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




**For
      the fiscal year ended December 31, 2007**




OR




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




**For
      the transition period from****_________ to
      _________**




**COMMISSION
      FILE NO.** **000-51724**




**CHINA
      BOTTLES, INC.**




**(Formerly
      HUTTON HOLDINGS CORPORATION)**


**(Name
      of Small Business Issuer in Its Charter)**




**Nevada**
            **87-1578749******(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)




**Huanghuahu
      Industrial Zone, Fogang County**


**Guangdong
      Province, PRC 511675**


(Address
      of principal executive offices) (Zip Code)




**(86)
      763-4620777**


Issuer’s
      telephone number:




**Securities
      Registered Under Section 12(b) of the Exchange Act:**  **None.**




**Securities
      Registered Under Section 12(g) of the Exchange Act:**  **Common
      Stock, par value $0.001**




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act.  ̈




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




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will 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-KSB or any
      amendment to this Form 10-KSB. o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes o  No x




The
      issuer’s revenues for the fiscal year ended December 31, 2007 were
      $22,501,627.




The
      aggregate market value of the registrant’s Common Stock held by non-affiliates
      as of April 11, 2008 was $ 121,500,000.




As
      of April
      11,
      2008 ,
      the
      registrant had 75,000,000 shares
      of Common Stock ($ 0.001 par
      value) issued and outstanding.




Documents
      incorporated by reference: None.




Transitional
      Small Business Disclosure Format (check one):  Yes o  No o









**TABLE
      OF CONTENTS**




**Page****PART
                I.**Item
                1. Description of Business
            
            4Item
                2. Description of Property
            
            9Item
                3. Legal Proceedings
            
            9Item
                4. Submission of Matters to a Vote of Security Holders
            
            10**PART
                II.**Item
                5. Market for Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            
            10Item
                6. Management’s Discussion and Analysis or Plan of
                Operation
            
            11Item
                7. Financial Statements
            
            16Item
                8. Changesinand Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            16Item
                8A. Controls and Procedures
            
            16Item
                8B. Other Information
            
            16**PART
                III.**Item
                9. Directors, Executive Officers, Promoters and Control Persons,
                Compliance with Section 16(a) of the Exchange Act
            
            17Item
                10. Executive Compensation
            
            18Item
                11. Security Ownership of Certain BeneficialOwnersand Management and Related Stockholder Matters
            
            19Item
                12. Certain Relationships and Related Transactions
            
            19Item
                13. Exhibits
            
            20Item
                14. Principal Accountant Fees and Services
            
            20**SIGNATURES**
            
            22


2




**PART
      I**





**FORWARD
      LOOKING STATEMENTS**





In
      this
      annual report references to " China
      Bottles ,"" the
      Company ,"
       "we," "us," and "our" refer to China
      Bottles, Inc. and its subsidiaries.





This
      annual report contains certain forward-looking statements and for this purpose
      any statements contained in this annual report that are not statements of
      historical fact may be deemed to be forward-looking statements.  Without
      limiting the foregoing, words such as "may," "will," "expect," "believe,"
      "anticipate," "estimate" or "continue" or comparable terminology are intended
      to
      identify forward-looking statements.  These statements by their nature
      involve substantial risks and uncertainties, and actual results may differ
      materially depending on a variety of factors, many of which are not within
      our
      control.  These factors include but are not limited to economic conditions
      generally and in the markets in which China
      Bottles may
      participate, competition within China
      Bottles ’
chosen
      industry, technological advances and failure by us to successfully develop
      business relationships.





3


**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**





**Business
      Development**





**History**





The
      Company was incorporated under the laws of the State of Nevada on February
      26,
      2001, as Geraco, Inc. On December 15 ,
      2004,
      the Company changed its name to Hutton Holdings Corporation. On April 3, 2008,
      the Company changed its name to China Bottles, Inc.





On
      August
 26, 2007, we entered into an Agreement for Share Exchange (the
“Agreement”) with China Valley Development Limited, a British Virgin Islands
      company (“CVDL”) and Cai Yingren and Wu Wen, individually, the owners and
      shareholders of CVDL (the “Shareholders”)





Pursuant
      to the terms of the Agreement, we acquired a 100% ownership interest in CVDL in
      exchange for the issuance to the Shareholders of 29,750,000 shares of
      common stock (the “Common Stock”) and 5,000,000 shares of Series A Preferred
      Stock (the “Series A Preferred Stock”). Each share of the Series A Preferred
      Stock was convertible into five shares of common Stock, subject to the
      availability of the shares of Common Stock. The
      share exchange took place according to the terms of the Agreement and in
      accordance with applicable law.  Immediately following completion of the
      transaction through the issuance of the e xchange s hares,
      we
      had a total of approximately 50,000,000 shares of its common stock and 5,000,000
      shares of Series A Preferred Stock issued and outstanding.  On April 3,
      2008, we amended our Articles of Incorporation to increase the number of shares
      that we are authorized to issue to 175,000,000 shares of Common Stock and
      25,000,000 shares of Preferred Stock.




CVDL
      owns
      100% of the outstanding equity of Guozhu Holdings Limited, a Hong Kong company
      (“Guozhu”). Guozhu owns 100% of each of Fogang Guozhu Plastics Company Limited,
      Fogang Guozhu Blowing Equipment Company Limited and Guangdong Guozhu Precision
      Mold Company Limited (collectively, the “Guozhu Operating
      Companies”).





On
      November 15, 2007, our Board of Directors acted by unanimous written consent
      to
      change our fiscal year end from June 30 to December 31. As a result of the
      interpretive guidelines, no transition report is required in connection with
      such change in fiscal year end.


On
        April
        3, 2008, we filed an amendment to our Articles of Incorporation pursuant
        to
        which we changed our name to China Bottles, Inc and we increased our authorized
        capitalization to 200,000,000 shares, of which 175,000,000 are shares of
        Common
        Stock and 25,000,000 are shares of Preferred Stock.




**Acquisition
      of Guozhu Group**





We
      are a
      company with expertise in production of beverage bottle which mainly is made
      of
      PET (Polyethylene terephthalate), a type of plastic with desirable
      characteristics for packaging including clear and wide range of color and shape,
      tough, good resistance to heat, moisture, dilute acid, and recyclable. We
      produce, market and sell full range of beverage bottle production machineries
      including high speed injection molding machines, semi-automatic and high speed
      automatic plastics stretch blow molding machines, infrared ray perform heater,
      label heat shrinker and perform injection mold and blowing mold. We also provide
      bottle production service. We now are selling our machines using the brand
      name
“ ***Guo
      Zhu*** ”.





Currently,
      we have about 385 full-time staff. We operate one production plant in Qingyuan
      City, Guangdong Province, a sales office in Beijing and a R&D center in
      Guangzhou City, PRC. In 2006, around 80% of our sales are contributed from
      China
      market. In addition to China, we are exporting our machines to more than ten
      countries including Japan, Germany, United Kingdom, Hong Kong, Taiwan, Korea,
      Australia, Russia, Vietnam, Brazil and countries in Middle East. Our target
      customers are drink and beverage companies and pharmaceutical companies and
      their packaging services providers including China Huiyuan Juice Group Limited,
      Nestle, Coca-Cola, Harbin Pharmaceutical Group, and Wahaha Group.




4





**Corporate
      Milestones**





We
      are
      one of the leaders in the beverage packaging production industry in China.
      We
      started our operation in 1996. Certain of our milestones are illustrated in
      the
      table below:




Milestone
            
            DateCommenced
                the beverage bottle production business
            
            1993Commenced
                the injection molds and blowing molds production services
            
            1995Produced
                and marketed the first semi-automatic blowing machine
            
            1998Started
                to export injection and blowing molds to overseas market
            
            2000Qualified
                by Coca-Cola as PET bottle providers
            
            2000Started
                to export semi-automatic blowing machine to overseas market
            
            2002Qualified
                by Coca-Cola as molds suppliers
            
            2004Produced
                and marketed the first automatic blowing machine
            
            2004Started
                to export automatic blowing machine to overseas market
            
            2005Produced
                and marketed the first perform injection molding machine
            
            2006





**Our
      Business**





**General**





Our
      business focus is PET bottle production in beverage production process. We
      provide three kinds of services and products for our customers:





·
            We
                provide bottle production machineries so that our customer can produce
                bottles themselves;


·
            We
                provide perform injection mold and blow molds for our customers’ bottle
                production machines; and


·
            We
                provide complete bottles production
                services;





**Principal
      Products and their Market**





The
      table
      bellow illustrated the product lines and corresponding products we are producing
      and selling and their respective percentage of contribution to the turnover
      for
      the year of 2007.


Plastic
                  packaging machineries andProduct
                  lines
              
              supplementary
                  machineries
              
              Molds
                  Production
              
              Finished
                  Bottles productionSemi-automatic
                  blowing machine
              
              Multi-cavities
                  Perform injection
              
              PET
                  bottles for carbonatedmolds
              
              soft
                  drink, water and hot filledbeverages
                  such as juice andtea.Automatic
                  blowing machines
              
              Blowing
                  molds
              
              PP
                  bottles for pills and IVProducts
              
              
              
              
              
              injectionInjection
                  molding machinesPreform
                  HeaterNecking
                  CrystallizerLabel
                  Head ShrinkerPercentage
                  ofcontribution
                  to
              
              7.6%
              
              69.2%
              
              23.2%turnover
                  (2007)




5





**Market
      Overview**





*Global
      Beverage Packaging Machinery Market*





Beverage
      packaging is one of key application for packaging machines. In 2007, beverage
      packaging accounted for 20% of total global sales of packaging machinery, ranked
      second after food packaging which accounted for 40%.





In
      term
      of geographical classification of global market of packaging machinery for
      2007,
      the Americas had the largest market share which was equivalent to 31.8% of
      the
      total market. China plus Japan and Europe occupied similar size of shares which
      were equal to 25.9% and 24.7% respectively. Asia-Pacific ranked the forth which
      owned a market share of 11.2%. Africa plus Middle East owned 3.5% and Russia
      with Central Asia owned the remaining 2.9%.





