**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





(Mark
      One)


**Form
      10-Q**





þ
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(****d****)
                OF THE SECURITIES EXCHANGE ACT OF
                1934**





For
                The Quarterly Period Ended March 31,
                2008





or





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





For
                The Transition Period From __________________ to
                __________________________Commission
                File Number: 2-95836-NY





**China
                Industrial Waste Management, Inc.**(Name
                of registrant as specified in its charter)





**Nevada**
            **13-3250816**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)





**c/o
                Dalian Dongtai Industrial Waste Treatment Co.**
              **No.
                1 Huaihe West Road, E-T-D Zone, Dalian, China**
            **11660**(Address
                of principal executive offices)
            (Zip
                Code)





**011-86-411-8581-1229**(Registrant's
                telephone number, including area
                code)





**N/A**(Former
                name, former address and former fiscal year, if changed since last
                report)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.


YesxNo
o





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





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





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


Yes
oNo
x





Indicated
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date. 13,270,843 shares of common stock
      are
      issued and outstanding as of May 15, 2008.









**TABLE
      OF CONTENTS**





PageNo.**PART
                I. - FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements.
            1Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations.
            22Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk.
            28Item
                4T
            Controls
                and Procedures.
            28**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings.
            30Item
                1A.
            Risk
                Factors.
            30Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds.
            30Item
                3.
            Defaults
                Upon Senior Securities.
            31Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            31Item
                5.
            Other
                Information.
            31Item
                6.
            Exhibits.
            31









**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**





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.


**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,
        unless otherwise indicated, amounts expressed in this report as RMB have
        been
        translated into United States dollars (“USD$” or “$”) at the rate of USD$1.00
        = RMB7.3046 quoted by The People’s Bank of China (“PBOC”) as of December 31,
        2007; and at the rate of USD$1.00 = RMB7.0222 quoted by OANDA as of March
        31,
        2008. OANDA is a Delaware corporation providing internet foreign exchange
        rate
        at www.oanda.com .
        OANDA
        is also a foreign exchange market maker. Its internet foreign exchange rate
        is
        widely used by public which is including but not limited to major international
        audit firms.  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
        PBOC or other banks or other market makers 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, OANDA 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.


**PART
      1 - FINANCIAL INFORMATION**





**Item
      1.** **Financial
      Statements.**





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




March
                31,
            
            December
                31,2008
            
            2007(Unaudited)
            
            (Audited)**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            4,225,461
            
            $
            3,260,307Trade
                accounts receivable, net
            
            
            1,592,320
            
            
            594,322Other
                receivables
            
            
            98,049
            
            
            22,453Inventory
            
            
            1,550,024
            
            
            1,332,349Advances
                to suppliers
            
            
            816,886
            
            
            390,159Deferred
                expense
            
            
            19,225
            
            
            42,784Total
                current assets
            
            
            8,301,965
            
            
            5,642,374Investment
            
            
            2,730,017
            
            
            2,633,354Property,
                plant & equipment
            
            
            4,946,526
            
            
            4,697,305Less:
                Accumulated depreciation
            
            
            (2,254,850
            )
            
            (2,055,268
            )


Net
                property, plant and equipment
            
            
            2,691,676
            
            
            2,642,037Construction
                in progress
            
            
            8,448,045
            
            
            7,410,255Land
                usage right, net of accumulated amortization
            
            
            1,791,147
            
            
            1,732,074Deposits
            
            
            576,228
            
            
            80,925Related
                party Receivable
            
            
            638,669
            
            
            388,796Total
                assets
            
            $
            25,177,747
            
            $
            20,529,815**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilitiesAccounts
                payable
            
            $
            1,043,192
            
            $
            279,600Short-term
                loan
            
            
            2,563,299
            
            
            1,369,000Tax
                payable
            
            
            138,816
            
            
            93,954Deferred
                Sales
            
            
            703,221
            
            
            667,389Accrued
                expenses
            
            
            33,246
            
            
            7,236Related
                party payable
            
            
            598,103
            
            
            536,362Other
                payable
            
            
            256,609
            
            
            343,207Total
                current liabilities
            
            
            5,336,486
            
            
            3,296,748Asset
                retirement obligation liability
            
            
            464,734
            
            
            437,619Other
                long-term liabilities
            
            
            1,001,965
            
            
            620,979Total
                liabilities
            
            
            6,803,185
            
            
            4,355,346Minority
                interest in subsidiary
            
            
            2,494,117
            
            
            2,259,595Stockholders'
                equityCommon
                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
            
            
            1,968,634Other
                comprehensive income
            
            
            1,743,682
            
            
            1,153,728Retained
                earnings
            
            
            12,154,908
            
            
            10,779,291Total
                stockholders' equity
            
            
            15,880,445
            
            
            13,914,874**Total
                liabilities and stockholders’ equity**
            
            $
            25,177,747
            
            $
            20,529,815




See
        notes
        to Consolidated Financial Statements.


1




**CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                INCOME****(In
                U.S. dollars)********(Unaudited)**




For
                Three Months Ended
              March
                31,2008
            
            2007RestatedService
                fees
            
            $
            1,819,552
            
            $
            837,063Sales
                of cupric sulfate
            
            
            708,843
            
            
            388,333Sales
                of recycled commodities
            
            $
            601,885
            
            $
            457,576Operating
                revenue
            
            $
            3,130,280
            
            $
            1,682,972Cost
                of service fees
            
            
            371,035
            
            
            228,619Cost
                of cupric sulfate
            
            
            286,526
            
            
            97,295Cost
                of recycled commodities
            
            $
            270,532
            
            $
            183,854Costs
                of revenue (including depreciation)
            
            $
            928,093
            
            $
            509,768





Gross
                profit
            
            
            2,202,187
            
            
            1,173,204Operating
                expensesSelling
                expenses
            
            
            228,081
            
            
            204,241General
                and administrative expenses
            
            
            353,846
            
            
            217,160Total
                operating expenses
            
            
            581,927
            
            
            421,401Income
                from operations
            
            
            1,620,260
            
            
            751,803Other
                income(expense)Investment
                income(expense)
            
            
            (9,039
            )
            
