f10k2012_huixinwaste.htm

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES.

Market information

Our ordinary shares are being quoted and traded on OTC Bulletin Board under the symbol of “HXWWF”. The OTC Bulletin Board is an inter-dealer, over-the-counter market that provides significantly less liquidity than the New York Stock Exchange or NASDAQ Stock Market. The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade our shares, and could depress the trading price of our ordinary shares and have a long-term adverse impact on our ability to raise capital in the future.

Holders

As of March 29, 2013, there are 21,126,695 ordinary shares issued and outstanding. There are approximately 473 shareholders of our ordinary shares and 17 shareholders of our preference shares.

Transfer Agent and Registrant

Our independent stock transfer agent is Corporate Stock Transfer, located in 3200 Cherry Creek Dr. South, Suite 430, Denver, Co 80209. Their phone number is (303) 282-4800.

Dividends

During the year ended December 31, 2011, we declared and paid dividends to Mr. Tan in the amount of $294,373 as consideration to acquire his remaining 38% equity interest in Shanxi Wealth.

On October 30, 2012, Access America Fund, LP (holder of 52.46% of our Preference Shares, “AAF”) and Taylor International Fund, Ltd (14.99% of our Preference Shares, “Taylor Fund”) collectively as holders of greater than two-thirds of all of the Company’s issued Preference Shares adopted a written resolution to modify and amend Section 3.2 of the Rights, Privileges and Restrictions of the Preference Shares (the “Amendment”). Pursuant to the Amendment, dividends of the Preference Shares shall be paid in kind instead of in cash, effective as of the date of the Amendment. From October 2012 to December 2012, three shareholders of our Preference Shares (AAF, Taylor Fund, and Precise Skill Holding) agreed to accept dividend in kind accrued from December 25, 2010, and received a total number of 37,188 Preference Shares as payment of dividend in kind.

We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

In addition, due to various restrictions under PRC laws on the distribution of dividends by our PRC operating companies, we may not be able to pay dividends to our shareholders. The Wholly-Foreign Owned Enterprise Law (1986), as amended and The Wholly-Foreign Owned Enterprise Law Implementing Rules (1990), as amended and the Company Law of the PRC (2006) contain the principal regulations governing dividend distributions by wholly foreign owned enterprises. Under these regulations, wholly foreign owned enterprises may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. Additionally, such companies are required to set aside a certain amount of their accumulated profits each year, if any, to fund certain reserve funds. These reserves are not distributable as cash dividends except in the event of liquidation and cannot be used for working capital purposes. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from the Company’s profits. Furthermore, if our subsidiaries and affiliates in China incur debt on their own in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments. If we or our subsidiaries and affiliates are unable to receive all of the revenues from our operations through the current contractual arrangements, we may be unable to pay dividends on our ordinary shares.

Further, recent regulations promulgated by SAFE, regarding offshore financing activities by PRC residents have undergone a number of changes which may increase the administrative burden we face. The failure by our shareholders and affiliates who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and our PRC resident shareholders to liability under PRC law.

In 2005, SAFE promulgated regulations in the form of public notices, which require registrations with, and approval from, SAFE on direct or indirect offshore investment activities by PRC resident individuals. The SAFE regulations require PRC resident individuals to register with the relevant SAFE branch before establishing or acquiring control over an offshore special purpose company, known as “SPC”, for the purpose of engaging in an equity financing outside of PRC on the strength of domestic PRC assets originally held by those resident individuals. Without registration, the PRC entity cannot remit any of its profits out of the PRC as dividends or otherwise. This could have a material adverse effect on us given that we are a publicly traded company in the U.S.

Securities Authorized for Issuance Under Equity Compensation Plans

As of the end of the fiscal year ended December 31, 2012, we do not have any compensation plan under which equity securities of the Company are authorized for issuance. In future, we may establish and adopt equity-based compensation plan(s) if it is in the best interest of the Company and our stockholders to do so.

ITEM 6.

SELECTED FINANCIALDATA

Not applicable.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATION.

Company Overview

We are a leading manufacturer of water purifying agents in the PRC, specializing in manufacturing and distributing water purifying agents, dehydrating agents, papermaking auxiliary agents, printing and dyeing auxiliary agents, fine chemical materials, textile materials, steel, stainless steel, construction materials, aluminum alloy materials, electrical appliances and fittings, hardware for AC power, air-conditioning equipment, and plastic products. Our products are distributed in the southern, south-western, mid-eastern, and eastern part of China.

The annual amount of wastewater discharge in mainland China has been on the rise from the years of 2006 to 2012 with a 2.9%-5.6% growth rate per year. (http://jcs.mep.gov.cn/hjzl/zkgb/2011zkgb/201206/t20120606_231040.htm) Due to water deterioration in both quantity and quality, its protection becomes a concern on the top of the agenda for the Chinese government and the Chinese public. The Chinese government has adopted regulations and policies listing waste water disposal and drinking water safety as two issues of priority importance for Chinese mid-term and long-term national development plans. The Chinese government is making every effort to increase the wastewater disposal rate and wholesome water coverage rate, and at the same time raising the discharge standard for organic substances, nitrogen and phosphorus nutrient content, together with the standard for drinking water. Given the above-mentioned governmental endeavors, the demand for water purifying products has increased over the years and is expected to continue to increase in the future, considering Chinese large population and the severity of China’s current environmental challenges. As a result, we believe that there will be continuing there has been increasing market demand for our water purifying products.

Production Capacity

As of December 31, 2012, our PRC Operating Companies, Guizhou Yufeng and Shanxi Wealth, respectively reached production capability of 100,000 tons and 200,000 tons. As of December 31, 2012, our water purifying agent producing company, Jiangment Wealth Water, maintains a production capacity between 350,000 and 400,000 tons.

Our management will continue to maintain its current production capacity, and is considering the prospect of expanding the production capacity of HAC powder at Guizhou Yufeng and Shanxi Wealth in the near future. However, we presently do not have a concrete plan with respect to expansion, and therefore we are not able to estimate capital expenditures associated with such expansion with reasonable certainty.

Current Products and Manufacturing Facilities

Our major products include water purifying agents and high calcium aluminate powder. As a leading producer of water purifying agents and high calcium aluminate powder in China, we reached an annual production and distribution of approximately 322,000 tons and 290,000 tons of water purifying agent, for the years ended December 31, 2012 and 2011, respectively, and approximately 288,000 tons and 277,000 tons of HAC powder for years ended December 31, 2012 and 2011, respectively. Our operating scale has given us considerable competitive advantage in the aspects of reducing costs and developing new products to accommodate to the ever-evolving demands of the market.

We supply water purifying products for industries such as printing and dyeing, paper making, municipal wastewater, phosphorus removal, and oil removal from washing water. We employ high calcium aluminate powder to produce water purifying agent, while American and European water purifying agent manufacturers use higher-cost aluminum hydroxide. Aided by our unique and advanced technologies, the quality of our water purifying agent is similar to that produced by our American and European counterparts, and better than the products of most of our Chinese competitors. The cost of using HAC powder as raw material is only half of that of aluminum hydroxide, which gives Jiangsu Huiyuan a significant price advantage.

Traditional water purifying agents are usually produced for general purposes without tailoring to the needs of particular industrial requirements. Our water purifying agents, on the other hand, are specially developed by our research and development team and the institutions which we work with aiming at satisfying particular industrial situations and requirements. As a result, our products usually have better water purifying effects than other more general products and require a lesser amount of post-sale services. The unique character and strength of our product have been widely acknowledged by our customers over our history of business.

Realizing the popularity of customization of our products, and to further buttress our services, we have designed a mechanism to manufacture polyaluminum chloride production lines for large purchasers. These facilities are architected to produce water purifying agent to be used in treating wastewater with specific physical and chemical qualities, and located on the property of the customers for their convenience and cost-saving purposes. The implementation of this system requires substantial research and development investment, which is not available for our PRC competitors, due to their comparatively limited business scale.

Recent Events

On December 15, 2011, we effectuated a 1:1.42610714 reverse stock split of the Company’s issued and outstanding ordinary shares such that the share capital of the Company was consolidated and increased from US $5,100 divided into 39,062,500 Ordinary Shares of US$0.000128 par value each and 781,250 Preference Shares of US$0.000128 par value each, to US $7,230.536 divided into 39,062,500 Ordinary Shares of US$0.00018254172 par value each and 781,250 Preference Shares of US$0.000128 par value each. After the adjustment for such Reverse Split, each Preference Shares will be convertible into 5 ordinary shares and the holder of each Warrant will be entitled to purchase 5 ordinary shares at an exercise price of $4.50 per share. See “Description of Securities – Preference Shares” below for a description of our Preference Shares.

Critical Accounting Policies, Estimates and Assumptions

The SEC defines critical accounting policies as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates.

The discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

Revenue recognition. We recognize revenue from the sales of products. Sales are recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectivity is reasonably assured. Sales revenue is presented net of value added tax (VAT), sales rebates and returns. No return allowance is made as product returns are insignificant based on historical experience.

Allowance for doubtful accounts. In estimating the collectability of accounts receivable we analyze historical write-offs, changes in our internal credit policies and customer concentrations when evaluating the adequacy of our allowance for doubtful accounts. Differences may result in the amount and timing of expenses for any period if we make different judgments or use different estimates. Our accounts receivable represent a significant portion of our current assets and total assets. Our realization on accounts receivable, expressed in terms of United States dollars may be affected by fluctuations in currency rates since the customer’s currency is frequently a currency other than United States dollars.

Inventories. Inventories comprise raw materials and finished goods are stated at the lower of cost or market. Substantially all inventory costs are determined using the weighted average basis. Costs of finished goods include direct labor, direct materials, and production overhead before the goods are ready for sale. Inventory costs do not exceed net realizable value. We did not record any inventory reserve at the end of each of the reporting periods.

Taxation

Cayman Islands

The Government of the Cayman Islands does not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon us or our shareholders. The Cayman Islands are not party to a double tax treaty with any country that is applicable to any payments made to or by us.

We have received an undertaking from the Governor-in-Cabinet of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, for a period of 20 years from April 2006 no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to our shareholders or a payment of principal or interest or other sums by us due under a debenture or other obligation.

Hong Kong

Our indirect subsidiary, Wealth Environmental Technology, was incorporated in Hong Kong and under the current laws of Hong Kong, is subject to Profits Tax of 16.5%. No provision for Hong Kong Profits Tax has been made as Wealth Environmental Technology has no taxable income.

China

Before the implementation of the New EIT Law, FIEs established in the PRC, unless granted preferential tax treatments by the PRC government, were generally subject to an earned income tax, or EIT, rate of 33.0%, which included a 30.0% state income tax and a 3.0% local income tax. On March 16, 2007, the National People’s Congress of China passed the New EIT Law, and on November 28, 2007, the State Council of China passed the EIT Law Implementing Rules which took effect on January 1, 2008. The EIT Law and its implementing rules impose a unified EIT of 25.0% on all domestic-invested enterprises and FIEs, unless they qualify under certain limited exceptions.

In addition to the changes to the current tax structure, under the New EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a resident enterprise and will normally be subject to an EIT of 25% on its global income. The implementing rules define the term “de facto management bodies” as “an establishment that exercises, in substance, overall management and control over the production, business, personnel, accounting, etc., of a Chinese enterprise.” If the PRC tax authorities subsequently determine that we should be classified as a resident enterprise, then our organization’s global income will be subject to PRC income tax of 25%. For detailed discussion of PRC tax issues related to resident enterprise status, see “Risk Factors – Risks Related to Our Business – Under the New Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.”

In addition, the New EIT Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purposes unless the jurisdiction of incorporation of such enterprises’ shareholder has a tax treaty with China that provides for a different withholding arrangement. In this regard, we expect that 10% withholding tax will apply to dividends paid to Wealth Environmental Technology by Jiangmen Huiyuan.

Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income and non-tax deductible expenses incurred. Our management carefully monitors these legal developments and will timely adjust our effective income tax rate when necessary.

Recently Adopted Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). This pronouncement was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU No. 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. ASU No. 2011-04 is effective for reporting periods beginning after December 15, 2011 with application on a prospective basis. The adoption of ASU No. 2011-04, effective January 1, 2012, did not have a significant impact on the Company’s consolidated financial statements or disclosures.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more likely than not threshold is defined as having a likelihood of more than 50 percent. Under ASU No. 2011-08, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. ASU No. 2011-08 is effective for annual periods beginning after December 15, 2011. The adoption of ASU 2011-08, effective January 1, 2012, did not have a significant impact on the Company’s consolidated financial statements or disclosures.

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU No. 2011-11 was issued to provide enhanced disclosures that will enable users of the financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position. The amendments under ASU No. 2011-11 require enhanced disclosures by requiring entities to disclose both gross information and net information about both instruments and transactions subject to an agreement similar to a master netting arrangement. This scope would include derivatives, sale and repurchase agreements, reverse sale and repurchase agreements, and securities borrowing and lending arrangements. ASU No. 2011-11 is effective retrospectively for annual periods beginning on or after January 1, 2013, and interim periods within those periods. The adoption of ASU No. 2011-11 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU No. 2011-12 defers the effective date for provisions of ASU No. 2011-05 requiring entities to present the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income on the face of the financial statements for all periods presented. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12. ASU No. 2011-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and reinstates the requirement that reclassifications must be either disclosed on the face of the financial statements or in the notes. The adoption of ASU No. 2011-12, effective January 1, 2012, did not have a significant impact on the Company’s consolidated financial statements or disclosures.

In July 2012, the FASB issued ASU No. 2012-02, Intangible - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. ASU No. 2012-02 permits an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles – Goodwill and Other – General Intangibles Other than Goodwill. The more likely than not threshold is defined as having a likelihood of more than 50 percent. Under ASU No. 2012-02, an entity is not required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines it is more likely than not that its fair value is less than its carrying value. ASU No. 2012-02 is effective for annual periods beginning after September 15, 2012. The adoption of ASU No. 2012-02 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

RESULTS OF OPERATIONS

The following table shows key components of our results of operations during the fiscal years ended December 31, 2012 and 2011.

	Years ended December 31,
	2012			% of Revenue			2011			% of Revenue
Net revenue	$	80,459,992			100.00	%	$	68,900,075			100.00	%
Cost of revenue		44,411,319			55.20	%		37,342,469			54.20	%
Gross profit		36,048,673			44.80	%		31,557,606			45.80	%
Operating expenses:
Selling and marketing		2,953,258			3.67	%		2,174,688			3.16	%
General and administrative		6,300,847			7.83	%		5,169,298			7.50	%
Research and development		622,684			0.77	%		604,549			0.88	%
Total operating expenses		9,876,789			12.27	%		7,948,535			11.54	%
Income from operations		26,171,884			32.53	%		23,609,071			34.26	%

Other income (expenses):
Interest expense		(495,997	)		(0.62	)%		-			-	%
Interest income		753,301			0.94	%		553,107			0.80	%
Miscellaneous		14,278			0.02	%		(38	)		-	%
Total other income		271,582			0.34	%		553,069			0.80	%

Income before provision for income taxes		26,443,466			32.87	%		24,162,140			35.06	%
Provision for income taxes		6,739,279			8.38	%		6,148,633			8.92	%
Net income	$	19,704,187			24.49	%	$	18,013,507			26.14	%

Revenue:

Revenue increased by $11,559,917 or 17%, to $80,459,992 for the year ended December 31, 2012 from $68,900,075 for the year ended December 31, 2011. The increase in revenue was primarily due to the increased sales contributed by sale unit price increase, sales generated from new customers and distributers, and overall increase in volume from our existing customers.

Our revenue from sales of water purifying agents for the year ended December 31, 2012 was $42,882,342 and for the year ended December 31, 2011 was $36,388,733, representing an increase of $6,493,609 or approximately 18%. The increase was due to continuous increase of the sales of our water purifying agents through expansion of our customer base and increased orders from our existing customers.

Our revenue from sales of HAC powder for the year ended December 31, 2012 was $37,577,650 and for the year ended December 31, 2011 was $32,511,342, representing an increase of $5,066,308 or approximately 16%. This increase was primarily due to unit prices increased by 13% during the year ended December 31, 2012 compared to same period in 2011.

