UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION


Washington, DC
20549






FORM
10-Q




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





For the quarterly
period ended September
30, 2008





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




For the transition
period from ______________To ______________




Commission file
number 000-52749






CHANG-ON
INTERNATIONAL, INC.


(Exact
name of registrant as specified in its charter)




Utah
            
            87-0302579(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)514 No. 18 Building
              High New Technology
Development
              Harbin, Heilongjiang Province,
      China
            
            N/A(Address
      of principal executive offices)
            
            (Zip
      Code)





+86
451 82695010  (Registrant’s
telephone number, including area code)




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




Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated
filer o       Accelerated
filer o    Non-accelerated
filer o    Smaller reporting companyþ




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






APPLICABLE ONLY TO
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
YEARS:






Check whether the
registrant has filed all documents and reports required to be filed by Sections
12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court. o Yes o No






APPLICABLE ONLY TO
CORPORATE ISSUERS:






As of November 4,
2008, the registrant’s outstanding common stock consisted of 67,307,366
shares.












TABLE
OF CONTENTS





PagePART
      I – FINANCIAL INFORMATION
              2ITEM
      1. FINANCIAL STATEMENTS
              2ITEM
      2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
              3ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISKS
              7ITEM
      4. CONTROLS AND PROCEDURES
              7PART
      II – OTHER INFORMATION
              8ITEM
      1. LEGAL PROCEEDINGS
              8ITEM
      1A. RISK FACTORS
              8ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
              8ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
              8ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              8ITEM
      5. OTHER INFORMATION
              8ITEM
      6. EXHIBITS
              8
 
 1







PART
I – FINANCIALINFORMATION






ITEM
1.  FINANCIAL STATEMENTS






The unaudited
consolidated financial statements of Chang-On International, Inc., and
subsidiaries (the “Company”, “Chang-On”, “we”, “our”, “us”)
follow.  All currency references in this report are in US dollars
unless otherwise noted.






The consolidated
financial statements of the Company, included herein were prepared, without
audit, pursuant to rules and regulations of the Securities and Exchange
Commission.  Because certain information and notes normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America were condensed or omitted
pursuant to such rules and regulations, these financial statements should be
read in conjunction with the financial statements and notes thereto included in
the audited financial statements of the Company as included in the Company's
Form 10-K/A for the year ended December 31, 2007.












CHANG-ON
      INTERNATIONAL, INC. AND SUBSIDIARIES(A
      Development Stage Company)INDEX







PAGECONSOLIDATED
      BALANCE SHEETS
            F-1CONSOLIDATED
      STATEMENTS OF OPERATIONS
            F-2CONSOLIDATED
      STATEMENTS OF CASH FLOWS
            F-3NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
            F4-F11










2




CHANG-ON
INTERNATIONAL, INC. AND SUBSIDIARIES


(A Development
Stage company)


CONSOLIDATED
BALANCE SHEETS






September
      30,
            
            
            December
      31,2008
            
            
            2007(Unaudited)
            
            
            (Audited)ASSETSCurrent
      AssetsCash
      (Note 4)
            
            $
            2,279
            
            
            $
            7,380Prepaid
      and other receivables
            
            
            295
            
            
            
            960Inventories
            
            
            109,634
            
            
            
            50,702Total
      Current Assets
            
            
            112,208
            
            
            
            59,042Property,
      plant and equipment, net (Note 5)
            
            
            406,650
            
            
            
            400,965Total
      Assets
            
            $
            518,858
            
            
            $
            460,007LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesTrade
      accounts payable
            
            $
            700
            
            
            $
            15,059Accrued
      expenses
            
            
            1,325
            
            
            
            1,143Government
      subsidy (Note 6)
            
            
            56,425
            
            
            
            52,521Due
      to shareholders (Note 7)
            
            
            794,299
            
            
            
            657,017Total
      Current Liabilities
            
            
            852,749
            
            
            
            725,740Minority
      interest
            
            
            -
            
            
            
            -Stockholders'
      Deficit:Common stock, par value $0.001, authorized100,000,000 shares,
      issue and outstanding 67,307,366 shares (Note
8)
            
            
            67,307
            
            
            
            67,307Additional
      paid in capital (Note 8)
            
            
            2,708,602
            
            
            
            2,708,602Deficit
            
            
            (2,623,162
            )
            
            
            (1,817,769
            )Deferred
      compensation (Note 9)
            
            
            (472,500
            )
            
            
            (1,230,833
            )Accumulated comprehensive income
            
            
            (14,138
            )
            
            
            6,960Stockholders'
      deficit:
            
            
            (333,891
            )
            
            
            (265,733
            )Total
      Liabilities and Stockholders' Equity
            
            $
            518,858
            
            
            $
            460,007








The accompanying
notes are an integral part of these financial statements.


