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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 September 30, 2007
 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
(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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  o o þ
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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
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3. Defaults upon Senior Securities
    
    
    17Item 4. Submission of Matters to a Vote of the Security Holders
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    18SIGNATURES
    
    
    19INDEX TO EXHIBITS
    
    
    20Certification 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,September 30, 2007
    
    
    2006Current AssetsCash
    
    $
    634,852
    
    
    $
    49,349Cash in Trust
    
    
    57,529,334
    
    
    
    Prepaid expense
    
    
    69,856
    
    
    
    Total Current Assets
    
    
    58,234,042
    
    
    
    49,349Fixed Asset Net of Depreciation
    
    
    4,819
    
    
    
    Deferred tax asset, net
    
    
    66,545
    
    
    
    Deferred offering costs
    
    
    
    
    
    
    331,479TOTAL ASSETS
    
    $
    58,305,406
    
    
    $
    380,828LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccrued expenses
    
    
    17,130
    
    
    
    208,828Due to stockholder
    
    
    3,094
    
    
    
    Deferred underwriting fees
    
    
    2,133,867
    
    
    
    Taxes payable
    
    
    313,947
    
    
    
    Notes payable to stockholder
    
    
    150,000
    
    
    
    150,000TOTAL LIABILITIES
    
    
    2,618,038
    
    
    
    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
    
    
    582,809
    
    
    
    (3,000
    )Total Stockholders Equity
    
    
    44,658,103
    
    
    
    22,000TOTAL LIABILITIES & STOCKHOLDERS EQUITY
    
    $
    58,305,406
    
    
    $
    380,828
  3




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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 Period fromPeriod from
    
    
    June 7, 2006Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    June 7, 2006
    
    
    (inception) toEnded
    
    
    Ended
    
    
    Ended
    
    
    (inception) to
    
    
    September 30, 2007September 30, 2007
    
    
    September 30, 2006
    
    
    September 30, 2007
    
    
    September 30, 2006
    
    
    (Cumulative)Interest Income
    
    $
    690,700
    
    
    $
    
    
    
    $
    1,200,684
    
    
    $
    
    
    
    $
    1,200,684Formation and operating costs
    
    
    113,830
    
    
    
    
    
    
    
    174,503
    
    
    
    3,000
    
    
    
    177,503Delaware franchise tax
    
    
    16,733
    
    
    
    
    
    
    
    47,773
    
    
    
    
    
    
    
    47,773Income (loss) before provision for income taxes
    
    
    560,137
    
    
    
    
    
    
    
    978,408
    
    
    
    (3,000
    )
    
    
    975,408Provision for income taxes
    
    
    223,127
    
    
    
    
    
    
    
    392,599
    
    
    
    
    
    
    
    392,599Net income (loss)
    
    $
    337,010
    
    
    $
    
    
    
    $
    585,809
    
    
    $
    (3,000
    )
    
    $
    582,809Net income (loss) per share (basic and diluted)
    
    $
    0.03
    
    
    $
    0.00
    
    
    $
    0.07
    
    
    $
    0.00
    
    
    $
    0.10Weighted average number of shares outstanding (basic and diluted)
    
    
    11,876,555
    
    
    
    2,500,000
    
    
    
    7,848,811
    
    
    
    2,500,000
    
    
    
    5,585,102
  4




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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
CONDENSED STATEMENT OF STOCKHOLDERS EQUITY
(Unaudited)
 For the period from June 7, 2006 (inception) to September 30, 2007
 Income (deficit)accumulatedduring theCommon Stock
    
    
    Additional
    
    
    development
    
    
    Total StockholdersShares
    
    
    Amount
    
    
    paid-in Capital
    
    
    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
    
    
    
    
    
    
    
    1,500,000Sale of 8,500,000 units, net of underwriters discount and offering expenses (1,699,150 shares subject to possible redemption) on April 25, 2007
    
    
    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
    )Unaudited:Net income for the nine months ended September 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    585,809
    
    
    
    585,809Balance at September 30, 2007
    
    
    11,876,555
    
    
    $
    1,188
    
    
    $
    44,074,106
    
    
    $
    582,809
    
    
    $
    44,658,103
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CHINA HEALTHCARE ACQUISITION CORP.
(a development stage company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 Period fromPeriod from
    
    June 7, 2006Nine Months
    
    June 7, 2006
    
    (inception)Ended
    
    (inception)
    
    to September 30, 2007September 30, 2007
    
    to September 30, 2006
    
    (cumulative)Cash flows from operating activities:Net income (loss)
    
    $
    585,809
    
    
    $
    (3,000
    )
    
    $
    582,809Adjustments to reconcile net income (loss) to
net cash used in operating activities:Depreciation
    
    
    125
    
    
    
    
    
    
    