It
      is
      expected that the global market for beverage packaging machinery is growing
      at
      an annual rate of around 3%. Following figure illustrates the global market
      size
      from 2003 to 2008.




page6




*(Source:
      SPG Media)*





*Beverage
      Market and Packaging Trends*





Packaged
      beverage is usually packed by four kinds of packaging material: carton, can,
      glass and PET. In 2003, these four kinds of packaging material accounts for
      98%
      of 870 billion units, the total consumption of the year, in which glass is
      the
      most popular kind of packing having 33% of market and Can ranked the second
      occupying 27%. However, from the research of marketers and players in the
      industry, PET is the most rapidly growing packaging material for beverages.
      It
      is expected that 41% of beverage sold in 2015 will be packaged in PET bottles
      which equal to 565 billion units. Following table lists the forecasted annual
      growth rate of these four kinds of packaging material in global beverage market.





Carton
            
            Can
            
            Glass
            
            PETGrowth
                Rate p.a.
            
            
            4
            %
            
            1
            %
            
            0
            %
            
            9
            %


6




PET
      outperforms other packaging material in popularity. Forecasted number of
      packaged beverage in different packaging material for the year 2003, 2007,
      2011
      and 2015 is shown in following figure.






page7


*(Source:
      PCI, Canadean, Mercer, GDA, Tetra, KRONES)*





**Government
      Regulation**





In
      relation to the design, development, manufacture and sale of plastic injection
      molding machines, Chinese government and PRC laws do not require any special
      and/or additional approvals, permissions or any other qualifications required
      except for the relevant business license.





In
      certain provinces and cities, the provincial governments and the city government
      requires the beverage bottle manufactures acquired Food Hygiene Permits before
      they can sell these bottles or use these bottles for food and drinks containing
      usage.





We
      carry
      on our business in an industry that is subject to PRC environmental protection
      laws and regulations. These laws and regulations require enterprises engaged
      in
      manufacturing and construction that may cause environmental waste to adopt
      effective measures to control and properly dispose of waste gases, waste water,
      industrial waste, dust and other environmental waste materials, as well as
      fee
      payments from producers discharging waste substances. Fines may be levied
      against producers causing pollution.





**Business
      Strategies**





We
      are in
      the leading position among the Chinese beverage packaging machinery companies.
      We are one of few China companies which can produce high speed automatic bottle
      blowing machines. We are also the only China company can produce all machines
      and components of both high speed bottle production line and semi-auto bottle
      production line including inject molding machine, injection and blowing molds,
      semi-automatic and high speed automatic blowing machine.





By
      leverage our market leadership and the growth opportunity of the market, we
      adopt following strategies to grow our business:





*Expanding
      production capacity*





The
      demand for PET beverage bottle production machines is huge that the current
      supply level cannot fully match. The growth rate of demand of PET bottles is
      9%
      per annum which is promising for the industry. We believe the growth rate of
      the
      global demand of PET beverage bottles in China is higher than that of global
      market. Our major growth strategy is to expand our production capacity to cope
      with the growth of market so that we can preserve our position in the industry.
      We are focusing to gather and acquire resources available inside or outside
      of
      our company to execute this strategy. We are refining our production process
      so
      as to speed up our product deliver time in order to increase the efficiency
      of
      working capital. In June 2007, we had secured a loan of US$1.07 million for
      working capital. We are also developing market with high profit margin to
      strength our financial performance for our growth.





*Enhancing
      production efficiency and speed*





The
      competition of the packaged beverage market is very keen. The Product
      development cycle of the beverage industry is getting short in order to act
      fast
      enough to match the competitors. The requirement from the beverage industry
      for
      fast delivery of production line including the packaging components becomes
      mandatory. The faster a vendor can deliver the business, the more likeness
      the
      vendor can gain the business.




7





In
      addition, faster delivery of products can enhance efficiency of working capital
      which is crucial for the expansion of production capacity.





*Expanding
      overseas markets*





While
      the
      Chinese market is very promising, the overseas market offers a better margin
      for
      our products. In addition, our business performance will be more stable if
      we
      can diversify our market in order to avoid any possible fluctuation in Chinese
      economy and market condition. We are expanding our percentage of sales in
      overseas market so as to increase our market coverage and improve our profit
      margin.





*Continuing
      product development*





Beverage
      packaging is a fast growth industry. The market is keeping required for faster
      and more sophisticated machineries to cope with the development. Technology
      and
      production development is one of our key focuses of business strategy in order
      to sustain our growth and success. In 2007, we setup a research and development
      center, with a prestige university in China, for our product development and
      enhance.





**Marketing
      and Distribution**





We
      market
      our products and update the market about our progress and breakthrough by
      participating the tradeshows and exhibitions related to beverage industry and
      bottle production industry. In 2007, we attended a number of tradeshows and
      exhibitions demonstrating the newest and killing products. We also organize
      plant visit for prospect to demonstrate the solutions we can provide. As
      beverage industry is a concentrated industry, this is proven to be the most
      effective way of marketing for us.





As
      we are
      well known in the beverage industry in China, nearly all beverage companies
      contact our sales team or senior management directly to seek for solutions
      or
      products. Our sales team and the senior managements totally participate and
      manage the whole sales process. For overseas market, we mainly market their
      production through trading agents and export companies in China. In certain
      overseas markets, we also appoint local agent for order taking and after sales
      services.





**Competition**





We
      face
      different competition environment for its three business lines.





*Beverage
      bottle production machinery*





Our
      beverage bottle production machineries cover both high-end market and mid-end
      market.





The
      high-mid production line mainly covers the production line composed of
      high-speed bottle blowing machines and high speed preform injection molding
      machines. For the high-end market, we have around 10 competitors in which most
      of them are foreign company. For this market, price-performance ratio,
      throughput of product, reliability and product delivery time and services
      support are key factors for competition. Because of the high entry barrier
      in
      capital investment and technology expertise and the higher demand over the
      supply in the market, the competition in this market is mild yet.





There
      are
      hundreds of companies supping semi-automatic machinery in the mid-tier market.
      The competition in this market is keen. Players in this market mainly compete
      in
      price, reliability. As the result, only a few players with scale can be in
      the
      business. In the long run, the market will become an oligopoly.





*Bottle
      production*





This
      market has a large number of players with great variation in quality, scale
      of
      operation. Cost, technological expertise and ability of timely delivery is
      key
      factor in competition. We are the top-tier player in this business because
      of
      our quality and reputation and have stable business relation with big companies
      which are willing to pay premium for quality.





8




*Injection
      and Blowing Molds production*





Key
      factors for competition in this market are technology expertise, timely delivery
      and durability of the product. The market is stratified and we are the leader
      in
      this industry and are one of three authorized molds suppliers of Coca-Cola
      Company. The competition in the tier we are in is mild as there are only a
      few
      players who can provide up to standard injection molds and blowing molds for
      mid
      to higher tier beverage and drinks companies.





**Employees**





Currently
      we have about 409 employees.





**Intellectual
      Property**





We
      own
      three patents related to designs of bottle blowing machines registered in China.
      All these patents will be expired 10 years after the patent registered date.
      Table below has summarized these three patents:





Item
            
            Patent
                Number
            
            Registered
                Date1
            
            ZL
                03 2 67574.7
            
            July
                16, 20032
            
            ZL
                03 2 67575.3
            
            July
                16, 20033
            
            ZL
                03 2 67576.3
            
            July
                16, 2003





We
      also
      have the rights to our trademark which composes of our logo and the Chinese
      words “ ***Guo
      Zhu*** ”
in
      China.





**ITEM
      2. DESCRIPTION OF PROPERTY**





**Property
      Owned and Leased**





We
      own
      one production plant with executive offices and rent two offices that one is
      a
      sales office and one is an R&D center. The following table has summarized
      real property we own or lease:





Item
            
            Address
            
            Leased/Owned1
            
            Huanghuahu
                Industrial Zone, Tangtang Town , Fogang County, Qingyuan City, Guangdong
                Province, PRC
            
            We
                possess a land use right2
            
            Rm
                C580, C521, 5/F., Wushan Technology Plaza, Wushan Road, Guangzhou,
                PRC
            
            Leased3
            
            Rm
                504, 249 Chashan Road, Guangzhou, PRC
            
            Leased





The
      period of land use right of item 1 will expire in 2053 at which time the
      property will be acquired by the State under PRC laws. The leasing period of
      item 2 and 3 will expire in 2010 and 2009 respectively. All leasing agreements
      are with customary Chinese leasing conditions.





**ITEM
      3. LEGAL PROCEEDINGS**





We
      are
      currently not involved in any litigation that we believe could have a material
      adverse effect on our financial condition or results of operations. There is
      no
      action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      or, to the knowledge of the executive officers of our company or any of our
      subsidiaries, threatened against or affecting our Company, our Common Stock,
      any
      of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers
      or directors in their capacities as such, in which an adverse decision could
      have a material adverse effect.





9




**ITEM
      4** **.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**




On
      December 27, 2007 ,
      the
      Board of Directors of the Company as well as the stockholders of a majority
      of
      the outstanding shares of the Company’s common and preferred stock approved by
      written consent, (i) the amendment of the Company’s Articles of Incorporation to
      increase the number of authorized shares of the capital stock of the Company
      to
      200,000,000 shares, of which 175,000,000 shares were to be designated as Common
      Stock and 25,000,000 shares were to be designated as preferred stock (“Capital
      Increase Amendment”), and (ii) the amendment of the Company’s Articles of
      Incorporation to change the name of the Company to China Bottles, Inc (“Name
      Change Amendment”). On or about March 7, 2008, the Company mailed to its
      stockholders, an Information Statement disclosing the approval of the Capital
      Increase Amendment and the Name Change Amendment. On April 3, 2008, the Company
      amended its Articles of Incorporation to change its name to China Bottles,
      Inc
      and to increase its authorized capital as described above.




**PART
      II**





**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES**





On
      March 31 ,
      2005,
      our shares were cleared for trading on the National Association of Securities
      Dealers (NASD) Over-the-Counter Bulletin Board (OTCBB) under the symbol “HTTH”.





The
      aggregate market value of our common equity held by non-affiliates based upon
      the average bid and ask price of such common equity on April 11, 2008, as
      reported by OTCBB was approximately $ 121,500,000





We
      have not declared dividends on our Common Stock and do not anticipate paying
      dividends on our Common Stock in the foreseeable future. There were no reported
      bids for our Common Stocks during 2006 and the first quarter of
      2007.




