**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**




FORM
      10-KSB/A





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**




 ̈
            **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  ̈




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.  ̈




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




The
      issuer’s revenues for the fiscal year ended December 31, 2007 were
      $42,371,011.




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  ̈ No  ̈





**TABLE
      OF CONTENTS**




**Page****PART
                I.**Item
                1. Description of Business
            2Item
                2. Description of Property
            7Item
                3. Legal Proceedings
            7Item
                4. Submission of Matters to a Vote of Security Holders
            8**PART
                II.**Item
                5. Market for Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            8Item
                6. Management’s Discussion and Analysis or Plan of
                Operation
            9Item
                7. Financial Statements
            14Item
                8. Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure
            14Item
                8A. Controls and Procedures
            14Item
                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 Beneficial Owners and Management
                and
                Related Stockholder Matters
            19Item
                12. Certain Relationships and Related Transactions
            20Item
                13. Exhibits
            21Item
                14. Principal Accountant Fees and Services
            21**SIGNATURES**
            23










**This
      Form 10-KSB is being amended to revise and restate (i) the consolidated
      statements of income and comprehensive income to correct the reporting of basic
      and diluted earnings per share and basic and diluted weighted average shares
      outstanding; (ii)the consolidated statements of cash flows to reclassify certain
      items and to properly report the acquisition of three operating companies;
      (iii)
      the footnotes to the financial statements to provide additional disclosures
      regarding the acquisition of three operating companies and to provide pro forma
      financial statements and disclosures associated with these
      acquisitions;**  **and
      (iv) the Statement of Changes in Stockholders Equity to correct the reporting
      of
      the business acquisitions the occurred during the year.**




**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.


1





**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.





**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.


2





**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:





o
            We
                provide bottle production machineries so that our customer can produce
                bottles themselves;o
            We
                provide perform injection mold and blow molds for our customers’ bottle
                production machines; ando
            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)




3




**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.









*(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
            %




4




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.







*(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.


5





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.




6




*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.


7





**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.


8





**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.


9





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.


10





*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**




Year
      Ended December 31, 2007 as Compared to Year Ended December 31,
      2006




The
      following table summarizes the results of our operations during the year periods
      ended December 31, 2007 and 2006, and provides information regarding the dollar
      and percentage increase or (decrease) from the year period ended December 31,
      2007 to the one-year period ended December 31, 2006.




Year ended December 31,2007
            
            2006
            
            Increase
            
            % increaseRevenue
            
            $
            42,371,011
            
            $
            25,787,621
            
            
            16,583,390
            
            
            64
            %Cost
                of Goods Sold
            
            
            28,625,056
            
            
            18,500,817
            
            
            10,124,239
            
            
            55
            %Gross
                Profit
            
            
            13,745,955
            
            
            7,286,804
            
            
            6,459,151
            
            
            89
            %General
                and Administrative Expenses
            
            
            2,717,429
            
            
            572,790
            
            
            2,144,639
            
            
            374
            %Sales
                and Marketing Expenses
            
            
            1,047,086
            
            
            827,276
            
            
            219,810
            
            
            27
            %Total
                Operating Expenses
            
            
            3,764,515
            
            
            1,400,066
            
            
            2,364,449
            
            
            169
            %Income
                from Operation
            
            
            9,981,440
            
            
            5,886,738
            
            
            4,094,702
            
            
            70
            %Other
                Income (expense)
            
            
            721,027
            
            
            735,736
            
            
            (14,709
            )
            
            -2
            %Interest
                Income (expense)
            
            
            (95,116
            )
            
            (27,977
            )
            
            (67,139
            )
            
            240
            %Income
                before Income Tax
            
            
            10,607,351
            
            
            6,594,497
            
            
            4,012,854
            
            
            61
            %Provision
                for Taxes
            
            
            2,727,625
            
            
            2,072,331
            
            
            655,294
            
            
            32
            %Net
                income
            
            
            7,879,726
            
            
            4,522,166
            
            
            3,357,560
            
            
            74
            %





*Revenues*





Sales
      revenue increased from $25,787,621 for the year of 2006 to $42,371,011 for
      the
      year of 2007, an increase of 16,583,390 or 64% to that of the year 2006. In
      terms of product lines, sales of blowing machines, molding and bottles
      production grew from $16,318,728, $7,552,671 and $1,916,222 for the year of
      2006, to $27,892,838, $10,934,213 and $3,506,214 for the year of 2007, an
      increase of $11,574,110, $3,381,542 and $1,589,992 respectively.





The
      increase in revenue was mainly due to the increase in sale our two top products,
      the automatic blowing machines and advanced 32-cavity and 48-cavity preform
      injection molds which started to be popular in the drink and beverage industry.
      The drink and beverage companies in China were competing for market share
      because of the high demand of bottled drinks including water, carbonated drinks
      and juice in China. These two top products were in high demand as they increase
      production efficiency of drinks company with comparable lower price than that
      of
      foreign products. These two kinds of products continued to be the growth driver
      of the Company for the first half year of 2007 and their demand from drinks
      and
      beverage industry would be continued.





11




*Cost
      of goods sold and gross profit*





Cost
      of
      goods sold for the year ended December 31, 2007 was $28,625,056, an increase
      of
      $10,124,239 or 55% compared to $18,500,817 of the same period in 2006. The
      increase of cost of good sold for the year of 2007 as compared that of 2006
      was
      a result of increase in sales.




Our
      gross
      profit increased $6,459,151, or 89%, to $13,745,955 for the year ended December
      31, 2007 from $7,286,804 during the same period in 2006. Gross profit as a
      percentage of revenue was 32% for the year of 2007, an increase of 3% from
      28%
      during the same period in 2006. Such increase was mainly contributed by
      production of faster automatic blowing machines and preform molds with more
      cavities which has a higher gross margin compared with less advanced products
      sold in 2006. Gross profit as percentage of revenues with respect to blowing
      machines, molding and bottles production was 31%, 21% and 39%, respectively,
      for
      the year of 2007, an increase of 6%, 1% and 8% compared to that of 2006,
      respectively. Increase of gross profit ratio for bottle production was mainly
      due to improvements in production process to increase the production
      efficiency.





*General
      and Administrative*




General
      and administrative expenses increased from $572,790 in the year of 2006 to
      $2,717,429 in the year of 2007, representing an increase of 2,144,639 or 374%.
      The increase in general and administrative expenses in the year of 2007 compared
      to that of 2006 was primarily due to the expansion of operation which led to
      the
      increase in staff cost, traveling and entertainment and sundry expenses. The
      general and administrative expenses for the year of 2007 mainly consisted of
      staff cost, traveling and entertainment and sundry expenses.





*Sales
      and marketing*





Selling
      and marketing expenses, including distribution expenses, increased from $827,276
      in the year ended December 31, 2006 to $1,047,086 in the same period of 2007,
      representing a 27% increase. The increase in the selling and marketing expenses
      is primary due to the increase in advertising, marketing and exhibition cost
      and
      traveling cost. The selling and marketing expenses for the year of 2007 mainly
      consisted of advertising, marketing and exhibition cost and traveling
      expenses.





