U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





Quarterly
      Report Under Section 13 or 15 (d) of


Securities
      Exchange Act of 1934





For
      the
      Period ended June 30, 2007





Commission
      File Number 333-139910








China
      Shoe Holdings, Inc.


(Name
      of
      small business issuer in its charter)


Nevada
              1712
              20-2234410(State
                  or other jurisdiction
                of
                    incorporation or organization)
              (Primary
                  SIC
                  Code)
              (IRS
                  Employer Identification
                  No.)




488 Wai
      Qingsong Road ,


Waigang,
      Jiading District, Shanghai


People’s
      Republic of China 201800


011-86-21-59587756


(Address,
      including zip code, and telephone number,


including
      area code, of registrant's principal executive offices)





Gu
      Xianzhong, President and CEO


488 Wai
      Qingsong Road


Waigang,
      Jiading District, Shanghai


People’s
      Republic of China 201800


011-86-21-59587756


(Mailing
      Address of Agent for Service)





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





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





There
      were 100,000,001 shares of Common Stock outstanding as of June 30,
      2007.





**PART
            I.**
 **Item
            1. FINANCIAL STATEMENTS.**
 
 **See
            Financial Statements beginning on Page F-1**
 
 **ITEM
            2.**  **MANAGEMENT'S
            DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS.**
  ***Special
            Note Regarding Forward Looking Statements***
  This
            Quarterly Report on Form 10-Q, including the following “Management's Discussion
            and Analysis of Financial Condition and Results of Operations,” contains
            forward-looking statements within the meaning of Section 27A of the Securities
            Act of 1933, as amended, and Section 21E of the Securities Exchange Act
            of 1934,
            as amended (the “Exchange Act”). Such statements include, among others, those
            concerning our expected financial performance and strategic and operational
            plans, as well as all assumptions, expectations, predictions, intentions
            or
            beliefs about future events. You are cautioned that any such forward-looking
            statements are not guarantees of future performance and that a number
            of risks
            and uncertainties could cause actual results of the Company to differ
            materially
            from those anticipated, expressed or implied in the forward-looking statements.
            The words “believe,” “expect,” “anticipate,” “project,” “targets,” “optimistic,”
“intend,” “aim,” “will” or similar expressions are intended to identify
            forward-looking statements. All statements other than statements of historical
            fact are statements that could be deemed forward-looking statements.
            Risks and
            uncertainties that could cause actual results to differ materially from
            those
            anticipated include risks related to new and existing products; any projections
            of sales, earnings, revenue, margins or other financial items; any statements
            of
            the plans, strategies and objectives of management for future operations;
            any
            statements regarding future economic conditions or performance; uncertainties
            related to conducting business in China; any statements of belief or
            intention;
            any of the factors mentioned in the “Risk Factors” section of our “Report of
            U nscheduled
            Material Events or Corporate Changes” on Form 8-K for the years ended December 31, 2006 and December 2005,
            and other
            risks mentioned in this Form 10-Q. The Company assumes no obligation
            and does
            not intend to update any forward-looking statements, except as required
            by
            law.
  ***Use
            of terms***
 
 Except
            as otherwise indicated by the context, references in this Form 10-Q to
“CHSH,”
“we,” “us,” “our,” “our Company,” or “the Company” are to China Shoe Holdings,
            Inc., a Nevada corporation and its consolidated subsidiaries. Unless
            the context
            otherwise requires, all references to (i) “WSTG” are to Wholly Success
            Technology Group Limited, a British Virgin Islands corporation; (ii)
“SHKH” are
            to Shanghai Kanghong Yunheng Enterprise Development Company Limited.,
            a
            corporation incorporated in the People's Republic of China; (iii) “BVI” are to
            British Virgin Islands; (vi) “PRC” and “China” are to the People's Republic of
            China; (v) “U.S. dollar,” “$” and “US$” are to United States dollars; (vi) “RMB”
are to Yuan Renminbi of China; (vii) “Securities Act” are to the Securities Act
            of 1933, as amended; and (viii) “Exchange Act” are to the Securities Exchange
            Act of 1934, as amended.
  
  ***Overview***
  The
            Company continued to implement its growth strategy for the six month
            ended June
            30, 2007 through slightly higher marketing efforts to be placed on the
            ladies
            footwear for the Japanese market.
 
 The
            Company continued to strengthen its balance sheet in 2006 and for the
            six month
            ended of June 30, 2007. Total assets and stockholders’ equity have both
            increased.
 
 ***Our
            Business***
  We
            are an
            independent, single facility-based, private label designer, manufacturer
            and
            marketer of a broad line of woman’s shoes, in which the footwear are generally
            sold under its customers’ brand names. We also manufactures shoe component such
            as soles, for other shoe manufacturers.
 
 In
            2006,
            we sold shoes and shoe components to approximately forty customers in
            Japan and
            China. Our factory is located in Jiading Township, a suburb of Shanghai
            in the
            People’s Republic of China.
 
 ***Recent
            Development***
  On
            July 3, 2007, a closing was held pursuant to an Agreement and Plan of
            Reorganisation, dated as of June 29, 2007, the “Agreement”) by and among the
            Company, WSTG, a BVI Corporation, and WSTG’s shareholders. Pursuant to the
            Agreement, each shareholder of WSTG exchanged all of his shares in WSTG
            for
            shares in The Company with an aggregate of 69,615,000 shares in the Company
            being issued in exchange for the shares in WSTG. In addition, the Agreement
            provided that China Venture Partners, Inc (“CVP”), a Delaware corporation, would
            be issued 15,185,000 shares in the Company at their par value of $0.001
            per
            share for service pursuant to a consulting agreement which the Company
            and CVP
            have agreed to value at $15,185. CVP has advised the Company that it
            is
            assigning a portion of the shares it received pursuant to the consulting
            agreement as set forth herein.
 WSTG
              is the owner of all the outstanding shares of SHKH, a corporation organized
              under the laws of the People’s Republic of China (“PRC”) and a manufacturer of
              woman’s shoes, casual shoes and shoe components.
 
 Under
            the terms of the Agreement, all of the officers of the Company resigned,
            WSTG
            was permitted to appoint two directors, representing 50% of the Company’s Board
            of Directors and WSTG and the Company agreed not to file a registration
            statement on From SB-2 allowing for insiders’ share sales for a period of one
            year or to file a registration statement on From S-8 for nine months.
            CVP
            provides general business consulting services, specializing in the needs
            of
            entities with interests in the PRC.
 
 **Results
            of Operations**
 
 The
            following table summarizes the results of our operations during the six-month
            period ended June 30 2007 and 2006, and provides information regarding
            the
            dollar and percentage increase or (decrease) from the six-month period
            ended
            June 30, 2007 to the six month period ended June 30, 2006.
 
 All
            amount, other than percentages, in millions of U.S dollars
  ***Three
            Months Ended June 20, 2007 Compared to Three Months Ended June 30,
            2006***
 
 ***Revenue:*** Revenue
            was $1.95 million for the three months ended June 30, 2007 as compared
            to $1.28
            million for the three months ended June 30, 2006, representing an increase
            by
            52.3%. The increase in revenue was mainly contributed to the increased
            in the
            proportion of sales into the Japanese market.
 
