UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K/A


Amendment
No. 1





(Mark
      One)x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934For
      the Fiscal Year Ended:  December 31, 2009o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934ORFor
      the transition period from ________ to
_________





Commission
File Number:  000-50029





CHINA HEALTH RESOURCE,
INC.


(Exact
name of Registrant as specified 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


Suining City, Sichuan
Province, P.R. China


(Address
of Principal Executive Offices)





+(86-825)
239-1788


(Issuer’s
Telephone Number)





Securities
registered pursuant to Section 12(b) of the Act:





Title of each class
            Name of each exchange on which
      registeredNone
            Not
      Applicable





Securities registered
pursuant to Section 12(g) of the Act:


Common
Stock, Class A, $.001 par value





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes o  No  x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.  Yes  o
 No  x





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














Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K.  o





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





Large
      accelerated filer      o
            Accelerated
      filer                       
      oNon-accelerated
      filer        o
            Smaller
      reporting company      x








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





As of
December 31, 2009, there were 142,288,894 shares of the registrant’s Class
A Common Stock, par value $0.001, issued and outstanding, of which approximately
76,965,906 are held by non-affiliates of the registrant.   The
aggregate market value of securities held by non-affiliates is approximately
$384,830 as of June 30, 2009, based upon the registrant’s closing bid price as
quoted on the OTC Bulletin Board on June 30, 2009, of $0.005 per
share.





Information
related to our company, including certain reports filed with or furnished to the
SEC, are available through our website (www.chriglobal.com).  We are
not including any information on our website as part of, or incorporating it by
reference into, our Form 10-K.















CAUTIONARY
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION





Except
for historical information, this report contains forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended.  Such forward-looking statements involve risks and
uncertainties, including, among other things, statements regarding our business
strategy, future revenues and anticipated costs and expenses.  Such
forward-looking statements include, among others, those statements including the
words “expect,” “anticipate,” “intend,” “believe” and similar
language.  Our actual results may differ significantly from those
projected in the forward-looking statements.  Factors that might cause
or contribute to such differences include, but are not limited to, those
discussed in Item 1. Business and Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations. You are cautioned not to place
undue reliance on the forward-looking statements, which speak only as of the
date of this report.  We undertake no obligation to publicly release
any revisions to the forward-looking statements or reflect events or
circumstances taking place after the date of this document.





EXPLANATORY
NOTE





We are
filing this Amendment No. 1 to the Annual Report on Form 10-K (the “Form
10-K/A”) of China Health Resource, Inc. (the “Company”) for the fiscal year
ended December 31, 2009 previously filed with the Securities and Exchange
Commission (the “SEC”) on April 15, 2010 (the “2009 Form 10-K”) to effect the
following amendments:








(a)
            Part II, Item 9A(T):
      Controls and Procedures.  The disclosure in this Item has
      been amended in light of the material weakness in internal control over
      financial reporting identified in connection with the restatement (the
      "Restatement") of the registrant’s financial statements contained in its
      Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
      2009 (the "Third Quarter 2009 Form 10-Q"), as described
below.(b)
            Part IV, Item
      15:  Exhibits and Financial Statement Schedules. The
      disclosure in this Item has been amended to correct certain errors
      appearing in our previously-filed financial statements as of December 31,
      2009.





Except
for the amendments described above, this Form 10-K/A does not revise, update, or
in any way affect any information or disclosure contained in the 2009 Form 10-K
and we have not updated the disclosures contained herein to reflect events that
occurred at a later date. Accordingly, this Form 10-K/A should be read in
conjunction with our SEC filings made subsequent to the 2009 Form
10-K.






- 2
-





Concurrently
with the filing of this report, we are also amending the following
previously-filed reports:





Form 10-Q
for the period ended September 30, 2009 - Part I:




Item 1:     
Financial Statements (Unaudited)


Item 4T:   Controls and
Procedures





Form 10-Q
for the period ended March 31, 2010 - Part I:




Item 4T:   Controls and
Procedures





Background of the
Restatement of the Company's Financial Statements





Effective
July 30, 2009, the Company and Mr. Lei Guo, as Trustee for the Sichuan Yinfa
Resource Co., Ltd. (“Trustee”), terminated the following
agreements:  (1) Contract of Lease of Property entered into between
CHRI and Trustee, dated December 19, 2008 (the “Property Lease”), with respect
to the 3,262 acres of leased forest area property, license number B5103185981,
located in Heiwengtang Valley, Xianping Forestry, Pingwu County, Mianyang City,
Sichuan Province, the People’s Republic of China; and (2) the Amended and
Restated Convertible Promissory Note (the “Note”), issued on January 21, 2009
and effective as of December 31, 2008, as rent for the Lease
Property.  In connection with the termination of the Lease Property
and Note, the 12,605,615 shares of  the Company's Class A common stock
(the "Class A Common Stock"), issued to the Trustee on March 30, 2009, were
withdrawn and cancelled and the Trustee was allowed to retain the 43,000,000
shares of the Class A Common Stock issued to the Trustee on December 30,
2008.





The
Company disclosed these matters in a Current Report on Form 8-K filed August 11,
2009.





During
the preparation of the Company's 2009 Form 10-K, we discovered that the Third
Quarter 2009 Form 10-Q erroneously reported 43,000,000 shares of Class A Common
Stock had been withdrawn and cancelled.  The financial statements
contained in the Third Quarter 2009 Form 10-Q should have recorded that, as of
September 30, 2009, the Company had 142,288,894 shares of Class A Common Stock
outstanding.





