**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**





[X]
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      fiscal year ended December 31, 2006





[
                 ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from ___________ to ___________





Commission
      file number: 333-136215





**NANO
      HOLDINGS INTERNATIONAL, INC.**


(Name
      of
      small business issuer in its charter)





**Delaware**
            **20-3724068**(State
                of organization)
            (I.R.S.
                Employer Identification No.)





**1640
      Terrace Way**


**Walnut
      Creek, California 94597**


(Address
      of principal executive offices)





**(925)
      938-0406**


(Registrant's
      telephone number)





SECURITIES
      REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:





NONE





SECURITIES
      REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:





COMMON
      STOCK, $0.001 PAR VALUE PER SHARE





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for
      such shorter periods that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days. Yes
      [X]
      No [  ]





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of the registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. [  ]





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
















The
      issuer's revenues for its most recent fiscal year were $135,912.





The
      aggregate market value of the issuer's voting and non-voting common equity
      held
      by non-affiliates computed by reference to the average bid and ask price of
      such
      common equity as of March 1, 2007, was $0, as the Registrant’s common stock was
      not publicly traded.





At
      March
      5, 2007, there were 7,030,000 shares of the Issuer's common stock
      outstanding.





Traditional
      Small Business Disclosure Format (check one): Yes [  ] No [X].




































TABLE
      OF
      CONTENTS





**PART
      I**





ITEM
                1. DESCRIPTION OF BUSINESS
            4ITEM
                2. DESCRIPTION OF PROPERTY
            8ITEM
                3. LEGAL PROCEEDINGS
            8ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            8**PART
                II**ITEM
                5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            9ITEM
                6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            9ITEM
                7. FINANCIAL STATEMENTS
            F-1ITEM
                8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE
            20ITEM
                8A. CONTROLS AND PROCEDURES
            20ITEM
                8B. OTHER INFORMATION
            20**PART
                III**ITEM
                9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
            21ITEM
                10. EXECUTIVE COMPENSATION
            23ITEM
                11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                AND
                RELATED STOCKHOLDER MATTERS
            26ITEM
                12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
            27ITEM
                13. EXHIBITS
            28ITEM
                14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
            29SIGNATURES
            30















**PART
        I**
 
 FORWARD-LOOKING
        STATEMENTS


ALL
      STATEMENTS IN THIS DISCUSSION THAT ARE NOT HISTORICAL ARE FORWARD-LOOKING
      STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT
      OF
      1934, AS AMENDED. STATEMENTS PRECEDED BY, FOLLOWED BY OR THAT OTHERWISE INCLUDE
      THE WORDS "BELIEVES", "EXPECTS", "ANTICIPATES", "INTENDS", "PROJECTS",
      "ESTIMATES", "PLANS", "MAY INCREASE", "MAY FLUCTUATE" AND SIMILAR EXPRESSIONS
      OR
      FUTURE OR CONDITIONAL VERBS SUCH AS "SHOULD", "WOULD", "MAY" AND "COULD" ARE
      GENERALLY FORWARD-LOOKING IN NATURE AND NOT HISTORICAL FACTS. THESE
      FORWARD-LOOKING STATEMENTS WERE BASED ON VARIOUS FACTORS AND WERE DERIVED
      UTILIZING NUMEROUS IMPORTANT ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD
      CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
      STATEMENTS. FORWARD-LOOKING STATEMENTS INCLUDE THE INFORMATION CONCERNING OUR
      FUTURE FINANCIAL PERFORMANCE, BUSINESS STRATEGY, PROJECTED PLANS AND OBJECTIVES.
      THESE FACTORS INCLUDE, AMONG OTHERS, THE FACTORS SET FORTH BELOW UNDER THE
      HEADING "RISK FACTORS." ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED
      IN
      THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT GUARANTEE FUTURE
      RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS. MOST OF THESE FACTORS
      ARE DIFFICULT TO PREDICT ACCURATELY AND ARE GENERALLY BEYOND OUR CONTROL. WE
      ARE
      UNDER NO OBLIGATION TO PUBLICLY UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS
      TO
      REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE
      OCCURRENCE OF UNANTICIPATED EVENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE
      RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. REFERENCES IN THIS FORM 10-KSB,
      UNLESS ANOTHER DATE IS STATED, ARE TO DECEMBER 31, 2006. AS USED HEREIN, THE
      "COMPANY," "NANO," "WE," "US," "OUR" AND WORDS OF SIMILAR MEANING REFER TO
      NANO
      HOLDINGS INTERNATIONAL, INC..





**ITEM
      1. DESCRIPTION OF BUSINESS**





**History:**





We
      were
      incorporated as Nano Holdings International, Inc. in Delaware on April 16,
      2004.
      We have 85,000,000 shares of stock authorized, representing 75,000,000 shares
      of
      common stock, $0.001 par value and 10,000,000 shares of preferred stock, $0.001
      par value.





On
      December 15, 2005, we entered into a Share Exchange Agreement with Sunshine
      Group, LLC, a Florida, limited liability company, whereby we exchanged 3,500,000
      newly issued shares of our restricted common stock for 100% of the outstanding
      membership units of Sunshine. The acquisition or Sunshine was an arms length
      transaction, with the exchange rate of the exchange determined by the mutual
      agreement of us and Sunshine based on the estimated value of Sunshine. Since
      that time, Sunshine has been our wholly owned subsidiary. We run all of our
      operations through Sunshine, and unless otherwise stated, all references to
      Nano
      Holdings International, Inc., the “Company,” “we,” “us,” or words of similar
      meaning used herein include the operations of Sunshine.








-4-







We
      have a
      webpage which describes our products and through which customers can purchase
      our products at http://www.shotskis.com, www.shotskis.sitefly.com (and/or
      www.bombshots.com), which include information which we do not which to be
      included in this report.





Through
      Sunshine, we sell party and drinking supplies including gelatin shot mixes,
      shot
      glasses, flavored sugar and salts, and various other drinking containers and
      paraphernalia including:





**o**
            **Gelatin
                Shooters -**Our Gelatin Shooters are drink mixes, which customers can mix with
                water
                and alcohol to create Jello shots for consumption in bars or at individual
                customers homes. We currently offer gelatin shooters in the following
                cocktail flavors: Sex on the Beach, Purple Hooter, Margarita, Mai
                Tai,
                Pina Colada and Kamikaze. We do not sell alcoholic beverages, but
                instead
                our powdered Gelatin Shooter drink mixes are intended to be combined
                with
                alcoholic or non-alcoholic beverages to create flavored gelatin shooters,
                which are then intended to be eaten once hardened. We believe that
                our
                Gelatin Shooters will be popular with individuals as well as bar
                owners
                because the Gelatin Shooters themselves do not compete with other
                alcoholic beverages, but act instead as an add on sale for bar owners,
                and
                are often a spur of the moment impulse purchase. As the Gelatin Shooters
                are not an alcoholic beverage themselves, they can be sold to anyone
                of
                any age in any type of store.**o**
            **Bomb
                Shots -**Bomb shots are plastic shot glasses, which contain a smaller shot
                glass
                within a larger shot glass and allow the bartender to pour two liquids
                into the shot glass, but to keep the liquids separate until the shot
                is
                tilted up in a drinking position, at which time the two separate
                liquids
                mix as they are consumed.





**o**
            **Shotski's
                Flavored & Colored Sugars and Salts -**Our flavored and colored sugars and salts add eye appeal to any drink
                while improving the flavor as the sugars and salts are designed to
                compliment each beverage. We currently offer flavored sugars for
                use as a
                bar supply in the following flavors: strawberry, sour apple, lemon
                and
                lime. Additionally, we offer flavored salt in lime and strawberry
                flavors.**o**
            **Party
                Packages -**Additionally, we sell party packages, containing Gelatin Shooters,
                shot
                glasses and various other drinking supplies.**o**
            **Various
                other bar supplies -**We
                also sell various other bar and drinking supplies, including various
                other
                shot glasses, instruments for injecting and squirting our gelatin
                shots
                into individuals’ mouths, serving trays and cocktail
                stirrers.





Sunshine
      does business as "Shotski's" and "Shotski's Gelatin Cocktail Mixes" and
      "Shotski's Cocktail Sugars & Salts and Bar Supplies."








-5-








We
      currently have partial distribution (where our distributors provide distribution
      to only a limited portion of each state) in approximately 15 states including
      Alabama, Arizona, California, Illinois, Indiana, Massachusetts, Michigan,
      Missouri, North Carolina, Ohio, South Carolina, Texas, Virginia, Washington
      and
      Wisconsin. We have only partial distribution in the states above due to the
      fact
      that our various appointed distributors only distribute products regionally
      in
      the states presented above. In order to change a state’s distribution from
      partial to full distribution within the state, we would be forced to change
      distributors, which we do not currently have any plans to do.




We
      also
      have full distribution in Florida, Nevada and Minnesota, which distribution
      covers all of such states. Additionally, we provide direct shipments nationwide
      and internationally through our website as described herein.





We
      may
      choose to expand our distribution channels in the future to cover all of the
      states above with which we only have partial distribution and/or expand to
      other
      states, however; we are able to sell all of our products to the entire country
      though our website and have no such plans for expansion in the United States.
      We
      currently have plans, funding permitting, to expand distribution to various
      locations in Mexico, Switzerland, the Bahamas and Trinidad in the next six
      (6)
      to twelve (12) months.





**Our
      Principal Suppliers Include:**





o
            Exotic
                Foods, Moody, AL - Food Productso
            Flavor
                Dynamics, South Plainfield, NJ - Food Concentrateo
            Creative
                Flavors - Concentrate for Shotski'so
            Quality
                Components, Hong Kong - Bomb Shot cups and Shooter's flavoringo
            CR
                Lenco, Waverly, NEo
            Labasco,
                Jacksonville, FLo
            Plas
                Pak, Norwich, CTo
            Tooters,
                Cocoa, FL; ando
            Excel
                Industries





All
      of
      our food products are packed by Exotic Foods in Moody, Alabama. We assemble
      the
      party packages ourselves.





We
      do not
      have any material agreements with any of our suppliers disclosed
      above.





We
      distribute our products ourselves via web sales, trade shows and distributor
      sales.





