China Industrial Waste Management (CIWT) 10QSB 2007 Q2 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 JUNE 30, 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 OF INCORPORATION OR ORGANIZATION)	(I.R.S. EMPLOYER  IDENTIFICATION NO.)

                                                                                                                              & #160;                                                                                  

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

Darren Ofsink, Esq.

Guzov Ofsink, LLC

600 Madison Avenue, 14^th Floor

New York, New York 10022

__________________________________

Agent Contact Information

Agent’s Telephone number: 212-371-8008

           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 June 30, 2007 was 13,220,843.

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

CHINA INDUSTRIAL WASTE MANAGEMENT,  INC.

INDEX TO JUNE 30, 2007 FORM 10-QSB

	Page
Part I - Financial Information	3
Item 1 - Financial Statements	3
Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006 (unaudited)	3
Consolidated  Statements of  Operations and Comprehensive Income  for the three and six months ended June 30, 2007 and June 30, 2006 (unaudited)	4
Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and June 30, 2006 (unaudited)	5
Notes to the Consolidated Financial Statements (unaudited)	6
Item 2 - Management's Discussion and Analysis or Plan of  Operation	18
Item 3 - Controls and Procedures	22
Part II - Other Information	23
Item 1 - Legal Proceedings	23
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3 - Defaults Upon Senior Securities	23
Item 4 -  Submission of Matters to a Vote of Security Holders	23
Item 5 - Other Information	23
Item 6 - Exhibits	23
Signature Page	24

2

PART I.                      FINANCIAL INFORMATION

Item 1.                      Financial Statements

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. dollars)
	June 30,			December 31,
	2007			2006
	(Unaudited)			Unaudited and Restated
ASSETS
Current assets
Cash and cash equivalents	$	4,833,691		$	5,713,925
Trade accounts receivable, net		302,209			151,144
Other receivables		36,604			35,999
Inventory		894,347			602,944
Advances to suppliers		11,272			374,046
Deferred expense		43,658			20,490
Total current assets		6,121,781			6,898,548
Investment		1,617,753			322,717
Property, plant & equipment		4,371,273			4,189,517
Less: Accumulated depreciation		(1,762,203	)		(1,502,899	)
Net property, plant and equipment		2,609,070			2,686,618
Construction in progress		1,904,880			202,974
Land usage right, net of accumulated amortization		1,544,835			1,524,319
Related party Receivable		479,250			231,793
Total assets	$	14,277,569		$	11,866,969
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	356,907		$	92,255
Tax payable		5,135			6,346
Deferred Sales		467,105			455,548
Accrued expenses		494,423			15,768
Other payable		140,576			283,981
Total current liabilities		1,464,146			853,898
Asset retirement obligation		405,657			381,873
Total liabilities		1,869,803			1,235,771
Minority interest in subsidiary		1,260,545			1,083,022
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		1,960,634			1,952,634
Other comprehensive income		605,720			381,579
Retained earnings		8,567,646			7,200,742
Total stockholders' equity		11,147,221			9,548,176
Total liabilities and stockholders' equity	$	14,277,569		$	11,866,969

See Notes to Consolidated Financial Statements.

3

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In U.S. dollars)
(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
				Restated						Restated
Operating revenue	$	2,464,263		$	1,485,653		$	4,147,235		$	3,037,090
Costs of revenue (including depreciation)		853,677			537,717			1,363,445			978,605
Gross profit		1,610,586			947,936			2,783,790			2,058,485
Operating expenses
Selling expenses		277,783			76,601			482,024			230,080
General and administrative expenses		579,847			290,327			797,007			543,364
Total operating expenses		857,630			366,928			1,279,031			773,444
Income from operations		752,956			581,008			1,504,759			1,285,041
Other income(expense)
Interest income		9,085			-			11,889			-
Other income		1,118			57,389			1,486			57,389
Other expense		(26	)		(1,416	)		(53	)		(1,451	)
Total other income (expense)		10,177			55,973			13,322			55,938
Net income before minority interest and income tax		763,133			636,981			1,518,081			1,340,979
Income tax (benefit)		-			-			-			-
Net income after income tax		763,133			636,981			1,518,081			1,340,979
Minority interest		76,141			62,564			151,177			132,964
Net income	$	686,992		$	574,417		$	1,366,904		$	1,208,015
Foreign currency translation adjustment		165,373			19,353			224,141			101,195
Comprehensive income	$	852,365		$	593,770		$	1,591,045		$	1,309,210
Basic weighted average shares outstanding		13,220,843			12,948,151			13,220,843			12,947,709
Diluted weighted average shares outstanding		13,220,843			12,948,151			13,220,843			12,947,709
Basic and diluted net earnings per share	$	0.05		$	0.04		$	0.10		$	0.09

See Notes to Consolidated Financial Statements.

