| x | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
|---|------------------------------------------------------------------------------------------|

|  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
|--------|-------------------------------------------------------------------------------------------|

| Nevada                          |         | 13-3250816          |
|---------------------------------|--------------|---------------------|
| (State or other jurisdiction of |         | (IRS Employer       |
| incorporation or organization)  |    | Identification No.) |

| c/o Dalian Dongtai Industrial Waste Treatment Co. |   |       |
|---------------------------------------------------|--------|------------|
| No. 1 Huaihe West Road, E-T-D-Zone, Dalian, China |   | 116600     |
| (Address of principal executive offices)          |   | (Zip Code) |

| Large accelerated filer       ̈           | Accelerated filer                      ̈ |
|------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                   |                                                                                                                                             |
| Non-accelerated filer         ̈ | Smaller reporting company    x                                                                                                    |
| (Do not check if a smaller reporting company)                          |

----

|                    |                                                                                                                                        | Page         |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|--------------|
| PART I                  | FINANCIAL INFORMATION                                                                                                                       |    |
|                    |                                                                                                                                        |         |
| Item 1.                 | Financial Statements.                                                                                                                       | 3            |
|                    |                                                                                                                                        |         |
|                    | Consolidated Balance Sheets As of June 30, 2011(Unaudited) and December 31, 2010                                                            | 4            |
|                    |                                                                                                                                        |         |
|                    | Consolidated Statements of Operations and Comprehensive Income For the Three Months and Six Months Ended June 30, 2011 and 2010 (Unaudited) | 5            |
|                    |                                                                                                                                        |         |
|                    | Consolidated Statements of Changes in Equity For the Six Months Ended June 30, 2011 (Unaudited)                                             | 6            |
|                    |                                                                                                                                        |         |
|                    | Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2011 and 2010 (Unaudited)                                           | 7            |
|                    |                                                                                                                                        |         |
|                    | Notes to Consolidated Financial Statements June 30, 2011 and 2010 (Unaudited)                                                               | 8            |
|                    |                                                                                                                                        |         |
| Item 2.                 | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                 | 28           |
|                    |                                                                                                                                        |         |
| Item 3.                 | Quantitative and Qualitative Disclosures about Market Risk                                                                                  | 37           |
|                    |                                                                                                                                        |         |
| Item 4.                 | Controls and Procedures.                                                                                                                    | 37           |
|                    |                                                                                                                                        |         |
| PART II                 | OTHER INFORMATION                                                                                                                           |         |
|                    |                                                                                                                                        |         |
| Item 6.                 | Exhibits                                                                                                                                    | 38           |
|                    |                                                                                                                                        |         |
| Signatures              |                                                                                                                                        | 39           |
|                    |                                                                                                                                        |         |
| Exhibits/Certifications |                                                                                                                                        |

----

| Item 1. | Financial Statements |
|---------|----------------------|

----

|                                                                                                                                                                         |   | June 30, 2011 |       |   | December 31, 2010 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|-------------------|--------|
|                                                                                                                                                                         |   | (Unaudited)   |       |   |              |   |
| ASSETS                                                                                                                                                                       |   |          |       |   |              |   |
| Current assets                                                                                                                                                               |   |          |       |   |              |   |
| Cash and cash equivalents                                                                                                                                                    |   | $             | 7,112,182  |   |              | $      | 8,163,880 |   |
| Notes receivable                                                                                                                                                             |   |          | 286,650    |   |              |   | 86,364 |   |
| Accounts receivable, net                                                                                                                                                     |   |          | 6,349,092  |   |              |   | 5,146,994 |   |
| Other receivables                                                                                                                                                            |   |          | 1,365,367  |   |              |   | 359,383 |   |
| Receivable from subsidiary's buyer                                                                                                                                           |   |          | 1,856,579  |   |              |   | - |   |
| Inventories                                                                                                                                                                  |   |          | 7,000,250  |   |              |   | 4,652,148 |   |
| Advances to suppliers                                                                                                                                                        |   |          | 1,780,211  |   |              |   | 1,624,433 |   |
| Deferred expense                                                                                                                                                             |   |          | 156,745    |   |              |   | 210,752 |   |
| Related party receivable                                                                                                                                                     |   |          | 132,252    |   |              |   | 291,552 |   |
| Deferred tax assets                                                                                                                                                          |   |          | 132,457    |   |              |   | 61,145 |   |
| Total current assets                                                                                                                                                         |   |          | 26,171,785 |   |              |   | 20,596,651 |   |
|                                                                                                                                                                         |   |          |       |   |              |   |   |   |
| Long-term investment-cost method                                                                                                                                             |   |          | 154,715    |   |              |   | 151,515 |   |
| Property, plant and equipment, net                                                                                                                                           |   |          | 35,172,777 |   |              |   | 32,384,139 |   |
| Construction in progress                                                                                                                                                     |   |          | 14,710,637 |   |              |   | 18,642,061 |   |
| Accounts receivable, net                                                                                                                                                     |   |          | 778,105    |   |              |   | 584,853 |   |
| Land use right, net                                                                                                                                                          |   |          | 2,039,508  |   |              |   | 2,022,384 |   |
| Build-Operate-Transfer ("BOT") franchise right                                                                                                                               |   |          | -          |   |              |   | 4,242,424 |   |
| Deposits                                                                                                                                                                     |   |          | 78,967     |   |              |   | 77,152 |   |
| Restricted cash                                                                                                                                                              |   |          | 160,289    |   |              |   | 1,788,510 |   |
| Deferred tax assets                                                                                                                                                          |   |          | 682,919    |   |              |   | 504,017 |   |
| Other assets                                                                                                                                                                 |   |          | 1,483,102  |   |              |   | 1,233,580 |   |
| TOTAL ASSETS                                                                                                                                                                 |   | $             | 81,432,804 |   |              | $      | 82,227,286 |   |
|                                                                                                                                                                         |   |          |       |   |              |   |   |   |
| LIABILITIES AND EQUITY                                                                                                                                                       |   |          |       |   |              |   |   |   |
| Current liabilities                                                                                                                                                          |   |          |       |   |              |   |   |   |
| Short-term bank loans                                                                                                                                                        |   | $             | 3,558,444  |   |              | $      | 3,030,303 |   |
| Accounts payable                                                                                                                                                             |   |          | 3,396,514  |   |              |   | 2,458,260 |   |
| Tax payable                                                                                                                                                                  |   |          | 502,423    |   |              |   | 513,243 |   |
| Advance from customers                                                                                                                                                       |   |          | 800,658    |   |              |   | 610,508 |   |
| Deferred revenue                                                                                                                                                             |   |          | 883,050    |   |              |   | 394,862 |   |
| Accrued expenses                                                                                                                                                             |   |          | 417,635    |   |              |   | 804,205 |   |
| Construction projects payable                                                                                                                                                |   |          | 2,434,736  |   |              |   | 3,070,169 |   |
| Other payables                                                                                                                                                               |   |          | 364,315    |   |              |   | 836,141 |   |
| Long-term loan-current portion                                                                                                                                               |   |          | 2,958,923  |   |              |   | 2,321,970 |   |
| Related party payable                                                                                                                                                        |   |          | 529,434    |   |              |   | 393,939 |   |
| Total current liabilities                                                                                                                                                    |   |          | 15,846,132 |   |              |   | 14,433,600 |   |
|                                                                                                                                                                         |   |          |       |   |              |   |   |   |
| Long-term bank loans                                                                                                                                                         |   |          | 17,050,553 |   |              |   | 17,964,962 |   |
| Asset retirement obligation                                                                                                                                                  |   |          | 602,473    |   |              |   | 571,109 |   |
| Deferred income-Government subsidy                                                                                                                                           |   |          | 4,565,182  |   |              |   | 7,673,724 |   |
| TOTAL LIABILITIES                                                                                                                                                            |   |          | 38,064,340 |   |              |   | 40,643,395 |   |
|                                                                                                                                                                         |   |          |       |   |              |   |   |   |
| EQUITY                                                                                                                                                                       |   |          |       |   |              |   |   |   |
| Stockholders' equity of the Company                                                                                                                                          |   |          |       |   |              |   |   |   |
| Preferred stock: par value $.001; 5,000,000 shares authorized; none issued and outstanding                                                                                   |   |          | -          |   |              |   | - |   |
| Common stock: par value $.001; 95,000,000 shares authorized; 15,336,535 and 15,336,535 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively |   |          | 15,337     |   |              |   | 15,337 |   |
| Additional paid-in capital                                                                                                                                                   |   |          | 10,456,314 |   |              |   | 10,337,105 |   |
| Statutory Reserves                                                                                                                                                           |   |          | 7,801,019  |   |              |   | 7,801,019 |   |
| Retained earnings                                                                                                                                                            |   |          | 13,687,951 |   |              |   | 10,805,375 |   |
| Accumulated other comprehensive income                                                                                                                                       |   |          | 4,068,145  |   |              |   | 3,349,296 |   |
| Total stockholders' equity of the Company                                                                                                                                    |   |          | 36,028,766 |   |              |   | 32,308,132 |   |
| Non-controlling interests                                                                                                                                                    |   |          | 7,339,698  |   |              |   | 9,275,759 |   |
| TOTAL EQUITY                                                                                                                                                                 |   |          | 43,368,464 |   |              |   | 41,583,891 |   |
|                                                                                                                                                                         |   |          |       |   |              |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                                                                                                                                 |   | $             | 81,432,804 |   |              | $      | 82,227,286 |   |

