China Industrial Waste Management (CIWT) 10QSB 2007 Q1 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________ TO __________

COMMISSION FILE NUMBER: 002-95836-NY

_CHINA INDUSTRIAL WASTE MANAGEMENT INC.

(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

NEVADA	13-3250816
(STATE OR OTHER JURISDICTION OFI NCORPORATION OR ORGANIZATION)	(I.R.S. EMPLOYER IDENTIFICATION NO.)

c/o Dalian Dongtai Industrial Waste Treatment Co., Ltd

No. 1 Huaihe West Road E-T-D-Zone, Dalian, China116600

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

ISSUER 'S TELEPHONE NUMBER, INCLUDING AREA CODE: 011-86-411-9770-3333

American Union Securities, Inc.

Attention: China Industrial Waste Management, 15th Floor

100 Wall Street, New York, NY 10005

--------------------------------------------------------

Agent Contact Information

Agent’s Telephone number: 212-232-0120

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

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 number of shares of Common Stock of the Registrant, par value $.001 per share, outstanding at March 31, 2007 was 13,220,843.

Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|.

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CHINA INDUSTRIAL WASTE MANAGEMENT INC.

INDEX TO MARCH 31, 2007 FORM 10-QSB

	Page
Part I - Financial Information		3
Item 1 - Financial Statements		3
Consolidated Balance Sheets as of March 31, 2007 (unaudited) and December 31, 2006		3
Consolidated Statements of Operations for the three months ended March
31, 2007 and March 31, 2006 (unaudited)		4
Consolidated Statements of Cash Flows for the three months ended March
31, 2007 and March 31, 2006 (unaudited)		5
Notes to the Consolidated Financial Statements (unaudited)		6
Item 2 - Management's Discussion and Analysis or Plan of Operation		15
Item 3 - Controls and Procedures		18
Part II - Other Information		19
Item 1 - Legal Proceedings		19
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds…		19
Item 3 - Defaults Upon Senior Securities		19
Item 4 - Submission of Matters to a Vote of Security Holders		19
Item 5 - Other Information		19
Item 6 - Exhibits		19
Signature Page		20

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. dollars)
	March 31,			December 31,
	2007			2006
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	3,626,913		$	5,660,698
Trade accounts receivable, net		258,823			151,144
Other receivables		13,091			50,789
Inventory		774,326			602,582
Advances to suppliers		3,901			374,046
Deferred expense		40,142			20,490
Tax receivable		6,398			-
Total current assets		4,723,594			6,859,749
Investment		1,592,925			361,136
Property, plant & equipment		3,986,672			3,927,234
Less: Accumulated depreciation		(1,607,983	)		(1,487,340	)
Net property, plant and equipment		2,378,689			2,439,894
Construction in progress		1,851,374			202,974
Land usage right, net of accumulated amortization		1,530,064			1,524,319
Related party receivable		363,321			231,793
Total assets	$	12,439,967		$	11,619,865
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	236,455		$	92,255
Tax payable		-			6,346
Deferred sales		459,936			455,548
Accrued expenses		17,490			15,410
Other payables		118,722			181,136
Total current liabilities		832,603			750,695
Minority interest in subsidiary		1,180,371			1,086,917
Stockholders' equity
Preferred stock: par value $.001; 5,000,000 shares authorized; none issued and outstanding		-			-
Common stock: par value $.001; 95,000,000 shares authorized; 13,220,843 shares issued and outstanding		13,221			13,221
Additional paid-in capital		1,956,634			1,952,634
Other comprehensive income		426,322			478,500
Retained earnings		8,030,816			7,337,898
Total stockholders' equity		10,426,993			9,782,253
Total liabilities and stockholders' equity	$	12,439,967		$	11,619,865

See notes to Consolidated Financial Statements.

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CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In U.S. dollars)
(Unaudited)
	For Three Months Ended March 31,
	2007			2006
Revenue	$	1,682,972		$	1,551,437
Costs of revenue (including depreciation)		495,317			438,778
Gross profit		1,187,655			1,112,659
Operating expenses
Selling expenses		204,241			153,479
General and administrative expenses		217,160			253,037
Total operating expenses		421,401			406,516
Income from operations		766,254			706,143
Other income (expense)
Interest income		2,804			-
Other income		368			-
Other expense		(27	)		(35	)
Total other income (expense)		3,145			(35	)
Net income before minority interest and income tax		769,399			706,108
Income tax (benefit)		-			-
Net income after income tax		769,399			706,108
Minority interest		76,481			70,611
Net income	$	692,918		$	635,497
Foreign currency translation adjustment		(52,178	)		81,826
Comprehensive income	$	640,740		$	717,323
Basic weighted average shares outstanding		13,220,843			13,140,843
Diluted weighted average shares outstanding		13,220,843			13,140,843
Basic and diluted net earnings per share	$	0.05		$	0.05

See notes to Consolidated Financial Statements.