4

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars)
(Unaudited)
	Six Months Ended June 30,
	2007			2006
				Restated
Cash flows from operating activities:
Net income	$	1,366,904		$	1,208,015
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest		151,177			132,964
Depreciation		218,250			162,280
Amortization		17,915			17,212
Bad debt allowance		-			-
Stock issued for services		8,000			-
Accretion expenses		13,910			12,491
Changes in operating assets and liabilities:
Accounts receivable		(36,476	)		(106,083	)
Inventory		(272,455	)		(19,753	)
Other receivables		(148,646	)		81,090
Advance to suppliers		(9,138	)		(285	)
Prepaid expense		(22,349	)		500
Accrued expense		471,927			70,909
Accounts payable & other payables		111,217			(78,445	)
Tax payable		(1,354	)		24,998
Net cash provided by operating activities		1,868,882			1,505,893
Cash flows from investing activiies
Equity investment		(1,269,825	)		(35,233	)
Purchase of property and equipment		(74,472	)		(175,552	)
Construction contracts		(1,297,834	)		(343,238	)
Due from related party		(239,625	)		-
Proceeds on sale of equity investments		-			-
Net cash used in investing activities		(2,881,756	)		(554,023	)
Cash flows from financing activities
Net cash used in financing activities		-			-
Effect of exchange rate on cash		132,640			31,853
Net increase (decrease) in cash and cash equivalents		(880,234	)		983,723
Cash and cash equivalents, beginning of period		5,713,925			2,944,179
Cash and cash equivalents, end of period	$	4,833,691		$	3,927,902
Supplemental cash flow information:
Cash paid during the year for:
Interest	$	-		$	-
Income taxes		-			-

See Notes to Consolidated Financial Statements.

5

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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 six months ended June 30, 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 incorporated on November 12, 2003 and formerly known as Goldtech Mining Corporation  (the “Company”), its 100% owned subsidiary, DonTech Waste Services, a Delaware corporation incorporated in November 2005 (“DonTech”), and its indirect majority owned subsidiaries, Dalian Dongtai Industrial Waste Treatment Co. Ltd. (“Dongtai”) and Liaoyang Dongtai Industrial Waste Treatment Co. Ltd. (“Liaoyang Dongtai”).

Dongtai was incorporated on January 9, 1991 in the People’s Republic of China (“PRC”). As of June 30, 2007 Dongtai has three subsidiaries - Liaoyang Dongtai, Dongtai Water Recycling Company (“Dongtai Water”) and Dongtai Organic Waste Treatment Company (“Dongtai Organic”), each of which was formed under the laws of the PRC. Dongtai is located in the Economic and Technology Development Zone, Dalian, PRC. Dongtai is engaged in the collection, treatment, disposal and recycling of industrial waste in China. Dongtai 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, PRC and is engaged in the business of the collection, treatment, disposal and recycling of industrial wastes.

6

Dongtai Water was incorporated in July 2006. As of June 30, 2007 Dongtai had acquired 18% of the equity of such company. On July 16, 2007 Dongtai purchased an additional 62% of the equity of Dongtai Water. 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 49% of the equity of Dongtai Organic, a newly formed company which is also a BOT project, engaged in municipal sludge treatment in Dalian. Dongtai Organic will operate for the next 20 years.

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.

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 June 30, 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.”

7

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 June 30, 2007 and December 31, 2006 is $21,071 and $20,550, respectively.

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.

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

8

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	5 Years

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

Landfills

Cost Basis of Landfill Assets — We capitalize various costs that we incur to make a landfill ready to accept waste. These costs generally include expenditures for land,  permitting, excavation, liner material and installation and other capital infrastructure costs. The cost basis of our landfill assets also includes estimates of future costs associated with landfill final capping, closure and post-closure activities in accordance with SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”) and its Interpretations.

Interest accretion on final capping, closure and post-closure liabilities is recorded using the effective interest method and is recorded as accretion expense, which is included our Consolidated Statements of Operations.

Amortization of Landfill Assets — The amortizable basis of a landfill includes (i) amounts previously expended and capitalized; (ii) capitalized landfill final capping, closure and post-closure costs; (iii) projections of future purchase and development costs required to develop the landfill site to its remaining permitted and expansion capacity; and (iv) projected asset retirement costs related to landfill final capping, closure and post-closure activities.

Amortization is recorded on a units-of-consumption basis, applying cost as a rate per ton. The rate per ton is calculated by dividing each component of the amortizable basis of a landfill by the number of tons needed to fill the corresponding asset’s airspace.