**Year**
            
            **Period**
            
            **High**
            
            **Low**2006
            
            
            First
                Quarter
            
            
            -
            
            
            -Second
                Quarter
            
            
            -
            
            
            -Third
                Quarter
            
            
            -
            
            
            -Fourth
                Quarter
            
            
            -
            
            
            -2007
            
            
            First
                Quarter
            
            
            -
            
            
            -Second
                Quarter
            
            $
            6.00
            
            $
            6.00Third
                Quarter
            
            
            6.00
            
            
            6.00Fourth
                Quarter
            
            
            6.00
            
            
            6.002008
            
            
            First
                Quarter
            
            $
            6.00
            
            $
            6.00





The
      source for the high and low closing bids quotations is the Bloomberg database
      and does not reflect inter-dealer prices. Such quotations are without retail
      mark-ups, mark-downs or commissions, and may not represent actual transactions
      and have not been adjusted for stock dividends or splits.





As
      of
      April 11, 2008, the Company had 75,000,000 shares of Common Stock issued and
      outstanding.





**Holders**





As
      of
      April 11, 2008, we have approximately 69 shareholders of record of holding
      75,000,000 shares of Common Stock.





As
      of the
      fiscal year ended December 31, 2007, we had 50,000,000 shares of Common Stock
      and 5,000,000 shares of Series A Preferred Stock issued and outstanding. Each
      share of Series A Preferred Stock was convertible into five (5) shares of Common
      Stock at the option of the holders, subject to the availability of Common
      Shares, at any time after their issue date. On April 3, 2008, the Company
      amended its Articles of Incorporation to increase the number of shares of Common
      Stock that it is entitled to issue from 50,000,000 shares to 175,000,000 shares
      and the number of shares of Preferred Stock that it is authorized to issue
      from
      10,000,000 shares to 25,000,000 shares. On April 11, 2008, 5,000,000 shares
      of
      Series A Preferred Stock held by China Water and Drinks Inc. were converted
      into
      25,000,000 shares of Common Stock.





10




**Dividends**





We
      have
      never declared or paid any cash dividends or distributions on our Common Stock.
      We currently intend to retain our future earnings to support operations and
      to
      finance future growth and expansion and, therefore, do not anticipate paying
      any
      cash dividends on our Common Stock in the foreseeable future.





**Transfer
      Agent and Registrar** .





Our
      transfer agent is Interwest Transfer Company, Inc., located at 1981 East Murray
      Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, UT 84117. Their
      telephone number is (801) 272-9294.





**Securities
      Authorized for Issuance Under Equity Compensation Plans**





None.





**Recent
      Sales of Unregistered Securities**





On
      August
      26, 2007, we entered into an Agreement for Share Exchange (the “Agreement”) with
      China Valley Development Limited, a British Virgin Islands company (the “CVDL”)
      and Cai Yingren and Wu Wen, individually, the owners and shareholders of CVDL
      (the “Shareholders”) pursuant to which we acquired a 100% ownership interest in
      CVDL from the Shareholders. In consideration for the acquisition of the shares
      of CVDL, we issued to Cai
      Yingren 19,337,500 shares of our Common Stock and 3,250,000 shares of our Series
      A Preferred Stock, and to Wu Wen 10,412,500 shares of our Common Stock and
      1,750,000 shares of our Series A Preferred Stock. The
      issuance of the shares of Common Stock and shares of Series A Preferred Stock
      were issued pursuant to Regulation S in a transaction that was exempt from
      registration under the Securities Act of 1933, as amended.





On
      April
      11, 2008, China Water and Drinks, Inc, the holder of 5,000,000 shares of our
      Series A Preferred Stock converted such shares into 25,000,000 shares of Common
      Stock, The shares of Common Stock were issued pursuant to Regulation S in a
      transaction that was exempt from registration under the Securities Act of 1933,
      as amended.





**Issuer
      Purchase of Securities**





None.





**Off-Balance
      Sheet Arrangements**





None.




**ITEM
      6.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS**





The
      following is management's discussion and analysis of certain significant factors
      which have affected our financial position and operating results during the
      periods included in the accompanying consolidated financial statements, as
      well
      as information relating to the plans of our current management. This report
      includes forward-looking statements. Generally, the words "believes,"
      "anticipates," "may," "will," "should," "expect," "intend," "estimate,"
      "continue," and similar expressions or the negative thereof or comparable
      terminology are intended to identify forward-looking statements. Such statements
      are subject to certain risks and uncertainties, including the matters set forth
      in this report or other reports or documents we file with the SEC from time
      to
      time, which could cause actual results or outcomes to differ materially from
      those projected. Undue reliance should not be place on these forward-looking
      statements which speak only as of the date hereof. We undertake no obligation
      to
      update these forward-looking statements.





The
      following discussion and analysis should be read in conjunction with our
      consolidated financial statements and the related notes thereto and other
      financial information contained elsewhere in this Form 10-KSB.





We
      are
      engaged in the business of manufacturing and selling plastic packaging machines,
      precision molds and PET finished bottles. Our products are primarily marketed
      and sold in the PRC.




11





We
      currently has the capacity to produce approximately 90 units of blowing machines
      per year, 350 units of perform molds and 4,500 units of blowing molds per year
      and we have 12 production lines for PET finished bottles.





During
      2008, the Company intends to focus on expanding market penetration for our
      products based on our position in the growing China market, favorable cost
      structure as compared to overseas suppliers, focus on product innovation and
      customer relationships. In order to support this growth we plan to invest in
      new
      production facilities in Northern China and upgrade our existing production
      lines to enhance their efficiency. The Company is evaluating financing
      alternatives to meet the capital expenditures and working capital required
      to
      meet these goals, including the issuance of equity and debt.





The
      Company also intends to establish an R&D center in Guangzhou City in 2008 so
      as to attract more talented researchers and engineers and enhance the
      competitiveness of our products. Our R&D projects include initiatives that
      will seek to:





(1)    
      Increase the production speed for Automated Circle Blowing Machine to 1500
      bottles per hour;


(2)    
      Develop a Direct-line Machine;


(3)    
      Redesign the appearance of current machines;


(4)    
      Develop a mold for bottle caps;


(5)    
      Improve of appearance of molds, etc.




The
      Company plans to implement Hybrid Build-to-Order (BTO) and Build-to-Stock (BTS)
      production models that we expect will improve production efficiencies. China
      Bottles expects to improve its product delivery time and shorten its sales
      cycles with a BTO production model. The Company will begin production when
      sales
      orders are committed allowing greater control in production planning and
      improving production efficiency and potentially enhancing profit
      margins.




We
      also
      plan to locate our sales headquarters in Beijing to increase visibility and
      penetrate the North China and international market. Locating in Beijing has
      the
      potential to enhance our market share by enhancing our business relationships
      with both domestic and international clients.




**Significant
      Accounting Policies and Management Estimates**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States.
      The preparation of these financial statements requires us to make estimates
      and
      judgments that affect the reported amounts of assets, liabilities, revenues
      and
      expenses, and related disclosure of contingent assets and liabilities. On an
      on-going basis, we evaluate our estimates based on historical experience and
      on
      various other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying values of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions. The policies discussed below are considered by
      management to be critical to an understanding of our financial statements.





Our
      significant accounting policies are summarized in Note 3 to our financial
      statements. While all these significant accounting policies impact its financial
      condition and results of operations, we view certain of these policies as
      critical. Policies determined to be critical are those policies that have the
      most significant impact on our consolidated financial statements and require
      management to use a greater degree of judgment and estimates. Actual results
      may
      differ from those estimates. Our management believes that given current facts
      and circumstances, it is unlikely that applying any other reasonable judgments
      or estimate methodologies would cause an adverse effect on our consolidated
      results of operations, financial position or liquidity for the periods presented
      in this report.





*Revenue
      recognition*




Revenue
      represents the invoiced value of goods sold recognized upon the delivery of
      goods to the customers. We generally recognize product revenue when persuasive
      evidence of an arrangement exists, delivery has occurred or services have been
      rendered, the price fee is fixed or determinable, and collectibility is
      reasonably assured.




12




*Income
      taxes*





Provision
      for income and other related taxes have been provided in accordance with the
      tax
      rates and laws in effect in the PRC.





Income
      tax expense is computed based on pre-tax income included in the consolidated
      statements of operations. Deferred income taxes are provided for the net tax
      effects of temporary differences between the carrying amounts of assets and
      liabilities for financial reporting purposes and the amounts used for income
      tax
      purposes. A valuation allowance is provided for deferred tax assets if there
      is
      a strong likelihood the items will expire before its benefits are realized
      or if
      its future utilization is uncertain.





*Inventories*





Inventories
      are stated at the lower of cost or net realizable value, which is based on
      estimated selling prices less any further costs expected to be incurred for
      completion and disposal. Cost of raw materials is calculated using the weighted
      average method. Finished goods costs are determined using the weighted average
      method and comprise direct materials, direct labor and an appropriate proportion
      of overhead.




**Results
      of Operations**





Our
      operating results are presented on a consolidated basis for the year ended
      December 31, 2007, as compared to the year ended December 31, 2006.





**Revenue**





Sales
      revenue increased from $0 in 2006 to $22,501,627 for the year ended December
      31,
      2007.





The
      increase in revenue was mainly due to the new business of bottle production
      machinery, mold and bottle production service acquired in late August 2007.
      The
      new business has a much large scale of business and thus generated much larger
      revenue.





**Cost
      of goods sold and gross profit**





Cost
      of
      goods sold for the year ended December 31, 2007 was $15,933,826 compared to
      $0
      of the year ended December 31, 2006. The increase of cost of good for year
      ended
      December 31, 2007 as compared the previous year was a result of acquisition
      of a
      new business that generated revenue from sales.





Gross
      profit was $6,567,801 for the year ended December 31, 2007 compared to $0 in
      2006. This increase was contributed by the increase of revenue after acquisition
      of new business in August 2007.





Gross
      profit as a percentage of net revenues was 29.2% for the year of 2007.




**Expenses**





*Selling
      and distribution expenses*





Selling
      and marketing expenses, including distribution expenses, increased from $0
      for
      the year ended December 31, 2006 to $357,184 for the year ended December 31,
      2007. The main components of the expenses consist of exhibition fees and freight
      charges, constituting 23% and 19%, respectively, for selling and distribution
      expenses for the year.





The
      increase in the selling and marketing expenses is primary due to the increase
      in
      participating exhibitions and the increase of marketing activities and sales
      personnel after acquiring the new business in late August 2007.





