China Industrial Waste Management 10QSB/A 2007 Q1 Quarterly report (small business) (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB/A

(Amendment No. 1)

(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

o	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	(I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)	IDENTIFICATION NO.)

c/o Dalian Dongtai Industrial Waste Treatment Co., Ltd
No. 1 Huaihe West Road E-T-D-Zone, Dalian, China	116600
(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 o.

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

The 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 o No x.

EXPLANATORY NOTE

China Industrial Waste Management, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-QSB/A to its Quarterly Report on Form 10-QSB for the three months ended March 31, 2007, as filed with the Securities and Exchange Commission on May 17, 2007, solely to (a) amend and restate in its entirety Part II, Item 2. Management’s Discussion and Analysis or Plan of Operation and restate the financial statements of the Company as of March 31, 2007 and the three months then ended and (b) file as exhibits hereto currently dated certifications from our Principal Executive and Principal Financial Officer. Only the amended Item, financial statements and updated exhibits are being filed herewith. The restatement of the financial statements includes adjustments to the Company’s landfill related asset retirement obligations (“ARO”) and the consolidation of the Company’s subsidiary, Liaoyang Dongtai Industrial Waste Treatment Co., Ltd.., which was not consolidated in the financial statements of the Company and its subsidiaries filed with the original Quarterly Report on Form 10-KQB for the three months ended March 31, 2007 filed on May 17, 2007. These changes impacted previously reported net income, net income per share, total assets, total liabilities, shareholders' equity, and cash flows. No other changes are being effected by this filing. Therefore, information not affected by this amendment is unchanged and reflects the disclosures made at the time of the original filing.

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)
	Restated			Restated
ASSETS
Current assets
Cash and cash equivalents	$	3,626,913		$	5,713,925
Trade accounts receivable, net		258,823			151,144
Other receivables		13,091			35,999
Inventory		774,326			602,944
Advances to suppliers		3,901			374,046
Deferred expense		40,142			20,490
Tax receivable		6,398			-

Total current assets		4,723,594			6,898,548

Investment		1,592,925			322,717
Property, plant & equipment		4,250,965			4,189,517
Less: Accumulated depreciation		(1,631,047	)		(1,502,899	)
Net property, plant and equipment		2,619,918			2,686,618
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	$	12,681,196		$	11,866,969

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			15,768
Other payable		118,722			283,981
Total current liabilities		832,603			853,898

Asset retirement obligation liability for landfills		392,492			381,873
Total liabilities		1,225,095			1,235,771

Minority interest in subsidiary		1,165,245			1,083,022

Stockholders' equity
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		440,347			381,579
Retained earnings		7,880,654			7,200,742
Total stockholders' equity		10,290,856			9,548,176

Total liabilities and stockholders' equity	$	12,681,196		$	11,866,969

See notes to Consolidated Financial Statements.

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In U.S. dollars)

(Unaudited)

	For Three Months Ended March 31,
	2007			2006
	Restated			Restated
Revenue	$	1,682,972		$	1,551,437
Costs of revenue (including depreciation)		509,768			440,888
Gross profit		1,173,204			1,110,549

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		751,803			704,033

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		754,948			703,998

Income tax (benefit)		-			-

Net income after income tax		754,948			703,998

Minority interest		75,036			70,400

Net income	$	679,912		$	633,598

Foreign currency translation adjustment		58,768			81,842

Comprehensive income	$	738,680		$	715,440

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.

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. dollars)

	2007			2006
	Restated			Restated
Cash flows from operating activities:
Net income	$	679,912		$	633,598
Adjustments to reconcile net income to net cash
provided by operating activities:
Minority interest		75,036			70,400
Depreciation and Amortization		122,186			81,993
Stock issued for services		4,000			-
Accretion expenses		6,916			6,225

Changes in operating assets and liabilities:
Accounts receivable		(105,857	)		(157,391	)
Inventory		(165,004	)		(3,862	)
Other receivables		23,175			62,157
Advances to suppliers		(1,843	)		(333	)
Deferred expense		(19,388	)		10,201
Accounts payable and other payables		(24,598	)		(158,110	)
Accrued expense and deferred sales		1,565			-
Tax payable		(12,761	)		53,695
Net cash provided by operating activities		583,339			598,573

Cash flows from investing activiies
Investment in subsidiary		(1,262,735	)		(37,297	)
Purchase of property and equipment		(21,019	)		(155,427	)
Construction contracts		(1,266,472	)		(279,960	)
Advances to related party		(128,851	)		-
Repayment of advances to related party		-			34,811
Net cash used in investing activities		(2,679,077	)		(437,873	)

