anno10q08112008.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to _______________

Commission File Number 000-52940

American Nano Silicon Technologies, Inc.

(Exact name of registrant as specified in its charter)


California		33-0726410
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

c/o American Union Securities
100 Wall Street 15th Floor
New York, New York		10005
(Address of principal executive offices)		(Zip Code)

(212) 232-0120

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

As of June 30, 2008, 26,558,767 shares of common stock, par value $.001 per share, were outstanding, of which 10,549,910 shares were held by non-affiliates.

PART I. Financial Information.

Item 1. Financial Statements.

AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2008 and 2007

(UNAUDITED)

TABLE OF CONTENTS

	Page(s)

Condensed Consolidated Balance Sheets as of June 30, 2008 (Unaudited)
And September 30, 2007 (Audited) ..............................................................................................................................................................................................................................................................................................................................................1

Condensed Consolidated Statemetns of Operations for the Nine and Three Months
Ended June 30, 2008 and 2007 (Unaudited) ................................................................................................................................................................................................................................................................................................................................2

Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 2008 and 2007 (Unaudited) .................................................................................................................................................................................................................................................................................................................................3

Notes to Condensed Consolidated Financial Statements (Unaudited)	..............................................................................................................................................................................................................................................................4 - 11

AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in US dollars)

	June 30, 2008			Sept. 30, 2007
	(Unaudited)			(Audited)

ASSETS
Current assets:
Cash and cash equivalents	$	477,717		$	423,700
Accounts receivable		69,408			-
Advances to suppliers		135,549			123,041
Inventory		825,724			690,030
Other receivables		10,386			172,692
Other receivables - related parties		243,355			272,585
Employee advances		25,679			27,911
Total Current Assets		1,787,818			1,709,959

Property, plant and equipment, net		6,825,528			5,848,444

Other assets:
Land use right, net		963,954			900,640
Total other assets		963,954			900,640

Total Assets	$	9,577,300		$	8,459,043


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Short term loan	$	1,175,578		$	937,414
Accounts payable		323,216			382,262
Advance from customers		50,372			-
Construction security deposits		1,256,903			1,172,043
Accrued expenses and other payables		229,117			405,339
Total Current Liabilities		3,035,186			2,897,058

Due to related parties		870,376			200,223

Total Liabilities		3,905,562			3,097,281

Minority Interests		948,278			999,751

Commitments and Contingencies

Stockholders' Equity
Common stock, $0.0001 par value, 200,000,000 shares authorized;
26,558,767 and 21,181,450 shares issued and outstanding at June 30, 2008
and September 30, 2007, respectively		2,656			2,118
Additional paid-in-capital		4,487,743			3,979,691
Accumulated other comprehensive income		958,392			474,341
Accumulated deficits		(725,331	)		(94,139	)
Total Stockholders' Equity		4,723,460			4,362,011

Total Liabilities and Stockholders' Equity	$	9,577,300		$	8,459,043

The accompanying notes are an integral part of these condensed consolidated financial statements

- 1 -

AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED JUNE 30, 2008 AND 2007
(Expressed in US dollars)



	Nine Months Ended						Three Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Revenues	$	1,470,483		$	1,612,573		$	756,995		$	745,810

Cost of Goods Sold		1,281,955			1,283,264			670,836			580,270

Gross Profit		188,528			329,309			86,159			165,540

Operating Expenses
Selling, general and administrative		244,204			139,479			104,150			62,822

Income (loss) before other Income and (Expenses)		(55,676	)		189,830			(17,991	)		102,718

Other Income and (Expense)
Interest income (expense)		(86,893	)		(63,456	)		(16,385	)		(36,373	)
Other income (expense)		283			(1,473	)		254			620
Total other income and (expense)		(86,610	)		(64,929	)		(16,131	)		(35,753	)

Income (Loss) Before Minority Interests and Income Taxes		(142,286	)		124,901			(34,122	)		66,965

