| 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 March 31, 2011(Unaudited) and December 31, 2010(Audited)                                    | 4      |
|                    |                                                                                                                          |   |
|                    | Consolidated Statements of Operations and Comprehensive Income For the Three Months Ended March 31, 2011 and 2010 (Unaudited) | 5      |
|                    |                                                                                                                          |   |
|                    | Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2011 and 2010 (Unaudited)                          | 6      |
|                    |                                                                                                                          |   |
|                    | Notes to Consolidated Financial Statements March 31, 2011 and 2010 (Unaudited)                                                | 7      |
|                    |                                                                                                                          |   |
| Item 2.                 | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                   | 24     |
|                    |                                                                                                                          |   |
| Item 3.                 | Quantitative and Qualitative Disclosures about Market Risk                                                                    | 31     |
|                    |                                                                                                                          |   |
| Item 4.                 | Controls and Procedures.                                                                                                      | 31     |
|                    |                                                                                                                          |   |
| PART II                 | OTHER INFORMATION                                                                                                             |   |
|                    |                                                                                                                          |   |
| Item 6.                 | Exhibits                                                                                                                      | 32     |
|                    |                                                                                                                          |   |
| Signatures              |                                                                                                                          | 33     |
|                    |                                                                                                                          |   |
| Exhibits/Certifications | 34                                                                                                                            |

----

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

----

|                                                         |   | March 31, 2011 |       |   | December 31, 2010 |   |
|--------------------------------------------------------------|--------|--------------------------|------------|--------|-----------------------------|--------|
|                                                         |   | (Unaudited)              |       |   | (Audited)                   |   |
| ASSETS                                                       |   |                     |       |   |                        |   |
| Current assets                                               |   |                     |       |   |                        |   |
| Cash and cash equivalents                                    |   | $                        | 5,865,833  |   |                        | $      | 8,163,880 |   |
| Notes receivable                                             |   |                     | 220,256    |   |                        |   | 86,364 |   |
| Accounts receivable, net                                     |   |                     | 6,328,174  |   |                        |   | 5,731,847 |   |
| Other receivables                                            |   |                     | 731,547    |   |                        |   | 359,383 |   |
| Inventories                                                  |   |                     | 4,660,680  |   |                        |   | 4,652,148 |   |
| Advances to suppliers                                        |   |                     | 1,552,771  |   |                        |   | 1,624,433 |   |
| Deferred expense                                             |   |                     | 185,607    |   |                        |   | 210,752 |   |
| Related party receivable                                     |   |                     | 344,689    |   |                        |   | 291,552 |   |
| Deferred tax assets                                          |   |                     | 121,705    |   |                        |   | 61,145 |   |
| Total current assets                                         |   |                     | 20,011,262 |   |                        |   | 21,181,504 |   |
|                                                         |   |                     |       |   |                        |   |   |   |
| Long-term equity investment                                  |   |                     | 152,711    |   |                        |   | 151,515 |   |
| Property, plant and equipment, net                           |   |                     | 32,157,991 |   |                        |   | 32,384,139 |   |
| Construction in progress                                     |   |                     | 21,333,856 |   |                        |   | 18,642,061 |   |