*General
      and administrative expenses*




General
      and administrative expenses increased from $2,090 for the year ended December
      31, 2006 to $1,646,483 for the year ended December 31, 2007, an increase of
      $1,644,393. The most significant item for the year ended December 31, 2007
      was
      legal and professional fees, constituting 70% of the total of general and
      administrative expenses. Such fees were primarily incurred for acquiring new
      business in late August 2007.





13




*Finance
      costs*





Finance
      costs increased from $0 for the year ended December 31, 2006 to $66,541 for
      the
      year ended December 31, 2007. The costs were mainly for interest incurred during
      2007 from the short-term bank loans.





**Income/(loss)
      before tax and provision for taxation**





Income
      before tax was $5,135,989 for the year ended December 31, 2007 compared to
      a
      loss of $2,090 for the year ended December 31, 2006. The increase was mainly
      due
      to the increase in revenue from the new business acquired in August 2007.





Provision
      for taxation for the year ended December 31, 2007 was $1,392,122, compared
      to $0
      for the year ended December 31, 2006. The Company’s effective tax rate for the
      year ended December 31, 2007 was 27%.




**Net
      income**





Net
      income for the year ended December 31, 2007 was $3,743,867, compared to a loss
      of $2,090 from in 2006. The increase was mainly due to the increase in revenue
      and hence net income from the new business acquired in August 27, 2007. Net
      margin for the year ended December 31, 2007 was 16.7%.





**Liquidity
      and capital resources**





*Cash*





Our
      cash
      balance as of December 31, 2007, was $1,375,786 compared with our cash balance
      of $0 as of December 31, 2006. The increase was mainly attributable to net
      cash
      received through acquisition of the new business in late August 2007.





*Cash
      Flow*





Our
      cash
      inflows from operations during the year ended December 31, 2007 amounted to $737,710. The increase in cash flow was due
      primarily to increases in account receivable, inventories, prepaid expenses
      and
      other receivable.





Our
      cash
      outflows used in investing activities amounted to $ 3,895,239 for the
      year ended December 31, 2007. During the year, we purchased equipment and land
      use right for our expansion of production capacity.





Our
      cash
      inflows from financing activities amounted to $ 4,133,956 for the
      year ended December 31, 2007. During the year, we received two short-term bank
      loans and obtained addition cash through the acquisition in August 2007.





*Working
      Capital*





Our
      working capital as of December 31, 2007 was $2,633,599 as compared to a net
      working capital deficit of $2,090 as of December 31, 2006, primarily due to
      the
      addition cash obtained through the acquisition in August 2007.





We
      currently generate our cash flow through our operations. We believe that our
      cash flow generated from operations will be sufficient to sustain operations
      for
      at least the next 12 months. There is no identifiable expansion plan as of
      December 31, 2007, but from time to time, we may identify new expansion
      opportunities for which there will be a need for use of cash.





*Off-Balance
      Sheet Arrangements*





We
      do not
      have any off-balance sheet arrangements.




14





*Inflation*





Inflation
      has not had a material impact on our business and we do not expect inflation
      to
      have an impact on our business in the near future.





*Currency
      Exchange Fluctuations*





All
      of
      the Company’s revenues and a majority of its expenses for the year ended
      December 31, 2007 were denominated in Renminbi (“RMB”), the currency of China,
      and were converted into US dollar at the exchange rate of 7.6172 to 1. In the
      third quarter of 2005, RMB began to rise against the US dollar. There can be
      no
      assurance that RMB to US dollar exchange rates will remain stable. A devaluation
      of RMB relative to the US dollar would adversely affect our business,
      consolidated financial condition and results of operations. We do not engage
      in
      currency hedging.




15





**ITEM
      7. FINANCIAL STATEMENTS**





Reference
      is made to pages F-1 through F-15 comprising a portion of this annual
      report on Form 10-KSB.





**ITEM
      8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





As
      approved by the Company’s Board of Directors on July 18, 2007, the accounting
      firm of Madsen
      & Associates CPA’s, Inc. (“Madsen”) was engaged to take over the audit responsibilities from Robison,
      Hill &Co. (“Robison”) and Robison was dismissed on that same
      date.





During
      the Company's two most recent fiscal years and any subsequent interim period
      prior to the engagement of Madsen, the Company (or someone on its behalf) has
      not consulted with Madsen, or any other auditor, regarding any accounting or
      audit concerns, to include, but not by way of limitation, those stated in Item
      304(a)(2) of Regulation S-B.





Robison
      had been appointed on January 31, 2006 as the Company’s independent auditor.





During
      the period that Robison served as the Company’s independent auditor and through
      the date of dismissal, the Company has not had any disagreements with Robison,
      whether resolved or not resolved, on any matter of accounting principals or
      practices, financial statement disclosure, or auditing scope or procedure,
      which, if not resolved to said accountants' satisfaction, would have caused
      it
      to make reference to the subject matter of the disagreements(s) in connection
      with its report.





The
      Company has provided the information required to comply with Item 304(a)(3)
      of
      Regulation S-B to Robison and requested that Robison furnish it with a letter
      addressed to the Securities and Exchange Commission stating whether it agrees
      with the above statements.




**ITEM 8A.
      CONTROLS AND PROCEDURES**





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our reports filed pursuant to the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time periods specified in the SEC’s rules, regulations
      and related forms, and that such information is accumulated and communicated
      to
      our principal executive officer and principal financial officer, as appropriate,
      to allow timely decisions regarding required disclosure.





We,
      under
      the supervision of our chief executive officer and chief financial officer,
      carried out an evaluation of the effectiveness of the design and operation
      of
      its disclosure controls and procedures as of December 31, 2007. Based upon
      that
      evaluation, management, including our chief executive officer and chief
      financial officer, concluded that our disclosure controls and procedures were
      effective in alerting it in a timely manner to information relating to us
      required to be disclosed in this report.





During
      our fiscal year ended December 31, 2007, there were no significant changes
      in
      our internal controls over financial reporting that have materially affected,
      or
      are reasonably likely to materially affect our internal controls over financial
      reporting.





**ITEM 8B.
      OTHER INFORMATION**





Not
      applicable.




16





**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
      WITH
      SECTION 16(a) OF THE EXCHANGE ACT**




The
      table
      below sets forth the names and ages of our directors and executive officers
      as
      of March 31, 2008.




**Name**
            
            **Age**
            
            **Position
                Held**
            
            **Experience**Yingren
                CAI
            
            62
            
            Founder
                and Chairman
            
            -Over
                30 years of experience in sales and marketing of plastic products
                and
                machinery
              
              -
                Established Zhu Jiang Plastics Industrial Company and served as general
                manager
              
              -Founded
                and managed all three operating subsidiariesChonghui
                ZHAO
            
            41
            
            Chief
                Executive Officer,
              Chief
                Financial Officer
            
            -Over
                17 years of experience in technology and production of plastic machinery
                and mold, beverage packaging plant management and sales and marketing
                of
                beverage packaging solutions
              
              -Graduated
                from South China University of Technology, majored in Machinery in
                Chemical IndustryWen
                WU
            
            51
            
            Director
            
            -Over
                20 years of experience in plant management, machinery and molding
                production.
              
              -Responsible
                for the strategic development, administrative and financial operation
                of
                the CompanyLei
                Shan LEUNG
            
            48
            
            Director
            
            -Has
                twenty-nine years of experience in the trading industry and sales
                management.
              
              -Since
                2002, Ms. Leung has served the Company as a consultant to develop
                new
                customers and to formulate and implement marketing
                strategy.




Our
      executive officers are appointed annually by the Board of Directors. Our
      directors serve a term of one year or until their successors are elected and
      duly qualified. The executive officers serve a term until their death,
      resignation or removal by the Board of Directors or election of their respective
      successors. In
      addition, there were no arrangements or understanding between any executive
      officer and any other person pursuant to which any person was selected as an
      executive officer.




**Family
      Relationships**




There
      are
      no family relationships between any of directors or executive
      officers.




**Audit
      Committee**




We
      have
      not established an audit committee of the Board of Directors. Currently, our
      entire Board of Directors serves as our audit committee. We do not currently
      have a financial expert on our Board of Directors.




**No
      Other Committees**




We
      have
      not established compensation, nominating executive or any other committees
      of
      the Board of Directors.




**Code
      of Ethics**




We
      have
      not adopted a Code of Business Conduct and Ethics (the “Code”) that applies to
      our directors and employees, including our principal executive officer,
      principal financial officer, principal accounting officer and controller, or
      persons performing similar functions.




17




**Changes
      in Director Nomination Process for Stockholders**




None.





**Compliance
      with Section 16(A) of the Exchange Act**




Based
      solely upon a review of Forms 3 and 4 and amendments thereto furnished to us
      pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934 during
      our
      most recent fiscal year and Forms 5 and amendments thereto furnished to us
      with
      respect to our most recent fiscal year, neither Chonghui Zhao, our Chief
      Executive Officer and Chief Financial Officer, Lei Shan Leung, one of our
      directors nor China Water and Drinks Inc., the holder of 48% of our outstanding
      common stock have filed Forms 3, 4 and 5 on a timely basis as required
      by Section 16(a) of the Securities Exchange Act of 1934, as amended.




We
      are
      aware of the following transactions with respect to China Water and Drinks
      Inc.:




(i)
            On
                August 31, 2007, China Water and Drinks Inc. acquired 11,000,000
                shares of
                our Common Stock and 5,000,000 shares of our Series A Preferred
                Stock.




(ii)
            On
                April 11, 2008, China Water and Drinks Inc. acquired 25,000,000 shares
                of
                our Common Stock upon conversion of the 5,000,000 shares of our Series
                A
                Preferred Stock.




**Committees
      of the Board of Directors** ****





As
      of
      December 31, 2007, our Board of Directors did not have any standing committees.