 ***Cost
            of Revenue and Gross Profit:*** Cost
            of
            revenue and gross profit were respectively $1.30 million and $0.65 million
            for
            the three months ended June 30, 2007 as compared to $1.06 million and
            $0.23
            million for the three months ended June 30, 2006, representing an increase
            by
            23.2% and 188.3% respectively. Accordingly, the substantial growth in
            cost of
            revenue and gross profit were attributable to the increased in the proportion
            of
            sales into the Japanese market that are generally at higher margins than
            sales
            within the PRC.
 
 ***Operating
            Expenses:*** Operating
            expenses was $0.44 million for the three months ended June 30, 2007 as
            compared
            to $0.17 million for the three months ended June 30, 2006, representing
            an
            increase by 156.7%. Such increased was mainly attributable to the hiring
            of
            additional staff and overtime compensation paid to the workers, increased
            in
            entertainment and motor vehicle expenses for serving the Japanese customers
            and
            professional expenses related to the reverse take-over activities on
            the
            over-the counter market.
 ***Income
              Tax Expenses:*** ** No
              income
              tax was incurred during the three months ended June 30, 2007. Starting
              from the
              first quarter of 2007, Shanghai
              Kanghong Yunheng Enterprise Development Company Limited, a subsidiary
              of the
              Group, which operates in the People’s Republic of China (“PRC”), is exempted
              from the PRC state and local enterprise income tax for the first two
              profitable
              financial years of operation and therefore a 50% relief from the PRC
              state
              corporate income tax for the following three years. Accordingly, it
              was not
              subject to tax in 2007.
 
 On
            March
            16, 2007, the National People’s Congress of the PRC determined to adopt a new
            corporate income tax law in its fifth plenary session. The new corporate
            income
            tax law unifies the application scope, tax rate, tax deduction and preferential
            policy for both domestic and foreign-invested enterprises. The new corporate
            income tax law will be effective on January 1, 2008. According to the
            new
            corporate income tax law, the applicable income tax law rate for our
            operating
            subsidiaries may be subject to change. As the implementation detail has
            not yet
            been announced, we cannot be sure of the potential impact of such new
            corporate
            income tax law on out financial position and operating results.
 
 ***Net
            income:*** Net
            income was $0.20 million for the three months ended June 30, 2007 as
            compared to
            $0.03 million for the three months ended June 30, 2006, representing
            an increase
            by 486.0%, the increase was mainly attributable to the increase in the
            greater
            proportion of sales from the Japanese market.
  ***Six
            Months Ended June 30, 2007 Compared to Six Months Ended June 30,
            2006***
 
 ***Revenue:*** ** During
            the six months ended June 30, 2007, we experienced a substantial growth
            in
            sales, sales revenue was $3.13 million for the six months ended June
            30, 2007 as
            compared to $1.94 million for the six months ended June 30, 2006, representing
            an increase by 61.0%. The increase in revenue was mainly attributable
            to the
            increased in the proportion of sales into the Japanese market.
 
 ***Cost
            of Revenue and Gross Profit:*** Cost
            of
            revenue and gross profit were respectively $2.11 million and $1.02 million
            for
            the six months ended June 30, 2007 as compared to $1.55 million and$0.39
            million
            for the six months ended June 30, 2006, representing an increase by 35.5%
            and
            162.6% respectively. Accordingly, the substantial growth in cost of revenue
            and
            gross profit were attributable to the increased in the proportion of
            sales into
            the Japanese market that are generally at higher margins than sales within
            the
            PRC.
 ***Operating
              Expenses:*** ** Operating
              expenses was 0.62 million for the six months ended June 30, 2007 as
              compared to
              $0.27 million for the six months ended June 30, 2006, representing
              an increase
              by 133.0%. Such increased was mainly attributable to Such increased
              was mainly
              attributable to the hiring of additional staff and overtime compensation
              paid to
              the workers, increased in entertainment and motor vehicle expenses
              for serving
              the Japanese customers and professional expenses related to the reverse
              take-over activities on the over-the counter market.
 
 ***Income
            Tax Expenses:*** No
            income
            tax was incurred during the period from January 2007 to June 2007, as
            starting
            from the first quarter of 2007, Shanghai
            Kanghong Yunheng Enterprise Development Company Limited, a subsidiary
            of the
            Group, which operates in the People’s Republic of China (“PRC”), is exempted
            from the PRC state and local enterprise income tax for the first two
            profitable
            financial years of operation and therefore a 50% relief from the PRC
            state
            corporate income tax for the following three years. Accordingly, it was
            not
            subject to tax in 2007.
 
 On
            March
            16, 2007, the National People’s Congress of the PRC determined to adopt a new
            corporate income tax law in its fifth plenary session. The new corporate
            income
            tax law unifies the application scope, tax rate, tax deduction and preferential
            policy for both domestic and foreign-invested enterprises. The new corporate
            income tax law will be effective on January 1, 2008. According to the
            new
            corporate income tax law, the applicable income tax law rate for our
            operating
            subsidiaries may be subject to change. As the implementation detail has
            not yet
            been announced, we cannot be sure of the potential impact of such new
            corporate
            income tax law on out financial position and operating results.
 
 *Net
            income:* Net
            income for the six months ended from January 2007 to June 2007 was $0.39
            million, representing a 416.7% increase from the same period in 2006.
            The
            increase was mainly due to the increase in sales derived from the greater
            proportion of sales into the Japanese market.
 **Liquidity
              and Capital Resources**
 **Cash
              Flows**
 Six
                      months ended2007
                  
                  2006Net
                      cash (used in) provided by operating activities
                  
                  $
                  (0.09
                  )
                  $
                  0.21Net
                      cash provided by investing activities
                  
                  
                  -
                  
                  
                  -Net
                      cash provided by financing activities
                  
                  
                  0.37
                  
                  
                  -Net
                      cash in cash and cash equivalents
                  
                  $
                  0.28
                  
                  $
                  0.21
  ***Operating
            Activities:***
 
 Net
            cash
            used in operating activities was ($0.09) million for the six months ended
            June
            30, 2007, which is a decrease of ($0.30) million from $0.21 million of
            the net
            cash provided by operating activities for the same period in 2006. The
            decrease
            was mainly due to the increase in account receivables, inventories, other
            receivables and prepayment, value added tax receivable, accounts payable,
            other
            payable and accrued liabilities, amounts due to directors and loan repayable
            to
            a related party.
 
 ***Investing
            Activities:***
 
 There
            is
            no cash used in investing activities for both the six months ended June
            30 2007
            and June 30 2006.
 
 ***Financing
            Activities:***
 
 Net
            cash
            provided by financing activities in the six months ended June 30, 2007
            totaled
            $0.37 million as compared to nil in the same period of 2006. The increase
            of
            cash provided by financing activities was mainly attributable to the
            proceeds
            from short term borrowings.
 
 ***Short
            Term Bank Borrowings:***
 
 The
            Company utilizes short term bank borrowings to provide for its liquidity
            needs
            as the Company is typically paid for its product adequate to allow the
            Company
            to operate at present levels and to sustain moderate growth.
  Short-term
            bank borrowings were as follows:
 
 June
                      30, 2007
                  
                  December
                      31, 2006(unaudited)
                  
                  (audited)Short-term
                      bank loans
                  
                  $
                  191,116
                  
                  $
                  185,600Trust
                      receipt loans
                  
                  
                  469,514
                  
                  
                  147,649$
                  660,630
                  
                  $
                  333,249
 
 Management
            believes that the Company’s reputation for quality production will result in
            more large orders that will be difficult to fill without significant
            plant
            expansion and to explore the feasibility of entering the retail shoe
            market in
            China. However, the Company does not have any commitments for additional
            financing and no assurance is given that any additional financing will
            be
            available or that, if available, it will be on terms that are favorable
            to our
            shareholders.
 