| Land usage right, net of accumulated amortization            |   |                     | 2,025,724  |   |                        |   | 2,022,384 |   |
| BOT franchise right                                          |   |                     | 4,275,919  |   |                        |   | 4,242,424 |   |
| Deposits                                                     |   |                     | 77,762     |   |                        |   | 77,152 |   |
| Restricted cash                                              |   |                     | 1,607,845  |   |                        |   | 1,788,510 |   |
| Other assets                                                 |   |                     | 1,248,308  |   |                        |   | 1,233,580 |   |
| Deferred tax assets                                          |   |                     | 584,581    |   |                        |   | 504,017 |   |
| TOTAL ASSETS                                                 |   | $                        | 83,475,959 |   |                        | $      | 82,227,286 |   |
|                                                         |   |                     |       |   |                        |   |   |   |
| LIABILITIES                                                  |   |                     |       |   |                        |   |   |   |
| Current liabilities                                          |   |                     |       |   |                        |   |   |   |
| Short-term loans                                             |   | $                        | 3,054,228  |   |                        | $      | 3,030,303 |   |
| Accounts payable                                             |   |                     | 3,022,277  |   |                        |   | 2,458,260 |   |
| Tax payable                                                  |   |                     | 863,005    |   |                        |   | 513,243 |   |
| Advance from customers                                       |   |                     | 609,005    |   |                        |   | 610,508 |   |
| Deferred sales                                               |   |                     | 798,500    |   |                        |   | 394,862 |   |
| Accrued expenses                                             |   |                     | 52,757     |   |                        |   | 804,205 |   |
| Construction projects payable                                |   |                     | 2,491,470  |   |                        |   | 3,070,169 |   |
| Other payable                                                |   |                     | 378,459    |   |                        |   | 836,141 |   |
| Long-term loan-current portion                               |   |                     | 2,340,302  |   |                        |   | 2,321,970 |   |
| Related party payable                                        |   |                     | 473,405    |   |                        |   | 393,939 |   |
| Total current liabilities                                    |   |                     | 14,083,408 |   |                        |   | 14,433,600 |   |
|                                                         |   |                     |       |   |                        |   |   |   |
| Long-term loans                                              |   |                     | 17,758,425 |   |                        |   | 17,964,962 |   |
| Asset retirement obligation                                  |   |                     | 585,144    |   |                        |   | 571,109 |   |
| Government subsidy                                           |   |                     | 7,734,310  |   |                        |   | 7,673,724 |   |
| TOTAL LIABILITIES                                            |   |                     | 40,161,287 |   |                        |   | 40,643,395 |   |
|                                                         |   |                     |       |   |                        |   |   |   |
| Commitments and contingencies                                |   |                     |       |   |                        |   |   |   |
|                                                         |   |                     |       |   |                        |   |   |   |
| 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 shares issued and outstanding as of               |   |                     |       |   |                        |   |   |   |
| March 31, 2011 and December 31, 2010.                        |   |                     | 15,337     |   |                        |   | 15,337 |   |
| Additional paid-in capital                                   |   |                     | 7,606,512  |   |                        |   | 7,602,625 |   |
| Deferred stock-based compensation                            |   |                     | (595,833   | )      |                        |   | (653,494 | ) |
| Accumulated other comprehensive income                       |   |                     | 3,610,967  |   |                        |   | 3,349,296 |   |
| Retained earnings                                            |   |                     | 23,220,713 |   |                        |   | 21,994,368 |   |
| Total stockholders' equity of the Company                    |   |                     | 33,857,696 |   |                        |   | 32,308,132 |   |
| Noncontrolling interest                                      |   |                     | 9,456,976  |   |                        |   | 9,275,759 |   |
| TOTAL EQUITY                                                 |   |                     | 43,314,672 |   |                        |   | 41,583,891 |   |
|                                                         |   |                     |       |   |                        |   |   |   |
| TOTAL LIABILITIES AND EQUITY                                 |   | $                        | 83,475,959 |   |                        | $      | 82,227,286 |   |

