**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549







FORM
      10-KSB







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




For
      the
      Fiscal Year Ended December 31, 2006




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




For
      the
      transition period from ________________ to __________________




Commission
      File Number 002-95836-NY











**CHINA
      INDUSTRIAL WASTE MANAGEMENT, INC.**


(Name
      of
      small business issuer in its charter)







Nevada
            13-3250816(State
                or other jurisdiction ofincorporation
                or organization)
            (IRS. Employer Identification No.)Dalian
                Dongtai Industrial Waste Treatment Co.
              No.
                1 Huaihe West Road, E-T-D-Zone, Dalian, China
            116600(Address
                of principal executive offices)
            (Zip
                Code)




Issuer’s
      telephone number, including area code 011-86-411-82595339




American
      Union Securities, Inc


100
      Wall
      Street, 15th Floor


New
      York,
      New York 10005


Attn:
      Peter D. Zhou, President


(212)
      232-0120


(Name,
      address and telephone number of agent for service)







Securities
      registered pursuant to Section 12(b) of the Act: None








Securities
      registered pursuant to Section 12(g) of the Act: None







Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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.




Yes X No___





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B is not contained in this form, and no disclosure will be contained, to
      the
      best of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. [X]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes
      [  ] No [X]





State
      issuer’s revenues for its most recent fiscal year: US$6,383,233 for the fiscal
      year ended December 31, 2006.





The
      aggregate market value of the voting stock held by non-affiliates of the
      Company, computed by reference to the closing bid price of such stock as of
      April 5, 2007 on the OTC Bulletin Board ($1.55) was $5,570,612. For purposes
      of
      the computation we consider all directors and holders of 10% or more of our
      common stock to be affiliates. Therefore, the number of shares of our common
      stock held by non-affiliates as of April 5, 2007 was 3,593,943.





On
      April
      5, 2007, the Company had 13,220,843 shares of common stock
      outstanding.





Transitional
      Small Business Disclosure Format (check one):




Yes
      ___  No: _ X _





**China
      Industrial Waste Management, Inc.**




**Form
      10-KSB**




Table
      of Contents





Forward-Looking
      Statements and Associated Risk





PART
                I
            
            PageItem
                1.Description
                of Business
            2Item
                2.Description
                of Property
            22Item
                3.Legal
                Proceedings
            23Item
                4.Submission
                of Matters to a Vote of Security Holders
            24PART
                IIItem
                5.Market
                for Common Equity, Related Stockholder Matters and
                Small Business Issuer Purchases of Equity
                Securities
            24Item
                6.Management's
                Discussion and Analysis or Plan of Operation
            27Item
                7.Financial
                Statements
            33Item
                8.Changes
                in and Disagreements with Accountants
                on Accounting and Financial
                Disclosure
            33Item
                8A.Controls
                and Procedures
            33Item
                8B.Other
                Information
            34PART
                IIIItem
                9.Directors
                and Executive Officers of
                the Registrant.
            37Item
                10.Executive
                Compensation
            38Item
                11.Security
                Ownership of Certain Beneficial Owners
                and Management and Related Stockholder
                Matters
            38Item
                12.Certain
                Relationships and Related Transactions
            39Item
                13.Exhibits
            40Item
                14.Principal
                Accountant Fees and Services
            41Signatures
            
            42Financial
              Statements
            
            F-1











FORWARD-LOOKING
      STATEMENTS AND ASSOCIATED RISK





This
      report contains forward-looking statements that involve risks and uncertainties.
      Such forward-looking statements include statements regarding, among other
      things, (a) our projected sales, profitability, and cash flows, (b) our growth
      strategies, (c) anticipated trends in our industries, (d) our future financing
      plans, and (e) our anticipated needs for working capital. They are generally
      identifiable by use of the words “may,” “will,” “should,” “anticipate,”
“estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,”
“management believes,” “we believe,” “we intend,” or the negative of these words
      or other variations on these words or comparable terminology. These statements
      may be found under “Management’s Discussion and Analysis of Financial Condition
      and Results of Operations” and “Business,” as well as in this prospectus
      generally. Actual events or results may differ materially from those discussed
      in forward-looking statements as a result of various factors, including, without
      limitation, the risks outlined under “Risk Factors” and matters described in
      this prospectus generally. In light of these risks and uncertainties, there
      can
      be no assurance that the forward-looking statements contained in this filing
      will in fact occur. You should not place undue reliance on these forward-looking
      statements.





The
      forward-looking statements speak only as of the date on which they are made,
      and, except to the extent required by federal securities laws, we undertake
      no
      obligation to update any forward-looking statement to reflect events or
      circumstances after the date on which the statement is made or to reflect the
      occurrence of unanticipated events.





The
      Private Securities Litigation Reform Act of 1995, which provides a “safe harbor”
for similar statements by certain existing public companies, does not apply
      to
      us because our stock qualified as “penny stock.”




Unless
      otherwise noted, all currency figures in this filing are in U.S. dollars.
      References to "yuan" or "RMB" are to the Chinese yuan (also known as the
      renminbi). According to Xe.com as of April 5, 2007, $1 = 7.71950
      yuan.





The
      "Company", "we," "us," "our," and the "Registrant" refer to (i) China Industrial
      Waste Management, Inc., (ii) Dalian Acquisition Corporation, and (iii) Dalian
      Dongtai Industrial Waste Treatment, Co., Ltd. (“Dongtai”).





All
      share
      and per share information contained herein has been adjusted to reflect a 1
      for
      100 share reverse stock split which occurred on May 12, 2006.








1





**PART
      I**





**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**





Through
      Dongtai the Company is engaged in the collection, treatment, disposal and
      recycling of industrial wastes principally in Dalian, China and surrounding
      areas in Liaoning Province, China.  The Company provides waste disposal
      solutions and realty management service to its more than 400 customers. Dongtai
      is located in the Economic and Technology Development Zone, Dalian, PRC. Dongtai
      treats, disposes of and/or recycles many types of industrial wastes. Recycled
      waste products are used by customers as raw material to produce chemical and
      metallurgy products. Dongtai also treats or disposes of other industrial waste
      it collects through incineration, burial or water treatment. Dongtai also
      provides environmental protection services, technology consultation, pollution
      treatment services, and waste management design processing
      services.








Company
      History





The
      Company was originally incorporated as a Delaware company in 1987 under the
      name
      of Egan Systems, Inc. In late 1987, the Company acquired ENVYR Corporation
      as a
      wholly owned subsidiary and established its headquarters in Raleigh, North
      Carolina. From 1987 to 2003, the Company was primarily engaged in the business
      of developing, selling and supporting computer software products, particularly
      products related to the COBOL computer language.





In
      October, 2003, the Company acquired a group of 35 mining claims from Goldtech
      Mining Corporation, a Washington Corporation. In November, 2003, the Company
      acquired the remaining mining claims of Goldtech Mining Corporation. In
      connection with that, the Company changed its name to Goldtech Mining
      Corporation and re-domiciled to the State of Nevada. As a result of this
      acquisition, the Company had two lines of business: (a) the exploration and
      development of potential mining properties, and (b) the development, marketing
      and support of computer software products and services. In September 2004,
      the
      Company sold its computer business and adopted a business plan to focus
      exclusively on its mining exploration business.





In
      2005
      the board of directors of the Company decided to look for other business
      opportunities. In November 2005, the Company acquired a 90% indirect ownership
      interest (through a wholly owned Delaware subsidiary of the Company called
      DonTech Waste Services Inc. which was originally called Dalian Acquisition
      Corp.) in Dongtai through a reverse merger transaction.










2


As
      a
      result of this transaction, Dongtai became a joint venture with foreign
      investment under the PRC laws with a total registered capital of $2.3 million.
      The formation of the joint venture was approved by Dalian Industry and Commerce
      Bureau and the term of the joint venture is 12 years. A new business
      license was issued to Dongtai on October 10, 2005, and the registered capital
      has been fully paid as of April, 2007.





Dongtai
      was founded on January 9, 1991 as a limited liability company under the PRC
      laws, with a total registered capital of $250,000.





As
      a
      result of the reverse merger referred to above and as set forth in the following
      diagram, the Company acquired the business of Dongtai. Since the former
      shareholders of the holding company which owned 90% of the stock of Dongtai
      acquired approximately 98% of the voting capital stock of the Company as a
      result of the reverse merger, and because the business of Dongtai represents
      the
      primary operations and business of the Company, the acquisition of Dongtai
      has
      been treated as a reverse merger for accounting purposes (the “Reverse
      Merger”).











Our
      U. S.
      agent is American Union Securities, Inc. which is located at 100 Wall Street,
      15 th Floor,
      New York, NewYork 10005 and its telephone number is 212-232-0120. Dongtai is
      located in the city of Dalian, Liaoning Province of the PRC. We currently have
      approximately 308 employees and use seven facilities in Dalian, PRC with a
      total
      of 1,301,293 square feet for our business operations.


3





**Risk
      Factors**


*An
      investment in our common stock involves a high degree of risk. You should
      carefully consider the risks described below and the other information contained
      in this Annual Report on Form 10-KSB before deciding to invest in our common
      stock.*





Risks
      Related to our Business





*Our
      failure to compete effectively may adversely affect our ability to generate
      revenue.*





We
      compete primarily on the basis of our ability to secure contracts with
      industrial companies, and local government entities in Dalian, China and
      surrounding areas for waste processing and disposal or for the purchase by
      us of
      waste material which we recycle. There can be no assurance that such contracts
      will be available to us in new areas as we attempt to expand or that our
      competitors will negotiate more favorable arrangements with our current
      customers. We expect that we will be required to continue to invest in building
      waste treatment and disposal infrastructure. Our competitors may have better
      resources and better strategies to raise capital which could have a material
      adverse effect on our business, results of operations and financial
      condition.





*We
      rely on our governmental permits and exclusive rights to operate our business
      in
      Dalian, China and the loss of the permits or exclusive rights would have a
      material adverse impact on our business.*




Only
      those companies who have been granted a special operating license issued by
      the
      national and local governments are permitted to engage in the industrial waste
      treatment and disposal business in China. Dongtai's
      expansion project has been listed as one of the 31 items
      of the Hazardous Waste and Medical Waste Treatment Facility
      Construction Program approved by State Environmental Protection Administration.
      The national and local governments have strict requirements regarding the
      technology which must be employed and the gualihcations and training of
      management of the licensee which must be maintained, Either the national or
      local government could determine at any time that we do not meet the strict
      requirements of technology or management and revoke our permit to engage in
      the
      industrial. waste business in China. The termination of our licenses to operate
      would have a material adverse impact on our revenue and business.





*If
      we
      fail to introduce new services or our existing services are not accepted by
      potential customers we may not gain or may lose market share.*





Rapid
      technological changes and frequent new service introductions are typical for
      the
      markets we serve. Our future success will depend in part on continuous, timely
      development and introduction of new services that address evolving market
      requirements. To the
      extent we fail to introduce new and innovative services, we may lose market
      share to potential competitors, which will be difficult or impossible to regain.
      Any inability, for technological or other reasons, to successfully develop
      and
      introduce new services could reduce our growth rate or damage our
      business.


4





We
      may
      experience delays in the development and introduction of services. We cannot
      assure that we will keep pace with the rapid rate of change in waste collection
      and disposal research or that our new services will adequately meet the
      requirements of the marketplace or achieve market acceptance. We have not
      experienced any difficulties with the preceding factors. However, there can
      be
      no assurance that we will not experience difficulties in the future. The
      expenses or losses associated with unsuccessful service development or lack
      of
      market acceptance of our new services could materially adversely affect our
      business, operating results and financial condition.





*Our
      inability to fund our capital expenditure requirements may adversely affect
      our
      growth and profitability.*





Our
      continued growth is dependent upon our ability to generate more revenue from
      our
      existing customers, obtain new customers and raise capital from outside sources.
      We believe that in order to continue to capture additional market share and
      generate additional revenue, we will have to raise more capital to fund the
      construction and installation of additional facilities and to obtain additional
      equipment to collect, process and dispose of industrial waste and recycle waste
      for our existing and future customers. In the future we may be unable to obtain
      the necessary financing on a timely basis and on acceptable terms, and our
      failure to do so may adversely affect our financial position, competitive
      position, growth and profitability. Our ability to obtain acceptable financing
      at any time may depend on a number of factors, including:





-  our
      financial condition and results of operations,





-  the
      condition of the PRC economy and the industrial waste treatment industry in
      the  PRC,
      and





-  conditions
      in relevant financial markets in the United States, the PRC and elsewhere
      in the
      world.





*We
      may not be able to effectively control and manage our growth.*





If
      our
      business and markets grow and develop, it will be necessary for us to finance
      and manage expansion in an orderly fashion. We may face challenges in managing
      our industrial waste treatment and disposal business over an expanded
      geographical area as well as managing a business offering expanded waste
      treatment services. We may also encounter difficulties in integrating acquired
      businesses with our own. Such eventualities will increase demands on our
      existing management, workforce and facilities. Failure to satisfy such increased
      demands could interrupt or adversely affect our operations and cause
      administrative inefficiencies.


5


*If
      we
      are unable to successfully complete and integrate new operational locations
      in a
      timely manner, our growth strategy could be adversely impacted.*





An
      important element of our growth strategy is expected to be the development
      of
      operational locations outside of Dalian, China. However, integrating businesses
      involves a number of special risks, including the possibility that management
      may be distracted from regular business concerns by the need to integrate
      operations, unforeseen difficulties in integrating operations and systems,
      problems relating to assimilating and retaining the employees of acquired
      businesses, accounting issues that arise in connection with acquisitions,
      challenges in retaining customers, and potential adverse short-term effects
      on
      operating results. In addition, we may incur debt to finance future operational
      locations, and we may issue securities in connection with future operational
      locations that may dilute the holdings of our current or future stockholders.
      If
      we are unable to successfully complete and integrate new operational locations
      in a timely manner, our business, growth strategy and financial results could
      be
      materially and adversely impacted.





*Our
      waste treatment operations are risky and we may be subject to civil liabilities
      as a result of hazards posed by such operations.*





Our
      operations are subject to potential hazards incident to the gathering,
      processing and storage of industrial waste such as explosions, product spills,
      leaks, emissions and fires. These hazards can cause personal injury and loss
      of
      life, severe damage to and destruction of property and equipment, and pollution
      or other environmental damage, and may result in curtailment or suspension
      of
      operations at the affected facility. Consequently, we may face civil liabilities
      in the ordinary course of our business. At present, we do not carry any
      insurance to cover such liabilities in the ordinary course of our business,
      except that our employees are insured for injuries occurring at work. Although
      we have not faced any civil liabilities historically in the ordinary course
      of
      our waste treatment operations, there is no assurance that we will not face
      such
      liabilities in the future. If such liabilities occur in the future, they may
      adversely and materially affect our operations and financial
      condition.





*We
      do
      not presently maintain liability insurance which leaves us with exposure in
      the
      event of loss or damage to our properties or claims filed against
      us.*





We
      currently
      do not carry any liability or other similar insurance, except for liability
      in
      connection with the operation of motor vehicles. Although we have never
      experienced significant liability as a result of any of our operations, we
      cannot assure you that we would not face such liability in the future. We do
      not
      carry any property insurance to cover our real property, facilities and
      equipment, nor do we have other insurance such as business liability or
      disruption insurance coverage for our operations in the PRC.





*Failure
      to retain services of key personnel will affect our operations and
      results* .





Our
      success to date has been largely due to the contributions of our executive
      officers. The continued success of our business is very much dependent on the
      goodwill that they have developed
      in the industry over the past years. Our continued success is dependent, to
      a
      large extent, on our ability to retain the services of our executive officers.
      The loss of any of our executive officers’ services due to resignation,
      retirement, illness or otherwise without suitable replacement or the inability
      to attract and retain qualified personnel would affect our operations and may
      reduce our profitability and the return on your investment.


6





*We
      may not be able to protect our processes, technologies and systems against
      claims by other parties* .





Although
      we have four registered PRC patents and have applied for two other PRC patents
      in respect of the processes, technologies and systems we use frequently in
      our
      systems, we have not purchased or applied for any patents other than these
      as we
      are of the view that it may not be cost-effective to do so. For such other
      processes, technologies and systems for which we have not applied for or
      purchased or been licensed to use patents, we may have no legal recourse to
      protect our rights in the event that they are replicated by other parties.
      If
      our competitors are able to replicate our processes, technologies and systems
      at
      lower costs, we may lose our competitive edge and our profitability may be
      reduced.





*We
      may face claims for infringement of third-party intellectual property
      rights* .





We
      may
      face claims from third parties in respect of the infringement of any
      intellectual property rights owned by such third parties. There is no assurance
      that third parties will not assert claims to our processes, technologies and
      systems. In such an event, we may need to acquire licenses to, or to contest
      the
      validity of, issued or pending patents or claims of third parties. There can
      be
      no assurance that any license acquired under such patents would be made
      available to us on acceptable terms, if at all, or that we would prevail in
      any
      such contest. In addition, we would incur substantial costs and spend
      substantial amounts of time in defending ourselves in or contesting suits
      brought against us for alleged infringement of another party’s patent rights. As
      such, our operations and business may be adversely affected by such civil
      actions. We rely on trade secrets, technology and know-how. There can be no
      assurance that other parties may not obtain knowledge of our trade secrets
      and
      processes, technology and systems. Should these events occur, our business
      would
      be affected and our profitability reduced.





*We
      are reliant on a few major suppliers* .





We
      are
      dependent on our major suppliers for the timely delivery of waste materials
      that
      we require for our recycling operations. Should our major suppliers fail to
      deliver such materials on time, and if we are unable to source these materials
      from alternative suppliers on a timely basis, our revenue and profitability
      could be adversely affected.





*We
      are subject to risks relating to BOT (Build-Operate-Transfer) projects in which
      we have started to invest* .