 
  **ITEM
            3. CONTROLS AND PRODCECURES**
  Members
            of our management, including our Chief Financial Officer and Principal
            Accounting and Financial Officer, have evaluated the effectiveness of our
            disclosure controls and procedures, as defined by paragraph (e) of Exchange
            Act
            Rules 13a-15 or 15d-15, as of June 30, 2007, the end of the period covered
            by
            this report. Based upon that evaluation, Mr. Burley concluded that our
            disclosure controls and procedures are effective.
  **INTERNAL
            CONTROL OVER FINANCIAL REPORTING**
  There
            were no changes in our internal control over financial reporting or in
            other
            factors identified in connection with the evaluation required by paragraph
            (d)
            of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter
            ended
            September 30, 2006 that have materially affected, or are reasonably likely
            to
            materially affect, our internal control over financial reporting.
  **PART
            II: OTHER INFORMATION**
  **Item
            1. Legal Proceedings**
  **None.**
  **Item
            2. Unregistered Sales of Equity Securities and Use of
            Proceeds**
  Previously
            reported on Form 8-K dated July 3, 2007.
  **Item
            3. Defaults Upon Senior Securities**
  None.
  **Item
            4. Submission of Matters to a Vote of Security Holders**
  Previously
            reported on Form 8-K dated June 6, 2007.
  **Item
            5. Other Information**
  None.
  
  **Item
            6. Exhibits and Reports on Form 8-K**
  b)
                  EXHIBITS
  31.1
                  Certification
                      of the Chief Executive Officer pursuant toSection
                      302 of the Sarbanes-Oxley Act of
                      2002
  31.2
                  Certification
                      of the Chief Financial Officer pursuant toSection
                      302 of the Sarbanes-Oxley Act of
                      2002
  32
                    Certifications
                        of the Chief Executive Officer and Chief Financial Officer
                        pursuant to 18
                        U.S.C. Section 1350, as adopted pursuant to Section 906 of
                        the
                        Sarbanes-Oxley Act of 2002
  b)
            REPORTS ON FORM 8-K
  The
            Company filed a Form 8-K, dated June 6, 2007. The Company filed additional
            reports on Form 8-K after the close of the period covered by this
            report.
  
 **SIGNATURES**
  In
            accordance with Section 13 or 15(d) of the Securities Exchange Act of
            1934, the
            Registrant caused this report to be signed on its behalf by the undersigned,
            thereunto duly authorized.
  **China
            Shoe Holdings, Inc.**
  (Registrant)
 Date:
                    August 14, 2007
                  By:
                  /s/
                    Gu
                    XianzhongGu
                      Xianzhong
                    President
                      and CEO
  Pursuant
            to the requirements of the Securities Exchange Act of 1934, as amended,
            this
            Report has been signed below by the following persons on behalf of the
            registrant and in the capacities and on the dates indicated.
   NAME
                  
                  TITLE
                  DATE/s/
                    Gu
                    Xianzhong
                  
                  President
                    and CEO
                  August
                    14, 2007Gu Xianzhong/s/
                    Angus
                    Cheung Ming
                  
                  Chief
                    Financial Officer
                  August
                    14, 2007Angus
                      Cheung Ming
                  
                  (Principal Financial and Accounting
                    Officer)
  **CHINA
        SHOE HOLDINGS, INC**
 **(Formerly
        Indigo Technologies, Inc., A Development Stage Company)**
 **INDEX
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(UNAUDITED)**
 **Pages**Condensed
                    ConsolidatedBalanceSheets as of June 30, 2007 and December 31, 2006
                
                F-2Condensed
                    ConsolidatedStatements
                    of Operations And Comprehensive Income (Loss) for the Three and
                    Six Months
                    Ended June 30, 2007 and 2006
                
                F-3Condensed
                    ConsolidatedStatements
                    of Cash Flowsfor the Six Months Ended June 30, 2007 and 2006
                
                F-4Condensed
                    Consolidated Statements of Stockholders’ Equity for the Six Months Ended
                    June 30, 2007
                
                F-5Notes
                    to Condensed Consolidated Financial Statements
                
                F-6
                    - F-16
 F-1
  CHINA
        SHOE HOLDINGS,INC
 (Formerly
        Indigo Technologies, Inc. ,
        A
        Development Stage Company)
 CONDENSED
        CONSOLIDATED BALANCE SHEETS
 AS
        OF
        JUNE 30 2007 AND DECEMBER 31, 2006
 (Currency
        expressed in United States Dollars (‘US$”), except for number of
        shares)
 
 June
                  30, 2007
              
              December
                  31, 2006**ASSETS**
              
              (unaudited)
              
              (restated)Current
                  assets:Cash
                  and cash equivalents
              
              $
              617,924
              
              $
              335,474Restricted
                  cash
              
              
              123,896
              
              
              60,160Accounts
                  receivable, trade
              
              
              973,529
              
              
              582,372Advances
                  to employees
              
              
              -
              
              
              145,040Inventories
              
              
              1,054,020
              
              
              384,394Value
                  added tax receivable
              
              
              16,446
              
              
              66,948Other
                  receivables and prepayments
              
              
              324,948
              
              
              227,769Total
                  current assets
              
              
              3,110,763
              
              
              1,802,157Non-current
                  assets:Property,
                  plant and equipment, net
              
              
              1,235,186
              
              
              1,382,851**TOTAL
                  ASSETS**
              
              $
              4,345,949
              
              $
              3,185,008**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  liabilities:Short-term
                  bank borrowings
              
              $
              660,630
              
              $
              333,249Accounts
                  payable, trade
              
              
              602,336
              
              
              253,201Income
                  tax payable
              
              
              -
              
              
              20,119Amount
                  due to directors
              
              
              105,482
              
              
              -Other
                  payables and accrued liabilities
              
              
              95,546
              
              
              99,293Total
                  current liabilities
              
              
              1,463,994
              
              
              705,862Stockholders’
                  equity:Preferred
                  Stock, $0.001 par value; 10,000,000 shares authorized; no share
                  issued and
                  outstanding
              
              
              -
              
              
              -Common
                  stock, $0.001 par value; 300,000,000 shares authorized; 100,000,001
                  shares
                  and 69,615,000 shares issued and outstanding as of June 30, 2007
                  and
                  December 31, 2006
              
              
              100,000
              
              
              69,615Additional
                  paid-in capital
              
              
              1,838,549
              
              
              1,853,749Accumulated
                  other comprehensive loss
              
              
              (31,657
              )
              
              (33,829
              )Retained
                  earnings
              
              
              975,063
              
              
              589,6112,881,955
              
              
              2,479,146**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              $
              4,345,949
              
