Unassociated Document

10-Q/A 1 v124412_10qa.htm Unassociated Document

UNITES STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2008

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from __________ to __________

Commission file number: 000-51724

CHINA BOTTLES INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		87-1578749
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Huanghuahu Industrial Zone, Fogang County

Guangdong Province, PRC 511675

(Address of Principal Executive Offices) (Zip Code)

(86) 763-4620777

(Issuer’s Telephone Number, including area code)

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

Check whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller Reporting Company x

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 outstanding of each of the issuer’s classes of equity as of the latest practicable date is stated below

Title of each class of Common Stock			Outstanding as of August 14, 2008
Common Stock, $0.001 par value			75,000,000 shares

Documents incorporated by reference: None

Transitional Small Business Disclosure Format: Yes ¨ No ¨

TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements			1
Item 2. Management’s Discussion and Analysis or Plan of Operation			15
Item 3. Controls and Procedures

PART II.
OTHER INFORMATION

Item 1. Legal Proceedings			24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			24
Item 3. Defaults Upon Senior Securities			24
Item 4. Submission of Matters to a Vote of Security Holders			24
Item 5. Other Information			24
Item 6. Exhibits			24

This Form 10-QSB is being amended to provide additional disclosures regarding the acquisition of three operating companies and to provide pro forma financial statements and disclosures associated with these acquisitions.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CHINA BOTTLES INC. AND SUBSIDIARIES

(Formerly HUTTON HOLDINGS CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2008		December 31, 2007
	(Unaudited)		(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalent	$	853,825	$	1,375,786
Accounts receivable, net		15,258,885		1,494,539
Inventories		8,044,942		6,737,712
Notes receivable		160,488		-
Prepaid expenses and other receivables		5,379,905		2,112,535
Total current assets		29,698,045		11,720,572

PROPERTY, PLANT & EQUIPMENT, NET		4,034,798		3,636,505
LAND USE RIGHT, NET OF AMORTIZATION		247,237		229,689

TOTAL ASSETS	$	33,980,080	$	15,586,766

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
CURRENT LIABILITIES
Bank loans	$	729,491	$	1,777,389
Accounts payable		3,796,243		1,244,801
Accrued expenses and other payables		8,060,234		904,791
Amount due to a related party		802,440		3,508,083
Customers deposits		3,466,588		650,652
Income tax payable		1,837,667		1,001,257
Total current liabilities		18,692,663		9,086,973

TOTAL LIABILITIES	$	18,692,663	$	9,086,973

STOCKHOLDERS’ EQUITY
Preferred stock, Par value $0.001; 25,000,000 shares authorized for both time period; $0.001 par value; 5,000,000 shares issued and Nil outstanding and 5,000,000 shares issued and outstanding on June 30, 2008 and December 31, 2007, respectively	$	-	$	5,000
Common stock, Par value $0.001; 175,000,000 shares authorized for both period; $0.001 par value; 75,000,000 shares and 50,000,000 shares issued and outstanding on June 30, 2008 and December 31, 2007, respectively		75,000		50,000
Additional paid in capital		2,281,567		2,301,567
Retained earnings		11,448,694		3,743,867
Other comprehensive income		1,482,156		399,359
TOTAL STOCKHOLDERS’ EQUITY	$	15,287,417	$	6,499,793

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	33,980,080	$	15,586,766

See accompanying notes to the condensed consolidated financial statements

CHINA BOTTLES INC. AND SUBSIDIARIES

(Formerly HUTTON HOLDINGS CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2008		2007		2008		2007

REVENUE	$	24,631,687	$	-	$	38,356,217	$	-

COST OF SALES		16,622,697		-		26,278,547		-

GROSS MARGIN		8,008,990		-		12,077,670		-

EXPENSES
Selling and distributions		480,590		-		1,159,773		-
General and administrative		984,060		-		1,657,519		-
Finance		84,166		-		209,849		-
TOTAL OPERATING EXPENSES		1,548,816		-		3,027,141		-

INCOME FROM CONTINUING OPERATIONS		6,460,174		-		9,050,529		-

OTHER INCOME		585,153		-		1,344,503		-

INCOME BEFORE PROVISION FOR INCOME TAXES		7,045,327		-		10,395,032		-

PROVISION FOR INCOME TAXES		2,185,098		-		2,690,205		-

NET INCOME	$	4,860,229	$	-	$	7,704,827	$	-

OTHER COMPREHENSIVE INCOME
Gain on Foreign Exchange Translation		467,179		-		1,082,797		-

COMPREHENSIVE INCOME	$	5,327,405	$	-	$	8,787,624	$	-

NET INCOME PER SHARE, BASIC & DILUTED	$	0.071	$	N/A	$	0.117	$	N/A

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED		75,000,000		N/A		75,000,000		N/A

See accompanying notes to the condensed consolidated financial statements

CHINA BOTTLES INC. AND SUBSIDIARIES

(Formerly HUTTON HOLDINGS CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	For the Six Months Ended June 30,
	2008			2007

Cash Flows From Operating Activities:
Net income	$	7,704,827		$	-
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation		358,806			-
Amortization of land use rights		5,304			-
Changes in operating Assets and liabilities:
Increase in accounts receivable		(13,764,346	)		-
Increase in notes receivable		(160,488	)
Increase in inventories		(1,307,230	)		-
Increase in prepaid expenses and other receivable		(3,267,370	)		-
Increase in accounts payable		2,551,442			-
Increase in accrued expenses and other payables		7,155,443			-
Increase in customers deposits		2,815,936			-
Increase in taxes payable		836,410			-
Net cash provided from operating activities		2,928,734			-