The
Company's audited financial statements contained in the 2009 10-K correctly
reflect  the withdrawn and cancelled shares of Class A Common
Stock.






- 3
-





During
the preparation of the Restatement, we identified the following additional
errors (the "Additional Errors") in the Third Quarter 2009 Form 10-Q regarding
the description of the Company's capital stock:





·
            The
      report erroneously stated the par value of the Company's Class A Common
      Stock to be $0.01 per share.  Effective April 15, 2009, the
      Company amended and restated its Certificate of Incorporation to decrease
      the Class A Common Stock’s par value to $0.001 per
    share.


·
            The
      report erroneously stated that there were 8,344 shares of  Class
      B common stock ("Class B Common Stock") authorized as of September 30,
      2009.  Effective April 15, 2009, the Company amended and
      restated its Certificate of Incorporation to eliminate the Class B Common
      Stock.


·
            The
      report failed to state that the Company is authorized to issue 50,000,000
      shares of undesignated preferred stock ("Preferred Stock"). Effective
      April 15, 2009, the Company amended and restated its Certificate of
      Incorporation to authorize the issuance of 50,000,000 shares of Preferred
      Stock.





We also
discovered that the Additional Errors appeared in the audited financial
statements contained in the 2009 10-K filed on April 15, 2010.





The
Additional Errors are not significant, individually or in the
aggregate.





Determinations




We
announced on April 15, 2010 that the Board of Directors had determined that we
would restate our financial statements for the fiscal quarter ended September
30, 2009 as a result of errors in those financial statements.  The
Restatement results from our Board of Director’s determination subsequent to the
issuance of our financial statements for the quarter ended September 30, 2009
that there were errors in the recording of the number of shares of Class A
Common Stock issued and outstanding and, therefore, our unaudited consolidated
financial statements required restatement.  Our Board of Directors and
senior management, assisted by outside consultants and Lake & Associates,
CPA, the Company’s independent registered public accounting firm, commenced, and
have now completed, a review of the facts and circumstances that gave rise to
the erroneous recording of the withdrawal and cancellation of 43,000,000 shares
of Class A Common Stock and the Additional Errors appearing in the financial
statements as described above.





As a
result of the review and as described in Part II, Item 9A(T), Controls and
Procedures, in this report, the Company identified a material weakness in our
internal control over financial reporting due to a shortage of experienced
accounting staff, and the lack of segregation of duties in financial reporting,
as our financial reporting and all accounting functions are performed by the
Chief Financial Officer with no oversight by other members of management with
appropriate accounting experience. Our President does possess accounting
expertise, but the Board of Directors does not have an audit committee. This
material weakness was due to the Company's lack of working capital to hire
additional staff. The Company also concluded that its disclosure controls and
procedures were not effective as of December 31, 2009.  As of the date
of this report, we have remediated the material weakness in our internal control
over financial reporting and deficiencies in our disclosure controls and
procedures.






- 4
-





Impact of Corrections on
Previously-Issued Consolidated Financial Statements





As a
result of the Additional Errors described above, the audited balance sheet
appearing in the 2009 10-K has been amended as follows:








China
      Health Resource, Inc. and SubsidiaryAudited
      Consolidated Balance SheetsAs
      of December 31, 2009 and 2008ASSETS
            December
      31, 2009
            
            December
      31, 2008CURRENT
      ASSETSCash
      and Cash Equivalents
            
            $
            18,211
            
            
            $
            101,497Accounts
      Receivable
            
            
            889,020
            
            
            
            441,047Note
      Receivable
            
            
            350,312
            
            
            
            378,054Employee
      Advances
            
            
            14,916
            
            
            
            3,016Advances
      to Suppliers
            
            
            55,630
            
            
            
            162,158Prepaid
      Expenses
            
            
            -
            
            
            
            59,648Inventory
            
            
            29,006
            
            
            
            264,177TOTAL
      CURRENT ASSETS
            
            
            1,357,094
            
            
            
            1,409,598FIXED
      ASSETSProperty,
      Plant, and Equipment
            
            
            959,557
            
            
            
            6,912,234Accumulated
      Depreciation
            
            
            (126,507
            )
            
            
            (154,759
            )TOTAL
      NET FIXED ASSETS
            
            
            833,050
            
            
            
            6,757,475TOTAL
      ASSETS
            
            $
            2,190,144
            
            
            $
            8,167,073LIABILITIES
      AND EQUITYCURRENT
      LIABILITIESAccounts
      Payable and Accrued Liabilities
            
            $
            268,849
            
            
            $
            238,275Other
      Payables
            
            
            113,592
            
            
            
            87,678Note
      Payable-Convertible Debt
            
            
            -
            
            
            
            3,500,000Due
      to Shareholder
            
            
            376,457
            
            
            
            83,258Taxes
      Payable
            
            
            309,574
            
            
            
            241,493Notes
      Payable - Current Portion
            
            
            234,322
            
            
            
            412,773TOTAL
      CURRENT LIABILITIES
            
            
            1,302,794
            
            
            
            4,563,477LONG-TERM
      LIABILITIESNotes
      Payable-Convertible debt
            
            
            -
            
            
            