Liabilities for landfill and environmental remediation costs are presented in the table below:

	As of
	June 30, 2007		December 31, 2006
Long-term	$	405,657		381,873

Long-term investment

9

Invested company	Equity acquired		Balance as of  June 30, 2007		Balance as of December 31, 2006
Dongtai Water		20%	$	330,904	$	322,717
Dongtai Organic		49%		1,286,849		0
Total				1,617,753		322,717

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

Dongtai Water, is constructing and will operate a municipal sewage treatment facility in Dalian, PRC and Dongtai Organic is constructing and will operate a sludge treatment and disposal facility in Dalian, PRC.

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:

• 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.

10

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. 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 June 30, 2007 were $1,544,835. Such assets consist entirely of a right to use land of $1,706,987, less accumulated amortization of $162,152.

Minority interest

Minority interest represents the minority owners’ 10% equity interest in 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.

11

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 June 30, 2007 and December 31, 2006 deferred sales amounted to $467,105 and $455,548, respectively.

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 six months ended June 30, 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.

12

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.

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.

4. New accounting pronouncement

SFAS No. 157 — Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 will be effective for the Company beginning January 1, 2008. We are currently in the process of assessing the provisions of SFAS No. 157 and determining how this framework for measuring fair value will affect our current accounting policies and procedures and our financial statements.

5. Restatements

During the preparation of the financial statements for three and six months ended June 30, 2007, the Company received a comment letter from the Office of the Chief Accountant of the Division of Corporation Finance of Securities and Exchange Commission regarding certain disclosures in the Company’s previously filed periodic reports. The Company determined that its asset retirement obligations (“ARO”) had not been properly accounted for and also that its  subsidiary, Liaoyang Dongtai, had not been consolidated while preparing the Company’s consolidated financial statements in accordance with GAAP contained in such reports.  The Company has therefore restated its consolidated balance sheet as of December 31, 2006, its consolidated statements of income for the three and six months ended June 30, 2006 and its consolidated statement of cash flows for the six months ended June 30, 2006. The effects of the restatements are shown in the following tables.

13

Balance Sheet

	Original			Restated
	December 31,
	2006			2006
Current assets
Cash and cash equivalents	$	5,660,698		$	5,713,925
Trade accounts receivable		151,144			151,144
Other receivables		50,789			35,999
Inventory		602,582			602,944
Advances to suppliers		374,046			374,046
Deferred expense		20,490			20,490
Total current assets		6,859,749			6,898,548
Investment		361,136			322,717
Property, plant & equipment		3,927,234			4,189,517
Less: Accumulated depreciation		(1,487,340	)		(1,502,899	)
Net property, plant and equipment		2,439,894			2,686,618
Construction in progress		202,974			202,974
Land usage right, net of accumulated amortization		1,524,319			1,524,319
Related party Receivable		231,793			231,793
Total assets	$	11,619,865		$	11,866,969
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	92,255		$	92,255
Tax payable		6,346			6,346
Deferred Sales		455,548			455,548
Accrued expenses		15,410			15,768
Other payable		181,136			283,981
Total current liabilities		750,695			853,898
Long-term debt
ARO liability		-			381,873
Total liabilities		750,695			1,235,771
Minority interest in subsidiary		1,086,917			1,083,022
Stockholders' equity
Common stock		13,221			13,221
Additional paid-in capital		1,952,634			1,952,634
Other comprehensive income		478,500			381,579
Retained earnings		7,337,898			7,200,742
Total stockholders' equity		9,782,253			9,548,176
Total liabilities and stockholders' equity	$	11,619,865		$	11,866,969

As a result of the restatement of the consolidated balance sheet as of December 31, 2006, total assets as of December 31, 2006 increased from $11,619,865, as originally reported, to $11,866,969, an increase of $247,104. The increase in total assets was mostly a result of a $246,724 increase in net property, plant and equipment resulting from the change in accounting for ARO liabilities pertaining to the Company’s landfill. Stockholders' equity as of December 31, 2006 decreased from $9,782,253, as originally reported, to $9,548,176, a decrease of $234,077. Minority interest in subsidiary decreased by $3,895, from $1,086,917 to $1,083,022.