----

|                                                             |   | For the Three Months Ended March 31, |       |
|------------------------------------------------------------------|--------|--------------------------------------------------------------------|------------|
|                                                             |   | 2011                                                               |       |   | 2010 |   |
| Revenues                                                         |   |                                                               |       |   |   |   |
| Service fees                                                     |   | $                                                                  | 3,777,184  |   |   | $ | 2,944,558 |   |
| Sales of  recycled commodities                         |   |                                                               | 2,288,444  |   |   |   | 1,150,283 |   |
| Total revenues                                                   |   |                                                               | 6,065,628  |   |   |   | 4,094,841 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Cost of revenues                                                 |   |                                                               |       |   |   |   |   |   |
| Cost of service fees                                             |   |                                                               | 1,689,096  |   |   |   | 1,028,493 |   |
| Cost of recycled commodities                                     |   |                                                               | 1,292,309  |   |   |   | 388,458 |   |
| Total cost of revenues                                           |   |                                                               | 2,981,405  |   |   |   | 1,416,951 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Gross profit                                                     |   |                                                               | 3,084,223  |   |   |   | 2,677,890 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Operating expenses                                               |   |                                                               |       |   |   |   |   |   |
| Selling expenses                                                 |   |                                                               | 180,441    |   |   |   | 151,624 |   |
| Research and development expenses                                |   |                                                               | 94,608     |   |   |   | 71,486 |   |
| General and administrative expenses                              |   |                                                               | 1,090,184  |   |   |   | 896,608 |   |
| Total operating expenses                                         |   |                                                               | 1,365,233  |   |   |   | 1,119,718 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Income from operations                                           |   |                                                               | 1,718,990  |   |   |   | 1,558,172 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Other income (expense)                                           |   |                                                               |       |   |   |   |   |   |
| Interest expense                                                 |   |                                                               | (240,325   | ) |   |   | (225,803 | ) |
| Bank interest income                                             |   |                                                               | 7,922      |   |   |   | - |   |
| Other income                                                     |   |                                                               | 120,788    |   |   |   | 7,167 |   |
| Other expense                                                    |   |                                                               | (3,955     | ) |   |   | (2,520 | ) |
| Settlement expense                                               |   |                                                               | -          |   |   |   | (439,821 | ) |
| Total other expense                                              |   |                                                               | (115,570   | ) |   |   | (660,977 | ) |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Net income before income tax provision                           |   |                                                               | 1,603,420  |   |   |   | 897,195 |   |
| Income tax provision                                             |   |                                                               | (269,596   | ) |   |   | (133,001 | ) |
| Net income                                                       |   |                                                               | 1,333,824  |   |   |   | 764,194 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Net income attributable to the noncontrolling interest           |   |                                                               | (107,479   | ) |   |   | (155,339 | ) |
| Net income attributable to the Company                           |   | $                                                                  | 1,226,345  |   |   | $ | 608,855 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Foreign currency translation adjustment                          |   |                                                               | 261,671    |   |   |   | 1,532 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Comprehensive income attributable to the Company                 |   |                                                               | 1,488,016  |   |   |   | 610,387 |   |
| Comprehensive income attributable to the noncontrolling interest |   |                                                               | 181,217    |   |   |   | 155,339 |   |
| Comprehensive income                                             |   | $                                                                  | 1,669,233  |   |   | $ | 765,726 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Basic and diluted weighted average shares outstanding            |   |                                                               |       |   |   |   |   |   |
| Basic                                                            |   |                                                               | 15,336,535 |   |   |   | 15,327,507 |   |
| Diluted                                                          |   |                                                               | 15,336,535 |   |   |   | 16,401,437 |   |
|                                                             |   |                                                               |       |   |   |   |   |   |
| Basic and diluted net earnings per share                         |   |                                                               |       |   |   |   |   |   |
| Basic                                                            |   | $                                                                  | 0.08       |   |   | $ | 0.04 |   |
| Diluted                                                          |   | $                                                                  | 0.08       |   |   | $ | 0.04 |   |

