UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  December 27, 2010

CHINA HEALTH RESOURCE, INC.

(Name of Small Business Issuer in its Charter)

343 Sui Zhou Zhong Road

Sui Ning, Si Chuan Province, P.R. China

(Address of Principal Executive Offices)

+(86-825) 239-1788

(Issuer’s Telephone Number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

ITEM 1.01.  Entry into a Material Definitive Event. 

On December 27, 2010, the China Health Resource, Inc.’s (“Company”) subsidiary corporation, Suining Shi Yinfa Bai Zhi Chan Ye You Xian Gong Si (“Yinfa”), entered into a short-term loan agreement with Suining City Commercial Bank (“Bank Loan”). The Bank Loan provides the amount of RMB 3,000,000 (approximately US $451,467) for a term from December 27, 2010 to December 26, 2011 at a fixed annual interest rate of 8.34%, of which the interest is payable monthly, secured by Yinfa’s corporate office building on No. 188 Xishan Road, Suining, Sichuan Province, P.R. China. The Bank Loan is further described under Item 2.03 of this Current Report on Form 8-K, which is incorporated herein by reference.

On December 27, 2010, the Company entered into a bank loan security agreement (“Bank Collateral Agreement”) to designate the collateral of the Bank Loan. Bank Collateral Agreement provides for the collateralization of its office building located at ground floor, the 2^nd floor and the 3^rd floor of the Estate Management Building of Yinhejiayuan (address: No. 188 Xishan Road, Suining). The Bank Collateral Agreement is further described under Item 2.03 of this Current Report on Form 8-K, which is incorporated herein by reference.

On December 27, 2010, the Company entered into an unsecured promissory note agreement (“Jiayin Wang Note”) with Mr. Jiayin Wang, the company’s Chairman, President, and Chief Executive Officer. The Jiayin Wang Note provides Yinfa with RMB 3,000,000 (approximately US $451,467) from Mr. Wang, payable after one year on December 26, 2011. The Jiayin Wang Note is further described under Item 2.03 of this Current Report on Form 8-K, which is incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. 

On December 27, 2010, the Company’s subsidiary corporation, Yinfa, entered into the Bank Loan with Suining City Commercial Bank. The Bank Loan provides the amount of RMB 3,000,000 (approximately US $451,467) for a term from December 27, 2010 to December 26, 2011 at a fixed annual interest rate of 8.34%, of which the interest is payable monthly, secured by Yinfa’s corporate office building at 188 Xishan Road, Suining City, Sichuan Province, P.R. China; by which the Company on December 27, 2010 entered into a bank loan security agreement (“Bank Collateral Agreement”) to designate the collateral of the Bank Loan. Bank Collateral Agreement provided the necessary collateral for Suining City Commercial Bank to approve Bank Loan.

The Bank Loan of RMB 3,000,000 (approximately US $451,467) was drawn on December 27, 2010.  These proceeds will be used for working capital, capital expenditures and other general corporate purposes of Yinfa’s business development.

The foregoing description does not constitute a complete summary of the terms of the Bank Loan, and is qualified in its entirety by reference to the full text of the Bank Loan, which is filed as Exhibit 10.1 to this Form 8-K and incorporated herein by reference.

The Bank Collateral Agreement calls for the collateralization of the Yinfa’s corporate office building located at 188 Xishan Road, Suining City, Sichuan Province, P.R. China as security for the Company’s Bank Loan with Suining City Commercial Bank, filed as Exhibit 10.1.

The foregoing description does not constitute a complete summary of the terms of the Bank Collateral Agreement, and is qualified in its entirety by reference to the full text of the Bank Collateral Agreement, which is filed as Exhibit 10.2 to this Form 8-K and incorporated herein by reference.

On December 27, 2010, the Company entered into an unsecured promissory note agreement (“Jiayin Wang Note”) with Mr. Jiayin Wang, the company’s Chairman, President, and Chief Executive Officer. The Jiayin Wang Note provides Yinfa with RMB 3,000,000 (approximately US $451,467) from Mr. Wang, payable after one year on December 27, 2011.

These proceeds will be used for working capital, capital expenditures and other general corporate purposes of Yinfa’s business development.

The foregoing description does not constitute a complete summary of the terms of the Jiayin Wang Note, and is qualified in its entirety by reference to the full text of the Jiayin Wang Note, which is filed as Exhibit 10.3 to this Form 8-K and incorporated herein by reference.

A copy of the press release, dated December 29, 2010, issued by the Company regarding the entering into of the Bank Loan, the entering into of the Bank Collateral Agreement, and entering into of the Jiayin Wang Note is filed as Exhibit 99.1 to this Form 8-K.

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Certain disclosures regarding transactions with related persons:

As a director and an executive officer of the Company, Mr. Wang is a "related person" of the Company for purposes of applicable rules and regulations of the U.S. Securities and Exchange Commission.