Cost of Revenue:

Cost of revenue increased by $7,068,850, or 19%, to $44,411,319 for the year ended December 31, 2012 from $37,342,469 for the year ended December 31, 2011. The increase in the cost of revenue was mainly due to the increase in sales of our products and was in line with the increase of our revenue. However since the increases of raw materials and overhead cost have increased at a faster pace than the increases of our sales prices, the cost of revenue ratio to revenue increased in the current year as compared to the prior year.

Cost of revenue from sales of water purifying agents for the year ended December 31, 2012 was $17,438,109, an increase of $3,986,999 or 30%, from $13,451,110 for the year ended December 31, 2011. As a percentage of net revenue, cost of revenue from sales of water purifying agents was 41% and 37% for the years ended December 31, 2012 and 2011, respectively. The increase of cost of revenue from sales of water purifying agents was primarily attributable to the increase of our revenue from sales of water purifying agents caused by both increases in sales prices and volume.

Cost of revenue from sales of HAC powder for the year ended December 31, 2012 was $26,973,210, an increase of $3,081,851 or 13%, from $23,891,359 for the year ended December 31, 2011. As a percentage of net revenue, cost of revenue from sales of HAC powder approximated 72% and 73% for the years ended December 31, 2012 and 2011, respectively. The increase of cost of revenue from sales of HAC powder was primarily attributable to the increase of our revenue from sales of HAC powder.

Gross profit:

Our gross profit increased by $4,491,067or 14% to $36,048,673 for the year ended December 31, 2012 from $31,557,606 for the year ended December 31, 2011. Our gross profit margin (gross profit divided by net revenue) decreased to 44.80% for 2012 from 45.8% for 2011. The decrease in gross profit margin was primarily due to the increases in the price of raw materials and overhead costs, which increased at a faster pace than our sales prices.

Selling and Marketing Expenses:

Our selling and marketing expenses increased by $778,570 or 36% to $2,953,258 for the year ended December 31, 2012 from $2,174,688 for the year ended December 31, 2011. The increase in our selling and marketing expenses in 2012 was primarily attributable to increase in head counts in the sales and marketing department and increase of sales commission expenses, as a result of increase of sales, which was in line with the increase of our revenue.

General and Administrative Expenses:

Our general and administrative expenses increased by $1,131,549 or 22% to $6,300,847 for the year ended December 31, 2012 from $5,169,298 for the year ended December 31, 2011. The increase in our general and administrative expenses was primarily attributable to the increase of professional expense resulting from being a public reporting company in United States, increase of payroll expenses due to increase of our head count and pay increase, increase of rent expenses and increase in sponsorship for Champion of the Earth Award we entered into with the United Nations Environment Program (“UNEP”) during the year of 2012.

Research and Development Cost:

Our research and development cost increased by $18,135 or 3% to $622,684 for the year ended December 31, 2012 from $604,549 for the year ended December 31, 2011 to develop new products in order to continue to launch new products in the future. We expect to continue to increase our research and development efforts to enhance the competitiveness of our products.

Other income (expenses):

Interest expense:

Interest expense increased by $495,997, or 100% for the year ended December 31, 2012 from $0 for the year ended December 31, 2011. The increase was primarily due to interest expense of $495,997 for short-term loans obtained during the year 2012 for use in our business operations and mining right acquisition.

Interest income:

Interest income increased by $200,194, or 36% to $753,301 for the year ended December 31, 2012 from $553,107 for the year ended December 31, 2011. The increase was primarily due to the increase in cash balance in banks as a result of our continuous increase in profits and interest income from a secured short-term note receivable with a non-related party. The note receivable carries an annual interest rate of 9% which generated an interest income of approximately $540,000 for the year ended December 31, 2012.

Net Income:

Net income increased by $1,690,680 or 9% to $19,704,187 for the year ended December 31, 2012 from $18,013,507 for the year ended December 31, 2011. The increase of our net income was primarily due to price increase and strong demand of our products as a result of our marketing efforts while we can continue keep our cost of revenue and other operating costs at a reasonable level.

LIQUIDITY AND CAPITAL RESOURCES

We had a restricted cash balance of approximately $0 as of December 31, 2012, as compared to $670,000 as of December 31, 2011. Our restricted cash held by our Escrow Agent pursuant to Investor Relations Escrow Agreement entered in December 2010, amended in November 2012, was released in December 2012 according to the terms of the escrow agreement. As of December 31, 2012, both the Holdback Escrow Agreement and Investor Relations Escrow Agreement had been expired and all funds were released.

Our funds are kept in financial institutions located in China, and banks and other financial institutions in the PRC do not provide insurance for funds held on deposit, and in the event of a bank failure, we may not have access to our funds on deposit. In addition, we are subject to the regulations of the PRC, which restrict the transfer of cash from China, except under certain specific circumstances. Accordingly, such funds may not be readily available to us to satisfy obligations that have been incurred outside the PRC.

We had working capital of approximately $12.1 million and $54.3 million as of December 31, 2012 and 2011, respectively. The decrease of working capital was largely caused by cash flows used in investing activities in mining right acquisition of approximately $63.5 million.

Our accounts receivable has been a small portion of our current assets, representing $2.7 million and $2.4 million, or 7.1% and 4.0% of current assets, as of December 31, 2012 and 2011, respectively. If customers responsible for a significant amount of accounts receivable were to become insolvent or otherwise unable to pay for our products, or to make payments in a timely manner, our liquidity and results of operations could be adversely affected. An economic or industry downturn could materially adversely affect the servicing of these accounts receivable, which could result in longer payment cycles, increased collections costs and defaults in excess of management’s expectations. A significant deterioration in our ability to collect on accounts receivable could affect our cash flow and working capital position and could also impact the cost or availability of financing available to us.

We provide our major customers with payment terms ranging from 30 to 90 days. It takes approximately one day to mine our raw materials and deliver the raw materials to our Guizhou and Shanxi facilities. We can manufacture the HAC powder and water purification agent within one day. Therefore the average time from mining the raw materials to completion of our products is approximately 2 days. Depending on the locations of our customers, delivery time ranges between a few hours to three days. We have frequent communications with our customers about their needs for our products. Our customers send us purchase orders 2 to 4 weeks prior to the requested delivery dates. We typically estimate our required raw materials for production at each month end for the following month based on the purchase orders received at month end. Since our production lead time for HAC powder and purifying agent is very short, we keep relatively small amounts of inventories. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Allowance for doubtful accounts is based on our assessment of the aging of accounts receivable, the collectability of specific customer accounts, our history of bad debts, and the general condition of the industry.

Our aging of accounts receivables could result in our inability to collect receivables requiring us to increase our doubtful accounts reserve, which would decrease our net income and working capital. We experienced no bad debt expense during the year ended December 31, 2012 and December 31, 2011. As of December 31, 2012, we believed it was appropriate not to record any allowance for doubtful accounts against our accounts receivable primarily due to the subsequent collections made on our receivable balance and our historical ability to collect our accounts receivable. Bad debt expense was $0 for the years ended December 31, 2012 and 2011.

As of December 31, 2012, inventories amounted to $1.45 million, compared to $1 million as of December 31, 2011. We have experienced steady growth of our sales. Our supplies of raw material have been very stable since we own the mining rights of mines which supply the majority of our raw material. Therefore we do not need to maintain large amounts of raw material. We expect our inventories including raw material and finished goods will continue to increase in order to meet the market demands as our sales increase.

We are required to contribute a portion of our employees’ total salaries to the Chinese government’s social insurance funds, including pension insurance, medical insurance, unemployment insurance, and job injuries insurance, and maternity insurance, in accordance with relevant regulations. Total contributions to the funds are approximately $652,767 and $384,882 for the years ended December 31, 2012, and 2011, respectively. We expect that the amount of our contribution to the government’s social insurance funds will increase in the future as we expand our workforce and operations and commence contributions to an employee housing fund.

According to the relevant PRC regulations on housing provident funds, PRC enterprises are required to contribute housing provident funds for their employees. The monthly contributions for Jiangmen City must be at least 5% of each employee’s average monthly income in the previous year. Prior to 2010, neither Jiangmen Wealth, Shanxi Wealth, nor Guizhou Yufeng, our operating subsidiaries under the PRC laws, have paid sufficient social insurance premiums and housing provident funds for their employees pursuant to the applicable PRC laws. The competent government authorities may require them not only to rectify their incompliance by paying the due and unpaid social insurance premiums and housing provident, but also impose fines. We estimated our exposure related to unpaid social insurance premiums and housing provident funds and believe the cumulated amount, including potential penalties, be approximately $300,000 for underpayments from inception of its operations through December 31, 2009. Beginning 2010, we accrued and remitted full amounts of social insurance premiums and housing provident funds for their employees pursuant to the applicable PRC laws. The underpayment amount of $300,000 was included in accrued expenses in our financial statements as of December 31, 2012 and 2011.

The ability of the Company to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. A majority of our revenue being earned and currency received are denominated in RMB, which is subject to the exchange control regulation in China, and, as a result, we may unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into US Dollars. Accordingly, the Company’s funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations.

Future Capital Expenditure

In future years, as we accelerate expansion, we expect continued capital expenditure for adding manufacturing equipment, expanding workshops and harbors, and modernizing existing equipment. We believe that such expansion will have a material impact on liquidity, capital resources and/or results of operation. However, we believe our existing cash, cash equivalents and cash flows from operations and proceeds from the completed financing in December 2010 will be sufficient to meet our presently anticipated future cash needs to bring all of our facilities into full production. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue.

It is management's intention to expand our operations as quickly as reasonably practicable to capitalize on the demand opportunity for our products. However, we presently do not have a concrete plan with respect to expansion, and therefore we are not able to estimate capital expenditures associated with expansion with reasonable certainty.

We regularly review our cash funding requirements and attempt to meet those requirements through a combination of cash on hand, cash provided by operations and available borrowings under bank lines of credit. We believe that we can continue meeting our cash funding requirements for our business in this manner over the next twelve months.

Cash Flow

	Year Ended December 31,
	2012			2011
Net cash provided by operating activities	$	25,926,157		$	15,193,667
Net cash used for investing activities		(38,362,053	)		(25,008,333	)
Net cash provided by financing activities		19,707,466			1,323,986
Effect of exchange rate changes on cash and cash equivalents		216,180			963,760
Cash and cash equivalents at the beginning of year		26,383,537			33,910,457
Cash and cash equivalents at the end of year	$	33,871,287		$	26,383,537

Net cash provided by operating activities was $25.9 million for the year ended December 31, 2012, compared to $15.2 million for the year ended December 31, 2011, an increase of $10.7 million. The net cash provided by operating activities for 2012 was primarily attributable to net profits of $19.2 million, increased by non-cash item, depreciation and amortization of $1.4 million, and shares issued as in kind payment for preferred shares dividend of $0.56 million and advance payment to supplier of 3.9 million; partially offset by an increase of accounts receivable of $0.38 million. The net cash provided by operating activities for 2011 was primarily attributable to net profits of $18 million, increased by non-cash items of $1.3 million, partially offset by an increase of accounts receivable of $1.67 million and advances from suppliers of $3.76 million.

Investing activity during the years ended December 31, 2012 and 2011 included the purchasing of equipment of $287,122 and $219,042, respectively. On August 28, 2012, we entered into a purchase agreement with a non-related party for an Aluminum Bauxite mining right located in Guizhou Province, PRC in the total amount of approximately $83 million (RMB520,000,000). In accordance with PRC regulations on natural resources, the transaction is subject to the Ministry of Land and Resources of the PRC for final approval. Pursuant to the purchase agreement, we paid $63,480,677 (RMB400,000,000) security deposit for the transaction as of December 31, 2012. The transaction has been completed and approved by the Ministry of Land and Resources of the PRC in January 2013. On August 29, 2011, we entered into a secured note receivable agreement with a non-related party in the amount of $14 million (RMB90,000,000) which was increased to approximately $25 million (RMB160,000,000) in December 2011. The note carries an annual interest rate of 9%. This note originally expired on November 28, 2011 but was extended to March 31, 2012, and is secured by the debtor’s land use right, certain tangible assets and all the business operation rights. As of March 28, 2012, the note receivable was fully repaid.

Net cash provided by financing activities amounted to $19.7 million for the year ended December 31, 2012, compared to $1.3 million for the year ended December 31, 2011, an increase of $18.4 million. The net cash provided by financing activities was primarily from various short-term note agreements we entered into during the year of 2012. The interest rate under the short-term note agreement is based on the base rate, the interest rate set by the People’s Bank of China. All short-term note agreements are personally guaranteed by Mr. Tan and Ms. Du and contain no maintenance covenants. Through these financing arrangements, we are able to seek new opportunities for investments or acquisitions with lower in interest expense. Interest under the short term note is paid monthly at the ended of each month. During the year ended December 31, 2012, $670,000 of restricted cash was released by our investors group as we fulfilled certain conditions set forth in the Holdback Escrow Agreements and the expiration of Inventor Escrow Agreement.

Based upon our present plans, we believe that cash on hand and cash flow from operations will be sufficient to fund our current capital needs. We expect that our primary sources of funding for our operations for this year will result from cash flow from operations to fund our operations during this year. However, our ability to maintain sufficient liquidity depends partially on our ability to achieve anticipated levels of revenue, while continuing to control costs. If we did not have sufficient available cash, we would have to seek additional debt or equity financing through other external sources, which may not be available on acceptable terms, or at all. Failure to maintain financing arrangements on acceptable terms would have a material adverse effect on our business, results of operations and financial condition.

Reconciliation of the Effect of Exchange Rates on Cash and Cash Equivalents

Our cash accounts are denominated in RMB and the absolute amount of RMB that we hold is unaffected by the change in the exchange rate of the RMB, our functional currency, as compared to the US Dollar, our reporting currency. The effect of exchange rate changes on cash represents changes in the value of our cash accounts because the USD to RMB exchange rate has changed during the reporting periods. When the USD declines in value against the RMB, the translation of our financial statements at year end exchange rates yields an increase in the reported amount of cash in USD. A summary of the effect of exchange rates on cash and cash equivalents follows:

	Year Ended December 31,
	2012			2011

Effect on beginning cash at period end exchange rate	$	213,701		$	1,119,733
Effect from operating activities during the year		9,319			250,715
Effect from investing activities during the year		(13,577	)		(401,957	)
Effect from financing activities during the year		6,737			(4,731	)
Effect of exchange rate changes on cash	$	216,180		$	963,760

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK.

Smaller reporting companies are not required to provide the information required by this item.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements begin on page F-1.

ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE

Except the changes in our independent auditors that were previously reported on the Annual Report on Form 10-K filed with the SEC on April 15, 2011, as amended, there is no change in and disagreements with accountants on accounting and financial occurred during the two most recent fiscal years or any subsequent interim period.

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the President and Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, due to a material weakness consisting of a lack of accounting personnel with sufficient experience in maintaining books and records and preparing financial statements in accordance with U.S. GAAP, which existed as of December 31, 2012.

Management’s Annual Report on Internal Control over Financial Reporting.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2012, the Company’s internal control over financial reporting was ineffective for the purposes for which it is intended.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In assessment of the effectiveness of internal control over financial reporting as of December 31, 2012, our management determined that a lack of accounting personnel with sufficient experience in maintaining books and records and preparing financial statements in accordance with U.S. GAAP constituted a material weakness.

We implemented or are in the process of implementing the following steps to remediate the material weakness identified above:

(1) We hired a consultant with extensive experience in U.S. GAAP and SEC reporting in May 2011 to better improve our knowledge of U.S. GAAP and SEC reporting;

(2) We hired a qualified chief financial officer in June 2011 to improve our internal control over financial reporting; and

(3) We plan to provide training to our accounting personnel to improve their knowledge of U.S. GAAP.

However, the implementation of the above remedial measures has not fully cured such identified material weakness. We are not able to estimate with reasonable certainty the costs that we will incur in continuing to implement the above and other measures designed to improve our internal control over financial reporting. If we fail to establish an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market value of our equity and/or debt may be adversely impacted.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the fourth fiscal quarter of the year ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.

