United
States


Securities
and Exchange Commission


Washington,
D. C. 20549





FORM
10-Q





[X]
            QUARTERLY
      REPORT PUSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the quarterly period ended March 31, 2008





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


For the transition period from _____ to _____







Commission
File No.
0-25380





CHINA HUAREN ORGANIC
PRODUCTS, INC.


(Exact
Name of Small Business Issuer as specified in its Charter.)














DELAWARE
            43-1401158(State of Other
      Jurisdiction of incorporation or organization)
            (I.R.S.
      Employer I.D. No.)









c/o American Union
Securities, Inc. 100 Wall Street, 15thFloor, New York, NY
10005


(Address
of Principal Executive Offices, including zip code)




212-232-0120


(Issuer's
Telephone Number, Including Area Code)





Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes ý    No o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):


Large
      accelerated filer o
            
            Accelerated
      filer o
            
            Non-accelerated
      filer o
            
            Smaller
      reporting company ý





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




The number of shares of
common stock, par value $.01 per share, outstanding as of May 16, 2008 was
14,699,853.
















CHINAHUAREN ORGANIC PRODUCTS,
INC.


FORM
10-Q


QUARTERLY
      PERIOD ENDED March 31, 2008


INDEX





TABLE OF
CONTENTS










PART
      I - FINANCIAL INFORMATIONPageItem 1:
            Financial
      Statements
            2Item 2:
            Management's
      Discussion and Analysis of Financial Condition and
            11Results of
      OperationsItem 3:
            Quantative and
      Qualitative Disclosures About Market Risk
            12Item 4T:
            Controls and
      Procedures
            12PART
      II - OTHER INFORMATIONItem 1:
            Legal
      Proceedings
            13Item 1A:
            Risk
    Factors
            13Item 2:
            Unregistered Sales
      of Equity Securities and Use of Proceeds
            13Item 3:
            Defaults Upon Senior
      Securities
            13Item 4:
            Submission of
      Matters to a Vote of Security Holders
            13Item 5:
            Other
      Information
            13Item 6:
            Exhibits
            13



























Part
I


Financial
Information





Item
      1.
            Financial
      Statements






CHINA
      HUAREN ORGANIC PRODUCTS INC. AND SUBSIDIARYCONSOLIDATED
      BALANCE SHEETSMarch
      31,2008
            
            
            December
      31,2007Assets
            
            Unaudited
            
            
            AuditedCurrent
      Assets:Cash and equivalents
            
            $
            2,159
            
            
            $
            76,658Accounts receivable, net of allowance for doubtful amounts of
      $47,508and $45,668 , respectively
            
            
            4,703,328
            
            
            
            4,521,106Inventories
            
            
            840,411
            
            
            
            762,972Loan to officers/shareholders
            
            
            59,042
            
            
            
            -Prepaid expenses
            
            
            1,573,497
            
            
            
            1,591,952Other current assets
            
            
            114
            
            
            
            110Total Current Assets
            
            
            7,178,551
            
            
            
            6,952,798Property
      and Equipment, Net
            
            
            10,055
            
            
            
            10,670Deposit
      for Purchase of Fixed Assets
            
            
            3,841,794
            
            
            
            3,692,950Total Assets
            
            
            11,030,400
            
            
            
            10,656,418Liabilities
      and Stockholders' EquityCurrent
      Liabilities:Accounts payable and accrued expenses
            
            
            87,854
            
            
            
            87,732Loan from officers/stockholders
            
            
            93,673
            
            
            
            90,132Tax
      payable
            
            
            1,632,506
            
            
            
            1,570,078Other current liabilities
            
            
            2,700
            
            
            
            5,127Total Current Liabilities
            
            
            1,816,733
            
            
            
            1,753,069Stockholders'
      EquitySeries C preferred stock, $0.01 par value, 150,000 shares
      authorized100,000  shares issued and outstanding
            
            
            1,000
            
            
            
            1,000Common stock,$0.01 par value,100,000,000 shares authorized14,699,853 shares issued and outstanding
            
            
            146,999
            
            
            
            146,999Additional paid-in capital
            
            
            6,043,876
            
            
            
            6,043,876Reserve
      fund
            
            
            259,244
            
            
            
            259,244Retained earnings
            
            
            1,400,818
            
            
            
            1,447,838Accumulated other comprehensive income
            
            
            1,361,730
            
            
            
            1,004,392Total Shareholders’ Equity
            
            
            9,213,667
            
            
            
            8,903,349Total Liabilities and Stockholders’ Equity
            
            $
            11,030,400
            
            
            $
            10,656,418




See
      notes to consolidated financial
statements.


