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


Washington,
      D.C. 20549





**FORM
      10-K**





(Mark
      One)





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




For
      the
      Fiscal Year Ended December
      31, 2007




o
      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.**


(Exact
      name of registrant as specified in its charter)




Nevada
            
            13-3250816(State
                or other jurisdiction of incorporation 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)




Registrant’s
      telephone number, including area code 011-86-411-85811229




Securities
      registered pursuant to Section 12(b) of the Act:




None





Securities
      registered pursuant to Section 12(g) of the Act:




None




Indicate
      by check mark if the registrant is a well known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.




o
      Yes  x No




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section to file reports pursuant to Section 13 or 15(d) of the Act.




o
      Yes  x
      No




**Note** -
      Checking the box above will not relieve any registrant required to file reports
      pursuant to Section 13 or 15(d) of the Exchange Act from their obligations
      under
      those Sections.











Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding
      12 months (or for such shorter period that the registrant was required to file
      such reports), and (2) has been subject to such filing requirements for the
      past
      90 days.




x  Yes  
oNo




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not 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-K or any amendment to
      this
      Form 10-K.




oYesx
      No




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting
      company:




Large
                accelerated filer
            o
            Accelerated
                filer
            oNon-accelerated
                filer
              (Do
                not check if smaller reporting company)
            o
            Smaller
                reporting company
            x


Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).


State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked prices of such common equity, as of the
      last
      business day of the registrant's most recently completed second fiscal quarter.
      $8,186,206 as of June 29, 2007.




Indicate
      the number of shares outstanding of each of the registrant's classes of common
      stock, as of the latest practicable date. 13,220,843 shares of common stock
      are
      issued and outstanding as of March 28, 2008.




DOCUMENTS
      INCORPORATED BY REFERENCE




List
      hereunder the following documents if incorporated by reference and the Part
      of
      the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
      incorporated: (1) Any annual report to security holders; (2) Any proxy or
      information statement; and (3) Any prospectus filed pursuant to Rule 424(b)
      or
      (c) under the Securities Act of 1933. The listed documents should be clearly
      described for identification purposes (e.g., annual report to security holders
      for fiscal year ended December 24, 1980).





None.







**FORWARD-LOOKING
      STATEMENTS AND ASSOCIATED RISK**





This
      report includes "forward-looking statements." You can identify these statements
      by the fact that they do not relate strictly to historical or current facts.
      These statements contain such words as "may," "project," "might," "expect,"
      "believe," "anticipate," "intend," "could," "would," "estimate," "continue,"
      or
      "pursue," or the negative or other variations thereof or comparable terminology.
      In particular, they include statements relating to, among other things, future
      actions, new projects, strategies, future performance, the outcomes of
      contingencies and our future financial results. These forward-looking statements
      are based on current expectations and projections about future events.





Investors
      are cautioned that forward-looking statements are not guarantees of future
      performance or results and involve risks and uncertainties that cannot be
      predicted or quantified and, consequently, our actual performance may differ
      materially from those expressed or implied by such forward-looking statements.
      Such risks and uncertainties include, but are not limited to, the following
      factors, as well as other factors described from time to time in our reports
      filed with the Securities and Exchange Commission (including the sections
      entitled "Risk Factors" and "Management's Discussion and Analysis of Financial
      Condition and Results of Operations" contained therein): the timing and
      magnitude of technological advances; the prospects for future acquisitions;
      the
      effects of political, economic and social uncertainties regarding the
      governmental, economic and political circumstances in the People’s Republic of
      China, 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;
      our
      projected sales, profitability, and cash flows; our growth strategies;
      anticipated trends in our industries; our future financing plans; and our
      anticipated needs for working capital.





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 is a “penny stock,” as defined under federal
      securities laws.





**CONVENTIONS
      AND GENERAL MATTERS**





The
      official currency of the People’s Republic of China is the Chinese “Yuan” or
“Renminbi” (“yuan,” “Renminbi” or “RMB”). For the convenience of the reader,
      amounts expressed in this report as RMB have been translated into United States
      dollars (“US$” or “$”) at the rate of US$1.00 = RMB7.3046 quoted by The People’s
      Bank of China as of December 28, 2007. The
      Renminbi is not freely convertible into foreign currencies and the quotation
      of
      exchange rates does not imply convertibility of Renminbi into U.S. Dollars
      or
      other currencies. All foreign exchange transactions take place either through
      the Bank of China or other banks authorized to buy and sell foreign currencies
      at the exchange rates quoted by the People's Bank of China. No representation
      is
      made that the Renminbi or U.S. Dollar amounts referred to herein could have
      been
      or could be converted into U.S. Dollars or Renminbi, as the case may be, at
      the
      PBOC Rate or at all.





The
      "Company," "we," "us," "our" and similar words refer to China Industrial Waste
      Management, Inc, its direct, wholly-owned subsidiary DonTech Waste Services,
      Inc. (“DonTech”) and
      DonTech’s majority owned subsidiaries, Dalian Dongtai Industrial Waste Treatment
      Co. Ltd. (“Dongtai”), Dongtai Water Recycling Co. Ltd. (“Dongtai Water”), Dalian
      Zhuorui Resource Recycling Co., Ltd. (“Zhuorui”), Dalian Lipp Environmental
      Energy Engineering & Technology Co., Ltd.(“Dalian Lipp”) and ,
      prior
      to its dissolution in July 2007, Liaoyang
      Dongtai Industrial Waste Treatment Co., Ltd. (“Liaoyang Dongtai”). The
      Company is in the process of dissolving DonTech, which serves as a holding
      company for the shares of the Company’s operating subsidiaries.





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.







PageNo.Forward
                Looking Statements and Associated RiskConventions
                and General Matters**Part
                I**Item
                1.
            Business
            
            1Item
                1A.
            Risk
                Factors
            
            14Item
                1B.
            Unresolved
                Staff Comments
            
            23Item
                2.
            Properties
            
            24Item
                3.
            Legal
                Proceedings
            
            25Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            25**Part
                II**Item
                5.
            Market
                for Registrant's Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            
            26Item
                6.
            Selected
                Financial Information
            
            29Item
                7.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operation.
            
            29Item
                7A.
            Quantitative
                and Qualitative Disclosure About Market Risk
            
            37Item
                8.
            Financial
                Statements and Supplementary Data
            
            37Item
                9.
            Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure.
            
            37Item
                9A.(T)
            Controls
                and Procedures
            
            37Item
                9B.
            Other
                Information
            
            40**Part
                III**Item
                10.
            Directors,
                Executive Officers and Corporate Governance
            
            41Item
                11.
            Executive
                Compensation
            
            43Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            45Item
                13.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            
            45Item
                14.
            Principal
                Accountant Fees and Services
            
            46**Part
                IV**Item
                15.
            Exhibits,
                Financial Statement Schedules
            
            47








**PART
      I**




**ITEM
      1.**  **BUSINESS**





Overview





China
      Industrial Waste Management, Inc., through its 90%-owned subsidiary Dalian
      Dongtai Industrial Waste Treatment Co., Ltd. (“Dongtai”) and other indirect
      subsidiaries, 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 to its more
      than 400 customers from facilities located in the Economic and Technology
      Development Zone, Dalian, PRC. Dongtai treats, disposes of and/or recycles
      many
      types of industrial wastes, and recycled waste products are used by customers
      as
      raw material to produce chemical and metallurgy products. In addition, Dongtai
      and its subsidiaries treat or dispose of industrial waste through incineration,
      burial or water treatment; as well as provide the following to its
      clients:





·
            environmental
                protection services,


·
            technology
                consultation,


·
            pollution
                treatment services,


·
            waste
                management design processing services,


·
            waste
                disposal solutions,


·
            waste
                transportation services,


·
            onsite
                waste management services, and


·
            environmental
                pollution remediation services.





Industry
      Background and Market Opportunities





Rapid
      economic growth has resulted in China becoming the fourth largest economy in
      the
      world, and it is expected that the GDP of China will surpass that of Germany
      in
      the near future. However, in the face of this economic surge, it is believed
      that economic losses attributable to environmental pollution are causing a
      10%
      offset to GDP growth in China.





The
      PRC
      state environmental protection administration (“SEPA”) observes that China
      suffers from significant environmental issues including:





·
            A
                fragile ecological environment,


·
            Inadequate
                laws and regulations on preserving ecological
                environment,


·
            Inadequate
                investment on preserving ecological environment,
                and


·
            Inadequate
                technological and information support for preserving ecological
                environment.




SEPA
      has
      indicated that it will take measure s
      to
      strengthen ecological environmental protection in the PRC. According to SEPA,
      the worldwide environmental protection investment is approximately $600 billion,
      but the investment in China approximates only $24 billion, or approximately
      only
      4% of the global investment. As a result, China has fallen behind in the
      development of its environ mental
      protection industry.




In
      the
      Eleventh Five-year Plan, the PRC government has established the following three
      primary environmental protection goals:





·
            Reduce
                total pollutants by 10%;











·
            Decrease
                energy cost per unit of GDP by 20%;
                and




·
            Decrease
                water cost per unit of industrial value added by 30%.





Assuming
      that these objectives are fulfilled, we estimate that the GDP of the
      environmental protection industry of China would double. In addition the central
      government has, for the first time, included an environmental protection index
      in its performance inspection system for local government. It
      is
      estimated that the environmental protection industry in China increases by
      25%
      per year, and management believes that an environmental protection industry
      system is taking shape in China, and the industry has become a significant
      part
      of the state economy. By rough estimate, the industry will experience a 15%-20%
      compound rate increase during the Eleventh Five-year Plan, and the total GDP
      will reach RMB 880 billion (USD$12 billion) by the year 2010.





In
      the
      significant environmental and ecological protection market known as the “huge
      green cake,” it is anticipated that major roles will be
      undertaken by companies engaged in water treatment, air pollution control,
      and
      solid waste treatment and disposal. Dongtai also plans to expand operations
      into
      the water resource and recovery through its acquisition of operating
      subsidiaries. At present, the environmental protection industry in China is
      still early in its development; and centralized treatment and disposal
      facilities have been established in only a small number of coastal cities,
      such
      as Shenzhen, Shanghai, Hangzhou, Shenyang, Tianjin and Dalian. Therefore,
      management believes that the Company is well-positioned to perform a pivotal
      role in the implementation of the PRC’s Eleventh Five-year Plan.





Sources
      and Components of Revenues




Dongtai
      is licensed to conduct its industrial waste collection and disposal business
      by
      SEPA, which is an agency equivalent to the Environmental Protection Agency
      in
      the United States. 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 applicant’s staff
      and an evaluation of its management processes. Dongtai is licensed to dispose
      of
      hazardous waste by the province of Liaoning.





Our
      income is comprised of two components, i.e., solid waste treatment and disposal
      service fees and sales of valuable waste material and regenerated products.
      The
      following chart depicts these revenue producing components:







-2-


The
      following chart illustrates the constituents of fees as relates to 2007 solid
      waste treatment fees:










Our
      core
      10 customers include Cannon Office Machine (Dalian), Toshiba (Dalian), Capstone
      Building Material (Dalian) and Konica (Dalian). Core customers and major
      customers account for 20% of all customers and 89% of total treatment fees,
      whereas 80% of all customers only contribute 11% to our revenues generated
      from
      waste treatment fees.





When
      an
      expanded centralized facility for waste treatment and disposal that has been
      approved by National Development and Reform Commission is completed, Dongtai’s
      capacity for waste treatment and recovery will be significantly improved.
      Management believes that as new companies with strong international reputations
      relocate to Dalian, Dongtai will be provided with the unique opportunity to
      participate in the environmental development of this growing region of China.
      We
      anticipate that the comprehensive growth rate with regard to waste treatment,
      sales of waste recovery and valuable material will exceed 25% in the next five
      years.





Business
      Activities




*Solid
      waste collection and treatment:* Dongtai
      collects solid waste from customers, and charges processing fees based upon
      the
      weight of the collected waste. Dongtai’s services include incineration,
      landfill, water treatment, transportation, packaging, analysis, storage, labor,
      depreciation of facilities, maintenance, chemicals, energy, management and
      taxes.





*Sales
      of recovered products:* Recovered products contain copper sulfate and organic solvent. The production
      and sales of alloy are performed by our subsidiary, Dalian Zhuorui Resource
      Recycling Company. Zhourui processes the recovered products and converts them
      into copper sulfate and organic solvents in a form that is desirable for use
      by
      companies engaged in chemical engineering, agriculture and mining. To date,
      demand for copper sulfate has exceeded the supply. The sales price for copper
      sulfate is affected by the supply of raw materials, product life span, product
      structure and production status. Organic solvent is generally used in chemical
      engineering and in the electronic industry. At present the resources are
      scattered and the volume is limited, but potential volume in the coming three
      years is expected to reach 3,000 tons per year.




-3-




*Collection
      and sales of valuable material:* Valuable
      material refers to material that can be reused after sorting or treatment,
      such
      as waste metal and waste plastic. This waste stream comes from general
      industrial waste. Dongtai sorts and treats the valuable material contained
      in
      industrial waste, and resells them based upon prevailing market prices. The
      following chart shows the valuable materials sold during fiscal
      2007:





**Category**
            
            **Volume
                (tons)**Plastic
            
            
            550Waste
                oil
            
            
            4,045Waste
                iron
            
            
            1,890Valuable
                Metals
            
            
            395Waste
                Drum (size variable)
            
            
            300,000
                unitsOther
            
            
            2,430





*Municipal
      waste water treatment:* Inadequate
      investment has traditionally impeded the progress of environmental protection
      efforts in China. Over the long-term, the investment emphasis has been placed
      on
      industrial waste water treatment. However, more recently, the emphasis has
      been
      refocused to municipal waste water and solid waste pollution prevention. It
      is
      estimated that approximately $ 17 billion will be invested in building municipal
      waste water treatment facilities in order to realize the objectives of the
      Eleventh Five-year Plan.





Dongtai
      Water Recycling Co. Ltd (“Dongtai Water”) was incorporated in July 2006, when
      Dongtai acquired an 18% equity interest. On July 16, 2007
      Dongtai purchased an additional 62% of the equity of Dongtai
      Water. Dongtai Water is a Build-Operate-Transfer (BOT) project, designed to
      process polluted water generated by the city of Dalian.





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.





*Organic
      Waste Treatment:* Environmental protection has become a concern of both the public and the
      government in China. It is estimated that currently, the municipal sludge volume
      in Dalian is approximately 240 tons per day, and the volume will increase to
      590
      tons per day by the end of 2010. Dalian has no facility that can handle the
      current or expected volume of municipal sludge in the manner required by
      environmental standards. In order to address environmental issues triggered
      by
      municipal sludge, Dalian Government has approved the establishment of Dalian
      Dongtai Organic Waste Treatment Company (“Dongtai Organic”).





Dongtai
      Organic is the first sludge treatment plant designed and built in the mode
      of a
      BOT, with a projected term of operation of 20 years. The projected capacity
      of
      the plant is 28,000 cubic meters of methane per day, along with fermentation
      liquid and slag following processing. The project was commenced in April 2007;
      and commissioning is now scheduled to be completed in June of 2008. The plant
      is
      expected to become operational following performance testing and environmental
      protection evaluation. Based upon the anticipated sludge volume, the plant
      is
      expected to operate at full capacity by the end of 2010. As required by
      regulation, the government will supply raw material (municipal sludge), and
      pay
      processing fees to Dongtai Organic. Management believes that there is a
      significant market for municipal sludge and other organic waste treatment.
      We
      expect that Dongtai Organic will enhance technological capacity by introducing
      advanced technology and research to seize the opportunity. Dongtai owns a 49%
      interest in the Dongtai Organic BOT project.




