UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
  
 Form
        10-KSB
  
 (Mark
        One)
  x
              ANNUAL
                  REPORT UNDER SECTION 13
                  OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                  1934
  For the fiscal year ended December 31, 2007
  o
              TRANSITION
                  REPORT UNDER SECTION
                  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                  1934
 
 For
        the transition period from 
        to
 Commission
        File Number: 000-50029
  
 CHINA
        HEALTH RESOURCE INC.
 f/k/a
        VOICE DIARY
        INC.
 (Name
        of Small Business Issuer in its Charter)
  
 Delaware
              73-1629948(State
                  or Other Jurisdiction of
                incorporation
                  or organization)
              (I.R.S.
                  Employer
                Identification
                  No.)
 
 343
        Sui Zhou Zhong
        Road
 Sui
        Ning, Si Chuan Province,
        P.R. China
 (Address
        of Principal Executive Offices)
 
 (86825)
        239-1788
 (Issuer’s
        Telephone Number)
  
 Securities
        registered under Section 12(b) of the Act:
  Title
                  of each class
              Name
                  of each exchange
                on
                  which registeredNone
              Not
                  Applicable
  Securities
        registered under Section 12(g) of the Exchange Act:
 Common
        Stock, Class A and Class B, $.01 par value
 (Title
        of Class)
  
 1
 Table
            of Contents
  Check
        whether the issuer is not required to file reports pursuant to Section 13
        or
        15(d) of the Exchange Act.  o
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act.):    Yes  o   No  x
  Check
        whether the issuer (1) filed all reports required to be filed by
        Section 13 or 15 (d) of the Exchange Act during the past 12 months (or
        for such shorter period that the registrant was required to file such reports),
        and (2) has been subject to such filing requirements for the past 90 days.
    YesxNoo
  Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of the registrant’s knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB.  x
  The
        Registrant’s revenues for its fiscal year ended December 31, 2007 were
        $725,529.
 
 The
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates of the issuer computed by reference to the close price of
        $.011
        reported by brokers, as of April 14, 2008, was approximately
        $901,636.
 
 At
        April
        14, 2008, the registrant had outstanding 104,288,894 shares of par value
        $.01
        Class A Common Stock, of which approximately 81,966,906 shares were held
        by
        non-affiliates, and 2,000 shares of par value $.01 Class B Common Stock,
        of
        which none was held by non-affiliates.
 Transitional
        Small Business Disclosure Format (check one):   oYesxNo
  CAUTIONARY
        STATEMENT REGARDING FORWARD LOOKING INFORMATION
 
 The
        discussion contained in this 10-KSB under the Securities Exchange Act of
        1934,
        as amended, (the "Exchange Act") contains forward-looking statements that
        involve risks and uncertainties. The issuer's actual results could differ
        significantly from those discussed herein. 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," "the Company believes," "management believes" and similar
        language, including those set forth in the discussion under "Description
        of
        Business," including the "Risk Factors" described in that section, and
        "Management's Discussion and Analysis or Plan of Operation" as well as those
        discussed elsewhere in this Form 10-KSB. We base our forward-looking statements
        on information currently available to us, and we assume no obligation to
        update
        them. Statements contained in this Form 10-KSB that are not historical facts
        are
        forward-looking statements that are subject to the "safe harbor" created
        by the
        Private Securities Litigation Reform Act of 1995.
 
 
  TABLE
        OF CONTENTS
 
 PART
                  IItem 1
              
              Description
                  of Business
              
              4Item 2
              
              Description
                  of Property
              
              7Item 3
              
              Legal
                  Proceedings
              
              7Item 4
              
              Submissions
                  of Matters to a Vote of Security
                  Holders
              
              7PART IIItem 5
              
              Market
                  for Common Equity, Related Stockholder Matters And Small
                  Business Issuer Purchases of Equity Securities
              
              8Item 6
              
              Management’s
                  Discussion and Analysis or Plan of
                  Operation
              
              8Item 7
              
              Financial
                  Statements
              
              10Item 8
              
              Changes
                  in and Disagreements with Accountants on Accounting and
                  Financial Disclosure
              
              20Item 8A
              
              Controls
                  and Procedures
              
              20PART IIIItem 9
              
              Directors,
                  Executive Officers, Promoters, Control Persons and
                  Corporate Governance; Compliance With Section 16(a) of the Exchange
                  Act
              
              20Item 10
              
              Executive
                  Compensation
              
              21Item 11
              
              Security
                  Ownership of Certain Beneficial Owners and Management
                  and Related Stockholder Matters
              
              22Item 12
              
              Certain
                  Relationships and Related Transaction, and Director
                  Independence
              
              23Item 13
              
              Exhibits
              
              23Item 14
              
              Principal
                  Accountant Fees and
                  Services
              
              23
 
 3
 Table
            of Contents
  PART
        I
  Item 1.
        Description of Business.
  General
  As
        used in this Annual Report, the
        terms "we", "us", "our," the “Registrant,” “CHRI” and the "Company" means, China
        Health Resource Inc., a Delaware corporation. These terms also refer to our
        subsidiary corporation, Sui Ning Shi Yin Fa Bai Zhi Chan Ye You Xian Gong
        Si, a
        corporation organized and existing under the laws of the Peoples’ Republic of
        China (“Yin Fa”) acquired in August 2006.
  We
        were
        incorporated in the State of Delaware on February 26, 2002. In June and July
        2002, we acquired approximately 99% of the outstanding shares of Voice Diary
        Ltd., an Israeli corporation (“VDL”), through an exchange of shares of the
        Company with former shareholders of the Subsidiary. VDL was disposed on August
        22, 2006 pursuant to the agreement between the Company, VDL and Arie Hinkis,
        our
        former president. On May 21, 2007, we changed our name to China Health Resource
        Inc. to more accurately reflect our business after a stock exchange transaction
        with Yin Fa.
 
 Mergers
        or Acquisitions
 
 On
        June 13,
        2006, CHRI (acquirer) executed a Plan of Exchange with Yin Fa (acquiree),
        the
        shareholders of Yin Fa and the then majority shareholders of the Voice Diary,
        Inc., pursuant to which CHRI issued 30,000,000 (post-split) new investment
        shares of Class A Common Stock of the Registrant to the Yin Fa shareholders
        pursuant to Regulation S under the Securities Act of 1933, as amended, in
        exchange for all of their shares of registered capital of Yin Fa. As a result,
        Yin Fa became a wholly-owned subsidiary of CHRI. The transaction was treated
        for
        accounting purposes as a capital transaction and recapitalization by the
        accounting acquirer and as a re-organization by the accounting
        acquiree.
 
 Since
        the
        completion of the Plan of Exchange, CHRI has changed its core business to
        pharmaceuticals and continued the operations of Yin Fa. Yin Fa is a Chinese
        pharmaceutical company focused on developing and commercializing Dahurian
        Angelica Root, a popular traditional Chinese medicine. Our business plan
        includes distributing Dahurian Angelica Root and its related products for
        the
        treatment of pain, swelling and pustule. Dahurian Angelica Root is a popular
        herb employed extensively as an ingredient in food, medicine and cosmetics.
        The
        Suining district in Sichuan Province is a major planting area for DAR as
        a
        result of local climates and soil. Production output and quality of DAR in
        this
        area are considered by some to be the best in China. In May 2005, we started
        the
        process of applying for GAP (Good Agricultural Practice of Medical Plants
        and
        Animals) certification for DAR, in cooperation with Sichuan Yinfa Resource
        Development Group Co. Ltd., our affiliate ("Yinfa Resource"). We met the
        standards for DAR in accordance with the guidelines established by European
        GAP.
        Such standards cover environment quality, seed quality, minimum pesticides,
        and
        fertilizer standards. The proposed standards were adopted by the Chinese
        State
        Food and Drug Administration (SFDA). Our new GAP project involves approximately
        133,334 square meters of experimental planting fields, and 1,333,340 square
        meters of fields run by companies we have hired, all of which passed inspection
        by the SFDA on February 26, 2006. The GAP certificate has been issued in
        name of
        our partner Yinfa Resource. GAP certification means that our planning, quality,
        and manufacturing of DAR have met a high and certifiable standard.
 
 Yin
        Fa was
        founded on April 24, 2001, with a registered capital of $125,000 (RMB
        1,000,000), and total assets of $1,475,795 (net assets of $2,962,552 as of
        December 31, 2007). Yin Fa's business incorporates a self-owned production
        base
        and a network of DAR associates, farmers and R&D affiliates. We believe our
        business model will help facilitate the process of growing DAR, R&D,
        commercializing DAR, sales and marketing. CHRI's current DAR related products
        include the Bai Ling Capsule, Yi Shen Capsule, DAR slices and DAR scent bag,
        all
        of which have been certified by the SFDA and are being sold into the market
        via
        regional distributors throughout China. We will continue to explore the
        development and addition of DAR in a range of foods, medicines and
        cosmetics.
  Market
        Opportunity
  We believe that traditional Chinese medicine presents a highly attractive
        opportunity for the following reasons.
 
 The
        trend towards
        organic materials. Since World War II, traditional agricultural and
        organic agriculture, has been broken due to the extensive application of
        synthetic chemicals, such as synthetic fertilizers, pesticides, herbicides,
        and
        mass-rearing techniques to agriculture. When people are enjoying the efficiency
        of modern agriculture, they are also hurt by the deteriorated environment.
        The
        advocacy of organic agriculture re-catches people's attention and the trend
        for
        organic materials is globalized gradually. Traditional Chinese medicine is
        an
        independent influent in medication. Different from modern chemical-intensive
        medication, traditional Chinese medicine consists of various natural herbs
        and
        naturalism is the essence in traditional Chinese herbal theory. The functions
        of
        herbs have been studied and applied for thousands of years in China; its
        miracle
        is disclosed to the world gradually.
 
 Substantial
        markets. In the global medication market, the revenues from herbal
        medication are more than $27 billions in 2005. In the European Union, the
        increase in the sales of herbal medication, approximately 30% annually, is
        faster than that of synthetic medication. Since 1978, the buying power of
        herbal
        medication has increased by approximately 70% in United Kingdom, and
        approximately 50% in France. In the US, the sales of herbal medication increased
        by more than 20% every year. (Chinese Traditional and
        Herbal
        Drugs, 1999, Vol. 30, No. 11)
 
 Developing
        traditional Chinese medicine industry. Even though Chinese herbal theory
        experienced thousands of years, China didn't play a key role in global herbal
        medication market, of which only approximately 2% was shared by China. The
        restriction in traditional Chinese medicine industry is due to lack of standards
        with respect to the qualities control of Chinese medicinal herbs. This situation
        has been changed since GAP was adopted by China in 2003. GAP is the abbreviation
        of “Good Agricultural Practice of Medicinal plants and animals” which regulates
        a whole set of controls at every stage of herb development from the ecological
        environment, germplasm and breeding, to cultivating, raising, collecting,
        transporting, packaging and quantitative administration. GAP is the first
        step
        to implement GMP in traditional Chinese medicine industry because it starts
        the
        qualities control from the plantation of herbs. We believe the adoption of
        GAP
        will minimize the gap between China and the world, resulting in the booming
        in
        traditional Chinese medicine industry in China.
 
 In
        China, the
        Traditional Chinese Medicine ("T.C.M.") industry has enjoyed a robust
        development. According to a 1996 statistical survey, approximately 1,059
        companies of T.C.M. in China have fixed assets of RMB13.34 billion, an annual
        total production of RMB23.54 billion, and sales revenues of RMB23.08. The
        T.C.M.
        realizes profits of RMB1.91 billion, with taxes at RMB23.54 billion and a
        total
        export value of USD0.589 billion. (Chinese Traditional and
        Herbal
        Drugs, 1999, Vol. 30, No. 11)
 
 Benefit
        from World
        Trade Organization.China’s accession to the World Trade Organization
        (“WTO”) in 2001, following fifteen years of difficult negotiations, was a
        watershed event for the WTO and its members and for China. WTO membership
        brought with it the opportunity to take advantage of new market access
        opportunities and new protections now available to China under the rules-based
        system of the WTO. When China was a non-member of the WTO, China found that
        its
        exports were often the subject of discriminatory treatment in overseas markets.
        In addition, as a country with planned economy to one with marketing economy,
        China often saw its exporting enterprises were subjected to anti-dumping
        acts.
        All will be changed under the protection of WTO. On the other hand, the
        accession to WTO also would bring with it the necessity of a large number
        of
        reforms in Chinese economic policies, many of which would require adapting
        the
        perspective of Chinese business establishments. The employment of GAP in
        traditional Chinese medicine is one of the policies to comply with WTO. With
        GAP
        certification, we believe global market access will be open to traditional
        Chinese medicine.
 
 Growing
        need for
        traditional Chinese medicine.  Social and demographic factors
        are contributing to the growth in the traditional Chinese medicine market
        and
        the need for new, natural therapies. The aging population of the world is
        more
        likely to have suppressed immune systems and will require treatments that
        are
        effective against increasingly resistant strains of bacteria. In addition,
        the
        pharmaceutical industry continues to develop therapeutics, such as cancer
        chemotherapy, that weakens the immune system as a side effect of the primary
        therapy. Traditional Chinese medicine is the supplement for chemical-intensive
        treatments due to its natural features and functions in strengthening the
        immune
        system. Traditional Chinese medicine covers thousands of herbs, the functions
        of
        which are still waiting for a deep disclosure. As a result, we believe there
        is
        a strong demand for traditional Chinese medicine that are more potent, more
        effective against resistant strains and that cause fewer side
        effects.
  Limitations
        of standard treatment
        regimens.  In addition to the increased side effects of
        chemical-intensive treatments, we believe that standard chemical-intensive
        treatment regimens have several other limitations, including multiple daily
        dosage requirements, lengthy treatment periods, limited effectiveness and
        severe
        side effects, all of which decrease patient compliance and ultimately,
        therapeutic efficacy.
  4
 Table
            of Contents
  Our
        Proprietary DAR products certified by GAP
 
 A
        GAP
        certificate means that the planning, quality and manufacturing of DAR meet
        a
        high and certifiable standard, which a quality assurance for the raw herb.
        GAP
        regulates a whole set of controls at every stage of herb development from
        the
        ecological environment, germplasm and breeding, to the cultivating, raising,
        collection, transporting, packaging and quantitative administration. The
        raw
        herb material is formed through different growing and production stages.
        Different germplasm, ecological environment, culture technology, and different
        harvesting times and processing methods can all influence the herbs output
        and
        quality. So it is easy to see that there are quite a lot of risks when buying
        herbs from different sources in the market. In the open market, herbs in
        the
        same genus, but not the same species are often confused and mixed together
        with
        the right species. However, only the right species will have the most active
        ingredients.
 
 We
        are
        confident in our DAR products due to couple reasons. First, the process in
        growing DAR is guaranteed by GAP. Please see Table 1 below for the difference
        between GAP DAR and non-GAP DAR.
 
 Table
        1. Comparison
        Between GAP DAR and non-GAP DAR
 
 No.
              Ingredient
              GAP
                  DAR
              Non-GAP
                  DAR1
              Water
              ≤12.0%
              N/A2
              Ash
              ≤6.0%
              N/A3
              Insoluble
                  Acid
              ≤2.0%
              N/A4
              Heavy
                  Metal
              Lead
              ≤5.0mg/kg
              N/ACadmium
              ≤0.3mg/kg
              N/AMercury
              ≤0.2mg/kg
              N/AArsenic
              ≤2.0mg/kg
              N/A5
              Pesticide
                  Residue
              Benzene
                  hexachloride (BHC)
              ≤2‰
              N/AGesarex
              ≤2‰
              N/ATerrachlor
              ≤1‰
              N/A6
              Microbes
              Virus
              ≤30000unit/g
              N/AMucedine
              ≤100
                  unit/g
              N/AColibacillus
              N/A
              N/A7
              Extract
              ≥14.0%
              N/A8
              Imperatorin
                  & Alloisoimperatorin
              ≥0.16%
              N/A9
              Total
                  Coumarin
              ≥0.5%
              N/A
 
 As
        mentioned
        above, ecological environment is another important factor affecting the quality
        of DAR. The suitable environment for DAR is the area with nice sun shine,
        warm
        and moist climate, and medium dry soil, which are exactly the geographic
        features in Sui Ning, the location of Yin Fa. Sui Ning is located at the
        edge of
        Si Chuan Basin, southwest of China, covered by the subtropical climate belt.
        The
        annual mean temperature in this region is approximately 17.4 °C, and annual
        rainfall is approximately 993 mm. In addition, the soil in this region contains
        abundant elements, such as Potassium, Phosphorus, etc., which is beneficial
        to
        the growth of traditional Chinese medicine.
 
