 2006, $26,839 is included in deferred compensation.

     b.   On January 18, 2006, the Company issued 300,000 common shares with a
          fair value of $0.11 per share for $33,000 of management consulting
          services. At March 31, 2006, $20,328 is included in deferred
          compensation.

     c.   On January 22, 2006, the Company issued 250,000 common shares with a
          fair value of $0.12 per share for $30,000 of consulting services. At
          March 31, 2006, $26,712 is included in deferred compensation.

     d.   On January 22, 2006, the Company issued 134,710 common shares with a
          fair value of $0.12 per share for $16,165 of corporate expenses of
          which $13,034 is included as a deferred compensation at March 31,
          2006.

     e.   On January 28, 2006, the Company issued 200,000 common shares with a
          fair value of $0.19 per share for $38,000 of consulting services, of
          which $34,424 is included as a deferred compensation at March 31,
          2006.

     f.   On February 1, 2006, the Company issued 90,000 common shares with a
          fair value of $0.25 per share for $22,500 of consulting services. At
          March 31, 2006, $16,789 is included in deferred compensation.

     g.   On February 14, 2006, the Company issued 100,000 common shares with a
          fair value of $0.11 per share for $11,000 of legal services.

     h.   On February 16, 2006, the Company declared a stock dividend on the
          basis of one new share of common stock for every four shares of common
          stock outstanding resulting in 12,092,910 common shares being issued,
          and one new share of Series A preferred stock for every four shares of
          Series A preferred stock outstanding resulting in 250,000 preferred
          shares being issued. The record date was February 28, 2006 and the
          payment date was March 17, 2006.

     i.   On February 21, 2006, the Company issued 300,000 common shares with a
          fair value of $0.12 per share for $36,000 of consulting services. At
          March 31, 2006, $32,620 is included in deferred compensation.

     j.   On February 21, 2006, the Company issued 150,000 common shares with a
          fair value of $0.12 per share for $18,000 of filing services. At March
          31, 2006, $16,215 is included in deferred compensation.

     k.   During the quarter ended March 31, 2005, the Company issued 4,500,000
          common shares with a fair value of $0.30 per share as partial
          consideration for the purchase of licensing rights. (See Note 3 (c)).

     l.   During 2004, the Company issued 1,000,000 common shares with a fair
          value of $0.25 per share pursuant to a two-year services agreement. In
          2004, $46,875 was recorded as consulting fees and $203,125 was
          recorded as prepaid expenses. Pursuant to the same agreement, the
          Company granted 1,000,000 stock options to the consultant with an
          exercise price of $0.10 per share subject to immediate vesting. These
          options were granted in respect of a contract that required services
          to be performed over a two year term. The intrinsic value of these
          options at the date of grant was estimated to be $150,000. In 2004,
          $9,375 was recorded as a consulting fee and $140,625 was recorded as a
          prepaid expense.

          During the quarter ended March 31, 2005, this services agreement was
          cancelled. Subsequent to the quarter end, the Company and the
          consultant agreed that 700,000 out of the 1,000,000 common shares
          issued in 2004 were to be returned to the Company for cancellation.
          Accordingly, during the current quarter, $28,125 was recorded as
          consulting fees and $175,000 was recorded as shares to be returned for
          cancellation. Both parties also agreed to cancel 1,000,000 stock
          options granted in 2004. During the current quarter, the balance of
          $140,625 in prepaid expense was recorded as consulting fee.

     m.   During the quarter ended March 31, 2005, the Company issued 427,900
          common shares with fair values ranging from $0.25 to $0.30 for a total
          value of $125,725. $50,725 was recorded as consulting expenses and
          $75,000 was recorded as professional fees.

                                       19
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2006


8.   RELATED PARTY TRANSACTIONS


The Company has entered into the following related party transactions:

     a)   Accrued management and consulting fee to directors and shareholders
          totalling $286,643 (March 31, 2005 - $39,500);

     b)   Accrued interest expense to directors and shareholders totalling
          $20,069 (March 31, 2005 - $60,452);

9.   COMMITMENTS

     a)   On January 16, 2006, the Company entered into a letter of intent,
          effective January 27, 2006, with WangJing Hospital and WangJing
          Hospital of China Academy of Chinese Medical Sciences, located in
          Beijing, China, for the worldwide development of the China
          International University of Traditional Chinese Medicine and the
          University Hospital for Traditional Chinese Medical Sciences (the
          "Project"). Pursuant to the Letter of Intent, the parties agreed to
          pursue the co-development of the Project on a worldwide basis for a
          five (5) year period following execution of the Letter of Intent.
          Further, WangJing Hospital and WangJing Hospital of China Academy of
          Chinese Medical Sciences have agreed to provide the Company with full
          intellectual and scientific and medical and technical support for
          further development of the Project, while the Company has agreed to be
          responsible for further investment capital and business development
          for the Project. The parties have agreed to further discuss and
          negotiate the detailed terms for the development of the Project, and
          expect that any such agreement shall be made in a formal agreement to
          be entered into between the parties.

     b)   On February 19, 2006, the Company entered into a letter of intent
          effective February 28, 2006, with Shaanxi WanAn Pharmaceutical Co.
          Ltd. For the proposed acquisition by the Company of 51% or more of
          Shaanxi WanAn Pharmaceutical Co. Ltd. Pursuant to the letter of intent
          the Company has first refusal rights and legal exclusive rights for
          further acquisition of 51% of Shaanxi WanAn for the next 12 months.

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


          -    pay a monthly management fee of $20,000 to the Company's
               President starting on January 1, 2006 and pay a 3% royalty on
               gross sales of the Company.
          -    pay a monthly consulting fee of $7,000 to a shareholder and
               officer of the Company.


                                       20
<PAGE>
                            CHINA HEALTH HOLDING INC.
                          (a development stage company)

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2006


12.  SUBSEQUENT EVENTS


     a.   On April 12, 2006, the Company issued 300,000 common shares with a
          fair value of $0.10 per share for $30,000 of consulting services.

     b.   On April 16, 2006, the Company entered into a letter of intent, with
          Henan Tiankang Pharmaceuticals Co. Ltd. ("Henan"), located in Henan,
          China, for the proposed acquisition by the Company of 51% or more of
          Henan. Pursuant to the Letter of Intent, the Company has first refusal
          rights and legal exclusive rights to acquire 51% Henan for 9 months
          from the date of letter.

     c.   On May 2, 2006, the Company entered into a letter of intent, effective
          as May 10, 2006, with Shannxi Meichen Pharmaceuticals, Co. Ltd.
          ("Shannxi Meichen") for the proposed acquisition by the Company of 51%
          or more of Shannxi Meichen. Pursuant to the Letter of Intent, the
          Company has first refusal rights and legal exclusive rights to acquire
          51% Shannxi Meichen for 9 months from the date of the letter of
          intent.