-4-





*Waste
      catalyst treatment and comprehensive reuse:*  Dalian
      Zhuorui Resource Recycling Co., Ltd. (“Zhuorui”) was incorporated in April 2006
      and is engaged in plasma arc melting, separation and purification of waste
      catalysts, treatment of industrial wastes and comprehensive utilization of
      waste
      catalysts or similar material. In August 2007, Dongtai acquired 70% of the
      equity of Zhuorui from a related company controlled by Mr. Dong Jinqing, our
      CEO, for a purchase price of RMB 7 million (approximately US$958,300). We
      believe that the acquisition of Zhuorui will improve the Company’s capacity as
      well as its profitability in treating waste catalyst. Since
      oil
      imported from the Middle-East and Russia is of high sulfur content, a catalyst
      has to be used in the refining process to remove sulfur, nickel, vanadium and
      other impurities. Excess catalysts, containing approximately 20% oil, cobalt,
      molybdenum, nickel and vanadium, are considered hazardous waste which must
      be
      properly controlled, treated and disposed of. At the same time, these heavy
      metals are important industrial materials with high recovery value.





Dalian
      is
      the national strategic oil storage and refining base. There are two large scale
      oil refining companies in Dalian, i.e., West Pacific Petrochemical Company
      (with
      a 10 million ton capacity) and Dalian Petrochemical Corporation (with a 20
      million ton capacity). The total amount of spent catalyst produced by the two
      companies is approximately 30 million tons. Additionally, other refining plants
      in northeast China are reconstructing their facilities to address high-sulfur
      content oil. Upon completion of the reconstruction projects, the annual
      generation volume of spent catalyst is expected to reach 80-100 million tons.





*Design
      and installation of environmental protection equipment and renewable energy
      equipment:* On
      October 18, 2007, Dongtai entered into a Contract for Joint Venture Using
      Foreign Investment with Roland Lipp, Karin Lipp-Mayer and Minghuan Shan to
      establish a joint venture limited liability company in the People’s Republic of
      China. The joint venture entity, to be known as Dalian Lipp Environmental Energy
      Engineering & Technology Co., Ltd. (“Dalian Lipp”), expects to conduct
      business in the Dalian Economic & Technical Development Zone. The business
      of the joint venture will be to design and install environmental protection
      equipment and renewable energy equipment and provide other technical
      support.





The
      agreement provides that the registered capital of Dalian Lipp will be
      $1,095,200, of which Dongtai is to contribute $821,400 in return for a 75%
      interest, and Roland Lipp, Karin Lipp-Mayer and Minghuan Shan are to contribute
      $109,520, $109,520 and $54,760, respectively. All contributions are payable
      prior to October 18, 2008, following receipt of a business license covering
      Dalian Lipp. The initial members of the Board of Directors of the new company
      will be Dong Jinqing (Chairman), Roland Lipp (Vice-Chairman), Tang Lijun, Li
      Jun
      and Minghuan Shan.




-5-





The
      following table describes the capacity of the various facilities used by the
      Company, both currently and following completion of planned
      expansion:





**Nature
                  of Service**
              
              **Type
                  of Facility**
              
              **Description**
              
              **Capacity*****Existing**
              
              **Post-Expansion**Solid
                  waste treatment and disposal
              
              Incinerator
              
              Incineration
                  Treatment
              
              3,300
                  t/a
              
              9,000
                  t/aLandfill
              
              Disposal
                  of Waste by Landfill
              
              13,000
                  t
              
              40,000
                  tEffulent
                  Treatment System
              
              Handling
                  of Various Industrial Effluent
              
              18,000
                  t/a
              
              25,000
                  t/aResource
                  recovery
              
              Etchant
                  Utilization System
              
              Generation
                  of Copper Sulfate from Etchant
              
              2,000
                  t/a
              
              ——Waste
                  Solvent Recovery System
              
              Production
                  of Industrial-Class Organic Solvent Products with Waste
                  Solvent
              
              1,000
                  t/a
              
              3,000
                  t/aValuable
                  Metal Recovery System
              
              Yielding
                  of Valuable Alloy or Metal Oxide Products
              
              5,000
                  t/a
              
              10,000t/aCollection
                  and Sales of Valuable Material
              
              Waste
                  Sorting and Filtrating System
              
              ——
              
              10,000
                  t/a
              
              ——Municipal
                  Sewage, Municipal Sludge Treatment
              
              Sewage
                  Treatment Plant Operation (BOT)
              
              Municipal
                  Sewage Treatment Plant Operation and Management
              
              30,000
                  t/d
              
              100,000
                  t/dMunicipal
                  Sludge Treatment Plant Operation (BOT Project)
              
              Municipal
                  Sludge Plant Operation and Management
              
              400
                  t/d
              
              600
                  t/dEnvironmental
                Protection
                  Equipment Manufacturing
              
              Manufacturing
                  and Sales of Lipp Tank
              
              Sludge
                  Fermentation-Tank and Auxiliary Equipment Manufacturing
              
              ——
              
              ——





*  Key:
      t =
      tons; t/d = tons per day; t/a = tons annually.





Waste
      Treatment Systems





Dongtai
      operates proprietary and non-proprietary systems for waste treatment, disposal
      and recycling, including:




·
            Electric
                Garbage Dismantling System


·
            Organic
                Solvent Distillation Recycling System


·
            Fluorescent
                Tube Treatment System


·
            Organic
                Macromolecular Waste Destructive Distillation Cracking
                System


·
            Treatment
                System for Catalyst Containing Valuable
                Metals


·
            Waste
                Etchant Liquor Treatment System


·
            Comprehensive
                Treatment System for Industrial Waste
                Water


·
            Incineration
                System for Solid Waste


·
            Hazardous
                Waste Landfill


·
            Ordinary
                Industrial Solid Waste Landfill




-6-




*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.





*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,
      and
      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.




-7-





*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.





*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.


Market
      and 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 52% of Dongtai’s revenue in the
      year ended December 31, 2007 was for waste collection, treatment and disposal
      services, and approximately 48% of such revenues related to recycling
      operations.





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 solid waste disposal contracts with more than 400 companies,
      including such 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, 2007, Dongtai’s 10 largest waste disposal customers accounted
      for approximately 42% of Dongtai’s waste disposal revenues. The three largest
      waste disposal customers during 2007 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 used for recycling (which Dongtai
      generally purchases from suppliers and is required to collect and treat and
      dispose of waste residue at Dongtai’s sole expense) accounted for approximately
      52% of the payments made by Dongtai for waste products in 2007. Canon Dalian
      Business Machine Co., Ltd. accounted for approximately 48% of the amount which
      Dongtai paid for waste in 2007 as part of its recycling operations.




-8-





Dongtai’s
      ten largest customers for recycled waste products accounted for approximately
      70% of Dongtai’s sales of recycled products in 2007. Shenyang Hongyuan Mining
      Company and Hu Guoyuan accounted for approximately 25% and 7%, respectively,
      of
      Dongtai’s sales of recycled waste products in 2007.





Technology
      and Intellectual Property





Dongtai
      has established the Dongtai Industrial Waste Disposal Technology Center in
      conjunction 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, the Center is focusing on research related to ecoplanning
      theory and policy, professional training, ecological efficiency evaluation
      and
      analysis of simulations.





Since
      its
      establishment, Dongtai has closely cooperated 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 also participated in compiling the
      National Waste Disposal Criteria along 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.





In
      addition, Dongtai's research and development team specializes in environmental
      engineering, chemical engineering, water supply and drainage systems, surface
      treatment, biological engineering, metallurgy, machinery, electronics, and
      computer science. They provide significant input into the research of methods
      of
      treatment for industrial solid waste and comprehensive waste utilization.
      Dongtai has been recognized for its scientific achievements for business
      operations including:





·
            Dongtai
                was awarded second prize of Dalian Technology Innovation for its
                system
                relating to the Comprehensive Utilization and Disposal of Waste Organic
                Solvents. 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;


·
            The
                Destructive Distillation Thermal Cracking of Powdered
                Ink;


·
            The
                Safety Landfill of Hazardous Waste;


·
            Pyrolysis
                Incineration Stove;


·
            The
                Innocuous Treatment of Cyanide;


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


·
            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;


·
            The
                Treatment of PCB Industry's Waste Liquid containing heavy
                metal;


·
            The
                Disposal of Medical Refuse;


·
            The
                Disposal of Waste Batteries;


·
            The
                Innocuous Treatment of Arsenic
                Compound;


·
            The
                Wet Oxidation of High Concentration Organic
                Waste;




-9-




·
            The
                Disposal of Ordinary Industrial Waste;
                and


·
            The
                Comprehensive Utilization and Innocuous Treatment of Electric
                Waste.





Dongtai
      has been granted four patents covering waste disposal systems and techniques
      by
      the PRC Patent Office, and two additional patents remain the subject of
      applications. The following table identifies those patents and
      applications:




**Status**
            
            **Description**
            
            **Patent
                Number**
            
            **Date
                Applied**
              **For**
            
            **Grant**
              **Date**
            
            **Date
                Expires**Granted
            
            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
            
            ZL200620091047.4
            
            5/26/06




Operating
      Strengths and Strategy




We
      believe that we have a qualified and experienced management team and staff
      who
      possess strong technical capabilities and who specialize in project management,
      project design and research and development in relation to the waste treatment
      and disposal industry. Most of our senior management possess degrees or senior
      technical qualifications and have strong technical expertise and are
      professionally trained.




We
      place
      great emphasis on technical research and development, and typically set up
      research and development teams for specific projects to handle design,
      development and improvement. For example, our personnel have made innovations
      in
      our methods of oil sludge extraction, our waste toner dry distillation system,
      our etchant recycling system and in the methods we employ for solid waste
      incineration. We also keep monitor recent developments in water treatment
      technology through advisors and consultants who are experts in the waste
      treatment industry. We believe that our management experience and our strong
      technical capabilities provide us with a competitive edge over our competitors.





We
      also
      believe that our good track record and the goodwill that we have established
      in
      developing and operating industrial waste treatment systems provide us with
      an
      advantage over our competitors. Our experience and technical expertise have
      contributed to our being awarded various operating certificates by different
      environmental institutions, including certifications of Operation
      on Environmental Protection Facilities and Comprehensive Operation on Hazardous
      Waste .
      We
      believe that these certificates will strengthen our ability to tender for BOT
      (Build-Operate-Transfer) projects with the municipal government.





We
      also
      believe that we are an industry leader in our operation of quality of waste
      processing facilities, and following completion of an expansion project of
      current facilities, which we anticipate to be completed by the end of 2008,
      we
      will have ample capacity to handle the significant increases in demand for
      our
      waste treatment services that we anticipate will occur.





Our
      strong, long-term relationships with Dalian University of Technology and Anshan
      Coking and Refractory Engineering Consulting Corporation MCC provide
      important technical support in design and project execution, such as the
      production of biogas from sludge. We also believe that we have a good
      relationship with the government of the city of Dalian, and that the presence
      of
      our facilities has contributed to the city of Dalian being able to attract
      major
      companies. As a result, the local government has awarded us significant
      financial aid such as an Innovation Fund of Medium or Small Science and
      Technology Enterprise grant.




-10-





We
      anticipate that by providing flexible and customized quality services, in
      accordance with advanced environmental protection standards, we will continue
      to
      enjoy a high degree of customer satisfaction and loyalty. We maintain close
      and
      long-term relationships with clients, many of which have been clients since
      our
      company was founded in 1991.




The
      threshold of capital requirements for entering the waste water treatment segment
      and the initial capital investment of waste water treatment facilities and
      projects, especially BOT projects, is relatively high. Based on our good track
      record and relationships with the local Dalian government, we believe we are
      capable of obtaining sufficient capital resources to fund our operation of
      projects and expansion plan. One
      of
      the key factors our potential customers evaluate is financial stability. We
      believe our ability to demonstrate consistently strong financial performance
      will continue to differentiate our company and provide a competitive advantage
      in winning new contracts and renewing existing contracts.





Our
      business strategy is aimed at increasing revenue and earnings through profitable
      growth and improving returns on invested capital. The components of our strategy
      include: (1) placing emphasis on the commercialization of solid waste
      treatment; (2) our expansion into municipal sewage and sludge treatment BOT
      projects; (3) managing our businesses locally with a strong operations focus
      on
      customer service; (4) entering into new geographic markets in China; and
      (5) maintaining our financial capacity and effective administrative systems
      and controls to support on-going operations and future growth. We are evaluating
      growth in our solid waste treatment operations through opportunities to
      cooperate with prominent domestic or overseas partners and attempt to integrate
      customer groups (for example, the refinery industry), to realize resource
      optimization. We also plan to seek new BOT projects and acquire interests in
      existing projects.





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. Both SEPA and local bureaus of environmental protection
      license and regulate companies engaged in waste disposal and treatment. The
      requirements for licensing have become stringent and applicants must
      demonstrate, among other things, that they have a sufficient operating history
      and a sufficient number of professional technicians, as well as compliance
      with
      national and local environmental standards.





The
      State
      has also adopted Measures for the Administration of Permit for Operation of
      Dangerous Wastes (“Measures”). The Measures are intended to strengthen
      supervision and administration of activities relating to the collection, storage
      and disposal of dangerous wastes, and preventing dangerous wastes from polluting
      the environment.





Dongtai
      has been awarded an Environmental Protection Facility Operation License by
      SEPA.
      In addition, pursuant to the Measures, Dongtai has received a Permit for the
      Operation of Dangerous Wastes by the local Bureau of Environmental Protection.




-11-





The
      Company believes that it currently complies with all licensing requirements
      relating to its business operations. However, there is no assurance that the
      central or local governments will not adopt new regulations or licensing
      requirements that will make it more difficult for Dongtai to operate in the
      environmental protection industry.





Competition





There
      are
      several large companies in China that engage in providing solid waste recycling
      services, the recovery and treatment of waste materials, the production and
      sale
      of recycled products, the operation of environmental protection facilities
      (BOT)
      and/or the manufacture of environmental protection equipment. In addition to
      Dongtai, these companies include Shenzen Dongjiang Environmental Co., Ltd.,
      Tianjin Hejia Veolia Environmental Service Co., Ltd., Hangzhou Dadi
      Environmental Protection Co., Ltd. and Shanghai Solid Waste Disposal Center.
      However, only Dongtai and Shenzen Dongjiang provide the full range of these
      services, and only Dongtai in Dalian and Liaoning Province.





Within
      Liaoning Province, our principal competitors are Liaoning Zhen Xing, a
      state-owned environmental concern, primarily serving Shenyang and the
      surrounding area, and Liaoning Muchang Solid Waste Disposal Co., Ltd., a private
      solid waste disposal company also serving Shenyang and the surrounding area.
      Within Dalian, our principal competitor is Dalian Pingan Environmental
      Protection, a smaller-capacity, private enterprise, primarily dealing with
      hazardous waste.





We
      believe that we enjoy a competitive advantage over other companies engaged
      in
      the environmental protection industry, including:





·
            ***Reputation***-
                Dongtai has established itself as the leading environmental protection
                company in Liaoning Province, and an industry leader in all of China.
                Government officials have consulted with Dongtai when drafting
                environmental protection legislation. Dongtai’s expanded facility has been
                included in the current national centralized hazardous waste disposal
                facility plan established by the National Development and Reform
                Commission.





·
            ***Broad
                and Diversified Customer Base***-
                Dongtai has a diverse customer base including some 400 companies
                engaged
                in private enterprises, municipal institutions and universities,
                including
                Canon, Pfizer, Toshiba and Panasonic. Management anticipates that
                as
                additional large multinational companies locate in Liaoning Province,
                Dongtai will be their natural choice to provide environmental services.
                Dongtai holds both national and provincial operating
                permits.





·
            ***Long-term
                Stable Relationships***-
                Dongtai has a 17-year operating history and is committed to maintaining
                its customers by providing high quality products and services. Some
                of
                Dongtai’s customers, including Canon and Pfizer, have continuously engaged
                Dongtai’s services since it commenced operations in 1991, and others such
                as Goodyear, have used Dongtai’s services for over ten
                years.





·
            ***Comprehensive
                Services***-
                Dongtai provides a comprehensive array of services including solid
                waste
                treatment, waste collection and transportation, environmental protection
                services, storage to landfill and on-site management. The broad range
                of
                services we offer allows us to customize a package of services to
                meet the
                needs of the large clients that we
                service.