 Marketing
        Strategy
 
 We
        expect to
        use our novel finding and related proprietary technology in DAR to develop
        and
        commercialize more efficient, effective and convenient DAR products. To achieve
        this objective, we have set up a business model associating our self-owned
        production base, DAR associates, farmers and R&D affiliates. We believe the
        business model will facilitate the process in growing DAR, R&D,
        commercializing DAR, sales and marketing. Currently, the DAR related products
        included Bai Ling Capsule, Yi Shen Capsule, DAR slices and DAR scent bag,
        which
        have been certified by SFDA and put into the market via regional distributors
        throughout China. Yin Fa continues to explore the application for DAR in
        a range
        of food, medicine and cosmetics.
 
 In
        addition,
        we have adopted the following product development and commercialization
        strategies:
 
 Commercialize
        GAP DAR
        products. We plan to develop DAR products that have best quality assured
        by GAP over current non-GAP DAR products available in the market, which may
        include DAR seeds to pharmaceutical factories as raw material, or DAR related
        products, such as DAR slice, DAR extract, Bai Ling Capsule etc. to the end
        users. We believe that our DAR and DAR related products will be competitive
        in
        the market due to their improved and certified efficacy.
  Develop
        sales and marketing
        functions across multiple DAR products.We intend to build over time a
        pharmaceutical company which may take advantage of the local resources of
        DAR
        and develop and commercialize DAR and its related products. We believe that
        its
        commercialization strategy will allow us to fully enhance the value of its
        DAR
        product and retain significant control over its development and commercial
        activities. In order to facilitate the sales channel for DAR, we are considering
        several sales and marketing strategies, including building up nation-wide
        network in China via regional distributors. We also enter into agreements
        with
        other pharmaceutical companies which will take DAR as raw material. For example,
        on April 18, 2007, we entered into an Exclusive Agency Agreement with Chengdu
        Derentang Pharmaceutical Ltd. ("Derentang"), the largest Chinese medicine
        distributor in Sichuan province of China, who owns approximately 600 medical
        franchise stores throughout China, of which 120 stores in Sichuan. Pursuant
        to
        the Agreement we act as the exclusive supplier of Derentang for DAR in the
        Sichuan area and Derentang sells our DAR products at all of their medical
        franchise stores. The agreement will expire in 2012.
 
 Seeking
        for supports
        from local government. In order to commercialize T.C.M. and increase the
        income for T.C.M. farmers, the local government of Sui Ning City has
        successfully built up networks for T.C.M. to facilitate the process from
        fields
        to end users, including planting, production, distribution and sales. Currently,
        there are 177 associates specialized in T.C.M. in Sui Ning with more than
        1,000
        people working in T.C.M. industry. The annual purchase of various T.C.M in
        Sui
        Ning is approximately 2,000 tons (Han Yang Technology, 2005,
        No. 2). Yin Fa plans to apply the local resources to its marketing.
 
 Seeking
        for strategic
        partners.For certain DAR products, we intend to enter into collaborative
        arrangements with third parties. These collaborations may be necessary in
        order
        for us to:
  •
              fund
                  our research and development activities;•
              fund
                  manufacturing by third parties;•
              seek
                  and obtain regulatory approvals; and•
              successfully
                  commercialize our DAR products.
  On
        March 6,
        2007, we entered into an Exclusive Import-Export Agency Agreement with DongUi
        Cosmetics Co. ("DongUi"), a corporation organized and existing under the
        laws of
        the Republic of Korea (South Korea), for business development in South Korea.
        The Agreement will expire in 2017.
  Competition
 
 The
        T.C.M.
        industry is highly competitive in many areas. Our product DAR and other DAR
        related products will compete with other available products based primarily
        on:
  •
              efficacy•
              safety•
              tolerability•
              acceptance
                  by doctors•
              patient
                  compliance and acceptance•
              patent
                  protection•
              convenience•
              price•
              insurance
                  and other reimbursement coverage•
              distribution•
              marketing•
              adaptability
                  to various modes of dosing
 
 Competitors
        include national and regional T.C.M. providers, T.C.M. manufacturers,
        wholesalers and chain drug stores.
 
 Many
        of our
        competitors possess greater financial, managerial and technical resources
        and
        have established reputations for successfully developing and marketing T.C.M.,
        all of which put us at a competitive disadvantage. Our competitors may be
        able
        to apply their resources and capabilities to develop and commercialize products
        that have distinct, enhanced, or perceived advantages versus our products.
        The
        competitors may be in a position to devote greater resources in the sales,
        marketing, and distribution of these products and therefore considerably
        impact
        our ability to successfully commercialize our own products.
  5
 Table
            of Contents
  Manufacturing
 
 We
        currently
        rely on third-party contract manufacturers to produce sufficient quantities
        of
        DAR related products. We believe that our initial focus on the application
        for
        GAP authentication for DAR will reduce the risk and time involved in the
        development of manufacturing capabilities because production of DAR related
        products involves well-established and well-accepted manufacturing techniques
        and processes. We intend to continue to rely upon third-party contract
        manufacturers for production of our DAR related products. The use of
        third-parties for these activities allows us to minimize our initial capital
        investment and reduce the risk that would be associated with the establishment
        of our own commercial manufacturing and distribution operations.
  Government
        Regulation
 
 We
        are
        subject to extensive pre- and post-market regulation by the FDA, including
        regulations that govern the testing, manufacturing, safety, efficacy, labeling,
        storage, record keeping, advertising, and promotion of drugs under the Federal
        Food, Drug and Cosmetic Act and the Public Health Services Act, and by
        comparable agencies in foreign countries. FDA approval is required before
        any
        dosage form of any new drug, a generic equivalent of a previously approved
        drug,
        or a new combination of previously approved drugs, can be marketed in the
        United
        States. All applications for FDA approval must contain information relating
        to
        pharmaceutical formulation, stability, manufacturing, processing, packaging,
        labeling and quality control.
  Employees
  As
        of December 31,
        2007, we had 31 full-time employees, including 5 office executives, 12
        specialists in researching and developing traditional Chinese medicines.
        All
        employees are working in our subsidiary located in China.
 
 Risk
        Factors
 
 There
        are a
        number of important factors that could cause our actual results to differ
        materially from those that are indicated by forward-looking statements. Those
        factors include, without limitation, those listed below and elsewhere
        herein.
 
 We
        have incurred
        losses from operations, which may have impact on implementing our business
        plan
 
 We
        had net
        losses of $226,048 and $155,233 for the years ended December 31, 2007 and
        2006,
        respectively, which may have impact on implementing our business
        plan.
 
 We
        may
        continue to incur substantial losses for the foreseeable future as a result
        of
        increases in our research and development costs, including costs associated
        with
        conducting quality improvement of DAR, and regulatory compliance
        activities.
 
 Our
        chances
        for achieving profitability will depend on numerous factors, including success
        in:
  •
              achieving
                  milestones under our collaboration agreements;•
              developing
                  more proprietary DAR related products;•
              commercializing
                  our products; and•
              establishing
                  our competitive position.
 
 Many
        of
        these factors will depend on circumstances beyond our control. We cannot
        assure
        you that we will ever gain more net income.
 
 If
        a competitor
        produces and commercializes DAR products that are superior to our products,
        the
        market for our potential products would be reduced or
        eliminated.
 
 We
        have
        devoted a substantial amount of our research efforts and capital to improve
        the
        quality of DAR. Competitors are developing or have developed new DAR products
        that may compete with ours. In addition, other companies are developing
        technologies to enhance the efficacy of DAR products by adding new techniques
        in
        extracting DAR. If a competitor produces and commercializes DAR products
        that
        provide superior safety, effectiveness or other significant advantages over
        our
        products, the value of our DAR products would be substantially reduced. As
        a
        result, we would need to conduct substantial new research and development
        activities to establish new product targets, which would be costly and time
        consuming. In the event we are unable to establish new product targets, we
        will
        be unable to generate sources of revenue.
 
 We
        have not
        sought patent protection for certain aspects of our
        technology.
 
 We
        have not
        filed for patent protection with respect to specific formulations, materials
        (including inactive ingredients) or manufacturing process approaches that
        are
        incorporated in our DAR products, and we may not seek such patent coverage
        in
        the future. In producing our DAR products, we expect to use general formulation
        techniques used in the industry that would be modified by us and which would,
        therefore, include know-how and trade secrets that we have developed. We
        cannot
        be certain that a patent would issue to cover such intellectual property
        and
        currently, we would prefer to keep such techniques and know-how as our trade
        secrets. In the event a competitor is able to develop technology substantially
        similar to ours and patent that approach, we may be blocked from using certain
        of our formulations or manufacturing process approaches, which could limit
        our
        ability to develop and commercialize products.
  If
        we do not
        successfully attract and retain collaborative partners, or our partners do
        not
        satisfy their obligations, we will be unable to develop our partnered product
        candidates.
 
 For
        certain
        DAR products, we intend to enter into collaborative arrangements with third
        parties. These collaborations may be necessary in order for us to:
  •
              fund
                  our research and development activities;•
              fund
                  manufacturing by third parties;•
              seek
                  and obtain regulatory approvals; and•
              successfully
                  commercialize our product
                  candidates.
 
 We
        cannot
        assure that we will be able to enter into collaborative agreements with partners
        on terms favorable to us, or at all, and any future agreement may expose
        us to
        risks that our partner might fail to fulfill its obligations and delay
        commercialization of our products. We also could become involved in disputes
        with partners, which could lead to delays in or terminations of our development
        and commercialization programs and time consuming and expensive litigation
        or
        arbitration. Our inability to enter into additional collaborative arrangements
        with other partners, or our failure to maintain such arrangements, would
        limit
        the number of product candidates which we could develop and ultimately, decrease
        our sources of any future revenues.
  We
        will need
        additional capital in the future. If additional capital is not available,
        we may
        be forced to delay or curtail the development of our product
        candidates.
 
 We
        anticipate
        that our existing capital resources and expected product sales will enable
        us to
        maintain our current operations for at least the next 12 months. We may
        need additional capital to fund our operations beyond 2008. Our requirements
        for
        additional capital could be substantial and will depend on many other factors,
        including:
  •
              payments
                  received under future collaborative partner agreements;•
              continued
                  progress of research and development of our DAR
                  products;•
              our
                  ability to acquire or license drugs from others for use with
                  DAR;•
              costs
                  associated with protecting our intellectual property
                  rights;•
              development
                  of sales and marketing capabilities; and•
              market
                  acceptance of our products.
 
 We
        have no
        significant committed sources of additional capital. To the extent our capital
        resources are insufficient to meet future capital requirements, we will have
        to
        raise additional funds to continue the development of our product candidates.
        We
        cannot assure you that funds will be available on favorable terms, if at
        all. To
        the extent we raise additional capital through the sale of securities, the
        issuance of those securities could result in dilution to our stockholders.
        In
        addition, if we obtain debt financing, a substantial portion of our operating
        cash flow may be dedicated to the payment of principal and interest on such
        indebtedness, thus limiting funds available for our business activities.
        If
        adequate funds are not available, we may be required to curtail significantly
        our development and commercialization activities.
  We
        could be
        forced to pay substantial damage awards if product liability claims that
        may be
        brought against us are successful.
  The
        sale of
        any approved DAR products may expose us to liability claims and financial
        losses
        resulting from the use or sale of our products. Insurance for our DAR products
        are not required pursuant to SFDA in China.
  If
        we fail to
        establish sales, marketing, and distribution capabilities, or fail to enter
        into
        arrangements with third parties, we will not be able to commercialize our
        products.
 
 We
        have
        limited sales, marketing, and distribution capabilities. In order to
        commercialize our DAR products, we must considerably expand our commercial
        capabilities or make arrangements with third parties to perform these services
        for us. In order to market any of our products directly, we must considerably
        expand our commercial infrastructure, including distribution, marketing,
        and
        sales personnel. The expansion or contracting of a sales and distribution
        infrastructure would require substantial resources, which may divert the
        attention of our management and key personnel and defer our product development
        efforts. To the extent that we enter into sales and marketing arrangements
        with
        other companies, our revenues will depend on the efforts of others. These
        efforts may not be successful. If we fail to expand sales, marketing and
        distribution capabilities, or fail to enter into arrangements with third
        parties, we will experience delays in product sales and incur increased
        costs.
  6
 Table
            of Contents
  Our
        assets are located in China and its revenues
        are derived from its operations in China
 
 In
        terms of
        industry regulations and policies, the economy of China has been transitioning
        from a planned economy to market oriented economy. Although in recent years
        the
        Chinese government has implemented measures emphasizing the utilization of
        market forces for economic reforms, the reduction of state ownership of
        productive assets and the establishment of sound corporate governance in
        business enterprises, a substantial portion of productive assets in China
        are
        still owned by the Chinese government. For example, all lands are state owned
        and are leased to business entities or individuals through governmental granting
        of State-owned Land Use Rights. The granting process is typically based on
        government policies at the time of granting and it could be lengthy and complex.
        This process may adversely affect our future manufacturing expansions. The
        Chinese government also exercises significant control over China’s economic
        growth through the allocation of resources, controlling payment of foreign
        currency and providing preferential treatment to particular industries or
        companies. Uncertainties may arise with changing of governmental policies
        and
        measures. At present, our development of research and development technologies
        and products is subject to approvals from the relevant government authorities
        in
        China. Such governmental approval processes are typically lengthy and complex,
        and never certain to be obtained.
 
 Political
        and economic risks
 
 China
        is a
        developing country with a young market economic system overshadowed by the
        state. Its political and economic systems are very different from the more
        developed countries and are still in the stage of change. China also faces
        many
        social, economic and political challenges that may produce major shocks and
        instabilities and even crises, in both its domestic arena and in its
        relationship with other countries, including but not limited to the United
        States. Such shocks, instabilities and crises may in turn significantly and
        adversely affect our performance.
 
 Risks
        related to interpretation of China laws and regulations which involves
        significant uncertainties
 
 China’s
        legal
        system is based on written statutes and their interpretation by the Supreme
        People’s Court. Prior court decisions may be cited for reference but have
        limited value as precedents. Since 1979, the Chinese government has been
        developing a comprehensive system of commercial laws, and considerable progress
        has been made in introducing laws and regulations dealing with economic matters
        such as foreign investment, corporate organization and governance, commerce,
        taxation and trade. However, because these laws and regulations are relatively
        new, and because of the limited volume of published cases and judicial
        interpretation and their lack of force as precedents, interpretation and
        enforcement of these laws and regulations involve significant uncertainties.
        In
        addition, as the Chinese legal system develops, we cannot assure that changes
        in
        such laws and regulations, and their interpretation or their enforcement
        will
        not have a material adverse effect on our business operations.
  Fluctuations
        in the exchange rate could have a material adverse effect upon our
        business.
  We
        conduct our business in the Renminbi. The value of the Renminbi against the
        U.S.
        dollar and other currencies may fluctuate and is affected by, among other
        things, changes in political and economic conditions. On July 21, 2005, the
        PRC
        government changed its decade old policy of pegging its currency to the U.S.
        currency. Under the current policy, the Renminbi is permitted to fluctuate
        within a narrow and managed band against a basket of certain foreign currencies.
        This change in policy has resulted in an approximately 6.5% appreciation
        of the
        Renminbi against the U.S. dollar between July 21, 2005 and August 31, 2007.
        However, there remains significant international pressure on the PRC government
        to adopt an even more flexible currency policy, which could result in a further
        and more significant appreciation of the RMB against the U.S. dollar. To
        the
        extent our future revenues are denominated in currencies other the United
        States
        dollars, we would be subject to increased risks relating to foreign currency
        exchange rate fluctuations which could have a material adverse affect on
        our
        financial condition and operating results since our operating results are
        reported in United States dollars and significant changes in the exchange
        rate
        could materially impact our reported earnings.
 