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CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars)
(Unaudited)
	For the three months ended
	2007			2006
Cash flows from operating activities:
Net income	$	692,918		$	635,497
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest		76,481			70,611
Depreciation		105,666			77,518
Amortization		8,908			8,595
Bad debt allowance		14,881			-
Stock issued for services		4,000			-
Changes in operating assets and liabilities:
Accounts receivable		(105,857	)		(157,389	)
Inventory		(165,004	)		(3,862	)
Other receivables		(158,947	)		209,517
Advance to suppliers		(1,843	)		(138,935	)
Prepaid expense		(19,388	)		10,201
Deferred sales		1,565			(6,949	)
Accounts payable & other payables		(23,611	)		(158,108	)
Tax payables		(12,761	)		60,643
Net cash provided by operating activities		417,008			607,339
Cash flows from investing activiies
Equity investment		(1,210,643	)		(37,297	)
Purchase of property and equipment		(21,019	)		(155,425	)
Construction contracts		(1,266,472	)		(141,355	)
Net cash used in investing activities		(2,498,125	)		(334,077	)
Cash flows from financing activities
Net cash used in financing activities		-			-

Effect of exchange rate on cash	47,332			20,445
Net increase in cash and cash equivalents	(2,033,785		)	293,707
Cash and cash equivalents, beginning of period		5,660,698			2,944,243
Cash and cash equivalents, end of period	$	3,626,913		$	3,237,950
Supplemental cash flow information:
Cash paid during the year for:
Interest	$	-		$	-
Income taxes	$	-		$	-

See notes to Consolidated Financial Statements.

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CHINA INDUSTRIAL WASTE MANAGEMENT, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2007

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accounts of the Company and all of its subsidiaries are included in the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated operating results for the three months ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Form 10-KSB for the year ended December 31, 2006.

1. Nature of operations

The unaudited consolidated financial statements are those of China Industrial Waste Management, Inc., a Nevada Corporation formerly known as Goldtech Mining Corporation, (the “Company”) and its majority owned subsidiaries. Dalian Dongtai Industrial Waste Treatment Co. Ltd. (“Dongtai”) was incorporated on January 9, 1991. As of March 31, 2007 Dongtai has three subsidiaries - Liaoyang Dongtai Industrial Waste Treatment Co. Ltd (“Liaoyang Dongtai”), Dongtai Water Recycling Company (“Dongtai Water”) and Dongtai Organic Waste Treatment Company(“Dongtai Organic”). Dongtai is located in Economic and Technology Development Zone, Dalian, People’s Republic of China (“PRC”). Dongtai is engaged in the collection, treatment, disposal and recycling of industrial waste in China. The Company recovers all types of industrial wastes which can be used as raw material to produce chemical and metallurgy products. Dongtai also provides incineration, burial, and water treatment services. Dongtai also provides service for environment protection, technology consultation, pollution treatment, and waste managing process design.

Liaoyang Dongtai was incorporated on March 22, 2006. Dongtai has a 60% interest in this subsidiary. Liaoyang Dongtai is located in Liaoyang, People’s Republic of China (PRC) and is engaged in the business of the collection, treatment, disposal and recycling of industrial wastes.

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Dongtai Water Recycling Company was incorporated on July, 2006. Dongtai acquired 18% of the equity in such company. Dongtai Water is a Build-Operate-Transfer (BOT) project, designed to process polluted water generated by the city of Dalian.

On March 2, 2007, the Company purchased for 49% of the equity of a newly formed company named Dongtai Organic Waste Treatment Company. Dongtai Organic is basically a BOT project, engaged in municipal sludge treatment. Dongtai Organic will operate for the next 20 years.