----

|                                                                              |   | For the Three Months ended March 31, |       |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|------------|
|                                                                              |   | 2011                                                               |       |   | 2010 |   |
|                                                                              |   |                                                               |       |   |   |   |
| Cash flows from operating activities:                                             |   |                                                               |       |   |   |   |
| Net income attributable to the Company                                            |   | $                                                                  | 1,226,345  |   |   | $ | 608,855 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                                                               |       |   |   |   |   |   |
| Nontrolling interest                                                              |   |                                                               | 107,479    |   |   |   | 155,339 |   |
| Depreciation                                                                      |   |                                                               | 561,365    |   |   |   | 526,771 |   |
| Amortization                                                                      |   |                                                               | 12,568     |   |   |   | 15,837 |   |
| Amortization of deferred stock-based compensation                                 |   |                                                               | 57,661     |   |   |   | 57,661 |   |
| Bad debt allowance                                                                |   |                                                               | 42,548     |   |   |   | 35,547 |   |
| Stock and warrant issued for settlement                                           |   |                                                               | -          |   |   |   | 439,821 |   |
| Option issued for service                                                         |   |                                                               | 3,887      |   |   |   | - |   |
| Accretion expenses                                                                |   |                                                               | 14,035     |   |   |   | 9,155 |   |
| Government subsidy recognized as income                                           |   |                                                               | -          |   |   |   | (7,167 | ) |
|                                                                              |   |                                                               |       |   |   |   |   |   |
| Changes in operating assets and liabilities:                                      |   |                                                               |       |   |   |   |   |   |
| Notes receivable                                                                  |   |                                                               | (133,892   | ) |   |   | 79,307 |   |
| Accounts receivable                                                               |   |                                                               | (640,266   | ) |   |   | (1,091,651 | ) |
| Construction reimbursement receivable                                             |   |                                                               | -          |   |   |   | 703,933 |   |
| Other receivables                                                                 |   |                                                               | (372,164   | ) |   |   | 30,073 |   |
| Inventories                                                                       |   |                                                               | (8,532     | ) |   |   | (307,645 | ) |
| Advance to suppliers                                                              |   |                                                               | (90,482    | ) |   |   | 146,118 |   |
| Deferred expense                                                                  |   |                                                               | 25,145     |   |   |   | (5,142 | ) |
| Other asset                                                                       |   |                                                               | (14,728    | ) |   |   | (128,064 | ) |
| Deferred tax assets                                                               |   |                                                               | (141,124   | ) |   |   | (8,562 | ) |
| Accounts payable                                                                  |   |                                                               | 564,017    |   |   |   | 255,163 |   |
| Tax payable                                                                       |   |                                                               | 349,762    |   |   |   | 197,810 |   |
| Advance from customers                                                            |   |                                                               | (1,503     | ) |   |   | 17,256 |   |
| Accrued expense                                                                   |   |                                                               | (751,448   | ) |   |   | (390,470 | ) |
| Deferred income                                                                   |   |                                                               | 403,638    |   |   |   | (234,131 | ) |
| Other payable                                                                     |   |                                                               | (457,682   | ) |   |   | - |   |
| Net cash provided by operating activities                                         |   |                                                               | 756,629    |   |   |   | 1,105,814 |   |
|                                                                              |   |                                                               |       |   |   |   |   |   |
| Cash flows from investing activities                                              |   |                                                               |       |   |   |   |   |   |
| Purchase of property and equipment                                                |   |                                                               | (60,205    | ) |   |   | (101,464 | ) |
| Construction in progress                                                          |   |                                                               | (2,391,175 | ) |   |   | (726,790 | ) |
| Purchase of intangible assets                                                     |   |                                                               | -          |   |   |   | (6,871 | ) |
| Due from related party                                                            |   |                                                               | (53,137    | ) |   |   | - |   |
| Net cash used in investing activities                                             |   |                                                               | (2,504,517 | ) |   |   | (835,125 | ) |
|                                                                              |   |                                                               |       |   |   |   |   |   |
| Cash flows from financing activities                                              |   |                                                               |       |   |   |   |   |   |
| Repayment of construction project payable                                         |   |                                                               | (578,699   | ) |   |   | (812,769 | ) |
| Repayment of long-term loans                                                      |   |                                                               | (346,747   | ) |   |   | (561,174 | ) |
| Proceeds from related party loan                                                  |   |                                                               | 79,466     |   |   |   | - |   |
| Decrease in Restricted cash                                                       |   |                                                               | 180,665    |   |   |   | - |   |
| Net cash used in financing activities                                             |   |                                                               | (665,315   | ) |   |   | (1,373,943 | ) |
|                                                                              |   |                                                               |       |   |   |   |   |   |
| Effect of exchange rate on cash                                                   |   |                                                               | 115,156    |   |   |   | (4,660 | ) |
|                                                                              |   |                                                               |       |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                         |   |                                                               | (2,298,047 | ) |   |   | (1,107,914 | ) |
|                                                                              |   |                                                               |       |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                    |   |                                                               | 8,163,880  |   |   |   | 11,419,129 |   |
| Cash and cash equivalents, end of period                                          |   | $                                                                  | 5,865,833  |   |   | $ | 10,311,215 |   |
|                                                                              |   |                                                               |       |   |   |   |   |   |
| Supplemental cash flow information:                                               |   |                                                               |       |   |   |   |   |   |
| Cash paid during the period for:                                                  |   |                                                               |       |   |   |   |   |   |
| Interest                                                                          |   | $                                                                  | 400,220    |   |   | $ | 347,272 |   |
| Income taxes                                                                      |   | $                                                                  | -          |   |   | $ | 87,884 |   |
| Non-cash investing and financing activities:                                      |   |                                                               |       |   |   |   |   |   |
| Stock and warrant issued for settlement                                           |   | $                                                                  | -          |   |   | $ | 439,821 |   |
| Transfer of construction in progress to property, plant and equipment             |   | $                                                                  | 21,584     |   |   | $ | - |   |

----

----

----

----

----

----

----

----

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

----

----

|                                         |   | March 31, |    |   | December 31, |   |
|----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                         |   | 2011           |    |   | 2010              |   |
|                                         |   | (Unaudited)    |    |   | (Audited)         |   |
| Long-term equity investment-Xiangtan Dongtai |   | $              | 152,711 |   |              | $      | 151,515 |   |