            -Interest
                income
            
            
            6,298
            
            
            2,804Other
                income
            
            
            5,880
            
            
            368Other
                expense
            
            
            (2
            )
            
            (27
            )Total
                other income (expense)
            
            
            3,137
            
            
            3,145Net
                income from continuing operations before minority interest and income
                tax
            
            
            1,623,397
            
            
            754,948Income
                tax (benefit)
            
            
            (107,230
            )
            
            -Income
                from continuing operations
            
            
            1,516,167
            
            
            754,948


Income
                tax benefit
            
            
            -
            
            
            -Loss
                on discontinued operations
            
            
            -
            
            
            -Net
                income before minority interest
            
            
            1,516,167
            
            
            754,948Minority
                interest
            
            
            140,550
            
            
            75,036Net
                income
            
            $
            1,375,617
            
            $
            679,912Foreign
                currency translation adjustment
            
            
            589,954
            
            
            58,768Comprehensive
                income
            
            $
            1,965,571
            
            $
            738,680Basic
                weighted average shares outstanding
            
            
            13,220,843
            
            
            13,220,843Diluted
                weighted average shares outstanding
            
            
            13,220,843
            
            
            13,220,843Basic
                and diluted net earnings per share
            
            $
            0.10
            
            $
            0.05





See
      notes to Consolidated Financial
      Statements.




2





**CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.****CONSOLIDATED
                STATEMENTS OF CASH FLOWS**(In
                U.S. dollars)(Unaudited)




For
                Three Months Ended March 31,2008
            
            2007RestatedCash
                flows from operating activities:Net
                income
            
            $
            1,375,617
            
            $
            679,912Adjustments
                to reconcile net income to net cashprovided
                by operating activities:Minority
                interest
            
            
            140,550
            
            
            75,036Depreciation
            
            
            114,404
            
            
            122,186Amortization
            
            
            4,148
            
            
            -Bad
                debt allowance
            
            
            (3,534
            )
            
            -Stock
                issued for services
            
            
            -
            
            
            4,000Accretion
                expenses
            
            
            9,311
            
            
            6,916Subsidy
                received from government
            
            
            348,326
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (949,529
            )
            
            (105,857
            )Inventory
            
            
            (160,551
            )
            
            (165,004
            )Other
                receivables
            
            
            (314,010
            )
            
            23,175Advance
                to suppliers
            
            
            1,884
            
            
            (1,843
            )Prepaid
                expense
            
            
            24,734
            
            
            (19,388
            )Deposits
            
            
            (481,423
            )
            
            -Accounts
                payable & other payables
            
            
            637,869
            
            
            (24,598
            )Accrued
                expense and deferred sales
            
            
            33,961
            
            
            1,565Tax
                payable
            
            
            40,196
            
            
            (12,761
            )Net
                cash provided by operating activities
            
            
            821,953
            
            
            583,339





Cash
                flows from investing activitiesInvestment
                in subsidiary
            
            
            9,039
            
            
            (1,262,735
            )Purchase
                of property and equipment
            
            
            (59,015
            )
            
            (21,019
            )Construction
                contracts
            
            
            (1,121,648
            )
            
            (1,266,472
            )Due
                from related party
            
            
            11,751
            
            
            -Due
                to related party
            
            
            41,799
            
            
            (128,851
            )Investment
                in subsidiary by minority holder
            
            
            -
            
            
            -Proceeds
                on sale of equity investments
            
            
            -
            
            
            -Net
                cash used in investing activities
            
            
            (1,118,074
            )
            
            (2,679,077
            )Cash
                flows from financing activitiesProceeds
                from loans
            
            
            1,114,462
            
            
            -Net
                cash provided by financing activities
            
            
            1,114,462
            
            
            -Effect
                of exchange rate on cash
            
            
            146,633
            
            
            8,726Net
                increase(decrease) in cash and cash equivalents
            
            
            965,154
            
            
            (2,087,012
            )Cash
                and cash equivalents, beginning of period
            
            
            3,260,307
            
            
            5,713,925Cash
                and cash equivalents, end of period
            
            $
            4,225,461
            
            $
            3,626,913Supplemental
                cash flow information:Cash
                paid during the year for:Interest
            
            $
            -
            
            $
            -Income
                taxes
            
            
            -
            
            
            -




See
        notes
        to Consolidated Financial Statements .




3




CHINA
      INDUSTRIAL WASTE MANAGEMENT, INC.


NOTES
      TO
      UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
      31,
      2008





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America for interim financial information and with the instructions to Form
      10-Q
      and the new scaled disclosure requirements in Article 8 of Regulation S-K.
      Accordingly, they do not include all of the information and footnotes required
      by accounting principles generally accepted in the United States of America
      for
      annual financial statements. In the opinion of management, all adjustments
      (consisting of normal recurring accruals) considered necessary for a fair
      presentation have been included. The accounts of the Company and all of its
      subsidiaries are included in the consolidated financial statements. All
      significant intercompany accounts and transactions have been eliminated in
      consolidation. The consolidated operating results for the three months ended
      March 31, 2008 are not necessarily indicative of the results that may be
      expected for the year ending December 31, 2008. For further information, refer
      to the consolidated financial statements and footnotes thereto included in
      the
      Company's Form 10-K for the year ended December 31, 2007 .





**1.
      Nature of operations**





The
      unaudited consolidated financial statements are those of China Industrial Waste
      Management, Inc., a Nevada corporation incorporated on November 12, 2003 and
      formerly known as Goldtech Mining Corporation  (the “Company”), its 100%
      owned subsidiary, DonTech Waste Services, a Delaware corporation incorporated
      in
      November 2005 (“DonTech”), and its indirect 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”) and Dalian
      Lipp Environmental Energy Engineering & Technology Co., Ltd. (“Dalian
      Lipp”).




4




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.





Dongtai
      was incorporated on January 9,1991 in the PRC.





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, disposing and recycling of industrial
      wastes. On 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
      RMB
      7 million (USD$_958,300), which was accounted for as a reorganization of
      entities under common control.