China Industrial Waste Management, Inc. (“CIWM”) was incorporated in the State of Delaware on August 16, 2005. On September 22, 2005, CIWM acquired 90% of the outstanding shares of Dongtai from its shareholders in exchange for 1,280,000 shares of CIWM common stock, representing 100% of the issued and outstanding common stock of CIWM at the date of the acquisition.

The exchange of shares with Dongtai has been accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of Dongtai obtained control of the combined company. Accordingly, the merger of the two companies was recorded as a recapitalization of Dongtai, with Dongtai being treated as the continuing entity. The historical financial statements presented herein are of Dongtai and subsidiaries. Pro forma financial statements are not presented as the amounts are insignificant.

On November 11, 2005, CIWM and its shareholders entered into a Share Exchange Agreement with the Company, which closed on November 11, 2005. Pursuant to the agreement, the Company acquired all of the outstanding equity stock of CIWM from its shareholders. As consideration for the acquisition of CIWM, the Company issued 64,000 shares of the Company’s Series A Convertible Preferred stock to CIWM’s shareholders. Each share of Series A Convertible Preferred Stock was converted into 100 shares of common stock.

The exchange of shares with the Company was accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of CIWM obtained control of the Company. Accordingly, the merger of the two companies was recorded as a recapitalization of CIWM, with CIWM being treated as the continuing entity. The financial statements of the legal acquiree (the Company) are not significant, therefore, no pro forma financial information is submitted.

The Company incorporated a wholly-owned Delaware company, named “Dalian Acquisition Corp.” in November 2005, which has been renamed as “DonTech Waste Services Inc.”(“DonTech”). In November 2005 a reverse merger transaction was consummated in which a holding corporation which owned 90% of the stock of Dongtai merged into DonTech and the stockholders of the holding company received shares of common stock of CIWT. The holding company had acquired its 90% interest in Dongtai in September 2005 from the stockholders of Dongtai for a purchase price of $2.07 million. The selling stockholders retained a 10% interest in Dongtai.

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On May 12, 2006, the Company changed its name to “China Industrial Waste Management, Inc.” and began trading under a new trading symbol (CIWT). In addition the Company effected a 1:100 reverse split of its outstanding common shares.

On May 15, 2006, the Company issued to 10 stockholders an aggregate of 6,400,000 additional shares of the Company's Common Stock as an equitable adjustment of the number of shares which the Company had agreed to issue to such persons pursuant to a Share Exchange Agreement entered into on November 11, 2005.

2. Basis of Presentation

The accompanying consolidated financial statements include the accounts of China Industrial Waste Management, Inc., a Nevada corporation, its 100% owned subsidiary, DonTech Waste Services Inc., a Delaware corporation, its 90% indirectly owned subsidiary, Dalian Dongtai Industrial Waste Treatment Co., Ltd, a PRC Company, and its 60% indirectly owned subsidiary Liaoyang Dongtai Industrial Waste Treatment Co. Ltd., a PRC company. All material inter-company accounts and transactions have been eliminated in the consolidation.

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). This basis differs from that used in the statutory accounts of the Company, which were prepared in accordance with the accounting principles and relevant financial regulations applicable to enterprises in the PRC. All necessary adjustments have been made to present the financial statements in accordance with US GAAP.

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3. Summary of Significant Accounting Policies

Economic and Political Risks

The Company faces a number of risks and challenges as a result of having primary operations and markets in the PRC. Changing political climates in the PRC could have a significant effect on the Company’s business.

Foreign currency translation

As of March 31, 2007 and 2006, the accounts of the Company were maintained, and the consolidated financial statements were expressed in the Chinese Yuan Renminbi (“RMB”). Such consolidated financial statements were translated into U.S. dollars (“USD”) in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency Translation,” with the RMB as the functional currency. According to the Statement, all assets and liabilities were translated at the exchange rate on the balance sheet date, stockholders’ equity was translated at the historical rates and the statement of operations items were translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, “Reporting Comprehensive Income.”

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and cash on deposit, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts and other receivables

Accounts and other receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed. Allowance for uncollectible accounts as of March 31, 2007 is $20,747.

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Terms of the sales vary from COD through a credit term of up to nine to twelve months. Reserves are recorded primarily on a specific identification basis.

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Advances to suppliers

The Company makes advances to certain vendors for purchase of its material or equipment. The advances to suppliers are interest free and unsecured.