-12-




·
            ***Advanced
                Technologies***-
                Dongtai designs and develops proprietary processes and technologies
                for
                use in providing its services. It has been awarded four patents in
                the PRC
                covering solid waste disposal and treatment processes, and two additional
                patent applications are pending. Dongtai, in conjunction with the
                Dalian
                University Institute for Ecoplanning and Development, has established
                and
                operates the Dongtai Industrial Waste Disposal Technology Center.
                Dongtai
                also cooperates with experts in Canada and the United States to conduct
                research concerning ecoplanning theory and policy, ecological efficiency
                evaluation and related activities, with the support of the Dalian
                University of Technology.





·
            ***Experienced
                Management and Sound Management System***-
                Dongtai’s senior management has extensive experience in environmental
                protection. Mr. Dong Jinqing, our Chief Executive Officer, founded
                Dongtai
                in 1991, and has over 17 years experience in the field of environmental
                protection. Dongtai was one of the first companies to be granted
                a permit
                for the operation of environmental protection equipment by the State
                Environmental Protection Administration, and license to operate hazardous
                waste treatment and disposal facilities by the Liaoning Environmental
                Protection Bureau.





In
      addition to the competitive advantages we believe we enjoy, there are barriers
      to entering the solid waste and environmental services market,
      including:





·
            Substantial
                capital investment required;


·
            Retaining
                qualified management is difficult;


·
            Difficulties
                in developing a customer base;


·
            The
                need for government licenses and permits;
                and


·
            Advanced
                technologies are difficult to develop.


.


Notwithstanding
      our competitive advantages and the barriers to entering the marketplace, there
      is no assurance that we will remain a competitive force in our industry, or
      that
      we will operate on a profitable basis.





Employees





As
      of
      December 31, 2007 the Company had 313 full-time employees, of which 55 are
      management and supervisory personnel, 18 are technicians and 240 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.





Company
      History





The
      Company was originally incorporated as a Delaware corporation 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 the acquisitions, the Company changed its name to Goldtech
      Mining Corporation and re-domiciled to the State of Nevada.




-13-





Following
      these acquisitions, the Company operated 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 and adopted a business
      plan to focus exclusively on its mining exploration business. By September
      2005,
      the Company had ceased active mining operations as a result of its loss of
      contractual mining rights in Spain.





In
      2005
      the board of directors of the Company decided to pursue other business
      opportunities. In November 2005, the Company acquired a 90% indirect ownership
      interest (through a wholly owned Delaware subsidiary of the Company known as
      DonTech Waste Services Inc., which was originally known as Dalian Acquisition
      Corp.) in Dongtai, in a reverse merger transaction. Dongtai had been 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, Dongtai became a joint venture with foreign
      investment under the laws of the PRC, 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.





We
      are in
      the process of dissolving DonTech Waste Services, Inc., at which time Dongtai
      will become a direct 90%-owned subsidiary of China Industrial Waste Management,
      Inc.





**ITEM
      1A.**  **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-K 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 to operate our business
      in
      Dalian, China and the loss of the permits 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
      qualifications 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.




-14-





***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.***





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. For example, our 90% owned subsidiary,
      Dongtai, has entered into agreements with respect to the construction of two
      BOT
      (Build-Operate-Transfer) Projects in Dalian, China - a municipal sewage
      treatment facility and a sludge treatment and disposal facility. We estimate
      that Dongtai’s aggregate investment in such projects will be 35 million RMB
      (approximately $4.6 million) for an 80% interest in Dongtai Water Recycling
      Company, which intends to operate a municipal sewage treatment plant, and 63.21
      million RMB (approximately $8.31 million) for a 49% interest in Dongtai Organic
      Waste Treatment Company, which intends to operate a municipal sludge treatment
      and disposal facility. We anticipate that we will also require approximately
      120
      million RMB (approximately $15.8 million) in order to fund the expansion project
      relating to upgrade of Dongtai’s existing waste processing facilities, as well
      as approximately 44 million RMB (approximately $5.8 million) to satisfy its
      investment needs required by in Dalian Zhuorui Resource Recycling Co., Ltd.,
      in
      which Dongtai own a 70% interest. We
      anticipate that the total funding include expenditures mentioned above that
      we
      will require to finance the construction and installation of additional
      facilities and to obtain additional equipment for Dongtai to accommodate a
      sharp
      increase in demand for its waste management services and more stringent
      regulatory criteria in environmental management, as well as to strengthen our
      presence outside of Dalian, China, through investment and/or acquisition is
      approximately 320 million RMB (approximately $42.1 million) . We anticipate
      that
      such funding will be provided from bank loans, equity financing and internally
      generated funds.




It
      is
      likely that we will invest in additional projects, although no such projects
      have been identified by us at this time. In the future we may be unable to
      obtain the necessary financing for our capital requirements 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.





-15-




***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.





***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.




-16-





***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. We do not currently maintain key man insurance covering our
      executive officers.





***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*** **.**




Our
      90%
      owned subsidiary, Dongtai, has begun to invest capital in BOT projects which
      require high up-front capital expenditures. For example, Dongtai has entered
      into agreements to invest in Dongtai Water Recycling Company, which is
      constructing and will operate a municipal sewage treatment facility in Dalian,
      China and Dongtai Organic Waste Treatment Company, which is constructing and
      will operate a sludge treatment and disposal facility in Dalian, China. We
      estimate that Dongtai’s aggregate investment in such projects will be 21.0
      million RMB (approximately $3,968,500), of which 18.48 million RMB
      (approximately $2,378,700) had not been funded as of the date of this annual
      report). 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.




-17-





**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.





***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.




-18-





***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.





***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 austere 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 subsidiaries are 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
      subsidiaries in China. As a result of our holding company structure, we rely
      primarily on dividend payments from our subsidiaries. However, PRC regulations
      currently permit payment of dividends only out of accumulated profits, as
      determined in accordance with PRC accounting standards and regulations. Our
      subsidiaries in China are also required to set aside a portion of their
      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. Furthermore, if
      our
      subsidiaries in China incur debt on their own in the future, the instruments
      governing the debt may restrict its ability to pay dividends or make other
      payments. If we or our subsidiaries 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.




-19-





***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.




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 11.8%
      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.***





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.




-20-





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.***





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.




-21-





**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 79% of our
      outstanding common stock of CIWT. Dong Jinqing, our Chairman, President and
      Chief Executive Officer, beneficially owns 9,847,900 shares (approximately
      75%)
      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. Additional information relating to the beneficial ownership of
      our
      securities is contained elsewhere in this report under “Security Ownership of
      Certain Beneficial Owners and 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.





***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.




-22-





***The
      elimination of monetary liability against our directors, officers and employees
      under our certificate of incorporation and the existence of indemnification
      rights to our directors, officers and employees may result in substantial
      expenditures by our Company and may discourage lawsuits against our directors,
      officers and employees.***





Our
      certificate of incorporation contains provisions which eliminate the liability
      of our directors for monetary damages to our Company and stockholders to the
      maximum extent permitted under Delaware corporate law. Our By-laws also require
      us to indemnify our directors to the maximum extent permitted by Delaware
      corporate law. We may also have contractual indemnification obligations under
      our agreements with our directors, officers and employees. The foregoing
      indemnification obligations could result in our Company incurring substantial
      expenditures to cover the cost of settlement or damage awards against directors,
      officers and employees, which we may be unable to recoup. These provisions
      and
      resultant costs may also discourage our Company from bringing a lawsuit against
      directors, officers and employees for breaches of their fiduciary duties, and
      may similarly discourage the filing of derivative litigation by our stockholders
      against our directors, officers and employees even though such actions, if
      successful, might otherwise benefit our Company and stockholders.





**ITEM
      1B.**  **UNRESOLVED
      STAFF COMMENTS**





Not
      applicable to smaller reporting companies.


-23-




**ITEM
      2.**  **PROPERTIES**





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




**Address**
            
            **Function**
            
            **Area
                (square ft)**No.1,
                Dakai Huaihe West Road
            
            Office
                building and electric
            
            90,233waste
                disposal areaNo.27,
                Dakai Huaihe West Road
            
            Processing
                workshop of waste
            
            19,698No.
                100, Dakai Tieshan West Road No. 27
            
            Processing
                workshop of waste catalyst, waste water processing station
            
            72,588No.6
                District, Haiqing (Outside the Northwest wall of Xitai Oil Refinery
                Plant)
            
            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.




-24-




**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





From
      time
      to time, we may become party to 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(“ASC”), 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 we understand that the ASC 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 a/k/a Beverlee Kamerling. The plaintiffs claim
      to be
      victims of a failed "pump and dump" penny stock scheme. On
      October 9, 2007, the Company entered into a settlement agreement with the
      plaintiffs under which the settlement consideration was paid by a stockholder
      of
      the Company, and not by the Company. On October 11, 2007, The Honorable Nicole
      MacInnes of Kings County Superior Court signed an Order of Dismissal, with
      prejudice, thereby dismissing this lawsuit as against the Company.





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. On October
      9,
      2007, the Company entered into settlement agreement and general release of
      the
      claims wherein all claims of the plaintiff and the Company against each other
      were settled and released for the payment of cash and shares of common stock
      of
      the Company to the plaintiff. A third party and not the Company paid the
      settlement consideration. On
      November 5, 2007, The Honorable District Court Judge Elizabeth Gonzalez of
      District Court, Clark County, Nevada signed an Order of Dismissal, with
      prejudice, thereby dismissing this lawsuit as against the Company.





The
      Company is not currently a party to any legal proceedings.




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





No
      matters were submitted to a vote of stockholders during the fourth quarter
      of
      fiscal 2007.





-25-




**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.”





On
      March
      27, 2008, the closing price for the common stock of the Company was $1.85 per
      share. 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, 2006.
      All information has been adjusted to reflect a 1 for 100 share reverse stock
      split which occurred on May 12, 2006. The
      quotations reflect inter-dealer prices, without retail mark-up, markdown or
      commission, and may not represent actual transactions.




**Quarter
                Ended**
            
            
            **High
                Bid**
            
            
            **Low
                Bid**March
                31, 2006
            
            $
            0.18
            
            $
            0.05June
                30, 2006
            
            $
            2.50
            
            $
            0.07September
                30, 2006
            
            $
            2.60
            
            $
            2.50December
                31, 2006
            
            $
            2.60
            
            $
            0.51March
                31, 2007
            
            $
            9,00
            
            $
            1.50June
                30, 2007
            
            $
            2.95
            
            $
            1.48September
                30, 2007
            
            $
            4.00
            
            $
            1.95December
                31, 2007
            
            $
            4.50
            
            $
            2.15




As
      of
      March 31, 2008, there were 13,220,843 shares of our common stock issued and
      outstanding, and there were approximately 232 holders of record of our
      outstanding shares.





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




The
      Company issued no unregistered securities during the year ended December 31,
      2007. However, on February 4, 2008, the Company entered into a Business Advisory
      Agreement with Newbridge Securities Corporation. Under the Agreement, which
      is
      for a term of one year (subject to renewal on mutual agreement of the parties),
      Newbridge will provide the Company with business and financial advice and
      consulting services, and the Company will pay Newbridge a fee equal to $60,000
      (payable at the rate of $5,000 per month). The Company also agreed to issue
      Newbridge (a) 200,000 shares of common stock at $.0001 per share and (b)
      five-year options to purchase 300,000 shares, 75,000 of which are exercisable
      at
      $3.50, 75,000 at $4.00, 75,000 at $4.50 and 75,000 at $5.00. The shares are
      to
      be earned at the rate of 50,000 shares at the time of execution of the
      agreement, with an additional 50,000 being earned each 90 days thereafter.
      The
      Company will record an expense in an amount equal to the fair market value
      of
      the shares on each date on which the shares are to be issued. The options are
      to
      be earned in four equal tranches of 75,000 options each (consisting of options
      to purchase 18,750 shares at $3.50 per share, options to purchase 18,750 shares
      at $4.00 per share, options to purchase 18,750 shares at $4.50 per share and
      options to purchase 18,750 shares at $5.00 per share) commencing on execution
      of
      the Agreement and each 90 days thereafter.




-26-





Newbridge
      has such knowledge and experience in business and financial matters that it
      is
      able to evaluate the risks and merits of an investment in the Company and the
      certificates evidencing the shares and options issuable to Newbridge will bear
      a
      legend restricting their transferability absent registration or the existence
      of
      an available exemption from registration. The securities were issued to
      Newbridge in reliance on the exemption from registration under Section 4(2)
      of
      the Securities Act of 1933, as amended. As of the date of this report, 50,000
      shares have been earned and are due to be issued to Newbridge under its
      Agreement with the Company; however, such shares have not yet been issued and
      are, therefore, not shown as issued and outstanding in this report.




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.





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:





·
            Making
                up cumulative prior years’ losses, if
                any;


·
            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;


·
            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


·
            Allocations
                to the discretionary surplus reserve, if approved in the shareholders’
                general meeting.





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.





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.




-27-





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,
      2007.




**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 plansapproved
                by securityholders2006
                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. Inasmuch as the number of
      outstanding shares as of January 1, 2008 was 13,220,843, the number of shares
      covered by the 2006 Equity Incentive Plan increased by 1,322,084 shares to
      3,822,084 shares.





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.




-28-





**ITEM
      6.**  **SELECTED
      FINANCIAL DATA**





Not
      applicable to smaller reporting companies.




**ITEM
      7.**   **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




The
      following discussion should be read in conjunction with the audited consolidated
      financial statements of the Company and the notes thereto included in this
      report. Readers should also carefully review the risks and uncertainties
      described elsewhere in this report under “Risk Factors.”




FORWARD-LOOKING
      STATEMENTS




This
      Annual Report contains forward-looking statements within the meaning of federal
      securities laws. These include statements about our expectations, beliefs,
      intentions or strategies for the future, which we indicate by words or phrases
      such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,”
“management believes” and similar language. The forward-looking statements are
      based on the current expectations of management and are subject to certain
      risks, uncertainties and assumptions, including those described elsewhere in
      this report under “Risk Factors.” Actual results may differ materially from
      results anticipated in these forward-looking statements. We base the
      forward-looking statements on information currently available to us, and we
      assume no obligation to update them. Investors are also advised to refer to
      the
      information in our filings with the Securities and Exchange Commission, in
      which
      we discuss in greater detail various important factors that could cause actual
      results to differ from expected or historic results. It is not possible to
      foresee or identify all of the risks and uncertainties that could affect us.





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, a Delaware corporation known as China Industrial Waste
      Management, Inc. (“CIWM Delaware”) acquired 90% of the issued and outstanding
      capital stock of Dalian Dongtai Industrial Waste Treatment Co., Ltd. (“Dongtai”)
      from the shareholders of Dongtai in a reverse merger transaction in which the
      Dongtai shareholders became the owner of all of the issued and outstanding
      shares of CIWM Delaware. As a result of the reverse merger, Dongtai became
      a
      joint venture with foreign investment under the laws of the PRC, with a total
      registered and paid-in capital of $2.3 million. The exchange of shares with
      the
      Dongtai shareholders was accounted for as a reorganization between entities
      under common control with CIWM Delaware as the receiving entity, as prescribed
      by Appendix D of SFAS 141. The accounts of both entities were combined at their
      historical cost basis, resulting in no gain, loss, or goodwill. The combination
      was essentially a recapitalization of Dongtai.