                                       21
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

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 in the following discussion, including 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 is not strictly
historical, including statements as to revenue projections, business strategy,
outlook, objectives, future milestones, plans, intentions, goals, future
financial conditions, future collaboration agreements, the success of the
Company's development, events conditioned on stockholder or other approval, or
otherwise as to future events, such statements are forward-looking, All
forward-looking statements, whether written or oral, and whether made by or on
behalf of the company, are expressly qualified by the cautionary statements and
any other cautionary statements which may accompany the forward-looking
statements, and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The forward-looking statements
contained in this annual report are subject to certain risks and uncertainties
that could cause actual results to differ materially from the statements made.
Other important factors that could cause actual results to differ materially
include the following: business conditions and the amount of growth in the
Company's industry and general economy; competitive factors; ability to attract
and retain personnel; the price of the Company's stock; and the risk factors set
forth from time to time in the Company's SEC reports, including but not limited
to its annual report on Form 10-KSB; its quarterly reports on Forms 10-QSB; and
any reports on Form 8-K. In addition, the company disclaims any obligation to
update or correct any forward-looking statements in all the Company's annual
reports and SEC filings to reflect events or circumstances after the date
hereof.

                                     PART I
Item 1. Description of Business.

Overview

     We are a development stage company, founded by our Chairman and Chief
Executive Officer, Julianna Lu, in 2002 with the goal of becoming a leading
manufacturer, marketer and distributor in the global natural medical and
pharmaceutical industry. On April 3, 2002, we were incorporated under the laws
of the State of Nevada under the name A E&E Pharma Corporation. On May 25, 2004,
we changed our name to China Health Holding, Inc. Our common stock trades on the
OTC Bulletin Board under the symbol "CHHH" since April 18, 2005.

     We intend to manufacture, market and distribute proprietary natural
medicinal products. Our product lines include:


          1.   King of Herbs-based products;

          2.   Taoist Medicinal products; and

          3.   A line of natural multi-vitamins and supplements.

     All of our products are based on traditional Chinese medicine and the
principals of Taoism. Taoist philosophy and Taoist medicinal healing practices
have been incorporated into a broad spectrum of medical practices and treatments
in the People's Republic of China. Traditional Chinese medicine practices have
generally been labeled worldwide as "alternative medicine" or "holistic
medicine" since they rely more on natural remedies versus chemical remedies and
treatments.

PRODUCTS

     We intend to manufacture, market and sell proprietary neutraceutical
products. Neutraceuticals are products isolated or purified from plants or other
foods that are sold in dosage form. These products are intended to provide
certain physiological benefits and/or protection against chronic disease.
Neutraceuticals are commonly referred to as "dietary supplements" or
"nutritional supplements." Neutraceuticals are generally viewed as preventive
supplements, as opposed to drugs, which are active chemical substances used to
treat illnesses or symptoms of illnesses. Neutraceuticals represent an
alternative approach to medicine, based on nutrition and the health or wellness


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of the entire body rather than treating the symptoms of a disease or illness.
Since most of our products are considered to be dietary supplements, as opposed
to pharmaceutical products or drugs, our existing product line is not subject to
stringent clinical testing to which pharmaceutical products are subjected. All
of our products are manufactured in accordance with Good Manufacturing Practices
rules and standards.

     We also plan to introduce a line of natural skin care and cosmetic products
as well as to develop new products based on our knowledge of traditional Chinese
medical practice.

     Our product lines are based on two key fundamentals - the healing power of
King of Herbs and the thousands of years of history that forms the basis for
traditional Chinese medicine and Taoist medicine.

KING OF HERBS PRODUCT LINE

     King of Herbs is a term that we use to refer to the main proprietary herbal
formulations that are essential to all of our products. The herbs that make up
King of Herbs have been used in Chinese medicine to reinforce what is called the
body's vital energy source, or qii. Qii is a Chinese medical term for the human
body's energy. Our product line is intended to improve immune system and
cardio-vascular system, and improve and increase energy and endurance levels,
sexual function and the health and wellness of the entire body. We have
developed proprietary formulations that target certain physiological conditions
which we intend to market and sell to the public.

     o    VG-KING. A natural tonic for men's health, formulated specifically for
          the male genitor-urinary system.

     o    VG-QUEEN. A natural product for women's health, formulated
          specifically for the female reproductive system.

     o    VG-VITAL. This formula acts as a natural energy resource and
          anti-oxidant. This product also is marketed as an anti-fatigue and
          anti-aging agent and as a supplement to restore qii.

     o    VG-CARDIOVASCULAR. Designed to improve the function of the
          cardiovascular system, thereby improving overall health.

     o    VG-IMMUNE. Enhances the body's immune system.

     o    VG-BRAIN & MEMORY. Designed to increase blood flow to the brain and
          cerebral system to enhance memory and cerebral functions.

     o    VG-LIVER. Enhances liver function and protects it from damage from
          inflammation and oxidation.

     o    VG-LUNG. Designed to assist the functioning of the upper respiratory
          tract and lungs. This product also is marketed to increase respiratory
          ventilation for athletes.

     o    VG-LONGEVITY. A special formula for prolonging people's life by
          reducing the progress of aging. This product is designed to assist the
          body at multiple system levels, including the immune, nervous,
          cardiovascular and respiratory systems.

     o    VG-PANCREAS HEALTH. A special formula designed to promote healthy
          blood glucose levels.

     o    VG-HEALTH. A formula designed to help maintain a healthy immune
          system.

     o    VG-PROSTATE HEALTH. Designed to help ensure a healthy prostate.

     o    VG-WEIGHT CONTROL. Formulated to assist individuals with their weight
          loss goals.

TAOIST MEDICINAL PRODUCT LINE

     Taoist medicinal healing sciences have been incorporated into a broad
spectrum of medical practices and treatments in the People's Republic of China
and are collectively known as traditional Chinese medicine. From a global
perspective, medical treatments are divided into two broad categories: western
medicine and traditional Chinese medicine. In the United States and other
western countries, traditional Chinese treatments have been labeled "alternative
medicine" or "holistic medicine." The products in our Taoist Medicinal product
line are considered to be dietary supplements. They are based on the principles
of traditional Chinese medicine and Taoist healing sciences. Taoism is an
ancient worldview that acknowledges the movement towards balance inherent in all
things.

     o    VG-NRP (Nine Rare Pill). Formulated to enhance liver and kidney
          function and decrease lassitude in loin and knee.