Cash Flows From Investing Activities:
Purchase of property, plant and equipment		(757,100	)		-
Purchase of land use right		(11,412	)		-
Net cash used in investing activities		(768,512	)		-

Cash Flows From Financing Activities:
Decrease in amount due to a related party		(2,705,643	)		-
Repayment of bank loans		(1,047,898	)		-
Net cash used in financing activities		(3,753,541	)		-

Net decrease in cash		(1,593,319	)		-

Effect of foreign exchange rate changes		1,071,358			-

Cash at Beginning of Period		1,375,786			-

Cash at the End of Period	$	853,825		$	-

See accompanying notes to the condensed consolidated financial statements

CHINA BOTTLES INC. AND SUBSIDIARIES

(Formerly HUTTON HOLDINGS CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2008

NOTE 1 - BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements of China Bottles Inc. and subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of the management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operation. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The condensed consolidated balance sheet information as of December 31, 2007 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-KSB. These interim financial statements should be read in conjunction with that report.

All material inter-company accounts and transactions have been eliminated in consolidation.

NOTE 2 - USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. See “Critical Accounting Policies and Estimates” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section below.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW PRONOUNCEMENT

(a) Cash and cash equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains bank accounts in Hong Kong and China through its wholly owned subsidiaries.

(b) Inventories

Inventories consisting of raw materials, work-in-progress, and finished goods are stated at the lower of cost or net realizable value. Finished goods are comprised of direct materials, direct labor and a portion of overhead. Inventory costs are calculated using a weighted average, first in first out (FIFO) method of accounting.

Revenue represents the invoiced value of goods sold recognized upon the shipment of goods to customers. Revenue is recognized when all of the following criteria are met:

a)	Persuasive evidence of an arrangement exists,

b)	Delivery has occurred or services have been rendered,

c)	The seller's price to the buyer is fixed or determinable, and

d)	Collectibility is reasonably assured.

(d) Earnings Per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

(e) Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

NOTE 4 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments include cash and cash equivalents, accounts receivable, prepayments, notes receivable, other receivables, taxes payable, accounts payable, accrued expenses, debt, customer deposits and other payables. Management has estimated that the carrying amount approximates their fair value due to their short-term nature.

NOTE 5 - FOREIGN CURRENCY TRANSLATION

The accompanying condensed consolidated financial statements are presented in United States dollars (US$). The functional currency of the Company is the Renminbi (RMB) and Hong Kong dollar (HK$). Capital accounts of the consolidated financial statements are translated into US$ from RMB and HK$ at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the year. The translation rates are as follows:

	June 30, 2008		December 31, 2007

Period/Year end RMB : US$ exchange rate		6.854		7.314
Average RMB : US$ exchange rate for the reporting period/year		7.057		7.617

Period/Year end HK$ : US$ exchange rate		7.798		7.805
Average HK$ : US$ exchange rate for the reporting period/year		7.797		7.803

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

NOTE 6 - INVENTORIES

Inventories consisting of raw materials and finished goods are stated at the lower of weighted average cost or market value. Inventories are PET beverage bottles, beverage bottle production machineries, preform injection mold, blowing mold and the raw material to manufacture the bottles, mold and machineries.

Inventories as of June 30, 2008 and December 31, 2007 are summarized as follows:

	June 30, 2008		December 31, 2007

Raw materials	$	3,719,615	$	2,610,014
Work-in-progress		2,270,690		1,518,235
Finished goods		2,054,637		2,609,463

Total	$	8,044,942	$	6,737,712

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

Property, plant and equipment of the Company consist primarily of manufacturing facilities and equipment owned and operated by the Company’s wholly owned subsidiaries in China. Property, plant and equipment as of June 30, 2008 and December 31, 2007 are summarized as follows:

	June 30, 2008		December 31, 2007

At cost:
Buildings	$	1,380,800	$	1,277,126
Machinery and equipment		4,180,378		3,637,524
Motor Vehicles		430,262		324,416
Furniture and fixtures		224.420		219,695
		6,215,860		5,458,761

Less: Accumulated depreciation
Buildings	$	198,442	$	157,660
Machinery and equipment		1,706,533		1,440,136
Motor Vehicles		184,228		152,434
Furniture and fixtures		91,859		72,026
		2,181,062		1,822,256

Plant and equipment , net	$	4,034,798	$	3,636,505

Depreciation expense for the quarters ended June 30, 2008 and June 30, 2007, was $358,806 and $0, respectively.

NOTE 8 - SHORT TERM DEBT

All the short-term bank loans are repayable within 12 months and are unsecured.

Short-term loans are summarized as follows:

Due date	Interest rate per annum			June 30, 2008		December 31, 2007

June 27, 2008		8.541	%	$	-	$	1,093,790
September 19, 2008		8.748	%		729,491		683,599

NOTE 9 - INCOME TAX

(a) Corporation Income Tax ("CIT")

In accordance with the relevant tax laws and regulations of Hong Kong and PRC, the statutory corporate income tax rates are 17.5% for Hong Kong and 25% in PRC (2007: 33%). The corporate income tax rates applicable to the Company and its subsidiaries for the quarters ended June 30, 2008 and 2007 were as follows:

	June 30, 2008			June 30, 2007

Fogang Guozhu Plastics Co. Ltd.		25	%		33	%
Fogang Guozhu Blowing Equipment Co. Ltd.		25	%		33	%
Fogang Guozhu Precision Mold Co. Ltd		25	%		33	%

The actual and effective corporate income tax was 25.9% and Nil for the quarters ended June 30, 2008 and 2007, respectively.