5




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




Dalian
      Lipp Environmental Energy Engineering & Technology Co., Ltd. (“Dalian
      Lipp”), is a PRC joint venture established on December 22, 2007 and is 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.




**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, 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.





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.





6





**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
      March 31, 2008 and 2007, 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 March 31, 2008 and December 31,
      2007
      is $6,558 and $9,776, respectively. 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.




7




**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 .





**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 .




8




**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 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
                ofMarch
                31,
              2008
            
            December31,
              2007Long-term
            
            $
            464,734
            
            
            437,619





**Long-term
      investment**


Invested
                company
            
            Equity
                acquired
            
            Balance
                as
              of
                 March 31,
              2008
            
            Balance
                as of
              December
                31,
              2007Dongtai
                Organic
            
            
            49
            %
            
            2,730,017
            
            
            2,633,354Total
            
            
            
            
            
            2,730,017
            
            
            2,633,354





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.




9




**Asset
      impairments**





We
      monitor the carrying value of our long-lived assets for potential impairment
      and
      test the recoverability of such assets whenever events or changes in
      circumstances indicate that their carrying amounts may not be recoverable.
      Typical indicators that an asset may be impaired include:





• A
      significant decrease in the market price of an asset or asset
      group;


•
A
      significant adverse change in the extent or manner in which an asset or asset
      group is being used or in its physical condition;


•
A
      significant adverse change in legal factors or in the business climate that
      could affect the value of an asset or asset group, including an adverse action
      or assessment by a regulator;


•
An
      accumulation of costs significantly in excess of the amount originally expected
      for the acquisition or construction of a long-lived asset;


•
Current
      period operating or cash flow losses combined with a history of operating or
      cash flow losses or a projection or forecast that demonstrates continuing losses
      associated with the use of a long-lived asset or asset group; or


•
A
      current expectation that, more likely than not, a long-lived asset or asset
      group will be sold or otherwise disposed of significantly before the end of
      its
      previously estimated useful life.


If
      any of
      these or other indicators occurs, the asset is reviewed to determine whether
      there has been an impairment. An impairment loss is recorded as the difference
      between the carrying amount and fair value of the asset. If significant events
      or changes in circumstances indicate that the carrying value of an asset or
      asset group may not be recoverable, we perform a test of recoverability by
      comparing the carrying value of the asset or asset group to its undiscounted
      expected future cash flows. If cash flows cannot be separately and independently
      identified for a single asset, we will determine whether an impairment has
      occurred for the group of assets for which we can identify the projected cash
      flow. If the carrying values are in excess of undiscounted expected future
      cash
      flows, we measure any impairment by comparing the fair value of the asset or
      asset group to its carrying value. Fair value is determined by either an
      internally developed discounted projected cash flow analysis of the asset or
      asset group or an actual third-party valuation. If the fair value of an asset
      or
      asset group is determined to be less than the carrying amount of the asset
      or
      asset group, an impairment in the amount of the difference is recorded in the
      period that the impairment indicator occurs.





10





**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 March 31, 2008 were USD$1,791,147(RMB12,577,791). Such
      assets consist entirely of a right to use land of USD$1,992,404(RMB13,991,057),
      less accumulated amortization of USD$201,257(RMB1,413,261).





**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.





Before
      termination, Liaoyang Dongtai’s primary asset was cash in the amount of RMB
      399,989 (USD
      $52,602) .
      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).




11




**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 discloses estimated fair
      values of financial instruments. The carrying amounts reported in the statements
      of financial position for current assets and current liabilities qualifying
      as
      financial instruments are a reasonable estimate of fair value.





**Revenue
      recognition**





The
      Company’s revenue recognition policies are in compliance with Staff Accounting
      Bulletin (SAB) 104. Our revenues are generated from the fees we charge for
      waste
      collection, transfer, disposal and recycling services and the sale of recycled
      commodities. The fees charged for our services are generally defined in our
      service agreements and vary based on contract specific terms such as frequency
      of service, weight, volume and the general market factors influencing industry’s
      rates. We generally recognize revenue as services are performed or products
      are
      delivered.





Deferred
      sales consist of contracts for which the fees have been collected but revenue
      has not yet been recognized in accordance with the revenue recognition policy.
      As of March 31, 2008 and December 31, 2007 deferred sales amounted to $703,221
      and $667,389, respectively.





**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 three months
      ended March 31, 2008 and 2007 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.




12





**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 .




**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, reduced tax
      rate
      for three years at 9%, 10% and 11% for the third, fourth and fifth
      year..





**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.





13





**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.





**4.
      New accounting pronouncements**


In
        June
        2006, the Financial Accounting Standards Board (FASB) issued FASB Integration
        No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB
        Statements No. 109” (FIN 48). FIN 48 clarifies the accounting for uncertainty in
        income taxes by prescribing a two-step method of first evaluating whether
        a tax
        position has met a more likely than not recognition threshold and second,
        measuring that tax position to determine the amount of benefit to be recognized
        in the financial statements. Fin 48 provides guidance on the presentation
        of
        such positions within a classified statement of financial position as well
        as on
        derecognition, interest and penalties, accounting in interim periods, disclosure
        and transition. FIN 48 is effectively for fiscal years beginning after December
        15, 2006. The adoption of this standard is not expected to have a material
        effect on the Company’s results of operations or financial
        condition.
 
 FASB
        issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”. SFAS
        No. 155 amends SFAS No 133, “Accounting for Derivative Instruments and Hedging
        Activities”, and SFAF No. 140, “Accounting for Transfers and Servicing of
        Financial Assets and Extinguishments of Liabilities”. SFAS No. 155, permits fair
        value remeasurement for any hybrid financial instrument that contains an
        embedded derivative that otherwise would require bifurcation, clarifies which
        interest-only strips and principal-only strips are not subject to the
        requirements of SFAS No. 133, establishes a requirement to evaluate interest
        in
        securitized financial assets to identify interests that are freestanding
        derivatives or that are hybrid financial instruments that contain an embedded
        derivative requiring bifurcation, clarifies that concentrations of credit
        risk
        in the form of subordination are not embedded derivatives, and amends SFAS
        No.
        140 to eliminate the prohibition on the qualifying special-purpose entity
        from
        holding a derivative financial instrument that pertains to a beneficial interest
        other than another derivative financial instrument. This statement is effective
        for all financial instruments acquired or issued after the beginning of the
        Company’s first fiscal year that begins after September 15, 2006. The Company
        has not evaluated the impact of this pronouncement its financial
        statements.
 