-29-





On
      November 11, 2005, China Industrial Waste Management, Inc., a Nevada corporation
      (f/k/a Goldtech Mining Corporation) (“CIWM Nevada”) entered into an Agreement
      and Plan of Merger (the “Merger Agreement”) with CIWM Delaware and the
      shareholders of CIWM Delaware. Pursuant to the Merger Agreement, which closed
      on
      November 11, 2005, CIWM Delaware merged with and into CIWM Nevada’s wholly-owned
      Delaware subsidiary, DonTech. Pursuant to the Merger Agreement, after the
      merger, CIWM Delaware ceased to exist and DonTech was the surviving company
      (and
      the owner of 90% of the issued and outstanding capital stock of Dongtai). The
      merger of CIWM Delaware into DonTech was accounted for as a reverse acquisition
      under the purchase method of accounting since the shareholders of CIWM Delaware
      obtained control of CIWM Nevada (the Company) by virtue of the merger.
      Accordingly, the merger was recorded as a recapitalization of CIWM Delaware,
      with DonTech being treated as the continuing entity. CIWM Nevada (the Company)
      currently owns all of the issued and outstanding capital stock of DonTech,
      which
      in turn, owns 90% of the issued and outstanding capital stock of
      Dongtai.





Dongtai
      is engaged in the collection, treatment, disposal and recycling of industrial
      wastes principally in Dalian, China and surrounding areas in Liaoning Province,
      China. Dongtai provides waste disposal solutions to its more than 400
      customers, including large multinational corporations, from facilities located
      in the Economic and Technology Development Zone, Dalian, PRC. Dongtai treats,
      disposes of and/or recycles many types of industrial wastes, and recycled waste
      products are sold to customers as raw material to produce chemical and
      metallurgy products. In addition, Dongtai treats or disposes of industrial
      waste
      through incineration, burial or water treatment; as well as provides a range
      of
      environmental protection services to its clients. Dongtai generates revenues
      from waste collection and disposal services, as well as from sales of valuable
      products and recycled commodities.





In
      addition to its waste collection and disposal operations, Dongtai participates
      in the operation of the following waste disposal and environmental protection
      projects, which are expected to contribute to revenues in future
      periods:





·
            Dongtai
                Water Recycling Co. Ltd (“Dongtai Water”), a Build-Operate-Transfer (BOT)
                project established to process polluted water generated by the City
                of
                Dalian. Dongtai owns 80% of this project. The total investment in
                this
                project is approximately RMB 44 million (approximately $6 million).
                Construction of the sewage plant has been completed, and the project
                is
                currently in the stage of
                commissioning.





·
            Dongtai
                Organic Waste Treatment Co. Ltd. (“Dongtai Organic”), which is also a BOT
                project, engaged in municipal sludge treatment in Dalian. Dongtai
                owns a
                49% interest in Dongtai Organic, which is expected to operate for
                the next
                20 years and provide a municipal sludge treatment capacity of 600
                tons per
                day. The total investment in the project, which is in the installation
                stage, is approximately RMB 130 million (approximately $17.8
                million).





·
            Dalian
                Zhuorui Resource Recycling Co., Ltd. (“Zhuorui”), which is 70% owned by
                Dongtai, engages in plasma arc melting, separation and purification
                of
                waste catalysts, treatment of industrial wastes and comprehensive
                utilization of waste catalysts or similar material. RMB 65 million
                (approximately $8.9 million). The project is now in the facility
                installation stage.




-30-


·
            Dalian
                Lipp Environmental Energy Engineering & Technology Co., Ltd. (“Dalian
                Lipp”), is a PRC joint venture owned 75% by Dongtai. Dalian Lipp designs,
                manufactures and installs environmental protection equipment and
                renewable
                energy equipment and provides related technical services. The project
                is
                based on the Lipp tank building technique, and is dedicated to generating
                energy by organic waste anaerobic fermentation, and industrial effluent
                treatment and municipal sewage plant.





Fiscal
      2007 revenues were primarily attributable to fees from waste treatment and
      disposal services. We expect to experience continued increases in waste
      treatment and disposal services in fiscal 2008 in large part due to continued
      growth in Dalian and Liaoyang Province and increasing government environmental
      regulation.





In
      order
      to provide sufficient infrastructure to meet the increasing demand for waste
      treatment and disposal, an expansion project is now underway to significantly
      increase Dongtai’s capacity for waste treatment and disposal. It is anticipated
      that the total investment in this expansion project will be approximately RMB
      120 million (approximately $16.4 million). Groundbreaking, incinerator design
      and other facilities design for the expansion project have been completed,
      and
      an environmental impact assessment report has been submitted to and approved
      by
      the Ministry of Environmental Protection of China.





Our
      business strategy is aimed at increasing revenue and earnings through profitable
      growth and improving returns on invested capital. The components of our strategy
      include: (1) placing emphasis on the commercialization of solid waste
      treatment; (2) our expansion into municipal sewage and sludge treatment BOT
      projects; (3) managing our businesses locally with a strong operations focus
      on
      customer service; (4) entering into new geographic markets in China; and
      (5) maintaining our financial capacity and effective administrative systems
      and controls to support on-going operations and future growth. We are evaluating
      growth in our solid waste treatment operations through opportunities to
      cooperate with prominent domestic or overseas partners and attempt to integrate
      customer groups (for example, the refinery industry), to realize resource
      optimization.





We
      also
      plan to seek new BOT projects and acquire interests in existing projects, as
      we believe
      they can provide us with stable revenues and cash inflows. Furthermore, we
      believe that a well-operated BOT project will gain attention and social
      recognition from the local government and business community, which may, in
      turn, provide additional business opportunities in the Dalian metropolitan
      area.





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 which 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.




-31-




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





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 collectability is reasonably
      assured. Payments received before all of the relevant criteria for revenue
      recognition are satisfied are recorded as deferred sales.





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 required 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 COD through a credit
      term of up to nine to twelve months. Reserves are recorded primarily on a
      specific identification basis.





RESULTS
      OF OPERATIONS





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





Revenues





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.





Total
      revenue for the year ended December 31, 2007, was $9,539,507, an increase of
      $3,156,274 or 49.45% from $6,383,233 for the same period in 2006. The
      increase in revenue is attributable to a broadened customer base and increased
      demand from existing customers.





**Years
                Ended December 31,****2007**
            
            **2006**Service
                fees
            
            
            5,004,926
            
            
            3,252,725Sales
                of cupric sulfate
            
            
            1,817,861
            
            
            1,193,369Sales
                of other recycled commodities
            
            
            2,716,720
            
            
            1,937,139Total
            
            
            9,539,507
            
            
            6,383,233





Service
      fee revenue for the year ended December 31, 2007 was $5,004,926 which was 52.47%
      of total revenue for this year and an increase of $1,752,201 or 53.87% over
      the
      $3,252,725 in service fee revenue we generated in the year ended December 31,
      2006. Service fee accounted for 50.96% of our total revenue for the year ended
      December 31, 2006.




-32-





Sales
      of
      recycled products (including cupric sulfate and other recycled commodities)
      were
      $4,534,581 or 47.53% of total revenue for the year ended December 31, 2007.
      Sales of recycled products in 2007 increased by $1,404,073 or 44.85% over the
      year ended December 31, 2006. Sales of cupric sulfate increased by $624,492
      or
      52.33% from $1,193,369 in the year ended December 31, 2006 to $1,817,861 in
      the
      year ended December 31, 2007. This is attributable to a 208.375 tons increase
      in
      the sales amount of cupric sulfate as well as the increased unit price. Sales
      of
      recycled products for the year ended December 31,2007, was $2,716,720 ,an
      increase of $779,581 or 40.24% from $1,937,139 in the year ended December
      31,2006 as the revenues generated from sales of silicon steel sheet, waste
      iron,
      waste oil, scrap iron and waste drums increased. However, compared with last
      year, revenue from sales of aluminum and plastic decreased.





Cost
      of Revenues





Costs
      of
      revenues primarily include labor expenses (salaries, benefits, insurance and
      other benefits), depreciation, materials, transportation costs, rent, repair
      costs and other sundry expenses. Costs of revenue increased $954,264 or 52.36%
      from $1,822,657 for the year ended December 31, 2006 to $2,776,921 for the
      year
      ended December 31, 2007.





**Years
                Ended December 31,****2007**
            
            **2006**Cost
                of service fees
            
            
            1,251,049
            
            
            763,940Cost
                of cupric sulfate
            
            
            537,563
            
            
            310,585Cost
                of other recycled commodities
            
            
            988,309
            
            
            748,132Total
            
            
            2,776,921
            
            
            1,822,657





Costs
      related to providing services increased by $487,109 or 63.76% from $763,940
      for
      the year ended December 31, 2006 to $1,251,049 for the year ended December
      31,
      2007. Costs related to producing recycled waste products (including cupric
      sulfate and other recycled commodities) increased by $467,155 or 44.12% from
      $1,058,717 for the year ended December 31, 2006 to $1,525,872 for the year
      ended
      December 31, 2007.





Operating
      Expenses





Total
      Operating expenses for the fiscal year ended December 31, 2007 was $3,602,828
      which represents an increase of $1,394,478 or 63.15% from $2,208,350 for the
      same period ended December 31, 2006. The main cause for the increase is that
      in
      October 2007, the Company settled certain legal proceedings in consideration
      for
      the payment to the plaintiff of cash and shares of common stock of the Company.
      While the cash and shares were delivered by a third party, in accordance with
      US
      GAAP, the consideration for the settlement was accounted for as expenses,
      amounting to $860,460.





Furthermore,
      the increase in operation expenses is attributable to our business expansion
      in
      2007 as we need more employees and an increase in salary for all staff as a
      whole. Simultaneously, we also experienced an increase in labor cost and
      depreciation. Also, as a natural consequence of intensified business presence
      in
      other areas, the expenses incurred in transportation increased
      accordingly.





Reimbursed
      legal costs





As
      disclosed in the Company’s current report on Form 8-K filed on October 15, 2007,
      the consideration for the settlement of legal proceedings described under
      Operating Expenses was paid by a third party. The consideration, which was
      valued at $860,460, has been accounted for as Reimbursed legal
      costs.




-33-





LIQUIDITY
      AND CAPITAL RESOURCES





Liquidity
      is the ability of a company to generate funds to support its current and future

      operations, satisfy its obligations and otherwise operate on an ongoing basis.
      As of December 31, 2007 our working capital was approximately $2.35 million
      as compared to approximately $6.43 million as of December 31,
      2006.




On
      an
      on-going basis, we take steps to identify and plan our needs for liquidity
      and
      capital resources, to fund our planned ongoing construction and day to day
      business operations. In addition to working capital to support our routine
      activities, we will also require funds for the:





·
            construction
                and upgrading of crucial facilities;


·
            acquisition
                of assets and/or equity ; and


·
            repayment
                of debt.





We
      anticipate that our various projects will require us to invest an aggregate
      of
      approximately RMB 42 million (approximately $5.8 million). We will fund this
      investment through a combination of internally generated funds, bank loans
      and
      sales of our securities. We currently have no commitments from banks, investors
      or any other source of financing. While we anticipate that we will be able
      to
      secure necessary funding as and when needed, there is no assurance that such
      will be the case. If we are unable to secure funding as and when needed, our
      projects may be delayed which may, in turn, cause delays in generating revenues
      from the affected projects, and may reduce our profitability.





The
      following table provides certain selected balance sheet comparisons between
      the
      years ended December 31, 2007 and December 31, 2006.


**(in
                  000’s, except %)**
              
              **December
                  31,**
              
              **Increase/(Decrease)**
              
              **Percent****2007**
              
              **2006**Working
                  Capital
              
              $
              2,345
              
              $
              6,434
              
              $
              (4,089
              )
              
              (64
              )%Cash
              
              
              3,260
              
              
              6,479
              
              
              (3,219
              )
              
              (50
              )%Accounts
                  receivable, net
              
              
              594
              
              
              151
              
              
              443
              
              
              293
              %Inventory
              
              
              1,332
              
              
              602
              
              
              730
              
              
              121
              %Advances
                  to suppliers
              
              
              390
              
              
              374
              
              
              16
              
              
              41
              %Other
                  assets
              
              
              66
              
              
              154
              
              
              (88
              )
              
              NmTotal
                  current assets
              
              
              5,642
              
              
              7,760
              
              
              (2,118
              )
              
              (27
              )%Long
                  term assets
              
              
              14,887
              
              
              5,169
              
              
              9,718
              
              
              188
              %Total
                  assets
              
              $
              20,529
              
              
              12,929
              
              $
              7,600
              
              
              59
              %Loans
                  - short term
              
              $
              1,369
              
              
              —
              
              $
              1,369
              
              
              NmAccounts
                  payable and accrued expenses
              
              
              280
              
              
              92
              
              
              187
              
              
              203
              %Other
                  payables
              
              
              343
              
              
              284
              
              
              59
              
              
              21
              %Deferred
                  sales
              
              
              667
              
              
              456
              
              
              212
              
              
              47
              %Other
                  current liabilities
              
              
              638
              
              
              494
              
              
              142
              
              
              29
              %Total
                  current liabilities
              
              
              3,297
              
              
              1,326
              
              
              1,971
              
              
              149
              %Asset
                  retirement obligation liability
              
              
              438
              
              
              382
              
              
              56
              
              
              15
              %Other
                  long-term liabilities
              
              
              621
              
              
              —
              
              
              621
              
              
              NmTotal
                  liabilities
              
              $
              4,356
              
              $
              1,608
              
              $
              2,748
              
              
              171
              %




Nm
      = Not
      meaningful




-34-





All
      our
      cash reserves, approximately $3.26 million as of December 31, 2007,
      are in the form of RMB held in bank accounts at financial institutions located
      in the PRC. The value of cash on deposit in China at December 31, 2007 has
      been translated based on the exchange rate as of December 31, 2007. In
      1996, the Chinese government introduced regulations which relaxed restrictions
      on the conversion of the RMB; however restrictions still remain, including
      but
      not limited to restrictions on foreign invested entities. Foreign invested
      entities may only buy, sell or remit foreign currencies after providing valid
      commercial documents at only those banks authorized to conduct foreign
      exchanges. Furthermore, the conversion of RMB for capital account items,
      including direct investments and loans, is subject to PRC government approval.
      Chinese entities are required to establish and maintain separate foreign
      exchange accounts for capital account items. We cannot be certain Chinese
      regulatory authorities will not impose more stringent restrictions on the
      convertibility of the RMB, especially with respect to foreign exchange
      transactions. Accordingly, cash on deposit in banks in the PRC is not readily
      deployable by us for purposes outside of China.





Our
      working capital decreased approximately $4.09 million to $2.35 million
      as of December 31, 2007 from $6.43 as of December 31, 2006. This decrease
      in working capital is primarily attributable to decrease of approximately
      $3.22 million in cash and cash equivalents, which was helped by increases
      in short-term loans (approximately $1.37 million), accounts receivable
      (approximately $0.19 million) and deferred sales (approximately $0.21million).
      The decease of cash was caused by increasing expenditures on ongoing
      construction.





Our
      current assets as of December 31, 2007 decreased $2.12 million, or
      approximately 27%, from December 31, 2006 and reflects decreases in current
      asset items including cash and cash equivalents and other assets. Our current
      liabilities increased by approximately $1.97 million, or approximately
      149%, as of December 31, 2007 from December 31, 2006; this reflects
      increases in Loans, accounts payable, deferred sales, and other payables.





Our
      accounts receivables, net of allowances for doubtful accounts, increased
      approximately $4.43 million as of December 31, 2007 year over year.
      This increase is directly attributed to the increase in sales from treatment
      services rendered.





Inventories
      increased approximately 121% as of December 31, 2007 from the prior period.
      This resulted from an increase in recycled products and raw
      materials.





Short-term
      loans were acquired for the first time in recent three years to fund day to
      day
      operations resulting from the expenditure of significant amounts of working
      capital related to various construction projects.





Accounts
      payable increased significantly, by 203% in 2007, as a direct result of the
      overall significant increase in purchases and related operational
      activities.





Cash
      Flows


******Year
                  Ended December 31,****2007**
              
              **2006**Net
                  cash provided by operating activities
              
              $
              4,619,605
              
              $
              3,436,471Net
                  cash used in investing activities
              
              $
              (9,430,109
              )
              $
              (76,134
              )Cash
                  flows from financing activities
              
              $
              1,315,097
              
              
              —
  -35-




*Net
      cash provided by operating activities* *:* Net
      cash provided by operating activities in the year ended December 31, 2007
      increased by $1,183,134 or 34.4% over the net cash provided by operating
      activities for the year ended December 31, 2006.