	For the period ended June 30,
	2008		2007

Computed “expected” tax expense	$	2,690,205	$	-
Permanent expenses		-		-

Income tax expense	$	2,690,205	$	-

The provisions for income taxes for each of the two periods ended June 30, 2008 and 2007 are summarized as follows:

	As of June 30
	2008		2007

Current	$	2,690,205	$	-
Deferred		-		-

Total income tax expenses	$	2,690,205	$	-

(b) Value Added Tax ("VAT")

There is no VAT under current tax laws in Hong Kong.

In accordance with the current tax laws in the PRC, the VAT rate for the PRC subsidiaries for export sales is 8.5% to 10% and domestic sales is 17%. VAT is levied at 17% on the invoiced value of sales and is payable by the purchaser. The Company is required to remit the VAT it collects to the tax authority, but may offset this tax liability from the VAT for the taxes that it has paid on eligible purchases. The VAT payable have been accrued and reflected as other payables in the accompanying condensed consolidated balance sheets.

NOTE 10 - RELATED PARTY TRANSACTIONS

Due to a related party represented a loan from a shareholder as of June 30, 008 for the purposes of working capital. The amount is unsecured, interest-bearing at 6% per annum and repayable within 12 months.

NOTE 11 - PREFERRED STOCK

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

On August 26, 2007, the Company entered into an Agreement for Share Exchange with China Valley Development Limited, a British Virgin Islands company (“CVDL”) and Cai Yingren and Wu Wen, individually, the owners and shareholders of CVDL to acquired 100% ownership interest in CVDL from Cai Yingren and Wu Wen at a consideration of 29,750,000 shares of our common stock and 5,000,000 shares of Preferred Stock. Each share of Preferred Stock is convertible into 5 shares of the Company’s common stock, par value $.001 per share.

On April 11, 2008, the 5,000,000 shares of Preferred Stock were converted into 25,000,000 shares of common stocks of the Company.

NOTE 12 - COMMON STOCK

The Company has 175,000,000 shares of common stock authorized at $0.001 par value per share.

On August 26, 2007, the Company entered into an Agreement for Share Exchange with China Valley Development Limited, a British Virgin Islands company (“CVDL”) and Cai Yingren and Wu Wen, individually, the owners and shareholders of CVDL to acquire 100% ownership interest in CVDL from Cai Yingren and Wu Wen at a consideration of 29,750,000 shares of our common stock and 5,000,000 shares of Preferred Stock. Immediately following completion, the Company had a total of approximately 50,000,000 shares of common stock issued and outstanding.

On April 11, 2008, the 5,000,000 shares of Preferred Stock were converted into 25,000,000 shares of common stocks of the Company.

NOTE 13 - COMMITMENTS

The Company has capital commitments for $766,000 as of June 30, 2008.

The Company entered into unconditional purchase commitments for raw materials, packing materials and advertising for $0 within one year as of June 30, 2008.

As of June 30, 2008, the Company had remaining outstanding commitments with respect to its non-cancelable operating leases for its office amounted to $14,083 within one year and $16,751 over one year.

NOTE 14 - PRO FORMA FINANCIAL STATEMENTS - BUSINESS ACQUISITIONS

On August 16, 2007 China Valley Development Limited, a British Virgin Islands company (“CVDL”) acquired 100% equity interest of Fogang Guozhu Plastics Co. Ltd., Fogang Guozhu Blowing Equipment Co. Ltd. and Fogang Guozhu Precision Mold Co. Ltd. through acquisition of 100% equity of Guozhu Holdings Limited, a Hong Kong company (“Guozhu Holdings”) These three subsidiaries were acquired by Guozhu Holdings in 2007 in three separate transactions and were accounted for using the purchase method of accounting. The controlling ownership of Guozho Holdings did not change when these subsidiaries were acquired. These three companies have been consolidated with the Company as of August 16, 2007 following guidelines of GAAP and following the purchase price accounting methods for business combinations as outlined in SFAS 141 “Business Combinations”.

On August 27, 2007, the Company acquired 100% ownership interest in CVDL. For accounting purposes such share exchange was treated as an acquisition of the Company by, and a re-capitalization of, CVDL. CVDL is the accounting acquirer and the results of its operations carry over under reverse merger accounting.

The following tables show supplemental information of the results of operations of the Company on a pro forma basis for the quarter and period ended June 30, 2007 as if the acquisitions of Guozhu Holdings (and hence Fogang Guozhu Plastics Co. Ltd., Fogang Guozhu Blowing Equipment Co. Ltd. and Fogang Guozhu Precision Mold Co. Ltd.) by CVDL had been completed at January 1, 2007.

The pro forma financial information does not necessarily reflect the results that would have occurred if the acquisitions had been in effect for the periods presented. In addition, they are not intended to be a projection of future results. The pro forma calculations do not reflect any synergies that might be achieved from combining the operations.

