UNITED STATES

SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C.
20549



FORM 10-K



|                                            |  |                                                                                             
|------------------------------------------- |  | --------------------------------------------------------------------------------------------
|(Mark One)                                  |  |                                                                                             
|þ                                           |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the fiscal year ended December 31, 2010
|OR                                         
|o                                           |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|For the transition period from to          



Commission file number: 0-58513



Advanced Water Technology
Holdings, Inc.

(Exact name of registrant
as specified in its charter)





|                                                                       |  |                                     
|---------------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                               |  | 26-2814324                          
|(State or other jurisdiction of
        incorporation or organization) |  | (I.R.S. Employer
Identification No.)



1001 Bayhill Drive,
2nd Floor

San Bruno, California
94066

(Address of principal
executive offices) (Zip Code)





Registrant’s
telephone number, including area code: (650) 438-0928





Securities registered under Section 12(b) of
the Exchange Act: None



Securities registered under Section 12(g) of
the Exchange Act:



Common Stock, $.0001 par value

(Title of Class)



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o  No þ



Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No þ



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes  þ  No o



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.  o





1







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



| | Large accelerated filero | Accelerated filero          
| | ------------------------ | ----------------------------
| | Non-accelerated filero   | Smaller reporting company  x



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

On March 1, 2011, there were
6,750,000 shares of the registrant’s Common Stock issued and outstanding with 6,687,500 shares held by one (1) shareholder
deemed to be an affiliate of the registrant within the meaning of Rule 12b-2 under the Exchange Act.
The balance of 67,500 shares was held by (2) two shareholders who are not affiliates.








2





Advanced Water Technology Holdings, Inc.

FORM 10-K

For The Fiscal Year Ended December
31, 2010

INDEX *








|         |  |                                                                                                               |  |   
|-------- |  | ------------------------------------------------------------------------------------------------------------- |  | --
|PART I   |  |                                                                                                               |  |   
|Item 1.  |  | Business                                                                                                      |  | 4 
|Item 1A. |  | Risk Factors                                                                                                  |  | 6 
|Item 1B. |  | Unresolved Staff Comments                                                                                     |  | 12
|Item 2.  |  | Properties                                                                                                    |  | 12
|Item 3.  |  | Legal Proceedings                                                                                             |  | 12
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                           |  | 12
|         |  |                                                                                                              
|PART II  |  |                                                                                                               |  |   
|Item 5.  |  | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities |  | 13
|Item 6.  |  | Selected Financial Data                                                                                       |  | 13
|Item 7.  |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                         |  | 15
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                                    |  | 19
|Item 8.  |  | Financial Statements and Supplementary Data                                                                   |  | 20
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                          |  | 30
|Item 9A. |  | Controls and Procedures                                                                                       |  | 30
|Item 9B. |  | Other Information                                                                                             |  | 31
|         |  |                                                                                                              
|PART III |  |                                                                                                               |  |   
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                        |  | 32
|Item 11. |  | Executive Compensation                                                                                        |  | 33
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                |  | 35
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence                                     |  | 36
|Item 14. |  | Principal Accounting Fees and Services                                                                        |  | 36
|         |  |                                                                                                              
|PART IV  |  |                                                                                                               |  |   
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                    |  | 36
|         |  | Signatures                                                                                                    |  | 37



Explanatory
Notes





In this Annual Report on Form 10-K,
Advanced Water Technology Holdings, Inc. is sometimes referred to as the “AWTH”, “Company”, “we”,
“our” or “us” and U.S. Securities and Exchange Commission is sometimes referred to as the “SEC”.



3





PART I



Item 1. Business.



General



Advanced Water Technology Holdings, Inc. (“AWTH”) was
incorporated under the laws of the State of Florida on June 16, 2008 under the name of Alchemical Capital Corp, Inc. and subsequently
re-domiciled in Delaware and renamed Advanced Water Technology Holdings, Inc. on November 24, 2010. We are a developmental stage
company and have no revenues to date. From 2008 through April, 2010, Company activities were limited to actions related to organization
and the preparation of a registration statement on Form 10 (the “Registration Statement”). We are a “shell”
company conducting no current business operations. Since September, 2010 our efforts have focused on seeking to identify and acquire
companies (“Target Businesses”) with non-chemical water related technology solutions in the global water processing,
recycling, treatment, purification and disinfection market focusing on both the North American and key emerging Asian markets.
We have no full-time employees and neither own nor lease any real estate nor vehicles.



We are authorized to issue 75,000,000 shares of common stock (the
“Common Stock”), and 25,000,000 shares of Preferred Stock ( the “Preferred Stock”)pursuant the Articles
of Incorporation of the Company, of which 6,750,000 shares of common stock are currently issued and outstanding. We have a current
shareholder base consisting of three (3) shareholders. The parent of AWTH known as Advanced Water Technologies, Inc, owns 6,682,500
of the outstanding shares or 99%. None of the shares of Common Stock issued to such shareholders have been registered under the
Securities Act of 1933, as amended (the “Securities Act”). See “Description of Securities”. We intend to
seek potential business opportunities and effectuate acquisitions, mergers, exchanges of capital stock, or acquisition of stock
or assets for cash and securities (“Acquisitions”) of Target Businesses with growth potential which, in the opinion
could provide a return on investment to our shareholders in the form of cash compensation and/or the potential for capital appreciation
in the form of continuing equity ownership. Our efforts in identifying prospective Target Businesses are expected to include businesses
in the United States and abroad as described above in non-chemical related water technology. Our officers and employees when hired
will become involved in management of the Target Business and/or will hire qualified but as yet unidentified individuals to help
manage such Target Business. There are no acquisitions, business combinations, or mergers pending or which have occurred involving
the Company. Presently, we have no agreements to acquire or merge with any specific business or company.



Going Concern

Our financial statements have been prepared on the basis of
accounting principles applicable to a going concern. As a result, they do not include adjustments that would be necessary if we
were unable to continue as a going concern and would therefore be obligated to realize assets and discharge our liabilities other
than in the normal course of operations. As reflected in the accompanying financial statements, the Company is in the development
stage with no operations or revenues and has an accumulated deficit of $ (43,676) through December 31, 2010. This raises substantial
doubt about our ability to continue as a going concern, as expressed by our auditors in its opinion on our financial statements
included in this report. The ability of the Company to continue as a going concern is dependent on the Company’s ability
to raise additional capital and implement its business plan.



We have not yet established any source of revenues sufficient to
cover our operating costs and allow us to continue as a going concern other than loans from time to time by the parent company
AWT or the Chairman of the Board, President, Secretary, Treasurer and CEO of AWTH Basilio Chen.  Our ability to continue as
a going concern is dependent on us obtaining adequate capital or loans to fund operating losses until we become profitable.  If
we are unable to obtain adequate capital or loans, we could be forced to cease operations.  There can be no assurance that
we will operate at a profit or additional debt or equity financing will be available, or if available, can be obtained on satisfactory
terms.



4







“Shell” Corporation



Our discussion of the proposed business under
this caption and throughout this Report is purposefully general and is not meant to restrict our virtually unlimited discretion
to search for and enter into potential business opportunities in the water technology industry.



Background



We have conducted no business operations to date and expect to conduct
none in the future, other than our efforts to effectuate acquisitions. We, therefore, can be characterized as a “shell”
corporation. As a “shell” corporation, we face risks inherent in the investigation, acquisition, or involvement in
a new business opportunity. Further, as a “development stage” or “start-up” company, we face all of the
unforeseen costs, expenses, problems, and difficulties related to such companies, including whether we will continue to be a going
concern entity for the foreseeable future. We are dependent upon the efforts of our officers and consultants to effectuate a Business
Acquisition.



No trading market in our securities presently exists and we have
no plans on registering any securities under the Securities Act or state blue sky laws for the foreseeable future. It is not likely
that a trading market will be created in our securities until such time as Acquisitions of Target Businesses occur. No assurances
are given that subsequent to such acquisitions occur that a trading market in our securities will develop, or, if such a trading
market is developed, that it can be maintained with liquidity. We presently have 75,000,000 shares of Common Stock authorized and
25,000,000 shares of Preferred Stock, of which 6,750,000 of common stock are currently issued and outstanding. None of these outstanding
shares have been registered under the Securities Act, and all of which are deemed to be “restricted securities”, as
that term is defined under Rule 144 promulgated under the Securities Act. These shares cannot be resold under Rule 144 but must
be registered under the Securities Act. As of the date hereof, we have not provided to any shareholder registration rights to register
under the Securities Act any shares of Common Stock of the Company



Industry and Target Business



We will seek to acquire Target Businesses in the non-chemical water
technology market.



To date, we have not selected any particular Target Business in
which to concentrate our Acquisition efforts. Accordingly, we are only able to make general disclosures concerning the risks and
hazards of effectuating a transaction with a Target Business.



To the extent that we effect an Acquisition with a financially unstable
company or an entity in its early stage of development or growth (including entities without established records of sales or earnings),
we will become subject to numerous risks and uncertainties inherent in the business and operations of financially unstable and
early stage or potential emerging growth companies. In addition, to the extent that we effect an Acquisition even one with stable
earnings history being in an industry characterized by a high level of risk, we will become subject to the currently unascertainable
risks of the water industry. . Although we will endeavor to evaluate the risks inherent in a particular Target Business, there
can be no assurances that we will properly ascertain or assess all significant risk factors.



The Company's objective is to become a provider and innovator of
Point of Use (“POU”) and Point of Entry (“POE”) water-related technology solutions in the global water
processing, treatment, recycling and disinfection market, focusing on key emerging markets and non-chemical technology such as
ozone, ultraviolet (UV), reverse osmosis, ultra filtration and atmospheric generation. The Company seeks to achieve this objective
through acquiring businesses in the United States, Canada and even Europe with proven technology , integrating sales and marketing
efforts, expanding distribution channels , reducing general and administrative costs and creating a market basket of water related
solutions to customers. In addition to expanding it’s presence in the US marketplace, the Company will focus on developing
a product and services distribution channel in emerging markets, with initial emphasis on China. The Company plans to become an
innovator of new technologies and applications to augment its position as an aspiring industry leader.