OTHERINFORMATION.

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

The following sets forth information about our directors and executive officers as of the date of this report:

Name	Age	Position
Mingzhuo Tan (1)	42	Chairman, President, Chief Executive Officer, Treasurer and Secretary
Hongyu Du (2)	41	Director
Siqi Kang (2)	55	Director
Joseph Levinson (2)	36	Director
Huaili Zheng (2)	55	Director
Tin Nang (Chris) Lui (3)	55	Chief Financial Officer

(1)	Mr. Tan, our Chief Executive Officer, was appointed as the Chairman of our board of directors on December 15, 2010 upon the closing of the Share Exchange.

(2)	On March 1, 2011, the Board of Directors of the Company, comprising its sole director, Mingzhuo Tan, in accordance with Section 86 of the Company’s Articles of Associations, appointed Ms. Hongyu Du, Mr. Siqi Kang, Mr. Joseph Levinson and Mr. Huaili Zheng as directors of the Company. Mr. Siqi Kang, Mr. Joseph Levinson and Mr. Huaili Zheng (the “Independent Directors”) were each elected to serve on the Board of Directors as an “independent director” as defined by Rule 4200(a)(15) of the Marketplace Rules of The Nasdaq Stock Market, Inc..

(3)	Mr. Tin Nang (Chris) Lui was appointed as our Chief Financial Officer on June 28, 2011.

Mr. Mingzhuo Tan, Age 42, Chairman, President, Chief Executive Officer

Mr. Tan is the Chairman, President, Chief Executive Officer and the founder of the Company and has served the Company since April 2003. From July 1994 to October 1998, Mr. Tan worked for Xinhui Environmental Service Co. From November 1998 to March 2003, he served as the general manager of Jiangmen Pengjiang Huixin Chemical Industry Co., Ltd. Mr. Tan is currently the vice chairman of Guangdong Council for the Development Promotion of Small and Middle Size Enterprises, a director of Guangdong Association of Environmental Protection Industry, vice director of Guangdong Chamber of Commerce in Guizhou and vice director of Jiangmen Chamber of Commerce, etc. Mr. Tan received his B.A. in Environmental Engineering from Chongqing University in 1994. He received an EMBA degree from the Business School of South China University of Technology in 2010.

Mr. Tan’s experience as the founder of the PRC operation companies and his experience with Xinhui Environmental Service Co. and Jiangmen Pengjiang Huixin Chemical Industry Co., Ltd., and his qualifications and comprehensive skills in business management accumulated from such prior experience led to the conclusion that Mr. Tan qualifies to serve as our director in light of our business and structure.

Hongyu Du, 41, Director. Ms. Du is the co-founder of the Jiangmen Wealth Environmental Protection Company Limited and has worked as the vice president since April 2003, being responsible for the administrative operations, personnel and financial records. From July 1994 to April 2002, Ms. Du served as the section chief in Jinling Electrical Appliance Co., Ltd., Mitsubishi Heavy Industries. Ms. Du is experienced in corporate finance, enterprise interior operation and financial management. She graduated from Chongqing University in 1994, with a Bachelor degree in heating ventilation and air conditioning.

Ms. Du’s experience as the founder of the PRC operation companies and her experience with Jinling Electrical Appliance Co., Ltd., and Mitsubishi Heavy Industries (China) Co., Ltd., and her qualifications and attributes in corporate finance and operation management accumulated from such prior experience led to the conclusion that Ms. Du qualifies to serve as our director in light of our business and structure.

Siqi Kang, 55, Director. Mr. Kang has been the Vice Chancellor and a professor in Guangdong Science and Technology Vocational College since March 2004. He was the Vice Chancellor and a professor in Wuyi University from May 1996 to March 2004, and a professor in Department Director of Central South University from September 1988 to May 1996. Mr. Kang has extensive teaching and researching experience in the universities in China. He also worked as a project leader for nine national and provincial projects, and forty research and development projects for enterprises in related to environmental protection issues. He published over thirty papers in environmental protection and wastewater treatment areas. Additionally, Mr. Kang participated in assessment and evaluation of environmental engineering projects. Mr. Kang received his PhD degree in non-ferrous metallurgy and environmental protection, Central South University in 1988.

Mr. Kang’s experience in environmental protection research and studies in China, his qualification as an scholar in environmental protection, in particular wastewater treatment areas, and his skills in assessment and evaluation of environmental engineering projects led to the conclusion that Mr. Kang qualifies to serve as our director in light of our business and structure.

Joseph Levinson, 36, Director. Mr. Levinson has been a director of the Company since March, 2011. He has been a United States Certified Public Accountant for more than 15 years. From January 2006 until the present, he has been principally engaged as an independent consultant to Chinese companies involved in overseas transactions. He speaks, reads and writes Chinese fluently and has vast experience in China working with Chinese companies. He was previously a Manager in the banking practice of the New York office of Deloitte and Touche and was involved in numerous transactions involving complex financial structures. He also previously worked at KPMG in New York and Hong Kong. In the 1990s, Mr. Levinson served as an executive of Hong Kong Stock Exchange-listed China Strategic Holdings, where his major responsibilities included its subsidiary, China Tire, one of the first Mainland Chinese companies to list on the NYSE. He is also the editor of Wall Street Guanxi: How Chinese Companies Can Maximize Their Value in the U.S. Capital Markets, a trade paperback published in Chinese by Beijing University Press in 2007. Mr. Levinson graduated summa cum laude from the University at Buffalo in 1994 with a double major in accounting and finance.

Mr. Levinson’s experience as directors in various Chinese companies involved in overseas transactions, and his qualification and skills in financial management led to the conclusion that Mr. Levinson qualifies to serve as our director in light of our business and structure.

Huaili Zheng, 55, Director. Mr. Zheng has been a professor in Chongqing University, Institute of Urban Construction and Environmental Engineering since October 2007. From December 2000 to September 2007, he was a director of Materials Chemistry Department and a professor at Chongqing University. From December 1995 to November 2000, he was an associate professor, the laboratory director and the department director in Chongqing Architecture University. From July 1988 to November 1995, he was an assistant professor and a department deputy director in Chongqing Architecture University, Science and Technology Application Department. Mr. Zheng is a water treatment specialist in China and he is familiar with the application of water treatments and environmental protection area. Mr. Zheng graduated from Chongqing University with a PhD degree in chemistry/municipal engineering in 2003. He received his Master degree in analytical chemistry from Sichuan University in 1988 and his Bachelor degree in analytical chemistry from Sichuan University in 1982.

Mr. Zheng’s experience and qualification as professors in chemistry and environmental protection field at universities in China and his specific knowledge and academic capability in water treatment field led to the conclusion that Mr. Zheng qualifies to serve as our director in light of our business and structure.

Tin Nang (Chris) Lui, Age 55, Chief Financial Officer. Mr. Lui is the owner and founder of T.N. Lui & Co., a Hong Kong company established in January 1997, which provides advisory services in tax, insolvency and audit matters for small to medium sized businesses in a variety of industries. Mr. Lui is a fellow member of the Institute of Chartered Accountants in England & Wales and the Hong Kong Institute of Certified Public Accountants. Mr. Lui is also a member of the Chartered Institute of Management Accountants in the United Kingdom. Mr. Lui graduated from University of Bradford in the United Kingdom with a Masters Degree in Business Administration. Mr. Lui also received a Bachelor of Science Degree in Accounting and Data Processing from the University of Leeds in the United Kingdom.

Advisory Board

We engage experts in the fields of water treatment and chemistry to act as our advisory and constitute our advisory board. Our advisors are engaged and compensated on an annual basis and may vary from year to year. As of the filing of this report, prior engagement of advisors has expired, and we are seeking to renew or engage new addition to our advisory board.

Term of Office

Our directors hold office until the next annual general meeting of our stockholders and until their successors have been duly elected and qualified or until removed from office in accordance with our bylaws. Our officers are elected by and serve at the discretion of the board of directors.

Family Relationships

Except that Mr. Tan, our chairman, Chief Executive Officer and President, and Mrs. Du, our director are related by marriage, there are no family relationships between any of our directors or executive officers.

Employment Agreements

We entered into an employment agreement that the Company with Mr. Lui on June 28, 2011, pursuant to which Mr. Lui’s employment commences on July 1, 2011 and will expire on June 30, 2013. Mr. Lui’s employment may be terminated by the Company upon thirty (30) days’ notice by the Company if Mr. Lui is unable to fulfill his duties as the Chief Financial Officer or breaches his obligations under the Employment Agreement. However, either party may terminate the Employment Agreement upon fifteen (15) days’ notice to the other party during the first three months of the employment term. Mr. Lui is entitled to receive an annual salary of $60,000 before taxes and may receive a discretionary bonus at the year-end during the employment.

As of the filing of this report, we have not entered into employment agreements with other executive officers and directors other than Mr. Lui.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

●	been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
●	had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
●	been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

●	been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
●	been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
●	been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Potential Conflict of Interest

Except as set forth in our discussion below in “Certain Relationships and Related Transactions, and Director Independence – Transactions with Related Persons,” none of our directors, director nominees, or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Board Committees

We have not formed an Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report. Our Board of Directors performs the principal functions of an Audit Committee. We currently do not have an audit committee financial expert on our Board of Directors. We believe that an audit committee financial expert is not required because the cost of hiring an audit committee financial expert to act as one of our directors and to be a member of an Audit Committee outweighs the benefits of having an audit committee financial expert at this time.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, officers and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and are required to furnish us with copies of these reports. Based solely on our review of the reports filed with the SEC, we believe that all persons subject to Section 16(a) of the Exchange Act timely filed all required reports in fiscal year of 2012 as of the date of this filing.

Code of Ethics

We currently do not have a code of ethics that applies to our officers, employees and director, including our Chief Executive Officer, however, we are in the process of formulating a code of ethics and intend to adopt one in the near future.

ITEM 11.

EXECUTIVE COMPENSATION.

Summary Compensation Table— Fiscal Years Ended December 31, 2012 and 2011

Summary Compensation of Named Executive Officers

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Mingzhuo Tan	2012		57,132		79,351		-		-		136,483
Chairman, President and Chief Executive Officer	2011		55,700		-		-		-		55,700

Patrick S.H. Chan	2012		-		-		-		-		-
Former Interim Chief Financial Officer (1)	2011(2)		8,900		-		-		-		8,900

Tin Nang (Chris) Lui	2012		60,000		-		-		-		60,000
Chief Financial Officer (3)	2011(4)		30,000		-		-		-		30,000

(1)	Mr. Chan, was appointed as our interim Chief Financial Officer on December 15, 2010 upon the closing of the Share Exchange, and was later dismissed by us from such position on June 28, 2011. Mr. Chan’s dismissal is not a result of any disagreement with the Company on any matters relating to the Company’s operations, policies or practices.
(2)	Represents compensation that Mr. Chan received from January 1, 2011 through June 28, 2011.
(3)	Mr. Tin Nang (Chris) Lui was appointed as our Chief Financial Officer on June 28, 2011.
(4)	Represents compensation that Mr. Lui received from June 28, 2011 through December 31, 2011

Outstanding Equity Awards at Fiscal Year End

None of our executive officers received any equity awards, including, options, restricted stock or other equity incentives during the fiscal year ended December 31, 2012.

Compensation of Directors

Our director Mr. Mingzhuo Tan was not compensated for serving on the board of directors in fiscal year 2012 and 2011. Our directors Ms. Hongyu Du, Mr. Joe Levinson, Mr. Huaili Zheng, and Mr. Siqi Kang, were appointed to serve on the board of directors on March 1, 2011. Mr. Joe Levinson receives compensation for $30,000 each year and Mr. Huaili Zheng receives compensation for $20,000 each year for serving on the board of directors. Ms. Hongyu Du and Siqi Kang are not compensated for serving on the board of directors. Ms. Du received $28,500 and $27,800, in fiscal years of 2012 and 2011, respectively, in connection with services provided to our Operating Companies as a financial manager.

Compensation Committee Interlocks and Insider Participation

During the fiscal year of 2012, we did not have a standing compensation committee. Our board of directors was responsible for the functions that would otherwise be handled by the compensation committee. All directors participated in deliberations concerning executive officer compensation, including directors who were also executive officers, however, none of our executive officers received any compensation during the last fiscal year. None of our executive officers has served on the board of directors or compensation committee (or other committee serving an equivalent function) of any other entity, any of whose executive officers served on our Board or Compensation Committee.

Indemnification of Directors and Executive Officers and Limitation of Liability

Cayman Islands law does not limit the extent to which a company’s articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articles of association provide for indemnification of our officers and directors for any liability incurred in their capacities as such, except through their own willful negligence or default.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is theretofore unenforceable.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS.

The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our ordinary shares, the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding ordinary shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. ordinary shares subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on 21,126,695 ordinary shares and 177,530 preference shares issued and outstanding as of March 29, 2013.

	Amount and Nature of Beneficial Ownership
	Ordinary Shares (1)						Preference Shares (2)					% Total Voting Power (3)
Name and Address of Beneficial Owner	No. of Shares			% of Class			No. of Shares		% of Class			% Total Voting Power (3)
Directors and Officers
Mingzhuo Tan, Chairman, President, and CEO (4)		9,000,000			42.68	%		0		*			42.68	%
Hongyu Du, Director		0			*			0		*			*
Siqi Kang, Director		0			*			0		*			*
Joseph Levinson, Director		0			*			0		*			*
Huaili Zheng, Director		0			*			0		*			*
Tin Nang (Chris) Lui, CFO		0			*			0		*			*
All officers and directors as a group (6 persons)		9,000,000			42.68	%		0		*			42.68	%

5% Security Holders
Access America Fund, LP 800 Town & Country Blvd., Suite 420 Houston, TX 77024		4,025,841	(5)		19.09	%		-		*	%		19.09	%
Taylor International Fund, Ltd. 714 S. Dearborn 2nd Floor Chicago, IL 60605		574,995	(6)		2.73	%		59,394		32.24	%		2.73	%
Feinberg Family Trust 25220 Walker Road Hidden Hills, CA 91302		250,005	(7)		1.19	%		33,334		18.10	%		1.19	%

(1)

Based on 21,126,695 ordinary shares issued and outstanding as of March 29, 2013. For each beneficial owner above, the number of ordinary shares into which preference shares held by such beneficial owner are convertible within 60 days of March 29, 2013 have been included in the number of ordinary shares owned by such beneficial owner.

(2)	Based on 177,530 Preference Shares issued and outstanding as of March 29, 2013. Each Preference Share is convertible into 5 ordinary shares (subject to customary adjustments for stock splits, combinations, or equity dividends on ordinary shares). Holders of Preference Shares vote with the holders of ordinary shares on all matters on an “as converted” basis.
(3)	Percentage Total Voting Power represents total voting power for each beneficial owner with respect to all shares of our ordinary shares and Preference Shares beneficially owner as of March 29, 2013 and voting as a single class on an “as converted” basis.
(4)	Includes 9,000,000 ordinary shares held by Star Prince Limited. Mr. Mingzhuo Tan is the sole director of Star Prince Limited and has voting and dispositive control over the securities held by it. Pursuant to the Lock-up Agreement, all of the ordinary shares held by Star Prince Limited are subject to an eighteen-month lock-up period following the closing of the private placement on December 15, 2010. In addition, pursuant to the Make Good Escrow Agreement, Star Prince Limited deposited 4,500,000 ordinary shares held by it into an escrow account for the benefit of the investors in the event that we fail to meet certain financial performance thresholds.
(5)	Includes 583,335 ordinary shares issuable upon exercise of a warrant. Access America Investments LLC is the General Partner of Access America Fund, LP and has voting and dispositive control over securities held by Access America Fund, LP. Christopher Efird is the Managing Director of Access America Fund, LP and has voting and dispositive control over securities held by it.
(6)	Includes 166,665 ordinary shares issuable upon exercise of a warrant and 296,970 ordinary shares issuable upon conversion of 59,394 Preference Shares. Stephan Taylor has voting and dispositive control over securities held by Taylor International Fund Ltd..
(7)	Includes 83,335 ordinary shares issuable upon exercise of a warrant and 166,670 ordinary shares issuable upon conversion of 33,334 Preference Shares. Jeffrey Feinberg has voting and dispositive control over securities held by Feinberg Family Trust.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE.