We
      have
      begun to invest capital in BOT projects which require high up-front capital
      expenditures. For example, we have agreed to invest in a municipal sewage
      treatment facility and a sludge treatment facility in
      Dalian, China as our initial investment in a BOT project. Our returns from
      BOT
      projects are derived from fees paid by the PRC government and such BOT projects
      are able to generate a steady and recurring source of income for us over a
      sustained period of time between 20 and 25 years. However, our BOT projects
      are
      exposed to risks such as the occurrence of natural disasters or the imposition
      of more stringent government regulations, which may result in the disruption
      of
      our BOT projects. Our investment returns from these BOT projects may thus be
      reduced should any of such risks materialize. In addition, our lack of
      experience in administering BOT projects may negatively impact our ability
      to
      successfully manage the projects we have undertaken.  7


*We
      do
      not have key man insurance on our Chairman, CEO and CFO, Mr. Dong, or any of
      our
      other directors and officers, on whom we rely for the management of our
      business.*





We
      depend, to a large extent, on the abilities and participation of our current
      management team, but have a particular reliance upon Dong Jinqing, our founder,
      Chairman, CEO and CFO; Mr. Ruiguan Liu, the Chief Engineer of Dongtai and
      DonTech Waste Services, Inc.; and Mr. Jun Li, the Chief Operating Officer of
      Dongtai and DonTech Waste Services, Inc.. The loss of the services of any of
      Mr.
      Dong, Mr. Liu or Mr. Li for any reason, may have a material adverse effect
      on
      our business and prospects. We cannot assure you that the services of any of
      our
      officers will continue to be available to us, or that we will be able to find
      a
      suitable replacement for them. We do not carry key man life insurance for any
      key personnel.







Risks
      Related to Doing Business in the PRC .





*We
      face the risk that changes in the policies of the PRC government could have
      a
      significant impact upon the business we may be able to conduct in the PRC and
      the profitability of such business.*





The
      PRC’s
      economy is in a transition from a planned economy to a market oriented economy
      subject to five-year and annual plans adopted by the government that set
      national economic development goals. Policies of the PRC government can have
      significant effects on the economic conditions of the PRC. The PRC government
      has confirmed that economic development will follow the model of a market
      economy. Under this direction, we believe that the PRC will continue to
      strengthen its economic and trading relationships with foreign countries and
      business development in the PRC will follow market forces. While we believe
      that
      this trend will continue, we cannot assure you that this will be the
      case. A change
      in policies by the PRC government could adversely affect our interests by,
      among
      other factors: changes in laws, regulations or the interpretation thereof,
      confiscatory taxation, restrictions on currency conversion, imports or sources
      of supplies, or the expropriation or nationalization of private enterprises.
      Although the PRC government has been pursuing economic reform policies for
      more
      than two decades, we cannot assure you that the government will continue to
      pursue such policies or that such policies may not be significantly altered,
      especially in the event of a change in leadership, social or political
      disruption, or other circumstances affecting the PRC's political, economic
      and
      social life.


8





*Introduction
      of new laws or changes to existing laws by the PRC government may adversely
      affect our business* .





The
      PRC
      legal system is a codified legal system made up of written laws, regulations,
      circulars, administrative directives and internal guidelines. Unlike common
      law
      jurisdictions like the U.S., decided cases (which may be taken as reference)
      do
      not form part of the legal structure of the PRC and thus have no binding effect.
      Furthermore, in line with its transformation from a centrally-planned economy
      to
      a more free market-oriented economy, the PRC government is still in the process
      of developing a comprehensive set of laws and regulations. As the legal system
      in the PRC is still evolving, laws and regulations or the interpretation of
      the
      same may be subject to further changes. For example, the PRC government may
      impose restrictions on the amount of tariff that may be payable by municipal
      governments to waste water treatment service providers like us. Also, more
      stringent environmental regulations may also affect our ability to comply with,
      or our costs to comply with, such regulations. Such changes, if implemented,
      may
      adversely affect our business operations and may reduce our profitability.








*The
      PRC laws and regulations governing our current business operations are sometimes
      vague and uncertain. Any changes in such PRC laws and regulations may have
      a
      material and adverse effect on our business.*




There
      are
      substantial uncertainties regarding the interpretation and application of PRC
      laws and regulations, including, but not limited to, the laws and regulations
      governing our business, or the enforcement and performance of our arrangements
      with customers in the event of the imposition of statutory liens, death,
      bankruptcy and criminal proceedings. We and any future subsidiaries are
      considered foreign persons or foreign funded enterprises under PRC laws, and
      as
      a result, we are required to comply with PRC laws and regulations. These laws
      and regulations are sometimes vague and may be subject to future changes, and
      their official interpretation and enforcement may involve substantial
      uncertainty. The effectiveness of newly enacted laws, regulations or amendments
      may be delayed, resulting in detrimental reliance by foreign investors. New
      laws
      and regulations that affect existing and proposed future businesses may also
      be
      applied retroactively. We cannot predict what effect the interpretation of
      existing or new PRC laws or regulations may have on our businesses.





*A
      slowdown or other adverse developments in the PRC economy may materially and
      adversely affect our customers, demand for our services and our
      business.*




We
      are a
      holding company. All of our operations are conducted in the PRC and all of
      our
      revenues are generated from sales in the PRC. Although the PRC economy has
      grown
      significantly in recent years, we cannot assure you that such growth will
      continue. The industrial waste treatment industry in the PRC is relatively
      new
      and growing, but we do not know how sensitive we are to a slowdown in economic
      growth or other adverse changes in the PRC economy which may affect demand
      for
      our services. A slowdown in overall economic growth, an economic downturn or
      recession or other adverse economic developments in the PRC may materially
      reduce the demand for our services and the recycled materials we sell and
      materially and adversely affect our business.


9




*Inflation
      in the PRC could negatively affect our profitability and
      growth.*




While
      the
      PRC economy has experienced rapid growth, such growth has been uneven among
      various sectors of the economy and in different geographical areas of the
      country. Rapid economic growth can lead to growth in the money supply and rising
      inflation. If prices for our products rise at a rate that is insufficient to
      compensate for the rise in the costs of supplies, it may have an adverse effect
      on profitability. In order to control inflation in the past, the PRC government
      has imposed controls on bank credits, limits on loans for fixed assets and
      restrictions on state bank lending. Such an austerity policy can lead to a
      slowing of economic growth. In October 2004, the People’s Bank of China, the
      PRC’s central bank, raised interest rates for the first time in nearly a decade
      and indicated in a statement that the measure was prompted by inflationary
      concerns in the Chinese economy. Repeated rises in interest rates by the central
      bank would likely slow economic activity in China which could, in turn,
      materially increase our costs and also reduce demand for our services and
      recycled products.





*Our
      PRC subsidiary is subject to restrictions on paying dividends and making other
      payments to us.*




We
      are a
      holding company incorporated in the State of Nevada and do not have any assets
      or conduct any business operations other than our investments in our subsidiary
      in China. As a result of our holding company structure, we rely primarily on
      dividend payments from such subsidiary. However, PRC regulations currently
      permit payment of dividends only out of accumulated profits, as determined
      in
      accordance with PRC accounting standards and regulations. Our subsidiary in
      China is also required to set aside a portion of its after-tax profits according
      to PRC accounting standards and regulations to fund certain reserve funds.
      The
      PRC government also imposes controls on the conversion of RMB into foreign
      currencies and the remittance of currencies out of China. We may experience
      difficulties in completing the administrative procedures necessary to obtain
      and
      remit foreign currency. See “ *Governmental
      control of currency conversion may affect the value of your
      investment* .”
      Furthermore, if our subsidiary or in China incurs debt on its own in the future,
      the instruments governing the debt may restrict its ability to pay dividends
      or
      make other payments. If we or our subsidiary are unable to receive all of the
      revenues from our operations through these contractual or dividend arrangements,
      we may be unable to pay dividends on our common stock.





*Governmental
      control of currency conversion may affect the value of your
      investment.*




The
      PRC
      government imposes controls on the convertibility of Renminbi into foreign
      currencies and, in certain cases, the remittance of currency out of the PRC.
      We
      receive substantially all of our revenues in Renminbi, which is currently not
      a
      freely convertible currency. Shortages in the availability of foreign currency
      may restrict our ability to remit sufficient foreign currency to pay dividends,
      or otherwise satisfy foreign currency dominated obligations. Under existing
      PRC
      foreign exchange regulations, payments of current account items,
      including profit distributions, interest payments and expenditures from the
      transaction, can be made in foreign currencies without prior approval from
      the
      PRC State Administration of Foreign Exchange by complying with certain
      procedural requirements. However, approval from appropriate governmental
      authorities is required where Renminbi is to be converted into foreign currency
      and remitted out of the PRC to pay capital expenses such as the repayment of
      bank loans denominated in foreign currencies.


10




The
      PRC
      government may also at its discretion restrict access in the future to foreign
      currencies for current account transactions. If the foreign exchange control
      system prevents us from obtaining sufficient foreign currency to satisfy our
      currency demands, we may not be able to pay certain of our expenses as they
      come
      due.




*The
      fluctuation of the Renminbi may materially and adversely affect your
      investment.*




The
      value
      of the Renminbi against the U.S. dollar and other currencies may fluctuate
      and
      is affected by, among other things, changes in the PRC's political and economic
      conditions. As we rely entirely on revenues earned in the PRC, any significant
      revaluation of the Renminbi may materially and adversely affect our cash flows,
      revenues and financial condition. For example, to the extent that we need to
      convert U.S. dollars we receive from an offering of our securities into Renminbi
      for our operations, appreciation of the Renminbi against the U.S. dollar could
      have a material adverse effect on our business, financial condition and results
      of operations. Conversely, if we decide to convert our Renminbi into U.S.
      dollars for the purpose of making payments for dividends on our common shares
      or
      for other business purposes and the U.S. dollar appreciates against the
      Renminbi, the U.S. dollar equivalent of the Renminbi we convert would be
      reduced. In addition, the depreciation of significant U.S. dollar denominated
      assets could result in a charge to our income statement and a reduction in
      the
      value of these assets.





On
      July
      21, 2005, the PRC government changed its decade-old policy pegging the value
      of
      the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to
      fluctuate within a narrow and managed band against a basket of certain foreign
      currencies. This change in policy has resulted in an approximately 2.0%
      appreciation of the RMB against the U.S. dollar. While the international
      reaction to the RMB revaluation has generally been positive, there remains
      significant international pressure on the PRC government to adopt an even more
      flexible currency policy, which could result in a further and more significant
      appreciation of the RMB against the U.S. dollar.




*Recent
      PRC State Administration of Foreign Exchange (“SAFE”) Regulations regarding
      offshore financing activities by PRC residents, have undertaken continuous
      changes which may increase the administrative burden we face and create
      regulatory uncertainties that could adversely affect the implementation of
      our
      acquisition strategy, and a failure by our shareholders who are PRC residents
      to
      make any required applications and filings pursuant to such regulations may
      prevent us from being able to distribute profits and could expose us and our
      PRC
      resident shareholders to liability under PRC law.*


11


Recent
      regulations promulgated by the PRC State Administration of Foreign Exchange,
      or
      SAFE, regarding offshore financing activities by PRC residents have undergone
      a
      number of changes which may increase the administrative burden we face. The
      failure by our shareholders who are PRC residents to make any required
      applications and filings pursuant to such regulations may prevent us from being
      able to distribute profits and could expose us and our PRC resident shareholders
      to liability under PRC law.





In
      2005,
      SAFE promulgated regulations in the form of public notices, which require
      registrations with, and approval from, SAFE on direct or indirect offshore
      investment activities by PRC resident individuals. The SAFE regulations require
      that if an offshore company directly or indirectly formed by or controlled
      by
      PRC resident individuals, known as “SPC”, intends to acquire a PRC company, such
      acquisition will be subject to strict examination by the SAFE. Without
      registration, the PRC entity cannot remit any of its profits out of the PRC
      as
      dividends or otherwise.





*Any
      recurrence of severe acute respiratory syndrome, or SARS, or another widespread
      public health problem, could adversely affect our operations.*





A
      renewed
      outbreak of SARS or another widespread public health problem in the PRC, where
      all of the Company’s revenue is derived, could have an adverse effect on our
      operations. Our operations may be impacted by a number of health-related
      factors, including quarantines or closures of some of our facilities or offices
      that would adversely disrupt our operations.





Any
      of
      the foregoing events or other unforeseen consequences of public health problems
      could adversely affect our operations.





*Because
      our principal assets are located outside of the United States and all of our
      directors and all our officers reside outside of the United States, it may
      be
      difficult for you to enforce your rights based on U.S. Federal Securities Laws
      against us and our officers and directors or to enforce a judgment of a United
      States court against us or our officers and directors in the
      PRC.*





All
      of
      our directors and officers reside outside of the United States. In addition,
      our
      operating subsidiary is located in the PRC and substantially all of our assets
      are located outside of the United States. It may therefore be difficult for
      investors in the United States to enforce their legal rights based on the civil
      liability provisions of the U.S. Federal securities laws against us in the
      courts of either the U.S. or the PRC and, even if civil judgments are obtained
      in U.S. courts, to enforce such judgments in PRC courts. Further, it is unclear
      if extradition treaties now in effect between the United States and the PRC
      would permit effective enforcement against us or our officers and directors
      of
      criminal penalties, under the U.S. Federal securities laws or
      otherwise.





*We
      may face obstacles from the communist system in the PRC.*


12


Foreign
      companies conducting operations in PRC face significant political, economic
      and
      legal risks. The Communist regime in the PRC, including a cumbersome
      bureaucracy, may hinder Western investment.




*We
        may have difficulty establishing adequate management, legal and financial
        controls in the PRC.*




The
      PRC
      historically has not adopted a western style of management and financial
      reporting concepts and practices, as well as in modern banking, computer and
      other control systems. We may have difficulty in hiring and retaining a
      sufficient number of qualified employees to work in the PRC. As a result of
      these factors, we may experience difficulty in establishing management, legal
      and financial controls, collecting financial data and preparing financial
      statements, books of account and corporate records and instituting business
      practices that meet Western standards.





Risks
      Related to Our Common Stock .





*Our
      officers, directors and affiliates control us through their positions and stock
      ownership and their interests may differ from other
      stockholders.*





Our
      officers, directors and affiliates beneficially own approximately 72.8% of
      our
      outstanding common stock of CIWT. Dong Jinqing, our Chairman, President and
      Chief Executive Officer, beneficially owns 9,100,400 shares (approximately
      68.8%) of our outstanding common stock. As a result, Mr. Dong is and will
      continue to be able to influence the outcome of stockholder votes on various
      matters, including the election of directors and extraordinary corporation
      transactions including business combinations. Mr. Dong’s interests may differ
      from other stockholders. Please refer to Item 11. “Security Ownership of Certain
      Beneficial Owners and Management” of this Annual Report on Form 10-KSB for more
      information regarding beneficial ownership of securities of our
      management.





*We
      are not likely to pay cash dividends in the foreseeable
      future.*





We
      currently intend to retain any future earnings for use in the operation and
      expansion of our business. We do not expect to pay any cash dividends in the
      foreseeable future, but will review this policy as circumstances dictate. Should
      we decide in the future to do so, as a holding company, our ability to pay
      dividends and meet other obligations depends upon the receipt of dividends
      or
      other payments from our operating subsidiary. In addition, our operating
      subsidiary, from time to time, may be subject to restrictions on its ability
      to
      make distributions to us, including as a result of restrictions on the
      conversion of local currency into U.S. dollars or other hard currency and other
      regulatory restrictions.


*Our
      common stock is illiquid and subject to price volatility unrelated to our
      operations.*





The
      market price of our common stock could fluctuate substantially due to a variety
      of factors, including market perception of our ability to achieve our planned
      growth, quarterly operating
      results of other companies in the same industry, trading volume in our common
      stock, changes in general conditions in the economy and the financial markets
      or
      other developments affecting our competitors or us. In addition, the stock
      market is subject to extreme price and volume fluctuations. This volatility
      has
      had a significant effect on the market price of securities issued by many
      companies for reasons unrelated to their operating performance and could have
      the same effect on our common stock.


13




*Our
      common stock is subject to the “Penny Stock” rules of the SEC, which will make
      transactions in our common stock cumbersome and may reduce the value of an
      investment in our common stock.*





Our
      securities are subject to the “penny stock rules” adopted pursuant to
      Section 15(g) of the Securities Exchange Act of 1934, as amended. The penny
      stock rules apply generally to companies whose common stock trades at less
      than
      $5.00 per share, subject to certain limited exemptions. Such rules require,
      among other things, that brokers who trade “penny stock” to persons other than
“established customers” complete certain documentation, make suitability
      inquiries of investors and provide investors with certain information concerning
      trading in the security, including a risk disclosure document and quote
      information under certain circumstances. Many brokers have decided not to trade
      “penny stock” because of the requirements of the “penny stock rules” and, as a
      result, the number of broker-dealers willing to act as market makers in such
      securities is limited. In the event that we remain subject to the “penny stock
      rules” for any significant period, there may develop an adverse impact on the
      market, if any, for our securities. Because our securities are subject to the
      “penny stock rules,” investors will find it more difficult to dispose of our
      securities. Further, it is more difficult: (i) to obtain accurate
      quotations, (ii) to obtain coverage for significant news events because
      major wire services, such as the Dow Jones News Service, generally do not
      publish press releases about such companies, and (iii) to obtain needed
      capital.





**Description
      of Business**




Dongtai
      has obtained a license to conduct its industrial waste collection and disposal
      business from the State Environmental Protection Administration of the PRC
      (“SEPA”), which is an agency equivalent to the Environmental Protection Agency
      in the U.S. Companies without this license are not permitted to conduct business
      related to industrial waste disposal and collection. The grant of the license
      is
      based upon the professional qualifications of the Company’s staff and an
      evaluation of the Company’s management processes. In addition, Dongtai is
      licensed for the disposal of hazardous waste by the province of
      Liaoning.




