<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
(Mark One)

         [x]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2005

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

                  For the transition period from _____________ to _____________

Commission File Number 000-26175

                       China Evergreen Environmental Corp.
                       -----------------------------------
        (Exact name of small business issuer as specified in its charter)

           Nevada                                                 88-0409151
           ------                                                 ----------
(State or other jurisdiction                                    (IRS Employer
of incorporation or organization)                            Identification No.)

                  5/F, Guowei Building, 73 Xianlie Middle Road
              Guangzhou, Guangdong, The People's Republic Of China
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 86-20-8732-7909
                                 ---------------
                           (Issuer's telephone number)


                                 Not Applicable
                                 --------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

            Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
                        Yes    [X]             No   [ ]

            As of August 12, 2005, the Company had 99,999,997 shares of its
common stock issued and outstanding.

            Transitional Small Business Disclosure Format (Check one):
Yes [ ] No  [X]

<PAGE>

                         PART 1 - FINANCIAL INFORMATION

                                                                         Page(s)
Item 1.     Financial Statements


Unaudited Consolidated Balance Sheets
     at December 31, 2004 and June 30, 2005..................................F-1
Unaudited Consolidated Statements of Operations for the
   three month periods ended June 30, 2005 and 2004..........................F-2
Unaudited Consolidated Statements of Cash Flows for the
   three month periods ended June 30, 2005 and 2004..........................F-3
Notes to Unaudited Consolidated Financial Statements.........................F-4

                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION


ITEM  1  FINANCIAL STATEMENTS

<TABLE>

CHINA EVERGREEN ENVIRONMENTAL CORP

Unaudited Consolidated Balance Sheets

                                                                   June 30,2005       Dember 31,2004
                                                                    (Unaudited)            (Audited)
                                                                    -----------            ---------
                                                                            US$                  US$
<S>                                                                     <C>                  <C>
Current assets
Cash and cash equivalents                                               295,254              336,079
Inventories, net                                                          2,422                    -
Accounts receivable                                                   2,630,583            9,462,999
Prepayment, deposits and other receivables                            2,503,491              777,365
Amounts due from related companies                                    3,463,559            3,158,328
Amounts due from directors                                                    -               26,794
Amount due from an associate                                          1,749,535            1,744,775
Deferred tax assets                                                     209,206              199,981
                                                                    ------------         ------------
Total current assets                                                 10,854,050           15,706,321

Non-current assets
Infrastructure assets, net                                            5,239,895            3,305,089
Property, plant and equipment, net                                      322,595              330,865
Convertible note receivable                                           1,156,690            1,366,997
Deposit paid for acquisition of property, plant and equipment           543,478              543,478
Interest in an associate                                                432,846              345,363
                                                                    ------------         ------------
Total non-current assets                                              7,695,504            5,891,792
                                                                    ------------         ------------

Total assets                                                         18,549,554           21,598,113
                                                                    ============         ============
Current liabilities

Unsecured loan                                                          181,160              229,468
Convertible debenture (Note 6)                                          500,000                    -
Other borrowing                                                               -               24,155
Accounts Payable                                                      4,443,211            8,755,148
Accrued liabilities                                                     460,342              526,068
Amounts due to directors                                                493,212              606,645
Amounts due to related companies                                      2,937,291            2,864,506
Deposit received for disposal of a subsidiary                                 -              350,514
Income tax payable                                                      927,258              626,249
                                                                    ------------         ------------
Total current liabilities                                             9,942,474           13,982,753

Minority interests                                                      315,214              159,642

Stockholders' equity
Common stock                                                             83,800               83,800
Additional paid in capital                                            3,857,296            3,857,296
Retained earnings / (accumulated deficit)                             4,350,770            3,514,622
                                                                    ------------         ------------
Total stockholders' equity                                            8,291,866            7,455,718
                                                                    ------------         ------------

Total liabilities and stockholders' equity                           18,549,554           21,598,113
                                                                    ============         ============
</TABLE>

                                                     F-1
<PAGE>
<TABLE>

CHINA EVERGREEN  ENVIRONMENTAL  CORP

Unaudited Consolidated Statements of Operations

                                                Three months                  Six months
                                               ended June 30,                ended June 30,
                                        -------------------------      -------------------------
                                           2005           2004           2005            2004
                                        ----------     ----------      ----------     ----------
                                            US$            US$            US$              US$
<S>                                      <C>              <C>           <C>              <C>
Revenue (Note 4)                         2,120,882        111,228       4,000,954        191,014