-
2 -





CHINA
      HUAREN ORGANIC PRODUCTS INC. AND SUBSIDIARYCONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      INCOME (UNAUDITED)Three
      Months Ended March 31,2008
              
              
              2007Unaudited
              
              
              UnauditedRevenues
              
              $
              -
              
              
              $
              5,235,293Cost
      of Goods Sold
              
              
              -
              
              
              
              4,983,974Gross
      Profit
              
              
              -
              
              
              
              251,319Operating
      ExpensesSelling
      expenses
              
              
              2,581
              
              
              
              69,946General
      and administrative expenses
              
              
              14,054
              
              
              
              64,374Total
      Operation Expenses
              
              
              16,635
              
              
              
              134,320(Loss)
      Income  From Operations
              
              
              (16,635
              )
              
              
              116,999Other
      Income (Expenses)Interest
      income
              
              
              4,524
              
              
              
              4,195Other
      expense, net
              
              
              (34,909
              )
              
              
              (44,834
              )Total
      Other Expenses
              
              
              (30,385
              )
              
              
              (40,639
              )(Loss)
      Income  Before Income Taxes
              
              
              (47,020
              )
              
              
              76,360Provision
      for Income Taxes
              
              
              -
              
              
              
              25,199Net
      (Loss)  Income
              
              $
              (47,020
              )
              
              $
              51,161Foreign
      Currency Translation Adjustment
              
              
              357,338
              
              
              
              85,223Comprehensive
      Income
              
              $
              310,318
              
              
              $
              136,384Net
      (Loss) Income  Per Common Share-Basic
              
              $
              0.00
              
              
              $
              0.00-Diluted
              
              $
              0.00
              
              
              $
              0.00Weighted
      Common Shares Outstanding*-Basic
              
              
              14,699,853
              
              
              
              14,699,853-Diluted
              
              
              14,999,850
              
              
              
              14,999,850


* As
      restated to reflect recapitalization and the subsequent reverse stock
      split.See notes to
      consolidated financial statements.















CHINA
      HUAREN ORGANIC PRODUCTS INC. AND SUBSIDIARYCONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)Three
      Months Ended March 31,2008
              
              
              2007Unaudited
              
              
              UnauditedCash
      Flows From Operating Activities:Net  (Loss)
      Income
              
              $
              (47,020
              )
              
              $
              51,161Adjustments
      to Reconcile Net Income to Net CashProvided
      by Operating ActivitiesBad debt adjustment
              
              
              -
              
              
              
              24,730Depreciation
              
              
              1,023
              
              
              
              3,056Changes
      in operating assets and liabilitiesAccounts
      receivable
              
              
              -
              
              
              
              (4,917,144
              )Inventories
              
              
              (44,878
              )
              
              
              4,535,523Employee travel and operation advance
              
              
              -
              
              
              
              1,354Advances to suppliers
              
              
              -
              
              
              
              53,257Prepaid expenses
              
              
              79,418
              
              
              
              98,508Accounts
      payable and accrued expenses
              
              
              (3,282
              )
              
              
              33,084Customer deposit
              
              
              -
              
              
              
              (75,051
              )Tax payable
              
              
              -
              
              
              
              232,698Other current liabilities
              
              
              (2,531
              )
              
              
              (1,401
              )Net
      Cash (Used in) Provided by Operating Activities
              
              
              (17,270
              )
              
              
              39,775Cash
      Flows From Investing ActivitiesProceeds from repayment of related party advance
              
              
              -
              
              
              
              37,441Payment for deposit of purchase of fixed assets
              
              
              -
              
              
              
              (128,137
              )Net
      Cash Used in Investing Activities
              
              
              -
              
              
              
              (90,696
              )Cash
      Flows From Financing ActivitiesProceeds from officers/shareholders loans
              
              
              -
              
              
              
              4,143Payment for loan to officers/shareholders
              
              
              (59,042
              )
              
              
              -Net
      Cash (Used in) Provided by Financing Activities
              
              
              (59,042
              )
              
              
              4,143Net
      Decrease in Cash and Equivalents
              
              
              (76,312
              )
              
              
              (46,778
              )Effect
      of Exchange Rate Changes on Cash
              
              
              1,813
              
              
              
              (80
              )Cash
      and Equivalents, at Beginning of Period
              
              
              76,658
              
              
              
              86,266Cash
      and Equivalents, at End of Period
              
              $
              2,159
              
              
              $
              39,408


See notes
      to consolidated financial statements.




