            2,210,994TOTAL
      LONG-TERM LIABILITIES
            
            
            -
            
            
            $
            2,210,994TOTAL
      LIABILITIES
            
            
            1,302,794
            
            
            
            6,774,471STOCKHOLDERS'
      EQUITYCommon
      stock Class A ( 500,000,000 shares authorized,142,288,894
      issued and outstanding, par value $0.001)
            
            
            142,289
            
            
            
            142,289Undesignated
      Preferred Stock ( 50,000,000 shares authorized,0
      issued and outstanding, par value $0.01)
            
            
            -
            
            
            
            -Additional
      paid in capital
            
            
            1,145,832
            
            
            
            1,145,832Accumulated
      other comprehensive income
            
            
            157,143
            
            
            
            149,523Retained
      earnings (deficit)
            
            
            (557,914
            )
            
            
            (45,042
            )TOTAL
      STOCKHOLDERS' EQUITY
            
            
            887,350
            
            
            
            1,392,602TOTAL
      LIABILITIES AND EQUITY
            
            $
            2,190,144
            
            
            $
            8,167,073The
      accompanying notes are an integral part of these financial
      statements.






- 5
-





The
audited Consolidated Statement of Operations was not affected by the errors, but
is presented here as follows:





China
      Health Resource, Inc. and SubsidiaryAudited
      Consolidated Statement of OperationsFor
      the Year Ended December 31, 2009 and 2008For
      the 12 months2009
            
            
            2008REVENUESSales
            
            $
            4,377,463
            
            
            $
            2,646,111Cost
      of Sales
            
            
            3,736,867
            
            
            
            1,760,035GROSS
      PROFIT
            
            
            640,596
            
            
            
            886,076OPERATING
      EXPENSESSelling,
      General, and Administrative
            
            
            1,184,213
            
            
            
            505,058Financial
      ExpenseInterest
      Expense
            
            
            69,508
            
            
            
            50,537Distribution
      Costs
            
            
            -
            
            
            
            -TOTAL
      OPERATING EXPENSES
            
            
            1,253,721
            
            
            
            555,595OPERATING
      INCOME (LOSS)
            
            
            (613,125
            )
            
            
            330,481OTHER
      INCOME / (EXPENSES)Non-Operating
      Expenses
            
            
            -
            
            
            
            -Government
      Grants
            
            
            -
            
            
            
            72,857Debt
      Forgiveness
            
            
            177,893Other
            
            
            2,167
            
            
            
            3,197TOTAL
      OTHER INCOME / (EXPENSE)
            
            
            180,060
            
            
            
            76,054NET
      INCOME (LOSS) BEFORE TAXES
            
            
            (433,065
            )
            
            
            406,535INCOME
      TAX EXPENSE
            
            
            79,807
            
            
            
            149,635NET
      INCOME (LOSS)
            
            $
            (512,872
            )
            
            $
            256,900INCOME
      FROM DISCONTINUED OPERATIONS
            
            
            -
            
            
            
            -OTHER
      COMPREHENSIVE INCOME (LOSS)Foreign
      Currency Translation (Loss) Gain
            
            
            7,620
            
            
            
            73,406COMPREHENSIVE
      INCOME (LOSS)
            
            $
            (505,252
            )
            
            $
            330,306WEIGHTED
      AVERAGE COMMON SHARES OUTSTANDINGBasic
            
            
            142,288,894
            
            
            
            99,523,815Fully
      diluted
            
            
            142,288,894
            
            
            
            99,523,815NET
      LOSS PER COMMON SHAREBasic
            
            
            **
            
            
            
            **Fully
      diluted
            
            
            **
            
            
            
            ****
      Less than $.01The
      accompanying notes are an integral part of these financial
      statements.






- 6
-





The
audited Consolidated Statement of Cash Flows was not affected by the errors, but
is presented here as follows:





China
      Health Resource, Inc. and SubsidiaryAudited
      Consolidated Statement of Cash FlowsFor
      the Year Ended December 31, 2009 and 2008For
      the 12 months2009
            
            
            2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income after income tax
            
            $
            (555,705
            )
            
            $
            256,900Adjustments
      to reconcile net income tonet
      cash used in operating activities:Depreciation
            
            
            (28,385
            )
            
            
            48,260Amortization
      of prepaid expenses
            
            
            -
            
            
            
            -Due
      from related party
            
            
            -
            
            
            
            533,824Cancel
      Stock issued for lease contract
            
            
            0
            
            
            
            (1,965,256
            )Accounts
      receivable
            
            
            (447,371
            )
            
            
            58,360Employee
      Advances
            
            
            (11,892
            )
            
            
            5,347Other
      Receivable
            
            
            106,635
            
            
            
            48,814Bad
      debt provision
            
            
            -
            
            
            
            -Prepaid
      Expenses
            
            
            124,647
            
            
            
            1,641,413Inventory
            
            
            235,321
            
            
            
            (226,448
            )Notes
      receivable
            
            
            0
            
            
            
            -Intangible
      assets
            
            
            
            
            
            
            -Long
      term deferred assets
            
            
            
            
            
            
            -Accounts
      payable and accrued liabilities
            
            
            411,786
            
            
            
            116,268Notes
      payable
            
            
            
            
            
            
            -Other
      payable
            
            
            (202,699
            )
            
            
            38,061Others
            
            
            9,515
            
            
            
            10,877Tax
      payable
            
            
            72,319
            
            
            