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     o    VG-MP (Motherwort Pill with Ten Precious Ingredients). Designed to
          enhance the tonifying qii and blood, enhance female regeneration
          functions and enhance the body's energy and endurance levels.

     o    VG-EPP (Decoction of Eight Precious Products for Refreshing). Designed
          to prevent restlessness.

     o    VG-PFI (Pill of Four Immortals). Designed to enhance kidney functions.

     o    VG-NWP (Nine-Wei Powder for Strengthening Yang). Primarily for men,
          this product is designed to nourish marrow and promote flow of kidney
          qii.

     o    VG-FKB (Five Kernel Bolus). Moistens the intestines.

     o    VG-LYZR (Bolus of Longyan Aril and Wild Jujube Seed). Enriches the
          blood, tranquilize the mind and tone the kidney.

     o    VG-ZMGQ (Bolus of Sesame Seed and Wolfberry Fruit). Designed to
          invigorate the liver and kidney.

     o    VG-HTZM (Bolus of Walnut and Sesame Seed). Designed to invigorate the
          liver, tone the kidney, promote healthy eyes and moisten the
          intestines.

     o    VG-LZFL (Cake of Lotus Seed and Poria). Designed to strengthen the
          spleen.

We currently have 118 100% natural Taoist Herbal Medicinal products.

MULTI-VITAMINS AND SUPPLEMENTS

This product line will offer a full compliment of 100% natural multi-vitamins
and multi-mineral food supplements. These products are intended to support the
immune system, increase energy, provide stress relief, strengthen bones, enhance
mental clarity and support relaxation and overall vitality.

RECENT DEVELOPMENTS

Letter of Intent with WangJing Hospital and WangJing Hospital of China Academy
of Chinese Medical Sciences

     On January 16, 2006, the Company) entered into a Letter of Intent,
effective as of January 27, 2006, with WangJing Hospital and WangJing Hospital
of China Academy of Chinese Medical Sciences, located in BeiJing, China, for the
worldwide development of the China International University of Traditional
Chinese Medicine and the University Hospital for Traditional Chinese Medical
Sciences (the "Project"). WangJing Hospital and WangJing Hospital of China
Academy of Chinese Medical Sciences consist of the Affiliated Hospital of
Beijing College of Acupuncture and Orthopedics, the Orthopedic Department of
Beijing College of Acupuncture and Orthopedics and the Institute of Orthopedics
and Traumatology of China Academy of Traditional Chinese Medical Sciences.

         Pursuant to the Letter of Intent, the parties agreed to pursue the
co-development of the China International University of Traditional Chinese
Medicine and the University Hospital for Traditional Chinese Medical Sciences on
a worldwide basis during the five (5) year period following execution of the
Letter of Intent. Further, WangJing Hospital and WangJing Hospital of China
Academy of Chinese Medical Sciences have agreed to provide the Company with full
intellectual and scientific and medical and technical support for further
development of the Project, while the Company has agreed to be responsible for
further investment capital and business development for the Project. The Company
believes that the Project will allow it to bring the Traditional Chinese Medical
technologies and methods utilized by WangJing Hospital of China Academy of
Chinese Medical Sciences to other universities and hospitals on a worldwide
basis.

Letter of Intent with Shaanxi WanAn Pharmaceutical Co. Ltd.

     On February 19, 2006, the Company entered into a Letter of Intent,
effective as of February 28, 2006, with Shaanxi WanAn Pharmaceutical Co. Ltd.
for the proposed acquisition by the Company of 51% or more of Shaanxi WanAn
Pharmaceutical Co. Ltd. Pursuant to the letter of intent, Shaanxi WanAn
Pharmaceutical Co. Ltd. has agreed to offer the Company with first refusal
rights and legal exclusive rights for further acquisition of 51% or more Shaanxi
WanAn Pharmaceutical Co. Ltd. in next 12 months.

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Letter of Intent  with Henan  Tiankang  Pharmaceuticals  Co. Ltd.

     On April 16, 2006, the Company entered into a Letter of Intent with Henan
Tiankang Pharmaceuticals Co. Ltd. for the proposed acquisition by the Company of
51% or more of Henan Tiankang Pharmaceuticals Co. Ltd. Pursuant to the letter of
intent, both parties have expressed their intent and support for the cooperation
and accomplishment of the acquisition and merge of Henan Tiankang
Pharmaceuticals Ltd. by the Company. Further, Henan Tiankang Pharmaceuticals Co.
Ltd. has agreed to offer the Company with first refusal rights and legal
exclusive rights for further acquisition of 51% or more of Henan Tiankang
Pharmaceuticals Co. Ltd. in the next 9 months from the date of the signed Letter
of Intent.

     Henan Tiankang Pharmaceuticals Co. Ltd., which was established under the
laws of the Peoples Republic of China and is based in Henan, China, is a
pharmaceutical manufacturer and research and development company that has been
GMP certified (in 2004) by the Peoples Republic of China State Drug
Administrative Department. Henan Tiankang Pharmaceuticals Co. Ltd. was
established in 2002 following the restructuring of Henan XinYuan
Pharmaceuticals, which had 40 years of operating history and accomplishments in
the Peoples Republic of China. Henan Tiankang Pharmaceuticals Co. Ltd. also
acquired Henen XinLuei Pharmaceuticals (formerly known as Henan Guishanshencao
Pharmaceuticals) in 2005.

Letter of Intent with Shannxi Meichen Pharmaceuticals co. Ltd.

     On May 2, 2006, the Company entered into a Letter of Intent, effective as
of May 10, 2006, with Shannxi Meichen Pharmaceuticals Co. Ltd. for the proposed
acquisition by the Company of 51% or more of Shannxi Meichen Pharmaceuticals Co.
Ltd. Pursuant to the letter of intent, both parties have expressed their intent
and support for the cooperation and accomplishment of the acquisition and merge
of Henan Tiankang Pharmaceuticals Ltd. by the Company. Further, Shannxi Meichen
Pharmaceuticals Co. Ltd. has agreed to offer the Company with first refusal
rights and legal exclusive rights for further acquisition of 51% or more of
Shannxi Meichen Pharmaceuticals Co. Ltd. in next 9 months from the date of
signed Letter of Intent.

     Shannxi Meichen Pharmaceuticals Co. Ltd. is certified as a GMP
Pharmaceutical Manufacturer by the Peoples Republic of China State Drug
Administrative Agency. Shannxi Meichen Pharmaceuticals Co. Ltd. produces 69
different categories of pharmaceutical products, including, large capacity
injection tablet, hard gelatin capsule, soft capsule, palletized granule for
electric motor, tincture and eye drops and owns approximately 25 pharmaceutical
drugs/products from the Peoples Republic of China State Drug Administrative
Agency. Shannxi Meichen Pharmaceuticals Co. Ltd. has been awarded the title of
Good Product at the Municipal Level, Good Product and Famous Brand Product at
Municipal Level in the PR of China. In addition, its large volume injection and
small volume injection products have been awarded the GMP certificate by the
Peoples Republic of China State Drug Administrative Agency. Shannxi Meichen
Pharmaceuticals Co. Ltd. is the surviving entity from the restructuring of
Shannxi Meichen Bioscientific, Stock Co. Ltd. and Xianang Third Pharmaceutical
Factory in January 2003.

     Each of the foregoing transactions is subject to a number of terms and
conditions including, but not limited to, the negotiation and execution of a
definitive acquisition agreement, as well as to the completion of full legal and
financial due diligence, including the determination of the valuation of
companies, and the completion and delivery of audited financial statements of
the companies. There can be no assurance that any or all of the proposed
transactions will be completed on the terms described, or at all.