CHINA
HUAREN ORGANIC PRODUCTS INC. AND SUBSIDIARY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





1.
Basis of Preparing Accounting Statement





The
accompanying unaudited consolidated financial statements of China Huaren Organic
Products Inc. and subsidiary (the "Company") have been prepared in
accordance with U.S. generally accepted accounting principles for interim
financial information and pursuant to the requirements for reporting on Form
10-Q. Accordingly, they do not include all the information and footnotes
required by accounting principles generally accepted in the United States of
America for annual financial statements. However, the information included in
these interim financial statements reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of management,
necessary for the fair presentation of the consolidated financial position and
the consolidated results of operations. Results shown for interim periods are
not necessarily indicative of the results to be obtained for a full year. The
consolidated balance sheet information as of December 31, 2007 was derived from
the audited consolidated financial statements included in the Company's Annual
Report on Form 10-KSB. These interim financial statements should be read in
conjunction with that report.





2.
Organization and Nature of Business





China
Huaren Organic Products Inc. (“the Company”) is a holding company with one
subsidiary: China Organic Health Products Inc. (“China Organic”). China Organic
was incorporated in 2006 as a Delaware corporation. China Organic is a holding
company that owned 100% of registered capital of Jilin Huaren Organic Health
Products Co., Ltd. ("Jilin Huaren "), a corporation organized under the laws of
The People’s Republic of China (“PRC”).





In
November 2006, the Company acquired China Organic in exchange for shares of
common stock and shares of Series D Preferred Stock of the Company. The
capitalizations are described in further detail in Note 13 to the accompanying
consolidated financial statements.





China
Organic never initiated any business activity. Most of the Company's activities
are conducted through its 100% owned subsidiary Jilin Huaren. Jilin Huaren is
engaged in the business of research, development, production and sale of organic
foods and healthcare products.  All of Jilin Huaren’s business is currently
in PRC.





Jilin
Huaren is a domestic enterprise incorporated in Jilin district of PRC in
February 2000. Jilin Huaren was formerly known as Jilin KangJian Technology
Trade Center (Jilin KangJian) and changed its name to Jilin Huaren Organic
Health Products Co., Ltd. in December 23, 2004.





3.
Net loss during Transition Period and Management Plans





During
the fourth quarter of 2007, the sales revenue of Jilin Huaren had dropped down
significantly and the Company incurred a net loss. During the first quarter of
2008, the sales revenue was none. As of March 31, 2008, the Company had $2,159
cash and equivalents and $4,703,328 of net trade receivables to fund short-term
working capital requirements.  But these net trade receivables have
been outstanding for more than one year.





The
Company’s ability to continue as a going concern and its future success is
dependent upon its ability to find a better management team to handle the
Company’s business in China, to merge with a better business, and to raise
capital in the near term to (1) satisfy its current obligations, and (2) fund
the successful wide scale development and marketing of its
products.





The
Company presently has ongoing discussions and negotiations with a number of
additional financing alternatives and merger targets. However, the Company has
no definitive agreements to provide funding at this time. In addition, the
Company has no firm commitment with any merger target.





The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.














4.
Summary of Significant Accounting Policies





a.
Use of Estimates





The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from these estimates.








b.
Revenue Recognition





Revenue
is recognized at the date of shipment to customers, and when the price is fixed
or determinable, the delivery is completed, no other significant obligations of
us exist and collectibles is reasonably assured. All revenues for the quarter
ended March 31, 2007 were product sales revenue recorded net of value added
taxes. There were no sales during the first quarter of 2008.