5







Acquisition and Integration Strategy. Through its acquisition
strategy, the Company plans to acquire, integrate, and consolidate select target companies, providing the Company with additional
competitive products and services readily available in the U.S. and, as appropriate, other geographies. The Company's acquisition
strategy is based on the following elements: (a) the ability to identify and acquire leading technologies; and (b) implementation
of an efficient program to move prospects through lead generation, negotiation, consummation and integration;



The Company plans to execute its acquisition strategy by initially
targeting companies in the US and Canada and then following up with international acquisitions of companies with market share in
China. In the future, the Company may also consider acquisitions of companies in other geographies. Examples of areas currently
being explored include turnkey system integration for industrial water processing including ground water treatment, wastewater
treatment, soil remediation, and water conservation.



The Company expects to use a combination of cash, debt (including
seller financing) and equity to acquire companies, and to incentivize the managers of these companies through participation in
the Company's equity plan. Various types of debt and equity capital will be necessary to implement the acquisition strategy. The
Company expects to seek funding from equity investors and from other sources, including, among others, traditional bank financing,
and seller financing.



Management and Advisory Team. The Company's operations model
is intended to make the firm scalable, diversifiable and maintainable as it grows through acquisition. A significant component
of this model is the Company's program for developing an effective distributed management structure. The Company has focused initially
on hiring management and consultants to drive its growth. The Company currently has no full time paid employees. We intend to
add professionals and support staff that have relevant industry experience and are expected to provide the human capital needed
to expand the Company's development, operations, sales and marketing and distribution capabilities.



Item 1A. Risks Related to the Company and Management



No Previous Operating History.
The Company was formed on June 16, 2008 and only since October, 2010 has been involved in the water technology market to the extent
of seeking acquisition candidates. Because the Company has been operating for a relatively short period of time, it has not produced
a profit. There is no assurance that it will ever produce a profit. There have been only limited development stage organizational
efforts and no operations or revenues. As a new enterprise, it is likely to be subject to risks its management has not anticipated.
The business will fail, if management is unable to secure sales of the initial products in the Asia
Pacific market or acquire the targeted acquisitions and do so as expected and when expected, and then the Investors will suffer
a complete loss of their investment. Even after the development of Asia Pacific distribution network and consummation of acquisitions,
management is still required to successfully manage the operations to avoid failure.



No Assurance of Success. New businesses typically experience
a high rate of failure within the first two years of business and the success of the Company is dependent upon a variety of factors
and its ongoing success in general is subject to uncertainties and contingencies beyond the control of the Company. No assurance
can be given that that the Company’s business operations or strategy will be successful or that future results anticipated
herein or in any other document in connection with this Offering, will be successful and any investment made herein would be lost
in its entirety.



Management has Limited Experience in the Water Industry. The Company's
management has little experience in the water industry. As a result, the Company will depend on the experience of consultants and
additional personnel, some of whom may be added through acquisition of other companies. There can be no assurance that the Company
will be able to obtain and maintain expert capabilities in the water industry, and any failure to do so would have a material adverse
effect on the Company's business.



6







The Company’s Parent owns 99% of the Outstanding Voting
Securities. Currently, Basilio Chen, Chief Executive Officer, President, Treasurer, Secretary and Chairman of the Board of
Directors of the Company, through the majority shareholder, AWT, owns or controls, approximately restricted shares of Common Stock,
of the shares of Common Stock issued and outstanding of AWT, As a result, Mr. Chen and the management, collectively, control over
all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
This concentration of ownership limits the power to exercise control by the minority, public shareholders and enables insiders
to control almost all aspects of corporate affairs, including approving or blocking mergers and acquisitions. The Company is largely
dependent upon the personal efforts and abilities of Basilio Chen, Chief Executive Officer, President, Secretary, Treasurer and
Chairman of the Board of Directors, to implement the business plan. The loss of the services of Mr. Chen may be fatal in the start-up
phase of the Company. The Company will need to continue to attract quality management, employees and consultants to successfully
implement the business and help operate the Company as its operations may grow. The Company also expects to rely on the efforts
of various consultants and contractors. There can be no assurance that the Company will be able to attract and retain management
and other talent it may require. Failure to obtain and retain such personnel will adversely affect its business and performance.



Amended and Restated Articles
of Incorporation provide for Indemnification and Exculpation of Officers and Directors and limit their liability. The Management
is accountable to the Company as a fiduciary and consequently must exercise good faith and integrity in handling its affairs and
the Company is obligated to indemnify and defend its officers and directors against certain claims. The
Company’s Amended and Restated Articles of Incorporation, and applicable Delaware law, provide for the indemnification of
directors, officers, employees and agents, and under certain circumstances against attorney's fees and other expenses incurred
in litigation to which they become a party arising from their association with or activities on the Company’s behalf. The
By-Laws also contain an exculpation provision that the Company will indemnify and hold management harmless for any claim arising
from any act or omission to act on behalf of the Company provided such act or omission does not involve the fraud, gross negligence
or malfeasance of the management. As a result, the Company and the Shareholders may have more limited rights against management,
its affiliates, all employees and agents of the Company than they would otherwise have under common law and, furthermore, may
be obligated to fund the defense of management, its affiliates, and all employees and agents of the Company in certain cases. We have obtained directors' and officers' liability insurance to cover potential risks and
liabilities. In the current environment, insurance companies are increasingly particular about what they will and will not insure.
It is possible that the Company may not have enough insurance to meet its needs, or may have to pay very high prices for continued
coverage. If the Company or its officers or directors were found liable for a significant claim in the future, operating results
could be negatively impacted. Furthermore, the Company has been advised that in the opinion of the SEC, indemnification for liabilities
arising under federal securities laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against these types of liabilities, and they are not covered under insurance, if
such coverage exists, the Company may be obligated to indemnify such liabilities under the indemnification agreement or be subject
to legal proceedings over the question of whether the Company is obligated to indemnify against such liabilities. In either case,
the resulting obligations may exceed the ability to pay. While the Company does not believe there would liability for claims of
indemnification for liabilities under the current indemnification agreements, the mere legal challenge from an indemnitee to determine
if indemnification is in fact not available could significantly and adversely affect the company's ability to continue in business.



The Company has general business liability insurance but it
may be inadequate to cover future liabilities of the proposed business. The Company has standard business liability insurance
but it will be inadequate to cover the specific liabilities faced by its proposed business line. The Company may be unable to
obtain such additional insurance or do so on affordable terms. If additional insurance coverage with affordable terms is not obtained,
operating results could be negatively impacted if the Company is found liable for a significant claim in the future.



7







Key Man Life Insurance.The Company does not have key man
life insurance and may not have sufficient cash or cash flow to replace key personnel in the future, and such failure may prove
harmful or fatal to its business. The Company may seek key man life insurance on the lives of certain key personnel in the foreseeable
future, but it cannot be guaranteed that such insurance will be obtained or that the Company will be able to maintain it.



Future Issuance of Company Stock. The Company intends to
raise capital for acquisitions and working capital by offering its securities, including Common, Preferred Stock or shares of
other series of Company stock which may be authorized in the future, This will be done when acquisitions are identified and may
do so on terms and conditions, liquidation and voting rights to other classes of Company stock, if any. There are also no restrictions
on the ability to authorize and issue new series or classes of stock that can have senior dividend, other distribution, liquidation
and voting rights. Investors of the Stock may very well suffer substantial dilution and may face other series or classes of stock
that may effectively prevent the investors from realizing any distributions or economic return on the Company’s Stock. He
offering of such securities would be through the sale of unregistered securities through Regulation D , Rule 506 to accredited
investors.



There is no public market for the Company’s stock.
The Company will endeavor to establish a public market for its Securities, however there can be no assurance that a public market
will develop in the foreseeable future and a market may never develop. The Securities may never be traded on any national stock
exchange or quotation system or, if so traded, may never enjoy a viable or liquid public market. If a public market for the Securities
does not develop, investors may not be able to trade the Securities and may lose their entire investment as well as be holding
an illiquid investment.



Risks Related to the Business Plan



Significant risks relating to management abilities to successfully
implement the business plan. From incorporation to date, the Company has had no revenue generating operations upon which you
can evaluate the business and its prospects. Prospects must be considered in light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development and under the current worldwide recession. These risks
include, without limitation, competition, the absence of ongoing revenue streams, inexperienced management and lack of brand recognition.
It cannot guarantee that the Company will be successful in accomplishing its objectives. If management fails to implement and
establish a business and financial base of operations, the Company may be forced to cease operations, in which case the Investors
will lose their entire investment. While management believes that private concerns will invest in companies, infrastructure and
technologies necessary for the business line to succeed, they may be mistaken in this assumption, or such investments, if they
occur, may be made in a manner that benefits other, more established companies in the industry. The Company does not have the
funds to lobby for government funding at this time. Even with such funding, management may lack the qualifications or skill sets
to win such business.



The Company must raise sufficient funding to be able to implement
the Business Plan. Unless the Company begins to generate sufficient revenues from the full implementation of the business
plan to finance operations as a going concern, it may experience liquidity and solvency problems. Such liquidity and solvency
concerns may force the Company to go out of business, if additional financing is not available. Management has no intention of
liquidating. In the event cash resources are insufficient to continue operations, management intends to raise additional capital
through offerings and sales of equity or debt securities. In the event sufficient funds are unable to be raised, the Company will
be forced to go out of business and liquidate. The Company cannot and does not make any representations or projections on the
overall prospects in the near term or long term. The current global recession will make it extremely difficult for any development
stage company to succeed or survive. As such, any investment in the securities herein is only suitable for investors who can afford
to lose their entire investment, require no liquidity and have no need for a steady return on investment.



8







The Business Plan, marketing plan and acquisition plan were
prepared by the Company's management and may be very aggressive and there is no assurance it can be met with any certainty or
timeframe. Under current economic conditions in the world, any financial projections may vary significantly from actual results.
The uncertainties as to availability of financing alone, makes any business vulnerable to sudden failure from lack of adequate
and affordable capital. Development stage enterprise concerns are especially vulnerable in such times. Risks associated with investments
in development stage enterprises like the Company are greatly increased during such periods of economic downturn and financial
crises.