Inventory

Inventories are stated at the lower of cost, as determined on a first-in, first-out basis, or market. Management compares the cost of inventories with the market value, and allowance is made for writing down the inventories to their market value, if lower.

Property, equipment and construction in progress

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:

Buildings	30 Years
Machinery	10 Years
Vehicles	8 Years
Office equipment	5Years

Construction in progress consists of the design expenses, architect fee and cost of the equipment to treat waste.

Long-term investment

Long-term investments are recorded under the equity method. Although we acquired less than 20% equity of the invested company, namely Dongtai Water Recycling, the majority of equity of that company is controlled indirectly by Mr. Dong Jinqing, CEO and CFO of the company.

Asset impairments

We monitor the carrying value of our long-lived assets for potential impairment and test the recoverability of such assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Typical indicators that an asset may be impaired include:

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• A significant decrease in the market price of an asset or asset group;

• A significant adverse change in the extent or manner in which an asset or asset group is being used or in its physical condition;

• A significant adverse change in legal factors or in the business climate that could affect the value of an asset or asset group, including an adverse action or assessment by a regulator;

• An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset;

• Current period operating or cash flow losses combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group; or

• A current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

If any of these or other indicators occurs, the asset is reviewed to determine whether there has been an impairment. An impairment loss is recorded as the difference between the carrying amount and fair value of the asset. If significant events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flow. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value. Fair value is determined by either an internally developed discounted projected cash flow analysis of the asset or asset group or an actual third-party valuation. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, an impairment in the amount of the difference is recorded in the period that the impairment indicator occurs.

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Intangible assets

Intangible assets consist of “Rights to use land and build a plant” for fifty years and “Rights of use landfill” for twenty years. The methods to amortize intangible assets are a fifty year straight-line method and a twenty year straight-line method for landfill. The Company also evaluates intangible assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability of intangible assets, other long-lived assets and, goodwill is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss.

Net intangible assets on March 31, 2007 were $1,530,064 Such assets consist entirely of a right to use land of $1,680,789 less accumulated amortization of $150,725.

Minority interest

Minority interest represents the minority owners’ 10% equity interest in Dalian Dongtai and 40% equity interest in Liaoyang Dongtai.

Fair value of financial instruments

Statements of Financial Accounting Standards No. 107, “Disclosures About Fair Value of Financial Instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Revenue recognition

The Company’s revenue recognition policies are in compliance with Staff Accounting Bulletin (SAB) 104.

Our revenues are generated from the fees we charge for waste collection, transfer, disposal and recycling services and the sale of recycled commodities. The fees charged for our services are generally defined in our service agreements and vary based on contract specific terms such as frequency of service, weight, volume and the general market factors influencing industry’s rates. We generally recognize revenue as services are performed or products are delivered.

Deferred sales consist of contracts for which the fees have been collected but revenue has not yet been recognized in accordance with the revenue recognition policy. As of March 31, 2007 deferred sales amounted to $459,936.

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Advertising costs

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the three months ended March 31, 2007 and 2006 were immaterial.

Stock-based compensation

In December 2004, the FASB issued SFAS No.123(R) which prescribes accounting and reporting standards for all stock based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123(R) requires compensation expense to be recorded using the fair value method.

Income taxes

The Company utilizes SFAS No. 109, “Accounting for Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to realized.

Local PRC income tax

The Company is subject to the PRC Enterprise Income Tax at a rate of 30% percent on its net income. According to a PRC ruling, any joint venture with foreign investment will get special tax exempt treatment for the first two years.

Statement of cash flows

In accordance with Statement of Financial Accounting Standards No. 95, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Basic and diluted net earnings per share

Earnings per share is calculated in accordance with Statement of Financial Accounting Standards No. 128 (“SFAS No. 128), “Earnings Per Share”. Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

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Contingent liabilities

We estimate the amount of potential exposure we may have with respect to claims, assessments and litigation in accordance with SFAS No. 5. We are party to pending or threatened legal proceedings covering a wide range of matters in various jurisdictions. It is not always possible to predict the outcome of litigation, as it is subject to many uncertainties. Additionally, it is not always possible for management to make a meaningful estimate of the potential loss or range of loss associated with such litigation.

3. Shareholders’ equity

On May 15, 2006, the Company issued to 10 stockholders an aggregate of 6,400,000 additional shares of the Company's Common Stock as an equitable adjustment of the number of shares which the Company had agreed to issue to such persons pursuant to an Agreement and Plan of Merger entered into on November 11, 2005.