*Income
      before income tax and income taxes expenses*




Income
      before income tax was $10,607,351 for the year of 2007 compared to $6,594,497
      for the year of 2006, representation an increase of $4,012,854. The increase
      was
      mainly due to the increase in revenue.





Provision
      for taxation for the year of 2007 was $2,727,625, compared to $2,072,331 for
      the
      year ended December 31, 2006. The Company’s effective tax rate for the year of
      2007 was 25.7%.





*Net
      income*




Net
      income for the year of 2007 was $7,879,726, representing an increase of
      $4,522,166 from the same period in 2006. The increase was mainly due to the
      increase in revenue and hence net income because of the increase in sale of
      automatic blowing machines and advanced 32-cavity and 48-cavity perform
      injection molds. Net margin for the year of 2007 was 18.6%





**Liquidity
      and Capital Resources**





*Cash*





As
      of
      December 31, 2007, the Company had $1,375,786 of cash and cash equivalents
      as
      compared to $497,078 at of December 31, 2006.





*Cash
      Flow*





Year ended December 312007
            
            2006Net
                cash from operating activities
            
            $
            (547,796
            )
            $
            7,795,202Net
                cash used in investing activities
            
            $
            (1,033,516
            )
            $
            (486,002
            )Net
                cash provided by financing activities
            
            $
            2,264,400
            
            $
            (7,182,767
            )Net
                increase in cash
            
            $
            681,088
            
            $
            126,433


12





Cash
      outflows from operations during the year ended December 31, 2007 amounted to
      $547,796 as compared to net cash inflows from operations of $7,795,202 in the
      same period of 2006. The decrease in cash inflow was mainly due to payments
      to
      our suppliers who offered us better price for a shorter payment term. We adopted
      such approach in order to compensate for the increase of cost of raw materials
      and parts for production in the period.





Our
      cash
      outflows used in investing activities during the year ended December 31, 2007
      amounted to $1,033,516 as compared to the net cash used in investing activities
      amounted to 486,002 in the same period of 2006. During that period, we purchased
      equipment and machinery for the expansion of our production
      capacity.




Our
      cash
      inflows from financing activities amounted to $2,262,400 in the year ended
      December 31, 2007 as compared to cash outflows of $7,182,767 in financing
      activities in the same period of 2006. The increase in cash inflow was primarily
      due to the decrease of dividend payout, increase in amount due to a related
      party and amount received from bank loan.





*Working
      Capital*





As
      of
      December 31, 2007, the working capital of the Company was
      $4,584,696.





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 the use of
      cash.








*Off-Balance
      Sheet Arrangements*





We
      do not
      have any off-balance sheet arrangements.





*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.




13





**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**




Restatement
      of Financial Statements





As
      discussed elsewhere in this Amended and Restated Form 10-K, we have amended
      our
      previously-issued consolidated financial statements as of December 31, 2007
      and
      December 31, 2006 and for the years ended December 31, 2007 and 2006. See Note
      17 - Restatement in the notes to consolidated financial statements in Item
      7 of
      this Amended and Restated Form 10-K for more detailed information regarding
      the
      amendment. In connection with this amendment, and as a result of the
      determination to correct the Company’s consolidated financial statements and in
      connection with management’s ongoing assessment of internal controls over
      financial reporting, the Company’s Chief Executive Officer and Chief Financial
      Officer undertook a special evaluation of the effectiveness of the Company’s
      internal control of financial reporting, in connection with accounting for
      reverse mergers. The material weaknesses identified below are related to the
      inappropriate application of purchase accounting with respect to the acquisition
      of the three Guozhu operating companies on August 16, 2007. The Company has
      now
      determined that the acquisition of the three operating companies by Guozhu
      should have been accounted for as acquisitions of entities under common control.
      As a result, the Company has restated its previously issued balance sheets
      as of
      December 31, 2007 and 2006 and the results of operations and cash flows for
      the
      years ended December 31, 2007 and 2006. The Company’s management intends to take
      all necessary steps to address these material weaknesses. Management has
      retained an expert consultant to review its accounting treatments for mergers
      and acquisitions and to carefully validate that such treatments are in full
      alignment with US GAAP.





Evaluation
      of disclosure controls and procedures





In
      connection with the Form 10-K for the fiscal year ended December 31, 2007
      originally filed on April 15, 2008 (the “Original Form 10-K”), with the
      participation of our Chief Executive Officer and Chief Financial Officer, our
      management had evaluated the effectiveness of our disclosure controls and
      procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
      the Exchange Act) as of December 31, 2007. Based on this evaluation, our
      Chief Executive Officer and Chief Financial Officer had concluded that, as
      of
      the end of the period covered by the Original Form 10-K, our disclosure controls
      and procedures were effective.





Subsequent
      to the evaluation made in connection with our Original Form 10-K, as required
      by
      Rule 13a-15(b) promulgated under the Exchange Act, our management, with the
      participation of our Chief Executive Officer and Chief Financial Officer,
      reevaluated the effectiveness as of December 31, 2007 of our disclosure controls
      and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange
      Act
      as a result of the restatement of our previously-issued consolidated financial
      statements as described above. Based on this evaluation our Chief Executive
      Officer and Chief Financial Officer concluded that, our disclosure controls
      and
      procedures were ineffective because the Company failed to include Management’s
      Annual Report on Internal Control over Financial Reporting (the “Management
      Report”) and due to the material weaknesses in our internal control over
      financial reporting described below. The failure to include the Management
      Report resulted from the Company having inexperienced staff that is responsible
      for ensuring that information required to be disclosed in this Annual Report
      on
      Form 10-K is disclosed, processed, summarized and reported on a timely basis.
      The Company will continue to review its policies and procedures to ensure
      compliance and adequate personnel to facilitate these policies. Our Chief
      Executive Officer and Chief Financial Officer were not aware of the failure
      to
      include the Management Report at the time of filing of the Original Form 10-K
      and therefore concluded that disclosure controls and procedures were effective
      as of December 31, 2007; however upon reevalution of the design and operating
      effectiveness as of December 31, 2007 of our disclosure controls and procedures,
      the conclusion of our Chief Executive Officer and Chief Financial Officer has
      changed.


14





Internal
      Control Over Financial Reporting





*Management’s
      Annual Report on Internal Control over Financial Reporting*





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
      under the Exchange Act. Our internal control over financial reporting is
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      in
      accordance with generally accepted accounting principles. Our internal control
      over financial reporting includes those policies and procedures that (1) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of our assets, (2) provide reasonable
      assurance that transactions are recorded as necessary to permit preparation
      of
      financial statements in accordance with generally accepted accounting
      principles, and that our receipts and expenditures are being made only in
      accordance with authorizations of our management and directors; and (3) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of our assets that could have a material effect
      on the consolidated financial statements.





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





As
      required by Rule 13a-15(c) promulgated under the Exchange Act, our management,
      with the participation of our Chief Executive Officer and Chief Financial
      Officer, evaluated the effectiveness of our internal control over financial
      reporting as of December 31, 2007. Management’s assessment was based on criteria
      set forth by the Committee of Sponsoring Organizations of the Treadway
      Commission in Internal Control-Integrated Framework (“COSO”). Our assessment
      identified deficiencies that were determined to be material
      weaknesses.