Cash flows from financing activities
Net cash provided by financing activities		-			-

Effect of exchange rate on cash		8,726			23,961

Net increase (decrease) in cash and cash equivalents		(2,087,012	)		184,661

Cash and cash equivalents, beginning of period		5,713,925			2,944,179
Cash and cash equivalents, end of period	$	3,626,913		$	3,128,840

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	-		$	-
Income taxes		-			-
Non-cash investing and financing activities:
Stock issued for services		4,000			-

See notes to Consolidated Financial Statements.

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/A 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.

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 49% of the equity of a newly formed company named Dongtai Organic Waste Treatment Company. Dongtai Organic is a BOT project, engaged in municipal sludge treatment. 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 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.

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	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 in 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
	March 31, 2007		December 31, 2006
Asset retirement obligation liability for landfills	$	392,492		381,873

Long-term investment

Invested company	Equity acquired			Balance as of March 31, 2007		Balance as of December 31, 2006
Dongtai Water		18	%	$	325,826	$	322,717
Dongtai Organic		49	%		1,267,099		0
Total					1,592,925		322,717

Long-term investments are recorded under the equity method.

Dongtai Water Recycling Company was incorporated on July, 2006. Dongtai acquired 18% of the equity in such company. Dongtai Water Recycling is a Build-Operate-Transfer (BOT) project, designed to process polluted water generated by the city of Dalian. Though the Company acquired less than 20% equity interest of Dongtai Water Recycling Company as of March 31, 2007, the other 82% equity interest of the invested company was held as of March 31, 2007 by Lida Environment Engineering Company, which is controlled by Mr. Dong Jinqing, CEO and CFO of the Company. In accordance with US GAAP, the equity method of accounting for the acquisition has been applied.

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.

Intangible assets

Intangible assets consist of “Rights to use land and build a plant” for fifty years. The intangible assets are amortized straight-line over fifty years.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 two sources, namely, service fees we charge for waste collection, transfer, disposal and recycling services and our sale of recycled commodities.

1. Recognition of service fees as revenue

Before waste treatment services are rendered, the Company will enter into agreements with its customers which explicitly express the scope of the Company’s services, the types of wastes to be treated, the method of treatment to be applied, the Company’s fees rates and form of settlement and other rights and obligations of the parties.

Once an agreement with a customer takes effect, the Company conducts the treatment activities described in the agreement, such as collection and transfer, which activities are observed and confirmed by the Company’s client. Both parties will sign a note, acknowledging that the wastes have been delivered to the Company’s working site for further treatment.

The fees charged by the Company for its services are then determined by multiplying the fee rate defined in the agreement by the customer confirmed waste amount delivered to the Company’s plant for treatment. The bill for the services will be sent to the client, indicating the fees due. After sending out the invoice, the company will recognize the fees as revenue.

Deferred sales refer to those for which fees have been collected, but for which the related treatment and disposal services have not been completely performed. The Company uses the fee rate and the amount of waste not treated to calculate the deferred sales. At March 31, 2007 deferred sales amounted to $459,936.

2. Recognition of revenues from reclaimed products

The Company also enters into agreements with customers who need reclaimed products that the Company generates from the waste treatment process. The parties usually settle the price in the agreement and make adjustments in case the market price of the reclaimed product fluctuates significantly between contract signing and delivery. After the products are delivered to customers, the Company issues an invoice to purchasers and identifies all contents and details concerning sales. The buyer then either can pay the full invoiced amount or promise to make payment over time. In the latter case, the Company also recognizes upon invoicing the amount due as revenues of reclaimed product.

Costs of revenue

The costs of revenue fall into two categories -costs of service fees charged for services and costs of revenue from reclaimed products.

The costs of service fees refer to the production expenses incurred by the Company’s departments providing waste disposal services, which include the waste disassembly department, waste solvent recovery department, industrial waste water treatment department, waste storage, sorting and burning department, dangerous waste filling and burying department and common industrial waste filling and burying department. The costs include the direct labor cost, direct material and depreciation expenses and other miscellaneous expenses incurred by the foregoing departments.