----

----

| 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 |

----

----

| i)   | Grants related to revenue, such as certain export subsidies and price control subsidies, should be recognized in the period of the related events. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ii)   | Grants to reimburse current expenditures, such as research and development costs, wages, training costs and transportation costs, should be treated as a reduction of current or future related expense, depending on when the related expense is recognized. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iii)   | Grants related to developing property, such as timberlands, or mineral reserves, should be recognized over the useful lives of the assets. |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

|                            |   | March 31, 2011 |      |   | December 31, 2010 |   |
|---------------------------------|--------|--------------------------|-----------|--------|-----------------------------|--------|
| Aging                           |   | (Unaudited)              |      |   | (Audited)                   |   |
| 1-3 months                      |   | $                        | 3,367,891 |   |                        | $      | 3,464,368 |   |
| 4-6 months                      |   |                     | 1,631,489 |   |                        |   | 484,177 |   |
| 7-12 months                     |   |                     | 660,747   |   |                        |   | 1,198,449 |   |
| 1-2 years                       |   |                     | 788,531   |   |                        |   | 723,107 |   |
| over 2 years                    |   |                     | 74,445    |   |                        |   | 12,736 |   |
| Total                           |   | $                        | 6,523,103 |   |                        | $      | 5,882,837 |   |
| Allowance for doubtful accounts |   |                     | (194,929  | )      |                        |   | (150,990 | ) |
| Accounts receivable, net        |   | $                        | 6,328,174 |   |                        | $      | 5,731,847 |   |

|                                     |   | For the Three  |    |   |                              |   |
|------------------------------------------|--------|--------------------------|---------|--------|-----------------------------------|--------|
|                                     |   | Months Ended        |    |   | For the year Ended |   |
|                                     |   | March 31, 2011 |    |   | December 31, 2010       |   |
| Aging                                    |   | (Unaudited)              |    |   | (Audited)                         |   |
| Beginning allowance for doubtful account |   | $                        | 150,990 |   |                              | $      | 31,068 |   |
| Additional charged to bad debt expense   |   |                     | 42,548  |   |                              |   | 118,858 |   |
| Foreign currency translation adjustment  |   |                     | 1,391   |   |                              |   | 1,064 |   |
| Ending allowance for doubtful accounts   |   | $                        | 194,929 |   |                              | $      | 150,990 |   |

----

----

|                 |   | March 31, 2011 |      |   | December 31, 2010 |   |
|----------------------|--------|--------------------------|-----------|--------|-----------------------------|--------|
|                 |   | (Unaudited)              |      |   | (Audited)                   |   |
| Raw materials        |   | $                        | 2,171,541 |   |                        | $      | 2,129,507 |   |
| Recycled commodities |   |                     | 2,489,139 |   |                        |   | 2,522,641 |   |
|                 |   | $                        | 4,660,680 |   |                        | $      | 4,652,148 |   |

|                              |   | March 31, 2011 |       |   | December 31, 2010 |   |
|-----------------------------------|--------|--------------------------|------------|--------|-----------------------------|--------|
|                              |   | (Unaudited)              |       |   | (Audited)                   |   |
| Buildings                         |   | $                        | 16,356,407 |   |                        | $      | 16,228,283 |   |
| Machinery and equipment           |   |                     | 20,236,166 |   |                        |   | 20,045,833 |   |
| Office equipment                  |   |                     | 785,794    |   |                        |   | 749,715 |   |
| Vehicles                          |   |                     | 1,768,252  |   |                        |   | 1,734,613 |   |
|                              |   |                     | 39,146,619 |   |                        |   | 38,758,444 |   |
| Less accumulated depreciation     |   |                     | (6,988,628 | )      |                        |   | (6,374,305 | ) |
| Total property and equipment, net |   |                     | 32,157,991 |   |                        |   | 32,384,139 |   |
|                              |   |                     |       |   |                        |   |   |   |
| Construction in progress          |   |                     | 21,333,856 |   |                        |   | 18,642,061 |   |
| Total                             |   | $                        | 53,491,847 |   |                        | $      | 51,026,200 |   |

----

----

|                     |   | March 31, |      |   | December 31, |   |
|--------------------------|--------|----------------|-----------|--------|-------------------|--------|
|                     |   | 2011           |      |   | 2010              |   |
|                     |   | (Unaudited)    |      |   | (Audited)         |   |
| Land usage right         |   | $              | 2,382,914 |   |              | $      | 2,364,248 |   |
| Accumulated amortization |   |           | (357,190  | )      |              |   | (341,864 | ) |
| Land usage right, net    |   | $              | 2,025,724 |   |              | $      | 2,022,384 |   |

| Year       |   | Amount |      |
|------------|--------|--------|-----------|
| 2011       |   | $      | 37,881    |   |
| 2012       |   |   | 50,508    |   |
| 2013       |   |   | 50,508    |   |
| 2014       |   |   | 50,508    |   |
| 2015       |   |   | 50,508    |   |
| Thereafter |   |   | 1,785,811 |   |
| Total      |   | $      | 2,025,724 |   |

|           |   |             |   |    |   |               |   |   | Principal                |   |
|----------------|--------|------------------|--------|---------|--------|--------------------|--------|--------|--------------------------|--------|
|           |   |             |   |    |   | Interest Rate |   |   | March 31, 2011 |   |   | December 31, 2010 |   |
| Effective Date |   | Maturity         |   | Type    |   | (Per Annum)   |   |   | (Unaudited)              |   |   | (Audited) |   |
| 06-13-2010     |   |  06-10-2011 |   | Secured |   |               | 6.372  | %      |                     | $      | 3,054,228 |   |   | $ | 3,030,303 |   |