A
      material weakness is a control deficiency, or combination of control
      deficiencies, that results in more than a remote likelihood that a material
      misstatement of the annual or interim financial statements will not be prevented
      or detected. Because of the material weaknesses described below and our failure
      to include Management’s Report in the Original Form 10-K, management concluded
      that our internal control over financial reporting was not effective as of
      December 31, 2007.





The
      specific material weaknesses identified by management as of December 31, 2007
      are described as follows:





(a)
      lack
      of sophisticated and capable accounting and reporting personnel to determine
      the
      proper method of accounting for the Guozhu acquisitions;


(b)
      lack
      of timely identification, research and resolution of accounting issues;
      and


(c)
      lack
      of technical accounting expertise among senior financial staff regarding US
      GAAP
      and the requirements of the PCAOB, and regarding preparation of financial
      statements.





As
      discussed above under the heading “Evaluation of disclosure controls and
      procedures,” our Form 10-K for the year ended December 31, 2007 did not include
      management's report on internal controls over financial reporting, which was
      required by Item 308T of Regulation S-B. Management's conclusion that internal
      controls over financial reporting were not effective at December 31, 2007 is
      the
      result of the material weaknesses described above, the omission of the
      Management Report and the inadequate and inexperienced staffing.





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





Future
      Remediation Plan for Material Weakness





The
      Company is in the process of developing and implementing remediation plans
      to
      address our material weaknesses. Management has taken the following actions
      to
      improve internal controls over financial reporting:





(1)
      establishment of more detailed policies and procedures for the preparation
      of
      financial statements under US GAAP and


15





(2)
      hiring additional personnel to assist the Company’s accounting staff, including
      the use of external consultants and experienced temporary staff, to ensure
      that
      management has appropriate accounting resources.


.


Our
      management anticipates remedying of these deficiencies in the second half of
      2008.





Changes
      in Internal Control Over Financial Reporting





During
      the fiscal quarter 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. However, consistent with the disclosure above in connection the
      reevaluation of our internal controls over financial reporting, we plan to
      make
      take the above actions to improve 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.


17


**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.





**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 of Shares of
                Common Stock
                Beneficially Owned
              
              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.




19


**ITEM
      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
      27, 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.


20





**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 27, 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 27, 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 Officer31.2
            
            Sarbanes
                Oxley Section 302 Certification of Chief FinancialOfficer32.1
            
            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.


21





**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.






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.




22


**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 2nd day of December, 2008.
 
 Date:
          December 2, 2008
  **CHINA
                    BOTTLES, INC.**By:
                /s/
                  Chong Hui ZhaoChong
                    Hui Zhao
                  Chief
                    Financial Officer
                  (Principal
                    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:
          December 2, 2008
 /s/ J.
                  John ChengDate:
                    December 2, 2008
                J.
                    John Cheng
                  Chief
                    Executivel Officer
                  (Principal
                    Executive Officer)
                  
                  /s/
                    Chong Hui ZhaoChong
                    Hui Zhao
                  Chief
                    Financial Officer
                  (Principal
                    Accounting and Financial
                    Officer)
  Date:
                    December 2, 2008/s/
                  Yingren
                  CaiYingren
                    CaiDirectorDate:
                    December 2, 2008/s/
                  Wen
                  WuWen
                    WuDirectorDate:
                    December 2, 2008Lei
                    Shan LeungDirector
  23




**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 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.





The
      financial statements have been restated to correct the application of an
      accounting principle involving the reporting of a business combination which
      has
      resulted in a change in the reporting entity. The restatement adjustments are
      outlined in note 17 to the financial statements.





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,
        2008, except Note 17 which is dated November 26, 2008


Salt
      Lake
      City, Utah




F-2





**CHINA
      BOTTLES INC. AND SUBSIDIARIES**


**(Formerly
      HUTTON HOLDINGS CORPORATION)**


**CONSOLIDATED
      BALANCE SHEETS**


**(RESTATED)**




**December 31,****2007**
            
            **2006****ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            1,375,786
            
            $
            497,078Accounts
                receivable, net
            
            
            1,494,539
            
            
            2,327,692Inventories
            
            
            6,737,712
            
            
            4,579,106Prepaid
                expenses and other receivables
            
            
            2,112,535
            
            
            1,340,433Total
                current assets
            
            
            11,720,572
            
            
            8,744,309PROPERTY,
                PLANT & EQUIPMENT, NET
            
            
            3,636,505
            
            
            2,809,503LAND
                USE RIGHT, NET
            
            
            229,689
            
            
            118,515**TOTAL
                ASSETS**
            
            $
            15,586,766
            
            $
            11,672,327**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            1,244,801
            
            $
            1,509,330Accrued
                expenses and other payables
            
            
            904,791
            
            
            5,604,397Amount
                due to a director
            
            
            -
            
            
            688,245Amount
                due to a related company
            
            
            1,556,986
            
            
            -Customers
                deposits
            
            
            650,652
            
            
            2,109,612Notes
                payable
            
            
            -
            
            
            106,645Short
                term bank loans
            
            
            1,777,389
            
            
            383,730Taxes
                payable
            
            
            1,001,257
            
            
            1,116,958Total
                current liabilities
            
            
            7,135,876
            
            
            11,518,917**TOTAL
                LIABILITIES**
            
            $
            7,135,876
            
            $
            11,518,917**STOCKHOLDERS’
                EQUITY**Preferred
                stock, Par value $0.001; 50,000,000 shares authorized; 5,000,000
                shares
                issued and outstanding on December 31, 2007 and 2006
            
            $
            5,000
            
            $
            5,000Common
                stock, par value $0.001, 50,000,000 shares authorized, 50,000,000
                shares
                and 29,750,000 shares issued and outstanding on December 31, 2007
                and
                2006
            
            
            50,000
            
            
            29,750Additional
                paid-in capital
            
            
            2,685,900
            
            
            2,706,150Retained
                earnings (Accumulated deficits)
            
            
            5,177,197
            
            
            (2,702,529
            )Other
                comprehensive income
            
            
            532,793
            
            
            115,039**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            $
            8,450,890
            
            $
            153,410**TOTAL
                LIABILITIES AND EQUITY**
            
            $
            15,586,766
            
            $
            11,672,327




See
      accompanying notes to the consolidated financial statements




F-3


**CHINA
      BOTTLES INC. AND SUBSIDIARIES**


**(Formerly
      HUTTON HOLDINGS CORPORATION)**


**CONSOLIDATED
      STATEMENTS OF COMPREHENSIVE INCOME**


**(RESTATED)**


For the Year
                Ended December 31,2007
              
              2006REVENUE
              
              $
              42,371,011
              
              $
              25,787,621COST
                  OF SALES
              
              
              28,625,056
              
              
              18,500,817GROSS
                  PROFIT
              
              
              13,745,955
              
              
              7,286,804EXPENSESGeneral
                  and administrative
              
              
              2,717,429
              
              
              572,790Selling
                  and distribution
              
              
              1,047,086
              
              
              827,276TOTAL
                  OPERATING EXPENSES
              
              
              3,764,515
              
              
              1,400,066OPERATING
                  INCOME
              
              
              9,981,440
              
              
              5,886,738OTHER
                  INCOMESales
                  of scraps
              
              
              350,792
              
              
              146,135Sales
                  of parts
              
              
              290,520
              
              
              238,885Other
                  income
              
              
              50,732
              
              
              332,470Interest
                  income
              
              
              28,983
              
              
              18,246Interest
                  expense
              
              
              (95,116
              )
              