 14
 
 In
        May
        2005, the FASB issued SFAS No. 154, entitled Accounting Changes and Error
        Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3. This
        Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement
        No. 3, Reporting Accounting Changes in Interim Financial Statements, and
        changes
        the requirements for the accounting for and reporting of a change in accounting
        principle. This Statement applies to all voluntary changes in accounting
        principle. It also applies to changes required by an accounting pronouncement
        in
        the unusual instance that the pronouncement does not include specific transition
        provisions. Opinion 20 previously required that most voluntary changes in
        accounting principle be recognized by including in net income of the period
        of
        the change the cumulative effect of changing to the new accounting principle.
        This Statement requires retrospective application to prior periods’ financial
        statements of changes in accounting principle, unless it is impracticable
        to
        determine either the period-specific effects or the cumulative effect of
        the
        change. This Statement defines retrospective application as the application
        of a
        different accounting principle to prior accounting periods as if that principle
        had always been used or as the adjustment of previously issued financial
        statements to reflect a change in the reporting entity. This Statement also
        redefines restatement as the revising of previously issued financial statements
        to reflect the correction of an error. The provisions of SFAS No. 154 are
        effective for accounting changes and correction of errors made in fiscal
        years
        beginning after December 15, 2005. The adoption of SFAS 154 did not impact
        the
        consolidated financial statements.
 
 In
        September 2006, the FASB issued Statement of Financial Accounting
        Standards ** (“SFAS”)
        No. 157, “Fair Value Measurements,” or SFAS 157, which defines fair value,
        establishes a framework for measuring fair value in U.S. GAAP, and expands
        disclosures about fair value measurements. SFAS 157 applies under other
        accounting pronouncements that require or permit fair value measurements,
        where
        fair value is the relevant measurement attribute. The standard does not require
        any new fair value measurements. SFAS 157 is effective for financial statements
        issued for fiscal years beginning after November 15, 2007, and interim periods
        within those fiscal years. The Company is currently evaluating the impact
        of
        adopting SFAS 157 on its consolidated financial statements.
 
 In
        February 2007, the FASB issued Statement of Financial Accounting Standards
        (“SFAS”) 159, “The Fair Value Option for Financial Assets and Financial
        Liabilities - Including an Amendment of FASB Statement No. 115,” or SFAS 159.
        SFAS 159 permits entities to choose to measure many financial instruments
        and
        certain other items at fair value. Entities that elect the fair value option
        will report unrealized gains and losses in earnings at each subsequent reporting
        date. The fair value option may be elected on an instrument-by-instrument
        basis,
        with a few exceptions. SFAS 159 also establishes presentation and disclosure
        requirements to facilitate comparisons between entities that choose different
        measurement attributes for similar assets and liabilities. The requirements
        of
        SFAS 159 are effective for the Company’s fiscal year beginning on October 1,
        2008. The Company’s management is in the process of evaluating this guidance and
        therefore has not yet determined the impact that SFAS 159 will have on its
        financial statements upon adoption.
  In
        September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) ** No.
        108,
        or SAB 108, which provides guidance on the process of quantifying financial
        statement misstatements. In SAB 108, the SEC staff establishes an approach
        that
        requires quantification of financial statement errors, under both the
        iron-curtain and the roll-over methods, based on the effects of the error
        on
        each of our financial statements and the related financial statement
        disclosures. SAB 108 is generally effective for annual financial statements
        in
        the first fiscal year ending after November 15, 2006. The transition provisions
        of SAB 108 permits existing public companies to record the cumulative effect
        in
        the first year ending after November 15, 2006 by recording correcting
        adjustments to the carrying values of assets and liabilities as of the beginning
        of that year with the offsetting adjustment recorded to the opening balance
        of
        retained earnings. We do not expect that the adoption of SAB 108 would have
        a
        material effect on our consolidated financial statements.




15




**5.
      Restatements**





During
      the preparation of the financial statements for three and six months ended
      June
      30, 2007, the Company received a comment letter from the Office of the Chief
      Accountant of the Division of Corporation Finance of Securities and Exchange
      Commission regarding certain disclosures in the Company’s previously filed
      periodic reports. The Company determined that its asset retirement obligations
      (“ARO”) had not been properly accounted for and also that
      its  subsidiary, Liaoyang Dongtai, had not been consolidated while
      preparing the Company’s consolidated financial statements in accordance with
      GAAP contained in such reports.





The
      amounts in the restated financial statements were translated at a rate of USD$1
      = RMB 7.7342, USD$1 = RMB 7.8087 and USD$1 = RMB 8.0170, as quoted by People’s
      Bank of China as of March 31, 2007, December 31, 2006 and March 31, 2006
      respectively





The
      Company therefore restated its consolidated balance sheet as of March 31, 2007
      and 2006, its consolidated statements of income for three months ended March
      31,
      2007 and March 31, 2006 and its consolidated statement of cash flows for three
      months ended March 31, 2007 and March 31, 2006. These restatements have
      previously been filed with the Securities and Exchange Commission. The effects
      of the restatements are shown in the following tables.