 Governmental
        regulatory and policy risks
 
 We
        must
        follow various government regulations and in particular, the PRC State Food
        and
        Drug Administration (“SFDA”) regulations. Government regulations may have
        material impact on our operations, increase costs and could prevent or delay
        our
        licensing, manufacturing and selling our products. Our research, development,
        testing, manufacturing and marketing activities are subject to various
        governmental regulations in China, including health and drug regulations.
        Government regulations, among other things, cover the inspection of and controls
        over testing, manufacturing, safety and environmental considerations, efficacy,
        labeling, advertising, promotion, record keeping and sale and distribution
        of
        pharmaceutical products. We will not be able to license, manufacture, sell
        and
        distribute the vast majority of its products without a proper approval from
        government agencies and in particular the SFDA. There is no assurance that
        we
        will obtain such approvals.
  In
        addition, delays or rejections may be encountered based upon additional
        government regulation from future legislation, administrative action or changes
        in governmental policy and interpretation during the period of product
        development and product assessment. Although we have, so far, obtained the
        marketing rights for selling some of our products in China, we may not continue
        to receive and maintain regulatory approvals for the sales of these products.
        Our marketing activities are also subject to government regulations with
        respect
        to the prices that we intend to charge or any other marketing and promotional
        related activities. Government regulations may substantially increase our
        costs
        for developing, licensing, manufacturing and selling products, impacting
        negatively on our operation, revenue, income and cash flow.
 
 There
        could be changes in government regulations towards the pharmaceutical Industries
        that may adversely affect our business.
 
 The
        manufacture and sale of pharmaceutical products in the PRC is heavily regulated
        by many state, provincial and local authorities. These regulations significantly
        increased the difficulty and costs involved in obtaining and maintaining
        regulatory approvals for marketing new and existing products. Our future
        growth
        and profitability depend to a large extent on our ability to obtain regulatory
        approvals.
 
 The
        State
        Food and Drug Administration of China recently implemented new guidelines
        for
        licensing of pharmaceutical products. All existing manufacturers with licenses,
        which are currently valid under the previous guidelines, are required to
        apply
        for the Good Manufacturing Practices ("GMP") certifications by June 30, 2004,
        and to receive approvals by December 31, 2004. We have received our
        certifications. However, should we fail to receive or maintain the GMP
        certifications under the new guidelines in the future, our businesses would
        be
        materially and adversely affected.
  Moreover,
        the
        laws and regulations regarding acquisitions of the pharmaceutical industry
        in
        the PRC may also change and may significantly impact our ability to grow
        through
        acquisitions.
 
 Item 2.
        Description of Property.
 
 Self-owned
        property
 
 Our
        main
        office is located at 343 Sui Zhou Zhong Road, Sui Ning, Si Chuan Province,
        People’s Republic of China, which is owned by us and has a total area of 1,775
        square feet. No other businesses operate from this office.
 
 We
        also
        have a self-owned five-story building in the City of Cheng Du, China, total
        area
        of which is approximately 13,934 square feet. We allocated our sales and
        R&D
        departments to this location due to the convenient transportation. We purchased
        this building from a related party and the application of title transfer
        was in
        processing.
 
 There
        is
        no private ownership of land in China; all land ownership is held by the
        government of China, its agencies and collectives. Land use rights are obtained
        from government for periods ranging from 50 to 70 years, and are typically
        renewable. Land use rights can be transferred upon approval by the land
        administrative authorities of China (State Land Administration Bureau) upon
        payment of the required transfer fee.
  Leased
        property
  We
        lease
        our warehouse of approximately 2,600 square feet for approximately $1,478
        per
        year, which expires March 14, 2007. The lease is renewed every year
        automatically at the expiration date if no disagreements between the landlord
        and us. We lease farm land of approximately 861,112 square feet from a
        cooperative of farmers with a total lease payment of $71,005, or $6,455 per
        year. The lease expires in December 2017.
 
 On
        June
        29, 2007, we leased a property of approximately 3,600 square feet in Chengdu,
        the capital city of Si Shuan Province, for our marketing and sales department.
        The lease is for 20 years and will expire in 2027. The total payment of the
        rent
        for 20-year leasing period is $2,023,121, paid by the issuance of 2,000 shares
        of Class B Common Stock. Total rent expense for the year ended December 31,
        2007
        was $23,146.
  Item 3.
        Legal Proceedings.
  As
        of the
        date of this report, we are not a party to any pending legal proceeding and
        are
        not aware of any threatened legal proceeding.
  Item 4.
        Submission of Matters to a Vote of Security Holders.
  None.
  7
 Table
            of Contents
  PART
        II
  Item 5.
        Market for Common Equity, Related Stockholder Matters and
        Small Business Issuer Purchases of Equity Securities.
  Trading
        Market
        for Common Equity
  Our
        Class
        A common stock, $.01 par value, began trading on the OTC Bulletin Board
        (“OTCBB”) on June 22, 2004 under the symbol “CHRI.OB”. The following table sets
        forth the high and low bid prices posted on the OTC Bulletin Board for our
        Class
        A Common Stock for the quarter ended March 31, 2008 and the years ended
        December 31, 2007 and 2006. The quotations reflect inter-dealer prices,
        without retail mark-up, mark-down or commission, and may not represent actual
        transactions.
  Year
                  Ended December 31, 2006:
              
              High
              
              Low3/31/2006
              
              $
              1.44
              
              $
              1.226/30/2006
              
              $
              1.55
              
              $
              1.449/30/2006
              
              $
              0.88
              
              $
              0.8812/31/2006
              
              $
              0.44
              
              $
              0.44Year
                  Ended December 31, 2007:
              
              
              High
              
              
              Low3/31/2007
              
              $
              0.375
              
              $
              0.2556/30/2007
              
              $
              0.095
              
              $
              0.0959/30/2007
              
              $
              0.20
              
              $
              0.2012/31/2007
              
              $
              0.04
              
              $
              0.04Year
                  Ended December 31, 2008:
              
              
              High
              
              
              Low3/31/2008
              
              $
              0.025
              
              $
              0.016
 
 On
        January 26, 2007, there was a 1 for 11.1 reverse split effected.
 
 On
        July 23,
        2007, we effected a forward stock split of our Class A Common Stock, pursuant
        to
        the Delaware General Corporation Law, "no dissenters' rights under the Delaware
        General Corporation Law are afforded to the Company's stockholders as a result
        of the adoption of this resolution", exchanging one (1) existing shares of
        Class
        A Common Stock for two (2) shares of post forward split Class A Common Stock.
        The number of outstanding shares of our Class A common stock was increased
        from
        49,644,447 to 99,288,894 shares and par value of our Class A common stock
        was
        unchanged at $0.01.
 
 Dividends
 
 We
        have not
        declared or paid any cash dividends on our Common Stock since our formation,
        and
        do not presently anticipate paying any cash dividends on our Common Stock
        in the
        foreseeable future. We currently intend to retain any future earnings to
        finance
        the expansion and development of our business. The future payment of cash
        dividends on the Common Stock will depend on our earnings, capital requirements
        and financial position, applicable requirements of the Delaware General
        Corporation Law, general economic conditions and other factors considered
        relevant by our board of directors.
 
 There
        are no
        contractual restrictions on our ability to declare and pay
        dividends.
  Number
        of
        Holders
  As
        of
        April 14, 2008, we had 5,189 Common shareholders of record.
 
 Securities
        Authorized for Issuance Under Equity Compensation
        Plans
  As
        of the
        date of this Report, we have not authorized any equity compensation plan,
        nor
        has our Board of Directors authorized the reservation or issuance of any
        securities under any equity compensation plan.
  Recent
        Sales of
        Unregistered Securities; Use of Proceeds from Registered
        Securities
 
 On
        February 2, 2007, we issued 1,000,000 shares of Class A Common stock for
        payment
        of consulting services to Greentree Financial Group, Inc. for services in
        connection with general management consulting and advisory services.The
        fair value of this stock issuance was determined using the fair value of
        our
        common stock on the grant date or the specific terms of the applicable
        consulting agreements and booked pro rata due to the service periods. We
        calculated a stock-based compensation cost of total $51,225 and recognized
        $51,225 for the year ended December 31, 2007.
    Purchases
        of
        Equity Securities by the Small Business Issuer and Affiliated
        Purchasers
 
 None.
 
 Transfer
        Agent
  Our
        transfer agent is Guardian Registrar & Transfer, Inc.
        located at 7951 SW 6th Street, Suite 216, Plantation, Florida 33324.
  Item 6.
        Management’s Discussion and Analysis or Plan of Operation.
  FORWARD
        LOOKING STATEMENTS
  Certain
        statements in this report, including statements of our expectations, intentions,
        plans and beliefs, including those contained in or implied by "Management's
        Discussion and Analysis" and the Notes to Consolidated Financial Statements,
        are
        "forward-looking statements", within the meaning of Section 21E of the
        Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
        subject to certain events, risks and uncertainties that may be outside our
        control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”,
“will”, and similar expressions identify forward-looking statements. Readers are
        cautioned not to place undue reliance on these forward-looking statements,
        which
        speak only as of the date on which they are made. We undertake no obligation
        to
        update or revise any forward-looking statements. These forward-looking
        statements include statements of management's plans and objectives for our
        future operations and statements of future economic performance, information
        regarding our expansion and possible results from expansion, our expected
        growth, our capital budget and future capital requirements, the availability
        of
        funds and our ability to meet future capital needs, the realization of our
        deferred tax assets, and the assumptions described in this report underlying
        such forward-looking statements. Actual results and developments could differ
        materially from those expressed in or implied by such statements due to a
        number
        of factors, including, without limitation, those described in the context
        of
        such forward-looking statements, our expansion and acquisition strategy,
        our
        ability to achieve operating efficiencies, our dependence on network
        infrastructure, capacity, telecommunications carriers and other suppliers,
        industry pricing and technology trends, evolving industry standards, domestic
        and international regulatory matters, general economic and business conditions,
        the strength and financial resources of our competitors, our ability to find
        and
        retain skilled personnel, the political and economic climate in which we
        conduct
        operations and the risk factors described from time to time in our other
        documents and reports filed with the Securities and Exchange Commission (the
        "Commission"). Additional factors that could cause actual results to differ
        materially from the forward-looking statements include, but are not limited
        to:
        1) our ability to successfully develop, manufacture and deliver DAR and related
        products on a timely basis and in the prescribed condition; 2) our ability
        to
        compete effectively with other companies in the same industry; 3) our ability
        to
        raise sufficient capital in order to effectuate our business plan; and 4)
        our
        ability to retain our key executives.
   8
 Table
            of Contents
 CRITICAL
          ACCOUNTING POLICIES
 Revenue
        recognition
 
 Revenue
        is
        recognized at the time the product is delivered and title has passed to the
        customer. Cash discounts are recognized as an expense in the period in which
        it
        actually occurs.  Sales allowances are recorded as a reduction of
        revenue in the period in which they occur. Revenue is presented net of
        returns.
 
 Inventory
 
 Inventory
        includes raw material, package material, low-value consumables and merchandise.
        The Company adopts perpetual inventory system and inventories are recorded
        at
        actual cost.  Raw material, package material and merchandise are
        priced at cost upon acquisition, and with the weighted average method upon
        issuance and shipment. Low-value consumables are amortized at 50% of the
        amount
        upon application and amortized an additional 50% upon obsolescence.
  Property,
        Plant, and
        Equipment
 
 Property,
        plant, and equipment are recorded at cost, less accumulated depreciation
        and
        impairment. Repairs and maintenance expenditures, which are not considered
        improvements and do not extend the useful life of property, plant, and
        equipment, are expensed as incurred. The cost and related accumulated
        depreciation, applicable to sold or no longer in service property, plant,
        and
        equipment, are eliminated from the accounts and any gain or loss is included
        in
        the statement of operations.
 
 Depreciation
        is calculated to write-off the cost or basis of the property, plant, and
        equipment over their estimated useful lives for the date on which they become
        fully operational and after taking into account their estimated residual
        values
        (salvage value), using the straight-line method, at the following rates per
        year:
 
 Equipment Straight-line
        for 5 to 20 years with a 3% salvage value
  BuildingStraight-line
        for 20 years
        with a 5% salvage value
 
 We
        recognize
        an impairment loss on property, plant, and equipment when evidence, such
        as the
        sum of expected future cash flows (undiscounted and without interest charges),
        indicates that future operations will not produce sufficient revenue to cover
        the related future costs, including depreciation, and when the carrying amount
        of the asset cannot be realized through sale. Measurement of the impairment
        loss
        is based on the fair value of the assets.
 
 RESULTS
        OF
        OPERATIONS
 
 The
        following
        discussion should be read in conjunction with the financial statements included
        in this report and is qualified in its entirety by the foregoing.
  Revenues
  Gross
        revenues were $725,529 and $1,038,528 for the years ended December 31, 2007
        and
        2006. The decrease in revenue during 2007 was primarily attributable to the
        unusual weather, such as pouring rain and floods, that occurred in the third
        quarter of 2007. The sales revenues were due primarily to sales of DAR, which
        is
        seasonal due to the growth circle of DAR, and significantly affected by the
        weather. DAR is mature and suitable for harvest in June or July every year,
        the
        prime season is from July to October. We recognized revenue at the time the
        product was delivered and title had passed to the customer.  Cash
        discounts were recognized as an expense in the period in which it actually
        occurred.  Sales allowances were recorded as a reduction of revenue in
        the period in which they occurred.  Revenue was presented net of
        returns. Our sales arrangements were not subject to any warranties. We did
        not
        record any product returns during 2007 and 2006.
 
 Income
        /
        Loss
  We
        had
        net loss of $226,048 and $155,233 for the years ended December 31, 2007 and
        2006, respectively. The net loss in 2007 was attributable to the decease
        in
        sales revenue; as a result, the gross profit was insufficient to cover the
        operating expenses. In addition, we had non-cash consulting expenses of $258,716
        and $348,211 for the years ended December 31, 2007 and 2006, respectively.
        The
        non-cash consulting expenses were the result of the issuance of 7,500,000
        shares
        of common stock for services in connection with general management consulting
        and advisory services including, but not limited to, the following:
  -
              Advise
                  on matters relating to the structure, management, and operation
                  of the
                  Company and its subsidiaries;-
              The
                  preparation and implementation of a new business plan and a future
                  growth
                  strategy;-
              Our
                  corporate image design;-
              Advertisements-
              Assistance
                  in technology development for DAR products-
              Advise
                  on procedures, regulations, and compliance of a public listed
                  company;
 -
              Legal
                  advise on procedures, regulations, and compliance in
                  China;-
              Assistance
                  with preparation of applicable filings with the SEC;-
              Assistance
                  with preparation of financial statements;-
              EDGAR
                  services
 
 The
        shares
        were valued based on the market price on the date of the stock grant or the
        specific terms of the applicable consulting agreements and booked pro rata
        due
        to the service periods, which was completed as of December 31, 2007 and 2006,
        respectively.
 
 We
        expect to
        incur losses from operations during fiscal year 2007. There can be no assurance
        that we will achieve or maintain profitability, or that any revenue growth
        will
        take place in the future.
 
