UNITED ~~STATES~~STATESSECURITIES ~~SECURITIES~~ AND EXCHANGE COMMISSION Washington, D.C. 20549

~~FORM~~Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2009

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_________________________~~____________ to ~~_________________________~~______________

Commission File Number 333-127016

CHINA HEALTH CARE CORPORATION (Exact name of registrant as specified in ~~its~~ its charter)

Wyoming	98-0463119
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
T Plaza Center, Suite 400, 15950 North Dallas Parkway, Dallas, TX	75249
(Address of principal executive offices)	(Zip Code)

~~972.361.8033~~Rm ~~(Registrant’s~~904, ~~telephone~~Tung ~~number~~Wai Commercial Building, 109 – 111 Gloucester ~~including~~Road ~~area~~Wan ~~code~~Chai, Hong Kong(Address of principal executive offices) (Zip Code)

~~N/A~~ 972.361.8033(~~Former~~Registrant’s ~~name,~~telephone ~~former address and~~number, ~~former~~including ~~fiscal~~area ~~year, if changed since last report~~code)

~~Indicate by check mark whether the registrant~~ N/A(1)Former ~~has~~name, ~~filed~~former ~~all reports~~address ~~required~~and ~~to be filed by Section 13 or 15(d) of the Securities~~former ~~Exchange~~fiscal ~~Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports)~~year, ~~and~~if ~~(2)~~changed ~~has been~~since ~~subject~~last ~~to such filing requirements for the past 90 days. [X] YES [ ] NO~~ report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.
[X] YES [ ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[ ] YES [X] NO

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

Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [ ]	(Do not check if a smaller reporting company)	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 [X] NO

[ ] YES [X] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after ~~the~~ the distribution of securities under a plan confirmed by a court. [ ] YES [ ] ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 50,148,000 common shares issued and outstanding as August 19, 2009

~~50,148,000 common shares issued and outstanding as May 19, 2009~~ 1

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

F2 2

China Health Care Corp

Unaudited Financial Statements

~~March~~June 3130, 2009 and September 30, 2008

(Stated in US Dollars)

F0 3

China Health Care Corp

Contents	Pages
Report of Registered Independent Public Accounting Firm	15
Consolidated Balance Sheets	26 -37
Consolidated Statements of Operations	48
Consolidated Statements of Stockholders’ Equity	59
Consolidated Statements of Cash Flows	610
Notes to the Financial Statements	7 11– 2326

Board of Directors and Stockholders
China Health Care Corp

Report of Registered Independent Public Accounting Firm

We have reviewed the accompanying interim consolidated balance sheets of China Health Care Corp (the “Company”) as of ~~March~~June 3130, 2009 and September 30, 2008, and the related consolidated statement of operations, changes in stockholders’ equity, and cash flows for the three-month and ~~six~~nine-month periods ended ~~March~~June 3130, 2009 and 2008. These interim consolidated financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1, the Company continued to incur losses and working capital deficiencies that raise doubt over its ability to continue as a going concern. The accompanying financial statements do not include any adjustments to the financial statements that might be necessary should the company be unable to continue as a going concern.

South San Francisco, California	Samuel H. Wong & Co., LLP
May 16, 2009	Certified Public Accountants
August 12, 2009	Certified Public Accountants

~~China Health Care Corp Consolidated Balance Sheets At~~ ~~March~~ 5 ~~31, 2009 and September 30, 2008 (Stated in US Dollars)~~

			At		At
			March 31,		September 30,
Assets	Note		2009		2008
			(unaudited)
Current assets
Cash	2(d)	$	40,071	$	229,567
Accounts receivable	2(e),3		163,169		193,050
Prepaid expenses	4		2,191		78,717
Total current assets			205,431		501,334
Non-current assets
Property and equipment	2(f),5		706,682		842,710
Goodwill	6		155,201		154,809
Rent and utility deposits			1,160		867
Total assets		$	1,068,474	$	1,499,720
Liabilities, Minority Interest, and Stockholders’ Deficit
Current liabilities
Accounts payable			604,612		570,894
Dividends payable			19,915		24,884
Related party payables	7		2,708,881		2,510,978
Accrued liabilities	8		1,161,281		703,469
Convertible preferred stock - $0 par value, 10,000 shares
authorized; 600 and 4,605 shares issued and outstanding at
March 31, 2009, and September 30, 2008, respectively	9		1,507,000		1,503,226
Total current liabilities			6,001,689		5,313,451
Liabilities of discontinued operations
Accounts payable			918,860		839,219
Accrued liabilities	14		22,274		20,504
			941,134		859,723
Total liabilities		$	6,942,823	$	6,173,173

China Health Care Corp

Consolidated Balance Sheets

At June 30, 2009 and September 30, 2008

(Stated in US Dollars)

			At		At
			June 30,		September 30,
	Note		2009		2008
Assets			(unaudited)		(audited)
Current assets
Cash	2 (d)	$	26,630	$	229,567
Accounts receivable	2 (e),3		435,860		193,050
Prepaid expenses	4		11,325		78,717
Total current assets			473,815		501,334

Non-current assets
Property and equipment	2 (f),5		636,259		842,710
Goodwill	6		155,203		154,809
Rent and utility deposits			4,180		867
Total non-current assets			795,642		998,386

Assets of discontinued operations
Cash			48		-
Accounts receivable			208,155		-
			208,203		-

Total assets			1,477,660	$	1,499,720

Liabilities, Minority Interest, and Stockholders’ Deficit
Current liabilities
Accounts payable			593,904		570,894
Dividends payable			19,915		24,884
Related party payables	7		3,228,376		2,510,978
Accrued liabilities	8		695,618		703,469
Convertible preferred stock - $0 par value, 10,000 shares
authorized; 600 and 4,605 shares issued and outstanding at June
30, 2009, and September 30, 2008, respectively	9		1,503,226		1,503,226
Total current liabilities			6,041,039		5,313,451

Liabilities of discontinued operations
Accounts payable			916,556		839,219
Accrued liabilities	14		106,794		20,504
			1,023,350		859,723

Total liabilities			7,064,389	$	6,173,173

See Accompanying Notes to the Financial Statements and Accountant’s Report.

2 6

China Health Care Corp Consolidated Balance Sheets At ~~March~~ 31June 30, 2009 and September 30, 2008 (Stated in US Dollars)

			At			At
			March 31,			September 30,
			June 30,			September 30,
	Note		2009			2008
			(unaudited)			(audited)
Stockholders’ deficit
Common stock - $0.001 par value, 200,000,000 shares
authorized; 50,148,000 and 50,148,000 shares issued and
outstanding at March 31, 2009 and September 30, 2008,
outstanding at June 30, 2009 and September 30, 2008,					$
respectively		$	50,148		$	50,148
Additional paid in capital			21,632,697			21,632,697
Statutory Reverse			4,~~781~~782			-
Accumulated deficits			(27,~~372~~092,~~402~~307	)		(26,310,851	)
Accumulated other comprehensive income (loss)			(~~245~~237,~~390~~874	)		(45,448	)
Minority interest			55,~~817~~825			-
Total stockholders' deficit		$	(5,~~874~~586,~~349~~729	)		(4,673,454	)
Total liabilities, minority interest, and stockholders' deficit		$	1,~~068~~477,~~474~~660		$	1,499,720

See Accompanying Notes to the Financial Statements and Accountant’s Report.

3 7

China Health Care Corp Consolidated Statement of Operations for the three and ~~six~~nine months ended ~~March~~June 3130, 2009 and 2008 (Stated in US Dollars)

		3 months ended	~~3 months ended~~		3 months ended	~~3 months ended~~		9 months ended	~~6 months ended~~		9 months ended	~~6 months ended~~
			March 31, 2009			March 31, 2008			March 31, 2009			March 31, 2008
		June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Revenue	2 (g),15	$61,085	~~55,484~~		$127,482	~~88,122~~		$223,734	~~162,649~~		$358,959	~~235,171~~
Cost of revenue	2 (h)	48,291	~~21,836~~		47,581	~~58,283~~		111,383	~~63,092~~		138,526	~~95,416~~
Gross profit		12,794	~~33,648~~		79,901	~~29,839~~		112,351	~~99,557~~		220,433	~~139,755~~
Selling expenses	2 (i)	8,317	~~2,854~~		25,005	~~30,975~~		29,024	~~20,707~~		107,124	~~88,895~~
General and administrative expenses	2 (j)	100,500	~~720,558~~		96,553	~~1,057,129~~		1,265,920	~~1,165,420~~		2,127,381	~~1,305,002~~
Total operating expenses		108,817	~~723,412~~		121,558	~~1,088,104~~		1,294,944	~~1,186,127~~		2,234,505	~~1,393,897~~
Other income (expenses)
Other income		356,274	~~3,219~~		5,603	~~(133,790~~	)	365,000	~~8,726~~		8,454	~~48,196~~
Interest income		8	6		-	56		40	32		-	~~285~~
Interest expense		(9,442	~~(7,820~~)	)	(57,492	~~(7,272~~)	)	(29,257	~~(19,815~~)	)	(83,513	~~(174,614~~)	)
Other expenses		28,841	~~(38,499~~	)	-	~~(12,734~~	)	(11,969	~~(40,810~~)	)	-	~~(25,133~~	)
Total other income (expenses)		375,681	~~(43,094~~	)	(51,889	~~(153,740~~)	)	323,814	~~(51,867~~	)	(75,059	~~(151,266~~)	)
Loss before income tax		279,658	~~(732,858~~	)	(93,546	~~(1,212,005~~)	)	(858,779	~~(1,138,437~~)	)	(2,089,131	~~(1,405,408~~)	)
Provision for income tax	2 (k)	-	-		7,402	~~(8,095~~	)	-	-		26,444	~~(8,095~~	)
Loss from continued operations		279,658	~~(732,858~~	)	(100,948	~~(1,220,100~~)	)	(858,779	~~(1,138,437~~)	)	(2,115,575	~~(1,413,503~~)	)
Gain (Loss) from discontinued operations, net
of taxes	14	773	~~19,093~~		-	~~(84,291~~	)	82,423	~~81,650~~		-	~~(326,524~~	)
											$
Net (Loss) before non-controlling interests		280,431			(100,948	)		(776,356	)		(2,115,575	)
Net (Loss) before noncontrolling interests		$	(713,765	)	$	(1,304,391	)	$	(1,056,787	)		(1,740,027	)
Net (Loss) Attributable to:
Net (Loss) Attributable to:
- Parent		280,431			(100,948	)		(776,356	)		(2,115,575	)
- Parent			(713,765	)		(1,304,391	)		(1,056,787	)		(1,740,027	)
- Non-controlling Interest		(335	)		7,796			(318	)		15,817
- Non-controlling Interest			17			(22,634	)		17			-
Net Income/(Loss)		280,096			(93,152	)		(776,674	)		(2,099,758	)
		$	(713,748	)	$	(1,327,026	)	$	(1,056,770	)	$	(1,740,027	)
- Preferred dividends		-			-			-			(148,324	)
Earnings (loss) per share	2(l),13
		280,096			(93,152	)		(776,674	)		(2,248,082	)
Basic and diluted		$	(0.0142	)	$	(0.0309	)	$	(0.0211	)	$	(0.0422	)
Earnings (loss) per share	2 (l),13
Weighted average shares outstanding
Basic and diluted		0.0056			(0.0019	)		(0.0155	)		(0.0514	)
Basic and diluted			50,148,000			42,977,165			50,148,000			41,190,809
Weighted average shares outstanding
Statement of Comprehensive Income			3 months ended			3 months ended			6 months ended			6 months ended
Basic and diluted		50,148,000			48,874,769			50,148,000			43,742,781
(Loss):	Note		March 31, 2009			March 31, 2008			March 31, 2009			March 31, 2009
											$
Net income (loss)		$	(713,748	)	$	(1,327,026	)	$	(1,056,770	)		(1,740,027	)
Other comprehensive income (loss)	2(m)
Foreign currency translation
adjustment	2(n)		(233,882	)		102,252			(199,943	)		370,768
Total comprehensive income
		$	(947,630	)	$	1,224,774		$	(1,256,713	)	$	1,369,259

Statement of Comprehensive Income		3 months ended	3 months ended		9 months ended		9 months ended
(Loss):	Note	June 30, 2009	June 30, 2008		June 30, 2009		June 30, 2008

Net income (loss)		280,096	(93,152	)	(776,674	)	(2,099,758	)
Other comprehensive income (loss)	2 (m)
Foreign currency translation
adjustment	2 (n)	3,724	2,627		(196,219	)	1,401
Total comprehensive income
		283,820	(90,525	)	(972,893	)	(2,098,357	)

See Accompanying Notes to the Financial Statements and Accountant’s Report.

4 8

China Health Care Corp Consolidated Statements of Stockholders’ Equity at ~~March~~June 3130, 2009 and September 30, 2008 (Stated in US Dollars)

	Common Stock				Paid							Other
	Shares		Par		in		Statutory		Accumulated			Comprehensive			Minority
	Outstanding		Amount		Capital		Reserve		Deficit			Income (loss)			Interests		Total
Balance, October 1, 2007	39,314,000	$	39,314	$	10,477,823	$	-	$	(23,609,499	)	$	(115,900	)	$	-	$	(13,208,262	)
Conversion of preferred stock	8,928,000		8,928		9,787,640												9,796,568
Issuance of common stock	1,906,000		1,906		1,367,234												1,369,140
Net loss									(2,701,352	)							(2,701,352	)
Foreign currency translation adjustment												70,452					70,452
Balance, September 30, 2008	50,148,000	$	50,148	$	21,632,697	$	-	$	(26,310,851	)	$	(45,448	)	$	-	$	(4,673,454	)
Balance, October 1, 2008	50,148,000	$	50,148	$	21,632,697	$	-	$	(26,310,851	)	$	(45,448	)	$	-	$	(4,673,454	)
Net loss									(1776,~~056,770~~674	)							(1776,~~056,770~~674	)
Appropriate from retained earnings							4,~~781~~782		(4,~~781~~782	)							-
Noncontrolling interests															55,817		55,817
Non-controlling interests															55,825		55,825
Foreign currency translation adjustment												(~~199~~192,~~943~~426	)				(~~199~~192,~~943~~426	)
Balance, March 31, 2009	50,148,000	$	50,148	$	21,632,697	$	4,781	$	(27,372,402	)	$	(245,390	)	$	55,817	$	(5,874,350	)
Balance, June 30, 2009	50,148,000	$	50,148	$	21,632,697	$	4,782	$	(27,092,307	)	$	(237,874	)	$	55,825	$	(5,586,729	)

See Accompanying Notes to the Financial Statements and Accountant’s Report.