We
      have
      secured basic net 30 day terms from the majority of our suppliers in connection
      with the manufacture of our Shotski's gelatin mixes and related products. In
      connection with our bar supply product line offered by us and manufactured
      in
      China by Quality Components, we pay a 20% deposit to Quality Components at
      the
      time we place our orders for our bar supplies and pay the balance of the invoice
      on a weekly basis based on the amount of such products manufactured by Quality
      Components that are shipped and invoiced from our warehouse, up to a maximum
      of
      60 days from the date the supplier's invoice is received.








-6-









For
      our
      credit worthy customers, we extend net 30 day terms for our distributor
      relationships. For our internet direct customer orders, the products are paid
      for at the time of sale by credit card. Our sales mix at present is
      approximately 60% distributor sales and 40% internet sales.





Moving
      forward, we plan to concentrate our marketing efforts to two separate types
      of
      customers, 1) distributors to retail and on-site restaurant and beverage
      businesses and 2) internet retail customers, who are not covered in our
      distributor network and individual customers making one-time purchases. We
      anticipate our sales mix to remain relatively static during the next fiscal
      year, and plan to build our business base and hopefully add more distributors
      and gain greater market awareness through the internet.




**Competition**





The
      market for party drinks, drink mixes and drinking supplies is highly competitive
      and fragmented. The Company expects competition to intensify in the future.
      We
      compete in each of our markets with numerous national, regional and local
      companies, many of which have substantially greater financial, managerial and
      other resources than those presently available to us. Numerous well-established
      companies are focusing significant resources on providing party drinks, drink
      mixes and drinking supplies that will compete with our services. No assurance
      can be provided that we will be able to effectively compete with these other
      companies or that competitive pressures, including possible downward pressure
      on
      the prices we charge for our products, will not rise. In the event that we
      cannot effectively compete on a continuing basis or competitive pressures arise,
      such inability to compete or competitive pressures will have a material adverse
      effect on our business, results of operations and financial
      condition.





Our
      main
      competition is from a product called "Zippers," a gelatin shooter manufactured
      by BPNC, Inc. Zippers are gelatin shooters in prepackaged form which include
      alcohol and are therefore regulated by various individual state’s liquor control
      boards. We believe our product is superior to Zippers for many reasons
      including: (i) the fact that our Gelatin Shooters do not include alcohol and
      are
      therefore not regulated as an alcoholic beverage and are not subject to certain
      liquor control guidelines (ii) because of the fact that our end users are able
      to add their own liquor products, they can use the alcohol of their choice
      and
      make the Gelatin Shooters as strong or as weak as they like and (iii) our
      Gelatin Shooters will last longer and not go stale as fast as Zippers, due
      to
      the fact that they only come in powdered form.





We
      do not
      currently depend on one or a small number of customers for our sales. We
      currently offer and sell our products to a large number of customers, including
      distributors, hotels, restaurants, bars and clubs and direct retail via our
      website.





**Subsidiaries**





Our
      wholly owned subsidiary, Sunshine Group LLC, conducts business under the d/b/a
      of "Shotski's Gelatin Cocktail Mixes," "Shotski's," "Shotski's Cocktail Sugars
      & Salts and Bar Supplies” and “Shotski’s Gold Star Mfg.”








-7-





**Patents,
      Trademarks And Licenses**





The
      President of Sunshine, Marion R. "Butch" Barnes, holds a registered trademark
      for the term "Shotski's," serial number 76419327, registration number 2877880,
      which he licenses to us free of charge. In September 2006, we entered into
      a
      Trademark Licensing Agreement with Mr. Barnes in connection with our use of
      the
      "Shotski's" trademark. Pursuant to the licensing agreement, Mr. Barnes agreed
      to
      provide us a one (1) year non-revocable license to use of the trademark, which
      license shall automatically renew for additional one (1) year terms unless
      either party terminates the licensing agreement at least sixty, but not more
      than ninety days prior to the end of the then current term of the agreement.
      We
      have no reason to believe that Mr. Barnes will not continue to license us the
      use of the "Shotski's" trademark indefinitely.





Other
      than the trademark for "Shotski's," which we license from Mr. Barnes, we have
      no
      other patents, trademarks or licenses.





**Need
      For Government Approval**





We
      operate in the food and beverage industry and as such, our operations are
      regulated by the U.S. Food and Drug Administration, as well as by various other
      state, county and city regulations as required by law.





We
      have
      obtained all required federal and state permits, licenses, and bonds to operate
      our business. However, there can be no assurance that in the future, our
      operations and profitability will not be subject to more restrictive regulation
      and/or increased taxation by federal, state, or local agencies.





**ITEM
      2. DESCRIPTION OF PROPERTY**





Our
      primary office space currently occupies approximately 240 square feet of office
      space, at 1640 Terrace Way, Walnut Creek, California 94597, which we are
      provided at the home of David Rector, our sole officer and Director, free of
      charge. Mr. Rector does not have any current plans to cease providing such
      office space free of charge, nor do we have any current plans to seek an
      alternative office space arrangement.





We
      additionally have approximately 200 square feet of office space at our
      warehouse facility at 369 Blanding Blvd., Orange Park, Florida 32073. We entered
      into a one (1) year warehouse lease for approximately 1,500 square feet of
      warehouse space, which lease started on December 1, 2006 and expires on December
      31, 2007. The rent for the warehouse property is $10,593 per year, payable
      in
      monthly installments of $882.75. The lease for the Orange Park, Florida office
      space and warehouse facility is with a party not affiliated with us.





**ITEM
      3. LEGAL PROCEEDINGS**





From
      time
      to time, we may become party to litigation or other legal proceedings that
      we
      consider to be a part of the ordinary course of our business. We are not
      currently involved in legal proceedings that could reasonably be expected to
      have a material adverse effect on our business, prospects, financial condition
      or results of operations. We may become involved in material legal proceedings
      in the future.





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





None.


-8-







**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED
      STOCKHOLDER**  **MATTERS**





No
      established public trading market exists for our common stock. We have no shares
      of common stock subject to outstanding options or warrants to purchase, or
      securities convertible into, our common stock. We have no outstanding shares
      of
      Preferred Stock. Moving forward we plan to work with a market maker and to
      eventually quote our common stock on the Over-The-Counter Bulletin Board, of
      which there can be no assurance.





As
      of
      March 5, 2007, there were 7,030,000 shares of common stock outstanding, held
      by
      approximately thirty-nine (39) shareholders of record.





**Recent
      Sales of Unregistered Securities**





There
      were no sales of securities during the three months ended December 31, 2006,
      or
      through the date of this report.








**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
      OF**  **OPERATION**





**PLAN
      OF OPERATIONS**





We
      are
      currently funded solely by our shareholders and believe that we can continue
      our
      business operations for approximately the next three months with the funds
      we
      receive through sales of our products, the $7,458 of cash on hand we had as
      of
      December 31, 2006 and the $10,000 loan we received from Jenadosa in January
      2007. We plan to work to increase our sales in the future, by starting a mail,
      fax and email marketing program, and by utilizing and building upon the interest
      we generate for our products at trade shows.





We
      believe we will require up to $250,000 in the next twelve months to expand
      our
      operations, purchase a printing machine, which would allow us to increase the
      volume of our sales, pay the travel expenses associated with travel to certain
      trade shows, and purchase additional inventory and magazine ads. We do not
      currently have any commitments for this funding.





We
      spent
      approximately $2,500 per year on research and development activities on our
      products during each of the last two fiscal years ended December 31, 2006 and
      2005.





We
      are
      currently actively recruiting new distributors to expand our sales coverage
      for
      our product lines. Distributors can be regional, serving multiple states, within
      a state or distribute in or around a large city. We have found that getting
      the
      attention of a larger distributor with a new product line can be difficult
      and
      have found that we are more successful in recruiting multiple smaller
      distributors with limited coverage areas to date. However, because of this,
      we
      currently believe that there are currently many open areas within the states
      that we distribute our products to that are not serviced by the smaller
      distributors which we distribute our products through. To provide coverage
      to
      these areas, we conduct direct email marketing campaigns in an effort to attract
      customers and service such customers directly through our website. This
      two-pronged approach of recruiting regional distributors and directly marketing
      our products to individual customers will be the primary sales and marketing
      strategy for us for the next several years.








-9-







We
      have
      experienced a limited amount of increased demand for our products around the
      winter holidays, spring break and summer vacation. Other than these limited
      seasonal increases in our sales, we have experienced no significant seasonal
      increases in our sales to date. We are currently spending the majority of our
      efforts in growing our distribution channels and sales. At present, our sales
      growth has been relatively unaffected by any seasonality trends. For the
      foreseeable future, we do not anticipate any significant increases or decreases
      in sales due to seasonality factors.





Our
      primary branded product, Shotski's Gelatin Bar Mixes, is a product concept
      that
      has been in place for several years. With the unique formulation of the
      Shotski's product and the supporting line of bar accessories to help the on-site
      accounts market the products, we believe we have been able to differentiate
      ourselves from the mainstream and begin to build brand awareness as well as
      our
      revenue base. We believe that the key to our Shotski's mix product concept
      is
      the longevity of the on-site prepared gelatin product; that is that it remains
      useable for multiple weeks, where other gelatin products are only good for
      approximately 24-48 hours before they spoil. At this juncture, we have
      experienced a significant increase in growth for the year ended December 31,
      2006, compared to the year ended December 31, 2005, and plan to use the majority
      of our revenues moving forward, assuming we are able to continue to generate
      such revenues, and have any funds left over after paying our expenses, of which
      there can be no assurance, to increase our inventories and continue and expand
      our marketing campaign.





Our
      operations are based on just-in-time inventory policies and therefore our
      working capital is held to a minimum. However, we also try to take advantage
      of
      costs saving that can be gained from purchasing our supplies in bulk, which
      benefits we believe, along with the practice of keeping our working capital
      at a
      minimum has benefited our gross margins to date. We believe that our lines
      of
      supply are well-established and reliable to date and that moving forward, our
      suppliers have great flexibility to effectively handle any increases in sales
      volume we may experience, without delays.





We
      also
      believe that we have strong support and an excellent working relationship with
      our financial advisor, Viking Investment Group II, Inc., who will work with
      us
      on an ongoing basis to help provide assistance in generating additional working
      capital funds, if such funds are needed in the future.





