UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 001-33269
 CHINA HEALTHCARE ACQUISITION CORP.
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    20-5013347
(IRS Employer
Identification No.)
 1233 Encino Drive
Pasadena, CA 91108    (626) 568-9924
 þ o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ  þ o




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CHINA HEALTHCARE ACQUISITION CORP.
TABLE OF CONTENTS
 PagePART 1  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)
    
    
    2Balance Sheets
    
    
    2Statements of Operations
    
    
    3Statements of Stockholders  Equity
    
    
    4Statements of Cash Flows
    
    
    5Notes to Financial Statements
    
    
    6Item 2.
    
    Management Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    17Item 4T.
    
    Controls and Procedures
    
    
    18PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    19Item 1A.
    
    Risk Factors
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3.
    
    Defaults Upon Senior Securities
    
    
    19Item 4.
    
    Submission of Matters to a Vote of the Security Holders
    
    
    19Item 5.
    
    Other Information
    
    
    19Item 6.
    
    Exhibits
    
    
    20SIGNATURE
    
    
    22INDEX TO EXHIBITS
    
    
    23Certification by Chief Executive Officer Pursuant to Section 302Certification by Chief Financial Officer Pursuant to Section 302Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  1




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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
 BALANCE SHEETS
 
 Item 1. Financial Statements
 September 30,2008
    
    
    December 31,(Unaudited)
    
    
    2007ASSETSCurrent AssetsCash
    
    $
    946,868
    
    
    $
    850,870Cash in Trust
    
    
    57,457,446
    
    
    
    57,489,612Prepaid expense
    
    
    35,628
    
    
    
    51,375Prepaid federal income tax
    
    
    25,325
    
    
    
    Total Current Assets
    
    
    58,465,267
    
    
    
    58,391,857Fixed Asset Net of Depreciation
    
    
    6,659
    
    
    
    4,744TOTAL ASSETS
    
    $
    58,471,926
    
    
    $
    58,396,601LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable and accrued expenses
    
    $
    43,271
    
    
    $
    9,381Due to stockholder
    
    
    85,520
    
    
    
    4,245Deferred underwriting fees
    
    
    2,133,867
    
    
    
    2,133,867Taxes Payable
    
    
    9,413
    
    
    
    79,339Notes payable to stockholder
    
    
    
    
    
    
    150,000TOTAL LIABILITIES
    
    
    2,272,071
    
    
    
    2,376,832Common stock, subject to possible redemption, 1,949,335 shares at
redemption value, and interest subject to possible redemption
    
    
    11,167,879
    
    
    
    11,029,265COMMITMENTSSTOCKHOLDERS EQUITYPreferred stock  $.0001 par value; 1,000,000 authorized;
0 issued and outstanding
    
    
    
    
    
    
    Common stock  $.0001 par value; 50,000,000 shares
authorized; 11,876,555 issued and outstanding (which
include 1,949,335 shares subject to possible redemption)
    
    
    1,188
    
    
    
    1,188Additional paid-in capital
    
    
    44,074,106
    
    
    
    44,074,106Income accumulated during the development stage
    
    
    956,682
    
    
    
    915,210TOTAL SHAREHOLDERS EQUITY
    
    
    45,031,976
    
    
    
    44,990,504TOTAL LIABILITIES & STOCKHOLDERS EQUITY
    
    $
    58,471,926
    
    
    $
    58,396,601
  2




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##### 



CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
Statement of Operations
(Unaudited)
 Period fromJune 7, 2006Three Months
    
    Three Months
    
    Nine Months
    
    Nine Months
    
    (inception) toEnded
    
    Ended
    
    Ended
    
    Ended
    
    September 30,September 30,
    
    September 30,
    
    September 30,
    
    September 30,
    
    20082008
    
    2007
    
    2008
    
    2007
    
    (Cumulative)Interest Income
    
    $
    167,710
    
    
    $
    690,700
    
    
    $
    736,101
    
    
    $
    1,200,684
    
    
    $
    2,535,570Formation and operating costs
    
    
    166,968
    
    
    
    113,830
    
    
    
    615,604
    
    
    
    174,503
    
    
    
    959,053Delaware franchise tax
    
    
    15,688
    
    
    
    16,733
    
    
    
    47,063
    
    
    
    47,773
    
    
    
    111,010Income before provision for
income taxes
    
    
    (14,946
    )
    
    
    560,137
    
    
    
    73,435
    
    
    
    978,408
    
    
    