F-1


CHANG-ON
INTERNATIONAL, INC. AND SUBSIDIARIES


(A
Development Stage company)


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)







For
      the ThreeMonths Ended September 30,
            
            
            For
      the ThreeMonths Ended September 30,
            
            
            For
      the ThreeMonths Ended September 30,
            
            
            For
      the ThreeMonths Ended September 30,
            
            
            For
      the Period November 26, 2004 (inception) to September 30,2008
            
            
            2007
            
            
            2008
            
            
            2007
            
            
            2008Net
      sales
            
            $
            352
            
            
            $
            90
            
            
            $
            33,094
            
            
            $
            12,329
            
            
            $
            90,578Cost of
      sales
            
            
            (176
            )
            
            
            (67
            )
            
            
            (16,609
            )
            
            
            (9,258
            )
            
            
            (58,406
            )Gross
      profit
            
            
            176
            
            
            
            23
            
            
            
            16,485
            
            
            
            3,071
            
            
            
            32,172ExpensesSalaries
            
            
            6,559
            
            
            
            21,124
            
            
            
            19,672
            
            
            
            45,010
            
            
            
            104,734Transportation
            
            
            4,307
            
            
            
            1,138
            
            
            
            7,509
            
            
            
            2,490
            
            
            
            12,134Office
      equipment
            
            
            1,712
            
            
            
            123
            
            
            
            2,102
            
            
            
            389
            
            
            
            6,841Water,
      electricity and gas
            
            
            10,826
            
            
            
            18,282
            
            
            
            17,787
            
            
            
            45,349
            
            
            
            86,321Other
      expenses
            
            
            540
            
            
            
            2,827
            
            
            
            3,903
            
            
            
            13,897
            
            
            
            34,715Advertisement
            
            
            -
            
            
            
            65
            
            
            
            -
            
            
            
            65
            
            
            
            556Rent
      expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,811Depreciation
            
            
            8,571
            
            
            
            15,820
            
            
            
            19,730
            
            
            
            46,719
            
            
            
            122,740Repairs
      and maintenance
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,025R
      & D expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            22,578Loss(Gain)
      on disposal of fixed assets
            
            
            -
            
            
            
            (56
            )
            
            
            -
            
            
            
            (7,680
            )
            
            
            (7,730
            )Stock
      compensation
            
            
            221,666
            
            
            
            361,667
            
            
            
            758,333
            
            
            
            792,500
            
            
            
            1,927,500Fixed
      assets impairment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            345,962Intangibles
      writedown
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            241,639Total
      Expenses
            
            
            254,181
            
            
            
            420,990
            
            
            
            829,036
            
            
            
            938,739
            
            
            
            2,902,826Other
      income
            
            
            76
            
            
            
            -
            
            
            
            7,159
            
            
            
            -
            
            
            
            7,159Loss before
      provision for income tax,and minority
      interest
            
            
            (253,929
            )
            
            
            (420,967
            )
            
            
            (805,392
            )
            
            
            (935,668
            )
            
            
            (2,863,495
            )Income tax
      provision
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Loss before
      minority interest
            
            
            (253,929
            )
            
            
            (420,967
            )
            
            
            (805,392
            )
            
            
            (935,668
            )
            
            
            (2,863,495
            )Minority
      interest
            
            
            -
            
            
            
            23,132
            
            
            
            -
            
            
            
            55,849
            
            
            
            240,333Net
      loss
            
            
            (253,929
            )
            
            
            (397,835
            )
            
            
            (805,392
            )
            
            
            (879,819
            )
            
            
            (2,623,162
            )Other
      comprehensive incomeForeign
      exchange gain (loss)
            
            
            (3,797
            )
            
            
            1,894
            
            
            
            (21,098
            )
            
            
            7,471
            
            
            
            (14,138
            )Total
      comprehensive income (loss)
            
            $
            (257,726
            )
            
            $
            (395,941
            )
            
            $
            (826,490
            )
            
            $
            (872,348
            )
            
            $
            (2,637,300
            )Basic and
      Fully Diluted Earnings per Share
            
            $
            -
            
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.04
            )Weighted
      average shares outstanding
            
            
            67,307,366
            
            
            
            67,307,366
            
            
            
            67,307,366
            
            
            
            65,307,366
            
            
            
            62,688,878





The accompanying
notes are an integral part of these financial statements.


F-2




CHANG-ON
INTERNATIONAL, INC. AND SUBSIDIARIES


(A Development
Stage company)


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)






For
      the NineMonths Ended September 30,
            
            
            For
      the NineMonths Ended September 30,
            
            
            For
      the Period November 26, 2004 (inception) to September 30,2008
            
            
            2007
            
            
            2008Operating
      Activities:Net gain
      (loss)
            
            $
            (805,392
            )
            
            $
            (879,819
            )
            
            $
            (2,623,162
            )Adjustments
      to reconcile net loss to net cash usedby operationsDepreciation
      (cost and expense)
            
            
            25,300
            
            
            
            47,387
            
            
            
            132,173Impairment
      loss on intangible assets
            
            
            -
            
            
            
            -
            
            
            
            241,639Impairment
      loss on fixed assets
            
            
            -
            
            
            
            -
            
            
            
            345,962Gain on
      disposal of fixed assets
            
            
            -
            
            
            
            (7,680
            )
            
            
            (7,730
            )Stock issued
      for consulting
            
            
            758,333
            
            
            
            792,500
            
            
            
            1,925,500Minority
      interest (loss)
            
            
            -
            
            
            
            (55,849
            )
            
            
            (240,333
            )Changes in
      operating assets and liabilities:(Increase)/decrease
      in account receivable
            
            
            -
            
            
            
            (6,031
            )
            
            
            -(Increase)/decrease
      in prepaid and other receivables
            
            
            665
            
            
            
            2,111
            
            
            
            (295
            )(Increase)/decrease
      in inventory
            
            
            (58,932
            )
            
            
            (17,306
            )
            
            
            (109,634
            )Increase/(decrease)
      in accounts payable
            
            
            (14,359
            )
            