Transactions with Related Persons

Wealth Environmental Protection and its Subsidiaries

The following sets forth a summary of transactions since the beginning of the fiscal year of 2010, or any currently proposed transaction, in which the Company was to be a participant and the amount involved exceeded or exceeds $120,000 and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

●

On August 23, 2012, the Company entered into a $12.70 million (RMB80,000,000) short-term note agreement with Industrial Bank Co., Limited (“IB”) with a one year maturity, is personally guaranteed by Mr. Tan and Ms. Du, and contains no maintenance covenants. The interest rate under the short-term note agreement is based on the base rate, the interest rate set by the People’s Bank of China (6% at December 31, 2012). Interest under the short term note is paid monthly at the ended of each month. As of December 31, 2012, all interest was fully paid.

●

On December 3, 2012, the Company entered into a $6.35 million (RMB40,000,000) short-term note agreement with Industrial Bank Co., Limited (“IB”) with a one year maturity, is personally guaranteed by Mr. Tan and Ms. Du, and contains no maintenance covenants. The interest rate under the short-term note agreement is based on the base rate, the interest rate set by the People’s Bank of China (6% at December 31, 2012). Interest under the short term note is paid monthly at the ended of each month. As of December 31, 2012, all interest was fully paid.

●	During the year ended December 31, 2011, the Company declared and paid a dividend in the amount of $294,373 to Mr. Ming Zhou Tan (“Mr. Tan”) to acquire his remaining 38% equity interest in Shanxi Wealth.

●	During the year ended December 31, 2012, Mr. Tan loaned $0 to the Company. As of December 31, 2012 and 2011, amount due to Mr. Tan and Ms. Du totaled $15,290 and $15,226, respectively. The advances are payable on demand and are non-interest bearing.

●

During the year ended December 31, 2010, the Company executed a lease agreement for its corporate office space owned by Mr. Tan. The lease is for a term of 5 years from January 1, 2011 to December 31, 2015 with monthly lease payments of $11,833. The Company incurred rent expense approximately of $152,140 and $148,736 related to this office lease during the years ended December 31, 2012 and 2011, respectively.

●

On September 29, 2010, Jiangmen Huiyuan entered into an Exclusive Business Cooperation Agreement with Jiangmen Wealth Water, pursuant to which Jiangmen Huiyuan will provide Jiangmen Wealth Water with exclusive and complete business support, and technical and consulting services related to the principal business of Jiangmen Wealth Water.

●

On September 29, 2010, each of Jiangmen Huiyuan and Jiangmen Wealth Water entered into an Equity Interest Pledge Agreement with Mr. Mingzhuo Tan and Ms. Hongyu Du, respectively, pursuant to which Mr. Tan and Ms. Du pledged all of their equity interest in Jiangmen Wealth Water to Jiangmen Huiyuan to secure Jiangmen Water Wealth’s obligations under the Exclusive Business Cooperation Agreement. On September 29, 2010, the pledges were registered with the Pengjiang Branch of Jiangmen Administration of Industry and Commerce.

●

On September 29, 2010, Jiangmen Huiyuan and Jiangmen Wealth Water entered into an Exclusive Option Agreement with Mr. Tan and Ms. Du, respectively, pursuant to which Jiangmen Huiyuan obtained the exclusive option to purchase or designate another qualified person to purchased part or all of the equity interest that Mr. Tan and Ms. Du hold in Jiangmen Wealth Water to the extent permitted by the PRC law.

●

On September 29, 2010, each of Mr. Tan and Ms. Du signed a power of attorney which provides that Jiangmen Huiyuan has the power to act as his/her exclusive agent with respect to all matters related to his/her equity interest in Jiangmen Wealth Water while he or she is a shareholder of Jiangmen Wealth Water.

●	In May 2010 and September 2010, Wealth Environmental Protection issued two note for a total of $500,000 to Huixin, The notes pay interest at 10% and are due at the earlier of a) the one year anniversary form the date of issuance, or b) a change of control of Huixin.

●

For the year ended December 31, 2010, the Company loaned $115,163, on a non-interest bearing basis, to an affiliated company, which is owned by the Company’s shareholders, Mr. Ming Zhou Tan (“Mr. Tan”) and Ms. Hong Yu Du (“Ms Du”). On December 30, 2010, the Company declared and paid dividends to Mr. Tan, Ms. Du, and Mr. Pan in the amount of $115,163 which was used as a full repayment of the aforementioned loan.

●

In August and September 2010, through a restructuring process, Jiangmen Wealth paid $74,705 and $463,160 to acquire 100% equity interest of Guizhou Yufeng and 62% equity interest of Shainxi Wealth, respectively. Upon completion of this restructuring, the remaining 38% of Shainxi Wealth was owned by Mr. Tan who assigned all the ownership rights including voting rights to Jiangmen Wealth. Mr. Tan and Ms. Du collectively owned 100% of Jiangmen Wealth and its subsidiaries after this restructuring.

●	In May 2010, Mr. Tan paid on behalf of the Company, cash collateral of $250,000, pursuant to the terms of the Convertible Note Payable Agreement between us and Jiangmen Wealth.

Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons

We expect to prepare and adopt a written related-person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration and approval or ratification of “related-persons transactions.” For purposes of our policy only, a “related-person transaction” will be a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any “related person” are participants involving an amount that exceeds $120,000. Transactions involving compensation for services provided to us as an employee, director, consultant or similar capacity by a related person will not be covered by this policy. A related person will be any executive officer, director or a holder of more than five percent of our ordinary shares, including any of their immediate family members and any entity owned or controlled by such persons.

We anticipate that, where a transaction has been identified as a related-person transaction, the policy will require management to present information regarding the proposed related-person transaction to our audit committee (or, where approval by our audit committee would be inappropriate, to another independent body of our board of directors) for consideration and approval or ratification. Management’s presentation will be expected to include a description of, among other things, the material facts, the direct and indirect interests of the related persons, the benefits of the transaction to us and whether any alternative transactions are available.

To identify related-person transactions in advance, we are expected to rely on information supplied by our executive officers, directors and certain significant shareholders. In considering related-person transactions, our board of directors will take into account the relevant available facts and circumstances including, but not limited to:

●	the risks, costs and benefits to us;

●	the effect on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

●	the terms of the transaction;

●	the availability of other sources for comparable services or products; and

●	the terms available to or from, as the case may be, unrelated third parties or to or from our employees generally.

We also expect that the policy will require any interested director to excuse himself or herself from deliberations and approval of the transaction in which the interested director is involved.

Promoters and Certain Control Persons

Promoter within the definition of 12b-2 includes (i) any person who, acting alone or in conjunction with one or more other persons, directly or indirectly takes initiative in founding and organizing the business or enterprise of an issuer; or (ii) any person who, in connection with the founding and organizing of the business or enterprise of an issuer, directly or indirectly receives in consideration of services or property, or both services and property, 10 percent or more of any class of securities of the issuer or 10 percent or more of the proceeds from the sale of any class of such securities.

We have no knowledge of any person who would be deemed a “promoter” of our company during the past five years within the meaning of Rule 405 under the Securities Act, except as follows:

Mr. David Richardson, who was a director at the inception of Huixin, may come into the definition of promoter as person taking initiative in founding and organizing the business of the company. On September 27, 2006, Huixin issued 78,125 ordinary shares (adjusted to reflect consolidation effectuated On March 1, 2008.) or 9.1% of the number of the outstanding ordinary shares at the time of the issuance, at par value of 0.000128 to Mid-Ocean Consulting Limited, for aggregate consideration of $10 at a purchase price of $.0001 per share. Mr. Richardson is the owner and the President and CEO of Mid-Ocean Consulting Limited and has voting and investment control over such shares, and therefore may be deemed to be the beneficial owner of the shares issued by the company. The shares Mr. Richardson beneficially owns may be deemed an item of value received from the Company as a promoter.

Mr. Joseph Rozelle, who was a director at the inception of Huixin, may come into the definition of promoter as person taking initiative in founding and organizing the business of the company. On September 27, 2006, the company issued 781,250 ordinary shares (adjusted to reflect consolidation effectuated On March 1, 2008.) or 90.9% of the number of outstanding ordinary shares at the time of the issuance, at par value of 0.000128 to Nautilus Global Partners, LLC, for aggregate consideration of $100 at a purchase price of $.0001 per share. Mr. Rozelle is the President of Nautilus Global Partners but does not have voting or investment control over such shares, and the shares issued by Huixin may not be deemed to be beneficially owned by Mr.Rozelle, and therefore will not be deemed as item of value received by Mr. Rozelle from Huixin.

Director Independence

Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

ooo	the director is, or at any time during the past three years was, an employee of the company;
ooo	the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);
ooo	a family member of the director is, or at any time during the past three years was, an executive officer of the company;
ooo	the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);

ooo	the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or
ooo	the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

Only Mr. Siqi Kang, Mr. Joseph Levinson and Mr. Huaili Zheng are considered independent in light of the NASDAQ Listing Rule 5605(a)(2) and the standards established by the SEC.

We do not currently have a separately designated audit, nominating or compensation committee.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES ANDSERVICES.

(1) Audit Fees

The aggregate fees paid for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-K or 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was $219,773 and $218,869 for the fiscal years ended December 31, 2012 and 2011, respectively.

(2) Audit-Related Fees

There were no fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements.

(3) Tax Fees

There were no fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

(4) All Other Fees

There were no other fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.

(5) Pre-Approval Policies and Procedures

Before the accountant is engaged by the issuer to render audit or non-audit services, the engagement is approved by the Company’s the board of directors acting as the audit committee.

ITEM 15.

EXHIBITS, FINANCIAL STATEMENTSCHEDULES.

HUIXIN WASTE WATER SOLUTIONS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2012 and 2011


		Page

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of December 31, 2012 and 2011		F-3

Consolidated Statements of Income for the years ended December 31, 2012 and 2011		F-4

Consolidated Statements of Comprehensive Income ended December 31, 2012 and 2011		F-5

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2012 and 2011		F-6 - 7

Notes to Consolidated Financial Statements		F-9 - 30

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Huixin Waste Water Solutions, Inc.:

We have audited the accompanying consolidated balance sheets of Huixin Waste Water Solutions, Inc. (the “Company”), as of December 31, 2012 and 2011, and the consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows the years ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Ham, Langston & Brezina, L.L.P.

Houston, Texas

March 29, 2013

F-2

HUIXIN WASTE WATER SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of December 31,
	2012		2011
ASSETS

Current assets:
Cash and cash equivalents	$	33,871,287	$	26,383,537
Restricted cash		-		670,000
Accounts receivable		2,729,778		2,372,832
Note receivable		-		25,187,727
Interest receivable		-		156,085
Inventories		1,447,570		957,509
Advances to suppliers		-		3,825,386
Other current assets		31,479		14,168

Total current assets		38,080,114		59,567,244

Property, plant and equipment and land use and mining rights, net		13,618,082		14,627,533
Deposit for mining right acquisition		63,480,677		-

Total assets	$	115,178,873	$	74,194,777

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Short-term debt	$	19,044,203	$	-
Accounts payable		2,444,555		1,855,530
Accrued expenses		2,335,342		1,533,878
Due to an officer/stockholder		15,290		15,226
Value added taxes payable		646,743		497,581
Other taxes payable		160,605		90,150
Income tax payable		1,332,804		1,286,537

Total current liabilities		25,979,542		5,278,902

Deferred income taxes		311,425		311,339

Total liabilities		26,290,967		5,590,241

Commitments and contingencies

Shareholders’ equity:
Preferred stock, $0.000128 par value, 781,250 shares
authorized, 184,198 and 444,804 shares issued and outstanding at
December 31, 2012 and 2011, respectively		24		57
Common stock: $0.00018254172 par value, 39,062,500 shares
authorized, 21,089,275 and 19,600,305 shares issued and outstanding
at December 31, 2012 and 2011, respectively		3,850		3,578
Additional paid-in capital		24,840,803		24,283,222
Accumulated other comprehensive income		7,071,841		6,492,658
Retained earnings (the restricted portion of retained earnings
is $496,396 at December 31, 2012 and 2011)		56,971,388		37,825,021

Total shareholders’ equity		88,887,906		68,604,536

Total liabilities and shareholders’ equity	$	115,178,873	$	74,194,777

The accompanying notes form an integral part of these consolidated financial statements

F-3

HUIXIN WASTE WATER SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Year Ended December 31,
	2012			2011

Net revenue	$	80,459,992		$	68,900,075
Cost of revenue		44,411,319			37,342,469

Gross profit		36,048,673			31,557,606

Operating expenses:
Selling and marketing		2,953,258			2,174,688
General and administrative		6,300,847			5,169,298
Research and development		622,684			604,549

Total operating expenses		9,876,789			7,948,535

Income from operations		26,171,884			23,609,071

Other income and (expenses):

Interest expense		(495,997	)		-
Interest income		753,301			553,107
Miscellaneous		14,278			(38	)

Total other income		271,582			553,069

Income before provision for income taxes		26,443,466			24,162,140

Provision for income taxes		6,739,279			6,148,633

Net income		19,704,187			18,013,507
Less: cumulative dividends on preferred stock		386,809			400,324
Net income attributable to common shareholders	$	19,317,378		$	17,613,183

Net income per common share - basic	$	0.97		$	0.90
Net income per common share - diluted	$	0.90		$	0.83

Weighted average number of common shares outstanding - basic		19,815,857			19,600,305
Weighted average number of common shares outstanding - diluted		21,824,325			21,824,325

The accompanying notes form an integral part of these consolidated financial statements

F-4

HUIXIN WASTE WATER SOLUTIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31,
	2012		2011

Net income	$	19,704,187	$	18,013,507
Other comprehensive income:		579,183		1,889,067
foreign currency translation adjustments
Comprehensive income	$	20,283,370	$	19,902,574

The accompanying notes form an integral part of these consolidated financial statements

F-5

HUIXIN WASTE WATER SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Years Ended December 31, 2012 and 2011

											Additional
	Preferred Stock						Common Stock				Paid-In
	Shares			Amount			Shares		Amount		Capital

Balance as of
January 1, 2011		444,804		$	57			19,600,305	$	3,578	$	24,283,222
Dividend declared		-			-			-		-		-
Net income		-			-			-		-		-
Other comprehensive income – foreign
currency translation adjustment		-			-			-		-		-
Balance as of
December 31, 2011		444,804			57			19,600,305		3,578		24,283,222
Net income
Shares issued in kind for the payment
of preferred stock dividend		37,188			5			-		-		557,815
Preferred stock and related dividends in arrears converted to common stock		(297,794	)		(38	)		1,488,970		272		(234	)
Other comprehensive income - foreign
currency translation adjustment		-			-			-		-		-
Balance as of
December 31, 2012		184,198		$	24			21,089,275	$	3,850	$	24,840,803

The accompanying notes form an integral part of these consolidated financial statements

F-6

HUIXIN WASTE WATER SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Years Ended December 31, 2012 and 2011

	Accumulated
	Other							Total
	Comprehensive		Retained Earnings					Shareholders’
	Income		Restricted		Unrestricted			Equity

Balance as of	$	4,603,591	$	496,396	$	19,605,190		$	48,992,034
January 1, 2011
Dividend declared		-		-		(290,072	)		(290,072	)
Net income		-		-		18,013,507			18,013,507
Other comprehensive income – foreign
currency translation adjustment		1,889,067		-		-			1,889,067
Balance as of
December 31, 2011		6,492,658		496,396		37,328,625			68,604,536
Net income		-		-		19,704,187			19,704,187
Shares issued in kind for the payment
of preferred stock dividend		-		-		(557,820	)		-
Preferred stock and related dividends in arrears converted to common stock		-		-		-			-
Other comprehensive income – foreign
currency translation adjustment		579,183		-		-			579,183
Balance as of
December 31, 2012	$	7,071,841	$	496,396	$	56,474,992		$	88,887,906

The accompanying notes form an integral part of these consolidated financial statements