Sales
transactions not meeting all the conditions of the full accrual method are
accounted for using the deposit method of accounting. Under the deposit method,
all costs are capitalized as incurred, and payments received from the buyer are
recorded as a customer deposits.





c.
Foreign Currency Translation





The
Company’s reporting currency is the U.S. dollar. The functional currencies of
the Company's subsidiaries are local currencies, primarily the Chinese Renminbi.
The financial statements are translated into U.S. dollars using period-end rates
of exchange for assets and liabilities and average rates of exchange for the
period for revenues and expenses. Translation adjustments resulting from the
process of translating the local currency financial statements into U.S. dollars
are included in other comprehensive income or loss of statements of operations
and comprehensive income (loss).





d.
Income Taxes





The
Company and its U. S. subsidiary will file consolidated federal income tax
returns and individual state franchise tax returns. The Company’s PRC subsidiary
files income tax returns under the Income Tax Law of the People's Republic of
China concerning Foreign Investment Enterprises and Foreign Enterprises and
local income tax laws.





The
Company follows Statement of Financial Accounting Standards No. 109 - Accounting
for Income Taxes, which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.





e.
Comprehensive Income





SFAS 130,
Reporting Comprehensive
Income, defines comprehensive income to include all changes in equity
except those resulting from investments by owners and distributions to owners
and requires that the period’s comprehensive income, its components and
accumulated balances be disclosed. Among other disclosures, SFAS 130 requires
that all items that are required to be recognized under current accounting
standards as components of comprehensive income be reported in a financial
statement that is presented with the same prominence as other financial
statements. The Company’s only current component of comprehensive income is the
foreign currency translation adjustment.





f.
Segment Reporting





SFAS 131,
Disclosure about Segments of
an Enterprise and Related Information, requires disclosure of reportable
segments used by management for making operating decisions and assessing
performance. Reportable segments are categorized by products and services,
geography, legal structure, management structure, or any other manner in which
management disaggregates a company. SFAS 131 has no effect on the Company’s
financial statements as substantially all of our operations and management is
under a single operating segment.





g.
Recent Pronouncements




In
December 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
160, "Noncontrolling Interests in Consolidated Financial Statements-an amendment
of ARB No.51" which clarifies that a noncontrolling interest in a subsidiary is
an ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements. This statement also changes the
way the consolidated income statement is presented. It requires consolidated net
income to be reported at amounts that include the amounts attributable to both
the parent and the noncontrolling interest. In addition, it requires disclosure,
on the face of the consolidated statement of income, of the amounts of
consolidated net income attributable to the parent and to the noncontrolling
interest. SFAS No. 160 is effective for fiscal years, and interim periods within
those fiscal years beginning on or after December 15, 2008 (that is, January 1,
2009, for entities with calendar year-ends). Earlier adoption is prohibited. The
Company is currently in the process of evaluating the effect, if any, the
adoption of SFAS No. 160 will have on its consolidated results of operations,
financial position, and financial disclosure.






In
December 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
141R (revised 2007), “Business Combinations” which replaces FASB Statement No.
141, “Business Combinations”. The Statement 141R retains the fundamental
requirements in Statement 141 that the acquisition method of accounting (which
Statement 141 called the purchase method) be used for all business combinations
and for an acquirer to be identified for each business combination. The
Statement 141R defines the acquirer as the entity that obtains control of one or
more businesses in the business combination and establishes the acquisition date
as date that the acquirer achieves control. Statement 141 did not define the
acquirer, although it included guidance on identifying the acquirer, as does in
Statement 141R. The scope of Statement 141R is broader than that of Statement
141, which applied only to business combinations in which control was obtained
by transferring consideration. By applying the same method accounting – the
acquisition method- to all transactions and other events in which on entity
obtains control over one or more other businesses, the Statement 141R improves
the comparability of the information about business combinations provided in
financial reports. SFAS No.141R applies prospectively to business combinations
for which that acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The Company is currently in the process of evaluating
the effect, if any, for the future acquisition and combinations.




In
February 2007, the Financial Accounting Standard Board (“FASB”) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial
Liabilities-Including an amendment of FASB Statement No. 115” which permits all
entities to choose to measure eligible items at fair value at specified election
dates. A business entity shall report unrealized gains and losses on items for
which the fair value option has been elected in earnings (or another performance
indicator if the business entity does not report earnings) at each subsequent
reporting date. SFAS No. 159 is effective as of the beginning of an entity
15 first fiscal year that begins after November 15, 2007. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before November
15, 2007, provided the entity also elects to apply the provisions of FASB
Statement No. 157, “Fair Value Measurements”. The Company is currently in the
process of evaluating the effect, if any, the adoption of SFAS No 159 and 157
will have on its consolidated results of operations, financial position, and
cash flows.