The industry is highly fragmented and competitive and increased
competition could have a material adverse impact on results of operations. The marketplace in which the Company will have
to compete is intensely competitive and subject to rapid change. Competitors include well-established water technology companies
and publicly funded utilities. Some of these competitors are based globally or have strong national or regional markets. The Company
anticipates that it will face additional competition from new entrants that may offer significant performance, price, creative
or other advantages over those offered by the Company. Many of these competitors have greater name recognition, market share and
resources than the Company. Additionally, potential competitors with established market shares and greater financial resources
may introduce products which directly compete against proposed products or gain market share that have been targeted before it
can compete. Thus, there can be no assurance that the Company will be able to compete successfully in the future or that competition
will not have a material adverse affect on the results of operations. As is true with most early development stage companies,
an established competitor could undermine business with a targeted marketing and sales campaign aimed at eliminating the Company
from competition.



Acquisitions involve risks that could cause actual growth to
differ from expectations. An element of the Company’s strategy is, on an ongoing basis, to seek to acquire, license,
resell new technologies and products and acquire companies to enhance products and services in the future. The consummation of
any acquisition will be based on a number of factors and some of those factors are beyond its ability to control and predict.
Acquisitions involve risks that could cause actual growth to differ from expectations. For example: The Company may not be successful
in not only obtaining licenses and products to resell but also be unable to sell those products and services in the Asia Pacific
market. The Company may not be successful in identifying attractive acquisitions. It competes with other companies and expects
this competition will continue, which may inhibit the ability to complete suitable acquisitions on favorable terms. Acquisitions
will depend on timely and affordable funding by outside investors and such funding may, under current economic conditions, be
impossible to obtain. The lack of funding would undermine the strategic plan and result in the possible failure of the business
plan and Company. The Company may be unable to successfully integrate acquired businesses and realize anticipated economic, operational
and other benefits in a timely manner. If unable to successfully integrate acquired businesses, product lines and personnel, the
Company may incur substantial costs and delays or other operational, technical or financial problems. In addition, efforts to
integrate or failure to successfully integrate acquisitions may divert management's attention from existing business and may damage
relationships with its key employees and customers.



The due diligence investigation of potential companies to be
acquired may not adequately discover problems that could cause a loss of value, risk or losses. Intensive due diligence is
time consuming and expensive due to the operations, accounting, finance and legal professionals who must be involved in the due
diligence process. Even though the Company may conduct extensive due diligence on the target acquisition companies, it cannot
be sure that this due diligence will identify all material issues that may be present inside the target business, or that factors
outside of the target company and its business and outside of its control will not later arise. If the Company failed to identify
issues specific to the target acquisition company, its industry, or the environment in which it operates, it may be forced to
later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses
which could affect the Company in significant ways.



9







The Company's acquisition strategy may result in duplicative
operations and corresponding costs and inefficiencies, which could impair the Company's business. The Company's acquisition
and integration strategy may result in duplicative operations and corresponding costs and inefficiencies. The Company plans to
address the risk of inefficiency and conflict in operations, management, and accounting systems occasioned by the decentralized
aspects of the Company's acquisition plan and management approaches by attempting, where economically and culturally practicable,
to eliminate duplication of management, accounting systems and personnel. Where duplication cannot be avoided, such inefficiencies
can substantially reduce or prevent profitability as well as make internal fraud or operational efficiencies to go undetected
or not remedied for prolonged periods. The Company expects consolidation of financial results and statements of various operations
to be complex, which may result in delays and errors in reporting and misdirect management. Failure to implement appropriate systems
and controls to address these risks will adversely impact the Company's business and ability to communicate accurately with its
shareholders.



Risks Related to Doing Business in Asia, and, in Particular
China



The Company may acquire companies and plans to undertake distributions
in Asia and, in the event of such acquisitions and distribution channels the risk factors relating to operating in Asia will be
relevant to business. Adverse changes in political and economic policies of China (PRC) government could impede the overall
economic growth of China, which could affect plans to expand into China and the rest of Asia, and reduce the demand for products
and damage business. The Company plans to take advantage of the growth potential in the water industry in Asia. Accordingly, the
Company plans to conduct substantial operations and generate a significant portion of its revenue in the region with particular
focus on China. Accordingly, its business, financial condition, results of operations and prospects will be affected significantly
by economic, political and legal developments in China. The PRC economy differs from the economies of most developed countries
in many respects, including: the higher level of government involvement in commercial activities, including the provision of resources
such as water; the early stage of development of the market-oriented sector of the economy; the rapid growth rate; the higher
level of control over foreign exchange; and the allocation of resources. As the PRC economy has been transitioning from a planned
economy to a more market-oriented economy, the PRC government has implemented various measures to encourage economic growth and
guide the allocation of resources. While these measures may benefit the overall PRC economy, they may also have a negative effect
on the Asia business operations and consequently affect the Company.



Although the PRC government has in recent years implemented measures
emphasizing the utilization of market forces for economic reform, the PRC government continues to exercise significant control
over economic growth in China through the production, distribution and allocation of resources, including water, controlling payment
of foreign currency-denominated obligations, setting monetary policy and imposing policies that impact particular industries or
companies in different ways. Any adverse change in the economic conditions or government policies in China could have a material
adverse effect on the overall economic growth and the level of investments and expenditures in China, which in turn could lead
to a reduction in demand for business in China or future products or services and consequently have a material adverse effect on
business and prospects.



Uncertainties with respect to the PRC legal system could limit
the legal protections available to the Company and Shareholders. The Company may conduct business in China and other Asian
and other foreign locations worldwide and it may do so through foreign operating subsidiaries and in the case specifically in
China through a China subsidiary. China's operating subsidiaries are generally subject to laws and regulations applicable to foreign
investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written
statutes, and prior court decisions may be cited for reference but have limited historical value. Since 1979, a series of new
PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China.
However, since the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not
always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available
to the Company and its stockholders. In addition, any litigation in China may be protracted and result in substantial costs and
diversion of resources and management attention. As a result, it could be difficult for investors to affect service of process
in the United States or to enforce a judgment obtained in the United States against any future Chinese operations and subsidiaries.



10







China's (PRC) government exerts substantial influence over the
manner in which the Company must conduct business activities. The PRC government has exercised and continues to exercise substantial
control over virtually every sector of the Chinese economy, including water through regulation and state ownership. If and when
an acquisition is completed, the Company's ability to operate in China may be harmed by changes in the PRC's laws and regulations,
including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other
matters. Furthermore, the central or local governments of the jurisdictions in which the Company in China operates may impose
new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on
the Company's part to ensure compliance with such regulations or interpretations. Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or
regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions
in China or particular regions thereof and could require the Company to divest itself of any interest it then holds in Chinese
properties or joint ventures, and/or cause other sanctions or have other governmental demands which would affect business significantly.



Accounting laws in certain parts of Asia mandate accounting
practices which may not be consistent with U.S. generally accepted accounting principles and, therefore, financials and their
interpretation involve uncertainties. The accounting laws of certain countries require an annual "statutory audit"
to be performed in accordance with local accounting standards and the books of foreign invested enterprises to be maintained in
accordance with country specific accounting laws. These accounting practices may not be consistent with U.S. generally accepted
accounting principles, or GAAP. For example, Article 14 of the PRC Wholly Foreign-Owned Enterprise Law requires a wholly foreign-owned
enterprise to submit certain periodic fiscal reports and statements to designated financial and tax authorities. Noncompliance
with such requirements may cause revocation of the Company’s China companies' business license. The translation of the financial
statements from the requirements of the local governments to U.S. GAAP requires interpretation and exercise of judgment. This
may increase costs or cause additional errors. Moreover, local accounting records may not convert directly into the needed U.S.
GAAP accounting records, causing inaccuracies or misstatements that could negatively impact the Company's ability to get audit
opinion in the U.S. or may lead to fines by certain governmental bodies, which could negatively impact performance and create
unknown losses to the Company and the investment made herein may be at further risk.



Restrictions on currency exchange may affect and limit the Company’s
ability to receive and use sales revenue effectively and other risks associated with local currency exchange and other currency
exchanges. Sales revenue and expenses from businesses in China are denominated in RMB and in other countries in currencies
other than US Dollar. Under PRC law, the RMB is currently convertible under the "current account," which includes dividends
and trade and service-related foreign exchange transactions, but not under the "capital account," which includes foreign
direct investment and loans. Currently, companies operating in China may purchase foreign currencies for settlement of current
account transactions without the approval of the State Administration of Foreign Exchange, or SAFE, by complying with certain
procedural requirements. However, the relevant PRC government authorities may limit or eliminate the ability to purchase foreign
currencies in the future. Since a significant amount of the company's future revenue may be denominated in RMB, any existing and
future restrictions on currency exchange may limit the company's ability to utilize revenue generated in RMB to fund its business
activities outside China that are denominated in foreign currencies.



Foreign exchange transactions by PRC operating subsidiaries under
the capital account continue to be subject to significant foreign exchange controls and require the approval of or need to register
with PRC government authorities, including SAFE. In particular, if, following a merger or acquisition, the Company's PRC operating
subsidiaries borrow foreign currency through loans from the Company or other foreign lenders, these loans must be registered with
SAFE, and if the Company finances the subsidiaries by means of additional capital contributions, these capital contributions must
be approved by certain government authorities, including the Ministry of Commerce, or MOFCOM, or their respective local counterparts.
These limitations could affect the Company or the future target companies in China and the ability to obtain foreign exchange through
debt or equity financing.