            
            (55,686
            )
            
            
            699Increase/(decrease)
      in accrued expenses
            
            
            182
            
            
            
            (2,022
            )
            
            
            1,325Decrease in
      government subsidy
            
            
            -
            
            
            
            -
            
            
            
            (50,038
            )Net cash used
      by operating activities
            
            
            (94,203
            )
            
            
            (182,395
            )
            
            
            (383,894
            )Investing
      ActivitiesPurchase of
      fixed assets
            
            
            (1,852
            )
            
            
            (106,895
            )
            
            
            (710,118
            )Loan to
      shareholders
            
            
            -
            
            
            
            -
            
            
            
            (24,659
            )Repay of loan
      to shareholders
            
            
            -
            
            
            
            -
            
            
            
            24,659Net cash used
      by investing activities
            
            
            (1,852
            )
            
            
            (106,895
            )
            
            
            (710,118
            )Financing
      ActivitiesDistribution
      to shareholders
            
            
            -
            
            
            
            -
            
            
            
            (24,994
            )Capital
      contribution
            
            
            -
            
            
            
            -
            
            
            
            274,103Proceeds from
      government subsidy
            
            
            -
            
            
            
            -
            
            
            
            99,130Proceeds from
      shareholder loans
            
            
            137,282
            
            
            
            230,283
            
            
            
            779,917Repay of
      shareholder loans
            
            
            -
            
            
            
            (11,708
            )
            
            
            (12,299
            )Net cash
      provided by financing activities
            
            
            137,282
            
            
            
            218,575
            
            
            
            1,115,857Effect of
      exchange rate changes on cash
            
            
            (46,328
            )
            
            
            8,885
            
            
            
            (19,566
            )Increase(decrease)  in
      cash
            
            
            (5,101
            )
            
            
            (61,830
            )
            
            
            2,279Cash at
      beginning of period
            
            
            7,380
            
            
            
            64,069
            
            
            
            -Cash at end
      of period
            
            $
            2,279
            
            
            $
            2,239
            
            
            $
            2,279Supplemental
      Cash Flow Information:Interest
      received (paid) during the year
            
            $
            9
            
            
            $
            173
            
            
            $
            276Non-cash
      financing activities:Contribution
      of patent for equity
            
            $
            -
            
            
            $
            -
            
            
            $
            241,639Contribution
      of fixed assets for equity
            
            $
            -
            
            
            $
            -
            
            
            $
            125,497Stock
      issued in exchange for consulting services
            
            $
            -
            
            
            $
            2,400,000
            
            
            
            2,400,000





The accompanying
notes are an integral part of these financial statements.


F-3





Chang-On
International, Inc. and Subsidiaries


(A Development
Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
1- ORGANIZATION AND BUSINESS BACKGROUND





Chang-On
International, Inc., (the “Company”) was incorporated under the law of the State
of Utah as Gold Standard, Inc. (“Gold Standard”) on November 28, 1972 and
changed its name to Chang-On International, Inc. on April 18, 2007. The Company
is principally engaged in the business of waste recycling and reutilization in
the People’s Republic of China (“PRC”) through its majority-owned subsidiary,
Hongbo Environment Protection Material, Inc. (“Hongbo”) a corporation formed
under the laws of the PRC.





Chang-On
International Limited (“Chang-On”) was incorporated as a Hong Kong limited
liability company on September 8, 2006. Chang-On was formed to facilitate a
merger between a US company and a PRC business entity. On December 29, 2006,
under the terms of the Agreement for the Share Exchange, the Company agreed to
acquire all the outstanding capital stock of Chang-On in return for the issuance
of 60,000,000 shares of common stock.





Chang-On is a
holding company that owns 61% of the registered capital of Hongbo on November
26, 2004. Hongbo is engaged in the business of manufacturing construction
materials from waste products. All Hongbo’s business is currently in the
PRC.





The Company is
considered to be a development stage company, as it has not generated
substantial revenues from operations.





Note
2- GOING CONCERN





As of September 30,
2008, the Company had incurred accumulated losses of $2,623,162 from operations
since inception and has limited operations. The Company is actively pursuing
additional funding and strategic partners, which would enhance owners’
investment.





Note
3- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





·
            Basis of
      presentation





These accompanying
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States of America and are presented in U.S.
dollars.





The consolidated
financial statements have been prepared in accordance with US GAAP for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation SX. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (which
include normal recurring adjustments) considered necessary to present fairly the
financial position, results of operations and cash flows at September 30, 2008
and for all periods presented have been made. Operating results for the nine
months ended September 30, 2008 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2008.





·
            Principles of
      Consolidation





The consolidated
financial statements include the accounts of the Company and all its
majority-owned subsidiaries which require
consolidation.  Inter-company transactions have been eliminated in
consolidation. The functional currency of the Company’s operation is Reminbi
(“RMB”)










F-4





Chang-On
International, Inc. and Subsidiaries


(A Development
Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
3- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





·
            Use of
      estimates





In preparing these
financial statements, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities in the balance sheets and revenues
and expenses during the year reported. Actual results may differ from these
estimates.





·
            Revenue
      recognition





Revenues are
recognized when finished products are shipped to unaffiliated customers, both
title and the risks and rewards of ownership are transferred or services have
been rendered and accepted, and collectibility is reasonably
assured.





·
            Inventories





Inventories are
stated at the lower of cost or market. Cost is determined using the average cost
method. Costs include direct material, direct labor and applicable manufacturing
overhead.