Dongtai
      maintains six workshops for the recycling or disposal of types of industrial
      waste and has proprietary and non-proprietary systems for waste treatment,
      disposal and recycling, including:




1.
      Electric Garbage Dismantling System


2.
      Organic Solvent Distillation Recycling System




14


3.
      Fluorescent Tube Treatment System


4.
      Organic Macromolecular Waste Destructive Distillation Cracking
      System


5.
      Treatment System for Catalyst Containing Valuable Metals


6.
      Waste
      Etchant Liquor Treatment System


7.
      Comprehensive Treatment System for Industrial Waste Water


8.
      Incineration System for Solid Waste


9.
      Hazardous Waste Landfill


10.
      Ordinary Industrial Solid Waste Landfill








Electric
      Garbage Dismantling System





After
      classification and dismantlement of photocopier ink cartridges and electric
      components of certain household appliances, the system can recover metal and
      plastic with high value and limit the amount of unrecyclable residual waste.
      Dongtai can also recycle metals from household electric appliances, such as
      TV
      picture tubes and treat the hazardous residual components such as phosphor
      and
      Freon so that such residual waste is rendered innocuous. The system was built
      in
      1997 and includes a large disintegrator, electronic scale, oven, vacuum cleaner,
      decorticator and large goods elevator.





Organic
      Solvent Distillation Recycling System




Dongtai
      established the organic solvent distillation recycling system in 1992. This
      system includes a raw material storage tank, rectifying tower, and flashing
      tower. The system is capable of treating organic solvents including triclene,
      acetone, ethyl acetate, isopropyl alcohol, propylene glycol monomethyl ether
      methyl alcohol, methylbenzene, and cyclohexanone.




Since
      2003
      this system has been listed and promoted as a "national key environmental
      project" by the State Environmental Protection Administration for three
      consecutive years. As a result of employing this system Dongtai is also listed
      as the technology supporting unit of the "National Technology Achievement
      Promotion Project". This system also won the second prize of Dalian Technology
      Innovations in December 2000.




Dongtai
      has
      established very strict procedures for the disposal or treatment of toxic and
      hazardous chemical waste. No environmental pollution accident has occurred
      since
      the establishment of Dongtai. Dongtai has established relationships with over
      40
      enterprises in dealing with their toxic chemical waste.





Fluorescent
      Tube Treatment System




Dongtai
      has
      developed a waste fluorescent tube treatment system. The system is able to
      safely dispose of fluorescent lighting tubes which contain harmful substances
      such as mercury. The system breaks the tubes under negative pressure, and
      absorbs and washes the harmful components such as mercury. The glass fragments
      and metal residue resulting from the treatment can then be
      recycled.


15





Organic
      Macromolecular Waste Destructive Distillation Cracking System





Canon
      Dalian Business Machines Co. Ltd is an enterprise established in Dalian by
      Canon
      (China) Co. Ltd. mainly to produce laser printer ink cartridges. The treatment
      of the residual powdered ink in used cartridges was problematic, so Dongtai
      developed for Canon a unique waste powdered ink destructive distillation
      pyrolysis treatment technique. This system can transform the waste powdered
      ink
      into fuel with a high calorific value. The residue can also be used to produce
      cement. The system was built in 1995 and is composed of destructive distillation
      cracking oven, heat exchange device and air storage tank. The system is able
      to
      treat photocopier and printer powdered ink, and organic macromolecular materials
      such as polystyrene, polypropylene resin, polycarbonate, rubber materials,
      oil
      sludge.





Catalyst
      with Valuable Metals Treatment System





Petroleum
      refining enterprises produce a large amount of catalyst waste in production
      operations. The treatment system for catalysts containing valuable metals
      developed by Dongtai allows it to apply plasma technology to the comprehensive
      utilization and treatment of such hazardous waste. Through melting of waste
      in a
      plasma oven the system can extract from waste catalysts such rare metals as
      cobalt, nickel, molybdenum, vanadium, etc. The slag can be used as a raw
      material to produce cement. This technology has won the third prize of National
      Technology Advancement and is sponsored by the National Technology Innovation
      Funds for Small-and-Medium Sized Scientific and Technological
      Enterprise.





Waste
      Etchant Liquor Treatment System





This
      system
      includes a material delivery device, reaction vessel, and a filtering device.
      The system can process waste copper acid and alkaline etchants and produce
      copper sulphate through neutralization, acidification, and metathesis.





Industrial
      Waste Comprehensive Treatment System





The
      system
      includes a treatment tank, oil removal tank, reaction tank, precipitation tank,
      neutralization tank, absorption tank, filtering device and filter press. It
      is
      able to treat the ablution resulting from removing oil from the surface of
      metal, and grinding and cutting fluids resulting from machining.





Solid
      Waste Incineration System





The
      inappropriate handling of hazardous chemicals can trigger serious environment
      pollution. Dongtai has built an incineration system which includes a two-stage
      incineration stove, residual heat recovery system and residual gas discharge
      system which renders the gas innocuous. The major waste that can be processed
      through the system include: waste organic solvents, waste oil, waste glue
      liquor, and combustible solid industrial garbage. The system has met national
      standards and is automatically operated.


16





Hazardous
       Waste Landfill





The
      landfill
      has been built in accordance with PRC national construction standards. It has
      a
      double HDPE impermeable layer lining and percolating water collection system.
      After stabilization and solidification, the toxic and hazardous waste to be
      deposited in the landfill receives treatment rendering it innocuous. The system
      is able to handle all kinds of waste residue containing heavy metal and
      incinerate residues. The project covers an area of 112,350 square feet.





Landfill
      for Ordinary Industrial Solid Waste





The
      landfill
      for ordinary industrial solid waste has been built according to PRC national
      standards. It is equipped with a single layer anti-seepage pretreatment system
      and a collection system of percolating water. The landfill can process ordinary
      industrial Class 1 and Class 2 wastes.





The
      following table sets forth the annual capacity of the each of the foregoing
      treatment systems and portion of such capacity which was used during the year
      ended December 31, 2006:





Facilities
            
            Total
                Annual Capacity
              (Tons)
            
            Used
                In 2006
              (Tons)Electric
                Garbage Dismantling System
            
            
            1,000
            
            
            725Organic
                Solvent Distillation Recycling System
            
            
            1,200
            
            
            746Fluorescent
                Tube Treatment System
            
            
            200
            
            
            17Organic
                Macromolecular Waste Destructive Distillation Cracking
                System
            
            
            450
            
            
            408Catalyst
                with Valuable Metals Treatment System
            
            
            550
            
            
            500Industrial
                Waste Water Comprehensive Treatment System
            
            
            15,000
            
            
            11,500Waste
                Etchant Liquor Treatment System
            
            
            3,000
            
            
            2,300Solid
                Waste Incineration System
            
            
            2,000
            
            
            1,610Hazard
                Waste Landfill
            
            
            20,000
                (1
            )
            
            1,104Landfill
                for Ordinary Industrial Solid Waste
            
            
            150,000
                (1
            )
            
            10,796


(1)
      Represents total capacity, rather than annual capacity





Market/Customers





The
      major
      sources of industrial waste in the Dalian area are industrial enterprises,
      medical units, scientific research institutions and university laboratories.
      According to statistics from Dongtai, the amount of waste collected has been
      increasing every year. The amount in 2001 was 11,000 tons, 13,226 tons in 2002,
      14,594 tons in 2003, and 18,460 tons in 2004, 26,425 tons in 2005 and 36,630
      tons in 2006. Management of the Company estimates that the annual growth rate
      in
      the next ten years will be 20%. Approximately 53% of Dongtai’s revenue
      in the year ended December 31, 2006 were for waste collection, treatment and
      disposal services and approximately 47% of such revenues related to recycling
      operations.


17





The
      industrial waste treatment business is still new in China. There are only a
      few
      coastal cities as well as major cities in inland industrialized regions that
      have built or plan to build industrial waste treatment facilities. Due to the
      strict requirements of professional technology and management required to obtain
      necessary licenses to operate an industrial waste treatment and disposal
      business, the basic market for the Dongtai’s services is guaranteed to some
      degree.





Dongtai
      has entered into contracts of disposing solid waste from more than 400
      enterprises, among which are multinational companies such as Canon, Pfizer,
      Toshiba, Toto, Posco-CFM Coated Steel, Fuji, Wepec, Ryobi, TDK, YKK, and
      Panasonic. In the year ended December 31, 2006, Dongtai’s 10 largest customers
      for waste disposal service accounted for approximately 47% of Dongtai’s revenues
      from such segment. The three largest customers in such segment during 2006
      were
      Dalian Pacific Multi-layer PCB Co., Ltd.; Canon Dalian Business Machines Co.,
      Ltd. and PetroChina Dalian Petrochemical Company Limited. No customer accounted
      for 10% or more of Dongtai’s revenues for waste treatment.





Dongtai’s
      ten largest suppliers of industrial waste for recycling (which Dongtai generally
      purchases from such suppliers and is responsible to collect and treat and
      dispose of waste residue at Doingtai’s sole expense) accounted for approximately
      92% of the payments made by Dongtai for waste products in 2006. Canon Dalian
      Business Machine Co., Ltd. accounted for approximately 53% of the amount which
      Dongtai paid for waste in 2006 as part of its recycling operations.





Dongtai’s
      ten largest customers for recycled waste products accounted for approximately
      62% of Dongtai’s sales of such recycled products in 2006. Shenyang Hongyuan
      Mining Company and Hu Guoyuan accounted for approximately 14.0% and 10.3%,
      respectively, of Dongtai’s sales of recycled waste products in
      2006.








Technology
      and Intellectual Property





Dongtai
      has established the Dong Tai Industrial Waste Disposal Technology Center with
      the Dalian University Institute for Ecoplanning and Development. The center
      currently has 22 professional engineers and 9 analysts. With cooperation from
      experts from Canada and the U.S.- based RPP International Consulting Company
      which is now under the support of Dalian University of Technology, the Center
      is
      focusing on the research concerning ecoplanning theory and policy, professional
      training, ecological efficiency evaluation and analysis of
      simulations.





Since
      its
      establishment, Dongtai has been in close cooperation with scientific research
      academy and universities, such as Dalian Institute of Chemical Physics , 
the Chinese Academy of Sciences (Beijing) Mechanics Institute, Tsinghua
      University and Dalian University of
      Technology. Dongtai took part in the compilation of National Waste Disposal
      Criteria with over 50 international enterprises such as China Electronics
      Engineering Design Institute, Intel (China) Co., Ltd, Motorola (China) Co.,
      Ltd,
      and Dell (China) Co., Ltd. Dongtai's R&D team specializes in environmental
      engineering, chemical engineering, water supply and drainage systems, surface
      treatment, biological engineering, metallurgy, machinery, electronics, and
      computer science. They are especially important to the research of methods
      of
      treatment for industrial solid waste and the comprehensive waste utilization.
      The scientific achievements that have been awarded to Dongtai for its business
      operations include:


18





1.
      Dongtai won the second prize of Dalian Technology Innovation for its system
      relating  to
      the
      Comprehensive Utilization and Disposal of Waste Organic Solvents and
      the system
      has been listed as the "National Key Practical Technology for Environmental Protection"
      by the Ministry of Science and Technology and the State Administration
      of Environmental Protection of the PRC;


2.  The
      Destructive Distillation Thermal Cracking of Powdered Ink;


3.  The
      Safety Landfill of Hazardous Waste;


4.  Pyrolysis
      Incineration Stove;


5.  The
      Innocuous Treatment of Cyanide;


6.  The
      Comprehensive Utilization of the Waste Etchant Liquor from PCB industry;


7.  The
      Comprehensive Utilization and Disposal of Waste Catalyst. This system won the
      third
      prize of Dalian Technology Innovation and has been listed as the "National
      Key  Practical
      Technology for Environmental Protection" by the State Administration of  Environmental
      Protection of the PRC. It was supported by the Innovation Funds for  Small-and-Medium
      Sized Scientific and Technological Enterprises of the Ministry of  Science
      and Technology;


8.  The
      treatment of PCB Industry's Waste Liquid containing heavy metal;


9.  The
      Disposal of Medical Refuse;


10.  The
      Disposal of Waste Batteries;


11.
      The
      Innocuous Treatment of Arsenic Compound;


12.  The Wet
      Oxidation of High Concentration Organic Waste;


13.  The
      Disposal of Ordinary Industrial Waste; and


14.  The
      Comprehensive Utilization and Innocuous Treatment of Electric
      Waste.





The
      following table list certain information concerning the patents obtained and
      applied for by the Company in the PRC:





Status
            Description
            Patent
                Number
            Date
                Applied
              for
            Grant
              Date
            Date
                ExpiresGranted
            The
                Disposal of Powdered Ink Waste from Copy Machines
            ZL
                01 1 27963.X
            7/20/01
            7/7/04
            7/6/24Granted
            Consecutive
                Destructive Distillation Stove
            ZL
                200420069745.5
            7/9/04
            7/13/05
            7/12/15Granted
            Plasma
                Fusion Pyrolysis Device
            ZL
                200420069742.1
            7/9/04
            7/20/05
            7/19/05Granted
            The
                Disposal of Waste Catalyst
            ZL
                200410021093.2
            1/20/04
            1/17/07
            1/16/27Application
              Accepted
            Method
              and Equipment For High-Efficiency Solid-Liquid Separation Under High
              Pressure
            ZL
                200610046723.0
            5/26/06Application
                Accepted
            Method
                  For High-Efficiency Solid-Liquid Separation Under High
                  Pressure
            ZL
                  200620091047.4
            5/26/06




19


Government
      Regulation





The
      industrial waste treatment business is still in its nascent stages in China.
      There are only a few coastal cities and several major cities in industrialized
      regions that have built or even plan to build industrial waste treatment
      facilities. The industry has high barriers to entry due to the central
      government's strict licensing requirements of professional technology and
      management. Only those companies who have been granted a special operating
      license issued by the national and local governments are permitted to engage
      in
      the industrial waste business. Additionally, the central government has granted
      exclusive rights to companies to operate in the industrial waste business
      according to regions. As part of this national planning scheme, Dongtai is
      responsible for collecting and processing the industrial waste in all of Dalian
      and its surrounding areas in Liaoning Province.





Employees





As
      of March
      31, 2007 the Company had 308 full-time employees. 55 of such employees are
      management and supervisory personnel, 18 are technicians and 235 are assembly
      line workers.





The
      Company has not experienced any work stoppages and it considers relations with
      its employees to be good. The Company anticipates hiring additional employees
      as
      it increases production and collection of waste materials.





BOT
      Projects





Dongtai
      has entered into agreements with respect to the construction of two BOT
      (Build-Operate-Transfer) Projects in Dalian, China.





In
      a
      typical BOT project, the municipal governmental will invite candidates to bid
      on
      the project. The winner of the bid is generally the bidder which offers the
      best
      combination of price and construction and operating model for the project.
      The
      winning bidder then becomes eligible to contribute investment in construction
      of
      the BOT facility and to operate the facility for 20-25 years after construction.
      In connection with the project, the municipal government effectively guarantees
      revenues to the operator of the facility.


20





The
      first
      BOT project being undertaken by the Company is for a municipal sewage treatment
      plant in Dalian. The first phase of the construction, scheduled for completion
      in August 2007, will provide for the processing of 30,000 tons of sewage per
      day. A second phase, anticipated to be completed by in 2010, would expand the
      facility to allow processing of up to 100,000 tons of sewage per day. Dongtai
      will have an 18% interest in the project. Dalian Lida, Ltd., a company
      controlled by Mr. Dong, the Company’s Chairman and Chief Executive Officer, will
      have an 82% interest in the project. The total registered capital for the
      project will be 14 million RMB  (approximately  $1,813,600) for the
      first phase and 40 million RMB (approximately $5,181,700) for the second phase,
      of which Dongtai will contribute 1.8 million RMB (approximately
      $233,175) and 7.2 million RMB (approximately $932,700), respectively. We
      estimate that the facility will generate approximately $985,000 in revenues
      and
      $150,000 in profits in 2008, although no assurance can be given that such
      estimates are accurate.





The
      second BOT project is for a sludge treatment and disposal facility. The project
      will be owned 49% by Dongtai, 36% by Dalian Lida, Ltd. and 15% by an
      unaffiliated company. The registered capital for the project will be 40 million
      RMB (approximately $5,181,660), of which Dongtai shall contribute approximately
      19.96 million RMB (approximately $2,585,660). The project is scheduled to be
      completed by the end of 2007 and provide for the treatment of up to 600 tons
      of
      sludge per day. We estimate that the facility will generate approximately $4.95
      million in revenues and $515,000 in profits in 2008, although no assurance
      can
      be given that such estimates are accurate.





21








**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





Dongtai's
      principal executive offices are located at No. 1 Huailu West Road, EDT Zone.
      Dalian City, China 11660. In addition, Dalian Dong Tai has the following
      facilities:




Address
            Function
            Area
                (square ft)No.1,
                Dakai Huaihe West Road
            Office
                building and electric
            90,233waste
                disposal areaNo.27,
                Dakai Huaihe West Road etchant liquor and analysis ab
            Processing
                  workshop of waste
            19,698No.
                100, Dakai Tieshan West Road No. 27
            Processing
                  workshop of wastecatalyst, waste water processing station
            72,588No.6
                  District, Haiqing (Outside theNorthwest wall of Xitai Oil Refinery
                  Plan)
            Hazardous
                waste safe
              landfill
            112,350Flame-retardant
                Plant of Xiaowang
                Tuanyuan
                  Development Zone
            Hazardous
                waste incineration field,
                waste classification and storage
                field
            214,000Qianguan
                Village, Ganjinzi District
            Industrial
                solid waste
              landfill
            107,000No.
                85, Dagu Hill
            Project
                under construction
            685,4241709
                Hogyuan Mansion, 23
                Renmin
                  Road, Zhongshan District
            Office of
              Chief
              Executive Officer
            3,003





All
      of
      the above facilities, except 1709 Hogyuan Mansion (which is owned by the
      Company’s Chairman and is currently being provided to the Company free of
      charge) are owned by Dongtai and none are subject to a mortgage.