In May 2005, in cooperation with our affiliate, Sichuan Yinfa Resource Development Group Co. Ltd. (“Yinfa Resource”), we applied for certification from the Chinese State Food and Drug Administration (the “SFDA”) for Good Agricultural Practice of Medical Plants and Animals (“GAP”) covering DAR.  On February 26, 2006, the SFDA issued a GAP certificate related to the planting fields operated by the Company and third parties under contract with the Company certifying that our planning, quality, and manufacturing of DAR have met applicable SFDA standards.  On January 1, 2007, Yinfa Resource and Suining Shi Yinfa Bai Zhi Chan Ye You Xian Gong Si, a wholly-owned subsidiary of the Company ("Yinfa"), entered into a Contract for Exclusive Right of Using DAR GAP Certificate (the "GAP Agreement") pursuant to which Yinfa Resource granted Yinfa the exclusive right to use the DAR GAP certificate through December 31, 2017. Under the Agreement, no compensation is payable to Yinfa Resource by Yinfa. Yinfa, the wholly-owned subsidiary of the Company, owns 0.27% of the registered capital stock of Yinfa Resource, the affiliate company. Mr. Wang is the Chairman of Yinfa Resource.

In 2007, Yinfa contracted with the Sichuan Province Suining City DAR Association (“Association”) and received the exclusive rights to the “Suining Sichuan Angelica” certified trademark from the Chinese State Administration of Industry and Commerce through December 13, 2016. As holder of the rights to the trademark, Yinfa is entitled to receive a management fee of 1RMB (or approximately US $0.14) per kilogram of DAR (including packaging fees) from any user of the trademark, of which 60% may be used by Yinfa for further development and investment of its DAR business and the remaining 40% must be paid to the Association for related expenses. In addition, Yinfa is entitled to receive 100% of the revenue stream from the use of the DAR trademark through December 13, 2016 and 95% of the revenue stream thereafter. There are approximately 235 regional certification trademarks in China, including 65 for natural resources, of which over 20 are for natural herb resources. Mr. Wang is the Chairman of the Association.   

According to the Contract of Exclusive Right for Using “Suining Sichuan Angelica” Certified Trademark entered into, as of March 16th, 2007, by and between Association and Yinfa, Yinfa obtains, from Association, the exclusive right for using the “Suining Sichuan Angelica” certified trademark. Pursuant to the this contract, Association shall provide relevant information and materials for applying for the “Suining Sichuan Angelica” certified trademark; provide planting fields for “Suining Sichuan Angelica”; and assist Yinfa in applying for “Suining Sichuan Angelica” certified trademark in the Industrial and Commercial Administration Bureau. Also pursuant to this contract, Yinfa shall write and compile the materials for applying for the “Suining Sichuan Angelica” certified trademark; and assume all of the fees for applying for such certified trademark. Also, pursuant to this contract, upon successively obtaining such certified trademark, Association shall be entitled to have the ownership to such trademark and Yinfa shall be entitled to have the exclusive right for using, managing and protecting such trademark. As for the profit from such trademark, Yinfa shall be entitled to have such profit from the trademark in the first 10 years; from the 11th year and the years thereafter, Association shall be entitled to have 5% of such profit from the trademark and Yinfa has 95%. In case such trademark expires, renewal process shall be adopted. Yinfa shall still be entitled to have the exclusive right for using such trademark after renewal and shall assume all of the fees for such renewal. This contract was renewed from the previously contract signed March 16, 2004, and basically contains the same terms.

In 2006, Mr. Wang paid fees and expenses totaling $376,457 on the Company's behalf for investment banking, legal, accounting and other services provided to the Company in connection with the Plan of Exchange pursuant to which Yinfa became a wholly-owned subsidiary of the Company.  The amount of $80,258 was fees paid by Mr. Wang on the Company’s behalf for consulting fees related to the merger, which was reflected on the Company’s balance sheet as a liability “Due to Shareholder” beginning December 2007, which is when Mr. Wang submitted his reimbursement report. The remaining amount was reflected on the Company's balance sheet as a liability "Due to Shareholder" beginning December 31, 2009 which is when Mr. Wang submitted his reimbursement report to the Company.  There is currently no written agreement between the Company and Mr. Wang regarding this liability, but the parties are in the process of formulating a repayment arrangement. The Company does not believe that this will have an effect on business operations.

On December 19, 2008, the Company and Mr. Lei Guo, as Trustee, on behalf of Yinfa Resource, the Trustor, pursuant to a Property Trust Agreement made under the PRC trust and contract laws, and other applicable PRC laws and regulations, entered into a Contract of Lease of Property, pursuant to PRC contract law, leasing for the Company approximately 3,262 acres located in Sichuan Province, PRC.  Mr. Wang is the controlling shareholder of Yinfa Resource.