Cost of revenue                          1,353,769         24,728       2,657,008         58,978
                                        ----------     ----------      ----------     ----------
Gross profit                               767,113         86,500       1,343,946        132,036

General and administrative expenses        359,147         73,994         444,493        175,518
                                        ----------     ----------      ----------     ----------
Income / (loss) from operations            407,966         12,506         899,453        (43,482)

Other income                                   137         23,879           2,861         35,094

Share of results in an associate            51,695             --          87,483             --

Interest expense                            19,412             --          23,827          4,818
                                        ----------     ----------      ----------     ----------
Income / (loss) before income tax          440,386         36,385         965,970        (13,206)

Income tax expense / (credit)               18,478         (1,917)         70,867         (8,416)

Minority interests                          13,767          7,323          58,955          2,498
                                        ----------     ----------      ----------     ----------
Net income / (loss)                        408,141         30,979         836,148         (7,288)
                                        ==========     ==========      ==========     ==========
Basic net income / (loss) per
  share (Note 5)                           0.00408        0.00036         0.00836       (0.00008)
</TABLE>

                                                F-2
<PAGE>
<TABLE>

CHINA  EVERGREEN ENVIRONMENTAL CORP

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
                                                                                    Six months ended June 30,
                                                                                     2005              2004
                                                                                     ----              ----
<S>                                                                                 <C>               <C>
Cash flows from operating activities:

Net income / (loss)                                                                 836,148           (7,288)

Adjustments to reconcile net income / (loss) to net cash provided by /
(used in) operating activities:
     Depreciation and amortization                                                   47,406           47,695

     Provision for inventories                                                           --           12,558
     Increase in deferred tax assets                                                 (9,225)          (1,765)
     Increase in minority interests                                                 155,571            2,499
     Share of results in an associate                                               (87,483)              --

Changes in operating assets and liabilities:
     Increase in inventories                                                         (2,422)          (5,343)
     Decrease / (increase) in accounts receivable                                 6,692,209           (4,772)
     (Increase) / decrease in prepayment, deposits and
        other receivables                                                        (1,726,126)         566,315
     (Decrease) / increase in accounts payable                                   (4,311,936)         534,938
     (Decrease) / increase in accrued liabilities                                   (65,725)       2,154,750
     Decrease in amounts due to directors                                           (86,640)        (745,895)
     Decrease / (increase) in amounts due from related companies                    619,640       (2,952,692)
     Increase / (decrease) in tax payable                                           301,009         (118,816)
     (Decrease) / increase in amounts due to related companies                     (852,085)         161,741
                                                                                 -----------      -----------
Net cash provided by / (used in) operating activities                             1,510,341         (356,075)

Cash flows from investing activities:
      Deposit paid for acquisition of property, plant and equipment                      --        2,619,566
      Acquisition of infrastructure assets                                       (1,973,942)      (1,263,445)
      Increase in amount due from an associate                                       (4,760)         (10,477)
                                                                                 -----------      -----------

Net cash (used in) / provided by investing activities                            (1,978,702)       1,345,644

Cash flows from financing activities:
       Increase in share capital                                                         --          241,546
       Proceeds from convertible debenture issued                                   500,000               --
       Repayment of borrowing                                                       (72,464)      (1,145,170)
                                                                                 -----------      -----------

Net cash provided by / (used in) financing activities                               427,536         (903,624)
                                                                                 -----------      -----------

Net (decrease) / increase in cash and cash equivalents                              (40,825)          85,945

Cash and cash equivalents, beginning of period                                      336,079           54,556

Cash and cash equivalents, end of period                                            295,254          140,501
</TABLE>

                                                          F-3
<PAGE>

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The condensed consolidated financial statements of China Evergreen Environmental
Corp. (the "Company") and subsidiaries (the "Group") included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"). Certain information and
footnote disclosures normally included in consolidated financial statements
prepared in conjunction with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. These condensed consolidated financial statements
should be read in conjunction with the annual audited financial statements and
the notes thereto included in the Company's Form 10-KSB Annual Report, and other
reports filed with the SEC.

The accompanying unaudited quarterly consolidated financial statements reflect
all adjustments of a normal and recurring nature which are, in the opinion of
management, necessary to present fairly the financial position, results of
operations and cash flows of the Group for the periods presented. The results of
operations for these periods are not necessarily comparable to, or indicative
of, results of any other quarterly period of or for the fiscal year taken as a
whole. Factors that affect the comparability of financial data from year to year
and for comparable quarterly periods include non-recurring expenses associated
with the Group's costs incurred to reorganize the Group, raise capital, and
stock options and awards. Certain financial information that is not required for
interim financial reporting purposes has been omitted.