On June 8, 2006, we issued an aggregate of 80,000 shares of our Common Stock to two consultants pursuant to a Consulting Agreement. Management valued the stock issued at $1.00 per share based on the value of the services to be performed by the consultants under consulting agreement rather than the quoted price of our common stock during a period with little or no trading activity. The Company recorded a contra equity in additional paid-in capital for the value of the consulting services to be received and is amortizing that value as an expense over the five year requisite service period, which is accounted as $4,000 per quarter.

4. Statutory Common Welfare Fund

As stipulated by the Company Law of the People’s Republic of China (“PRC”) as applicable to Chinese companies with foreign ownership, net income after taxation can only be distributed as dividends after appropriation has been made for the following:

a. Making up cumulative prior years’ losses, if any

b. Allocations to the “Statutory surplus reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company’s registered capital;

c. Allocations of 5 -10% of income after tax, as determined under PRC accounting rules and regulations to the Company’s “Statutory common welfare fund”, which is established for the purpose of providing employee facilities and other collective benefits to the Company’s employees; and

d. Allocations to the discretionary surplus reserve, if approved in the shareholders’ general meeting.

5. Current vulnerability due to certain concentrations

The Company’s operations are carried out in the People’s Republic of China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the People’s Republic of China, by the general state of the People’s Republic of China’s economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversions and remittance abroad, and rates and methods of taxation, among other things.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING INFORMATION - Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") includes forward-looking statements. All statements, other than statements of historical facts, included in this MD&A regarding the Company's financial position, business strategy and plans and objectives of management of the Company for future operations are forward-looking statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside of the Company's control that could cause actual results to materially differ from such statements. While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors, especially the timing and magnitude of technological advances; the prospects for future acquisitions; the possibility that a current customer could be acquired or otherwise be affected by a future event that would diminish their waste management requirements; the competition in the waste management industry and the impact of such competition on pricing, revenues and margins; uncertainties surrounding budget reductions or changes in funding priorities of existing government programs and the cost of attracting and retaining highly skilled personnel.

Overview

Historically, the Company engaged in two lines of business: (a) the exploration and development of potential mining properties, and (b) the development, marketing and support of computer software products and services. In September 2004, the Company sold its computer business. Since September 2005, the Company has no longer been in the mining business due to its loss of all its contractual rights in certain mining properties in Spain.

The Company, through its wholly-owned subsidiary, DonTech Waste Services Inc. (formerly, Dalian Acquisition Corp.), a Delaware corporation (“DonTech”), holds 90% of the capital stock of Dalian Dongtai Industrial Waste Treatment Co., Ltd., a corporation located in Dalian, the People’s Republic of China, or PRC (“Dongtai”). As a result of the acquisition, the Company is now engaged in the waste management business, and Dongtai currently represents the primary operations and business of the Company.

Dongtai was one of the first companies specializing in the centralized treatment of industrial waste in the PRC. Dongtai is engaged in the collection, treatment, disposal and recycle of all types of industrial wastes. It provides a wide range of waste treatment services to diversified customers. Dongtai uses industrial waste as a raw material to produce chemical and metallurgy products or incinerates, buries, or treats the waste.

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Dongtai also provides waste disposal solutions, waste transportation services, realty management services and environmental pollution remediation services to its clients.

On March 22, 2006, Dongtai and two other shareholders formed a subsidiary, Liaoyang Dongtai Industrial Waste Treatment Co., Ltd. (“Liaoyang Dongtai”) in the PRC, in which Dongtai holds a 60% ownership interest. Liaoyang Dongtai is also engaged in the collection, treatment, disposal and recycling of industrial waste. It is located in Liaoyang, where there is a concentration of large-scale chemical industrial enterprises. Industrial wastes generated by these enterprises are on the increase and have not, in our opinion, been properly been disposed. We believe that this presents a good business opportunity for the Company to meet this need.

     On March 31, 2006, the Company filed with the Securities and Exchange Commission a definitive information statement on Schedule 14C in which it notified stockholders of its intention to make the following changes:

§ to change the name of the Company to China Industrial Waste Management Inc. and apply for a new trading symbol of CIWT.OB.

§ to authorize the Board of Directors to effect a one-for-one hundred (1:100) reverse stock split of the outstanding shares of Common Stock (the "Reverse Split").