F-7

HUIXIN WASTE WATER SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2012			2011
Cash flows from operating activities:
Net income	$	19,704,187		$	18,013,507
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization		1,414,963			1,309,577
Deferred income taxes		(2,573	)		96,971
Changes in operating assets and liabilities:
Accounts receivable		(337,557	)		(1,666,107	)
Interest receivable		157,297			(153,616	)
Inventories		(482,114	)		(229,997	)
Advances to suppliers		3,855,087			(3,764,874	)
Other current assets		(17,190	)		7,027
Accounts payable		574,745			1,107,137
Accrued expenses		808,741			182,667
Value added taxes payable		159,755			92,376
Other taxes payable		55,010			62,266
Income tax payable		35,806			136,733

Net cash provided by operating activities		25,926,157			15,193,667

Cash flows from investing activities:
Promissory note from non related party		25,383,288			(24,789,291	)
Purchase of property, equipment and improvements		(287,122	)		(219,042	)
Deposite for mining right acquisition		(63,458,219	)		-

Net cash used for investing activities		(38,362,053	)		(25,008,333	)

Cash flows from financing activities:
Decrease in restricted cash		670,000			1,617,203
Proceeds from short term debt		41,565,134			-
Repayment on short term debt		(22,527,668	)		-
Advances from a shareholder		-			1,156
Dividend paid to a shareholder		-			(294,373	)

Net cash provided by financing activities		19,707,466			1,323,986

Effect of exchange rate changes on cash and cash equivalents		216,180			963,760

Net increase/(decrease) in cash and cash equivalents		7,487,750			(7,526,920	)

Cash and cash equivalents at the beginning of year		26,383,537			33,910,457

Cash and cash equivalents at the end of year	$	33,871,287		$	26,383,537

Supplemental disclosure of cash flow information:
Interest paid	$	495,997		$	-
Income taxes paid	$	6,703,473		$	5,904,419
Non-cash financing activities:
Preferred stocks issued in kind of payment for dividend	$	557,820		$	-

The accompanying notes form an integral part of these consolidated financial statements

F-8

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)	Organization, Nature of Business and Basis of Presentation

Huixin Waste Water Solutions, Inc. (“the Company” or “Huixin”) was incorporated in the Cayman Islands on December 7, 2006. The Company was originally organized as a “blank check” shell company to investigate and acquire a target company or business desiring to be a publicly held corporation. Wealth Environmental Protection Group, Inc. (“WEP”) was incorporated under the laws of the British Virgin Islands on June 3, 2010 to serve as an investment holding company. On December 15, 2010, the Company (i) closed a share exchange transaction pursuant to which it became the 100% parent of WEP, and (ii) assumed the operations of WEP and its subsidiaries.

The share exchange transaction has been treated as a recapitalization of WEP, with Huixin emerging as the surviving legal entity and WEP treated as the acquirer from a financial reporting standpoint. Prior to the recapitalization, the Huixin had essentially no assets or liabilities and issued approximately 96% of its outstanding shares to the shareholders of WEP and their designees in the recapitalization. The accompanying consolidated financial statements have been restated on a retroactive basis to present the capital structure of WEP as though it were the reporting entity at the beginning of the reporting period. A summary of the Company subsidiaries is currently as follows:

	Domicile and
	Date of	Paid -In		Effective
Name and Location	Incorporation	Capital		Ownership	Activities

Wealth Environmental Protection Group, Inc (“WEP”)	British Virgin Islands June 3, 2010	$	7,000	100% Owned	Holding Company

Wealth Environmental Technology Holding Ltd.(“Wealth Technology”) Hong Kong	Hong Kong June 18, 2010	$	1,299	100% Owned	Holding Company

Jiangmen Huiyuan Environmental Protection Technology Consultancy Co. (“Jiangmen Huiyuan”) Jiangmen, Guandong Province	Peoples Republic Of China (“PRC”) July 22, 2010	$	15,082	100% Owned - Wholly Foreign Owned Entity (“WFOE”)	Holding Company

Jiangmen Wealth Water Purifying Agent Co., Ltd (“Jiangmen Wealth Water”) Jiangmen, Guandong Province	PRC April 25, 2003	$	4,049,060	100% Control Through Contractual Arrangements	Manufacturing of water purifying agents

Guizhou Yufeng Melt Co., Ltd. (“Guizhou Yufeng”) Guizhou Provincre	PRC March 25, 2005	$	4,233,854	100% Control Through Contractual Arrangements	Manufacturer of HAC Powder using bauxite and limestone from mines controlled under mining rights agreements

Shanxi Wealth Aluminate Materials Co., Ltd Shangxi Province	PRC April 8, 2004	$	6,786,056	100% Control Through Contractual Arrangements	Manufacturer of HAC Powder using bauxite and limestone from mines controlled under mining rights agreements

F-9

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)	Organization, Nature of Business and Basis of Presentation, continued

On September 29, 2010, Jiangmen Huiyuan entered into a series of contractual arrangements with Jiangmen Wealth Water, and its shareholders, in which Jiangmen Huiyuan effectively assumed management of the business activities of Jiangmen Wealth Water and has the right to appoint all executives and senior management and the members of the board of directors of Jiangmen Wealth Water. The contractual arrangements are comprised of a series of agreements, including an Exclusive Business Cooperation Agreement, Exclusive Option Agreement, Equity Interest Pledge Agreement and Power of Attorney, through which Jiangmen Huiyuan has the right to provide exclusive complete business support and technical and consulting services to Jiangmen Wealth Water for an annual fee in the amount of Jiangmen Wealth Water’s yearly net profits after tax. Additionally, Jiangmen Wealth Water’s shareholders have pledged their rights, titles and equity interests in Jiangmen Wealth Water as security for Jiangmen Huiyuan to collect consulting and services fees provided to Jiangmen Wealth Water through the Equity Interest Pledge Agreement. In order to further reinforce Jiangmen Huiyuan’s rights to control and operate Jiangmen Wealth Water, the shareholders of Jiangmen Wealth Water have granted Jiangmen Huiyuan the exclusive right and option to acquire all of their equity interests in Jiangmen Wealth Water through an Exclusive Option Agreement.

Jiangmen Wealth Water owns all of the issued and outstanding capital stock of Guizhou Yufeng, and 62% of the issued and outstanding capital stock of Shanxi Wealth. The remaining 38% of the issued and outstanding capital stock of Shanxi Wealth is held by Mingzhuo Tan (“Mr. Tan”), our Chief Executive Officer. During the year ended December 31, 2009 and through the date of restructuring, Mr. Tan and his spouse, Ms. Hong Yu Du (“Ms. Du”) directly or through an affiliated company, had controlling equity interests in Jiangmen Wealth Water, Guizhou Yufeng and Shanixi Wealth. In August and September 2010, through a restructuring process, Jiangmen Wealth Water paid $74,705 and $463,160 to acquire 100% equity interest of Guizhou Yufeng and 62% equity interest of Shanxi Wealth, respectively. Upon completion of this restructuring, the remaining 38% of Shanxi Wealth was owned by Mr. Tan who assigned all the ownership rights including voting rights to Jiangmen Wealth Water. Mr. Tan and Ms. Du collectively owned 100% of Jiangmen Wealth Water and its subsidiaries after this restructuring.

Based on Jiangmen Huiyuan’s contractual relationship with Jiangmen Wealth, the Company has determined that a variable interest entity has been created and therefore Jiangmen Wealth is considered a consolidated subsidiary of the Company. Additionally, because all of the companies are currently under common control, the series of agreements and restructurings referred to above have been accounted for as a reorganization of the entities and the financial statements have been prepared as if the reorganization had occurred retroactively. Accordingly these financial statements present the consolidated operating results, assets and liabilities of Wealth, its subsidiaries and variable interest entities, which are collectively referred to as the “Company”.

The Company produces and sells water purifying agents and high-performance aluminate calcium (HAC) powder in China. HAC powder is the core ingredient of its water purifying agents.

Reverse Stock Split

On December 15, 2011, the Board of Directors and the stockholders of the Company approved and implemented a reverse stock split in a ratio of 1 share to 1.42610718 shares of the Company’s common stock. Par value of the common stock has been changed to $0.00018254172 per share. The accompanying consolidated financial statements and notes have been retroactively adjusted to reflect the effects of the reverse stock split.

(2)	Summary of Significant Accounting Policies

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

Consolidated Financial Statements

These financial statements present the consolidated accounts of the Company and its subsidiaries, WEP, Wealth Technology, and its variable interest entities, Jiangmen Huiyan, Jiangmen Wealth Water, Guizhou Yufeng and Shanxi Wealth, which are collectively referred to as the “Company”. This presentation is based upon the retroactive treatment of series of agreements and restructurings of companies under common control as described in Note 1.

All inter-company transactions and balances have been eliminated in preparation of the consolidated financial statements.

F-10

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s consolidated financial statements include collectability of accounts receivable, useful lives and impairment of property and equipment, mineral reserves available for mining production, total expected use of mineral reserves and value and realizability of intangible assets. Actual results could differ from those estimates.

Segments

For the years ended December 31, 2012 and 2011, the Company’s operations have been broken down into segments based on production facility, which represents the manner that management reviews operations on a regular basis. All of the Company’s operations revolve around the production of water purification agents made to similar specifications. All of the Company’s segments have similar assets, customers and distribution methods, and their economic characteristics are similar with regard to their gross margin percentages.

Currency Reporting

Amounts reported are stated in U.S. Dollars (“USD”), unless stated otherwise. The Company’s functional currency is Renminbi (“RMB”). Foreign currency transactions (outside the PRC) are translated into RMB according to the prevailing exchange rate at the transaction dates. Assets and liabilities denominated in foreign currencies at the balance sheet dates are translated into RMB at period-end exchange rates. For the purpose of preparing the consolidated financial statements, the consolidated balance sheets of the Company have been translated into USD at the current rates as of the end of the respective periods and the consolidated statements of income have been translated into USD at the weighted average rates during the periods the transactions were recognized. The resulting translation adjustments are recorded as other comprehensive income in the consolidated comprehensive income and as a separate component of the consolidated balance sheets and consolidated statements of shareholders’ equity.

Following is an analysis of exchange rates used in translating the Company’s financial statements from the RMB to USD as of and for the years ended December 31, 2012 and 2011 (amounts of RMB to equal 1 USD):

F-11

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

	2012		2011

Year-end exchange rate		6.3011		6.3523
Average exchange rate for the year		6.3034		6.4544

Cash and Cash Equivalents

Cash and cash equivalents consist of cash held in banks and on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased. Substantially all of the Company’s cash is deposited in the banks located in the People’s Republic of China, where there is currently no rule or regulation in place for obligatory insurance of accounts with banks and financial institutions. As of December 31, 2012, the Company had uninsured deposits in banks of approximately $33.9 million.

Restricted Cash

The restricted cash represents cash deposits in the bank which are restricted until the Company fulfills certain requirements established under the Holdback Escrow Agreement and the Investor Relations Escrow Agreement as described in Note 9. At December 31, 2012 and 2011, the Company had restricted cash of $0 and $670,000, respectively

Note Receivable

Note receivable is carried at amortized cost less an allowance for bad debt of $0. Interest income is accrued and calculated based on the stated interest rate and the principal balance of the promissory note. The Company periodically evaluates the collectability of the note receivable in order to determine whether an allowance should be recorded. As of December 31, 2012 and 2011, no allowance was recorded against the balance of the note receivable balance.

On August 29, 2011, the Company entered into a secured note receivable agreement with a non-related party in the amount of $14,087,748 (RMB90,000,000) which was increased to approximately $25,187,727 (RMB160,000,000) in December 2011. The note carries an annual interest rate of 9%. This note originally expired on November 28, 2011 but was extended to March 31, 2012, and is secured by the debtor’s land use right, certain tangible assets and all the business operation rights. Interest receivable related to this note amounted to $156,085 as of December 31, 2011. As of March 28, 2012, the note receivable was fully repaid.

Fair Value Disclosures of Financial Instruments

The Company has estimated the fair value amounts of its financial instruments using the available market information and valuation methodologies considered to be appropriate and has determined that the book value of the Company’s accounts receivable, note receivable, interest receivable, inventories, advances to suppliers, accounts payable, accrued expenses, due to officer/stockholder, value added taxes payable, other taxes payable, and income tax payable as of December 31, 2012 and 2011 approximate fair value.

Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from investments by or distributions to shareholders. Among other disclosures, items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The changes in other comprehensive income of $579,183 and $1,889,067 for the years ended December 31, 2012 and 2011, respectively, are foreign currency translation adjustments.

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, and note receivable. The Company places its cash and cash equivalents with reputable financial institutions with high credit ratings and the Company has not experienced any losses on deposits.

The Company conducts credit evaluations of customers and generally does not require collateral or other security from customers. When appropriate, the Company establishes an allowance for doubtful accounts based on various factors including the age of receivables and other information relevant to the credit risk of specific customers. The Company has not experienced any significant credit losses on accounts receivable and at December 31, 2012 and 2011, management’s analysis of customer accounts did not indicate any impaired or problem accounts for which a reserve should be established. Accordingly, there was no allowance for doubtful accounts at December 31, 2012 or 2011.

The Company periodically evaluates the financial condition of the note receivable holder and the fair value of the collateral used to secure the note receivable. As of December 31, 2012 and 2011, there was no allowance against the note receivable balance as a result of the Company’s evaluation.

Major Customers

During the years ended December 31, 2012 and 2011, there was no customer that accounted for 10% or more of the Company’s net revenue. However, certain customers did account for more than 10% of open accounts receivable at year end as described in the accounts receivable policy footnote.

F-12

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

Major Suppliers

During the years ended December 31, 2012 and 2011, certain suppliers accounted for more than 10% of the Company’s total net purchases as follows:

	Percentage of Total Purchases
	2012			2011

Supplier A		14.13	%		19.65	%
Supplier B		11.60	%		14.39	%

Revenue Recognition

The Company’s main source of revenue is generated from sales of water purifying agents and high-performance calcium aluminates powder (“HAC”). The Company recognizes revenue when there is persuasive evidence of a sales arrangement, delivery and acceptance by the customer has occurred, the sales price is fixed or determinable, and collection is probable. Under the Company’s typical sales terms for both water purifying agents and HAC, the Company recognizes revenue when product is shipped from its production facilities because shipments are made FOB shipping point with the customer bearing all shipping costs and title and risk of loss transferring to the customer upon shipment. Sales terms for water purifying agents and HAC do not include customer acceptance provisions, the right of return (unless the product is proven to be defective) or other post-delivery obligations. The Company has not experienced any significant returns associated with defective product.

Value added taxes (“VAT”) represent amounts collected on behalf of specific government agencies that require remittance of tax by specified dates. VAT is billed to customers at the time of sales and is detailed on invoices provided to the customers. The Company accounts for value added taxes on a net basis. The Company records and remits sales related value added taxes based on the applicable value added tax percentage. VAT is not included in revenue or cost of goods sold, but is recorded in accounts receivable and recognized as a net liability for unremitted amounts on the balance sheet.

Accounts Receivable

The Company evaluates the collection status of outstanding receivables at the end of each reporting period and makes estimates of potential credit losses, if any. The Company has historically had no significant credit losses on its accounts receivable and, accordingly, has not provided an allowance for doubtful accounts as of December 31, 2012 or 2011. Following is an aged analysis of accounts receivable at December 31, 2012 and 2011:

	2012		2011
Current	$	2,562,159	$	1,355,837
1 - 30 days past due		167,619		653,074
30 - 60 days past due		-		191,923
60 - 90 days past due		-		171,998
Greater than 90 days past due		-		-

	$	2,729,778	$	2,372,832

At December 31, 2012 and 2011, certain customers accounted for more than 10% of accounts receivable as follows:

	2012			2011
Customer A		29	%		26	%
Customer B		17	%		11	%
Customer C		19	%		28	%

F-13

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

Inventories

Finished goods and work-in-process inventories include the cost of raw materials, direct labor and manufacturing overhead. Raw materials inventory consists primarily of chemicals and coal for manufacturing. Inventories are stated at the lower of cost (weighted average method) or market.