22


Item
      3.Legal
      Proceedings






From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. Except as described below,
      we are currently not aware of any such legal proceedings or claims that we
      believe will have, individually or in the aggregate, a material adverse affect
      on our business, financial condition or operating results.





On
      September 14, 2006, the Alberta Securities Commission, Canada, citing Goldtech
      Mining Corporation, 2006 ABASC 1690, under Securities Act, R. S. A. 2000, c.
      S-4
      (the "Alberta Act"), provided notice to the Company, Glen Lochton Management
      Inc., and certain other individuals (collectively, "Respondents") that a hearing
      will be held on certain allegations that Respondents breached subsection 75(1)
      and 110(1) of the Alberta Act by trading and distributing securities of the
      Company in Alberta without registration or a prospectus or had appropriate
      exemption from the prospectus requirement, wherein such failure was contrary
      to
      the public interest. On October 27, 2006, the hearing was scheduled for March,
      2007. On February 6, 2007 the ASC discontinued without prejudice the action
      against the Company and will proceed against the other Respondents.




On
      August
      9, 2006, the Company was served with a Summons and Complaint, in an action
      filed
      in the Superior Court of Washington, Kings County, entitled Don Moroz and Glen
      Lochton Management Inc., V. Tolan Furusho, Columbia State Bank, Goldtech Mining
      Corporation, a Nevada Corporation, Goldtech Mining Corporation, a Washington
      corporation, Tracy Kroeker, Ralph Jordan, Jack Laskin, Nancy Egan, Richard
      Smith, and Beverlee Claydon AKA Beverlee Kamerling. The plaintiffs claim to
      be
      victims of a failed "pump and dump" penny stock scheme. The Company believes
      that the complaint against the Company is without merit and filed an answer,
      affirmative defenses and cross-claims on October 31, 2006. The case is
      continuing with discovery. The Company is contesting this case
      vigorously.





On
      March 6,
      2006, a lawsuit was filed against the Company entitled Tolan S. Furusho V.
      Goldtech Mining Corp., Case No.:  06-A-518343-B, in the District Court,
      Clark County, Nevada. The plaintiff claims that he is the sole director of
      the
      Company, alleging that he was improperly removed as a director. The Company
      filed an answer and affirmative defenses and believes that the complaint is
      without merit. The case is continuing with discovery. The Company is contesting
      this case vigorously.




On
      October
      14, 2004, a small group of shareholders commenced a derivative action on behalf
      of the Company, entitled Steward, Pearce, Vizzard, Furusho and Robertson v.
      Kroeker, Jordan, Laskin, Egan, Smith, Bourgoin, Civil Action No. CV04-2130L,
      in
      the United States  District  Court for the Western  District of
      Washington alleging  conversion  and  breach of specific duties
      against former directors. The Court dismissed the case with prejudice against
      all defendants, except defendant Tracy Kroeker and without prejudice against
      Ms.
      Kroeker.


23





With
      respect
      to the business of Dongtai, we are not currently aware of any other pending,
      past or present litigation that would be considered to have a material effect
      on
      us.  There
      are
      no known bankruptcy or receivership issues outstanding and we have no known
      securities law violations. Additionally, we have no known legal proceedings
      in
      which certain corporate insiders or affiliates of us are in a position that
      is
      adverse to us.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





There
      were no stockholders meetings in the fourth quarter of this fiscal year and
      the
      Company did not submit any matters for stockholders to vote on by written
      consent







**PART
      II**





**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
      PURCHASES OF EQUITY SECURITIES**





Market
      for Common Equity and Related Stockholder Matters .





The
      Company's common stock is currently quoted on the Over-the-Counter Bulletin
      Board (“OTCBB”) under the trading symbol “CIWT.OB.”





On
      April
      5, 2007, the closing bid price for the common stock of the Company was $1.55.
      The following table sets forth the high and low prices of the Company’s common
      stock, as reported by the OTCBB for each quarter since January 1, 2005. All
      information has been adjusted to reflect a 1 for 100 share reverse stock split
      which occurred on May 12, 2006.





Quarter
                Ended
            
            High
                Bid
            
            Low
                BidMarch
                31, 2005
            
            $
            2.00
            
            $
            0.19June
                30, 2005
            
            $
            1.65
            
            $
            0.75September
                30, 2005
            
            $
            1.01
            
            $
            0.31December
                31, 2005
            
            $
            0.45
            
            $
            0.11March
                31, 2006
            
            $
            0.18
            
            $
            0.05June
                30, 2006
            
            $
            2.50
            
            $
            0.07September
                30, 2006
            
            $
            2.60
            
            $
            2.50December
                31, 2006
            
            $
            2.60
            
            $
            0.51








Some
      of
      the above prices reflect inter-dealer prices, without retail mark-up, mark-down
      or commission and may not necessarily represent actual transactions.


24


As
      of
      April 5, 2007, there were 13,220,843
      sh ares
      of
      our common stock issued and outstanding, and there were 228 holders of record
      of
      our outstanding shares.





Recent
      Sales of Unregistered Securities; Use of Proceeds from Unregistered
      Securities .




The
      following sets forth information concerning sales by the Company of unregistered
      securities during the fiscal year ended December 31, 2006:





On
      May
      15, 2006, the Company issued to 10 stockholders an aggregate of 6,400,000 shares
      of
      the Company's Common Stock as an equitable adjustment of the number of shares
      which the Company had agreed to issue to such persons pursuant to a Share
      Exchange Agreement entered into on November 11, 2005.





On
      June
      8, 2006, 80,000 shares of its Common Stock, par value $.001 per share, were
      authorized for issuance in the aggregate to Ms. Mui Chiu Yeung and Mr. Chi
      Chuen
      Cheung pursuant to a Consulting Agreement.




No
      underwriter was involved in any of the above issuances of securities. All of
      the
      above securities were issued in reliance upon the exemptions set forth in
      Section 4(2) of the Securities Act of 1933 on the basis that they were issued
      under circumstances not involving a public offering.




Dividend
      Policy





The
      payment of dividends, if any, is to be within the discretion of the Company’s
      Board of Directors and will be contingent upon the Company’s revenues and
      earnings, capital requirements, financial condition and the ability of Dongtai
      to obtain approval to get monies out of the PRC. The Company presently intends
      to retain all earnings, if any, for use in its business operations and
      accordingly, the Board of Directors does not anticipate declaring any dividends
      in the near future.





Additionally,
      the PRC’s national currency, the yuan, is not a freely convertible currency.
      Effective January 1, 1994, the PRC foreign exchange system underwent fundamental
      changes. This reform was stated to be in line with the PRC’s commitment to
      establish a socialist market economy and to lay the foundation for making the
      yuan convertible in the future. The currency reform is designed to turn the
      dual
      exchange rate system into a unified and managed floating exchange rate
      system.





A
      China
      Foreign Exchange Trading Centre was formed in April, 1994 to provide an
      interbank foreign exchange trading market whose main function is to facilitate
      the matching of long and short term foreign exchange positions of the
      state-designated banks, and to provide clearing and settlement services. The
      People’s Bank of China publishes the state managed exchange rate daily based on
      the daily average rate from the previous day’s inter-bank trading market, after
      considering fluctuations in the international foreign exchange markets. Based
      on
these
      floating exchange rates, the state-designated banks list their own exchange
      rates within permitted margins, and purchase or sell foreign exchange with
      their
      customers.


25





The
      State
      Administration of Foreign Exchange of the PRC (“SAFE”) administers foreign
      exchange dealings and requires that they be transacted through designated
      financial institutions. All Foreign Investment Enterprises (“FIEs”) may buy and
      sell foreign currency from designated financial institutions in connection
      with
      current account transactions, including, but not limited to, profit
      repatriation. With respect to foreign exchange needed for capital account
      transactions, such as equity investments, all enterprises in the PRC (including
      FIEs) are required to seek approval of the SAFE to exchange yuan into foreign
      currency. When applying for approval, such enterprises will be subject to review
      by the SAFE as to the source and nature of the Yuan funds.





There
      can
      be no assurance that the yuan relative to other currencies will not be volatile
      or that there will be no devaluation of the yuan against other foreign
      currencies, including the U.S. dollar.





Equity
      Compensation Plan Information





The
      following table gives information about our common stock that may be issued
      upon
      the exercise of options, warrants and rights under our 2006 Equity Incentive
      Plan which is our only equity compensation plan as of December 31, 2006.




Plan
                  Category
              
              Number
                  of Securities to be
                issued
                  upon exercise of
                outstanding
                  options, warrants
                and
                  rights
              Weighted-average
                  exercise
                price
                  of outstanding options,
                warrant
                  and rights
              
              Number
                  of securities
                remaining
                  available for future
                issuance
                  under equity
                compensation
                plans
                  (excluding securities
                reflected
                  in column (a))Equity
                  compensation plans
                approved
                  by security
                holders:2006
                  Equity Incentive Plan
              
              
              0
              
              N/A
              
              
              2,500,000Equity
                  compensation plans not approved by security holders
              
              
              0
              
              N/A
              
              
              0Total
              
              
              0
              
              N/A
              
              
              2,500,000





(a)
      Securities available for future issue increase each year by 10% of our
      outstanding common stock at the beginning of each year. The total amount of
      common stock available under the plan cannot exceed 10 million
      shares.







26


Transfer
      Agent




The
      Company’s stock transfer agent is Interwest Transfer Company, Inc., 1981 East
      Murray Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, Utah
      84117.




Penny
      Stock Regulations





The
      Commission has adopted regulations which generally define “penny stock” to be an
      equity security that has a market price of less than $5.00 per share. The
      Company’s Common Stock, when and if a trading market develops, may fall within
      the definition of penny stock and subject to rules that impose additional sales
      practice requirements on broker-dealers who sell such securities to persons
      other than established customers and accredited investors (generally those
      with
      assets in excess of $1,000,000, or annual incomes exceeding $200,000 or
      $300,000, together with their spouse).





For
      transactions covered by these rules, the broker-dealer must make a special
      suitability determination for the purchase of such securities and have received
      the purchaser’s prior written consent to the transaction. Additionally, for any
      transaction, other than exempt transactions, involving a penny stock, the rules
      require the delivery, prior to the transaction, of a risk disclosure document
      mandated by the Commission relating to the penny stock market. The broker-dealer
      also must disclose the commissions payable to both the broker-dealer and the
      registered representative, current quotations for the securities and, if the
      broker-dealer is the sole market-maker, the broker-dealer must disclose this
      fact and the broker-dealer’s presumed control over the market. Finally, monthly
      statements must be sent disclosing recent price information for the penny stock
      held in the account and information on the limited market in penny stocks.
      Consequently, the “penny stock” rules may restrict the ability of broker-dealers
      to sell the Company’s Common Stock and may affect the ability of investors to
      sell their Common Stock in the secondary market.





**ITEM
      6.**   **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





*FORWARD-LOOKING
      INFORMATION - Management's Discussion and Analysis of Financial Condition and
      Results of Operations ("MD&A") includes forward-looking statements. All
      statements, other than statements of historical facts, included in this MD&A
      regarding the Company's financial position, business strategy and plans and
      objectives of management of the Company for future operations are
      forward-looking statements. These forward-looking statements rely on a number
      of
      assumptions concerning future events and are subject to a number of
      uncertainties and other factors, many of which are outside of the Company's
      control that could cause actual results to materially differ from such
      statements. While the Company believes that the assumptions concerning future
      events are reasonable, it cautions that there are inherent difficulties in
      predicting certain important factors, especially the timing and magnitude of
      technological advances; the prospects for future acquisitions; the possibility
      that a current customer could be acquired or otherwise be affected by a future
      event that would diminish their *waste
      management requirements; the competition in the waste management industry and
      the impact of such competition on pricing, revenues and margins; uncertainties
      surrounding budget reductions or changes in funding priorities of existing
      government programs and the cost of attracting and retaining highly skilled
      personnel.**


27


Overview





Historically,
      the Company engaged in two lines of business: (a) the exploration and
      development of potential mining properties, and (b) the development, marketing
      and support of computer software products and services. In September 2004,
      the
      Company sold its computer business. Since September 2005, the Company has no
      longer been in the mining business due to its loss of all its contractual rights
      in certain mining properties in Spain.





In
      November 2005, the Company, through its wholly-owned subsidiary, DonTech Waste
      Services, Inc. (formerly, Dalian Acquisition Corp.), a Delaware corporation
      (“DonTech”), acquired 90% of the capital stock of Dalian Dongtai Industrial
      Waste Treatment Co., Ltd., a corporation located in Dalian, the People’s
      Republic of China, or PRC (“Dongtai”). As a result of the acquisition, the
      Company is now engaged in the waste management business, and Dongtai
      currently represents the primary operations and business of the
      Company.





Dongtai
      was one of the first companies specializing in the centralized treatment of
      industrial waste in the PRC. Dongtai is engaged in the collection, treatment,
      disposal and recycle of all types of industrial wastes. It provides a wide
      range
      of waste treatment services to diversified customers. Dongtai uses industrial
      waste as a raw material to produce chemical and metallurgy products or
      incinerates, buries, or treats the waste. Dongtai also provides waste disposal
      solutions, waste transportation services , realty
      management services and environmental pollution remediation services to its
      clients.





On
      March
      22, 2006, Dongtai and two other shareholders formed a subsidiary, Liaoyang
      Dongtai Industrial Waste Treatment Co., Ltd. (“Liaoyang Dongtai”) in the PRC, in
      which Dongtai holds a 60% ownership interest. Liaoyang Dongtai is also engaged
      in the collection, treatment, disposal and recycling of industrial waste. It
      is
      located in Liaoyang, where there is a concentration of large-scale chemical
      industrial enterprises. Industrial wastes generated by these enterprises are
      on
      the increase and have not, in our opinion, been properly been disposed. We
      believe that this presents a good business opportunity for the Company to
      meet this need.





On
      March 31,
      2006, the Company filed with the Securities and Exchange Commission a definitive
      information statement on Schedule 14C in which it notified stockholders of
      its
      intention to make the following changes:


28


o
            to
                change the name of the Company to China Industrial Waste Management
                Inc.
                and apply for a new trading symbol of
                CIWT.OB.




o
            to
                authorize the Board of Directors to effect a one-for-one hundred
                (1:100)
                reverse stock split of the outstanding shares of Common Stock (the
                "Reverse Split").




o
            to
                approve the Company's 2006 Equity Incentive
                Plan.





The
      name
      change and the reverse stock split became effective on May 12,
      2006.




Results
      of Operations





The
      following discussion should be read in conjunction with the consolidated
      financial statements and notes appearing elsewhere in this annual
      report.





Years
      ended December 31, 2006 and 2005


2006
            
            2005Revenue
            
            $
            6,383,233
            
            $
            4,869,185Costs
                of revenue (including depreciation)
            
            
            1,782,397
            
            
            1,557,106Gross
                profit
            
            
            4,600,836
            
            
            3,312,079Operating
                expensesSelling
                expenses
            
            
            599,691
            
            
            197,355General
                and administrative expenses
            
            
            1,358,038
            
            
            1,695,685Total
                operating expenses
            
            
            1,957,729
            
            
            1,893,040Income
                from operations
            
            
            2,643,107
            
            
            1,419,039Other
                income (expense)Interest
                income
            
            
            25,319
            
            
            26,728Other
                income
            
            
            206,031
            
            
            564,293Other
                expense
            
            
            (11,803
            )
            
            (14,764
            )Total
                other income (expense)
            
            
            219,547
            
            
            576,257Net
                income before minority interest and income tax
            
            
            2,862,654
            
            
            1,995,296Income
                tax (benefit)
            
            
            626
            
            
            385,382




29






Net
                income after income tax
            
            
            2,862,028
            
            
            1,609,914Minority
                interest
            
            
            319,091
            
            
            87,731Net
                income
            
            $
            2,542,937
            
            $
            1,522,183Foreign
                currency translation adjustment
            
            
            319,547
            
            
            158,953Comprehensive
                income
            
            $
            2,862,484
            
            $
            1,681,136Basis
                and diluted weighted average shares outstanding
            
            
            13,181,391
            
            
            12,949,660Basic
                and diluted net earnings per share
            
            $
            0.19
            
            $
            0.12





Revenue





We
      generate
      revenue primarily from two sources, namely, fees charged to customers for waste
      collection, transfer, recycling and disposal services and that from the sale
      of
      recycled materials. We consider our collection and disposal operations and
      reclamation of reusable substances as our core business.





Revenue
      for the year ended December 31, 2006, was $6,383,233, an increase of $1,514,048
      or 31.09% from $4,869,185 for the same period in 2005. The increase in revenue
      is attributable to a broadened customer base.





**** Costs
      of
      revenue ****





Costs
      of
      revenue increased $225,291or 14.47% from $1,557,106 for the year ended December
      31, 2005 to $1,782,397 for the year ended December 31, 2006. The increase in
      costs of revenue is attributable to the increase in the number of customers
      which retained our company for providing professional services and an increase
      in the volume of the waste we treat.





Operating
      expenses ****





Total
      operating expenses for the fiscal year ended December 31, 2006 was $1,957,729,
      which represents an increase of $64,689 or 3.42% from $1,893,040 for the same
      period ended December 31, 2005. The principal reason for the small increase
      in
      operating expenses is the increased
      operating expenses we incurred in recycling products since sales of this type
      of
      material increased.


30




Foreign
      Currency Translation





The
      foreign currency translation adjustment as of December 31, 2006 was $319,547
      compared to an adjustment of $158,953 for the year ended December 31, 2005.
      Such
      a fluctuation was the result of volatility in foreign exchange rates between
      the
      U.S. dollar and the RMB for the fiscal year ended December 31,
      2006.