5.
Accounts receivable





During
the first quarter of 2007, the Company, facing an imminent expiration date on
organic crops that it had received from Wancheng, sold those crops at cost to
Yushu Wanli Co., Ltd (“Yushu”) pursuant to a sales contract. This sale on March
15, 2007 increased the Company’s accounts receivable by approximately $5,749,114
(equivalent to RMB 40,312,786), which included the merchandise price plus VAT
and other sales taxes. Yushu Wanli Co., Ltd. is a non-related third party. Based
upon the sales contract, Yushu started to pay the amount due to the Company in
May 2007. As of March 31, 2008, the outstanding balance due from Yushu was
$4,750,836 (equivalent to RMB 33,312,786). It represented all of
the Company’s gross accounts receivable balance as of March 31,
2008.





6.
Inventories





Inventories
consist of the following:




March 31,2008
            
            
            December 31,2007Unaudited
            
            
            AuditedFinished goods
            
            $
            252,412
            
            
            $
            242,633Work in process
            
            
            546,586
            
            
            
            480,532Packaging materials and other
            
            
            41,413
            
            
            
            39,807Total
            
            $
            840,411
            
            
            $
            762,972




7.Prepaid
Expenses





Prepaid
expenses consist of the following:




March 31,2008
            
            
            December 31,2007Unaudited
            
            
            AuditedPrepaid office rent
            
            $
            -
            
            
            $
            267Prepaid lease fee for the right to use
      lands
            
            
            1,573,497
            
            
            
            1,591,685Total
            
            $
            1,573,497
            
            
            $
            1,591,952






8.
Property and Equipment, Net





Property and equipment at cost, less
accumulated depreciation, consists of the following:




Estimated Life
            
            March 31,2008
            
            
            December 31,2007Unaudited
            
            
            AuditedOffice equipments
            5 years
            
            $
            22,814
            
            
            $
            21,930Subtotal
            
            
            
            22,814
            
            
            
            21,930Less: Accumulated depreciation
            
            
            
            12,759
            
            
            
            11,260Total
            
            
            $
            10,055
            
            
            $
            10,670




Depreciation
expenses charged to operations were $1,023 and $3,056 for the three months ended
March 31, 2008 and 2007, respectively.















9.
Deposit for Purchase of Fixed Assets





Starting
from late 2005, the subsidiary in China, Jilin Huaren, has intended to purchase
an office building from an unrelated company in P. R. China. The purchase price
was $1,069,598 (equivalent to RMB 7,500,000) and fix up construction cost was
$376,298 (equivalent to RMB 2,638,593). During 2006 and 2007, all these
cost had been paid to the seller by Jilin Huaren, but the title to the property
has not been transferred. Jilin Huaren had occupied the property since 2005
without paying any rent. Accordingly, Jilin Huaren has recognized $18,097
(equivalent to RMB 129,600) of rent expenses per year since October 1,
2005, and has recognized an equal amount of interest income imputed on the
payments that Jilin Huaren made to the seller since 2005. Management has
estimated the value of the contribution items, and expects to get a full refund
of $1,445,896 (equivalent to RMB 10,138,593) if the purchase does not go
through.





On March
1, 2007, Jilin Huaren signed a letter of intent with a village in Jilin
P.R.China to purchase a land use right from the village. This letter of intent
did not list the total purchase price, but Jilin Huaren had deposited $2,395,898
(equivalent to RMB16,800,000) to the village as of March 31, 2008. In addition,
the title to the land use rights has not passed to Jilin Huaren yet as of March
31, 2008.





The
Company’s total deposits for purchase of fixed assets, therefore, consist of the
following:




March 31,2008
            
            
            December 31,2007Unaudited
            
            
            AuditedDeposit for purchase office
    building
            
            $
            1,445,896
            
            
            $
            1,389,876Deposit for purchase land use right
      from village
            
            
            2,395,898
            
            
            
            2,303,074Total
            
            $
            3,841,794
            
            
            $
            3,692,950






10.
Operating lease commitments





The
Company leases office space and certain farm and plant lands under
operating lease agreements.