RESULTS OF OPERATIONS

     We had a net loss of $429,119 for the three months ended March 31, 2006 as
compared to a net loss of $1,768,989 for the three months ended March 31, 2005.
The net loss for the three months ended March 31, 2006 consisted primarily of
$117,104 of consulting fees, $169,538 of management fees, $61,637 of
professional fees, $21,339 of interest and bank charges, $8,111 in rent, $3,556
of travel expenses, $8,794 of office expenses, $34,479 of investor relations
related travel costs, $1,052 in depreciation expenses and $3,106 of vehicle
expenses. The decrease in net loss was the result in an increase in management
fees.

     Other Income (Expenses) was $(403) for the three months ended March 31,
2006 as compared to $(1,359,999) for the three months ended March 31, 2005. The
decrease is attributed primarily to the impairment of licensing rights of
$1,359,999 recognized during the three months ended March 31, 2005 compared to
nil for the three months ended March 31, 2006.

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LIQUIDITY AND CAPITAL RESOURCES

     As of March 31, 2006, we had cash of $14,404. Our current liabilities as of
March 31, 2006 aggregated $784,788. As of March 31. 2006, we had a working
capital deficiency of $763,298 and an accumulated deficit of $6,425,420. In
order to sustain our current level of operations, we will need to raise at least
$ 1million over the next six to twelve months. In order to expand our business,
fund future development and begin marketing and selling our three product lines
we will need to raise at least $5 million over the next six to twelve months. We
intend to seek outside debt and equity financing, to the extent that such
funding is available under reasonable terms and conditions. We have not yet
sought any commitments for such financing and no assurance can be given that
additional financing will be available, or if available, will be on acceptable
terms. If adequate working capital is not available, we may be forced to curtail
or cease operations.

     As of March 31, 2006, we had outstanding loans to our President Julianna
Lu, Vice President XiaoFei Yu and Dick Wu of $612,786, $126,663 and $650,
respectively. 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.

     We have no off balance sheet arrangements as defined by Item 303(c) of
Regulation S-B.

Future Development

     We expect to focus our resources over the next six to twenty four months on
expanding the scope of our three product lines, and expanding our business
operations into the People's Republic of China, the United States and Europe. To
expand our operations and business, we are implementing and developing our
worldwide marketing and distribution strategy and infrastructures for our
products and business development, and we are developing and implementing our
worldwide e-commerce infrastructure, including our e-commerce website at
www.thechinahealth.com. Our worldwide e-commerce website will have
multi-language and multi-currency capabilities. Our worldwide e-commerce
infrastructure is expected to also include media advertising and distribution
agreements in multiple countries.

     In the next three to six months, we are planning to launch the VG-King and
VG-Queen to be sold in North America. VG-King and VG-Queen are part of King of
Herbs product line. VG-King is formulated specifically for the male
genitor-urinary system. VG Queen is formulated specifically for the female
reproductive system.

     We are developing a proprietary enhanced Global Retail and Franchise
Infrastructure and System to support the launch of our global retail and
franchising operations. The System is expected to be fully operational in about
twenty four months. The new Global Retail Infrastructure will enable our
employees to perform global customer maintenance, process account payments and
view a customer's sales history.

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

     We are in the process of identifying merger and/or acquisitions candidates
in the Peoples Republic of China and worldwide as part of our growth plan to
secure a strong future. Our acquisition strategy highlights our updated growth
strategy to accrete value to our shareholders through the strategic combination
of assets and net income and natural medicinal products and technologies and
established China market with major natural medical companies and pharmaceutical
companies in China and throughout the world. Growth by acquisition is an
important component of our updated business model. As the Chinese government
policy continues to change and move towards privatization of businesses, our
focus on the emerging opportunities in China will primarily focus on small and
medium-sized enterprises. Management believes that our growth strategy will
enable the company to secure a strong future and a powerful position in the
global natural medicinal industry and pharmaceutical industry.

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     If we are successful in raising $5 million of financing in order to expand
our business and fund future development, we anticipate the following expenses
over the next twelve months: (a) $150,000 to develop our Internet website and
e-commerce system; (b) $150,000 for media advertising to promote our brand name;
(c) $200,000 for our research and development program; (d) $2,000,000 to
establish our first retail outlet in the United States, including an integrated
inventory management/ manufacturing/sales computer system; (e) $200,000 for an
investor relations program; (f) $500,000 for professional and consultant fees;
and (g) $1,800,000 for general working capital, including product development,
inventory, and general and administrative expenses. We do not expect to purchase
or sell significant equipment or to significantly increase the number of our
employees over the next twelve months.

     If we are only successful in raising $1 million of financing to sustain our
current level of business operations, we anticipate the following expenses over
the next twelve months: (a) $20,000 to develop our Internet website and
e-commerce system; (b) $200,000 for media advertising to promote our brand name;
(c) $60,000 for our research and development program; (d) $250,000-$400,000 to
begin the process of establishing our first retail outlet in the United States;
(e) $50,000 for an investor relations program; (f) $150,000-$250,000 for
professional and consultant fees; and (g) $200,000-$300,000 for general working
capital, including product development, inventory, and general and
administrative expenses. We do not expect to purchase or sell significant
equipment or to significantly increase the number of our employees over the next
twelve months.

Research and Development

     We expect to pay approximately $200,000 over the next six months to
scientific consultants in the People's Republic of China to identify and work
with new product candidates held by third parties that we will ultimately
attempt to acquire the rights to. Each of the formulations would be considered
by the FDA to be unapproved new drugs and will require approval by the FDA or
foreign regulators before we can sell them. If approval of such products by the
FDA or foreign regulators is delayed or cannot be obtained, we will be forced to
delay our plans to market and sell these products. Any delay could adversely
affect our operations.

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     As part of our growth strategy, we are currently in negotiations with
respect to a number of product candidates that we intend to license or acquire
for development and commercialization although no formal agreements with respect
to any such proposed products have been entered into. Proposing, negotiating and
implementing an economically viable product acquisition or license is a lengthy
and complex process. Other companies, including those with substantially greater
financial, marketing and sales resources, may compete with us for the
acquisition or license of product candidates. We may not be able to acquire or
license the rights to additional product candidates on terms that we find
acceptable, or at all. If we are successful acquiring such product candidates,
we will be required to raise additional capital for research and development,
regulatory review and marketing efforts associated with such products. This will
require substantial investment before our new product candidates could provide
us with any revenue. We intend to seek outside debt and equity financing, to the
extent that such funding is available under reasonable terms and conditions, in
order to fund our research and development efforts. We have not yet sought any
commitments for such financing and no assurance can be given that additional
financing will be available, or if available, will be on acceptable terms.