              (27,977
              )INCOME
                  BEFORE TAXES
              
              
              10,607,351
              
              
              6,594,497PROVISION
                  FOR TAXATION
              
              
              2,727,625
              
              
              2,072,331NET
                  INCOME
              
              $
              7,879,726
              
              
              4,522,166OTHER
                  COMPREHENSIVE INCOMEGain
                  on Foreign Exchange Translation
              
              
              417,754
              
              
              190,546COMPREHENSIVE
                  INCOME
              
              $
              8,297,480
              
              
              4,712,712NET
                  INCOME PER SHARE BASIC
              
              $
              0.22
              
              $
              0.15WEIGHTED
                  AVERAGE SHARES BASIC
              
              
              35,186,986
              
              
              29,750,000NET
                  INCOME PER SHARE DILUTED
              
              $
              0.13
              
              $
              0.08WEIGHTED
                  AVERAGE SHARES DILUTED
              
              
              60,186,986
              
              
              54,750,000




See
      accompanying notes to the consolidated financial statements





F-4




**CHINA
      BOTTLES INC. AND SUBSIDIARIES**


**(Formerly
      HUTTON HOLDINGS CORPORATION)**


**CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDER EQUITY**


**FOR
      THE YEARS ENDED DECEMBER 31, 2007 and 2006**


**(RESTATED)**




(Accumulated
            
            AccumulatedAdditional
            
            deficits)
            
            OtherPreferred stock
            
            Common stock
            
            Paid-in
            
            Retained
            
            ComprehensiveShares
            
            Par value
            
            Shares
            
            Par value
            
            Capital
            
            Earnings
            
            Income
            
            TotalBalance
                at January 1, 2006
            
            
            5,000,000
            
            $
            5,000
            
            
            29,750,000
            
            
            29,750
            
            $
            2,706,150
            
            $
            283,822
            
            
            (75,507
            )
            $
            2,949,215Foreign
                currency translation gain
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            190,546
            
            
            190,546Dividend
                declared and paid
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (7,508,517
            )
            
            
            
            
            (7,508,517
            )Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -
            
            
            4,522,166
            
            
            
            
            
            4,522,166Balance
                at December 31, 2006
            
            
            5,000,000
            
            $
            5,000
            
            
            29,750,000
            
            $
            29,750
            
            $
            2,706,150
            
            $
            (2,702,529
            )
            $
            115,039
            
            
            153,410Foreign
                currency translation gain
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            417,754
            
            
            417,754Recapitalization
            
            
            
            
            
            
            
            
            20,250,000
            
            
            20,250
            
            
            (20,250
            )
            
            
            
            
            
            
            
            -Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            7,879,726
            
            
            -
            
            
            7,879,726**BALANCE
                AT December 31, 2007**
            
            
            5,000,000
            
            $
            5,000
            
            
            50,000,000
            
            $
            50,000
            
            $
            2,685,900
            
            $
            5,177,197
            
            $
            532,793
            
            $
            8,450,890




See
      accompanying notes to the consolidated financial statements.




F-5




**CHINA
      BOTTLES INC. AND SUBSIDIARIES**


**(Formerly
      HUTTON HOLDINGS CORPORATION)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(RESTATED)**





For the Year Ended December 31,2007
            
            2006**Cash
                Flows From Operating Activities:**Net
                income
            
            $
            7,879,726
            
            $
            4,522,166Adjustments
                to reconcile net income to net cash used in (provided by) operating
                activities:Depreciation
            
            
            308,031
            
            
            301,017Amortization
                of land use rights
            
            
            7,443
            
            
            2,581Changes
                in operating assets and liabilities:Decrease
                (increase) in accounts receivable
            
            
            833,153
            
            
            (1,451,114
            )Increase
                in inventories
            
            
            (2,158,606
            )
            
            (1,645,155
            )Decrease
                in prepaid expenses and other receivable
            
            
            (772,102
            )
            
            (401,925
            )(Decrease)
                increase in accounts payable
            
            
            (264,529
            )
            
            1,074,629(Decrease)
                increase in customers deposits
            
            
            (1,458,960
            )
            
            358,875(Decrease)
                increase in accrued expenses and other payables
            
            
            (4,699,606
            )
            
            4,670,489(Decrease)
                increase in notes payable
            
            
            (106,645
            )
            
            102,328(Decrease)
                increase in taxes payable
            
            
            (115,701
            )
            
            261,311Net
                cash (used in) provided from operating activities
            
            
            (547,796
            )
            
            7,795,202**Cash
                Flows From Investing Activities:**Purchase
                of property, plant and equipment
            
            
            (952,831
            )
            
            (499,243
            )Purchase
                of land use right
            
            
            (80,685
            )
            
            -Cash
                acquired due to reverse merger
            
            
            -
            
            
            13,241Net
                cash used in investing activities
            
            
            (1,033,516
            )
            
            (486,002
            )**Cash
                Flows From Financing Activities:**Proceeds
                from bank loans
            
            
            1,393,659
            
            
            383,730Dividend
                paid
            
            
            -
            
            
            (7,508,517
            )Decrease
                in amount due from a director
            
            
            (688,245
            )
            
            (57,980
            )Increase
                in amount due to a related party
            
            
            1,556,986
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            2,262,400
            
            
            (7,182,767
            )**Net
                increase in cash**
            
            
            681,088
            
            
            126,433**Effect
                of exchange rate change on cash and cash
                equivalents**
            
            
            197,638
            
            
            109,655**Cash
                and Cash Equivalents at Beginning of the year**
            
            
            497,078
            
            
            260,990**Cash
                and Cash Equivalents at the End of the year**
            
            $
            1,375,804
            
            $
            497,078





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.





On
      August
      26, 2007, the Company entered into and closed an Agreement for Share Exchange
      with China Valley Development Limited, a British Virgin Islands company
      (“CVDL”), Cai Yingren and Wu Wen, individually, the owners and shareholders of
      CVDL. The Company 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. The Agreement for Share Exchange resulted in a change
      of control of the Company. For accounting purposes such share exchange was
      treated as an acquisition of the Company by, and a re-capitalization of, CVDL.
      CVDL is the accounting acquirer and the results of its operations carry over
      under reverse merger accounting.





On
      August
      24, 2007, China Valley acquired 100% ownership of Guozhu Holdings Limited,
      a
      Hong Kong registered company. Since the ownership of the Company and Guozhu
      Holdings Limited were the same and they were under the control of one same
      shareholder, the merger was accounted for as a transaction between entities
      under common control, whereby the Company recognized the assets and liabilities
      transferred at their carrying amounts. Accordingly, China Valley’s historical
      financial statements have been prepared to give retroactive effect to the
      merger, and represent the operations of the Company and Guozhu Holdings
      Limited.