The
following is a schedule of future minimum rental payments required under
operating leases that had initial or remaining non-cancelable lease terms
beyond March 31, 2008.




Operating Lease
      CommitmentsQuarter Ending March 31,2008
            
            $
            142,6132009
            
            
            142,6132010
            
            
            142,6132011
            
            
            142,6132012
            
            
            142,613Thereafter
            
            
            6,179,897Total minimum payments required
            
            $
            6,892,962




Rent
expenses amounted to $85,691 and $100,566 for the three months ended March 31,
2008 and 2007, respectively.















11.
Taxation





a.
Corporation Income Tax (“CIT”)





The
Company and its US subsidiary will file consolidated federal and
individual state franchise tax returns. The Company’s PRC subsidiary files
income tax returns under the Income Tax Law of the People's Republic of China
concerning Foreign Investment Enterprises and Foreign Enterprises and local
income tax laws.





In
accordance with the relevant PRC tax laws and regulations, the Company’s PRC
subsidiary was subject to CIT at 33% and 25% tax rate before and after December
31, 2007, respectively.





b.
Value Added Tax (“VAT”)





The
Company is subjected to VAT on merchandise sales in PRC. For the quarter ended
March 31, 2008 and 2007, a small scale VAT tax rate of 4% was
applicable.





c.
Business Tax (“BT”)





The
Company also subject to Business Tax, which is charged on the service
income at a generate rate of 5% in accordance with the tax law in Jilin District
of PRC.





d.
Taxes Payable





As of
March 31, 2008 and December 31, 2007, tax payable consists of the
following:




Taxes PayableMarch 31,2008
            
            
            December 31,2007Unaudited
            
            
            AuditedValue-added tax
            
            $
            580,295
            
            
            $
            557,813Income tax
            
            
            1,003,440
            
            
            
            964,564Delaware franchise taxes
            
            
            21,186
            
            
            
            21,186Individual income tax withholdings
            
            
            6,373
            
            
            
            6,126City construction, education, and
      other taxes
            
            
            21,212
            
            
            
            20,389Total
            
            $
            1,632,506
            
            
            $
            1,570,078

















12.
Foreign Subsidiary





a. Operations





Substantially
all of the Company’s operations are carried out through its subsidiary located
in the PRC. Accordingly, the Company’s business, financial condition and results
of operations may be influenced by the political, economic and legal
environments in the PRC. The Company’s business may be influenced by
changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency fluctuation and remittances and methods of
taxation, among other things.





b. Dividends
and Reserves





Under
laws of the PRC, net income after taxation can only be distributed as dividends
after appropriation has been made for the following: (i) cumulative prior years'
losses, if any; (ii) allocations to the "Statutory Surplus Reserve" of at least
10% of net income after tax, as determined under PRC accounting rules and
regulations, until the fund amounts to 50% of the Company's registered capital;
(iii) allocations of 5-10% of income after tax, as determined under PRC
accounting rules and regulations, to the Company's "Statutory Common Welfare
Fund", which is established for the purpose of providing employee facilities and
other collective benefits to employees in China; and (iv) allocations to any
discretionary surplus reserve, if approved by shareholders.





As
of March 31, 2008 and as of December 31, 2007, the Company’s PRC
subsidiaries established and segregated in retained earnings an aggregate amount
of $259,244 respectively, for the Statutory Surplus Reserve and the Statutory
Common Welfare Fund.





13.
Stockholders Equity





On
November 13, 2006, the Company acquired all of the outstanding capital
stock of China Organic Health Products, Inc. (“China Organic”).  In
connection with the closing of the acquisition (the “Share Exchange”), the
Company issued to the shareholders of China Organic (a) 27,486,175 shares of
common stock and (b) Series D Preferred Stock, which was convertible into
469,760,000 shares of common stock. As a part of the merger, we changed our
corporate name to "China Huaren Organic Products, Inc. from Ultradata Systems,
Inc. " In addition, the Company brought into effect a 1:39 reverse
split of its outstanding common shares and an increase in the number of
authorized shares of common stock from 50,000,000 shares, par value $0.01 to
100,000,000 shares, $0.01 par value. After recapitalization, the Series D
Preferred Stock was converted into 12,045,128 common shares, and there were
14,699,853 common shares issued and outstanding, par value $0.01 on March 31,
2008.