5 9

China Health Care Corp Consolidated Statements of Cash Flows for the three and ~~six~~nine months ended ~~March~~June 3130, 2009 and 2008 (Stated in US Dollars)

		3 months			3 months			69 months			69 months
		ended			ended			ended			ended
		Ended			Ended			Ended			Ended
		March 31, 2009			March 31, 2008			March 31, 2009			March 31, 2008
		June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Cash Flow from Operating Activities
Net income (loss)	$	~~(713~~280,~~748~~096	)	$	(193,~~327.026~~152	)	$	(1776 ,~~056,770~~674	)	$	(12,~~740~~099,~~027~~758	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation		70,~~456~~445			3970,~~851~~082			~~143~~213,~~210~~655			~~104~~210,~~263~~344
Minority interest		55,817			-			55,817			-
Non-cash compensation		-			-			-			708,122
Decrease/(Increase) in accounts receivable		(31,831	)		38,316			29,880			101,904
Minority interest		8			(7,795	)		55,825			(15,817	)
Decrease/(Increase) in related party receivable		-			526,361			-			509,608
Decrease/(Increase) in accounts receivable		8,974			(368,027	)		38,854			11,815
Decrease/(Increase) in prepaid expenses		12,766			231,572			76,526			(73,024	)
Decrease/(Increase) in related party receivable		(489,818	)		-			(489,818	)
(Decrease)/Increase in accounts payables		37,124			(70,928	)		113,359			(94,792	)
Decrease/(Increase) in prepaid expenses		(9,134	)		63,102			67,392			147,191
(Decrease)/Increase in accrued liabilities		649,728			746,772			459,580			665,855
(Decrease)/Increase in accounts payables		(13,013	)		247,900			100,346			276,701
(Decrease)/Increase in related party payable		132,699			(59,969	)		201,678			52,183
(Decrease)/Increase in accrued liabilities		(381,143	)		(20	)		78,436			(20	)
(Decrease)/Increase in dividend payable		-			-			(4,969	)
(Decrease)/Increase in related party payable		(1,088,873	)		-			(887,195	)
Cash provided by operating activities		203,011			124,949			18,311			(474,030	)
(Decrease)/Increase in dividend payable		4,969			-			-
Cash provided by operating activities		(1,617,489	)		(87,910	)		(1,599,179	)		(761,422	)
Cash Flows from Investing Activities
Rent and utility (deposits paid)/deposits refund		(293	)		1,211			(293	)		-
Rent and utility deposits paid		(3,020	)		-			(3,313	)		-
Proceeds from Intangible Assets		(4	)		-			(391	)		-
Purchase of intangible assets		(2	)		-			(393	)		-
Proceeds from sales of/(purchase of) equipment		(46	)		(7,541	)		(7,181	)		(8,985	)
Purchase of equipment		(22	)		(1,392	)		(7,203	)		(11,835	)
Cash used in investing activities		(~~343~~3,044	)		(61,~~330~~392	)		(710,~~866~~909	)		(811,~~985~~835	)
Cash Flows from Financing Activities
Proceeds from issuance of stock		-			-			-			-
Loan proceeds from related parties		1,608,387			153,520			1,604,594			934,403
Issuance of convertible preferred stock		-			-			-			-
Repayment of loan to related parties		-			-			-			(125,768	)
Paid Dividend		-(4,969	)		-(66,392	)		-(4,969	)		-(395,301	)
Cash Sourced/(Used) in Financing Activities		-1,603,418			-87,128			-1,599,625			-413,334
Net Increase/(Decrease) in Cash & Cash
Equivalents for the Period	$	~~212~~(17,~~668~~115	)	$	~~118~~(2,~~619~~174	)	$	(10,~~445~~463	)	$	(~~483~~359,~~015~~923	)
Effect of Currency Translation		~~(233~~3,~~881~~722	)		(~~186~~3,~~071~~750	)		(~~199~~192,~~941~~426	)		82(37,~~445~~069	)
Cash & Cash Equivalents at Beginning of Period		6140,~~284~~071			8315,~~587~~328			229,567			~~416~~406,~~705~~396
Cash & Cash Equivalents at End of Period	$	4026,~~071~~678		$	169,~~135~~404		$	4026,~~071~~678		$	169,~~135~~404

See Accompanying Notes to the Financial Statements and Accountant’s Report.

6 10

China Health Care Corp Notes to Consolidated Financial Statements AtFor ~~March 31, 2009 and September 30, 2008 and for~~ the three ~~months~~ and ~~six~~nine months ended ~~March~~June 3130, 2009 and 2008 (Stated in US Dollars)

1.	ORGANIZATION AND PRINCIPAL ACTIVITIES

	History

	China Health Care Corporation (the “Company”) was incorporated in the state of Wyoming on February 11, 2005 under the name of The Cavalier Group. On May 13, 2008, the Secretary of State of Wyoming effected a change of the Company to China Health Care Corporation, as approved by our shareholders. On January 20, 2008, the Company entered into a share exchange agreement with United Premier Medical Group Limited (“UPMG”) and its shareholders to acquire all of the outstanding common shares of UPMG. The transaction closed on July 24, 2008.

	The share exchange transaction has been accounted for as a recapitalization of UPMG where the Company (the legal acquirer) is considered the accounting acquiree and UPMG (the legal acquiree) is considered the accounting acquirer. As a result of this transaction, the Company is deemed to be a continuation of the business of UPMG.

	Accordingly, the financial data included in the accompanying consolidated financial statements for all periods prior to July 24, 2008 is that of the accounting acquirer (UPMG). The historical stockholders’ equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.

	United Premier Medical Group Limited (“UPMG”) is a medical consultancy service provider in the People’s Republic of China (“PRC”) providing services in the areas of hospital management and specialty medical consultancy. UPMG’s primary focus is the health care needs of women and children.

	The business was founded in 2001, with UPMG as the ultimate holding company. UPMG was organized under the laws of Cayman Island on March 28, 2003, whereas UPMG International Limited (“UPMGI”) was incorporated in the British Virgin Islands on September 15, 2003. The intention is to build the Company using a holding company structure, with a top-level entity owing interests in operating entities. Separate operating entities are established in each geographic region. At times, the company owns less than 100% of an operating entity because this enables the use of resources and expertise of local partners.

	There were a number of restructuring events, which occurred over the past several years. These events would include:

• On July 19, 2001, UPMGI acquired 50% of the operating entity Proactive Medicare Enterprise (Hong Kong) Limited (“PME-HK”). At the same time, PME-HK held 90% in equity interest of the operating entity Shanghai Proactive Medicare Health Education Center Limited (“BK-SH”). • On May 5, 2003, UPMG acquired 100% of UPMGI and hence UPMGI became a wholly-owned subsidiary of UPMG. • On March 17, 2004, UPMGI increased its ownership of the operating entity PME-HK from 50% to 100% and hence PME-HK became a wholly-owned subsidiary of UPMGI. • Pro-Innovative Holdings Limited (“PHL”), an investment holding company, was incorporated on January 22, 2004 with 51% in equity interest held by UPMG. • On February 17, 2004, UPMG transferred all common shareholding in Ideamart Holdings Limited (“Ideamart”) to PHL. Ideamart, which incorporated on May 28, 2003, is a dormant company.
1On May 5, 2003, UPMG acquired 100% of UPMGI and hence UPMGI became a wholly-owned subsidiary of UPMG.
~~China~~On ~~Health Care Corp Notes to Consolidated Financial Statements At~~ March 3117, ~~2009~~2004, ~~and~~UPMGI ~~September~~increased ~~30,~~its ~~2008~~ownership of ~~and for~~ the ~~three~~operating ~~months~~entity ~~and~~PME-HK ~~six~~from ~~months~~50% ~~ended~~to ~~March~~100% ~~31,~~and ~~2009~~hence ~~and~~PME-HK ~~2008~~became a ~~(Stated~~wholly-owned insubsidiary USof ~~Dollars)~~UPMGI.
•Pro-Innovative OnHoldings ~~March 19, 2004, UPMG International (Guangdong)~~ Limited (“~~UPMGIG~~PHL”), ~~increased~~an investment ~~its~~holding ~~ownership~~company, ofwas ~~UPMG~~incorporated ~~(Guangdong)~~on ~~Company~~January ~~Limited (“UPMGGC”) from 99% to 100%. • On May 7~~22, 2004, ~~PHL~~with ~~transferred 100~~51% ~~of its ownership~~ in equity ~~UPMG~~interest ~~(Hong~~held ~~Kong)~~by ~~Limited (“~~UPMG~~-HK”) and UPMG (US) Limited (“UPMG-US”) to UPMGI and hence UPMG-HK and UPMG-US became the wholly-owned subsidiaries of UPMGI~~. ~~• In April 2007, UPMG-HK disposed of its 100% interest in Broad Prosper Limited.~~
On February 17, 2004, UPMG transferred all common shareholding in Ideamart Holdings Limited (“Ideamart”) to PHL. Ideamart, which incorporated on May 28, 2003, is a dormant company.

On March 19, 2004, UPMG International (Guangdong) Limited (“UPMGIG”) increased its ownership of UPMG (Guangdong) Company Limited (“UPMGGC”) from 99% to 100%.
On May 7, 2004, PHL transferred 100% of its ownership in UPMG (Hong Kong) Limited (“UPMG-HK”) and UPMG (US) Limited (“UPMG-US”) to UPMGI and hence UPMG-HK and UPMG-US became the wholly-owned subsidiaries of UPMGI.
In April 2007, UPMG-HK disposed of its 100% interest in Broad Prosper Limited.

Current Structure & Basis of Presentation

The Company owned the following subsidiaries at ~~March~~June 3130, 2009:

No.	Company Code	Company Name	Place of Incorporation	Date of Incorporation	Remark
1	UPMG	United Premier Medical Group Limited	Cayman Islands	March 28, 2003	Ultimate Holding Company
2	UPMGI	UPMG International Limited	British Virgin Islands	September 15, 2003	Subsidiary of UPMG
3	PME-HK	Proactive Medicare Enterprise (Hong Kong) Limited	Hong Kong	March 17, 2000	Wholly-owned subsidiary of UPMGI
4	PME-SZ	Proactive Medicare (Shenzhen) Company Limited	Hong Kong	September 24, 2004	Wholly-owned subsidiary of UPMGI
5	PME-CS	Proactive Medicare (Changsha) Company Limited	Hong Kong	July 2, 2004	Wholly-owned subsidiary of UPMGI
6	PME-XIA	Proactive Medicare (Xiamen) Company Limited	Hong Kong	December 22, 2004	Wholly-owned subsidiary of UPMGI
7	PME-NAN	Proactive Medicare (Nanjing) Company Limited	Hong Kong	September 24, 2005	Wholly-owned subsidiary of UPMGI
8	PME-HZ	Proactive Medicare (Hangzhou) Company Limited	Hong Kong	August 25, 2005	Wholly-owned subsidiary of UPMGI
9	PME-WX	Proactive Medicare (Wuxi) Company Limited	Hong Kong	April 19, 2004	Wholly-owned subsidiary of UPMGI
10	UPMG-SHA	United Premier Medical Group (Shanghai) Limited	Hong Kong	February 25, 2004	Wholly-owned subsidiary of UPMGI
11	PMS-HK	Proactive Medicare Services (Hong Kong) Limited	Hong Kong	January 30, 2004	Wholly-owned subsidiary of UPMGI
12	PME-BJ	Proactive Medicare (Beijing) Company Limited	Hong Kong	March 27, 2000	Wholly-owned subsidiary of UPMGI
13	UPMG-HK	UPMG (Hong Kong) Limited	British Virgin Islands	August 8, 2003	Wholly-owned subsidiary of UPMGI
14	UPMG-US	UPMG (US) Limited	British Virgin Islands	November 23, 1993	Wholly-owned subsidiary of UPMGI
15	HB-GZ	Guangzhou Inno-Proactive Medicare Consultancy Ltd.	PRC	October 26, 2004	Wholly-owned subsidiary of PMEHK
16	BK-SH	Shanghai Proactive Medicare Health Education Center Limited	PRC	February 5, 2002	90% of common shareholding held by PMEHK

2 12

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

No.	Company Code	Company Name	Place of Incorporation	Date of Incorporation	Remark
17	UBK-SZ	UPMG (Shenzhen) Limited	PRC	January 5, 2006	Wholly-owned subsidiary of UPMG-US
18	UPMG-MU	UPMG (Macau) Company Limited	Macau	September 29, 2006	50% of common shareholding held by UPMG-HK
19	PHL	Pro-Innovative Holdings Limited	British Virgin Islands	January 22, 2004	51% of common shareholding held by UPMG
20	PML	Pro-Innovative Medical Limited	Hong Kong	December 8, 2003	Wholly-owned subsidiary of PHL
21	Ideamart	Ideamart Holdings Limited	British Virgin Islands	May 28, 2003	Wholly-owned subsidiary of PHL
22	UPMGIG	UPMG International (Guangdong) Limited	British Virgin Islands	August 29, 2003	62% of common shareholding held by PHL
23	UPMGGC	UPMG (Guangdong) Company Limited	Hong Kong	August 14, 2002	Wholly-owned subsidiary of UPMGIG

No.	Company Code	Company Name	Place of Incorporation	Date of Incorporation	Remark
15	HB-GZ	Guangzhou Inno-Proactive Medicare Consultancy Ltd.	PRC	October 26, 2004	Wholly-owned subsidiary of PMEHK
16	BK-SH	Shanghai Proactive Medicare Health Education Center Limited	PRC	February 5, 2002	90% of common shareholding held by PMEHK
17	UBK-SZ	UPMG (Shenzhen) Limited	PRC	January 5, 2006	Wholly-owned subsidiary of UPMG-US
18	UPMG-MU	UPMG (Macau) Company Limited	Macau	September 29, 2006	50% of common shareholding held by UPMG-HK
19	PHL	Pro-Innovative Holdings Limited	British Virgin Islands	January 22, 2004	51% of common shareholding held by UPMG
20	PML	Pro-Innovative Medical Limited	Hong Kong	December 8, 2003	Wholly-owned subsidiary of PHL
21	Ideamart	Ideamart Holdings Limited	British Virgin Islands	May 28, 2003	Wholly-owned subsidiary of PHL
22	UPMGIG	UPMG International (Guangdong) Limited	British Virgin Islands	August 29, 2003	62% of common shareholding held by PHL
23	UPMGGC	UPMG (Guangdong) Company Limited	Hong Kong	August 14, 2002	Wholly-owned subsidiary of UPMGIG

The consolidated financial statements include the accounts of UPMG and its consolidated subsidiaries. UPMG wholly owns UPMGI, which in turn directly holds 12 wholly-owned subsidiaries and indirectly holds 4 subsidiaries including HB-GZ (100% in equity interest), BK-SH (90% in equity interest), UBK-SZ (100% in equity interest) and UPMG-MU (50% in equity interest). Besides, UPMG holds 51% in equity interest of PHL, which in turn, wholly owns two direct subsidiaries and holds 62% in equity interest of UPMGIG, which in turn wholly owns UPMGGC

Business

The Company provides consultancy services to the VIP Maternity & Gynecological Centers (the “VIP Birthing Centers”) in the PRC. These services are provided in conjunction with Johns Hopkins International, LLC, a U.S. based healthcare provider, and based upon a Consultancy Agreement with JHI. (The Company and JHI are currently disputing certain material terms of the consultancy agreement – see below, and note 14). The first VIP Birthing Center commenced operations in October 2002 at the International Peace Maternity & Child Health Hospital in Shanghai. Over the past six years, we have signed co-operative agreements with a number of hospitals in Obstetrics / Gynecology (“OB/GYN”) across the PRC in cities including Beijing, Shanghai, Guangzhou, Foshan, Wuxi, Xiamen, Changsha and Hangzhou. In 2006, we signed a management agreement with the University Hospital at Macau University of Science and Technology (“UH-MUST”) whereby we provide general hospital management consultancy service.

We are currently under contracts to provide consultancy services to a total of five VIP Birthing Centers in the PRC and to manage a private hospital in Macau. These centers are located in Wuxi (“the Wuxi Center”), Xiamen (“the Xiamen Center”), Changsha (“the Changsha Center”), Foshan (“the Foshan Center”) and Hangzhou (“the Hangzhou Center”). The Wuxi Center, the Xiamen Center and the hospital in Macau are operated under our service contracts, and we receive a monthly fee for our services. We have had difficulty enforcing these contracts, and three of the VIP Birthing Centers have ceased complying with our payment terms (the Changsha Center, the Foshan Center, and the Hangzhou Center). We engaged lawyers to negotiate with the host hospitals for settlement. We also had a VIP Birthing Center in Shanghai (“the Shanghai Center”). We have not been paid by the Shanghai Center since January 2006 and we have taken legal action against the host hospital for breach of contract.

3We had an additional VIP Birthing Center in Guangzhou (“the Guangzhou Center”) which ceased its operation in March 2007. Our invested assets were sold back to its host hospital. Our net receipt on this asset sale amounted to $1,296,944. For the abovementioned centers that we have difficulty enforcing our contracts, we

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars) 13

~~operated~~have ~~under~~not ~~our~~accrued ~~service~~any ~~contracts, and~~revenue ~~we receive a monthly fee~~ for ~~our services. We have had difficulty enforcing these contracts, and three of~~ the ~~VIP Birthing Centers have ceased complying~~ ~~with~~years ~~our~~ended ~~payment~~September ~~terms (the Changsha Center~~30, ~~the~~2007 ~~Foshan Center,~~ and the Hangzhou Center). We engaged lawyers to negotiate with the host hospitals for settlement. We also had a VIP Birthing Center in Shanghai (“the Shanghai Center”). We have not been paid by the Shanghai Center since January 2006 ~~and we have taken legal action against the host hospital for breach of contract~~.

WeGoing had an additional VIP Birthing Center in Guangzhou (“the Guangzhou Center”) which ceased its operation in March 2007. Our invested assets were sold back to its host hospital. Our net receipt on this asset sale amounted to $1,296,944. For the abovementioned centers that we have difficulty enforcing our contracts, we have not accrued any revenue for the years ended September 30, 2007 and 2006. Concern

4The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a net loss of $776,674 for the nine months through June 30, 2009; a working capital deficiency of $5,567,224; and a shareholders’ deficit of $5,586,729 at June 30, 2009. These matters raise substantial doubt about the Company’s ability to continue as a going concern if the Company does not secure new outside financing. The Company is currently and continues to make efforts to procure outside financing to strengthen its financial position.