Net
      Income (Loss)





Net
      income for 2006 was $2,542,937, an increase of $1,020,754 or 67.06% from
      $1,522,183 for the same period in 2005. This increase is primarily attributable
      to the increase in the Company’s revenues during the fiscal year ended December
      31, 2006.




Income
      tax





The
      Company is not liable for income tax for 2006 as a consequence of a tax
      exemption granted to it when Dongtai became a Sino-American joint venture in
      2005 in connection with the reverse merger transaction it consummated. The
      Company has accrued income tax expenses of $385,382 for 2005. The Company’s
      tax-exempt status will continue through the end of 2007. Thereafter, the Company
      will only be liable to pay 50% of its income taxes for the next three
      years.  According
      to the newly adopted Enterprise Income Tax Law of the PRC commencing in 2011
      the
      Company will be subject to an enterprise income tax rate of 25%.




Liquidity
      and Capital Resources




We
      believe that our primary sources of liquidity are cash flows from operations
      and
      existing cash. We intend to use our available funds as working capital and
      to
      develop our current lines of business. We anticipate that cash flow provided
      by
      operating activities will provide the necessary funds on a short - and long-term
      basis to meet our operating cash requirements.





Cash
      and
      cash equivalents





The
      Company had cash and cash equivalents of $2.94 million at the beginning of
      2006
      and at December 31 2006, we had approximate $5.7 million cash and cash
      equivalents. The Company had cash and cash equivalents of approximately $2.37
      million at the beginning of 2005.


31





Working
      Capital





As
      of
      December 31, 2006, the Company had working capital of $6,109,054 as compared
      to
      $ 3,498,100 as of December 31, 2005. The increase is attributable to cash
      generated from operations





Cash
      used
      by Operating Activities




Cash
      provided by operating activities totaled $3,446,657 for the year ended
      December 31, 2006, as compared to cash provided by the operations of $968,589
      for the year ended December 31, 2005.




We
      believe that our available funds will provide us with sufficient capital for
      our
      operations during at least the next twelve months; however, to the extent that
      we make acquisitions, we may require additional capital for the acquisition
      or
      for the operation of the combined companies. We cannot give any assurance that
      such funding will be available on terms acceptable to us or at all.





**Critical
      Accounting Policies**





We
      have
      disclosed in Note 3 to our financial statements those accounting policies that
      we consider to be significant in determining our results of operations and
      our
      financial position. These policies are incorporated by reference herein.




The
      preparation of financial statements requires us to make estimates and judgments
      that affect the reported amounts of assets, liabilities, revenue and expenses.
      We evaluate our estimates, including those related to bad debts, inventories
      and
      warranty obligations, on an ongoing basis. We base our estimates on historical
      experience and on various assumptions that we believe to be reasonable under
      the
      circumstances. These estimates and assumptions affect the reported amounts
      of
      assets and liabilities at the date of the financial statements and the reported
      amounts of revenue and expenses during the periods presented. The actual results
      may differ from these estimates under different assumptions or conditions.




The
      significant accounting policies which we believe are the most critical to aid
      in
      fully understanding and evaluating our reported financial results include the
      following:




Revenue
      recognition


32




Revenue
      is
      recognized when services are rendered to customers when a formal arrangement
      exists, the price is fixed or determinable, the delivery is completed, no other
      significant obligations of the Company exist and collectibles is reasonably
      assured. Payments received before all of the relevant criteria for revenue
      recognition are satisfied are recorded as unearned revenues.




Property,
      Plant and Equipment





Property and equipment are stated at cost. Expenditures for maintenance
      and repairs are charged to earnings as incurred; additions, renewals and
      betterments are capitalized. When property and equipment are sold or otherwise
      disposed of, the related cost and accumulated depreciation are removed from
      the
      respective accounts, and any gain or loss is included in operations.





Bad
      debts




The Company maintains reserves for potential credit losses on accounts
      receivable. Management reviews the composition of accounts receivable and
      analyzes historical bad debts, customer concentrations, customer credit
      worthiness, current economic trends and changes in customer payment patterns
      to
      evaluate the adequacy of these reserves. Terms of the sales vary from cash
      on
      delivery (COD) through a credit term of up to nine to twelve months. Reserves
      are recorded primarily on a specific identification basis.





Off
      Balance Sheet Arrangements




Neither
      the Company nor any of its subsidiaries have engaged in any off-balance sheet
      transactions since its inception.


**ITEM
      7.**   **FINANCIAL
      STATEMENTS**





The
      financial statements of the Company are set forth beginning on page F-1
      immediately following the signature page of this report.




**ITEM
      8.**   **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





Not
      applicable.




**ITEM
      8A. CONTROLS AND PROCEDURES**


33


At
      the
      conclusion of the period ended December 31, 2006, we carried out an evaluation,
      under the supervision and with the participation of our management, including
      our Chairman and Chief Executive Officer and Chief Financial Officer, of the
      effectiveness of the design and operation of our disclosure controls and
      procedures. Based upon that evaluation, the Chairman and Chief Executive Officer
      and Chief Financial Officer concluded that our disclosure controls and
      procedures were effective in alerting them in a timely manner to information
      relating to the Company required to be disclosed in this report. There have
      been
      no significant changes in our internal controls over financial reporting that
      occurred during our most recent fiscal quarter or any subsequent interim period
      that have materially affected, or are reasonably likely to materially affect
      our
      internal controls over financial reporting.





**ITEM
      8B. OTHER INFORMATION**





During
      the
      preparation of the financial statements of the Company as of December 31, 2006
      and for the year then ended, accounting personnel of the Comapny discovered
      that
      several material errors were made in the consolidation and presentation of
      the
      Company’s financial statements as of December 31, 2005 and for the year then
      ended (the “2005 Statements”). The prior consolidation entries incorrectly
      eliminated minority interest and a significant amount of income from government
      subsidies, as well as incorrectly calculating other comprehensive income due
      to
      foreign currency translation. On January 26, 2007 the sole director, Chief
      Executive Officer and Chief Financial Officer of the Company, determined that
      the 2005 Statements should not be relied upon and should be restated. The
      effects of the restatement are shown in the following tables.


The
        table
        below shows the result of restatement:
 
 **Balance
        Sheet**
 **ITEMS**
                
                
                Original
                  2005
                
                
                Restated2005Current
                    assetsCash
                    and cash equivalents
                
                $
                2,944,179
                
                $
                2,944,179Trade
                    accounts receivable
                
                
                281,761
                
                
                281,761Other
                    receivables
                
                
                339,688
                
                
                115,417Inventory
                
                
                410,084
                
                
                410,084Advances
                    to suppliers
                
                
                8,240
                
                
                16,502Prepaid
                    expenses and other assets
                
                
                22,304
                
                
                22,304Total
                    current assets
                
                
                4,006,256
                
                
                3,790,247Net
                    property, plant and equipment
                
                
                2,160,243
                
                
                2,168,678Construction
                    in progress
                
                
                220,474
                
                
                220,474Land
                    usage right, net of accumulated amortization
                
                
                1,509,159
                
                
                1,509,159Related
                    party Receivable
                
                
                -
                
                
                281,851**Total
                    assets**
                
                $
                7,896,132
                
                $
                7,970,409**LIABILITIES
                    AND STOCKHOLDERS' EQUITY**Current
                    liabilitiesAccounts
                    payable
                
                $
                108,213
                
                $
                108,213Other
                    payable
                
                
                227,201
                
                
                183,934Total
                    current liabilities
                
                
                335,414
                
                
                292,147Minority
                    interest in subsidiary
                
                
                -
                
                
                767,826Stockholders'
                    equitySeries
                    A preferred stock $.001 par value; 5,000,000 shares authorized,
                    64,000
                    shares issued and outstanding
                
                
                64
                
                
                64Common
                    stock: par value $.001; 90,000,000 shares authorized; 340,843
                    shares
                    issued and outstanding
                
                
                13,141
                
                
                341Additional
                    paid-in capital
                
                
                2,164,795
                
                
                1,956,117Other
                    comprehensive income
                
                
                (227,827
                )
                
                158,953Retained
                    earnings
                
                
                5,610,545
                
                
                4,794,961Total
                    stockholders' equity
                
                
                7,560,718
                
                
                6,910,436**Total
                    liabilities and stockholders' equity**
                
                $
                7,896,132
                
                $
                7,970,409
 
 As
        a
        result of the restatement on the balance sheet, total assets as of December
        31,
        2005 increased from $7,896,132, as originally reported, to $7,970,409, an
        increase of $74,277; stockholders' equity as of December 31, 2005 decreased
        from
        $7,560,718, as originally reported, to $6,910,436, a decrease of
        $650,282.
 
 Part
        of
“Stockholders' equity” has been reclassified as “Minority interest in
        subsidiary”, and “Stockholders' equity” itself has been reclassified between its
        components, such as “Additional paid-in capital”, “Other comprehensive income”
and “Retained earnings”.
  34
 **Income
        Statement**
 **ITEMS**
                
                
                Original
                  2005
                
                
                Restated2005Revenue
                
                $
                4,869,300
                
                $
                4,869,185Costs
                    of revenue(including depreciation)
                
                
                1,582,338
                
                
                1,557,106Gross
                    profit
                
                
                3,286,962
                
                
                3,312,079Operating
                    expensesSelling
                    expenses
                
                
                344,660
                
                
                197,355General
                    and administrative expenses
                
                
                1,504,058
                
                
                1,695,685Total
                    operating expenses
                
                
                1,848,718
                
                
                1,893,040Income
                    from operations
                
                
                1,438,244
                
                
                1,419,039Other
                    income (expense)Investment
                    income
                
                
                47,847
                
                
                -Interest
                    income
                
                
                -
                
                
                26,728Other
                    income
                
                
                55,508
                
                
                564,293Other
                    expense
                
                
                (20,059
                )
                
                (14,764
                )Total
                    other income (expense)
                
                
                83,296
                
                
                576,257Net
                    income before minority interest and income tax
                
                
                1,521,540
                
                
                1,995,296Income
                    tax (benefit)
                
                
                505,834
                
                
                385,382Net
                    income after income tax
                
                
                1,015,706
                
                
                1,609,914Minority
                    interest
                
                
                (110,643
                )
                
                87,731Net
                    income
                
                $
                1,126,349
                
                $
                1,522,183Foreign
                    currency translation adjustment
                
                
                (227,827
                )
                
                158,953Comprehensive
                    income
                
                $
                898,522
                
                $
                1,681,136Basic
                    and diluted weighted average shares outstanding
                
                
                15,973,096
                
                
                12,949,660Basic
                    and diluted net earnings per share
                
                $
                0.06
                
                $
                0.12
  
 As
        a
        result of the restatement, net income for the year ended December 31, 2005
        increased from $1,126,349, as originally reported, to $1,522,183, an increase
        of
        $395,834.
  “Other
        income” as originally reported, failed to include the net income coming from the
        disposal of investment and subsidy income rewarded by local government, and
        net
        income was therefore restated accordingly.
 
 Originally
        reported “income tax” had be presented without deducting the amount of tax
        return made by tax authorities, which has been adjusted through
        restatement.
 
 35
 **Statement
          of Cash Flows**
  **ITEMS**
                
                
                Original
                  2005
                
                
                Restated2005Cash
                    flows from operating activities:Net
                    income
                
                $
                1,126,349
                
                $
                1,522,183Adjustments
                    to reconcile net income to net cashprovided
                    by operating activities:Minority
                    interest
                
                
                (110,643
                )
                
                87,731Depreciation
                    and amortization
                
                
                485,758
                
                
                214,200Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                (219,655
                )
                
                (219,655
                )Inventory
                
                
                (524,537
                )
                
                (524,537
                )Other
                    receivables
                
                
                (182,976
                )
                
                (269,175
                )Due
                    from related parties
                
                
                455,618
                
                
                281,851Advance
                    to suppliers
                
                
                152,699
                
                
                152,699Prepaid
                    expense
                
                
                (11,509
                )
                
                (11,509
                )Accounts
                    payable
                
                
                (277,122
                )
                
                (277,122
                )Other
                    payables
                
                
                11,923
                
                
                11,923Net
                    cash provided by operating activities
                
                
                905,905
                
                
                968,589Cash
                    flows from investing activitiesDecrease
                    in long-term investment
                
                
                12,391
                
                
                12,391Purchase
                    of property
                
                
                (146,833
                )
                
                (146,833
                )Net
                    cash used in investing activities
                
                
                (134,442
                )
                
                (134,442
                )Cash
                    flows from financing activitiesMinority
                    interest
                
                
                (142,616
                )
                
                -Capital
                    contribution
                
                
                -
                
                
                (205,300
                )Net
                    cash provided by financing activities
                
                
                (142,616
                )
                
                (205,300
                )Effect
                    of exchange rate on cash
                
                
                (57,053
                )
                
                (57,053
                )Net
                    increase in cash and cash equivalents
                
                
                628,847
                
                
                571,794Cash
                    and cash equivalents, beginning of period
                
                
                2,372,385
                
                
                2,372,385Cash
                    and cash equivalents, end of period
                
                $
                2,944,179
                
                $
                2,944,179
 On
        April
        19, 2007 the Company’s independent certified public accountants advised the
        Company to file a Current Report on Form 8-K to report the foregoing. In
        lieu of
        filing a Form 8-K, the Company determined to include the above information
        in
        this Item 8B.




36
  **PART
          III**
 
 **ITEM
          9.**   **DIRECTORS,
          EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
          16(** **a** **)
          OF THE EXCHANGE ACT.**
 
 The
          following table sets forth information as of the date of this prospectus
          with
          respect to the sole director and executive officer of the Company.
  Name
                PositionDong Jinqing
                Chairman of the Board, Chief Executive
                  Officer, Chief Financial Officer and
                  Director
 
 Mr.
          Dong
          Jinqing, age 50, was appointed the Company’s Chief Executive Officer, Chief
          Financial Officer and Director in November 2005. Mr. Dong has been the
          President
          of Dalian Dongtai Industrial Waste Treatment Co., Ltd. since he founded
          that
          company in 1991. Between 1982 and 1991, Mr. Dong worked for the Dalian
          Environmental Science Academy, being mainly engaged in research concerning
          the
          disposal of waste gas, waste water and industrial residue and the evaluation
          of
          the environment effects from industrial projects. Mr. Dong graduated from
          Dalian
          University of Technology in 1982 with a bachelor’s degree in environmental
          engineering.
 
 The
          following are the officers of Dongtai, the Company’s 90%-owned operating
          subsidiary in PRC.
   Name
                PositionLi Jun
                Chief Operating Officer and
                  DirectorLiu Ruiguang
                Chief Engineer and DirectorGuo Xin
                Chief Accounting Officer and
                  Director


Mr.
      Li
      Jun, age 45, was appointed the Company’s Chief Operating Officer and a director
      of the Company in January 2007. He has served as the Chief Operating Officer
      of
      Dalian Dongtai since 1998. From 1982 to 1993he worked for the Dalian Vacuum
      Flask Factory and Dalian Yili International Chemical Co. Ltd as the Director
      of
      Technology and Chief Production Manager. Mr. Li graduated from Dalian University
      of Technology in 1982, majoring in environmental engineering.





Mr.
      Liu
      Ruiguang, age 46, was appointed as the Company’s Chief Engineer in January 2007.
      He has served as the Chief Engineer for Dalian Dongtai since 1999. Mr. Liu
      graduated from Dalian University of Technology in 1982, majoring in basic
      organic synthesis.





Ms.
      Guo
      Xin, age 37, was appointed as the Company’s Chief Accounting Officer in January
      2007. She has served as Chief Accounting Officer for Dalian Dongtai since
      October 2003 and as a manager in Dongtai’s accounting department from April 2002
      to October 2003. Ms. Guo graduated from Beijing University of Commerce in 1992
      majoring in finance and received her Master's in Public Administration from
      China's Northeastern University in 2002.




Family
      Relationships





There
      are
      no family relationships among our directors or officers.





Audit
      Committee Financial Expert





The
      full
      Board of Directors of the Company currently serves as its audit committee.
      At
      the present time, we believe that our sole director is capable of analyzing
      and
      evaluating our financial statements and understanding internal controls and
      procedures for financial reporting. The Board of Directors does not currently
      have an audit committee “financial expert” as defined under Rule 401(e) of
      Regulation S-B and which is and is "independent" as the term is used in Item
      7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934. The
      Board
      of Directors is in the process of searching for a suitable candidate for this
      Board position.





Section
      16(a) Beneficial Ownership Reporting Compliance





Not
      applicable.





Code
      of
      Ethics


37


The
      Company has not yet adopted a Code of Ethics that applies to its principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or person’s performing similar functions, but the Company intends to
      do so during 2007.





**ITEM
      10. EXECUTIVE COMPENSATION**





Our
      sole
      director and executive officer did not receive any compensation directly from
      the Company during the two fiscal years ended December 31, 2006. The following
      table sets forth information concerning cash and non-cash compensation paid
      by
      Dongtai to its Chief Executive Officer and the four other most highly
      compensated employees of Dongtai for the two years ended December 31, 2006.