     We also plan to add VG-ALLERGY, VG-EYE and VG-ANTI-TUMOR to the products in
our King of Herbs product line. We acquired the rights to each of these products
under a purchase agreement dated May 1, 2004 with Julianna Lu, our founder and
principal executive officer, and Xiao Fei Yu, our President and one of our
directors. VG-ALLERGY is a product designed to reduce allergic reactions of the
human body. VG-EYE is formulated to prevent deterioration of eyesight.
VG-ANTI-TUMOR is formulated specifically to prevent cancerous growths for cancer
patients who are undergoing chemotherapy treatment. Each of these products would
be considered an unapproved new drug by the FDA and will require an approved New
Drug Application before the products can be marketed in the United States. No
clinical trials have been conducted for these products. The New Drug Application
process is expensive, lengthy and rigorous requiring extensive nonclinical and
clinical trials to be successfully conducted. We intend to seek outside debt and
equity financing, to the extent that such funding is available under reasonable
terms and conditions, in order to fund this process. We have not yet sought any
commitments for such financing and no assurance can be given that additional
financing will be available, or if available, will be on acceptable terms.
Additionally, there is no guarantee that the FDA would accept the data or
approve any New Drug Applications for these products. If approval of these
products by the FDA or foreign regulators is delayed or cannot be obtained, we
will be forced to delay our plans to market and sell these products to
consumers.

Global Marketing and Sales Strategy

     Our management recognizes that different markets offer different
opportunities for growth in sales. The following are marketing and sales
initiatives that we intend to implement to market our products:

     1. Global E-Commerce Infrastructure - We intend to target customers through
our e-commerce website www.thechinahealth.com. We intend to be able to offer our
neutraceutical and pharmaceutical product lines on its e-commerce website within
the next six to twelve months. We are currently working to establish and enhance
our website to be capable of handling retail transactions with multiple payment
forms (i.e., credit card, cheque and alternative payment systems), in multiple
currencies and in multiple languages. The E-Commerce Infrastructure will offer
complete online selling features which are fully integrated with our global IT
infrastructure that balances flexibility. Our website will offer both
functionality and integration with global customers and trading partners.

     Our Online Shopping Portal will also provide cross-sell and upsell
capabilities which we believe will increase incremental potential revenue. It
will also offer the capability to offer industrial strength capacity for high
volume of 100,000 SKUs and numerous configuration. Our e-commerce website will
also offer comprehensive features with online customer services, discounts
offers and customer pricing features, aimed at creating customer satisfaction
and loyalty.

     We believe that our E-Commerce Infrastructure addresses pressures to
improve employee effectiveness and lower the total cost of ownership and
increase productivity, increase customers services and satisfaction, improve
employee satisfaction. In addition, we believe that our e-commerce
infrastructure is the comprehensive way for us to market, distribute and
commercialize our natural medicinal herbal product lines to the global markets
and audiences. We believe that the site will allow us to reach consumers
globally, effectively and efficiently, while we continue the development of our
global retail and franchise and retail infrastructures. We believe that
E-Commerce has been proven to be a cost-effective way to reach large consumers
audiences, and we plan to commence an aggressive global marketing and
distribution and commercialization program once our site is operational. Our
e-commerce strategy represents one of the important parts of our goal of
becoming a leading global provider of neutraceutical and pharmaceutical
products.

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

     3. Global Retail and Franchise Infrastructure and Storefronts - We intend
to develop a proprietary enhanced Global Retail and Franchise IT Software
Infrastructure and System to support the launch of our intended global retail
and franchising operations. The System is expected to be fully operational
within six (6) to eighteen (18) months.

     The new Global Retail Infrastructure, known as "FUSION" will offer a fully
integrated global retail solution. Its integration platform will take the
uncertainty out of customer and inventory management, enabling our employees to
perform global customer maintenance, process account payments and view a
customer's sales history right at the register to gain valuable insight into our
customer's purchasing habits, loyalty, and spending history to enhance our
Global Customer Relationship Management (CRM).

     The Global Retail IT Infrastructure will have the comprehensive ability to
provide and accommodate us with customer support for a single register at one
location to a multi-register, multi-global retail chain of stores
infrastructure. It will also offer us the comprehensive ability to offer
integration , global pricing management, integrated global remote communication
capability between stores, global multi-currency cash management and global
shipping management.

     We intend to leverage our planned global fusion retail solution to develop
and expand and extend throughout our global enterprise with strategic inventory
control, efficient operations, streamlined communications and the overall
management of our global retail and franchise business within 1 to 5 years. Our
planned new Global Retail and Franchise Infrastructure and System will enable us
to support rapid global growth and allow us to have inventory management and CRM
tools which will provide us with the competitive advantage to create
efficiencies as we expand throughout North American and internationally.

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

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

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

RISK FACTORS

Our business involves a high degree of risk. Any of the following risks could
materially and adversely affect our business, financial condition, and results
of operations. This could cause the trading price of our common stock to
decline, with the loss of part or all of an investment in our common stock.
RISKS RELATED TO OUR FINANCIAL CONDITION

Our Financial Status Creates Doubt Whether We Will Continue As A Going Concern.


     We reported net losses totaling of $3,676,679, $2,098,276, $149,673 ,
December 31, 2005, December 31, 2004 and December 31, 2003, respectively. As of
December 31, 2005 we had a working capital deficiency of $598,411 (current
assets less current liabilities) and an accumulated deficit of $5,996,301. With
our current resources we expect to be able to satisfy our cash requirements
through March 2007. In order to expand our current business operations, fund
future development and market and sell our three existing product lines we will
need to raise at least $5 million in financing over the next twelve months. We
intend to raise additional working capital either through private placements,
public offerings and/or bank financing. 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.

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We Need Significant Infusions Of Additional Capital, Which May Result In
Dilution To Our Shareholders' Ownership And Voting Rights In Our Company.

     Based upon our current cash reserves and forecasted operations, we believe
that we will need to obtain at least $1 million of outside funding in order to
sustain our current business operations over the next twelve months, and at
least $5 million of outside funding in order to expand our business, fund future
development and market and sell our three existing product lines. Our need for
additional capital to finance our business strategy, operations, and growth will
be greater should, among other things, revenue or expense estimates prove to be
incorrect. If we fail to arrange for sufficient capital in the future, we may be
required to reduce the scope of our business activities until we can obtain
adequate financing. We may not be able to obtain additional financing in
sufficient amounts or on acceptable terms when needed, which could adversely
affect our operating results and prospects. Debt financing must be repaid
regardless of whether or not we generate profits or cash flows from our business
activities. Equity financing may result in dilution to existing shareholders and
may involve securities that have rights, preferences, or privileges that are
senior to our common stock.

RISKS RELATED TO OUR BUSINESS

We Are A Development Stage Company And Have A Limited Operating History Upon
Which An Evaluation Of Our Company Can Be Made. For That Reason, It Would Be
Difficult For A Potential Investor To Judge Our Prospects For Success.