              $
              3,185,008
  See
        accompanying notes to condensed consolidated financial statements.
  F-2
 CHINA
            SHOE HOLDINGS,INC
 (Formerly
            Indigo Technologies, Inc. ,
            A
            Development Stage Company)
 CONDENSED
            CONSOLIDATED STATEMENTS OF
 OPERATIONS
            AND COMPREHENISVE INCOME
 FOR
            THE
            THREE AND SIX MONTHS ENDED JUNE 30,2007 AND 2006
 (Currency
            expressed United States Dollars (‘US$”), except for number of
            shares)
 (Unaudited)


Three
                  Months Ended June 30,
              
              Six
                  Months Ended June 30,2007
              
              2006
              
              2007
              
              2006**OPERATING
                  REVENUES**
              
              $
              1,954,897
              
              $
              1,283,452
              
              $
              3,128,872
              
              $
              1,943,913**COST
                  OF REVENUES**
              
              
              1,303,201
              
              
              1,057,437
              
              
              2,106,141
              
              
              1,554,408**GROSS
                  PROFIT**
              
              
              651,696
              
              
              226,015
              
              
              1,022,731
              
              
              389,505**OPERATING
                  EXPENSES:**Depreciation
              
              
              5,344
              
              
              2,356
              
              
              12,511
              
              
              4,712Stock-based
                  compensation
              
              
              15,185
              
              
              -
              
              
              15,185
              
              
              -General
                  and administrative
              
              
              422,546
              
              
              170,231
              
              
              592,596
              
              
              261,538Total
                  operating expenses
              
              
              443,075
              
              
              172,587
              
              
              620,292
              
              
              266,250**INCOME
                  FROM OPERATIONS**
              
              
              208,621
              
              
              53,428
              
              
              402,439
              
              
              123,255**OTHER
                  INCOME (EXPENSE):**Other
                  income
              
              
              348
              
              
              83
              
              
              525
              
              
              83Interest
                  expense
              
              
              (12,599
              )
              
              (1,175
              )
              
              (17,512
              )
              
              (9,670
              )Total
                  other expense
              
              
              (12,251
              )
              
              (1,092
              )
              
              (16,987
              )
              
              (9,587
              )**INCOME
                  BEFORE INCOME TAXES**
              
              
              196,370
              
              
              52,336
              
              
              385,452
              
              
              113,668Income
                  tax expenses
              
              
              -
              
              
              (18,826
              )
              
              -
              
              
              (39,065
              )**NET
                  INCOME**
              
              $
              196,370
              
              $
              33,510
              
              $
              385,452
              
              $
              74,603Other
                  comprehensive (loss) income:-
                  Foreign currency translation (loss) gain
              
              
              (15,237
              )
              
              27,374
              
              
              2,172
              
              
              19,166**COMPREHENSIVE
                  INCOME**
              
              $
              181,133
              
              $
              60,884
              
              $
              387,624
              
              $
              93,769Net
                  income per share- Basic and diluted
              
              $
              0.00
              
              $
              0.00
              
              $
              0.01
              
              $
              0.00Weighted
                  average number of shares outstanding during the period -Basic
                  and diluted
              
              
              70,282,802
              
              
              69,615,000
              
              
              71,139,972
              
              
              69,615,000
  See
        accompanying notes to condensed consolidated financial statements.
 
 F-3
 CHINA
          SHOE HOLDINGS,INC
 (Formerly
          Indigo Technologies, Inc. ,
          A
          Development Stage Company)
 CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR
          THE
          SIX MONTHS ENDED JUNE 30,2007 AND 2006
 (Currency
          expressed United States Dollars (‘US$”))
 (Unaudited)
 Six
                  Months Ended June 30,2007
              
              2006**Cash
                  flows from operating activities:**Net
                  income
              
              $
              385,452
              
              
              74,603Adjustments
                  to reconcile net income to net cash (used in) provided by operating
                  activities:Depreciation
              
              
              147,665
              
              
              39,849Shares
                  issued for service rendered, non-cash
              
              
              15,185
              
              
              -Change
                  in operating assets and liabilities:Accounts
                  receivable, trade
              
              
              (391,157
              )
              
              283,299Inventories
              
              
              (669,626
              )
              
              (34,861
              )Advances
                  to employees
              
              
              145,040
              
              
              (151,072
              )Other
                  receivables and prepayments
              
              
              (97,179
              )
              
              (214,087
              )Value-added
                  tax receivable
              
              
              50,502
              
              
              (7,773
              )Accounts
                  payable, trade
              
              
              349,135
              
              
              (249,800
              )Other
                  payables and accrued liabilities
              
              
              (3,747
              )
              
              482,934Income
                  tax payable
              
              
              (20,119
              )
              
              (8,421
              )Net
                  cash (used in) provided by operating activities
              
              
              (88,849
              )
              
              214,671**Cash
                  flows from financing activities:**Advances
                  from a director
              
              
              105,482
              
              
              -Draw
                  down from short-term bank borrowings
              
              
              327,381
              
              
              -Increase
                  in restricted cash
              
              
              (63,736
              )
              
              -Net
                  cash provided by financing activities
              
              
              369,127
              
              
              -**Foreign
                  currency translation adjustment**
              
              
              2,172
              
              
              19,166**NET
                  CHANGE IN CASH AND CASH EQUIVALENTS**
              
              
              282,450
              
              
              233,837**CASH
                  AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
              
              
              335,474
              
              
              164,843**CASH
                  AND CASH EQUIVALENTS, END OF PERIOD**
              
              $
              617,924
              
              
              398,680**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                  paid for income taxes
              
              $
              20,119
              
              $
              -Cash
                  paid for interest expenses
              
              $
              17,512
              
              $
              -
  See
        accompanying notes to condensed consolidated financial statement
  F-4
  CHINA
          SHOE HOLDINGS, INC
 (Formerly
          Indigo Technologies, Inc. ,
          A
          Development Stage Company)
 CONDENSED
          CONSOLDIATED STATEMENTS OF STOCKHOLDERS’EQUITY
 FOR
          THE
          SIX MONTHS ENDED JUNE 30,2007
 (Currency
          expressed in United States Dollars (“US$”), except for number of
          shares)
 Common
                  Stock
              
              
              Additional
                paid-in
              
              
              Accumulated
                other
                comprehensive
              
              
              RetainedNo.
                  of share
              
              
              Amount
              
              
              capital
              
              
              loss
              
              
              earnings
              
              
              TotalBalance
                  as of January 1, 2006 (restated)
              
              
              69,615,000
              
              $
              69,615
              
              $
              1,853,749
              
              $
              (78,204
              )
              $
              415,993
              
              $
              2,261,153Foreign
                  currency translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              44,375
              
              
              -
              
              
              44,375Net
                  income for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              173,618
              
              
              173,618Balance
                  as of December 31, 2006
              
              
              69,615,000
              
              
              69,615
              
              
              1,853,749
              
              
              (33,829
              )
              
              589,611
              
              
              2,479,146Shares
                  issued to complete reverse acquisition
              
              
              15,200,001
              
              
              15,200
              
              
              (15,200
              )
              
              -
              
              
              -
              
              
              -Shares
                  issued for service
              
              
              15,185,000
              
              
              15,185
              
              
              -
              
              
              -
              
              
              -
              
              
              15,185Net
                  income for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              385,452
              
              
              385,452Foreign
                  currency translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              2,172
              
              
              -
              
              
              2,172Balance
                  as of June 30,2007
              
              
              100,000,001
              
              $
              100,000
              
              $
              1,838,549
              
              $
              (31,657
              )
              $
              975,063
              
              $
              2,881,955
  See
        accompanying notes to condensed consolidated financial statement
 
 F-5
  CHINA
          SHOE HOLDINGS,INC
 (Formerly
          Indigo Technologies,Inc. ,
          A
          Development Stage Company)
 NOTES
          TO
          CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
          expressed in United States Dollars (“US$”)
 (Unaudited)
 **NOTE
        –** **1**  **BASIS
        OF PRESENTATION**
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with both generally accepted accounting principles
        for
        interim financial information, and the instructions to Form 10-QSB and Item
        310(b) of Regulation S-B. Accordingly, they do not include all of the
        information and footnotes required by generally accepted accounting principles
        for complete financial statements. The accompanying unaudited condensed
        consolidated financial statements reflect all adjustments (consisting of
        normal
        recurring accruals) that are, in the opinion of management, considered necessary
        for a fair presentation of the results for the interim periods presented.
        Interim results are not necessarily indicative of results for a full
        year.
 