The Company’s reclaimed products can be divided into main two categories - products reclaimed by sophisticated production means and at great expense in terms of labor, energy , depreciation; and products reclaimed by simpler means such as manual sorting. For the former, the costs of revenue from reclaimed products includes the copper sulfate and alloy cost sold, which consist of the purchase cost of wastes as raw materials, as well as the direct labor cost, depreciation expenses, and other expenses incurred by the Company. For the latter, the costs of revenue includes the cost of units recycled and sold, consisting of the purchase cost of wastes used for recycling.

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 be 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.

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.

6. 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 March 31, 2007 and 2006, its consolidated statements of income for three months ended March 31, 2007 and March 31, 2006 and its consolidated statement of cash flows for three months ended March 31, 2007 and March 31, 2006. The effects of the restatements are shown in the following tables.

Balance Sheet

	Original			Restated
	March 31,
	2007			2007
ITEMS
Current assets
Cash and cash equivalents	$	3,626,913		$	3,626,913
Trade accounts receivable		258,823			258,823
Other receivables		13,091			13,091
Inventory		774,326			774,326
Advances to suppliers		3,901			3,901
Deferred expense		40,142			40,142
Tax receivable		6,398			6,398

Total current assets		4,723,594			4,723,594

Investment		1,592,925			1,592,925
Property, plant & equipment		3,986,672			4,250,965
Less: Accumulated depreciation		(1,607,983	)		(1,631,047	)
Net property, plant and equipment		2,378,689			2,619,918
Construction in progress		1,851,374			1,851,374
Land usage right, net of accumulated amortization		1,530,064			1,530,064
Related party Receivable		363,321			363,321

Total assets	$	12,439,967		$	12,681,196

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	236,455		$	236,455
Tax payable		-			-
Deferred Sales		459,936			459,936
Accrued expenses		17,490			17,490
Other payable		118,722			118,722
Total current liabilities		832,603			832,603

Long-term debt
Asset retirement obligation liability for landfills		-			392,492

Total liabilities		832,603			1,225,095

Minority interest in subsidiary		1,180,371			1,165,245

Stockholders' equity
Common stock: par value $.001; 90,000,000 shares authorized; 13,220,843 shares issued and outstanding		13,221			13,221
Additional paid-in capital		1,956,634			1,956,634
Other comprehensive income		426,322			440,347
Retained earnings		8,030,816			7,880,654
Total stockholders' equity		10,426,993			10,290,856

Total liabilities and stockholders' equity	$	12,439,967		$	12,681,196

As a result of the restatement of the consolidated balance sheet as of March 31, 2007, total assets as of March 31, 2007 increased from $12,439,967, as originally reported, to $12,681,196, an increase of $241,229. The increase in total assets was mostly a result of a $241,229 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 March 31, 2007 decreased from $10,426,993, as originally reported, to $10,290,856, a decrease of $136,137. Minority interest in subsidiary decreased by $15,126, from $1,180,371 to $1,165,245.

Balance Sheet

	Original			Restated
ITEMS	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
Asset retirement obligation 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.

Income Statements

		Original			Restated
		For Three Months Ended March 31,
ITEMS		2007			2007
Revenue	$	1,682,972		$	1,682,972
Costs of revenue (including depreciation)		495,317			509,768
Gross profit		1,187,655			1,173,204

Operating expenses
Selling expenses		204,241			204,241
General and administrative expenses		217,160			217,160
Total operating expenses		421,401			421,401

Income from operations		766,254			751,803

Other income (expense)
Interest income		2,804			2,804
Other income		368			368
Other expense		(27	)		(27	)
Total other income (expense)		3,145			3,145
Net income before minority interest and income tax		769,399			754,948

Income tax (benefit)		-			-

Net income after income tax		769,399			754,948

Minority interest		76,481			75,036

Net income	$	692,918		$	679,912

Foreign currency translation adjustment		(52,178	)		58,768

Comprehensive income	$	640,740		$	738,680

Basic and diluted weighted average shares outstanding		13,220,843			13,220,843

Basic and diluted net earnings per share		0.05			0.05

As a result of the restatement, net income for the three months ended March 31, 2007 decreased from $692,918, as originally reported, to $679,912, a decrease of $13,006, comprised of a $14,451 increase of cost of goods and a $1,445 decrease in minority interest.