NOTE 2 - DESCRIPTION OF BUSINESS

Our company was organized as a Nevada corporation on September 10, 1996 under
the name Discovery Investments, Inc., and was previously engaged in the business
of seeking, investigating and, if such investigation warranted, acquiring an
interest in a business opportunity.

On October 15, 2004, we were the subject of a reverse acquisition by Evergreen
Asset Group Limited, an International Business Company organized under the laws
of the British Virgin Islands ("Evergreen"), pursuant to which we have acquired
100% of the outstanding shares of Evergreen capital stock in exchange for a
controlling interest in our common stock. Pursuant to a securities purchase
agreement dated September 9, 2004, as amended, we issued 83,500,000 shares of
our common stock (representing 83.5% of our outstanding capital stock) in
exchange for all of the issued and outstanding shares of Evergreen capital stock
transferred to us by the Evergreen shareholders at the closing. Following the
close of the reverse acquisition, we changed our corporate name from Discovery
Investments, Inc. to China Evergreen Environmental Corp. ("CEEC", "we", "us" or
the "Company").

                                      F-4
<PAGE>

As a result of the transactions described above, Evergreen became our wholly
owned subsidiary. Evergreen, through its three majority owned subsidiaries,
Guang Dong Xin Xing Mei Biology Company Limited ("XXM"), Bei Jing Hao Tai Shi
Yuan Water Purifying Company Limited ("BJHT) and Hai Yang City Sheng Shi
Environment Protection Company Limited ("HY"), provides waste water turn-key
engineering, equipment and chemical trading. Evergreen currently holds 90% of
XXM. XXM provides turnkey waste water treatment engineering design and
contracting. XXM also holds 90% and 35% respectively in the equity interest of
the following two water treatment facilities operated through build, operate and
transfer (BOT) arrangements with the PRC government: (i) Tian Jin Shi Sheng
Water Treatment Company Limited ("TJSH"), which commissioned water treatment in
November 2003 and has a daily treatment capacity of approximately 10,000 cubic
meter and; (ii) Xin Le Sheng Mei Water Purifying Company Limited ("XL"), which
also commissioned water treatment in November 2003 and has a daily treatment
capacity of 40,000 cubic meter. XXM is retained as the managers to manage both
TJSH and XL. The fees from XL and TJSH did not represent a material portion of
our revenue during the second quarter of 2005.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

IMPAIRMENT OF ASSETS: The Group's policy is to periodically review and evaluate
whether there has been a permanent impairment in the value of long-lived assets.
Factors considered in the evaluation include current operating results, trends
and anticipated undiscounted future cash flows. An impairment loss is recognized
to the extent that the sum of undiscounted estimated future cash flows that is
expected to result from the use of the asset, or other measure of fair value, is
less than the carrying value.

OTHER INVESTMENT: Other investment includes equity investment in a private
company and is carried at fair value. Unless there has been a permanent
impairment to the value of the investment, the change in fair value is reported
as a separate component of other comprehensive income or loss. Permanent
impairment to the value of the investment is recognized in the consolidated
statements of operations.

REVENUE RECOGNITION: Revenue from fixed price long-term contracts is recognized
on the percentage of completion method for individual contracts. Revenues are
recognized in the ratio that costs incurred bear to total estimated contract
costs. The use of the percentage of completion method of revenue recognition
requires estimates of percentage of project completion. Changes in job
performance, estimated profitability and final contract settlements may result
in revisions to costs and income in the period in which the revisions are
determined. Provisions for any estimated losses on uncompleted contracts are
made in the period in which such losses are determinable. In instances when the
work performed on fixed price agreements is of relatively short duration, we use
the completed contract method of accounting whereby revenue is recognized when
the work is completed. Revenue arising from waste water treatment is recognized
based on waste water treated as recorded by meters read during the quarter.

INCOME PER SHARE: Basic income per share is computed by dividing the net income
for the year by the weighted average number of common shares outstanding during
the year. Diluted income per share is computed by dividing the net income for
the year by the weighted average number of common and common equivalent shares
outstanding during the year. Common equivalent shares, composed of incremental
common shares issuable upon the exercise of stock options, unvested restricted
common stock and contingently issuable shares that are probable of being issued,
are included in diluted income per share to the extent such shares are dilutive.
In accordance with SFAS 128, "Earnings Per Share", the Company uses income from
continuing operations, net of income taxes as the "control number" in
determining whether common equivalent shares are dilutive or anti-dilutive in
periods where discontinued operations are reported.