The
      principal reasons for the increase in 2007 were a $551,272 increase in
      accounts receivable, a $484,547 increase in inventory, and a $301,125 decrease
      in accrued expense and deferred revenues which were partially offset by a
      $1,358,437 increase in net income in 2007, a $129,793 increase in
      depreciation, a $128, 852 increase in minority interest, a $596,528 increase
      in
      Subsidy received from government and a $138,657 decrease in accounts payable
      and
      other payables.




The
      subsidy described in the preceding paragraph, amounting to $596,528 was received
      by Dongtai’s controlled subsidiary, Zhuorui, in February 2007 from central and
      local government agencies, in order to support the construction of the
      facilities dealing with waste catalysts. The money will be kept in Zhuorui
      and
      need not be paid back.





*Net
      cash used in investing activities* *:* Net
      cash
      used in investing activities for the year ended December 31, 2007 increased
      by
      $9,353,975 in the year ended December 31, 2007 as compared to the same period
      in
      2006.





In
      2007,
      as a result of Dongtai Water and Zhuorui’s BOT construction activities and
      Dongtai’s upgrades of existing facilities and the purchase of property and
      equipment, cash outflows increased by $5,990,337 in the year ended December
      31,
      2007 as compared to the year ended December 31, 2006; the increase by
      $2,643,351in the investment in Dongtai Organic also contribute to the cash
      used
      in investing activities.





The
      balance due from related party increased, due to the retroactive restatement
      of
      Dongtai Water and Zhuorui, by $116,179, combined with a $434,573 decrease of
      due
      to related party balance, contributed to the decrease in cash outflow in the
      year as of December 31, 2007.




*Net
      cash provided by financing activities* *:* Net
      cash
      provided by financing activities for the year ended December 31, 2007 increased
      by $1,315,097 in the year ended December 31, 2007 as compared to the same period
      in 2006, which resulted from a $1,315,097 increase in proceeds from
      loans.





On
      a
      continuous basis, we emphasize on the management and forecast of our liquidity
      and various capital resources, to fund our planned ongoing construction and
      day
      to day business operations. On top of the cash needs for working capitals
      fueling our routine activities, we also brace for the capital requirements
      for:
      the construction and upgrading of crucial facilities; acquisitions of assets
      and
      equities; repaying the loans, all of which are set to strengthen our position
      in
      the industry in the long run.





Off
      Balance Sheet Arrangements




Under
      SEC
      regulations, we are required to disclose our off-balance sheet arrangements
      that
      have or are reasonably likely to have a current or future effect on our
      financial condition, changes in financial condition, revenues or expenses,
      results of operations, liquidity, capital expenditures or capital resources
      that
      are material to investors. An off-balance sheet arrangement means a transaction,
      agreement or contractual arrangement to which any entity that is not
      consolidated with us is a party, under which we have:




·
            Any
                obligation under certain guarantee contracts;






-36-




·
            Any
                retained or contingent interest in assets transferred to an unconsolidated
                entity or similar arrangement that serves as credit, liquidity or
                market
                risk support to that entity for such assets;


·
            Any
                obligation under a contract that would be accounted for as a derivative
                instrument, except that it is both indexed to our stock and classified
                in
                stockholder’s equity in our statement of financial position;
                and


·
            Any
                obligation arising out of a material variable interest held by us
                in an
                unconsolidated entity that provides financing, liquidity, market
                risk or
                credit risk support to us, or engages in leasing, hedging or research
                and
                development services with us.





As
      of
      December 31, 2007, the Company has no off-balance sheet arrangements that have
      or are reasonably likely to have a current or future effect on our financial
      condition, changes in financial condition, revenues or expenses, results of
      operations, liquidity, capital expenditures or capital resources that is
      material to investors.





**ITEM
      7A.****QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





Not
      applicable to smaller reporting companies.





**ITEM
      8.**  **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**





The
      financial statements of the Company required by this Item 8 are set forth
      beginning on page F-1 immediately following the signature page to this annual
      report.





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





There
      have been no disagreements with or changes in the Company’s independent auditors
      within the past two fiscal years.





**ITEM
      9A(T).**  **CONTROLS
      AND PROCEDURES**





Evaluation
      of Disclosure Controls and Procedures





In
      connection with the preparation of this annual report on Form 10-K, an
      evaluation was carried out by the Company’s management, with the participation
      of the Company’s Chief Executive Officer and Chief Financial Officer, of the
      effectiveness of our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange
      Act)) as of December 31, 2007. Disclosure controls and procedures are designed
      to ensure that information required to be disclosed in reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in SEC rules and forms and that such
      information is accumulated and communicated to management, including the Chief
      Executive Officer and Chief Financial Officer, to allow timely decisions
      regarding required disclosures.





In
      designing and evaluating its disclosure controls and procedures, management
      recognized that disclosure controls and procedures, no matter how well conceived
      and operated, can provide only reasonable, not absolute, assurance that the
      objectives of the disclosure controls and procedures are met. Additionally,
      in
      designing disclosure controls and procedures, management necessarily was
      required to apply its judgment in evaluating the cost-benefit relationship
      of
      possible disclosure controls and procedures. The design of any disclosure
      controls and procedures also is based in part upon certain assumptions about
      the
      likelihood of future events, and there can be no assurance that any design
      will
      succeed in achieving its stated goals under all potential future
      conditions.




-37-





During
      the evaluation of disclosure controls and procedures as of December 31, 2007
      conducted during the preparation of the Company’s financial statements to be
      included in this Form 10-K, a material weakness in internal controls was
      identified.  As a result of this material weakness, described more
      fully below, the Company’s Chief Executive Officer and Chief Financial Officer
      concluded that, as of December 31, 2007, our disclosure controls and procedures
      were not completely effective.





Notwithstanding
      the existence of this material weakness in internal controls, the Company
      believes that the consolidated financial statements in this annual report on
      Form 10-K fairly present, in all material respects, our consolidated balance
      sheets as of December 31, 2007 and 2006, and the related consolidated
      statements of operations, stockholders’ equity, and cash flows for the years
      ended December 31, 2007, 2006 and 2005 in conformity with accounting principles
      generally accepted in the United States ("GAAP").





Management’s
      Report on Internal Control Over Financial Reporting





Our
      management, under the supervision of our Chief Executive Officer and Chief
      Financial Officer, is responsible for establishing and maintaining adequate
      internal control over financial reporting. Internal control over financial
      reporting is a process designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with GAAP.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with existing policies or procedures may deteriorate. Further, because of
      changes in conditions, effectiveness of internal controls over financial
      reporting may vary over time.





Company
      management conducted an assessment of the effectiveness of our internal control
      over financial reporting as of December 31, 2007. In making this assessment,
      management used the criteria set forth by the Committee of Sponsoring
      Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated
      Framework.  Based on this assessment, we have determined that we did
      not maintain effective internal controls over financial reporting as of December
      31, 2007.





A
      material weakness is “a deficiency, or a combination of deficiencies (within the
      meaning of PCAOB Auditing Standard No. 5), in internal control over financial
      reporting, such that there is a reasonable possibility that a material
      misstatement of the Company’s annual or interim financial statements will not be
      prevented or detected on a timely basis.” Company management has concluded that,
      as of December 31, 2007, the following material weakness existed:





·
            We
                had an insufficient familiarity with generally accepted accounting
                principles in the United States causing us to improperly (a) account
                for
                landfill-related asset retirement obligations and consolidation of
                the
                results of operations of a subsidiary company, as a result of which
                we
                restated ourfinancial
                statements as of December 31, 2006 and for the year then ended, and
                as of
                March 31, 2007 and for the quarter then endedand, (b)record
                and reconcile various financial statement entries including accounts
                receivable balances (including allowance for doubtful accounts),
                other
                current assets, construction in progress amounts, customer deposits,
                deferred revenues depreciation and amortization expenses, certain
                operating expenses and taxes payable, income and interest expense,
                a loss
                on investment, related party transactions; and subsidizing amounts;
                resulting in numerous audit
                adjustments.




-38-




Notwithstanding
      the existence of this material weakness in internal controls, we believe that
      the consolidated financial statements fairly present, in all material respects,
      our consolidated balance sheets as of December 31, 2007 and 2006 and
      the related consolidated statements of operations, stockholders’ equity, and
      cash flows for the years ended December 31, 2007, 2006 and 2005 in
      conformity with GAAP.





This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the Company’s registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the Company to provide only management’s report
      in this annual report.





Remediation
      of Material Weaknesses in Internal Control Over Financial Reporting During
      2007





Until
      recently, the Company’s founder and Chief Executive Officer also served as our
      Chief Financial Officer, and due to his need to devote a substantial portion
      of
      his time to operational matters was not able to devote sufficient time to the
      Company’s financial and accounting matters. In addition, while the Company
      engaged the services of an external accounting consultant to assist it with
      accounting matters, the Company has concluded that the consultant was not
      sufficiently experienced in US GAAP to provide it with meaningful services.
      We
      believe that a lack of personnel sufficiently familiar with US GAAP was the
      primary reason we restated certain of our financial statements and experienced
      numerous audit adjustments.




In
      order
      to remediate the material weakness the Company has taken the following
      actions:





·
            Appointed
                a full-time Chief Financial Officer which will now
                allow the CEO to devote his full-time and attention to the Company’s
                operations and permit a CFO with experience in accounting matters to
                devote her full time and attention to the functions of Chief Financial
                Officer.


·
            Added
                additional accounting and financial personnel with industry
                experience.


·
            Commenced
                the process by which we will become better informed about US
                GAAP.


·
            Incorporated
                US GAAP into the Company’s internal
                controls.


·
            Began
                the process of sourcing a consultant experienced in accounting principles
                generally accepted in the Untied States, including internal controls
                over
                financial reporting.




Changes
      in Internal Control over Financial Reporting





We
      have
      engaged in substantial efforts to improve our internal control over financial
      reporting and disclosure controls and procedures related to many areas of our
      financial statements and disclosures. Efforts to remediate our internal control
      over financial reporting are continuing and are expected to continue throughout
      fiscal 2008. There remains a risk that we will fail to identify weaknesses
      or
      adequately correct any identified weaknesses in our internal control over
      financial reporting or to prevent or detect a material misstatement of our
      annual or interim financial statements.




-39-




**ITEM
      9B.**  **OTHER
      INFORMATION**





None.




-40-





**PART
      III**




**ITEM
              10.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(a) OF THE EXCHANGE ACT**





Officers
      and Directors





The
      following table sets forth information as of the date of this prospectus with
      respect to the directors and executive officers of the Company.




**Name**
            
            **Position**Dong
                Jinqing
            
            Chairman
                of the Board, Chief Executive Officer and DirectorLi
                Jun
            
            Chief
                Operating Officer and DirectorGuo
                Xin
            
            Chief
                Financial Officer and DirectorZhang
                Dazhi
            
            Corporate
                Secretary





Mr.
      Dong
      Jinqing, age 51, was appointed the Company’s Chief Executive Officer, Chief
      Financial Officer and Director in November 2005, and continues to serve the
      Company as its Chairman of the Board and Chief Executive Officer. 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, where he was primarily engaged in research
      relating to the disposal of waste gas, waste water and industrial residue and
      the evaluation of the environmental effects of industrial projects. Mr. Dong
      graduated from Dalian University of Technology in 1982 with a bachelor’s degree
      in environmental engineering.





Mr.
      Li
      Jun, age 46, was appointed the Company’s Chief Operating Officer in March 2008.
      He has served on the Company’s board of directors since October 2006. Mr. Li has
      also served as the Chief Operating Officer of Dalian Dongtai since 1998. From
      1982 to 1993, he was employed by Dalian Vacuum Flask Factory and Dalian Yili
      International Chemical Co. Ltd as its Director of Technology and Chief
      Production Manager. Mr. Li graduated from Dalian University of Technology in
      1982, majoring in environmental engineering.





Ms.
      Guo
      Xin, age 38, has served as t he
      Company’s Chief Financial Officer and a member of the board of directors since
      March 2008. Ms. Guo has served as our Chief Accounting Officer since January
      2007, as Chief Accounting Officer for Dalian Dongtai since October 2003 and
      as a
      manager in Dalian 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 degree in Public Administration from China's
      Northeastern University in 2002.





Mr.
      Zhang
      Dazhi, age 31, has served as the Company’s Corporate Secretary since March 2008.
      He has engaged in Investor Relations Management since he joined Dalian Dongtai
      in 2004. Mr.
      Zhang
      was awarded a Master’s degree in International Banking and Financial Studies
      from the University of Southampton (United Kingdom) in 2004.




-41-




Family
      Relationships





There
      are
      no family relationships among our directors or officers.





Director
      Compensation





We
      have
      not established standard compensation arrangements for our directors and the
      compensation payable to each individual for their service on our Board will
      be
      determined from time to time by our Board of Directors. Directors did not
      receive any compensation for their services as directors during fiscal 2007.
      The
      following table provides information concerning the compensation of our
      directors, for services as members of our Board of Directors for fiscal 2007.
      The value attributable to any option awards is computed in accordance with
      FAS
      123R.





**Director
      Compensation**


Name
                (a)
              
              Fees
                  earned or paid in cash ($)
                (b)
              
              Stock
                  awards ($)
                (c)
              
              Option
                  awards
                ($)
                (d)
              
              Non-equity
                  incentive plan compensation ($)
                (e)
              
              Nonqualified
                  deferred compensation earnings
                ($)
                (f)
              
              All
                  other compensation ($)
                (g)
              
              Total
                ($)
                (h)Dong
                  Jinqing
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Li
                  Jun
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Guo
                  Xin
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0





Committees
      of the Board





Our
      Board
      of Directors has not established any committees of the Board, including an
      Audit
      Committee, a Compensation Committee or a Nominating Committee, or any committee
      performing similar functions. The functions of those committees are being
      undertaken by the Board of Directors as a whole.





We
      do not
      have a policy regarding the consideration of any director candidates which
      may
      be recommended by our shareholders, including the minimum qualifications for
      director candidates, nor has our Board of Directors established a process for
      identifying and evaluating director nominees. We have not adopted a policy
      regarding the handling of any potential recommendation of director candidates
      by
      our shareholders, including the procedures to be followed. Our Board has not
      considered or adopted any of these policies as we have never received a
      recommendation from any shareholder for any candidate to serve on our Board
      of
      Directors. Given our relative size and lack of directors and officers insurance
      coverage, we do not anticipate that any of our shareholders will make such
      a
      recommendation in the near future. While there have been no nominations of
      additional directors proposed, in the event such a proposal is made, all members
      of our Board will participate in the consideration of director nominees.





Audit
      Committee Financial Expert




In
      general, an “audit committee financial expert” is an individual member of the
      audit committee or Board of Directors who:




·
            understands
                generally accepted accounting principles and financial statements,


·
            is
                able to assess the general application of such principles in connection
                with accounting for estimates, accruals and reserves,


·
            has
                experience preparing, auditing, analyzing or evaluating financial
                statements comparable to the breadth and complexity to our financial
                statements,






-42-




·
            understands
                internal controls over financial reporting, and


·
            understands
                audit committee functions.





An
“audit
      committee financial expert” may acquire the foregoing attributes
      through:





·
            education
                and experience as a principal financial officer, principal accounting
                officer, controller, public accountant, auditor or person serving
                similar
                functions;


·
            experience
                actively supervising a principal financial officer, principal accounting
                officer, controller, public accountant, auditor or person serving
                similar
                functions; experience overseeing or assessing the performance of
                companies
                or public accounts with respect to the preparation, auditing or evaluation
                of financial statements; or


·
            other
                relevant experience.





At
      the
      present time, we believe that Mr. Dong, our CEO and a director, and Ms. Guo
      Xin,
      our CFO and a director, are capable of analyzing and evaluating our financial
      statements and understanding internal controls and procedures for financial
      reporting. However, as we do not currently have an audit committee, we do not
      currently have an “audit committee financial expert” as that term is defined
      under Rule 407(d)(5) of Regulation S-K, and neither Mr. Dong nor Ms. Guo is
      "independent" as that term is used in Item 7(d)(3)(iv) of Schedule 14A under
      the
      Securities Exchange Act of 1934.





