---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2010

or

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

For the transition period from _______________________ to
_______________________

Commission File Number 001-08937

CHANG-ON INTERNATIONAL, INC.(Exact name of registrant as specified in its charter)

|Utah                                                                 | 87-0302579                       
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS 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)

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

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).[   ] YES    [   ] NO

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

Large accelerated filer [   ]
    
    Accelerated filer [   ]Non-accelerated filer   [   ]
    (Do not check if a smaller reporting company)
    Smaller reporting company
[X]


Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act [   ] YES 
 [   ] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCYPROCEEDINGS 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 Exchange Act after the
distribution of securities under a plan confirmed by a court.[   ]
YES    [X] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuers
  classes of common stock, as of the latest practicable date.67,307,366 common shares issued and outstanding as of November 15, 2010

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Table of Contents

|PART I  FINANCIAL INFORMATION | 3      
|------------------------------ | -------
|                               |        
|                               | Item 1.
|                               |        
|                               | Item 2.
|                               |        
|                               | Item 3.
|                               |        
|                               | Item 4.
|                               |        
|PART II  OTHER INFORMATION    | 21     
|                               |        
|                               | Item 1.
|                               |        
|                               | Item 2.
|                               |        
|                               | Item 3.
|                               |        
|                               | Item 4.
|                               |        
|                               | Item 5.
|                               |        
|                               | Item 6.
|                               |        
|SIGNATURES                     | 22     

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PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited interim consolidated financial statements of
Chang-On International, Inc. (we, our, us) follow. All currency references
in this report are to U.S. dollars unless otherwise indicated.

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CHANG-ON INTERNATIONAL, INC.

(A Development Stage Company)

INDEX TO SEPTEMBER 30, 2010 CONSOLIDATED FINANCIAL
STATEMENTS



|                                                                        | PAGE  
|----------------------------------------------------------------------- | ------
|                                                                        |       
|CONSOLIDATED
      BALANCE SHEETS                                       | F2    
|                                                                        |       
|CONSOLIDATED
      STATEMENTS OF OPERATIONS (UNAUDITED)                 | F3    
|                                                                        |       
|CONSOLIDATED
      STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)         | F4    
|                                                                        |       
|CONSOLIDATED
      STATEMENTS OF CHANGES IN EQUITY(DEFICIT) (UNAUDITED) | F5    
|                                                                        |       
|CONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)                 | F6    
|                                                                        |       
|NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)            | F7-F16

F1

---

|CHANG-ON INTERNATIONAL, INC. 
|-----------------------------
|(A Development Stage Company)
|CONSOLIDATED BALANCE SHEETS  

|                                                                                                                                                                    |   | September 30, |   |   | December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | ------------ | -
|                                                                                                                                                                    |   | 2010          |   |   | 2009         |  
|                                                                                                                                                                    |   | (Unaudited)   |   |   |              |  
|ASSETS                                                                                                                                                              |   |               |   |   |              |  
|Current Assets                                                                                                                                                      |   |               |   |   |              |  
|Cash                                                                                                                                                                | $ | 71,895        |   | $ | 27,884       |  
|Prepaid and other receivables                                                                                                                                       |   | 51,112        |   |   | 293          |  
|Inventories (Note
      4)                                                                                                                                          |   | 39,082        |   |   | 38,305       |  
|Total
      Current Assets                                                                                                                                          |   | 162,089       |   |   | 66,482       |  
|                                                                                                                                                                    |   |               |   |   |              |  
|Property, plant and equipment, net (Note 5)                                                                                                                         |   | 342,082       |   |   | 361,211      |  
|                                                                                                                                                                    |   |               |   |   |              |  
|Total
      Assets                                                                                                                                                  | $ | 504,171       |   | $ | 427,693      |  
|                                                                                                                                                                    |   |               |   |   |              |  
|LIABILITIES                                                                                                                                                         |   |               |   |   |              |  
|Current Liabilities                                                                                                                                                 |   |               |   |   |              |  
|Trade accounts payable                                                                                                                                              | $ | 709           |   | $ | 696          |  
|Accrued expenses                                                                                                                                                    |   | 6,138         |   |   | 31,525       |  
|Deferred income-government grants
      (Note 6)                                                                                                                    |   | 111,060       |   |   | 78,089       |  
|Due to shareholders
      (Note 7)                                                                                                                                  |   | 401,045       |   |   | 273,001      |  
|Total
      Current Liabilities                                                                                                                                     |   | 518,952       |   |   | 383,311      |  
|                                                                                                                                                                    |   |               |   |   |              |  
|Total
      Liabilities                                                                                                                                             |   | 518,952       |   |   | 383,311      |  
|                                                                                                                                                                    |   |               |   |   |              |  
|EQUITY                                                                                                                                                              |   |               |   |   |              |  
|Chang-On International, Inc Stockholders' Equity:                                                                                                                   |   |               |   |   |              |  
|Common stock, par value $0.001, authorized
      