·
            Property,
      Plant and Equipment





Property, plant and
equipment are stated at cost. Depreciation is computed using the straight-line
method. Additions and improvement that substantially extend the useful life of
the properties, plan and equipment are capitalized. Property, plant and
equipment are depreciated to their estimated residual values over their
estimated useful lives, and reviewed for impairment in accordance with Statement
of Financial Accounting Standard No.144 “Accounting for the Impairment or
Disposal of Long-Lived Assets.”





·
            Intangible
      Assets





The Company
periodically analyzes its intangible assets for potential impairment, assessing
the appropriateness of lives and recoverability of unamortized balances through
measurement of undiscounted operating cash flows on a basis consistent with US
GAAP.





·
            Related
      Parties





The caption "Due
from shareholders" represents loans receivable that are unsecured, non-interest
bearing and have no fixed terms of repayment, and therefore are not considered
current assets.




The caption "Due to
shareholders" represents loans payable that are unsecured, non-interest bearing
and have no fixed terms of repayment, therefore, deemed payable on demand. Refer
to Note 7.







F-5





Chang-On
International, Inc. and Subsidiaries


(A Development
Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
3- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





·
            Income
      Tax





Income tax expense
is based on reported income before income taxes. Deferred income taxes reflect
the effect of temporary differences between assets and liabilities that are
recognized for financial reporting purposes and the amounts that are recognized
for income tax purposes. In accordance with Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," these deferred taxes
are measured by applying currently enacted tax laws.





The Company did not
provide any current or deferred income tax provision or benefit for any period
presented to date because there is no income from operations, with only minor
timing differences with regard to the depreciation of fixed assets. Management
has determined that any deferred tax asset or liability is inconsequential, and
not material to the financial statements.





·
            Fair Value of
      Financial Instruments





The carrying value
of financial instruments, including cash and cash equivalents, receivables,
accounts payable and accrued expenses, approximates their fair value at
September 30, 2008, due to the relatively short-term nature of these
instruments.  Unless otherwise noted, it is management opinion that
the Company is not exposed to significant interest, currency or credit risk
arising from those financial instruments.





·
            Foreign
      currencies translation





The functional
currency of the Company is the Reminbi (“RMB”). The accompanying financial
statements have been expressed in United States dollars, the reporting currency
of the Company.  The balance sheet is translated into United States dollars
based on the rates of exchange ruling at the balance sheet date.  The
statement of operations is translated using a weighted average rate for the
period.  Translation adjustments are reflected as accumulated comprehensive
income in shareholders’ equity.





·
            Newly adopted
      Accounting Principles





In September 2006,
the FASB issued SFAS No. 157, "Fair Value Measurements". SFAS No. 157 defines
fair value, establishes a framework and gives guidance regarding the methods
used for measuring fair value, and expands disclosures about fair value
measurements. In February 2008, the FASB issued FASB Staff Position 157-1,
"Application of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address Fair Value Measurements for Purposes of
Lease Classification or Measurement under Statement 13" ("FSP 157-1") and FASB
Staff Position 157-2, "Effective Date of FASB Statement No. 157" ("FSP 157-2").
FSP 157-1 amends SFAS No. 157 to remove certain leasing transactions from its
scope. FSP 157-2 delays the effective date of SFAS No. 157 for all non-financial
assets and non-financial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), until fiscal years beginning after November 15, 2008. SFAS No.
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The
Company adopted SFAS No. 157 effective January 1, 2008 for all financial assets
and liabilities as required. The adoption of SFAS No. 157 was not material to
the Company's financial statements or results of operations.









F-6









Chang-On
International, Inc. and Subsidiaries


(A Development
Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
3- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




In February 2007,
the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities — Including an Amendment of FASB Statement No. 115”, which
is effective for fiscal years beginning after November 15, 2007. SFAS No. 159 is
an elective standard which permits an entity to choose to measure many financial
instruments and certain other items at fair value at specified election dates.
Subsequent unrealized gains and losses on items for which the fair value option
has been elected will be reported in earnings. The Company has not elected the
fair value option for any assets or liabilities under SFAS No. 159.




·
            New
      Accounting Pronouncements





On December 4,
2007, the FASB issued SFAS No. 160, Noncontrolling interest in
Consolidated Financial Statements(SFAS No. 160).  SFAS No. 160
requires all entities to report noncontrolling (minority) interests in
subsidiaries as equity in the consolidated financial statements.  The
statement establishes a single method of accounting for changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation and
expands disclosures in the consolidated financial statements.  SFAS
No. 160 is effective for fiscal years beginning after December 15, 2008 and
interim periods within those fiscal years.  We have not yet determined
the impact of the adoption of SFAS No. 160 on our consolidated financial
statements and footnote disclosures.





On December 4,
2007, the FASB issued SFAS No.141R, Business Combinations (SFAS
No. 141R).  SFAS No. 141R requires the acquiring entity in a business
combination to recognize all the assets acquired and liabilities assumed,
establishes the acquisition date fair value as the measurement objective for all
assets acquired and liabilities assumed, and requires the acquirer to expand
disclosures about the nature and financial effect of the business
combination.  SFAS No. 141R is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.  We have not
yet determined the impact of the adoption of SFAS No. 141R on our consolidated
financial statements and footnote disclosures.