Section
      16(a) Beneficial Ownership Reporting Compliance





We
      are
      not currently subject to Section 16(a) of the Securities Exchange Act of 1934,
      and, therefore, our directors and executive officers, and persons who own more
      than ten percent of our common stock are not required to file with the
      Securities and Exchange Commission reports disclosing their initial beneficial
      ownership and changes in their beneficial ownership of our common
      stock.





Code
      of Ethics





A
      Code of
      Ethics is a written standard designed to deter wrongdoing and to
      promote:





·
            honest
                and ethical conduct,


·
            full,
                fair, accurate, timely and understandable disclosure in regulatory
                filings
                and public statements,


·
            compliance
                with applicable laws, rules and regulations,


·
            the
                prompt reporting violation of the code, and


·
            accountability
                for adherence to the Code of Ethics.




We
        are in
        the process of completing a Code of Ethics, a copy of which will be filed
        with
        the Securities and Exchange Commission once it has been adopted by the Board
        of
        Directors.




**ITEM
      11.**  **EXECUTIVE
      COMPENSATION**





The
      following table summarizes all compensation recorded by us in each of the last
      two completed fiscal years for our principal executive officer, each other
      executive officer serving as such whose annual compensation exceeded $100,000
      and up to two additional individuals for whom disclosure would have been made
      in
      this table but for the fact that the individual was not serving as an executive
      officer of our company at December 31, 2007. The value attributable to any
      option awards is computed in accordance with FAS 123R.




-43-




**Summary
      Compensation Table**


**Name
                  and principal position**
                **(a)**
              
              **Year**
                **(b)**
              
              **Salary**
                **($)**
                **(c)**
              
              **Bonus**
                **($)**
                **(d)**
              
              **Stock**
                **Awards**
                **($)**
                **(e)**
              
              **Option**
                **Awards**
                **($)**
                **(f)**
              
              **Non-Equity
                  Incentive Plan Compensation ($)**
                **(g)**
              
              **Nonqualified
                  Deferred Compensation Earnings ($)**
                **(h)**
              
              **All**
                **Other
                  Compensation**
                **($)**
                **(i)**
              
              **Total**
                **($)**
                **(j)**Dong
                  Jinqing
                CEO
              
              
              2007
                2006
              
              
              12,934
                10,740
              
              
              60,558
                40,305
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              73,492
                51,045Li
                  Jun
                COO
              
              
              2007
                2006
              
              
              11,553
                10,013
              
              
              51,615
                36,778
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              63,168
                46,791Liu
                  Ruiguang
                Chief
                  Engineer
              
              
              2007
                2006
              
              
              10,455
                8,761
              
              
              31,862
                25,417
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              42,317
                34,178Guo
                  Xin
                Chief
                  Financial Officer*
              
              
              2007
                2006
              
              
              8,641
                7,051
              
              
              18,327
                16,500
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              26,968
                23,551Tian
                  Hongyi
                VP-
                  Dongtai
              
              
              2007
                2006
              
              
              8,641
                7,199
              
              
              18,327
                15,305
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              0
                0
              
              
              29,968
                22,504





*
      Ms. Guo
      served as Chief Accounting Officer during the periods covered by the
      table.





The
      executives of 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 December 31, 2007 no awards had been made to any
      officer, director or employee of the Company under such plan.




Employment
      Agreements





We
      are
      not a party to any written employment agreements.





**Outstanding
      Equity Awards at Fiscal Year End**





The
      following table provides information concerning unexercised options, stock
      that
      has not vested and equity incentive plan awards for each named executive officer
      outstanding as of December 31, 2007:





**OPTION
                AWARDS**
            
            **STOCK
                AWARDS**Name
              (a)
            
            Number
                of securities underlying unexercised options
              (#)
                exercisable
              (b)
            
            Number
                of securities underlying unexercised options
              (#)
                unexercisable
              (c)
            
            Equity
                incentive plan awards: Number of securities underlying unexercised
                unearned options
              (#)
              (d)
            
            Option
                exercise price
              ($)
              (e)
            
            Option
                expiration date
              (f)
            
            Number
                of shares or units of stock that have not vested (#)
              (g)
            
            Market
                value of shares or units of stock that have not vested ($)
              (h)
            
            Equity
                incentive plan awards: Number of unearned shares, units or other
                rights
                that have not vested (#)
              (i)
            
            Equity
                incentive plan awards: Market or payout value of unearned shares,
                units or
                other rights that have not vested (#)
              (j)Dong
                Jinqing
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Li
                Jun
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Liu
                Ruiguang
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Guo
                Xin
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Tian
                Hongyi
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0




-44-




**ITEM
              12.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS**





As
      of
      March 31, 2008, there were 13,220,843 shares of our common stock (the only
      class
      of our voting securities) issued and outstanding. The following table sets
      forth
      as of March 31, 2008, certain information with respect to the beneficial
      ownership of our voting securities by:





·
            each
                person who is known by us to be the beneficial owner of more than
                five
                percent of our outstanding common stock; ·
            each director; ·
            each “named executive officer” [as defined in Item
              402(a)(3) of Regulation S-K]; and ·
            all executive officers and directors as a
              group.





Unless
      otherwise indicated, the business address of each person listed is c/o Dalian
      Dongtai Industrial Waste Treatment Co., Ltd., No. 1 Huaihe West Road, E-T-D
      Zone, Dalian, China. The percentages in the table have been calculated on the
      basis of treating as outstanding for a particular person, all shares of our
      common stock outstanding on that date and all shares of our common stock
      issuable to that holder in the event of exercise of outstanding options,
      warrants, rights or conversion privileges owned by that person at that date
      which are exercisable within 60 days of that date. Except as otherwise
      indicated, the persons listed below have sole voting and investment power with
      respect to all shares of our common stock owned by them, except to the extent
      that power may be shared with a spouse.


**Name
                  and Address of Beneficial Owner**
              
              
              **Number
                  of Shares Beneficially Owned**
              
              
              
              **Percent
                  of Class**Dong
                  Jinqing
              
              
              9,847,900
              (1
              )
              
              74.5
              %Li
                  Jun
              
              
              343,900
              
              
              
              2.6
              %Liu
                  Ruiguan
              
              
              30,000
              
              
              
              *Guo
                  Xin
              
              
              222,600
              
              
              
              1.7
              %Tian
                Hongyi
              
              
              20,000
              
              
              
              *All
                  officers and directors as a group (5 persons)
              
              
              10,464,400
              (1
              )
              
              79.2
              %





*  Less
      than
      1%.





(1)  Includes
      103,500 shares owned by Dong Su, the son of Mr. Dong.





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





Dalian
      Bofa Chemical Material Company (“Bofa”), a company controlled by Dong
      Jinqing, our Chief Executive Officer and principal shareholder, sells products that are recycled by Dongtai. Our total sales to
      Bofa were $1,819,806 and $1,235,825 for the years ended December 31, 2007 and
      2006, respectively. As of December 31, 2007, Bofa was indebted to Dongtai in
      the
      amount of $384,689 for product sold to Bofa. This amount is payable on or before
      December 30, 2008, with interest at the rate of 6% per annum.





Lida
      Environment Engineering Company (“Lida”), which is also a company controlled by
      Dong Jinqing, our Chief Executive Officer and principal shareholder, provides
      equipment used in the construction of facilities by Dongtai Water and Dongtai
      Organic. Our total purchase from Lida were $48,724and $ 0 respectively, for
      the
      years ended December 31, 2007 and 2006.





Dongtai
      owns a 49% interest in Dongtai Organic. For the years ended December 31, 2007
      and 2006, As of December 31, 2007, Dongtai was indebted to Dongtai Organic
      in
      the amount of $276,252 resulting from loans made by Dongtai Organic to Dongtai
      Water, a BOT project that is 80% owned by the Company. Such amount is payable
      on
      or before June 12, 2008, without interest.




-45-




Dongtai
      Investment Inc., a company which is also controlled by Mr. Dong, owns a 30%
      equity interest in our subsidiary, Zhuorui. As of December 31, 2007, Zhourui
      was
      indebted to Dongtai Investment in the amount of $260,110 for loans it made
      to
      Zhourui. This amount is payable on or before October 14, 2008, with interest
      at
      the rate of 6% per annum.





Except
      for the foregoing, 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 $120,000 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.





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





Audit
      and Non-Audit Fees


Fiscal
                  Year Ended December 31,2007
              
              2006Audit
                  Fees
              
              $
              92,700
              
              $
              52,750Audit
                  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 2007 were pre-approved by the Board of Directors.




-46-


**PART
      IV**





**ITEM
      15.**  **EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES**


**Exhibit
                  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
              
              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 June 30, 2006.3.3
              
              By-laws
                  of the Company. Incorporated by reference to Exhibit 3.2 to the
                  Company’s
                  Quarterly Report on Form 10-QSB for the quarter ended September
                  30,
                  2003.10.1
              
              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,
                  2005.10.2
              
              Contract
                  for Joint Venture Using Foreign Investment dated October 18, 2007
                  among
                  Dalian Dongtai Industrial Waste Treatment Co., Ltd., Ronald Lipp,
                  Karin
                  Lipp-Mayer and Minghuan Shan. Incorporated by reference to Exhibit
                  10.1 to
                  the Current Report on Form 8-K filed by the Company on October
                  18,
                  2007.10.3
              
              Agreement
                  dated July 10, 2007 by and between Dalian Lida Environmental Engineering
                  Co., Ltd. and Dalian Dongtai Industrial Waste Treatment Co.,
                  Ltd.*10.4
              
              Agreement
                  dated August 6, 2007 by and between Dalian Dongtai Investement
                  Co., Ltd.
                  and Dalian Dongtai Industrial Waste Treatment Co.,
                  Ltd.*10.5
              
              2006
                  Equity Compensation Plan. Incorporated by reference to the Definitive
                  Information Statement filed by the Company on March 31,
                  200621.1
              
              List
                  of Subsidiaries*31.1
              
              Certification
                  of Jinqing Dong 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 Guo Xin Dong 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
                  of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                  to Section
                  906 of the Sarbanes-Oxley Act of 2002.*32.2
              
              Certification
                  of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                  to Section
                  906 of the Sarbanes-Oxley Act of
                  2002.*




*  Filed
      herewith.




-47-




**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.**Dated:
                April 4, 2008
            By:
            /s/
                Dong JinqingDong
                Jinqing
              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.




**SIGNATURE**
            
            **TITLE**
            
            **DATE**/s/
                Dong Jinqing
            
            Chairman
                of the Board, Chief Executive Officer and Director
            
            April
                4, 2008Dong
                Jinqing/s/
                Li Jun
            
            Chief
                Operating Officer and Director
            
            April
                4, 2008Li
                Jun/s/
                Guo Xin
            
            Chief
                Financial Officer and Director
            
            April
                4, 2008Guo
                Xin


















Douglas
                W. Child, CPA
              Marty
                D. Van Wagoner, CPA
              J.
                Russ Bradshow, CPA
              William
                R. Denney, CPA
              Roger
                B. Kennard, CPA
              Russell
                E. Anderson, CPA
              Scott L
                Farnes
              
              
              
              
              
              1284
                W. Flint Meadow Dr.  #D
              Kaysville,
                Utah 84037
              Telephone
                801.927.1337
              Facsimilie
                801.927.1344
              
              5296
                S. Commerce Dr. #300
              Salt
                Lake City, Utah 84107
              Tdmphom
                801.281.4700
              Facsimile
                801.281.4701
              
              Suite
                B, 4F
              North
                Cape Commercial Bldg.
              388
                king’s Road
              North
                Point, Hong kong
              
              www.cpaone.net
            
            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, 2007 and 2006,
                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,
                2007 and 2006, 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.
              
              
              Child,
                Van Wagoner & Bradshaw, PLLC
              Salt
                Lake City, Utah
              March
                19, 2008




F-1


**CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                BALANCE SHEETS**(In
                U.S. dollars)




December
                31,
            
            December
                31,2007
            
            2006Restated**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            3,260,307
            
            $
            6,478,978Trade
                accounts receivable, net
            
            
            594,322
            
            
            151,144Other
                receivables
            
            
            22,453
            
            
            132,935Inventory
            
            
            1,332,349
            
            
            602,944Advances
                to suppliers
            
            
            390,159
            
            
            374,046Deferred
                expense
            
            
            42,784
            
            
            20,490Total
                current assets
            
            
            5,642,374
            
            
            7,760,537Investment
            
            
            2,633,354
            
            
            -Property,
                plant & equipment
            
            
            4,697,305
            
            
            4,215,545Less:
                accumulated depreciation
            
            
            (2,055,268
            )
            
            (1,505,130
            )Net
                property, plant and equipment
            
            
            2,642,037
            
            
            2,710,415Construction
                in progress
            
            
            7,410,255
            
            
            554,608Land
                usage right, net of accumulated amortization
            
            
            1,732,074
            
            
            1,524,319Deposits
            
            
            80,925
            
            
            5,548Related
                party receivable
            
            
            388,796
            
            
            374,498**Total
                assets**
            
            $
            20,529,815
            
            $
            12,929,925**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilitiesAccounts
                payable
            
            $
            279,600
            
            $
            92,255Short-term
                loan
            
            
            1,369,000
            
            
            -Tax
                payable
            
            
            93,954
            
            
            6,346Deferred
                sales
            
            
            667,389
            
            
            455,548Accrued
                expenses
            
            
            7,236
            
            
            16,580Related
                party payable
            
            
            536,362
            
            
            471,269Other
                payable
            
            
            343,207
            
            
            284,071Total
                current liabilities
            
            
            3,296,748
            
            
            1,326,069Asset
                retirement obligation liability
            
            
            437,619
            
            
            381,873Other
                long-term liabilities
            
            
            620,979
            
            
            -Total
                liabilities
            
            
            4,355,346
            
            
            1,707,942Minority
                interest in subsidiary
            
            
            2,259,595
            
            
            1,786,323Stockholders'
                equityPreferred
                stock: par value $.001; 5,000,000 shares authorized; none issued
                and
                outstanding
            
            
            -
            
            
            -Common
                stock: par value $.001; 95,000,000 shares authorized; 13,220,843
                shares
                issued and outstanding
            
            
            13,221
            
            
            13,221Additional
                paid-in capital
            
            
            1,968,634
            
            
            1,952,634Other
                comprehensive income
            
            
            1,153,728
            
            
            379,721Retained
                earnings
            
            
            10,779,291
            
            
            7,090,084Total
                stockholders' equity
            
            
            13,914,874
            
            
            9,435,660**Total
                liabilities and stockholders' equity**
            
            $
            20,529,815
            
            $
            12,929,925




See
        notes
        to Consolidated Financial Statements.
  F-2




**CHINA
                  INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                  STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                  INCOME****(In
                  U.S. dollars)**
  Years
                  Ended December 31,2007
              
              2006RestatedService
                  fees
              
              $
              5,004,926
              
              $
              3,252,725Sales
                  of recycled commodities
              
              
              4,534,581
              
              
              3,130,508Operating
                  revenue
              
              
              9,539,507
              
              
              6,383,233Cost
                  of service fees
              
              
              1,251,049
              
              
              763,940Cost
                  of recycled commodities
              
              
              1,525,872
              
              
              1,058,717Costs
                  of revenue (including depreciation)
              
              
              2,776,921
              
              
              1,822,657Gross
                  profit
              
              
              6,762,586
              
              
              4,560,576Operating
                  expensesSelling
                  expenses
              
              
              1,159,069
              
              
              783,057General
                  and administrative expenses
              
              
              2,443,759
              
              
              1,425,293Total
                  operating expenses
              
              
              3,602,828
              
              
              2,208,350Income
                  from operations
              
              
              3,159,758
              
              
              2,352,226Other
                  income(expense)Investment
                  income (loss)
              
              
              (47,923
              )
              