11







Failure to comply with PRC regulations relating to the establishment
of offshore special purpose companies by PRC residents may subject PRC resident stockholders to personal liability, limit the
Company's ability to acquire PRC companies or to inject capital into PRC subsidiaries, limit PRC subsidiaries' ability to distribute
profits to the Company or otherwise materially adversely affect the Company's business. In China, SAFE, issued the Notice
on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents
inside China, generally referred to as Circular 75. Circular 75 requires PRC residents to register with an applicable branch of
SAFE before establishing or acquiring control over an offshore special purpose company for the purpose of engaging in an equity
financing outside of China that is supported by domestic PRC assets originally held by those residents. Following the issuance
of Circular 75, SAFE issued internal implementing guidelines for Circular 75. These implementing guidelines, known as Notice 106,
effectively expanded the reach of Circular 75 by: purporting to regulate the establishment or acquisition of control by PRC residents
of offshore entities which merely acquire "control" over domestic companies or assets, even in the absence of legal
ownership; adding requirements relating to the source of the PRC resident's funds used to establish or acquire the offshore entity;
regulating the use of existing offshore entities for offshore financings; purporting to regulate situations in which an offshore
entity establishes a new subsidiary in China or acquires an unrelated company or unrelated assets in China; making the domestic
affiliate of the offshore entity responsible for the accuracy of certain documents which must be filed in connection with any
such registration, notably, the business plan which describes the overseas financing and the use of proceeds; and requiring that
the registrant establish that all foreign exchange transactions undertaken by the offshore entity and its affiliates were in compliance
with applicable laws and regulations.



Failure to comply with the requirements of Circular 75, as applied
by SAFE in accordance with Notice 106, may result in fines and other penalties under PRC laws for evasion of applicable foreign
exchange restrictions. Any such failure could also result in the offshore entity's affiliates being impeded or prevented from distributing
their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore entity, or from engaging
in other transfers of funds into or out of China.



Fluctuations in exchange rates could adversely affect business.The could be major fluctuations in the foreign exchange rate between U.S. dollars and Asian currencies in which sales may
be denominated. Appreciation or depreciation in the value of the those currencies relative to the U.S. dollar would affect financial
results reported in U.S. dollars without giving effect to any underlying change in business or results of operations. Fluctuations
in the exchange rate will also affect the relative value of any U.S. dollar denominated investments which are made in the future.



Item 1B. Unresolved Staff Comments.



None.



Item 2.
Properties.



Our principal executive office is located at
1001 Bayhill Drive, 2nd Floor, San Bruno, CA 94066. We believe these facilities are adequate to serve our needs. We
do not currently pay for the use of such space as it is being supplied by the parent of the Company. We anticipate that we will
rent additional office facilities and space, when needed, to support the growth of our business.



Item 3. Legal Proceedings.



We are not a party to any legal proceedings,
nor are we aware of any threatened litigation whatsoever.



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



During the fourth quarter of 2010, shareholders
approved the redomiciling of the Company to Delaware and amended and restated By-Laws. This was previously reported on a Form 8-K
filed November 2010.



12







PART II



Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.



Market Information



Our common stock has not been approved for quotation or trading
and, accordingly, a public trading market for our shares of common stock has not yet commenced and no shares of our common stock
have been traded. There can be no assurance that such a public trading market will develop, or, if such a trading market is developed,
that it can be maintained with liquidity.



Dividends



We have not paid any dividends on our common stock, and it is not
anticipated that any dividends will be paid in the foreseeable future. The declaration and payment of dividends in the future will
be determined by the Board of Directors in light of conditions then existing, including our earnings, financial condition, capital
requirements and other factors.



Recent Sales of Unregistered Securities



None



Item 6. Selected Financial Data.



The following financial data has been derived from and should be
read in conjunction with (i) our audited financial statements for the year ended December 31, 2010, the year ended December
31, 2009, and for the period June 16, 2008 (our inception) to December 31, 2010, together with the notes to these financial statements;
(ii) and the sections of this report entitled “Business” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”, included elsewhere herein or filed with the SEC.  Our historical results
are not necessarily indicative of the results we may achieve in any future period.

13







|Statement of Operations Data:                        |  | Year Ended December 31, 20010 |           | Year Ended December 31, 2009 |  | Cumulative from June 16, 2008 (inception) to December 31, 20010
|---------------------------------------------------- |  | ----------------------------- | --------- | ---------------------------- |  | ---------------------------------------------------------------
|                                                     |  |                               |           |                              |  |                                                                
|Revenue:                                             |  | $                             | —         |                              |  |                                                                
|                                                     |  |                               |           |                              |  |                                                                
|Expenses:                                            |  |                               |           |                              |  |                                                                
|General and administrative                           |  |                               | 13,470    |                              |  |                                                                
|                                                     |  |                               |           |                              |  |                                                                
|Total expenses                                       |  |                               | 13,470    |                              |  |                                                                
|                                                     |  |                               |           |                              |  |                                                                
|Net (loss)                                           |  | $                             | (13,470   | )                            |  |                                                                
|                                                     |  |                               |           |                              |  |                                                                
|Basic and diluted net (loss) per share               |  | $                             | —         |                              |  |                                                                
|Weighted average number of common shares outstanding |  |                               | 6,750,000 |                              |  |                                                                



|Consolidated Balance Sheet Data: |  | As of December 31, 2010 |         | As of December 31, 2009
|-------------------------------- |  | ----------------------- | ------- | -----------------------
|                                 |  |                         |         |                        
|Cash and cash equivalents        |  | $                       | —       |                        
|Working capital                  |  |                         | (12,766 | )                      
|Total assets                     |  |                         |         |                        
|Total long-term liabilities      |  |                         | —       |                        
|Total liabilities                |  |                         | 12,766  |                        
|Total shareholders’ deficit      |  |                         | (12,766 | )                      



14





Item 7. Management’s Discussion
And Analysis Of Financial Condition And Results Of Operations



The following discussion should be read in conjunction with (i)
our audited financial statements for the period June 16, 2008, our inception, through December 31, 2010, the year ended December
31, 2009, and the year ended December 31, 2010, and the related notes; and (ii) the section entitled “Business” that
appears elsewhere in this report.  The following discussion contains forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors
that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this
report. You should not place undue certainty on these forward-looking statements, which apply only
as of the date of this report. Our financial statements are stated in United States Dollars and are prepared in accordance
with United States Generally Accepted Accounting Principles.



The statements in this report include forward-looking
statements. These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous
risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these
forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected
in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology,
including words such as “may”, “will”, “believes”, “anticipates”, “estimates”,
“expects”, “continues”, “should”, “seeks”, “intends”, “plans”,
and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable
terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash
flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to
maintain and develop relationship with our existing and potential future customers; and, our ability to maintain a level of investment
that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in
these forward-looking statements, including, but not limited to: variability of our revenues and financial performance; risks associated
with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of
operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic
events; general economic conditions, government mandates and conditions in the gaming/entertainment industry in particular; and,
the continued employment of our key personnel and other risks associated with competition.



For a discussion of the factors that could cause
actual results to differ materially from the forward-looking statements see the “Liquidity and Capital Resources” section
under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this item of
this report and the other risks and uncertainties that are set forth elsewhere in this report or detailed in our other Securities
and Exchange Commission reports and filings. We believe it is important to communicate our expectations. However, our management
disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.



Advanced Water Technology Holdings, Inc., a Delaware corporation,
was incorporated in the State of Florida on June 16, 2008 as Alchemical Capital Corporation (“ACC”) with the objective
of effecting a business combination with a target business that desired to utilize its status as a reporting corporation under
the Exchange Act. Advanced Water Technologies purchased ACC on April 21, 2010, and redomiciled it, solely for the purpose of redomiciling,
from the State of Florida to the State of Delaware on November 24, 2010, and renamed it Advanced Water Technology Holdings, Inc.



AWTH’s intent is to acquire and operate businesses which develop,
manufacture, license, and/or distribute advance water technology products and services on a worldwide basis, with a focus on emerging
markets including China. To date, we have neither engaged in any operations nor generated any revenue. The continuation of our
business is dependent upon our ability to obtain adequate financing arrangements, and ultimately, engage in future profitable operations.



15







Presently, we are not in a position to meet our cash requirements
for the next 12 months. We neither generate any cash revenue nor have any cash flow. We will be required to raise capital through
the sale or issuance of additional securities or obtain borrowings or advances from third party sources in order to ensure that
we can pay our operating expenses and carry out our business plan. In the event we cannot meet our operating costs prior to the
obtaining of adequate financing operations, we may cease operations.



Presently, we are not in a position to meet our cash requirements
for the next 12 months. We neither generate any cash revenue nor cash flow. Our operating costs, which include professional fees
and costs are likely to approximate $19,000 during the next 12 months. In the event we cannot meet our operating costs prior to
the effectuation of a business combination, we may cease operations and a business combination may not occur.



Prior to the occurrence of a business combination, we may be required
to raise capital through the sale or issuance of additional securities or obtain borrowings or advances from third party sources
in order to ensure that we can pay our operating expenses. It is also possible that a business combination might not occur during
the next 12 months, if at all. In the event we are unable to pay our operating expenses prior to the effectuation of a business
combination, we may cease operations and a business combination may not occur.



Going Concern

Our financial statements have been prepared on the basis of
accounting principles applicable to a going concern. As a result, they do not include adjustments that would be necessary if we
were unable to continue as a going concern and would therefore be obligated to realize assets and discharge our liabilities other
than in the normal course of operations. As reflected in the accompanying financial statements, the Company is in the development
stage with no operations or revenues, has used cash flows in operations of $38,148 from inception of June 16, 2008 to December
31, 2010 and has an accumulated deficit of $(43,676) through December 31, 2010. This raises substantial doubt about our ability
to continue as a going concern, as expressed by our auditors in its opinion on our financial statements included in this report.
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital
and implement its business plan.



We have not yet established any source of revenues sufficient to
cover our operating costs and allow us to continue as a going concern.  Our ability to continue as a going concern is dependent
on us obtaining adequate capital or loans to fund operating losses until we become profitable.  If we are unable to obtain
adequate capital or loans, we could be forced to cease operations.  There can be no assurance that we will operate at a profit
or additional debt or equity financing will be available, or if available, can be obtained on satisfactory terms.



Results of Operations



We are a development stage company and have incurred losses of $(43,676)
as of December 31, 2010, which are due to ongoing general and administrative expenses and not having generated any revenues.



Results for the Year Ended December 31,
2010 and for the Year Ended December 31, 2009



Revenues. The Company’s revenues for the year ended
December 31, 2010 and the year ended December 31, 2009 were $0. No revenues occurred during these periods, because there were no
sales.