**RESULTS
      OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 COMPARED TO THE FISCAL
      YEAR ENDED DECEMBER 31, 2005**





We
      had
      product sales of $135,912 for the year ended December 31, 2006, compared to
      product sales of $46,984 for the year ended December 31, 2005, an increase
      in
      product sales of $88,928 or 189.3% from the prior period. The increase in
      product sales was due to increased awareness of and demand for our products,
      which product awareness was created through our attendance at various
      tradeshows, our Internet website and postings on certain Internet websites,
      as
      well as various magazine advertisements featuring our products.








-10-







We
      had a
      cost of goods sold of $84,136 for the year ended December 31, 2006, compared
      to
      a cost of goods sold of $45,840 for the year ended December 31, 2005, an
      increase in cost of good sold of $38,296 or 83.5%, which increase in cost of
      goods sold was directly attributable to our increased sales over the same
      period.





We
      had a
      gross margin of $51,776 for the year ended December 31, 2006, compared to a
      gross margin of $1,144 for the year ended December 31, 2005, an increase in
      gross margin of $50,632, which increase in gross margin was due to the 189.3%
      increase in revenues for the year ended December 31, 2006 compared to the year
      ended December 31, 2005, offset by only an 83.5% increase in cost of goods
      sold
      over the same period.





We
      had
      total expenses, consisting solely of general and administrative expenses of
      $276,094 for the year ended December 31, 2006, compared to total expenses
      consisting solely of general and administrative expenses of $85,885 for the
      year
      ended December 31, 2005, an increase in general and administrative expenses
      of
      $190,209 or 221.5% from the prior period. The increase in general and
      administrative expenses was caused by increased services contributed by our
      officers and Directors, relating to the amount of time they put into the
      Company’s operations even though they draw no salary from the Company, increases
      in our advertising expenses which totaled approximately $24,000 for the year
      ended December 31, 2006, compared to $0 for the year ended December 31, 2005,
      and increases in our professional fees in connection with becoming a reporting
      company during the fiscal year ended December 31, 2006, including the
      preparation of our periodic filings with the Securities and Exchange Commission
      by our legal counsel and the review and audit of our quarterly and annual
      financial statements by our independent auditors, which expenses were not
      present during the year ended December 31, 2005, as we were not a publicly
      reporting company at that time.





We
      had a
      loss from operations of $ 203 ,256
      for
      the year ended December 31, 2006, compared to a loss from operations of $84,741
      for the year ended December 31, 2005, an increase in loss from operations of
      $ 118,515 or 139 . 9 %
      from
      the prior period. This increase in loss from operations was caused by the 196 .9%
      increase in general and administrative expenses for the year ended December
      31,
      2006, compared to the year ended December 31, 2005.





We
      had
      other expenses, consisting of interest expense of $10,531 for the year ended
      December 31, 2006, compared to other expenses consisting of interest expense of $561
      for the year ended December 31, 2005, an increase in interest expense of
      $ 9,970 from the
      prior period. Interest expense for the year ended December 31, 2006 was in
      connection with Jenadosa Notes (described in greater detail and defined
      below).





We
      had a
      net loss of $213,787 for the year ended December 31, 2006, compared to a net
      loss of $85,302 for the year ended December 31, 2005, an increase in net loss
      of
      $128,485 or 150.6% from the prior period. The increase in net loss was mainly
      due to the 196 .9%
      increase in general and administrative expenses, the 83.5% increase in cost
      of
      goods sold, and the $ 9,970 increase
      in interest expense for the year ended December 31, 2006, compared to the prior
      year, which was not sufficiently offset by the 189.3% increase in sales over
      the
      same period.








-11-








**LIQUIDITY
      AND CAPITAL RESOURCES**





We
      had
      total assets of $27,853 as of December 31, 2006, which included current assets
      of $23,555, consisting of cash on hand of $7,458 and accounts receivable, net
      of
      $16,097, and non-current assets of $4,298, including property and equipment,
      net
      of $3,295, trademark of $275, consisting of the trademark “Shotski’s” licensed
      to us from Mr. Barnes pursuant to the Trademark Licensing Agreement described
      above and deposits of $728.





We
      had
      total liabilities of $151,621 as of December 31, 2006, consisting solely of
      current liabilities, including accounts payable of $13,529, and notes payable
      and accrued interest of $138,092 in connection with the notes payable to
      Jenadosa Holdings Limited.





We
      received two $50,000 loans, one $5,000 loan, one $7,000 loan and one $15,000
      loan from a third party, Jenadosa Holdings Limited ("Jenadosa"), during the
      years ended December 31, 2005 and 2006, and entered into promissory notes which
      evidence the loans, which notes bear interest at the rate of 10% per year until
      paid. We received $50,000 in connection with one promissory note on November
      20,
      2005, $50,000 in connection with another promissory note on February 14, 2006,
      $5,000 in connection with a third promissory note on August 21, 2006, $7,000
      in
      connection with a fourth note on September 20, 2006, and $15,000 in connection
      with a fifth note on October 13, 2006 (collectively the “2005 and 2006 Notes”).
      The Notes are all payable on July 31, 2007, together with any accrued and unpaid
      interest. Any amounts not paid on the Notes when due bear interest at the rate
      of 15% per annum until paid.





On
      January 15, 2007, we received an additional $10,000 loan from Jenadosa and
      entered into an additional promissory note with Jenadosa to evidence the loan,
      which bears 10% interest per annum and is due and payable on March 31, 2008
      (the
“2007 Note,” and collectively with the 2005 and 2006 Notes, the
“Notes”).





We
      had
      negative working capital of $128,066 and total stockholders’ deficit of $123,768
      as of December 31, 2006.





We
      had
      $89,527 of net cash used in operating activities for the year ended December
      31,
      2006, which mainly consisted of $213,787 of net loss and $21,778 of increase
      in
      receivables, offset by $117,001 of contributed services to us by our Chief
      Executive Officer, David Rector and the President of Sunshine, Marion "Butch"
      Barnes, neither of which we pay a salary, $10,000 in allowance for bad debts
      and
      $10,531 of increase in accrued interest payable in connection with the Jenadosa
      Notes.





We
      had
      $3,798 of net cash used by investing activities for the year ended December
      31,
      2006, which was solely due to the purchase of fixed assets in connection with
      the purchase of new phones and construction of our office space and floor jack
      in our Florida warehouse.





We
      had
      $80,300 of net cash provided by financing activities for the year ended December
      31, 2006, which included $3,300 of common stock issued for cash in connection
      with the sale by us in June 2006, of 330,000 shares of our common stock to
      an
      aggregate of thirty-three (33) offshore investors in connection with Offshore
      Subscription Agreements, for aggregate consideration of $3,300, or $0.01 per
      share; and $77,000 of proceeds from notes payable in connection with the
      Jenadosa Notes, which amount does not include the January 15, 2007 Jenadosa
      Note
      described above.








-12-







We
      have
      no current commitment from our officers and Directors or any of our shareholders
      to supplement our operations or provide us with financing in the future. If
      we
      are unable to raise additional capital from conventional sources and/or
      additional sales of stock in the future, we may be forced to curtail or cease
      our operations. Even if we are able to continue our operations, the failure
      to
      obtain financing could have a substantial adverse effect on our business and
      financial results.





In
      the
      future, we may be required to seek additional capital by selling debt or equity
      securities, selling assets, or otherwise be required to bring cash flows in
      balance when we approach a condition of cash insufficiency. The sale of
      additional equity or debt securities, if accomplished, may result in dilution
      to
      our then shareholders. We provide no assurance that financing will be available
      in amounts or on terms acceptable to us, or at all.





**RISK
      FACTORS**





You
      should carefully consider the following risk factors and other information
      in
      this annual report on Form 10-KSB before deciding to become a holder of our
      common stock. If any of the following risks actually occur, our business and
      financial results could be negatively affected to a significant
      extent.





The
      Company's business is subject to the following Risk Factors (references to
      "our," "we," "Nano", and words of similar meaning in these Risk Factors refer
      to
      the Company):





**WE
      MAY NOT BE ABLE TO CONTINUE OUR BUSINESS PLAN WITHOUT ADDITIONAL
      FINANCING.**





We
      depend
      to a great degree on the ability to attract external financing in order to
      conduct our business activities and in order that we have sufficient cash on
      hand to expand our operations. We are currently funded solely by our
      shareholders and we believe that we can continue our business operations for
      approximately the next three months with the funds we receive through sales
      of
      our products and the $7,458 of cash on hand we had as of December 31, 2006
      and
      the $10,000 loan we received from Jenadosa in
      January 2007. We also anticipate the need for approximately $250,000 in the
      next
      twelve months to expand our operations (as described above under “Plan of
      Operations,” which we do not currently have any commitments from any related or
      third parties to provide. If we are unable to generate sufficient revenues
      to
      support our operations and/or fail to raise additional funds after the three
      months which we currently believe we will be able to continue our operations,
      and/or if we are unable to raise sufficient capital to increase our sales,
      we
      may be forced to abandon our current business plan. If you invest in us and
      we
      are unable to raise the required funds, your investment could become
      worthless.





**WE
      WILL REQUIRE APPROXIMATELY $148,000 PRIOR TO JULY 31, 2007, TO REPAY AMOUNTS
      WE
      OWE UNDER OUTSTANDING NOTES PAYABLE, WHICH FUNDS WE DO NOT CURRENTLY
      HAVE.**





Jenadosa
      Holding Limited ("Jenadosa"), loaned us $50,000 on November 20, 2005, $50,000
      on
      February 14, 2006, $5,000 on August 21, 2006, $7,000 on September 20, 2006,
      and
      $15,000 on October 13, 2006 which loans are evidenced by promissory notes,
      and
      which loans had accrued approximately $11,000 in accrued and unpaid interest
      as
      of December 31, 2006. The promissory notes bear interest at the rate of 10%
      per
      annum until paid and all principal and accrued and unpaid interest under the
      promissory notes is due and payable by us on July 31, 2007. Jenadosa also loaned
      us an additional $10,000, which bears interest at the rate of 10% per annum,
      which is due and payable on March 31, 2008. We do not currently have sufficient
      cash on hand to repay the $138,000 (including accrued and unpaid interest as
      of
      December 31, 2006) owed under the promissory notes with Jenadosa. If we are
      unable to generate a sufficient amount of net income to provide us enough funds
      to repay the notes prior to July 31, 2007, and/or March 31, 2008, respectively,
      we may be forced to raise additional funds through the sale of equity or debt
      securities, which could cause substantial dilution to our existing shareholders.
      As a result, if we fail to generate sufficient net income to repay our
      outstanding promissory notes with Jenadosa, the value of our securities, if
      any,
      could decline in value or become worthless.