----

----

|                 |   |          |   |       |   |                                     |   |          |    | Principal                           |   |
|----------------------|--------|---------------|--------|------------|--------|------------------------------------------|--------|---------------|---------|-------------------------------------|--------|
| Lending Bank    |   | EffectiveDate |   | Maturity   |   | Interest Rate (Per Annum) |   | Type          |    | March 31, 2011(Unaudited) |   |   | December 31, 2010(Audited) |   |
| China Merchants Bank |   | 01-08-2009    |   | 12-20-2016 |   |                                     | 6.72   | %   | Secured |                                | $      | 10,888,322 |   |   | $ | 11,030,303 |   |
| China Merchants Bank |   | 08-20-2009    |   | 08-20-2017 |   |                                     | 6.72   | %             | Secured |                                |   | 3,101,950 |   |   |   | 3,196,023 |   |
| SPD Bank             |   | 04-27-2010    |   | 04-27-2012 |   |                                     | 6.435  | %             | Secured |                                |   | 1,527,114 |   |   |   | 1,515,152 |   |
| SPD Bank             |   | 04-27-2010    |   | 04-27-2013 |   |                                     | 6.435  | %             | Secured |                                |   | 152,711 |   |   |   | 151,515 |   |
| SPD Bank             |   | 10-14-2010    |   | 04-27-2013 |   |                                     | 6.435  | %             | Secured |                                |   | 4,428,630 |   |   |   | 4,393,939 |   |
| Total                |   |          |   |       |   |                                     |   |          |    |                                | $      | 20,098,727 |   |   | $ | 20,286,932 |   |
| Current Portion      |   |          |   |       |   |                                     |   |          |    |                                | $      | 2,340,302 |   |   | $ | 2,321,970 |   |
| Non-current Portion  |   |          |   |       |   |                                     |   |          |    |                                | $      | 17,758,425 |   |   | $ | 17,964,962 |   |

| Year       |   | Amount |       |
|------------|--------|--------|------------|
| 2011       |   | $      | 1,755,226  |   |
| 2012       |   |   | 3,867,416  |   |
| 2013       |   |   | 6,921,644  |   |
| 2014       |   |   | 2,340,302  |   |
| 2015       |   |   | 2,340,302  |   |
| Thereafter |   |   | 2,873,837  |   |
| Total      |   | $      | 20,098,727 |   |

----

----

|            |   | March 31, 2011 |      |   | December 31, 2010 |   |
|-----------------|--------|--------------------------|-----------|--------|-----------------------------|--------|
|            |   | (Unaudited)              |      |   | (Audited)                   |   |
| Dalian Dongtai  |   | $                        | 2,901,517 |   |                        | $      | 2,878,788 |   |
| Zhuorui         |   |                     | 1,297,525 |   |                        |   | 1,287,360 |   |
| Hunan Hanyang   |   |                     | 3,206,939 |   |                        |   | 3,181,818 |   |
| Dongtai Organic |   |                     | 328,329   |   |                        |   | 325,758 |   |
| Total           |   | $                        | 7,734,310 |   |                        | $      | 7,673,724 |   |

----

----

|                                                                                 |   | March 31, 2011 |     |   | December 31, 2010 |   |
|--------------------------------------------------------------------------------------|--------|--------------------------|----------|--------|-----------------------------|--------|
|                                                                                 |   | (Unaudited)              |     |   | (Audited)                   |   |
| Due to Dalian Dongtai Investment Co., Ltd. (“Dongtai Investment”)        |   | $                        | (397,049 | )      |                        | $      | (393,939 | ) |
| Due to Xiangtan Dongtai                                                              |   |                     | (76,356  | )      |                        |   | - |   |
| Due from Dalian Lida Environmental Engineering Co., Ltd. (“Dalian Lida”) |   | $                        | 344,689  |   |                        | $      | 291,552 |   |