Cost of Revenues.The Company’s cost of revenues
for the year ended December 31, 2010 and the year ended December 31, 2009 were $0. There was no cost of revenues, because no sales
were made by the Company.

Gross Profit/Loss. The Company’s gross profit/loss
for the year ended December 31, 2010 and the year ended December 31, 2009 was $0. No gross profit/loss occurred during these periods,
because there were no sales.



16







General and Administrative Expenses. General
and administrative expenses for the year ended December 31, 2010 were $13,470 as compared to $18,613 for the year ended December
31, 2009. General and administrative expenses consist primarily of professional service fees paid to our law firm, accounting firm
and financial printer handling our SEC filings.

Net Loss. Net loss for the year ended December 31,
2010 was $13,470 as compared to $18,613 for the year ended December 31, 2009. The net loss was due to the expenses associated with
being a reporting company under the Exchange Act and generating no revenues since our inception.



Impact of Inflation

We believe that the rate of inflation has had
negligible effect on our operations. We believe we can absorb most, if not all, increased non-controlled operating costs by increasing
sales prices, whenever deemed necessary and by operating our Company in the most efficient manner possible.



Liquidity and Capital Resources



The following table sets forth our liquidity and capital resources
as of December 31, 2010:





|Cash and cash equivalents      |  | $ | —       |  
|------------------------------ |  | - | ------- | -
|Working capital deficit        |  |   | (12,766 | )
|Total assets                   |  |   | —       |  
|Total liabilities              |  |   | 12,766  |  
|Total shareholders’ deficiency |  |   | (12,766 | )



During the period June 16, 2008, our inception, through December
31, 2010, we had a working capital deficit of ($12,766), which was due to spending relating to our general and administrative expenses
and not having generated any revenues.



Cash Flows from Operating Activities



We have not generated positive cash flows from operating activities
since our inception on June 16, 2008.  Operating expenditures during the period covered by this report include general
and administrative costs.  The reason for the cash used in operating activities was due to the professional fees and costs
associated with the Company’s preparation and filing of its SEC reports.



Cash Flows from Investing Activities



We did not make any investments as of March 15,
2011.



Cash Flows from Financing Activities



We have financed our operations from the issuance
of equity securities and loans.  Net cash provided by financing activities for the year ended December 31, 2010 was $12,817.
Net cash provided by financing activities for the year ended December 31, 2009 was $16,238. We had received loan proceeds in the
amount $22,331 as of December 31, 2009 from a related party shareholder; an additional loan of $5,579 was made early in 2010, but
then canceled prior to the change in control on April 21, 2010, resulting in a related party shareholder contribution of $27,910.
After the change in control, there was a related party shareholder loan of $7,238 during the year ended December 31, 2010, and
the latter remained outstanding and payable as of December 31, 2010.



Intangible Assets



There were no intangible assets during the year ended December 31,
2010 and for the year ended December 31, 2009.



17







Material Commitments



There were no material commitments during the year ended December
31, 2010 and for the year ended December 31, 2009.



Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that are material to investors.



Critical Accounting Policies



Our financial statements and accompanying notes have been prepared
in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial
statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting periods.



We regularly evaluate the accounting policies and estimates that
we use to prepare our financial statements. In general, management's estimates are based on historical experience, on information
from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances.
Actual results could differ from those estimates made by management.



Cash and Cash Equivalents



We consider all highly liquid investments with original maturities
of three months or less to be cash equivalents. We have no cash equivalents.



Use of Estimates



The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.



Inventories



Inventories are valued at the lower of cost or market on a first-in,
first-out (FIFO) basis, and include finished goods.



Revenue Recognition



We recognize revenue when:



|· | Persuasive evidence of an arrangement exists;
|- | ---------------------------------------------



|· | Shipment has occurred;
|- | ----------------------



|· | Price is fixed or determinable; and
|- | -----------------------------------



|· | Collectability is reasonably assured.
|- | -------------------------------------



For the period from June 16, 2008 (inception) through December 31,
2010, we recognized revenues of $0.



18







Earnings (Loss) Per Share



We compute earnings per share in accordance with the Accounting
Standards Codification (“ASC”) 260 “Earnings per Share” which was previously Statement of Accounting Standards
No. 128, "Earnings per Share”. Under the provisions of ASC 260, basic earnings per share is computed by dividing the
net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings
per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potentially
dilutive common shares outstanding during the period.  There were no potentially dilutive common shares outstanding during
the period from June 16, 2008 (inception) through December 31, 2010.



Intangible Assets



We evaluate the recoverability of identifiable intangible assets
whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. There
was no impairment loss for the period from June 16, 2008 (inception) through December 31, 2010.



Income Taxes



The Company accounts for income taxes as outlined in ASC 740 “Income
Taxes”, which was previously Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.”
Under the asset and liability method of ASC 140, deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in
which those temporary differences are expected to be recovered or settled.



Fair Value of Financial Instruments



The Company considers that the carrying amount of financial instruments,
including accounts payable, approximates fair value because of the short maturity of these instruments.



Recent Accounting Pronouncements



The Company has adopted all recently issued accounting pronouncements.
The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect
on the financial position or results of operations of the Company.



Item 7A. Quantitative and Qualitative Disclosures
about Market Risk.



We are not currently subject to risks related to foreign currency
exchange rate fluctuations.



Our functional currency is the United States dollar. We do not currently
transact our business in other currencies. As a result, we are not subject to exposure from movements in foreign currency exchange
rates. We do not use derivative financial instruments for speculative trading purposes.



19





Item 8. Financial Statements and Supplementary
Data.







REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM



To the Board of Directors and
Stockholders of Advanced Water Technology Holdings, Inc.





We have audited the accompanying balance sheet
of Advanced Water Technology Holdings, Inc. (a development stage enterprise) (formerly known as “Alchemical Capital Corp.”)
(the “Company”) as of December 31, 2010 and 2009 and the related statements of operations, stockholders’ equity/(deficit),
and cash flows for the years then ended, and for the period June 16, 2008 (inception) through December 31, 2010. These financial
statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.



We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.



In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of Advanced Water Technology Holdings, Inc. (a Delaware
corporation) as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended and
the period June 16, 2008 (inception) through December 31, 2010, in conformity with accounting principles generally accepted in
the United States of America.



The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed further in Note 1, the Company has been in the
development stage since its inception (June 16, 2008) and continues to incur significant losses. The Company's viability is dependent
upon its ability to obtain future financing and the success of its future operations. These factors raise substantial doubt as
to the Company's ability to continue as a going concern. Management's plan in regard to these matters is also described in Note
1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.







/s/ Lake & Associates CPA’s LLC

Schaumburg, Illinois

April 8, 2011









20







Advanced Water Technology Holdings, Inc.

(formerly known as Alchemical Capital Corp)

(A Development Stage Company)





Financial Statements



For Year Ended December
31, 2010

and the Cumulative Period

from Inception (June 16, 2008) through December
31, 2010

(audited)











21





Advanced Water Technology Holdings, Inc.

(formerly known as Alchemical Capital Corp)

(A Development Stage
Company)

Balance Sheets

(audited)



|                                                       |  | Dec 31, 2010 |         | Dec 31, 2009
|------------------------------------------------------ |  | ------------ | ------- | ------------
|                                                       |  | (Audited)    |         | (Audited)   
|CURRENT ASSETS                                         |  |              |         |             
|Cash & equivalents                                     |  | $            | —       |             
|                                                       |  |              |         |             
|Total Assets                                           |  | $            | —       |             
|                                                       |  |              |         |             
|                                                       |  |              |         |             
|                                                       |  |              |         |             
|LIABILITIES AND SHAREHOLDERS' DEFICIT                  |  |              |         |             
|                                                       |  |              |         |             
|CURRENT LIABILITIES                                    |  |              |         |             
|Accounts payable & accrued expenses                    |  | $            | 5,528   |             
|Loan from shareholder                                  |  |              | 7,238   |             
|                                                       |  |              |         |             
|Total Liabilities                                      |  |              | 12,766  |             
|                                                       |  |              |         |             
|SHAREHOLDERS' DEFICIT                                  |  |              |         |             
|Common stock (75,000,000 shares authorized; par $.0001 |  |              |         |             
|6,750,000 issued and outstanding)                      |  |              | 675     |             
|Additional paid in capital                             |  |              | 30,235  |             
|Deficit accumulated during the development stage       |  |              | (43,676 | )           
|                                                       |  |              |         |             
|                                                       |  |              | (12,766 | )           
|                                                       |  |              |         |             
|Total Liabilities and Shareholders' Deficit            |  | $            | —       |             





The accompanying notes are an integral part
of these financial statements.







22





Advanced Water Technology Holdings, Inc.

(formerly known as Alchemical Capital Corp)

(A Development Stage
Company)

Statements of Operations



|                                     |  |                        |           |         |  | Cumulative       
|------------------------------------ |  | ---------------------- | --------- | ------- |  | -----------------
|                                     |  |                        |           |         |  | From Inception   
|                                     |  |                        |           |         |  | (June 16, 2008)  
|                                     |  | Year Ended December 31 |           | Through
|                                     |  | 2010                   |           | 2009    |  | December 31, 2010
|                                     |  |                        |           |         |  |                  
|Revenue                              |  | $                      | —         |         |  | $                
|                                     |  |                        |           |         |  |                  
|Expenses                             |  |                        |           |         |  |                  
|General and administrative           |  |                        | 13,470    |         |  |                  
|Total expenses                       |  |                        | 13,470    |         |  |                  
|                                     |  |                        |           |         |  |                  
|Net income (loss)                    |  | $                      | (13,470   | )       |  | $                
|                                     |  |                        |           |         |  |                  
|Basic and diluted net loss per share |  |                        | (0.00     | )       |  |                  
|                                     |  |                        |           |         |  |                  
|Weighted average shares outstanding  |  |                        | 6,750,000 |         |  |                  





The accompanying notes are an integral part
of these financial statements.





23





Advanced Water Technology Holdings, Inc.