                                      F-5
<PAGE>

NOTE 4 -  REVENUE

The Company reported total revenue of $2,120,882 for the three month period
ended June 30, 2005 as compared to $111,228 for the three month period ended
June 30, 2004. During the six month periods ended June 30, 2005 and 2004, the
revenue increase to $4,000,954 from 191,014. This increase in the three and six
month revenue are mainly due to the completion of one turnkey engineering waste
water project in Le Chang City in the first quarter of 2005 and the completion
of the remaining 15% construction of the waste water treatment plant of Xian
Yang City and one turnkey engineering waste water project in Yong Ji Economic
Development Zone coupled with the revenue from Tian Jin BOT waste water
treatment plant.


NOTE 5 - BASIC NET INCOME PER SHARE

The basic net income per share is calculated using the net income and the
weighted average number of shares outstanding during the period.

                                            Six months ended June 30,
                                              2005              2004
                                              ----              ----
Net income / (loss)                      $    836,148      $     (7,288)
Weighted average number of
common shares outstanding                  99,999,997        86,970,079

Basic net income / (loss) per share           0.00836          (0.00008)


NOTE 6 - CONVERTIBLE DEBENTURE

In April 2005, the Company conducted the private placement sale of 20 units, at
USD25,000 per unit, for the gross proceeds of USD500,000. Each unit consisted of
(a) one 12% convertible debenture in the original principal amount of USD25,000,
convertible into shares of the Company's common stock at the rate of the lesser
of (i) USD0.20 per share or (ii) a 10% discount to the price per share of common
stock (or conversion price per share of common stock) of the next private
placement conducted by the Company prior to any conversion of the debenture, and
(b) 125,000 detachable warrants to purchase one share each of the Company's
common stock at an exercise price of USD0.20 per share, expiring ten years from
their date of issuance. The debentures are due and payable August 1, 2005. The
debenture holders have, however, extended the payment period to September 1,
2005.

                                      F-6

<PAGE>


ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS


FORWARD-LOOKING INFORMATION

Much of the discussion in this Item is "forward looking" as that term is used in
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934. Actual operations and results may materially differ from present plans
and projections due to changes in economic conditions, new business
opportunities, changed business conditions, and other developments. Other
factors that could cause results to differ materially are described in our
filings with the Securities and Exchange Commission.

The following are factors that could cause actual results or events to differ
materially from those anticipated, and include, but are not limited to general
economic, financial and business conditions, changes in and compliance with
governmental laws and regulations, including various state and federal
environmental regulations, our ability to obtain additional financing from
outside investors and/or bank and mezzanine lenders; and our ability to generate
sufficient revenues to cover operating losses and position us to achieve
positive cash flow.

Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof. We believe
the information contained in this Form 10-QSB to be accurate as of the date
hereof. Changes may occur after that date. We will not update that information
except as required by law in the normal course of our public disclosure
practices.

Additionally, the following discussion regarding our financial condition and
results of operations should be read in conjunction with the financial
statements and related notes contained in Item 1 of Part I of this Form 10-QSB.

RESULTS OF OPERATIONS

The following table sets forth the items in our consolidated statements of
operations for the periods indicated.

                                       3
<PAGE>
<TABLE>
                                                   Three months ended                 Six months ended
                                                        June 30,                          June 30,
                                                        --------                          --------

                                               2005               2004             2005                2004
                                               ----               ----             ----                ----
<S>                                        <C>                   <C>             <C>                 <C>
Revenue .............................      $ 2,120,882           111,228         4,000,954           191,014
Cost of revenue .....................       (1,353,769)          (24,728)       (2,657,008)          (58,978)
Gross profit ........................          767,113            86,500         1,343,946           132,036
General and administrative expenses..         (359,147)          (73,994)         (444,493)         (175,518)
Income / (loss) from operations .....          407,966            12,506           899,453           (43,482)
Other income ........................              137            23,879             2,861            35,094
Share of results in an associate ....           51,695                --            87,483                --
Interest expense ....................          (19,412)               --           (23,827)           (4,818)
Income / (loss) before income tax ...          440,386            36,385           965,970           (13,206)
Income tax (expense) / credit .......          (18,478)            1,917           (70,867)            8,416
Minority interests ..................          (13,767)           (7,323)          (58,955)           (2,498)
Net income / (loss) .................          408,141            30,979           836,148            (7,288)
</TABLE>