-13-






**OUR
      AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT AS TO WHETHER OUR COMPANY CAN CONTINUE
      AS A GOING CONCERN.**





We
      have
      generated only limited revenues since our inception and have incurred
      substantial losses. These factors among others indicate that we may be unable
      to
      continue as a going concern, particularly in the event that we cannot generate
      sufficient cash flow to conduct its operations and/or obtain additional sources
      of capital and financing.





**WE
      LACK AN OPERATING HISTORY WHICH YOU CAN USE TO EVALUATE US, MAKING ANY
      INVESTMENT IN OUR COMPANY RISKY.**





We
      lack
      an operating history which investors can use to evaluate our previous history,
      as we were only incorporated in April 2004. Therefore, an investment in us
      is
      risky because we have no business history and it is hard to predict what the
      outcome of our business operations will be in the future.





**WE
      RELY UPON KEY PERSONNEL AND IF THEY LEAVE US, OUR BUSINESS PLAN AND RESULTS
      OF
      OPERATIONS COULD BE ADVERSELY AFFECTED.**





We
      rely
      heavily on our Chief Executive Officer, Chief Financial Officer, Secretary,
      Treasurer and Director, David Rector, as well as the President of Sunshine,
      Marion R. "Butch" Barnes. Their experience and input create the foundation
      for
      our business and they are responsible for the directorship and control over
      our
      products. We do not currently have an employment agreement or "key man"
      insurance policy on either Mr. Rector or Mr. Barnes. Moving forward, should
      we
      lose the services of Mr. Rector or Mr. Barnes, for any reason, we will incur
      costs associated with recruiting replacements and delays in our operations.
      If
      we are unable to replace either Mr. Rector or Mr. Barnes with another suitably
      trained individual or individuals, we may be forced to scale back or curtail
      our
      business plan. As a result of this, your investment in us could become
      devalued.






-14-







**WE
      FACE INTENSE COMPETITION FOR OUR PRODUCTS AND AS A RESULT, WE MAY BE UNABLE
      TO
      COMPETE IN THE MARKET FOR PARTY AND ALCOHOLIC DRINKING MIXES AND
      SUPPLIES.**





The
      market for party drinks, drink mixes and drinking supplies is highly competitive
      and fragmented. The Company expects competition to intensify in the future.
      We
      compete in each of our markets with numerous national, regional and local
      companies, many of which have substantially greater financial, managerial and
      other resources than those presently available to us. Numerous well-established
      companies are focusing significant resources on providing party drinks, drink
      mixes and drinking supplies that will compete with our services. No assurance
      can be given that we will be able to effectively compete with these other
      companies or that competitive pressures, including possible downward pressure
      on
      the prices we charge for its products, will not rise. In the event that we
      cannot effectively compete on a continuing basis or competitive pressures arise,
      such inability to compete or competitive pressures will have a material adverse
      effect on tour business, results of operations and financial
      condition.





**WE
      HAVE NOT AND DO NOT ANTICIPATE PAYING ANY CASH DIVIDENDS ON OUR COMMON STOCK
      AND
      BECAUSE OF THIS OUR SECURITIES COULD FACE DEVALUATION IN THE
      MARKET.**





We
      have
      paid no cash dividends on our common stock to date and it is not anticipated
      that any cash dividends will be paid to holders of our common stock in the
      foreseeable future. While our dividend policy will be based on the operating
      results and capital needs of our business operations, it is anticipated that
      any
      earnings will be retained to finance our business operations and future
      expansion.





**IF
      OUR COMMON STOCK IS APPROVED FOR TRADING ON THE OVER-THE-COUNTER BULLETIN BOARD,
      THERE MAY NOT BE A MARKET FOR OUR COMMON STOCK, AND IF THERE IS A MARKET, IT
      WILL LIKELY BE LIMITED, SPORADIC, AND VOLATILE.**





Subsequent
      to this filing, we hope to have our common stock quoted on the Over-The-Counter
      Bulletin Board ("OTCBB"). If we do obtain approval for our common stock to
      be
      quoted on the OTCBB, there may not be a market for our common stock, and if
      there is a market, it will likely be illiquid, highly volatile and not followed
      by analysts, which could lead to large increases and decreases in the trading
      value of our common stock, which are not based on our results of operations
      or
      the value of our company.





-15-







**IF
      OUR COMMON STOCK IS NOT APPROVED FOR TRADING ON THE OVER-THE-COUNTER BULLETIN
      BOARD, OUR COMMON STOCK MAY NOT BE PUBLICLY TRADED, WHICH COULD MAKE IT
      DIFFICULT TO SELL SHARES OF OUR COMMON STOCK AND/OR CAUSE THE VALUE OF OUR
      COMMON STOCK TO DECLINE IN VALUE.**





In
      order
      to have our common stock traded on the OTCBB, which is our current plan, we
      will
      need to have a market maker file a Form 15c2-11 with the National Association
      of
      Securities Dealers ("NASD") on our behalf; and then clear NASD comments to
      obtain a trading symbol on the OTCBB. Assuming we clear NASD comments, of which
      we can provide no assurances, we anticipate receiving a trading symbol and
      having our shares of common stock traded on the OTCBB in approximately two
      (2)
      to three (3) months after the filing of our 15c2-11. In the event our Form
      15c2-11 is not approved by the NASD, we plan to file a 15c2-11 to trade our
      shares of common stock on the Pink Sheets. If we are not cleared for trading
      on
      the OTCBB and are not cleared for trading on the Pink Sheets, there will be
      no
      public market for our common stock and it could be difficult or impossible
      for
      our then shareholders to sell shares of common stock which they own. As a
      result, the value of our common stock will likely be less than it would
      otherwise due to the difficulty shareholders will have in selling their shares.
      If we are unable to obtain clearance to trade on the OTCBB and/or the Pink
      Sheets, it will be difficult for us to raise capital and we could be forced
      to
      curtail or abandon our business operations, and as a result, the value of our
      common stock could become worthless.








**OUR
      BYLAWS PROVIDE FOR INDEMNIFICATION OF OUR OFFICERS AND DIRECTORS, SO IT WILL
      BE
      DIFFICULT TO SEEK DAMAGES FROM OUR OFFICERS AND/OR DIRECTORS IN A
      LAWSUIT.**





Our
      Bylaws provide that our officers and Directors will only be liable to us for
      acts or omissions that constitute actual fraud, gross negligence or willful
      and
      wanton misconduct. Thus, we may be prevented from recovering damages for certain
      alleged errors or omissions by our officers and Directors for liabilities
      incurred in connection with their good faith acts on our behalf. Additionally,
      such an indemnification payment on behalf of our officers and/or Directors
      may
      deplete our assets. Investors who have questions respecting the fiduciary
      obligations of our officers and Directors should consult with their own
      independent legal counsel prior to making an investment in us. Additionally,
      it
      is the position of the Securities and Exchange Commission that exculpation
      from
      and indemnification for liabilities arising under the 1933 Act and the rules
      and
      regulations thereunder is against public policy and therefore
      unenforceable.





-16-







**WE
      HAVE A LIMITED OPERATING HISTORY AND BECAUSE OF THIS IT MAY BE DIFFICULT TO
      EVALUATE OUR CHANCES FOR SUCCESS.**





We
      were
      formed as a Delaware corporation on April 16, 2004. From April 16, 2004 until
      December 31, 2005, the date we acquired Sunshine Group, LLC, we had limited
      operations. While we have had a limited volume of sales to date, we can provide
      no assurances that our sales will increase in the future and/or that our sales
      will not decline in the future. Although we feel that our results of operations
      are encouraging, we are a relatively new company and, as such, run a risk of
      not
      being able to compete in the marketplace because of our relatively short
      existence. New companies in the competitive environment of drinking mixes and
      supplies, such as ours, may have difficulty in continuing in the highly
      competitive beverage and drink mix industry, and as a result, we may be forced
      to abandon or curtail our business plan. Under such a circumstance, the value
      of
      any investment in us may become worthless.




**WE
      FACE A RISK OF A CHANGE IN CONTROL DUE TO THE FACT THAT OUR CURRENT SOLE
      DIRECTOR DOES NOT OWN A MAJORITY OF OUR OUTSTANDING COMMON
      STOCK.**





Our
      current Director, David Rector, owns 100,000 shares of our common stock,
      representing only 1.4% of our outstanding common stock and can therefore not
      exercise majority voting control over us. As a result, our shareholders who
      are
      not officers and Directors of us are able to obtain a majority of voting shares,
      which would allow such shareholders to choose who serves as our Director(s).
      Because of this, Mr. Rector may not be reappointed by our shareholders when
      he
      is up for re-election and/or may be replaced by another individual or
      individuals, and such replacement would be outside of Mr. Rector's control.
      If
      that were to happen, our new management could affect a change in our business
      focus and/or curtail or abandon our business operations, which in turn could
      cause the value of our securities, if any, to decline.