**ITEM
      10. EXECUTIVE COMPENSATION**





Set
      forth
      below is Summary
      Compensation Table





**SUMMARY
      COMPENSATION TABLE**





Name
                & Principal Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)
            
            Option
              Awards
              ($)
            
            Non-Equity
                Incentive Plan Compensation
              ($)
            
            Change
                in Pension value and Nonqualified deferred compensation earnings
              ($)
            
            All
                other Compensation
              ($)
            
            Total
              ($)Chonghui
            
            
            2007
            
            
            26,256
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            26,256ZHAO
            
            
            2006
            
            
            5,262
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            5,262CEO,
                CFOWen
                WU
            
            
            2007
            
            
            6,232
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            6,232Director
            
            
            2006
            
            
            6,314
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            6,314Yingren
            
            
            2007
            
            
            6,537
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            6,537CAI
            
            
            2006
            
            
            6,314
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            6,314ChairmanLei
                Shan
            
            
            2007
            
            
            -
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            -LEUNG
            
            
            2006
            
            
            -
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            N/A
            
            
            -Director




18





**Item
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDERS MATTERS**





The
      following table sets forth as of April
      11,
      2008, certain information regarding the beneficial ownership of our common
      stock, by each person known by us to be the beneficial owner of more than 5%
      of
      our outstanding shares of common stock, each
      of
      our directors, each of our named executive officers, and all executive officers
      and directors as a group. Under the SEC rules, beneficial ownership includes
      any
      shares as to which the individual has the sole or shared voting power or
      investment power. In addition, beneficial ownership includes any shares that
      the
      individual has the right to acquire within 60 days .
      Unless
      otherwise indicated, each
      person listed below has sole investment and voting power (or shares such powers
      with his or her spouse).





Name
                and Address of Beneficial Owner
            
            Number
                ofShares of
              Common
                Stock BeneficiallyOwned
            
            Percentage
                of Class (1)China
                Water and Drinks Inc.
              Unit
                607, 6/F, Concordia Plaza,
              1
                Science Musuem Road,
              Tsimshatsui
                East, Kowloon, Hong Kong
            
            
            36,000,000
            
            
            48
            %Sze
                Tang Li
              Flat
                G, 8/FL Tower 3
              The
                Waterfront 1 Auston Rd.
              West
                TST, Hong Kong
            
            
            4,765,500
            (2)
            
            6.35
            %Cai
                Yingren, Director
              2/F,
                142 Xue Zhong Road,
              Xue
                Xiu District,
              Guangzhou
                F40000, Peoples’ Republic of China
            
            
            12,187,500
            
            
            16.25
            %Wu
                Wen
              10
                Cheng Bo Street,
              Dian
                Bai Ju Sui Dong Zhen,
              Guangzhou
                F4000, Peoples’ Republic of China
            
            
            6,562,500
            
            
            8.75
            %Xue
                Fei Chun
              No
                551 Hutou Hill Village,
              Chengdoug
                Street Wenling City,
              Zhejiang
                Province, Peoples’ Republic of China
            
            
            5,900,000
            
            
            7.86
            %Jiang
                Chu
              No
                103-1-1 Chiuandong Road,
              Liujiaxia
                District,
              Yongjing
                County,
              Gansu
                Province, Peoples’ Republic of China
            
            
            5,900,000
            
            
            7.86
            %Chong
                Hui Zhao, Chief Executive Officer and Chief Finance Officer
              Huanghuahu
                Industrial Zone,
              Fogang
                County, 511675
              Guangdong
                Province, Peoples’ Republic of China
            
            
            -
            
            
            -Leung
                Lei Shan
              Huanghuahu
                Industrial Zone,
              Fogang
                County, 511675
              Guangdong
                Province, Peoples’ Republic of China
            
            
            -
            
            
            -Totally
                held by Directors and Executive Officers (four
                individuals)
            
            
            18,750,000
            
            
            25
            %




(1)
            Based
                on a total of 75,000,000 shares of Common Stock outstanding on March
                31,
                2008.





(2)
            Of
                the 4,765,000 shares beneficially owned by Sze Tang Li, (i) 2,479,000
                of
                such shares are held by IBroader Development Limited, of which Mr.
                Li is
                the sole owner and (ii) 2,286,500 of such shares are held by IPacific
                Asset Management Limited, of which Mr. Li is the sole owner.




**I** **TEM
      12. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS**





There
      has
      not been since January 1, 2007 nor is there currently pending any transaction
      or
      series of similar transactions to which we were or are to be a party in which
      the amount involved exceeded $120,000 and in which any director, executive
      officer, holder of more than 5% of our Common Stock or any member of the
      immediate family of any of these persons had or will have a direct or indirect
      material interest other than the following.:


On
        August
        26, 2007, we entered into and consummated an Agreement for Share Exchange
        with
        China Valley Development Limited (“CVDL”) and Cai Yingren and Wu Wen,
        individually, as the owners and shareholders of CVDL (the “Shareholders”).
        Pursuant to the terms of the Agreement we acquired a 100% ownership interest
        in
        CVDL in exchange for the issuance to the Shareholders of 29,750,000 shares
        of Common Stock and 5,000,000 shares of Series A Preferred
        Stock.




The
      Company does not currently have any independent directors.




19





**I** **TEM
      13. EXHIBITS**





The
      following exhibits are included as part of this report:





**Exhibit**
              **Number**
            
            **Exhibit
                Description**2.1
            
            Majority
                Stock Purchase Agreement dated May 24, 2007 (incorporated by reference
                to
                the Company’s Form 8-K dated May 29, 2007)2.2
            
            Agreement
                for Share Exchange dated August 26, 2007 (incorporated by reference
                to the
                Company’s Form 8-K dated August 31, 2007)4.1
            
            Articles
                of Incorporation (incorporated by reference to the Company’s Form SB-2
                dated August 9, 2001)4.2
            
            By-Laws
                (incorporated by reference to the Company’s to the Company’s Form SB-2
                dated August 9, 2001))4.3
            
            Certificate
                of Designation (incorporated by reference to the Company’s Form 8-K/A
                dated August 26, 2007)4.4
            
            Certificate
                of Amendment to the Company’s Articles of Incorporation (incorporated by
                reference to the Company’s Form 8-K/A dated January 25,
                2005)4.5
            
            Certificate
                of Amendment to the Company’s Articles of Incorporation (incorporated by
                reference to the Company’s Schedule 14C Information Statement dated March
                7, 2008)31.1
            
            Sarbanes
                Oxley Section 302 Certification of Chief Executive Officer and Chief
                Financial Officer32.1
            
            Sarbanes
                Oxley Section 906 Certification of Chief Executive Officer and Chief
                Financial Officer




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




With
      respect to the fiscal year ended December 31, 2007, the aggregate audit
      fees billed by our independent registered public accounting firm, Madsen, for
      professional services were as follows:




**Fiscal
                Year**
            
            **Audit**
            
            **Other
                audit related**
            
            **Tax**
            
            **All
                other**2007
            
            $
            88,500
            
            $
            -
            
            
            -
            
            
            -





**Audit
      Fees**





During
      the fiscal year ended December 31, 2007, the fees for our principal accountant
      were $88,500 ,
      which
      was composed of $6,110 for
      quarterly reviews, $73,690 for the
      preparation of this annual report on Form 10-KSB, and $8,700
      f or
      the
      audit of the financial statements filed with the current report on Form 8-K
      filed with the SEC.





**Audit
      Related Fees**





During
      the fiscal year ended December 31, 2007, our principal accountant did not render
      assurance and related services reasonably related to the performance of the
      audit or review of financial statements.





**Tax
      Fees**





During
      the fiscal year ended December 31, 2007, our principal accountant did not render
      services to us for tax compliance, tax advice and tax planning.





**All
      Other Fees**





During
      the fiscal year ended December 31, 2007, there were no fees billed for products
      and services provided by the principal accountant other than those set forth
      above.





20




During
      the fiscal years ended December 31, 2006 and 2007, the aggregate audit fees
      billed by our former independent registered public accounting firm, Robison,
      for
      professional services were as follows:


**Fiscal
                Year**
            
            **Audit**
            
            **Other
                audit related**
            
            **Tax**
            
            **All
                other**June
                30, 2006
            
            $
            23,250
            
            $
            -
            
            
            -
            
            
            -June
                30, 2007
            
            $
            8,195
            
            $
            -
            
            
            -
            
            
            -




**Audit
      Fees**




This
      category includes aggregate fees billed by our independent auditors for the
      audit of our annual financial statements on Form 10-KSB, audit or management’s
      assessment and effectiveness of internal controls over financial reporting,
      review of financial statements included in our quarterly reports on Form 10-QSB
      and services that are normally provided by the auditor in connection with
      statutory and regulatory filings for those fiscal years.




**Audit
      Related Fees**




This
      category consists of services by our independent auditors that are reasonably
      related to the performance of the audit or review of our financial statements
      and are not reported above under Audit Fees. This category includes accounting
      consultations on transaction and proposed transaction related
      matters.




**Tax
      Fees**




This
      category consists of professional services rendered for tax compliance and
      preparation of our corporate tax returns and other tax advice.




**All
      Other Fees**




There
      are
      no other fees to disclose.




All
      of
      the fees paid for the fiscal years ended December 31, 2006 and 2007, described
      above were pre-approved by the Board of Directors.




**Policy
      on Pre-Approval of Services Performed by Independent Registered Public
      Accounting Firm**




The
      Board
      of Director’s policy is to pre-approve all audit and permissible non-audit
      services provided by the independent auditors. These services may include audit
      services, audit-related services, tax services and other services. The audit
      committee may also pre-approve particular services on a case-by-case
      basis.





21


**SIGNATURES**





In
      accordance with Section 13 or 15(a) of the Exchange Act, the Registrant has
      caused this Report to be signed on its behalf by the undersigned, thereunto
      duly
      authorized on the 14th day of April, 2008.





Date:
      April 14, 2008


**CHINA
                BOTTLES, INC.**By:
            /s/
              Chonghui Zhao**Chonghui
                Zhao
              Chief
                Executive Officer and
              Chief
                Financial Officer
              (Principal
                Executive, Accounting
              and
                Financial Officer)




In
      accordance with the Exchange Act, this Report has been signed by the following
      persons on behalf of the Registrant in the capacities and on the dates
      indicated.