HUTTION HOLDINGS CORPORATION

UNAUDITED PRO-FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE PERIOD ENDED JUNE 30, 2007

	Hutton Historical			China Valley Historical		Guozhu Holding Historical (*)			Pro forma Adjustment		Pro forma Combined

REVENUE	$	29,042		$	-	$	17,105,531		$	-	$	17,134,573

COST OF SALES		19,760			-		10,687,909			-		10,707,669

GROSS MARGIN		9,282					6,417,622			-		6,426,904

EXPENSES
Sales and marketing		2,008			-		548,967			-		550,975
General and administrative		44,741			-		511,194			-		555,935
TOTAL EXPENSES		46,749			-		1,060,161			-		1,106,910

OPERATING LOSS / INCOME		(37,467	)		-		5,357,461			-		5,319,994

OTHER INCOME		59,346			-		662,620			-		721,966

INTEREST INCOME / EXPENSES		(289	)		-		(18,705	)		-		(18,994	)

LOSS / INCOME BEFORE TAXES		21,590			-		6,001,376			-		6,022,966

PROVISION FOR TAXATION		-			-		1,244,183			-		1,244,183

NET LOSS / INCOME		21,590			-		4,757,193			-		4,778,783

OTHER COMPREHENSIVE INCOME
Gain on Foreign Exchange Translation		-			-		66,302			-		66,302

COMPREHENSIVE LOSS / INCOME	$	21,590		$	-	$	4,823,495		$	-	$	4,845,085

*	Guozhu Holding historical includes the unaudited financials of the operations of Fogang Guozhu Plastics Co. Ltd., Fogang Guozhu Blowing Equipment Co. Ltd. and Fogang Guozhu Precision Mold Co. Ltd. in the reporting period

HUTTION HOLDINGS CORPORATION

UNAUDITED PRO-FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE QUARTER ENDED JUNE 30, 2007

	Hutton Historical			China Valley Historical		Guozhu Holding Historical (*)			Pro forma Adjustment		Pro forma Combined

REVENUE	$	9,319		$	-		9,585,999		$	-	$	9,595,318

COST OF SALES		2,256			-		6,281,276			-		6,283,532

GROSS MARGIN		7,063					3,304,723			-		3,311,786

EXPENSES
Sales and marketing		-			-		259,555			-		259,555
General and administrative		20,439			-		229,960			-		250,399
TOTAL EXPENSES		20,439			-		489,515			-		509,954

OPERATING LOSS / INCOME		(13,376	)		-		2,815,208			-		2,801,832

OTHER INCOME		59,346			-		364,758			-		424,104

INTEREST INCOME / EXPENSES		-			-		(6,373	)		-		(6,373	)

LOSS / INCOME BEFORE TAXES		45,970			-		3,173,593			-		3,219,563

PROVISION FOR TAXATION		-			-		722,651			-		722,651

NET LOSS / INCOME		45,970			-		2,450,942			-		2,496,912

OTHER COMPREHENSIVE INCOME
Gain on Foreign Exchange Translation		-			-		55,816			-		55,816

COMPREHENSIVE LOSS / INCOME	$	45,970		$	-		2,506,758		$	-	$	2,552,728

*	Guozhu Holding historical includes the unaudited financials of the operations of Fogang Guozhu Plastics Co. Ltd., Fogang Guozhu Blowing Equipment Co. Ltd. and Fogang Guozhu Precision Mold Co. Ltd. in the reporting period

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "CBTT believes," "management believes" and similar language. The forward-looking statements are based on the current expectations of CBTT and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. The actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.

Investors are also advised to refer to the information in our filings with the Securities and Exchange Commission, specifically Forms 10-KSB, 10-QSB and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions.

Except as otherwise indicated by the context, references in this Form 10-Q to “CBTT,” “we,” “us,” “our,” “the Registrant”, “our Company,” or “the Company” are to China Bottles, Inc., a Nevada corporation and its consolidated subsidiaries. Unless the context otherwise requires, all references to (i) “BVI” are to British Virgin Islands; (ii) “PRC” and “China” are to the People’s Republic of China; (iii) “U.S. dollar,” “$” and “US$” are to United States dollars; (iv) “RMB” are to Yuan Renminbi of China; (v) “Securities Act” are to the Securities Act of 1933, as amended; and (vi) “Exchange Act” are to the Securities Exchange Act of 1934, as amended.

Critical Accounting Policies and Estimates

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our condensed consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

We recognize revenue in accordance with Staff Accounting Bulletin ("SAB") No. 104. All of the following criteria must exist in order for us to recognize revenue:

1. Persuasive evidence of an arrangement exists;

2. Delivery has occurred or services have been rendered;

3. The seller's price to the buyer is fixed or determinable; and

4. Collectability is reasonably assured.

The majority of the Company's revenue results from sales contracts with direct customers and revenues are generated upon the shipment of goods. The Company's pricing structure is fixed and there are no rebate or discount programs. Management conducts credit background checks for new customers as a means to reduce the subjectivity of assuring collectability. Based on these factors, the Company believes that it can apply the provisions of SAB 104 with minimal subjectivity.

Recent Accounting Pronouncements

The Company does not expect the adoption of any recent accounting pronouncements will have any material impact on its financial statements.

Results of Operations - Three Months Ended June 30, 2008 as Compared to Three Months Ended June 30, 2007

The following table summarizes the results of our operations during the three-month periods ended June 30, 2008 and 2007, and provides information regarding the dollar and percentage increase or (decrease) from the three-month period ended June 30, 2008 to the three-month period ended June 30, 2007.

	Three months ended June 30,
	2008		2007		Increase		% increase

Revenue	$	24,631,687	$	-		24,631,687		-
Cost of Goods Sold		16,622,697		-		16,622,697		-
Gross Profit		8,008,990		-		8,008,990		-
Sales and Marketing Expenses		480,590		-		480,590		-
General and Administrative Expenses		984,060		-		984,060		-
Finance Charge		84,166		-		84,166		-
Total Operating Expenses		1,548,816		-		1,548,816		-
Income from Operation		6,460,174		-		6,460,174		-
Other Income (expense)		585,153		-		585,153		-
Income before Income Tax		7,045,327		-		7,045,327		-
Provision for Taxes		2,185,098		-		2,185,098		-
Net income		4,860,229		-		4,860,229		-

Revenues

Sales revenue increased from $0 for the second quarter of 2007 to $24,631,687 for the second quarter of 2008.