Name
                and Principal Position
            Year
                Ended
            Salary
                ($)
            Bonus
                ($)
            Stock
                Awards
            Non-Equity
                Incentive Plan Compensation (S)
            Non-Qualified
                Deferred Compensation Earnings ($)
            All
                Other Compensation ($)
            Total
                ($)Jinqing
                Dong, CEO, CFO and Director
            12/31/2006
              12/31/2005
            10,740
              9,632
            40,305
              23,858
            0
            0
            0
            0
            51,045
              33,490Li
                Jun, COO and Director
            12/31/2006
              12/31/2005
            10,013
              9,226
            36,778
              18,597
            0
              0
            0
              0
            0
              0
            0
              0
            46,792
              27,823Liu
                Ruiguang, Chief Engineer
            12/31/2006
              12/31/2005
            8,761
              8,361
            25,417
              24,690
            0
              0
            0
              0
            0
              0
            0
              0
            34,178
              33,051Guo
                Xin, Chief Accounting Officer
            12/31/2006
              12/31/2005
            7,051
              6,732
            16,500
              8,197
            0
              0
            0
              0
            0
              0
            0
              0
            23,551
              14,930Tian
                Hongyi, Director of Marketing
              Development
            12/31/2006
              12/31/2005
            7,199
              6,758
            15,305
              9,054
            0
              0
            0
              0
            0
              0
            0
              0
            22,503
              15,812





The
      executivesof the Company and its subsidiaries are eligible to be granted awards
      of stock options, stock appreciation rights, restricted stock, performance
      shares, cash awards and other stock based awards under our 2006 Equity
      Compensation Plan. As of April 5, 2007 no awards have been made to any officer
      director or employee of the Company under such plan.




There
      are
      no current employment agreements between any individuals and the Company or
      any
      of its subsidiaries.


**ITEM
      11.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**





The
      following table sets forth as of April 5, 2007, certain information with respect
      to the beneficial ownership of the voting securities by (i) any person or group
      with more than 5% of the Company’s
      securities, (ii) each director, (iii) each executive officer and (iv) all
      executive officers and directors as a group.


38





Number
                  of Shares
              
              Percent
                  ofof
                  Common Stock
              
              Common
                  StockName
                  and Address
              
              Beneficially
              
              Beneficiallyof
                  Beneficial Owner (1)
              
              
              Owned
                  (2)
              
              
              Owned
                  (2)Dong
                  Jinqing
              
              
              9,100,400
              
              
              68.8
              %American
                  Union Securities, Inc.
              
              
              777,500
              
              
              5.9
              %100
                  Wall Street, 15thFloorNew
                  York, New York 10005Peter
                  D. Zhou
              
              
              777,500(3
              )
              
              5.9
              %100
                  Wall Street, 15thFloorNew
                  York, New York 10005Li
                  Jun
              
              
              319,900
              
              
              2.4
              %Liu
                  Ruiguan
              
              
              0
              
              
              0Guo
                  Xin
              
              
              206,600
              
              
              1.6
              %All
                  Officers and Directors
              
              
              9,626,900
              
              
              72.8
              %as
                  a group (5 persons)


_____________________________________________




(1)
      Except as otherwise indicated, the address of each person is Dalian Dongtai
      Industrial Waste Treatment Co., Ltd., No. 1 Huaihe West Road, E-T-D Zone,
      Dalian, China 116600.





(2)
      Based
      upon 13,220,843 shares of our common stock issued and outstanding as of April
      5,
      2007.





(3)
      Includes 777,500 shares owned of record by American Union Securities, Inc.,
      a
      firm of which Mr. Zhou is the sole share shareholder, a director and the Chief
      Executive Officer.








**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





There
      have not been any transactions, or series of similar transactions, since
      the inception of the Company, or any currently proposed transaction, or
      series of similar transactions, to which the Company or any of its
      subsidiaries was or is to be a party, in which the amount involved exceeds
      $60,000 and in which any director or executive officer of the Company, nominee
      for election as a director, any five percent security holder or any member
      of
      the immediate family of any of the foregoing persons had, or will have, a direct
      or indirect material interest.





39


**ITEM
      13.**  **EXHIBITS**





**Number**
            **Description**  3.1
            Articles
                of Incorporation of the Company (f/k/a Goldtech Mining Corporation)
                filed
                November 12, 2003. Incorporated by reference to Exhibit 3.1 to the
                Company’s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 2003 (the “9/30/03 10-QSB”).





3.2
            Articles
                of Merger of Egan Systems, Inc. with and into the Company filed with
                the
                Secretary of State of Nevada. Incorporated by reference to Exhibit
                2.2 to
                the 9/30/03 10-QSB.





3.3
            Certificate
                of Amendment to Articles of Incorporation filed with the Nevada Secretary
                of State on April 27, 2006. Incorporated by reference to Exhibit
                3.2 to
                the Company’s Quarterly Report on Form 10-QSB for the quarter
                ended March  31, 2006.





3.4
            By-laws
                of the Company. Incorporated by reference to Exhibit 3.2 to the 9/30/03
                10-QSB.





10.1
            Agreement
                and Plan of Merger, dated November 11, 2005, by and among the Company,
                Dalian Acquisition Corp., China Industrial Waste Management Inc.,
                and each
                of the CIWM Shareholders. Incorporated by reference to Exhibit 10.1
                to the
                Current Report on Form 8-K filed by the Company on November 17,
                2005.




21.1
            List
                of Subsidiaries*




31.1
            Certification
                of Jinqing Dong in his capacity as the CEO of the Company pursuant
                to
                Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
                Section
                302 of the Sarbanes-Oxley Act of 2002;


31.2
            Certification
                of Jinqing Dong in his capacity as the CFO of the Company pursuant
                to
                Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to
                Section
                302 of the Sarbanes-Oxley Act of 2002;


32.1
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of the Sarbanes-Oxley Act of
                2002;






40


**ITEM
      14.**  **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





Audit
      and
      Non-Audit Fees





1.
      Child,
      Van Wagoner & Bradshaw, PLLC





Fiscal
                Year Ended December 31, 2006
            Fiscal
                Year Ended December 31, 2005Audit
                Fees
            $52,750(1)
            NoneAudit
                Related Fees
            None
            NoneTax
                Fees
            None
            NoneAll
                Other Fees
            None
            None


1)
      Includes $20,000 for the separate audit of the financial statements of
      the Company's subsidiary, DonTech Waste  Services Inc.





2.
      E.
      Randall Gruber, CPA





Fiscal
                Year Ended December 31, 2006
            Fiscal
                Year Ended December 31, 2005Audit
                Fees
            None
            $11,500Audit
                Related Fees
            None
            NoneTax
                Fees
            None
            NoneAll
                Other Fees
            None
            None





Pre-Approval
      of Services by the Independent Auditor





The
      Board
      of Directors has established policies and procedures for the approval and
      pre-approval of audit services and permitted non-audit services. The Board
      has
      the responsibility to engage and terminate the Company’s independent registered
      public accountants, to pre-approve their performance of audit services and
      permitted non-audit services and to review with the Company’s independent
      registered public accountants their fees and plans for all auditing services.
      All services provided by and fees paid to Child, Van Wagoner & Bradshaw,
      PLLC in 2006 were pre-approved by the Board of Directors.





41





**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 INDUSTRIAL WASTE MANAGEMENT,
              INC.**Date: April
              23, 2007
            By:
            /s/ Jinqing
              DongJinqing
              Dong, Chief Executive Officer








Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, this Report has been signed below by the following persons on behalf
      of
      the Registrant and in the capacities and on the dates indicated.






/s/ Jinqing Dong
              Jinqing Dong
            Chief
                Executive Officer,Chief
                Financial Officer and Director
            April
                23, 2007





42




**CHINA
        INDUSTRIAL WASTE MANAGENT, INC. AND SUBSIDIARIES**
 
 **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
   **As
                  of December 31, 2006 and from August 25, 2006 (Inception) to December
                  31 ,
                  2006**Report
                  of Independent Registered Public Accounting Firm
              F-2Consolidated
                  Balance Sheets
              F-3Consolidated
                  Statements of Operations and Comprehensive Income
              F-4Consolidated
                  Statements of Stockholders’ Equity
              F-5Consolidated
                  Statements of Cash Flows
              F-6Notes
                  to Consolidated Financial Statements
              F-7
 
  F-1
  Report
        of
        Independent Registered Public Accounting Firm
 
 To
        the
        Board of Directors and Audit Committee
 CHINA
        INDUSTRIAL WASTE MANAGEMENT, INC.
 Dalian,
        People’s Republic of China
 
 We
        have
        audited the consolidated balance sheets of CHINA INDUSTRIAL WASTE MANAGEMENT,
        INC. (the Company) as of December 31, 2006 and 2005, and the related
        consolidated statements of operations and comprehensive income, stockholders’
equity and cash flows for the years then ended. These consolidated financial
        statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these consolidated financial
        statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. The
        company
        is not required to have, nor were we engaged to perform, an audit of its
        internal control over financial reporting. Our audits included consideration
        of
        internal control over financial reporting as a basis for designing audit
        procedures that are appropriate in the circumstances, but not for the purpose
        of
        expressing an opinion on the effectiveness of the company’s internal control
        over financial reporting. Accordingly, we express no such opinion. An audit
        also
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the consolidated financial statements, assessing the accounting
        principles used and significant estimates made by management, as well as
        evaluating the overall consolidated financial statement presentation. We
        believe
        that our audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of CHINA
        INDUSTRIAL WASTE MANAGEMENT, INC. as of December 31, 2006 and 2005, and the
        consolidated results of its operations and its cash flows for the years then
        ended, in conformity with accounting principles generally accepted in the
        United
        States of America.
 
 /s/
        Child, Van Wagoner & Bradshaw, PLLC
 
 Child,
        Van Wagoner & Bradshaw, PLLC
 Salt
        Lake
        City, Utah
 March
        28,
        2007
 
  F-2
  **CHINA
                  INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                  BALANCE SHEETS**(In
                  U.S. dollars)December
                    31,
                
                December
                    31,2006
                
                2005(Restated)**ASSETS**Current
                    assetsCash
                    and cash equivalents
                
                
                
                
                $
                5,660,698
                
                $
                2,944,179Trade
                    accounts receivables
                
                
                
                
                
                151,144
                
                
                281,761Other
                    receivables
                
                
                
                
                
                50,789
                
                
                115,417Inventory
                
                
                
                
                
                602,582
                
                
                410,084Advances
                    to suppliers
                
                
                
                
                
                374,046
                
                
                16,502Deferred
                    expense
                
                
                
                
                
                20,490
                
                
                22,304Total
                    current assets
                
                
                
                
                
                6,859,749
                
                
                3,790,247Investment
                
                
                
                
                
                361,136
                
                
                -Property,
                    plant & equipment
                
                
                
                
                
                3,927,234
                
                
                3,330,937Less:
                    Accumulated depreciation
                
                
                
                
                
                (1,487,340
                )
                
                (1,162,259
                )Net
                    property, plant and equipment
                
                
                
                
                
                2,439,894
                
                
                2,168,678Construction
                    in progress
                
                
                
                
                
                202,974
                
                
                220,474Land
                    usage right, net of accumulated amortization
                
                
                
                
                
                1,524,319
                
                
                1,509,159Related
                    party Receivable
                
                
                
                
                
                231,793
                
                
                281,851**Total
                    assets**
                
                
                
                
                $
                11,619,865
                
                $
                7,970,409**LIABILITIES
                    AND STOCKHOLDERS' EQUITY**Current
                    liabilitiesAccounts
                    payable
                
                
                
                
                $
                92,255
                
                $
                108,213Tax
                    payable
                
                
                
                
                
                6,346
                
                
                -Deferred
                    Sales
                
                
                
                
                
                455,548
                
                
                -Accrued
                    expenses
                
                
                
                
                
                15,410
                
                
                -Other
                    payable
                
                
                
                
                
                181,136
                
                
                183,934Total
                    current liabilities
                
                
                
                
                
                750,695
                
                
                292,147Long-term
                    debtMinority
                    interest in subsidiary
                
                
                
                
                
                1,086,917
                
                
                767,826Stockholders'
                    equitySeries
                    A preferred stock $.001 par value; 5,000,000 shares authorized,
                    0 and
                    64,000 shares issued and outstanding
                
                
                
                
                
                -
                
                
                64Common
                    stock: par value $.001; 95,000,000 shares authorized; 13,220,843
                    and
                    340,843 shares issued and outstanding
                
                
                
                
                
                13,221
                
                
                341Additional
                    paid-in capital
                
                
                
                
                
                1,952,634
                
                
                1,956,117Other
                    comprehensive income
                
                
                
                
                
                478,500
                
                
                158,953Retained
                    earnings
                
                
                
                
                
                7,337,898
                
                
                4,794,961Total
                    stockholders' equity
                
                
                
                
                
                9,782,253
                
                
                6,910,436**Total
                    liabilities and stockholders' equity**
                
                
                
                
                $
                11,619,865
                
                $
                7,970,409See
                    notes to Consolidated Financial Statements.
 F-3
   **CHINA
                    INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                    STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**(In
                    U.S. dollars)Years
                    ended December 31,2006
                
                2005(Restated)Revenue
                
                $
                6,383,233
                
                $
                4,869,185Costs
                    of revenue(including depreciation)
                
                
                1,782,397
                
                
                1,557,106Gross
                    profit
                
                
                4,600,836
                
                
                3,312,079Operating
                    expensesSelling
                    expenses
                
                
                599,691
                
                
                197,355General
                    and administrative expenses
                
                
                1,358,038
                
                
                1,695,685Total
                    operating expenses
                
                
                1,957,729
                
                
                1,893,040Income
                    from operations
                
                
                2,643,107
                
                
                1,419,039Investment
                    income
                
                
                -
                
                
                -Interest
                    income
                
                
                25,319
                
                
                26,728Other
                    income
                
                
                206,031
                
                
                564,293Other
                    expense
                
                
                (11,803
                )
                
                (14,764
                )Total
                    other income (expense)
                
                
                219,547
                
                
                576,257Net
                    income before minority interest and income tax
                
                
                2,862,654
                
                
                1,995,296Income
                    tax (benefit)
                
                
                626
                
                
                385,382Net
                    income after income tax
                
                
                2,862,028
                
                
                1,609,914Minority
                    interest
                
                
                319,091
                
                
                87,731Net
                    income
                
                $
                2,542,937
                
                $
                1,522,183Foreign
                    currency translation adjustment
                
                
                319,547
                
                
                158,953Comprehensive
                    income
                
                $
                2,862,484
                
                $
                1,681,136Basic
                    and diluted earnings per share
                
                $
                0.19
                
                $
                0.12Weighted
                    average shares outstanding
                
                
                13,181,391
                
                
                12,949,660See
                    notes to Consolidated Financial
                    Statements.
  F-4
   **CHINA
                    INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                    STATEMENTS OF STOCKHOLDERS' EQUITY****FOR
                    THE YEARS ENDED DECEMBER 31, 2006 AND 2005
                    (Restated)**(In
                    U.S. dollars)Series
                    A Preferred Stock
                
                Common
                    StockShares
                
                Amount
                
                Shares
                
                Amount
                
                Additional
                    Paid In Capital
                
                Other
                    Comprehensive Income
                
                Retained
                    Earnings
                
                Total
                    Stockholders' EquityBalance
                    December 31, 2004
                
                
                -
                
                $
                -
                
                
                1,280,000
                
                $
                1,280
                
                $
                1,955,242
                
                $
                -
                
                $
                3,997,416
                
                $
                5,953,938Reverse
                    split 1:100 May 12, 2006, shown retroactively
                
                
                
                
                
                
                
                
                (1,267,061
                )
                
                (1,267
                )
                
                1,267
                
                
                
                
                
                
                
                
                -Balance
                    December 31, 2004 as adjusted
                
                
                
                
                
                
                
                
                12,939
                
                
                13
                
                
                1,956,509
                
                
                
                
                
                3,997,416
                
                
                5,953,938Shares
                    issued in connection with reverse merger
                
                
                64,000
                
                
                64
                
                
                118,608
                
                
                119
                
                
                (183
                )
                
                
                
                
                
                
                
                (0
                )Previously
                    canceled shares reinstated
                
                
                
                
                
                
                
                
                16,164
                
                
                16
                
                
                (16
                )
                
                
                
                
                
                
                
                0Additional
                    common shares issued for merger
                
                
                
                
                
                
                
                
                193,132
                
                
                193
                
                
                (193
                )
                
                
                
                
                
                
                
                0Change
                    in foreign currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                158,953
                
                
                
                
                
                158,953Net
                    Income for the year ended December 31, 2005
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,522,183
                
                
                1,522,183Dividend
                    paid
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (724,638
                )
                
                (724,638
                )Balance
                    December 31, 2005
                
                
                64,000
                
                
                64
                
                
                340,843
                
                
                341
                
                
                1,956,117
                
                
                158,953
                
                
                4,794,961
                
                
                6,910,436Conversion
                    of preferred shares to common
                
                
                (64,000
                )
                
                (64
                )
                
                6,400,000
                
                
                6,400
                
                
                (6,336
                )
                
                
                
                
                
                
                
                -Additional
                    common shares issued for merger
                
                
                
                
                
                
                
                
                6,400,000
                
                
                6,400
                
                
                (6,400
                )
                
                
                
                
                
                
                
                -S8
                    shares issued for services
                
                
                
                
                
                
                
                
                80,000
                
                
                80
                
                
                9,253
                
                
                
                
                
                
                
                
                9,333Change
                    in foreign currency translation gain
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                319,547
                
                
                
                
                
                319,547Net
                    Income for the year ended December 31, 2006
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,542,937
                
                
                2,542,937Balance
                    December 31, 2006
                
                
                -
                
                $
                -
                
                
                13,220,843
                
                $
                13,221
                
                $
                1,952,634
                
                $
                478,500
                
                $
                7,337,898
                
                $
                9,782,253See
                    notes to consolidated financial statements.
  F-5
  **CHINA
                  INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**(In
                  U.S. dollars)Years
                  ended December 31,2006
              
              2005(Restated)Cash
                  flows from operating activities:Net
                  income
              
              $
              2,542,937
              
              $
              1,522,183Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Minority
                  interest
              
              
              319,091
              
              
              87,731Depreciation
                  and amortization
              
              
              281,474
              
              
              214,200Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (104,070
              )
              
              (219,655
              )Inventory
              
              
              (175,811
              )
              
              (524,537
              )Other
                  receivables
              
              
              (145,270
              )
              
              (269,175
              )Due
                  from related parties
              
              
              231,793
              
              
              281,851Advance
                  to suppliers
              
              
              (125,575
              )
              
              152,699Prepaid
                  expense
              
              
              48,006
              
              
              (11,509
              )Prepaid
                  sales
              
              
              448,043
              
              
              -Accounts
                  payable
              
              
              (19,691
              )
              
              (277,122
              )Other
                  payables
              
              
              145,730
              
              
              11,923Net
                  cash provided by operating activities
              
              
              3,446,657
              
              
              968,589Cash
                  flows from investing activiiesDecrease
                  in long-term investment
              
              
              (302,836
              )
              
              12,391Purchase
                  of property
              
              
              (580,224
              )
              
              (146,833
              )Net
                  cash used in investing activities
              
              
              (883,060
              )
              
              (134,442
              )Cash
                  flows from financing activitiesCapital
                  contribution
              
              
              -
              
              
              (205,300
              )Net
                  cash provided by financing activities
              
              
              -
              
              
              (205,300
              )Effect
                  of exchange rate on cash
              
              
              152,922
              
              
              (57,053
              )Net
                  increase in cash and cash equivalents
              
              
              2,716,519
              
              
              571,794Cash
                  and cash equivalents, beginning of period
              
              
              2,944,179
              
              
              2,372,385Cash
                  and cash equivalents, end of period
              
              $
              5,660,698
              
              $
              2,944,179Supplemental
                  cash flow information:Cash
                  paid during the year for:Interest
              
              $
              -
              
              $
              -Income
                  taxes
              
              $
              626
              
              $
              385,382Stock
                  issued for services
              
              $
              80,000
              
              $
              -See
                  notes to Consolidated Financial Statements.
    F-6
 **CHINA
        INDUSTRIAL WASTE MANAGEMENT, INC.**


NOTES
      TO CONSOLIDATED FINANCIAL
      STATEMENTS 
  **1.**
            **Nature
                of operations** 
 The
        audited consolidated financial statements are those of China Industrial Waste
        Management, Inc., a Nevada corporation formerly known as Goldtech Mining
        Corporation, (the “Company”) and its majority owned subsidiaries. When the terms
“the Company,” “we,” “us” or “our” are used in this document, those terms refer
        to China Industrial Waste Management, Inc., and its consolidated subsidiaries.
        When we use the term “CIWM,” we are referring only to the parent holding
        company.
 