              -Interest
                  income
              
              
              88,499
              
              
              25,318Other
                  income
              
              
              15,769
              
              
              206,031Reimbursed
                  legal costs
              
              
              860,460
              
              
              -Other
                  expense
              
              
              (19,060
              )
              
              (11,803
              )Total
                  other income (expense)
              
              
              897,745
              
              
              219,546Net
                  income from continuing operations before minority interest and
                  income
                  tax
              
              
              4,057,503
              
              
              2,571,772Income
                  tax (benefit)
              
              
              -
              
              
              626Income
                  from continuing operations
              
              
              4,057,503
              
              
              2,571,146Discontinued
                  operationLoss
                  from operations of discontinued component
              
              
              (6,465
              )
              
              (6,192
              )Gain
                  on disposal of discontinued component
              
              
              1,205
              
              
              -Income
                  tax benefit
              
              
              -
              
              
              -Loss
                  on discontinued operations
              
              
              (5,260
              )
              
              (6,192
              )Net
                  income before minority interest
              
              
              4,052,243
              
              
              2,564,954Minority
                  interest
              
              
              363,036
              
              
              234,184Net
                  income
              
              $
              3,689,207
              
              $
              2,330,770Foreign
                  currency translation adjustment
              
              
              774,007
              
              
              267,438Comprehensive
                  income
              
              $
              4,463,214
              
              $
              2,598,208Basic
                  weighted average shares outstanding
              
              
              13,220,843
              
              
              13,181,391Diluted
                  weighted average shares outstanding
              
              
              13,220,843
              
              
              13,181,391Basic
                  and diluted net earnings per share
              
              $
              0.28
              
              $
              0.18


See
        notes
        to Consolidated Financial Statements.
  F-3


**CHINA
                  INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**(In
                  U.S. dollars)
  Years
                  Ended December 31,2007
              
              2006RestatedCash
                  flows from operating activities:Net
                  income
              
              $
              3,689,207
              
              $
              2,330,770Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Minority
                  interest
              
              
              363,036
              
              
              234,184Depreciation
              
              
              428,696
              
              
              298,903Amortization
              
              
              37,729
              
              
              34,830Bad
                  debt allowance
              
              
              3,476
              
              
              5,146Stock
                  issued for services
              
              
              16,000
              
              
              9,333Accretion
                  expenses
              
              
              28,235
              
              
              25,226Loss
                  on equity investment
              
              
              47,923
              
              
              -Loss
                  on disposal of subsidiary
              
              
              5,260
              
              
              -Subsidy
                  received from government
              
              
              596,528Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (419,185
              )
              
              132,087Inventory
              
              
              (660,714
              )
              
              (176,247
              )Other
                  receivables
              
              
              114,945
              
              
              (17,720
              )Advance
                  to suppliers
              
              
              1,778
              
              
              14,844Prepaid
                  expense
              
              
              (20,058
              )
              
              2,519Deposits
              
              
              (72,042
              )
              
              (1,167
              )Accounts
                  payable & other payables
              
              
              211,828
              
              
              73,171Accrued
                  expense and deferred sales
              
              
              163,225
              
              
              464,350Tax
                  payable
              
              
              83,738
              
              
              6,242Net
                  cash provided by operating activities
              
              
              4,619,605
              
              
              3,436,471Cash
                  flows from investing activiiesInvestment
                  in subsidiary
              
              
              (2,643,351
              )
              
              -Purchase
                  of property and equipment
              
              
              (183,326
              )
              
              (502,950
              )Construction
                  contracts
              
              
              (6,677,654
              )
              
              (687,317
              )Proceeds
                  from related party
              
              
              11,092
              
              
              -Repayments
                  to related party
              
              
              -
              
              
              (105,087
              )Due
                  to related party
              
              
              28,932
              
              
              463,505Investment
                  in subsidiary by minority holder
              
              
              -
              
              
              755,715Proceeds
                  on sale of subsidiary
              
              
              34,198
              
              
              -Net
                  cash used in investing activities
              
              
              (9,430,109
              )
              
              (76,134
              )Cash
                  flows from financing activitiesProceeds
                  from loans
              
              
              1,315,097
              
              
              -Net
                  cash provided by financing activities
              
              
              1,315,097
              
              
              -Effect
                  of exchange rate on cash
              
              
              276,736
              
              
              75,942Net
                  increase in cash and cash equivalents
              
              
              (3,218,671
              )
              
              3,436,279Cash
                  and cash equivalents, beginning of period
              
              
              6,478,978
              
              
              3,042,699Cash
                  and cash equivalents, end of period
              
              $
              3,260,307
              
              $
              6,478,978Supplemental
                  cash flow information:Cash
                  paid during the year for:Interest
              
              $
              -
              
              $
              -Income
                  taxes
              
              
              -
              
              
              -Stock
                  issued for services
              
              
              -
              
              
              80,000




See
        notes
        to Consolidated Financial Statements.
  F-4


**CHINA
                  INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS' EQUITY****FOR
                  THE YEARS ENDED DECEMBER 31, 2007 AND
                  2006**
  Series
                  A Preferred Stock
              
              Common
                  Stock
              
              Additional
                  Paid In
              
              Other
                Comprehensive
              
              Retained
              
              Total
                Stockholders'Contents
              
              Shares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Income
              
              Earnings
              
              EquityBalance
                  December 31, 2005
              
              
              64,000
              
              
              64
              
              
              6,740,843
              
              
              6,741
              
              
              1,949,717
              
              
              112,283
              
              
              4,759,314
              
              
              6,828,119Conversion
                  of preferred shares to common
              
              
              (64,000
              )
              
              (64
              )
              
              6,400,000
              
              
              6,400
              
              
              (6,336
              )
              
              
              
              
              
              
              
              -S8
                  shares issued for services
              
              
              
              
              
              
              
              
              80,000
              
              
              80
              
              
              9,253
              
              
              
              
              
              
              
              
              9,333Foreign
                  currency translation adjustment
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              267,438
              
              
              
              
              
              267,438Net
                  Income for the year ended December 31, 2006
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,330,770
              
              
              2,330,770Balance
                  December 31, 2006
              
              
              -
              
              
              -
              
              
              13,220,843
              
              
              13,221
              
              
              1,952,634
              
              
              379,721
              
              
              7,090,084
              
              
              9,435,660S8
                  shares issued for services
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              16,000
              
              
              
              
              
              
              
              
              16,000Change
                  in foreign currency translation gain
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              774,007
              
              
              
              
              
              774,007Net
                  Income for the year ended December 31, 2007
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              3,689,207
              
              
              3,689,207Balance
                  December 31, 2007
              
              
              -
              
              
              -
              
              
              13,220,843
              
              
              13,221
              
              
              1,968,634
              
              
              1,153,728
              
              
              10,779,291
              
              
              13,914,874




F-5





CHINA
      INDUSTRIAL WASTE MANAGEMENT, INC.


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
      31, 2007




**1.
      Nature of operations**





The
      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 Industrial
      Waste Treatment Co. Ltd. (“Dongtai”), an entity organized under the laws of the
      People’s Republic of China (“PRC”). As of December 31, 2007, Dongtai owned 80%
      of equity of Dongtai Water Recycling Co. Ltd. (“Dongtai Water”), 75% of the
      equity of Dalian Lipp Environmental Energy Engineering & Technology Co.,
      Ltd. (“Dalian Lipp”) and 70% of the equity of Dalian Zhuorui Resource Recycling
      Co., Ltd. (“Zhuorui”).





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 reorganization between entities under common control with China
      Industrial Waste Management, Inc. as the receiving entity, as prescribed by
      Appendix D of SFAS 141. The accounts of both entities were combined at their
      historical cost basis, resulting in no gain, loss, or goodwill. Since China
      Industrial Waste Management Inc. had minimal assets and liabilities, the
      combination was essentially a recapitalization of Dongtai.





On
      November 11, 2005, CIWM entered into an Agreement and Plan of Merger (the
“Merger Agreement”) with the Delaware corporation also called China Industrial
      Waste Management, Inc. and the shareholders of that company. Pursuant to the
      Merger Agreement, which closed on November 11, 2005, China Industrial Waste
      Management, Inc. (the Delaware corporation) merged with and into CIWM’s wholly
      owned subsidiary, DonTech, and CIWM issued 64,000 shares of its Series A
      Convertible Preferred Stock to the former shareholders of the Delaware
      corporation. Each share of Series A Convertible Preferred Stock was convertible
      into 10,000 shares of common stock and was 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 CIWM
      increased its authorized number of shares of common stock.





Pursuant
      to the Merger Agreement, after the merger, the Delaware corporation ceased
      to
      exist and DonTech was the surviving company. The merger of the Delaware
      corporation into DonTech was accounted for as a reverse acquisition under the
      purchase method of accounting since the shareholders of the Delaware corporation
      obtained control of the Company by virtue of the merger. Accordingly, the merger
      was recorded as a recapitalization of the Delaware corporation, with the
      Delaware corporation being treated as the continuing entity. The financial
      statements of the accounting acquiree (CIWM) are not significant. Therefore,
      no
      pro forma financial information is submitted.




F-6





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 Merger Agreement entered into and consummated on November 11,
      2005. Since the issuance of additional 6,400,000 shares was caused by the merger
      consummated on November 11, 2005, such shares have been assumed to be
      outstanding in 2005 in the calculation of EPS.





Dongtai
      was incorporated on January 9, 1991. 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.





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. In July 14, 2007, Liaoyang Dongtai was dissolved and
      liquidated.





Dongtai
      Water was incorporated in July 2006 and Dongtai acquired 18% of the equity
      of
      such company in such month. On July 16, 2007 Dongtai acquired an
      additional 62% of the equity of Dongtai Water, which was accounted for as a
      reorganization of entities under common control. Dongtai Water is a
      Build-Operate-Transfer (BOT) project, designed to process polluted water
      generated by the city of Dalian.





Zhuorui
      was incorporated in April 2006 and is engaged in plasma arc melting, separation
      and purification of waste catalysts, treatment of industrial wastes and
      comprehensive utilization of waste catalysts or similar material. In August
      2007, Dongtai acquired 70% of the equity of Zhuorui from a related company,
      controlled by Mr. Dong Jinqing, CEO and CFO of the company, at the price of
      RMB7
      million (approximately $958,300), which was accounted for as a reorganization
      of
      entities under common control.





On
      March
      2, 2007, the Company purchased 49% of the equity of Dongtai Organic, a newly
      formed company which is also a BOT project, engaged in municipal sludge
      treatment in Dalian. Dongtai Organic will operate for the next 20 years. The
      investment in Dongtai Organic is accounted for using the equity
      method.





On
      December 22, 2007 Dongtai, along with Roland Lipp, Karin Lipp-Mayer
      and  Minghuan Shan set up a joint venture, named Dalian Lipp Environmental
      Energy Engineering&Technology Co., Ltd in the People’s Republic of China,
      engaged in designing, manufacturing and installing of environmental protection
      equipment and renewable energy equipment and other technical services. Dongtai
      owns 75% of equity of the newly formed joint venture.





**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., a Delaware corporation, its 90%
      indirectly owned subsidiary, Dalian Dongtai Industrial Waste Treatment Co.,
      Ltd., a PRC company, its 80% indirectly owned subsidiary, Dongtai Water
      Recycling Co. Ltd., a PRC company ô its
      70%
      indirectly owned subsidiary, Dalian Zhuorui Resource Recycling Co., Ltd., a
      PRC
      company and its 75% indirectly owned subsidiary, Dalian Lipp Enviromental Energy
      Engineering & Technology Co., Ltd., a PRC company. All material
      inter-company accounts and transactions have been eliminated in the
      consolidation.




F-7





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.





Foreign
      currency translation





As
      of
      December 31, 2007 and 2006, 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 deposit, 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, 2007 and December 31,
      2006 is $9,776 and $20,550, respectively.




F-8





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.





The
      Company as well as its subsidiaries are 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 as follows:


As
                  of December 31,2007
              
              2006Advance
                  to suppliers
              
              $
              390,159
              
              $
              374,046





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
            
            
            30
                YearsMachinery
            
            
            10
                YearsVehicles
            
            
            8
                YearsOffice
                equipment
            
            
            5
                Years





Construction
      in progress consists of the design expenses, architect fee and cost of the
      equipment to treat waste.





Construction
      in progress includes capitalized interest of $77,353 as of   December
      31, 2007.




F-9





Landfills





Cost
      Basis of Landfill Assets — We capitalize various costs that we incur to make a
      landfill ready to accept waste. These costs generally include expenditures
      for
      land, permitting, excavation, liner material and installation and other
      capital infrastructure costs. The cost basis of our landfill assets also
      includes estimates of future costs associated with landfill final capping,
      closure and post-closure activities in accordance with SFAS No. 143, Accounting
      for Asset Retirement Obligations (“SFAS No. 143”) and its
      Interpretations.





Interest
      accretion on final capping, closure and post-closure liabilities is recorded
      using the effective interest method and is recorded as accretion expense, which
      is included in our Consolidated Statements of Operations.





Amortization
      of Landfill Assets — The amortizable basis of a landfill includes (i) amounts
      previously expended and capitalized; (ii) capitalized landfill final capping,
      closure and post-closure costs; (iii) projections of future purchase and
      development costs required to develop the landfill site to its remaining
      permitted and expansion capacity; and (iv) projected asset retirement costs
      related to landfill final capping, closure and post-closure
      activities.





Amortization
      is recorded on a units-of-consumption basis, applying cost as a rate per ton.
      The rate per ton is calculated by dividing each component of the amortizable
      basis of a landfill by the number of tons needed to fill the corresponding
      asset’s airspace.





Liabilities
      for landfill and environmental remediation costs are presented in the table
      below:





As
                of   December 31,2007
            
            2006Asset
                retirement obligation liability for landfills
            
            $
            437,619
            
            $
            381,873





Long-term
      investment




Invested
                company
            
            Equity
                acquired
            
            Balance
                as
              of
                 December 31,
              2007
            
            Balance
                as of
              December
                31, 2006Dongtai
                Organic
            
            
            49
            %
            $
            2,633,354
            
            
            0Total
            
            
            
            
            $
            2,633,354
            
            
            0




Long-term
      investments are recorded under the equity method. Dongtai Organic is
      constructing and will operate a sludge treatment and disposal facility in
      Dalian, PRC, of which the investment is recorded under the equity
      method.





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;




F-10




·
              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.





Intangible
      assets





Intangible
      assets consist of “Rights to use land and build a plant” for fifty years. The
      intangible assets are amortized straight-line over fifty years. 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, 2007 were $1,732,074. Such assets consist
      entirely of a right to use land of $1,921,474, less accumulated amortization
      of
      $189,400.





Amortization
      expense for the Company’s intangible assets for the year ended December 31, 2007
      and 2006 totaled $ 37,729 and $ 34,830, respectively.





Discontinued
      operations





Due
      to a
      lack of progress of Liaoyang Dongtai in developing a local market for its
      services, the Board of Directors of the company decided to dissolve and
      liquidate Liaoyang Dongtai in July 2007.




F-11





Before
      termination, Liaoyang Dongtai’s major asset was cash, in the amount of RMB
      399,989. Since Liaoyang Dongtai never generated any revenue, there was no tax
      incurred, and the expenses from its operations were accounted for as sundry
      expenses.





Dongtai
      recovered RMB 260,000 (USD $34,198) from the disposal of the investment in
      Liaoyang Dongtai. Dongtai’s book value in the investment was RMB 300,000 (USD
      $39,458). Therefore, Dongtai incurred a total loss from the disposal of RMB
      40,000 (USD $5,260).





Minority
      interest





Minority
      interest represents the minority owners’ 10% equity interest in Dongtai, 20%
      equity interest in Dongtai Water, 30% equity interest in Zhuorui and 25% equity
      interest in Dalian Lipp.





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 two sources, namely, service fees we charge for
      waste collection, transfer, disposal and recycling services and our sale of
      recycled commodities.