 Expenses
 
 Operating
        expenses for the years ended December 31, 2007 and 2006 were $724,453 and
        $775,148, respectively. The high operating expenses during 2007 were due
        primarily to accrued Selling, General and Administrative expenses of $663,448,
        of which $258,716 in connection with the non-cash consulting expenses resulting
        from the issuance of 7,500,000 shares of common stock for services in connection
        with general management consulting and advisory services. The shares were
        valued
        based on the market price on the date of the stock grant or the specific
        terms
        of the applicable consulting agreements and booked pro rata due to the service
        periods, which was completed as of December 31, 2007.
 
 Cost
        of
        Sales
  Cost
        of
        sales includes expenses directly related to the manufacturing and selling
        our
        products. Product delivery and direct labor would be examples of cost of
        sales
        items. During 2007, we had $401,480 in cost of sales, which was approximately
        55% of sales revenues, compared to cost of sales of $768,852 in 2006, which
        was
        approximately 74% of sales revenues. The decrease in 2007 reflected small
        sales
        revenue in the third quarter of 2007 impacted by the unusual weather. The
        cost
        of sales as a percentage of sales was high during 2007 and 2006 due to
        purchasing some of our ingredients through third parties resulting in small
        price markups. These markups typically range between 5-10%. We expect to
        lower
        the cost of sales by increasing the output of DAR.
 
 Impact
        of
        Inflation
 
 We
        believe
        that inflation has had a negligible effect on operations during this period.
        We
        believe that we can offset inflationary increases in the cost of sales by
        increasing sales and improving operating efficiencies.
 
 Liquidity
        and Capital
        Resources
 
 Cash
        flows
        provided by operating activities were $49,131 for the year ended December
        31,
        2007, compared to cash flows of $108,555 used in operating activities for
        the
        year ended December 31, 2006. Positive cash flows from operations during
        2007
        were due to the increase in tax payable by $95,934. In addition, the net
        loss
        was offset by the non-cash expenses of $281,862 and depreciation of $59,838.
        Negative cash flows from operations in 2006 were due primarily to the increase
        in accounts receivable by $382,763 and prepaid expenses by $351,342, partially
        offset by the increase in accounts payable by $646,512 in 2006.
 
 Cash
        flows
        used in investing activities were $567,187 and $325,510 for the years ended
        December 31, 2007 and 2006, respectively. Cash flows used in investment during
        2007 were due primarily to the issuance of note receivable of $436,297 and
        the
        purchase of property and equipment of $131,323. Cash flows used in investment
        during 2006 were due primarily to the acquisition of net liabilities in
        connection with share exchange, and the purchase of property and equipment
        of
        $586,508 in 2006.
 
 Cash
        flows
        provided by financing activities were $313,490 and $589,472 for the years
        ended
        December 31, 2007 and 2006, respectively. Cash flows from financing activities
        during 2007 included the proceeds from issuance of a short-term note of $219,040
        from unrelated party, which was unsecured and bearing 10.925 % interest due
        on
        September 20, 2008, proceeds from shareholder loan and note payable from
        related
        party. Cash flows from financing activities during 2006 included long-term
        loans
        of $386,666, which were secured, interest bearing and repayable over 12 months,
        offset by the payment of $74,000 in connection with the retirement of 744
        shares
        of Class B Common Stock. Additionally, we infused $264,000 of capital
        contributions in connection with the Plan of Exchange in 2006.
 
 We
        project
        that we will need additional capital to fund operations over the next 12
        months.
        We anticipate we will need an additional $250,000 in working capital during
        2008
        and $100,000 for the two years thereafter.
 
 Overall,
        we
        have funded our cash needs from inception through December 31, 2007 with
        a
        series of debt and equity transactions, primarily with related parties. If
        we
        are unable to receive additional cash from our related parties, we may need
        to
        rely on financing from outside sources through debt or equity transactions.
        Our
        related parties are under no legal obligation to provide us with capital
        infusions. Failure to obtain such financing could have a material adverse
        effect
        on operations and financial condition.
 
 We
        had cash
        of $36,127 on hand and a working capital of $2,358,938 as of December 31,
        2007.
        Currently, we have enough cash to fund our operations for about six months.
        This
        is based on current cash flows from financing activities and projected revenues.
        Also, if the projected revenues fall short of needed capital we may not be
        able
        to sustain our capital needs. We will then need to obtain additional capital
        through equity or debt financing to sustain operations for an additional
        year.
        Our current level of operations would require capital of approximately $250,000
        to sustain operations through year 2008 and approximately $100,000 per year
        thereafter. Modifications to our business plans may require additional capital
        for us to operate. For example, if we are unable to raise additional capital
        in
        the future we may need to curtail our number of product offers or limit our
        marketing efforts to the most profitable geographical areas. This may result
        in
        lower revenues and market share for us. In addition, there can be no assurance
        that additional capital will be available to us when needed or available
        on
        terms favorable to us.
 
 On
        a
        long-term basis, liquidity is dependent on continuation and expansion of
        operations, receipt of revenues, and additional infusions of capital and
        debt
        financing. Our current capital and revenues are insufficient to fund such
        expansion. If we choose to launch such an expansion campaign, we will require
        substantially more capital. The funds raised from this offering will also
        be
        used to market our products and services as well as expand operations and
        contribute to working capital. However, there can be no assurance that we
        will
        be able to obtain additional equity or debt financing in the future, if at
        all.
        If we are unable to raise additional capital, our growth potential will be
        adversely affected and we will have to significantly modify our plans. For
        example, if we unable to raise sufficient capital to develop our business
        plan,
        we may need to:
 
 -
              Curtail
                  new product launches
 
 -
              Limit
                  our future marketing efforts to areas that we believe would be
                  the most
                  profitable.
 
 Demand
        for
        the products and services will be dependent on, among other things, market
        acceptance of our products, Chinese tradition medicine market in general,
        and
        general economic conditions, which are cyclical in nature. Inasmuch as a
        major
        portion of our activities is the receipt of revenues from the sales of our
        products, our business operations may be adversely affected by our competitors
        and prolonged recession periods.
 
 Our
        success
        will be dependent upon implementing our plan of operations and the risks
        associated with our business plans. We manage the processing and DAR
        distribution business to retail consumers and wholesale buyers. We plan to
        strengthen our position in these markets. We also plan to expand our operations
        through aggressively marketing our products and our concept.
  9
 Table
            of Contents
  Item 7.
        Financial Statements.
  The
        consolidated financial statements include the accounts of Yin Fa, our wholly
        owned subsidiary. The following selected financial data for the years ended
        December 31, 2007 and 2006 is derived from our consolidated financial
        statements, and should be read in conjunction with the consolidated financial
        statements and related notes presented as a separate section commencing on
        page
        F-1.
   December 31,2007
              
              
              2006Balance
                  SheetTotal
                  Assets
              
              $
              3,941,487
              
              
              $
              1,649,617Total
                  Liabilities
              
              
              978,935
              
              
              
              1,295,742Total
                  Stockholders’ Equity
              
              
              2,962,552
              
              
              
              353,875Total
                  Liabilities and Stockholders’ Equity
              
              
              3,941,487
              
              
              
              1,649,617Statements
                  of OperationsFor
                  years endedDecember 31,2007
              
              
              2006Revenue
              
              $
              725,529
              
              
              $
              1,038,528Operating
                  Expenses
              
              
              724,453
              
              
              
              775,148Other
                  Income
              
              
              230,225
              
              
              
              205,777Net
                  Loss
              
              
              (226,048
              )
              
              
              (303,694
              )Net
                  Loss per Common Share
              
              
              **
              
              
              
              **Weighted
                  Average Common Shares Outstanding
              
              
              64,879,283
              
              
              
              18,204,056
 
 10
 Table
            of Contents
  
 REPORT
          OF
          INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To
          the
          Board of Directors and
 Stockholders
          of China Health Resource Inc.
 (FKA
          Voice Diary, Inc.) and Subsidiary
 
 We
          have
          audited the accompanying balance sheet of China Health Resource Inc. (FKA
          Voice
          Diary, Inc.) and Subsidiary (a Delaware corporation). as of December 31,
          2007
          and related statements of operations, stockholders’ deficit, and cash flows for
          the years ending December 31, 2007 and 2006. These financial statements
          are the
          responsibility of the company’s management. Our responsibility is to express an
          opinion on these financial statements based on our audit.
 
 We
          conducted our audits in accordance with the standards of the Public Company
          Accounting Oversight Board (United States). Those standards require that
          we plan
          and perform the audit to obtain reasonable assurance about whether the
          financial
          statements are free of material misstatement. The company is not required
          to
          have, nor were we engaged to perform, an audit of its internal control
          over
          financial reporting. Our audit included consideration of internal control
          over
          financial reporting as a basis for designing audit procedures that are
          appropriate in the circumstances, but not for the purpose of expressing
          an
          opinion on the effectiveness of the company’s internal control over financial
          reporting. Accordingly, we express no such opinion. An audit also includes
          examining, on a test basis, evidence supporting the amounts and disclosures
          in
          the financial statements, assessing the accounting principles used and
          significant estimates made by management, as well as evaluating the overall
          financial statement presentation. We believe that our audits provide a
          reasonable basis for our opinion.
  In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the financial position of China Health Resource Inc.
          and
          Subsidiary. (a Delaware corporation). as of December 31, 2007 and the results
          of
          its operations and its cash flows for years ended December 31, 2007 and
          2006 in
          conformity with accounting principles generally accepted in the United
          States of
          America.
  The
          accompanying financial statements have been prepared assuming the Company
          will
          continue as a going concern. The Company has suffered recurring losses
          and has
          yet to generate an internal cash flow that raises substantial doubt about
          its
          ability to continue as a going concern. Management's plans in regard to
          these
          matters are described in Note I. The financial statements do not include
          any
          adjustments that might result from the outcome of this uncertainty.
  /s/
          Lake & Associates, CPA’s LLC Lake
          & Associates, CPA’s LLC
 Boca
          Raton, Florida
 April
          10,
          2008
  
 11
 Table
              of Contents
  China
                      Health Resource, Inc. and
                      SubsidiaryConsolidated
                      Balance
                      SheetsAs
                      of December 31, 2007 and
                      2006ASSETS
                  
                  2007
                  2006CURRENT
                      ASSETSCash
                      and Cash
                      Equivalents
                  $         36,127
                  $         179,868Accounts
                      Receivable
                  460,414
                  388,079Note
                      Receivable-related
                      party
                  628,390
                  192,093Employee
                      Advances
                  7,197
                  -Prepaid
                      Expenses
                  2,143,827
                  351,343Inventory
                  61,918
                  6,104TOTAL
                    CURRENT
                    ASSETS
                  3,337,873
                  1,117,487FIXED
                      ASSETSProperty,
                      Plant, and
                      Equipment
                  717,831
                  586,508Accumulated
                      Depreciation
                  (114,217)
                  (54,379)TOTAL
                    NET FIXED
                    ASSETS
                  603,614
                  532,129TOTAL
                    ASSETS
                  $     3,941,487
                  $      1,649,617LIABILITIES
                      AND
                      EQUITYCURRENT
                      LIABILITIESAccounts
                      Payable and Accrued
                      Liabilities
                  $       207,957
                  $         893,208Other
                      Payables
                  -
                  12,806Due
                      to
                      Shareholder
                  83,258
                  -Taxes
                      Payable
                  98,996
                  3,061Notes
                      Payable - Current
                      Portion
                  588,724
                  185,471TOTAL
                    CURRENT
                    LIABILITIES
                  978,935
                  1,094,546LONG-TERM
                      LIABILITIESNotes
                      Payable
                  -
                  201,196TOTAL
                    LONG-TERM
                    LIABILITIES
                  -
                  201,196TOTAL
                    LIABILITIES
                  978,935
                  1,295,742STOCKHOLDERS'
                      EQUITY
                      (DEFICIT)Common
                      stock Class A ( 500,000,000
                      shares authorized,99,288,894
                      issued and outstanding,
                      par value $0.01)
                  992,889
                  318,018Common
                      stock Class B ( 8,344
                      shares authorized,2,000
                      issued and outstanding, par
                      value $0.01)
                  20
                  20Additional
                      paid in
                      capital
                  2,234,082
                  3,169,840Accumulated
                      other comprehensive
                      income
                  76,117
                  15,292Retained
                      earnings
                      (deficit)
                  (340,556)
                  (3,149,295)TOTAL
                    STOCKHOLDERS' EQUITY (DEFICIT)
                  2,962,552
                  353,875TOTAL
                      LIABILITIES AND
                      EQUITY
                  $     3,941,487
                  $      1,649,617The
                      accompanying notes are an
                      integral part of these financial
                      statements.
  12
 Table
              of Contents
  China
                      Health Resource, Inc. and
                      SubsidiaryConsolidated
                      Statement of
                      OperationsFor
                      the Years Ended December 31,
                      2007 and 20062007
                  
                  
                  2006REVENUESSales
                  
                  $
                  725,529
                  
                  
                  $
                  1,038,528Cost
                      of
                      Sales
                  
                  
                  401,480
                  
                  
                  
                  769,852GROSS
                      PROFIT
                  
                  
                  324,049
                  
                  
                  
                  268,676OPERATING
                      EXPENSESSelling,
                      General, and
                      Administrative
                  
                  
                  663,448
                  
                  
                  
                  721,465Interest
                      Expense
                  
                  
                  37,743
                  
                  
                  
                  25,081Distribution
                      Costs
                  
                  
                  23,262
                  
                  
                  
                  28,602TOTAL
                      OPERATING
                      EXPENSES
                  
                  
                  724,453
                  
                  
                  
                  775,148OPERATING
                      INCOME
                      (LOSS)
                  
                  
                  (400,404
                  )
                  
                  
                  (506,472
                  )OTHER
                      INCOME /
                      (EXPENSES)Non-Operating
                      Expenses
                  
                  
                  -
                  
                  
                  
                  (1,241
                  )Government
                      Grants
                  
                  
                  230,225
                  
                  
                  
                  207,018TOTAL
                      OTHER INCOME /
                      (EXPENSE)
                  
                  
                  230,225
                  
                  
                  
                  205,777NET
                      INCOME (LOSS) BEFORE
                      TAXES
                  
                  
                  (170,179
                  )
                  
                  
                  (300,695
                  )INCOME
                      TAX
                      EXPENSE
                  
                  
                  55,869
                  
                  
                  
                  2,999NET
                      INCOME (LOSS) FROM CONTINUED
                      OPERATIONS
                  
                  
                  (226,048
                  )
                  
                  
                  (303,694
                  )INCOME
                      FROM DISCONTINUED
                      OPERATIONS
                  
                  
                  -
                  
                  
                  
                  148,461NET
                      INCOME
                      (LOSS)
                  
                  
                  (226,048
                  )
                  
                  
                  (155,233
                  )OTHER
                      COMPREHENSIVE INCOME
                      (LOSS)Foreign
                      Currency Translation
                      (Loss) Gain
                  
                  
                  60,825
                  
                  
                  
                  14,306COMPREHENSIVE
                      INCOME
                      (LOSS)
                  
                  $
                  (165,223
                  )
                  
                  $
                  (140,927
                  )WEIGHTED
                      AVERAGE COMMON SHARES
                      OUTSTANDINGBasic
                      and Fully
                      Diluted
                  
                  
                  64,879,283
                  
                  
                  
                  18,204,056NET
                      LOSS PER COMMON
                      SHARE
                  
                  
                  **
                  
                  
                  
                  ****
                      Less than
                      $.01The
                      accompanying notes are an
                      integral part of these financial
                      statements.
  13
 Table
              of Contents
  China
                      Health Resource, Inc. and
                      SubsidiaryConsolidated
                      Statement of Cash
                      FlowsFor
                      the Years Ended December 31,
                      2007 and 20062007
                  
                  
                  2006CASH
                      FLOWS FROM OPERATING
                      ACTIVITIES:Net
                      Income after income
                      tax
                  
                  $
                  (226,048
                  )
                  
                  $
                  (155,233
                  )Adjustments
                      to reconcile net
                      income tonet
                      cash used in operating
                      activities:Non-cash
                      adjustment for retained
                      earnings due to reverse merger
                  