|                                                   |   | For the Threemonths endedMarch 31, 2011 |       |   | For the Threemonths endedMarch 31, 2010 |   |
|--------------------------------------------------------|--------|------------------------------------------------------------------|------------|--------|------------------------------------------------------------------|--------|
| Net income attributable to the Company                 |   | $                                                                | 1,226,345  |   |                                                             | $      | 608,855 |   |
| Adjustments for diluted EPS calculation                |   |                                                             | -          |   |                                                             |   | - |   |
| Adjusted net income for calculating EPS-diluted        |   | $                                                                | 1,226,345  |   |                                                             | $      | 608,855 |   |
|                                                   |   |                                                             |       |   |                                                             |   |   |   |
| Weighted average number of common shares – Basic |   |                                                             | 15,336,535 |   |                                                             |   | 15,327,507 |   |
| Effect of dilutive securities:                         |   |                                                             |       |   |                                                             |   |   |   |
| Option                                                 |   |                                                             | -          |   |                                                             |   | 20,000 |   |
| Warrants                                               |   |                                                             | -          |   |                                                             |   | 1,053,930 |   |
| Stock-based compensation                               |   |                                                             | -          |   |                                                             |   | - |   |
| Weighted average number of common shares - Diluted     |   |                                                             | 15,336,535 |   |                                                             |   | 16,401,437 |   |
|                                                   |   |                                                             |       |   |                                                             |   |   |   |
| Earnings per share                                     |   |                                                             |       |   |                                                             |   |   |   |
| Basic                                                  |   | $                                                                | 0.08       |   |                                                             | $      | 0.04 |   |
| Diluted                                                |   | $                                                                | 0.08       |   |                                                             | $      | 0.04 |   |

----

----

| For the Three months endedMarch 31, 2011 (Unaudited) |   | Waste treatmentand recycling |       |   | Sludge treatmentequipment supply |   |          | Other  |   |   | Segmenttotals |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------|------------|--------|--------------------------------------------|--------|---------------|--------|--------|--------|---------------|--------|
| Revenues                                                                                |   | $                                      | 6,065,628  |   |                                       |   | -             |   |   |   | -             |   |   | $ | 6,065,628 |   |
| Segment profit/(loss)                                                                   |   | $                                      | 1,569,086  |   |                                       | $      |  (64,074 | )      |   | $      | (171,188      | )      |   | $ | 1,333,824 |   |
| Segment assets                                                                          |   | $                                      | 82,187,766 |   |                                       | $      | 1,164,601     |   |   | $      | 123,592       |   |   | $ | 83,475,959 |   |

| For the Three months endedMarch 31, 2010 (Unaudited) |   | Waste treatmentand recycling |       |   | Sludge treatmentequipment supply |   |          | Other  |   |   | Segmenttotals |   |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------|------------|--------|--------------------------------------------|--------|---------------|--------|--------|--------|---------------|--------|
| Revenues                                                                                |   | $                                      | 4,094,841  |   |                                       |   | -             |   |   |   | -             |   |   | $ | 4,094,841 |   |
| Segment profit/(loss)                                                                   |   | $                                      | 1,367,301  |   |                                       | $      |  (35,208 | )      |   | $      | (567,899      | )      |   | $ |  764,194 |   |
| Segment assets                                                                          |   | $                                      | 68,368,872 |   |                                       | $      | 1,357,368     |   |   | $      | 404,868       |   |   | $ | 70,131,108 |   |

|       |   | For the Three months ended |      |
|------------|--------|------------------------------------------------|-----------|
|       |   | March 31, 2011                       |      |   | March 31, 2010 |   |
| Customer A |   |                                           | 736,665   |   |   |   | 914,688 |   |
| Customer B |   |                                           | 265,294   |   |   |   | 413,504 |   |
|       |   |                                           | 1,001,959 |   |   |   | 1,328,192 |   |

|                                |   | For the Three months ended |      |
|-------------------------------------|--------|------------------------------------------------|-----------|
|                                |   | March 31, 2011                       |      |   | March 31, 2010 |   |
| Service Fees from                   |   |                                           |      |   |   |   |
| Solid waste                         |   | $                                              | 2,802,617 |   |   | $ | 2,029,870 |   |
| Sludge processing                   |   |                                           | 728,203   |   |   |   | 585,394 |   |
| Sewage processing                   |   |                                           | 246,364   |   |   |   | 329,294 |   |
| Total Service Fees                  |   |                                           | 3,777,184 |   |   |   | 2,944,558 |   |
| Sales of                            |   |                                           |      |   |   |   |   |   |
| Recycled materials                  |   |                                           | 2,023,150 |   |   |   | 736,779 |   |
| Methane gas                         |   |                                           | 265,294   |   |   |   | 413,504 |   |
| Total Sales of Recycled Commodities |   |                                           | 2,288,444 |   |   |   | 1,150,283 |   |
| Total Sales                         |   | $                                              | 6,065,628 |   |   | $ | 4,094,841 |   |