     We were organized in April 2002 and have had limited operations since our
inception from which to evaluate our business and prospects. There can be no
assurance that our future proposed operations will be implemented successfully
or that we will ever have profits. If we are unable to sustain our operations,
our shareholders may lose their entire investments. We face all the risks
inherent in a new business, including the expenses, difficulties, complications
and delays frequently encountered in connection with conducting operations,
including capital requirements and management's potential underestimation of
initial and ongoing costs. As a new business, we may encounter delays and other
problems in connection with the methods of product distribution that we
implement. We also face the risk that we will not be able to effectively
implement our business plan. In evaluating our business and prospects, these
difficulties should be considered. If we are not effective in addressing these
risks, we will not operate profitably and we may not have adequate working
capital to meet our obligations as they become due.

If We Fail To Adequately Protect Or Enforce Our Intellectual Property Rights,
Competitors May Produce And Market Products Similar To Ours. In Addition, We May
Be Subject To Intellectual Property Litigation And Infringement Claims By Third
Parties.

     Our ability to compete effectively is dependent upon the proprietary nature
of the designs, processes, technologies and materials owned by, used by or
licensed to us. All of our intellectual property rights are based on common law
and our license agreements with Hotway Nutraceuticals Canada Co., Ltd. and from
rights to herbal supplement formulas that we obtained from our principal
officers, Ms. Julianna Lu and Mr. Xiao Fei Yu. We do not own and have not
applied for patents, trademarks or any other registrations of our intellectual
properties. Although we attempt to protect such proprietary properties, both in
the United States and in foreign countries through trade secret laws and
non-disclosure agreements, these may be insufficient. In addition, because of
the differences in foreign laws concerning proprietary rights, our products may
not receive the same degree of protection in foreign countries as they would in
the United States. We may not always be able to successfully protect or enforce
our proprietary properties against competitors, which may materially adversely
affect our business.

     In addition, although we do not believe that our products infringe the
rights of others and while to date we have not been subject to such claims, in
the future we may be subject to intellectual property litigation and
infringement claims, which could cause us to incur significant expenses or
prevent us from selling our products. A successful claim of trademark, patent or
other intellectual property infringement against us could adversely affect our
growth and profitability, in some cases materially. Others may claim that our
proprietary or licensed products are infringing their intellectual property
rights, and that our products may infringe those intellectual property rights.
If we are found to have infringed on the intellectual property rights of another
party, licenses for such intellectual property may not be available on favorable
terms or at all. If someone claims that our technology or products infringe
their intellectual property rights, any resulting litigation could be costly and
time consuming and would divert the attention of management and key personnel
from other business issues. The complexity of the technology involved and the
uncertainty of intellectual property litigation increase these risks. We also
may be subject to significant damages or injunctions preventing us from
manufacturing, selling or using some aspect of our products in the event of a
successful claim of patent or other intellectual property infringement. Any of
these adverse consequences could have a material adverse effect on our business
and profitability.

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<PAGE>
We May Incur Material Product Liability Costs.

     We are in the business of formulating and selling nutritional supplements
for human consumption. As a distributor of products designed for human
consumption, we are subject to product liability claims if the use of our
products is alleged to have resulted in injury. We may be subject to various
product liability claims, including, among others, allegations that our products
include inadequate instructions for use or inadequate warnings concerning
possible side effects and interactions with other substances. In addition,
although our manufacturers maintain quality controls and procedures with respect
to products that we sell, our products could contain contaminated substances.
All of the products we sell are produced by third-party manufacturers. As a
distributor of products manufactured by third parties, we may also be liable for
various product liability claims for products we do not manufacture even though
we have no control over the manufacturing procedures used in connection with the
production of these third-party products. We are in the process of applying for
product liability insurance. Such insurance, once obtained, may not be available
at a reasonable cost, or may not be adequate to cover liabilities.

If We Are Not Able To Manage Growth Of Our Business, Our Financial Condition And
Results Of Operations Will Be Negatively Affected.

     Over the next six to eighteen months, we anticipate launching our King of
Herbs, Taoist Medicinal and Vitamins and Supplements products lines upon the
receipt of funding. We have not yet implemented any marketing and distribution
strategies. Accordingly, we may experience a period of significant growth. While
we have not experienced problems with growth of our business in the past, any
future growth could cause significant strain on our managerial, operational,
financial and other resources. Success in managing this expansion and growth
will depend, in part, upon the ability of our senior management to effectively
manage the growth of our business. Any failure to manage the proposed growth and
expansion of our business could have a material adverse effect on our financial
condition and results of operations.

Our Strategy Of Growth Through Acquisition Is Inherently Risky.

     We intend to seek to identify and develop merger and/or acquisitions
candidates in the Peoples Republic of China and worldwide as part of our growth
plan to secure a strong future. Although we have signed a Letters of Intent to
acquire WangJing Hospital and WangJing Hospital of China Academy of Chinese
Medical Sciences, Shaanxi WanAn Pharmaceutical Co. Ltd. and Henan Tiankang
Pharmaceuticals Ltd., there can be no assurance that any or all of such
acquisitions will be completed. Even if the acquisitions are completed, the
final terms of the acquisition agreements may vary substantially from the terms
described in this Offering Memorandum.

     Our acquisition of companies and businesses and expansion of operations
involve risks, including the following:

     o    the potential inability to identify the companies best suited to our
          business plan;
     o    the potential inability to successfully integrate acquired operations
          and businesses or to realize anticipated synergies, economics of scale
          or other expected value;
     o    the potential need to restructure, modify or terminate customer
          relationships of the acquired company; and
     o    loss of key employees of acquired operations.

The occurrence of any one or more of these risks could result in a material
adverse effect on our operations.


If We Fail To Acquire And Develop Other Products Or Product Candidates, We May
Be Unable To Grow Our Business.

     We license the rights to a majority of our products from outside third
parties. As part of our growth strategy, we intend to license or acquire
additional products and product candidates for development and
commercialization. The success of this strategy depends upon our ability to
identify, select and acquire the right product candidates. Any product candidate
we license or acquire may require additional development efforts prior to
commercial sale, including extensive clinical testing and approval by regulatory
authorities. All product candidates are prone to the risks of failure inherent
in product development, including the possibility that the product candidate
will not be shown to be sufficiently safe and effective. In addition, we cannot
assure you that any products that we license or acquire will be manufactured or
produced economically, successfully commercialized or widely accepted in the
marketplace. Proposing, negotiating and implementing an economically viable
product acquisition or license is a lengthy and complex process. Other
companies, including those with substantially greater financial, marketing and
sales resources, may compete with us for the acquisition or license of product
candidates. We may not be able to acquire or license the rights to additional
products on terms that we find acceptable, or at all.

                                       31
<PAGE>
If Our Relationships With Our Manufacturers Terminate, Or Their Facilities Are
Damaged Or Destroyed, We May Be Unable To Develop Or Commercialize Our Products.