REVENUE. The Company reported total revenue of $2,120,882 for the three month
period ended June 30, 2005 as compared to $111,228 for the three month period
ended June 30, 2004. During the six month periods ended June 30, 2005 and 2004,
the revenue increase to $4,000,954 from 191,014. This increase in the three and
six month revenue are mainly due to the completion of one turnkey engineering
waste water project in Le Chang City in the first quarter of 2005 and the
completion of the remaining 15% construction of the waste water treatment plant
of Xian Yang City and one turnkey engineering waste water project in Yong Ji
Economic Development Zone coupled with the revenue from Tian Jin BOT waste water
treatment plant.

COST OF REVENUE. Our total cost of revenue increased from $24,728 to $1,353,769
in the three month periods ended June 30, 2005 and 2004. During the six month
periods ended June 30, 2005 and 2004, the cost of revenue increased to
$2,657,008 from $58,978. The increase in cost of revenue for the three and six
month periods ended June 30, 2005 is mainly due to the cost of revenue for the
turnkey engineering waste water projects.

GROSS PROFIT. Gross profit as a percentage of revenue for the three month
periods ended June 30, 2005 and 2004 were 36.2% or $767,113 and 77.7% or
$86,500, respectively. During the six month periods ended June 30, 2005 and
2004, the gross profit increased to $1,343,946 from $132,036. The percentage of
gross margin is higher in the three month period ended June 30, 2004 as compared
to that in the three month period ended June 30, 2005 because the revenue for
the three month period ended June 30, 2004 included revenue from technical
transfer which has no cost of revenue.

GENERAL AND ADMINISTRATIVE EXPENSES. Our total general and administrative
expenses for the three months ended June 30, 2005 and 2004 were $359,147 and
$73,994 respectively. During the six month periods ended June 30, 2005 and 2004,
the general and administrative expenses increased to $444,493 from $175,518. The
principal components of general and administrative expenses are administrative
salaries and benefits, depreciation, finance cost, traveling expenses, rental
and other general administration costs.

                                       4
<PAGE>

NET INCOME / (LOSS). We had a net income, after income tax and minority
interests, of $408,141 and $30,979 respectively for the three months ended June
30, 2005 and 2004. During the six month period ended June 30, 2005, net income,
after income tax and minority interests, increased to $836,148 from a net loss
of $7,288 for the six month period ended June 30, 2004.


LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are our cash and cash flow we generate from
operations and financing activities. Net cash provided by operating activities
during the six month period ended June 30, 2005 was $1,510,341 while net cash
used in operating activities during the six month period ended June 30, 2004 was
$356,075. Net cash provided by operating activities in the six month period
ended June 30, 2005 consisted of net income of $836,148, adjustment for non-cash
items of $106,269 and $567,924 provided by operating activities. Cash flow from
operating activities consisted primarily of a decrease in accounts receivable of
$6.7 million due to receipts from customers amounts fall due and decrease in
accounts payable of $4.3 million due to payments made to our suppliers.

In April 2005, we conducted the private placement sale of 20 units, at $25,000
per unit, for the gross proceeds of $500,000. Each unit consisted of (a) one 12%
convertible debenture in the original principal amount of $25,000, convertible
into shares of our common stock at the rate of the lesser of (i) $0.20 per share
or (ii) a 10% discount to the price per share of common stock (or conversion
price per share of common stock) of the next private placement conducted by us
prior to any conversion of the debenture, and (b) 125,000 detachable warrants to
purchase one share each of our common stock at an exercise price of $0.20 per
share, expiring ten years from their date of issuance. The debentures are due
and payable August 1, 2005. The debenture holders have, however, extended the
payment period to September 1, 2005.

Based on the Company's 2005 forecasted business plan, the Company will require
to raise long-term capital to fund its BOT projects and proposed acquisition of
a waster water facility and a potable water facility in Qiyuan, Henan.

We anticipate raising capital from outside investors coupled with bank or
mezzanine lenders to fund the Company's expansion plan. As of the date of this
report, we have not entered into any negotiations with any third parties to
provide such capital. We anticipate that our current financing strategy of
private debt and equity offerings will meet our anticipated objectives and
business operations for the next 12 months. We continue to evaluate
opportunities for corporate development. Subject to our ability to obtain
adequate financing at the applicable time, we may enter into definitive
agreements on one or more of those opportunities.