----

----

| Construction |   | $      | 2,231,686 |   |
|--------------|--------|--------|-----------|--------|
| Equipment    |   |   | 1,028,506 |   |
| Total        |   | $      | 3,260,192 |   |

----

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

----

----

|                                                           |   | Three Months Ended March 31, |      |
|----------------------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                           |   | 2011                                             |      |   | 2010 |   |
| Revenues                                                       |   | $                                                | 6,065,628 |   |   | $ | 4,094,841 |   |
| Cost of revenues                                               |   |                                             | 2,981,405 |   |   |   | 1,416,951 |   |
| Gross profit                                                   |   |                                             | 3,084,223 |   |   |   | 2,677,890 |   |
| Selling expenses, R&D, General and administrative expenses |   |                                             | 1,365,233 |   |   |   | 1,119,718 |   |
| Income from operations                                         |   |                                             | 1,718,990 |   |   |   | 1,558,172 |   |
| Net income before tax provision                                |   |                                             | 1,603,420 |   |   |   | 897,195 |   |
| Net income for the period                                      |   | $                                                | 1,333,824 |   |   | $ | 764,194 |   |

----

|                          |   | Three Months Ended March 31, |      |
|-------------------------------|--------|--------------------------------------------------|-----------|
|                          |   | 2011                                             |      |   | 2010 |   |
| Service Fees                  |   | $                                                | 3,777,184 |   |   | $ | 2,944,558 |   |
| Sales of Recycled Commodities |   |                                             | 2,288,444 |   |   |   | 1,150,283 |   |
| Total Sales                   |   | $                                                | 6,065,628 |   |   | $ | 4,094,841 |   |

|                         |   | Three Months Ended March 31, |      |
|------------------------------|--------|--------------------------------------------------|-----------|
|                         |   | 2011                                             |      |   | 2010 |   |
| Cost of Service Fees         |   | $                                                | 1,689,096 |   |   | $ | 1,028,493 |   |
| Cost of Recycled Commodities |   |                                             | 1,292,309 |   |   |   | 388,458 |   |
| Total Cost                   |   | $                                                | 2,981,405 |   |   | $ | 1,416,951 |   |

----

|                                |   | Three Months Ended March 31, |      |
|-------------------------------------|--------|--------------------------------------------------|-----------|
|                                |   | 2011                                             |      |   | 2010 |   |
| Selling expenses                    |   | $                                                | 180,441   |   |   | $ | 151,624 |   |
| R&D expenses                    |   |                                             | 94,608    |   |   |   | 71,486 |   |
| General and administrative expenses |   |                                             | 1,090,184 |   |   |   | 896,608 |   |
| Total operating expenses            |   | $                                                | 1,365,233 |   |   | $ | 1,119,718 |   |

----

|                                      |   | For the Three Months Ended March 31, |       |
|-------------------------------------------|--------|--------------------------------------------------------------------|------------|
|                                      |   | 2011                                                               |       |   | 2010 |   |
| Net cash provided by operating activities |   | $                                                                  | 756,629    |   |   | $ | 1,105,814 |   |
| Net cash used in investing activities     |   | $                                                                  | (2,504,517 | ) |   | $ | (835,125 | ) |
| Net cash used in financing activities     |   | $                                                                  | (665,315   | ) |   | $ | (1,373,943 | ) |

----

----

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

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

----

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

----

|                           | CHINA INDUSTRIAL WASTE MANAGEMENT, INC. |
|--------------------------------|-----------------------------------------|
|                           |                                    |   |
| Dated:  May 13, 2011 | By:                                     | /s/ Jinqing Dong  |
|                           |                                    |  Name: Jinqing Dong |
|                           |                                    |  Title: Chairman of the Board and Chief Executive |
|                           |                                    |    Officer |
|                           |                                    |  (principal executive officer) |
|                           |                                    |   |
| Dated:  May 13, 2011 | By:                                     | /s/ Xin Guo  |
|                           |                                    |  Name: Xin Guo |
|                           |                                    |  Title: Chief Financial Officer |
|                           |                                    |  (principal financial officer and principal |
|                           |                                    |  accounting officer) |

----

| Exhibit No. |   | Description                                                                                               |
|------------------|--------|-----------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                      |
| 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.       |

----