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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 June 30, 2007
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    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
(I.R.S. Employer Identification No.)1233 Encino DrivePasadena, CA
    
    91108(Address of principal executive offices)
    
    (Zip Code)
 (626) 568-9924
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CHINA HEALTHCARE ACQUISITION CORPORATION
 Table of Contents
 PagePART I  FINANCIAL INFORMATIONItem 1. Condensed Financial Statements (unaudited)Condensed Balance Sheets
    
    
    3Condensed Statements of Operations
    
    
    4Condensed Statements of Stockholders Equity
    
    
    5Condensed Statements of Cash Flows
    
    
    6Notes to Condensed Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    15PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    16Item 3. Defaults upon Senior Securities
    
    
    16Item 4. Submission of Matters to a Vote of the Security Holders
    
    
    16Item 5. Other Information
    
    
    16Item 6. Exhibits
    
    
    17SIGNATURES
    
    
    18INDEX TO EXHIBITS
    
    
    19Certification by Principal Executive Officer Pursuant to Section 302Certification by Principal Financial Officer Pursuant to Section 302Certification by Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906
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Item 1. Financial Statements
 CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
 BALANCE SHEET
 Unaudited
    
    
    December 31,June 30, 2007
    
    
    2006Current AssetsCash
    
    $
    300,170
    
    
    $
    49,349Cash in Trust
    
    
    57,539,883
    
    
    
    Prepaid expense
    
    
    13,438
    
    
    
    Total Current Assets
    
    
    57,853,491
    
    
    
    49,349Fixed Asset Net of Depreciation
    
    
    1,479
    
    
    
    Deferred tax asset, net
    
    
    21,315
    
    
    
    Deferred offering costs
    
    
    
    
    
    
    331,479TOTAL ASSETS
    
    $
    57,876,285
    
    
    $
    380,828LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccrued expenses
    
    $
    19,788
    
    
    $
    208,828Due to stockholder
    
    
    1,245
    
    
    
    Deferred underwriting fees
    
    
    2,133,867
    
    
    
    Taxes payable
    
    
    221,027
    
    
    
    Notes payable to stockholder
    
    
    150,000
    
    
    
    150,000TOTAL LIABILITIES
    
    
    2,525,927
    
    
    
    358,828Common Stock, subject to possible redemption, 1,949,335
shares at redemption value
    
    
    11,029,265
    
    
    
    COMMITMENTSSTOCKHOLDERS 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)
and 2,500,000 shares, respectively
    
    
    1,188
    
    
    
    250Additional paid-in capital
    
    
    44,074,106
    
    
    
    24,750Income (deficit) accumulated during the development stage
    
    
    245,799
    
    
    
    (3,000
    )Total Stockholders Equity
    
    
    44,321,093
    
    
    
    22,000TOTAL LIABILITIES & STOCKHOLDERS EQUITY
    
    $
    57,876,285
    
    
    $
    380,828
  3




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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
 Period fromPeriod from
    
    
    
    
    
    
    June 7, 2006Three Months
    
    
    June 7, 2006
    
    
    Six Months
    
    
    (inception) toEnded
    
    
    (inception) to
    
    
    Ended
    
    
    June 30, 2007June 30, 2007
    
    
    June 30, 2006
    
    
    June 30, 2007
    
    
    (Cumulative)Interest Income
    
    $
    509,971
    
    
    $
    
    
    
    $
    509,984
    
    
    $
    509,984Formation and operating costs
    
    
    60,653
    
    
    
    3,000
    
    
    
    60,673
    
    
    
    63,673Delaware franchise tax
    
    
    31,040
    
    
    
    
    
    
    
    31,040
    
    
    
    31,040Income (loss) before
provision for income taxes
    
    
    418,278
    
    
    
    (3,000
    )
    
    
    418,271
    
    
    
    415,271Provision for income taxes
    
    
    169,472
    
    
    
    
    
    
    
    169,472
    
    
    
    169,472Net income (loss)
    
    $
    248,806
    
    
    $
    (3,000
    )
    
    $
    248,799
    
    
    $
    245,799Net income (loss) per share
(basic and diluted)
    
    $
    0.03
    
    
    $
    0.00
    
    
    $
    0.04
    
    
    $
    0.06Weighted average number of
shares outstanding (basic
and diluted)
    
    
    9,756,471
    
    
    
    2,500,000
    
    
    
    5,967,306
    
    
    
    4,113,322
  4




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CHINA HEALTHCARE ACQUISITION CORP.
 (a development stage company)
 CONDENSED STATEMENT OF STOCKHOLDERS EQUITY
 For the period from June 7, 2006 (inception) to June 30, 2007
 Income (deficit)Common Stock
    
    
    Additional
    
    
    accumulated during the
    
    
    Total 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
    
    
    
    
    
    
    
    
    
    
    1,500,000
    
    
    
    
    
    
    
    1,500,000Sale of 8,500,000 units,
net of underwriters
discount and offering
expenses (1,699,150 shares
subject to possible
redemption)
    
    
    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)
    
    
    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
    )Unaudited:Net income
for the six months ended June 30,
2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248,799
    
    
    
    248,799Balance at June 30, 2007
    
    
    11,876,555
    
    
    $
    1,188
    
    
    $
    44,074,106
    
    
    $
    245,799
    
    
    $
    44,321,093
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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 Period fromPeriod from
    
    
    June 7, 2006Six Months
    
    
    June 7, 2006
    
    
    (inception) toEnded
    
    
    (inception) to
    
    
    June 30, 2007June 30, 2007
    
    
    June 30, 2006
    
    
    (cumulative)Cash flows from operating activities:Net income
    
    $
    248,799
    
    
    $
    (3,000
    )
    
    $
    245,799Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:Depreciation
    
    
    49
    
    
    