Provision for Income Taxes		4,698			-			3,012			-

Minority Interests		24,381			(2,706	)		7,367			(2,781	)

Net Income (Loss) from Continuing Operations	$	(122,603	)	$	122,195		$	(29,767	)	$	64,184

Discontinued Operations
Loss from discontinued operations		(12,318	)		-			-			-
Loss on disposal		(496,272	)		-			-			-

Net Income (Loss) from Discontinued Operations		(508,590)			-			-			-

Net Income (Loss)	$	(631,193	)	$	122,195		$	(29,767	)	$	64,184

Basic and diluted income per common share
Continuing operations	$	(0.00	)	$	0.00		$	(0.00	)	$	0.00
Discontinued operations	$	(0.02	)	$	-		$	-		$	-

Weighted average number of common shares		26,558,767			25,740,000			26,558,767			25,740,000

The accompanying notes are an integral part of these condensed consolidated financial statements

- 2 -

AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2008 AND 2007
(Expressed in US dollars)

	Nine Months Ended
	June 30,
	2008			2007
	(Unaudited)			(Unaudited)
Cash Flows From Operating Activities:
Continuing operations:
Net Income (Loss) from continuing operations	$	(122,603	)	$	122,195
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization		104,587			62,297
Minority interest		(24,381	)		2,706

Changes in operating assets and liabilities:
Accounts receivable		(69,408	)		(19,345	)
Inventory		(135,695	)		(438,147	)
Advances to suppliers		(12,508	)		255,964
Employee advances		2,232			(17,909	)
Other receivables		162,307			(5,304	)
Accounts payable		(59,045	)		(33,862	)
Advances from customers		50,372			24,499
Construction security deposits		84,860			(78,989	)
Accrued expenses and other payables		(176,222	)		298,490

Cash provided by (used in) continuing activities		(195,502	)		172,595

Discontinued operations
Net Loss from discontinued operations		(508,590	)		-
Adjustments to reconcile net loss to net cash
used in discontinued operations		508,590			-

Cash used in discontinued activities		-			-

Cash provided by (used in) operating activities		(195,502	)		172,595

Cash Flows From Investing Activities:
Purchase of machinery and equipments		(214,693	)		(11,342	)
Additions to construction in process		(525,572	)		(70,147	)

Cash used in investing activities		(740,265	)		(81,489	)

Cash Flows From Financing Activities
Other receivables- related party		-			(905	)
Proceeds from related party loans		670,152			150,908
Proceeds from short term loans		238,164			77,253

Cash provided by financing activities		908,316			227,256

Effect of exchange rate changes on cash and cash equivalents		81,468			38,363

Increase in cash and cash equivalents		54,019			356,725

Cash and Cash Equivalents - Beginning of period		423,700			60,205

Cash and Cash Equivalents - End of period	$	477,717		$	416,930


SUPPLEMENTAL CASH FLOW INFORMATION:
During the year, cash was paid for the following:
Interest expense	$	125,263		$	7,184
Income taxes	$	-		$	-

Non-cash investing and financing activities:
Additional capital contributed in the form of property	$	-		$	41,856

The accompanying notes are an integral part of these condensed consolidated financial statements

- 3 -

AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)

Note 1 – ORGANIZATION AND BASIS OF PRESENTATION

American Nano-Silicon Technologies, Inc. (the “Company” or “ANNO”) was originally incorporated in the State of California on September 6, 1996 as CorpHQ, Inc. (“CorpHQ”).

Initially, the Company was engaged in the business activities of providing marketing, advertising and financial consulting services until December 31, 1999. Since then, the Company explored a few business ventures and switched its business strategy to be involved in the development, acquisition and operation of minority-owned portfolio companies focus on consumer products and commercial technologies, as well as development of consulting and other business relationships with client companies that have demonstrated synergies with the Company’s core businesses.