 The
        condensed consolidated financial statements and related disclosures have
        been
        prepared with the presumption that users of the interim financial information
        have read or have access to our annual audited condensed consolidated financial
        statements for the preceding fiscal year. Accordingly, these condensed
        consolidated financial statements should be read in conjunction with the
        consolidated financial statements and the related notes thereto contained
        in the
        Annual Report on Form 10-KSB for the year ended December 31, 2006.
  **NOTE** **–** **2**  **ORGANIZATION
        AND BUSINESS BACKGROUND**
 
 China
        Shoe Holdings, Inc. (the “Company” or “CHSH”) was incorporated in the State of
        Nevada on January 24, 2005 as Indigo Technologies, Inc. On June 6, 2007,
        CHSH
        changed its name to China Shoe Holdings, Inc. The principal activity of CHSH,
        through its subsidiaries, is engaged
        in the manufacturing of ladies fashion footwear for shoes retailers in Japan
        and
        China. Meanwhile, the Company also produces various types of shoe soles for
        the
        domestic market in the PRC. To reveal the competency in the shoes manufacturing
        industry, the Company has developed the following proprietary technologies: (i)
        PU imitational grainy sole, (ii) TPR modified materials and (iii) Viscose
        water.
        The Company has registered and obtained “Utility Model” patent and “Invention”
patent respectively for these innovations from the State Intellectual Property
        Office of the PRC in 2006.
 
 CHSH
        was
        considered a  development stage companyand
        its
        principal activity is seeking and consummating a merger or acquisition
        opportunity with a business entity organized as a private corporation,
        partnership, or sole proprietorship as defined by Statement of Financial
        Accounting Standards (SFAS) No. 7*“Accounting
        and Reporting by Development Stage Enterprises”*.
        CHSH
        did not generate revenues from any business operations from its
        inception.
 
 On
        June
        6, 2007, CHSH completed a 7.6 for 1 forward stock split on the common stock
        in
        the form of a dividend and the par value remains at $0.001 per share. In
        addition, Amended and Restated Articles of Incorporation was filed to the
        Secretary of State of the State of Nevada in connection with the increase
        in
        authorized capital stock from 75,000,000 shares of common stock at par value
        of
        $0.001 per share to 300,000,000 shares of common stock at par value $0.001
        per
        share and 10,000,000 shares of preferred stock at par value $0.001 per share.
  F-6
 CHINA
          SHOE HOLDINGS,INC
 (Formerly
          Indigo Technologies,Inc. ,
          A
          Development Stage Company)
 NOTES
          TO
          CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
          THE
          SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
          expressed in United States Dollars (“US$”)
 (Unaudited)
 On
        June
        29, 2007, the CHSH cancelled 31,350,000 restricted shares of common stock.
        All
        common stock and per share data for all periods presented in these condensed
        consolidated financial statements have been restated to give effect to the
        forward stock split and stock cancellation.
 
 As
        a
        result, the total number of issued and outstanding shares of the Company
        before
        the stock exchange transaction was increased from 6,125,000 to 15,200,000
        shares
        and par value of its common stock was unchanged at $0.001.
 
 On
        June
        29, 2007, CHSH completed a stock exchange transaction with Wholly Success
        Technology Group Limited (“WSTG”). WSTG was
        incorporated as a limited liability company in the British Virgin Islands
        (“BVI”) on December 16, 2004 with an authorized, issued and outstanding shares
        of 994,500 common stock at par value of $1 per share. Its principal activity
        is
        investment holding.
 
 The
        stock
        exchange transaction involved CHSH issued to each WSTG’s shareholder 70 shares
        of common stock of the Company for each share of common stock of WSTG. As
        a
        result, the total number of new issued and outstanding shares of common stock
        to
        WSTG’s shareholders was 69,615,000 shares.
 
 In
        addition to the stock exchange transaction, CHSH agreed to issue an additional
        15,185,000 restricted common stock of the Company to China Venture Partners
        for
        consulting services at the price of $0.001 per share.
 
 The
        stock exchange transaction has been accounted for as a reverse acquisition
        and
        recapitalization of the CHSH whereby WSTG is deemed to be the accounting
        acquirer (legal acquiree) and CHSH to be the accounting acquiree (legal
        acquirer). The accompanying consolidated financial statements are in substance
        those of WSTG, with the assets and liabilities, and revenues and expenses,
        of
        CHSH being included effective from the date of stock exchange transaction.
        CHSH
        is deemed to be a continuation of the business of WSTG. Accordingly, the
        accompanying consolidated financial statements include the
        following:
 
 (1)
              the
                  balance sheet consists of the net assets of the accounting acquirer
                  at
                  historical cost and the net assets of the accounting acquiree at
                  historical cost;
 
 (2)
              the
                  financial position, results of operations, and cash flows of the
                  acquirer
                  for all periods presented as if the recapitalization had occurred
                  at the
                  beginning of the earliest period presented and the operations of
                  the
                  accounting acquiree from the date of stock exchange
                  transaction.
 
 On
        February 9, 2006, WSTG entered an equity transfer agreement with the equity
        owners of Shanghai Kanghong Yunheng Enterprise Development Company Limited
        (“Shanghai Kanghong”), whereby WSTG paid a cash consideration of $1,921,398
        (equivalent to Renminbi (“RMB”) 15,231,800) to purchase the total equity of
        Shanghai Kanghong. Shanghai Kanghong was organized as a limited liability
        company and located in Shanghai city, the People’s Republic of China (“PRC”)
        with a registered capital of RMB
        15,000,000. The transfer has been accounted for as a reorganization of entities
        under common control as the companies were beneficially owned by identical
        shareholders and share common management. The financial statements have been
        prepared as if the reorganization had occurred retroactively.
 F-7
 CHINA
            SHOE HOLDINGS,INC
 (Formerly
            Indigo Technologies,Inc. ,
            A
            Development Stage Company)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
            THE
            SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
            expressed in United States Dollars (“US$”)
 (Unaudited)
 CHSH,
        WSTG and Shanghai Kanghong are collectively known as “the Company” in these
        condensed consolidated financial statements.
  **NOTE** **–** **3**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 
 l
              Basis
                  of presentation
 
 These
        accompanying condensed consolidated financial statements have been prepared
        in
        accordance with generally accepted accounting principles in the United States
        of
        America.
 
 l
              Use
                  of estimates
 
 In
        preparing these condensed consolidated financial statements, management makes
        estimates and assumptions that affect the reported amounts of assets and
        liabilities in the balance sheets and revenues and expenses during the period
        reported. Actual results may differ from these estimates.
 
 l
              Basis
                  of consolidation
 
 The
        condensed consolidated financial statements include the financial statements
        of
        the Company and its subsidiaries, WSTG and Shanghai Kanghong.
 