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Income Statements

	Original			Restated
	For Three Months Ended June 30,
	2006			2006
Revenue	$	1,485,653		$	1,485,653
Costs of revenue (including depreciation)		521,620			537,717
Gross profit		964,033			947,936
Operating expenses
Selling expenses		76,601			76,601
General and administrative expenses		290,327			290,327
Total operating expenses		366,928			366,928
Income from operations		597,105			581,008
Other income (expense)
Other income		57,389			57,389
Other expense		(1,416	)		(1,416	)
Total other income (expense)		55,973			55,973
Net income before minority interest and income tax		653,078			636,981
Income tax (benefit)		-			-
Net income after income tax		653,078			636,981
Minority interest		64,174			62,564
Net income	$	588,904		$	574,417
Foreign currency translation adjustment		19,258			19,353
Comprehensive income	$	608,162		$	593,770
Basic and diluted weighted average shares   outstanding		12,948,151			12,948,151
Basic and diluted net earnings per share		0.04		$	0.04

As a result of the restatement, net income for the three months ended June 30, 2006 decreased by $14,487 from $588,904, as originally reported, to $574,417, comprised of a $16,097 increase in cost of goods and a $1,610 decrease in minority interest.

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	Original			Restated
	For Six Months Ended June 30,
	2006			2006
Revenue	$	3,037,090		$	3,037,090
Costs of revenue (including depreciation)		960,398			978,605
Gross profit		2,076,692			2,058,485
Operating expenses
Selling expenses		230,080			230,080
General and administrative expenses		543,364			543,364
Total operating expenses		773,444			773,444
Income from operations		1,303,248			1,285,041
Other income (expense)
Other income		57,389			57,389
Other expense		(1,451	)		(1,451	)
Total other income (expense)		55,938			55,938
Net income before minority interest and income tax		1,359,186			1,340,979
Income tax (benefit)		-			-
Net income after income tax		1,359,186			1,340,979
Minority interest		134,785			132,964
Net income	$	1,224,401		$	1,208,015
Foreign currency translation adjustment		101,084			101,195
Comprehensive income	$	1,325,485		$	1,309,210
Basic and diluted weighted average shares   outstanding		12,947,709			12,947,709
Basic and diluted net earnings per share		0.09		$	0.09

As a result of the restatement, net income for the six months ended June 30, 2006 decreased from $1,224,401, as originally reported, to $1,208,015, a decrease of $16,386, comprised of a $18,207 increase in cost of goods and a $1,821 decrease in minority interest.

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Statement of Cash Flows

	Original			Restated
	For Six Months Ended June 30,
	2006			2006
Cash flows from operating activities:
Net income	$	1,224,401		$	1,208,015
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest		134,785			132,964
Depreciation		142,536			162,280
Amortization		17,890			17,212
Accretion expenses		-			12,491
Changes in operating assets and liabilities:
Accounts receivable		(108,698	)		(106,083	)
Inventory		(24,033	)		(19,753	)
Other receivables		4,278			81,090
Advance to suppliers		(148,136	)		(285	)
Prepaid expense		(16,421	)		500
Accrued expense		-			70,909
Accounts payable & other payables		60,735			(78,445	)
Tax payable		-			24,998
Net cash provided by operating activities		1,287,337			1,505,893
Cash flows from investing activities
Equity investment		-			(35,233	)
Purchase of property and equipment		(430,962	)		(175,552	)
Construction contracts		-			(343,238	)
Net cash used in investing activities		(430,962	)		(554,023	)
Cash flows from financing activities
Net cash provided by financing activities		23,598			-
Effect of exchange rate on cash		101,084			31,853
Net increase in cash and cash equivalents		981,057			983,723
Cash and cash equivalents, beginning of period		2,944,179			2,944,179
Cash and cash equivalents, end of period	$	3,927,902		$	3,927,902

As a result of the restatement, net cash provided by operating activities for the six months ended June 30, 2006 increased by $218,566 from $1,287,337 as originally reported, to $1,505,893; and net cash used in investing activities increased by $123,061 from $430,962, as originally reported, to $554,023.

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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.

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

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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.

Six Months and Three Months Ended June 30, 2007 Compared to the Six Months and Three Months Ended June 30, 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’s operating revenues for the three and six months ended June 30, 2007 were $2,464,263 and $4,147,235, respectively, compared with $1,485,653 and $3,037,090 for the three and six months ended June 30, 2006, respectively.

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2007	2006	2007	2006
Service fees	1,031,021	676,835	1,868,084	1,717,993
Sales of cupric sulfate	561,859	178,917	950,192	471,376
Sales of other recycled commodities	871,383	629,901	1,328,959	847,721
Total	2,464,263	1,485,653	4,147,235	3,037,090

The increase in revenues in both the three and six months ended June 30, 2007 compared to the same period in 2006, is primarily attributable to a 72.8% increase in sales of recycled products compared with the same period in 2006, which included a 101.6% increase in sales of cupric sulfate as a result of both higher unit prices and greater volume and a 64.3% increase in sales of other recycled products.