 CIWM
        is a
        holding company which conducts its business through its only wholly-owned
        subsidiary, DonTech Waste Services, Inc. (“DonTech”), formerly known as Dalian
        Acquisition Corp., DonTech owns 90% of the stock of Dalian Dongtai Industry
        Waste Treatment Co. Ltd. (“Dongtai”), a joint venture under the laws of the
        People’s Republic of China (“ PRC”).
 
 Dongtai
        was incorporated on January 9, 1991. As of December 31, 2006, Dongtai has
        one
        subsidiary - Liaoyang Dongtai Industrial Waste Treatment Co. Ltd (“Liaoyang
        Dongtai”). Dongtai is located in the Economic and Technology Development Zone,
        Dalian, PRC. Dongtai is engaged in the collection, treatment, disposal and
        recycling of industrial waste in China. Dongtai recovers all types of industrial
        wastes which can be used as raw material to produce chemical and metallurgy
        products. Dongtai also provides incineration, burial, and water treatment
        services. Dongtai also provides service for environment protection, technology
        consultation, pollution treatment, and waste managing process
        design.
  Another
        corporation with the name China Industrial Waste Management, Inc. was
        incorporated in the State of Delaware on August 16, 2005. On September 22,
        2005,
        that corporation acquired 90% of the outstanding shares of Dongtai from its
        shareholders in exchange for 1,280,000 shares of the corporation’s common stock,
        representing 100% of the issued and outstanding shares of its common stock
        at
        the date of the acquisition.
 
 The
        exchange of shares with Dongtai was accounted for as a reverse acquisition
        under
        the purchase method of accounting since the shareholders of Dongtai obtained
        control of the combined company. Accordingly, the merger of the two companies
        was recorded as a recapitalization of Dongtai, with Dongtai being treated
        as the
        continuing entity. The historical financial statements presented herein are
        of
        Dongtai and subsidiaries. Pro forma financial statements are not presented
        as
        the amounts are insignificant.
 
 On
        November 11, 2005, China Industrial Waste Management, Inc. (the Delaware
        corporation) and its shareholders entered into an Agreement and Plan of Merger
        with the Company, which closed on November 11, 2005. Pursuant to the agreement,
        China Industrial Waste Management, Inc. (the Delaware corporation) merged
        into
        the Company’s wholly owned subsidiary, DonTech, and the Company issued 64,000
        shares of the Company’s Series A Convertible Preferred Stock to the former
        shareholders of China Industrial Waste Management, Inc. Each share of Series
        A
        Convertible Preferred Stock was convertible into 10,000 shares of common
        stock
        and is entitled to 10,000 votes on each matter submitted to the stockholders.
        The holders of the Series A Convertible Preferred Stock contractually agreed not
        to convert such shares until the Company increased its authorized number
        of
        shares of common stock.
 
 F-7
 **CHINA
          INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
          TO CONSOLIDATED FINANCIAL
          STATEMENTS
  The
        merger of China Industrial Waste Management, Inc. into a subsidiary of the
        Company was accounted for as a reverse acquisition under the purchase method
        of
        accounting since the shareholders of China Industrial Waste Management, Inc.
        obtained control of the Company. Accordingly, the merger was recorded as
        a
        recapitalization of CIWM, with CIWM being treated as the continuing entity.
        The
        financial statements of the legal acquiree (the Company) are not significant.
        Therefore, no pro forma financial information is submitted.
 
 On
        May
        12, 2006, the Company changed its name to “China Industrial Waste Management,
        Inc.” and began trading under a new trading symbol (CIWT). In addition, the
        Company effected a 1:100 reverse split of its outstanding common shares.
 
 On
        May
        15, 2006, the Company issued to 10 stockholders an aggregate of 6,400,000
        additional shares of the Company's Common Stock as an equitable adjustment
        of
        the number of shares which the Company had agreed to issue to such persons
        pursuant to the Agreement and Plan of Merger entered into and consummated
        on
        November 11, 2005.
 
 **2.
        Basis of Presentation**
 
 The
        accompanying consolidated financial statements include the accounts of China
        Industrial Waste Management, Inc., a Nevada corporation, its 100% owned
        subsidiary, DonTech Waste Services Inc. (formerly, Dalian Acquisition Corp.),
        a
        Delaware corporation, its 90% indirectly owned subsidiary, Dalian Dongtai
        Industrial Waste Treatment Co., Ltd., a PRC company, and its 60% indirectly
        owned subsidiary, Liaoyang Dantai Industrial Waste Treatment Co. Ltd., a
        PRC
        company. All material inter-company accounts and transactions have been
        eliminated in the consolidation.
 
 The
        accompanying financial statements are prepared in accordance with accounting
        principles generally accepted in the United States of America (US GAAP).
        This
        basis differs from that used in the statutory accounts of the Company, which
        were prepared in accordance with the accounting principles and relevant
        financial regulations applicable to enterprises in the PRC. All necessary
        adjustments have been made to present the financial statements in accordance
        with US GAAP.
 
 **3.
        Summary of Significant Accounting Policies**
 
 Economic
        and Political Risks
 
 The
        Company faces a number of risks and challenges as a result of having primary
        operations and markets in the PRC. Changing political climates in the PRC
        could
        have a significant effect on the Company’s business.
 
 F-8
 **CHINA
        INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
        TO CONSOLIDATED FINANCIAL
        STATEMENTS
 
 
 Foreign
        currency translation
 
 As
        of
        December 31, 2006 and 2005, the accounts of the Company were maintained,
        and the
        consolidated financial statements were expressed in the Chinese Yuan Renminbi
        (“RMB”). Such consolidated financial statements were translated into U.S.
        dollars (“USD”) in accordance with Statement of Financial Accounting Standards
        (“SFAS”) No. 52, “Foreign Currency Translation,” with the RMB as the functional
        currency. According to the Statement, all assets and liabilities were translated
        at the exchange rate on the balance sheet date, stockholders’ equity was
        translated at the historical rates and the statement of operations items
        were
        translated at the weighted average exchange rate for the period. The resulting
        translation adjustments are reported under other comprehensive income in
        accordance with SFAS No. 130, “Reporting Comprehensive Income.”
 
 Use
        of
        estimates
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenues and expenses during the reporting period.
        Actual results could differ from those estimates.
 
 Cash
        and cash equivalents
 
 Cash
        and
        cash equivalents include cash on hand and cash on deposits, certificates
        of
        deposit and all highly liquid debt instruments with original maturities of
        three
        months or less.
 
 Accounts
        and other receivables
 
 Accounts
        and other receivables are recorded at net realizable value consisting of
        the
        carrying amount less an allowance for uncollectible accounts, as needed.
        Allowance for uncollectible accounts as of December 31, 2006 is
        $5,760.
 
 The
        Company maintains reserves for potential credit losses on accounts receivable.
        Management reviews the composition of accounts receivable and analyzes
        historical bad debts, customer concentrations, customer credit worthiness,
        current economic trends and changes in customer payment patterns to evaluate
        the
        adequacy of these reserves. Terms of the sales vary from COD through a credit
        term of up to nine to twelve months. Reserves are recorded primarily on a
        specific identification basis.
 
 Advances
        to suppliers
 
 The
        Company makes advances to certain vendors for purchase of its material or
        equipment. The advances to suppliers are interest free and
        unsecured.
 
 F-9
 **CHINA
          INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
          TO CONSOLIDATED FINANCIAL
          STATEMENTS
  The
        Company is in the process of expanding and advancing its facilities, creating
        a
        need to increase the advanced payment for the purchase of machinery and the
        building of a new plant, resulting in an advance to suppliers balance of
        $357,544 at December 31, 2006.
 
 Inventory
 
 Inventories
        are stated at the lower of cost, as determined on a first-in, first-out basis,
        or market. Management compares the cost of inventories with the market value,
        and allowance is made for writing down the inventories to their market value,
        if
        lower.
 
 Property,
        equipment and construction in progress
 
 Property
        and equipment are stated at cost. Expenditures for maintenance and repairs
        are
        charged to earnings as incurred; additions, renewals and betterments are
        capitalized. When property and equipment are retired or otherwise disposed
        of,
        the related cost and accumulated depreciation are removed from the respective
        accounts, and any gain or loss is included in operations. Depreciation of
        property and equipment is provided using the straight-line method for
        substantially all assets with estimated lives as follows:
  Buildings
                30YearsMachinery
                10YearsVehicles
                8YearsOffice equipment
                5Years
 
 Construction
        in progress consists of the design expenses, architect fee and cost of the
        equipment to treat waste.
 
 Long-term
        investment
 
 Long-term
        investment are recorded at cost, for either we acquire less than 20% equity
        of
        the invested company or the investment and its financial impact on consolidated
        financial statements isn’t significant.
 
 As
        of
        December 31, 2006, Dongtai has made investments in two companies engaged
        in the
        same industry as Dongtai - Liaoyang Dongtai’s and Dongtai Water Recycling. Both
        the $38,473 equity investment in Liaoyang Dongtai and the $322,663 equity
        investment in Dongtai Water Recycling have been recorded at cost.
 
 Liaoyang
        Dongtai was incorporated on March 22, 2006. Dongtai has a 60% interest in
        this
        subsidiary. Liaoyang Dongtai is located in Liaoyang, PRC and is engaged in
        the
        business of the collection, treatment, disposal and recycling of industrial
        wastes.
 
 Dongtai
        Water Recycling Company was incorporated on July, 2006. Dongtai acquired
        18% of
        the equity in such company. Dongtai Water Recycling is a Build-Operate-Transfer
        (BOT) project, designed to process polluted water generated by the city of
        Dalian.
 
  F-10
 China
            Industrial Waste Management Inc.
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
  Asset
        impairments
  We
        monitor the carrying value of our long-lived assets for potential impairment
        and
        test the recoverability of such assets whenever events or changes in
        circumstances indicate that their carrying amounts may not be recoverable.
        Typical indicators that an asset may be impaired include:
   •
A
        significant decrease in the market price of an asset or asset group;
  •
A
        significant adverse change in the extent or manner in which an asset or asset
        group is being used or in its physical condition;
  •
A
        significant adverse change in legal factors or in the business climate that
        could affect the value of an asset or asset group, including an adverse action
        or assessment by a regulator;
  •
An
        accumulation of costs significantly in excess of the amount originally expected
        for the acquisition or construction of a long-lived asset;
  •
Current
        period operating or cash flow losses combined with a history of operating
        or
        cash flow losses or a projection or forecast that demonstrates continuing
        losses
        associated with the use of a long-lived asset or asset group; or
  •
A
        current expectation that, more likely than not, a long-lived asset or asset
        group will be sold or otherwise disposed of significantly before the end
        of its
        previously estimated useful life.
  If
        any of
        these or other indicators occurs, the asset is reviewed to determine whether
        there has been an impairment. An impairment loss is recorded as the difference
        between the carrying amount and fair value of the asset. If significant events
        or changes in circumstances indicate that the carrying value of an asset
        or
        asset group may not be recoverable, we perform a test of recoverability by
        comparing the carrying value of the asset or asset group to its undiscounted
        expected future cash flows. If cash flows cannot be separately and independently
        identified for a single asset, we will determine whether an impairment has
        occurred for the group of assets for which we can identify the projected
        cash
        flow. If the carrying values are in excess of undiscounted expected future
        cash
        flows, we measure any impairment by comparing the fair value of the asset
        or
        asset group to its carrying value. Fair value is determined by either an
        internally developed discounted projected cash flow analysis of the asset
        or
        asset group or an actual third-party valuation. If the fair value of an asset
        or
        asset group is determined to be less than the carrying amount of the asset
        or
        asset group, an impairment in the amount of the difference is recorded in
        the
        period that the impairment indicator occurs and is included in the “(Income)
        expense from divestitures, asset impairments and unusual items” line item in our
        Consolidated Statement of Operations.
 
  F-11
 China
            Industrial Waste Management Inc.
 
 NOTES
            TO
            CONSOLIDATED FINANCIAL STATEMENTS
  Intangible
        assets
 
 Intangible
        assets consist of “Rights to use land and build a plant” for fifty years and
“Rights of use landfill” for twenty years. The methods to amortize intangible
        assets are a fifty year straight-line method and a twenty year straight-line
        method for landfill. The Company also evaluates intangible assets for
        impairment, at least on an annual basis and whenever events or changes in
        circumstances indicate that the carrying value may not be recoverable from
        its
        estimated future cash flows. Recoverability of intangible assets, other
        long-lived assets and, goodwill is measured by comparing their net book value
        to
        the related projected undiscounted cash flows from these assets, considering
        a
        number of factors, including past operating results, budgets, economic
        projections, market trends and product development cycles. If the net book
        value
        of the asset exceeds the related undiscounted cash flows, the asset is
        considered impaired, and a second test is performed to measure the amount
        of
        impairment loss.
 
 Net
        intangible assets on December 31, 2006 were $1,524,319. Such assets consist
        entirely of a right to use land of $1,570,621 less accumulated amortization
        of
        $46,302.
  Amortization
        expense for the Company’s intangible assets for the year ended December 31, 2006
        and 2005 totaled $ 28,383 and $ 29,220, respectively.
 
 Minority
        interest
 
 Minority
        interest represents the minority owners’ 10% equity interest in Dalian
        Dongtai.
 
 Fair
        value of financial instruments
 
 Statements
        of Financial Accounting Standards No. 107, “Disclosures About Fair Value of
        Financial Instruments, requires that the Company disclose estimated fair
        values
        of financial instruments. The carrying amounts reported in the statements
        of
        financial position for current assets and current liabilities qualifying
        as
        financial instruments are a reasonable estimate of fair value.
 
 Revenue
        recognition
 
 The
        Company’s revenue recognition policies are in compliance with Staff Accounting
        Bulletin (SAB) 104.
 
 Our
        revenues are generated from the fees we charge for waste collection, transfer,
        disposal and recycling services and the sale of recycled commodities. The
        fees
        charged for our services are generally defined in our service agreements
        and
        vary based on contract specific terms such as frequency of service, weight,
        volume and the general market factors influencing a industry’s rates. We
        generally recognize revenue as services are performed or products are
        delivered.
 
 F-12
 **CHINA
          INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
          TO CONSOLIDATED FINANCIAL
          STATEMENTS
  Deferred
        sales consist of contracts for which the fees have been collected but revenue
        has not yet been recognized in accordance with the revenue recognition policy.
        At December 31, 2006 deferred sales amounted to $455,548.
 
 Advertising
        costs
 
 The
        Company expenses the cost of advertising as incurred or, as appropriate,
        the
        first time the advertising takes place. Advertising costs for the year ended
        December 31, 2006 and 2005 were immaterial.
 
 Stock-based
        compensation
 
 In
        December 2004, the FASB issued SFAS No.123(R) which prescribes accounting
        and
        reporting standards for all stock based compensation plans, including employee
        stock options, restricted stock, employee stock purchase plans and stock
        appreciation rights. SFAS No. 123(R) requires compensation expense to be
        recorded using the fair value method.
 
 Income
        taxes
 
 The
        Company utilizes SFAS No. 109, “Accounting for Income Taxes” which requires the
        recognition of deferred tax assets and liabilities for the expected future
        tax
        consequences of events that have been included in the financial statements
        or
        tax returns. Under this method, deferred income taxes are recognized for
        the tax
        consequences in future years of differences between the tax bases of assets
        and
        liabilities and their financial reporting amounts at each period end based
        on
        enacted tax laws and statutory tax rates, applicable to the periods in which
        the
        differences are expected to affect taxable income. Valuation allowances are
        established, when necessary, to reduce deferred tax assets to the amount
        expected to realized.
 