                100,000,000 shares, issue
      and outstanding 
                67,307,366 shares
      (Note 8) |   | 67,307        |   |   | 67,307       |  
|Additional paid
      in capital                                                                                                                                    |   | 3,067,959     |   |   | 3,067,959    |  
|Deficit                                                                                                                                                             |   | (3,157,506    | ) |   | (3,067,189   | )
|Deferred Compensation
      (Note 9)                                                                                                                                |   | -             |   |   | (50,000      | )
|Accumulated other comprehensive loss                                                                                                                                |   | (15,000       | ) |   | (15,605      | )
|Total Chang-On International, Inc Stockholders' equity                                                                                                              |   | (37,240       | ) |   | 2,472        |  
|                                                                                                                                                                    |   |               |   |   |              |  
|Noncontrolling interest                                                                                                                                             |   | 22,459        |   |   | 41,910       |  
|                                                                                                                                                                    |   |               |   |   |              |  
|Total Equity                                                                                                                                                        |   | (14,781       | ) |   | 44,382       |  
|                                                                                                                                                                    |   |               |   |   |              |  
|Total Liabilities and Equity                                                                                                                                        | $ | 504,171       |   | $ | 427,693      |  

See Notes to Financial Statements

F2

---

|CHANG-ON INTERNATIONAL, INC.         
|-------------------------------------
|(A Development Stage Company)        
|CONSOLIDATED STATEMENTS OF OPERATIONS
|(UNAUDITED)                          