----

|                                                                                                                                                                     |   | For the Three Months Ended June 30, |       |   | For the Six Months Ended June 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|--------|-----------------------------------|--------|
|                                                                                                                                                                          |   | 2011                                |       |   | 2010                              |   |   | 2011 |   |   | 2010 |   |
| Revenues                                                                                                                                                                      |   |                                |       |   |                              |   |   |   |   |   |   |   |
| Service fees                                                                                                                                                                  |   | $                                   | 5,096,403  |   |                              | $      | 3,226,923 |   |   | $ | 8,873,587 |   |   | $ | 6,171,481 |   |
| Sales of  recycled commodities                                                                                                                                      |   |                                | 3,247,130  |   |                              |   | 1,697,657 |   |   |   | 5,535,574 |   |   |   | 2,847,940 |   |
| Total revenues                                                                                                                                                                |   |                                | 8,343,533  |   |                              |   | 4,924,580 |   |   |   | 14,409,161 |   |   |   | 9,019,421 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Cost of revenues                                                                                                                                                              |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Cost of service fees                                                                                                                                                          |   |                                | 2,227,935  |   |                              |   | 1,228,378 |   |   |   | 3,917,031 |   |   |   | 2,256,871 |   |
| Cost of recycled commodities                                                                                                                                                  |   |                                | 1,803,742  |   |                              |   | 643,518 |   |   |   | 3,096,051 |   |   |   | 1,031,976 |   |
| Total cost of revenues                                                                                                                                                        |   |                                | 4,031,677  |   |                              |   | 1,871,896 |   |   |   | 7,013,082 |   |   |   | 3,288,847 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                                                                                                                                  |   |                                | 4,311,856  |   |                              |   | 3,052,684 |   |   |   | 7,396,079 |   |   |   | 5,730,574 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                                                                                                                            |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Selling expenses                                                                                                                                                              |   |                                | 171,894    |   |                              |   | 168,680 |   |   |   | 352,335 |   |   |   | 320,304 |   |
| Research and development expenses                                                                                                                                             |   |                                | 101,929    |   |                              |   | 56,114 |   |   |   | 196,537 |   |   |   | 150,722 |   |
| General and administrative expenses                                                                                                                                           |   |                                | 1,477,286  |   |                              |   | 941,258 |   |   |   | 2,567,470 |   |   |   | 1,758,477 |   |
| Total operating expenses                                                                                                                                                      |   |                                | 1,751,109  |   |                              |   | 1,166,052 |   |   |   | 3,116,342 |   |   |   | 2,229,503 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                                                                                                                                                        |   |                                | 2,560,747  |   |                              |   | 1,886,632 |   |   |   | 4,279,737 |   |   |   | 3,501,071 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense)                                                                                                                                                        |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                                                                                                              |   |                                | (287,309   | )      |                              |   | (209,560 | ) |   |   | (527,634 | ) |   |   | (449,885 | ) |
| Interest income                                                                                                                                                               |   |                                | 5,088      |   |                              |   | - |   |   |   | 13,010 |   |   |   | - |   |
| Other income                                                                                                                                                                  |   |                                | 215,154    |   |                              |   | 80,425 |   |   |   | 335,942 |   |   |   | 87,592 |   |
| Other expense                                                                                                                                                                 |   |                                | (330       | )      |                              |   | (14,669 | ) |   |   | (4,285 | ) |   |   | (1,935 | ) |
| Settlement expense                                                                                                                                                            |   |                                | -          |   |                              |   | - |   |   |   | - |   |   |   | (439,821 | ) |
| Total other expense                                                                                                                                                           |   |                                | (67,397    | )      |                              |   | (143,804 | ) |   |   | (182,967 | ) |   |   | (804,049 | ) |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Income  from continuing operations before income taxes                                                                                                              |   |                                | 2,493,350  |   |                              |   | 1,742,828 |   |   |   | 4,096,770 |   |   |   | 2,697,022 |   |
| Income taxes                                                                                                                                                                  |   |                                | (333,401   | )      |                              |   | (254,941 | ) |   |   | (602,997 | ) |   |   | (387,942 | ) |
| Net income from continuing operations                                                                                                                                         |   |                                | 2,159,949  |   |                              |   | 1,487,887 |   |   |   | 3,493,773 |   |   |   | 2,309,080 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations of discontinued component-Hunan Hanyang Environmental Protection Science &Technology Co., Ltd. (including loss on disposal of $188,886 ), net of tax |   |                                | (207,029   | )      |                              |   | (47,390 | ) |   |   | (239,492 | ) |   |   | (104,389 | ) |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                    |   |                                | 1,952,920  |   |                              |   | 1,440,497 |   |   |   | 3,254,281 |   |   |   | 2,204,691 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Net income attributable to the non-controlling interests                                                                                                                      |   |                                | (264,226   | )      |                              |   | (235,305 | ) |   |   | (371,705 | ) |   |   | (390,644 | ) |
| Net income attributable to the Company                                                                                                                                        |   |                                | 1,688,694  |   |                              |   | 1,205,192 |   |   |   | 2,882,576 |   |   |   | 1,814,047 |   |
| -Loss attributable to the Company from discontinued operation                                                                                                                 |   |                                | (200,679   | )      |                              |   | (30,804 | ) |   |   | (221,780 | ) |   |   | (67,853 | ) |
| -Income attributable to the Company from continuing operations                                                                                                                |   |                                | 1,889,373  |   |                              |   | 1,235,996 |   |   |   | 3,104,356 |   |   |   | 1,881,900 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                                                                                                       |   |                                | 457,178    |   |                              |   | 183,453 |   |   |   | 718,849 |   |   |   | 184,985 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income attributable to the Company                                                                                                                              |   |                                | 2,145,872  |   |                              |   | 1,388,645 |   |   |   | 3,601,425 |   |   |   | 1,999,032 |   |
| Comprehensive income attributable to the non-controlling interests                                                                                                            |   |                                | 390,721    |   |                              |   | 235,305 |   |   |   | 571,938 |   |   |   | 390,644 |   |
| Comprehensive income                                                                                                                                                          |   | $                                   | 2,536,593  |   |                              | $      | 1,623,950 |   |   | $ | 4,173,363 |   |   | $ | 2,389,676 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted weighted average shares outstanding                                                                                                                         |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                         |   |                                | 15,336,535 |   |                              |   | 15,336,535 |   |   |   | 15,336,535 |   |   |   | 15,323,068 |   |
| Diluted                                                                                                                                                                       |   |                                | 15,336,535 |   |                              |   | 17,594,787 |   |   |   | 15,336,535 |   |   |   | 17,549,633 |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net earnings per share                                                                                                                                      |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Basic:                                                                                                                                                                        |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                    |   | $                                   | 0.11       |   |                              | $      | 0.08 |   |   | $ | 0.19 |   |   | $ | 0.12 |   |
| -Net income from continuing operations                                                                                                                                        |   | $                                   | 0.12       |   |                              | $      | 0.08 |   |   | $ | 0.20 |   |   | $ | 0.12 |   |
| -Net loss from discontinued operation                                                                                                                                         |   | $                                   | (0.01      | )      |                              | $      | - |   |   | $ | (0.01 | ) |   | $ | - |   |
|                                                                                                                                                                          |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Diluted:                                                                                                                                                                      |   |                                |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                    |   | $                                   | 0.11       |   |                              | $      | 0.07 |   |   | $ | 0.19 |   |   | $ | 0.10 |   |
| -Net income from continuing operations                                                                                                                                        |   | $                                   | 0.12       |   |                              | $      | 0.07 |   |   | $ | 0.20 |   |   | $ | 0.10 |   |
| -Net loss from discontinued operation                                                                                                                                         |   | $                                   | (0.01      | )      |                              | $      | - |   |   | $ | (0.01 | ) |   | $ | - |   |