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	(a)	Method of Accounting

		The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.

	(b)	Consolidation

		Inter-company transactions, such as due to/due from balances, investment in subsidiaries, and subsidiaries’ capitalization have been eliminated.

	(c)	Use of Estimates

		In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These estimates and assumptions include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation of useful lives of property, plant, and equipment. Actual results could differ from these estimates.

	(d)	Cash and Cash Equivalents

		The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.

	(e)	Accounts Receivable

		Accounts receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. Management regularly reviews the Company’s outstanding receivables balance, and will provide allowance for doubtful accounts based on its assessment. Bad debts are charged against allowances when outstanding receivables have been determined to be uncollectible. See Note 3 – Accounts Receivable.

	Going Concern
	The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a net loss of $1,056,770 for the six months through March 31, 2009; a working capital deficiency of $5,796,258; and a shareholders’ deficit of $5,847,349 at March 31, 2009. These matters raise substantial doubt about the Company’s ability to continue as a going concern if the Company does not secure new outside financing. The Company is currently and continues to make efforts to procure outside financing to strengthen its financial position.
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Method of Accounting The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting. (b) Consolidation Inter-company transactions, such as due to/due from balances, investment in subsidiaries, and subsidiaries’ capitalization have been eliminated. (c) Use of Estimates In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These estimates and assumptions include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation of useful lives of property, plant, and equipment. Actual results could differ from these estimates. (d) Cash and Cash Equivalents The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents. (e) Accounts Receivable Accounts receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. Management regularly reviews the Company’s outstanding receivables balance, and will provide allowance for doubtful accounts based on its assessment. Bad debts are charged against allowances when outstanding receivables have been determined to be uncollectible. See Note 3 – Accounts Receivable.

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

	(f)	Property and Equipment

		Property and equipment are stated at cost less accumulated depreciation and any impairment write-downs related to assets held and used. Additions and improvements to equipment are capitalized at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation of equipment is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the equipment are as follows:

Software	5 years
Center equipment	5 years
Office equipment	5 years
Furniture and fixtures	5 years
Leasehold improvement	5 - 10 years
Machinery	5 years

6 15

~~China~~(k) ~~Health~~Income ~~Care~~Taxes ~~Corp~~The ~~Notes~~Company uses the accrual method of accounting to ~~Consolidated~~determine and report its taxable income for the year. The Company has implemented Statement of Financial ~~Statements~~Accounting AtStandards ~~March~~(SFAS) 31No. 109, ~~2009~~Accounting for Income Taxes. The Company also adopted FIN 48, Accounting for Uncertainty in Tax Positions. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), Hong Kong SAR and ~~September~~Macau 30SAR laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, ~~2008~~which will be taxable or deductible when the assets and liabilities are recovered of settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the ~~three~~Company ~~months~~is able to realize that tax benefit, or that future realization is uncertain. (l) Earnings (Loss) Per Share The Company computers earnings per share (“EPS”) in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS NO. 128”), and ~~six~~SEC ~~months~~Staff ~~ended~~Accounting ~~March~~Bulletin 31No. 98 (“SAB 98”). SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., ~~2009~~convertible securities, options, and ~~2008~~warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (~~Stated~~i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. (m) Other Comprehensive Income (Loss) Comprehensive income is defined to include all changes in USequity ~~Dollars~~except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment. (n) Foreign Currency Translation The Company maintains its financial statements in the functional currency, which is the Renminbi (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods. For financial reporting purposes, the financial statements of the Company, which are prepared using the functional currency, have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity. The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is Hong Kong dollars (“HK$”). Equity accounts of the consolidated financial

depreciation expense. (k) Income Taxes The Company uses the accrual method of accounting to determine and report its taxable income for the year. The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. The Company also adopted FIN 48, Accounting for Uncertainty in Tax Positions. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), Hong Kong SAR and Macau SAR laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be taxable or deductible when the assets and liabilities are recovered of settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain. (l) Earnings (Loss) Per Share The Company computers earnings per share (“EPS”) in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS NO. 128”), and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. (m) Other Comprehensive Income (Loss) Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment. (n) Foreign Currency Translation The Company maintains its financial statements in the functional currency, which is the Renminbi (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.16

7statements are translated into United States dollars from HK$ at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the year. Translation adjustments are not included in determining net income but are included in foreign currency translation adjustment in other comprehensive income, a component of stockholders’ equity.

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

	June 30,	December 31,	September 30,
	2009	2008	2008
HKD-USD Year End Rate	7.7504	7.75070	7.77010
HKD-USD Average Rate	7.75356	7.75461	7.79297
RMB-USD Year End Rate	6.8448	6.85420	6.85510
RMB-USD Average Rate	6.8466	6.85322	7.11061

For financial reporting purposes, the financial statements of the Company, which are prepared using the functional currency, have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.

	(o)	Recent Accounting Pronouncements

		In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"). SFAS 161 applies to all derivative instruments and related hedged items accounted for under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161 requires entities to provide greater transparency about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, results of operations and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

		In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy).

		Statement 162 will become effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles."

		In May 2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non- convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis.

		The Company is currently evaluating the potential impact, if any, of the adoption of the above recent accounting pronouncements on its consolidated results of operations and financial condition.

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is Hong Kong dollars (“HK$”). Equity accounts of the consolidated financial statements are translated into United States dollars from HK$ at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the year. Translation adjustments are not included in determining net income but are included in foreign currency translation adjustment in other comprehensive income, a component of stockholders’ equity.

	March 31,	December 31,	September 30,
	2009	2008	2008
HKD-USD Year End Rate	7.75050	7.75070	7.77010
HKD-USD Average Rate	7.75469	7.75461	7.79297
RMB-USD Year End Rate	6.84560	6.85420	6.85510
RMB-USD Average Rate	6.84994	6.85322	7.11061

	(o)	Recent Accounting Pronouncements
		In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"). SFAS 161 applies to all derivative instruments and related hedged items accounted for under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161 requires entities to provide greater transparency about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, results of operations and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.
		In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy).
		Statement 162 will become effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles."
		In May 2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non- convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis.
		The Company is currently evaluating the potential impact, if any, of the adoption of the above recent

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

accounting pronouncements on its consolidated results of operations and financial condition.

3.	ACCOUNTS RECEIVABLE

		At March 31,			At September 30,
			At June 30,			At September 30,
		~~2009~~	2009		~~2008~~	2008
~~Total Accounts Receivable-Trade~~	$Total Accounts Receivable-Trade	~~163,169~~$	154,197	$	~~193,050~~$	193,050
Less: Allowance for Bad Debt		-			-
	Related Party Receivable		489,818			-
	$	163,169		$	193,050
	Less: Allowance for Bad Debt		-			-
Allowance for Bad Debts
		$	644,015		$	193,050
Beginning Balance	$	-		$	-
Allowance Provided		-			-
Less: Bad Debt Written Off		-			-
Ending Balance	$	-		$	-

~~4. PREPAID EXPENSES The prepaid expenses at March 31, 2009 and September 30, 2008 are shown in the following table: -~~17

		At March 31,		At September 30,
		2009		2008
Purchases of baby beds	$	-	$	74,689
Various miscellaneous		2,191		4,028
	$	2,191	$	78,717

Allowance for Bad Debts

Beginning Balance	$	-	$	-
Allowance Provided		-		-
Less: Bad Debt Written Off		-		-
Ending Balance	$	-	$	-

4.	PREPAID EXPENSES

	The prepaid expenses at June 30, 2009 and September 30, 2008 are shown in the following table: -

		At June 30,		At September 30,
		2009		2008
Purchases of baby beds	$	-	$	74,689
Various miscellaneous		11,325		4,028
	$	11,325	$	78,717

5.	PROPERTY AND EQUIPMENT

	Property and equipment, which are stated at cost less depreciation, were comprised of the following: -

		At March 31,			At September 30,
			At June 30,			At September 30,
		~~2009~~	2009		~~2008~~	2008
~~Category of Asset~~	Category of Asset
~~Furniture & fixtures~~	$Furniture & fixtures	~~493,876~~$	493,876	$	~~492,631~~$	492,631
~~Office equipment~~	Office equipment	~~8,321~~	8,343		~~8,738~~	8,738
~~Computer software~~	Computer software	~~42,578~~	42,578		~~42,470~~	42,470
~~Leasehold improvement~~	Leasehold improvement	~~243,082~~	243,082		~~241,208~~	241,208
~~Center equipment~~	Center equipment	~~929,839~~	929,839		~~925,468~~	925,468
		1,717,696			1,710,515
			1,717,718			1,710,515
~~Less: Accumulated Depreciation~~	Less: Accumulated Depreciation
~~Furniture & fixtures~~	Furniture & fixtures	~~245,761~~	261,308		~~214,668~~	214,668
~~Office equipment~~	Office equipment	~~2,332~~	2,747		~~1,503~~	1,503
	Computer software		25,119			18,661
	Leasehold improvement		112,319			94,474
	Center equipment		679,966			538,499
			1,081,459			867,805
	Equipment, net	$	636,259		$	842,710

96. GOODWILL Goodwill amounting to $155,203 and $154,809 as of June 30, 2009 and September 30, 2008 is related to the acquisition of the minority interest of PME-WX, for which the company’s subsidiary, UPMGI, purchased the remaining 20% of interest from other stockholder in 2004. Management annually reviews the carry value of goodwill using the sum of the undiscounted cash flows generated by PME-WX to determine if an impairment charge is necessary. The Company has determined no impairment to the goodwill as of date.

Computer software		22,966		18,661
Leasehold improvement		107,145		94,474
Center equipment		632,810		538,499
		1,011,014		867,805
Equipment, net	$	706,682	$	842,710

7.	RELATED PARTY PAYABLES

6.The ~~GOODWILL~~following ~~Goodwill~~table ~~amounting~~presents ~~to $155,201 and $154,809 as of March 31, 2009 and September 30, 2008 is related to~~ the balances ~~acquisition of~~ the minority interest of PME-WX, for which the company’s subsidiary, UPMGI, purchased the remaining 20% of interest from other stockholder in 2004. Management annually reviews the carry value of goodwill using the sum of the undiscounted cash flows generated by PME-WX to determine if an impairment charge is necessary. The Company ~~has~~owed ~~determined no impairment~~ to ~~the~~related ~~goodwill as of date~~parties.

		At June 30,		At September 30,
		2009		2008
Due to Director: Robert Yao Wing
Wong		851,401	$	854,892
Due to Director: Yuen Yee Wong		521,675		-
Due to Director: Andrew Kramer		200,568		-
Due to Director: Lau Kin Chung,
Gerald		50,139		-
Loan from Innotech		1,604,593		1,656,086
	$	3,228,376	$	2,510,978

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

7. RELATED PARTY PAYABLES The following table presents the balances the Company owed to related parties.

		At March 31,		At September 30,
		2009		2008
Due to Director: Robert Yao Wing
Wong	$	703,593	$	854,892
Due to Director: Yuen Yee Wong		124,722		-
Due to Director: Andrew Kamer		200,566		-
Due to Director: Lau Kin Chung,
Gerald		83,349		-
Loan from Innotech		1,596,651		1,656,086
	$	2,708,881	$	2,510,978

Due to Director

Payables owed to the Company’s directors are non- interest- bearing and, payable on demand. There is no impact to the statement of operations as result of the payables to the directors.

Loan from Innotech

On June 20, 2007, Inno-Tech Holdings Limited (“Innotech”), a shareholder of United Premier Medical Group Limited (“UPMG”), loaned $772,777 (equivalent to HK$6,000,000) to UPMG for use as working capital. The repayment date was originally June 22, 2008, but was subsequently extended to December 22, 2008.

On January 10, 2008, Innotech loaned $384,615 (HK$3,000,000) to UPMG with the original repayment date on January 9, 2009. On January 25, 2008, Innotech loaned another $512,820 (HK$4,000,000) to UPMG with the original repayment date on January 24, 2009. These loan repayment dates have been extended. During the period ended June 30, 2008 and 2007, the Company incurred interest expense of $45,860 and $1,517 respectively.

On November 1, 2008, Innotech lowered the interest rates from 5% per annum to 2% per annum and extended the repayment until June, 22 2008.

During the period ended ~~March~~June 3130, 2009 and 2008, the Company incurred interest expense of $1929,~~815~~257 and $~~174~~83,~~614~~513 respectively.

The following table summarizes the loan from related party: -

		At March 31,
		2009
Loan principal amount	$	1,670,212
Accrued interest payable		19,770
Repayment, net		(82,963	)
Translation difference		(10,368	)
Balance at March 31, 2009	$	1,596,651

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

On April 29, 2008, the loan from related party was extended as below:

Date of Loan

~~Date of Loan~~

Loan Principal

~~Loan Principal~~

Loan Principal

~~Loan Principal~~

Original

~~Original~~

New

~~New~~

Agreement

~~Agreement~~

Amount (USD)

~~Amount (USD)~~

Amount (HKFD)

~~Amount (HKFD)~~

Repayment Date

~~Repayment Date~~

Repayment Date

~~Repayment Date~~

June 20, 2007

~~June 20, 2007~~

772,777

~~772,777~~

(HK$6,000,000

~~(HK$6,000,000~~)

)

December 22, 2008

~~December 22, 2008~~

June 22, 2009

~~June 22, 2009~~

January 10, 2008

~~January 10, 2008~~

384,615

~~384,615~~

(HK$3,000,000

~~(HK$3,000,000~~)

)

July 9, 2009

~~July 9, 2009~~

July 9, 2009

~~July 9, 2009~~

January 25, 2008

~~January 25, 2008~~

512,820

~~512,820~~

(HK$4,000,000

~~(HK$4,000,000~~)

)

July 24, 2009

~~July 24, 2009~~

July 24, 2009

~~July 24, 2009~~

$1,670,212

1,670,212

8. ACCRUED LIABILITIES

		At March 31,		At September 30,
		2009		2008
Regular operating expenses	$	1,007,227	$	447,925
Aliceb Kramer		-		200,059
Inter Pacific Capital Ltd		110,703		-
Income taxes		28,411		40,799
Business taxes		14,940		14,686
	$	1,161,281	$	703,469

9.	CONVERTIBLE PREFERRED STOCK
	From June 30, 2005 to September 30, 2007, the UPMG entered into a continuous securities subscription agreement with private investors for the sale of UPMG Convertible Preferred Stock. UPMG issued a total of 4,605 shares of Convertible Preferred Stock at a subscription price of $2,500 per shares for aggregate net proceeds of $10,225,269, after accounting for issuance costs and professional fees. The shares bear an 8% per annum preferred dividend payable semi-annually. The terms of the subscription agreement call for a conversion ratio of one Convertible Preferred Stock to one common share of UPMG, which in turn can be exchanged for 2,000 shares of the Company. The shares of Convertible Preferred Stock have no voting rights. Under the subscription agreement, mandatory conversion of the shares would be triggered by UPMG listing its shares in a public market. Should no public listing occur within three years (subject to extension under certain conditions), the Convertible Preferred Stock would be mandatorily redeemable at a price of $2,500 per share plus a premium of 2%. The Company believes the conversion feature of the Convertible Preferred Stock is not a beneficial conversion feature. At the time of their issuance, the UPMG was not a publicly traded corporation.
	On December 4, 2007, the Board of Directors of the UPMG resolved and notified the holders of the Convertible Preferred Stock that UPMG intended to force conversion of all the shares into common shares because the Company was to subsequently undertake a reverse merger transaction, which would transform the company into a public company.
	In December 2007, UPMG agreed to issue an additional 459 of Convertible Preferred Stock in lieu of paying out dividends in cash, which UPMG had accrued under dividends payable. The additional 459 shares of Convertible Preferred Stock were equivalent to $1,060,086 of dividends.
	From February to June 30, 2008, 4,304 shares of Convertible Preferred Stock were converted to 4,304 shares of