The increase in revenue was mainly due to the new business of bottle production machinery, mold and bottle production service acquired on August 27, 2007. The new business has a much large scale of business and thus generated much larger revenue.

Cost of goods sold and gross profit

Cost of goods sold for the second quarter of 2008 was $16,622,697, an increase of $16,622,697 compared to $0 of the same period in 2007. The increase of cost of good for the three months period ended June 30, 2008 as compared the same period last year was a result of acquisition of a new business that generated revenue from sales.

Gross profit was $8,008,990 for the three months ended June 30, 2008 compared to $0 for the same quarter last year. This increase was contributed by the increase of revenue after acquisition of new business on August 27, 2007.

Gross profit as a percentage of net revenues was 32% in the second quarter of 2008.

Sales and marketing

Sales and marketing expenses, including distribution expenses, increased from $0 in the three months ended June 30, 2007 to $480,590 in the same period of 2008. The details of our selling and marketing expenses for the quarter ended June 30, 2008 were as follows:

Staff cost	$	63,412
Supplies		31,309
Advertising, marketing and exhibition cost		181,025
Freight charges		143,367
Sundry expenses		61,477

The increase in the selling and marketing expenses is primary due to the increase in participating exhibitions and the increase of traveling expenses by marketing and sales personnel after acquiring the new business on August 27, 2007.

General and Administrative

General and administrative expenses increased from $0 in the second quarter of 2007 to $984,060 in the same quarter of 2008. The details of general and administrative expenses for the second quarter of 2008 were as follows:

Staff cost	$	197,360
Office and supplies		67,124
Traveling and entertainment		301,738
Transportation cost		81,621
Research and development		2,449
Insurance		38,143
Depreciation and amortization		11,179
Repair and maintenance		20,813
Legal and professional fees		207,819
Tax fee		8,884
Sundry expenses		46,932

The increase in general and administrative expenses in the quarter ended June 30, 2008 compared to the same period of 2007 was primarily due to the new business acquired on August 27, 2007.

Income before income tax and income taxes expenses

Income before income tax was $7,045,327 for the quarter ended June 30, 2008 compared to $0 of the same period last year. The increase was mainly due to the increase in revenue and hence income before tax from new business acquired on August 27, 2007.

Provision for taxation for the quarter ended June 30, 2008 was $2,185,098, compared to $0 for the quarter ended June 30, 2007. The Company’s effective tax rate for this quarter was 31.0%

Net income

Net income for the second quarter of 2008 was $4,860,229, representing an increase of $4,860,229 from the same period in 2007. The increase was mainly due to the increase in revenue and hence net income from new business acquired on August 27, 2007. Net margin for the second quarter of 2008 was 20%.

Results of Operations - Six Months Ended June 30, 2008 as Compared to Six Months Ended June 30, 2007

The following table summarizes the results of our operations during the six-month periods ended June 30, 2008 and 2007, and provides information regarding the dollar and percentage increase or (decrease) from the six-month period ended June 30, 2008 to the six-month period ended June 30, 2007.

	Six months ended June 30,
	2008		2007		Increase		% increase

Revenue	$	38,356,217	$	-		38,356,217		-
Cost of Goods Sold		26,278,547		-		26,278,547		-
Gross Profit		12,077,670		-		12,077,670		-
Sales and Marketing Expenses		1,159,773		-		1,159,773		-
General and Administrative Expenses		1,657,519		-		1,657,519		-
Finance Charge		209,849		-		209,849		-
Total Operating Expenses		3,027,141		-		3,027,141		-
Income from Operation		9,050,529		-		9,050,529		-
Other Income (expense)		1,344,503		-		1,344,503		-
Income before Income Tax		10,395,032		-		10,395,032		-
Provision for Taxes		2,690,205		-		2,690,205		-
Net income		7,704,827		-		7,704,827		-

Revenues

Sales revenue increased from $0 for the six months ended 2007 to $38,356,217 for the six months ended of 2008.

Cost of goods sold and gross profit

Cost of goods sold for the six months ended June 30, 2008 was $26,278,547, an increase of $26,278,547 compared to $0 of the same period in 2007. The increase of cost of good for the six months ended June 30, 2008 as compared the same period last year was a result of acquisition of a new business that generated revenue from sales.

Gross profit was $12,077,670 for the six months ended June 30, 2008 compared to $0 for the same quarter last year. This increase was contributed by the increase of revenue after acquisition of new business on August 27, 2007.

Gross profit as a percentage of net revenues was 31% in the six months ended June 30, 2008.

Sales and marketing

Sales and marketing expenses, including distribution expenses, increased from $0 in the six months ended June 30, 2007 to $1,159,773 in the same period of 2008. The details of our selling and marketing expenses for the six months ended June 30, 2008 were as follows:

Staff cost	$	101,380
Supplies		38,991
Advertising, marketing and exhibition cost		584,520
Freight charges		258,751
Sundry expenses		176,131

General and Administrative

General and administrative expenses increased from $0 in the six months ended June 30, 2007 to $1,657,519 in the same period of 2008. The details of general and administrative expenses for the six months ended June 30, 2008 were as follows:

Staff cost	$	354,789
Office and supplies		114,825
Traveling and entertainment		406,477
Transportation cost		113,710
Research and development		56,394
Insurance		63,515
Depreciation and amortization		60,559
Repair and maintenance		23,337
Legal and professional fees		235,654
Tax fee		9,765
Sundry expenses		218,494

The increase in general and administrative expenses in the six months ended June 30, 2008 compared to the same period of 2007 was primarily due to the new business acquired on August 27, 2007.