Income Statements

		Original			Restated
		For Three Months Ended March 31,
ITEMS		2006			2006
Revenue	$	1,551,437		$	1,551,437
Costs of revenue (including depreciation)		438,778			440,888
Gross profit		1,112,659			1,110,549

Operating expenses
Selling expenses		153,479			153,479
General and administrative expenses		253,037			253,037
Total operating expenses		406,516			406,516

Income from operations		706,143			704,033

Other income (expense)
Other expense		(35	)		(35	)
Total other income (expense)		(35	)		(35	)
Net income before minority interest and income tax		706,108			703,998

Income tax (benefit)		-			-

Net income after income tax		706,108			703,998

Minority interest		70,611			70,400

Net income	$	635,497		$	633,598

Foreign currency translation adjustment		81,826			81,842

Comprehensive income	$	717,323		$	715,440

Basic and diluted weighted average shares outstanding		13,140,843			13,140,843

Basic and diluted net earnings per share		0.05			0.05

As a result of the restatement, net income for the three months ended March 31, 2006 decreased from $635,497, as originally reported, to $633,598, a decrease of $1,899, comprised of a $2,110 increase in cost of goods and a $211 decrease in minority interest.

Statements of Cash Flows

	Original			Restated
	For three Months Ended March 31,
ITEMS	2007			2007
Cash flows from operating activities:
Net income	$	692,918		$	679,912
Adjustments to reconcile net income to net cash
provided by operating activities:

Minority interest		76,481			75,036
Depreciation & amortization		114,574			122,186
Bad debt allowance		14,881			-
Stock issued for services		4,000			4,000
Accretion expenses					6,916
Changes in operating assets and liabilities:
Accounts receivable		(105,857	)		(105,857	)
Inventory		(165,004	)		(165,004	)
Other receivables		(158,947	)		23,175
Advance to suppliers		(1,843	)		(1,843	)
Prepaid expense		(19,388	)		(19,388	)
Deferred sales		1,565			1,565
Accounts payable & other payables		(23,611	)		(24,598	)
Tax payables		(12,761	)		(12,761	)
Net cash provided by operating activities		417,008			583,339

Cash flows from investing activities
Equity investment		(1,210,634	)		(1,262,735	)
Purchase of property and equipment		(21,019	)		(21,019	)
Advances to related party		-			(128,851	)
Construction contracts		(1,266,472	)		(1,266,472	)
Net cash used in investing activities		(2,498,125	)		(2,679,077	)

Cash flows from financing activities
Net cash provided by financing activities		-			-

Effect of exchange rate on cash		47,332			8,726

Net increase in cash and cash equivalents		(2,033,785	)		(2,087,012	)

Cash and cash equivalents, beginning of period		5,660,698			5,713,925
Cash and cash equivalents, end of period	$	3,626,913		$	3,626,913

As a result of the restatement, net cash provided by operating activities for three months ended March 31, 2007 increased by $166,331 from $417,008 as originally reported, to $583,339; and net cash used in investing activities increased by $180,952 from $2,498,125, as originally reported, to $2,679,077.

Statements of Cash Flows

	Original			Restated
	For three Months Ended March 31,
ITEMS	2006			2006
Cash flows from operating activities:
Net income	$	635,497		$	633,598
Adjustments to reconcile net income to net cash					��
provided by operating activities:

Minority interest		70,611			70,400
Depreciation		86,113			81,993
Accretion expenses		-			6,225
Changes in operating assets and liabilities:
Accounts receivable		(157,389	)		(157,391	)
Inventory		(3,862	)		(3,862	)
Other receivables		209,517			62,157
Advance to suppliers		(138,935	)		(333	)
Prepaid expense		10,201			10,201
Deferred sales		(6,949	)		-
Accounts payable & other payables		(158,108	)		(158,110	)
Tax payables		60,643			53,695
Net cash provided by operating activities		607,339			598,573

Cash flows from investing activities
Equity investment		(37,297	)		(37,297	)
Purchase of property and equipment		(155,425	)		(155,427	)
Repayment of advances to related party		-			34,811
Construction contracts		(141,355	)		(279,960	)
Net cash used in investing activities		(334,077	)		(437,873	)

Cash flows from financing activities
Net cash provided by financing activities		-			-

Effect of exchange rate on cash		20,445			23,961

Net increase in cash and cash equivalents		293,707			184,661

Cash and cash equivalents, beginning of period		2,944,243			2,944,179
Cash and cash equivalents, end of period	$	3,237,950		$	3,128,840

As a result of the restatement, net cash provided by operating activities for three Months ended March 31, 2006 decreased by $8,766 from $607,339 as originally reported, to $598,573; and net cash used in investing activities increased by $103,796 from $334,077, as originally reported, to $437,873.