 All
        significant inter-company balances and transactions within the Company and
        subsidiaries have been eliminated upon consolidation.
 
 l
              Cash
                  and cash equivalents
 
 Cash
        and cash equivalents are carried at cost and represent cash on hand, demand
        deposits placed with banks or other financial institutions and all highly
        liquid
        investments with an original maturity of three months or less as of the purchase
        date of such investments.
 
 l
              Restricted
                  cash
 
 Restricted
        cash consists of cash pledged with a bank as collateral for all letters of
        credit.
 
 l
              Accounts
                  receivable, trade
 
 Accounts
        receivable are recorded at the invoiced amount and do not bear interest.
        The
        Company extends unsecured credit to its customers in the ordinary course
        of
        business but mitigates the associated risks by performing credit checks and
        actively pursuing past due accounts. An allowance for doubtful accounts is
        established and determined based on managements’ assessment of known
        requirements, aging of receivables, payment history, the customer’s current
        credit worthiness and the economic environment. As of June 30, 2007, the
        Company
        recorded no allowance for doubtful accounts.
 
 l
              Inventories
 F-8
 CHINA
            SHOE HOLDINGS,INC
 (Formerly
            Indigo Technologies,Inc. ,
            A
            Development Stage Company)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
            THE
            SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
            expressed in United States Dollars (“US$”)
 (Unaudited)
 Inventories
        include direct materials, labor and factory overhead and are stated at lower
        of
        cost or market value, cost being determined on a FIFO. The Company periodically
        reviews historical sales activity to determine excess, slow moving items
        and
        potentially obsolete items and also evaluates the impact of any anticipated
        changes in future demand. The Company provides inventory allowances based
        on
        excess and obsolete inventories determined principally by customer demand.
        As of
        June 30, 2007, the Company did not record an allowance for obsolete inventories,
        nor have there been any write-offs.
 
 l
              Property,
                  plant and equipment, net
 
 Property,
        plant and equipment are stated at cost less accumulated depreciation and
        accumulated impairment losses, if any. Depreciation is calculated on the
        straight-line basis over the following expected useful lives from the date
        on
        which they become fully operational and after taking into account their
        estimated residual values:
 
 Depreciable
                  life
              
              Residual
                  valueBuildings
              20
                  years
              
              5%Plant
                  and machinery
              10
                  years
              
              5%Office
                  equipments
              10
                  years
              
              5%Motor
                  vehicles
              5
                  years
              
              5%
 
 Expenditure
        for maintenance and repairs is expensed as incurred.
 
 l
              Impairment
                  of long-lived assets
 
 In
        accordance with SFAS No. 144, *“Accounting
        for the Impairment or Disposal of Long-Lived Assets”* ,
        long-lived assets and certain identifiable intangible assets held and used
        by
        the Company are reviewed for impairment whenever events or changes in
        circumstances indicate that the carrying amount of an asset may not be
        recoverable. Recoverability
        of assets to be held and used is evaluated by a comparison of the carrying
        amount of assets to estimated discounted net cash flows expected 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 amounts of
        the
        assets exceed the fair value of the assets. There has been no impairment
        as of
        June 30, 2007.
 
 l
              Revenue
                  recognition
 
 The
        Company derives revenues from the sale of self-manufactured products. The
        Company recognizes its revenues net of value added taxes (“VAT”). The Company is
        subject to VAT which is levied on the majority of the products of Shanghai
        at
        the rate of 17% on the invoiced value of sales. Output VAT is borne by customers
        in addition to the invoiced value of sales and input VAT is borne by the
        Company
        in addition to the invoiced value of purchases to the extent not refunded
        for
        export sales.
 
 In
        accordance with the SEC’s Staff Accounting Bulletin No. 104, *Revenue
        Recognition* ,
        the Company recognizes revenue when persuasive evidence of an arrangement
        exists, transfer of title has occurred or services have been rendered, the
        selling price is fixed or determinable and collectibility is reasonably
        assured.
 
 (a)
              Sale
                  of products
 F-9
 CHINA
            SHOE HOLDINGS,INC
 (Formerly
            Indigo Technologies,Inc. ,
            A
            Development Stage Company)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
            THE
            SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
            expressed in United States Dollars (“US$”)
 (Unaudited)
 The
        Company recognizes revenue from the sale of products upon delivery to the
        customers and the transfer of title and risk of loss. The Company experienced
        no
        product returns and has recorded no reserve for sales returns for the six
        months
        ended June 30, 2007.
 
 (b)
              Interest
                  income
 
 Interest
        income is recognized on a time apportionment basis, taking into account the
        principal amounts outstanding and the interest rates applicable.
 
 l
              Cost
                  of revenue
 
 Cost
        of revenues consists primarily of material costs, direct labor, depreciation
        and
        manufacturing overheads, which are directly attributable to the manufacture
        of
        products.
 
 l
              Income
                  taxes
 
 The
        Company accounts for income taxes in interim periods as required by Accounting
        Principles Board Opinion No. 28, *“Interim
        Financial Reporting”* and as interpreted by FASB Interpretation No. 18, *“Accounting
        for Income Taxes in Interim Periods.”* The Company has determined an estimated annual effective tax rate. The rate
        will
        be revised, if necessary, as of the end of each successive interim period
        during
        the Company’s fiscal year to the Company’s best current estimate.
 
 The
        estimated annual effective tax rate is applied to the year-to-date ordinary
        income (or loss) at the end of the interim period.
 
 l
              Stock-based
                  compensation
 
 The
        Company adopts SFAS No. 123R, *“Accounting
        for Stock-Based Compensation”* using
        the fair value method. Under
        SFAS No. 123R, stock-based compensation expense is measured at the
        grant date based on the value of the option or restricted stock and is
        recognized as expense, less expected forfeitures, over the requisite service
        period, which is generally the vesting period.
 
 l
              Net
                  income per share
 
 The
        Company calculates net income per share in accordance with SFAS
        No. 128, *“Earnings
        per Share.”* Basic income per share is computed by dividing the net income by the
        weighted-average number of common shares outstanding during the period. Diluted
        income per share is computed similar to basic income 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 stock equivalents had
        been
        issued and if the additional common shares were dilutive.
 
 l
              Comprehensive
                  (loss) income
 
 SFAS
        No. 130, *“Reporting
        Comprehensive Income”* ,
        establishes standards for reporting and display of comprehensive income,
        its
        components and accumulated balances. Comprehensive income as defined includes
        all changes in equity during a period from non-owner sources. Accumulated
        comprehensive income consists of changes in unrealized gains and losses on
        foreign currency translation. This comprehensive income is not included in
        the
        computation of income tax expense or benefit.
 F-10
 CHINA
            SHOE HOLDINGS,INC
 (Formerly
            Indigo Technologies,Inc. ,
            A
            Development Stage Company)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
            THE
            SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
            expressed in United States Dollars (“US$”)
 (Unaudited)
 l
              Foreign
                  currencies translation
 
 The
        reporting currency of the Company is the United States dollar (“U.S. dollars”).
        Transactions denominated in currencies other than U.S. dollar are translated
        at
        the average rate for the period. Monetary assets and liabilities denominated
        in
        currencies other than U.S. dollar are translated into U.S. dollar at the
        rates
        of exchange ruling at the balance sheet date. The resulting exchange differences
        are recorded in the other expenses in the condensed consolidated statements
        of
        operations and comprehensive income.
 