----

|                                                          |   | China Industrial Waste Management, Inc. Shareholders |       |   |                           |   |   |                   |   |
|---------------------------------------------------------------|--------|-------------------------------------------------------------------------------|------------|--------|--------------------------------|--------|--------|------------------------|--------|
|                                                     |   | Common Stock                                                             |       |   | AdditionalPaid-in Capital |   |   | Statutory Reserve |   |   | Accumulated OtherComprehensive Income |   |   | Retained Earnings |   |   | Total Shareholders' Equityof the Company |   |   | Non-controlling Interest |   |   | Total |   |
|                                                     |   | Shares                                                                        |       |   | Par Value                 |   |
| Balance as of December 31, 2010                               |   |                                                                          | 15,336,535 |   |                           | $      | 15,337 |                   |   | $ | 10,337,105 |   |   | $ | 7,801,019 |   |   | $ | 3,349,296 |   |   | $ | 10,805,375 |   |   | $ | 32,308,132 |   |   | $ | 9,275,759 |   |   | $ | 41,583,891 |   |
| Option issued for services                                    |   |                                                                          | -          |   |                           |   | -      |                   |   |   | 3,887 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,887 |   |   |   | - |   |   |   | 3,887 |   |
| Amortization of deferred stock-based compensation             |   |                                                                          | -          |   |                           |   | -      |                   |   |   | 115,322 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 115,322 |   |   |   | - |   |   |   | 115,322 |   |
| Disposal of a subsidiary                                      |   |                                                                          | -          |   |                           |   | -      |                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,518,829 | ) |   |   | (2,518,829 | ) |
| Capital contribution by minority shareholders of a subsidiary |   |                                                                          | -          |   |                           |   | -      |                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 10,830 |   |   |   | 10,830 |   |
| Net income                                                    |   |                                                                          | -          |   |                           |   | -      |                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,882,576 |   |   |   | 2,882,576 |   |   |   | 371,705 |   |   |   | 3,254,281 |   |
| Foreign currency translation adjustment                       |   |                                                                          | -          |   |                           |   | -      |                   |   |   | - |   |   |   | - |   |   |   | 718,849 |   |   |   | - |   |   |   | 718,849 |   |   |   | 200,233 |   |   |   | 919,082 |   |
| Balance as of June 30, 2011                                   |   |                                                                          | 15,336,535 |   |                           | $      | 15,337 |                   |   | $ | 10,456,314 |   |   | $ | 7,801,019 |   |   | $ | 4,068,145 |   |   | $ | 13,687,951 |   |   | $ | 36,028,766 |   |   | $ | 7,339,698 |   |   | $ | 43,368,464 |   |