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.

In November 2005, the Company, through its wholly-owned subsidiary, DonTech Waste Services Inc. (formerly, Dalian Acquisition Corp.), a Delaware corporation (“DonTech”), acquired 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.

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 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.

·	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

	For three months Ended March 31,
	2007		2006

Service fees		837,063		1,041,157
Sales of cupric sulfate		388,333		292,459
Sales of other recycled commodities		457,576		217,821
Total		1,682,972		1,551,437

The Company had $1,682,972 in revenues for the three months ended March 31, 2007, an increase of 8.48% compared to the three months ended March 31, 2006. The Company had revenues of $1,551,437 for the three months ended March 31, 2006. The $131,535 increase is attributable to an increase in sale of recycled material (including cupric sulfate and other recycled commodities) which was partially offset by a decrease in service fees.

Service fee revenue for the three months ended March 31, 2007 was $837,063 which was 49.74% of total revenue for such three month period and a decrease of $204,094 or 19.6% from the $1,041,157 in service fee revenue we generated in the three months ended March 31, 2006. Service fee revenue accounted for 67.11% of our total revenue for the three months ended March 31, 2006.

Sales of recycled products were $845,909 or 50.26% of total revenue for the three months ended March 31, 2007. Sales of recycled products in the three months ended March 31, 2007 increased by $335,629 over the three months ended March 31, 2006 when such sales were $510,280 or 32.89% of our total revenue for such period. Sales of cupric sulfate increased by approximately 33%, from $292,459 in the three months ended March 31, 2006 to $388,333 in the three months ended March 31, 2007, while sales of other recycled products, such as organic solvents, plastic, aluminum and motor oil increased by $239,755 or approximately 110% in the three months ended March 31, 2007 as compared to the three months ended March 31, 2006.

Costs of revenue

	For three months Ended March 31,
	2007		2006

Cost of service fees		228,619		178,765
Cost of cupric sulfate		97,295		112,763
Cost of other recycled commodities		183,854		149,360
Total		509,768		440,888

The Company had cost of sales of $509,768 for the three months ended March 31, 2007, an increase of $68,880 or 15.62% compared to the three months ended March 31, 2006. The Company had cost of sales of $440,888 for the three months ended March 31, 2006. The increase is attributable to the increase in revenue for the first quarter in 2007.

Costs related to providing services increased by $49,854 or 27.89% from $178,765 for the three months ended March 31, 2006 to $228,619 for the three months ended March 31, 2007. Costs related to producing recycled waste products increased by $19,026 or 7.26% from $262,123 for the three months ended March 31, 2006 to $281,149 for the three months ended March 31, 2007.

Operating Expenses

Total operating expenses for the three months ended March 31, 2007 increased by $14,885 to $421,401 from $406,516 for the three months ended March 31, 2006, an increase of 3.66%. The increase in operating expenses is principally attributable to increased selling expenses as the Company incurred expenses in connection with its expansion locally as well as in areas other than Dalian city.

Foreign Currency Translation

Foreign currency translation adjustments for the three months ended March 31, 2007 decreased to $58,768 from $81,842 for the three months ended March 31, 2006. This fluctuation is attributable to the revaluation of the Chinese currency against the U.S. dollar.

Net Income

Net income for the three months ended March 31, 2007 increased by $ 46,314 or 7.31% to $679,912 from $633,598 for the three months ended March 31, 2006. This increase is primarily 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 $5,713,925 at December 31, 2006. As of March 31, 2007, the Company had working capital of $3,890,991, as compared to $6,044,650 as of December 31, 2006.

Net cash provided by operating activities totaled $583,339 for the three months ended March 31, 2007, as compared to cash provided by the operations of $598,573 for the three months ended March 31, 2006. The $15,234 decrease was primarily attributable to a $161,142 cash outflow increase in inventory and a $ 133,512 cash outflow decrease in accounts payable and other payables.

Net cash used in investing activities was $2,679,077 for the three months ended March 31, 2007, as compared to net cash used in investing activities of $437,873 for the three months ended March 31, 2006. The $2,241,204 increase was primarily attributable to a $1,225,438 increase in equity investment in Dongtai Organic.

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.

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 cash on delivery 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 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.

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: January 30, 2008	By:	/s/ Dong Jinqing
		Dong Jinqing
		Chief Executive Officer

China Industrial Waste Management (CIWT) Inactive 10QSB/A2007 Q1 Quarterly report (small business) (amended)