(formerly known as Alchemical Capital Corp)

(A Development Stage Company)

Statement of Shareholders’ Deficit

(audited)



|                                  |  |               |           |        |  | Additional |     |             |  |      
|--------------------------------- |  | ------------- | --------- | ------ |  | ---------- | --- | ----------- |  | -----
|                                  |  | Number of     |           | Common |  | Paid-in    |     | Accumulated |  |      
|                                  |  | Common Shares |           | Stock  |  | Capital    |     | Deficit     |  | Total
|                                  |  |               |           |        |  |            |     |             |  |      
|Balance at June 16, 2008          |  |               |           |        |  |            |     |             |  |      
|(Inception), Founder's            |  |               |           |        |  |            |     |             |  |      
|Shares issued for cash            |  |               |           |        |  |            |     |             |  |      
|(3,000,000 shares at $.001/share) |  |               | 6,750,000 |        |  | $          | 675 |             |  | $    
|                                  |  |               |           |        |  |            |     |             |  |      
|Net Loss for the period           |  |               |           |        |  |            |     |             |  |      
|                                  |  |               |           |        |  |            |     |             |  |      
|                                  |  |               |           |        |  |            |     |             |  |      
|Balance at                        |  |               |           |        |  |            |     |             |  |      
|December 31, 2008                 |  |               | 6,750,000 |        |  | $          | 675 |             |  | $    
|                                  |  |               |           |        |  |            |     |             |  |      
|Net Loss for the period           |  |               |           |        |  |            |     |             |  |      
|                                  |  |               |           |        |  |            |     |             |  |      
|                                  |  |               |           |        |  |            |     |             |  |      
|Balance at                        |  |               |           |        |  |            |     |             |  |      
|December 31, 2009                 |  |               | 6,750,000 |        |  | $          | 675 |             |  | $    
|                                  |  |               |           |        |  |            |     |             |  |      
|Shareholder Contribution          |  |               |           |        |  |            |     |             |  |      
|                                  |  |               |           |        |  |            |     |             |  |      
|Net Loss for the period           |  |               |           |        |  |            |     |             |  |      
|                                  |  |               |           |        |  |            |     |             |  |      
|                                  |  |               |           |        |  |            |     |             |  |      
|Balance at                        |  |               |           |        |  |            |     |             |  |      
|December 31, 2010                 |  |               | 6,750,000 |        |  | $          | 675 |             |  | $    





The accompanying notes are an integral part
of these financial statements.





24





Advanced Water Technology Holdings, Inc.

(formerly known as Alchemical Capital Corp)

(A Development Stage Company)

Statements of Cash Flows

(audited)



|                                                 |  |                   |         |         |  | Cumulative       
|------------------------------------------------ |  | ----------------- | ------- | ------- |  | -----------------
|                                                 |  |                   |         |         |  | From Inception   
|                                                 |  |                   |         |         |  | (June 16, 2008)  
|                                                 |  | Year Ended Dec 31 |         | Through
|                                                 |  | 2010              |         | 2009    |  | December 31, 2010
|                                                 |  |                   |         |         |  |                  
|CASH FLOWS FROM OPERATING ACTIVITIES:            |  |                   |         |         |  |                  
|Net (loss)                                       |  | $                 | (13,470 | )       |  | $                
|Increase (decrease) in accounts payable          |  |                   | 653     |         |  |                  
|                                                 |  |                   |         |         |  |                  
|Net cash used in operating activities            |  |                   | (12,817 | )       |  |                  
|                                                 |  |                   |         |         |  |                  
|CASH FLOWS FROM FINANCING ACTIVITIES:            |  |                   |         |         |  |                  
|                                                 |  |                   |         |         |  |                  
|Loan from shareholder - before change in control |  |                   | 5,579   |         |  |                  
|Loan from shareholder - after change in control  |  |                   | 7,238   |         |  |                  
|Cancellation of loan from shareholders           |  |                   | (27,910 | )       |  |                  
|Shareholder contribution                         |  |                   | 27,910  |         |  |                  
|                                                 |  |                   |         |         |  |                  
|                                                 |  |                   |         |         |  |                  
|Net cash provided by financing activities        |  |                   | 12,817  |         |  |                  
|                                                 |  |                   |         |         |  |                  
|                                                 |  |                   |         |         |  |                  
|NET INCREASE IN CASH & CASH EQUIVALENTS          |  |                   | —       |         |  |                  
|                                                 |  |                   |         |         |  |                  
|CASH & CASH EQUIVALENTS, BEGINNING BALANCE       |  |                   | —       |         |  |                  
|                                                 |  |                   |         |         |  |                  
|CASH & CASH EQUIVALENTS, ENDING BALANCE          |  | $                 | —       |         |  | $                
|                                                 |  |                   |         |         |  |                  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |  |                   |         |         |  |                  
|                                                 |  |                   |         |         |  |                  
|NONCASH INVESTING AND FINANCING TRANSACTIONS     |  |                   |         |         |  |                  







The accompanying notes are an integral part
of these financial statements.





25





Advanced Water Technology Holdings, Inc.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2010





NOTE 1 - DESCRIPTION OF BUSINESS AND DEVELOPMENT STAGE RISK



ORGANIZATION



Advanced Water Technology Holdings, Inc. (the “Company”),
formerly known as Alchemical Capital Corp., is a development stage company incorporated in Florida on June 16, 2008. On November
24, 2010, the Company re-domiciled to Delaware and changed its name to Advanced
Water Technology Holdings, Inc.



The Company intends to acquire and operate businesses which as a
whole develop, license, manufacture, market, and/or distribute advanced water technology products and services on a worldwide basis.
At March 1, 2011, the Company had not yet commenced any formal business operations and all activity to date related to the Company
formation, capital stock issuance, professional fees with regard to proposed Securities and Exchange Commission (“SEC”)
filing and identification of businesses. The Company's fiscal year ends on December 31st.



Going Concern



The Company’s financial statements are prepared using generally
accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.  The Company has not yet established
an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.  The
ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease
operations.  The accompanying financial statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.



Management’s Plan to Continue as a Going Concern



The Company has met its historical working capital requirements
from the sale of its capital shares and loans from shareholders.  In order to continue as a going concern, the Company
will need, among other things, additional capital resources.  Management’s plans to obtain such resources for the
Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses,
and (2) seeking out and completing a merger with an existing operating company.  However, management cannot provide any
assurance that the Company will be successful in accomplishing any of its plans.



The ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources
of financing and attain profitable operations.  In order to minimize the financial burden on the Company, Advanced Water
Technologies, Inc., the Company’s majority shareholder, has agreed to provide non-interest bearing demand loans to the Company
to pay the Company’s annual audit fees, filing costs, legal fees and other costs as long as the Board of Directors of the
Company and Advanced Water Technologies, Inc. deem it necessary.  The Company will account for each such payment as a
demand loan and, accordingly, be recorded as a current liability on the Company’s books.  There can be no assurance
that such financial support shall be ongoing or available on terms or conditions acceptable to the Company.



Development Stage Risk



Since its inception, the Company has been dependent upon the receipt
of capital investment to fund its continuing activities. In addition to the normal risks associated with a new business venture,
there can be no assurance that the Company's business plan will be successfully executed. Our ability to execute our business plan
will depend on our ability to obtain additional financing and achieve a profitable level of operations. There can be no assurance
that sufficient financing will be obtained.  Further, we cannot give any assurance that we will generate substantial
revenues or that our business operations will prove to be profitable.



26







NOTE 2 – ACCOUNTING POLICIES



BASIS OF PRESENTATION – DEVELOPMENT STAGE COMPANY



The Company has not earned any revenue from operations.  Accordingly,
the Company’s activities have been accounted for as those of a “Development Stage Enterprise” as set forth in
ASC 915 “Development Stage Entities”, which was previously Financial Accounting Standards Board Statement No. 7.  Among
the disclosures required by ASC 915 are that the Company’s financial statements be identified as those of a development stage
company, and that the statements of operations, stockholders’ equity/(deficit) and cash flows disclose activity since the
date of the Company’s inception. The unaudited financial statements included in this report have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments
(consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation.



CASH AND CASH EQUIVALENTS



The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.



EARNINGS PER SHARE



The Company computes earnings per share in accordance with the Accounting
Standards Codification (“ASC”) 260 “Earnings per Share” which was previously Statement of Accounting Standards
No. 128, "Earnings per Share”.  Under the provisions of ASC 260, basic earnings per share is computed by dividing
the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings
per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potentially
dilutive common shares outstanding during the period.  There were no potentially dilutive common shares outstanding during
the period.



USE OF ESTIMATES



The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.



INCOME TAXES



The Company accounts for income taxes as outlined in ASC 740 “Income
Taxes”, which was previously Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.”
Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in
which those temporary differences are expected to be recovered or settled.



FAIR VALUE OF FINANCIAL INSTRUMENTS



The Company considers that the carrying amount of financial instruments,
including accounts payable, approximates fair value because of the short maturity of these instruments.



RELATED PARTIES



Related parties, which can be a corporation, individual, investor
or another entity are considered to be related if the party has the ability, directly or indirectly, to control the other party
or exercise significant influence over the Company in making financial and operating decisions. Companies are also considered to
be related if they are subject to common control or common significant influence. The Company has these relationships.



27







RECENT ACCOUNTING PRONOUNCEMENTS



The Company has adopted all recently issued accounting pronouncements.  The
adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the
financial position or results of operations of the Company.





NOTE 3 – SHAREHOLDERS’ EQUITY



On June 16, 2008, the Company issued 3,000,000 shares of common
stock to its initial shareholder in exchange for $3,000.



On April 21, 2010, Willowhuasca Wellness, Inc., a Florida corporation,
and Narayan Capital Funding Corp., a Florida corporation (each a “Seller” and collectively, the “Sellers”),
completed the sale of 2,970,000 shares of common stock of Advanced Water Technology Holdings, Inc., to Advanced Water Technologies,
Inc. (the “Purchaser”).