----

|                                                                                                                            |   | For the Six Months ended June 30, |       |
|---------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                                                                            |   | 2011                              |       |   | 2010 |   |
|                                                                                                                            |   |                              |       |   |   |   |
| Cash flows from operating activities:                                                                                           |   |                              |       |   |   |   |
| Net income attributable to the Company                                                                                          |   | $                                 | 2,882,576  |   |   | $ | 1,814,047 |   |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities:                                     |   |                              |       |   |   |   |   |   |
| Non-controlling interests                                                                                                       |   |                              | 371,705    |   |   |   | 390,644 |   |
| Depreciation                                                                                                                    |   |                              | 1,282,563  |   |   |   | 1,033,799 |   |
| Amortization                                                                                                                    |   |                              | 25,290     |   |   |   | 33,286 |   |
| Stock-based compensation                                                                                                        |   |                              | 115,322    |   |   |   | 115,322 |   |
| Deferred tax assets                                                                                                             |   |                              | (235,528   | ) |   |   | 49,665 |   |
| Bad debt expense                                                                                                                |   |                              | 116,568    |   |   |   | 113,486 |   |
| Gain from disposal of property, plant and equipment                                                                             |   |                              | (1,810     | ) |   |   | - |   |
| Loss from disposal of a subsidiary                                                                                              |   |                              | 188,886    |   |   |   | - |   |
| Stock and warrant issued for settlement                                                                                         |   |                              | -          |   |   |   | 439,821 |   |
| Stock issued for service                                                                                                        |   |                              | 3,887      |   |   |   | - |   |
| Interest accretion expenses                                                                                                     |   |                              | 19,080     |   |   |   | 18,314 |   |
| Government subsidy recognized as income                                                                                         |   |                              | (178,854   | ) |   |   | (14,337 | ) |
|                                                                                                                            |   |                              |       |   |   |   |   |   |
| Changes in operating assets and liabilities:                                                                                    |   |                              |       |   |   |   |   |   |
| Notes receivable                                                                                                                |   |                              | (196,171   | ) |   |   | 201,011 |   |
| Accounts receivable                                                                                                             |   |                              | (1,376,155 | ) |   |   | (2,911,253 | ) |
| Construction reimbursement receivable                                                                                           |   |                              | -          |   |   |   | 739,586 |   |
| Other receivables                                                                                                               |   |                              | (988,008   | ) |   |   | 19,998 |   |
| Inventories                                                                                                                     |   |                              | (2,223,878 | ) |   |   | (429,084 | ) |
| Advance to suppliers                                                                                                            |   |                              | (1,151,335 | ) |   |   | (738,292 | ) |
| Deferred expenses                                                                                                               |   |                              | 53,013     |   |   |   | (2,452 | ) |
| Related party receivable                                                                                                        |   |                              | (35,260    | ) |   |   | - |   |
| Other assets                                                                                                                    |   |                              | (220,890   | ) |   |   | 124,812 |   |
| Accounts payable                                                                                                                |   |                              | 876,105    |   |   |   | 777,080 |   |
| Tax payable                                                                                                                     |   |                              | (21,352    | ) |   |   | 26,777 |   |
| Advance from customers                                                                                                          |   |                              | 176,587    |   |   |   | 81,622 |   |
| Accrued expenses                                                                                                                |   |                              | (391,078   | ) |   |   | (272,036 | ) |
| Deferred revenue                                                                                                                |   |                              | 474,308    |   |   |   | (605,598 | ) |
| Related party payable                                                                                                           |   |                              | 125,707    |   |   |   | - |   |
| Other payables                                                                                                                  |   |                              | (221,851   | ) |   |   | (65,500 | ) |
| Net cash (used in) provided by operating activities                                                                             |   |                              | (530,573   | ) |   |   | 940,718 |   |
|                                                                                                                            |   |                              |       |   |   |   |   |   |
| Cash flows from investing activities:                                                                                           |   |                              |       |   |   |   |   |   |
| Investment in Xiangtan Dongtai                                                                                                  |   |                              | -          |   |   |   | (58,604 | ) |
| Purchase of property and equipment                                                                                              |   |                              | (313,374   | ) |   |   | (246,186 | ) |
| Construction in progress                                                                                                        |   |                              | (3,275,386 | ) |   |   | (3,202,966 | ) |
| Proceed from disposal of property, plant and equipment                                                                          |   |                              | 2,475      |   |   |   | - |   |
| Purchase of intangible assets                                                                                                   |   |                              | -          |   |   |   | (6,873 | ) |
| Certificate of deposit                                                                                                          |   |                              | -          |   |   |   | 293,019 |   |
| Cash received from a third party to acquire additional equity interest in Sino-Norway Energy Efficiency Dalian Center Co., Ltd. |   |                              | 10,705     |   |   |   | - |   |
| Cash received from disposal of a subsidiary                                                                                     |   |                              | 2,375,034  |   |   |   | - |   |
| Repayments from a related party                                                                                                 |   |                              | 275,271    |   |   |   | - |   |
| Net cash used in investing activities                                                                                           |   |                              | (925,275   | ) |   |   | (3,221,610 | ) |
|                                                                                                                            |   |                              |       |   |   |   |   |   |
| Cash flows from financing activities                                                                                            |   |                              |       |   |   |   |   |   |
| Repayment of construction project payable                                                                                       |   |                              | (692,185   | ) |   |   | (1,017,247 | ) |
| Repayment of long-term bank loans                                                                                               |   |                              | (697,737   | ) |   |   | (1,122,628 | ) |
| Repayment of short-term bank loan                                                                                               |   |                              | (3,058,572 | ) |   |   | (6,739,433 | ) |
| Proceeds from short-term bank loans                                                                                             |   |                              | 3,517,357  |   |   |   | 2,930,188 |   |
| Proceeds from long-term bank loan                                                                                               |   |                              | -          |   |   |   | 1,611,604 |   |
| Subsidy received from government                                                                                                |   |                              | 157,516    |   |   |   | - |   |
| Decrease in Restricted cash                                                                                                     |   |                              | 967,331    |   |   |   | - |   |
| Net cash provided by (used in) financing activities                                                                             |   |                              | 193,710    |   |   |   | (4,337,516 | ) |
|                                                                                                                            |   |                              |       |   |   |   |   |   |
| Effect of exchange rate changes in cash and cash equivalents                                                                    |   |                              | 210,440    |   |   |   | 29,623 |   |
|                                                                                                                            |   |                              |       |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                                                                       |   |                              | (1,051,698 | ) |   |   | (6,588,785 | ) |
|                                                                                                                            |   |                              |       |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                                                                  |   |                              | 8,163,880  |   |   |   | 11,419,129 |   |
| Cash and cash equivalents, end of period                                                                                        |   | $                                 | 7,112,182  |   |   | $ | 4,830,344 |   |
|                                                                                                                            |   |                              |       |   |   |   |   |   |
| Supplemental cash flow information:                                                                                             |   |                              |       |   |   |   |   |   |
| Cash paid during the period for:                                                                                                |   |                              |       |   |   |   |   |   |
| Interest                                                                                                                        |   | $                                 | 768,174    |   |   | $ | 660,077 |   |
| Income taxes                                                                                                                    |   | $                                 | 693,904    |   |   | $ | 304,778 |   |
| Non-cash investing and financing activities:                                                                                    |   |                              |       |   |   |   |   |   |
| Stock and warrant issued for settlement                                                                                         |   | $                                 | -          |   |   | $ | 439,821 |   |
| Transfer of construction in progress to property, plant and equipment                                                           |   | $                                 | 3,151,443  |   |   | $ | - |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|                                                   | June 30, 2011 |   | June 30, 2010 |
|--------------------------------------------------------|---------------|--------|---------------|
| The closing RMB : USD exchange rate at                 | 6.4635:1      |   | 6.7815:1      |
| Average RMB : USD exchange rate for six months ended   | 6.5390:1      |   | 6.8255:1      |
| Average RMB : USD exchange rate for three months ended | 6.4990:1      |   | 6.8238:1      |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|             |   | Useful Life |
|------------------|--------|-------------|
| Buildings        |   | 20 Years    |
| Machinery        |   | 5-14 Years  |
| Vehicles         |   | 3-8 Years   |
| Office equipment |   | 3-5 Years   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|                                         |   | June 30, 2011 |    |   | December 31, 2010 |   |
|----------------------------------------------|--------|-------------------------|---------|--------|-----------------------------|--------|
|                                         |   | (Unaudited)             |    |   |                        |   |
| Long-term equity investment-Xiangtan Dongtai |   | $                       | 154,715 |   |                        | $      | 151,515 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