    
    
    
    
    49Deferred tax
    
    
    (21,315
    )
    
    
    
    
    
    
    (21,315
    )Changes in:Accrued Expense Payable
    
    
    9,788
    
    
    
    
    
    
    
    9,788Tax payable
    
    
    221,027
    
    
    
    
    
    
    
    221,027Prepaid expense
    
    
    (13,438
    )
    
    
    
    
    
    
    (13,438
    )Interest Accrued on Money Market Trust
Account
    
    
    (508,631
    )
    
    
    
    
    
    
    (508,631
    )Net Cash provided (used) in operating activities:
    
    
    (63,721
    )
    
    
    (3,000
    )
    
    
    (66,721
    )Cash flows from investing activities:Cash held in Trust fund
    
    
    (57,307,802
    )
    
    
    
    
    
    
    (57,307,802
    )Disbursements
from Trust
    
    
    276,550
    
    
    
    
    
    
    
    276,550Purchase
of fixed asset net of Depreciation
    
    
    (1,529
    )
    
    
    
    
    
    
    (1,529
    )Net cash used in investing activities
    
    
    (57,032,781
    )
    
    
    
    
    
    
    (57,032,781
    )Cash flows from financing activities:Gross proceeds from issuance of common stock
    
    
    51,000,000
    
    
    
    25,000
    
    
    
    51,025,000Gross proceeds from issuance of warrants
    
    
    1,500,000
    
    
    
    
    
    
    
    1,500,000Underwriters purchase option
    
    
    100
    
    
    
    
    
    
    
    100Gross proceeds from issuance of common stock
    
    
    7,509,330
    
    
    
    
    
    
    
    7,509,330Proceeds from stockholders note payable
    
    
    150,000
    
    
    
    150,000
    
    
    
    300,000Repayment of stockholders note payable
    
    
    (150,000
    )
    
    
    
    
    
    
    (150,000
    )Payment of costs of public offering
    
    
    (2,663,352
    )
    
    
    (55,100
    )
    
    
    (2,786,003
    )Advances from shareholder
    
    
    1,245
    
    
    
    
    
    
    
    1,245Net cash provided by financing activities
    
    
    57,347,325
    
    
    
    119,900
    
    
    
    57,399,672Net increase in cash
    
    
    250,821
    
    
    
    116,900
    
    
    
    300,170Beginning balance
    
    
    49,349
    
    
    
    Ending balance
    
    $
    300,170
    
    
    $
    116,900
    
    
    $
    300,170Supplemental Schedule of Non Cash Financing ActivitiesAccruals of offering cost
    
    $
    10,000
    
    
    $
    4,143
    
    
    $
    10,000Accruals of deferred underwriters fees
    
    
    2,133,867
    
    
    
    
    
    
    
    2,133,867Total
    
    $
    2,143,867
    
    
    $
    4,143
    
    
    $
    2,143,867
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CHINA HEALTHCARE ACQUISITION CORP.
 (A Development Stage Company)
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 June 30, 2007
 Note 1  Interim Financial Information
   Note 2  Summary of Significant Accounting Policies
 Nature of Business
  Development stage company
   7




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Concentration of Credit Risk
  8




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Use of estimates
  Recent Accounting Standards
   Net loss per share
   Deferred Income Taxes
  Note 3  Notes Payable to Stockholder
  Note 4  Stockholders Equity
  9




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Note 5 Initial Public Offering
  Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Companys Own Stock.
   10




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Note 6  Commitments
     Note 7  Income Taxes
  June 30, 2007
    
    
    December 31, 2006Current:Federal taxes
    
    $
    148,448
    
    
    $
    State taxes
    
    
    42,339
    
    
    
    Deferred:Federal taxes
    
    
    (21,315
    )
    
    
    Total provision for income taxes
    
    $
    169,472
    
    
    $
    
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June 30, 2007
    
    
    December 31, 2006Expenses deferred for income tax purposes
    
    $
    24,973
    
    
    $
    1,000Valuation allowance
    
    
    (3,658
    )
    
    
    (1,000
    )Total deferred tax asset
    
    $
    21,315
    
    
    $
    
  June 30, 2007
    
    December 31, 2006Statutory Federal income tax rate
    
    
    34
    %
    
    
    (34
    %)Effective California income tax rate
    
    
    5.9
    %Increase (decrease) in valuation allowance
    
    
    (0.6
    %)
    
    
    34
    %Effective income tax rate
    
    
    40.5
    %
    
    
    
    %
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    12




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RESULTS OF OPERATIONS
 Net Income
    CHANGES IN FINANCIAL CONDITION
 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.
 13




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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;
    
    approximately $150,000 for repayment of the loan from our Chairman; and
    
    approximately $75,000 for a reserve for liquidation expenses.
     Off-Balance Sheet Arrangements
  14




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Contractual Obligations
  Forward Looking Statements
  Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Item 4. Controls and Procedures.
   15




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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
  16




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Item 6  Exhibits
 Number
    
    Description31.1
    
    Certification by Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification by Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification by Principal Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
Sarbanes-Oxley Act of 200232.2
    
    Certification by Principal Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
Sarbanes-Oxley Act of 2002
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SIGNATURES
  CHINA HEALTHCARE ACQUISITION CORP.Date: August 14, 2007
    By:
    /s/ Alwin TanAlwin TanChief Executive Officer and Treasurer
(Principal Executive Officer)By:
    /s/ Steven WangSteven WangVice President
(Principal Financial and Accounting Officer) 18




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INDEX TO EXHIBITS
 Number
    
    Description31.1
    
    Certification by Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification by Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification by Principal Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
Sarbanes-Oxley Act of 200232.2
    
    Certification by Principal Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
Sarbanes-Oxley Act of 2002
 19