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Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations





The following analysis of our
consolidated financial condition and results of operations for the three months
ended March 31, 2008 and 2007, should be read in conjunction with the
consolidated financial statements, including footnotes, and other information
presented in our annual report on Form 10-KSB as filed with the Securities and
Exchange Commission onMay 9,
2008.




Results
of Operations




Jilin Huaren commenced its marketing
operations in March of 2005.  In the spring of both 2006 and
2007, however, we found ourselves with large inventories of perishable
goods that we were unable to sell before their expiration dates.  So
at both times we transferred the goods to another distributor at
cost.  The transaction in 2007 involved a sale to Yushu Wanli Co.,
Ltd. of foodstuffs for $5,295,971 (equivalent at that time to
RMB 40,312,786) (including tax) under a contract that called for payments
to begin in cash in May 2007. This transaction relieved us of the problem of
perishable inventory.  But the result was that we realized only
$251,319 in gross profit on the transaction.  This gross margin is
inadequate to provide the funds we need for more than a minimal level of
operations.




The
problem with the Yushu Wanli transaction was compounded when Yushu Wanli stopped
making payments on the account.  During the second and third quarters
of 2007, we received $934,227 from this client. Since that time we have received
nothing.  We believe that the account is good, and that it will
eventually be paid in full.  But we do not know when payment will be
received.




Due to the slow growth of sales and low
margins achieved, in the fall of 2007 we transferred operational control over
Jilin Huaren to a group of experienced food supplies managers.  Our
contract with the management group provided that they would receive all net
earnings from Jilin Huaren in excess of specified amounts: 3 million RMB in the
period from August to December 2007, 14 million RMB in 2008, etc. Unfortunately,
the transfer of control to this new group brought sales to a halt.  In
the fourth quarter of 2007 we realized only $134,778 in revenue; in the first
quarter of 2008 we had no revenue.  For this reason we have terminated
the management agreement, and have appointed new managers, who will assume their
positions later in May 2008.




Despite the absence of revenue, we lost
only $47,020 in the first quarter of 2008, as we have eliminated most of our
expenses.  Likewise, despite our relatively low level of profitable
sales, our operations in 2007 were profitable due to our low level of expenses.
Our net income for the first quarter of 2007 was $51,161.  The fact
that we are able to operate profitably in the first quarter of 2007, despite low
gross profit, is attributable to two essential characteristics of our business
model:




·
            There
      are thousand of individuals involved in selling our products – but we
      incur no payroll obligation for them.  They are owners or
      employees of the companies that distribute for us.  So our
      selling expenses were less than 2% of revenue in the first quarter of 2007
      and have been less than 4% of our revenue since we began operations in
      2005.




·
            Our
      manufacturing activity is completely outsourced to enterprises dedicated
      to organic agricultural manufacturing.  As a result, during the
      first quarter of 2007 our general and administrative expense equaled less
      than 1.3% of our revenue. During the first quarter of 2008 and 2007
      our depreciation expense – often a major factor in agribusiness operations
      – were only $1,023 and 3,056, respectively, since we own no manufacturing
      equipment.




Our business operates entirely in
Chinese Renminbi, but we report our results in our SEC filings in U.S.
Dollars.  The conversion of our accounts from RMB to Dollars results
in translation adjustments, which are reported as a middle step between net
income and comprehensive income. The net income is added to the retained
earnings on our balance sheet; while the translation adjustment is added to a
line item on our balance sheet labeled “accumulated other comprehensive income,”
since it is more reflective of changes in the relative values of U.S. and
Chinese currencies than of the success of our business.  During the
first quarter of 2008 and 2007, the unrealized gain on foreign currency
translations added $357,338 and $85,223 to our accumulated other comprehensive
income.




Our prospects for the future will
depend on the success of our new managers, who will assume control of Jilin
Huaren in May 2008.  We believe that our business plan, if properly
implemented by competent management, can be successful and that we have put in
place most of the resources necessary to permit the plan to be
implemented.  But the new management will have to revive the Company’s
operations almost completely.  Whether they will be able to overcome
the inertia of recent stagnancy in our operations will be known only with the
passage of time.

