In March 2008, the
FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities”. The new standard is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity’s financial
position, financial performance, and cash flows. It is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The Company is currently evaluating
the impact of adopting SFAS No. 161 on its consolidated financial
statements.






In April 2008, the
FASB issued Staff Position FAS 142-3, Determination of the Useful Life of
Intangible Assets (“FSP FAS 142-3”) which amends the factors an entity should
consider in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under FAS No. 142, Goodwill and
Other Intangible Assets (“FAS No. 142”). FSP FAS 142-3 applies to intangible
assets that are acquired individually or with a group of assets and intangible
assets acquired in both business combinations and asset acquisitions. It removes
a provision under FAS No. 142, requiring an entity to consider whether a
contractual renewal or extension clause can be accomplished without substantial
cost or material modifications of the existing terms and conditions associated
with the asset. Instead, FSP FAS 142-3 requires that an entity consider its own
experience in renewing similar arrangements. An entity would consider market
participant assumptions regarding renewal if no such relevant experience exists.
FSP FAS 142-3 is effective for year ends beginning after December 15, 2008 with
early adoption prohibited. We have not yet determined the effect, if any, of the
adoption of this statement on our financial condition or results of
operations.




F-7






Chang-On
International, Inc. and Subsidiaries


(A Development
Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
3- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)




In June 2008, the
Financial Accounting Standards Board (“FASB”) issued FSP No. EITF 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities (“FSP EITF 03-6-1”). FSP EITF 03-6-1 concludes that
unvested share-based payment awards that contain rights to receive
non-forfeitable dividends or dividend equivalents are participating securities,
and thus, should be included in the two-class method of computing earnings per
share (“EPS”). FSP EITF 03-6-1 is effective for fiscal years beginning after
December 15, 2008, and interim periods within those years. Early application of
EITF 03-6-1 is prohibited. It also requires that all prior-period EPS data be
adjusted retrospectively. We have not yet determined the effect, if any, of the
adoption of this statement on our financial condition or results of
operations.




Note
4- CASH




Cash consists of
the following:





September
      30,
            
            
            December
      31,2008
            
            
            2007Cash on
      hand
            
            $
            241
            
            
            $
            5,246Cash in
      bank
            
            
            2,038
            
            
            
            2,134$
            2,279
            
            
            $
            7,380





Note
5- PROPERTY, PLANT AND EQUIPMENT




Property, Plant and
Equipment consist of the following:





September
      30,
            
            
            December
      31,2008
            
            
            2007Machinery and
      Equipment
            
            $
            337,475
            
            
            $
            241,322Office
      Equipment
            
            
            7,713
            
            
            
            7,179Vehicle
            
            
            6,922
            
            
            
            6,443Construction
      in Progress
            
            
            137,541
            
            
            
            199,056489,651
            
            
            
            454,000Less:
      Accumulated Depreciation
            
            
            (83,001
            )
            
            
            (53,035
            )$
            406,650
            
            
            $
            400,965





Depreciation is
calculated on a straight-line basis over the estimated useful life of the
assets. The annual percentages applied are:








Machinery and
      Equipment
            10%Office
      Equipment
            20%Vehicle
            10%







The depreciation
was $25,300 and $47,387, including cost and operating expense, for the nine
months ended September 30, 2008 and 2007,
respectively.





F-8







Chang-On
International, Inc. and Subsidiaries


(A Development
Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
6- GOVERNMENT SUBSIDY





During 2005, the
Company received a government subsidy of approximately $100,000 from the Finance
Department of Heilongjiang Province to be used for research and development
activities. This subsidy reduces the cost of the Company’s research and
development activities. Any unused portion of the subsidy has to be returned to
the province. At September 31, 2008, the Company had not used $56,425 of the
subsidy.





Note
7- DUE TO SHAREHOLDERS




Due to Shareholders
consists of the following:





September
      30,
            
            
            December
      31,2008
            
            
            2007Li,
      Yukun
            
            $
            22,430
            
            
            $
            15,395Li,
      Guomin
            
            
            769,946
            
            
            
            639,699Zhou,
      Qingwei
            
            
            1,923
            
            
            
            1,923$
            794,299
            
            
            $
            657,017





Li Guomin had been
a shareholder of Hongbo since November 2006. Zhou, Qingwei has been a
shareholder of Chang-On since September 2006.  Under the Agreement for
the Share Exchange on December 29, 2006, Li, Guomin and Zhou, Qingwei acquired
17,400,000 and 36,600,000 shares of Gold Standard, Inc.
respectively.





Note
8- COMMON STOCK





Under the Agreement
for the Share Exchange, Gold Standard, Inc. issued to the shareholders of
Chang-On 60,000,000 shares of common stock. There were 1,307, 366 shares issued
and outstanding before the share exchange. On March 23, 2007, the Company filed
a Form S-8 to register 6,000,000 common shares for stock based compensation
(Note 9). The Company has a total of 67,307,366 shares issued and outstanding as
of September 30, 2008.





Note
9-STOCK BASED COMPENSATION





On January 19,
2007, the Company entered into an agreement with Li, Yaru for legal services in
PRC for a term of two years, pursuant to which the Company issued 900,000 shares
of common stock in April 2007. The fair market value amounted to $360,000, which
is being amortized over the term of the agreement.





On January 31,
2007, the Company entered into an agreement with Canyon Red Group Limited,a
British Virgin Island company for advisory services on the marketing strategy
and implementation of corporate identity for a term of twelve months, pursuant
to which the Company issued 700,000 shares of common stock in April 2007. The
fair market value amounted to $280,000, which is being amortized over the term
of the agreement.