                                       5
<PAGE>

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in accordance with
accounting principles generally accepted in the United States of America.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. Critical accounting policies include revenue
recognition, impairment of assets and accounting for allowance of accounts
receivable.

REVENUE RECOGNITION. -- Revenue from fixed price long-term turnkey engineering
contracts is recognized on the percentage of completion method for individual
contracts. Revenues are recognized in the ratio that costs incurred bear to
total estimated contract costs. The use of the percentage of completion method
of revenue recognition requires estimates of percentage of project completion.
Changes in job performance, estimated losses on uncompleted contracts are made
in the period in which such losses are determinable. In instances when the work
performed on fixed price turnkey engineering contracts is of relatively short
duration, we use the completed contract method of accounting whereby revenue is
recognized when the work is completed.

Revenue arising from waste water treatment is recognized based on waste water
treated as recorded by meters read during the year.

IMPAIRMENT OF ASSETS. The Group's policy is to periodically review and evaluate
whether there has been a permanent impairment in the value of long-lived assets.
Factors considered in the evaluation include current operating results, trends
and anticipated undiscounted estimated future cash flows that is expected to
result from the use of the asset, or other measure of fair value, is less than
the carrying value.

ALLOWANCES FOR ACCOUNTS RECEIVABLE. The Group's provisioning policy for bad and
doubtful debt is based on the evaluation of collectability and aging analysis of
accounts receivable and on management's judgment. The Group does no require
collateral or other security to support client's receivables. The Group conducts
periodic review of its clients' financial condition and customer payment
practice to minimize collection risk on accounts receivable. This review is
based on a considerable amount of judgment which is required in assessing the
ultimate realization of these receivables, including the current
creditworthiness and the past collection history of each customer. During the
second quarter of 2005 financial period, the Group had not made any allowance
for doubtful debts.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

ITEM 3   CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act is accumulated and communicated to our management, including our
principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure.

                                       6
<PAGE>

As of the end of the period covered by this Quarterly Report, we conducted an
evaluation, under the supervision and with the participation of our chief
executive officer and chief financial officer, of our disclosure controls and
procedures (as defined in Rules 13a-15(e) of the Exchange Act). Based on this
evaluation, our chief executive officer and chief financial officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms.

There was no change in our internal controls, which are included within
disclosure controls and procedures, during our most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal controls.


                           PART II - OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS

As of the date of this report, we are not involved in any legal proceedings.

ITEM 2   CHANGES IN SECURITIES AND USE OF PROCEEDS

In April 2005, we conducted the private placement sale of 20 units, at $25,000
per unit, for the gross proceeds of $500,000. Each unit consisted of (a) one 12%
convertible debenture in the original principal amount of $25,000, convertible
into shares of our common stock at the rate of the lesser of (i) $0.20 per share
or (ii) a 10% discount to the price per share of common stock (or conversion
price per share of common stock) of the next private placement conducted by us
prior to any conversion of the debenture, and (b) 125,000 detachable warrants to
purchase one share each of our common stock at an exercise price of $0.20 per
share, expiring ten years from their date of issuance. The debentures are due
and payable August 1, 2005. The debenture holders have, however, extended the
payment period to September 1, 2005.


ITEM 3   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 4.  OTHER INFORMATION

None.


ITEM 5.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

                                       7
<PAGE>


                           PART II - OTHER INFORMATION


Item 6.     Exhibits.

            (a)         Index to Exhibits
                        -----------------

                        Exhibit 31.1            Section 302 Certification

                        Exhibit 32.1            Section 906 Certification


                                       8

<PAGE>


                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   CHINA EVERGREEN ENVIRONMENTAL CORP.

Dated:  August 12, 2005.

                                   By  /s/ Chong Liang Pu
                                     ------------------------------------------
                                      Chong Liang Pu
                                      President and Chief Executive Officer




            In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                       China Evergreen Environmental Corp.
                                       (Registrant)


Dated:  August 12, 2005                By:       /s/ Chong Liang Pu
                                                 ------------------------------
                                                   Chong Liang Pu,
                                                   Chief Executive Officer

Dated:  August 12, 2005                By:       /s/ Ren Cai Ding
                                                 ------------------------------
                                                   Ren Cai Ding,
                                                   Chief Financial Officer

                                       9