Summary of CHINA HEALTHCARE ACQUISITION CORP.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our financial statements and the related notes and schedules thereto included in this report. We were formed June 7, 2006, for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition or other similar business combination, an operating business with operations primarily in the People's Republic of China. Our initial business combination must be with a target business whose fair market value is at least equal to 80% of our net assets (excluding the deferred underwriting compensation held in trust) at the time of such acquisition. We intend to use cash derived from the proceeds of our recently completed offering and private placement, our capital stock, debt or a combination of cash, capital stock and debt, to effect such business combination.
China Healthcare Acquisition Corp. and Europe Asia Huadu Environment Holding Pte, Ltd. ("EAHE") announced on August 6, 2008 that CHAC and the owner of EAHE signed a definitive acquisition agreement for CHAC to acquire EAHE in exchange for CHAC common stock. Through its subsidiaries in the People's Republic of China ("China"), Europe-Asia Huadu (Yixing) Environment Protection Co., Ltd and Yixing Europe-Asia Huadu Environment Engineering Co. Ltd., EAHE manufactures water treatment equipment and provides construction and engineering services for water treatment projects in China.
On November 10, 2008, the acquisition agreement was terminated by mutual agreement of the parties. We had determined that we would not receive the votes of our stockholders required for approval of the acquisition. In connection with the termination, the parties entered into a mutual release. Our management is considering the Company's alternatives.
Results of Operations
Net Income
Net loss for the quarter ended September 30, 2008 was $15,183 consisting of interest income totaling $167,710 which was primarily offset by operating costs of $166,968, Delaware franchise tax of $15,688 and provision for income taxes of $237. Net income for nine month period ended September 30, 2008 was $41,472, consisting of interest income of $736,101 which was primarily offset by operating costs of $615,604, Delaware franchise tax of $47,063 and provision for income taxes of $31,963. Operating costs include expenses incurred in connection with due diligence on several potential candidates, including travel expenses, professional fees and other expenses. Compared to the same period of 2007, there is a reduction of income. This is due largely to the fact that the interest rate on the funds held in trust has decreased substantially, from approximately 5% last year to approximately 2% this year. Changes In Financial Condition

Liquidity and Capital Resources
On April 16, 2007, we entered in to an agreement with the Chairman of our Board of Directors for the sale of 3,000,000 warrants in a private placement. Each warrant entitles the holder to purchase from us one share of our common stock at an exercise price of $5.00. The warrants were sold at a price of $0.50 per warrant, generating net proceeds of $1,500,000.
On April 25, 2007, we consummated our initial public offering of 8,500,000 units, and on May 9, 2007, sold an additional 1,251,555 units attributable to the exercise of the underwriters' over-allotment option. Each unit consists of one share of common stock and two warrants. Each warrant entitles the holder to purchase from us one share of our common stock at an exercise price of $5.00. Our common stock and warrants commenced trading separately on May 29, 2007. The net proceeds from the sale of the units in the initial public offering (including the over-allotment option) and the private placement were $57,307,802 after deducting offering expenses of approximately $800,000 but including the deferred non-accountable expense allowance and the deferred portion of the underwriting discounts of approximately $2,133,867. All of this amount is held in trust. We will use substantially all of the net proceeds of this initial public offering and private placement proceeds (other than the deferred non-accountable expense allowance and the deferred portion of the underwriting discount) to acquire one or more operating businesses. However, we may not use all of such proceeds in the trust in connection with a business combination, either because the consideration for the business combination is less than the proceeds in trust or because we finance a portion of the consideration with our capital stock or debt securities. In that event, the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance the operations of the target business or businesses.
In the event that we consummate a business combination, the proceeds held in the trust account will be used for the following purposes:
• Payment of the purchase price for the business combination;

• Payment of the non-accountable expense allowance and the deferred portion of the underwriting discount due to the underwriters;

• Payment of any finder's fees or professional fees and costs; and

• Payment of any fees and costs the Company may incur in connection with any equity or debt financing relating to the business combination.

The Company does not currently have any agreement with any party with respect to the payment of finders' or professional fees. If the Company agrees to pay such fees in the future, such fees shall be negotiated on an arms-length basis. Prior to consummating a business combination, we finance our operations by using the interest earned on the trust funds. As of September 30, 2008, we had spent $959,053 of these funds on formation and operating costs. We believe that the remaining funds will be sufficient to allow us to

operate through at least April 19, 2009, assuming that a business combination is not consummated during that time. From the date of the closing of our initial public offering through April 19, 2009, we anticipate making the following expenditures:
• approximately $200,000 for legal, accounting and other expenses attendant to the structuring and negotiating of a business combination;

• approximately $300,000 for the due diligence and investigation of a target business;

• approximately $115,000 in legal and accounting fees relating to our SEC reporting obligations;

• approximately $120,000 in fees relating to our office space and certain general and administrative services;

• approximately $240,000 for travel, general working capital that will be used for miscellaneous expenses and reserves, including for director and officer liability insurance premiums, deposits, down payments and/or funding of a "no shop" provision in connection with a prospective business transaction and for international travel with respect to negotiating and finalizing a business combination; and

• approximately $75,000 for a reserve for liquidation expenses.

We are limited to $1,200,000, net of taxes, of interest earned on the trust account for these estimated expenditures. If the funds available to us are insufficient to cover these costs, our founders will have no obligation to provide additional funding.
We do not believe we will need additional financing following the initial public offering in order to meet the expenditures required for operating our business. However, we may need to obtain additional financing to the extent such financing is required to consummate a business combination, in which case we may issue additional securities or incur debt in connection with such business combination.
As of June 7, 2006, Mr. Kang lent a total of $150,000 to the Company for payment of offering expenses which was repaid without interest at closing out of offering proceeds. Upon the consummation of our initial public offering, Mr. Kang lent $150,000 to the Company, which was deposited in our operating account and bears interest at a rate of 4% per year. On April 25, 2008, we paid back the loan, principal plus interest, by issuing a check of $156,000 to Mr. Kang.
We are paying NCIL, an affiliate of Alwin Tan, a monthly fee of $5,000 for general and administrative services including office space, utilities and secretarial support.

Off-Balance Sheet Arrangements
Options and warrants issued in conjunction with our initial public offering are equity linked derivatives and accordingly represent off balance sheet arrangements. The options and warrants meet the scope exception in paragraph 11(a) of FAS 133 and are accordingly not accounted for as derivatives for purposes of FAS 133, but instead are accounted for as equity.
Other than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity.
Contractual Obligations
In connection with our initial public offering, we agreed to pay the underwriters a deferred non-accountable expense allowance and deferred portion of the underwriting discount of $2,133,867 upon consummation of our initial business combination. We expect such allowance will be paid out of the proceeds in the trust account. Other than the contractual obligations incurred in the ordinary course of business, we do not have any other long-term contractual obligations.
Forward Looking Statements
This Quarterly Report on From 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have based these forward-looking statements on our current expectations and projections about future events, and we assume no obligation to update any such forward-looking statements. The forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual result to be materially different from any future results expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause our future results to differ from those statements include, but are not limited to, those described in the section entitled "Risk Factors" of the prospectus filed with the Securities and Exchange Commission (the "SEC") in connection with our initial public offering. The following discussion should read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report and with the section entitled "Risk Factors" of the prospectus filed with the SEC in connection with our public offering and in our 10-K Annual Report. Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not required for a smaller reporting company.