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

	UPMG common stock. The outstanding number of shares of Convertible Preferred Stock at June 30, 2008 was 760. The converted shares were subsequently exchanged for shares in the Company pursuant to the share exchange agreement detailed Note 12. Of the 760 shares that were outstanding at June 30, 2008, 160 shares were subsequently converted to UPMG shares on July 11, 2008, and then in turn exchanged for shares in the Company. Since the Company accounted for the share exchange transaction as a recapitalization transaction, the equity of the Company has been retroactively restated to the first period presented. The shares that had been converted at June 30, 2008 have been included in the Company’s common stock. The remaining 760 shares of convertible preferred stock at June 30, 2008 have been accounted for as a current liability because during the three months ended June 30, 2008, the Company re-examined the characteristics of the Convertible Preferred Stock. The Company concluded the mandatory redemption feature, liquidation preference to common stockholders, and cumulative dividends were characteristics akin to liabilities. The Company has booked the redemption premium as interest expenses for the period.
	The Company is currently in arbitration with the holders of the remaining 600 shares of Convertible Preferred Stock over the Company’s intension to force conversion of their shares into common shares. The Company has retained counsel to represent it in arbitration.
	The related outstanding dividends payable for the Convertible Preferred Stock at March 31, 2009 and September 30, 2008 were $19,914 and $24,884.
10.	INCOME TAXES
	In accordance with the relevant tax laws and regulations of Hong Kong, the corporate income tax rate applicable to the subsidiaries of the Company in Hong Kong is 17.5% of taxable income. On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), effective from January 1, 2008. Under the New CIT Law, the corporate income tax rate applicable to the subsidiaries of the Company in the PRC starting from January 1, 2008 is 25%, replacing the currently applicable tax rate of 33%. The New CIT Law has an impact on the deferred tax assets and liabilities of the Company. Effects arising from the enforcement of New CIT law have been reflected into the accounts by applying the new tax rate. The Company was not liable for U.S. Income Tax at March 31, 2009since the Company continued to incur net operating losses during this quarter and prior years.
11.	SUBSEQUENT EVENTS
	The extension of the loan agreement with Inno-Tech Holding Ltimited
	On April 29, 2009, Inno-Tech Holdings Limited (“Innotech”), a shareholder of CHCC, extended the repayment dates of the Loan Agreement as table below:

Date of Loan

Loan Principal

Original

New

Agreement

Amount (USD)

Amount (HKFD)

Repayment Date

June 20, 2007

772,777

(HK$6,000,000

)

December 22, 2008

June 22, 2009

January 10, 2008

384,615

(HK$3,000,000

)

July 9, 2009

January 25, 2008

512,820

(HK$4,000,000

)

July 24, 2009

$1,670,212

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

12.	STOCK COMPENSATION EXPENSE
	During the six months ended March 31, 2009, the UPMG issued 4,203 shares of its common stock as compensation. The 4,203 shares of UPMG were equivalent to 8,406,000 shares of the Company’s common stock. The value of the common stock was $8,117,587, or $1,428 on per share basis of UPMG common stock or equivalent to $0.9657 per share of the Company’s common stock. The valuation of these shares was determined by using the same price that other UPMG stockholders bought their common stock. As result of the lack of secondary market at time of issuance of UPMG’s common stock as compensation, the Company believes that the use of a price that other investors had paid was a reasonable fair market value.
	The company including any of its subsidiaries did not grant options or rights and issue shares at any time to create any of such outstanding as of March 31, 2009.

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

13. EARNINGS PER SHARE Components of basic and diluted earnings per share were as follows:

		Three months			Three months			Six months			Six months
		ended			ended			ended			ended
		March 31,			March 31,			March 31,			March 31,
		2009			2008			2009			2008
Earning (Loss) from continuing operations		(732,841	)		(1,242,734	)		(1,138,420	)		(1,413,503	)
Net income		(713,748	)		(1,327,026	)		(1,056,770	)		(1,740,027	)
Original shares		50,148,000			39,314,000			50,148,000			39,314,000
– Addition to common stock from issuance		-			3,663,165			-			1,876,809
Basic weighted average shares outstanding		50,148,000			42,977,165			50,148,000			41,190,809
Dilutive Shares:
– Addition to common stock if preferred
stock had been converted *		-			-			-			-
Diluted Weighted Average Shares
Outstanding:		50,148,000			42,977,165			50,148,000			41,190,809
Earnings (Loss) Per Share
– basic	$	(0.0142	)	$	(0.0309	)	$	(0.0211	)	$	(0.0422	)
– diluted	$	(0.0142	)	$	(0.0309	)	$	(0.0211	)	$	(0.0422	)
Weighted average shares outstanding
– basic		50,148,000			42,977,165			50,148,000			41,190,809
– diluted		50,148,000			42,977,165			50,148,000			41,190,809
Supplemental Data
Earnings (loss) per share from continuing
operations	$	(0.0146	)	$	(0.0289	)	$	(0.0227	)	$	(0.0343	)

* If the preferred stock had been converted it would have been antidilutive, accordingly there was no potentially dilutive effect from them.

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

14. DISCONTINUED OPERATIONS

VIP Birthing Centers
Results of Operations
for the six months ended
March 31, 2009
	Changsha		Hangzhou		Foshan		Shanghai		Guangzhou		Total
Revenue	-		-		-		-		-	$	-
Cost of revenue	-		-		-		-		-		-
Gross profit	-		-		-		-		-		-
Selling expenses	-		-		-		-		-		-
General and administrative expenses	2,943		-		58		-		-		3,001
Total operating expenses	2,943		-		58		-		-		3,001
Other income	-		-		92,124		3,207		-		95,331
Other expense	-		-		(1,508	)	(9,172	)	-		(10,680	)
Taxes	-		-		-		-		-		-
Net income (loss)	(2,943	)	-		90,558		(5,965	)	-	$	81,650
VIP Birthing Centers
Results of Operations
for the six months ended
March 31, 2008
	Changsha		Hangzhou		Foshan		Shanghai		Guangzhou		Total
Revenue	-		-		-		-		-	$	-
Cost of revenue	-		-		-		-		-		-
Gross profit	-		-		-		-		-		-
Selling expenses	-		-		44		-		-		44
General and administrative expenses	2,569		13		26,792		-		-		29,374
Total operating expenses	2,569		13		26,836		-		-		29,418
Other income	-		-		-		209		-		209
Other expense	(52	)	-		(36	)	(297,227	)	-		(297,315	)
Taxes	-		-		-		-		-		-
Net income (loss)	(2,621	)	(13	)	(26,872	)	(297,018	)	-	$	(326,524	)

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

VIP Birthing Centers
Results of Operations
for the three months ended
March 31, 2009
	Changsha		Hangzhou	Foshan		Shanghai		Guangzhou		Total
Revenue	-		-	-		-		-	$	-
Cost of revenue	-		-	-		-		-		-
Gross profit	-		-	-		-		-		-
Selling expenses	(220	)	-	-		-		-		(220	)
General and administrative expenses	-		-	58		-		-		58
Total operating expenses	(220	)	-	58		-		-		(162	)
Other income	-		-	26,404		3,207		-		29,611
Other expense	-		-	(1,508	)	(9,172	)	-		(10,680	)
Taxes	-		-	-		-		-		-
Net income (loss)	(220	)	-	24,838		(5,965	)	-	$	19,093
VIP Birthing Centers
Results of Operations
for the three months ended
March 31, 2008
	Changsha		Hangzhou	Foshan		Shanghai		Guangzhou		Total
Revenue	-		-	-		-		-	$	-
Cost of revenue	-		-	-		-		-		-
Gross profit	-		-	-		-		-		-
Selling expenses	-		-	-		-		-		-
General and administrative expenses	(3	)	-	302		-		-		299
Total operating expenses	(3	)	-	302		-		-		299
Other income	-		-	-		-		-		-
Other expense	-		-	-		(83,992	)	-		(83,992	)
Taxes	-		-	-		-		-		-
Net income (loss)	3		-	(302	)	(83,992	)	-	$	(84,291	)

China Health Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)

VIP Birthing Centers
Financial Position
At September 30, 2008		Changsha			Hangzhou			Foshan			Shanghai			Guangzhou			Total
Current assets
Accounts receivable	$	-		$	-		$	-		$	-		$	-		$	-
Related party receivables		-			-			-			-			-			-
Prepaid expenses		-			-			-			-			-			-
Total current assets		-			-						-			-			-
Non-current assets
Property and equipment, net		-			-			-			-			-			-
Total assets		-			-			-			-			-			-
Current liabilities
Accounts payable		2,401			-			60,713			776,105			-			839,219
Related party payable		-			-			-			-			-			-
Accrued liabilities		1,287			772			1,287			12,960			4,198			20,504
Total current liabilities		3,688			772			62,000			789,065			4,198			859,723
Total liabilities		3,688			772			62,000			789,065			4,198			859,723
Net assets	$	(3,688	)	$	(772	)	$	(62,000	)	$	(789,065	)	$	(4,198	)	$	(859,723	)
VIP Birthing Centers
Financial Position
At March 31, 2009		Changsha			Hangzhou			Foshan			Shanghai			Guangzhou			Total
Current assets
Accounts receivable		-			-			-			-			-			-
Related party receivables		-			-			-			-			-			-
Prepaid expenses		-			-			-			-			-			-
Total current assets		-			-			-			-			-			-
Non-current assets
Property and equipment, net		-			-			-			-			-			-
Total assets		-			-			-			-			-			-
Current liabilities
Accounts payable		2,407			-			35,534			880,919			-			918,860
Related party payable		-			-			-			-			-			-
Accrued liabilities		1,290			774			1,290			14,711			4,209			22,274
Total current liabilities		3,697			774			36,824			895,630			4,209			941,134
Total liabilities		3,697			774			36,824			895,630			4,209			941,134
Net assets	$	(3,697	)	$	(774	)	$	(36,824	)	$	(895,630	)	$	(4,209	)	$	(941,134	)

~~China~~8. ~~Health~~ACCRUED ~~Care Corp Notes to Consolidated Financial Statements At March 31, 2009 and September 30, 2008 and for the three months and six months ended March 31, 2009 and 2008 (Stated in US Dollars)~~ LIABILITIES

15.	RISKS
			At June 30,		At September 30,
	Doing Business in the PRC
			2009		2008
	The Company’s operations are conducted in the People’s Republic of China (the “PRC”). Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.
	Regular operating expenses	$	647,223	$	468,429
	Concentrations
	Aliceb Kramer		-		200,059
	For the six months ended March 31, 2009, the Company derived its revenue from three VIP Birthing Centers. Each VIP Birthing Center unto itself can be considered single customers, and, as such, by virtue of there were only three centers, there was a concentration of risk in the Company’s revenues. The following provides a table of each centers’ contribution by amount and percentage for the six months presented.
	Inter Pacific Capital Ltd		110,703		-
	Income taxes		28,411		40,799
	Business taxes		16,075		14,686
		$	802,412	$	723,973

			Percentage Contribution
Center		Amount	to Total Revenue
Xiamen	$	7,324	4.50%
Wuxi		147,735	90.83%
Macau		7,590	4.67%
	$	162,649	100.00%

9.	CONVERTIBLE PREFERRED STOCK

16.	COMMITMENTS AND CONTINGENCIES
	A. Legal proceeding against IPMCHH
	Proactive Medicare Enterprise (HK) Limited, a subsidiary of UPMG, is a plaintiff of a legal proceeding regarding a civil claim against a hospital in the PRC namely, International Peace Maternity & Child Health Hospital of the China Welfare Institute (“IPMCHH” or the “defendant”) who refused to pay consultancy fees to PME-HK since April 2005 which may aggregate to $2,890,000
	On April 10, 2007, Proactive Medicare Enterprise (HK) Limited (“PME-HK”) brought a civil action to the Shanghai No. 1 Intermediate People’s Court (the “Shanghai Court”) in the PRC against IPMCCH for breach of contract. A statement of claim from PME-HK was sent to the Shanghai Court for acceptance of review. The proposed claims regarding this civil action included: (i) To order IPMCHH to honor the co-operative agreement signed between PME-HK and IPMCHH on February 2, 2004; (ii) To order IPMCHH to pay the consultant fee amounted $2,890,000 (equivalent to RMB22,677,123) in arrears owed to PME-HK, and (iii) IPMCHH shall bear the cost of this action.
	On April 12, 2007, the statement of claim was legally accepted and filed by the Shanghai Court (Notification of Acceptance: (2007) Hu Yi Zhong Min Wu (Shang) Chu Zi No. 93). On May 29, 2007, the first instance of the case was held to establish the case. On January 23, 2008, the second instance of the case was held to further negotiate a mutually accepted settlement plan. Through the mediation of the Shanghai Court, PME-HK and IPMCHH, so far, have gone through several rounds of negotiation for a mutually agreed settlement amount in recent months but a final settlement amount has yet to be confirmed.
	The result of this claim cannot be predicted, and it is possible that the ultimate resolution of the matters, individually or in the aggregate, may have a material adverse effect on the Company’s business (either in the

From June 30, 2005 to September 30, 2007, the UPMG entered into a continuous securities subscription agreement with private investors for the sale of UPMG Convertible Preferred Stock. UPMG issued a total of 4,605 shares of Convertible Preferred Stock at a subscription price of $2,500 per shares for aggregate net proceeds of $10,225,269, after accounting for issuance costs and professional fees. The shares bear an 8% per annum preferred dividend payable semi-annually. The terms of the subscription agreement call for a conversion ratio of one Convertible Preferred Stock to one common share of UPMG, which in turn can be exchanged for 2,000 shares of the Company. The shares of Convertible Preferred Stock have no voting rights. Under the subscription agreement, mandatory conversion of the shares would be triggered by UPMG listing its shares in a public market. Should no public listing occur within three years (subject to extension under certain conditions), the Convertible Preferred Stock would be mandatorily redeemable at a price of $2,500 per share plus a premium of 2%. The Company believes the conversion feature of the Convertible Preferred Stock is not a beneficial conversion feature. At the time of their issuance, the UPMG was not a publicly traded corporation.

On December 4, 2007, the Board of Directors of the UPMG resolved and notified the holders of the Convertible Preferred Stock that UPMG intended to force conversion of all the shares into common shares because the Company was to subsequently undertake a reverse merger transaction, which would transform the company into a public company.

In December 2007, UPMG agreed to issue an additional 459 of Convertible Preferred Stock in lieu of paying out dividends in cash, which UPMG had accrued under dividends payable. The additional 459 shares of Convertible Preferred Stock were equivalent to $1,060,086 of dividends.

From February to June 30, 2008, 4,304 shares of Convertible Preferred Stock were converted to 4,304 shares of UPMG common stock. The outstanding number of shares of Convertible Preferred Stock at June 30, 2008 was 760. The converted shares were subsequently exchanged for shares in the Company pursuant to the share exchange agreement detailed Note 12. Of the 760 shares that were outstanding at June 30, 2008, 160 shares were subsequently converted to UPMG shares on July 11, 2008, and then in turn exchanged for shares in the Company. Since the Company accounted for the share exchange transaction as a recapitalization transaction, the equity of the Company has been retroactively restated to the first period presented. The shares that had been converted at June 30, 2008 have been included in the Company’s common stock. The remaining 760 shares of convertible preferred stock at June 30, 2008 have been accounted for as a current liability because during the three months ended June 30, 2008, the Company re-examined the characteristics of the Convertible Preferred Stock. The Company concluded the mandatory redemption feature, liquidation preference to common stockholders, and cumulative dividends were characteristics akin to liabilities. The Company has booked the redemption premium as interest expenses for the period.

The Company is currently in arbitration with the holders of the remaining 600 shares of Convertible Preferred Stock over the Company’s intension to force conversion of their shares into common shares. The Company has retained counsel to represent it in arbitration.

~~China~~The ~~Health~~related ~~Care~~outstanding ~~Corp~~dividends ~~Notes~~payable tofor ~~Consolidated Financial~~the ~~Statements~~Convertible AtPreferred ~~March~~Stock 31at June 30, 2009 and September 30, 2008 were $19,915 and $24,884. 10. INCOME TAXES In accordance with the relevant tax laws and regulations of Hong Kong, the corporate income tax rate applicable to the subsidiaries of the Company in Hong Kong is 17.5% of taxable income. On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), effective from January 1, 2008. Under the New CIT Law, the corporate income tax rate applicable to the subsidiaries of the Company in the PRC starting from January 1, 2008 is 25%, replacing the currently applicable tax rate of 33%. The New CIT Law has an impact on the deferred tax assets and liabilities of the Company. Effects arising from the enforcement of New CIT law have been reflected into the accounts by applying the new tax rate. The Company was not liable for U.S. Income Tax at June 30, 2009since the ~~three~~Company ~~months~~continued to incur net operating losses during this quarter and ~~six~~prior years. 11. STOCK COMPENSATION EXPENSE During the nine months ended ~~March~~June 3130, 2009, the UPMG issued 4,203 shares of its common stock as compensation. The 4,203 shares of UPMG were equivalent to 8,406,000 shares of the Company’s common stock. The value of the common stock was $8,117,587, or $1,428 on per share basis of UPMG common stock or equivalent to $0.9657 per share of the Company’s common stock. The valuation of these shares was determined by using the same price that other UPMG stockholders bought their common stock. As result of the lack of secondary market at time of issuance of UPMG’s common stock as compensation, the Company believes that the use of a price that other investors had paid was a reasonable fair market value. The company including any of its subsidiaries did not grant options or rights and ~~2008~~issue ~~(Stated~~shares inat ~~US Dollars)~~any time to create any of such outstanding as of June 30, 2009. 12. EARNINGS PER SHARE Components of basic and diluted earnings per share were as follows:

near-term or in the long-term), financial position, results of operations, or cash flows. Though the management of the Company believes a portion of this claim may be recovered, the Company has reasonably estimated the uncertain portion and has eliminated their revenue contribution in 2007.