On May 24, 2007, the Company entered into a Stock Purchase and Share Exchange Agreement (the “Exchange Agreement”) with American Nano Silicon Technologies, Inc., a Delaware corporation (“ANST”) with the same name, the shareholders of ANST and Nanchong Chunfei Nano-Silicon Technologies Co., Ltd. (“Nanchong Chunfei”), a corporation registered in the People’s Republic of China (“PRC” or “China”).

In connection with the Exchange Agreement, the following major events occurred:

·	On August 9, 2007, the Company changed its name from CorpHQ, Inc. to American Nano Silicon Technologies, Inc. and effected a 1302 to 1 reverse stock split and decreased its authorized common stock from 2 billion shares to 200 millions shares with a par value of $0.0001.

·	On November 9, 2007, the Company issued 25,740,000 shares of new common stock to the shareholders of ANST in exchange for all of the outstanding stock of ANST, resulting in ANST becoming a wholly-owned subsidiary of the Company.

·	The Board of Directors elected to discontinue its original business activities in the Company and has transferred all of the existing assets and liabilities to South Bay Financial Solutions, Inc.

The Share Exchange resulted in a change in control of the Company as the Shareholders of ANST became the majority shareholders of the Company. Also, the original shareholders and directors of the Company resigned and the shareholders of ANST were elected as directors of the Company and appointed as its executive officers.

For accounting purpose, this transaction has been accounted for as a reverse acquisition under the purchase method. Accordingly, ANST and its subsidiaries are treated as the continuing entity for accounting purposes.

American Nano-Silicon Technologies, Inc. (“ANST”) was incorporated on August 8, 2006 under the laws of the State of Delaware. On August 26, 2006, ANST acquired 95% interest of Nanchong Chunfei Nano-Silicon Technologies Co., Ltd. (“Nanchong Chunfei”), a company incorporated in the People’s Republic of China (the “PRC” or “China”) in August 2006. Nanchong Chunfei directly owns 90% of Sichuan Chunfei Refined Chemicals Co., Ltd. (“Chunfei Chemicals”), a Chinese corporation established under the laws of PRC on January 6, 2006. Chunfei Chemicals itself owns 92% of Sichuan Hedi Veterinary Medicines Co., Ltd. (“Hedi Medicines”), also a Chinese company incorporated under the law of PRC on June 27, 2002.

Collectively, ANNO, ANST, Nachong Chunfie, Chunfei Chemicals and Hedi Medicines are hereinafter referred to as the “Company”.

The Company is primarily engaged in the business of manufacturing and distributing refined consumer chemical products through its subsidiary, Chunfei Chemicals, and veterinary drugs through another subsidiary, Hedi Medicines.

The accompanying consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America.

Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended June 30, 2008 and 2007 are not necessarily indicative of the results that may be expected for the full years. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and the financial statements and notes to thereto included in the Company’s Form 10/A filing dated on July 23, 2008.

- 4 -

AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements represent the consolidated accounts of ANST and its subsidiaries, Nanchong Chunfei, Chunfei Chemicals and Hedi Medicines. All significant intercompany balances and transactions have been eliminated in consolidation.

Minority interests

Minority interest results from the consolidation of 95% directly owned subsidiary, Nanchong Chunfei, 85.5% indirectly owned subsidiary, Chunfei Chemicals, and 78.66% indirectly owned subsidiary, Hedi Medicines.

Use of estimates

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant estimates, required by management, include the recoverability of long-lived assets and the valuation of inventories. Actual results could differ from those estimates.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and cash in deposits and all highly liquid debt instruments with an original maturity of three months or less.

Inventory

Inventories consist of the raw materials and packing supplies. Inventories are valued at the lower of cost or market with cost determined on a first-in first-out basis. Market value represents the estimated selling price in the ordinary course of business less the estimated costs necessary to complete the sale.

Advances to suppliers

Advance to suppliers represent the payments made and recorded in advance for goods and services. Advances were also made for the purchase of the materials and equipments of the Company’s construction in progress. The final phase of the construction is not completed. As such, no amortization was made.