Income before income tax and income taxes expenses

Income before income tax was $10,395,032 for the six months ended June 30, 2008 compared to $0 of the same period last year. The increase was mainly due to the increase in revenue and hence income before tax from new business acquired on August 27, 2007.

Provision for taxation for the six months ended June 30, 2008 was $2,690,205, compared to $0 for the six months ended June 30, 2007. The Company’s effective tax rate for this quarter was 25.9%

Net income

Net income for the six months ended June 30, 2008 was $7,704,827, representing an increase of $7,704,827 from the same period in 2007. The increase was mainly due to the increase in revenue and hence net income from new business acquired on August 27, 2007. Net margin for the six months ended June 30, 2008 was 20%.

Results of Operations - Three Months Ended June 30, 2008 as Compared to Three Months Ended June 30, 2007

The following table summarizes the results of our operations during the three months periods ended June 30, 2008 and 2007, and provides information regarding the dollar and percentage increase or (decrease) from the three months period ended June 30, 2008 to the three months period ended June 30, 2007.

	Three months ended June 30,
	2008		2007		Increase		% increase

Revenue	$	24,631,687	$	9,595,318		15,036,369		157	%
Cost of Goods Sold		16,622,697		6,283,532		10,339,165		165	%
Gross Profit		8,008,990		3,311,786		4,697,204		142	%
Sales and Marketing Expenses		480,590		259,555		221,035		85	%
General and Administrative Expenses		984,060		250,399		733,661		293	%
Finance Charge		84,166		6,373		77,793		1221	%
Total Operating Expenses		1,548,816		516,327		1,032,489		200	%
Income from Operation		6,460,174		2,795,459		3,664,715		131	%
Other Income (expense)		585,153		424,104		161,049		38	%
Income before Income Tax		7,045,327		3,219,563		3,825,764		119	%
Provision for Taxes		2,185,098		722,651		1,462,447		202	%
Net income		4,860,229		2,496,912		2,363,317		95	%

Revenues

Sales revenue increased from $9,595,318 for the three months period ended June 30, 2007 to $24,631,687 for the same period of 2008, an increase of 15,036,369 or 157%.

The increase in revenue was mainly due to the increase in market acceptance of our products, particular in those high-end products and the growing demand from the booming drink and beverage industry in China. In the period, middle sized or above bottle drinks production companies continued to upgrade their production lines to high speed machines in order to satisfy the growing demand of bottles drinks in the consumer market in China.

Cost of goods sold and gross profit

Cost of goods sold for the three months period ended June 30, 2008 was $16,622,697, an increase of $10,339,165 or 165% compared to $6,283,532 of the same period in 2007. The increase of cost of good was a result of increase in sales.

Our gross profit increased $4,697,204, or 142%, to $8,008,990 for the quarter ended June 30, 2008 from $3,311,786 during the same period in 2007. Gross profit as a percentage of revenue was 33% for the second quarter of 2008, a decrease of 2% from 35% during the same period in 2007. Such decrease was mainly due to the increase in cost of raw material and direct labor cost.

Sales and marketing

Selling and marketing expenses, including distribution expenses increased from $259,555 in the second quarter of 2007 to $480,590 for the same period of 2008, or an increase of 221,035.

The increase in the selling and marketing expenses is primary due to the increase in advertising, marketing and exhibition cost and traveling cost because of the increase in sales activities and participation of more overseas exhibitions in the second quarter of 2008. The selling and marketing expenses for the second quarter of 2008 mainly consisted of advertising, marketing and exhibition cost and traveling expenses.

General and Administrative

General and administrative expenses increased from $250,399 for the three months period ended June 30, 2007 to $984,060 for the same period of 2008, or an increase of 733,661.

The increase in general and administrative expenses in the second quarter of 2008 compared to that of the same period of 2007 was primarily due to the expansion of operation which led to the increase in staff cost, traveling and entertainment and due to the list which incurred more legal and professional cost. The general and administrative expenses for the second quarter of 2008 mainly consisted of staff cost, traveling and entertainment and legal and professional cost.

Income before income tax and income taxes expenses

Income before income tax was $7,045,327 for the second quarter of 2008 compared to $3,219,563 for the same period of 2007, representation an increase of $3,825,764. The increase was mainly due to the increase in revenue.

Provision for taxation for the three months period ended June 30, 2008 was $2,185,098, compared to $722,651 for the three months period ended June 30, 2007. The Company’s effective tax rate for the second quarter of 2008 was 31.5%.

Net income

Net income for the second quarter of 2008 was $4,860,229, representing an increase of $2,363,317 from the same period in 2007. The increase was mainly due to the increase in revenue and hence net income because of the increase in sale of automatic blowing machines and molds from the drinks and beverage industry. Net margin for the second quarter of 2008 was 19.7%

Results of Operations - Six Months Ended June 30, 2008 as Compared to Six Months Ended June 30, 2007 (for the pro forma results as stated in Note 14 to the financial statements)

The following table summarizes the results of our operations during the six months periods ended June 30, 2008 and 2007, and provides information regarding the dollar and percentage increase or (decrease) from the six months period ended June 30, 2008 to the six months period ended June 30, 2007.