	Three months	Three months		Nine months		Nine months
	ended	ended		ended		ended
	June 30,	June 30,		June 30,		June 30,
	2009	2008		2009		2008
Earning (Loss) from continuing operations	279,658	(100,948	)	(858,779	)	(2,115,575	)
Net income	280,096	(93,152	)	(776,674	)	(2,099,758	)
Original shares	50,148,000	47,720,000		50,148,000		39,314,000
- Addition to common stock from issuance	-	1,154,769		-		4,428,781
Basic weighted average shares outstanding	50,148,000	48,874,769		50,148,000		43,742,781

Dilutive Shares:
- Addition to common stock if preferred
stock had been converted *	-	-		-		-
Diluted Weighted Average Shares
Outstanding:	50,148,000	48,874,769		50,148,000		43,742,781

*Earnings (Loss) Per Share*
- basic	0.0056	(0.0019	)	(0.0155	)	(0.0514	)
- diluted	0.0056	(0.0019	)	(0.0155	)	(0.0514	)
Weighted average shares outstanding
- basic	50,148,000	48,874,769		50,148,000		43,742,781
- diluted	50,148,000	48,874,769		50,148,000		43,742,781


*Supplemental Data*
Earnings (loss) per share from continuing
operations	0.0056	(0.0019	)	(0.0171	)	(0.0514	)

* If the preferred stock had been converted it would have been antidilutive, accordingly there was no potentially dilutive effect from them.

13.

DISCONTINUED OPERATIONS

VIP Birthing Centers
Results of Operations
for the nine months ended
June 30, 2009
	Changsha		Hangzhou	Foshan		Shanghai		Guangzhou			Total

Revenue	-		-	-		-		-		$	-
Cost of revenue	-		-	-		-		-			-
Gross profit	-		-	-		-		-			-

General and administrative expenses	5,419		-	832		-		-			6,251
Total operating expenses	5,419		-	832		-		-			6,251

Other income	3,696		774	92,137		-		411			97,018
Other expense	-		-	(1,663	)	(6.631	)	(50	)		(8,344	)
Taxes	-		-	-		-		-			-

Net income (loss)	(1,723	)	774	89,642		(6,631	)	361		$	82,423

VIP Birthing Centers
Results of Operations
for the three months ended
June 30, 2009
	Changsha	Hangzhou	Foshan		Shanghai		Guangzhou		Total

Revenue	-	-	-		-		-		-
Cost of revenue	-	-	-		-		-		-
Gross profit	-	-	-		-		-		-

General and administrative expenses	2,476	-	774		-		-		3,250
Total operating expenses	2,476	-	774		-		-		3,250

Other income	3,696	774	13		(3,207	)	411		1,687
Other expense	-	-	(155	)	2,541		(50	)	2,336
Taxes	-	-	-		-		-		-

Net income (loss)	1,220	774	(916	)	(666	)	361		773

VIP Birthing Centers
Financial Position
At September 30, 2008		Changsha			Hangzhou			Foshan			Shanghai			Guangzhou			Total
Current liabilities
Accounts payable		2,401			-			60,713			776,105			-			839,219
Related party payable		-			-			-			-			-
Accrued liabilities		1,287			772			1,287			12,960			4,198			20,504
Total current liabilities		3,688			772			62,000			789,065			4,198			859,723

Total liabilities		3,688			772			62,000			789,065			4,198			859,723

Net assets	$	(3,688	)	$	(772	)	$	(62,000	)	$	(789,065	)	$	(4,198	)	$	(859,723	)

VIP Birthing Centers
Financial Position
At June 30, 2009	Changsha		Hangzhou	Foshan		Shanghai		Guangzhou	Total
Current assets
Cash	-		-	-		48		-	48
Accounts receivable	-		-	-		197,188		10,967	208,155

Total assets	-		-	-		197,236		10,967	208,203

Current liabilities
Accounts payable	-		-	35,535		881,021		-	916,556
Accrued liabilities	2,219		-	2,219		98,508		3,848	106,794
Total current liabilities	2,219		-	37,754		979,529		3,848	1,023,350

Total liabilities	2,219		-	37,754		979,529		3,848	1,023,350

Net assets	(2,219	)	-	(37,754	)	(782,293	)	7,119	(815,147	)

14.	RISKS

	Doing Business in the PRC

	The Company’s operations are conducted in the People’s Republic of China (the “PRC”). Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

	Concentrations

	For the nine months ended June 30, 2009, the Company derived its revenue from four VIP Birthing Centers. Each VIP Birthing Center unto itself can be considered single customers, and, as such, by virtue of there were only three centers, there was a concentration of risk in the Company’s revenues. The following provides a table of each centers’ contribution by amount and percentage for the nine months presented.

			Percentage Contribution
Center		Amount	to Total Revenue
Xiamen	$	7,325	4%
Macau		7,591	3%
Shenzhen		208,818	93%
	$	223,734	100.00%

15.	COMMITMENTS AND CONTINGENCIES

	A. Legal proceeding against IPMCHH

	Proactive Medicare Enterprise (HK) Limited, a subsidiary of UPMG, is a plaintiff of a legal proceeding regarding a civil claim against a hospital in the PRC namely, International Peace Maternity & Child Health Hospital of the China Welfare Institute (“IPMCHH” or the “defendant”) who refused to pay consultancy fees to PME-HK since April 2005 which may aggregate to $2,890,000

	On April 10, 2007, Proactive Medicare Enterprise (HK) Limited (“PME-HK”) brought a civil action to the Shanghai No. 1 Intermediate People’s Court (the “Shanghai Court”) in the PRC against IPMCCH for breach of contract. A statement of claim from PME-HK was sent to the Shanghai Court for acceptance of review. The proposed claims regarding this civil action included: (i) To order IPMCHH to honor the co-operative agreement signed between PME-HK and IPMCHH on February 2, 2004; (ii) To order IPMCHH to pay the consultant fee amounted $2,890,000 (equivalent to RMB22,677,123) in arrears owed to PME-HK, and (iii) IPMCHH shall bear the cost of this action.

	On April 12, 2007, the statement of claim was legally accepted and filed by the Shanghai Court (Notification of Acceptance: (2007) Hu Yi Zhong Min Wu (Shang) Chu Zi No. 93). On May 29, 2007, the first instance of the case was held to establish the case. On January 23, 2008, the second instance of the case was held to further negotiate a mutually accepted settlement plan. Through the mediation of the Shanghai Court, PME-HK and IPMCHH, so far, have gone through several rounds of negotiation for a mutually agreed settlement amount in recent months but a final settlement amount has yet to be confirmed.

	The result of this claim cannot be predicted, and it is possible that the ultimate resolution of the matters, individually or in the aggregate, may have a material adverse effect on the Company’s business (either in the near-term or in the long-term), financial position, results of operations, or cash flows. Though the management of the Company believes a portion of this claim may be recovered, the Company has reasonably estimated the uncertain portion and has eliminated their revenue contribution in 2007.

B. Contingent claims against other three hospitals in the PRC

The Company has also engaged a law firm in the PRC to negotiate with another two hospitals in the PRC, which are under contract to pay the Company for the consultancy services provided to their affiliated VIP Birthing Centers in Foshan and Changsha in the PRC. The proposed claim in each case is about one million US dollars. The Company has gone through several rounds of negotiation for an agreed settlement amount in recent months and a final settlement amount has yet to be confirmed. During the quarter ended December 31, 2008, the Company received $65,720 payment of claim from VIP center in Foshan.

For the Hangzhou Center, the Company is identifying a suitable PRC lawyer to negotiate with its host hospital for a mutually accepted settlement plan.

C. Contingent relationship with JHI

The Company is currently in dispute with JHI mainly on the fee structure, outstanding fee owing to JHI and use of “JHI” brand in future, and we are actively negotiating with JHI for settlement. As indicated in an email from JHI dated April 22, 2008, the Company believes that JHI is willing to provide limited support depending on JHI’s receiving advance payment for any services requested. The Company also believes that JHI is willing to proceed with settlement negotiations with the Company as long as the Company commits to pay a lump sum of $300,000 as the settlement of consulting services provided before. Given the positive attitude of JHI, the Company believes the negotiation outcome would be positive and constructive. The amount to be paid to JHI will ultimately be a liability of the Company, and the Company has accrued the amount of $550,000 during the year ended September 30, 2006. This amount appears as Accrued Liabilities on the Company’s balance sheet at September 30, 2007 and 2006.

21 26

China Health Care Corp

Notes to Consolidated Financial Statements

For the three and nine months ended June 30, 2009 and 2008

(Stated in US Dollars)

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report, particularly in the section entitled "Risk Factors".

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us" and "our" refer to China Health Care Corporation and our subsidiaries, unless otherwise indicated. All references to "common ~~shares~~stock" refer to the common ~~shares~~ shares in our capital stock.

Overview

We were incorporated in the state of Wyoming on February 11, 2005. From our incorporation to July 24, 2008, we had been in the business of the exploration and development of a mineral property approximately 1,320 acres in size in northeastern, Ontario. Our property was without known reserves and our program was exploratory in nature. Because we were not successful in implementing our business plan, we abandoned it and focused on the identification of suitable businesses with which to enter into a business opportunity or business combination.

On January 20, 2008, we entered into a share exchange agreement with United Premier Medical Group Limited, a Cayman corporation, and the shareholders of United Premier Medical Group Limited. The share exchange agreement contemplated our company acquiring all of the issued and outstanding common shares in the capital of United Premier Medical Group Limited in exchange for the issuance by our company of 42,658,000 shares of our common stock. As of the closing date of July 24, 2008, the former shareholders of United Premier Medical Group Limited held approximately 85.1% of the issued and outstanding common shares of our company.

Our fiscal year end is September 30.

On September 15, 2008, we engaged Samuel H. Wong & Co., LLP as our principal independent accountant with the approval of our company’s board of directors. Accordingly we dismissed Cordovano and Honeck LLP on September 15, 2008.

On October 1, 2008, Mr. Henry J. Macfarland resigned as our Chief Executive Officer. Mr. Macfarland will ~~continue to act as our Senior Group Advisor. As a result of Mr. Macfarland’s resignation on October 1, 2008, we appointed Mr. Siew Man Pang as our Chief Executive Officer.~~

1 27

continue to act as our Senior Group Advisor. As a result of Mr. Macfarland’s resignation on October 1, 2008, we appointed Mr. Siew Man Pang as our Chief Executive Officer.

As of the closing date of the share exchange agreement on July 24, 2008, we have contracts to provide consultancy services to a total of five VIP Birthing Centers in the PRC and to manage a private hospital in Macau. These centers are located in Wuxi (“the Wuxi Center”), Xiamen (“the Xiamen Center”), Changsha (“the Changsha Center”), Foshan (“the Foshan Center”) and Hangzhou (“the Hangzhou Center”).

On December 26, 2008, our common shares were delisted from the Over The Counter Bulletin Board System (OTCBB) due to deficiencies in our filings.

On February 1, 2009, Mr. Siew Man Pang resigned as our Chief Executive Officer, Mr. Edwin Chan resigned as our Chief Financial Officer and Mr. Kenneth Lee resigned as our Chief Operating Officer.

As a result of Mr. Pang’s resignation, we appointed Mr. Faith Lam as our Interim Chief Executive Officer and Interim Chief Financial Officer. Before the new appointments, Mr. Lam was our Vice President (Accounting & Procurement).

On February 10, 2009, our common shares resumed trading on the Over The Counter Bulletin Board System (OTCBB).

Our future business will typically consist of three major revenue drivers, namely, VIP Birthing Center, Satellite Health Center and Specialty Hospital.

VIP Birthing Center is typically a hotel-style integrated healthcare center consisting of 11 to 30 bedrooms. These centers are specialized in providing premium obstetric and gynecologic services to high-income locals and expatriates in the PRC. We emphasize home-feel facilities and environment, professional clinical services, sophisticated clinical indicators and reviews, high-end customer services, effective pain management and infection control - all of them have attained the stringent U.S. quality standards. More importantly, our customized and personalized services provide much flexibility and allow our patients to choose their own specialty medical services and surgery experts. To ensure service quality, safety and patient privacy, our one-stop services is a continuous flow ranging from ultrasound diagnosis, laboratory analysis to dispensary.

Satellite Health Center provides full scope of premium outpatient services. Strategically, it is better than the VIP Birthing Centers in the sense that we own the operating license of the clinic and hence has full control of revenue received. Such business model can substantially increase the flexibility in utilizing our resources in outpatient services. Besides, it will play an important role in the overall network development of our specialty hospitals by referring patients to specialty hospitals. At the initial stage, we will target a ratio of 1 specialty hospital associated with 3 satellite health centers.

Specialty Hospital Chain refers to a chain of medium size hospitals in the PRC providing specialty healthcare services primarily for women and children. For the coming years, we target to acquire a number of hospitals, each having 30 to 40 bedrooms in size, and convert them into specialty hospitals with outpatient services, inpatient services and minor surgery services principally in the categories of Obstetrics, Gynecology, Pediatrics, Urology and Infertility.

Results of Operations

Results of Operations for the Three-Month Period Ended ~~March~~June 3130, 2009 as compared to the Three-Month Period Ended ~~March~~June 3130, 2008.

	Three months ended				Increase (decrease)
	March 31,
	2009		2008		amount		percentage
	($)		($)		($)		(%)
Revenue	55,484		88,122		(32,638	)	(37.04%	)
Cost of revenue	(21,836	)	(58,283	)	(36,447	)	(62.53%	)
Gross profit	33,648		29,839		3,809		12.77%

	Three months ended				Increase (decrease)
	June 30,
	2009		2008		Amount		percentage
	($)		($)		($)		($)
Revenue	61,085		127,482		(66,397	)	(52.08%	)
Cost of revenue	(48,291	)	(47,581	)	710		1.49%
Gross profit	12,794		79,901		(67,107	)	(83.99%	)

Selling expenses	(8,317	)	(25,005	)	(16,688	)	(66.74%	)
General and administrative expenses	(100,500	)	(96,553	)	3,947		4.09%
Total other income (expenses)	375,681		(51,889	)	427,570		824.00%
Provision for income tax	0		(7,402	)	(7,402	)	(100.00%	)
Non-controlling interest in net (income)
loss of Subsidiaries	(335	)	7,796		(8,131	)	(104.30%	)
Gain (loss) from discontinued operations,
net of taxes	773		0		773		100.00%
Net income (loss) attributable to parent
commonShareholders	280,431		(100,948	)	381,379		377.80%

	Three months ended				Increase (decrease)
	March 31,
Selling expenses	(2,854	)	(30,975	)	(28,121	)	(90.79%	)
General and administrative expenses	(720,558	)	(1,057,129	)	(336,571	)	(31.84%	)
Total other income (expenses)	(43,094	)	(153,740	)	(110,646	)	(71.97%	)
Provision for income tax	0		(8,095	)	(8,095	)	(100.00%	)
Non-controlling interest in net (income)
loss of Subsidiaries	(17	)	22,634		22,651		100.08%
Gain (loss) from discontinued operations,
net of taxes	19,093		(84,291	)	103,384		122.65%
Net loss attributable to parent common
Shareholders	(713,782	)	(1,281,757	)	(567,975	)	(44.31%	)

Revenue

Our company’s revenues are derived from its share of operating profit from VIP Birthing Centers at hospitals where it has invested in capital equipment, leasehold improvements, and human capital in the form of technical training for hospital staff. Our company’s share of operating profit from the VIP Birthing Centers depends upon the contractual terms with each hospital. Financial statements are provided by the hospitals each month to our company for review, verification, and approval. When the financial statements of the VIP Birthing Centers have been approved, our company recognizes revenue by recording its portion of the total operating profit to its financial statements. Revenues that have been both recognized in accordance to their respective contracts and financial statements provided by the hospitals can be reasonably expected to be collectible.