 The
        Company’s subsidiaries maintain their books and record in their local currency,
        the Renminbi Yuan (“RMB”), which is functional currency as being the primary
        currency of the economic environment in which its operations are conducted.
        In
        general, for consolidation purposes, the Company translates the subsidiaries
        assets and liabilities into U.S. dollars using the applicable exchange rates
        prevailing at the balance sheet date, and the statements of operations is
        translated at average exchange rates during the
 reporting
        period. Adjustments resulting from the translation of the subsidiaries’
financial statements are recorded as accumulated other comprehensive
        income.
 
 l
              Related
                  parties
 
 Parties,
        which can be a corporation or individual, are considered to be related if
        the
        Company has the ability, directly or indirectly, to control the other party
        or
        exercise significant influence over the other party in making financial and
        operating decisions. Companies are also considered to be related if they
        are
        subject to common control or common significant influence.
 
 l
              Segment
                  reporting
 
 SFAS
        No. 131 *“Disclosures
        about Segments of an Enterprise and Related Information”* establishes standards for reporting information about operating segments
        on a
        basis consistent with the Company’s internal organization structure as well as
        information about geographical areas, business segments and major customers
        in
        the financial statements. The Company operates in one principal reportable
        segment in Japan and the PRC.
 
 l
              Fair
                  value of financial instruments
 
 The
        Company values its financial instruments as required by Statement of Financial
        Accounting Standard (SFAS) No. 107, “ *Disclosures
        about Fair Value of Financial Instruments* ”.
        The
        estimated fair value amounts have been determined by the Company, using
        available market information and appropriate valuation methodologies. The
        estimates presented herein are not necessarily indicative of amounts that
        the
        Company could realize in a current market exchange.
 
 The
        Company’s financial instruments primarily consist of cash and cash equivalents,
        accounts receivable, receivable from a third party, prepayments and deposits,
        short-term bank loan, other payables and accrued liabilities and income tax
        payable.
 
 As
        of the
        balance sheet date, the estimated fair values of the financial instruments
        were
        not materially different from their carrying values as presented due to the
        short term maturities of these instruments and that the interest rates on
        the
        borrowings approximate those that would have been available for loans of
        similar
        remaining maturity and risk profile at respective year ends.
 F-11
 CHINA
            SHOE HOLDINGS,INC
 (Formerly
            Indigo Technologies,Inc. ,
            A
            Development Stage Company)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
            THE
            SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
            expressed in United States Dollars (“US$”)
 (Unaudited)
 l
              Recently
                  issued accounting standards
 
 The
        Company has reviewed all recently issued, but not yet effective, accounting
        pronouncements and do not believe the future adoption of any such pronouncements
        may be expected to cause a material impact on its financial condition or
        the
        results of its operations.
 
 In
        June 2006, the FASB issued Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes* (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes
        recognized in the Company’s financial statements in accordance with SFAS
        No. 109. FIN 48 prescribes a recognition threshold and measurement
        attributes for the financial statement recognition and measurement of a tax
        position taken or expected to be taken in a tax return. The Company adopted
        FIN48 on January 1, 2007.
  The
        adoption of FIN 48 did not have an effect on the results of operations or
        financial condition. The Company did not have any unrecognized tax benefits
        as
        of June 30, 2007.
 
 On
        February 15, 2007, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standards No.159, *“The
        Fair Value Option for Financial Assets and Financial Liabilities — Including an
        Amendment of FASB Statement No.115”* (“SFAS
        159”). This standard permits an entity to measure financial instruments and
        certain other items at estimated fair value. Most of the provisions of SFAS
        No.159 are elective; however, the amendment to FASB No.115, “Accounting for
        Certain Investments in Debt and Equity Securities,” applies to all entities that
        own trading and available-for-sale securities. The fair value option created
        by
        SFAS 159 permits an entity to measure eligible items at fair value as of
        specified election dates. The fair value option (a) may generally be applied
        instrument by instrument, (b) is irrevocable unless a new election date occurs,
        and (c) must be applied to the entire instrument and not to only a portion
        of
        the instrument. SFAS 159 is effective as of the beginning of the first fiscal
        year that begins after November 15, 2007. Early adoption is permitted as
        of the
        beginning of the previous fiscal year provided that the entity (i) makes
        that
        choice in the first 120 days of that year, (ii) has not yet issued financial
        statements for any interim period of such year, and (iii) elects to apply
        the
        provisions of FASB 157. Management is currently evaluating the impact of
        SFAS
        159, if any, on the Company’s financial statements.
  **NOTE** **–** **4**  **ACCOUNTS
        RECEIVABLE, TRADE**
 
 The
        majority of the Company’s sales are on open credit terms and in accordance with
        terms specified in the contracts governing the relevant transactions. The
        Company evaluates the need of an allowance for doubtful accounts based on
        specifically identified amounts that management believes to be uncollectible.
        If
        actual collections experience changes, revisions to the allowance may be
        required. Based upon the aforementioned criteria, management has determined
        that  no
        allowance for doubtful accounts is required for the six months ended June
        30,
        2007.
 F-12
 CHINA
                SHOE HOLDINGS,INC
 (Formerly
                Indigo Technologies,Inc. ,
                A
                Development Stage Company)
 NOTES
                TO
                CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
                THE
                SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
                expressed in United States Dollars (“US$”)
 (Unaudited)
 **NOTE** **–** **5**  **INVENTORIES**
  Inventories
        consisted of following:
  June
                  30, 2007
              
              December
                  31, 2006(restated)Raw
                  materials
              
              $
              955,273
              
              $
              211,682Work
                  in progress
              
              
              -
              
              
              56,948Finished
                  goods
              
              
              98,747
              
              
              115,764$
              ****1,054,020
              
              $
              ****384,394
  For
        the
        six months ended June 30, 2007 and 2006, the Company did not record an allowance
        for obsolete inventories, nor have there been any write-offs.
  **NOTE** **–** **6**  **OTHER
        RECEIVABLES AND PREPAYMENTS**
 
 Other
        receivables and prepayments consisted of the following:
 
 June
                  30, 2007
              
              December
                  31, 2006(restated)Other
                  receivables
              
              $
              12,433
              
              $
              9,130Prepayments
              
              
              312,515
              
              
              218,639$
              324,948
              
              $
              227,769
  **NOTE** **–** **7**  **PROPERTY,
        PLANT AND EQUIPMENT, NET**
 
 Plant
        and
        equipment, net, consisted of the following:
 
 June
                  30, 2007
              
              December
                  31, 2006(restated)Buildings
              
              $
              403,046
              
              $
              403,046Plant
                  and machinery
              
              
              1,419,238
              
              
              1,419,238Office
                  equipments
              
              
              38,954
              
              
              38,954Motor
                  vehicles
              
              
              29,452
              
              
              29,4521,890,690
              
              
              1,890,690Less:
                  accumulated depreciation
              
              
              (655,504
              )
              