| EffectiveDate |   | ExpirationDate |   | Area(Square Meter) |   | Address                                                 |   | Status       |
|---------------|--------|----------------|--------|-------------------------|--------|---------------------------------------------------------|--------|--------------|
| 01-01-2003    |   | 01-01-2053     |   | 8,433                   |   | No.1, Huaihe West Road, Dalian Development Area         |   | Mortgaged    |
| 01-01-2003    |   | 01-01-2053     |   | 6,784                   |   | No. 100, Tieshan West Road, Dalian Development Area     |   | Mortgaged    |
| 04-14-2003    |   | 04-13-2053     |   | 1,841                   |   | No.1-1, Huaihe West Third Road, Dalian Development Area |   | Mortgaged    |
| 07-28-2003    |   | 07-27-2053     |   | 61,535                  |   | No. 85, Dagu Hill, Dalian Development Area              |   | Mortgaged    |
| 06-06-2007    |   | 06-06-2057     |   | 56,397                  |   | Dalian Huayuankou Economic Zone                         |   | Mortgaged    |
| 03-24-2010    |   | 12-23-2056     |   | 25,000                  |   | Yingkou Coastal Industrial Base                         |   | Unencumbered |
| -             |   | -              |   | 10,500                  |   | Haiqing Island, Dalian Development Area                 |   | Unencumbered |
| -             |   | -              |   | 24,740                  |   | Xiajiahez Villiage, Ganjingzi District, Dalian          |   | Unencumbered |
| -             |   | -              |   | 29,572                  |   | Xiajiahez Villiage, Ganjingzi District, Dalian          |   | Unencumbered |
| -             |   | -              |   | 1,941                   |   | Xiajiahez Villiage, Ganjingzi District, Dalian          |   | Unencumbered |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|                                  |   | June 30, 2011 |      |   | December 31, 2010 |   |
|---------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| Aging                                 |   | (Unaudited)   |      |   |              |   |
| 1-3 months                            |   | $             | 4,414,211 |   |              | $      | 3,464,368 |   |
| 4-6 months                            |   |          | 1,102,565 |   |              |   | 484,177 |   |
| 7-12 months                           |   |          | 832,316   |   |              |   | 1,198,449 |   |
| Accounts receivable, net, current     |   |          | 6,349,092 |   |              |   | 5,146,994 |   |
|                                  |   |          |      |   |              |   |   |   |
| 1-2 years                             |   |          | 843,329   |   |              |   | 723,107 |   |
| over 2 years                          |   |          | 206,884   |   |              |   | 12,736 |   |
| Total                                 |   | $             | 1,050,213 |   |              | $      | 735,843 |   |
| Allowance for doubtful accounts       |   |          | (272,108  | )      |              |   | (150,990 | ) |
| Accounts receivable, net, non-current |   | $             | 778,105   |   |              | $      | 584,853 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|                                                         |   | For the Six   |    |   |                              |   |
|--------------------------------------------------------------|--------|-------------------------|---------|--------|-----------------------------------|--------|
|                                                         |   | Months Ended       |    |   | For the year Ended |   |
|                                                         |   | June 30, 2011 |    |   | December 31, 2010       |   |
|                                                         |   | (Unaudited)             |    |   |                              |   |
| Beginning allowance for doubtful account |   | $                       | 150,990 |   |                              | $      | 31,068 |   |
| Additional charged to bad debt expense                       |   |                    | 116,568 |   |                              |   | 118,858 |   |
| Foreign currency translation adjustment                      |   |                    | 4,550   |   |                              |   | 1,064 |   |
| Ending allowance for doubtful accounts                       |   | $                       | 272,108 |   |                              | $      | 150,990 |   |

|                 |   | June 30, 2011 |      |   | December 31, 2010 |   |
|----------------------|--------|-------------------------|-----------|--------|-----------------------------|--------|
|                 |   | (Unaudited)             |      |   |                        |   |
| Raw materials        |   | $                       | 2,380,411 |   |                        | $      | 2,129,507 |   |
| Recycled commodities |   |                    | 4,619,839 |   |                        |   | 2,522,641 |   |
|                 |   | $                       | 7,000,250 |   |                        | $      | 4,652,148 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|                              |   | June 30, 2011 |       |   | December 31, 2010 |   |
|-----------------------------------|--------|-------------------------|------------|--------|-----------------------------|--------|
|                              |   | (Unaudited)             |       |   |                        |   |
| Buildings                         |   | $                       | 16,571,000 |   |                        | $      | 16,228,283 |   |
| Machinery and equipment           |   |                    | 23,672,513 |   |                        |   | 20,045,833 |   |
| Office equipment                  |   |                    | 798,176    |   |                        |   | 749,715 |   |
| Vehicles                          |   |                    | 1,802,809  |   |                        |   | 1,734,613 |   |
|                              |   |                    | 42,844,498 |   |                        |   | 38,758,444 |   |
| Less: Accumulated depreciation    |   |                    | (7,671,721 | )      |                        |   | (6,374,305 | ) |
| Total property and equipment, net |   |                    | 35,172,777 |   |                        |   | 32,384,139 |   |
|                              |   |                    |       |   |                        |   |   |   |
| Construction in progress          |   |                    | 14,710,637 |   |                        |   | 18,642,061 |   |
| Total                             |   | $                       | 49,883,414 |   |                        | $      | 51,026,200 |   |

|                           |   | June 30, |      |   | December 31, |   |
|--------------------------------|--------|---------------|-----------|--------|-------------------|--------|
|                           |   | 2011          |      |   | 2010              |   |
|                           |   | (Unaudited)   |      |   |              |   |
| Land use right, at cost        |   | $             | 2,414,178 |   |              | $      | 2,364,248 |   |
| Less: Accumulated amortization |   |          | (374,670  | )      |              |   | (341,864 | ) |
| Land use right, net            |   | $             | 2,039,508 |   |              | $      | 2,022,384 |   |

| Year       |   | Amount |      |
|------------|--------|--------|-----------|
| 2011       |   | $      | 25,585    |   |
| 2012       |   |   | 51,171    |   |
| 2013       |   |   | 51,171    |   |
| 2014       |   |   | 51,171    |   |
| 2015       |   |   | 51,171    |   |
| Thereafter |   |   | 1,809,239 |   |
| Total      |   | $      | 2,039,508 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|                |   |       |   |    |   |               |   |   | Principal               |   |
|---------------------|--------|------------|--------|---------|--------|--------------------|--------|--------|-------------------------|--------|
|                |   |       |   |    |   | Interest Rate |   |   | June 30, 2011 |   |   | December 31, 2010 |   |
| Effective Date |   | Maturity   |   | Type    |   | (Per Annum)   |   |   | (Unaudited)             |   |   |   |   |
| 06-13-2010          |   | 06-10-2011 |   | Secured |   |               | 6.372  | %      |                    | $      | - |   |   | $ | 3,030,303 |   |
| 06-28-2011          |   | 06-26-2012 |   | Secured |   |               | 7.572  | %      |                    |   | 3,094,299 |   |   |   | - |   |
| 05-17-2011          |   | 05-14-2012 |   | Secured |   |               | 7.572  | %      |                    |   | 464,145 |   |   |   | - |   |
|                |   |       |   |    |   |               |   |   |                    | $      | 3,558,444 |   |   | $ | 3,030,303 |   |

|                 |   |          |       |   |     |   |       |                               |   |   |   |   | Principal                          |    |
|----------------------|--------|---------------|------------|--------|----------|--------|------------|------------------------------------|--------|--------|--------|--------|------------------------------------|---------|
| Lending Bank    |   | EffectiveDate |       |   | Maturity |   |       | Interest Rate(Per Annum) |   |   | Type   |   | June 30, 2011(Unaudited) |    |   | December 31, 2010  |   |
| China Merchants Bank |   |          | 01-08-2009 |   |     |   | 12-20-2016 |                               |   |   | 7.14   | %      |                               | Secured |   | $ | 10,799,103 |   |   | $ | 11,030,303 |   |
| China Merchants Bank |   |          | 08-20-2009 |   |     |   | 08-20-2017 |                               |   |   | 7.14   | %      |                               | Secured |   |   | 3,021,776 |   |   |   | 3,196,023 |   |
| SPD Bank             |   |          | 04-27-2010 |   |     |   | 04-27-2012 |                               |   |   | 7.04   | %      |                               | Secured |   |   | 1,547,149 |   |   |   | 1,515,152 |   |
| SPD Bank             |   |          | 04-27-2010 |   |     |   | 04-27-2013 |                               |   |   | 7.04   | %      |                               | Secured |   |   | 154,715 |   |   |   | 151,515 |   |
| SPD Bank             |   |          | 10-14-2010 |   |     |   | 04-27-2013 |                               |   |   | 7.04   | %      |                               | Secured |   |   | 4,486,733 |   |   |   | 4,393,939 |   |
| Total                |   |          |       |   |     |   |       |                               |   |   |   |   |                               |    |   | $ | 20,009,476 |   |   | $ | 20,286,932 |   |
| Current Portion      |   |          |       |   |     |   |       |                               |   |   |   |   |                               |    |   | $ | 2,958,923 |   |   | $ | 2,321,970 |   |
| Non-current Portion  |   |          |       |   |     |   |       |                               |   |   |   |   |                               |    |   | $ | 17,050,553 |   |   | $ | 17,964,962 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