            163,498NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
            
            
            (285,828
            )
            
            
            729,918CASH
      FLOWS FROM INVESTING ACTIVITIES:Issuance
      of Note Receivable
            
            
            
            
            
            
            -Notes
      Receivable Decrease (Increase)
            
            
            28,085
            
            
            
            (432,370
            )Disposal
      of property , plant, and equipment
            
            
            168,158
            
            
            
            -Purchase
      of property, plant, and equipment
            
            
            -
            
            
            
            (1,054
            )NET
      CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
            
            
            196,243
            
            
            
            (433,424
            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of short-term note
            
            
            -
            
            
            
            -Proceeds
      from shareholder loan
            
            
            -
            
            
            
            -Note
      Payable from unrelated Party
            
            
            -
            
            
            
            (304,530
            )Payments
      on short-term-note payable
            
            
            -
            
            
            
            -Capital
      contribution
            
            
            -
            
            
            
            -Retirement
      of common stock
            
            
            -
            
            
            
            -Proceeds
      from issuance of common stock
            
            
            -
            
            
            
            -Bonds
      payable
            
            
            -
            
            
            
            -NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            -
            
            
            
            (304,530
            )FOREIGN
      CURRENCY TRANSLATION
            
            
            6,299
            
            
            
            73,406NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            (83,286
            )
            
            
            65,370CASH
      AND CASH EQUIVALENTS:Beginning
      of period
            
            
            101,497
            
            
            
            36,127End
      of period
            
            $
            18,211
            
            
            $
            101,497SUPPLEMENTAL
      CASH FLOW INFORMATION:Common
      stock issued for settlement of certain accounts payable
            
            $
            -
            
            
            $
            -Common
      stock issued for services
            
            $
            -
            
            
            $
            -Cancellation
      of Notes Payable for purchase of land right
            
            $
            5,710,994
            
            
            $
            -The
      accompanying notes are an integral part of these financial
      statements.





- 7
-





As a
result of the Additional Errors described above, the audited Consolidated
Statement of Equity appearing in the 2009 10-K has been amended as
follows:








China
      Health Resource, Inc. and SubsidiaryAudited
      Consolidated Statement of EquityFor
      the years Ended December 31, 2009 and 2008AccumulatedOtherClass
      A
              Shares
            
            
            par
      value
              0.001
            
            
            Class
      B
              Shares
            
            
            par
      value
              0.01
            
            
            Paid-in
              Capital
            
            
            Earnings
            
            
            Comprehensive
              Income
            
            
            TotalBalances,
      December 31, 2007
            
            
            99,288,842
            
            
            $
            99,289
            
            
            
            2,000
            
            
            $
            20
            
            
            $
            3,089,069
            
            
            $
            (301,942
            )
            
            $
            76,117
            
            
            $
            2,962,553Issuance
      for lease of property
            
            
            43,000,000
            
            
            
            43,000
            
            
            
            
            
            
            
            
            
            
            
            22,000
            
            
            
            
            
            
            
            
            
            
            
            65,000Cancellation
      of Class B common stock
            
            
            -
            
            
            
            -
            
            
            
            (2,000
            )
            
            $
            (20
            )
            
            
            (1,965,237
            )
            
            
            -
            
            
            
            -
            
            
            
            (1,965,257
            )Net
      Income (Loss) for the period
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            256,900
            
            
            
            
            
            
            
            256,900Other
      comprehensive income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            73,406
            
            
            
            73,406Balances,
      December 31, 2008
            
            
            142,288,842
            
            
            
            142,289
            
            
            
            -
            
            
            
            -
            
            
            $
            1,145,832
            
            
            $
            (45,042
            )
            
            $
            149,523
            
            
            $
            1,392,602Proceed
      from shareholderFractional
      shares
            
            
            52
            
            
            $
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            -
            
            
            $
            -
            
            
            
            -
            
            
            
            -Net
      Income(Loss) for the period
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (512,872
            )
            
            
            -
            
            
            
            (512,872
            )Other
      comprehensive income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            7,620
            
            
            
            7,620Balances
      @ December 31, 2009
            
            
            142,288,894
            
            
            $
            142,289
            
            
            
            -
            
            
            $
            -
            
            
            $
            1,145,832
            )
            
            $
            (557,914
            )
            
            $
            157,143
            
            
            $
            887,350The
      accompanying notes are an integral part of these financial
      statements.





- 8
-





China
Health Resource, Inc. and Subsidiary


Notes
to Audited Financial Statements (revised)


For
the Years Ended December 31, 2009 and 2008





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.







- 9
-




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





Our
revenue recognition policies are in accordance with Staff Accounting Bulletin
No. 104. Sales revenue is recognized when all of the following have occurred:
(i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or
services have been rendered, (iii) the price is fixed or determinable, and (iv)
the ability to collect is reasonably assured. These criteria are generally
satisfied at the time of shipment when risk of loss and title passes to the
customer.





We
recognize revenue when the goods are delivered and title has passed. Sales
revenue represents the invoiced value of goods, net of a value-added tax
(“VAT”). All of our products that are sold in the PRC are subject to a Chinese
value-added tax at a rate of 17% of the gross sales price or at a rate approved
by the Chinese local government. This VAT may be offset by the VAT paid by us on
raw materials and other materials included in the cost of producing their
finished product.