Revenue for the three-month period ended ~~March~~June 3130, 2009 was $5561,~~484~~085. Revenue for the three-month period ended ~~March~~June 3130, 2008 was $88127,~~122~~482. The decrease in revenue of $3266,~~638~~397 for the three-month period ended ~~March~~June 3130, 2009 was primarily due to the sudden drop of revenue from Xiamen center and according to the Co-operative Agreement, the share of operating profit in Wuxi center was decreased from 80% to 50%.

Cost of Revenue

Cost of revenue is primarily comprised of depreciation, wages, and licensing fees that must be paid to JHI for facilities with continuing operation. We believe that the depreciation of property and equipment matches the substantial initial investment equipment and leasehold improvements with revenues that are earned overtime. We charge wages paid to doctors and medical personnel who provide the initial training and hospital management expertise to the hospital when the VIP Birthing centers are initially setup and on a non-fixed on-going basis. Cost of revenue for the three-month period ended ~~March~~June 3130, 2009 was $2148,~~836~~291 whilst cost of revenue for the three-month period ended ~~March~~June 3130, 2008 was $5847,~~283~~581.

Selling Expenses

Selling expenses are comprised of client entertainment, commissions and salaries for sales personnel, marketing, and travel and lodging expenses. Selling expenses for the three-month period ended ~~March~~June 3130, 2009 was $28,~~854~~317 whilst selling expenses for the three-month period ended ~~March~~June 3130, 2008 was $3025,~~975~~005. The decrease in selling expenses of $2816,~~121~~688 for the three-month period ended ~~March~~June 3130, 2009 as compared to 2008 was primarily due to decrease in business trip expenses ~~and a special bonus paid to Wuxi center medical personnel~~.

General and Administrative Expenses

General and administrative expenses include outside consulting services, research & development, executive compensation, quality control, and general overhead such as finance and administrative staff, and depreciation expense. General and administrative expenses for the three-month period ended ~~March~~June 3130, 2009 was $~~720~~100,~~558~~500. General and administrative expenses for the three-month period ended ~~March~~June 3130, 2008 was $196,~~057,129~~553. The ~~decrease~~increase in general and administrative expenses of $336,571 for the three-month period ended March 31, 2009 as compared to 2008 was primarily due to the absence of professional fees for listing process and the decrease in consultancy service fee paid.

3 29

general and administrative expenses of $3,947 for the three-month period ended June 30, 2009 as compared to 2008 was primarily due to the public company expenses paid.

Other Income (Expenses)

The increase in other income of $~~137~~375,~~009~~681 for the three-month period ended ~~March~~June 3130, 2009 as compared to 2008 was primarily due to an exchange adjustment on ~~Shanghai~~VIP center in ~~2008~~PRC.

Income Tax

We account for income tax using an asset and liability approach and allow for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either, expire before the Company is able to realize their benefits, or future realization is uncertain. In accordance with the relevant tax laws and regulations of Hong Kong, the Corporate Income Tax (“CIT”) rate applicable to our subsidiaries in Hong Kong is 16.5% of taxable income. On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “new CIT Law”), effective from January 1, 2008. Under the new CIT Law, the corporate income tax rate applicable to our subsidiaries in the PRC starting from January 1, 2008 will be 25%, replacing the currently applicable tax rate of 33%. There was no income tax expense or benefit for the three-month period ended ~~March~~June 3130, 2009. Income tax expense for the three-month period ended ~~March~~June 3130, 2008 was $87,~~095~~402.

Non-controlling Interest

Non-controlling interest income of $17335 was recorded for the ~~for~~ for the three months ended ~~March~~June 3130, 2009 whilst the non-controlling interest recorded a loss of $227,~~634~~796 for the three months ended ~~March~~June 3130, 2008. The ~~increase~~ increase in non-controlling interest of $228,~~651~~131 for the three months ended ~~March 31~~June 30, 2009 was primarily due to there was a shared ~~loss~~income of Subsidiaries.

Net Income (Loss) Attributable to Parent Common Shareholders

For the three-month period ended ~~March~~June 3130, 2009, we incurred a net ~~loss~~income attributable to parent common shareholders of $~~713~~280,~~782~~431. The loss was primarily due to the general and administrative expenses incurred for the public company expenses and the consultancy service fees. For the three-month period ended ~~March~~June 3130, 2008, the Company incurred a loss of $1100,~~281,757~~948. The loss was primarily due to the professional fees for listing process.

Results of Operations for the ~~Six~~Nine-Month Period Ended ~~March~~June 3130, 2009 as compared to the ~~Six~~Nine-Month Period Ended ~~March~~June 3130, 2008.

	Six months ended				Increase (decrease)
	Nine months ended				Increase (decrease)
	March 31,
	June 30,
	2009		2008		Amount		percentage
	($)		($)		($)		(%)
Revenue	~~162~~223,~~649~~734		~~235~~358,~~171~~959		(72135,~~522~~225	)	(3037.8467%	)
Cost of revenue	(63111,~~092~~383	)	(95138,~~416~~526	)	(3227,~~324~~143	)	(3319.8859%	)
Gross profit	99112,~~557~~351		~~139~~220,~~755~~433		(40108,~~198~~082	)	(2849.7603%	)
Selling expenses	(2029,~~707~~024	)	(88107,~~895~~124	)	(6878,~~188~~100	)	(7672.7191%	)
General and administrative expenses	(1,~~165~~265,~~420~~920	)	(12,~~305~~127,~~002~~381	)	(~~139~~861,~~582~~461	)	(1040.7049%	)
Total other income (expenses)	~~(51~~323,~~867~~814	)	(~~151~~75,~~266~~059	)	~~(99~~398,~~399~~873	)	~~(65~~531.7141%	)
Provision for income tax	0		(826,~~095~~444	)	(826,~~095~~444	)	(100.00%	)
Non-controlling interest in net (income)
loss of Subsidiaries	(17318	)	015,817		(1716,135	)	~~100~~(102.0001%	)
Gain (loss) from discontinued operations,
net of taxes	81,650		(326,524	)	408,174		125.01%
Net loss attributable to parent common
shareholders	(1,056,804	)	(1,740,027	)	(683,223	)	(39.27%	)

4 30

	Nine months ended				Increase (decrease)
	June 30,
Gain (loss) from discontinued operations,
net of taxes	82,423		0		82,423	-%
Net loss attributable to parent common

Shareholders	(776,356	)	(2,115,575	)	1,339,219	63.30%

Revenue

Revenue for the ~~six~~nine-month period ended ~~March~~June 3130, 2009 was $~~162~~223,~~649~~734. Revenue for the ~~six~~nine-month period ended ~~March~~June 3130, 2008 was $~~235~~358,~~171~~959. The decrease in revenue of $72135,~~522~~225 for the ~~six~~nine-month period ended ~~March~~June 3130, ~~2009~~ 2009 was primarily due to the sudden drop of revenue from Xiamen center and ~~according~~ according to the Co-operative Agreement, the share of operating profit in Wuxi center was decreased from 80% to 50%.

Cost of Revenue

Cost of revenue is primarily comprised of depreciation, wages, and licensing fees that must be paid to JHI for facilities with continuing operation. We believe that the depreciation of property and equipment matches the substantial initial investment equipment and leasehold improvements with revenues that are earned overtime. We charge wages paid to doctors and medical personnel who provide the initial training and hospital management expertise to the hospital when the VIP Birthing centers are initially setup and on a non-fixed on-going basis. Cost of revenue for the ~~six~~nine-month period ended ~~March~~June 3130, 2009 was $63111,~~092~~383 whilst cost of revenue for the ~~six~~nine-month period ended ~~March~~ 31June 30, 2008 was $95138,~~416~~526.

Selling Expenses

Selling expenses are comprised of client entertainment, commissions and salaries for sales personnel, marketing, and travel and lodging expenses. Selling expenses for the ~~six~~nine-month period ended ~~March~~June 3130, 2009 was $2029,~~707~~024 whilst selling expenses for the ~~six~~nine-month period ended ~~March~~June 3130, 2008 was $88107,~~895~~124. The decrease in selling expenses of $6878,~~188~~100 for the ~~six~~nine-month period ended ~~March~~June 3130, 2009 as compared to 2008 was primarily due to decrease in business trip expenses and a special bonus paid to Wuxi center medical personnel.

General and Administrative Expenses

General and administrative expenses include outside consulting services, research & development, executive compensation, quality control, and general overhead such as finance and administrative staff, and depreciation expense. General and administrative expenses for the ~~six~~nine-month period ended ~~March~~June 3130, 2009 was $1,~~165~~265,~~420~~920. General and administrative expenses for the ~~six~~nine-month period ended ~~March~~June 3130, 2008 was $12,~~305~~127,~~002~~381. The decrease in general and administrative expenses of $~~139~~861,~~582~~461 for the ~~six~~nine-month period ended ~~March~~June 3130, 2009 as compared to 2008 was primarily due to ~~the~~ absence of professional fees ~~for~~ for listing process and the decrease inon consultancy service fee paid.

Other Income (Expenses)

The ~~interest~~increase expenses under this category principally referred to dividend expenses paid to Convertible Preference Shares (“CPS”) holders and the loan interests paid to Innotech. During the period from June 30, 2005 to March 10, 2008, we issued a total of 4,605 Convertible Preference Shares at a subscription price of $2,500 per share to a number of investors. The CPS bear an annual coupon rate of 8%, semi-annually in ~~terms~~other ofincome ~~either cash or the common shares~~ of UPMG, with a maturity period of 3 years, allowing for an extension of 1 year. The CPS bear no voting right and each CPS will be converted to one common share of UPMG upon its public listing. Subject to the public listing of UPMG, the conversion is mandatory and must be completed 14 days before the public listing of UPMG. The redemption price will be the subscription price plus a 2% premium. There was no dividend expenses incurred for the six months ended March 31, 2009 and we incurred dividend expenses of $~~148~~398,~~324~~873 for the ~~six~~nine-month ~~months~~period ended ~~March~~June 3130, ~~2008. No dividend expense for the six months ended March 31,~~ 2009 ~~was~~as ~~due~~compared to ~~the~~2008 ~~conversion~~was ofprimarily ~~some~~due ~~CPS~~ to ~~common~~an ~~shares and we have stopped~~exchange ~~paying~~adjustment ~~dividends~~on toVIP ~~CPS~~center ~~holders~~in ~~since December 2007~~PRC.

5 31

Income Tax

We account for income tax using an asset and liability approach and allow for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either, expire before the Company is able to realize their benefits, or future realization is uncertain. In accordance with the relevant tax laws and regulations of Hong Kong, the Corporate Income Tax (“CIT”) rate applicable to our subsidiaries in Hong Kong is 16.5% of taxable income. On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “new CIT Law”), effective from January 1, 2008. Under the new CIT Law, the corporate income tax rate applicable to our subsidiaries in the PRC starting from January 1, 2008 will be 25%, replacing the currently applicable tax rate of 33%. There was no income tax expense or benefit for the ~~six~~nine-month period ended ~~March~~June 3130, 2009. Income tax expense for the ~~six~~nine-month period ended ~~March~~June 3130, 2008 was $826,~~095~~444.

Non-controlling Interest

Non-controlling interest recorded an income of $17318 for the ~~six~~ nine months ended ~~March~~June 3130, 2009 whilst nothe non-controlling interest ~~was~~ recorded ~~for~~a loss of $15,817 for the ~~six~~nine months ended ~~March~~June 3130, 2008. The increase in non-controlling interest of $1716,135 for the ~~six~~nine months ended ~~March~~June 3130, 2009 was primarily due to there was a shared ~~loss~~income of Subsidiaries.

Net Loss Attributable to Parent Common Shareholders

For the ~~six~~nine-month period ended ~~March~~June 3130, 2009, we incurred a net loss attributable to common shareholders of $1776,~~056,804~~356. The loss was ~~primarily~~ primarily due to the general and administrative expenses incurred for the public ~~company~~ company expenses and the consultancy service fees. For the ~~six~~nine-month period ended ~~March 31~~June 30, 2008, the Company incurred a loss of $12,~~740~~115,~~027~~575. The loss was primarily due to the professional fees for listing process.

Liquidity and Capital Resources

As of ~~March~~June 3130, 2009, our total assets were $1,~~068~~477,~~474~~660 and our total liabilities were $67,~~942~~064,~~823~~389 and we had a working capital deficit of $5,~~796~~567,~~258~~224. Our financial statements report a net ~~loss~~income of $~~713~~280,~~765~~096 for the quarter ended ~~March~~June 3130, 2009, and a net loss of $27,~~372~~092,~~402~~307 for the period from inception to ~~March~~June 3130, 2009.

During the ~~six~~nine month periods ended ~~March~~June 3130, 2009 and 2008, we financed our operation mainly through cash generated from our operations and the loans from our directors. Cash from operations is only enough to fund our onsite personnel. The loans from our directors has providing the funding for our investment in capital expenditures, and the cost of medical and management expertise that are heavily involved in the early stages of building out the VIP Birthing Centers and training of the personnel that staff those VIP Birthing Centers.

We expect that with the expansion into new markets and development of our business model, we can gain economies scale on our heavy investment medical and hospital management experts. Related parties and directors have also provided the working capital during the most recent operating periods in order to maintain the business a going concern. We are actively seeking external financing to strengthen our financial position.

As of the date of this report, we have not experienced any difficulty in equity financing, and we have not experienced any liquidity problems in settling our payables in the normal course of business.

The following table sets forth the summary of the Company’s cash flows for the periods indicated:

	Six Months
	Nine Months
	Ended March 31,
	Ended June 30,
	2009		2008
Net cash provided (used) in operating activities	18(1,~~311~~599,179	)	(~~474~~761,~~030~~422	)
Net cash used in investing activities	(710,~~866~~909	)	(811,~~985~~835	)
Net cash used by financing activities	0		0
Net increase (decrease) in cash and cash equivalents	10,445		(483,015	)
Cash and cash equivalents, beginning of period	229,567		416,705
Effect of exchange rate changes on cash and cash equivalents	(199,941	)	82,445
Cash and cash equivalents, at end of period	40,071		16,135

Our cash requirement is mainly for daily working capital. As at March 31, 2009, we had $40,071 in cash and cash equivalents and a working capital deficiency of $5,796,258, compared to $16,135 in cash and cash equivalents and a working capital deficiency of $8,118,223 as of March 31, 2008. 32

Net cash used by financing activities	1,599,625		413,334
Net increase (decrease) in cash and cash equivalents	(10,463	)	(359,923	)
Cash and cash equivalents, beginning of period	229,567		406,396
Effect of exchange rate changes on cash and cash equivalents	(192,426	)	(37,069	)
Cash and cash equivalents, at end of period	26,678		9,404

Our cash requirement is mainly for daily working capital. As at June 30, 2009, we had $26,678 in cash and cash equivalents and a working capital deficiency of $5,567,224, compared to $9,404 in cash and cash equivalents and a working capital deficiency of $5,973,154 as of June 30, 2008.

Cash Flows from Operating Activities

For the ~~six~~nine months ended ~~March~~June 3130, 2009, our operating activities ~~provided~~used cash of $181,~~311~~599,179. For the ~~six~~nine months ended ~~March~~June 3130, 2008, ~~our~~ our operating activities used cash of $~~474~~761,~~030~~422. The increase in cash ~~provided~~used in operating activities of $~~492~~837,~~341~~757 for the ~~six~~nine months ended ~~March~~June 3130, 2009 was primarily due to the ~~absence~~payment ofto ~~the~~related ~~professional~~party ~~fees for listing process in 2009~~payable.

Cash Flows from Investing Activities

For the ~~six~~nine months ended ~~March~~June 3130, 2009, our investing activities used cash of $710,~~866~~909. For the ~~six~~nine months ended ~~March~~June 3130, 2008, our investing activities used cash of $811,~~985~~835. The decrease in cash used in ~~investing~~ investing activities of $~~1,119~~926 for the ~~six~~nine months ended ~~March~~June 3130, 2009 was primarily due to athe decrease in ~~purchasing~~purchase ~~office~~of equipment.

Cash Flows from Financing Activities

For the ~~six~~nine months ended ~~March~~June 3130, ~~2009 and~~ 2008, our financing activities ~~did~~generated ~~not~~cash ~~generate~~of ~~any~~$1,599,625. The increase in cash. provided in financing activities of $1,186,291 for the nine months ended June 30, 2009 was primarily due to loan proceed from related party.