|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   | For the Period |  
|---------------------------------------------------------------- | - | -------------------------- | - | - | ------------------------- | - | - | ------------- | - | - | ---------- | - | - | -------------- | -
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   | from November  |  
|                                                                 |   | For the Three Months Ended |   |   | For the Nine Months Ended |   |   | 26, 2004      |  
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   | (inception) to |  
|                                                                 |   | September 30,              |   |   | September 30,             |   |   | September 30, |  
|                                                                 |   | 2010                       |   |   | 2009                      |   |   | 2010          |   |   | 2009       |   |   | 2010           |  
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Net sales                                                        | $ | -                          |   | $ | 1,989                     |   | $ | -             |   | $ | 1,989      |   | $ | 93,776         |  
|Cost of sales                                                    |   | -                          |   |   | (1,228                    | ) |   | -             |   |   | (1,228     | ) |   | (129,170       | )
|Gross profit                                                     |   | -                          |   |   | 761                       |   |   | -             |   |   | 761        |   |   | (35,394        | )
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Expenses                                                         |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Salaries                                                         |   | 3,546                      |   |   | 3,513                     |   |   | 10,578        |   |   | 10,538     |   |   | 132,917        |  
|Transportation                                                   |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 13,354         |  
|Office equipment                                                 |   | -                          |   |   | -                         |   |   | -             |   |   | 28         |   |   | 6,879          |  
|Water, electricity and gas                                       |   | 3,593                      |   |   | 3,573                     |   |   | 14,269        |   |   | 23,889     |   |   | 132,390        |  
|Other expenses                                                   |   | 109                        |   |   | 122                       |   |   | 292           |   |   | 331        |   |   | 35,540         |  
|Advertisement                                                    |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 556            |  
|Rent expense                                                     |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 3,811          |  
|Depreciation                                                     |   | 8,721                      |   |   | 8,641                     |   |   | 26,015        |   |   | 25,917     |   |   | 191,909        |  
|R & D expense                                                    |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 22,578         |  
|Repairs and maintenance                                          |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 1,043          |  
|Gain on disposal of fixed assets                                 |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | (7,730         | )
|Stock compensation                                               |   | -                          |   |   | 50,000                    |   |   | 50,000        |   |   | 217,500    |   |   | 2,400,000      |  
|Professional fees                                                |   | 3,000                      |   |   | -                         |   |   | 9,000         |   |   | -          |   |   | 56,378         |  
|Fixed assets impairment                                          |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 345,962        |  
|Intangibles writedown                                            |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 241,639        |  
|Total Expenses                                                   |   | 18,969                     |   |   | 65,849                    |   |   | 110,154       |   |   | 278,203    |   |   | 3,577,226      |  
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Total expenses and loss from operations                          |   | (18,969                    | ) |   | (65,088                   | ) |   | (110,154      | ) |   | (277,442   | ) |   | (3,612,620     | )
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Other income                                                     |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | 7,195          |  
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Loss before provision for income tax                             |   | (18,969                    | ) |   | (65,088                   | ) |   | (110,154      | ) |   | (277,442   | ) |   | (3,605,425     | )
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Income tax provision                                             |   | -                          |   |   | -                         |   |   | -             |   |   | -          |   |   | -              |  
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Net loss                                                         |   | (18,969                    | ) |   | (65,088                   | ) |   | (110,154      | ) |   | (277,442   | ) |   | (3,605,425     | )
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Less: Net loss attributable to the noncontrolling
      interest |   | 6,185                      |   |   | 5,851                     |   |   | 19,837        |   |   | 23,305     |   |   | 285,640        |  
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Net loss attributable to Chang-On International,
      Inc       |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|common stockholders                                              | $ | (12,784                    | ) | $ | (59,237                   | ) | $ | (90,317       | ) |   | (254,137   | ) | $ | (3,319,785     | )
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Basic and Fully Diluted Earnings per Share                       | $ | (0.00                      | ) | $ | (0.00                     | ) | $ | (0.00         | ) | $ | (0.00      | ) |   |                |  
|                                                                 |   |                            |   |   |                           |   |   |               |   |   |            |   |   |                |  
|Weighted average shares outstanding                              |   | 67,307,366                 |   |   | 67,307,366                |   |   | 67,307,366    |   |   | 67,307,366 |   |   |                |  

See Notes to Financial Statements.

F3

---

|CHANG-ON INTERNATIONAL, INC.                 
|---------------------------------------------
|(A Development Stage Company)                
|CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|(UNAUDITED)                                  

|                                                                      |   | For the Three Months
      Ended |   |   | For the Nine Months
      Ended |   |   | For the Period from November 26, 2004 (inception)
      to |  
|--------------------------------------------------------------------- | - | -------------------------------- | - | - | ------------------------------- | - | - | ---------------------------------------------------------- | -
|                                                                      |   | September 30,                    |   |   | September 30,                   |   |   | September 30,                                              |  
|                                                                      |   | 2010                             |   |   | 2009                            |   |   | 2010                                                       |  
|Net loss                                                              | $ | (18,969                          | ) | $ | (65,088                         | ) | $ | (110,154                                                   | )
|Other comprehensive income(loss), net of tax:                         |   |                                  |   |   |                                 |   |   |                                                            |  
|Foreign currency translation gain(loss)                               |   | 601                              |   |   | 114                             |   |   | 991                                                        |  
|Comprehensive loss                                                    |   | (18,368                          | ) |   | (64,974                         | ) |   | (109,163                                                   | )
|Comprehensive loss attributable
      to the noncontrolling interest  |   | 5,951                            |   |   | 5,808                           |   |   | 19,451                                                     |  
|Comprehensive loss attributable to Chang-On International,
      Inc. | $ | (12,417                          | ) | $ | (59,166                         | ) | $ | (89,712                                                    | )

See Notes to Financial Statements.