    1,465,507Provision for income taxes
    
    
    237
    
    
    
    223,127
    
    
    
    31,963
    
    
    
    392,599
    
    
    
    508,826Net income
    
    $
    (15,183
    )
    
    $
    337,010
    
    
    $
    41,472
    
    
    $
    585,809
    
    
    $
    956,680Net income per share (basic
and diluted)
    
    $
    0.00
    
    
    $
    0.03
    
    
    $
    0.00
    
    
    $
    0.07
    
    
    $
    0.12Weighted average number of
shares outstanding (basic
and diluted)
    
    
    11,876,555
    
    
    
    11,876,555
    
    
    
    11,876,555
    
    
    
    7,848,811
    
    
    
    8,311,151
  3




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##### 



CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
Statement of Stockholders Equity
(Unaudited)
  Income (deficit)accumulated during
    
    TotalCommon Stock
    
    Additional
    
    the
    
    StockholdersShares
    
    Amount
    
    paid-in Capital
    
    development stage
    
    EquityIssuance of common stock to founders and
insiders on June 7, 2006 at $.01 per share
    
    
    2,500,000
    
    
    $
    250
    
    
    $
    24,750
    
    
    $
    
    
    
    $
    25,000Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,000
    )
    
    
    (3,000
    )Balance at December 31, 2006
    
    
    2,500,000
    
    
    
    250
    
    
    
    24,750
    
    
    
    (3,000
    )
    
    
    22,000Surrender and cancellation of 375,000 shares
of common stock by initial stockholders on
January 24, 2007
    
    
    (375,000
    )
    
    
    (37
    )
    
    
    37
    
    
    
    
    
    
    
    Sale of 3,000,000 private placement warrants
to the Chairman of the Board of Directors on
April 25, 2007
    
    
    
    
    
    
    
    
    
    
    1,500,000
    
    
    
    
    
    
    
    ,500,000Sale of 8,500,000 units, net of underwriters
discount and offering expenses (1,699,150
shares subject to possible redemption)
on April 25, 207
    
    
    8,500,000
    
    
    
    850
    
    
    
    46,407,199
    
    
    
    
    
    
    
    46,408,049Proceeds from issuance of underwriters option
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100Sale of 1,251,555 units, underwriters over-allotment option, net of underwriters discount
(250,185 shares subject to possible redemption)
on May 9, 2007
    
    
    1,251,555
    
    
    
    125
    
    
    
    7,171,285
    
    
    
    
    
    
    
    7,171,410Proceeds subject to possible redemption
of 1,949,335 shares
    
    
    
    
    
    
    
    
    
    
    (11,029,265
    )
    
    
    
    
    
    
    (11,029,265
    )Net income for the twelve months ended
December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    918,210
    
    
    
    918,210Balance at December 31, 2007
    
    
    11,876,555
    
    
    
    1,188
    
    
    
    44,074,106
    
    
    
    915,210
    
    
    
    44,990,504Unaudited:Net income for the nine months ended
September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,472
    
    
    
    41,472Balance at September 30, 2008
    
    
    11,876,555
    
    
    $
    1,188
    
    
    $
    44,074,106
    
    
    $
    956,682
    
    
    $
    45,031,976
  4




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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
Statement of Cash Flows
(Unaudited)
 Period fromJune 7, 2006(inception) toNine Months Ended
    
    
    Nine Months Ended
    
    
    September 30, 2008September 30, 2008
    
    
    September 30, 2007
    
    
    (cumulative)Cash flows from operating activities:Net income
    
    $
    41,472
    
    
    $
    585,809
    
    
    
    956,682Adjustments to reconcile net income to
net cash used in operating activities:Depreciation
    
    
    225
    
    
    
    125
    
    
    
    425Deferred tax
    
    
    
    
    
    
    (66,545
    )
    
    
    Changes in:Accrued expenses
    
    
    33,891
    
    
    
    17,130
    
    
    
    43,272Tax payable
    
    
    (95,251
    )
    
    
    313,947
    
    
    
    (15,912
    )Prepaid expense
    
    
    15,747
    
    
    
    (69,856
    )
    
    
    (35,628
    )Interest earned on investment held in Trust Account
    
    
    (862,478
    )
    
    
    (1,194,107
    )
    
    
    (2,647,476
    )Interest subject to possible redemption
    
    
    138,614
    
    
    
    
    
    
    
    138,614Net cash used in operating activities:
    
    
    (727,779
    )
    