The lease period commenced December 30, 2008 and was to expire on December 30, 2038. The total fixed rent for the full lease period was $5,775,994 for the full lease term. Pursuant to the Contract of Lease of Property, the Company agreed to pay $5,710,994 by issuing a Convertible Promissory Note in the principal sum of $5,710,994, along with annual interest at the rate of one and one-half percent (1.5%), per annum.  Pursuant to the terms of the Convertible Promissory Note, the principal amount and all accrued, but unpaid interest, automatically converted in four (4) tranches, on the dates (“Conversion Dates”) set forth in Convertible Promissory Note (each a “Mandatory Conversion”) into shares of Common Stock, at a conversion price equal to the closing bid price per share for the Common Stock, as quoted on the OTC Bulletin Board or, if the Common Stock is listed on a National Securities Exchange, at the closing price per share.  In each case, the conversion price was to be determined, on the date, five (5) days prior to the applicable Conversion Date (the “Conversion Price”).  The Mandatory Conversions were to be implemented as following:

The Company paid the remaining balance of $65,000, by issuing 43,000,000 shares of the Common Stock to the Trustee on behalf of the Trustor, on December 30, 2008 in a transaction exempt from the registration requirements of the 1933 Act in reliance upon Regulation S thereunder.

On January 21, 2009, the Company and Mr. Lei Guo, the Trustee, on behalf of the Trustor, agreed to amend and restate the Convertible Promissory Note by revising the terms of the conversion mechanism in the Convertible Promissory Note – the remaining terms and conditions of the Convertible Promissory Note remained unaffected by the amendment.  The amendments were reflected in an Amended and Restated Convertible Promissory Note (the “Note”).  Pursuant to the Note, the Conversion Price was amended into a fixed price, set forth in the terms of the Note, and the terms of the Mandatory Conversion were amended as follows:

On March 30, 2009, the outstanding principal in the amount of $2,500,000, plus the accrued and unpaid interest automatically converted at the Conversion Price of $0.20 per share into 12,605,615 shares of Common Stock for the Trustee pursuant to the terms of the Note.  The Note and the Common Stock were issued in reliance upon an exemption from the registration requirements of the 1933 Act in accordance with Regulation S.

Effective July 30, 2009, the Company and Mr. Lei Guo, as Trustee for the Trustor, terminated the Contract of Lease of Property the Note and in connection therewith, the 12,605,615 shares of the issued to the Trustee on March 30, 2009, were withdrawn and cancelled and the Trustee was allowed to retain the 43,000,000 shares of Common Stock issued to the Trustee on December 30, 2008.

Effective August 20, 2010, the Company’s Board of Directors appointed Mr. Jiayin Wang, 56, Chief Executive Officer of the Company.  As President of the Company, Mr. Wang continued to receive an annual cash salary of RMB 200,000 (approximately $29,851) and bonus (if applicable).

The Board of Directors approved the following compensation for Mr. Wang in his capacity as the Company’s Chief Executive Officer:

(a) no annual base salary will be paid until such time as the Company achieves $1,000,000 in annual net income, whereupon Mr. Wang will receive an annual base salary of based upon the Company’s market capitalization and fair market rate of a public company chief executive officer;

(b) a signing bonus totaling $50,000, payable on August 20, 2010 in shares of the Company's Class A common stock (the "Common Stock") based on a price per share of $0.00782, the average of the closing prices of the Common Stock as quoted on the OTC Bulletin Board for the five (5) trading days ending on such date.  Mr. Wang received 6,393,862 shares of Common Stock as a signing bonus which shares are not registered under the U.S. Securities Act of 1933, as amended (the "1933 Act");

(c) a grant of stock options to purchase 6,000,000 shares of Common Stock at an exercise price of $0.02 per share, vesting over 18 months in equal monthly installments.  The stock options were granted pursuant to the Company’s 2009 Omnibus Incentive Plan and have a grant date of August 20, 2010; and

(d) performance bonuses payable in shares of the Common Stock (which shares will not registered under the 1933 Act) based upon milestones and terms as follows:

Mr. Wang will also be eligible to receive periodic stock grants and participate in the Company's incentive plans and benefit plans for which he is eligible.

In recognition of Mr. Wang's contributions to the Company's achievement of various corporate and financial milestones, effective August 20, 2010, the Board of Directors approved a bonus for Mr. Wang in the amount of $88,000 payable in shares of Common Stock based on a price per share of $0.00782, the average of the closing prices of the Common Stock as quoted on the OTC Bulletin Board for the five (5) trading days ending on such date.  Mr. Wang received 11,253,197 shares of Common Stock that are not registered under the 1933 Act under this bonus.

(d) Exhibits.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.