Revenues from service fees increased by 8.7% for the six months ended June 30, 2007 as compared to the six months ended June 30, 2006.  Revenues from service fees for the three months ended June 30, 2007 increased by $354,186 or 52.3% over the comparable period in 2006. The increases in revenues  from service fees during the three and six months ended June 30, 2007 over the comparable periods in 2006 resulted from an increase in the number of our customers for waste processing services and increased demand for our services from existing customers.  However,  for the six months ended June 30, 2007, a  19.6 % decline of $204,094 in service fees in the three months ended  March 31, 2007, compared with the same period in 2006 partially offset the strong increase in service fees   in the second quarter of 2007 compared with the same period in 2006.

Cost of Revenues.

The Company’s cost of revenues for the three and six months ended June 30, 2007 were $853,677 and $1,363,445, respectively, compared with $537,717 and $978,605 for the three and six months ended June 30, 2006, respectively.

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2007	2006	2007	2006
Cost of service fees	354,530	266,591	583,148	445,356
Cost of cupric sulfate	168,454	41,290	265,751	154,052
Cost of other recycled commodities	330,693	229,836	514,546	379,197
Total	853,677	537,717	1,363,445	978,605

The cost of service fees increased by $137,792 or 30.9% for the six months ended June 30, 2007 compared to the six months ended June 30, 2006 and by $87,939 or 33.0% for the three months ended June 30, 2007 compared to the three months ended June 30, 2006 as the Company paid more in salaries to additional staff hired to accommodate the rapid expansion of our business. Likewise, the Company had to procure more vehicles to service increased demand which triggered an increase in depreciation, expenditures on reparations and other expenses relating to shipping. Meanwhile, the Company also leased more facilities to conduct its growing operations.

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The cost of reclaimed products (which includes cost of cupric sulfate and cost of other recycled commodities) for both the three and six months ended June 30, 2007 increased by

84.1% and 46.3%, respectively, compared with the same periods in 2006. Such increase is attributable to a sharp increase in the price of  raw materials.

Selling Expenses.

Total selling expenses for the six months ended June 30, 2007 increased by 109.5% over such expenses for the six months ended June 30, 2006 and rose by 263% for the three months ended June 30, 2007 compared with the same period in 2006. The increases in selling expenses were principally attributable to increased sales related tax accruals relating to our increased revenue and also increased depreciation expense and freight charges due to the increase in our depreciable assets and the expansion of our business.

General and Administrative Expenses.

In comparison with the same period in 2006, the general and administrative expenses for the three and six months ended June 30, 2007 increased by 99.7% and 46.7%, respectively, principally as a result of an increase in bonuses and salaries paid to our employees. Payroll increased by 57.7% compared with the six months ended June 30, 2006 whereas depreciation increased by 42.9% caused by the increase in other fixed assets. The increase in general and administrative expenses for the three months ended June 30, 2007 compared to the three months ended June 30, 2006 was due to accrued  bonuses for our employees being recorded on June 30, 2007.

Cash Flow.

	Six months ended June 30, 2007			Six months ended June 30, 2006
Net cash provided by operating activities	$	1,868,882		$	1,505,893
Net cash used in investing activities		(2,881,756	)		(554,023	)
Cash flows from financing activities		--			--

Net cash provided by operating activities

 Net cash provided by operating activities in the six months ended June 30, 2007 increased by $362,989 or 24.1% over the net cash provided by operating activities for the six months ended June 30, 2006.

The principal reasons for the increase in 2007 were a $401,008 increase in accrued expenses, a $189,662 increase in accounts payable and other payables and a $158,889 increase in net income in 2007 which were partially offset by an increase in inventory of $252,702 in 2007.

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Net cash used in investing activities

Net cash used in investing activities for the six months ended June 30, 2007 increased by $2,327,733, or 420.2% in the six months ended June 30, 2007 as compared to the same period in 2006.

In 2007 the Company invested in Dalian Dongtai Organic Waste Treatment Co., Ltd.  and increased expenses on upgrades of existing facilities. In 2007 the Company also invested in and formed Dalian Dongtai Organic Waste Treatment Co., Ltd. to pursue its long term plan.

The balance due from related party, namely Bofa, increased by $239,625 , contributing to the increase in cash outflow in the first half of 2007. Bofa’s business of selling products recycled by the Company is expanding quickly, as a result of more available products to be sold compared with the same period in 2006.

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.

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.

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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 June 30, 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 June 30, 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: September 19, 2007	By:	/s/ Dong Jinqing
		Dong Jinqing
		Chief Executive Officer

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