    
    (413,497
    )
    
    
    (1,560,022
    )Cash flows from investing activities:Cash held in Trust fund
    
    
    
    
    
    
    (57,307,802
    )
    
    
    (57,307,802
    )Disbursements from trust account
    
    
    894,643
    
    
    
    972,575
    
    
    
    2,497,831Purchase fixed asset
    
    
    (2,141
    )
    
    
    (4,944
    )
    
    
    (7,085
    )Net cash provided by (used in) investing activities:
    
    
    892,502
    
    
    
    (56,340,171
    )
    
    
    (54,817,056
    )Cash flows from financing activities:Gross proceeds from issuance of common stock
    
    
    
    
    
    
    58,509,330
    
    
    
    58,534,330Gross proceeds from issuance of warrants
    
    
    
    
    
    
    1,500,000
    
    
    
    1,500,000Proceeds from underwriters purchase option
    
    
    
    
    
    
    100
    
    
    
    100Payment (to) Proceeds from stockholders note payable
    
    
    (150,000
    )
    
    
    
    
    
    
    150,000Increase (Decrease) in due to stockholder
    
    
    81,275
    
    
    
    
    
    
    
    (68,725
    )Payment of costs of public offering
    
    
    
    
    
    
    (2,673,353
    )
    
    
    (2,796,004
    )Advance from shareholders
    
    
    
    
    
    
    3,094
    
    
    
    4,245Net cash provided by (used in) financing activities:
    
    
    (68,725
    )
    
    
    57,339,171
    
    
    
    57,323,946Net increase in cash
    
    
    95,998
    
    
    
    585,503
    
    
    
    946,868Beginning balance
    
    
    850,870
    
    
    
    49,349
    
    
    
    Ending balance
    
    $
    946,868
    
    
    $
    634,852
    
    
    $
    946,868Supplemental Schedule of Non Cash Financing Activities:Accruals of deferred underwriters fees
    
    $
    2,133,867
    
    
    $
    2,133,867
    
    
    $
    2,133,867
  5




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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
 NOTES TO FINANCIAL STATEMENTS
September 30, 2008
 Note 1  Introduction
 Interim Financial Information
 Company CHAC
 These unaudited financial statements should be read in conjunction with the Form 10-K
filed with the Securities and Exchange Commission (the SEC) on March 27, 2008. The accounting
policies used in preparing these unaudited financial statements are consistent with those
described in such filing. The December 31, 2007 balance sheet has been derived from the Companys
audited financial statements.
 Organization and Business Operation
  Units Private Placement
 6




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Business
Combination
 Trust Account government securities Initial
Stockholders Public Stockholders
  7




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Note 2  Summary of Significant Accounting Policies
 Concentration of Credit Risk
  Use of Estimates
  Recent Accounting Standards
 Business
Combinations
 SFAS 141R
 
    
    Acquisition costs will be generally expensed as incurred;
 
    
    Noncontrolling interests (formerly known as minority interests
see SFAS 160
 8




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discussion below) will be valued at fair value at the
acquisition date;
 
    
    Acquired contingent liabilities will be recorded at fair value at the
acquisition date and subsequently measured at either the higher of
such amount or the amount determined under existing guidance for
non-acquired contingencies;
 
    
    In-process research and development will be recorded at fair value as
an indefinite-lived intangible asset at the acquisition date;
 
    
    Restructuring costs associated with a business combination will be
generally expensed subsequent to the acquisition date; and
 
    
    Changes in deferred tax asset valuation allowances and income tax
uncertainties after the acquisition date generally will affect income
tax expense.
  Noncontrolling
Interests in Consolidated Financial Statements  An Amendment of
ARB No. 51
 SFAS 160
 Net Income (loss) per share
  9




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Deferred Income Taxes
  Note 3  Notes Payable to Stockholder
  Note 4  Stockholders Equity
  Note 5  Initial Public Offering
  10




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Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Companys Own Stock.
    11




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Note 6  Commitments
    12




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Note 7Income Taxes
  Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007Current:Federal taxes
    
    $
    29,676
    
    
    $
    357,338State taxes
    
    
    2,287
    
    
    
    101,806Deferred taxes
    
    
    
    
    
    
    (66,545
    )Total provision for income taxes
    
    $
    31,963
    
    
    $
    392,599
  Note 8 Subsequent Events
 EAHE
 13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   EAHE China
  Results of Operations
 Net Income
  Changes In Financial Condition
 14