 Local
        PRC income tax
 
 The
        Company is subject to the PRC Enterprise Income Tax at a rate of 30% percent
        on
        its net income. According to a PRC ruling, any joint venture with foreign
        investment will get special tax exempt treatment for the first two years.
        The
        Company received tax exempt treatment for the year ending December 31, 2006.
 
 Statement
        of cash flows
 
 In
        accordance with Statement of Financial Accounting Standards No. 95, “Statement
        of Cash Flows,” cash flows from the Company’s operations are calculated based
        upon the local currencies. As a result, amounts related to assets and
        liabilities reported on the statement of cash flows will not necessarily
        agree
        with changes in the corresponding balances on the balance sheet.
 
 Basic
        and diluted net earnings per share
 
 Earnings
        per share is calculated in accordance with Statement of Financial Accounting
        Standards No. 128 (“SFAS No. 128), “Earnings Per Share”. Basic earnings per
        share is based upon the weighted average number of common shares outstanding.
        Diluted earnings per share is based on the assumption that all dilutive
        convertible shares and stock options were converted or exercised. Dilution
        is
        computed by applying the treasury stock method. Under this method, options
        and
        warrants are assumed to be exercised at the beginning of the period (or at
        the
        time of issuance, if later), and as if funds obtained thereby were used to
        purchase common stock at the average market price during the
        period.
 
 F-13
 **CHINA
          INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
          TO CONSOLIDATED FINANCIAL
          STATEMENTS  Contingent
              liabilities
 
 We
              estimate the amount of potential exposure we may have with respect
              to claims,
              assessments and litigation in accordance with SFAS No. 5. We are party
              to pending or threatened legal proceedings covering a wide range of
              matters in
              various jurisdictions. It is not always possible to predict the outcome
              of
              litigation, as it is subject to many uncertainties. Additionally, it
              is not
              always possible for management to make a meaningful estimate of the
              potential
              loss or range of loss associated with such litigation.
 
 Subsequent
              events
 
 On
              March
              2, 2007, the Company purchased for $1,271,077, 49% of the equity of
              a newly
              formed company named Dongtai Organic Waste Treatment Company. The company
              is
              basically a BOT project, engaged in municipal sludge treatment. The
              company will
              operate for the next 20 years. The fees for treating sludge will be
              paid by the
              local government at a predetermined price on a periodic basis.
 
 **4.
              Inventory**
 
 Our
              inventory consists of raw materials and recycled commodities as
              follows:
 
 2006
                    
                    2005Raw
                        materials
                    
                    
                    220,863
                    
                    
                    261,092Recycled
                        commodities
                    
                    
                    381,719
                    
                    
                    148,992602,582
                    
                    
                    410,084
 
 5 **.
              Property and equipment**
  Property
              and equipment at December 31 consisted of the following:
 
 2006
                    
                    2005Land
                        and building
                    
                    $
                    1,895,238
                    
                    
                    1,833,827Machinery
                        equipment
                    
                    
                    1,129,566
                    
                    
                    824,153Office
                        equipment
                    
                    
                    352,346
                    
                    
                    354,179Vehicles
                    
                    
                    550,084
                    
                    
                    318,7783,927,234
                    
                    
                    3,330,937Less:
                        Accumulated depreciation
                    
                    
                    (1,487,340
                    )
                    
                    (1,162,259
                    )$
                    2,439,894
                    
                    
                    2,168,678
  F-14
 **CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
                TO CONSOLIDATED FINANCIAL
                STATEMENTS
  **6.
              Accumulated Other Comprehensive Income**
 
  The
              components of accumulated other comprehensive income were as follows:
  December
                        31,2006
                    
                    2005Cumulative
                        translation adjustment of foreign currency statements
                    
                    $
                    319,547
                    
                    $
                    158,953
   **7.
              Shareholders’ equity**
 
 On
              May
              15, 2006, the Company issued to 10 stockholders an aggregate of 6,400,000
              additional shares of the Company's Common Stock as an equitable adjustment
              of
              the number of shares which the Company had agreed to issue to such
              persons
              pursuant to an Agreement and Plan of Merger entered into on November
              11,
              2005.
 
 On
              June
              8, 2006, we issued an aggregate of 80,000 shares of our Common Stock
              to two
              consultants pursuant to a Consulting Agreement. Management valued the
              stock
              issued at $1.00 per share based on the value of the services to be
              performed by
              the consultants under consulting agreement rather than the quoted price
              of our
              common stock during a period with little or no trading activity. The
              Company
              recorded a contra equity for the value of the consulting services to
              be received
              and is amortizing that value as an expense over the five year requisite
              service
              period.
 
 
 **8.
              Statutory Common Welfare Fund**
 
 As
              stipulated by the Company Law of the PRC as applicable to Chinese companies
              with
              foreign ownership, net income after taxation can only be distributed
              as
              dividends after appropriation has been made for the following:
 
 a.
                    Making
                        up cumulative prior years’ losses, if any
 b.
                    Allocations
                        to the “Statutory surplus reserve” of at least 10% of income after tax, as
                        determined under PRC accounting rules and regulations, until
                        the fund
                        amounts to 50% of the Company’s registered capital;
 c.
                    Allocations
                        of 5 -10% of income after tax, as determined under PRC accounting
                        rules
                        and regulations to the Company’s “Statutory common welfare fund”, which is
                        established for the purpose of providing employee facilities
                        and other
                        collective benefits to the Company’s employees; and
 d.
                    Allocations
                        to the discretionary surplus reserve, if approved in the
                        shareholders’
                        general meeting.
 
 F-15
 **** **CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
                TO CONSOLIDATED FINANCIAL
                STATEMENTS
  **9.
              Earnings Per Share**
  Basic
              earnings per common share (“EPS”) are calculated by dividing net income by the
              weighted average number of common shares outstanding during the year.
              Diluted
              EPS is calculated by adjusting the weighted average outstanding shares,
              assuming
              conversion of all potentially dilutive securities, such as stock options
              and
              warrants, using the treasury stock method. The numerators and denominators
              used
              in the computations of basic and diluted EPS are presented in the following
              table:
   Years
                        Ended December 31,2006
                    
                    2005Income
                        available to common stockholders
                    
                    $
                    2,542,937
                    
                    $
                    1,522,183Diluted
                        net income
                    
                    $
                    2,542,937
                    
                    $
                    1,522,183Weighted
                        average basic common shares outstanding
                    
                    
                    13,181,391
                    
                    
                    12,949,600Weighted
                        average diluted common shares outstanding
                    
                    
                    13,181,391
                    
                    
                    12,949,600Basic
                        net earnings per share
                    
                    $
                    0.19
                    
                    $
                    0.12Diluted
                        net earnings per share
                    
                    $
                    0.19
                    
                    $
                    0.12
 
 
 **10.
              Current vulnerability due to certain concentrations**
 
 The
              Company’s operations are carried out in the PRC. Accordingly, the Company’s
              business, financial condition and results of operations may be influenced
              by the
              political, economic and legal environments in the PRC and by the general
              state
              of the PRC economy. The Company’s business may be influenced by changes in
              governmental policies with respect to laws and regulations, anti-inflationary
              measures, currency conversions and remittance abroad, and rates and
              methods of
              taxation, among other things.
 
 **11.
              Recently issued accounting pronouncements**
 
 
 In
              February, 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
              Financial Instruments”. SFAS No. 155 amends SFAS No. 133, “Accounting for
              Derivative Instruments and Hedging Activities”, and SFAS No. 140, “Accounting
              for Transfers and Servicing of Financial Assets and Extinguishments
              of
              Liabilities”. SFAS No. 155, permits fair value re-measurement for any hybrid
              financial instrument that contains an embedded derivative that otherwise
              would
              require bifurcation, clarifies which interest-only strips and principal-only
              strips are not subject to the requirements of SFAS No. 133, establishes
              a
              requirement to evaluate interest in securitized financial assets to
              identify
              interests that are freestanding derivatives or that are hybrid financial
              instruments that contain an embedded derivative requiring bifurcation,
              clarifies
              that concentrations of credit risk in the form of subordination are
              not embedded
              derivatives, and amends SFAS No. 140 to eliminate the prohibition on
              the
              qualifying special-purpose entity from holding a derivative financial
              instrument
              that pertains to a beneficial interest other than another derivative
              financial
              instrument. This statement is effective for all financial instruments
              acquired
              or issued after the beginning of the Company’s first fiscal year that begins
              after September 15, 2006. The Company expects that the Statement will
              have no
              material impact on its consolidated financial statements.
 
 F-16
 **** **CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
                TO CONSOLIDATED FINANCIAL
                STATEMENTS
  **12.
              Restatements**
 
 During
              the preparation of the 2006 financial statements the Company discovered
              that
              several material errors were made in the consolidation and presentation
              of its
              2005 financial statements. The prior consolidation entries incorrectly
              eliminated minority interest and a significant amount of income from
              government
              subsidies, as well as incorrectly calculating other comprehensive income
              due to
              foreign currency translation. The Company has therefore restated its
              2005
              financial statements. The effects of the restatement are shown in the
              following
              tables.
 
 The
              table
              below shows the result of restatement:
 
 **Balance
              Sheet**
  Original
                    
                    
                    Restated**ITEMS**
                    
                    
                    2005
                    
                    
                    2005  Current
                          assetsCash
                          and cash equivalents
                      
                      $
                      2,944,179
                      
                      $
                      2,944,179Trade
                          accounts receivable
                      
                      
                      281,761
                      
                      
                      281,761Other
                          receivables
                      
                      
                      339,688
                      
                      
                      115,417Inventory
                      
                      
                      410,084
                      
                      
                      410,084Advances
                          to suppliers
                      
                      
                      8,240
                      
                      
                      16,502Prepaid
                          expenses and other assets
                      
                      
                      22,304
                      
                      
                      22,304Total
                          current assets
                      
                      
                      4,006,256
                      
                      
                      3,790,247Net
                          property, plant and equipment
                      
                      
                      2,160,243
                      
                      
                      2,168,678Construction
                          in progress
                      
                      
                      220,474
                      
                      
                      220,474Land
                          usage right, net of accumulated amortization
                      
                      
                      1,509,159
                      
                      
                      1,509,159Related
                          party Receivable
                      
                      
                      -
                      
                      
                      281,851**Total
                          assets**
                      
                      $
                      7,896,132
                      
                      $
                      7,970,409**LIABILITIES
                          AND STOCKHOLDERS' EQUITY**Current
                          liabilitiesAccounts
                          payable
                      
                      $
                      108,213
                      
                      $
                      108,213Other
                          payable
                      
                      
                      227,201
                      
                      
                      183,934Total
                          current liabilities
                      
                      
                      335,414
                      
                      
                      292,147Minority
                          interest in subsidiary
                      
                      
                      -
                      
                      
                      767,826Stockholders'
                          equitySeries
                          A preferred stock $.001 par value; 5,000,000 shares authorized,
                          64,000
                          shares issued and outstanding
                      
                      
                      64
                      
                      
                      64Common
                          stock: par value $.001; 90,000,000 shares authorized; 340,843
                          shares
                          issued and outstanding
                      
                      
                      13,141
                      
                      
                      341Additional
                          paid-in capital
                      
                      
                      2,164,795
                      
                      
                      1,956,117Other
                          comprehensive income
                      
                      
                      (227,827
                      )
                      
                      158,953Retained
                          earnings
                      
                      
                      5,610,545
                      
                      
                      4,794,961Total
                          stockholders' equity
                      
                      
                      7,560,718
                      
                      
                      6,910,436**Total
                          liabilities and stockholders' equity**
                      
                      $
                      7,896,132
                      
                      $
                      7,970,409
   F-17
 **CHINA
              INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
              TO CONSOLIDATED FINANCIAL
              STATEMENTS
 
 As
              a
              result of the restatement on the balance sheet, total assets as of
              December 31,
              2005 increased from $7,896,132, as originally reported, to $7,970,409,
              an
              increase of $74,277; stockholders' equity as of December 31, 2005 decreased
              from
              $7,560,718, as originally reported, to $6,910,436, a decrease of
              $650,282.
 
 Part
              of
“Stockholders' equity” has been reclassified as “Minority interest in
              subsidiary”, and “Stockholders' equity” itself has been reclassified between its
              components, such as “Additional paid-in capital”, “Other comprehensive income”
and “Retained earnings”.
 
 **Income
              Statement**
  Original
                      
                      
                      Restated**ITEMS**
                      
                      
                      2005
                      
                      
                      2005
 Revenue
                      
                      $
                      4,869,300
                      
                      $
                      4,869,185Costs
                          of revenue(including depreciation)
                      
                      
                      1,582,338
                      
                      
                      1,557,106Gross
                          profit
                      
                      
                      3,286,962
                      
                      
                      3,312,079Operating
                          expensesSelling
                          expenses
                      
                      
                      344,660
                      
                      
                      197,355General
                          and administrative expenses
                      
                      
                      1,504,058
                      
                      
                      1,695,685Total
                          operating expenses
                      
                      
                      1,848,718
                      
                      
                      1,893,040Income
                          from operations
                      
                      
                      1,438,244
                      
                      
                      1,419,039Other
                          income (expense)Investment
                          income
                      
                      
                      47,847
                      
                      
                      -Interest
                          income
                      
                      
                      -
                      
                      
                      26,728Other
                          income
                      
                      
                      55,508
                      
                      
                      564,293Other
                          expense
                      
                      
                      (20,059
                      )
                      
                      (14,764
                      )Total
                          other income (expense)
                      
                      
                      83,296
                      
                      
                      576,257Net
                          income before minority interest and income tax
                      
                      
                      1,521,540
                      
                      
                      1,995,296Income
                          tax (benefit)
                      
                      
                      505,834
                      
                      
                      385,382Net
                          income after income tax
                      
                      
                      1,015,706
                      
                      
                      1,609,914Minority
                          interest
                      
                      
                      (110,643
                      )
                      
                      87,731Net
                          income
                      
                      $
                      1,126,349
                      
                      $
                      1,522,183Foreign
                          currency translation adjustment
                      
                      
                      (227,827
                      )
                      
                      158,953Comprehensive
                          income
                      
                      $
                      898,522
                      
                      $
                      1,681,136Basic
                          and diluted weighted average shares outstanding
                      
                      
                      15,973,096
                      
                      
                      12,949,660Basic
                          and diluted net earnings per share
                      
                      $
                      0.06
                      
                      $
                      0.12
   F-18
 **CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.**
  NOTES
                TO CONSOLIDATED FINANCIAL
                STATEMENTS
 As
              a
              result of the restatement, net income for the year ended December 31,
              2005
              increased from $1,126,349, as originally reported, to $1,522,183, an
              increase of
              $395,834.
  “Other
              income” as originally reported, failed to include the net income coming from
              the
              disposal of investment and subsidy income rewarded by local government,
              and net
              income was therefore restated accordingly.
 
 Originally
              reported “income tax” had be presented without deducting the amount of tax
              return made by tax authorities, which has been adjusted through
              restatement.
 
 
 **Statement
              of Cash Flows**
  Original
                    
                    
                    Restated**ITEMS**
                    
                    
                    2005
                    
                    
                    2005Cash
                        flows from operating activities:Net
                        income
                    
                    $
                    1,126,349
                    
                    $
                    1,522,183Adjustments
                        to reconcile net income to net cashprovided
                        by operating activities:Minority
                        interest
                    
                    
                    (110,643
                    )
                    
                    87,731Depreciation
                        and amortization
                    
                    
                    485,758
                    
                    
                    214,200Changes
                        in operating assets and liabilities:Accounts
                        receivable
                    
                    
                    (219,655
                    )
                    
                    (219,655
                    )Inventory
                    
                    
                    (524,537
                    )
                    
                    (524,537
                    )Other
                        receivables
                    
                    
                    (182,976
                    )
                    
                    (269,175
                    )Due
                        from related parties
                    
                    
                    455,618
                    
                    
                    281,851Advance
                        to suppliers
                    
                    
                    152,699
                    
                    
                    152,699Prepaid
                        expense
                    
                    
                    (11,509
                    )
                    
                    (11,509
                    )Accounts
                        payable
                    
                    
                    (277,122
                    )
                    
                    (277,122
                    )Other
                        payables
                    
                    
                    11,923
                    
                    
                    11,923Net
                        cash provided by operating activities
                    
                    
                    905,905
                    
                    
                    968,589Cash
                        flows from investing activitiesDecrease
                        in long-term investment
                    
                    
                    12,391
                    
                    
                    12,391Purchase
                        of property
                    
                    
                    (146,833
                    )
                    
                    (146,833
                    )Net
                        cash used in investing activities
                    
                    
                    (134,442
                    )
                    
                    (134,442
                    )Cash
                        flows from financing activitiesMinority
                        interest
                    
                    
                    (142,616
                    )
                    
                    -Capital
                        contribution
                    
                    
                    -
                    
                    
                    (205,300
                    )Net
                        cash provided by financing activities
                    
                    
                    (142,616
                    )
                    
                    (205,300
                    )Effect
                        of exchange rate on cash
                    
                    
                    (57,053
                    )
                    
                    (57,053
                    )Net
                        increase in cash and cash equivalents
                    
                    
                    628,847
                    
                    
                    571,794Cash
                        and cash equivalents, beginning of period
                    
                    
                    2,372,385
                    
                    
                    2,372,385Cash
                        and cash equivalents, end of period
                    
                    $
                    2,944,179
                    
                    $
                    2,944,179
 
 **13.
              Related parties**
 
 Dalian
              Bofa Chemical Material Company (“Bofa”), a company controlled by the Company’s
              majority shareholder, sells part of the products recycled by Dongtai,
              the
              subsidiary of the Company. Our total sales to Bofa were $1,235,825
              and $668,728
              respectively, for the years ended December 31, 2006 and 2005.
 F-19