On March 30, 2007,
the Company entered into an agreement with Shiwei Mu for internal audit services
for a term of three years, pursuant to which the Company issued 1,500,000 shares
of common stock in April 2007. The fair market value amounted to $600,000, which
is being amortized over the term of the agreement.





F-9




Chang-On
International, Inc. and Subsidiaries


(A Development
Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)








Note
9-STOCK BASED COMPENSATION (continued)





On March 30, 2007,
the Company entered into an agreement with I &V Limited, a British Virgin
Island company for advisory services on the sales and distribution channels of
certain environmentally friendly construction materials in Northern China
for


a term of eighteen
months, pursuant to which the Company issued 1,000,000 shares of common stock in
April 2007. The fair market value amounted to $400,000, which is being amortized
over the term of the agreement.





On March 30, 2007,
the Company entered into an agreement with Billion Profit International Holdings
Limited, a British Virgin Island company for advisory services on the sales and
distribution channels of certain environmental friendly construction materials
in Hainan Province of China for a term of twelve months, pursuant to which the
Company issued 700,000 shares of common stock in April 2007. The fair market
value amounted to $280,000, which is being amortized over the term of the
agreement.





On March 30, 2007,
the Company entered into an agreement with Prospect Bright Holdings Limited, a
British Virgin Island company for advisory services on the sales and
distribution channels of certain environmental friendly construction materials
in Northeast China for a term of twenty-four months, pursuant to which the
Company issued 1,200,000 shares of common stock in April 2007. The fair market
value amounted to $480,000, which is being amortized over the term of the
agreement.





For the nine months
ended September 30, 2008, $758,333 of the above stock compensation was charged
to operating expenses and $472,500 was recorded as deferred
compensation.





Note
10- GEOGRAPHIC INFORMATION





All of the
Company's sales and all of the Company's long-lived assets are located in
PRC.





Note
11- OPERATING RISK




Concentrations of credit
risk


Financial
instruments that subject the Company to concentrations of credit risk consist
primarily of cash and cash equivalents. The Company maintains its cash and cash
equivalents with high-quality institutions to mitigate the fact there is no
deposit insurance.





Country
risk


The Company has
significant investments in the PRC. The operating results of the Company may be
adversely affected by changes in the political and social conditions in the PRC
and by changes in Chinese government policies with respect to laws and
regulations, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation, among other things. There can be no
assurance; however, those changes in political and other conditions will not
result in any adverse impact.








Note
12- EMPLOYEE BENEFIT PLAN





Full time employees
of the Company participate in a government mandated multi-employer defined
contribution plan pursuant to which certain pension benefits, medical care,
unemployment insurance, employee housing fund and other welfare benefits are
provided to employees. Chinese labor regulations require the Company to accrue
for these benefits based on certain percentages of the employees' salaries. The
total provisions for such employee benefits were $0 for the nine months
ended September 30, 2008 and 2007.




Note
13- RESTRICTED RETAINED EARNINGS
 
 Pursuant to the
laws applicable to the PRC, PRC entities must make appropriations from after-tax
profit to the non-distributable “statutory surplus reserve fund”. Subject to
certain cumulative limits, the “statutory surplus reserve fund” requires annual
appropriations of 10% of after-tax profit until the aggregated appropriations
reach 50% of the registered capital (as determined under accounting principles
generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign
invested enterprises and joint ventures in the PRC, annual appropriations should
be made to the “reserve fund”. For foreign invested enterprises, the annual
appropriation for the “reserve fund” cannot be less than 10% of after-tax
profits until the aggregated appropriations reach 50% of the registered capital
(as determined under PRC GAAP at each year-end). The Company did not make any
appropriations to the reserve funds mentioned above due to lack of profit after
tax since commencement of operations.




F-10




ITEM
2.  MANAGEMENT DISCUSSION AND ANALYSISOF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




Forward
Looking Statements






This report on Form
10-Q contains certain forward-looking statements.  All statements
other than statements of historical fact are “forward-looking statements” for
purposes of these provisions, including any projections of earnings, revenues,
or other financial items; any statements of the plans, strategies, and
objectives of management for future operation; any statements concerning
proposed new products, services, or developments; any statements regarding
future economic conditions or performance; statements of belief; and any
statement of assumptions underlying any of the foregoing. Such forward-looking
statements are subject to inherent risks and uncertainties, and actual results
could differ materially from those anticipated by the forward-looking
statements.






These
forward-looking statements involve significant risks and uncertainties,
including, but not limited to, the following: competition, promotional costs,
and risk of declining revenues. Our actual results could differ materially from
those anticipated in such forward-looking statements as a result of a number of
factors. These forward-looking statements are made as of the date of this
filing, and we assume no obligation to update such forward-looking statements.
The following discusses our financial condition and results of operations based
upon our consolidated financial statements which have been prepared in
conformity with accounting principles generally accepted in the United States.
It should be read in conjunction with our financial statements and the notes
thereto included elsewhere herein.






Business
Overview




We are principally
engaged in the business of waste recycling and reutilization in the People’s
Republic of China (“China”) through our wholly owned subsidiary, Chang-On
International Limited, a company incorporated under the laws of Hong Kong as a
limited liability company on September 8, 2006 (“Chang-On HK”).