**Balance
        Sheet**
  Original
              
              RestatedMarch
                  31,2007
              
              2007**ITEMS**Current
                  assetsCash
                  and cash equivalents
              
              $
              3,626,913
              
              $
              3,626,913Trade
                  accounts receivable
              
              
              258,823
              
              
              258,823Other
                  receivables
              
              
              13,091
              
              
              13,091Inventory
              
              
              774,326
              
              
              774,326Advances
                  to suppliers
              
              
              3,901
              
              
              3,901Deferred
                  expense
              
              
              40,142
              
              
              40,142Tax
                  receivable
              
              
              6,398
              
              
              6,398Total
                  current assets
              
              
              4,723,594
              
              
              4,723,594Investment
              
              
              1,592,925
              
              
              1,592,925Property,
                  plant & equipment
              
              
              3,986,672
              
              
              4,250,965Less:
                  Accumulated depreciation
              
              
              (1,607,983
              )
              
              (1,631,047
              )Net
                  property, plant and equipment
              
              
              2,378,689
              
              
              2,619,918Construction
                  in progress
              
              
              1,851,374
              
              
              1,851,374Land
                  usage right, net of accumulated amortization
              
              
              1,530,064
              
              
              1,530,064Related
                  party Receivable
              
              
              363,321
              
              
              363,321**Total
                  assets**
              
              $
              12,439,967
              
              $
              12,681,196**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilitiesAccounts
                  payable
              
              $
              236,455
              
              $
              236,455Tax
                  payable
              
              
              -
              
              
              -Deferred
                  Sales
              
              
              459,936
              
              
              459,936Accrued
                  expenses
              
              
              17,490
              
              
              17,490Other
                  payable
              
              
              118,722
              
              
              118,722Total
                  current liabilities
              
              
              832,603
              
              
              832,603Long-term
                  debtAsset
                  retirement obligation liability for landfills
              
              
              -
              
              
              392,492Total
                  liabilities
              
              
              832,603
              
              
              1,225,095Minority
                  interest in subsidiary
              
              
              1,180,371
              
              
              1,165,245Stockholders'
                  equityCommon
                  stock: par value $.001; 90,000,000 shares authorized; 13,220,843
                  shares
                  issued and outstanding
              
              
              13,221
              
              
              13,221Additional
                  paid-in capital
              
              
              1,956,634
              
              
              1,956,634Other
                  comprehensive income
              
              
              426,322
              
              
              440,347Retained
                  earnings
              
              
              8,030,816
              
              
              7,880,654Total
                  stockholders' equity
              
              
              10,426,993
              
              
              10,290,856**Total
                  liabilities and stockholders' equity**
              
              $
              12,439,967
              
              $
              12,681,196
  As
        a
        result of the restatement of the consolidated balance sheet as of March 31,
        2007, total assets as of March 31, 2007 increased from $12,439,967, as
        originally reported, to $12,681,196, an increase of $241,229. The increase
        in
        total assets was mostly a result of a $241,229 increase in net property,
        plant
        and equipment resulting from the change in accounting for ARO liabilities
        pertaining to the Company’s landfill. Stockholders' equity as of March 31, 2007
        decreased from $10,426,993, as originally reported, to $10,290,856, a decrease
        of $136,137. Minority interest in subsidiary decreased by $15,126, from
        $1,180,371 to $1,165,245.
  16
  **Balance
        Sheet**
 
 Original
              
              Restated**ITEMS**
              
              December
                  31,2006
              
              2006Current
                  assetsCash
                  and cash equivalents
              
              $
              5,660,698
              
              $
              5,713,925Trade
                  accounts receivable
              
              
              151,144
              
              
              151,144Other
                  receivables
              
              
              50,789
              
              
              35,999Inventory
              
              
              602,582
              
              
              602,944Advances
                  to suppliers
              
              
              374,046
              
              
              374,046Deferred
                  expense
              
              
              20,490
              
              
              20,490Total
                  current assets
              
              
              6,859,749
              
              
              6,898,548Investment
              
              
              361,136
              
              
              322,717Property,
                  plant & equipment
              
              
              3,927,234
              
              
              4,189,517Less:
                  Accumulated depreciation
              
              
              (1,487,340
              )
              
              (1,502,899
              )Net
                  property, plant and equipment
              
              
              2,439,894
              
              
              2,686,618Construction
                  in progress
              
              
              202,974
              
              
              202,974Land
                  usage right, net of accumulated amortization
              
              
              1,524,319
              
              
              1,524,319Related
                  party Receivable
              
              
              231,793
              
              
              231,793**Total
                  assets**
              
              $
              11,619,865
              
              $
              11,866,969**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilitiesAccounts
                  payable
              
              $
              92,255
              
              $
              92,255Tax
                  payable
              
              
              6,346
              
              
              6,346Deferred
                  Sales
              
              
              455,548
              
              
              455,548Accrued
                  expenses
              
              
              15,410
              
              
              15,768Other
                  payable
              
              
              181,136
              
              
              283,981Total
                  current liabilities
              
              
              750,695
              
              
              853,898Long-term
                  debtAsset
                  retirement obligation liability
              
              
              -
              
              
              381,873Total
                  liabilities
              
              
              750,695
              
              
              1,235,771Minority
                  interest in subsidiary
              
              
              1,086,917
              
              
              1,083,022Stockholders'
                  equityCommon
                  stock
              
              
              13,221
              
              
              13,221Additional
                  paid-in capital
              
              
              1,952,634
              
              
              1,952,634Other
                  comprehensive income
              
              
              478,500
              
              
              381,579Retained
                  earnings
              
              
              7,337,898
              
              
              7,200,742Total
                  stockholders' equity
              
              
              9,782,253
              
              
              9,548,176**Total
                  liabilities and stockholders' equity**
              
              $
              11,619,865
              
              $
              11,866,969
 
 As
        a
        result of the restatement of the consolidated balance sheet as of December
        31,
        2006, total assets as of December 31, 2006 increased from $11,619,865, as
        originally reported, to $11,866,969, an increase of $247,104. The increase
        in
        total assets was mostly a result of a $246,724 increase in net property,
        plant
        and equipment resulting from the change in accounting for ARO liabilities
        pertaining to the Company’s landfill. Stockholders' equity as of December 31,
        2006 decreased from $9,782,253, as originally reported, to $9,548,176, a
        decrease of $234,077. Minority interest in subsidiary decreased by $3,895,
        from
        $1,086,917 to $1,083,022.
  17
 
 **Income
        Statements**
  Original
              
              RestatedFor
                  Three Months Ended
                March
                  31,**ITEMS**
              
              2007
              
              2007Revenue
              
              $
              1,682,972
              
              $
              1,682,972Costs
                  of revenue (including depreciation)
              
              
              (495,317
              )
              