Cost of Revenue

Cost of revenue includes raw materials, direct labor and factory overhead costs. Factory overhead costs consist of depreciation of production equipment and leasehold improvements, amortization of patent costs, amortization of mining and land use rights, indirect labor, utilities, repairs and maintenance costs related to the Company’s production equipment and costs related to the Company’s distribution network.

Operating Expenses

Selling and marketing expenses include salaries and employee benefits, commissions, travel and entertainment, regional office expenses and other selling expenses.

General and administrative expenses include management and office salaries and employee benefits, deprecation of office facilities, leasehold improvements, office equipment and automobiles, travel and entertainment, legal and accounting expenses, consulting fees, rent expense and other office expenses.

Transportation Charges

Transportation charges represent costs to deliver the Company’s inventory to the point of sale. Substantially all sales by the Company are made FOB shipping point, and accordingly, the customer bears the cost of shipping and the costs are not reflected in the Company’s financial statements. In the infrequent circumstance that the Company pays transportation costs on product sold, such costs are expensed and charged to costs of goods sold as incurred.

The Company incurs substantial shipping costs in moving mined bauxite and limestone from its mines to its manufacturing facilities and in moving product between facilities for further processing. Such freight-in transportation costs are recognized in the cost of inventory and recognized as expense as the underlying products are sold. Transportation costs of mined products are included in the cost of Bauxite and Limestone as specified in mining service contracts and totaled approximately $3,958,016 and $3,178,662 during the years ended December 31, 2012 and 2011, respectively. Transportation costs incurred in moving product between facilities totaled approximately $1,157,262 and $997,938 during the years ended December 31, 2012 and 2011, respectively.

Property, Plant and Equipment, and Land Use and Mining Rights

Property, plant and equipment and land use rights are carried at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line basis method over the following estimated useful lives:

		Estimated
Category		Useful Life

Land use rights		43 to 48 years
Mining rights		14 to 19 years
Leasehold improvements		20 to 40 years
Production equipment		5 to 30 years
Furniture and fixtures		5 years
Automobiles		5 years

F-14

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

Property, Plant and Equipment, and Land Use and Mining Rights, continued

Mining rights, which are for definite terms ranging from 14 to 19 years, are amortized using the units of production method. In applying this method, the numerator is current year production and the denominator is expected production from mines over the life of the individual mining rights, with consideration of production limitations imposed by the mining rights agreements. See Long-Lived Assets below.

Long-Lived Assets

If events or circumstances indicate the carrying amount of an asset may not be recoverable, management tests property and equipment and intangible assets with definite lives for impairment. If the estimated future cash flows are projected to be less than the carrying amount, an impairment write-down (representing the carrying amount of the long-lived asset which exceeds the present value of estimated expected future cash flows) is recorded as a period expense.

Events that would trigger an impairment test include the following:

●	A significant decrease in the market price of a long-lived asset.
●	A significant change in the use of a long-lived asset or in its physical condition.
●	A significant change in the business climate that could affect an asset’s value.
●	An accumulation of cost significantly greater than the amount originally expected to acquire or construct a long-lived asset.
●	A current period operating or cash flow loss combined with a history of such losses or a forecast demonstrating continued losses associated with the use of a long-lived asset.
●	An expectation to sell or otherwise dispose of a long-lived asset significantly before the end of its estimated useful life.

Based on the Company’s reviews during the years ended December 31, 2012 and 2011, there were no events or circumstances that caused management to believe that impairment tests were necessary.

Value Added Taxes (“VAT”)

Enterprises or individuals, who sell commodities, engage in repair and maintenance or import or export goods in the PRC are subject to a value-added tax in accordance with the PRC laws. The value-added tax standard rate for sales made by the Company is 17% of the gross sales price and the Company records its revenue net of VAT. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products. When the Company acquires raw materials the VAT incurred by the Company, and subject to credit, generally varies from 6% to 17% depending on the type of materials or services purchased. There is a significant difference in the VAT that the Company incurs on purchases and the amount the Company bills to customers for sales of HAC and water purifying agents due to the fact that the Company converts raw materials from their mined state to finished product and is responsible for the substantial portion of increased value in its products.

Following is an analysis of VAT billed to the Company on purchases, VAT billed by the Company on sales and VAT remitted to PRC during the years ended December 31, 2012 and 2011, with information related to the liability for uncollected or unremitted VAT at December 31, 2012 and 2011:

F-15

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

Value-Added Tax (“VAT”), continued

	2012			2011

VAT billed to customers for sales during the year	$	15,804,653		$	13,539,501
VAT billed to the Company for purchases during the year		6,287,897			5,368,815

Net VAT due the PRC for transactions during the year		9,516,756			8,170,686
Amount remitted to the PRC		(9,367,594	)		(8,062,158	)
Liability at beginning of the year		497,581			389,053

Liability at end of the year	$	646,743		$	497,581


Liability for taxes collected but not remitted at year-end	$	250,109		$	152,811
Liability for taxes billed to customers but not collected
from the customers or remitted to the PRC at year-end		396,634			344,770

Total liability for VAT at end of year	$	646,743		$	497,581

VAT is not included in revenue or costs of goods sold, but is recorded in accounts receivable and recognized as a liability for billed but uncollected or unremitted amounts on the consolidated balance sheets. The amount of VAT collected on sales differs from the 17% expected amount due to intercompany sales for which VAT is reported. VAT included in accounts receivable was approximately $396,634 and $344,770 at December 31, 2012 and 2011, respectively.

Income Taxes

Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

The FASB prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes a tax benefit associated with an uncertain tax position when, in the judgment of management, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the Company initially and subsequently measures the tax benefit as the largest amount that the Company judges to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Company’s effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management. The Company has not incurred any interest or penalties related to potential underpaid income taxes and has recognized no assets or liabilities associated with uncertain tax positions as of or for the years ended December 31, 2012 or 2011.

U.S. income taxes are not provided on foreign earnings when such earnings are indefinitely reinvested offshore. The Company periodically evaluates its investment strategies for each foreign tax jurisdiction in which it operates to determine whether foreign earnings will be indefinitely reinvested offshore and, accordingly, whether U.S. income taxes should be provided when such earnings are recorded. At December 31, 2012 and 2011, substantially all operations are in the PRC and management believes that all earnings will be indefinitely reinvested in the PRC.

Accounting for Uncertainty in Income Taxes

The Company accounts for uncertainty in income taxes in accordance with applicable accounting standards, which prescribe a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These accounting standards also provide guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Based on the Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its consolidated financial statements.

F-16

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

Environmental Expenditures

The Company records liabilities for environmental assessments and/or cleanup when it is probable a loss has been incurred and the costs can be reasonably estimated. Environmental liability estimates may include costs such as anticipated site testing, consulting, remediation, disposal, post-remediation monitoring and legal fees, as appropriate. The liability does not reflect possible recoveries from insurance companies or reimbursement of remediation costs by state agencies, but does include estimates of cost sharing with other potentially responsible parties. Estimates are not discounted as the timing of the anticipated cash payments is not fixed or readily determinable. Claims for reimbursement of remediation costs are recorded when recovery is deemed probable. To date, the Company has not had any significant recurring costs associated with managing hazardous materials and pollution in its on-going operations or any mandated expenditures to limit or remediate contamination.

Earnings Per Share

The Company accounts for earnings per common share in accordance with the relevant accounting guidance which requires companies to present basic earnings per share and diluted earnings per share. Basic earnings per share is computed by dividing net income attributable to the Company by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings per common share is computed by dividing net income attributable to the Company by the weighted-average number of shares of common stock outstanding and dilutive securities outstanding during the year. In determining the number of shares outstanding and the weighted -average number of shares, the Company considered the effect of the restructuring described in Note 1. The components of basic and diluted earnings per share are as follows:

	2012		2011
Net income (A)	$	19,704,187	$	18,013,507
Less dividends attributable to 6% convertible preferred stock		386,809		400,324

Net income available for common shareholders (B)	$	19,317,378	$	17,613,183

Weighted average number of common shares
outstanding – basic (C)		19,815,857		19,600,305
Dilutive effect of preferred stock conversions		2,008,468		2,224,020

Weighted average number of common shares outstanding – diluted (D)		21,824,325		21,824,325

Earnings per share:
Basic (B/C)	$	0.97	$	0.90

Diluted (A/D)	$	0.90	$	0.83

F-17

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2)	Summary of Significant Accounting Policies, continued

Recently Adopted Accounting Pronouncements

F-18

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3)	Inventories

A summary of inventories at December 31, 2012 and 2011 is as follows:

	2012		2011

Raw Materials	$	949,111	$	674,114
Work in progress		33,228		-
Finished goods		465,231		283,395

	$	1,447,570	$	957,509

(4)	Property, Plant and Equipment and Land Use and Mining Rights

A summary of property, plant and equipment and land use and mining rights is as follows:

	2012		2011

Leasehold improvement	$	3,348,013	$	3,321,044
Production equipment		6,777,072		6,715,532
Furniture and fixtures		468,644		441,857
Automobiles		572,900		313,333
Land use rights		2,294,833		2,276,347
Mining rights		9,045,997		8,973,128

		22,507,459		22,041,241
Less: Accumulated depreciation		8,889,377		7,413,708

	$	13,618,082	$	14,627,533

Depreciation and amortization expense was $1,414,963 and $1,309,577 for the years ended December 31, 2012 and 2011, respectively, as follows:

	2012		2011

Depreciation of plant, equipment and improvements	$	752,693	$	703,836
Amortization of land use rights		50,583		49,400
Amortization of mining rights		611,687		556,341

	$	1,414,963	$	1,309,577

As of December 31, 2012, weighted average remaining amortizable life for land-use rights and mining rights is approximately 13.58 years.

F-19

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4)	Property, Plant and Equipment and Land Use and Mining Rights, continued

The cost of land use and mining rights consists solely of the cash acquisition price of those assets under transfer of right agreements with third parties. Mine development costs and production costs are included in the cost of mined materials, are subsequently included as a component of the cost of inventory and are ultimately expensed to cost of good sold. Following is an analysis of cost of the Company’s land use rights and mining rights acquisition costs:

Land Use Rights
			Cash
	Date	Date Right	Purchase
Location	Acquired	Expires	Price

Muzhou Sanya Industrial District	August 2003	April 2046	$	857,375
Xinghong Village Zhazuo Town Xiuwen County	July 2005	August 2056		555,755
Industrial District Sanquan Town Fenyang	September 2005	September 2052		881,703

			$	2,294,833

F-20

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4)	Property, Plant and Equipment and Land Use and Mining Rights, continued

Mining Rights
			Cash
	Date	Date Right	Purchase
Location	Acquired	Expires	Price

Dashan Village Zhazuo Town Xiuwen County -
Surface Limestone Mine	September 2005	September 2023	$	476,105
Gaocang Village Longchang Town Xiuwen
County - Underground Bauxite Mine	October 2005	October 2020		2,856,630
Sangzao Village Lijiaxiang Town Fenyang City -
Surface Limestone Mine	January 2006	January 2025		1,269,615
Luotuoju Village Wangjiagou Liulin County Lvliang
Lvliang City - Underground Bauxite Mine	January 2006	January 2020		4,443,647

			$	9,045,997

The terms of the Company’s mining rights agreements provide the Company with only the right to produce specified quantities of minerals from specific mining sites. The amounts mined under the mining rights agreements are subject to annual limits; however, the rights are cumulative and unused production in any given years will carry forward to the following years to allow the Company to mine greater amounts in future years, up to the cumulative limit. At December 31, 2012 and 2011, the Company has cumulative unused limestone and bauxite production that can be used to increase production in subsequent years as shown in the following table:

	Amounts in Tons
	2012			2011
Limestone

Allowable annual production		300,000			300,000

Beginning cumulative unused production		1,477,373			1,280,154
Production allowed during the year		300,000			300,000
Actual production		(97,791	)		(102,781	)

Ending cumulative unused production		1,679,582			1,477,373

	Amounts in Tons
	2012			2011
Bauxite

Allowable annual production		350,000			350,000

Beginning cumulative unused production		1,218,404			1,115,218
Production allowed during the year		350,000			350,000
Actual production		(271,000	)		(246,814	)

Ending cumulative unused production		1,297,404			1,218,404

For the years ended December 31, 2012 and 2011, the Company is subject to a resource tax on all production from its mines of approximately $0.32 and $0.31 per ton of limestone, respectively, and $3.17 and $3.09 per ton of bauxite, respectively. The resource tax, reported in the accompanying financial statements as a component of cost of revenue, was approximately $890,363 and $796,640 for the years ended December 31, 2012 and 2011, respectively.

(5)	Deposit for mining right acquisition

On August 28, 2012, the Company entered into a purchase agreement with a non-related party for an Aluminum Bauxite mining right located in Guizhou Province, PRC in the total amount of approximately $83 million (RMB520,000,000). In accordance with PRC regulations on natural resources, the transaction is subject to the Ministry of Land and Resources of the PRC for final approval. Pursuant to the purchase agreement, the Company paid $63,480,677 (RMB400,000,000) as security deposit for the transaction as of December 31, 2012. The transaction has been completed and approved by the Ministry of Land and Resources of the PRC in January 2013.

F-21

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6)	Short-term debt

The Company's Short-term debt consisted of the following:

	December 31,		December 31,
	2012		2011

Short term note (1)	$	12,696,135	$	-
Short term note (2)	$	6,348,068	$	-

Total	$	19,044,203	$	-

On August 23, 2012, the Company entered into a $12.70 million (RMB80,000,000) short-term note agreement with Industrial Bank Co., Limited (“IB”) with a one year maturity and, is personally guaranteed by Mr. Tan and Ms. Du, and contains no maintenance covenants. The interest rate under the short-term note agreement is based on the base rate, the interest rate set by the People’s Bank of China (6% at December 31, 2012). Interest under the short term note is paid monthly at the ended of each month. As of December 31, 2012, all interest was fully paid.

On December 3, 2012, the Company entered into a $6.35 million (RMB40,000,000) short-term note agreement with Industrial Bank Co., Limited (“IB”) with a one year maturity and, is personally guaranteed by Mr. Tan and Ms. Du, and contains no maintenance covenants. The interest rate under the short-term note agreement is based on the base rate, the interest rate set by the People’s Bank of China (6% at December 31, 2012). Interest under the short term note is paid monthly at the ended of each month. As of December 31, 2012, all interest was fully paid.

(7)	Income Taxes

The Company has not recorded a provision for U.S. federal income tax for the years ended December 31, 2012 and 2011 because substantially all of the Company’s operations are conducted in the PRC. On March 16, 2007, the National People’s Congress of China approved the new Corporate Income Tax Law of the PRC (“New CIT Law”), which was effective on January 1, 2008. Under the New CIT Law, the statutory corporate income tax rate applicable to most companies, including the Company is 25%. In accordance with the New CIT Law, enterprises established under the laws of foreign countries or regions and whose “place of effective management” is located within the PRC territory are considered PRC resident enterprises and subject to the PRC income tax at the rate of 25% on worldwide income. The definition of “place of effective management” refers to an establishment that exercises, in substance, overall management and control over the production and business, personnel, accounting, properties, etc. of an enterprise. As of December 31, 2012 and 2011, no detailed interpretation or guidance has been issued to define “place of effective management”. Furthermore, as of December 31, 2012 and 2011, the administrative practice associated with interpreting and applying the concept of “place of effective management” is unclear. However, the Company has analyzed the applicability of this law, as of and for the years ended December 31, 2012 and 2011, and the Company has accrued and paid PRC tax on such basis. The Company will continue to monitor changes in the interpretation or guidance of this law.

The New CIT Law also imposes a 10% withholding income tax, subject to reduction based on tax treaty where applicable, for dividends distributed by a foreign invested enterprise to its immediate holding company outside China. Such dividends were exempted from PRC tax under the previous income tax law and regulations.

The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises have completed their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities.