On
      August
      16,, 2007, Guozhu Holdings Limited owns 100% ownership of Fogang Guozhu Plastics
      Company Limited and Guangdong Guozhu Precision Mold Company Limited, both of
      which are registered in China. Also, through Excellent Fame Investments Limited,
      Guozhu Holdings Limited’s wholly owned subsidiary registered in Hong Kong,
      Guozhu Holdings Limited also owns 100% of Fogang Guozhu Blowing Equipment
      Company Limited, a Chinese registered company. Since Guozhu Holdings Limited,
      Excellent Fame Investments Limited and the three Chinese registered companies
      were under the control of one same shareholder, these mergers were accounted
      for
      as transactions among entities under common control, whereby Guozhu Holdings
      Limited recognized the assets and liabilities transferred at their carrying
      amounts. Accordingly, Guozhu Holdings Limited’s historical financial statements
      have been prepared to give retroactive effect to the mergers, and represent
      the
      operations of Guozhu Holdings Limited, Excellent Fame Investments Limited and
      the three Chinese registered companies.





The
      principle operations of Guangdong Guozhu Precision Mold Company Limited are
      the
      manufacturing and sale of precision mold and PVC products while the principle
      operations of Fogang Guozhu Blowing Equipment Company are the manufacturing
      and
      sale of blowing equipment and plastic production machinery. The principle
      operations of Fogang Guozhu Plastics Company Limited are plastic bottle and
      PVC
      products manufacturing.





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





The
      consolidated financial statements include the accounts of the Company and all
      its subsidiaries. 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 **- 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.




F-7




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 $3,968 and $2,581 for the years ended December 31, 2007 and 2006,
      respectively.




(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.




F-8




(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.





(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.





The
      following table sets forth the computation of basic and diluted net income
      per
      share for the periods indicated:





For Year Ended December 31,2007
            
            2006Numerator:Net
                income available to common stockholders
            
            $
            7,879,726
            
            $
            4,522,166Denominator:Weighted-average
                common shares outstanding
            
            
            35,186,986
            
            
            29,750,000Dilutive
                effect of preferred stock
            
            
            25,000,000
            
            
            25,000,000Weighted-average
                common shares outstanding, assuming dilution
            
            
            60,186,986
            
            
            54,750,000Net
                income per shareBasic
            
            $
            0.22
            
            $
            0.15Diluted
            
            $
            0.13
            
            $
            0.08





(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
      4 - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR DOUBTFUL
      ACCOUNTS**





2007
            
            2006Accounts
                receivable
            
            $
            1,502,268
            
            $
            2,327,692Less:
                Allowance for doubtful accounts
            
            
            7,729
            
            
            -Accounts
                receivable, net
            
            $
            1,494,539
            
            $
            2,327,692





Management
      of the Company has evaluated these Accounts receivable at December 31, 2007
      and
      2006 and determined that the accounts receivable were fully collectible and
      there was no need to establish an allowance for doubtful accounts.





**NOTE** 5 **- 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 and 2006 are summarized as follows:





2007
            
            2006Raw
                materials
            
            $
            2,610,014
            
            $
            2,955,866Work-in-progress
            
            
            1,518,235
            
            
            457,731Finished
                goods
            
            
            2,609,463
            
            
            1,165,509Total
            
            $
            6,737,712
            
            $
            4,579,106




F-11





**NOTE
      6 - 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.




2007
            
            2006Prepaid
                expenses
            
            $
            961,514
            
            $
            1,235,945Other
                receivables
            
            
            1,151,021
            
            
            104,488Total
            
            $
            2,112,535
            
            $
            1,340,433





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
      7 - 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:





2007
            
            2006At
                cost:Buildings
            
            $
            1,277,126
            
            $
            211,208Machinery
                and equipment
            
            
            3,637,524
            
            
            3,014,475Motor
                vehicles
            
            
            324,416
            
            
            240,544Furniture
                & fixtures
            
            
            219,695
            
            
            100,512Construction
                in progress
            
            
            -
            
            
            606,7285,458,761
            
            
            4,173,467Less:
                Accumulated depreciationBuildings
            
            $
            157,660
            
            $
            104,161Machinery
                and equipment
            
            
            1,440,136
            
            
            1,107,069Motor
                vehicles
            
            
            152,434
            
            
            108,707Furniture
                & fixtures
            
            
            72,026
            
            
            44,0271,822,256
            
            
            1,363,964Property,
                plant and equipment, net
            
            $
            3,636,505
            
            $
            2,809,503





Depreciation
      expense for the years ended December 31, 2007 and 2006 was $308,031 and
      $301,017, respectively.





F-12




**NOTE
      8 - 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.





2007
            
            2006At
                cost
            
            $
            140,824
            
            $
            131,747Addition
                during the year
            
            
            80,681
            
            
            -Transfer
                from construction in progress
            
            
            30,079
            
            
            -251,584
            
            
            131,747Less:
                Accumulated amortization
            
            
            21,895
            
            
            13,232Land
                use rights, net
            
            $
            229,689
            
            $
            118,515





Amortization
      expense for the years ended December 31, 2007 and 2006 was $7,443 and $2,581,
      respectively.





**NOTE
      9 - 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 and 2006 are summarized
      as
      follows:




2007
            
            2006Accrued
                expenses
            
            $
            197,761
            
            $
            65,649Other
                payables
            
            
            707,030
            
            
            5,538,748Total
            
            $
            904,791
            
            $
            5,604,397





**NOTE
      10 - 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
      11 - 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
            %




F-13




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





2007
            
            2006Computed
                “expected” tax expense
            
            $
            2,727,625
            
            $
            2,072,331Permanent
                expenses
            
            
            -
            
            
            -Income
                tax expense
            
            $
            2,727,625
            
            $
            2,072,331





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





2007
            
            2006Current
            
            $
            2,727,625
            
            $
            2,072,331Deferred
            
            
            -
            
            
            -Total
                income tax expenses
            
            $
            2,727,625
            
            $
            2,072,331





Under
      the
      provisions of FAS 109, deferred tax assets and liabilities are recognized for
      temporary differences.  The Company has examined provisions, reserves,
      inventory valuation methods, depreciation, and amortization of intangibles,
      and
      while there were certain temporary differences during the years ended December
      31, 2007 and 2006, such temporary differences were immaterial to the Company
      .





One
      of
      the subsidiaries of the Company, Fogang Guozhu Precision Mold Co. Ltd. enjoys
      a
      tax holiday for the year of 2006 and 2007 and the corresponding taxable profits
      are exempted from enterprise income tax. Save as mentioned above, there are
      no
      differences between the accounting and taxable income and expenses of the
      Company.





(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 other
      payable in the accompanying consolidated balance sheets.




F-14




**NOTE
      12 - 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**  **13
      - PREFERRED STOCK**





The
      Company has 25,000,000 shares of Series A Convertible Preferred Stock
      authorized. The Company has 5,000,000 shares of Series A Convertible Preferred
      Stock issued and outstanding at $0.001 par value per share (the “Preferred
      Stock”).





On
      August
      27, 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**  **14
      - COMMON STOCK**





The
      Company has 175,000,000 shares of Common Stock authorized. The Company has
      50,000,000 shares of Common Stock issued and outstanding at $0.001 par value
      per
      share.