Chang-On HK is a
holding company with one asset: 61% of the equity in Harbin Hongbo Environment
Protection Material, Inc. (“Hongbo”), a corporation organized under the laws of
China.  The remaining 39% of the registered capital of Hongbo is owned by
Guomin Li (29%) and Su Yu (10%), who are members of our Board of
Directors.  We manufacture construction material out of waste plastic
and waste coal ash.  From inception to September 30, 2008 we have
generated revenues of $90,578 from the sale of our products.







Liquidity
and Capital Resources






As
of September 30, 2008, we had cash of $2,279 and a working capital deficiency of
$740,541.  As at September 30, 2008 our accumulated deficit was
$2,623,162.  Our net loss for the period from our inception on
November 26, 2004 until September 30, 2008 was $2,623,162.  Our loss
was funded primarily by proceeds from shareholder loans.  During the
nine months ended September 30, 2008, we did not raise any money in equity
financing but we did receive $137,282 in shareholder loans.  During
the nine months ended September 30, 2008 our cash position decreased by $5,101,
mainly due to the cash provided by proceeds from shareholder
loans.




3




We used net cash of
$94,203 in operating activities for the nine months ended September 30, 2008
compared to net cash of $182,395 in operating activities for the same period in
2007.  We used $1,852 in investing activities for the nine months
ended September 30, 2008 compared to net cash of $106,895 in purchase of fixed
assets for our manufacturing plant during the same period in 2007.






We received net
cash of $137,282 from financing activities for the nine months ended September
30, 2008 compared to net cash of $218,575 during the same period in
2007.  All cash received during the period in 2007 and 2008 was
provided by proceeds from shareholder loans.  We did not raise any
funds through the sale of our securities during the nine months ended September
30, 2008 or during the same period in 2007.






The effect of
exchange rates on cash was a decrease in cash of $46,328 for the nine months
ended September, 2008. The effect of exchange rates on cash was an increase in
cash of $8,885 for the nine months ended September 30, 2007.






During the nine
months ended September 30, 2008 our monthly cash requirement was approximately
$10,467, compared to our cash requirements of approximately $20,266 for the same
period in 2007.






We expect to
require a total of approximately $1,280,000 set out as follows to fully carry
out our business plan over the next twelve months beginning November
2008.




Description
            Estimated
              Expenses
    ($)Research and
      development costs for further products and manufacturing
      processes
            250,000Consulting
      fees (including legal and auditing fees)
            100,000Rent
      expenses
            20,000Marketing
      expenses
            400,000Investor
      relations expenses
            80,000Equipment
      purchases for Hongbo’s factory
            350,000Other
      administrative expenses
            80,000Total
            1,280,000







We anticipate that
our future revenues will be nominal and we do not anticipate enough positive
internal operating cash flow until we can generate substantial revenues, which
may take the next few years to fully realize. There is no assurance we will
achieve profitable operations.




We have
historically financed our operations primarily by cash flows generated from the
sale of our equity securities and through cash infusions from officers and
affiliates in exchange for debt and/or common stock. No officer or affiliate has
made any commitment or is obligated to continue to provide cash through loans or
purchases of equity.




We estimate that we
require approximately an additional $1,280,000 to carry out our planned business
operations and expansion over the next 12 months.








4




Results
of Operations for the three months ended September 30, 2008 compared to the
three months ended September 30, 2007 and from inception to September 30,
2008.






Revenues






We generated $352
in revenues for the three months ended September 30, 2008 compared to $90 for
the same period in 2007 from the sale of our building
materials.  Since inception on November 26, 2004 to September 30, 2008
we generated total revenues of $90,578.  As we are a development stage
company, our revenue streams are not established and thus our product sales are
unstable.  We generated only nominal revenues during the period ended
September 30, 2008 because construction is traditionally very limited in our
local area during this time.




Net
Loss






We incurred a net
loss of $253,929 for the three months ended September 30, 2008, compared to a
net loss of $397,385 for the same period in 2007. The decrease of $143,456 in
net loss was a result of less stock-based compensation during the three months
ended September 30, 2008.  From inception on November 26, 2004 to
September 30, 2008, we have incurred net loss of $2,623,162.




Our net loss per
share was $0.00 for the three months ended September 30, 2008, $0.01 for the
same period in 2007 and $0.04 for the period from inception to September 30,
2008.




Expenses




Our total operating
expenses decreased from $420,990 for the three months ended September 31, 2007
to $254,181 for the three months ended September 30, 2008.  The reason
for the decrease was less issuance of stock based compensation. Since our
inception on November 26, 2004 to September 30, 2008, we have incurred total
operating expenses of $2,902,826.





Our expenses, net
of stock-based compensation, decreased $26,808 from $59,323 to $32,515 for the
three months ended September 30, 2008 compared to the same period in
2007.  This decrease was mainly due to a decrease in water,
electricity and gas costs and lower salaries for our employees.  These
expenses consist of transportation, utilities, salaries, management fees, legal
and auditing consulting fees, depreciation, office equipment repairs and
maintenance as well as gain on disposal of fixed assets.





Our stock
compensation decreased $140,001 to $221,666 for the three months ended September
30, 2008 from $361,667 for the same period in 2007.  From inception on
November 26, 2004 to September 30, 2008, we have incurred stock compensation
expenses of $1,927,500.




We did not incur
research and development expenses for the three months ended September 30, 2008
or for the three months ended September 30, 2007.   Since our
inception on November 26, 2004 until September 30, 2008 we have spent $22,578 on
research and development.  Going forward, we anticipate that we will
spend approximately $250,000 on research and development during the next 12
months.