              (509,768
              )Gross
                  profit
              
              
              1,187,655
              
              
              1,173,204Operating
                  expensesSelling
                  expenses
              
              
              204,241
              
              
              204,241General
                  and administrative expenses
              
              
              217,160
              
              
              217,160Total
                  operating expenses
              
              
              421,401
              
              
              421,401Income
                  from operations
              
              
              766,254
              
              
              751,803Other
                  income (expense)Interest
                  income
              
              
              2,804
              
              
              2,804Other
                  income
              
              
              368
              
              
              368Other
                  expense
              
              
              (27
              )
              
              (27
              )Total
                  other income (expense)
              
              
              3,145
              
              
              3,145Net
                  income before minority interest and income tax
              
              
              769,399
              
              
              754,948Income
                  tax (benefit)
              
              
              -
              
              
              -Net
                  income after income tax
              
              
              769,399
              
              
              754,948Minority
                  interest
              
              
              76,481
              
              
              75,036Net
                  income
              
              $
              692,918
              
              $
              679,912Foreign
                  currency translation adjustment
              
              
              (52,178
              )
              
              58,768Comprehensive
                  income
              
              $
              640,740
              
              $
              738,680Basic
                  and diluted weighted average shares outstanding
              
              
              13,220,843
              
              
              13,220,843Basic
                  and diluted net earnings per share
              
              
              0.05
              
              
              0.05
 
 As
        a
        result of the restatement, net income for the three months ended March 31,
        2007
        decreased from $692,918, as originally reported, to $679,912, a decrease
        of
        $13,006, comprised of a $14,451 increase of cost of goods and a $1,445 decrease
        in minority interest.
 
 18
 
 **Income
        Statements**
  Original
              
              RestatedFor
                  Three Months Ended
                March
                  31,**ITEMS**
              
              2006
              
              2006Revenue
              
              $
              1,551,437
              
              $
              1,551,437Costs
                  of revenue (including depreciation)
              
              
              438,778
              
              
              440,888Gross
                  profit
              
              
              1,112,659
              
              
              1,110,549Operating
                  expensesSelling
                  expenses
              
              
              153,479
              
              
              153,479General
                  and administrative expenses
              
              
              253,037
              
              
              253,037Total
                  operating expenses
              
              
              406,516
              
              
              406,516Income
                  from operations
              
              
              706,143
              
              
              704,033Other
                  income (expense)Other
                  expense
              
              
              (35
              )
              
              (35
              )Total
                  other income (expense)
              
              
              (35
              )
              
              (35
              )Net
                  income before minority interest and income tax
              
              
              706,108
              
              
              703,998Income
                  tax (benefit)
              
              
              -
              
              
              -Net
                  income after income tax
              
              
              706,108
              
              
              703,998Minority
                  interest
              
              
              70,611
              
              
              70,400Net
                  income
              
              $
              635,497
              
              $
              633,598Foreign
                  currency translation adjustment
              
              
              81,826
              
              
              81,842Comprehensive
                  income
              
              $
              717,323
              
              $
              715,440Basic
                  and diluted weighted average shares outstanding
              
              
              13,140,843
              
              
              13,140,843Basic
                  and diluted net earnings per share
              
              
              0.05
              
              
              0.05
 
 As
        a
        result of the restatement, net income for the three months ended March 31,
        2006
        decreased from $635,497, as originally reported, to $633,598, a decrease
        of
        $1,899, comprised of a $2,110 increase in cost of g oods
        and
        a $211 decrease in minority interest.
  19
  **Statements
        of Cash Flows**
  Original
              
              RestatedFor
                  three Months Ended March 31,**ITEMS**
              
              2007
              
              2007Cash
                  flows from operating activities:Net
                  income
              
              $
              692,918
              
              $
              679,912Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Minority
                  interest
              
              
              76,481
              
              
              75,036Depreciation
                  & amortization
              
              
              114,574
              
              
              122,186Bad
                  debt allowance
              
              
              14,881
              
              
              -Stock
                  issued for services
              
              
              4,000
              
              
              4,000Accretion
                  expenses
              
              
              
              
              
              6,916Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (105,857
              )
              
              (105,857
              )Inventory
              
              
              (165,004
              )
              
              (165,004
              )Other
                  receivables
              
              
              (158,947
              )
              
              23,175Advance
                  to suppliers
              
              
              (1,843
              )
              
              (1,843
              )Prepaid
                  expense
              
              
              (19,388
              )
              
              (19,388
              )Deferred
                  sales
              
              
              1,565
              
              
              1,565Accounts
                  payable & other payables
              
              
              (23,611
              )
              
              (24,598
              )Tax
                  payables
              
              
              (12,761
              )
              
              (12,761
              )Net
                  cash provided by operating activities
              
              
              417,008
              
              
              583,339Cash
                  flows from investing activitiesEquity
                  investment
              
              
              (1,210,634
              )
              
              (1,262,735
              )Purchase
                  of property and equipment
              
              
              (21,019
              )
              
              (21,019
              )Advances
                  to related party
              
              
              -
              
              
              (128,851
              )Construction
                  contracts
              
              
              (1,266,472
              )
              
              (1,266,472
              )Net
                  cash used in investing activities
              
              
              (2,498,125
              )
              
              (2,679,077
              )Cash
                  flows from financing activitiesNet
                  cash provided by financing activities
              
              
              -
              
              
              -Effect
                  of exchange rate on cash
              
              
              47,332
              
              
              8,726Net
                  increase in cash and cash equivalents
              
              
              (2,033,785
              )
              
              (2,087,012
              )Cash
                  and cash equivalents, beginning of period
              
              
              5,660,698
              
              
              5,713,925Cash
                  and cash equivalents, end of period
              
              $
              3,626,913
              
              $
              3,626,913
 
 As
        a
        result of the restatement, net cash provided by operating activities for
        three
        months ended March 31, 2007 increased by $166,331 from $417,008 as originally
        reported, to $583,339; and net cash used in investing activities increased
        by
        $180,952 from $2,498,125, as originally reported, to $2,679,077.
  20
  **Statements
        of Cash Flows**
  Original
              
              RestatedFor
                  three Months Ended March 31,**ITEMS**
              
              2006
              
              2006Cash
                  flows from operating activities:Net
                  income
              