- 10
-







Comprehensive Income
(Loss)





The
Company adopted Financial Accounting Standards Board Statement of Financial
Accounting Standards (SFAS) No. 130 (FASB ASC 220), “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.






- 11
-





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 valueBuilding
      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.





Income
Taxes





Income
taxes are provided in accordance with Statement of Financial Accounting
Standards (SFAS) No. 109 (FASB ASC 740), “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.






- 12
-





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
collectability 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
January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and
Disclosures (Topic 820) - Improving Disclosures about Fair Value
Measurements.” ASU 2010-06 requires new disclosures regarding transfers
in and out of the Level 1 and 2 and activity within Level 3 fair value
measurements and clarifies existing disclosures of inputs and valuation
techniques for Level 2 and 3 fair value measurements. ASU 2010-06 also includes
conforming amendments to employers’ disclosures about postretirement benefit
plan assets. The new disclosures and clarifications of existing disclosures are
effective for interim and annual reporting periods beginning after
December 15, 2009, except for the disclosure of activity within Level 3
fair value measurements, which is effective for fiscal years beginning after
December 15, 2010, and for interim periods within those years. The adoption
of this statement is not expected to have a material impact on our consolidated
financial position or results of operation.







- 13
-






In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
CodificationTM and the Hierarchy of Generally Accepted Accounting Principles - a
replacement of FASB Statement No. 162” (also issued as Accounting Standards Update “ASU”No. 2009-01). This standard establishes the FASB Accounting
Standards Codification as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in conformity with generally accepted
accounting principles. This standard is effective for financial statements
issued for interim and annual periods ending after September 15, 2009. The
adoption of ASU No. 2009-5 had no impact on the results of operations or
the financial position of the Company.





In August
2009, the FASB issued ASU No. 2009-5, “Fair Value Measurements and
Disclosures (Topic 820) - Measuring Liabilities at Fair Value.” ASU
No. 2009-5 provides clarification that in circumstances in which a quoted
price in an active market for the identical liability is not available, a
reporting entity is required to measure fair value using a valuation technique
that uses the quoted price of the identical liability when traded as an asset,
quoted prices for similar liabilities or similar liabilities when traded as
assets, or another valuation technique that is consistent with the principles of
ASC Topic 820. ASU No. 2009-5 is effective for the first reporting period
(including interim periods) beginning after issuance. The adoption of ASU
No. 2009-5 did not have a material impact on the results of operations or
financial position of the Company.





In May
2009, the FASB issued a new accounting standard (FASB ASC 855-10) on subsequent
events, which establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. This accounting standard establishes:
1) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements; 2) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements; and 3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. This accounting standard also requires
disclosure of the date through which an entity has evaluated subsequent events.
The adoption of this statement is not expected to have a material impact on our
consolidated financial position or results of operation.





In April
2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments,” (FASB ASC 320-10-65), which amends the
other-than-temporary impairment guidance in U.S. GAAP for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities in
the financial statements. This Staff Position was effective for interim and
annual reporting periods ending after June 15, 2009. The adoption of this
statement did not have an impact on the results of operations or the financial
position of the Company.






- 14
-





NOTE B - SUPPLEMENTAL CASH
FLOW INFORMATION





Supplemental
disclosures of cash flow information for the period ended December 31, 2009 and
2008 is summarized as follows:





Cash paid
during the period ended December 31, 2009 and 2008 for interest and income
taxes:





2009
            
            
            2008Income
      Taxes
            
            $
            -0-
            
            
            
            -0-Interest
            
            $
            69,508
            
            
            
            50,537





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, 2009 and
2008.





NOTE D - NOTE
RECEIVABLE





As of
December 31, 2008, the company has a note receivable from an unrelated-party
with a total balance due of $378,054. The note is due on December 30, 2009 with
interest payable quarterly at 10.395%. The loan is extended for another year
from December 31, 2009 to December 30, 2010 with the same interest and payment
schedule. As of December 31, 2009, the total balance due is
$350,312.





As of
December 31, 2009 & 2008, the company has no note receivable from any
related-party.








- 15
-





NOTE E - NOTES PAYABLE -
CURRENT AND LONG-TERM





As of
December 31, 2009 and 2008, notes payable consist of the following:





2009
            
            
            2008Secured
      note payable to an unrelated party.Bearing
      8.6625 % interest Principal payments due10/21/2010
      one payment of $ 234,322
            
            $
            234,322
            
            
            
            234,103Unsecured
      note payable –unrelated partyBearing
      2.4% interest Principal payment due10/31/2009
            
            
            
            
            
            
            178,670TOTAL
            
            $
            234,322
            
            
            
            412,773





Future
payments on note due as follow:





Before
      December 31, 2009
            
            
            234,322
            
            
            
            412,773TOTAL
            
            $
            234,322
            
            
            $
            412,773





NOTE F -
COMMITMENTS





During
2008 the company leased a warehouse for $2,043 per year, which expires on March
14, 2009. In 2009, this lease is renewed on similar terms.





The
Company leased its office space of approximately 1,100 sq feet for approximately
$440 per year, which expires May 21, 2010.





Future
      annual lease payments are as follows:May
      22, 2009 to May 21, 2010
            
            $
            440TOTAL
            
            $
            440







- 16
-




The
Company leased its office space of approximately 1,320 sq feet for approximately
$967 per year.  The lease expires in January 12, 2014. Total Rent
Expense for December 31, 2009 was $967.