Property, plant & equipment

Property and equipment are stated at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and locations for its intended use. Depreciation are amortization are calculated using the straight-like method over the following useful lives:

Buildings and improvements 39 years

Machinery, equipment and automobiles 5-10 years

Expenditures for maintenance and repairs are charged to expense as incurred. Additions, renewals and betterments are capitalized.

Revenue recognition

The Company utilizes the accrual method of accounting. Upon commencement of operations, The Company’s revenue recognition policies will be in compliance with Staff Accounting Bulletin (“SAB”) 104. Sales revenue is recognized when products are shipped and payments of the customers and collection are reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Taxation

Enterprise income tax

The Company is governed by the Income Tax Law of the People’s Republic of China concerning the private-run enterprises, which are subject to tax at a statutory rate of 25% and were, until January 2008, subject to tax at a statutory rate of 33% (30% state income tax plus 3% local income tax) on its taxable income.

The Company will account for income tax under the provisions of SFAS No.109 "Accounting for Income Taxes", which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances will also be established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. The income tax incurred for the Company for the nine months ended June 30, 2008 and 2007 was $4,698 and $0, respectively.

Value added tax

Value added tax is imposed on goods sold in or imported into the PRC. Value added tax payable in the People’s Republic of China is charged on an aggregated basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided, but excluding, in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and services in the same financial year. There was no value added tax payable for the Company as of June 30, 2008.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of advances to suppliers and other receivables arising from its normal business activities. The Company does not require collateral or other security to support these receivables. The Company routinely assesses the financial strength of its debtors and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts.

Risks and uncertainties

The operations of the Company are located in the PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, in addition to the general state of the PRC economy. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and 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, among other things.

- 5 -

AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair value of financial instruments

The carrying amounts of certain financial instruments, including cash and cash equivalents, advance to suppliers, other receivables, accounts payable, accrued expenses and construction security deposits approximate fair value due to the short-term nature of these items as of June 30, 2008 because of the relatively short-term maturity of these instruments.

Foreign currency translation

The Company’s principal country of operations is in PRC. The financial position and results of operations of the Company are determined using the local currency, Renminbi (“RMB”), as the functional currency. Foreign currency transactions are translated at the applicable rates of exchange in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Revenues and expenses are translated at the average exchange rates in effect during the reporting period.

Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated Other Comprehensive Income". Gains and losses resulting from foreign currency translations are included in Accumulated Other Comprehensive Income.

Recent accounting pronouncements

In December 2007, the FASB issued SFAS No. 160,“Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51” (“SFAS 160”), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non-controlling interest, changes in a parent’s ownership interest and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. The Statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. SFAS 160 is effective for fiscal years beginning after December 15, 2007. The Company has not determined the effect that the application of SFAS 160 will have on its consolidated financial statements.

In December 2007, Statement of Financial Accounting Standards No. 141(R), Business Combinations, was issued. SFAS No. 141R replaces SFAS No. 141, Business Combinations. SFAS 141R retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. This replaces SFAS 141’s cost-allocation process, which required the cost of acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141R also requires the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with SFAS 141R). SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2007 An entity may not apply it before that date. The Company is currently evaluating the impact that adopting SFAS No. 141R will have on its financial statements.

In June 2007, the FASB issued FASB Staff Position No. EITF 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services Received for use in Future Research and Development Activities” (“FSP EITF 07-3”), which addresses whether nonrefundable advance payments for goods or services that used or rendered for research and development activities should be expensed when the advance payment is made or when the research and development activity has been performed. Management is currently evaluating the effect of this pronouncement on financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of SFAS 159 is to provide opportunities to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply hedge accounting provisions. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 will be effective in the first quarter of fiscal 2009. The Company is evaluating the impact that this statement will have on its consolidated financial statements.