F4

---

|CHANG-ON INTERNATIONAL, INC.                          
|------------------------------------------------------
|(A Development Stage Company)                         
|CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
|FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010          
|(UNAUDITED)                                           

|                                                     |   |             |   |   |               |   |   | Chang-On International, Inc. Stockholders | 
|---------------------------------------------------- | - | ----------- | - | - | ------------- | - | - | ----------------------------------------- | 
|                                                     |   |             |   |   |               |   |   | Common Stock                              | 
|                                                     |   |             |   |   | Comprehensive |   | $ | 0.001 Par Value                           | 
|                                                     |   | Total       |   |   | Income        |   |   | Shares                                    | 
|                                                     |   |             |   |   |               |   |   |                                           | 
|Balance December 31, 2009                            | $ | 44,382      |   |   |               |   |   | 67,307,366                                | 
|                                                     |   |             |   |   |               |   |   |                                           | 
|Amortization of deferred compensation                |   | 50,000      |   |   |               |   |   |                                           | 
|                                                     |   |             |   |   |               |   |   |                                           | 
|Comprehensive loss:                                  |   |             |   |   |               |   |   |                                           | 
|Net loss                                             |   | (110,154    | ) |   | (110,154      | ) |   |                                           | 
|Other comprehensive
      income (loss), net of tax: |   |             |   |   |               |   |   |                                           | 
|Foreign currency
      translation gain (loss)       |   | 991         |   |   | 991           |   |   |                                           | 
|                                                     |   |             |   |   |               |   |   |                                           | 
|Comprehensive loss                                   |   | (109,163.00 | ) | $ | (109,163      | ) |   |                                           | 
|                                                     |   |             |   |   |               |   |   |                                           | 
|Balance September 30, 2010                           | $ | (14,781     | ) |   |               |   |   | 67,307,366                                | 

Seeaccompanyingnotes toconsolidatedfinancialstatements

F5

---

|CHANG-ON INTERNATIONAL, INC.         
|-------------------------------------
|(A Development Stage Company)        
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(UNAUDITED)                          