                  
                  -
                  
                  
                  
                  80,325Common
                      stock issued for
                      services
                  
                  
                  2,074,346Waiver
                      of subscription
                      receivable
                  
                  
                  -
                  
                  
                  
                  10,000Depreciation
                  
                  
                  59,838
                  
                  
                  
                  54,379Accounts
                      receivable
                  
                  
                  (72,335
                  )
                  
                  
                  (382,763
                  )Employee
                      Advances
                  
                  
                  (7,197
                  )Prepaid
                      Expenses
                  
                  
                  (1,792,484
                  )
                  
                  
                  (351,342
                  )Inventory
                  
                  
                  (55,814
                  )
                  
                  
                  (6,104
                  )Accounts
                      payable and accrued
                      liabilities
                  
                  
                  (14,303
                  )
                  
                  
                  646,512Other
                      payable
                  
                  
                  (12,806
                  )
                  
                  
                  (7,389
                  )Tax
                      payable
                  
                  
                  95,934
                  
                  
                  
                  3,060NET
                      CASH PROVIDED BY (USED IN)
                      OPERATING ACTIVITIES
                  
                  
                  49,131
                  
                  
                  
                  (108,555
                  )CASH
                      FLOWS FROM INVESTING
                      ACTIVITIES:Issuance
                      of Note
                      Receivable
                  
                  
                  (436,297
                  )
                  
                  
                  (192,093
                  )Proceeds
                      from Notes
                      Receivable
                  
                  
                  433Reverse
                      merger with Yin
                      Fa
                  
                  
                  -
                  
                  
                  
                  453,091Purchase
                      of property, plant, and
                      equipment
                  
                  
                  (131,323
                  )
                  
                  
                  (586,508
                  )NET
                      CASH PROVIDED BY (USED IN)
                      INVESTING ACTIVITIES
                  
                  
                  (567,187
                  )
                  
                  
                  (325,510
                  )CASH
                      FLOWS FROM FINANCING
                      ACTIVITIES:Proceeds
                      from issuance of
                      short-term note
                  
                  
                  219,040
                  
                  
                  
                  12,806Proceeds
                      from shareholder
                      loan
                  
                  
                  83,258Retirement
                      of common
                      stock
                  
                  
                  -
                  
                  
                  
                  (74,000
                  )Proceeds
                      from issuance of common
                      stock
                  
                  
                  -
                  
                  
                  
                  264,000Note
                      Payable from Related
                      Party
                  
                  
                  11,192
                  
                  
                  
                  386,666NET
                      CASH PROVIDED BY FINANCING
                      ACTIVITIES
                  
                  
                  313,490
                  
                  
                  
                  589,472FOREIGN
                      CURRENCY
                      TRANSLATION
                  
                  
                  60,825
                  
                  
                  
                  14,306NET
                      INCREASE (DECREASE) IN CASH
                      AND CASH EQUIVALENTS
                  
                  
                  (143,741
                  )
                  
                  
                  169,713CASH
                      AND CASH
                      EQUIVALENTS:Beginning
                      of
                      period
                  
                  
                  179,868
                  
                  
                  
                  10,155End
                      of
                      period
                  
                  $
                  36,127
                  
                  
                  $
                  179,868SUPPLEMENTAL
                      CASH FLOW
                      INFORMATION:Common
                      stock issued for settlement
                      of certain accounts payable
                  
                  $
                  699,554
                  
                  
                  $Common
                      stock issued for
                      services
                  
                  $
                  2,074,346
                  
                  
                  $The
                      accompanying notes are an
                      integral part of these financial statements.
  14
 Table
              of Contents
 China
                      Health Resource, Inc. and
                      SubsidiaryConsolidated
                      Statement of Equity
                      (Deficit)For
                      the Years Ended December 31,
                      2007 and 2006AccumulatedCommon
                      Stock
                  
                  
                  
                  
                  
                  
                  
                  
                  Additional
                  
                  
                  
                  
                  
                  Retained
                  
                  
                  OtherClass
                      A
                  
                  
                  par
                      value
                  
                  
                  Class
                      B
                  
                  
                  par
                      value
                  
                  
                  Paid-in
                  
                  
                  Subscription
                  
                  
                  Earnings
                  
                  
                  ComprehensiveShares
                  
                  
                  
                  0.01
                  
                  
                  Shares
                  
                  
                  
                  0.01
                  
                  
                  Capital
                  
                  
                  receivable
                  
                  
                  (Deficit)
                  
                  
                  Income
                  
                  
                  TotalBalances,
                      December 31,
                      2005
                  
                  
                  12,022,977
                  
                  
                  
                  120,230
                  
                  
                  
                  744
                  
                  
                  
                  7
                  
                  
                  $
                  2,724,551
                  
                  
                  $
                  (10,000
                  )
                  
                  $
                  (3,073,401
                  )
                  
                  $
                  -
                  
                  
                  $
                  (238,613
                  )Waiver
                      of subscription
                      receivables
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  10,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  10,000Issuance
                      in connection with
                      reverse merger-Yin Fa
                  
                  
                  7,977,023
                  
                  
                  
                  79,770
                  
                  
                  
                  2,000
                  
                  
                  
                  20
                  
                  
                  
                  184,210
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  264,000Retired
                      to
                      treasury
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (744
                  )
                  
                  
                  (7
                  )
                  
                  
                  (73,994
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (74,001
                  )Reverse
                      merger with Yin
                      Fa
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  453,091
                  
                  
                  
                  
                  
                  
                  
                  79,339
                  
                  
                  
                  986
                  
                  
                  
                  533,416Effect
                      of 11.1:1 reverse
                      split
                  
                  
                  (18,198,198
                  )
                  
                  
                  (181,982
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  181,982
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  0Issuance
                      in connection with
                      reverse merger-Yin Fa
                  
                  
                  30,000,000
                  
                  
                  
                  300,000
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (300,000
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -Net
                      Income(Loss) for the
                      year
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (155,233
                  )
                  
                  
                  
                  
                  
                  
                  (155,233
                  )Other
                      comprehensive
                      income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  14,306
                  
                  
                  
                  14,306Balances,
                      December 31,
                      2006
                  
                  
                  31,801,802
                  
                  
                  
                  318,018
                  
                  
                  
                  2,000
                  
                  
                  $
                  20
                  
                  
                  $
                  3,169,840
                  
                  
                  $
                  -
                  
                  
                  $
                  (3,149,295
                  )
                  
                  $
                  15,292
                  
                  
                  $
                  353,875Issuance
                      for services
                      rendered
                  
                  
                  6,500,000
                  
                  
                  
                  65,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  634,554
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  699,554Issuance
                      for services
                      rendered
                  
                  
                  1,000,000
                  
                  
                  
                  10,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  41,225
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  51,225Recapitalization
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,034,787
                  )
                  
                  
                  -
                  
                  
                  
                  3,034,787
                  
                  
                  
                  -
                  
                  
                  
                  -Issuance
                      of stock due to
                      conversion
                  
                  
                  10,342,593
                  
                  
                  
                  103,426
                  
                  
                  
                  (2,000
                  )
                  
                  $
                  (20
                  )
                  
                  
                  (103,406
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -Issuance
                      for
                      services
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,000
                  
                  
                  
                  20
                  
                  
                  
                  2,023,101
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  2,023,1211:2
                      Forward stock
                      split
                  
                  
                  49,644,447
                  
                  
                  
                  496,445
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (496,445
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -Net
                      Income(Loss) for the
                      period
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (226,048
                  )
                  
                  
                  
                  
                  
                  
                  (226,048
                  )Other
                      comprehensive
                      income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  60,825
                  
                  
                  
                  60,825Balances,
                      December 31,
                      2007
                  
                  
                  99,288,842
                  
                  
                  $
                  992,889
                  
                  
                  $
                  2,000
                  
                  
                  $
                  20
                  
                  
                  $
                  2,234,082
                  
                  
                  $
                  -
                  
                  
                  $
                  (340,556
                  )
                  
                  $
                  76,117
                  
                  
                  $
                  2,962,552The
                      accompanying notes are an
                      integral part of these financial statements.
  15
 Table
              of Contents
 CHINA
            HEALTH RESOURCE, INC. AND SUBSIDIARY
 NOTES
            TO
            AUDITED FINANCIAL STATEMENTS
 For
              the
              Years Ended December 31, 2007 and 2006
  NOTE
            A - SUMMARY OF
            SIGNIFICANT ACCOUNTING POLICIES
 
 Business
            Activity
 
 China
            Health Resource Inc., f/k/a Voice Diary Inc. (the “Company” or “CHRI”) was
            incorporated in the State of Delaware on February 26, 2002. In June and
            July
            2002, the Company acquired approximately 99% of the outstanding shares
            of Voice
            Diary Ltd., an Israeli corporation (“VDL”), through the exchange of shares of
            the Company with former shareholders of the Subsidiary. VDL was disposed
            of on
            August 22, 2006 pursuant to the agreement between the Company, VDL and
            Arie
            Hinkis, the former president of the Company. On May 21, 2007, the Company
            changed its name to “China Health Resource Inc.”.
 
 On
            June
            13, 2006, CHRI (“acquiree”) executed a Plan of Exchange with Sui Ning Shi Yin Fa
            Bai Zhi Chan Ye You Xian Gong Si, a corporation organized and existing
            under the
            laws of the Peoples’ Republic of China (“Yin Fa” or ‘acquirer”), the
            shareholders of Yin Fa (the “Yin Fa Shareholders”) and the Majority Shareholder
            of the CHRI, pursuant to which six simultaneous transactions were consummated
            at
            closing, as follows: (1) settlement of the liabilities of CHRI, (2) a
            deposit of
            7,977,023 (pre-split) new shares of Class A Common Stock and 2,000 new
            shares of
            Class B Common Stock via hand delivery by Mr. Hinkis in exchange for
            a payment
            of $264,000 in cash , (3) a deposit of 1,305,000 (pre-split) shares of
            Class A
            Common Stock via hand delivery by Mr. Hinkis in exchange for a payment
            of
            $136,000 in cash, (4) the issuance of  30,000,000 (post-split)
            investment shares of Class A Common Stock of the Registrant to the Yin
            Fa
            shareholders pursuant to Regulation S under the Securities Act of 1933,
            as
            amended, in exchange for all of the shares of registered capital of Yin
            Fa, (5)
            vending out the CHRI subsidiary after closing, and (6) retirement of
            744 shares
            of Class B Common Stock owned Mr. Hinkis at closing against payment of
            $74,000
            and settlement of all unpaid salaries and severance pay to Mr. Hinkis
            in the
            amount of $100,000, of which both amounts was taken from the payment
            made to
            CHRI for the issued shares.
 The
            Plan
            of Exchange was consummated on August 22, 2006; as a result, Yin Fa became
            a
            wholly-owned subsidiary of CHRI. The transaction was treated for accounting
            purposes as a capital transaction and recapitalization by the accounting
            acquirer and as a re-organization by the accounting acquiree.
 
 Accordingly,
            the consolidated financial statements include the following:
 
 (1)
                  The
                      balance sheet consists of the net assets of the acquirer at
                      historical
                      cost and the net assets of the acquiree at historical cost.(2)
                  The
                      statement of operations includes the operations of the acquirer
                      for the
                      periods presented and the operations of the acquiree from the
                      date of the
                      merger.
  Yin
            Fa
            was founded on April 24, 2001 in China.  The main business plan
            includes the manufacturing, processing, and sales of Dahurian Angelica
            Root
            (DAR) and its related products.  DAR is one of the major herbs used in
            Chinese traditional medicines.  In 2004 and 2005, the company and
            Sichuan Yingfa Resource Development Co., Ltd., (Sichuan) began the process
            of
            applying for Good Agricultural Practice of Medical Plants and Animals
            (GAP) for
            DAR. The project passed the inspection of the State Food and Drug Administration
            (SFDA), and the SFDA made the final, official announcement on February
            26,
            2006.
  A
            GAP
            certificate means that the planning, quality, and manufacturing of DAR meet
            a
            high and certifiable standard.  The GAP certificate is in the name of
            Sichuan and the company manages the processing and sales of DAR.
  CHRI
            and
            its wholly owned subsidiary Yin Fa are hereafter referred to as (the
            “Company”).
 
 Basis
            of
            Presentation
  The
            financial statements included herein were prepared under the accrual
            basis of
            accounting.
 
 Cash
            and Cash
            Equivalents
  For
            purposes of the Consolidated Statement of Cash Flows, the Company considers
            liquid investments with an original maturity of three months or less
            to be cash
            equivalents.
 
 Management’s
            Use of
            Estimates
  The
            preparation of consolidated financial statements in conformity with accounting
            principles generally accepted in the United States of America requires
            management to make estimates and assumptions that affect the reported
            amounts of
            assets and liabilities and disclosures of contingent assets and liabilities
            at
            the date of consolidated financial statements and the reported amounts
            of
            revenues and expenses during the reporting period. Actual results could
            differ
            from those estimates.
  Revenue
            Recognition
  Revenue
            is recognized at the time the product is delivered and title has passed
            to the
            customer. Cash discounts are recognized as an expense in the period in
            which it
            actually occurs.  Sales allowances are recorded as a reduction of
            revenue in the period in which they occur. Revenue is presented net of
            returns.
 
 Comprehensive
            Income
            (Loss)
  The
            Company adopted Financial Accounting Standards Board Statement of Financial
            Accounting Standards (SFAS) No. 130, “Reporting Comprehensive
            Income,” which establishes standards for the reporting and display of
            comprehensive income and its components in the consolidated financial
            statements.
 
 Foreign
            Currencies
  Assets
            and liabilities denominated in respective functional currencies are translated
            into United States Dollars at the exchange rate as of the balance sheet
            date.  The share capital and retained earnings are translated at
            exchange rates prevailing at the time of the transactions. Revenues,
            costs, and
            expenses denominated in respective functional currencies are translated
            into
            United States Dollars at the weighted average exchange rate for the period.
            The
            effects of foreign currencies translation adjustments are included as
            a separate
            component of accumulated other comprehensive income.
 
 Company’s
            Future Operations
            Are Dependent on Foreign Operations
  The
            Company’s future operations and earnings will depend on the results of the
            Company’s operations in China. There can be no assurance that the Company will
            be able to successfully conduct such operations, and a failure to do
            so would
            have a material adverse effect on the Company’s financial position, results of
            operations, and cash flows.
  Also,
            the
            success of the Company’s operations will be subject to numerous contingencies,
            some of which are beyond management’s control. These contingencies include
            general and regional economic conditions, prices for the Company’s products, competition,
            and changes in regulation. Since the Company is dependent on international
            operations, specifically those in China, the Company will be subject
            to various
            additional political, economic, and other uncertainties. Among other
            risks, the
            Company’s operations will be subject to the risks of restrictions on transfer
            of
            funds; export duties, quotas, and embargoes; domestic and international
            customs
            and tariffs; changing taxation policies; foreign exchange restrictions;
            and
            political conditions and governmental regulations.
 
 Inventory
  Inventory
            includes raw material, package material, low-value consumables and merchandise.
            The Company adopts perpetual inventory system and inventories are recorded
            at
            actual cost.  Raw material, package material and merchandise are
            priced at cost upon acquisition, and with the weighted average method
            upon
            issuance and shipment. Low-value consumables are amortized at 50% of
            the amount
            upon application and amortized an additional 50% upon obsolescence.
 
 Property,
            Plant, and
            Equipment
  Property,
            plant, and equipment are recorded at cost, less accumulated depreciation
            and
            impairment.  Repairs and maintenance expenditures, which are not
            considered improvements and do not extend the useful life of property,
            plant,
            and equipment, are expensed as incurred. The cost and related accumulated
            depreciation, applicable to sold or no longer in service property, plant,
            and
            equipment, are eliminated from the accounts and any gain or loss is included
            in
            the statement of operations.
 