    125Deferred tax assets net of valuation allowance
    
    
    (66,545
    )
    
    
    
    
    
    
    (66,545
    )Changes in:Accrued Expense Payable
    
    
    17,130
    
    
    
    
    
    
    
    17,130Tax payable
    
    
    313,947
    
    
    
    
    
    
    
    313,947Prepaid expense
    
    
    (69,856
    )
    
    
    
    
    
    
    (69,856
    )Interest
earned on investment held in Trust Account
    
    
    (1,194,107
    )
    
    
    
    
    
    
    (1,194,107
    )Net Cash provided (used) in operating activities:
    
    
    (413,497
    )
    
    
    (3,000
    )
    
    
    (416,497
    )Cash flows from investing activities:Cash held in Trust fund
    
    
    (57,307,802
    )
    
    
    
    
    
    
    (57,307,802
    )Disbursements from trust account
    
    
    972,575
    
    
    
    
    
    
    
    972,575Deferred Offering Cost
    
    
    
    
    
    
    
    
    
    
    Purchase fixed asset net of Depreciation
    
    
    (4,944
    )
    
    
    
    
    
    
    (4,944
    )Net cash used in investing activities
    
    $
    (56,340,171
    )
    
    $
    
    
    
    
    (56,340,171
    )Cash flows from financing activities:Gross proceeds from issuance of common stock
    
    
    58,509,330
    
    
    
    25,000
    
    
    
    58,534,330Gross proceeds from issuance of warrants
    
    
    1,500,000
    
    
    
    
    
    
    
    1,500,000Proceeds from underwriters purchase option
    
    
    100
    
    
    
    
    
    
    
    100Proceeds from stockholders note payable
    
    
    150,000
    
    
    
    150,000
    
    
    
    300,000Repayment of stockholders not payable
    
    
    (150,000
    )
    
    
    
    
    
    
    (150,000
    )Payment of costs of public offering
    
    
    (2,673,353
    )
    
    
    (85,008
    )
    
    
    (2,796,004
    )Advances from shareholder
    
    
    3,094
    
    
    
    
    
    
    
    3,094Net cash provided by financing activities
    
    $
    57,339,171
    
    
    $
    89,992
    
    
    $
    57,391,520Net increase in cash
    
    
    585,503
    
    
    
    86,992
    
    
    
    634,852Beginning balance
    
    
    49,349
    
    
    
    
    
    
    
    Ending balance
    
    $
    634,852
    
    
    $
    86,992
    
    
    $
    634,852Supplemental Schedule of Non Cash Financing ActivitiesAccruals of offering cost
    
    $
    
    
    
    $
    111,497
    
    
    $
    Accruals of Deferred underwriters fees
    
    
    2,133,867
    
    
    
    
    
    
    
    2,133,867Total
    
    $
    2,133,867
    
    
    $
    111,497
    
    
    $
    2,133,867
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CHINA HEALTHCARE ACQUISITION CORP.
 (A Development Stage Company)
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 September 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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Amount placed in trust
    
    $
    57,307,802Interest earned on the Trust Account
    
    
    1,194,107Disbursements from the Trust Account
    
    
    (972,575
    )Balance at September 30, 2007
    
    $
    57,529,334
   8




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Concentration of Credit Risk
  Use of estimates
  Recent Accounting Standards
   9




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Net Income( loss) per share
   Deferred Income Taxes
  Note 3  Notes Payable to Stockholder
  Note 4  Stockholders Equity
  10




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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.
   11




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Note 6  Commitments
     Note 7  Income Taxes
  Nine months EndedSeptember 30, 2007
    
    
    September 30, 2006(unaudited)
    
    
    (unaudited)Current:Federal taxes
    
    $
    357,338
    
    
    $
    State taxes
    
    
    101,806
    
    
    
    Deferred:Federal taxes
    
    
    (66,545
    )
    
    
    Total provision for income taxes
    
    $
    392,599
    
    
    $
    
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September 30, 2007
    
    
    December 31, 2006(unaudited)Expenses deferred for income tax purposes
    
    $
    70,324
    
    
    $
    1,000Valuation allowance
    
    
    (3,779
    )
    
    
    (1,000
    )Total deferred tax asset
    
    $
    66,545
    
    
    $
    
  September 30, 2007
    
    
    September 30, 2006(unaudited)
    
    
    (unaudited)Statutory Federal income tax rate
    
    
    34
    %
    
    
    (34
    %)Effective California income tax rate
    
    
    5.9
    %Increase in valuation allowance
    
    
    0.2
    %
    
    
    34
    %Effective income tax rate
    
    
    40.1
    %
    
    
    
    %
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    13




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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.
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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
  15




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Contractual Obligations
  Forward Looking Statements
  Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Item 4. Controls and Procedures.
   16




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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
  17




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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: November 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) 19




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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
 20