|                                                               |   |                           |   |   |               |   |   | For the Period |  
|-------------------------------------------------------------- | - | ------------------------- | - | - | ------------- | - | - | -------------- | -
|                                                               |   |                           |   |   |               |   |   | from November  |  
|                                                               |   | For the Nine Months Ended |   |   | 26, 2004      |  
|                                                               |   |                           |   |   |               |   |   | (inception) to |  
|                                                               |   | September 30,             |   |   | September 30, |  
|                                                               |   | 2010                      |   |   | 2009          |   |   | 2010           |  
|Operating Activities:                                          |   |                           |   |   |               |   |   |                |  
|Net loss                                                       | $ | (110,154                  | ) | $ | (277,442      | ) | $ | (3,605,425     | )
|Adjustments to reconcile net loss to net                       |   |                           |   |   |               |   |   |                |  
|cash used by operations                                        |   |                           |   |   |               |   |   |                |  
|Depreciation (cost and expense)                                |   | 26,015                    |   |   | 25,917        |   |   | 201,371        |  
|Provision for obsolete inventories                             |   | -                         |   |   | -             |   |   | 68,887         |  
|Impairment loss on intangible assets                           |   | -                         |   |   | -             |   |   | 241,639        |  
|Impairment loss on fixed assets                                |   | -                         |   |   | -             |   |   | 345,962        |  
|Gain on disposal of fixed assets                               |   | -                         |   |   | -             |   |   | (7,730         | )
|Stock compensation                                             |   | 50,000                    |   |   | 217,500       |   |   | 2,400,000      |  
|Changes in operating assets and liabilities:                   |   |                           |   |   |               |   |   |                |  
|(Increase)/decrease in account receivable                      |   | -                         |   |   | -             |   |   | -              |  
|(Increase)/decrease in prepaid and other receivables           |   | (50,819                   | ) |   | -             |   |   | (51,112        | )
|(Increase)/decrease in inventory                               |   | -                         |   |   | -             |   |   | (107,192       | )
|Increase/(decrease) in accounts payable                        |   | -                         |   |   | -             |   |   | 695            |  
|Increase/(decrease) in accrued expenses                        |   | (25,387                   | ) |   | -             |   |   | 6,138          |  
|Increase/(decrease) in deferred income-government
      grants |   | 32,971                    |   |   | 21,942        |   |   | 103,997        |  
|Net cash used in operating activities                          |   | (77,374                   | ) |   | (12,083       | ) |   | (402,770       | )
|                                                               |   |                           |   |   |               |   |   |                |  
|Investing Activities                                           |   |                           |   |   |               |   |   |                |  
|Purchase of fixed assets                                       |   | -                         |   |   | -             |   |   | (710,118       | )
|Loan to shareholders                                           |   | -                         |   |   | -             |   |   | (24,659        | )
|Repay of loan from shareholders                                |   | -                         |   |   | -             |   |   | 24,659         |  
|Net cash used in investing activities                          |   | -                         |   |   | -             |   |   | (710,118       | )
|                                                               |   |                           |   |   |               |   |   |                |  
|Financing Activities                                           |   |                           |   |   |               |   |   |                |  
|Distribution to shareholders                                   |   | -                         |   |   | -             |   |   | (24,994        | )
|Capital contribution                                           |   | -                         |   |   | -             |   |   | 274,103        |  
|Proceeds from shareholder loans                                |   | 121,414                   |   |   | 80,499        |   |   | 977,830        |  
|Repay of loan to shareholders                                  |   | -                         |   |   | (58,545       | ) |   | (70,844        | )
|Net cash provided by financing activities                      |   | 121,414                   |   |   | 21,954        |   |   | 1,156,095      |  
|                                                               |   |                           |   |   |               |   |   |                |  
|Effect of exchange rate changes on cash                        |   | (29                       | ) |   | 1,248         |   |   | 28,688         |  
|                                                               |   |                           |   |   |               |   |   |                |  
|Increase(decrease) in cash                                     |   | 44,011                    |   |   | 11,119        |   |   | 71,895         |  
|Cash at beginning of period                                    |   | 27,884                    |   |   | 3,798         |   |   | -              |  
|Cash at end of period                                          | $ | 71,895                    |   | $ | 14,917        |   | $ | 71,895         |  
|                                                               |   |                           |   |   |               |   |   |                |  
|Supplemental Cash Flow Information:                            |   |                           |   |   |               |   |   |                |  
|Interest received (paid) during the year                       | $ | -                         |   | $ | -             |   | $ | 260            |  
|Non-cash financing activities:                                 |   |                           |   |   |               |   |   |                |  
|Contribution of patent for equity                              | $ | -                         |   | $ | -             |   | $ | 241,639        |  
|Contribution of fixed assets for
      equity                  | $ | -                         |   | $ | -             |   | $ | 125,497        |  
|Stock issued in exchange for consulting services               | $ | -                         |   | $ | -             |   | $ | 2,400,000      |  
|Conversion of shareholder's loan
      to paid in capital      | $ | -                         |   | $ | -             |   | $ | 589,100        |  

See Notes to Financial Statements.

F6

---

Note 1 - ORGANIZATION AND BUSINESS BACKGROUND

Chang-On International, Inc. (the “Company”) was incorporated under the laws of the State of Utah as Gold Standard, Inc. 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, Chang-On International Limited (“Chang-On”).