| Year       |   | Amount |       |
|------------|--------|--------|------------|
| 2011       |   | $      | 705,888    |   |
| 2012       |   |   | 2,958,923  |   |
| 2013       |   |   | 7,476,599  |   |
| 2014       |   |   | 2,835,151  |   |
| 2015       |   |   | 2,835,151  |   |
| Thereafter |   |   | 3,197,764  |   |
| Total      |   | $      | 20,009,476 |   |

|            |   | June 30, 2011 |      |   | December 31, 2010 |   |
|-----------------|--------|---------------|-----------|--------|-------------------|--------|
|            |   | (Unaudited)   |      |   |              |   |
| Dalian Dongtai  |   | $             | 2,939,583 |   |              | $      | 2,878,788 |   |
| Zhuorui         |   |          | 1,292,961 |   |              |   | 1,287,360 |   |
| Hunan Hanyang   |   |          | -         |   |              |   | 3,181,818 |   |
| Dongtai Organic |   |          | 332,637   |   |              |   | 325,758 |   |
| Total           |   | $             | 4,565,181 |   |              | $      | 7,673,724 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

| Name of related parties                                                     |   | Relationship with the Company                            |
|-----------------------------------------------------------------------------|--------|----------------------------------------------------------|
| Dalian Dongtai Investment Co., Ltd. (“Dongtai Investment”)      |   | Entity controlled by Chairman & CEO Mr. Dong Jinqing |
| Dalian Bofa Chemical Material Co., Ltd.(“Dalian Bofa”)          |   | Entity controlled by Chairman & CEO Mr. Dong Jinqing |
| Dalian Lida Environmental Engineering Co., Ltd. (“Dalian Lida”) |   | Entity controlled by Chairman &C EO Mr. Dong Jinqing |

|                      |   | June 30, 2011 |     |   | December 31, 2010 |   |
|---------------------------|--------|---------------|----------|--------|-------------------|--------|
|                      |   | (Unaudited)   |     |   |         |   |
| Due to Dongtai Investment |   | $             | (402,259 | )      |              | $      | (393,939 | ) |
| Due to Dalian Bofa        |   |          | (98,213  | )      |              |   | - |   |
| Due from Dalian Lida      |   |          | 103,290  |   |              |   | 291,552 |   |

|                                                   |   | For the Six months ended |    |
|--------------------------------------------------------|--------|--------------------------|---------|
|                                                   |   | June 30, 2011            |    |   | June 30, 2010 |   |
| Equipment installation service provided by Dalian Lida |   | $                        | 132,742 |   |   | $ | - |   |
| Raw materials purchased from Dalian Bofa               |   |                     | 178,913 |   |   |   | - |   |
| Sales to Dalian Lida                                   |   |                     | 1,616   |   |   |   | - |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

|                                                               |   | For the Sixmonths endedJune 30, 2011 |       |   | For the Sixmonths endedJune 30, 2010 |   |
|--------------------------------------------------------------------|--------|--------------------------------------|------------|--------|-------------------------------------------|--------|
| Net income attributable to the Company from continuing operation   |   | $                                    | 3,104,356  |   |                                      | $      | 1,881,900 |   |
| Net loss attributable to the Company from discontinued operation   |   |                                 | (221,780   | )      |                                      |   | (67,853 | ) |
| Net income attributable to the company                             |   |                                 | 2,882,576  |   |                                      |   | 1,814,047 |   |
|                                                               |   |                                 |       |   |                                      |   |   |   |
| Weighted average number of common shares – Basic             |   |                                 | 15,336,535 |   |                                      |   | 15,323,068 |   |
| Effect of dilutive securities:                                     |   |                                 |       |   |                                      |   |   |   |
| Option                                                             |   |                                 | -          |   |                                      |   | 20,000 |   |
| Warrants                                                           |   |                                 | -          |   |                                      |   | 2,206,565 |   |
| Weighted average number of common shares - Diluted                 |   |                                 | 15,336,535 |   |                                      |   | 17,549,633 |   |
|                                                               |   |                                 |       |   |                                      |   |   |   |
| Earnings per share                                                 |   |                                 |       |   |                                      |   |   |   |
| Basic:                                                             |   |                                 |       |   |                                      |   |   |   |
| Net income                                                         |   | $                                    | 0.19       |   |                                      | $      | 0.12 |   |
| -Net income attributable to the company from continuing operations |   |                                 | 0.20       |   |                                      |   | 0.12 |   |
| -Net loss attributable to the company from discontinued operation  |   |                                 | (0.01      | )      |                                      |   | - |   |
| Diluted:                                                           |   |                                 |       |   |                                      |   |   |   |
| Net income                                                         |   | $                                    | 0.19       |   |                                      | $      | 0.10 |   |
| -Net income from continuing operations                             |   |                                 | 0.20       |   |                                      |   | 0.10 |   |
| -Net loss from discontinued operation                              |   |                                 | (0.01      | )      |                                      |   | - |   |

| For the Six months endedJune 30, 2011 (Unaudited) |   | Waste treatmentservices andrecycling |       |   | Sludge treatmentequipment supply |   |           | Other  |   |   | Segment totals |   |
|--------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|--------|--------------------------------------------|--------|----------------|--------|--------|--------|---------------------|--------|
| Revenues                                                                             |   | $                                              | 14,409,161 |   |                                       |   | -              |   |   |   | -                   |   |   | $ | 14,409,161 |   |
| Segment profit/(loss) from continuing operation                                      |   | $                                              | 4,009,177  |   |                                       | $      |  (161,100 | )      |   | $      | (354,304            | )      |   | $ | 3,493,773 |   |
| Segment assets                                                                       |   | $                                              | 80,275,737 |   |                                       | $      | 1,032,580      |   |   | $      | 124,487             |   |   | $ | 81,432,804 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

| For the Six months endedJune 30, 2010 (Unaudited) |   | Waste treatmentservices andrecycling |       |   | Sludge treatmentequipment supply |   |          | Other  |   |   | Segment totals |   |
|--------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|--------|--------------------------------------------|--------|---------------|--------|--------|--------|---------------------|--------|
| Revenues                                                                             |   | $                                              | 9,019,421  |   |                                       |   | -             |   |   |   | -                   |   |   | $ | 9,019,421 |   |
| Segment profit/(loss) from continuing operation                                      |   | $                                              | 3,115,841  |   |                                       | $      |  (76,001 | )      |   | $      | (730,760            | )      |   | $ |  2,309,080 |   |
| Segment assets                                                                       |   | $                                              | 57,639,093 |   |                                       | $      | 1,323,926     |   |   | $      | 299,668             |   |   | $ | 59,262,687 |   |
| Assets related to a discontinued operation                                           |   |                                           | 9,949,061  |   |                                       |   | -             |   |   |   | -                   |   |   |   | 9,949,061 |   |
| Total assets                                                                         |   | $                                              | 67,588,154 |   |                                       | $      | 1,323,926     |   |   | $      | 299,668             |   |   | $ | 69,211,748 |   |