Future
      annual lease payments are as follows:Year
      Ending December 31, 2009
            
            $
            9672010
            
            
            9672011
            
            
            9672012
            
            
            9672013
            
            
            9672014
            
            
            967TOTAL
            
            $
            5,802





NOTE G - RELATED-PARTY
TRANSACTIONS





The
former shareholders of the Company were Sichuan Suining Yinfa Resource
Development Group Co., Ltd., Suining Yinfa Construction Materials Company Ltd,
and Sichuan Yinfa Resource Development Co., Ltd. (the Yinfa 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 Yinfa
group from 2004 to January 20, 2006 are listed below:





The GAP
certificate is owned by the Yinfa Group, namely Sichuan Yinfa Resource
Development Co., Ltd. GAP is a quality standard for agricultural products such
as DAR.  The GAP certificate means that the company’s DAR meets a 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.









- 17
-





NOTE H -COMPREHENSIVE INCOME
(LOSS)





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, 2009 and 2008, total comprehensive income (loss) was
($505,252) and $330,306 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 a 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 and
increase sales.  In terms of operating profit and cash flow analysis,
the Company’s operating profit and cash flow are relatively poor compare to the
prior year’s data. The reasons are that the Company has cost a lot in
reorganizing the corporate operation, much higher cost of goods especially the
raw material cost and the transportation cost, relative low sales price,
tremendous increase of A/R, cancellation of stock issue for property lease. In
the future, the Company will have a capital expansion plan and sales promotion
plan which will give the advantage to the Company’s asset and profit
level.





NOTE J - INCOME
TAXES





The
Company conducts all its operating business through its subsidiary in China. The
subsidiary is governed by the income tax laws of the PRC and do not have any
deferred tax assets or deferred tax liabilities under the income tax laws of the
PRC because there are no temporary differences between financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
Company by itself does not have any business operating activities in the United
States and is therefore not subject to United States income tax.





The
Company’s subsidiaries are governed by the Income Tax Law of the People’s
Republic of China (“PRC”) concerning Foreign Investment Enterprises and Foreign
Enterprises and various local income tax laws (the “Income Tax Laws”).
 Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law has
replaced the previous laws for Domestic Enterprises (“DEs”) and Foreign Invested
Enterprises (“FIEs”). The new standard EIT rate of 25% has replaced the 33% rate
previously applicable to both DEs and FIEs.







- 18
-




Prior to
2008, under the Chinese Income Tax Laws, FIEs generally were subject to an
income tax at an effective rate of 33% (30% state income taxes plus 3% local
income taxes) on income as reported in their statutory financial statements
after appropriate tax adjustments unless the enterprise was located in specially
designated regions for which more favorable effective tax rates
apply.  Beginning January 1, 2008, China has unified the corporate
income tax rate on foreign invested enterprises and domestic enterprises. The
unified corporate income tax rate is 25%.





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.





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, 2009 is as
follows:





2009
            
            
            2008Net
      operating loss carry-forwards
            
            $
            200,755
            
            
            $
            0Valuation
      Allowance
            
            
            (200,755
            )
            
            
            (0
            )$
            0
            
            
            $
            0Prevailing
      PRC tax rate
            
            
            25
            %
            
            
            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 accrued income taxes as of December 31, 2009 and 2008 were $79,807 and
$149,635, respectively.







- 19
-








The
following table reconciles the U.S. statutory rate to the Company’s effective
tax rate:





Year Ended December 312009
            
            
            2008U.S.
      Statutory rate
            
            
            34
            %
            
            
            34
            %Foreign
      income not recognized in USA
            
            
            (34
            )
            
            
            (34
            )China
      income taxes
            
            
            25
            
            
            
            33Total
      provision for income taxes
            
            
            25
            %
            
            
            16
            %





The
Company applies SFAS 109, “Accounting for Income Taxes”, which requires
recognition of deferred income tax liabilities and assets for the expected
future tax consequences of temporary differences between the income tax basis
and financial reporting basis of assets and liabilities. The provision for
income taxes consist of taxes currently due plus deferred taxes. Because the
Company has no operations within the United States, there is no provision for US
income taxes and there are no deferred tax amounts as of December 31, 2009 and
2008.





The
charge for taxation is based on the results for the year as adjusted for items
that are non-assessable or disallowed. It is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date. Deferred
taxes are accounted for using the balance sheet liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the financial statements and the corresponding tax
basis used in the computation of assessable tax profit.  In principle,
deferred tax liabilities are recognized for all taxable temporary differences,
and deferred tax assets are recognized to the extent that it is probable that
taxable profit will be available against which deductible temporary differences
can be utilized.




Deferred
taxes are calculated at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled.  Deferred
taxes are charged or credited in the income statement, except when they relate
to items credited or charged directly to equity, in which case the deferred
taxes are also recorded in equity. Deferred tax assets and liabilities are
offset when they relate to income taxes levied by the same taxation authority
and the Company intends to settle its current tax assets and liabilities on a
net basis.




- 20
-






The
Company adopted FASB Interpretation 48, “Accounting for Uncertainty in Income
Taxes” (“FIN 48”), as of January 1, 2007. A tax position is recognized as a
benefit only if it is “more likely than not” that the tax position would be
sustained in a tax examination, with a tax examination being presumed to occur.
The amount recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on examination. For tax positions not meeting the
“more likely than not” test, no tax benefit is recorded. The adoption of FIN 48
had no affect on the Company’s financial statements.