**DELAWARE
      LAW AND OUR CERTIFICATE OF INCORPORATION AUTHORIZE US TO ISSUE SHARES OF STOCK,
      WHICH SHARES MAY CAUSE SUBSTANTIAL DILUTION TO OUR EXISTING SHAREHOLDERS AND/OR
      HAVE RIGHTS AND PREFERENCES GREATER THAN THE COMMON STOCK CURRENTLY
      OUTSTANDING.**





Pursuant
      to our Certificate of Incorporation, we have 75,000,000 shares of common stock
      and 10,000,000 shares of Preferred Stock authorized. As of the filing of this
      Report, we have 7,030,000 shares of common stock issued and outstanding and
      - 0
      - shares of Preferred Stock issued and outstanding. As a result, our Board
      of
      Directors has the ability to issue a large number of additional shares of common
      stock without shareholder approval, which if issued could cause substantial
      dilution to our then shareholders. Additionally, shares of Preferred Stock
      may
      be issued by our Board of Directors without shareholder approval with voting
      powers, and such preferences and relative, participating, optional or other
      special rights and powers as determined by our Board of Directors, which may
      be
      greater than the shares of common stock currently outstanding. As a result,
      shares of Preferred Stock may be issued by our Board of Directors which cause
      the holders to have super majority voting power over our shares, provide the
      holders of the Preferred Stock the right to convert the shares of Preferred
      Stock they hold into shares of our common stock, which may cause substantial
      dilution to our then common stock shareholders and/or have other rights and
      preferences greater than those of our common stock shareholders. Investors
      should keep in mind that the Board of Directors has the authority to issue
      additional shares of common stock and Preferred Stock, which could cause
      substantial dilution to our existing shareholders. Additionally, the dilutive
      effect of any Preferred Stock, which we may issue may be exacerbated given
      the
      fact that such Preferred Stock may have super majority voting rights and/or
      other rights or preferences which could provide the preferred shareholders
      with
      voting control over us and/or give those holders the power to prevent or cause
      a
      change in control. As a result, the issuance of shares of common stock and/or
      Preferred Stock, may cause the value of our securities to decrease and/or become
      worthless.






-17-






**EFFECT
      OF UNFAVORABLE PUBLICITY FOR OUR PRODUCTS, OTHER DRINK MIX PRODUCTS, OR THE
      ALCOHOLIC DRINK MARKET AS A WHOLE.**





We
      believe that the market for our products will be affected by national media
      attention regarding the consumption of alcoholic beverages as a whole. Future
      publicity regarding the potential effects of the daily consumption and/or excess
      consumption of alcoholic beverages could have a material adverse effect on
      our
      sales and marketing efforts. If we or other drink mix suppliers, and/or
      alcoholic beverage suppliers were to suffer adverse media attention, it could
      cause the value of our common stock to decrease, and could lead to any
      investment you have in us becoming worthless.





**EFFECT
      OF GOVERNMENT REGULATIONS ON OUR FUTURE PRODUCTS AND POTENTIAL LEGAL PROCEEDINGS
      SUCH CHANGES IN REGULATIONS COULD CREATE.**





The
      manufacturing, packaging, labeling, advertising, distribution and sale of our
      products and mixes are subject to regulation by federal, state and local
      agencies, the most active of which is the U.S. Food and Drug Administration
      (the
      "FDA"). While we currently believe that our operations fully comply with all
      FDA
      rules and regulations, there can be no assurance that the FDA will not enact
      stricter rules and regulations in the future. There can be no assurance, that
      if
      FDA rules are enacted, that we will be able to comply with them without
      incurring material expenses. Additionally, any additional products we may choose
      to distribute in the future, if any, will likely be regulated by federal, state
      and local agencies as well, including the FDA. Currently all of our drink mix
      ingredients have previously passed FDA approval, however there can be no
      assurance that such ingredients will continue to be approved by the FDA. If
      any
      of our ingredients were found in the future to be harmful by the FDA, we could
      be forced to change the ingredients in our products and/or may face legal
      proceedings in connection with the defense of any customers who claim they
      were
      harmed by such ingredients. If this were to happen we could be forced to abandon
      or curtail our business plan. Additionally, if stricter regulations are enacted
      in the future and we are unable to meet these new laws or regulations, any
      investment in our securities could become worthless.





**OUR
      SALES EXPERIENCE LARGE FLUCTUATIONS DUE TO THE SEASONALITY OF OUR
      PRODUCTS.**





We
      generally experience greater sales in the spring, summer and during the winter
      holidays, as in our opinion, there are a greater number of individuals consuming
      alcoholic beverages during the spring and summer months and during the winter
      holidays, due to the fact that schools are on spring break and summer and winter
      vacations occur during those months. As such, our results of operations for
      any
      one quarter may not be indicative of the results of operations for any other
      quarter and/or our yearly results of operations.








-18-






**WE
      DO NOT CURRENTLY HAVE A PUBLIC MARKET FOR OUR SECURITIES. IF THERE IS A MARKET
      FOR OUR SECURITIES IN THE FUTURE, OUR STOCK PRICE MAY BE VOLATILE AND
      ILLIQUID.**





There
      is
      currently no public market for our common stock. Moving forward, we hope to
      quote our securities on the OTC Bulletin Board. However, we can make no
      assurances that we will be able to quote our securities on the OTC Bulletin
      Board, or that there will be a public market for our common stock in the future.
      If there is a market for our common stock in the future, we anticipate that
      such
      market would be illiquid and would be subject to wide fluctuations in response
      to several factors, including, but not limited to:





(1)
            actual
                or anticipated variations in our results of operations;(2)
            our
                ability or inability to generate new revenues;(3)
            increased
                competition; and(4)
            conditions
                and trends in the market for alcohol and alcohol related services,
                bars
                and other establishments which sell alcoholic
                beverages.





Furthermore,
      our stock price may be impacted by factors that are unrelated or
      disproportionate to our operating performance. These market fluctuations, as
      well as general economic, political and market conditions, such as recessions,
      interest rates or international currency fluctuations may adversely affect
      the
      market price and liquidity of our common stock.





**INVESTORS
      MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO
      FEDERAL REGULATIONS OF PENNY STOCKS.**





Once
      our
      common stock is listed on the OTC Bulletin Board, it is likely that it will
      be
      subject to the requirements of Rule 15(g)9, promulgated under the Securities
      Exchange Act as long as the price of our common stock is below $4.00 per share.
      Under such rule, broker-dealers who recommend low-priced securities to persons
      other than established customers and accredited investors must satisfy special
      sales practice requirements, including a requirement that they make an
      individualized written suitability determination for the purchaser and receive
      the purchaser's consent prior to the transaction. The Securities Enforcement
      Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure
      in connection with any trades involving a stock defined as a penny stock.
      Generally, the Commission defines a penny stock as any equity security not
      traded on an exchange or quoted on NASDAQ that has a market price of less than
      $4.00 per share. The required penny stock disclosures include the delivery,
      prior to any transaction, of a disclosure schedule explaining the penny stock
      market and the risks associated with it. Such requirements could severely limit
      the market liquidity of the securities and the ability of purchasers to sell
      their securities in the secondary market.




**ITEM
      7. FINANCIAL
      STATEMENTS**






-19-






**NANOHOLDINGS
        INTERNATIONAL, INC.**
 Consolidated
        Balance Sheet
 **ASSETS**December
                    31,2006CURRENT
                    ASSETSCash
                $
                7,458Accounts
                    receivable, net
                
                16,097Total
                    Current Assets
                
                23,555PROPERTY
                    AND EQUIPMENT, net
                
                3,295OTHER
                    ASSETSTrademark
                
                275Deposits
                
                728Total
                    Other Assets
                
                1,003TOTAL
                    ASSETS
                $
                27,853**LIABILITIES
                    AND STOCKHOLDERS' EQUITY (DEFICIT)**CURRENT
                    LIABILITIESAccounts
                    payable
                $
                13,529Notes
                    payable and accrued interest
                
                138,092Total
                    Current Liabilities
                
                151,621LONG-TERM
                    DEBT
                
                -Total
                    Liabilities
                
                151,621COMMITMENTS
                    AND CONTINGENCIES
                
                -STOCKHOLDERS'
                    EQUITY (DEFICIT)Preferred
                    stock:$0.001 par value, 10,000,000 sharesauthorized;
                    no shares issued and outstanding
                
                -Common
                    stock:$0.001 par value, 75,000,000 sharesauthorized;
                    7,030,000 shares issued and outstanding
                
                7,030Additional
                    paid-in capital
                
                240,791Accumulated
                    deficit
                
                (371,589
                )Total
                    Stockholders' Equity (Deficit)
                
                (123,768
                )TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                $
                27,853
      F-1
    **NANO
          HOLDINGS INTERNATIONAL, INC.**
 Consolidated
          Statements of Operations
 For
                    the Years Ended December 31,2006
                
                
                2005REVENUESProduct
                    sales
                
                $
                135,912
                
                
                $
                46,984Cost
                    of goods sold
                
                
                84,136
                
                
                
                45,840Gross
                    Margin
                
                
                51,776
                
                
                
                1,144EXPENSESGeneral
                    and administrative
                
                
                255,032
                
                
                
                85,885Total
                    Expenses
                
                
                255,032
                
                
                
                85,885Loss
                    from Operations
                
                
                (203,256
                )
                
                
                (84,741
                )OTHER
                    EXPENSESInterest
                    expense
                
                
                10,531
                
                
                
                (561
                )Net
                    Loss
                
                $
                (213,787
                )
                
                $
                (85,302
                )PER
                    SHARE DATA:Basic
                    and diliuted loss per share
                
                $
                (0.06
                )
                
                $
                (0.02
                )Weighted
                    average number of shares outstanding3,500,000
                
                
                
                3,500,000
       F-2
    **NANO
          HOLDINGS INTERNATIONAL, INC.**
 Consolidated
          Statements of Stockholders' Equity (Deficit)
   AdditionalCommon
                      Stock
                  
                  Paid-in
                  
                  AccumulatedShares
                  
                  Amount
                  
                  Capital
                  
                  Deficit
                  
                  TotalBalance,
                      December 31, 2004
                  
                  
                  3,500,000
                  
                  $
                  3,500
                  
                  $
                  73,020
                  
                  $
                  (72,500
                  )
                  $
                  4,020Contributed
                      capital
                  
                  
                  -
                  
                  
                  -
                  
                  
                  51,000
                  
                  
                  -
                  
                  
                  51,000Shares
                      issued in recapitalization
                  
                  
                  3,100,000
                  
                  
                  3,100
                  
                  
                  (3,100
                  )
                  
                  -
                  
                  
                  -Net
                      loss for the year ended December 31, 2005-
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (85,302
                  )
                  
                  (85,302
                  )Balance,
                      December 31, 2005
                  
                  
                  6,600,000
                  
                  
                  6,600
                  
                  
                  120,920
                  
                  
                  (157,802
                  )
                  
                  (30,282
                  )Common
                      stock issued for servicesperformed
                      by an officerand
                      shareholder
                  