| For the Three months endedJune 30, 2011 (Unaudited) |   | Waste treatmentservices andrecycling |      |   | Sludge treatmentequipment supply |   |          | Other  |   |   | Segment totals |   |
|----------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|--------|--------------------------------------------|--------|---------------|--------|--------|--------|---------------------|--------|
| Revenues                                                                               |   | $                                              | 8,343,533 |   |                                       |   | -             |   |   |   | -                   |   |   | $ | 8,343,533 |   |
| Segment profit/(loss) from continuing operation                                        |   | $                                              | 2,440,091 |   |                                       | $      |  (97,026 | )      |   | $      | (183,116            | )      |   | $ | 2,159,949 |   |

| For the Three months endedJune 30, 2010 (Unaudited) |   | Waste treatmentservices andrecycling |      |   | Sludge treatmentequipment supply |   |          | Other  |   |   | Segment totals |   |
|----------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|--------|--------------------------------------------|--------|---------------|--------|--------|--------|---------------------|--------|
| Revenues                                                                               |   | $                                              | 4,924,580 |   |                                       |   | -             |   |   |   | -                   |   |   | $ | 4,924,580 |   |
| Segment profit/(loss) from continuing operation                                        |   | $                                              | 1,691,541 |   |                                       | $      |  (40,793 | )      |   | $      | (162,861            | )      |   | $ |  1,487,887 |   |

|       |   | For the Three months ended |      |   | For the Six months ended |   |
|------------|--------|----------------------------|-----------|--------|--------------------------|--------|
|       |   | June 30, 2011              |      |   | June 30, 2010            |   |   | June 30, 2011 |   |   | June 30, 2010 |   |
| Customer A |   |                       | 1,025,826 |   |                     |   | 832,976 |   |   |   | 2,000,393 |   |   |   | 1,747,664 |   |

|                                |   | For the Three months ended |      |   | For the Six months ended |   |
|-------------------------------------|--------|----------------------------|-----------|--------|--------------------------|--------|
|                                |   | June 30, 2011              |      |   | June 30, 2010            |   |   | June 30, 2011 |   |   | June 30, 2010 |   |
| Service Fees from                   |   |                       |      |   |                     |   |   |   |   |   |   |   |
| Solid waste                         |   | $                          | 4,070,577 |   |                     | $      | 2,393,947 |   |   | $ | 6,873,194 |   |   | $ | 4,423,817 |   |
| Sludge processing                   |   |                       | 769,481   |   |                     |   | 577,813 |   |   |   | 1,497,684 |   |   |   | 1,163,207 |   |
| Sewage processing                   |   |                       | 256,345   |   |                     |   | 255,163 |   |   |   | 502,709 |   |   |   | 584,457 |   |
| Total Service Fees                  |   |                       | 5,096,403 |   |                     |   | 3,226,923 |   |   |   | 8,873,587 |   |   |   | 6,171,481 |   |
| Sales of                            |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Recycled materials                  |   |                       | 2,918,473 |   |                     |   | 1,281,919 |   |   |   | 4,941,623 |   |   |   | 2,018,698 |   |
| Methane gas                         |   |                       | 328,657   |   |                     |   | 415,738 |   |   |   | 593,951 |   |   |   | 829,242 |   |
| Total Sales of Recycled Commodities |   |                       | 3,247,130 |   |                     |   | 1,697,657 |   |   |   | 5,535,574 |   |   |   | 2,847,940 |   |
| Total Sales                         |   | $                          | 8,343,533 |   |                     | $      | 4,924,580 |   |   | $ | 14,409,161 |   |   | $ | 9,019,421 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

| Cash and cash equivalents                                |   | $      | 227,377    |   |
|----------------------------------------------------------|--------|--------|------------|--------|
| Other receivable                                         |   |   | 619        |   |
| Deferred expense                                         |   |   | 4,826      |   |
| Property, plant and equipment, net                       |   |   | 102,343    |   |
| Construction in progress                                 |   |   | 5,438,765  |   |
| BOT franchise right                                      |   |   | 4,332,018  |   |
| Restricted cash                                          |   |   | 687,362    |   |
| Advance from customers                                   |   |   | (1,392     | )      |
| Accrued expenses                                         |   |   | (7,829     | )      |
| Tax payable                                              |   |   | (57        | )      |
| Other payable                                            |   |   | (261,005   | )      |
| Related party payable                                    |   |   | (77,357    | )      |
| Government subsidy                                       |   |   | (3,249,014 | )      |
| Carrying values of net assets on disposal                |   |   | 7,196,656  |   |
| Non-controlling interest                                 |   |   | (2,518,829 | )      |
| The Group’s share of carrying values of net assets |   | $      | 4,677,827  |   |
|                                                     |   |   |       |   |
| Satisfied by cash                                        |   |   | 2,630,154  |   |
| Satisfied by receivable                                  |   |   | 1,856,579  |   |
| Total consideration                                      |   | $      | 4,486,733  |   |
|                                                     |   |   |       |   |
| Foreign exchange effect                                  |   |   | 2,208      |   |
| Loss on disposal of a subsidiary                         |   | $      | 188,886    |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

| Cash consideration                          |   | $      | 2,630,154 |   |
|---------------------------------------------|--------|--------|-----------|--------|
| Cash and bank balances disposed of          |   |   | (227,377  | )      |
| Net cash inflow on disposal of a subsidiary |   | $      | 2,402,777 |   |

|                                |   | For the Threemonth ended |    |   | For the Threemonth ended |   |   | For the Sixmonth ended |   |   | For the Sixmonth ended |   |
|-------------------------------------|--------|-----------------------------------------|---------|--------|-----------------------------------------|--------|--------|---------------------------------------|--------|--------|---------------------------------------|--------|
|                                |   | June 30, 2011                           |    |   | June 30, 2010                           |   |   | June 30, 2011                         |   |   | June 30, 2010                         |   |
| General and administrative expenses |   | $                                       | 18,143  |   |                                    | $      | 47,390 |                                  |   | $      | 50,642                                |   |   | $ | 103,657 |   |
| Bank interest income                |   |                                    | -       |   |                                    |   | -      |                                  |   |   | (36                                   | )      |   |   | - |   |
| Other expense                       |   |                                    | -       |   |                                    |   | -      |                                  |   |   | -                                     |   |   |   | 732 |   |
| Loss from discontinued operations   |   |                                    | 18,143  |   |                                    |   | 47,390 |                                  |   |   | 50,606                                |   |   |   | 104,389 |   |
| Loss on disposal of a subsidiary    |   |                                    | 188,886 |   |                                    |   | -      |                                  |   |   | 188,886                               |   |   |   | - |   |
| Total                               |   | $                                       | 207,029 |   |                                    | $      | 47,390 |                                  |   | $      | 239,492                               |   |   | $ | 104,389 |   |