Liquidity and Capital
Resources




On March
31, 2008 we had working capital of $5,361,817, $162,088 more than on December
31, 2007. We had no long-term liabilities. However, our working capital
consisted primarily of the account receivable from Yushu Wanli Co., Ltd. (on
which we have received no payment since September 2007) and prepaid expenses,
which are mostly advances for lease fees of land on which we will plant our
future crops. Since the market for our organic products continues to grow, we do
not anticipate any difficulty in liquidating the inventory. However we lack the
cash necessary to make our distribution network more efficient, having had only
$2,159 in cash as of March 31, 2008.  To obtain the necessary cash, we
expect make more effort in collecting our account receivable.  We will
also be seeking to acquire the necessary funds from outside sources or majority
shareholders in the second quarter of 2008.




During
2005 we contracted to purchase an office building for our operations. We have
deposited $1,445,896 (equivalent to RMB 10,138,593) with the seller to cover the
cost of the building and certain improvements that we require.  Title
to the building has not passed to us yet, however.  So our investment
is recorded on the balance sheet as a “deposit for purchase of fixed
assets.”  In addition, on March 1, 2007 we signed a letter of intent
with a village in Jilin, P.R.China to purchase a land use right from the
village. This letter of intent did not list the total purchase price, but we
have deposited $2,395,898 (equivalent to RMB16.8 million) to the village. This
sum represents the remainder of the “deposit for purchase of fixed assets” on
our balance sheet.




The cash
demands of our business mean that in order to make capital improvements we will
require additional capital from external sources.  Our plan is to
acquire additional organic soil resources in the near future, and to invest in
manufacturing capability over the longer term.  To fund those
additions to our balance sheet, we intend to sell equity.  At the
present time, however, we have received no commitments from any
source.






Off-Balance Sheet
Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition or results of
operations.





Item
3.                         Quantitative
and Qualitative Disclosures about Market Risk





A smaller reporting company is not
required to provide the information required by this Item.





Item
4T.                      Controls
and Procedures





Evaluation of Disclosure Controls
and Procedures.




Our Chief
Executive Officer and Chief Financial Officer carried out an evaluation of the
effectiveness of our disclosure controls and procedures as of March 31, 2008.
Pursuant to Rule13a-15(e) promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, “disclosure controls and
procedures” means controls and other procedures that are designed to insure that
information required to be disclosed by China Huaren in the reports that it
files with the Securities and Exchange Commission is recorded, processed,
summarized and reported within the time limits specified in the Commission’s
rules.  “Disclosure controls and procedures” include, without
limitation, controls and procedures designed to insure that information China
Huaren is required to disclose in the reports it files with the Commission is
accumulated and communicated to our Chief Executive Officer and Chief Financial
Officer as appropriate to allow timely decisions regarding required
disclosure.  Based on his evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that China Huaren’s system of disclosure
controls and procedures was effective as of March 31, 2008 for the purposes
described in this paragraph.





Changes inInternal Control overFinancialReporting




.During the most recent quarter ended
March 31, 2008, there has been no change in our internal control over financial
reporting (as defined in Rule  13a-15(f) and 15d-15(f) under the
Exchange Act) ) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.














PART
II   -   Other Information






Item
      1.
              Legal
      ProceedingsNoneItem
      1A.
              Risk
      FactorsA smaller reporting
      company is not required to provide the information required by this
      Item.Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds.NoneItem
      3.
              Defaults
      upon Senior SecuritiesNoneItem
      4.
              Submission
      of Matters to a Vote of Securities HoldersNoneItem
      5.
              Other
      informationNoneItem
      6.
              Exhibits







Exhibit


Number   Description


31
              Certification of
      Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
              Certification of
      Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sabranes-Oxley Act of
  2002







SIGNATURES








In
accordance with the requirements of the Exchange Act, the registrant has caused
his report to be signed on its behalf by the undersigned, thereunto duly
authorized.





CHINA HUAREN ORGANIC PRODUCTS,
INC.





Date:
      May 19, 2008
            By:
      /s/ Jinzhong
      Fang


Jinzhong
      Fang, Chief Executive Officer


and
      Chief Financial Officer









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