On
      August
      27, 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
      15 - 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
      16 - SUBSEQUENT EVENTS**





1.
            On
                April 3, 2008, the Company increased the number of authorized shares
                of
                preferred stock to 25,000,000 and increased the number of authorized
                shares of common stock to 175,000,000 and the Company changed its
                name to
                China Bottles, Inc.





2.
            On
                April 11, 2008, 5,000,000 shares of issued and outstanding preferred
                stock
                were converted into 25,000,000 shares of the Company’s common stock.





**NOTE
      17 – RESTATEMENT OF FINANCIAL STATEMENTS**





The
      Company has restated its previously issued consolidated financial statements
      for
      the years ended December 31, 2007 and 2006. The balance sheets as of December
      31, 2007 and 2006 and the results of operations, changes in stockholders’ equity
      and cash flows for the years ended December 31, 2007 and 2006 have been restated
      from amounts previously reported.





The
      Company is restating its financial statements to correct the application of
      an
      accounting principle involving the reporting of a business combination which
      has
      resulted in a change in the reporting entity. As reported in Note 1 to these
      financial statements, China Valley Development Limited (the Company) was
      incorporated under the laws of the British Virgin Islands on July 5, 2005.
      On
      August 24, 2007 the Company acquired 100% ownership of Guozhu Holdings Limited,
      a Hong Kong registered company (Guozhu). On August 16, 2007 Guozhu acquired
      Fogang Gouzhu Plastics Company Limited, Guangdon Guozhu Precison Mold Company
      Limited and Excellent Frame Investments Limited, a Company that owned 100%
      of an
      operating subsidiary, Fogang Guozhu Blowing Equipment Company Limited.




F-15




The
      business combination between the Company and Guozhu transacted on August 24,
      2007 was reported as a business combination with entities under common control,
      as the sole shareholder of the Company was also the sole shareholder of Guozhu.
      The acquisitions of the three operating companies on August 16, 2007 was
      reported using the purchase method of accounting. The Company has now determined
      that the acquisition of the three operating companies by Guozhu should have
      been
      accounted for using reverse merger accounting or entities under common control.
      Using this method of accounting, Guozhu along with its operating subsidiaries
      is
      considered to be the accounting acquirer and the historical results of Guozhu
      and its operating subsidiaries should be reported in the financial statements
      of
      the Company.





The
      following tables summarize the impact of the restatement adjustments on the
      previously issued consolidated balance sheet as of December 31, 2007 and
      2006.





**December
                31, 2007****As
                previously**
              **reported**
            
            **Total**
              **adjustments**
            
            **As**
              **restated****ASSETS**
            
            
            
            
            
            -CURRENT
                ASSETS
            
            
            
            
            
            -Cash
                and cash equivalents
            
            $
            1,375,786
            
            $
            -
            
            $
            1,375,786Accounts
                receivable, net
            
            
            1,494,539
            
            
            -
            
            
            1,494,539Inventories
            
            
            6,737,712
            
            
            -
            
            
            6,737,712Prepaid
                expenses and other receivables
            
            
            2,112,535
            
            
            -
            
            
            2,112,535Total
                current assets
            
            
            11,720,572
            
            
            -
            
            
            11,720,572PROPERTY,
                PLANT & EQUIPMENT, NET
            
            
            3,636,505
            
            
            -
            
            
            3,636,505LAND
                USE RIGHT, NET
            
            
            229,689
            
            
            -
            
            
            229,689**TOTAL
                ASSETS**
            
            $
            15,586,766
            
            $
            -
            
            $
            15,586,766**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            1,244,801
            
            $
            -
            
            $
            1,244,801Accrued
                expenses and other payables
            
            
            904,791
            
            
            -
            
            
            904,791Amount
                due to a related company
            
            
            3,508,083
            
            
            (1,951,097
            )
            
            1,556,986Customers
                deposits
            
            
            650,652
            
            
            -
            
            
            650,652Short
                term bank loans
            
            
            1,777,389
            
            
            -
            
            
            1,777,389Taxes
                payable
            
            
            1,001,257
            
            
            -
            
            
            1,001,257Total
                current liabilities
            
            
            9,086,973
            
            
            (1,951,097
            )
            
            7,135,876**TOTAL
                LIABILITIES**
            
            
            9,086,973
            
            
            (1,951,097
            )
            
            7,135,876**STOCKHOLDERS’
                EQUITY**Preferred
                stock, Par value $0.001; 25,000,000 shares authorized; 5,000,000
                shares
                issued and outstanding
            
            
            5,000
            
            
            -
            
            
            5,000Common
                stock, Par value $0.001, 50,000,000 shares authorized; 50,000,000
                shares
                issued and outstanding
            
            
            50,000
            
            
            -
            
            
            50,000Additional
                paid-in capital
            
            
            2,303,657
            
            
            382,243
            
            
            2,685,900Retained
                earnings
            
            
            3,741,777
            
            
            1,435,420
            
            
            5,177,197Other
                comprehensive income
            
            
            399,359
            
            
            133,434
            
            
            532,793**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            6,499,793
            
            $
            1,951,097
            
            
            8,450,890**TOTAL
                LIABILITIES AND EQUITY**
            
            $
            15,586,766
            
            $
            -
            
            $
            15,586,766


F-16





**December
                31, 2006****As
                previously**
              **reported**
            
            **Total**
              **adjustments**
            
            **As**
              **restated****ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            -
            
            $
            497,078
            
            $
            497,078Accounts
                receivable, net
            
            
            -
            
            
            2,327,692
            
            
            2,327,692Inventories
            
            
            -
            
            
            4,579,106
            
            
            4,579,106Prepaid
                expenses and other receivables
            
            
            -
            
            
            1,340,433
            
            
            1,340,433Total
                current assets
            
            
            -
            
            
            8,774,309
            
            
            8,774,309PROPERTY,
                PLANT & EQUIPMENT, NET
            
            
            -
            
            
            2,809,503
            
            
            2,809,503LAND
                USE RIGHT, NET
            
            
            -
            
            
            118,515
            
            
            118,515**TOTAL
                ASSETS**
            
            $
            -
            
            $
            11,672,327
            
            $
            11,672,327**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****LIABILITIES**CURRENT
                LIABILITIESAccounts
                payable
            
            $
            -
            
            $
            1,509,330
            
            $
            1,509,330Accrued
                expenses and other payables
            
            
            2,090
            
            
            5,602,307
            
            
            5,604,397Amount
                due to a director
            
            
            -
            
            
            688,245
            
            
            688,245Amount
                due to a related companyCustomers
                deposits
            
            
            -
            
            
            2,109,612
            
            
            2,109,612Notes
                payable
            
            
            -
            
            
            106,645
            
            
            106,645Short
                term bank loans
            
            
            -
            
            
            383,730
            
            
            383,730Taxes
                payable
            
            
            -
            
            
            1,116,958
            
            
            1,116,958Total
                current liabilities
            
            
            2,090
            
            
            11,516,827
            
            
            11,518,917**TOTAL
                LIABILITIES**
            
            
            2,090
            
            
            11,516,827
            
            
            11,518,917**STOCKHOLDERS’
                EQUITY**Preferred
                stock, par value $0.001; 25,000,000 shares authorized; 5,000,000
                shares
                issued and outstanding
            
            
            50,000
            
            
            (45,000
            )
            