The sale resulted in the transfer of ninety-nine percent (99%) of
the issued and outstanding shares of capital stock of the Company to the Purchaser, which resulted in a change in control of the
Company.  Narayan Capital Funding Corp. retains 27,000 shares of common stock and Willowhuasca Wellness, Inc. retains
3,000 shares of common stock, representing an aggregate of one (1%) percent of the issued and outstanding shares of capital stock
of the Company retained by the Sellers.



Sellers and Purchaser agreed that, during the six (6) month period
following April 21, 2010 (the “Closing Date”), the Purchaser may effect a reverse split or a forward split event (each
a “Recapitalization Event”) so long as such Recapitalization Event effects all shareholders immediately prior to the
recapitalization on a pro rata basis.



Each of the Sellers severally agreed to lock up, leak-out provisions
that will last with an agreed lock-up, leak-out of no more than ten (10%) percent per day of the daily trading volume in a single
day and no more than a cumulative of ten (10%) percent per month of the monthly volume and no more than ten (10%) percent per month
of their total share ownership as measured by their initial holding, of the each of the Sellers individual ownership interest percentage
of the shares of Common Stock, as measured on the date that the shares of Common Stock become free trading shares AND are eligible
for trading on the OTCBB, AMEX, NASDAQ or NYSE Stock Market, whichever listing or quotation occurs first.  In addition,
if the trading strike price falls below Two Dollars ($2.00) during the first (1st) year of trading, Purchaser agrees to provide
both Sellers with an additional Thirty Thousand (30,000) Shares of Common Stock, to be divided equally pursuant to the Sellers
individual ownership percentage.



On November 24, 2010 the Company re-domiciled from the State of
Florida to the State of Delaware and increased the Company’s authorized shares of common stock to 75,000,000 shares, par
value $0.0001, and shares of preferred stock to 25,000,000 par value $0.0001.



The Company effected a forward stock split of the common stock at
a forward split ratio of 2.25-for-1, pursuant to a plan approved by the Company’s Board of Directors. As a result of the
forward stock split, every pre-split share of common stock issued was automatically exchanged for 2.25 post-split share of the
common stock, $0.0001 par value per share, with any fractional shares resulting from the exchange being rounded up to the nearest
whole share. Accordingly, the number of shares of the Company’s common stock issued and outstanding has been increased from
3,000,000 shares to approximately 6,750,000 shares, without accounting for fractional shares.





NOTE 4 – INCOME TAXES



The Company provides for income taxes under ASC 740, “Income
Taxes”, which was previously Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. ASC 740 requires
the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based
on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these
differences are expected to reverse.



28







ASC 740 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets
will not be realized.



The provision for income taxes differs from the amounts which would
be provided by applying the statutory federal income tax rate of 34% to the net loss before provision for income taxes for the
following reasons:



|                                             |  | December 31 |        | December 31
|-------------------------------------------- |  | ----------- | ------ | -----------
|                                             |  | 2010        |        | 2009       
|Income tax expense (asset) at statutory rate |  |             | (4,580 | )          
|Valuation allowance                          |  |             | 4,580  |            
|Income tax expense per books                 |  |             | —      |            



Net deferred tax assets consist of the following components as of:



|                       |  | December 31 |         | December 31
|---------------------- |  | ----------- | ------- | -----------
|                       |  | 2010        |         | 2009       
|NOL carryover          |  |             | 43,676  |            
|Valuation allowance    |  |             | (43,676 | )          
|Net deferred tax asset |  |             | —       |            



Due to the change in ownership provisions of the Tax Reform Act
of 1986, net operating loss carry forwards for the years ended December 31, 2010 and December 31, 2009, were $43,676 and 30,206,
respectively, and for federal income tax reporting purposes are subject to annual limitations. Should a change in our ownership
occur the net operating loss carry forwards may be limited as to their use in future years.





NOTE 5 - RELATED PARTY TRANSACTIONS



On April 21, 2010, the Company’s majority shareholder before
the change in control or stock transfer canceled loans to the Company in the amount of $27,910 and, as a result, such amount increased
paid in capital to the Company.



After the change in control, the Company’s majority shareholder,
Advanced Water Technologies, Inc. has provided loans to the Company in the amount of $7,238 as of December 31, 2010.  The
Company does not lease or rent any property.  Office space and services are provided without charge. Such costs are immaterial
to the financial statements and, accordingly, have not been reflected therein.  The officers and directors of the Company
are involved in other business activities and may, in the future, become involved in other business opportunities.  If a specific
business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business
interests.  The Company has not formulated a policy for the resolution of such conflicts.



29





Item 9. Changes In and
Disagreements with Accountants on Accounting and Financial Disclosure.



None.



Item 9A. Controls and Procedures.



In April, 2010 Basilio Chen was elected Chairman
of the Board, President, Chief Executive Officer, Secretary and Treasurer of the Company.



We maintain disclosure controls and procedures that are designed
to ensure that the information required to be disclosed in the reports that we file under the Securities Exchange Act of 1934 (the
"Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including
our President and Treasurer, as appropriate, to allow timely decisions regarding required disclosures.  In designing
and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable
level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.



As required by SEC Rule 13a-15(b), we carried out an evaluation,
under the supervision and with the participation of our management, including our President and Treasurer, of the effectiveness
of the design and operation of our disclosure controls and procedures as of the end of our fourth fiscal quarter covered by this
report. Based on the foregoing, our President and Treasurer concluded that our disclosure controls and procedures were effective
at the reasonable assurance level.



There has been no change in our internal controls over financial
reporting during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.



MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING



Our management is responsible for establishing and maintaining adequate
internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or
15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s
principal executive and financial officer and effected by the Company’s board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:



| | · | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



30







The Company’s management assessed the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2010.  In making this assessment, the Company’s
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
in Internal Control-Integrated Framework.  The COSO framework is based upon five integrated components of control: control
environment, risk assessment, control activities, information and communications and ongoing monitoring.



Based on the assessment performed, management has concluded that
the Company’s internal control over financial reporting, as of December 31, 2010, is effective and provides reasonable assurance
regarding the reliability of its financial reporting and the preparation of its financial statements in accordance with generally
accepted accounting principles. Further, management has not identified any material weaknesses in internal control over financial
reporting as of December 31, 2010.



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



/s/ Basilio
Chen

Chairman
of the Board, Chief Executive Officer, President, Secretary and Treasurer



Item
9B. Other Information.



There exists no information required to be
disclosed by us in a report on Form 8-K during the three-month period ended December 31, 2010, but not reported. Kim Le resigned
from the position of Vice-President, Finance as of April 8, 2011. Ms. Le resigned due to time constraints of her other growing
business interests. There were no differences of opinion with respect to accounting. The Company expects to utilize Ms. Le’s
firm, A2Q2, to assist in accounting and compliance for acquired companies.





31





PART III



Item
10. Directors, Executive Officers and Corporate Governance.



Our directors
and executive officers and their ages as of March 31, 2011 is as follows:



|Name                       |  | Age |  | Principal Positions With Us                                                           
|-------------------------- |  | --- |  | --------------------------------------------------------------------------------------
|                           |  |     |  |                                                                                       
|Basilio Chen               |  | 58  |  | Chairman of the Board, Chief Executive Officer, President, Secretary
    and Treasurer
|                           |  |     |  |                                                                                       
|R. Dixon “Dirk” Speas, Jr. |  | 64  |  | Vice-President, Business Operations                                                   



Basilio Chen is our Chairman of the Board, Chief Executive
Officer, President, Secretary and Treasurer, which positions he has held since April, 2010. Mr. Chen is the Managing Partner of
Evotech Management Corporation, an international merchant banking advisory firm focusing on cross-border transactions, located
in San Bruno, California and Shanghai, PRC, since 2005. Mr. Chen has over 25 years of experience in the telecommunications, computer,
green technology and health industries, and over 15 years of experience in management and finance, and has started, financed, actively
managed, and operated a multitude of companies. Mr. Chen has been advisor to corporations, public and private, as well as federal,
city and state governments. Mr. Chen has given over 200 seminars worldwide in technology, business, and health, and has been part
of panels on water industry opportunities in China. Mr. Chen is an alumni of La Salle College, Panama and an Eta Kappa Nu and Tau
Beta Pi graduate in Electronics & Electrical Engineering (Cum Laude) from California Polytechnic State University. In 1975,
he attended the Florida State University Master of Business Administration program and subsequently was a post-graduate at the
University of British Columbia in 1976. Mr. Chen is a registered professional engineer in the Republic of Panama. Mr. Chen is fluent
in English, Chinese and Spanish.



R. Dixon “Dirk” Speas, Jr.is our Vice-President,
Business Operations, which position he has held since November 2010. Mr. Speas has been in global high technology for thirty years,
working in management/corporate officer roles for such companies as ROLM Corporation, Aspect Communications (twice), Latitude Communications,
Cisco Networks, NuVox, SS8 Networks, and Siperian. In these positions, Mr. Speas was responsible for achieving significant growth,
international sales, operations, and M&A objectives as he held responsibilities at various (and sometimes overlapping) times
for customer support, manufacturing, product development, and international sales. Mr. Speas earned his CPA while at Ernst &
Ernst. He received his BS - Industrial Engineering and an MS - Operations Research in 1970, and an MBA in 1975, from Stanford University.
Mr. Speas served in the United States Public Health Service from 1970 to 1972.



There are no acquisitions, business combinations, or mergers pending
or which have occurred involving the Company. Presently, we have no plans, proposals, agreements, understandings or arrangements
of any kind or nature whatsoever to acquire or merge with any specific business or company, and we have not identified any specific
business or company for investigation and evaluation. Until such time as a Business Combination occurs, our officers and director
do not expect any change in our management.



Our Board of Directors does not have audit,
compensation or nominating committees, and no determination has been made as to whether our sole director qualifies as an “audit
committee financial expert”, as defined in Item 407 of Regulation S-K.



Compliance
with Section 16(a) of the Act



Section 16(a) of the Exchange Act requires
our officers and directors, and persons who own more than ten percent (10%) of our shares of common stock, to file reports of ownership
and changes in ownership with the SEC. Officers, directors and greater than ten percent (10%) stockholders are required by regulations
promulgated by the SEC to furnish us with copies of all Section 16(a) forms that they file. With reference to transactions during
the fiscal year ended December 31, 2008, to our knowledge, based solely on review of the copies of such reports furnished to us
and written representations, all Section 16(a) forms required to be filed with the SEC were filed.