              $
              635,497
              
              $
              633,598Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Minority
                  interest
              
              
              70,611
              
              
              70,400Depreciation
              
              
              86,113
              
              
              81,993Accretion
                  expenses
              
              
              -
              
              
              6,225Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (157,389
              )
              
              (157,391
              )Inventory
              
              
              (3,862
              )
              
              (3,862
              )Other
                  receivables
              
              
              209,517
              
              
              62,157Advance
                  to suppliers
              
              
              (138,935
              )
              
              (333
              )Prepaid
                  expense
              
              
              10,201
              
              
              10,201Deferred
                  sales
              
              
              (6,949
              )
              
              -Accounts
                  payable & other payables
              
              
              (158,108
              )
              
              (158,110
              )Tax
                  payables
              
              
              60,643
              
              
              53,695Net
                  cash provided by operating activities
              
              
              607,339
              
              
              598,573Cash
                  flows from investing activitiesEquity
                  investment
              
              
              (37,297
              )
              
              (37,297
              )Purchase
                  of property and equipment
              
              
              (155,425
              )
              
              (155,427
              )Repayment
                  of advances to related party
              
              
              -
              
              
              34,811Construction
                  contracts
              
              
              (141,355
              )
              
              (279,960
              )Net
                  cash used in investing activities
              
              
              (334,077
              )
              
              (437,873
              )Cash
                  flows from financing activitiesNet
                  cash provided by financing activities
              
              
              -
              
              
              -Effect
                  of exchange rate on cash
              
              
              20,445
              
              
              23,961Net
                  increase in cash and cash equivalents
              
              
              293,707
              
              
              184,661Cash
                  and cash equivalents, beginning of period
              
              
              2,944,243
              
              
              2,944,179Cash
                  and cash equivalents, end of period
              
              $
              3,237,950
              
              $
              3,128,840
 
 As
        a
        result of the restatement, net cash provided by operating activities for
        three
        Months ended March 31, 2006 decreased by $8,766 from $607,339 as originally
        reported, to $598,573; and net cash used in investing activities increased
        by
        $103,796 from $334,077, as originally reported, to
        $437,873.




21




**Item
      2.**  **Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations.**








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




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 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.





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.




22




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.





·
            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.





Our
      revenues generated in first quarter 2008 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.




23




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 USD$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.




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.




24




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 quarterly report.





Three
      Months Ended March 31, 2008 Compared to the Three Months Ended March 31, 2007





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





Revenues





The
      Company’s operating revenues for the three months ended March 31, 2008 was
      $3,130,280, increased by $1,447,308 or 86% compared with $1,682,972 for the
      three months ended March 31, 2007.





Three
                Months Ended March 31,2008
            
            2007RestatedService
                fees
            
            $
            1,819,552
            
            $
            837,063Sales
                of cupric sulfate
            
            
            708,843
            
            
            388,333Sales
                of recycled commodities
            
            $
            601,885
            
            $
            457,576Operating
                revenue
            
            $
            3,130,280
            
            $
            1,682,972




25




The
      increase in revenues from service fees mainly result from broadened customer
      base during this period compared with the same period last year, as well as
      an
      increase in sales of cupric sulfate. We experienced a $320,510 or 83% increase
      during the three months ended March 31, 2008 in comparison with the same period
      in 2007 as both the unit price and volume of cupric sulfate sold
      increased.





Cost
      of
      Revenues




The
      Company’s cost of revenues for the three months ended March 31, 2008 was
      $928,093 compared with $509,768 for the three months ended March 31, 2007.





Cost
                of service fees
            
            $
            371,035
            
            $
            228,619Cost
                of cupric sulfate
            
            $
            286,526
            
            $
            97,295Cost
                of recycled commodities
            
            $
            270,532
            
            $
            183,854Total
            
            $
            928,093
            
            $
            509,768





The
      cost
      of revenues increased by $418,325 or 82% for the three months ended March 31,
      2008 compared to the three months ended March 31, 2007 as the rapid expansion
      of
      our business caused the corresponding increase in costs.





The
      cost
      of reclaimed products (which includes cost of cupric sulfate and cost of other
      recycled commodities) for the three months ended March 31, 2008 increased
      by $275,909 or 98%, compared with the same period in 2007. Such increase is
      attributable to a sharp increase in the price of raw materials.





**Operating
      Expenses**





Total
      operating expenses for the three months ended March 31, 2008 increased by
      $160,526 to $581,927 from $421,401 for the three months ended March 31, 2007,
      an
      increase of 38%. The increase in operating expenses is principally attributable
      to relatively significant increased on General and administrative expenses
      as
      the Company incurred expenses in connection with the company’s expansion in
      operation.  In
      comparison with the same periods in 2007, the general and administrative
      expenses for the three months ended March 31, 2008 increased by 63%.





**Foreign
      Currency Translation**





Foreign
      currency translation adjustments for the three months ended March 31, 2008
      increased to $589,954 from $58,768 for the three months ended March 31, 2007.
      This fluctuation is attributable to the revaluation of the Chinese currency
      against the U.S. dollar.




26





**Net
      Income**





Net
      income for the three months ended March 31, 2008 increased by $695,705 or 102%
      to $1,375,617 from $679,912 for the three months ended March 31, 2007. This
      increase is primarily attributable to the increase in revenues for the Company
      in the 2008 quarter.




**Liquidity
      and Capital Resources**





We
      have
      financed our operations and met capital expenditure requirements primarily
      through cash provided by operating activities, trade credit and bank loans.





Accounts
      receivable increased by $997,998 or 168% from 594,322 as of December 31 2007
      to
      $1,592,320. This is attributable to an increase in the number of customers
      during the 2008 three-month period. Short-term loan as of the three months
      ended
      March 31 2008 was $2,563,299 whereas the amount as of December 31 2007 was
      $1,369,000 as the Company made additional bank borrowings to accelerate our
      business expansion.





As
      of
      March 31, 2008, the Company had cash and cash equivalents of $4,225,461,
      compared to $3,260,307 at December 31, 2007. As of March 31, 2008, the Company
      had working capital of $2,965,479, compared to $2,345,626 as of December 31,
      2007.