Value added tax
(“VAT”)





Enterprises
or individuals who sell commodities, engage in repair and maintenance or import
or export goods in the PRC are subject to a value added tax in accordance with
the PRC laws. The value added tax standard rate is 17% of the gross sales price.
A credit is available whereby VAT paid on the purchases of semi-finished
products or raw materials used in the production of the Company’s products can
be used to offset the VAT due on the sales of the products.





NOTE K - PLANT AND
EQUIPMENT, NET





Plant and
equipment, net as of December 31, 2009 and 2008 consists of the
following:





2009
            
            
            2008Building
            
            $
            905,083
            
            
            $
            6,564,133Furniture,
      fixture and equipment
            
            
            54,474
            
            
            
            348,101959,557
            
            
            
            6,912,234Less:
      accumulated depreciation
            
            
            (126,507
            )
            
            
            (154,759
            )Plant
      and equipment, net
            
            $
            833,050
            
            
            $
            6,757,475





Depreciation
expense for the year ended December 31, 2009 and 2008 respectively was $30,049
and $48,260.







- 21
-





NOTE L -EQUITY
TRANSACTIONS





On
January 10, 2007, the Company issued 6,500,000 shares (pre-forward split) 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 and
$84,024 for the year ended December 31, 2008. As of December 31, 2008, the
balance of $59,647 is to be amortized on the straight-line method over the
remaining contract periods of seven months.





On
February 2, 2007, the Company issued 1,000,000 shares (pre-forward
split) 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
(pre-forward split) 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, exchanging one
(1) existing share 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 99,288,842 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 authorized the payment of 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.





On
December 15, 2008 the 2000 shares of Class B Common Stock shares were returned
to the company and the above lease contract was cancelled.





On
December 30, 2008 43,000,000 shares of Class A Common Stock shares were issued
as a partial payment for land usage rights and forestry rights (see note M) the
shares were valued at $65,000.





On April
15, 2009, the Company filed with the Delaware Secretary of State its Amended and
Restated Articles of Incorporation, which changed the Class A Common Stock par
value from $0.01 to $0.001, eliminated the Class B Common Stock, and authorized
to issue 50,000,000 shares of undesignated Preferred Stock, at par value of
$0.01.






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NOTE M –NOTE
PAYABLE-CONVERTIBLE DEBT





On
December 30, 2008 the Company issued a convertible note to an un-related party
for the purchase of land usage rights and forestry rights to 3,261.79 acres
valued at $5,775,994. The Note has a stated simple interest rate of 1.5% per
year.  Interest is payable upon conversion dates.  The note
has fixed conversion dates, share prices as follows:





On March
30, 2009 the company planned to issue 12,500,000 shares valued at $.20 per share
total $2,500,000.





On
December 30, 2009 the company planned to issue 2,500,000 shares valued at $.40
per share total $1,000,000





On March
30, 2010 the company will issue 1,000,000 shares valued at $1.00 per share total
$1,000,000





On
December 30, 2010 the company will issue 807,329 shares valued at $1.50 per
share total $1,210,994





Current
      portion of Note
            
            $
            3,500,000Non
      Current portion of Note
            
            
            2,210,994Total
      Note Payable
            
            $
            5,710,994





On
December 19 2009, the total Note payable-convertible debt with interest was
cancelled under the decision of the management board meeting. The scheduled
issuance in 2009 has never been issued.





NOTE N – DEBT
FORGIVENESS





The
Company has an unsecured note payable to an unrelated party bearing 2.4%
interest with principal payment due on 10/31/2009. As of December 31, 2008, the
total balance due is $178,670. In 2009, the lender forgave the debt, and the
total unpaid principal balance plus accrued interest is $117,893.








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NOTE O - CONCENTRATION AND
RISK
 
  (a) Major
customers
  For the
year ended December 31, 2009, 100% of the Company’s assets were located in the
PRC and 100% of the Company’s revenues and purchases were derived from customers
and vendors located in the PRC.
  The
Company had two customer that individually comprised 84% and 10% of net revenue
for the year ended December 31, 2009, respectively.
  As of
December 31, 2009
  Customers
              
              
              Revenues
              
              
              
              
              
              
              Accounts
                ReceivableCustomer
      A
              
              
              $
              3,595,368
              
              
              
              84
              %
              
              
              $
              752,877
              
              
              
              85
              %Customer
      B
              
              
              
              423,265
              
              
              
              10
              %
              
              
              
              63,167
              
              
              
              7
              %Total:
              
              $
              4,018,633
              
              
              
              94
              %
              Total:
              
              $
              816,044
              
              
              
              92
              %
 
 (b)   Credit
risk
  Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and trade accounts receivable. The
Company performs ongoing credit evaluations of its customers' financial
condition, but does not require collateral to support such
receivables.
  NOTE P - SUBSEQUENT
EVENTS
 
 None. The
Company has evaluated subsequent events through April 14, 2010, the date
that the financial statements were available to be issued, and no such events
have occurred.





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PART
II, ITEM 9A(T): CONTROLS AND PROCEDURES





Evaluation of Disclosure
Controls and Procedures (As Revised)





We
maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"))
that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required
disclosure.