	Six months ended June 30,
	2008		2007		Increase		% increase

Revenue	$	38,356,217	$	17,134,573		21,221,644		124	%
Cost of Goods Sold		26,278,547		10,707,669		15,570,878		145	%
Gross Profit		12,077,670		6,426,904		5,650,766		88	%
Sales and Marketing Expenses		1,159,773		505,975		653,798		129	%
General and Administrative Expenses		1,657,519		555,935		1,101,584		198	%
Finance Charge		209,849		18,994		190,855		1005	%
Total Operating Expenses		3,027,141		1,125,904		1,901,237		169	%
Income from Operation		9,050,529		5,301,000		3,730,535		70	%
Other Income (expense)		1,344,503		721,966		622,537		86	%
Income before Income Tax		10,395,032		6,022,966		4,372,066		73	%
Provision for Taxes		2,690,205		1,244,183		1,446,022		116	%
Net income		7,704,827		4,778,783		2,926,044		61	%

Revenues

Sales revenue increased from $17,134,573 for the six months period ended June 30, 2007 to $38,356,217 for the same period of 2008, an increase of 21,221,644 or 124%.

Cost of goods sold and gross profit

Cost of goods sold for the six months period ended June 30, 2008 was $26,278,547, an increase of $15,570,878 or 145% compared to $10,707,669 for the same period in 2007. The increase of cost of good was a result of increase in sales.

Our gross profit increased $5,650,766, or 88%, to $12,077,670 for the six months period ended June 30, 2008 from $6,426,904 during the same period in 2007. Gross profit as a percentage of revenue was 31% for the six month period ended June 30, 2008, a decrease of 7% from 38% during the same period in 2007. Such decrease was mainly due to the increase in cost of raw material and direct labor cost.

Sales and marketing

Selling and marketing expenses, including distribution expenses increased from $505,975 in the first half of 2007 to $1,159,773 for the same period of 2008, or an increase of 653,798.

The increase in the selling and marketing expenses is primary due to the increase in advertising, marketing and exhibition cost and traveling cost because of the increase in sales activities and participation of more overseas exhibitions in the first half of 2008. The selling and marketing expenses for the first half of 2008 mainly consisted of advertising, marketing and exhibition cost and traveling expenses.

General and Administrative

General and administrative expenses increased from $555,935 for the six months period ended June 30, 2007 to $1,657,519 for the same period of 2008, or an increase of 1,101,584.

The increase in general and administrative expenses in the first half of 2008 compared to that of the same period of 2007 was primarily due to the expansion of operation which led to the increase in staff cost, traveling and entertainment and due to the list which incurred more legal and professional cost. The general and administrative expenses for the first half of 2008 mainly consisted of staff cost, traveling and entertainment and legal and professional cost.

Income before income tax and income taxes expenses

Income before income tax was $10,395,032 for the first half of 2008 compared to $6,022,966 for the same period of 2007, representation an increase of $4,372,066. The increase was mainly due to the increase in revenue.

Provision for taxation for the six months period ended June 30, 2008 was $2,690,205, compared to $1,244,183 for the same period of 2007. The Company’s effective tax rate for first half of 2008 was 25.9%.

Net income

Net income for the first half of 2008 was $7,704,827, representing an increase of $2,926,044 from the same period in 2007. The increase was mainly due to the increase in revenue and hence net income because of the increase in sale of automatic blowing machines and molds from the drinks and beverage industry. Net margin for the first half of 2008 was year of 2006 was 20.0%.

Liquidity and Capital Resources

Cash

Our cash balance at June 30, 2008, was $853,825, representing an increase of $853,825 compared with our cash balance of $0 at June 30, 2007. The increase was mainly attributable to net cash received through acquisition of the new business on August 27, 2007.

Cash Flow

Cash inflows from operations during the six months ended June 30, 2008 amounted to $2,928,734 as compared to cash inflows from operations of $0 in the same period of 2007. The increased in cash inflows was due primarily to increase in accounts payables, accrued expenses and other payables.

Our cash outflows used in investing activities amounted to $768,512 in the six months ended June 30, 2008. During that period, we have purchased equipment and land use right for our expansion of production capacity.

Our cash outflows from financing activities amounted to $3,753,541 in the six months ended June 30, 2008 as compared to cash outflows of $0 from financing activities in the same period last year. The increase in cash outflows was primarily due to the decrease in amount due to a related party and repayment of bank loan.

Working Capital

Our working capital increased by $11,008,344 to $11,005,382 at June 30, 2008 as compared to net working capital deficit of $2,962 at June 30, 2007, primarily due to the addition cash obtained through the acquisition on August 27, 2007.

We currently generate our cash flow through our operations. We believe that our cash flow generated from operations will be sufficient to sustain operations for at least the next 12 months. There is no identifiable expansion plan as of June 30, 2008, but from time to time, we may identify new expansion opportunities for which there will be a need for use of cash.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks arising from adverse changes in market rates and prices, such as foreign exchange fluctuations and interest rates, which could impact our results of operations and financial position. We do not currently engage in any hedging or other market risk management tools, and we do not enter into derivatives or other financial instruments for trading or speculative purposes.