     Currently, only a limited number of companies manufacture our products. The
number of contract manufacturers with the expertise, required regulatory
approvals and facilities to manufacture our product candidates on a commercial
scale is extremely limited, and it would take a significant amount of time to
arrange for alternative manufacturers. If any of our manufacturers fail to
deliver the required commercial quantities of bulk substance or finished product
on a timely basis and at commercially reasonable prices, and we are unable to
find one or more replacement manufacturers capable of production at a
substantially equivalent cost, in substantially equivalent volumes and quality,
and on a timely basis, we will likely be unable to meet customer demand as we
begin to market and sell our existing product lines.

The Loss Of Our Current Management Team Could Have A Material Adverse Effect On
Our Business. If We Are Not Able To Retain Additional Key Personnel, Our
Business Could Suffer.

     Our success depends to a large degree upon the skills of our current
management team and advisors, including Ms. Julianna Lu and Mr. Xiao Fei Yu, and
upon our ability to identify, hire, and retain additional senior management,
sales, marketing, scientific, and financial personnel. Although, to date we have
not experienced problems attracting and retaining key personnel, we may
encounter such problems in the future as we grow and expand our operations. The
loss of any of our current executives, employees, or advisors or the failure to
attract, integrate, motivate, and retain additional key employees could have a
material adverse effect on our business. To our knowledge, none of our key
employees has plans to retire or leave us in the near future. We do not have
"key person" insurance on the lives of any of our management team.

RISKS RELATED TO OUR INDUSTRY

The Nutritional Supplements Industry Is Intensely Competitive. We Have Many
Well-Established Competitors With Substantially Greater Financial And Other
Resources Than Us. These Factors May Make It More Difficult For Us To
Successfully Implement Our Business Plan And May Adversely Affect Our Results Of
Operations.

     The nutritional supplements industry is a large, highly fragmented and
growing industry, with no single industry participant accounting for more than
10% of total industry retail sales. Participants include specialty retailers,
supermarkets, drugstores, mass merchants (wholesalers), multi-level marketing
organizations, mail order companies and a variety of other smaller participants.
The market is also highly sensitive to the introduction of new products,
including various prescription drugs, which may rapidly capture a significant
share of the market. Increased competition from companies that distribute
through retail or wholesale channels could have a material adverse effect on our
financial condition and results of operations. Some of the nutraceutical
companies that we will compete with are Weider Nutrition International, Inc.,
USANA Health Sciences Inc., Nature's Sunshine Products, Inc. and Herbalife
International, Inc. We are a development stage business and the only revenues we
have received from product sales since inception were nominal and were generated
during 2004. Accordingly, we have not been operational long enough to experience
any of the above problems. However, since we are a development stage business,
most, if not all companies in our industry have greater financial and other
resources available to them and possess manufacturing, distribution and
marketing capabilities greater than ours. In addition, our competitors may be
more effective and efficient in integrating new products. We may not be able to
compete effectively and any of the factors listed above may cause price
reductions, reduced margins and difficulties in gaining market share.

Compliance With Governmental Regulations May Impose Additional Costs, Which May
Adversely Affect Our Financial Condition And Results Of Operations.

     The processing, formulation, manufacturing, packaging, labeling,
advertising and distribution of our products are subject to regulation by one or
more federal agencies, including the Health Protectorate Branch in Canada, the
FDA, the Federal Trade Commission ("FTC"), the Consumer Product Safety
Commission, the United States Department of Agriculture, the United States
Customs and Border Protection and the Environmental Protection Agency. These
activities are also regulated by various agencies of the states and localities
in which our products are sold.

                                       32
<PAGE>
     The FDA may attempt to regulate any of our products that fall within its
jurisdiction, and the FTC has jurisdiction to regulate the advertising of our
products that fall within its jurisdiction. The FDA may not accept the evidence
of safety for any new ingredients that we may want to market, may determine that
a particular product or product ingredient presents an unacceptable health risk,
may determine that a particular statement of nutritional support that we want to
use is an unacceptable drug claim or an unauthorized version of a food "health
claim," may determine that a particular product is an unapproved new drug, or
the FDA or the FTC may determine that particular claims are not adequately
supported by available scientific evidence. Such a determination would prevent
us from marketing particular products or using certain statements of nutritional
support on our products. One of the key areas of our development focus is the
specialty supplements category, which includes products that are directed at
particular nutritional concerns. The FDA may not agree with our statements of
nutritional support as to a particular specialty supplement or permit us to
promote our specialty supplements directed at particular nutritional concerns.
We also may be unable to disseminate third-party literature in connection with
our products if the third-party literature fails to satisfy certain
requirements. In addition, the FDA could require us to remove a particular
product from the market. Any future recall or removal would result in additional
costs to us, including lost revenues from any products that we are required to
remove from the market, any of which could be material. Any such product recalls
or removals could lead to liability, substantial costs and reduced growth
prospects.

     Although the regulation of dietary supplements is less restrictive than the
regulation of drugs, dietary supplements may not continue to be subject to less
restrictive regulation. Many of our dietary supplements contain traditional
Chinese herbs which may or may not have been previously evaluated by the FDA.
All herbs marketed in dietary supplements in the United States must be Generally
Recognized as Safe (GRAS). The FDA maintains a list of problems herbs. If any of
the herbs in our products appeared on the FDA's list, or if the agency
determined there were issues concerning their safety, we would not be able to
market the products containing these ingredients in the United States. We have
not determined whether any of the herbs in our products are on the FDA's list of
problem herbs and we have not determined whether any such herbs are Generally
Recognized as Safe. If any of the herbs in our products have not been evaluated
by the FDA and are not Generally Recognized as Safe, then we would not be
permitted to sell products containing them in the United States. Any such
prohibition could materially adversely affect our results of operations and
financial condition.

     Further, if more stringent statutes are enacted for dietary supplements, or
if more stringent regulations are promulgated, we may not be able to comply with
such statutes or regulations without incurring substantial expense, or at all.
Legislation has been introduced in Congress to impose substantial new regulatory
requirements for dietary supplements including adverse event reporting, post
market surveillance requirements, FDA reviews of dietary supplement ingredients,
safety testing and records inspection. If enacted, any of the proposed
legislation may result in difficulty getting our products to the market and
could raise our costs and hinder our business.

     In addition, we expect that the FDA soon will adopt the proposed rules on
Good Manufacturing Practice in manufacturing, packaging, or holding dietary
ingredients and dietary supplements, which will apply to the products we
manufacture. These regulations will require dietary supplements to be prepared,
packaged and held in compliance with strict rules, and will require quality
control provisions similar to those in the Good Manufacturing Practice
regulations for drugs. We may not be able to comply with the new rules without
incurring additional expenses.

     Each of our products imported into the United States may be blocked at the
border by U.S. Customs. The FDA could issue Import Alerts for any of our
products if the agency considers them to be misbranded, adulterated and/or
unapproved new drugs.