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Liquidity and Capital Resources
     
    
    Payment of the purchase price for the business combination;
 
    
    Payment of the non-accountable expense allowance and the deferred
portion of the underwriting discount due to the underwriters;
 
    
    Payment of any finders fees or professional fees and costs; and
 
    
    Payment of any fees and costs the Company may incur in connection with
any equity or debt financing relating to the business combination.
   15




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
    
    approximately $200,000 for legal, accounting and other expenses attendant to the
structuring and negotiating of a business combination;
 
    
    approximately $300,000 for the due diligence and investigation of a target business;
 
    
    approximately $115,000 in legal and accounting fees relating to our SEC reporting
obligations;
 
    
    approximately $120,000 in fees relating to our office space and certain general and
administrative services;
 
    
    approximately $240,000 for travel, general working capital that will be used for
miscellaneous expenses and reserves, including for director and officer liability
insurance premiums, deposits, down payments and/or funding of a no shopprovision
in connection with a prospective business transaction and for international travel
with respect to negotiating and finalizing a business combination; and
 
    
    approximately $75,000 for a reserve for liquidation expenses.
     16




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Off-Balance Sheet Arrangements
   Contractual Obligations
  Forward Looking Statements
 Securities Act Exchange Act may, should, could, would, expect, plan, anticipate, believe,
estimate, continue, Risk Factors SEC Risk Factors
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  17




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Item 4. Controls and Procedures
    18




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of the Security Holders
  
 Item 5. Other Information
  19




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Item 6. Exhibits
 Number
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation**3.2
    
    Amended and Restated Bylaws**4.1
    
    Specimen Unit Certificate**4.2
    
    Specimen Common Stock Certificate**4.3
    
    Specimen Warrant Certificate**4.5
    
    Form of Warrant Agreement between American Stock Transfer & Trust
Company and the Registrant**4.6
    
    Form of Underwriters Purchase Option**10.1(a)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and Jack Kang**10.1(b)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and Alwin Tan**10.1(c)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and Steven Wang**10.1(d)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and Mark Tan**10.1(e)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and Larry Liou**10.1(f)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and James Ma**10.1(g)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and Stanley Chang**10.1(h)
    
    Letter Agreement among the Registrant, Ferris, Baker Watts,
Incorporated and Ron Harrod**10.2
    
    Form of Investment Management Trust Agreement between American
Stock Transfer & Trust Company and the Registrant**10.3
    
    Form of Stock Escrow Agreement between the Registrant, American
Stock Transfer & Trust Company and the Initial Stockholders**10.4
    
    Form of Letter Agreement between NCIL and the Registrant regarding
administrative support**10.5
    
    Advance Agreement between the Registrant and Jack Kang**10.6
    
    Form of Registration Rights Agreement among the Registrant, the
Initial Stockholders and Ferris, Baker Watts, Incorporated**10.7
    
    Warrants Placement Agreement**10.8
    
    Form of Letter Agreement between the Registrant, Jack Kang and
Ferris, Baker Watts, Incorporated**10.9
    
    Stock Purchase Agreement among Registrant, Europe Asia Huadu Environment Holding,
Pte Ltd, Teambest International, Ltd and Wang Lahua dated
August 6, 2008***10.10
    
    Termination Agreement dated as November 10, 2008 by and among
Europe Asia Huadu Environment Holdings, Pte Ltd, Wang Lahua,
Teambest International, Ltd and China Healthcare Acquisition Corp
****31.1
    
    Certification by Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002*31.2
    
    Certification by Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002*
 20




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Number
    
    Description32.1
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*32.2
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002* 
 *
    
    Filed herewith**
    
    Incorporated by reference to the exhibits of the same number filed with the Registrants Registration Statement on Form S-1 or amendments thereto (File No. 333-135705)***
    
    Incorporated by reference to Registrants Current Report on Form 8-K filed August 11, 2008****
    
    Incorporated by reference to Registrants Current Report on Form 8-K filed November 13, 2008
 21




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SIGNATURES
  CHINA HEALTHCARE ACQUISITION CORP.Date: November 14, 2008
    By:
    /s/ Alwin TanAlwin TanChief Executive Officer and PresidentBy:
    /s/ Steven WangSteven WangVice President and Treasurer
Chief Financial Officer 22




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##### 



INDEX TO EXHIBITS
 Number
    
    Description31.1
    
    Certification by Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 200231.2
    
    Certification by Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 200232.1
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002