Date:
      April 14, 2008


/s/
                  Chonghui ZhaoChonghui
                    Zhao
                  Chief
                    Executive Officer and
                  Chief
                    Financial Officer
                  (Principal
                    Executive, Accounting
                  and
                    Financial Officer)


Date:
                  April 14, 2008/s/
                  Yingren Cai
                Yingren
                  CaiDirectorDate:
                  April 14, 2008/s/
                  Wen Wu
                Wen
                  WuDirectorDate:
                  April 14, 2008/s/
                  Lei Shan Leung
                Lei
                  Shan LeungDirector




22





**CHINA
      BOTTLES, INC. AND SUBSIDIARIES**


(Formerly
      Hutton Holdings Corporation)





INDEX
      TO
      FINANCIAL STATEMENTS








REPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            F-2CONSOLIDATED
                BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006
            F-3CONSOLIDATED
                STATEMENTS OF INCOME & COMPREHENSIVE INCOME FOR THE YEARS ENDED
                DECEMBER 31, 2007 AND 2006
            F-4CONSOLIDATED
                STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY AS AT DECEMBER 31, 2007 AND
                2006
            F-5CONSOLIDATED
                STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007 AND
                2006
            F-6NOTES
                TO CONSOLIDATED FINANCIAL STATEMENTS
            F-7




F-1




Board
      of
      Directors


China
      Bottles, Inc. and Subsidiaries


(Formerly
      Hutton Holdings Corporation)




**Report
      of Independent Registered Public Accounting Firm**




We
      have
      audited the accompanying consolidated balance sheets of China Bottles, Inc.
      and
      Subsidiaries (Formerly Hutton Holdings Corporation) as of December 31, 2007
      and
      2006 and the consolidated statements of income, stockholders’ equity and cash
      flows for the years then ended. These consolidated financial statements are
      the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these consolidated financial statements based on our
      audit.





We
      conducted our audit in accordance with auditing standards of the Public Company
      Accounting Oversight Board (“PCAOB”). Those standards require that we plan and
      perform an audit to obtain reasonable assurance 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. An audit also includes assessing the accounting principles used,
      significant estimates made by management and evaluating the overall financial
      statement presentation. We believe that our audits provide a reasonable basis
      for our opinion.





In
      our
      opinion, these consolidated financial statements referred to above present
      fairly, in all material aspects, the consolidated financial position of the
      Company as of December 31, 2007 and 2006, and the consolidated results of its
      operations and cash flows for the years then ended, in conformity with
      accounting principles generally accepted in the United States of
      America.




/s/
                Madsen & Associates CPA’s, Inc.Madsen
                & Associates CPA’s, Inc.April
                12, 2008Salt
                Lake City, Utah




F-2





**CONSOLIDATED
      FINANCIAL STATEMENTS**




CHINA
      BOTTLES, INC. AND SUBSIDIARIES


(Formerly
      Hutton Holdings Corporation)


CONSOLIDATED
      BALANCE SHEETS





December
                31,
              2007
            
            December
                31,
              2006**ASSETS**CURRENT
                ASSETSCash
                and cash equivalent
            
            
            1,375,786
            
            $
            -Accounts
                receivable, net of allowance for doubtful accounts
            
            
            1,494,539
            
            
            -Inventories
            
            
            6,737,712
            
            
            -Prepaid
                expenses and other receivables
            
            
            2,112,535
            
            
            -Total
                current assets
            
            
            11,720,572PROPERTY,
                PLANT & EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
            
            
            3,636,505
            
            
            -LAND
                USE RIGHTS, NET OF ACCUMULATED AMORTIZATION
            
            
            229,689
            
            
            -**TOTAL
                ASSETS**
            
            $
            15,586,766
            
            $
            -**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**CURRENT
                LIABILITIESShort-term
                bank loans
            
            
            1,777,389
            
            $
            -Accounts
                payable
            
            
            1,244,801
            
            
            -Accrued
                expenses and other payables
            
            
            904,791
            
            
            2,090Amount
                due to a related party
            
            
            3,508,083
            
            
            -fCustomers
                deposits
            
            
            650,652
            
            
            -Taxes
                payable
            
            
            1,001,257
            
            
            -Total
                current liabilities
            
            
            9,086,973
            
            
            2,090**TOTAL
                LIABILITIES**
            
            $
            9,086,973
            
            $
            2,090**COMMITMENTS****STOCKHOLDERS’
                EQUITY**Preferred
                stock, Par value $0.001; 50,000,000 shares authorized; $0.001 par
                value;
                5,000,000 shares issued and outstanding on December 31,
                2007
            
            $
            5,000
            
            $
            50,000Common
                stock, Par value $0.001; 50,000,000 shares authorized; $0.001 par
                value;
                50,000,000 shares issued and outstanding on December 31,
                2007
            
            
            50,000
            
            
            (50,000
            )Additional
                paid in capital
            
            
            2,303,657
            
            
            -Retained
                earnings (Accumulated deficit)
            
            
            3,741,777
            
            
            (2,090
            )Other
                comprehensive income
            
            
            399,359
            
            
            -**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            6,499,793
            
            $
            (2,090
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            
            15,586,766
            
            $
            -




See
      accompanying notes to the consolidated financial statements




F-3





CHINA
      BOTTLES, INC. AND SUBSIDIARIES


(Formerly
      Hutton Holdings Corporation)


CONSOLIDATED
      STATEMENTS OF INCOME &


COMPREHENSIVE
      INCOME





For
                the Year Ended December 31,2007
            
            2006REVENUE
            
            $
            22,501,627
            
            $
            -COST
                OF SALES
            
            
            15,933,826
            
            
            -GROSS
                MARGIN
            
            
            6,567,801
            
            
            -EXPENSESGeneral
                & administrative
            
            
            1,646,483
            
            
            2,090Sales
                & distribution
            
            
            357,184
            
            
            -TOTAL
                OPERATING EXPENSES
            
            
            2,003,667
            
            
            2,090OPERATING
                INCOME/(LOSS)
            
            
            4,564,134
            
            
            (2,090
            )OTHER
                INCOME (EXPENSE)Sales
                of scarps
            
            
            275,363
            
            
            -Sales
                of parts
            
            
            298,865
            
            
            -Miscellaneous
            
            
            64,168
            
            
            -INTEREST
                EXPENSE
            
            
            (66,541
            )
            
            -INCOME/(LOSS)
                BEFORE TAXES
            
            
            5,135,989
            
            
            (2,090
            )PROVISION
                FOR TAXATION
            
            
            1,392,122
            
            
            -NET
                INCOME/(LOSS)
            
            $
            3,743,867
            
            $
            (2,090
            )OTHER
                COMPREHENSIVE INCOMEGain
                on Foreign Exchange Translation
            
            
            399,359
            
            
            -COMPREHENSIVE
                INCOME/(LOSS)
            
            $
            4,143,226
            
            $
            (2,090
            )NET
                INCOME PER SHARE
              BASIC
                & DILUTED
            
            $
            0.08
            
            $
            N/AWEIGHTED
                AVERAGE SHARES
              BASIC
                & DILUTED
            
            
            50,000,000
            
            
            N/A




See
      accompanying notes to the consolidated financial statements




F-4


CHINA
      BOTTLES, INC. AND SUBSIDIARIES


(Formerly
      Hutton Holdings Corporation)


CONSOLIDATED
      STATEMENTS OF CHANGES IN EQUITY


FOR
      THE
      YEARS ENDED DECEMBER 31, 2007 AND 2006





AccumulatedAdditional
            
            
            
            OtherPreferred
                stock
            
            Common
                stock
            
            Paid
                in
            
            Retained
            
            ComprehensiveShares
            
            Par
                value
            
            Shares
            
            Par
                value
            
            Capital
            
            Earnings
            
            Income
            
            TotalBalance
                at December 31, 2005
            
            
            -
            
            $
            -
            
            
            -
            
            
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            (1,218
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,090
            )
            
            -
            
            
            (872
            )**BALANCE
                AT December 31, 2006**
            
            
            -
            
            $
            -
            
            
            -
            
            
            -
            
            $
            -
            
            $
            (2,090
            )
            $
            -
            
            $
            (2,090
            )Recapitalization
            
            
            50,000,000
            
            $
            5,000
            
            
            50,000,000
            
            $
            50,000
            
            $
            2,303,657
            
            $
            -
            
            $
            -
            
            
            2,358,657Foreign
                currency translation gain
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            399,359
            
            
            399,359Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            3,743,867
            
            
            -
            
            
            3,743,867**BALANCE
                AT December 31, 2007**
            
            
            50,000,000
            
            $
            5,000
            
            
            50,000,000
            
            $
            50,000
            
            $
            2,303,657
            
            $
            3,741,777
            
            $
            399,359
            
            $
            6,499,793




See
      accompanying notes to the consolidated financial statements.




F-5




CHINA
      BOTTLES, INC. AND SUBSIDIARIES


(Formerly
      Hutton Holdings Corporation)


CONSOLIDATED
      STATEMENTS OF CASH FLOWS





For
                the Year Ended December 31,2007
            
            2006(Unaudited)**Cash
                Flows From Operating Activities:**Net
                income/(loss)
            
            $
            3,743,867
            
            $
            (2,090
            )Adjustments
                to reconcile net income to net cash used by operating
                activities:Depreciation
            
            
            27,015
            
            
            -Amortization
                of land use rights
            
            
            2,030
            
            
            -Changes
                in operating Assets and liabilities:Increase
                in accounts receivable
            
            
            (1,494,539
            )
            
            -Increase
                in inventories
            
            
            (6,737,712
            )
            
            -Increase
                in prepaid expenses and other receivable
            
            
            (2,112,535
            )
            
            -Increase
                in accounts payable
            
            
            1,244,801
            
            
            -Increase
                in customers deposits
            
            
            650,652Increase
                in accrued expenses and other payables
            
            
            904,791
            
            
            2,090Increase
                in amount due to a related party
            
            
            3,508,083
            
            
            -Increase
                in taxes payable
            
            
            1,001,257
            
            
            -Net
                cash provided from operating activities
            
            
            737,710
            
            
            -**Cash
                Flows From Investing Activities:**Purchase
                of property, plant and equipment
            
            
            (3,663,520
            )
            
            -Purchase
                of land use right
            
            
            (231,719
            )
            
            -Net
                cash used in investing activities
            
            
            (3,895,239
            )**Cash
                Flows From Financing Activities:**Proceeds
                from bank loans
            
            
            1,777,389
            
            
            -Cash
                acquired from acquisition by issuing preferred and common
                shares
            
            
            2,356,567
            
            
            -Net
                cash provided from financing activities
            
            
            4,133,956
            
            
            -**Net
                increase in cash**
            
            
            976,427
            
            
            -**Effect
                of foreign exchange rate changes**
            
            
            399,359
            
            
            -**Cash
                at Beginning of Period**
            
            
            -
            
            
            -**Cash
                at the End of Period**
            
            $
            1,375,786
            
            $
            -





See
      accompanying notes to the consolidated financial statements




F-6




CHINA
      BOTTLES, INC. AND SUBSIDIARIES


(Formerly
      Hutton Holdings Corporation)


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
      31, 2007




**NOTE
      1 - PRINCIPAL ACTIVITIES AND ORGANIZATION**





China
      Bottles, Inc. (“the Company”) is engaged in production of beverage bottle which
      mainly is made of PET, a type of plastic with desirable characteristic for
      packaging including clear and wide range of color and shape, tough, good
      resistance to heat, moisture, dilute acid, and recyclable. The Company produces,
      markets and sells full range of beverage bottle production machineries including
      high speed injection molding machines, semi-automatic and high speed automatic
      plastics stretch blow molding machines, infrared ray perform heater, label
      heat
      shrinker and perform injection mold and blowing mold.