Capital Expenditures

During the ~~six~~nine months ended ~~March~~June 3130, 2009, we incurred capital expenditures of $7,~~181~~203. The capital expenditure principally consisted of medical equipment and facilities, office equipment and leasehold improvement. During the ~~six~~nine months ended ~~March~~June 3130, 2008, we incurred capital expenditures of $811,~~985~~835. Depending on the availability of equity financing, over the next twelve months, we expect to spend about $5,000,000 on capital expenditures, mainly for purchase of medical equipment, facilities and operating licenses and center renovation in the future acquisition of specialty hospitals, health centers and VIP birthing centers in the PRC.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that our company will continue as a going concern. We had a net loss of $1776,~~056,804~~674 and a ~~positive~~negative cash flow from operations of $181,~~311~~599,179 for the ~~six~~nine month period ended ~~March~~June 3130, 2009 and a working capital deficiency of $5,~~796~~567,~~258~~224, and a shareholders’ deficit of $5,~~874~~586,~~349~~729 at ~~March~~June 3130, 2009. These matters raise substantial doubt about our company’s ability to continue as a going concern if we do not secure new outside financing. We are currently and continue to make efforts to procure outside financing to strengthen its financial position.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to shareholders.

Application of Critical Accounting Policies

~~(a)~~ Method of Accounting The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting. (b) Consolidation Inter-company transactions, such as due to/due from balances, investment in subsidiaries, and subsidiaries’ capitalization have been eliminated. (c) Use of Estimates In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These estimates and assumptions include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation of useful lives of property, plant, and equipment. Actual results could differ from these estimates. (d) Cash and Cash Equivalents The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents. (e) Accounts Receivable Accounts receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. Management regularly reviews the Company’s outstanding receivables balance, and will provide allowance for doubtful accounts based on its assessment. Bad debts are charged against allowances when outstanding receivables have been determined to be uncollectible. See Note 3 – Accounts Receivable. (f) Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any impairment write-downs related to assets held and used. Additions and improvements to equipment are capitalized at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation of equipment is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the equipment are as follows:

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.

Consolidation

Inter-company transactions, such as due to/due from balances, investment in subsidiaries, and subsidiaries’ capitalization have been eliminated.

Use of Estimates

In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. These estimates and assumptions include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation of useful lives of property, plant, and equipment. Actual results could differ from these estimates.

Cash and Cash Equivalents

The Company considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. Management regularly reviews the Company’s outstanding receivables balance, and will provide allowance for doubtful accounts based on its assessment. Bad debts are charged against allowances when outstanding receivables have been determined to be uncollectible. See Note 3 – Accounts Receivable.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment write-downs related to assets held and used. Additions and improvements to equipment are capitalized at cost. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation of equipment is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the equipment are as follows:

Software	5 years
Center equipment	5 years
Office equipment	5 years
Furniture and fixtures	5 years
Leasehold improvement	5 - 10 years
Machinery	5 years

8The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to the statement of operations as incurred, whereas significant renewals and betterments are capitalized. See Note 6 –Equipment.

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to the statement of operations as incurred, whereas significant renewals and betterments are capitalized. See Note 6 –Equipment. (g) Revenue Recognition The Company’s revenues are derived from its share of operating profit from VIP Birthing Centers at hospitals where it has invested in capital equipment, leasehold improvements, and human capital in the form of technical training for hospital staff. The Company’s share of operating profit from the VIP Birthing Centers depends upon the contractual terms with each hospital. The typical share of operating profit ranges between 70% and 80% of the total operating profit of the VIP Birthing Center. Financial statements are provided by the hospitals each month to the Company for review, verification, and approval. When the financial statements of the VIP Birthing Centers have been approved, the Company recognizes revenue by recording its portion of the total operating profit to its financial statements. Revenues that have been both recognized in accordance to their respective contracts and financial statements provided by the hospitals can be reasonably expected to be collectible. (h) Cost of Revenue Cost of revenue is primarily comprised of depreciation, wages, and licensing fees that must be paid to JHI for facilities with continuing operation. The Company believes that the depreciation of property and equipment matches the substantial initial investment equipment and leasehold improvements with revenues that are earned overtime. The Company charges wages paid to doctors and medical personnel who provide the initial training and hospital management expertise to the hospital when the VIP Birthing centers are initially setup and on a non-fixed on-going basis. (i) Selling Expenses Selling expenses are comprised of client entertainment, commissions and salaries for sales personnel, marketing, and travel and lodging expenses. (j) General & Administrative Expenses General and administrative expenses include outside consulting services, research & development, executive compensation, quality control, and general overhead such as finance and administrative staff, and depreciation expense. (k) Income Taxes The Company uses the accrual method of accounting to determine and report its taxable income for the year. The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. The Company also adopted FIN 48, Accounting for Uncertainty in Tax Positions. Income tax liabilities computed according to the United States, People’s Republic of China (PRC), Hong Kong SAR and Macau SAR laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be taxable or deductible when the assets and liabilities are recovered of settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the34

9Revenue Recognition

~~Company is able to realize that tax benefit, or that future realization is uncertain. (l) Earnings (Loss) Per Share~~ The Company’s ~~computers~~revenues ~~earnings~~are ~~per~~derived ~~share~~from ~~(“EPS”)~~its in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS NO. 128”), and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share ~~basis~~ of ~~potential~~operating profit ~~common~~from ~~shares~~VIP ~~(e.g.,~~Birthing ~~convertible~~Centers ~~securities, options, and warrants) as if they had been converted~~ at ~~the~~hospitals ~~beginning~~where ofit ~~the~~has ~~periods~~invested ~~presented,~~in ~~or issuance date~~capital equipment, ifleasehold ~~later. Potential common shares that have an anti-dilutive effect (i.e.~~improvements, those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. (m) Other Comprehensive Income (Loss) Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and ~~distributions~~human tocapital ~~owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported~~ in ~~a financial statement that is presented with~~ the ~~same~~form ~~prominence~~of astechnical training ~~other~~for ~~financial~~hospital ~~statements~~staff. The Company’s ~~current~~share ~~component~~ of ~~other~~operating ~~comprehensive~~profit ~~income~~from is the VIP ~~foreign~~Birthing ~~currency~~Centers ~~translation~~depends ~~adjustment.~~upon ~~(n) Foreign Currency Translation The Company maintains its financial statements in~~ the ~~functional~~contractual ~~currency,~~terms ~~which~~with iseach ~~the Renminbi (RMB)~~hospital. ~~Monetary~~The typical ~~assets~~share ~~and~~of ~~liabilities~~operating ~~denominated~~profit inranges ~~currencies~~between ~~other~~70% ~~than~~and ~~the~~80% ~~functional~~of ~~currency are translated into~~ the ~~functional~~total operating ~~currency~~profit ~~at rates~~ of ~~exchange prevailing at~~ the ~~balance~~VIP ~~sheet~~Birthing ~~dates~~Center. ~~Transactions~~Financial ~~denominated~~statements ~~in currencies other than the functional currency~~ are ~~translated~~provided by ~~into~~ the ~~functional~~hospitals ~~currency~~each atmonth ~~the~~to ~~exchanges rates prevailing at~~ the ~~dates~~Company ~~of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income~~ for ~~the~~review, ~~respective~~verification, ~~periods~~and approval. ~~For~~When ~~financial reporting purposes,~~ the financial statements of the ~~Company,~~VIP ~~which~~Birthing ~~are~~Centers ~~prepared using the functional currency,~~ have been approved, ~~translated into United States dollars. Assets and liabilities are translated at~~ the ~~exchange~~Company ~~rates~~recognizes ~~at the balance sheet dates and~~ revenue ~~and~~by ~~expenses~~recording ~~are~~its ~~translated~~portion atof the ~~average~~total operating ~~exchange~~profit ~~rates and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment~~ to ~~other~~its ~~comprehensive income, a component of stockholders’ equity. The accompanying consolidated~~ financial statements ~~are presented in United States dollars~~. ~~The~~Revenues ~~functional~~that ~~currency~~have ofbeen ~~the~~both recognized ~~Company~~in isaccordance ~~Hong~~to ~~Kong~~their ~~dollars~~respective ~~(“HK$”).~~contracts ~~Equity~~and ~~accounts of the consolidated~~ financial statements provided ~~are~~by ~~translated into United States dollars from HK$ at their historical exchange rates when~~ the ~~capital~~hospitals ~~transactions~~can ~~occurred.~~be ~~Assets~~reasonably ~~and~~expected ~~liabilities~~to ~~are~~be ~~translated at the exchange rates as of balance sheet date~~collectible. Income and expenditures are translated at the average exchange rate of the year. Translation adjustments are not included in determining net income but are included in foreign currency translation adjustment in other comprehensive income, a component of stockholders’ equity.

	March 31,	September 30,
	2009	2008
HKD-USD Year End Rate	7.75050	7.77010
HKD-USD Average Rate	7.75469	7.79297
RMB-USD Year End Rate	6.84560	6.85510
RMB-USD Average Rate	6.84994	7.11061

Cost of Revenue

10Cost of revenue is primarily comprised of depreciation, wages, and licensing fees that must be paid to JHI for facilities with continuing operation. The Company believes that the depreciation of property and equipment matches the substantial initial investment equipment and leasehold improvements with revenues that are earned overtime. The Company charges wages paid to doctors and medical personnel who provide the initial training and hospital management expertise to the hospital when the VIP Birthing centers are initially setup and on a non-fixed on-going basis.

	(o)	Recent Accounting Pronouncements
		In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"). SFAS 161 applies to all derivative instruments and related hedged items accounted for under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161 requires entities to provide greater transparency about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, results of operations and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.
		In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy).
		Statement 162 will become effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles."
		In May 2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non- convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis.
		Our company is currently evaluating the potential impact, if any, of the adoption of the above recent accounting pronouncements on its consolidated results of operations and financial condition.

Selling Expenses

Selling expenses are comprised of client entertainment, commissions and salaries for sales personnel, marketing, and travel and lodging expenses.

General & Administrative Expenses

Income Taxes

The Company uses the accrual method of accounting to determine and report its taxable income for the year. The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. The Company also adopted FIN 48, Accounting for Uncertainty in Tax Positions.

Income tax liabilities computed according to the United States, People’s Republic of China (PRC), Hong Kong SAR and Macau SAR laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be taxable or deductible when the assets and liabilities are recovered of settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

Earnings (Loss) Per Share

The Company computers earnings per share (“EPS”) in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS NO. 128”), and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at

the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Other Comprehensive Income (Loss)

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment.

Foreign Currency Translation

The Company maintains its financial statements in the functional currency, which is the Renminbi (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

	June 30,	December 31,	September 30,
	2009	2008	2008
HKD-USD Year End Rate	7.7504	7.75070	7.77010
HKD-USD Average Rate	7.75356	7.75461	7.79297
RMB-USD Year End Rate	6.8448	6.85420	6.85510
RMB-USD Average Rate	6.8466	6.85322	7.11061

Recent Accounting Pronouncements

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"). SFAS 161 applies to all derivative instruments and related hedged items accounted for under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161 requires entities to provide greater transparency about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, results of operations and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles"

("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy). Statement 162 will become effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles."

In May 2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis.

The Company is currently evaluating the potential impact, if any, of the adoption of the above recent accounting pronouncements on its consolidated results of operations and financial condition.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

ITEM 4t. Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer (who is acting as our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

As of ~~March~~June 3130, 2009, the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and our chief financial officer (who is acting as our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and our chief financial officer (who is acting as our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during our quarter ended ~~March~~June 3130, 2009 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

Other than as disclosed below, we know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of ~~our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.~~

our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

Proactive Medicare Enterprise (HK) Limited, a subsidiary of UPMG, is a plaintiff of a legal proceeding regarding a civil claim against a hospital in the PRC namely, International Peace Maternity & Child Health Hospital of the China Welfare Institute (“IPMCHH” or the “defendant”) who refused to pay consultancy fees to PME-HK since April 2005.

On April 10, 2007, Proactive Medicare Enterprise (HK) Limited (“PME-HK”) brought a civil action to the Shanghai No. 1 Intermediate People’s Court (the “Shanghai Court”) in the PRC against IPMCCH for breach of contract. A statement claim from PME-HK was sent to the Shanghai Court for acceptance of review. The proposed claims regarding this civil action included: (i) To order IPMCHH to honor the co-operative agreement signed between PME-HK and IPMCHH on February 2, 2004; (ii) To order IPMCHH to pay the consultant fee amounted $2,890,000 (equivalent to RMB22,677,123) in arrears owed to PME-HK, and (iii) IPMCHH shall bear the cost of this action.

On April 12, 2007, the statement of claim was legally accepted and filed by the Shanghai Court (Notification of Acceptance: (2007) Hu Yi Zhong Min Wu (Shang) Chu Zi No. 93). On May 29, 2007, the first instance of the case was held to establish the case. On January 23, 2008, the second instance of the case was held to further negotiate a mutually accepted settlement plan. Through the mediation of the Shanghai Court, PME-HK and IPMCHH, so far, have gone through several rounds of negotiation for a mutually agreed settlement amount in recent months but a final settlement amount has yet to be confirmed

We have also engaged a law firm in the PRC to negotiate with another two hospitals in the PRC which are under contracts to pay us for the consultancy services provided to their affiliated VIP Birthing Centers in Foshan and Changsha in the PRC. The proposed claim in each case is about one million US dollars. We have gone through several rounds of negotiation for an agreed settlement amount in recent months and a final settlement amount has yet to be confirmed. For the Hangzhou Center, we are identifying a suitable PRC lawyer to negotiate with the host hospital for a mutually accepted settlement plan.

The results of these negotiations / claim cannot be predicted, and it is possible that the ultimate resolution of these matters, individually or in the aggregate, may have a material adverse effect on our business (either in the near-term or in the long-term), financial position, results of operations, or cash flows. Although our management believes a portion of our investment in these affiliated VIP Birthing Centers may be recovered, we have reasonably estimated the uncertain portion and have eliminated their revenue contribution in 2007.

ITEM 1A. Risk Factors

The following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, the trading price of our securities could decline, and you may lose all or part of your investment.

Risks Related to our Business

We have a limited operating history, and it is difficult to evaluate our financial performance and prospects. There is no assurance that we will achieve profitability or that we will not discover problems with our business model.

We have a limited operating history. As such, it is difficult to evaluate our future prospects and performance, and therefore we cannot ensure that we will operate profitably in the future.

We have limited funds available for operating expenses. If we do not obtain funds when needed, we will have to cease our operations.

Currently, we have limited operating capital. As of ~~March~~June 3130, 2009, our cash available was approximately $1626,~~135~~630. In the foreseeable future, we expect to incur significant expenses when developing our business. We may be unable to locate sources of capital or may find that capital is not available on terms that are acceptable to us to fund our additional expenses. There is the possibility that we will run out of funds, and this may affect our operations and thus our profitability. If we cannot obtain funds when needed, we may have to cease our operations.

the foreseeable future, we expect to incur significant expenses when developing our business. We may be unable to locate sources of capital or may find that capital is not available on terms that are acceptable to us to fund our additional expenses. There is the possibility that we will run out of funds, and this may affect our operations and thus our profitability. If we cannot obtain funds when needed, we may have to cease our operations.

We depend on attracting and retaining qualified employees, the failure of which could result in a material decline in our revenues.

We are a provider of healthcare consultancy services. Our revenues and future growth depend on our ability to attract and retain qualified employees. This is especially crucial to our business, as these employees will generate revenue by providing the services that are the staple product that we offer. We may face difficulties in recruiting and retaining sufficient numbers of qualified employees because the market may not have enough of such personnel. In addition, we compete with other companies for qualified employees. If we are unable to retain such employees, we could face a material decline in our revenue.

We derive most of our revenue from treatment facilities rested with our host hospitals that are located in the People’s Republic of China, which makes us particularly sensitive to regulatory and economic conditions in those cities where our facilities are, or will be located.

For the ~~six~~nine month period ended ~~March~~June 3130, 2009, our facilities rested with our host hospitals in the People’s Republic of China, or the PRC, accounted for most of our total revenue. If our treatment facilities are adversely affected by changes in regulatory and economic conditions within China, our revenue and profitability may decline.

We may have difficulty opening new medical facilities and operating them profitably. We have limited experience in opening new treatment facilities. If we are unable to execute our strategy, our growth may be restrained and our operating results could be adversely affected.

Our growth strategy includes developing and opening new medical facilities throughout the PRC, and, to date, we have limited experience in opening new treatment facilities. Planning and opening new treatment facilities can be complex and may be delayed, and, in some circumstances, prevented, by a variety of forces, including local zoning and land use regulations, health facility licensing, community opposition and other political issues. Healthcare laws and other rules and regulations may also impede or increase the cost of opening new facilities. If we are unable to open new treatment facilities on time and on budget, our rate of growth and operating results may be adversely affected.