The Company conducts substantially all of its business and income producing activities in the PRC and it is subject to PRC income taxes at a 25% standard tax rate in 2012 and 2011. Following is a reconciliation of the Company’s income tax provision of $6,739,279 and $6,148,633, for the years ended December 31, 2012 and 2011, respectively, to the expected US statutory rate of 34%:

F-22

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7)	Income Taxes, continued

	2012						2011
Description	Amount			Percent			Amount			Percent

Income taxes at US statutory rate applied to pretax income	$	8,990,778			34	%	$	8,215,128			34	%
Difference between US and PRC income tax rates		(2,379,912	)		(9	)%		(2,174,593	)		(9	)%
Change in valuation allowance		174,625			1	%		147,013			1	%
Other		(46,212	)		0	%		(38,915	)		(0	)%

Income tax provision	$	6,739,279			26	%	$	6,148,633			25	%

The Company’s provision for income taxes consists of the following:

	2012			2011

Current:
PRC	$	6,741,852		$	6,051,662

Deferred:
PRC		(2,573	)		96,971

	$	6,739,279		$	6,148,633

At December 31, 2012 and 2011, differences between the basis of assets and liabilities reported in the accompanying financial statements and those recognized for tax reporting purposes in the PRC, and the related deferred taxes were as follows:

Description of Deferred Tax	2012			2011

Non current liabilities:
Difference in basis of mining rights for
financial and tax reporting purposes	$	(386,425	)	$	(386,339	)

Total deferred tax liabilities		(386,425	)		(386,339	)

Non-current assets:
Net operating loss carryforwards for US and
British Virgin Island purposes		1,240,356			1,065,731
Liability for social insurance premiums
and provident housing funds not yet deductible
for tax purposes		75,000			75,000

Total deferred tax assets		1,315,356			1,140,731
Less valuation allowance		(1,240,356	)		(1,065,731	)

Net deferred tax assets		75,000			75,000

Net deferred tax liability	$	(311,425	)	$	(311,339	)

A valuation allowance for the benefit of losses incurred in the US and British Virgin Islands has been established because the Company cannot demonstrate its ability to use those losses to offset income generated in those countries.

Accounting for Uncertainty in Income Taxes

Based on the Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its consolidated financial statements.

F-23

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8)	Shareholders’ Equity

General Reserve Fund

In accordance with the PRC Regulations on Enterprises with Foreign Investment, an enterprise established in the PRC with foreign investment is required to provide for certain statutory reserves, namely (i) General Reserve Fund, (ii) Enterprise Expansion Fund and (iii) Staff Welfare and Bonus Fund, which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A WOFE is required to allocate at least 10% of its annual after-tax profit to the General Reserve Fund until the balance of such fund has reached 50% of its respective registered capital. A non- wholly-owned foreign invested enterprise is permitted to provide for the above allocation at the discretion of its board of directors. Appropriations to the Enterprise Expansion Fund and Staff Welfare and Bonus Fund are at the discretion of the board of directors for all foreign invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. As a result, $496,396 has been appropriated to the accumulated statutory reserves (included in the retained earnings) by the Company as of December 31, 2012 and 2011 and the balance represents a fully funded General Reserve Fund:

Following is an analysis of the general fund by subsidiary at December 31, 2012 and 2011:

	Registered		General
	Capital		Reserve Fund

Jiangmen Huiyuan	$	-	$	-
Jiangmen Wealth Water		61,981		38,801
Guizhou Yufeng		61,981		39,211
Shangxi Wealth		619,806		418,384

	$	743,768	$	496,396

Reverse Stock Split

During the year ended December 31, 2012 and 2011, the Company issued common and preferred stock as follows:

Common Stock

During the year ended December 31, 2012, 297,794 preferred shares were converted into 1,488,970 common shares per subscription agreement with various preferred shareholders.

F-24

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8)	Shareholders’ Equity, continued

Preferred Stock

During the year ended December 31, 2012, the Company paid $557,820 in preferred stock dividends, all of these dividends were paid in-kind at $15 per preferred share based on the pricing of the subscription agreement dated on December 15, 2010 for the total issuance of 37,188 shares of preferred stock with each of the Preference Shares convertible into five ordinary shares.

(9)	Contractual Agreements

Agreements to Prepare the Company for Recapitalization

The Company was formed through a series of reverse mergers and contractual agreements which were completed with the reverse merger of Huixin and WEP in the recapitalization transaction provided for in the Share Exchange Agreement. Prior to the recapitalization, on September 29, 2010, WEP, through its wholly owned subsidiary, Jiangmen Huiyuan entered into the following agreements with Jiangmen Wealth Water and the shareholders of Jiangmen Wealth Water and such agreements are summarized as follows:

Exclusive Business Cooperation Agreement

Under the terms of the Exclusive Business Cooperation Agreement (“Cooperation Agreement”), Jiangmen Huiyuan has the exclusive rights to provide to Jiangmen Wealth Water complete technical support, technical and consulting services related to Jiangmen Wealth Water’s principal business. Jiangmen Wealth Water cannot assign its rights under such agreement to another third party without Jiangmen Huiyuan’s consent. However, Jiangmen Huiyuan must provide a written notification to Jiangmen Wealth Water of its intent to assign the agreement to a third party but does not need the consent of Jiangmen Wealth Water for such assignment. Jiangmen Wealth Water agreed to pay an annual service fee to Jiangmen Huiyuan equal to 100% of the annual net income of Jiangmen Wealth Water. This agreement has a ten-year term, subject to renewal or early termination at the option of Jiangmen Huiyuan.

Equity Pledge Agreements

Under the Equity Pledge Agreements entered into among Jiangmen Huiyuan, Jiangmen Wealth Water and the shareholders of Jiangmen Wealth Water, the two shareholders of Jiangmen Wealth Water pledged their equity interests in Jiangmen Wealth Water to guarantee Jiangmen Wealth Water’s performance of its obligations under the Exclusive Business Cooperation Agreement and pay the consulting and service fees when they become due. If Jiangmen Wealth Water or any of its shareholders breaches his/her respective contractual obligations under the agreement, or upon the occurrence of an event of default, as defined in the agreement, Jiangmen Huiyuan is entitled to certain rights, including the rights to dispose of the pledged equity interests. In addition, the shareholders of Jiangmen Wealth Water agreed not to dispose of the pledged equity interests or take any actions that would prejudice Jiangmen Huiyuan’s interest. Each of the Equity Pledge Agreements is valid until all the service fee payments due under the Exclusive Business Cooperation Agreement have been fulfilled. Since the Exclusive Business Cooperation Agreement may be renewed at Jiangmen Huiyuan’s option, the equity pledge will remain in effect in case the Exclusive Business Cooperation Agreement is being renewed, and until all payments due under the Exclusive Business Cooperation are paid in full by Jiangmen Wealth Water.

F-25

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9)	Contractual Agreements, continued

Exclusive Option Agreements

Under the Exclusive Option Agreements among Jiangmen Huiyuan, Jiangmen Wealth Water and the shareholders of Jiangmen Wealth Water, prior to any sale of equity interest of Jiangmen Wealth Water to Jiangmen Huiyuan, the shareholders of Jiangmen Wealth Water agreed to grant exclusive rights to Jiangmen Huiyuan to purchase the equity interests from the shareholders of Jiangmen Wealth Water at a price equal to the registered capital of the proportion of equity interest being purchased to the extent which is permitted by the relevant laws and regulations of the PRC.

Irrevocable Power of Attorney

Under the Irrevocable Power of Attorney Agreement, each of the shareholders of Jiangmen Wealth Water granted to Jiangmen Huiyuan the power to exercise all voting rights of such shareholdings in shareholders’ meetings, including, but not limited to, the power to determine the sale or transfer of all or part of such shareholder’s equity interest in, and appoint and elect the directors, the legal representative, chief executive officer and other senior management of Jiangmen Wealth Water. Upon the execution of this Power of Attorney, all Jiangmen Wealth Water shareholder rights have been assigned to Jiangmen Huiyuan.

Holdback Escrow Agreement

In connection with the Private Placement, the Company entered into a Holdback Escrow Agreement with Anslow & Jaclin, LLP (“A&J”), the escrow agent, and AAI, as investor representative (the “Holdback Escrow Agreement”), pursuant to which $2,167,203 was deposited with the escrow agent to be distributed upon the satisfaction of certain covenants set forth in the Subscription Agreement. Pursuant to the Holdback Escrow Agreement, the $1,500,000 shall be released to the Company upon the hiring of a chief financial officer on terms acceptable to AAI (the “Chief Financial Officer Holdback”) and $667,203 shall be released to us upon appointment of the required independent directors to our board of directors. In March 2011, pursuant to the Holdback Escrow Agreement, $667,203 was released to us upon appointment of the required independent directors to our board of directors.

On May 20, 2011, the Holdback Escrow Agreement was amended to provide that as soon as practicable following the Offering, the Company shall employ a chief financial officer meeting certain requirements and to permit the “Lead Investor” (as defined in the Subscription Amendment) to authorize the escrow agent appointed pursuant to the Holdback Escrow Agreement to disburse a portion of the Chief Financial Officer Holdback, such portion not to exceed $750,000 in the aggregate, to the Company (a “Good Faith Disbursement”). Pursuant to Holdback Escrow Agreement, as amended on May 20, 2011, $750,000 was released to us as Good Faith Disbursement. On December 1, 2011, the Holdback Escrow Agreement was further amended to provide for a series of disbursements from the Chief Financial Officer Holdback to the Company of $100,000 commencing on December 1, 2011 and continuing on the first day of each successive month thereafter until the remaining balance of the Chief Financial Officer Holdback is disbursed to the Company (the “Monthly Disbursements”). As of December 31, 2012, all remaining balance was released.

Investor Relations Escrow Agreement

The Company entered into an investor relations escrow agreement with Anslow & Jaclin, LLP, the escrow agent, and Access America Investments, LLC, as representative of the investors, pursuant to which $120,000 was deposited with the escrow agent to be distributed in incremental amounts to pay our investor relations firm, the choice of which is subject to the approval of Access America Investments, LLC, which approval cannot be unreasonably withheld. The investor relations escrow agreement was expired in December 2012 and $120,000 remained balance was released as of December 31, 2012.

F-26

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10)	Related Party Balances and Transactions

On December 3, 2012, the Company entered into a $6.35 million (RMB40,000,000) short-term note agreement with Industrial Bank Co., Limited (“IB”) with a one year maturity(6% at December 31, 2012). Interest under the short term note is paid monthly at the ended of each month. As of December 31, 2012, all interest was fully paid.

During the year ended December 31, 2011, the Company declared and paid a dividend in the amount of $294,373 to Mr. Ming Zhou Tan (“Mr. Tan”) to acquire his remaining 38% equity interest in Shanxi Wealth. During the year ended December 31, 2011, Mr. Tan loaned $1,156 to the Company. As of December 31, 2012 and 2011, amount due to shareholders totaled $15,290 and $15,226, respectively.

During the year ended December 31, 2010, the Company executed a lease agreement for its corporate office space owned by Mr. Tan. The lease is for a term of 5 years from January 1, 2011 to December 31, 2015 with monthly lease payments of $12,696. The Company incurred rent expense of $152,300 and $148,736 related to this office lease during the years ended December 31, 2012 and 2011, respectively. (See Note 11, Operating Leases section for details)

(11)	Contingencies and Commitments

Risks Associated with Operations in the PRC

The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the United States of America. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation.

Currency Risks Associated with RMB

The Company’s sales, purchases and expense transactions are denominated in RMB and all of the Company’s assets and liabilities are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the PRC current law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation in order to affect the remittance.

Potential Liability Related to Unpaid Social Insurance Premiums and Housing Provident Funds

Prior to 2010, neither Jiangmen Wealth, Shanxi Wealth, nor Guizhou Yufeng, our operating subsidiaries under the PRC laws, have paid sufficient social insurance premiums and housing provident funds for their employees pursuant to the applicable PRC laws. The competent government authorities may require them not only to rectify their incompliance by paying the due and unpaid social insurance premiums and housing provident, but also impose fines. The Company estimated its exposure related to unpaid social insurance premiums and housing provident funds and believes the cumulated amount, including potential penalties, be approximately $300,000 for underpayments from inception of its operations through December 31, 2009. Beginning 2010, the Company accrued and remitted full amounts of social insurance premiums and housing provident funds for their employees pursuant to the applicable PRC laws. The underpayment amount of $300,000 was included in accrued expenses in the accompanying financial statements as of December 31, 2012 and 2011.

Risks Associated with Mining

The Company is involved in mineral exploration, development and production, activities that involve many risks that even a combination of experience, knowledge and careful evaluation may not be able to overcome. The Company’s operations are subject to all of the hazards and risks inherent in these activities, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our company.

F-27

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(11)	Contingencies and Commitments, continued

Asset Retirement Obligation

According to the “Rules on Mineral Resources Administration” and “Rules on Land Rehabilitation” of the PRC, mining companies causing damages to cultivated land, grassland or forest are required to restore the land to a state approved by the local governments. Based on the current positions of with the local governments administering the “Rules on Mineral Resources Administration” and “Rules on Land Rehabilitation” related to the Company’s four mines and based on management’s review of rehabilitation requirements, , the Company believes that it is not required to restore or rehabilitate its two surface limestone mining sites and its two underground bauxite mining sites because all of its current mines mining sites are located in distant areas and the mines do not affect cultivated land, grasslands or forests. Additionally, the Company’s believes that its mining and extraction activities have not negatively impacted the surrounding environment.

Operating Leases

The Company leases certain office and marketing premises under non-cancelable operating leases. During 2010, the Company’s leases for its office space expired and the Company entered into two operating leases for its headquarter and administrative offices. The Company’s most significant operating lease is the office space owned by Mr. Tan. (See Note 10) For the years ended December 31, 2012 and 2011, rent expense under operating leases was $189,990 and $158,032 respectively, including rent expense of $152,300 and $148,736, respectively, to Mr. Tan.

At December 31, 2012, future minimum lease payments due under non-cancelable operating leases were as follows:

Year ending December 31,	Related Party		Unrelated Party		Total

2013	$	152,354	$	24,755	$	177,109
2014		152,354		-		152,354
2015		152,354		-		152,354
2016		-		-		-
		-		-		-
	$	457,062	$	24,755	$	481,187

Sponsorship obligation

On November 15, 2012, the Company entered into a Donor agreement with United Nations Environment Programme (“UNEP”) to contribute to UNEP the total amount of $1,356,000 in 3 equal payments from the year of 2012 to 2014. The contribution will support UNEP Champion of the Earth, which is a global, flagship UN award established in 2004 and presented each year to outstanding environmental leaders in the categories of Policy Leadership, Science and innovation, Inspiration and Action and Entrepreneurial Vision. At December 31, 2012, the Company had not made the first payment and accrued $452,000 which was included in accrued expense. The following represents the future obligation related to this Donor agreement:

	December 31,

2013	$	452,000
2014		452,000
	$	904,000

F-28

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(12)	Segment Information

The Company follows FASB ASC 280-Segment Reporting, which requires that companies disclose segment data based on how management makes decision about allocating resources to segments and evaluating their performance. The Company has three operating segments identified by manufacturing facility and each segment is operated in a separate subsidiary. The Company primarily evaluates performance based on income before income taxes and excluding non-recurring items. The operations and product produced by the Company’s various segments are as follows:

●

Jiangmen Wealth Water produces water purification agents for specific industrial uses such as the treatment of waste water from paper mills, decolorization agent to treat waste water that contains active dyes, acid dyes and direct dyes produced in the textile and printing industry, and other industry specific water purification applications. The Company uses HAC powder produced by the Guizhou Yefeng segment in the production of its water purification agents.

●	Guizhou Yefeng produces HAC powder from calcium and aluminum derived from its limestone and bauxite mines. The HAC powder is used by Jiangmen Wealth Water in the production of its water purification agents and is also sold to outside customers for waste water treatment.

●	Shanxi Wealth produces HAC powder from calcium and aluminum derived from its limestone and bauxite mines. The HAC powder is sold to outside customers for waste water treatment.