Cash
      Flow





March
                31, 2008
            
            March
                31, 2007Net
                cash provided by operating activities
            
            $
            821,953
            
            $
            583,339Net
                cash used in investing activities
            
            $
            (1,118,074
            )
            $
            (2,679,077
            )Net
                cash provided by financing activities
            
            $
            1,114,642
            
            
            -




Net
      cash
      provided by operating activities totaled $ 821,953 for
      the
      three months ended March 31, 2008, compared to cash provided by operations
      of
      $ 583,339 for the
      three months ended March 31, 2007; an increase of $238,614 or 41% over the
      same
      period in the previous year. The principal reason for the increase in 2008
      was
      cash in-flow generated from sales experienced a 7% increase in the first quarter
      compared with the same period in 2007. Therefore cash spent on material
      procurement, payroll and tax payment increased.




Net
      cash
      used in investing activities for the three months ended March 31, 2008 decreased
      by $1,561,003 or 58% compared to the same period in 2007. This decrease is
      attributable to a decline in spending on fixed assets and other investing
      activities.





Net
      cash
      provided by financing activities for the three months ended March 31, 2008
      increased by $1,114,642 compared to the same period in 2007 as we received
      an
      additional bank loan in the first quarter of 2008.





We
      intend
      to use our available funds as working capital and to expand and develop our
      current lines of business. We believe that our available funds will provide
      us
      with sufficient capital for at least the next twelve months; however, to the
      extent that we make acquisitions, we may require additional capital for the
      acquisition or to support the operations of the combined companies. We cannot
      provide any assurance that any required funding will be available on terms
      acceptable to us.





27





**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;


·
            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
      March 31, 2008, 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
      3.** **Quantitative
      and Qualitative Disclosures About Market Risk**





Not
      Applicable





**Item
      4T.**  **Controls
      and Procedures.**





Evaluation
      of Disclosure Controls and Procedures





In
      connection with the preparation of this quarterly report on Form 10-Q, 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 March 31, 2008. 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.




28




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.





During
      the evaluation of disclosure controls and procedures as of December 31, 2007
      conducted during the preparation of the Company’s financial statements included
      in its annual report on Form 10-K, a material weakness in internal controls
      was
      identified.  As a result of this material weakness 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.





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.” The Company’s management had 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 (“US GAAP”) 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.





Since
      January 2, 2008 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. In order to remediate
      the material weakness identified as of December 31, 2007, during 2008 we
      have:





·
            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.


·
            Began
                the process of sourcing a consultant experienced in the application
                of US
                GAAP, including internal controls over financial reporting, to augment
                our
                accounting staff.





Notwithstanding
      the remedial actions we have undertaken since December 31, 2007, because of
      the
      scope of the material weakness at December 31, 2007, our management concluded
      that our disclosure controls and procedures at March 31, 2008 were not
      completely ineffective. Our efforts to remediate our disclosure controls and
      procedures and internal control over financial reporting are continuing and
      are
      expected to continue throughout fiscal 2008. Until such time, however, as our
      efforts remediate this weakness, there remains a risk that we will fail to
      identify weaknesses or adequately correct any identified weaknesses in our
      disclosure controls and procedures and internal control over financial
      reporting, both as they relate to the material weakness identified at December
      31, 2007 and to other possible areas.




29




Notwithstanding
      the existence of this material weakness in disclosure controls and procedures
      and internal control over financial reporting at March 31, 2008, we believe
      that
      the consolidated financial statements included elsewhere in this report fairly
      present, in all material respects, our consolidated balance sheets as of March
      31, 2008 and 2007 and the related consolidated statements of
      operations, stockholders’ equity, and cash flows for the quarters ended
      March 31, 2008 and 2007 in conformity with US GAAP.





Changes
      in Internal Control over Financial Reporting





During
      the three months ended March 31, 2008 in connection with the remedial actions
      described earlier in this section we modified our internal control over
      financial reporting to incorporate additional internal controls required by
      US
      GAAP. Other than these changes, there have been no changes in our internal
      control over financial reporting during our last fiscal quarter that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting .





**PART
      II - OTHER INFORMATION**





**Item
      1.** **Legal
      Proceedings.**





None.





**Item
      1A.** **Risk
      Factors.**





None.





**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds.**





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
      provides the Company with business and financial advice and consulting services,
      and the Company pays Newbridge an annual 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 warrants
      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 warrants are to be earned in
      four
      equal tranches of 75,000 warrants each (consisting of warrants to purchase
      18,750 shares at $3.50 per share, warrants to purchase 18,750 shares at $4.00
      per share, warrants to purchase 18,750 shares at $4.50 per share and warrants
      to
      purchase 18,750 shares at $5.00 per share) commencing on execution of the
      Agreement and each 90 days thereafter. On April 9, 2008, we issued the initial
      50,000 shares to Newbridge under the Agreement and delivered the initial
      installment of warrants to purchase 75,000 shares.




30




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 warrants 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.





**Item
      3.** **Defaults
      Upon Senior Securities.**





None.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders.**





None.





**Item
      5.**  **Other
      Information.**





On
      May 7
      2008, the Company’s Board of Directors adopted a Code of Ethics. A copy of the
      Code of Ethics is filed as an exhibit to this report.




**Item
      6.**  **Exhibits.**





**No.**
            **Description**14
            Code
                of Ethics31.1
            Rule
                13a-14(a)/ 15d-14(a) Certificationof
                Chief Executive Officer31.2
            Rule
                13a-14(a)/ 15d-14(a) Certificationof
                principal financial and accounting officer32.1
            Section
                1350 Certification of Chief Executive Officer32.2
            Section
                1350 Certification of Chief Financial
                Officer





31








**SIGNATURES**





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





**CHINA
                INDUSTRIAL WASTE MANAGEMENT, INC.**By:
              /s/
              Dong
                  JinqingDong
                  Jinqing, Chief Executive OfficerDate:
                  May 15, 2008
 
 
 By:
              /s/
              Guo
                  XinGuo
                  Xin, ChiefFinancialOfficerDate:
                  May 15, 2008
  32