32







Code of Ethics



We do not currently have a code of ethics applicable
to our principal executive and financial officers. Prior to an acquisition, we do not believe such a code is necessary because
we are not an operating company. Our Board of Directors intends to consider adopting such a code in the future.



Involvement in Certain Legal Proceedings



None of our directors, executive officers or control persons has
been involved in any of the events prescribed by Item 401(f) of Regulation S-K during the past five years, including:



|1. | any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------



|3. | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. | being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 11. Executive Compensation.



Executive Compensation



No officer will receive any salary or other
compensation in connection with being employed by, or providing services to, us. There are no employment or consulting agreements
with our officers and director in any form whatsoever.

The following table sets forth information concerning all
cash and non-cash compensation awarded to, earned by or paid to the following persons for services performed for us during 2010
in all capacities.

Summary Compensation Table



|                                |  |      |      |             |   |            |  |                         |   |                    |   |                                              |  |                                                                                  |   |                             |   |           |  |   |   |  |   |   |  |   |   | 
|------------------------------- |  | ---- | ---- | ----------- | - | ---------- |  | ----------------------- | - | ------------------ | - | -------------------------------------------- |  | -------------------------------------------------------------------------------- | - | --------------------------- | - | --------- |  | - | - |  | - | - |  | - | - | 
|                                |  | Year |      | Salary  ($) |   | Bonus  ($) |  | Stock  Awards ($)(2)(3) |   | Option  Awards ($) |   | Non-Equity
 Incentive Plan 
Compensation ($) |  | Change in 
Pension Value 
and Nonqualified 
Deferred 
Compensation 
Earnings ($) |   | All Other 
Compensation ($) |   | Total ($) | 
|Name and Principal Position (a) |  | (b)  |      | (c)         |   | (d)        |  | (e)                     |   | (f)                |   | (g)                                          |  | (h)                                                                              |   | (i)                         |   | (j)       | 
|                                |  |      |      |             |   |            |  |                         |   |                    |   |                                              |  |                                                                                  |   |                             |   |           | 
|CEO Basilio Chen (1)            |  |      | 2010 |             | $ | 0          |  | $                       | 0 |                    | $ | 0                                            |  | $                                                                                | 0 |                             | $ | 0         |  | $ | 0 |  | $ | 0 |  | $ | 0 | 
|CEO Robert Papiri               |  |      | 2010 |             | $ | 0          |  | $                       | 0 |                    | $ | 0                                            |  | $                                                                                | 0 |                             | $ | 0         |  | $ | 0 |  | $ | 0 |  | $ | 0 | 
|VP R. Dixon Speas, Jr (2)       |  |      |      |             | $ | 0          |  | $                       | 0 |                    | $ |                                              |  | $                                                                                | 0 |                             | $ | 0         |  | $ | 0 |  | $ | 0 |  | $ | 0 | 



|(1) | Mr. Chen became Chief Executive Officer in April 2010 and Mr. Papiri
        resigned in that same month.
        Mr. Chen also serves as Chairman, Principal
        Financial Officer and Principal Accounting Officer.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                          
|(2) | VP R. Dixon Speas, Jr. became a Vice President in November, 2010.                                                                                                                                                        



33







Employment Agreements



We have not entered into any employment or consulting agreements
with our executive officers.  Our decision to enter into an employment agreement or consulting agreements, if any, will be
made by our compensation committee.



Potential Payments Upon Termination or Change in Control



There were no potential payments or benefits payable to our named
executive officer upon his termination of employment or in connection with a change in control.



Grants of Plan-Based Awards in 2010



We have not granted any plan-based awards to our officers, since
our inception.



Outstanding Equity Awards at Fiscal Year-End



We did not have any outstanding equity awards to our named executive
officers, as of December 31, 2010, our fiscal year-end.



Option Exercises and Stock Vested in 2010



Our named executive officers did not exercise any options, nor did
any unvested shares of stock vest, during fiscal year 2010.  Our named executive officers did not have any stock options or
unvested shares of stock of the Company.



Equity Incentive Plan



We expect to adopt an equity incentive plan. The purposes of the
plan are to attract and retain qualified persons upon whom our sustained progress, growth and profitability depend, to motivate
these persons to achieve long-term company goals and to more closely align these persons' interests with those of our other shareholders
by providing them with a proprietary interest in our growth and performance. Our executive officers, employees, consultants and
non-employee directors will be eligible to participate in the plan.  We have not determined the amount of shares of our
common stock to be reserved for issuance under the proposed equity incentive plan.



Potential Employment Agreement and Benefits



There is no present intention to enter into employment or consulting
agreements with Basilio Chen and R. Dixon Speas, Jr.



Potential Payments Upon Termination or Change in Control



As of December 31, 2010, there were no potential payments or benefits
payable to our named executive officers upon their termination or in connection with a change in control.



Grants of Plan-Based Awards in 2010



We have not granted any plan-based awards to our named executive
officers, since our inception.



34







Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



The following table sets forth certain information regarding beneficial
ownership of our common stock as of March 1, 2011, for:



·each person or group known to us to beneficially own 5% or more of our common stock;



·each of our directors and director nominees;



·each of our named executive officers; and



·all of our executive officers and directors as a group.



Unless otherwise indicated below, to our knowledge, all persons
listed below have sole voting and investment power with respect to their shares of common stock, except to the extent authority
is shared by spouses under applicable law.



The number of shares beneficially owned by each shareholder is determined
under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose.
Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment
power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days after March
1, 2011, through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares,
however, does not constitute an admission that the named shareholder is a direct or indirect beneficial owner.



|Beneficial owner                                |  | Number  of Shares Beneficially Owned(1) |           | Percentage  of Shares  Outstanding(1)
|----------------------------------------------- |  | --------------------------------------- | --------- | -------------------------------------
|Advanced Water Technologies, Inc (2)            |  |                                         | 6,682,500 |                                      
|                                                |  |                                         |           |                                      
|Narayan Capital/ Willowhuasca Wellness, Inc.(3) |  |                                         | 67,500    |                                      
|                                                |  |                                         |           |                                      
|All directors and executive officers as a group |  |                                         | 6,750,000 |                                      



|(1) |  | The
number of shares and percentage of class beneficially owned set forth above is determined under rules
promulgated by the SEC and the information is not necessarily indicative of beneficial ownership for
any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares that the individual has the right
to acquire within 60 days through the exercise of stock options. Unless otherwise indicated and pursuant
to applicable community property laws, each person or entity named in the table has sole voting power
and investment power with respect to all shares of common stock listed as owned by such person or entity.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Basilio
Chen, Chairman of the Board, Chief Executive Officer, President, Secretary, Treasurer and sole director,
maintains voting and investment control of the shares held by Advanced Water Technologies, Inc. As a
result, Mr. Chen is deemed to beneficially own all of the shares of Common Stock held by Advanced Water
Technologies, Inc.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | Robert
Papiri maintains sole voting and investment control of Narayan Capital Funding Corp who owns 60,750 shares
and Willowhuasca Wellness, Inc., which owns 6750 shares and, as a result, is deemed to beneficially own
such shares of common stock.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



35







Item 13. Certain Relationships and Related
Transactions, and Director Independence.



Related Party Transactions



All related party transactions involving provision of services or
tangible assets were recorded at the exchange amount, which is the value established and agreed to by the related parties reflecting
arms length consideration payable for similar services or transfers.



Neither our officers nor our director nor any
promoter or affiliate have, or proposes to have, any direct or indirect material interest in any asset proposed to be acquired
through security holdings, contracts, options, or otherwise.



It is not currently anticipated that any salary,
consulting fee, or finder’s fee shall be paid to any of our officers and director, or to any other affiliate, prior to Acquisitions
being completed and revenues generated by the Company. See “Executive Compensation”.



Annual Report on Form 10-K



Copies of our Annual Report on Form 10-K,
without exhibits, can be obtained without charge from us at Advanced Water Technology Holdings, Inc., at 1001 Bayhill Drive, 2nd
Floor, San Bruno, CA 94066.



Item 14. Principal Accountant Fees and Services.



The
following table sets forth fees billed to us for principal accountant fees and services during the period fromJanuary 1,
2009 and the year endedDecember 31, 2010:



|                                   |  | 2010 |       | 2009
|---------------------------------- |  | ---- | ----- | ----
|Audit Fees                         |  | $    | 6,500 |     
|Audit-Related Fees                 |  |      | —     |     
|Tax Fees                           |  |      | —     |     
|All Other Fees                     |  |      | —     |     
|Total Audit and Audit-Related Fees |  | $    | 6,500 |     



Item 15.
Exhibits.



|(a) | Exhibits
|--- | --------



The following exhibits are filed with this report on Form 10-K:



|Exhibit No. |                                                                                                              | Description
|----------- | ------------------------------------------------------------------------------------------------------------ | -----------
|            |                                                                                                              |            
|            | 3.1                                                                                                          |            
|            | 3.1                                                                                                          |            
|            | 4.1                                                                                                          |            
|            | 31.1                                                                                                         |            
|            | 32.1                                                                                                         |            
|            |                                                                                                              |            
|            | * Previously filed with the SEC as exhibits on the registrant’s Form 8-K Current Report on November 29, 2010







36







SIGNATURES



Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.



| | ADVANCED WATER TECHNOLOGY HOLDINGS, INC.
| | ----------------------------------------
| |                                         
| |                                         
| | By:                                     
| |                                         
| |                                         



37





Alchemical Capital Corp.



Index to Exhibits



Exhibits



|Exhibit 4.1  | Specimen common stock certificate                                                  
|------------ | -----------------------------------------------------------------------------------
|             |                                                                                    
|Exhibit 31.1 | Certification of Basilio Chen pursuant to Section 302 of Sarbanes-Oxley Act of 2002
|             |                                                                                    
|Exhibit 32.1 | Certification of Basilio Chen pursuant to Section 906 of Sarbanes-Oxley Act of 2002



38