            5,000Common
                stock, par value $0.001; 50,000,000 shares authorized; 29,750,000
                shares
                issued and outstanding
            
            
            (50,000
            )
            
            79,750
            
            
            29,750Additional
                paid in capital
            
            
            
            
            
            2,706,150
            
            
            2,706,150Accumulated
                deficits
            
            
            (2,090
            )
            
            (2,700,439
            )
            
            (2,702,529
            )Other
                comprehensive income
            
            
            
            
            
            115,039
            
            
            115,039**TOTAL
                STOCKHOLDERS’ EQUITY**
            
            
            (2,090
            )
            
            155,500
            
            
            153,410**TOTAL
                LIABILITIES AND EQUITY**
            
            $
            -
            
            $
            11,672,327
            
            $
            11,672,327


F-17


The
      following table summarizes the impact of the restatement adjustments on the
      consolidated statement of operations for the year ended December 31, 2007 and
      2006:





**For
                the Year Ended December 31, 2007****As
                previously**
              **reported**
            
            **Total**
              **adjustments**
            
            **As**
              **restated**REVENUE
            
            $
            22,501,627
            
            $
            19,869,384
            
            $
            42,371,011COST
                OF SALES
            
            
            15,933,826
            
            
            12,691,230
            
            
            28,625,056GROSS
                PROFIT
            
            
            6,567,801
            
            
            7,178,154
            
            
            13,745,955EXPENSESGeneral
                and administrative
            
            
            1,646,483
            
            
            1,070,946
            
            
            2,717,429Selling
                and distributions
            
            
            357,184
            
            
            689,902
            
            
            1,047,086TOTAL
                OPERATING EXPENSES
            
            
            2,003,667
            
            
            1,760,848
            
            
            3,764,515OPERATING
                INCOME
            
            
            4,564,134
            
            
            5,417,306
            
            
            9,981,440OTHER
                INCOMESales
                of scraps
            
            
            275,363
            
            
            75,429
            
            
            350,792Sales
                of parts
            
            
            298,865
            
            
            -8,345
            
            
            290,520Other
                income
            
            
            64,168
            
            
            -13,436
            
            
            50,732Interest
                income
            
            
            
            
            
            28,983
            
            
            28,983INTEREST
                EXPENSES
            
            
            (66,541
            )
            
            (28,575
            )
            
            (95,116
            )INCOME
                BEFORE TAXES
            
            
            5,135,989
            
            
            5,471,362
            
            
            10,607,351PROVISION
                FOR TAXATION
            
            
            1,392,122
            
            
            1,335,503
            
            
            2,727,625NET
                INCOME
            
            $
            3,743,867
            
            $
            4,135,859
            
            $
            7,879,726OTHER
                COMPREHENSIVE INCOMEGain
                on Foreign Exchange Translation
            
            
            399,359
            
            
            18,395
            
            
            417,754COMPREHENSIVE
                INCOME
            
            $
            4,143,226
            
            $
            4,154,254
            
            $
            8,297,480NET
                INCOME PER SHARE - BASIC
            
            $
            0.08
            
            
            
            
            $
            0.22WEIGHTED
                AVERAGE SHARES - BASIC
            
            
            50,000,000
            
            
            
            
            
            35,186,986NET
                INCOME PER SHARE - DILUTED
            
            $
            0.08
            
            
            
            
            $
            0.13WEIGHTED
                AVERAGE SHARES - DILUTED
            
            
            50,000,000
            
            
            
            
            
            60,186,986




F-18




**For
                the Year Ended December 31, 2006****As
                previously**
              **reported**
            
            **Total**
              **adjustments**
            
            **As**
              **restated**REVENUE
            
            $
            -
            
            $
            25,787,621
            
            $
            25,787,621COST
                OF SALES
            
            
            -
            
            
            18,500,817
            
            
            18,500,817GROSS
                PROFIT
            
            
            -
            
            
            7,286,804
            
            
            7,286,804EXPENSESGeneral
                and administrative
            
            
            2,090
            
            
            570,700
            
            
            572,790Selling
                and distributions
            
            
            -
            
            
            827,276
            
            
            827,276TOTAL
                OPERATING EXPENSES
            
            
            2,090
            
            
            1,397,976
            
            
            1,400,066OPERATING
                INCOME
            
            
            (2,090
            )
            
            5,888,828
            
            
            5,886,738OTHER
                INCOMESales
                of scraps
            
            
            -
            
            
            146,135
            
            
            146,135Sales
                of parts
            
            
            -
            
            
            238,885
            
            
            238,885Other
                income
            
            
            -
            
            
            332,470
            
            
            332,470Interest
                income
            
            
            -
            
            
            18,246
            
            
            18,246INTEREST
                EXPENSES
            
            
            -
            
            
            (27,977
            )
            
            (27,977
            )INCOME
                BEFORE TAXES
            
            
            (2,090
            )
            
            6,596,587
            
            
            6,594,497PROVISION
                FOR TAXATION
            
            
            -
            
            
            2,072,331
            
            
            2,072,331NET
                INCOME
            
            $
            (2,090
            )
            $
            4,524,256
            
            $
            4,522,166OTHER
                COMPREHENSIVE INCOMEGain
                on Foreign Exchange Translation
            
            
            -
            
            
            190,546
            
            
            190,546COMPREHENSIVE
                INCOME
            
            
            (2,090
            )
            
            4,714,802
            
            
            4,712,712NET
                INCOME PER SHARE - BASIC
            
            $
            N/A
            
            
            
            
            $
            0.15WEIGHTED
                AVERAGE SHARES - BASIC
            
            
            N/A
            
            
            
            
            
            29,750,000NET
                INCOME PER SHARE - DILUTED
            
            $
            N/A
            
            
            
            
            $
            0.08WEIGHTED
                AVERAGE SHARES - DILUTED
            
            
            N/A
            
            
            
            
            
            54,750,000





F-19





The
      following table summarizes the impact of the restatement adjustments on the
      consolidated statement of cash flows for the year ended December 31, 2007 and
      2006:





**For
                the Year Ended December 31, 2007****As
                previously**
              **reported**
            
            **Total**
              **adjustments**
            
            **As**
              **restated****Cash
                Flows From Operating Activities:**Net
                income
            
            $
            3,743,867
            
            $
            4,135,859
            
            $
            7,879,726Adjustments
                to reconcile net income to net cash (used in) provided by operating
                activities:Depreciation
            
            
            27,015
            
            
            281,016
            
            
            308,031Amortization
                of land use rights
            
            
            2,030
            
            
            5,413
            
            
            7,443Changes
                in operating assets and liabilities:Decrease
                (increase) in accounts receivable
            
            
            (1,494,539
            )
            
            2,327,692
            
            
            833,153Increase
                in inventories
            
            
            (6,737,712
            )
            
            4,579,106
            
            
            (2,158,606
            )Decrease
                in prepaid expenses and other receivable
            
            
            (2,112,535
            )
            
            1,340,433
            
            
            (772,102
            )(Decrease)
                increase in accounts payable
            
            
            1,244,801
            
            
            (1,509,330
            )
            
            (264,529
            )(Decrease)
                increase in customers deposits
            
            
            650,652
            
            
            (2,109,612
            )
            