Even if we are able to open new treatment facilities, we may not be able to staff them. In addition, there can be no assurance that, once completed, new treatment facilities will be able to generate operating profits. Developing new facilities involves significant upfront capital investment and expense and, if we are unable to attract patients quickly and/or enter into contracts or extend our existing contracts with third party payers for these facilities, these facilities may not be profitable and our operating results could be adversely affected.

If we fail to cultivate new or maintain established relationships with patient referral sources, our revenue may decline.

Our ability to grow or maintain our existing level of business depends significantly on our ability to establish and maintain close working relationships with patient referral sources. We may not be able to maintain our existing referral source relationships or develop and maintain new relationships in existing or new markets. If we lose existing relationships with our referral sources, the number of patients we treat may decline, which may adversely affect our revenue. If we fail to develop new referral relationships, our growth may be restrained.

If we fail to implement our business strategy, our business, financial condition and results of operations could be materially and adversely affected.

Our future financial performance and success are dependent in large part upon our ability to implement our business strategy successfully. We may not be able to implement our business strategy successfully or achieve the anticipated benefits of our business plan. If we are unable to do so, our long-term growth and profitability may be adversely affected. Even if we are able to implement some or all of the initiatives of our business plan successfully, our ~~operating results may not improve to the extent we anticipate, or at all.~~

operating results may not improve to the extent we anticipate, or at all.

If we fail to use the brand of Johns Hopkins International, financial conditions results of operations could be materially and adversely affected.

Our current performance and success are dependent in certain extent upon the educational and consulting services provided by Johns Hopkins International, LLC. If we are unable to receive such services, our profitability may be adversely affected and our operating results may not improve to the extent we anticipate.

Our success depends on our ability to manage growth effectively. If we do not manage growth effectively, we may not be able to maintain profitability.

Even if we are successful in obtaining new business, failure to manage our growth could adversely affect our financial condition. We may experience extended periods of very rapid growth. If we are not able to manage our growth effectively, our business and financial condition could materially suffer. Our growth may significantly strain our managerial, operational and financial resources and systems. To manage our growth effectively, we will have to continue to implement and improve our operational, financial and management controls, reporting systems and procedures. In addition, we must effectively expand, train and manage our employees. We will be unable to manage our businesses effectively if we are unable to alleviate the strain on resources caused by growth in a timely and successful manner. We may not be able to manage our growth and a failure to do so could have a material adverse effect on our business.

If the PRC government finds that the agreements that establish the structure for operating our business operations within the PRC do not comply with PRC governmental regulations on foreign investment in the medical industry, we could be subject to penalties. Such penalties may impact our ability to maintain profitability.

If we or our operating subsidiaries or affiliates are found to be in violation of any existing or future PRC laws or regulations, we could be subject to severe penalties, including but not limited to: (i) revocation of our business and operating licenses; (ii) discontinuing or restricting our operations; (iii) imposition of conditions or requirements with which we may not be able to comply; (iv) requirement that we restructure the relevant ownership structure or operation; and (v) restriction or prohibition on our use of the proceeds of our business operations to further finance our operations in the PRC.

We rely on contractual arrangements with PRC obstetric and gynecologic hospitals, which may not be as effective in providing operational control as direct ownership. If we cannot maintain these arrangements, we may have to cease operations.

We rely on contractual arrangements with PRC obstetric and gynecologic hospitals to operate our business. These contractual arrangements may not be as effective in providing us with control over our operations as direct ownership. Under the current contractual arrangements, if the PRC obstetric and gynecologic hospitals fail to perform their respective obligations under these contractual arrangements, we may have to incur substantial costs to enforce such arrangements and rely on legal remedies available under PRC law, which may not be effective to allow us to maintain our business operations. Additionally, many of these contractual arrangements are governed by PRC law and, accordingly, will be interpreted in accordance with PRC law, and any disputes would be resolved according to PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control over our operations, and our ability to conduct our business may be negatively affected.

us to maintain our business operations. Additionally, many of these contractual arrangements are governed by PRC law and, accordingly, will be interpreted in accordance with PRC law, and any disputes would be resolved according to PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control over our operations, and our ability to conduct our business may be negatively affected.

Contractual arrangements we have entered into among our subsidiaries and affiliated entities may be subject to scrutiny by the PRC tax authorities. Such scrutiny may lead to additional tax liability and fines, which would hinder our ability to achieve or maintain profitability.

Risks Relating to the People’s Republic of China

Substantially all of our assets are located in the PRC and substantially all of our revenues are derived from our operations in the PRC. Accordingly, our business, financial condition, results of operations, and prospects are ~~subject, to a significant extent, to economic, political and legal developments in the PRC.~~

subject, to a significant extent, to economic, political and legal developments in the PRC.

The PRC’s economic, political and social conditions, as well as governmental policies, could affect the financial markets in the PRC, our liquidity and access to capital, and our ability to operate our business.

Our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. The PRC economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant growth, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and to guide the allocation of resources. The PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has implemented measures since the late 1970s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in the PRC are still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over its economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Since late 2003, the PRC government has implemented a number of measures, such as raising bank reserves against deposit rates to place additional limitations on the ability of commercial banks to make loans and raise interest rates, in order to slow down specific segments of the PRC’s economy. These actions, as well as future actions and policies of the PRC government, could materially affect our liquidity and access to capital and our ability to operate our business.

The PRC legal system embodies uncertainties which could limit the legal protections available to us.

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation has been significantly enhanced protections afforded to various forms of foreign investment in the PRC. However, these laws, regulations and legal requirements change frequently, and their interpretation and enforcement involve uncertainties. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, because PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. In addition, such uncertainties, including the inability to enforce our contracts, could materially and adversely affect our business and operation. Also, intellectual property rights and confidentiality protections in the PRC may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the PRC legal system, particularly with regard to the medical industry, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us.

U.S. investors may experience difficulties in attempting to enforce judgments based upon U.S. federal securities laws against us and our non-U.S. resident directors.

All of our operations and our assets are located outside the United States and some of our directors and officer are foreign citizens. As a result, it may be difficult or impossible for U.S. investors to enforce judgments of U.S. courts for civil liabilities against any of our individual directors or officers.

Risks Relating to Our Common Shares

Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common shares and make it difficult for our shareholders to resell their shares.

Our common shares are quoted on the OTC Bulletin Board service. Trading in shares quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common shares for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of the shares.

Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common shares for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of the shares.

Our share is a penny stock. Trading of our share may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s ability to buy and sell our shares.

Our share is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the shares that are subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common shares.

FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our share.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority, or FINRA, has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our share.

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common shares.

ITEM 2. Unregistered Sales of Equity Securities

None.

ITEM 3. Default Upon Senior Securities

None.

ITEM 4. Submission of Matters to a Vote of Security Holders

On April 8, 2009, stockholders of our company were asked to approve, at an annual meeting of stockholders, the election of Wong Yuen Yee, Gerald Lau and Andrew B. Kramer as directors and the appointment of Samuel H. Wong & Co., LLP as the independent auditors of our company.

Votes representing 13,283,300 shares voted (representing 9 shareholders of our company) in favor of the election of Wong Yuen Yee and Gerald Lau as directors of our company and votes representing 144,000 voted against (representing 1 shareholder of our company) the election of Wong Yuen Yee and Gerald Lau as directors.

Votes representing 13,427,300 shares voted (representing 10 shareholders of our company) in favor of the election of Andrew B. Kramer as a director. The approval of Mr. Kramer as a director was unanimous.

Votes representing 13,427,300 shares voted (representing 10 shareholders of our company) in favor of the appointment of Samuel H. Wong & Co. LLP as the independent auditors of our company. The appointment of Samuel H. Wong & Co. LLP as the independent auditors of our company was unanimous.

ITEM 5. Other Information

On December 26, 2008, our common shares were delisted from the Over The Counter Bulletin Board System (OTCBB) due to deficiencies in our filings. On February 10, 2009, our common shares resumed trading on the Over The Counter Bulletin Board System (OTCBB).

On March 11, 2009, Mr. Wong Yao Wing resigned as our Director. As a result of Mr. Wong Yao Wing’s resignation on March 11, 2009, we appointed Mr. Gerald Lau as our Director.

On May 12, 2009, we changed the place of our executive offices to Room 904, Tung Wai Commercial Building, 109 – 111 Gloucester Road, Wan Chai, Hong Kong. Our telephone number is (852)-2511-8008 and our facsimile number is (852)-2511-8928.

ITEM 6. Exhibits.

Exhibits required by Item 601 of Regulation S-K

Exhibit
No.	Description
(2)	Plan of Purchase, Sale, Reorganization, Arrangement, Liquidation or Succession
2.1	Share Exchange Agreement dated January 20, 2008, among our company, United Premier Medical Group and the selling shareholders of United Premier Medical Group as set forth in the share exchange agreement (incorporated by reference from our Current Report on Form 8-K filed on January 28, 2008)
(3)	Articles of Incorporation and By-laws
3.1	Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on July 29, 2005)
3.2	Bylaws (incorporated by reference from our Registration Statement on Form SB-2 filed on July 29, 2005)

17 43

Exhibit
No.	Description
(3)	Articles of Incorporation and By-laws
3.1	Articles of Incorporation (incorporated by reference from our Registration Statement on Form SB-2 filed on July 29, 2005)
3.2	Bylaws (incorporated by reference from our Registration Statement on Form SB-2 filed on July 29, 2005)
(10)	Material Contracts
10.1	Option To Purchase And Royalty Agreement between The Cavalier Group and Larry Gervais of Timmins, Ontario, dated April 25, 2005 to acquire a 100% interest in the Casa Claim Block, Porcupine Mining Division, Ontario.( incorporated by reference from our Registration Statement on Form SB-2 filed on July 29, 2005)
10.2	Code Of Business Conduct & Ethics and Compliance Program (incorporated by reference from our Annual Report on Form 10-KSB filed on August 28, 2008)
10.3	Educational and Consulting Services Agreement between JHI and PMEHK dated June 15, 2002. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.4	Licensing Agreement between JHI and PMEHK dated June 15, 2002. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.5	Novation and Assignment Agreement for Education and Consulting Services Agreement between PMEHK, PMEUS and JHI. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.6	Novation and Assignment for Licensing Agreement between PMEHK, PMEUS and JHI dated April 11, 2003. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.7	Amendment to Licensing Agreement between JHI and PMEUS dated August 8, 2003. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.8	Second Amendment to Licensing Agreement between JHI and PME dated June 10, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.9	First Amendment to Educational And Consulting Services Agreement between JHI and PME dated June 10, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.10	Description of Co-operative Agreement between IPMCHH and UPMG (U.S.) Limited dated ~~March~~June 3130, 2005. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.11	Description of Co-operative Agreement between IPMCHH and PMEHK dated February 2, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.12	Description of Co-operative Agreement between IPMCHH and PMEHK dated March 21, 2003. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.13	Description of Technical Exchange and Cooperative Agreement between Xiamen Maternity and Child Health Care Hospital and Proactive Medicare (Xiamen) Company Limited dated March 6, 2005. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.14	Description of Co-operative Agreement between Jinan Maternity and China Care Hospital and Proactive Medicare Enterprise (Jinan) Limited dated February 5, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.15	Description of Co-operative Agreement between Beijing Obstetrics & ~~Gynecology~~Gynaecology Hospital and Proactive Medicare (Beijing) Company Limited dated April 25, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.16	Co-operative Agreement between Foshan Maternal and Children’s Hospital and Proactive Medicare Services (Hong Kong) Limited dated February 27, 2004 (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.17	Description of Supplemental Agreement to the Co-operative Agreement between Foshan Maternal and Children’s Hospital and Proactive Medicare Services (Hong Kong) Limited dated February 27, 2004 (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)

18 44

Exhibit
No.	Description
10.16	Co-operative Agreement between Foshan Maternal and Children’s Hospital and Proactive Medicare Services (Hong Kong) Limited dated February 27, 2004 (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.17	Description of Supplemental Agreement to the Co-operative Agreement between Foshan Maternal and Children’s Hospital and Proactive Medicare Services (Hong Kong) Limited dated February 27, 2004 (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.18	Description of Co-operative Agreement betweenThe Second Affiliated Hospital of Guangzhou Medical College and UPMG (Guangdong) Company Limited dated November 18, 2003. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.19	Description of Co-operative Agreement between Changsha Maternity and Child Hospital and Proactive Medicare (Changsha) Company Limited dated July 7, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.20	Supplemental Agreement to the Co-operative Agreement between Changsha Maternity and Child Hospital and Proactive Medicare (Changsha) Company Limited dated July 7, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.21	Description of Co-operative Agreement between Wuxi Maternity and Children Hospital and Proactive Medicare (Wuxi) Company Limited dated April 19, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.22	Description of Supplemental Agreement to the Co-operative Agreement between Wuxi Maternity and Children Hospital and Proactive Medicare (Wuxi) Company Limited dated April 19, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.23	Technical Exchange and Co-operative Agreement between Hangzhou Tin Mu Shan Hospital Limited and Proactive Medicare (Hangzhou) Company Limited dated August 20, 2005. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.24	Description of Technical Exchange and Co-operative Agreement between Proactive Medicare (Jiangsu) Company Limited and Jiangsu Province Women and Children Hygiene and Health Center/the Auxiliary Ward of the Jiangsu Province People’s Hospital dated September 29, 2005. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.25	Agreement between Data Pacific Medical Group Limited and UPMG (Hong Kong) Limited dated June 28, 2006. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.26	Hospital Management, Hospital Services Development and Related Consulting Services Agreement between The University Hospital of Macau University of Science and Technology Foundation and UPMG (Macau) Limited dated October 1, 2006. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.27	Amendment Agreement to the Hospital Management, Hospital Services Development and Related Consulting Services Agreement between The University Hospital of Macau University of Science and Technology Foundation and UPMG (Macau) Limited dated June 27, 2007. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.28	Management Services Agreement between UPMG (Hong Kong) Limited and American-Sino Human Resources Consulting and Management (Shanghai) Ltd. Dated October 26, 2006. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
10.29	Services Agreement PMEHK and PMEUS dated March 28, 2004. (incorporated by reference from our CCurrent Report on Form 8-K ~~fil~~filed don lJuly 31, 2008)
10.30	Project Consultancy Agreement between PMEHK and PMEUS dated March 28, 2004. (incorporated by reference from our Current Report on Form 8-K filed on July 31, 2008)
(21)	Subsidiaries of the Small Business Issuer
	UPMG International Limited Proactive Medicare Enterprise (Hong Kong) Limited Proactive Medicare (Shenzhen) Company Limited Proactive Medicare (Changsha) Company Limited

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Exhibit
No.	Description
(21)	Subsidiaries of the Small Business Issuer
	Proactive Medicare (Xiamen) Company Limited Proactive Medicare (Nanjing) Company Limited Proactive Medicare (Hangzhou) Company Limited Proactive Medicare (Wuxi) Company Limited United Premier Medical Group (Shanghai) Limited Proactive Medicare Services (Hong Kong) Limited Proactive Medicare (Beijing) Company Limited UPMG (Hong Kong) Limited UPMG (US) Limited Guangzhou Inno-Proactive Medicare Consultancy Limited Shanghai Proactive Medicare Health Education Center Limited UPMG (Shenzhen) Limited Broad Prosper Limited UPMG (Macau) Company Limited
	UPMG International Limited
	Proactive Medicare Enterprise (Hong Kong) Limited
	Proactive Medicare (Shenzhen) Company Limited
	Proactive Medicare (Changsha) Company Limited
	Proactive Medicare (Xiamen) Company Limited
	Proactive Medicare (Nanjing) Company Limited
	Proactive Medicare (Hangzhou) Company Limited
	Proactive Medicare (Wuxi) Company Limited
	United Premier Medical Group (Shanghai) Limited
	Proactive Medicare Services (Hong Kong) Limited
	Proactive Medicare (Beijing) Company Limited
	UPMG (Hong Kong) Limited
	UPMG (US) Limited
	Guangzhou Inno-Proactive Medicare Consultancy Limited
	Shanghai Proactive Medicare Health Education Center Limited
	UPMG (Shenzhen) Limited
	Broad Prosper Limited
	UPMG (Macau) Company Limited
(31)	Section 302 Certification
31.1*	Section 302 Certification of Faith Lam
(32)	Section 906 Certification
32.1*	Section 906 Certification of Faith Lam

*filed herewith

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SIGNATURES

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

CHINA HEALTH CARE CORPORATION

By /s/ Faith Lam Faith ~~Lam Interim~~LamInterim Chief Executive Officer, Interim Chief Financial Officer Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer Date: August ~~May~~ 20, 2009.

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