                  
                  100,000
                  
                  
                  100
                  
                  
                  116,901
                  
                  
                  -
                  
                  
                  117,001Common
                      stock issued for cashat
                      $0.01 per share
                  
                  
                  330,000
                  
                  
                  330
                  
                  
                  2,970
                  
                  
                  -
                  
                  
                  3,300Net
                      loss for the year ended December 31, 2006-
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (213,787
                  )
                  
                  (213,787
                  )Balance,
                      December 31, 2006
                  
                  
                  7,030,000
                  
                  $
                  7,030
                  
                  $
                  240,791
                  
                  $
                  (371,589
                  )
                  $
                  (123,768
                  )
        F-3
    **NANO
          HOLDINGS INTERNATIONAL, INC.**
 Consolidated
          Statements of Cash Flows
   For
                    the Years Ended December 31,2006
                
                2005CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    loss
                
                
                $
                (213,787
                )
                $
                (85,302
                )Adjustments
                    to Reconcile Net Loss to Net Cash Used by Operating
                    Activities:Depreciation
                    and amortization
                
                
                
                503
                
                
                -Allowance
                    for bad debts
                
                
                
                10,000
                
                
                -Contributed
                    services
                
                
                
                117,001
                
                
                36,000Changes
                    in Operating Assets and Liabilities:(Increase)
                    decrease in receivables
                
                
                
                (21,778
                )
                
                (2,712
                )(Increase)
                    decrease in other assets
                
                
                
                (1,003
                )
                
                -Increase
                    (decrease) in accrued interest payable
                
                
                
                10,531
                
                
                561Increase
                    (decrease) in accounts payable
                
                
                
                9,006
                
                
                3,563Net
                    Cash Used in Operating Activities
                
                
                
                (89,527
                )
                
                (47,890
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESPurchase
                    of fixed assets
                
                
                
                (3,798
                )
                
                -Net
                    Cash Provided (Used) By Investing Activities
                
                
                
                (3,798
                )
                
                -CASH
                    FLOWS FROM FINANCING ACTIVITIESCommon
                    stock issued for cash
                
                
                
                3,300
                
                
                -Proceeds
                    from notes payable
                
                
                
                77,000
                
                
                50,000Contributed
                    capital
                
                
                
                -
                
                
                15,000Net
                    Cash Provided (Used) By Financing Activities
                
                
                
                80,300
                
                
                65,000INCREASE
                    (DECREASE) IN CASH
                
                
                
                (13,025
                )
                
                17,110CASH
                    AT BEGINNING OF YEAR
                
                
                
                20,483
                
                
                3,373CASH
                    AT END OF YEAR
                
                
                $
                7,458
                
                $
                20,483Supplemental
                    Cash Flow Disclosures:Cash
                    paid for:Interest
                    expense
                
                
                $
                -
                
                $
                -Income
                    taxes
                
                
                $
                -
                
                $
                -
         F-4
     **NANO
          HOLDINGS INTERNATIONAL, INC.**
 Notes
          to
          the Consolidated Financial Statements
 December
          31, 2006
 NOTE
          1
          - ORGANIZATION
          AND DESCRIPTION OF BUSINESS
 
 The
          Company was incorporated under the laws of the State of Delaware as Nano
          Holdings International, Inc. on April 16, 2004 with a principal business
          objective of seeking a merger with an existing operating company. Sunshine
          Group, LLC., (Sunshine) was formed as a limited liability company, under
          the
          laws of the State of Florida on June 24, 2002, to engage in the manufacture
          and
          sale of alcoholic and non alcoholic beverages. On December 31, 2005, Nano
          Holdings International, Inc. acquired all of the ownership interests of
          Sunshine
          Group, LLC for 3,500,000 shares of its common stock. The shareholders of
          Sunshine Group, LLC became the controlling shareholders of the Company
          and Nano
          Holdings International, Inc. was inactive prior to the acquisition. Accordingly,
          the accompanying financial statements reflect the historical financial
          statements of Sunshine Group, LLC as the historical of the Company, i.e.
          a
          reverse merger.
 
 NOTE
          2
          - SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES
 
 a.
          Accounting Method
 
 The
          Company’s financial statements are prepared using the accrual method of
          accounting. The Company has elected a December 31 year-end.
 
 b.
              Revenue
                  Recognition 
 The
          Company recognizes revenue from the sales of its alcoholic and non alcoholic
          beverages upon
          delivery to the customer’s delivery site, the customers take title and assume
          the risks and rewards of ownership, when persuasive
          evidence of an arrangement exists, when the contract price is fixed or
          determinable, and collectibility is reasonably assured.
 
 The
          Company has a policy of limiting returns to only non perishable non food
          items.
 
 c.
              Income
                  Taxes 
 The
          Company recognizes deferred tax assets and liabilities based on differences
          between the financial reporting and tax bases of assets and liabilities
          using
          the enacted tax rates and laws that are expected to be in effect when the
          differences are expected to be recovered. The Company provides a valuation
          allowance for deferred tax assets for which it does not consider realization
          of
          such assets to be more likely than not. The Company has a net operating
          loss
          carryover of approximately $104,514 as of December 31, 2006. The benefit
          of the
          net operating loss carryover of $40,760 as of December 31, 2006 has been
          offset
          by a valuation allowance of $40,760.
 
 Until
          its
          acquisition by the Company, Sunshine elected to file its taxes as a limited
          liability company, whereby its profits and losses are passed through to
          its
          members. Accordingly, Sunshine did not pay or accrue income taxes. Also,
          Sunshine did not record an asset for the value of its net operating loss
          carryforwards.
 
  
 F-5
  
 
 NOTE
          2
          - SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  d.
          Use of
          Estimates
 
 The
          preparation of the financial statements in conformity with generally accepted
          accounting principles requires management to make estimates and assumptions
          that
          affect the reported amounts of assets and liabilities and disclosure of
          contingent assets and liabilities at the date of the financial statements
          and
          the reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those estimates.
 
 e.
              Accounts
                  Receivable 
 The
          Company’s accounts receivable are shown net of the allowance for doubtful
          accounts of $10,000 and $-0- as of December 31, 2006 and 2005,
          respectively.
 
 f.
              Research
                  and Development 
 The
          Company expenses research and development costs in the period incurred.
          Research
          and development expenses for the years ended December 31, 2006 and 2005
          totaled
          approximately $2,500 per year.
 
 g.
              Basic
                  Income (Loss) Per Share 
 The
          computation of basic income (loss) per share is based on the weighted average
          number of shares outstanding during the periods covered by the financial
          statements. Diluted income per shares units is equal to the basic income
          per
          unit as there are no potentially dilutive shares outstanding.
 
 h.
          Cash
          and Cash Equivalents
 
 For
          purposes of the statement of cash flows, the Company considers all highly
          liquid
          investments purchased with a maturity of three months or less to be cash
          equivalents.
 
 i.
          Common
          Stock
 
 The
          holders of the Company’s common stock are entitled to receive dividends out of
          assets or funds legally available for the payment of dividends at such
          times and
          in such amounts as the board from time to time may determine. Holders of
          common
          stock are entitled to one vote for each share held on all matters submitted
          to a
          vote of shareholders. There is no cumulative voting of the election of
          directors
          then standing for election. The common stock is not entitled to pre-emptive
          rights and is not subject to conversion or redemption. Upon liquidation,
          dissolution or winding up of the Company, the assets legally available
          for
          distribution to stockholders are distributable ratably among the holders
          of the
          common stock after payment of liquidation preferences, if any, on any
          outstanding payment of other claims of creditors.
 
  
 F-6
 
  
 NOTE
          2
          -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (continued)
 
 j.
          Preferred Stock
 
 Shares
          of
          preferred stock may be issued from time to time in one or more series,
          each of
          which shall have such distinctive designation or title as shall be determined
          by
          the board of directors of the Company. Preferred stock shall have such
          voting
          powers, full or limited, or no voting powers, and such preferences and
          relative,
          participating, optional or other special rights and such qualifications,
          limitations or restrictions thereof, as may be adopted from time to time
          by the
          board of directors.
 
 k.
          Costs
          of Goods Sold
 
 All
          shipping costs and handling costs are classified in costs of goods sold.
          These
          costs include inbound freight charges, receiving costs, inspection costs,
          warehousing costs, internal transfer costs and the other costs of the Company’s
          distribution network.
 
 l.
          General and Administrative Expenses
 
 General
          and administrative expenses include those costs not directly related to
          the
          sales of the Company’s products. These expenses include travel, administrative
          compensation, professional fees and marketing.
 
 m.
          Principles of Consolidation
 
 The
          accompanying financial statements include the accounts of Nano Holdings
          International, Inc. and its wholly owned subsidiary Sunshine Group,
          LLC.
 
 NOTE
                    3 -
                GOING
                    CONCERN
 
 The
          Company’s financial statements are prepared using generally accepted accounting
          principles applicable to a going concern which contemplates the realization
          of
          assets and liquidation of liabilities in the normal course of business.
          The
          Company has generated significant losses from operations.
 
 In
          order
          to continue as a going concern and achieve a profitable level of operations,
          the
          Company will need, among other things, additional capital resources  and
          developing a consistent source of revenues. Management’s plans include raising
          capital from the private placement of its debt or equity.
 
 The
          ability of the Company to continue as a going concern is dependent upon
          its
          ability to successfully accomplish the plan described in the preceding
          paragraph
          and eventually attain profitable operations. The accompanying financial
          statements do not include any adjustments that might be necessary if the
          Company
          is unable to continue as a going concern.
 
 
 
 
 F-7
 
  NOTE
                    4 -
                NOTES
                    PAYABLE
 
 The
                    Company has incurred notes payable to an unrelated party as the
                    source of
                    the funding for its newly acquired business. The notes payable
                    total
                    $127,000, are unsecured, bear interest at 10% per annum and are
                    due with
                    accrued interest on July 31, 2007. The Company has accrued $11,092
                    in
                    interest payable on the notes payable as of December 31, 2006.
 
 NOTE
                    5 -
                COMMITMENTS
 
 On
          January 16, 2006 the Company entered into a one year lease for approximately
          875
          square feet of warehouse space.
 