            (1,458,960
            )(Decrease)
                increase in accrued expenses and other payables
            
            
            904,791
            
            
            (5,604,397
            )
            
            (4,699,606
            )(Decrease)
                increase in notes payable
            
            
            3,508,083
            
            
            (3,614,728
            )
            
            (106,645
            )(Decrease)
                increase in taxes payable
            
            
            1,001,257
            
            
            (1,116,958
            )
            
            (115,701
            )Net
                cash (used in) provided by operating activities
            
            
            737,710
            
            
            (1,285,506
            )
            
            (547,796
            )**Cash
                Flows From Investing Activities:**Purchase
                of property, plant and equipment
            
            
            (3,663,520
            )
            
            2,710,689
            
            
            (952,831
            )Purchase
                of land use right
            
            
            (231,719
            )
            
            151,034
            
            
            (80,685
            )Decrease
                in amount due from a director
            
            
            
            
            
            (688,245
            )
            
            (688,245
            )Net
                cash used in investing activities
            
            
            (3,895,239
            )
            
            2,173,478
            
            
            (1,721,761
            )**Cash
                Flows From Financing Activities:**Proceeds
                from bank loans
            
            
            1,777,389
            
            
            (383,730
            )
            
            1,393,659Cash
                acquired from acquisition by issuing preferred and common
                shares
            
            
            2,356,567
            
            
            (2,356,567
            )Dividend
                paid
            
            
            
            
            
            
            
            
            -Increase
                in amount due to a related party
            
            
            
            
            
            1,556,986
            
            
            1,556,986Net
                cash provided from (used in) financing activities
            
            
            4,133,956
            
            
            (1,183,311
            )
            
            2,950,645**Net
                increase in cash and cash equivalents**
            
            
            976,427
            
            
            (295,339
            )
            
            681,088**Effect
                of foreign exchange rate changes**
            
            
            399,359
            
            
            (201,739
            )
            
            197,620**Cash
                and Cash Equivalents at Beginning of Period**
            
            
            -
            
            
            497,078
            
            
            497,078**Cash
                and Cash Equivalents at the End of Period**
            
            $
            1,375,786
            
            $
            -
            
            $
            1,375,786


F-20





**For
                the Year Ended December 31, 2006****As
                previously**
              **reported**
            
            **Total**
              **adjustments**
            
            **As**
              **restated****Cash
                Flows From Operating Activities:**Net
                income
            
            $
            (2,090
            )
            $
            4,524,256
            
            $
            4,522,166Adjustments
                to reconcile net income to net cash used by operating
                activities:Depreciation
            
            
            -
            
            
            301,017
            
            
            301,017Amortization
                of land use rights
            
            
            -
            
            
            2,581
            
            
            2,581Changes
                in operating assets and liabilities:Decrease
                (increase) in accounts receivable
            
            
            -
            
            
            (1,451,114
            )
            
            (1,451,114
            )Increase
                in inventories
            
            
            -
            
            
            (1,645,155
            )
            
            (1,645,155
            )Decrease
                in prepaid expenses and other receivable
            
            
            -
            
            
            (401,925
            )
            
            (401,925
            )(Decrease)
                increase in accounts payable
            
            
            -
            
            
            1,074,629
            
            
            1,074,629(Decrease)
                increase in customers deposits
            
            
            -
            
            
            358,875
            
            
            358,875(Decrease)
                increase in accrued expenses and other payables
            
            
            2,090
            
            
            4,668,399
            
            
            4,670,489(Decrease)
                increase in notes payable
            
            
            -
            
            
            102,328
            
            
            102,328(Decrease)
                increase in taxes payable
            
            
            -
            
            
            261,311
            
            
            261,311Net
                cash (used in) provided from operating activities
            
            
            -
            
            
            7,795,202
            
            
            7,795,202**Cash
                Flows From Investing Activities:**Purchase
                of property, plant and equipment
            
            
            -
            
            
            (499,243
            )
            
            (499,243
            )Purchase
                of land use rightCash
                acquired due to reverse merger
            
            
            -
            
            
            13,241
            
            
            13,241Net
                cash used in investing activities
            
            
            
            
            
            (486,002
            )
            
            (486,002
            )**Cash
                Flows From Financing Activities:**Proceeds
                from bank loans
            
            
            -
            
            
            383,730
            
            
            383,730Dividend
                paid
            
            
            -
            
            
            (7,508,517
            )
            
            (7,508,517
            )Decrease
                in amount due from a director
            
            
            -
            
            
            (57,980
            )
            
            (57,980
            )Net
                cash provided from (used in) financing activities
            
            
            -
            
            
            (7,182,767
            )
            
            (7,182,767
            )**Net
                increase in cash and cash equivalents**
            
            
            -
            
            
            126,433
            
            
            126,433**Effect
                of foreign exchange rate changes**
            
            
            -
            
            
            109,655
            
            
            109,655**Cash
                and Cash Equivalents at Beginning of the year**
            
            
            -
            
            
            230,990
            
            
            230,990**Cash
                and Cash Equivalents at the End of the year**
            
            $
            -
            
            $
            497,078
            
            $
            497,078





F-21





The
      following table summarizes the impact of the restatement adjustments on the
      consolidated statement of changes in equity for the year ended December 31,
      2007
      and 2006:





Additional
            
            
            
            OtherPreferred
                stock
            
            Common
                stock
            
            Paid-in
            
            Retained
            
            ComprehensiveShares
            
            Par
                value
            
            Shares
            
            Par
                value
            
            Capital
            
            Earnings
            
            Income
            
            Total**Balance
                at January 1, 2006**
            
            
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            (1,218
            )
            $
            -
            
            $
            (1,218
            )Restatement
                for beginning balance
            
            
            5,000,000
            
            
            5,000
            
            
            29,750,000
            
            
            29,750
            
            
            2,706,150
            
            
            285,040
            
            
            (75,507
            )
            
            2,950,433Restated
                foreign currency translation gain
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            190,546
            
            
            190,546Restated
                dividend declared and paid
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (7,508,517
            )
            
            
            
            
            (7,508,517
            )Net
                loss as previously reported
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,090
            )
            
            
            
            
            (2,090
            )Restatement
                adjustment for net income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            4,524,256
            
            
            -
            
            
            4,524,256**BALANCE
                AT December 31, 2006**
            
            
            5,000,000
            
            $
            5,000
            
            
            29,750,000
            
            $
            29,750
            
            $
            2,706,150
            
            $
            (2,702,529
            )
            $
            115,039
            
            $
            153,410Restated
                foreign currency translation gain
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            417,754
            
            
            417,754Recapitalization
            
            
            -
            
            
            -
            
            
            20,250,000
            
            
            20,250
            
            
            (20,250
            )
            
            -
            
            
            -
            
            
            -Net
                income as previously reported
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            3,743,867
            
            
            -
            
            
            3,743,867Restatement
                adjustment for net income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            4,135,859
            
            
            -
            
            
            4,135,859**BALANCE
                AT December 31, 2007**
            
            
            5,000,000
            
            $
            5,000
            
            
            50,000,000
            
            $
            50,000
            
            $
            2,685,900
            
            $
            5,177,197
            
            $
            532,793
            
            $
            8,450,890




F-22