              (507,839
              )Property,
                  plant and equipment, net
              
              $
              1,235,186
              
              $
              1,382,851
 
 As
        of
        December 31, 2006, in accordance with the "Assets Transfer Agreement" signed
        by
        Shanghai Kanghong, Mr. Gu Xianzhong and Mr. Gu Changhong, the ownership of
        the
        building suites is recorded on Shanghai Kanghong's books of record. The net
        book
        value of the assets was $401,910 as of June 30, 2007. All parties have declared
        that the ownership of the assets should be Shanghai Kanghong's as of the
        balance
        sheet date and legally the transfer of ownership of the assets is under progress
        with the Real Property Registry of Jia Ding District, Shanghai.
 F-13
 CHINA
              SHOE HOLDINGS,INC
 (Formerly
              Indigo Technologies,Inc. ,
              A
              Development Stage Company)
 NOTES
              TO
              CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
              THE
              SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
              expressed in United States Dollars (“US$”)
 (Unaudited)
 Depreciation
        expense for the six months ended June 30, 2007 and 2006 were $147,665 and
        $39,849, respectively.
  **NOTE** **–** **8** **SHORT-TERM
        BANK BORROWINGS**
 
 Short-term
        bank borrowings were as follows:
  June
                  30, 2007
              
              December
                  31, 2006(restated)Short-term
                  bank loans
              
              $
              191,116
              
              $
              185,600Trust
                  receipt loans
              
              
              469,514
              
              
              147,649$
              660,630
              
              $
              333,249
  As
        of
        June 30, 2007, the short-term bank loans consist of four individual bank
        loans
        with aggregate amount of RMB 1,450,000 (2006: RMB 1,450,000) payable to a
        financial institution, guaranteed by an independent third party, with interest
        at 7.38% (2006: 7.38%) per annum payable quarterly, with principle due October
        30, 2007.
 
 As
        of
        June 30, 2007, trust receipts loans with an aggregate amount of RMB 3,562,197
        (2006: RMB 1,153,505) payable to financial institutions, guaranteed by the
        shareholders of the Company, with interest at 6.975% (2006: 6.975%) per annum,
        with principle due July 20, 2007.
  **NOTE** **–** **9**  **OTHER
        PAYABLES AND ACCRUED LIABILIITES**
 
 Other
        payables and accrued liabilities consisted of the followings:
 
 June
                  30, 2007
              
              December
                  31, 2006(restated)Salaries
                  payable
              
              $
              64,530
              
              $
              780Welfare
                  payable
              
              
              4,220
              
              
              4,098Advances
                  from customers
              
              
              -
              
              
              43,199Accrued
                  expenses
              
              
              21,000
              
              
              43,115Other
                  payables
              
              
              5,796
              
              
              8,101$
              95,546
              
              $
              99,293
 F-14
 CHINA
              SHOE HOLDINGS,INC
 (Formerly
              Indigo Technologies,Inc. ,
              A
              Development Stage Company)
 NOTES
              TO
              CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
              THE
              SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
              expressed in United States Dollars (“US$”)
 (Unaudited)
 **NOTE** **–** **10
        INCOME TAXES**
 
 The
        Company is registered in the United States of America and has operations
        in two
        tax jurisdictions: the United States of America and the PRC. For the six
        months
        ended June 30, 2007, the operation in the United States of America incurred
        net
        operating losses of $8,323 for income tax purposes.
 
 In
        December 2006, the Shanghai city local government tax bureau in the PRC approved
        Shanghai Kanghong as a foreign investment enterprise. Hence, effective from
        January 1, 2007, Shanghai Kanghong is entitled to a two-year exemption from
        enterprise income tax and a reduced enterprise income tax rate of 15% for
        the
        following three years. Hence,
        Shanghai Kanghong did not provide any tax provision for the six months ended
        June 30, 2007.
 
 The
        Company’s effective income tax rates for the three and six months ended June 30,
        2007 and 2006 were 0%, 0% and 33% and 33%, respectively.
  **NOTE** **–** **11
        AMOUNT DUE TO DIRECTORS**
  The
        balances due to directors represented unsecured advances which are interest-free
        and repayable in next twelve months.
  **NOTE** **–** **12
        CAPITAL TRANSACTIONS**
  June
        29,
        2007, CHSH completed a stock exchange transaction with the stockholders of
        WSTG
        and CHSH issued to WSTG’s stockholders an aggregated amount equal to 69,615,000
        shares of common stock of CHSH, as more fully described in Note 2.
  **NOTE** **–** **13
        STOCK-BASED COMPENSATION**
 
 On
        June 29, 2007, the Company issued 15,815,000 restricted shares of common
        stock
        at the price of $0.001 per share for business advisory services to China
        Venture
        Partners (the “Consultant”).  The
        Company calculated and recognized the stock-based compensation cost of $15,815
        to the condensed consolidated statements of operations for the six months
        ended
        June 30, 2007.
  **NOTE** **–** **14**  **CONCENTRATION
        AND RISK**
 
 (a)
              Major
                  customers and vendors
 
 For
        the
        six months ended June 30, 2007 and 2006, 100% of the Company’s assets were
        located in the PRC and 75% of the Company’s revenues were derived from customers
        located in Japan for six months ended June 30, 2007. Further, there are no
        customers and vendors who account for 10% or more of revenues and
        purchases.
 F-15
 CHINA
              SHOE HOLDINGS,INC
 (Formerly
              Indigo Technologies,Inc. ,
              A
              Development Stage Company)
 NOTES
              TO
              CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR
              THE
              SIX MONTHS ENDED 30 JUNE, 2007
 (Currency
              expressed in United States Dollars (“US$”)
 (Unaudited)
 (b)
              Credit
                  risk
 
 Financial
        instruments that potentially subject the Company to significant concentrations
        of credit risk consist principally of cash and trade accounts receivable.
        The
        Company performs ongoing credit evaluations of its customers’ financial
        condition, but does not require collateral to support such
        receivables.
 
 (c)
              Interest
                  rate risk
 
 As
        the
        Company has no significant interest-bearing assets, the Company’s income and
        operating cash flows are substantially independent of changes in market interest
        rates.
 
 The
        Company’s interest-rate risk arises from short-term borrowings. Borrowings
        issued at variable rates expose the Company to cash flow interest-rate risk.
        Borrowings issued at fixed rates expose the Company to fair value interest-rate
        risk. Company policy is to maintain approximately all of its borrowings in
        fixed
        rate instruments. As of June 30, 2007, all of borrowings were at fixed
        rates.
  **NOTE** **–** **15**  **OPERATING
        LEASE COMMITMENT**
 
 The
        Company rented offices and factories under non-cancelable operating lease
        agreements. Based on the current rental lease agreements, the future minimum
        rental payments required for the coming years are as follows:
 
 Year
                  ending June 30:2008
              
              $
              34,1112009
              
              
              35,8172010
              
              
              37,6082011
              
              
              39,488Thereafter
              
              
              104,452$
              251,476
 
 For
        the
        six months ended June 30, 2007 and 2006, rental expenses were $30,161 and
        nil
        respectively.
 
 F-16