     The FTC exercises jurisdiction over the advertising of dietary supplements.
In the past, the FTC has instituted numerous enforcement actions against dietary
supplement companies for failure to have adequate substantiation for claims made
in advertising or for the use of false or misleading advertising claims. These
enforcement actions have often resulted in consent decrees and the payment of
civil penalties by the companies involved.

                                       33
<PAGE>
     We are also subject to regulation under various state, local, and
international laws that include provisions governing, among other things, the
processing, formulation, manufacturing, packaging, labeling, advertising and
distribution of our products that are deemed "dietary supplements" or
"over-the-counter drugs." Government regulations in foreign countries may
prevent or delay the introduction, or require the reformulation, of certain of
our products. In addition, from time to time in the future, Congress, the FDA,
the FTC or other federal, state, local or foreign legislative and regulatory
authorities may impose additional laws or regulations that apply to us, repeal
laws or regulations that we consider favorable to us or impose more stringent
interpretations of current laws or regulations. We are not able to predict the
nature of such future laws, regulations, repeals or interpretations or to
predict the effect additional governmental regulation, when and if it occurs,
would have on our business in the future. Such developments could, however,
require reformulation of certain products to meet new standards, recalls or
discontinuance of certain products not able to be reformulated, additional
record-keeping requirements, increased documentation of the properties of
certain products, additional or different labeling, additional scientific
substantiation, or other new requirements. Any such developments could have a
material adverse effect on our business, financial condition and results of
operations.

RISKS RELATED TO OUR COMMON STOCK

There Is A Limited Public Market For Our Common Stock. Failure To Develop Or
Maintain A Trading Market Could Negatively Affect The Value Of Our Shares And
Make It Difficult Or Impossible For Shareholders To Sell Their Shares.

     On April 18, 2005, our common stock was approved for quotation on the OTC
Bulletin Board under the symbol "CHHH." To date there is a limited trading
market in our common stock on the OTC Bulletin Board. Failure to develop or
maintain an active trading market could negatively affect the value of our
shares and make it difficult for our shareholders to sell their shares or
recover any part of their investment in us. The market price of our common stock
may be highly volatile. In addition to the uncertainties relating to our future
operating performance and the profitability of our operations, factors such as
variations in our interim financial results, or various, as yet unpredictable
factors, many of which are beyond our control, may have a negative effect on the
market price of our common stock.

The Exercise Of Our Outstanding Warrants And Options May Depress Our Stock Price

     Not including the Warrants to be issued in connection with this offering,
we currently have 15,409,175 warrants and options to purchase shares of our
common stock outstanding. The exercise of warrants and/or options by a
substantial number of holders within a relatively short period of time could
have the effect of depressing the market price of our common stock and could
impair our ability to raise capital through the sale of additional equity
securities.

The Issuance Of Additional Shares Of Common Stock In Connection With Our
Proposed Acquisition Will Dilute Your Investment In Our Common Stock.

     In connection with our proposed acquisitions, we may issue a substantial
amount of shares of Common Stock, Preferred Stock and/or warrants to purchase
additional shares of Common Stock or Preferred Stock. The issuance of these
shares will have a significant further diluting effect on the proportionate
equity interest and voting power of current holders of our Common Stock,
including investors in this Offering.

 ITEM 3. CONTROLS AND PROCEDURES.

     a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. As of the date of this
report, the Company's management carried out an evaluation, under the
supervision of the Company's Chief Executive Officer and the Chief Financial
Officer of the effectiveness of the design and operation of the Company's system
of disclosure controls and procedures pursuant to the Securities and Exchange
Act, Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures were effective, as of the
date of their evaluation, for the purposes of recording, processing, summarizing
and timely reporting material information required to be disclosed in reports
filed by the Company under the Securities Exchange Act of 1934.

     b) CHANGES IN INTERNAL CONTROLS. There were no changes in internal controls
over financial reporting that occurred during the period covered by this report
that has materially affected, or is likely to materially effect, the Company's
internal control over financial reporting.


                                       34
<PAGE>
                                     PART II

ITEM 1. LEGAL PROCEEDINGS.

We are currently not aware of any legal proceedings or claims that we believe
will have, individually or in the aggregate, a material adverse affect on our
business, financial condition or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On January 17, 2006, the Company issued 250,000 common shares with a fair value
of $0.12 per share for $30,000 of consulting services.

On January 18, 2006, the Company issued 300,000 common shares with a fair value
of $0.11 per share for $33,000 of management consulting services.

On January 22, 2006, the Company issued 250,000 common shares with a fair value
of $0.12 per share for $30,000 of consulting services.

On January 22, 2006, the Company issued 134,710 common shares with a fair value
of $0.12 per share for settlement of $16,165 for $13,039 of auto expenses, of
which $13,034 is included as a deferred compensation at March 31, 2006.

On January 22, 2006, the Company issued an aggregate of 2,000,000 stock options
to two consultants with an exercise price of $0.20 per share, subject to
immediate vesting.

On January 22, 2006, the Company issued of 2,500,000 stock options to its
President, with an exercise price of $0.20 per share, subject to immediate
vesting.

On January 28, 2006, the Company issued 200,000 common shares with a fair value
of $0.19 per share for $38,000 of consulting services.

On January 28, 2006, the Company issued 1,000,000 stock options to a consultant
of the Company with an exercise price of $0.20 per share, subject to immediate
vesting.

On February 1, 2006, the Company issued 90,000 common shares with a fair value
of $0.25 per share for $22,500 of consulting services.

On February 1, 2006, the Company issued 1,000,000 stock options to a consultant
of the Company with an exercise price of $0.20 per share, subject to immediate
vesting.

On February 7, 2006, the Company issued 150,000 stock options to a consultant of
the Company with an exercise price of $0.30 per share, subject to immediate
vesting.

On February 14, 2006, the Company issued 100,000 common shares with a fair value
of $0.11 per share for $11,000 of legal services.

On February 16, 2006, the Company declared a stock dividend on the basis of one
new share of common stock for every four shares of common stock outstanding, and
one new share of Series A preferred stock for every four shares of Series A
preferred stock outstanding. The record date was February 28, 2006 and the
payment date was March 17, 2006.

On February 21, 2006, the Company issued 300,000 shares with a fair value of
$0.12 per share for $36,000 of consulting services.

On February 21, 2006, the Company issued 150,000 shares with a fair value of
$0.12 per share for $18,000 of filing services.

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


                                       35
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


31.1      Certification by Chief Executive Officer/Chief Financial Officer,
          required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act,
          promulgated pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1      Certification by Chief Executive Officer/Chief Financial Officer,
          required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and
          Section 1350 of Chapter 63 of Title 18 of the United States Code,
          promulgated pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


                                       36
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



Dated: May 12, 2006
                              China Health Holdings, Inc.


                              By: /s/ Julianna Lu
                              -------------------
                              Julianna Lu
                              Chief Executive Officer, Principal
                              Financial Officer, Principal Accounting Officer,
                              Treasurer and Chairman of the Board of Directors



                                       37