 Depreciation
            is calculated to write-off the cost or basis of the property, plant,
            and
            equipment over their estimated useful lives for the date on which they
            become
            fully operational and after taking into account their estimated residual
            values
            (salvage value), using the straight-line method, at the following rates
            per
            year:
 
 Equipment                   Straight-line
            for 5 to 20 years with a 3% salvage value
 Building                      
            Straight-line for 20 years with a 5% salvage value
 
 The
            Company recognizes an impairment loss on property, plant, and equipment
            when
            evidence, such as the sum of expected future cash flows (undiscounted
            and
            without interest charges), indicates that future operations will not
            produce
            sufficient revenue to cover the related future costs, including depreciation,
            and when the carrying amount of the asset cannot be realized through
            sale.  Measurement of the impairment loss is based on the fair value
            of the assets.
  16
 Table
                of Contents
 CHINA
              HEALTH RESOURCE, INC. AND SUBSIDIARY
 NOTES
              TO
              AUDITED FINANCIAL STATEMENTS
 For
                the
                Years Ended December 31, 2007 and 2006
  Income
            Taxes
 
 Income
            taxes are provided in accordance with Statement of Financial Accounting
            Standards (SFAS) No. 109, “Accounting for Income
            Taxes.”A deferred tax asset or liability is recorded for all
            temporary differences between financial and tax reporting and net operating
            loss
            carry forwards.
  Deferred
            tax assets are reduced by a valuation allowance when, in the opinion
            of
            management, it is more likely than not that, and some portion or the
            entire
            deferred tax asset will not be realized.  Deferred tax assets and
            liabilities are adjusted for the effect of changes in tax laws and rates
            on the
            date of enactment.
  Fair
            Value of Financial
            Instruments
 
 The
            carrying amounts reported in the consolidated balance sheet for cash,
            accounts
            receivable, accounts payable, and loans payable approximate fair value
            based on
            the short-term maturity of these instruments.  The carrying value of
            the Company’s long-term debt approximated its fair value based on the current
            market conditions for similar debt instruments.
 
 Accounts
            Receivable
  Accounts
            receivable are stated at estimated net realizable value.  Accounts
            receivable are comprised of balances due from customers net of estimated
            allowances for uncollectible accounts.  In determining the
            collectablility of the account, historical trends are evaluated and specific
            customer issues are reviewed to arrive at appropriate allowances.
 
 Impairment
            of Long-Lived
            Assets
  The
            Company evaluated the recoverability of its property and equipment, and
            other
            assets in accordance with Statements of Financial Accounting Standards
            (SFAS)
            No. 121, “Accounting for the
            Impairment of Long-Lived Assets to be Disposed of,” which requires
            recognition of impairment of long-lived assets in the event the net book
            value
            of such assets exceeds the estimated future undiscounted cash flows attributable
            to such assets or the business to which such intangible assets
            relate.
 
 Stock-Based
            Compensation
  Employee
            stock-based compensation is accounted for in accordance with Accounting
            Principles Board Opinion No. 25, “Accounting for Stock
            Issued to
            Employees” (“APB 25”) and the FASB interpretations thereof. Pursuant to
            those accounting pronouncements, compensation is recorded for share options
            granted to employees at the date of grant based on the difference between
            the
            exercise price of the options and the market value of the underlying
            shares at
            that date. Due to the terms of the grants, the fair value of the compensation
            in
            accordance with SFAS No. 123R, "Accounting for Stock-Based
            Compensation" approximates the values computed in accordance with APB No.
            25. Stock-based compensation to non-employees is accounted for in accordance
            with SFAS No. 123R. Under both accounting pronouncements, as part of
            the
            necessary computations, management is required to estimate the fair value
            of the
            underlying shares. Fair value has generally been determined by management,
            as
            the price at which the Company's shares were issued at the most recent
            prior
            placement of the Company's Common Stock. Since the Company was approved
            for
            listing on the Over the Counter Bulletin Board - fair value is determined
            according to stock market price. The timing of the grant and measurement of
            stock-based awards will not have a material effect on the Company's results
            of
            operations and financial position.  Since no stock-based awards
            exist.
  Recently
            Issued Accounting
            Pronouncements
  In
            February 2007, the FASB issued Statement of Financial Accounting Standard
            No.
            159, “The Fair Value Option
            for Financial Assets and Financial Liabilities” (“SFAS No. 159”). This
            statement permits entities to choose to measure many financial instruments
            and
            certain other items at fair value. Companies should report unrealized
            gains and
            losses on items for which the fair value option has been elected in earnings
            at
            each subsequent reporting date. This statement is effective as of the
            beginning
            of an entity’s first fiscal year that begins after November 15, 2007. The
            Company is currently assessing the potential impact, if any, for the
            adoption of
            SFAS No.159 on its consolidated financial statements.
 
 In
            December 2007, the FASB issued two new statements: (a.) SFAS No. 141(revised
            2007), Business
            Combinations, and (b.) No. 160, Noncontrolling
            Interests in
            Consolidated Financial Statements. These statements are effective for
            fiscal years beginning after December 15, 2008 and the application of
            these
            standards will improve, simplify and converge internationally the accounting for
            business combinations and the reporting of noncontrolling interests in
            consolidated financial statements. The Company is in the process of evaluating
            the impact, if any, on SFAS 141 (R) and SFAS 160 and does not anticipate
            that
            the adoption of these standards will have any impact on its consolidated
            financial statements.
 
 (a.)  SFAS
            No. 141 (R) requires an acquiring entity in a business combination to:
            (i)
            recognize all (and only) the assets acquired and the liabilities assumed
            in the
            transaction, (ii) establish an acquisition-date fair value as the measurement
            objective for all assets acquired and the liabilities assumed, and (iii)
            disclose to investors and other users all of the information they will
            need to
            evaluate and understand the nature of, and the financial effect of, the
            business
            combination, and, (iv) recognize and measure the goodwill acquired in
            the
            business combination or a gain from a bargain purchase.
 
 (b.)
            SFAS
            No. 160 will improve the relevance, comparability and transparency of
            financial
            information provided to investors by requiring all entities to: (i) report
            noncontrolling (minority) interests in subsidiaries in the same manner,
            as
            equity but separate from the parent’s equity, in consolidated finan
 
 NOTE
            B - SUPPLEMENTAL CASH
            FLOW INFORMATION
 
 Supplemental
            disclosures of cash flow information for the period ended December 31,
            2007 and
            2006 is summarized as follows:
 
 Cash
            paid
            during the period ended December 31, 2007 and 2006 for interest and income
            taxes:
 
 2007                      
            2006
 
 Income
            Taxes                          
$        
-0-          
              
-0-
 Interest                                    
            $        
-0-                    
     -0-
 
 NOTE
            C - SEGMENT
            REPORTING
 
 In
            June
            1997, the Financial Accounting Standards Board issued Statement of Financial
            Accounting Standards No. 131, “Disclosures about
            Segments of an
            Enterprise and Related Information.”
  This
            statement requires companies to report information about operating segments
            in
            interim and annual consolidated financial statements.  It also
            requires segment disclosures about products and services, geographic
            areas, and
            major customers.  The Company determined that it did not have any
            separately reportable operating segments as of December 31, 2007 and
            2006.
  NOTE
            D - NOTE
            RECEIVABLE
 
 As
            of
            December 31, 2006, the company has a note receivable from a related-party
            with a
            total balance due of $192,093. The note is due on May 29, 2007 with interest
            at
            6.12%.
 
 As
            of
            December 31, 2007, the company has a note receivable from a related-party
            with a
            total balance due of $191,660. The note is due on May 29, 2007 with interest
            at
            6.12%.
 
 As
            of
            December 31, 2007, the company has a note receivable from a related-party
            with a
            total balance due of $436,730. The note is due on December 31,
            2008.
 
 NOTE
            E - NOTES PAYABLE -
            CURRENT AND LONG-TERM
 
 As
            of
            December 31, 2007 and 2006, notes payable consist of the following:
  2007
                    
                    
                    2006Secured
                        note payable to an unrelated party.Bearing
                        6.3 % interest Principal payments due12/31/2008
                        one payment of $ 198,270
                    
                    $
                    198,270
                    
                    
                    
                    370,940Unsecured
                        note payable –unrelated partyBearing
                        10.925 % interest Principal payment due09/20/2008
                    
                    $
                    219,040
                    
                    
                    
                    -0-Unsecured
                        note payable –unrelated partyBearing
                        2.4 % interest Principal payments due
                    
                    $
                    171,414
                    
                    
                    
                    -0-10/31/2008TOTAL
                    
                    $
                    588,724
                    
                    
                    
                    370,940Future
                      payments on note due as follow:Before
                      December 31, 2008
                    
                    $
                    588,724
                    
                    
                    $
                    198,270TOTAL
                    
                    $
                    $588,724
                    
                    
                    $
                    $198,270
 
 17
 Table
                of Contents
 CHINA
              HEALTH RESOURCE, INC. AND SUBSIDIARY
 NOTES
              TO
              AUDITED FINANCIAL STATEMENTS
 For
                the
                Years Ended December 31, 2007 and 2006
  NOTE
            F -
            COMMITMENTS
 
 The
            Company leases its warehouse for approximately $1,478 per year, which
            expires
            March 14, 2008.
  Future
                      annual lease payments are as follows:March
                      15, 2007 to March 14, 2008
                  
                  $
                  1,478TOTAL
                  
                  $
                  1,478
  The
            Company leases farm land of approximately 861,000 sq feet from a cooperative
            of
            farmers.  The lease expires in December 2017. Total Rent Expense for
            December 31, 2007 was $6,455.
  Future
                      annual lease payments are as follows:Year
                      Ending December 31, 2008
                  
                  $
                  6,4552009
                  
                  
                  6,4552010
                  
                  
                  6,4552011
                  
                  
                  6,4552012
                  
                  
                  6,4552013
                      and beyond
                  
                  
                  32,275TOTAL
                  
                  $
                  64,550
  The
            Company leases its office space of approximately 3,600 sq feet for sales
            and
            marketing.  The lease commences in July 2007 and expires in June 2027.
            Total Rent Expense for the year ended December 31, 2007
            was $34,719.
 
 Future
                      annual lease payments are as follows:Year
                      Ending December 31, 2008
                  
                  $
                  46,2922009
                  
                  
                  46,2922010
                  
                  
                  46,2922011
                  
                  
                  53,7852012
                  
                  
                  62,750...TOTAL
                  
                  $
                  1,999,975
  NOTE
            G - RELATED-PARTY
            TRANSACTIONS
 
 The
            former shareholders of the Company were Sichuan Suining Yingfa Resource
            Development Group Co., Ltd., Suining Yingfa Construction Materials Company
            Ltd,
            and Sichuan Yingfa Resource Development Co., Ltd. (the Yingfa group).
            According
            to the Temporary Resolution of the Shareholders' Meeting of the Company
            held on
            January 20, 2006, the company has had a capital restructuring as mentioned
            in
            Note L.  Related-party transactions between the Company and Yingfa
            group from 2004 to January 20, 2006 are listed below:
 
 Related-Party
            Transactions- cont’d
 
 The
            GAP
            certificate is owned by the Yingfa Group, namely Sichuan Yingfa Resource
            Development Co., Ltd. GAP is a quality standard for agricultural products
            such
            as DAR.  The GAP certificate means high and certifiable standard. The
            Company is the virtual manufacturer and seller of DAR.
 
 The
            Company trademark for its “Bailing Capsules” is “Zhiwang” which Sichuan owns and
            has applied for registration.  Sichuan is waiting for approval by
            State Industrial and Commercial Administration General Bureau Trademark
            Bureau.
 
 The
            office building was purchased from the Yingfa group. The land use right
            of the
            building was transferred from the Yingfa group to the Company.
 
 Government
            grants and loans were obtained by the Yingfa group.
 
 As
            of
            December 31, 2006, the company has a note receivable from a related-party
            with a
            total balance due of $192,093. The note is due on May 29, 2007 with interest
            at
            6.12%.
 
 As
            of
            December 31, 2007, the company has a note receivable from a related-party
            with a
            total balance due of $191,660. The note is due on May 29, 2007 with interest
            at
            6.12%.
 
 As
            of
            December 31, 2007, the company has a note receivable from a related-party
            with a
            total balance due of $436,730. The note is due on December 31,
            2008.
 
 On
            August
            15, 2007, the Company's Board of Directors approved to pay for the total
            rent of
            a 20-year leasing property by the issuance of 2,000 shares of Class B
            Common
            Stock to Lian, Xiao Jian, the owner of a property. Pursuant to the terms
            and
            conditions of the Contract of Lease Property, dated June 29, 2007, the
            total
            payment of the rent for 20 years leasing period is $2,023,121 and the
            leasing
            property is approximately 3,600 square feet. The lease commences in July
            2007
            and expires in June 2027. Total rent expense for the year ended December
            31,
            2007 was $23,146.
  NOTE
            H -COMPREHENSIVE
            INCOME
 
 Statement
            of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive
            Income,” establishes standards for reporting and display of comprehensive
            income, its components and accumulated balances. Comprehensive income
            as defined
            includes all changes in equity during a period from non-owner sources.
            Accumulated comprehensive income, as presented in the accompanying statement
            of
            changes in stockholders’ equity consists of changes in unrealized gains and
            losses on foreign currency translation. This comprehensive income is
            not
            included in the computation of income tax expense or benefit. For the
            years
            ended December 31, 2007 and 2006, total comprehensive income was $60,825
            and
            $14,306, respectively.
  NOTE
            I -
            GOING CONCERN
 
 As
            shown in the accompanying audited
            financial statements, the Company has a deficit book value and a negative
            cash
            flow from operations that have placed substantial doubt as to whether
            the
            Company can continue as a going concern. The ability of the Company to
            continue
            as a going concern is dependent on developing operations, increasing
            revenues,
            and obtaining new capital. Management has enacted a plan to raise capital
            and
            increase sales.
  NOTE
            J - INCOME
            TAXES
  Due
            to
            operating losses, there was no provision for current federal or state
            income
            taxes for the year ended December 31, 2007.
 
 Deferred
            income taxes reflect the net tax effects of temporary differences between
            the
            carrying amounts of assets and liabilities for financial reporting purposes
            and
            the amount used for federal and state income tax purposes.
 
 The
            Company’s deferred tax asset at December 31, 2007 consists of net operating loss
            carry-forward calculated using prevailing PRC tax rates equating to
            approximately $85,000 less a valuation allowance in the amount of $85,000.
            Because of the Company’s lack of earnings history, the deferred tax asset has
            been fully offset by a valuation allowance. The valuation allowance increased
            (decreased) by approximately $85,000 compared to the same period in 2006
            due to
            reorganization.
 
 Utilization
            of the net operating losses may be subject to certain annual limitations
            due to
            changes in control. This may result in the expiration of net operating
            losses
            before full utilization.
 