----

| CHINA INDUSTRIAL WASTE MANAGEMENT, INC.              |
|------------------------------------------------------|
| NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS |
|                                  |

| Construction |   | $      | 1,204,803 |   |
|--------------|--------|--------|-----------|--------|
| Equipment    |   |   | 779,556   |   |
| Total        |   | $      | 1,984,359 |   |

----

| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------------|

----

----

|                                                          |   | Three months endedJune 30, |      |
|---------------------------------------------------------------|--------|----------------------------|-----------|
|                                                          |   | 2011                       |      |   | 2010 |   |
| Revenues                                                      |   | $                          | 8,343,533 |   |   | $ | 4,924,580 |   |
| Cost of revenues                                              |   |                       | 4,031,677 |   |   |   | 1,871,896 |   |
| Gross profit                                                  |   |                       | 4,311,856 |   |   |   | 3,052,684 |   |
| Selling expenses, R&D,General and administrative expenses |   |                       | 1,751,109 |   |   |   | 1,166,052 |   |
| Income from operations                                        |   |                       | 2,560,747 |   |   |   | 1,886,632 |   |
| Income from continuing operations before income taxes         |   |                       | 2,493,350 |   |   |   | 1,742,828 |   |
| Net income for the period                                     |   | $                          | 1,952,920 |   |   | $ | 1,440,497 |   |

|                          |   | Three Months Ended June 30, |      |
|-------------------------------|--------|-----------------------------|-----------|
|                          |   | 2011                        |      |   | 2010 |   |
| Service Fees                  |   | $                           | 5,096,403 |   |   | $ | 3,226,923 |   |
| Sales of Recycled Commodities |   |                        | 3,247,130 |   |   |   | 1,697,657 |   |
| Total Sales                   |   | $                           | 8,343,533 |   |   | $ | 4,924,580 |   |

----

|                                                          |   | Six months endedJune 30, |       |
|---------------------------------------------------------------|--------|--------------------------|------------|
|                                                          |   | 2011                     |       |   | 2010 |   |
| Revenues                                                      |   | $                        | 14,409,161 |   |   | $ | 9,019,421 |   |
| Cost of revenues                                              |   |                     | 7,013,082  |   |   |   | 3,288,847 |   |
| Gross profit                                                  |   |                     | 7,396,079  |   |   |   | 5,730,574 |   |
| Selling expenses, R&D,General and administrative expenses |   |                     | 3,116,342  |   |   |   | 2,229,503 |   |
| Income from operations                                        |   |                     | 4,279,737  |   |   |   | 3,501,071 |   |
| Income from continuing operations before income taxes         |   |                     | 4,096,770  |   |   |   | 2,697,022 |   |
| Net income for the period                                     |   | $                        | 3,254,281  |   |   | $ | 2,204,691 |   |

|                          |   | Six Months Ended June 30, |       |
|-------------------------------|--------|---------------------------|------------|
|                          |   | 2011                      |       |   | 2010 |   |
| Service Fees                  |   | $                         | 8,873,587  |   |   | $ | 6,171,481 |   |
| Sales of Recycled Commodities |   |                      | 5,535,574  |   |   |   | 2,847,940 |   |
| Total Sales                   |   | $                         | 14,409,161 |   |   | $ | 9,019,421 |   |

----

|                         |   | Three months endedJune 30, |      |
|------------------------------|--------|----------------------------|-----------|
|                         |   | 2011                       |      |   | 2010 |   |
| Cost of service fees         |   | $                          | 2,227,935 |   |   | $ | 1,228,378 |   |
| Cost of recycled commodities |   |                       | 1,803,742 |   |   |   | 643,518 |   |
| Total  Cost        |   | $                          | 4,031,677 |   |   | $ | 1,871,896 |   |

|                         |   | Six months endedJune 30, |      |
|------------------------------|--------|--------------------------|-----------|
|                         |   | 2011                     |      |   | 2010 |   |
| Cost of service fees         |   | $                        | 3,917,031 |   |   | $ | 2,256,871 |   |
| Cost of recycled commodities |   |                     | 3,096,051 |   |   |   | 1,031,976 |   |
| Total  Cost        |   | $                        | 7,013,082 |   |   | $ | 3,288,847 |   |

----

|                                 |   | Three months endedJune 30, |      |
|--------------------------------------|--------|----------------------------|-----------|
|                                 |   | 2011                       |      |   | 2010 |   |
| Selling expenses                     |   | $                          | 171,894   |   |   | $ | 168,680 |   |
| R&D expenses                     |   |                       | 101,929   |   |   |   | 56,114 |   |
| General &administrative expenses |   |                       | 1,477,286 |   |   |   | 941,258 |   |
| Total operating expenses             |   | $                          | 1,751,109 |   |   | $ | 1,166,052 |   |

----

|                                 |   | Six months endedJune 30, |      |
|--------------------------------------|--------|--------------------------|-----------|
|                                 |   | 2011                     |      |   | 2010 |   |
| Selling expenses                     |   | $                        | 352,335   |   |   | $ | 320,304 |   |
| R&D expenses                     |   |                     | 196,537   |   |   |   | 150,722 |   |
| General &administrative expenses |   |                     | 2,567,470 |   |   |   | 1,758,477 |   |
| Total operating expenses             |   | $                        | 3,116,342 |   |   | $ | 2,229,503 |   |

----

|                                                |   | For the Six Months Ended |     |
|-----------------------------------------------------|--------|----------------------------------------------|----------|
|                                           |   | June 30, 2011                      |     |   | June 30, 2010 |   |
| Net cash provided by (used in) operating activities |   | $                                            | (530,573 | ) |   | $ | 940,718 |   |
| Net cash used in investing activities               |   |                                         | (925,275 | ) |   |   | (3,221,610 | ) |
| Net cash provided by (used in) financing activities |   | $                                            | 193,710  |   |   | $ | (4,337,516 | ) |

----

----

| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
|---------|------------------------------------------------------------|

| Item 4. | Controls and Procedures |
|---------|-------------------------|

----

| Item 6. | Exhibits |
|---------|----------|

----

|                  | CHINA INDUSTRIAL WASTE MANAGEMENT, INC. |
|-----------------------|-----------------------------------------|
|                  |                                    |   |
| Date: August 15, 2011 |                                    | By:  | /s/ Jinqing Dong |
|                  |                                    | Name:  | Jinqing Dong |
|                  |                                    | Title: | Chairman of the Board and Chief ExecutiveOfficer (Principal executive officer) |
|                  |                                    |   |   |
| Date: August 15, 2011 |                                    | By: | /s/ Xin Guo |
|                  |                                    | Name: Xin Guo |
|                  |                                    | Title: Chief Financial Officer |
|                  |                                    | (Principal financial officer and principal |
|                  |                                    | accounting officer) |

----

| Exhibit No. |         | Description                                                                                                                                                                                                                                                             |
|------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |         |                                                                                                                                                                                                                                                                    |
| 10.1             |         | Equity Transfer Agreement of Hunan Hanyang Environmental Protection Science & Technology Co., Ltd. with Hunan Tian Kun Jia He Investment Co., Ltd., incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 25, 2011. |
|             |         |                                                                                                                                                                                                                                                                    |
| 31.1             |         |  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                               |
|             |         |                                                                                                                                                                                                                                                                    |
| 31.2             |         | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                     |
|             |         |                                                                                                                                                                                                                                                                    |
| 32.1             |         | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                     |
|             |         |                                                                                                                                                                                                                                                                    |
| 32.2             |    | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                     |

----