Foreign Currency Exchange Rate Risk

Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies, primarily the Chinese Renminbi (“RMB”), could adversely affect our financial results. During the period ended June 30, 2008, approximately all of our sales are denominated in foreign currencies. We expect that foreign currencies will continue to represent a similarly significant percentage of our sales in the future. Selling, marketing and administrative costs related to these sales are largely denominated in the same respective currency, thereby mitigating our transaction risk exposure. We therefore believe that the risk of a significant impact on our operating income from foreign currency fluctuations is not substantial. However, for sales not denominated in U.S. dollars, if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases and if we price our products in the foreign currency, we will receive less in U.S. dollars than we did before the rate increase went into effect. If we price our products in U.S. dollars and competitors price their products in local currency, an increase in the relative strength of the U.S. dollar could result in our price not being competitive in a market where business is transacted in the local currency. All of our sales and expenses denominated in foreign currencies are denominated in the RMB. Our principal exchange rate risk therefore exists between the U.S. dollar and this currency. Fluctuations from the beginning to the end of any given reporting period result in the re-measurement of our foreign currency-denominated receivables and payables, generating currency transaction gains or losses that impact our non-operating income/expense levels in the respective period and are reported in other (income) expense, net in our combined consolidated financial statements. We do not currently hedge our exposure to foreign currency exchange rate fluctuations. We may, however, hedge such exposure to foreign currency exchange rate fluctuations in the future.

Interest Rate Risk

Changes in interest rates may affect the interest paid (or earned) and therefore affect our cash flows and results of operations. However, we do not believe that this interest rate change risk is significant.

Inflation

Inflation has not had a material impact on the Company's business in recent years.

Currency Exchange Fluctuations

All of the Company's revenues and a majority of its expenses in the six months ended June 30, 2008 are denominated in RMB, and are converted into US dollar at the exchange rate of 7.153 to 1. The value of the RMB-to-U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Since 1994, the conversion of RMB into foreign currencies, including U.S. dollars, has been based on rates set by the People's Bank of China, which are set daily based on the previous day's inter-bank foreign exchange market rates and current exchange rates on the world financial markets. Since 1994, the official exchange rate for the conversion of RMB to U.S. dollars had generally been stable and RMB had appreciated slightly against the U.S. dollar. However, on July 21, 2005, the Chinese government changed its policy of pegging the value of RMB to the U.S. dollar. Under the new policy, RMB may fluctuate within a narrow and managed band against a basket of certain foreign currencies. Recently there has been increased political pressure on the Chinese government to decouple the RMB from the United States dollar. At the recent quarterly regular meeting of People's Bank of China, its Currency Policy Committee affirmed the effects of the reform on RMB exchange rate. Since February 2006, the new currency rate system has been operated; the currency rate of RMB has become more flexible while basically maintaining stable and the expectation for a larger appreciation range is shrinking. The Company has never engaged in currency hedging operations and has no present intention to do so.

Concentration of Credit Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions as described below:

The Company's business is characterized by new product and service development and evolving industry standards and regulations. Inherent in the Company's business are various risks and uncertainties, including the impact from the volatility of the stock market, limited operating history, uncertain profitability and the ability to raise additional capital.

Approximately 100% of the Company's revenue is derived from China. Changes in laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, results of operations and financial condition.

3.	If the Company is unable to derive any revenues from China, it would have a significant, financially disruptive effect on the normal operations of the Company.

ITEM 4. CONTROL AND PROCEDURES

Evaluation of disclosure controls and procedures

Our Chief Executive Officer ("Certifying Officers") maintain a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management timely. Under the supervision and with the participation of management, the Certifying Officers evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) as of June 30, 2008 Management’s assessment was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Our assessment identified deficiencies that were determined to be material weaknesses.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Because of the material weakness described below, management concluded that our internal control over financial reporting was not effective as of June 30, 2008.

The specific material weakness identified by management as of June 30, 2008 is the lack of capable accounting and reporting personnel and insufficient policies and procedures for financial reporting under US GAAP.

Remediation of Material Weaknesses

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

(1) establishment of more detailed policies and procedures for the preparation of financial statements under US GAAP and (2) improvement of communication between headquarters and subsidiaries dealing with supervision over subsidiaries.

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

Changes in internal controls

Our Certifying Officers have indicated that there were no significant changes in our internal controls or other factors that could significantly affect such controls subsequent to the date of their evaluation, and there were no such control actions with regard to significant deficiencies and material weaknesses.

Sarbanes - Oxley Act 404 compliance

The Company anticipates that it will be fully compliant with section 404 of the Sarbanes-Oxley Act of 2002 by the required date for non-accelerated filers and it is in the process of reviewing its internal control systems in order to be compliant with Section 404 of the Sarbanes Oxley Act. However, at this time the Company makes no representation that its systems of internal control comply with Section 404 of the Sarbanes-Oxley Act.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company may from time to time be involved in various claims, lawsuits, and disputes with third parties, actions involving allegations of discrimination, or breach of contract actions incidental to the operation of its business. The Company is not currently involved in any such litigation that it believes could have a materially adverse effect on its financial condition or results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no unregistered sales of equity securities during the period covered by this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

There have been no material defaults for the quarter ended June 30, 2008.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the period covered by this report.

ITEM 5. OTHER INFORMATION

Change of Authorized Share of Capital Stock

On April 3, 2008, the Company amended its Articles of Incorporation to increase its authorized shares of the capital stock of the Company to 200,000,000 shares, of which 175,000,000 shares were to be designated as Common Stock and 25,000,000 shares were to be designated as Preferred Stock.

Name Change

On April 3, 2008, the Company amended its Articles of Incorporation to change its name to China Bottles Inc..

Conversion of Preferred Stock

On April 11, 2008, 5 million Preferred Stocks of the Company owned by a shareholder were converted into 25 million Common Stocks.

ITEM 6 - EXHIBITS

The following exhibits are furnished as part of the Quarterly Report on Form 10-Q/A:

Exhibit No.		Description

31		Certification of the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Dated: August 20, 2008	CHINA BOTTLES, INC.

	By:	/s/ Chong Hui Zhao
		Name: Chong Hui Zhao
		Title: Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Accounting and Financial Officer)