 The
            Company’s total deferred tax asset as of December 31, 2007 is as
            follows:
  2007
                  
                  
                  2006Net
                      operating loss carry-forwards
                  
                  $
                  85,000
                  
                  
                  $
                  -0-Valuation
                      Allowance
                  
                  
                  (85,000
                  )
                  
                  
                  (-0-
                  )$
                  -0-
                  
                  
                  $
                  -0-Prevailing
                      PRC tax rate
                  
                  
                  15
                  %
                  
                  
                  15
                  %
  The
            Company is subject to income taxes on an entity basis, on income arising
            in, or
            derived from the tax jurisdiction in which it is domiciled and operates.
            The
            corporate has no income taxes accrued as of December 31, 2007 due to
            operating
            losses.
  The
            Company is subject to income taxes on an entity basis, on income arising
            in, or
            derived from the tax jurisdiction in which it is domiciled and operates.
            The
            corporate income taxes accrued as of December 31, 2006 were $2,999.
  18
 Table
                of Contents
 CHINA
              HEALTH RESOURCE, INC. AND SUBSIDIARY
 NOTES
              TO
              AUDITED FINANCIAL STATEMENTS
 For
                the
                Years Ended December 31, 2007 and 2006
  NOTE
              K -PLANT
              AND
              EQUIPMENT, NET
 
 
 Plant
              and
              equipment, net as of December 31, 2007 and 2006 consists of the following:
 
 2007
                    
                    
                    2006Building
                    
                    $
                    400,995
                    
                    
                    $
                    400,995Furniture,
                        fixture and equipment
                    
                    
                    316,836
                    
                    
                    
                    185,475717,831
                    
                    
                    
                    586,470Less:
                        accumulated depreciation
                    
                    
                    (114,217
                    )
                    
                    
                    (54,379
                    )Plant
                        and equipment, net
                    
                    $
                    603,614
                    
                    
                    $
                    532,091
 
 Depreciation
              expense for the year ended December 31, 2007 and 2006 respectively
              was $59,838
              and $6,427.
  NOTE
            L -EQUITY TRANSACTIONS
  On
            July
            10, 2006, the Company issued 7,977,023 new shares of Class A Common Stock
            and
            2,000 new shares of Class B Common Stock in exchange for a payment of
            $264,000
            in cash, in reliance upon exemptions from the registration requirements
            of
            Section 5 of the Securities Act of 1933, as amended (the “Act”), pursuant
            to Section 4(2) of the Act and Rule 506 promulgated there
            under.
 
 On
            August
            22, 2006, Arie Hinkis, the former president of the Company, returned
            744 shares
            of Class B Common Stock against payment of $74,000 and settlement of
            all unpaid
            salaries and severance pay to Mr. Hinkis in the amount of $100,000, both
            amounts
            will be taken from the payment made to VDYI for the aforesaid issued
            shares.
  On
            November 10, 2006, the Company issued 333,000,000 new shares of Class
            A Common
            Stock (the effect of 30,000,000 shares after consideration of the proposed
            11.1:1 reverse split), to the Yin Fa shareholders pursuant to Regulation
            S under
            the Securities Act of 1933, as amended, in exchange for all of their
            shares of
            registered capital of Yin Fa, pursuant to the Plan of Exchange, dated
            June 13,
            2006.
  On
            January 10, 2007, the Company issued 6,500,000 shares of Class A Common
            stock
            for payment of consulting services to several companies and individuals.
            The
            fair value of this stock issuance was determined using the fair value
            of the
            Company’s common stock on the grant date or the specific terms of the applicable
            consulting agreements and booked pro rata due to the service periods.
            The
            Company calculated a stock-based compensation cost of total $699,554
            and
            recognized $212,896 for the year ended December 31, 2007. As of December
            31, 2007, a deferred compensation is amounted to $143,852 and amortized
            on the
            straight-line method over the contract periods.
 
 On
            February 2, 2007, the Company issued 1,000,000 shares of Class A Common
            stock
            for payment of consulting services to Greentree Financial Group, Inc.
            for
            services in connection with general management consulting and advisory
            services.
  The
            fair
            value of this stock issuance was determined using the fair value of the
            Company’s common stock on the grant date or the specific terms of the applicable
            consulting agreements and booked pro rata due to the service periods.
            The
            Company calculated a stock-based compensation cost of total $51,225 and
            recognized $51,225 for the year ended December 31, 2007.
 
 On
            June
            8, 2007, Deng Shu Lan, the former president of Yin Fa, resigned from all
            positions in Yin Fa. Pursuant to an oral termination agreement, Deng Shu
            Lan transferred Zheng Zhimin, the new Vice President of Yin Fa, 2,000
            shares of
            Class B Common stock of the Company, which were converted into 10,342,593
            Class
            A Common Stock on July 9, 2007.
 
 On
            July
            23, 2007, the Company effected a forward stock split of the Company's
            Class A
            Common Stock, pursuant to the Delaware General Corporation Law, "no dissenters'
            rights under the Delaware General Corporation Law are afforded to the
            Company's
            stockholders as a result of the adoption of this resolution", exchanging
            one (1)
            existing shares of Class A Common Stock for two (2) shares of post forward
            split
            Class A Common Stock. The number of outstanding shares of the Company’s Class A
            common stock was increased from 49,644,447 to 99,288,894 shares and par
            value of
            its Class A common stock was unchanged at $0.01.
 
 On
            August
            15, 2007, the Company's Board of Directors approved to pay for the total
            rent of
            a 20-year leasing property by the issuance of 2,000 shares of Class B
            Common
            Stock to Lian, Xiao Jian, the owner of a property. Pursuant to the terms
            and
            conditions of the Contract of Lease Property, dated June 29, 2007, the
            total
            payment of the rent for 20 years leasing period is $2,023,121 and the
            leasing
            property is approximately 3,600 square feet. The lease commences in July
            2007
            and expires in June 2027. Total rent expense for the year ended December
            31,
            2007 was $23,146.
  NOTE
            M - REVERSE STOCK
            SPLITS
  A
              common
              stock reverse split of 11.1 for 1 was effective October 1, 2006. All
              common
              stock amounts in the accompanying financial statements issued on or
              before the
              date of the reverse stock split have been restated retroactively to
              reflect this
              capitalization change.
 NOTE
                N –SUBSEQUENT EVENT
 
 On
            February 5, 2008, the Company issued 5,000,000 shares of Class A Common
            stock
            for payment of consulting services to a company. The fair value of this
            stock
            issuance was determined using the fair value of the Company’s common stock on
            the grant date or the specific terms of the applicable consulting agreements
            and
            will be booked pro rata due to the service periods.
 19
 Table
            of Contents
  Item 8.
        Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
 
 None.
  Item 8A.
        Controls and Procedures.
 
 We
        maintain disclosure controls and
        procedures designed to ensure that information required to be disclosed in
        reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is
        recorded, processed, summarized and reported within the specified time periods.
        Our Chief Executive Officer and our Chief Financial Officer (collectively,
        the
“Certifying Officers”) are responsible for maintaining our disclosure controls
        and procedures. The controls and procedures established by us are designed
        to
        provide reasonable assurance that information required to be disclosed by
        the
        issuer in the reports that it files or submits under the Exchange Act is
        recorded, processed, summarized and reported within the time periods specified
        in the Commission’s rules and forms.
  As
        of the end of the period covered by
        this report, the Certifying Officers evaluated the effectiveness of our
        disclosure controls and procedures. Based on the evaluation, the Certifying
        Officers concluded that our disclosure controls and procedures were effective
        to
        provide reasonable assurance that information required to be disclosed by
        us in
        the reports that we file or submit under the Exchange Act is recorded,
        processed, summarized and reported, within the time periods specified in
        the
        applicable rules and forms, and that it is accumulated and communicated to
        our
        management, including the Certifying Officers, as appropriate to allow timely
        decisions regarding required disclosure.
  The
        Certifying Officers have also
        concluded, based on our evaluation of our controls and procedures that as
        of
        December 31, 2007, our internal controls over financial reporting are effective
        and provide a reasonable assurance of achieving their objective.
  Due
        to its inherent limitations,
        internal control over financial reporting may not prevent or detect
        misstatements under all potential conditions. Therefore, effective internal
        control over financial reporting provides only reasonable, and not absolute,
        assurance that a restatement of our financial statements would be prevented
        or
        detected.
  Changes
        in Internal Control Over
        Financial Reporting
  There
        were no changes in the our
        internal control over financial reporting that occurred during the period
        covered by this report that have materially affected, or are reasonably likely
        to materially affect, our internal control over financial
        reporting.
 
 This
        annual report does not include an
        attestation report of our registered public accounting firm regarding internal
        control over financial reporting. Management's report was not subject to
        attestation by our registered public accounting firm pursuant to temporary
        rules
        of the Commission that permit us to provide only management's report in this
        annual report.
  PART
        III
  Item 9.
        Directors, Executive Officers, Promoters and Control Persons; Compliance
        with
        Section 16(a) of the Exchange Act.
  Directors
        and
        Executive Officers
  Our
        directors are elected at the annual meeting of shareholders and hold office
        for
        one year and until their successors are elected and qualified. Our officers
        are
        appointed by the Board of Directors and serve at the pleasure of the Board.
        We
        have not entered into any employment agreements with our executive
        officers.
 
 Name
              Age
              Position
              Date
                  to StartWang,
                  Jiguang
              34
              President
                  and Director
              August
                  22, 2006Chen,
                  Jiang
              34
              Chief
                  Executive Officer and Director
              September
                  7, 2006Zhong,
                  Ying
              35
              Chief
                  Financial Officer and Director
              September
                  7, 2006Wang,
                  Gewei
              39
              Independent
                  Director
              September
                  7, 2006Wang,
                  Bing
              33
              Independent
                  Director
              September
                  7, 2006
 
 Mr.
        Wang,
        Jiguang is appointed as our President. He has also been nominated as a
        Director of the Board. Mr. Wang is 34 years old. In 2001, Mr. Wang received
        a
        Bachelor of Arts in architecture from Chong Qing Logistics Engineering
        University. Mr. Wang has extensive investment experience in real estate,
        commercial operations and merchandise trading. In 1998, Mr. Wang incorporated
        a
        real estate company and also a property management company in Sui Ning City,
        Si
        Chuan Province, P. R. China. In the past five years, Mr. Wang has been the
        president and general manager of these two companies and has made rapid progress
        developing new markets and new business projects. As a result of Mr. Wang's
        strong management skills both companies are currently reporting record
        profits.
 
 Mr.
        Chen, Jiangis appointed as our Chief Executive Officer. He has also been nominated
        as a Director of the Board. Mr. Chen is 34 years old and in 1995 he earned
        his
        Bachelor of Arts in Commercial Economics from Si Chuan University. In 2003,
        Mr.
        Chen received a Master of Business Administrative from Si Chuan University.
        Mr.
        Chen has extensive business management and Chinese regulatory experience
        focusing on business strategies, corporate development and corporate growth
        strategies. In the last five years, Mr. Chen has been the Chief Executive
        Officer of Cheng Du Leader Investment Company Limited, a company located
        in the
        P. R. China. Cheng Du Leader Investment Company Limited's principal business
        involves investment in media, real estate and movie production in mainland
        China. Mr. Chen also served as the senior manager in several other companies
        involved in investment management, media, real estate and merchandise
        trading.
  Ms.
        Zhong, Yingis appointed as our Chief Financial Officer. She has also been nominated
        as a Director of the Board. Ms. Zhong is 35 years old. She earned her Bachelor
        of Arts in Accounting from Si Chuan University in 1994 and Masters Degree
        in
        Economics at Si Chuan University in 1999. Ms. Zhong has over 10 years working
        experience in auditing, transaction consulting, and commerce. From 1999 to
        2002,
        Ms. Zhong served as an internal auditor and secretary of Si Chuan Mei Feng
        Share
        Company Ltd., a public company listed on the Chinese stock market.
 
 Mr.
        Wang,
        Gewei has been nominated as our Independent Director. Mr. Wang is 39
        years old. In 1991 he earned a Bachelor of Arts in Chinese literature from
        Renmin University of China. Mr. Wang has extensive experience as an investment
        banker. He is currently the Chief Executive Officer of Si Chuan Tian Yi
        Investment Consulting Management Company Ltd.
 
 Mr.
        Wang,
        Bing, has been nominated as our Independent Director. Mr. Wang is 33
        years old and has extensive experience in business and investment management.
        Mr. Wang has a strong professional relationship with the Si Chuan provincial
        government and the Sui Ning municipal government. Currently, he is a member
        of
        the supervision committee for Sui Ning Yin Fa Bai Zhi Chan Ye You Xian Gong
        Si.
 
 Family
        Relationships.
  None.
 
 Legal
        Proceedings.
 
 No
        officer,
        director, or persons nominated for such positions and no promoter or significant
        employee has been involved in legal proceedings that would be material to
        an
        evaluation of our management.
 
 Audit
        Committee
 
 We
        do not
        have a separately designated standing audit committee. Pursuant to Section
        3(a)(58)(B) of the Exchange Act, the entire Board of Directors acts as an
        audit
        committee for the purpose of overseeing the accounting and financial reporting
        processes, and audits of our financial statements. The Commission recently
        adopted new regulations relating to audit committee composition and functions,
        including disclosure requirements relating to the presence of an "audit
        committee financial expert" serving on its audit committee. In connection
        with
        these new requirements, our Board of Directors examined the Commission's
        definition of "audit committee financial expert" and concluded that we do
        not
        currently have a person that qualifies as such an expert. We had minimal
        operations for the past two (2) years. Presently, there are only four (4)
        directors serving on our Board, and we are not in a position at this time
        to
        attract, retain and compensate additional directors in order to acquire a
        director who qualifies as an "audit committee financial expert", but we intend
        to retain an additional director who will qualify as such an expert, as soon
        as
        reasonably practicable. While neither of our current directors meets the
        qualifications of an "audit committee financial expert", each of our directors,
        by virtue of his past employment experience, has considerable knowledge of
        financial statements, finance, and accounting, and has significant employment
        experience involving financial oversight responsibilities. Accordingly, we
        believe that our current directors capably fulfill the duties and
        responsibilities of an audit committee in the absence of such an
        expert.
 
 20
 Table
            of Contents
  Code
        of
        Ethics
 
 hawse
        have
        adopted a code of ethic (the "Code of Ethics") that applies to our principal
        chief executive officer, principal financial officer, principal accounting
        officer or controller, or persons performing similar functions. The Code
        of
        Ethics is being designed with the intent to deter wrongdoing, and to promote
        the
        following:
 
 *
              Honest
                  and ethical conduct, including the ethical handling of actual or
                  apparent
                  conflicts of interest between personal and professional
                  relationships
 *
              Full,
                  fair, accurate, timely and understandable disclosure in reports
                  and
                  documents that a small business issuer files with, or submits to,
                  the
                  Commission and in other public communications made by the small
                  business
                  issuer
 *
              Compliance
                  with applicable governmental laws, rules and
                  regulations
 *
              The
                  prompt internal reporting of violations of the code to an appropriate
                  person or persons identified in the
                  code
 *
              Accountability
                  for adherence to the code
 
 Section
        16(a) Beneficial Ownership Reporting Compliance
 
 Under
        Section
        16(a) of the Exchange Act, all executive officers, directors, and each person
        who is the beneficial owner of more than 10% of the common stock of a company
        that files reports pursuant to Section 12 of the Exchange Act, are required
        to
        report the ownership of such common stock, options, and stock appreciation
        rights (other than certain cash-only rights) and any changes in that ownership
        with the Commission. Specific due dates for these reports have been established,
        and we are required to report, in this Form 10-KSB, any failure to comply
        therewith during the fiscal year ended December 2005. We believe that all
        of
        these filing requirements were satisfied by its executive officers, directors
        and by the beneficial owners of more than 10% of our common stock. In making
        this statement, we have has relied solely on copies of any reporting forms
        received by it, and upon any written representations received from reporting
        persons that no Form 5 (Annual Statement of Changes in Beneficial Ownership)
        was
        required to be filed under applicable rules of the Commission.
  Item 10.
        Executive Compensation
  The
        following table sets forth certain
        information regarding the annual and long-term compensation for services
        in all
        capacities to us for the prior fiscal years ended December 31, 2007, 2006
        and 2005, of those persons who were either the chief executive officer during
        the last completed fiscal year or any other compensated executive officers
        as of
        the end of the last completed fiscal year, and whose compensation exceeded
        $100,000 for those fiscal periods.
 
 SUMMARY
                  COMPENSATION TABLEName
                  and principal position
                (a)
              Year
                (b)
              Salary
                  ($)
                (c)
              Bonus
                  ($)
                (d)
              Stock
                  Awards ($)
                (e)
              Option
                  Awards ($)
                (f)
              Non-Equity
                  Incentive Plan Compensation ($)
                (g)
              Nonqualified
                  Deferred Compensation Earnings ($)
                (h)
              All
                  Other Compensation ($)
                (i)
              Total
                  ($)
                (j)Wang,
                  Ji Guang
                President
              2007
              0
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              0
              0
              0
              0
              02005
              0
              0
              0
              0
              0
              0
              0
              0Zhong,
                  Ying
                Chief
                  Financial Officer
              2007
              0
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              0
              0
              0
              0
              02005
              0
              0
              0
              0
              0
              0
              0
              0
 
 We
        have not
        entered into any other employment agreements with our employees, Officers
        or
        Directors. We have no standard arrangements to compensate our directors for
        their services to us.
 