§ to approve the Company's 2006 Equity Incentive Plan.

The name change and the reverse stock split became effective on May 12, 2006.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes appear elsewhere in this quarterly report.

Three Months Ended March 31, 2007 compared to the Three Months Ended March 31, 2006

 We generate revenue primarily from two sources, namely, fees charged to customers for waste collection, transfer, recycling and disposal services and that from the sale of recycled materials. We consider our collection and disposal operations and reclamation of reusable substances as our core business.

Revenues. The Company had $1,682,972 in revenues for the three months ended March 31, 2007, an increase of $131,535 or 8.47% over the Company’s revenues of $1,551,437 for the three months ended March 31, 2006. The increase in the three months ended March 31, 2007 is attributable to an increase in sales of recycled material.

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Cost of Revenues. The Company had cost of sales of $495,317 for the three months ended March 31, 2007, an increase of $56,539 or 12.89% compared to cost of sales of $438,778 for the three months ended March 31, 2006. The increase in the three months ended March 31, 2007 is attributable to the increase in revenue for the first quarter in 2007.

Total Operating Expenses. Total operating expenses for the three months ended March 31, 2007 increased by $14,885 or 3.67% to $421,401 from $406,516 for the three months ended March 31, 2006, a increase of 3.67%. The increase in operating expenses was principally attributable to increased selling expenses as the Company expanded its operation locally as well as in areas outside of the city of Dalian, China.

 Foreign Currency Translation. Foreign currency translation adjustments for the three months ended March 31, 2007 decreased to $(52,178) from $81,826 for the three months ended March 31, 2006. This fluctuation is attributable to the revaluation of the Chinese currency against U.S .dollar.  

Net Income. Net income for the three months ended March 31, 2007 increased by $57,421 to $692,918 from $635,497 for the three months ended March 31, 2006, an increase of 9%. This increase is principally attributable to the increase in revenues for the Company in the 2007 quarter.  

Liquidity and Capital Resources. We have financed our operations and met capital expenditure requirements primarily through cash provided by operating activities, trade credit and equity financing.

As of March 31, 2007, the Company had cash and cash equivalents of $3,626,913, as compared to $5,660,698 at December 31, 2006. As of March 31, 2007, the Company had working capital of $3,890,991, as compared to $6,109,054 as of December 31, 2006.

Net cash provided by operating activities totaled $417,008 for the three months ended March 31, 2007, as compared to cash provided by the operations of $607,339 for the three months ended March 31, 2006.

We intend to use our available funds as working capital and to develop our current lines of business. We believe that our available funds will provide us with sufficient capital for at least the next twelve months; however, to the extent that we make acquisitions, we may require additional capital for the acquisition or for the operation of the combined companies. We cannot assure that such funding will be available.

Critical Accounting Policies. We have disclosed in Note 3 to our financial statements those accounting policies that we consider to be significant in determining our results of operations and our financial position which are incorporated by reference herein.

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The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We evaluate our estimates, including those related to bad debts, inventories and warranty obligations, on an ongoing basis. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. The actual results may differ from these estimates under different assumptions or conditions.

The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Revenue Recognition. Revenue is recognized when services are rendered to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred sales.

Property, Plant and Equipment. Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are required or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.

Bad Debts.  The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Terms of the sales vary from COD through a credit term of up to nine to twelve months. Reserves are recorded primarily on a specific identification basis.

OFF-BALANCE SHEET ARRANGEMENTS Neither the Company nor any of its subsidiaries have engaged in any off-balance sheet transactions since its inception.

Item 3.Controls and Procedures.

At the conclusion of the period ended March 31, 2007, we carried out an evaluation, under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chairman and Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in alerting them in a timely manner to information relating to the Company required to be disclosed in this report. There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter or any subsequent interim period that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

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PART II

Item 1. Legal Proceedings.

In the three months ended March 31, 2007 there were no material developments in any of the matters disclosed in Item 3 of the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.Defaults Upon Senior Securities.

None.

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

None.

Item 5.Other Information.

None.

Item 6. Exhibits

(a) Exhibits

31.1 - Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 - Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.

	CHINA INDUSTRIAL WASTE MANAGEMENT INC.
Date: May 17, 2007	By:	/s/ Dong Jinqing
		Dong Jinqing Chief Executive Officer

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