●	Other represents the cost of corporate activities and eliminations

The segment data presented below was prepared on the same basis as the Company’s consolidated financial statements:

For the year ended December 31, 2012

	Jiangmen
	Wealth Water		Guizhou Yefeng		Shanxi Wealth		Corporate			Elimination			Total

Net revenue	$	42,882,342	$	16,594,960	$	30,832,672	$	-		$	(9,849,982	)	$	80,459,992
Cost of revenue		27,288,091		8,915,310		18,057,900		-			(9,849,982	)		44,411,319

Gross profit		15,594,251		7,679,650		12,774,772		-			-			36,048,673

Selling and marketing		1,223,289		321,584		1,408,385		-			-			2,953,258
General and administrative		2,920,265		727,336		1,409,524		1,243,722			-			6,300,847
Research and development		586,989		35,695		-		-			-			622,684

Income from operations	$	10,863,708	$	6,595,035	$	9,956,863	$	(1,243, 722	)	$	-		$	26,171,884

F-29

HUIXIN WASTE WATER SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(12)	Segment Information, continued

For the year ended December 31, 2011

	Jiangmen		Guizhou		Shanxi
	Wealth Water		Yefeng		Wealth		Corporate			Elimination			Total

Net revenue	$	36,388,732	$	13,653,814	$	26,944,749	$	-		$	(8,087,220	)	$	68,900,075
Cost of revenue		21,538,330		7,388,029		16,503,330		-			(8,087,220	)		37,342,469

Gross profit		14,850,402		6,265,785		10,441,419		-			-			31,557,606

Selling and marketing		1,131,230		292,993		750,465		-			-			2,174,688
General and administrative		2,214,036		710,215		1,259,111		985,936			-			5,169,298
Research and development		570,154		34,395		-		-			-			604,549

Income from operations	$	10,934,982	$	5,228,182	$	8,431,843	$	(985,936	)	$	-		$	23,609,071

As of December 31, 2012
	Jiangmen			Guizhou			Shanxi
		Wealth Water			Yefeng			Wealth		Corporate		Elimination			Total

Current assets		$	15,217,117		$	16,443,582		$	26,699,097	$	5,697,282	$	(25,976,962	)	$	38,080,115
Property, plant and equipment,
land use and mining right			2,707,170			4,608,245			6,302,665		-		-			13,618,080
Deposit for mining right acquisition			63,480,677			-			-		-		-			63,480,677
Total assets		$	81,404,964		$	21,051,827		$	33,001,762	$	5,697,282	$	(25,976,962	)	$	115,178,873

As of December 31, 2011
	Jiangmen		Guizhou		Shanxi
	Wealth Water		Yefeng		Wealth		Corporate		Elimination			Total
Current assets	$	37,939,256	$	10,658,031	$	18,087,450	$	6,109,033	$	(13,226,526	)	$	59,567,244
Property, plant and
equipment, land use and
mining rights		2,708,952		4,946,209		6,972,372		-		-			14,627,533
Total assets	$	40,648,208	$	15,604,240	$	25,059,822	$	6,109,033	$	(13,226,526	)	$	74,194,777

(13)	Subsequent event

F-30

(3) Exhibits

Exhibit No.		Description
2.1		Share Exchange Agreement, dated December 15, 2010, by and among Huixin Waste Water Solutions, Inc. (formerly known as China Growth Corporation), Wealth Environmental Protection Group, Inc., and Wealth Environmental Protection Shareholders Group. (1)
3.1		Amended and Restated Memorandum Of Association And Articles Of Association of the Company (7)
4.1		Form of Warrant (1)
10.1		Form of Subscription Agreement (1)
10.2		Make Good Escrow Agreement, dated December 15 2010. (1)
10.3		Holdback Escrow Agreement, dated December 15, 2010. (1)
10.4		Investor Relations Escrow Agreement, dated December 15, 2010. (1)
10.5		Form of Lockup Agreement between Star Prince Limited and Huixin Waste Water Solutions, Inc. (formerly known as China Growth Corporation) 1)
10.6		Form of Lockup Agreement between shareholder set forth therein and Huixin Huixin Waste Water Solutions, Inc. (formerly known as China Growth Corporation) (1)
10.7		Exclusive Business Cooperation Agreement between Jiangmen Huiyuan Wealth Environmental Protection Co., Ltd. and Jiangmen Wealth Water Purifying Agent Co, Ltd., dated September 29, 2010. (1)
10.8		Equity Interest Pledge Agreement between Mingzhuo Tan and Jiangmen Huiyuan Wealth Environmental Protection Co., Ltd., dated September 29, 2010. (1)
10.9		Exclusive Option Agreement between Mingzhuo Tan and Jiangmen Huiyuan Wealth Environmental Protection Co., Ltd., dated September 29, 2010. (1)
10.10		Power of Attorney by Mingzhuo Tan, dated September 29, 2010 (1)
10.11		Equity Interest Pledge Agreement between Hongyu Du and Jiangmen Huiyuan Wealth Environmental Protection Co., Ltd., dated September 29, 2010. (1)
10.12		Exclusive Option Agreement between Hongyu Du and Jiangmen Huiyuan Wealth Environmental Protection Co., Ltd., dated September 29, 2010. (1)
10.13		Power of Attorney by Hongyu Du, dated September 29, 2010 (1)
10.14		Technology Development Agreement between Jiangmen Wealth Water and Tongji University., dated October 9, 2003 (2)
10.15		Secured Note Purchase Agreement (2)
10.16		Senior Preferred Secured Note No. 1(3)
10.17		Senior Preferred Secured Note No. 2(3)
10.18		Share Transfer Agreement between Mingzhuo Tan and Jiangmen Wealth Water dated December 27, 2010 (4)
10.19		Lease between Mingzhuo Tan and Jiangmen Wealth Water Water dated December 31, 2010 (4)
10.20		Form Limestone Extraction Entrusting Contract (3)
10.21		Form Bauxite Extraction Entrusting Contract (5)

31.1*		Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (6)
31.2*		Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (6)
32.1+		Certification of the Chief Executive Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (6)
32.2+		Certification of the Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (6)
99.4		Guizhou Limestone Mining License (5)
99.5		Guizhou Bauxite Mining License (3)
99.6		Shanxi Limestone Mining License (3)
99.7		Shanxi Bauxite Mining License (3)

101. INS**		XBRL Instance Document. (6)
101. SCH**		XBRL Taxonomy Extension Schema Document (6)
101. CAL**		XBRL Taxonomy Extension Calculation Linkbase Document. (6)
101. LAB**		XBRL Taxonomy Extension Label Linkbase Document. (6)
101. PRE**		XBRL Taxonomy Extension Presentation Linkbase Document. (6)
101. DEF**		XBRL Taxonomy Extension Definition Linkbase Document. (6)

(1) Incorporated herein by reference to the Company’s current report on Form 8-K filed on December 21, 2010

(2) Incorporated herein by reference to the Company’s current report on Amendment No. 1 to Form 8-K filed on February 28, 2011

(3) Incorporated herein by reference to the Company’s current report on Amendment No. 2 to Form 8-K filed on April 18, 2011

(4) Incorporated herein by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2010 filed on April 15, 2011

(5) Incorporated herein by reference to the Company’s current report on Amendment No. 3 to Form 8-K filed on June 6, 2011

(6) Filed herewith.

(7) Incorporated herein by reference to the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2011 filed on March 29, 2012.

*Filed with this report.

+In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

**Furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise not subject to liability under these sections.

SIGNATURES

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Huixin Waste Water Solutions, Inc.

Date: March 29, 2013	By:	/s/ Mingzhuo Tan
		Mingzhuo Tan
		President and Chief Executive Officer (Duly Authorized Officer and Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date


/s/ Mingzhuo Tan	Chief Executive Officer, President and	March 29, 2013
Mingzhuo Tan	Chairman of the Board of Directors (Principal Executive Officer)

/s/ Tin Nang (Chris) Lui	Chief Financial Officer	March 29, 2013
Tin Nang (Chris) Lui	(Principal Financial Officer)

/s/ Hongyu Du
Hongyu Du	Director	March 29, 2013

/s/ Siqi Kang
Siqi Kang	Director	March 29, 2013

/s/ Joseph Levinson
Joseph Levinson	Director	March 29, 2013

/s/ Huaili Zheng
Huaili Zheng	Director	March 29, 2013

Cayman Islands		N/A
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
#99 Jianshe Road 3, Pengjiang District, Jiangmen City Guangdong Province, 529000 People’s Republic of China
(Address of principal executive offices and Zip Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class registered:	Name of each exchange on which registered:
None	None

Securities registered pursuant to Section 12(g) of the Exchange Act:
Ordinary Shares, par value $ 0.00018254172 per share (Title of class)

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	x

Item Number and Caption		Page

PART I

Item 1.	Business	1

Item 1A.	Risk Factors	16

Item 1B.	Unresolved Staff Comments	34

Item 2.	Properties	34

Item 3.	Legal Proceedings	47

Item 4.	Mine Safety Disclosures	47

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	48

Item 6.	Selected Financial Data	50

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	51

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	59

Item 8.	Financial Statements and Supplementary Data	59

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	59

Item 9A.	Controls and Procedures	59

Item 9B.	Other Information	60

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	61

Item 11.	Executive Compensation	66

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	67

Item 13.	Certain Relationships and Related Transactions, and Director Independence	69

Item 14.	Principal Accountant Fees and Services	73

PART IV

Item 15.	Exhibits, Financial Statement Schedules	F-1

SIGNATURES		76

Rank	Amount (US Dollar)		% of Revenue
Customer 1	$	4,201,735.51		9.51	%
Customer 2		3,160,499.67		7.15	%
Customer 3		3,084,465.77		6.98	%
Customer 4		3,006,854.42		6.80	%
Customer 5		2,636,115.61		5.97	%
Customer 6		2,142,840.28		4.85	%
Customer 7		2,029,665.26		4.59	%
Customer 8		2,001,917.26		4.53	%
Customer 9		1,895,975.60		4.29	%
Customer 10		1,788,109.87		4.05	%
Total	$	25,948,179.25		58.72	%

●	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
●	“Guizhou Yufeng” refers to Guizhou Yufeng Melt Co., Ltd, a PRC limited company;
●	“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
●	“Jiangmen Huiyuan” refers Jiangmen Huiyuan Environmental Protection Technology Consultancy Co. Ltd., a wholly foreign owned enterprise organized under the PRC laws;
●	“Jiangmen Wealth Water” refers to Jiangmen Wealth Water Purifying Agent Co., Ltd. , a PRC limited liability company;
●	“PRC”, “China”, and “Chinese” refer to the People’s Republic of China;
●	“PRC Operating Company” /”PRC Subsidiary” or “PRC Operating Companies” /”PRC Subsidiaries” refers to each of Jiangmen Huiyuan, Jiangmen Wealth Water, Guizhou Yufeng and Shanxi Wealth, individually or collectively;
●	“Renminbi” and “RMB” refer to the legal currency of China;
●	“SEC” refers to the United States Securities and Exchange Commission;

●	“Securities Act” refers to the Securities Act of 1933, as amended;
●	“Shanxi Wealth” refers to Shanxi Wealth Aluminate Materials Co., Ltd, a PRC limited company;
●	“Star Prince” refers to Star Prince Limited, a British Virgin Island company and a shareholder of Wealth Environmental Protection;
●	“U.S. dollars,” “dollars” and “$” refer to the legal currency of the United States;
●	“Wealth Environmental Protection” refers to Wealth Environmental Protection Group, Inc., a British Virgin Islands company;
●	“Wealth Environmental Protection Shareholders” refers to all shareholders of Wealth Environmental Protection, a British Virgin Islands company; and
●	“Wealth Environmental Technology” refers to Wealth Environmental Technology Holding, Ltd., a Hong Kong company.

(iii)	The Foreign Investment Enterprise Law (1986), as amended, and the Regulations of Implementation of the Foreign Investment Enterprise Law (1990), as amended.

(iv)	The Company Law (2005).

Item		Address		Size (m2) (1 square meter ≈ 10.78 square feet)
1		Sanya Industrial Park, Muzhou Town, Xinhui District, Jiangmen City, Guangdong Province		24,560.12

1tem	Address	Size (m2) (1 square meter ≈ 10.78 square feet)
1.	Limestone Mine, Dashan Village, Zhaozuo Town, Xiuwen County, Guizhou Province	19,400
2.	Bauxite Mine, Gaocang Village, Zhaozuo Town, Xiuwen County, Guizhou Province	387,900

No.	X coordinate	Y coordinate
1	2965220	36366465
2	2964625	36366790
3	2964410	36366550
4	2964410	36366150
5	2964630	36366200
6	2964820	36366055
7	2965055	36366110
Mining area: 0.3879km2 Mining depth: 1400m to 1150m

Sample numbers	Analyses Results（%）
	Al2O3		MgO		TiO2		SiO2		Fe2O3
	Analytical value	Average value	Analytical value	Average Value	Analytical value	Average value	Analytical Value	Average value	Analytical value	Average value
Y1	75.52	75.21	1.04	0.97	2.78	2.93	4.35	4.86	1.25	1.35
Y2	74.45		1.12		2.84		5.23		1.46
Y3	72.87		1.15		3.83		5.75		1.56
Y4	76.46		0.85		2.54		4.78		1.24
Y5	76.75		0.71		2.68		4.23		1.23

Aluminum Ore Actual Production (Ton)
2010	2011	2012
65,214	79,792	89,227

No.	X coordinate	Y coordinate
1	2966360	36368290
2	2966290	36368290
3	2966230	36368130
4	2966350	36368140
The Mine Area：0.0194km2 The Mining Depth：1403.6m～1350m

The Sample Number	The Analytical Results（%）
	CaO		MgO		Al2O3		SiO2		Fe2O3
	The Analytical Value	The Mean Value	The Analytical Value	The Mean Value	The Analytical Value	The Mean Value	The Analytical Value	The Mean Value	The Analytical Value	The Mean Value
Y1	54.50	53.17	1.14	1.06	3.85	2.93	5.25	5.13	1.42	1.45
Y2	53.05		0.95		2.14		4.23		1.36
Y3	52.80		1.05		2.83		5.15		1.51
Y4	51.30		1.08		2.94		5.78		1.44
Y5	54.20		1.10		2.88		5.23		1.53

Rank	Amount (US Dollar)		% of Revenue
Customer 1 *	$	4,945,563.08		10.14	%
Customer 2		2,330,538.69		4.77	%
Customer 3		2,207,173.13		4.52	%
Customer 4		2,147,096.30		4.41	%
Customer 5		1,921,314.53		3.94	%
Customer 6		1,884,712.50		3.87	%
Customer 7		1,758,685.90		3.61	%
Customer 8		1,481,471.45		3.04	%
Customer 9		1,435,632.04		2.95	%
Customer 10		1,246,104.84		2.56	%
Total	$	21,358,292.46		43.81	%

Limestone Quarries Actual Production (Ton)
2010	2011	2012
27,324	33,727	37,011

Turning Point No.	Coordinate
Turning Point No.	X	Y
1	3688710545.800	41145806197.528
2	3688710545.800	41145804864.935
3	3688708925.132	41145804818.707
4	3688709304.069	41145806250.567

Number of inflection points	X coordinate	Y coordinate
1	558862	374126468
2	559009	374126500
3	559010	374126377
4	558838	374126376

Production & Raw material use quantity
		2010 (Unit: Ton)						2011 (Unit: Ton)						2012 (Unit: Ton)
Company	Raw Material	Raw Material Received		Used quantity		Finished Goods Quantity		Current incoming		Used quantity		Finished Goods Quantity		Current incoming		Used quantity		Finished Goods Quantity
Guizhou Yufeng Melt Co., Ltd	Aluminium Ore		65,214		64,759		72,581		79,792		80,003		89,734		89,807		89,227		99,947
Guizhou Yufeng Melt Co., Ltd	Limestone Quarries		27,324		26,862				33,727		33,185				37,499		37,011		187,384
Shanxi Wealth Aluminate Material Co., Ltd	Aluminium Ore		139,379		138,892		155,563		167,021		167,005		187,357		176,562		169,440
Shanxi Wealth Aluminate Material Co., Ltd	Limestone Quarries		58,810		57,612				69,054		69,273				70,932		70,283
Total			290,727		288,125		228,125		349,594		349,466		277,091		374800		365,961		287,331