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AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)

Note 3 – INVENTORY

	As of June 30,		As of September 30,
	2008		2007
Raw materials	$	69,179		123,647
Packing supplies		180,908		232,485
Work-in-process		558,973		277,818
Finished goods		16,664		56,080

Total	$	825,724	$	690,030

No allowance for inventories was made for nine months ended June 30, 2008 and 2007.

Note 4 – PROPERTY, PLANT AND EQUIPMENT

	As of June 30,			As of September 30,
	2008			2007
Machinery & equipment	$	661,856		$	604,835
Automobiles		62,120			56,867
Plant & Buildings		3,332,627			2,846,200
Total		4,056,603			3,507,902

Less: accumulated depreciation		(182,057	)		(84,868	)
Add: construction in process		2,950,982			2,425,410
Property, plant and equipment	$	6,825,528		$	5,848,444

Depreciation expense for the nine months ended June 30, 2008 and 2007 was $85,292 and $43,925, respectively.

Construction in progress represents direct costs of construction or acquisition and design fees incurred for the Company’s new plant and equipment. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for its intended use.

NOTE 5 - RELATED PARTY TRANSACTIONS

The details of loans to/from related parties are as follows:

	As of June 30,		As of September 30,
	2008		2007

Receivables from affiliates

Chunfei Daily Chemical	$	192,798	$	176,492
Chunfei Real Estate		50,557		96,093
Total	$	243,355		272,585

Due to related parties
Pu, Fachun	$	848,508		108,136
Zhang, Qiwei		14,578		74,738
Ren, Xin		7,290		10,142
Others		-		7,207
	$	870,376	$	200,223

NOTE 6 - LAND USE RIGHT

All land in the People’s Republic of China is government owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” (the Right) to use the land. The land use right was originally acquired by one of the Company’s shareholders in September 2000 for the amount of $833,686 and later was transferred to the Company as capital investment. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over the period of 50 years.

The amortization expense from the nine months ended June 30, 2008 and 2007 was $19,295 and $18,372, respectively.

NOTE 7 – DISCONTINUED OPERATIONS

On May 24, 2007, upon signing of the Exchange Agreement, the Company’s Board of Directors elected to discontinue its existing business activities in the Company, and on January 8, 2008, the Company spun off its related assets to South Bay Financial Solutions, Inc. The financial statements for the period ended June 30, 2008 include reclassifications of the operations of the Company’s old business to reflect the disposal of the business below the line as discontinued operations in accordance with the provisions of FASB 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. There was a one-time loss of $496,727 on disposal recognized in the Statement of Operations for the nine months ended June 30, 2008 as a result of this disposition.

NOTE 8 – CONSTRUCTION SECURITY DEPOSITS

The Company requires security deposits from its plant and building contractor prior to start of the construction. The deposits are refunded upon officially certified completion of the works within the specified time. The purpose of the security deposits is to protect the Company from unexpected delay and poor construction quality.

The Company offers no interest to the security deposits and is not precluded from using the deposits for other purpose. As of June 30, 2008, the balance of the construction security deposits was $1,256,903.

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AMERICAN NANO-SILICON TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JUNE 30, 2008 AND 2007 (UNAUDITED)

NOTE 9 - SHORT-TERM LOANS

The short-term loans include the following:

	June 30,		Sept. 30,
	2008		2007
a) Loan payable to Nanchong City Bureau of Finance
one year term, reneable unpn maturity,a fixed interest
rate of 0.47% per month	$	583,167	$	533,846

b) Individual loans from unrelated parties and employees
interest varied from 3% to 10% per month, all with one year term,
renewable upon maturity		213,652		96,607

c) Individual loans from unrelated parties with no interest,
payable in one year		101,755		-

d) Individual loans from unrelated parties with a fixed interest
rate of 2% per month, payable in one year		277,004		306,961
Total	$	1,175,578	$	937,414

The Company accrued interest expenses of $86,893 for the nine months ended June 30, 2008 and $63,456 for the nine months ended June 30, 2007.