1.
      Recognition of service fees as revenue




Before
      waste treatment services are rendered, the Company will enter into agreements
      with its customers which explicitly express the scope of the Company’s services,
      the types of wastes to be treated, the method of treatment to be applied, the
      Company’s fees rates and form of settlement and other rights and obligations of
      the parties.





Once
      an
      agreement with a customer takes effect, the Company conducts the treatment
      activities described in the agreement, such as collection and transfer, which
      activities are observed and confirmed by the Company’s client. Both parties will
      sign a note, acknowledging that the wastes have been delivered to the Company’s
      working site for further treatment.





The
      fees
      charged by the Company for its services are then determined by multiplying
      the
      fee rate defined in the agreement by the customer confirmed waste amount
      delivered to the Company’s plant for treatment. The bill for the services will
      be sent to the client, indicating the fees due. After sending out the invoice,
      the company will recognize the fees as revenue.





Deferred
      sales refer to those for which fees have been collected, but for which the
      related treatment and disposal services have not been completely performed.
      The
      Company uses the fee rate and the amount of waste not treated to calculate
      the
      deferred sales. At December 31, 2007 and 2006 deferred sales amounted to
      $667,389 and $455,548, respectively.




F-12





2.
      Recognition of revenues from reclaimed products




The
      Company also enters into agreements with customers who need reclaimed products
      that the Company generates from the waste treatment process. The parties usually
      settle the price in the agreement and make adjustments in case the market price
      of the reclaimed product fluctuates significantly between contract signing
      and
      delivery. After the products are delivered to customers, the Company issues
      an
      invoice to purchasers and identifies all contents and details concerning sales.
      The buyer then either can pay the full invoiced amount or promise to make
      payment over time. In the latter case, the Company also recognizes upon
      invoicing the amount due as revenues of reclaimed product.





Costs
      of revenue





The
      costs
      of revenue fall into two categories -costs of service fees charged for services
      and costs of revenue from reclaimed products.





The
      costs
      of service fees refer to the production expenses incurred by the Company’s
      departments providing waste disposal services, which include the waste
      disassembly department, waste solvent recovery department, industrial waste
      water treatment department, waste storage, sorting and burning department,
      dangerous waste filling and burying department and common industrial waste
      filling and burying department. The costs include the direct labor cost, direct
      material and depreciation expenses and other miscellaneous expenses incurred
      by
      the foregoing departments.





The
      Company’s reclaimed products can be divided into two main categories - products
      reclaimed by sophisticated production means and at great expense in terms of
      labor, energy, depreciation; and products reclaimed by simpler means such as
      manual sorting. For the former, the costs of revenue from reclaimed products
      includes the copper sulfate and alloy cost sold, which consist of the purchase
      cost of wastes as raw materials, as well as the direct labor cost, depreciation
      expenses, and other expenses incurred by the Company. For the latter, the costs
      of revenue includes the cost of units recycled and sold, consisting of the
      purchase cost of wastes used for recycling.





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, 2007 and 2006 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 be realized.




F-13





Local
      PRC income tax





The
      Company is subject to the PRC Enterprise Income Tax at a rate of 30% 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, namely 2006
      and
      2007.





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.





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.





Reclassifications





Certain
      reclassifications have been made in the 2006 financial statements to conform
      with the 2007 presentation.





**4.
      Inventory**





Our
      inventory at December 31 consists of raw materials and recycled commodities
      as
      follows:





2007
            
            2006Raw
                materials
            
            $
            786,427
            
            $
            221,225Recycled
                commodities
            
            
            545,922
            
            
            381,719$
            1,332,349
            
            $
            602,944




F-14




**5.
      Property and equipment**




Property
      and equipment at December 31 consisted of the following:





2007
            
            2006Land
                and building
            
            $
            2,305,868
            
            $
            2,157,521Machinery
                equipment
            
            
            1,242,966
            
            
            1,129,566Office
                equipment
            
            
            375,433
            
            
            352,346Vehicles
            
            
            773,038
            
            
            576,1124,697,305
            
            
            4,215,545Less:
                Accumulated depreciation
            
            
            (2,055,268
            )
            
            (1,505,130
            )$
            2,642,037
            
            $
            2,710,415




**6.
      Short-term loan**





On
      September 26, 2007, the Company entered into a one-year, $1,369,000 short-term
      loan, with an annual interest rate of 8.748%, which mature in September 2008.
      This loan provides us with more working capital to be used for promoting
      operations.





**7.
      Other long-term liabilities**





Thanks
      to
      more attention and investment from Chinese government in environment protection,
      Dongtai’s controlled subsidiary, Zhuorui, received $620,979 in total, as
      subsidy, from central and local government agencies to support the construction
      of the facilities dealing with waste catalysts. The money will be kept in
      Zhuorui and need not to be paid back.





**8.
      Accumulated Other Comprehensive Income**




The
      components of accumulated other comprehensive income were as follows:




December
                31,2007
            
            2006Cumulative
                translation adjustment of foreign currency statements
            
            $
            774,007
            
            $
            267,438




**9.
      Shareholders’ equity**





On
      November 11, 2005, the Company entered into and consummated an Agreement and
      Plan of Merger (the “Merger Agreement”) with China Industrial Waste Management
      Inc. a Delaware corporation (“Delaware”), the stockholders of Delaware, and
      Dalian Acquisition Corp., a Delaware corporation wholly-owned by the Company.
      In
      the merger, the stockholders of Delaware received 64,000 shares of the Company’s
      newly-designated Series A Convertible Preferred Stock (the “Series A Stock”) in
      exchange for the outstanding shares of Delaware. Each share of Series A Stock
      was convertible into 10,000 shares of Common Stock. Since the Company did not
      have sufficient authorized but unissued shares of Common Stock to effect a
      full
      conversion of the Series A Stock at the effective time of the merger, the
      holders of the Series A Stock have agreed that they would not convert their
      shares of Series A Stock until the Company had sufficient available shares
      for a
      full conversion.




On
      March
      9, 2006, the Board of Directors of the Company determined that it had made
      an
      error at a previous meeting held on June 13, 2005 in cancelling certain
      outstanding shares of common stock. To correct such error a total 6,983,400
      pre-split shares of common stock were reinstated, as a result of which the
      total common shares outstanding increased from 7,773,841 pre-split to 14,757,241
      pre-split.





On
      May
      12, 2006, two amendments to the Company's Articles of Incorporation became
      effective. The amendments changed the name of the Company to China Industrial
      Waste Management, Inc. and effected a 1 for 100 reverse split of the Company's
      Common Stock. In the statement of shareholders’ equity, the reverse split has
      been treated as it happened at the beginning of 2005.




F-15





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 Merger Agreement entered into on November 11, 2005. As this
      issuance is part of the 2005 recapitalization transaction, such shares are
      deemed to be outstanding from the beginning of 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.





On
      August
      22, 2006, the Company issued 96,566 shares to Jie Sun and Yunzhong Wu,
      respectively, as compensation for their services pursuant to the Merger
      Agreement consummated on November 11, 2005. This was accounted for as a cost
      of
      issuance. Since the issuance was connected with the reverse merger, the
      financial effect of the issuance had been reflected in the financial statements
      for the fiscal year ended December 31, 2005.





**10.
      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 anyb.
            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; andd.
            Allocations
                to the discretionary surplus reserve, if approved in the shareholders’
                general meeting.




**11.
      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:




F-16




Years
                Ended December 31,2007
            
            2006Income
                available to common stockholders
            
            $
            3,689,207
            
            $
            2,330,770Diluted
                net income
            
            $
            3,689,207
            
            $
            2,330,770Weighted
                average basic common shares outstanding
            
            
            13,220,843
            
            
            13,181,391Basic
                net earnings per share
            
            $
            0.28
            
            $
            0.18Diluted
                net earnings per share
            
            $
            0.28
            
            $
            0.18





As
      stated
      above, 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.





Since
      the
      issuance of additional 6,400,000 shares was caused by the merger consummated
      on
      November 11, 2005, the issuance had been assumed outstanding in
      2005.





**12.
      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.





**13.
      New accounting pronouncement**





In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* ,
      (“SFAS No. 157”), which defines fair value, establishes a framework
      for measuring fair value, and expands disclosures about fair value measurements.
      SFAS No. 157 will be effective for the Company beginning
      January 1, 2008. We are currently in the process of assessing the
      provisions of SFAS No. 157 and determining how this framework for
      measuring fair value will affect our current accounting policies and procedures
      and our financial statements.





In
      February 2007, the FASB issued Statement No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an amendment to FASB
      Statement No. 115”. This statement permits companies to choose to measure many
      financial instruments and other items at fair value. The objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. This Statement is expected to expand the use of fair value
      measurement of accounting for financial instruments. This statement applies
      to
      all entities, including not for profit. The fair value option established by
      this statement permits all entities to measure eligible items at fair value
      at
      specified election dates. This statement is effective as of the beginning of
      an
      entity’s first fiscal year that begins after November 15, 2007.The Company is
      currently assessing the impact adoption of SFAS No. 159 will have on its
      financial statements.





In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB
      Statements No.141 (revised 2007), “Business Combinations” (“FAS 141(R)”) and No.
      160, “Noncontrolling Interests in Consolidated Financial Statements” (“FAS
      160”). These standards aim to improve, simplify, and converge internationally
      the accounting for business combinations and the reporting of noncontrolling
      interests in consolidated financial statements. The provisions of FAS 141 (R)
      and FAS 160 are effective for the fiscal year beginning January 1, 2009. We
      are
      currently evaluating the provisions of FAS 141(R) and FAS 160.




F-17





**14.
      Reimbursed legal costs**





As
      disclose in the 8K on October 15, 2007, the consideration for the settlement
      of
      all claims, mentioned above, was the responsibility of some third party, who
      afterwards delivered the cash and shares of common stock, which therefore was
      accounted for as Reimbursed legal costs.





**15.
      Business combinations between entities under common
      control**





During
      the year ended December 31, 2007, the Company became the majority shareholder
      of
      Dongtai Water and Zhuorui through additional acquisition of equity of both
      companies at the price of RMB 8.68 million (approximately $1,095,200) and RMB
      7
      million (approximately $958,300), respectively. The acquisitions are considered
      to be reorganizations of entities under common control according to GAAP.
      Therefore, as the acquiring entity, the Company has restated its December 31,
      2006 balance sheet as though the acquisition had occurred as of January 1,
      2006.





The
      Company has therefore restated its consolidated balance sheet as of December
      31,
      2006, its consolidated statements of income for the year ended December 31,
      2006
      and its consolidated statement of cash flows for the year ended December 31,
      2006. The results of the restatement on operations were to decrease net income
      for the year ended December 31, 2006 by $110,659. The effects of the business
      combinations between entities under common control are as follows:




December
                31,2006Original
            
            
            Dongtai
                Water
            
            
            Zhuorui
            
            
            RestatedCash
                and cash equivalents
            
            $
            5,713,925
            
            $
            541,678
            
            $
            223,375
            
            $
            6,478,978Other
                current assets
            
            
            1,184,623
            
            
            90,830
            
            
            11,654
            
            
            1,287,107Net
                property, plant and equipment
            
            
            2,686,618
            
            
            6,178
            
            
            17,619
            
            
            2,710,415Land
                usage right, net of accumulated amortization
            
            
            1,524,319
            
            
            
            
            
            
            
            
            1,524,319Other
                assets
            
            
            757,484
            
            
            130,533
            
            
            41,089
            
            
            929,106**Total
                assets**
            
            $
            11,866,969
            
            $
            769,219
            
            $
            293,737
            
            $
            12,929,925Total
                current liabilities
            
            
            853,898
            
            
            689
            
            
            213
            
            
            854,800Other
                liabilities
            
            
            381,873
            
            
            471,269
            
            
            356,988
            
            
            1,210,130Minority
                interest in subsidiary
            
            
            1,083,022
            
            
            346,313
            
            
            
            
            
            1,429,335Stockholders'
                equity
            
            
            
            
            
            
            
            
            
            
            
            -Common
                stock
            
            
            13,221
            
            
            
            
            
            
            
            
            13,221Additional
                paid-in capital
            
            
            1,952,634
            
            
            
            
            
            
            
            
            1,952,634Other
                comprehensive income
            
            
            381,579
            
            
            (811
            )
            
            (1,047
            )
            
            379,721Retained
                earnings
            
            
            7,200,742
            
            
            (48,241
            )
            
            (62,417
            )
            
            7,090,084Total
                stockholders' equity
            
            
            9,548,176
            
            
            (49,052
            )
            
            (63,464
            )
            
            9,435,660**Total
                liabilities and stockholders' equity**
            
            $
            11,866,969
            
            $
            769,219
            
            $
            293,737
            
            $
            12,929,925





F-18




For
                the Year ended December 31, 2006Original
            
            
            Dongtai
                Water
            
            
            Zhuorui
            
            
            RestatedOperating
                revenue
            
            $
            6,383,233
            
            
            
            
            
            
            
            $
            6,383,233Costs
                of revenue (including depreciation)
            
            
            1,822,657
            
            
            -
            
            
            -
            
            
            1,822,657Gross
                profit
            
            
            4,560,576
            
            
            
            
            
            
            
            
            4,560,576Operating
                expenses
            
            
            2,069,279
            
            $
            60,301
            
            $
            84,962
            
            
            2,214,542Income
                from operations
            
            
            2,491,297
            
            
            (60,301
            )
            
            (84,962
            )
            
            2,346,034Other
                income (expense)
            
            
            219,624
            
            
            -
            
            
            (78
            )
            
            219,546Net
                income from continuing operations before minority interest and income
                tax
            
            
            2,710,921
            
            
            (60,301
            )
            
            (85,040
            )
            
            2,565,580Income
                tax (benefit)
            
            
            626
            
            
            -
            
            
            -
            
            
            626Net
                income before minority interest
            
            
            2,710,295
            
            
            (60,301
            )
            
            (85,040
            )
            
            2,564,954Minority
                interest
            
            
            268,867
            
            
            (12,060
            )
            
            (22,623
            )
            
            234,184Net
                income
            
            $
            2,441,428
            
            $
            (48,241
            )
            $
            (62,417
            )
            $
            2,330,770Foreign
                currency translation adjustment
            
            
            269,296
            
            
            (811
            )
            
            (1,047
            )
            
            267,438Comprehensive
                income
            
            $
            2,710,724
            
            $
            (49,052
            )
            $
            (63,464
            )
            $
            2,598,208





**16.
      Related parties**





Related
      party receivable





Related
                Party
            
            As
                of
              December
                31, 2007
            
            Interest
                rate
            
            Repayment
                dateBofa
            
            $
            384,689
            
            
            6
            %
            
            December
                30, 2008Tang
                Lijun
            
            $
            2,738
            
            
            -
            
            
            -Yu
                Chengbin
            
            $
            1,369
            
            
            -
            
            
            -




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 $ 1,819,806 and $
      1,235,825 respectively, for the years ended December 31, 2007 and
      2006.





Mr.
      Tang
      and Mr. Yu are the general managers of Dongtai Water and Zhuirui, respectively,
      who borrowed the money to undertake day to day business activities.





Related
      party payables





Related
                Party
            
            As
                of
              December
                31, 2007
            
            Interest
                Rate
            
            Repayment
                DateDongtai
                Organic Waste
            
            $
            276,252
            
            
            -
            
            
            June
                12, 2008Dongtai
                Investment Inc.
            
            $
            260,110
            
            
            6
            %
            
            October
                14, 2008




F-19




Lida
      Environment Engineering Company(“Lida”), which is also controlled by the
      Company’s majority shareholder, provides equipment used in the construction of
      facilities undertaken by Dongtai Water and Dongtai Organic. Our total purchases
      from Lida were $ 48,724 and $ 0 for the years ended December 31, 2007 and 2006,
      respectively.





Dongtai
      Investment Inc., which is under control of the Company’s majority shareholder,
      owned 30% equity interest of Zhuorui.





**17.
      Contingent liabilities**





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 dismissed without prejudice the action against
      the Company and will proceed against the other Respondents.




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.





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.




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