 Future
          obligations under the operating lease are as follows:
  2007
                  $769Total
                  $                                                   769
 NOTE
          6 -
          RELATED PARTY TRANSACTIONS
 
 The
                    Company has recorded the value of the uncompensated services
                    provided by
                    its officers and directors as a contribution of capital. The
                    Company has
                    recorded $117,001 and $36,000 in 2006 and 2005, respectively,
                    for such
                    uncompensated services. The Company has also recorded $10,000
                    for the
                    value of 100,000 shares issued to an officer and director in
                    July
                    2006.
 
   F-8





**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
      ON**  **ACCOUNTING
      AND FINANCIAL DISCLOSURE**





None.





**ITEM
      8A. CONTROLS AND PROCEDURES.**





(a)
      Evaluation of disclosure controls and procedures. Our Chief Executive Officer
      and Principal Financial Officer, after evaluating the effectiveness of our
      "disclosure controls and procedures" (as defined in the Securities Exchange
      Act
      of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
      by
      this Annual Report on Form 10-KSB (the "Evaluation Date"), has concluded that
      as
      of the Evaluation Date, our disclosure controls and procedures are effective
      to
      provide reasonable assurance that information we are required to disclose in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the Securities
      and
      Exchange Commission rules and forms, and that such information is accumulated
      and communicated to our management, including our Chief Executive Officer and
      Principal Financial Officer, as appropriate, to allow timely decisions regarding
      required disclosure.





(b)
      Changes in internal control over financial reporting. There were no changes
      in
      our internal control over financial reporting during the last fiscal year and/or
      up to and including the date of this filing that we believe materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting.





**ITEM
      8B. OTHER INFORMATION.**





None.





-20-







**PART
      III**





**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
      CONTROL**  **PERSONS;
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.**





The
      following table sets forth the name, age and position of our Director and
      executive officer, as well as the material officer of Sunshine, our wholly
      owned
      subsidiary:





**NAME******
            **AGE******
            **POSITION**David
                Rector
            60
            Chief
                Executive Officer,President,
                Principal Accounting Officer,Secretary,
                Treasurer and DirectorMarion
                R. "Butch" Barnes
            64
            President
                  of Sunshine










**David
      Rector**





Mr.
      Rector has served as our Chief Executive Officer, President, Principal
      Accounting Officer, Secretary, Treasurer and Director since April 19, 2004.
      Mr.
      Rector does not have an employment agreement with us and does not receive
      compensation for his services to us, other than the 100,000 restricted shares
      of
      common stock which he was issued during the three months ended September 30,
      2006, in consideration for services rendered, which shares were valued at
      $10,000 or $0.10 per share. Since August 2005, Mr. Rector has been employed
      as
      the Chief Operating Officer of Nanoscience Technologies, Inc. Mr. Rector had
      previously served as President and Chief Executive Officer of Nanoscience from
      June 2004 to August 2005. Since June 1985, Mr. Rector has been the principal
      of
      the David Stephen Group, which provides enterprise consulting services to
      emerging and developing companies in a variety of industries. From January
      1995
      until June 1995, Mr. Rector served as the General Manger of the Consumer
      Products Division of Bemis-Jason Corporation. Mr. Rector was employed by Sunset
      Designs Inc., a manufacturer and marketer of consumer product craft kits from
      June 1980 until June 1985. From June 1983 until June 1985, Mr. Rector served
      as
      President and General Manager of Sunset, from August 1981 until May 1985, Mr.
      Rector served as an Administrative and International Director of Sunset, and
      from June 1980 until August 1981, Mr. Rector served as Group Product Manager
      for
      Sunset.





Additionally,
      Mr. Rector currently served on the Board of Directors of the following companies
      as of December 31, 2006:





Name
            Director
                  SinceSenesco
                Technologies, Inc. (AMEX:SNT)
            February
                2002Nanoscience
                Technologies, Inc. (OTCBB:NANS)
            May
                2004Superior
                Galleries, Inc. (OTCBB:SPGR)
            May
                2003Callkey
                International Inc. (PINKSHEETS:CKYI)
            March
                2006









-21-






As
      a
      result, the amount of time that Mr. Rector has to devote to our activities
      may
      be limited. Mr. Rector currently spends approximately four to six hours per
      week
      working for us on Company matters and works full-time for
      Nanoscience.





Mr.
      Rector obtained his Bachelors Degree in Business Administration from Murray
      State University in 1969.





**Marion
      R. "Butch" Barnes**





Mr.
      Barnes has served as the President of Sunshine Group, LLC, our wholly owned
      subsidiary since Sunshine was formed in June 2002. Mr. Barnes does not have
      an
      employment agreement with us and does not receive a salary from us. From
      approximately October 1996 until June 2002, Mr. Barnes was employed as President
      of Unified Beverage Group, LLC ("UBG"), which produces Dos Toros Cerveza. While
      at UBG, Mr. Barnes was in charge of distribution of their products. From October
      1996 to June 1977, Mr. Barnes served as a market consultant and as brand
      development manager with Markstein Enterprises, in Danville, California, which
      had multiple Miller Beer distributorships throughout California. From August
      1967 until October 1977, he served as western regional manager of Bacardi
      Imports in Miami, Florida.





Our
      Directors are elected annually and hold office until our next annual meeting
      of
      the shareholders and until their successors are elected and qualified. Officers
      will hold their positions at the pleasure of the Board of Directors, absent
      any
      employment agreement. Our officers and Directors may receive compensation as
      determined by us from time to time by vote of the Board of Directors. Such
      compensation might be in the form of stock options. Directors may be reimbursed
      by the Company for expenses incurred in attending meetings of the Board of
      Directors. Vacancies in the Board are filled by majority vote of the remaining
      Directors.





**EMPLOYEES**





We
      currently have two (2) full-time employees, Marion R. "Butch" Barnes, the
      President of Sunshine and Robert Barnes, Sunshine's promotions and Internet
      sales manager, who is the son of Marion R. "Butch" Barnes. Additionally, David
      Rector, our sole officer and Director spends approximately four to six hours
      per
      week on Company matters.


























[Remainder
      of page left intentionally blank.]




-22-







**ITEM
      10. EXECUTIVE COMPENSATION.**





Other(1)AnnualName & Principal
              
              Compen-
              
              Restricted
              
              TotalPosition
              
              Year
              
              Salary
                  ($)
              
              sation
              
              Stock
                  Awards
              
              CompensationDavid
                  Rector,
              
              
              2006
              
              $
              0
              
              $
              0
              
              $
              10,000
                  (3)
              
              $
              10,000CEO,
                  President,
              
              
              2005
              
              $
              0
              
              $
              0
              
              $
              0
              
              $
              0CFO,
                  Secretary,Treasurer,
                  andDirector
                  (2)Marion
                  “Butch”Barnes
              
              
              2006
              
              $
              0
              
              $
              6,000(4)
              
              $
              0
              
              $
              6,000President
                  ofSunshine















Does
      not
      include perquisites and other personal benefits in amounts less than 10% of
      the
      total annual salary and other compensation. We had no executive employees who
      have received more than $100,000 in compensation, including bonuses, options,
      and SARS since our formation in July 2005.




(1)
      No
      Executive Officer received any LTIP payouts, retirement payments, options,
      warrants or bonuses during the last two fiscal years, and no salaries are being
      accrued.





(2)
      Mr.
      Rector was appointed as our Chief Executive Officer, President, Chief Financial
      Officer, Secretary, Treasurer and Director on April 19, 2004. Mr. Rector does
      not have an employment agreement with us.





(3)
      The
      100,000 shares of common stock issued to Mr. Rector in July 2006 had a value
      of
      $10,000 or $0.10 per share.





(4)
      Mr.
      Barnes receives an automobile allowance of $500 per month.





**COMPENSATION
      DISCUSSION AND ANALYSIS**





**Director
      Compensation**





Mr.
      David
      Rector, our sole Director, has not received any separate remuneration to date
      for his service to the Board of Directors, other than the amounts he has
      received in consideration for his services to the Company as an officer,
      however, the Board of Directors reserves the right in the future to award the
      members of the Board of Directors cash or stock based consideration for their
      services to the Company, which awards, if granted shall be in the sole
      determination of the Board of Directors.





**Executive
      Compensation Philosophy**





Our
      Board
      of Directors, consisting solely of Mr. Rector, determines the compensation
      given
      to our executive officers in his sole determination. Our executive compensation
      program currently consists solely of shares of common stock issued in
      considerations for services rendered by Mr. Rector, which we believe aligns
      our
      executives’ interests with the interests of our shareholders by making our
      executive’s salary, if any, be paid through sales of our common stock, which
      salary can therefore only increase in the event the share price of our common
      stock increases. In addition, although we have not to date, our Board of
      Directors also reserves the right to pay our executives competitive salaries
      and
      award incentive bonuses which are linked to our performance, as well as to
      the
      individual executive officer’s performance. This package may also include
      long-term, stock based compensation to certain executives which is intended
      to
      align the performance of our executives with our long-term business strategies.
      While our Board of Directors has not granted any performance base stock options
      to date, the Board of Directors reserves the right to grant such options in
      the
      future, if the Board in its sole determination believes such grants would be
      in
      the best interests of the Company.






-23-







**Incentive
      Bonus**





The
      Board
      of Directors may grant incentive bonuses to our executive officers in its sole
      discretion, if the Board of Directors believes such bonuses are in the Company’s
      best interest, after analyzing, our current business objectives and growth,
      if
      any, and the amount of revenue we are able to generate each month, which revenue
      is a direct result of the actions and ability of such executives.





As
      of the
      date of this filing, no executive officers or Directors hold any outstanding
      options to purchase shares of common stock in the Company, nor were there any
      outstanding options to purchase shares in the common stock of the Company as
      of
      December 31, 2006 or 2005.





**Long-term,
      Stock Based Compensation**





In
      order
      to attract, retain and motivate executive talent necessary to support the
      Company’s long-term business strategy we may award certain executives with
      long-term, stock based compensation in the future, in the sole discretion of
      our
      Board of Directors, which we do not currently have any immediate plans to
      award.





**Criteria
      for Compensation Levels**




The
      Company has always sought to attract and retain qualified executives and
      employees able to positively contribute to the success of the Company for the
      benefit of its various stakeholders, the most important of which is its
      shareholders, but also including its customers, its employees, and the
      communities in which the Company operates.