NOTE 10– STOCKHOLDERS’ EQUITY

Prior to the closing of the Exchange Agreement, the Company has 1,065,753,214 shares of common stock issued and outstanding. On August 9, 2007, the Company affected a 1,302 for 1 reverse split on its outstanding common stock, which left the Company with 818,767 shares of common stock outstanding.

As part of the Exchange Agreement, the Company issued 25,740,000 shares of its common stock to the shareholders of ANST.

As of June 30, 2008, there were 26,558,767 shares of common stock issued and outstanding.

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ITEM 2. MANGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

American Nano-Silicon Technologies, Inc. (the “Company” or “ANNO”) was originally incorporated in the State of California on September 6, 1996 as CorpHQ, Inc. (“CorpHQ).

On May 24, 2007, the Company entered into a Stock Purchase and Share Exchange Agreement (the “Exchange Agreement”) with American Nano Silicon Technologies, Inc., a Delaware corporation (“ANST”), the shareholders of ANST and Nanchong Chunfei Nano-Silicon Technologies Co., Ltd. (“Nanchong Chunfei”), a corporation registered in the People’s Republic of China (“PRC” or “China”).

In connection with the Exchange Agreement, the following major events occurred:

·	On August 9, 2007, the Company changed its name from CorpHQ, Inc. to American Nano Silicon Technologies, Inc. and effected a 1302 to 1 reverse stock split and decreased its authorized common stock from 2 billion shares to 200 millions shares with a par value of $0.0001.
·	On November 9, 2007, the Company issued 25,740,000 shares of New common stock to the shareholders of ANST in exchange for all of the outstanding stock of ANST, resulting in ANST becoming a wholly-owned subsidiary of the Company.

·	The Board of Directors elected to discontinue its original business activities in the Company and has transferred all of the existing assets and liabilities to South Bay Financial Solutions, Inc.

Collectively, ANST, Nachong Chunfie, Chunfei Chemicals and Hedi Medicines are hereinafter referred to as the “Company”.

The accompanying consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended June 30, 2008 and 2007 are not necessarily indicative of the results that may be expected for the full years. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and the financial statements and notes to thereto included in the Company’s Form 10/A filing dated on July 23, 2008.

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Financial Operations Overview

The Company expects to incur substantial additional costs, including costs related to ongoing research and development activities. We intend to raise additional debt and/or equity financing to sustain our operations. The Company's future cash requirements will depend on many factors, including continued scientific progress in our research and development programs, the time and costs involved in obtaining regulatory approvals, the costs involved in filing, prosecuting and enforcing patents, competing technological and market development and the cost of product commercialization. We will require external financing to sustain our operations, perhaps for a significant period of time. We intend to seek additional funding through grants and through public or private financing transactions. Successful future operations are subject to a number of technical and business risks, including our continued ability to obtain future funding, satisfactory product development, regulatory approvals and market acceptance for our products.

Selling, General and Administrative Expenses

Our selling, general and administrative, or SG&A, expenses include costs associated with salaries and other expenses related to research and other administrative costs. In addition, we have incurred expenses through the use of consultants and other outsourced service providers to take advantage of specialized knowledge and capabilities that we required for short durations of time to avoid unnecessary hiring of full-time staff.

RESULTS OF OPERATIONS – Three months ended June 30, 2008 compared to three months ended June 30, 2007

The Company has one reportable segment that is engaged in manufacturing chemical products, chemical intermediaries and Chinese herbal medicines for animal use.