 Stock
        Option Plan
  We
        have not
        implemented a stock option plan at this time and since inception, have issued
        no
        stock options, SARs or other compensation. We may decide, at a later date,
        and
        reserve the right to, initiate such a plan as deemed necessary by the
        Board.
  21
 Table
            of Contents
  Item 11.
        Security Ownership of Certain Beneficial Owners and
        Management.
  As
        of
        December 31, 2007, we had 5,193 stockholders of record and 99,288,894 shares
        of
        our Class A Common Stock and 2,000 shares of our Class B Common Stock issued
        and
        outstanding. As of April 14, 2008, we had 5,189 stockholders of record and
        104,288,894 shares of our Class A Common Stock and 2,000 shares of our Class
        B
        Common Stock issued and outstanding. The following table sets forth as of
        April
        14, 2008, certain information with respect to the beneficial ownership of
        Common
        Stock by (i) each Director, nominee and executive officer of us; (i) each
        person
        who owns beneficially more than 5% of the common stock; and (iii) all Directors,
        nominees and executive officers as a group. The percentage of shares
        beneficially owned is based on there having been 104,288,894 shares of Class
        A
        Common Stock and 2,000 shares of Class B Common Stock outstanding as of April
        14, 2008.
 
 OFFICERS,
        DIRECTORS AND BENEFICIAL OWNERS, AS OF APRIL 14, 2008
 
 Title
                  of Class
              Name
                  & Address of Beneficial Owner(1)
              Amount
                  & Nature of Beneficial Owner
              %
                  of Class(2)Class
                  B Common Stock
              Lian,
                  Xiao Jian
              2,000
              100%Class
                  B Common Stock
              All
                  directors and executive officers as a group (five persons)
              -0-
              0%Class
                  A Common Stock
              Wang,
                  Ji Guang
                1
                  De Sheng Road, Shi Zhong Qu, Suining, Sichuan,P.R.China
              199,500
              *Class
                  A Common Stock
              Wang,
                  Li
                No.
                  1-2-8 Dou Ya Xiang
                Shi
                  Zhong Qu, Fu Jian, P. R. China
              5,461,996
              5.24%Class
                  A Common Stock
              Zheng,
                  Zhi Min
              22,122,488
              21.21%Class
                  A Common Stock
              All
                  directors and executive officers as a group (five persons)
              99,750
              *
 
 *
        Represents less than 1%
  (1)
        Unless
        stated otherwise, the business address for each person named is c/o China
        Health
        Resource Inc.
 
 (2)
        Calculated pursuant to Rule 13d-3(d) (1) of the Securities Exchange Act of
        1934.
        Under Rule 13d-3(d), shares not outstanding which are subject to options,
        warrants, rights or conversion privileges exercisable within 60 days are
        deemed
        outstanding for the purpose of calculating the number and percentage owned
        by a
        person, but not deemed outstanding for the purpose of calculating the percentage
        owned by each other person listed. We believe that each individual or entity
        named has sole investment and voting power with respect to the shares of
        common
        stock indicated as beneficially owned by them (subject to community property
        laws where applicable) and except where otherwise noted.
  Changes
        in Control
 
 None.
 
 Item 12.
        Certain Relationships and Related Transactions.
  On
        January
        10, 2007, we issued 6,500,000 shares of Class A Common stock for payment
        of
        consulting services to several companies and individuals. The fair value
        of this
        stock issuance was determined using the fair value of our common stock on
        the
        grant date or the specific terms of the applicable consulting agreements
        and
        booked pro rata due to the service periods. We calculated a stock-based
        compensation cost of total $699,554 and recognized $212,896 for the year
        ended
        December 31, 2007. As of December 31, 2007, a deferred compensation is amounted
        to $143,852 and amortized on the straight-line method over the contract
        periods.
 
 On
        February
        2, 2007, we issued 1,000,000 shares of Class A Common stock for payment of
        consulting services to Greentree Financial Group, Inc. for services in
        connection with general management consulting and advisory
        services.
 
 
 The
        fair
        value of this stock issuance was determined using the fair value of our common
        stock on the grant date or the specific terms of the applicable consulting
        agreements and booked pro rata due to the service periods. We calculated
        a
        stock-based compensation cost of total $51,225 and recognized $51,225 for
        the
        year ended December 31, 2007.
 
 On
        June 8,
        2007, Deng Shu Lan, the former president of Yin Fa, resigned from all
        positions in Yin Fa. Pursuant to an oral termination agreement, Deng Shu
        Lan transferred Zheng Zhimin, the new Vice President of Yin Fa, 2,000 shares
        of
        our Class B Common stock, which were converted into 10,342,593 Class A Common
        Stock on July 9, 2007.
 
 On
        July 23,
        2007, we effected a forward stock split of our Class A Common Stock, pursuant
        to
        the Delaware General Corporation Law, "no dissenters' rights under the Delaware
        General Corporation Law are afforded to our stockholders as a result of the
        adoption of this resolution", exchanging one (1) existing shares of Class
        A
        Common Stock for two (2) shares of post forward split Class A Common Stock.
        The
        number of outstanding shares of our Class A common stock was increased from
        49,644,447 to 99,288,894 shares and par value of its Class A common stock
        was
        unchanged at $0.01.
 
 On
        August 15,
        2007, our Board of Directors approved to pay for the total rent of a 20-year
        leasing property by the issuance of 2,000 shares of Class B Common Stock
        to
        Lian, Xiao Jian, the owner of a property. Pursuant to the terms and conditions
        of the Contract of Lease Property, dated June 29, 2007, the total payment
        of the
        rent for 20 years leasing period is $2,023,121 and the leasing property is
        approximately 3,600 square feet. The lease commences in July 2007 and expires
        in
        June 2027. Total rent expense for the year ended December 31, 2007
        was $23,146.
 
 Our
        former
        shareholders were Sichuan Suining Yingfa Resource Development Group Co.,
        Ltd.,
        Suining Yingfa Construction Materials Company Ltd, and Sichuan Yingfa Resource
        Development Co., Ltd. (the Yingfa group). According to the Temporary Resolution
        of our Shareholders' Meeting held on January 20, 2006, we have had a capital
        restructuring as mentioned in Note L.  Related-party transactions
        between us and Yingfa group from 2004 to January 20, 2006 are listed
        below:
 
 The
        GAP
        certificate is owned by the Yingfa Group, namely Sichuan Yingfa Resource
        Development Co., Ltd. GAP is a quality standard for agricultural products
        such
        as DAR.  The GAP certificate means high and certifiable standard. We
        are the virtual manufacturer and seller of DAR.
 
 Our
        trademark
        for “Bailing Capsules” is “Zhiwang” which Sichuan owns and has applied for
        registration.  Sichuan is waiting for approval by State Industrial and
        Commercial Administration General Bureau Trademark Bureau.
 
 The
        office
        building was purchased from the Yingfa group. The land use right of the building
        was transferred from the Yingfa group to us.
 
 Government
        grants and loans were obtained by the Yingfa group.
 
 As
        of
        December 31, 2006, we had a note receivable from a related-party with a total
        balance due of $192,093. The note is due on May 29, 2007 with interest at
        6.12%.
 
 As
        of
        December 31, 2007, we had a note receivable from a related-party with a total
        balance due of $191,660. The note is due on May 29, 2007 with interest at
        6.12%.
 
 As
        of
        December 31, 2007, we had a note receivable from a related-party with a total
        balance due of $436,730. The note is due on December 31, 2008.
 
 Subsequent
        Event
 
 On
        February
        5, 2008, we issued 5,000,000 shares of Class A Common stock for payment of
        consulting services to us. The fair value of this stock issuance was determined
        using the fair value of our common stock on the grant date or the specific
        terms
        of the applicable consulting agreements and will be booked pro rata due to
        the
        service periods.
  22
 Table
            of Contents
  Item 13.
        Exhibits.
 
 (a)
              Financial
                  Statements
  1.
        The
        following financial statements of Voice Diary, Inc. are included in Part
        II,
        Item 7:
 
 Report
        of
        independent Registered Public Accounting
        Firm      ..................................F-11
 Balance
        Sheet-December 31, 2007................................................................F-12
 Statements
        of Operations - For years ended December 31, 2007 and
        2006....................F-13
 Statements
        of Cash Flows - For year ended December 31, 2007 and
        2006....................F-14
 Statements
        of Stockholders’ Equity - For year ended December 31, 2007 and
        2006.........F-15
 Notes
        to
        Financial Statements.........................................................................F-16 to F-23
  2.
        Exhibits
  14.1.Code
        of Ethics *
 31.1.Rule
        13a-14(a)/15d-14(a) Certifications of Chief Executive
        Officer
 31.2.Rule
        13a-14(a)/15d-14(a) Certifications of Chief
        Financial  Officer
 32.1.Section
        1350 Certifications of Chief Executive
        Officer
 32.2.Section
        1350 Certifications of Chief Financial
        Officer
  
 (b)
              Reports
                  on Form 8-K
  (1)
              On
                  February 6, 2007, we filed a current report on Form 8-K to announce
                  the
                  change of its certifying accountant.(2)
              On
                  March 6, 2007, we filed a current report on Form 8-K to announce
                  that we
                  entered into an Exclusive Import-Export Agency Agreement with DongUi
                  Cosmetics Co. ("DongUi"), a corporation organized and existing
                  under the
                  laws of the Republic of Korea (South Korea), for business development
                  in
                  South Korea.(3)
              On
                  April 20, 2007, we filed a current report on Form 8-K to announce
                  that we
                  entered into an Exclusive Agency Agreement with Chengdu Derentang
                  Pharmaceutical Ltd.("Derentang"), a corporation organized and existing
                  under the laws of the People's Republic of China, for the sales
                  of
                  DAR.(4)
              On
                  June 21, 2007, we filed a current report on Form 8-K to announce
                  that we
                  executed a 1 for 2 forward stock split of our Class A Common Stock,
                  which
                  took effective at July 23, 2007.(5)
              On
                  July 23, 2007, we filed a current report on Form 8-K to announce
                  the
                  resignation of Deng, Shu Lan, the former president of Yin Fa, and
                  the
                  stock transfer for the 2,000 shares of our Class B Common
                  Stock.(6)
              On
                  August 31, 2007, we filed a current report on Form 8-K to announce
                  the
                  issuance of 2,000 shares of Class B Common Stock for the rental
                  payment of
                  a 20-year leasing property.
 
 Item 14.
        Principal Accountant Fees and Services.
 
 Fees
        Billed For Audit and Non-Audit Services
 
 The
        following table represents the aggregate fees billed for professional audit
        services rendered to the independent auditor, Lake & Associates CPA’s LLC
        (“Lake”), for our audit of the annual financial statements for the years ended
        December 31, 2007 and 2006. Audit fees and other fees of auditors are listed
        as
        follows:
 
 Year
                  Ended December 31
              
              2007
              
              
              
              2006Lake
              
              
              
              LakeAudit
                  Fees (1)
              
              $
              42,000
              
              
              (3)
              
              $
              42,000
              
              
              (2)Audit-Related
                  Fees (4)
              
              
              --
              
              
              
              
              
              --Tax
                  Fees (5)
              
              
              --
              
              
              
              
              
              --All
                  Other Fees (6)
              
              
              --
              
              
              
              
              
              --Total
                  Accounting Fees and Services
              
              $
              42,000
              
              
              
              
              $
              42,000
  (1)
              Audit
                  Fees. These are
                  fees for professional services for the audit of our annual financial
                  statements, and for the review of the financial statements included
                  in our
                  filings on Form 10-QSB, and for services that are normally provided
                  in
                  connection with statutory and regulatory filings or
                  engagements.
  (2)
              The
                  amounts shown for Lake in 2006 relate to (i) the audit of our annual
                  financial statements for the fiscal year ended December 31, 2006,
                  and (ii)
                  the review of the financial statements included in our filings
                  on Form
                  10-QSB for the first, second and third quarters of
                  2007.
  (3)
              The
                  amounts shown for Lake in 2007 relate to (i) the audit of our annual
                  financial statements for the fiscal year ended December 31, 2007,
                  and (ii)
                  the review of the financial statements included in our filings
                  on Form
                  10-QSB for the first, second and third quarters of
                  2008.
  (4)
              Audit-Related
                  Fees.
                  These are fees for the assurance and related services reasonably
                  related
                  to the performance of the audit or the review of our financial
                  statements.
  (5)
              Tax
                  Fees. These are
                  fees for professional services with respect to tax compliance,
                  tax advice,
                  and tax planning.
  (6)
              All
                  Other Fees. These
                  are fees for permissible work that does not fall within any of
                  the other
                  fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
                  Fees.
 
 Pre-Approval
        Policy For Audit and Non-Audit Services
 
 We
        do not
        have a standing audit committee, and the full Board performs all functions
        of an
        audit committee, including the pre-approval of all audit and non-audit services
        before we engage an accountant. All of the services rendered to us by Lake
&
Associates CPA’s LLC were pre-approved by our Board of Directors.
 
 We
        are
        presently working with its legal counsel to establish formal pre-approval
        policies and procedures for future engagements of our accountants. The new
        policies and procedures will be detailed as to the particular service, will
        require that the Board or an audit committee thereof be informed of each
        service, and will prohibit the delegation of pre-approval responsibilities
        to
        management. It is currently anticipated that our new policy will provide
        (i) for
        an annual pre-approval, by the Board or audit committee, of all audit,
        audit-related and non-audit services proposed to be rendered by the independent
        auditor for the fiscal year, as specifically described in the auditor's
        engagement letter, and (ii) that additional engagements of the auditor, which
        were not approved in the annual pre-approval process, and engagements that
        are
        anticipated to exceed previously approved thresholds, will be presented on
        a
        case-by-case basis, by the President or Controller, for pre-approval by the
        Board or audit committee, before management engages the auditors for any
        such
        purposes. The new policy and procedures may authorize the Board or audit
        committee to delegate, to one or more of its members, the authority to
        pre-approve certain permitted services, provided that the estimated
        fee for any such service does not exceed a specified dollar amount (to be
        determined). All pre-approvals shall be contingent on a finding, by the Board,
        audit committee, or delegate, as the case may be, that the provision of the
        proposed services is compatible with the maintenance of the auditor's
        independence in the conduct of its auditing functions. In no event shall
        any
        non-audit related service be approved that would result in the independent
        auditor no longer being considered independent under the applicable rules
        and
        regulations of the Securities and Exchange Commission.
 
 (a)
        On
        December 31, 2007, our President and Chief Financial Officer made an evaluation
        of our disclosure controls and procedures. In our opinion, the disclosure
        controls and procedures are adequate because the systems of controls and
        procedures are designed to assure, among other items, that 1) recorded
        transactions are valid; 2) valid transactions are recorded; and 3) transactions
        are recorded in the proper period in a timely manner to produce financial
        statements which present fairly the financial condition, results of operations
        and cash flows for the respective periods being presented. Moreover, the
        evaluation did not reveal any significant deficiencies or material weaknesses
        in
        our disclosure controls and procedures.
 
 (b)
        There
        have been no significant changes in our internal controls or in other factors
        that could significantly affect these controls since the last
        evaluation.
 
 23
  SIGNATURES
  In
        accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
        the registrant has caused this report to be signed on its behalf by the
        undersigned majority of the Board of Directors, thereunto duly
        authorized.
  CHINA
                  HEALTH RESOURCE INC.Date:
                  April 14, 2008
              
              /s/
                  Wang, Ji
                  GuangWang,
                  Ji GuangPresident