The
      Company was incorporated under the laws of the State of Nevada on February
      26,
      2001, as Geraco, Inc. On December 15, 2004, the Company changed its name to
      Hutton Holdings Corporation. On April 3, 2008, the Company changed its name
      to
      China Bottles, Inc.





The
      Company entered into a share exchange agreement on August 26, 2007, with China
      Valley Development Limited (“CDVL”), a British Virgin Islands company, to
      acquire a 100% ownership interest in CVDL.





**NOTE
      2 -**  **BASIS
      OF PRESENTATION**





The
      consolidated financial statements include the accounts of The Company and all
      its subsidiaries (“The Group”). All material inter-company accounts and
      transactions have been eliminated. The consolidated financial statements are
      prepared in accordance with generally accepted accounting principles used in
      the
      United States of America.





**NOTE**  **3
      -**  **PRINCIPLES
      OF CONSOLIDATION**  **AND
      BUSINESS COMBINATIONS**





Business
      Combinations and Acquisitions





On
      August
      16, 2007, CVDL acquired 100% equity interest of 3 subsidiaries in China
      including:





1.
            Fogang
                Guozhu Plastics Co. Ltd.2.
            Fogang
                Guozhu Blowing Equipment Co. Ltd. through Excellent Fame Investments Ltd,
                a 100% subsidiary of CVDL3.
            Guangdong
                Guozhu Precision Mold Co. Ltd.





These
      three companies have been consolidated with the Group as of August 16, 2007
      following guidelines of GAAP and following the purchase price accounting methods
      for business combinations as outlined in SFAS 141 “Business
      Combinations”





Principles
      of Consolidation





For
      the
      year ended December 31, 2007, the consolidated financial statements include
      the
      accounts of the Group and the following wholly-owned subsidiaries:





1.
            Guozhu
                Holdings Limited2.
            Excellent
                Fame Investments Ltd.3.
            Fogang
                Guozhu Plastics Co. Ltd.4.
            Fogang
                Guozhu Blowing Equipment Co. Ltd.5.
            Guangdong
                Guozhu Precision Mold Co. Ltd.




F-7




These
      wholly owned Chinese subsidiaries are engaged in the manufacturing of beverage
      bottle production equipment as well as providing molds and bottle production
      services for various customers. The accompanying consolidated financial
      statements include the accounts of its subsidiaries. All significant
      inter-company balances and transactions have been eliminated.





**NOTE**  **4
      - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





(a)
            Economic
                and Political Risk





The
      Group’s major operations are conducted in China (“PRC”). Accordingly, the
      political, economic, and legal environments in the PRC, as well as the general
      state of the PRC’s economy may influence the Group’s business, financial
      condition, and results of operations.




The
      Group’s major operations in the PRC are subject to special considerations and
      significant risks not typically associated with companies in North America
      and
      Western Europe. These include risks associated with, among others, the
      political, economic, and legal environment. The Group’s results may be adversely
      affected by changes in governmental policies with respect to laws and
      regulations, anti-inflationary measures, and rates and methods of taxation,
      among other things.





(b)
            Cash
                and Cash Equivalents





The
      Group
      considers all highly liquid investments purchased with original maturities
      of
      three months or less to be cash equivalents. The Group maintains bank accounts
      in Hong Kong and China through its wholly owned subsidiaries.





(c)
            Accounts
                Receivable





Trade
      receivables are recognized and carried at the original invoice amount less
      allowance for any uncollectible amounts. An estimate for doubtful accounts
      is
      made when collection of the full amount is no longer probable. Bad debts are
      written off as incurred. The Group did not have provided an allowance for
      doubtful accounts for the year ended December 31, 2007. There were bad debts
      $7,436 incurred for the year ended December 31, 2007.





(d)
            Inventories





Inventories
      consisting of raw materials, work-in-progress, and finished goods are stated
      at
      the lower of cost or net realizable value. Finished goods are comprised of
      direct materials, direct labor and a portion of overhead. Inventory costs are
      calculated using a weighted average method of accounting.





(e)
            Property,
                Plant and Equipment





Property,
      plant and equipment are carried at cost less accumulated depreciation. The
      cost
      of maintenance and repairs is charged to the statement of income as incurred,
      whereas significant renewals and betterments are capitalized. The cost and
      the
      related accumulated depreciation of assets sold or otherwise retired are
      eliminated from the accounts and any gain or loss is included in the statement
      of income.





(f)
            Land
                Use Rights





According
      to the law of PRC, the government owns all the land in PRC. Companies or
      individuals are authorized to possess and use the land only through land use
      rights granted by the PRC government for 50 years.





Land
      use
      rights represent the cost for purchasing the right to use the leasehold land
      for
      the production facilities of Fogang Guozhu Plastics Co. Ltd. It is stated at
      cost less amortization. Land use rights are being amortized using the
      straight-line method over the lease term of 50 years.





Amortization
      expense was $17,811 and $0 for the years ended December 31, 2007 and 2006,
      respectively.





F-8




(g)
            Depreciation
                and Amortization





The
      Group
      provides for depreciation of plant and equipment principally by use of the
      straight-line method for financial reporting purposes. Plant and equipment
      are
      depreciated to its residual value over the following estimated useful
      lives:




Building
            
            
            10
                yearsFurniture
                and fixtures
            
            
            5
                yearsMachinery
                and equipment
            
            
            5
                to 10 yearsMotor
                vehicles
            
            
            5
                to 10 years





(h)
            Accounting
                for the Impairment of Long-Lived
                Assets





The
      long-lived assets held and used by the Group are reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying amount
      of
      assets may not be recoverable. It is reasonably possible that these assets
      could
      become impaired as a result of technology or other industry changes.
      Determination of recoverability of assets to be held and used is by comparing
      the carrying amount of an asset to future net undiscounted cash flows to be
      generated by the assets. If such assets are considered to be impaired, the
      impairment to be recognized is measured by the amount by which the carrying
      amount of the assets exceeds the fair value of the assets. Assets to be disposed
      of are reported at the lower of the carrying amount or fair value less costs
      to
      sell. There were no impairments of long-lived assets for the year ended 31,
      2007
      and 2006.




(i)
            Income
                Tax




The
      Group
      has adopted the provisions of statements of Financial Accounting Standards
      No.
      109, "Accounting for Income Taxes," which incorporates the use of the asset
      and
      liability approach of accounting for income taxes. The Group allows for
      recognition of deferred tax benefits in future years. Under the asset and
      liability approach, deferred taxes are provided for the net tax effects of
      temporary differences between the carrying amounts of assets and liabilities
      for
      financial reporting purposes and the amounts used for income tax purposes.
      A
      valuation allowance is provided for deferred tax assets if it is more likely
      than not these items will either expire before the Group is able to realize
      their benefits, or that future realization is uncertain.





In
      accordance with the relevant tax laws and regulations of PRC and Hong Kong,
      the
      corporation income tax rate applicable ranges from 17.5% to 33%. At times
      generally accepted accounting principles requires the Group to recognize certain
      income and expenses that do not conform to the timing and conditions allowed
      by
      the PRC. The Group incurred income tax expense of $88,490 and $0 for the years
      ended 31, 2007 and 2006, respectively.





(j)
            Fair
                Value of Financial Instruments





The
      carrying amounts of the Group's cash, accounts receivable, accounts payable
      and
      accrued expenses approximate fair value because of the short maturity of these
      items. Term debt secured by various properties have interest rates attached
      to
      them commensurate with the finance market at the time and management believes
      approximate fair values in the short as well as the long term. It is currently
      not practicable to estimate the fair value of the other debt obligations because
      these note agreements contain unique terms, conditions, covenants and
      restrictions which were negotiated at arm's length with the Group's lenders,
      and
      there is no readily determinable similar instrument on which to base an estimate
      of fair value. Accordingly, no computation or adjustment to fair value has
      been
      determined.





F-9




(k)
            Revenue
                Recognition





Revenue
      represents the invoiced value of goods sold recognized upon the shipment of
      goods to customers. Revenue is recognized when all of the following criteria
      are
      met:





a)
            Persuasive
                evidence of an arrangement exists,b)
            Delivery
                has occurred or services have been rendered,c)
            The
                seller's price to the buyer is fixed or determinable,
                andd)
            Collectibility
                is reasonably assured.





(l)
            Earnings
                Per Share





Basic
      earnings per share is computed by dividing income available to common
      shareholders by the weighted-average number of common shares outstanding during
      the period. Diluted earnings per share is computed similar to basic earnings
      per
      share except that the denominator is increased to include the number of
      additional common shares that would have been outstanding if the potential
      common shares had been issued and if the additional common shares were dilutive.
      As of December 30, 2007, the Company has 5,000,000 shares of Series A
      Convertible Preferred Stock issued and outstanding and each share of Preferred
      Stock is convertible into 5 shares of the Company’s common stock. However, such
      Series A Convertible Preferred Stock were not considered as dilutive in nature
      as of December 31, 2007.





(m)
            Use
                of Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of assets and liabilities
      and
      disclosure of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Actual results may differ from those estimates.





(n)
            Retirement
                Benefits





The
      country of PRC mandates companies to contribute funds into the national
      retirement system, which benefits qualified employees based on where they were
      born within the country. The Group pays the required payment of qualified
      employees of the Group as a payroll tax expense. Very few employees in the
      Group
      fall under the mandatory conditions requiring the Group to pay as a payroll
      tax
      expense into the retirement system of the PRC. The Group provides no other
      retirement benefits to its employees.





(o)
            Comprehensive
                Income





Comprehensive
      income is defined to include all changes in equity except those resulting from
      investments by owners and distributions to owners. Among other disclosures,
      all
      items that are required to be recognized under current accounting standards
      as
      components of comprehensive income are required to be reported in a financial
      statement that is presented with the same prominence as other financial
      statements. Comprehensive income includes net income and the foreign currency
      translation gain, net of tax.