5




Results
of Operations for the nine months ended September 30, 2008 compared to the nine
months ended September 30, 2007






Revenues






We generated
$33,094 in revenues for the nine months ended September 30, 2008 compared to
$12,329 for the same period in 2007 from the sale of our SF building
materials.




Net
Loss






We incurred a net
loss of $805,392 for the nine months ended September 30, 2008, compared to net
loss of $879,819 for the same period in 2007. The decrease of $74,427 in net
loss was the result of increased stock based compensation during the nine months
ended September 30, 2008.




Our net loss per
share was $0.01 for the nine months ended September 30, 2008, and $0.01 for the
same period in 2007.




Expenses




Our total operating
expenses decreased from $938,739 to $829,036 for the nine months ended September
30, 2008 compared to the same period in 2007.  The reason for the
decrease in operating expenses for the period ended September 30, 2008 as
compared to the same period in 2007 was the issuance of less stock based
compensation.





Our general and
administrative expenses (net of stock-based compensation) decreased from
$146,239 to $70,703 for the nine months ended September 30, 2008 compared to the
same period in 2007.  The decrease in general and administrative
expenses was mainly due to a decrease in water, electricity and gas costs, lower
salaries for our employees and a decrease in depreciation.  Our
general and administrative expenses consist of transportation, utilities,
salaries, management fees, depreciation, office equipment repairs and
maintenance as well as gain on disposal of fixed assets.





Our stock based
compensation decreased $34,167 to $758,333 for the nine months ended September
30, 2008 from $792,500 for the same period in 2007.  This decrease was
due to a lower amount of formerly issued stock based compensation being
recognized during this period for investor relations and administrative
services.





We did not incur
research and development expenses for the nine months ended September 30, 2008
or for the nine months ended September 30, 2007.   Going forward,
we anticipate that we will spend approximately $250,000 on research and
development during the next 12 months.




6






Inflation
  The amounts
presented in the financial statements do not provide for the effect of inflation
on our operations or financial position. The net operating losses shown would be
greater than reported if the effects of inflation were reflected either by
charging operations with amounts that represent replacement costs or by using
other inflation adjustments.


Off-Balance
Sheet Arrangements




As of September 30,
2008, we had no off-balance sheet transactions that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
our financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.






Critical
Accounting Policies




Revenue
recognition





Revenues are
recognized when finished products are shipped to unaffiliated customers, both
title and the risks and rewards of ownership are transferred or services have
been rendered and accepted, and collecting the purchase price is reasonably
assured.





Property, plant and
Equipment





Property, plant and
equipment are stated at cost.  Depreciation is computed using the
straight-line method. Additions and improvement that substantially extend the
useful life of the properties, plan and equipment are capitalized. Property,
plant and equipment are depreciated to their estimated residual values over
their estimated useful lives, and reviewed for impairment in accordance with
Statement of Financial Accounting Standard No.144 “Accounting forthe Impairment or Disposal of
Long-Lived Assets.”





Foreign Current
Conversion





Our functional
currency is the Reminbi (“RMB”).  The accompanying financial
statements have been expressed in United States dollars, our reporting currency.
 The balance sheet is translated into United States dollars based on the
rates of exchange ruling at the balance sheet date. The statement of operations
is translated using a weighted average rate for the period.  Translation
adjustments are reflected as accumulated comprehensive income in shareholders’
equity.







ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.






Not
applicable.






ITEM 4. CONTROLS AND PROCEDURES.




We
maintain disclosure controls and procedures, as defined in Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that
are designed to ensure that information required to be disclosed by us in the
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's rules and forms and that such information is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure. We carried out an evaluation, under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures as of September
30, 2008. Based on the evaluation of these disclosure controls and procedures,
the Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective.






Changes
in Internal Control Over Financial Reporting
  There were no
changes in our internal control over financial reporting, as defined in Rule
13a-15(f) promulgated under the Exchange Act, during the quarter ended September
30, 2008, that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.


7




PART II – OTHER INFORMATION






ITEM
1.  LEGAL PROCEEDINGS






Management is not
aware of any legal proceedings contemplated by any governmental authority or any
other party against us.  None of our directors, officers or affiliates
are (i) a party adverse to us in any legal proceedings, or (ii) have an adverse
interest to us in any legal proceedings.  Management is not aware of
any other legal proceedings that have been threatened against us.






ITEM
1A. RISK FACTORS.






Not
applicable.






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






None.






ITEM
3.  DEFAULTS UPON SENIOR SECURITIES






None.






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






None.






ITEM
5.  OTHER INFORMATION






None.






ITEM 6.  EXHIBITS




Exhibit
              Number
            Exhibit
              Description31.1
            Certification of the Chief Executive Officer and Chief
      Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act
      pursuant to Section 302 of the Sarbanes-Oxley Act of
    200232.1
            Certification of the Chief Executive Officer and Chief
      Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002






8






SIGNATURES







Pursuant to the
requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly
caused this Quarterly Report to be signed on its behalf by the undersigned
thereunto duly authorized.





Chang-On International,
      Inc.By: /s/Guomin
      LiDate:
      November 7, 2008
            Guomin
      LiPresident,
      Chief Executive Officer Chief Financial Officer, Principal Accounting
      Officer, Director
              (Authorized
      Officer and Principal Financial
Officer)