The
      Board
      of Directors (in establishing compensation levels for the Company’s Chief
      Executive Officer) and the Company (in establishing compensation levels for
      other executives, if any) considers many factors, including, but not limited
      to,
      the individual’s abilities and executed performance that results in: the
      advancement of corporate goals of the Company, execution of the Company’s
      business strategies, contributions to positive financial results, and
      contributions to the development of the management team and other employees.
      An
      officer must demonstrate his or her ability to deliver results in his or her
      areas of responsibility, which can include, among other things: business
      development with new and existing customers, development of new products,
      efficient management of operations and systems, implementation of appropriate
      changes and improvements to operations and systems, personnel management,
      financial management, and strategic decision making. In determining compensation
      levels, the Board of Directors also considers: competitiveness of compensation
      packages relative to other comparable companies, both inside and outside of
      the
      Company’s industry, and the experience level of each particular individual.






-24-






Compensation
      levels for executive officers are generally reviewed upon the expiration of
      such
      executive’s employment agreement (if any), or annually, but may be reviewed more
      often as deemed appropriate.




**Compensation
      Philosophy and Strategy**




In
      addition to the “Criteria for Compensation Levels” set forth above, the Company
      has a “Compensation Philosophy” for all employees of the Company (set forth
      below), and a “Compensation Strategy for Key Management Personnel” (set forth
      below), a substantial portion of which also applies to all employees of the
      Company.




**Compensation
      Philosophy**




The
      Company’s compensation philosophy is as follows:




•
            
            The
                Company believes that compensation is an integral component of its
                overall
                business and human resource strategies. The Company’s compensation plans
                will strive to promote the hiring and retention of personnel necessary
                to
                execute the Company’s business strategies and achieve its business
                objectives.




•
            
            The
                Company’s compensation plans will be strategy-focused, competitive, and
                recognize and reward individual and group contributions and results.
                The
                Company’s compensation plans will strive to promote an alignment of the
                interests of employees with the interests of the shareholders by
                having a
                portion of compensation based on financial results and actions that
                will
                generate future shareholder value.




•
            
            In
                order to reward financial performance over time, the Company’s
                compensation programs generally will consist of: base compensation,
                and
                may also consist of short-term variable incentives and long-term
                variable
                incentives, as appropriate.




•
            
            The
                Company’s compensation plans will be administered consistently and fairly
                to promote equal opportunities for the Company’s employees.




**Compensation
      Strategy for Key Management Personnel**




The
      Company’s compensation strategy for its key management personnel is as follows:




•
            
            Total
                compensation may include base salary and short-term and long-term
                variable
                incentives based on annual performance, and long-term variable incentives,
                in each case, where appropriate.




•
            
            Compensation
                will be comparable to general and industry-specific compensation
                practices
                as practicable.






-25-






•
            
            Generally,
                base compensation, and targeted short and long-term variable compensation,
                if any, will be established within the range of compensation of similarly
                situated companies. The Company’s organization size and complexity will be
                taken into account, and therefore similarly situated companies includes
                companies of similar size and complexity whether or not such companies
                are
                in the Company’s industry or not.




•
            
            When
                determining compensation for officers and managers, the Company takes
                into
                account the employee’s knowledge and experience, including industry
                specific knowledge and experience, to the extent such knowledge and
                experience contributes to the Company’s ability to achieve its business
                objectives.




•
            
            The
                Company reserves the right to adjust annual base salaries of employees
                if
                individual performance is at or above pre-established performance
                expectations.







**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      AND**  **MANAGEMENT
      AND RELATED STOCKHOLDER MATTERS.**





The
      following table provides the names and addresses of each person known to own
      directly or beneficially more than a 5% of the outstanding common stock (as
      determined in accordance with Rule 13d-3 under the Exchange Act) as of March
      5,
      2007 and by the officers and Directors, individually and as a group. Except
      as
      otherwise indicated, all shares are owned directly.










Name
                and Address ofBeneficial
                Owner
            Shares
                Beneficially Owned
            Percent(1)**David
                Rector (2)**
            **100,000**
            **1.4%**1640
                Terrace WayWalnut
                Creek,California
                94597**Viking
                Investment Group II, Inc. (3)**
            **3,000,000**
            **42.7%**488
                Madison Avenue12th
                FloorNew
                York, New York10022**Marion
                R. "Butch" Barnes**
            **2,047,500**
            **29.1%**709
                Martinique Ct.Orange
                Park,Florida
                32073**William
                D. Blanchard**
            **1,039,500**
            **14.8%**313
                Gatefield Dr.Wilmington,North
                Carolina 28412=======================
            ====================
            ===================**All
                the officers and Directors****of
                the Company as a group**
            **2,147,500**
            **30.5%****(2
                Persons)**








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(1)
      Based
      on 7,030,000 shares outstanding as of March 5, 2007.





(2)
      Mr.
      Rector is our Chief Executive Officer, President, Chief Financial Officer,
      Secretary, Treasurer and sole Director.





(3)
      The
      Beneficial owner of Viking Investment Group II, Inc. is Ian Markofsky, the
      President of Viking Investment Group II, Inc.








**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS**





In
      April
      2004, we issued 3,000,000 shares of common stock to Viking Investment Group,
      Inc., a greater than 10% shareholder of us, in consideration for financial
      consulting and advisory services rendered to us in connection with our formation
      as a Delaware corporation, including assisting us in obtaining the loans
      received from Jenadosa, as described above.





In
      April
      2004, we issued 100,000 shares of common stock, to our attorney, David M. Loev,
      in consideration for legal services rendered to us in connection with our
      formation as a Delaware corporation.





In
      December 2005, we issued an aggregate of 3,500,000 shares of our common stock
      to
      four individuals in connection with the Exchange (defined and described above),
      whereby Sunshine Group, LLC, became our wholly owned subsidiary. Pursuant to
      the
      terms of the Exchange, we issued 2,047,500 shares of common stock to Marion
      R.
      "Butch" Barnes, for Mr. Barnes 58.5% interest in Sunshine, 1,039,500 shares
      of
      common stock to William Blanchard, in consideration for Mr. Blanchard's 29.7%
      interest in Sunshine, 350,000 shares of common stock to James Lundeen, Jr.,
      in
      consideration for Mr. Lundeen's 10% interest in Sunshine, and 63,000 shares
      of
      common stock to Robert Barnes, in consideration for Mr. Barnes 1.8% interest
      in
      Sunshine.





In
      July
      2006, we issued 100,000 shares of our common stock to our Chief Executive
      Officer and Director, David Rector, in consideration for services rendered
      to us
      as our Chief Executive Officer.





We
      recorded the value of uncompensated services provided by our officer and
      Director, David Rector and the President of Sunshine, Marion “Butch” Barnes as a
      contribution of capital for the year ended December 31, 2006 and 2005. Those
      contributions to capital totaled $117,001 and $36,000, respectively for the
      year
      ended December 31, 3006 and 2005.








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**ITEM
      13. EXHIBITS**





**a)
      The exhibits listed below are filed as part of this annual
      report.**





Exhibit
                No.
            Description3.1(1)
            Certificate
                of Incorporation of Nano Holdings International, Inc.3.2(1)
            Bylaws
                of Nano Holdings International, Inc.10.1(1)
            Exchange
                Agreement between Nano Holdings International, Inc. and Sunshine
                Group
                LLC10.2(1)
            $50,000
                Promissory Note with Jenadosa Holdings Limited
                (11/20/05)10.3(1)
            $50,000
                Promissory Note with Jenadosa Holdings Limited
                (2/14/06)10.4(2)
            $5,000
                Promissory Note with Jenadosa Holdings Limited
                (8/21/06)10.5(3)
            $7,000
                Promissory Note with Jenadosa Holdings Limited
                (9/20/06)10.6(3)
            $15,000
                Promissory Note with Jenadosa Holdings Limited
                (10/13/06)10.7(2)
            Trademark
                Licensing Agreement10.8*
            $10,000
                Promissory Note with Jenadosa Holdings Limited
                (01/15/07)21*
            List
                of the Subsidiaries of Nano Holdings International,
                Inc.31*
            Certificate
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200232*
            Certificate
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 2002





*
      Filed
      herein.





(1)
                Filed as exhibits to our Form SB-2 Registration Statement filed with
                the
                Commission on August 1, 2006 and incorporated herein by
                reference.(2)
                Filed as exhibits to our amended Form SB-2 Registration Statement
                filed
                with the Commission on September 20, 2006 and incorporated herein
                by
                reference.(3)
                Filed as exhibits to our amended Form SB-2 Registration Statement
                filed
                with the Commission on November 29, 2006 and incorporated herein
                by
                reference.





**b)
      REPORTS ON FORM 8-K**





We
      have
      not filed any reports on Form 8-K.






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**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND
      SERVICES.**





AUDIT
      FEES





The
      aggregate fees billed for the fiscal years ended December 31, 2006 and 2005,
      for
      professional services rendered by the Company's principal accountants, Moore
      & Associates Chartered, for the audit of the Company's annual financial
      statements totaled $750 and $0, respectively. The aggregate fees billed by
      the
      Company’s principal accounts for the audit of the Company’s annual financial
      statements, as well as services provided in connection with statutory and
      regulatory filings or engagements for those fiscal years were $4,000 and $4,000,
      respectively. The Company did not file any Quarterly Reports on Form 10-QSB
      for
      the year ended December 31, 2006 or 2005, as the Company only became a publicly
      reporting company during the three months ended December 31, 2006, and this
      annual report is the Company’s first periodic filing.





AUDIT
      RELATED FEES





None.





TAX
      FEES





None.





ALL
      OTHER
      FEES





None.


























[Remainder
      of page left intentionally blank.]




-29-







**SIGNATURES**





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





**NANO
      HOLDINGS INTERNATIONAL, INC.**





By:
      /s/ David Rector


David
      Rector,


Chief
      Executive Officer


April
      2, 2007











In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.







**Name**
            **Title**
            **Date**/s/
                David Rector
            Chief
                  Executive Officer,
            April
                  2, 2007David
                Rector
            President,
                  Chief Financial Officer(Principal
                Accounting Officer),Treasurer,
                Secretary and Director









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