F-10





(p)
            Foreign
                Currency Translation





The
      accompanying consolidated financial statements are presented in United States
      dollars (US$). The functional currency of the Group is the Renminbi (RMB) and
      Hong Kong dollar (HK$). Capital accounts of the consolidated financial
      statements are translated into US$ from RMB and HK$ at their historical exchange
      rates when the capital transactions occurred. Assets and liabilities are
      translated at the exchange rates as of balance sheet date. Income and
      expenditures are translated at the average exchange rate of the year. The
      translation rates are as follows:


2007
            
            2006Year
                end RMB : US$ exchange rate
            
            
            7.314
            
            
            7.818Average
                RMB : US$ exchange rate for the year
            
            
            7.617
            
            
            7.982Year
                end HK$ : US$ exchange rate
            
            
            7.805
            
            
            7.780Average
                HK$ : US$ exchange rate for the year
            
            
            7.803
            
            
            7.769





The
      RMB
      is not freely convertible into foreign currency and all foreign exchange
      transactions must take place through authorized institutions. No representation
      is made that the RMB amounts could have been, or could be, converted into US$
      at
      the rates used in translation.





(q)
            Recent
                Accounting Pronouncements





The
      Group
      does not expect that the adoption of other recent accounting pronouncements
      will
      have a material impact on its financial statements.





**NOTE**  **5
      - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR DOUBTFUL
      ACCOUNTS**





2007Accounts
                receivable
            
            
            $
            1,502,268Less:
                Allowance for doubtful accounts
            
            
            
            7,729Accounts
                receivable, net
            
            
            $
            1,494,539





N **OTE**  **6
      - INVENTORIES**





Inventories
      consisting of raw materials and finished goods are stated at the lower of
      weighted average cost or market value. Inventories are bottled water and its
      raw
      material to manufacture the bottles.





Inventories
      as of December 31, 2007 is summarized as follows:





2007Raw
                materials
            
            
            $
            2,610,014Work-in-progress
            
            
            
            1,518,235Finished
                goods
            
            
            
            2,609,463Total
            
            
            $
            6,737,712





F-11




**NOTE
      7 - PREPAID EXPENSES AND OTHER RECEIVABLES**





Prepaid
      expenses consist of payments and deposits made by the Group to third parties
      in
      the normal course of business operations. These payments are made for the
      purchase of goods and services that are used by the Group for its current
      operations.




2007Prepaid
                expenses
            
            
            $
            961,514Other
                receivables
            
            
            
            1,151,021Total
            
            
            $
            2,112,535





The
      Group
      evaluates the amounts recorded as prepaid expenses and other receivables on
      a
      periodic basis and records a charge to the current operations of the Group
      when
      the related expense has been incurred or when the amounts reported as other
      receivables is no longer deemed to be collectible by the Group.




**NOTE
      8 - PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
      DEPRECIATION**





Property,
      plant and equipment of the Group consist primarily of manufacturing facilities
      and equipment owned and operated by the Group’s wholly owned subsidiaries in
      China. Property, plant and equipment as of December 31, 2007 are summarized
      as
      follows:





2007At
                cost:Buildings
            
            
            $
            1,277,126Machinery
                and equipment
            
            
            
            3,637,524Motor
                vehicles
            
            
            
            324,416Furniture
                & fixtures
            
            
            
            219,6955,458,761Less:
                Accumulated depreciationBuildings
            
            
            $
            157,660Machinery
                and equipment
            
            
            
            1,440,136Motor
                vehicles
            
            
            
            152,434Furniture
                & fixtures
            
            
            
            72,0261,822,256Property,
                plant and equipment, net
            
            
            $
            3,636,505





Depreciation
      expense for the years ended December 31, 2007 and 2006 was $1,822,256 and $0,
      respectively.





F-12




**NOTE
      9 - LAND USE RIGHTS, NET OF ACCUMULATED AMORTIZATION**





Land
      use
      rights of the Group are being amortized using the straight-line method over
      the
      lease term of 50 years.





2007At
                cost
            
            
            
            140,824Addition
                during the year
            
            
            
            
            $
            80,681Transfer
                from construction in progress
            
            
            
            
            
            30,079251,584Less:
                Accumulated amortization
            
            
            
            
            
            21,895Land
                use rights, net
            
            
            
            
            $
            229,689





Amortization
      expense for the years ended December 31, 2007 and 2006 was $21,895 and $0,
      respectively.





Amortization
      expense for the next 5 years end thereafter is as follows:





Year
                Ending December 31,2008
            $
            4,1322009
            
            4,1322010
            
            4,1322011
            
            4,1322012
            
            4,132Thereafter
            
            209,029$
            229,689




**NOTE
      10 - ACCRUED EXPENSES AND OTHER PAYABLES**





Other
      payables consist of amounts owed by the Group to various entities that are
      incurred by the Group outside of the normal course of business operations.
      These
      liabilities do not carry any interest rate and are paid within 12 months.
      Customer deposits consist of advance payments made by customers for the purchase
      of products from the Group.





Accrued
      expenses and other payables as of December 31, 2007 are summarized as
      follows:




2007Accrued
                expenses
            
            
            $
            197,761Other
                payables
            
            
            
            707,030Total
            
            
            $
            904,791





F-13




**NOTE
      11 - SHORT-TERM BANK LOANS**





All
      the
      short-term bank loans are repayable within 12 months and are
      unsecured.




Short-term
      loans are summarized as follows:




Due
                date
            
            
            Interest
                rate per annum
            
            2007June
                27, 2008
            
            
            
            8.541
            %
            $
            1,093,790September
                19, 2008
            
            
            
            8.748
            %
            $
            683,599




**NOTE
      12 - INCOME TAX**





(a)
      Enterprise Income Tax ("EIT")





In
      accordance with the relevant tax laws and regulations of Hong Kong and PRC,
      the
      statutory corporate income tax rates are 17.5% for Hong Kong and 33% in PRC
      for
      the year of 2007. The enterprise income tax rates applicable to the Group for
      the years ended December 31, 2007 and 2006 were as follows:





2007
            
            2006Fogang
                Guozhu Plastics Co. Ltd.
            
            
            33
            %
            
            33
            %Fogang
                Guozhu Blowing Equipment Co. Ltd.
            
            
            33
            %
            
            33
            %Guangdong
                Guozhu Precision Mold Co. Ltd
            
            
            33
            %
            
            33
            %





The
      Group’s tax expense differs from the “expected” tax expense as
      follows:





2007
            
            2006Computed
                “expected” tax expense
            
            $
            1,392,122
            
            $
            -Permanent
                expenses
            
            
            -
            
            
            -Income
                tax expense
            
            $
            1,392,122
            
            $
            -





The
      provision for income tax for the years ended December 31, 2007 and 2006 are
      summarized as follows:





2007
            
            2006Current
            
            $
            1,392,122
            
            $
            -Deferred
            
            
            -
            
            
            -Total
                income tax expenses
            
            $
            1,392,122
            
            $
            -





(b)
      Value
      Added Tax ("VAT")





There
      is
      no VAT under current tax laws in Hong Kong.





In
      accordance with the current tax laws in the PRC, the VAT rate for the PRC
      subsidiaries for export sales is 8.5% to 10% and domestic sales is 17%. VAT
      is
      levied at 17% on the invoiced value of sales and is payable by the purchaser.
      The Group is required to remit the VAT it collects to the tax authority, but
      may
      offset this tax liability from the VAT for the taxes that it has paid on
      eligible purchases. The VAT payable have been accrued and reflected as taxes
      payable in the accompanying consolidated balance sheets.





F-14




**NOTE
      13 - RELATED PARTY TRANSACTIONS**





Due
      to a
      related party represented mainly advances from 2 related parties as of December
      31, 2007 for the purposes of working capital. The amounts are unsecured,
      interest-free and repayable within 12 months.




**NOTE**  **14
      - PREFERRED STOCK**





The
      Company has 5,000,000 shares of Series A Convertible Preferred Stock authorized
      at $0.001 par value per share (the “Preferred Stock”).





On
      August
      26, 2007, the Company entered into an Agreement for Share Exchange with China
      Valley Development Limited, a British Virgin Islands company (“CVDL”) and Cai
      Yingren and Wu Wen, individually, the owners and shareholders of CVDL to
      acquired 100% ownership interest in CVDL from Cai Yingren and Wu Wen at a
      consideration of 29,750,000 shares of our Common Stock and 5,000,000 shares
      of
      Preferred Stock. Each share of Preferred Stock is convertible into 5 shares
      of
      the Company’s Common Stock, par value $.001 per share. As of December 31, 2007,
      none of the shares of Preferred Stock was converted into common shares of the
      Company.





**NOTE**  **15
      - COMMON STOCK**





The
      Company has 50,000,000 shares of Common Stock authorized at $0.001 par value
      per
      share.





On
      August
      26, 2007, the Company entered into an Agreement for Share Exchange with China
      Valley Development Limited, a British Virgin Islands company (“CVDL”) and Cai
      Yingren and Wu Wen, individually, the owners and shareholders of CVDL to
      acquired 100% ownership interest in CVDL from Cai Yingren and Wu Wen at a
      consideration of 29,750,000 shares of our Common Stock and 5,000,000 shares
      of
      Preferred Stock. Immediately following completion and as of December 31, 2007,
      the Company had a total of approximately 50,000,000 shares of Common Stock
      issued and outstanding.




**NOTE
      16 - COMMITMENTS**




The
      Company has capital commitments for $256,206 as of December 31, 2007.




The
      Company entered into unconditional purchase commitments for raw materials,
      packing materials and advertising for $0 within one year as of December 31,
      2007.




As
      of
      December 31, 2007, the Company had remaining outstanding commitments with
      respect to its non-cancelable operating leases for its office amounted to
      $14,083 within one year and $23,792 over one year.





**NOTE
      17 - SUBSEQUENT EVENTS**





1.
            On
                April 3, 2008, the number of authorized share of the capital stock
                of the
                Company has been increased to 200,000,000 shares, being 175,000,000
                shares
                of the capital as Common Stock and 25,000,000 shares of the capital
                stock
                as Preferred Stock





2.
            On
                April 3, 2008, the name of the Company has been changed to China
                Bottles, Inc.





3.
            On
                April 11, 2008, 5 million preferred stocks of the Company owned by
                a
                shareholder were converted into 25 million common
                stocks.





F-15