Revenues increased from $745,810 in the three months ended June 30 of 2007 to $756,995 in the three months ended June 30 of 2008, an increase of $11,185 or 1.50%. Gross Profit decreased from $165,540 in the three months ended June 30 of 2007 to $86,159 in the three months ended June 30 of 2008, a decrease of ($79,381) or (47.95%). The increase in revenues was primarily the result of production recovery experienced during the period that is ongoing. The reduction in gross profit was primarily the result of a lack of working capital to purchase the raw materials needed to produce Micro-Nano Silicon. Since we didn’t sell as much Micro-Nano Silicon, our gross profit decreased accordingly. Selling General and Administrative expense increased from $62,822 in the three months ended June 30 of 2007 to $104,150 in the three months ended June 30 of 2008, an increase of $41,328 or 65.79% principally as a result of charges related to the costs associated with restarting the production. As a result, the Company incurred a loss for the three months ended June 30 of 2008 of ($29,767), compared to income of $64,184 in the three months ended June 30 of 2007.

RESULTS OF OPERATIONS – Nine months ended June 30, 2008 compared to nine months ended June 30, 2007

The Company has one reportable segment that is engaged in manufacturing chemical products, chemical intermediaries and Chinese herbal medicines for human and animal use.

Revenues decreased from $1,612,573 in the nine months ended June 30, 2007 to $1,470,483 in the nine months ended June 30, 2008, a decrease of ($142,090) or (8.81%). Gross Profit decreased from $329,309 in the nine months ended June 30, 2007 to $188,528 in the nine months ended June 30, 2008, a decrease of ($140,781) or (42.75%). The reduction in gross profit was primarily the result of a lack of working capital to purchase the raw materials needed to produce Micro-Nano Silicon. Since we didn’t sell as much Micro-Nano Silicon, our gross profit decreased accordingly. Selling General and Administrative expense increased from $139,479 in the nine months ended June 30, 2007 to $244,204 in the nine months ended June 30, 2008, an increase of $104,725 or 75.08% principally as a result of charges related to the costs associated with restarting the production. As a result, the Company incurred a loss for the nine months ended June 30, 2008 of ($631,193), compared to income of $122,195 in the nine months ended June 30, 2007.

Plan of Operations

During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations:

We will require outside capital to implement our business plan. We will have to expand our management team with qualified personnel. There can be no assurance that our management will be successful in completing our product development programs, implementing the corporate infrastructure to support operations at the levels called for by our business plan, conclude a successful sales and marketing plan with third parties to attain significant market penetration or that we will generate sufficient revenues to meet our expenses or to achieve or maintain profitability.

Liquidity and Capital Resources

The Company's current assets are $1,787,818, include $477,717 of cash and cash equivalents. Accordingly, unless it can fully restore production at its manufacturing facilities, the Company may not be able to fund its operations without additional investment. Management will seek additional equity or debt financing for the Company to overcome its operating difficulties. However, the Company does not have any commitments for additional financing and no assurance is given that any additional financing will be available or that, if available, it will be on terms that are favorable to our shareholders. The Company has incurred one year interest free loans from affiliated parties in the aggregate amount of $848,508 due on various dates from in May and June 2009 and a one year interest free loan from a non-affiliated party in the amount of $29,110 due in July 2009. These loans were utilized to fund the Company's working capital requirements. No assurance can be given that additional funding from these sources will be available in the future.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

The discussion and analysis of our financial condition and results of operations are based on our unaudited financial statements, which have been prepared according to U.S. generally accepted accounting principles. In preparing these financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. We evaluate these estimates on an on-going basis. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We consider the following accounting policies to be the most important to the portrayal of our financial condition and that require the most subjective judgment.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of June 30, 2008, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are effective in enabling us to record, process, summarize and report information required to be included in our periodic SEC filings within the required time period.

(b) Changes in Internal Controls

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

The company is not party to any material legal proceeding.

Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

a) EXHIBITS

31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32 Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

b) REPORTS ON FORM 8-K

None

SIGNATURES

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

		American Nano Silicon Technologies, Inc.
	By:	/s/ Pu Fachun
		Pu Fachun
	Date: August 14, 2008	Chief Executive Officer and President (Principal Executive, Financial and Accounting Officer)

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