In
connection with the Restatement described in the Explanatory Note, our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, re-evaluated the effectiveness of our disclosure controls and
procedures and determined that there was a material weakness in our internal
control over financial reporting as of December 31, 2009 as more fully described
below. A material weakness is a deficiency, or combination of deficiencies, such
that there is a reasonable possibility that a material misstatement of the
annual or interim financial statements will not be prevented or detected on a
timely basis.





Based on
the re-evaluation and because of the material weakness in internal control, our
Chief Executive Officer and Chief Financial Officerhave concluded that the
Company's disclosure controls and procedures were not effective as of December
31, 2009.





As of the
date of the filing of this report, we have remedied this deficiency in our
disclosure controls and procedures by implementing additional controls and
procedures, as described below, designed to ensure completeness and more
effective control over disclosures.





Management's Report on
Internal Control Over Financial Reporting (As Revised)





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act).  Internal control over financial reporting is a process
designed by, or under the supervision of, our Chief Executive Officer and our
Chief Financial Officer and effected by our Board of Directors and management to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles in the United States of America
("GAAP").





Our
internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the Company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the Company's assets that could
have a material effect on the financial statements.






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In
connection with the Restatement described in the Explanatory Note, our
management, with the participation of our Chief Executive Officer and our Chief
Financial Officer, re-assessed the effectiveness of our internal control over
financial reporting as of December 31, 2009. Management’s re-assessment of
internal control over financial reporting was conducted using the criteria
in Internal
Control — Integrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”).  In
performing the re-assessment, our management concluded that, as of
December 31, 2009, our internal control over financial reporting was not
effective to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting
purposes in accordance with GAAP because of the lack of segregation of duties in
financial reporting, as our financial reporting and all accounting functions are
performed by the Chief Financial Officer with no oversight by another
internal professional with accounting expertise. Our President does possess
accounting expertise but our Board of Directors does not have an audit
committee. This material weakness is due to the company's lack of working
capital to hire additional staff.





As of the
date of the filing of this report, we have remedied the material weakness in our
internal control over financial reporting and the deficiencies in our disclosure
controls and procedures by implementing additional controls and procedures, as
described below.





We
reviewed the results of management’s assessment with our Board of Directors and
our independent registered public accounting firm, Lake & Associates, CPA’s
LLC.





Changes in Internal Control
Over Financial Reporting





There was
no change in our internal control over financial reporting that occurred during
the period covered by this report that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.  During the second quarter of 2010, certain remedial
efforts to address the material weakness in our internal control and deficiency
in our disclosure controls and procedures have been undertaken, or will be
undertaken, as described below.





Remediation





Subsequent
to April 15, 2010 through the filing date of this report, we have undertaken or
will undertake the following remedial efforts to address the material weakness
in our internal control over financial reporting and deficiencies in our
disclosure controls and procedures:





·
            We
      have hired an accountant experienced with GAAP and related reporting
      requirements to assist the Chief Financial Officer with the preparation of
      the Company's financial statements.


·
            We
      intend to raise additional capital to hire additional accountant staff
      where needed to assist with financial reporting as soon as our finances
      will allow.


·
            We
      have implemented a revised review process by using the internal control
      worksheet we developed to insure that disclosure of all required
      information is included in future company regulatory
    filings.


·
            We
      have provided guidance and additional training to the Chief Financial
      Officer regarding the appropriate accounting treatment for complex
      transactions of the type involved in the Restatement and the proper
      recording of changes in the Company's capital
  stock.


·
            We
      have hired additional, outside consultants and accounting professionals to
      assist management with the preparation of financial statements to be
      included in reports required under U.S. securities
  law.


·
            The
      Company's outside consultants and Lake & Associates, CPA’s LLC, the
      Company’s independent registered public accounting firm, have reviewed
      applicable reporting obligations required under U.S. securities law with
      the Chief Financial Officer and other members of senior management and
      have developed an internal control worksheet designed to ensure that
      required disclosures are made on a timely
basis.






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Inherent Limitations on the
Effectiveness of Internal Controls





A system
of internal control over financial reporting is intended to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements in accordance with GAAP; however no control system, no
matter how well designed and operated, can provide absolute assurance that
financial statement errors and misstatements will be prevented or detected.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any within the Company, have been
detected.





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 SEC that permit us to provide
only management's report in this annual report.






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SIGNATURES





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





CHINA
      HEALTH RESOURCE, INC.By: 
      /s/    Wang,
      Jiayin
            Date:  July
      15, 2010Wang,
      JiayinPresident





Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated





Signature
            Title
            Date/s/ Jiang,
      Chen
            Chief
      Executive Officer and Director
            July
      15, 2010Chen,
      Jiang
            (Principal
      Executive Officer)/s/ Zhou,
      Yi
            Chief
      Financial Officer and Director
            July
      15, 2010Zhou,
      Yi
            (Principal
      Financial Officer)/s/ Wang,
      Jiayin
            President
      and Director
            July
      15, 2010Wang,
      Jiayin/s/ Wang,
      Bing
            Director
            July
      15, 2010Wang,
      Bing/s/ Wang,
      Geiwi
            Director
            July
      15, 2010Wang,
      Geiwi








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-





CHINA
HEALTH RESOURCE, INC.


(the
“Registrant”)


(Commission
File No. 000-50029)


Exhibit Index


to


2009
ANNUAL REPORT ON FORM 10-K/A





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.














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