Chang-On was incorporated as a Hong Kong limited liability company on September 8, 2006 to facilitate a merger between a U.S. company and a PRC business entity. On December 29, 2006, under the terms of a Share Exchange Agreement, 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 Harbin Hongbo Environment Protection Material, Inc. (“Hongbo”) a corporation formed under the laws of the PRC 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 reflected in the accompanying consolidated financial statements, the Company has accumulated deficits of $3,157,506 at September 30, 2010 that includes losses of $110,154 for the nine months ended September 30, 2010. These factors raise
substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements have been prepared on a going basis and do not include any adjustments that might result from the outcome of this
uncertainty.

At September 30, 2010, the Company has suffered losses from development stage activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no
assurance these activities will be successful.

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

•   Basis of Presentation

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

These consolidated financial statements have been prepared
  in accordance with U.S. GAAP for interim financial information and the instructions
  to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
  all of the information and footnotes required by U.S. GAAP for complete financial
  statements. In the opinion of management, all adjustments (consisting of normal
  recurring accruals) considered necessary for a fair presentation of the financial
  position, results of operations and cash flows for the interim periods have
  been included. These consolidated financial statements should be read in conjunction
  with the consolidated financial statements of the Company for the year ended
  December 31, 2009 and notes thereto contained in the Annual Report on Form 10-K/A
  of the Company filed with the United States Securities and Exchange Commission
  (the "SEC") on April 23, 2010. Interim results are not necessarily
  indicative of the results for the full year.

•   Principles of Consolidation

These 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 operations is Reminbi ("RMB").

F7

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•   Use of Estimates

In preparing these consolidated 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. The Company regularly
  evaluates estimates and assumptions related to obsolete inventory, useful life
  and recoverability of long lived assets, and goodwill. The Company bases its
  estimates and assumptions on current facts, historical experience and various
  other factors that it believes to be reasonable under the circumstances, the
  results of which form the basis for making judgments about the carrying values
  of assets and liabilities and the accrual of costs and expenses that are not
  readily apparent from other sources. The actual results experienced by the Company
  may differ materially and adversely from the Company's estimates. To the extent
  there are material differences between the estimates and the actual results,
  future results of operations will be affected.

•   Fair Value of Financial Instruments

The Company adopted the standard "Fair Value Measurements",
  codified with ASC 820 and effective January 1, 2008. The provisions of ASC 820
  are to be applied prospectively.

ASC 820 clarifies that fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e. the exit price at the
measurement date). Under ASC 820, fair value measurements are not adjusted for transaction cost. ASC 820 provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Input other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed
based on market data obtained from sources independent of the Company.

Level 3: Unobservable inputs. Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.

An asset or liability's level within the fair value hierarchy
  is based on the lowest level of any input that is significant to the fair value
  measurement. Availability of observable inputs can vary and is affected by a
  variety of factors. The Company uses judgment in determining fair value of assets
  and liabilities and Level 3 assets and liabilities involve greater judgment
  than Level 1 and Level 2 assets or liabilities.

•   Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less. Cash deposits with banks are held in financial institutions in China, which has no federally insured
deposit protection. Accordingly, the Company has a concentration of credit risk related to these uninsured deposits.

•   Inventories

Inventories are stated at the lower of cost or market value.
  Cost is determined using the weighted average cost method. Costs include direct
  material, direct labor and applicable manufacturing overhead. Market value is
  determined by reference to selling prices after the balance sheet date or to
  management's estimates based on prevailing market conditions. Management writes
  down the inventories to market value if market value is below cost. Management
  also regularly evaluates the composition of the Company’s inventories
  to identify slow-moving and obsolete inventories to determine if a valuation
  allowance is required.

F8

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•   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 property, plant 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 the standard, "Accounting for the Impairment or Disposal of Long-Lived
  Assets", codified with ASC 360.

•   Construction in Progress

Construction in progress represents direct costs of construction or acquisition incurred. Capitalization of these costs ceases and construction in progress is transferred to property and equipment when substantially all the activities necessary to
prepare the assets for their intended use are completed.

•   Intangible Assets

The Company periodically analyzes its intangible assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through the measurement of undiscounted operating cash flows on a basis consistent
with U.S. 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, and therefore are deemed payable on demand. Refer to Note 7.

•   Comprehensive Income

The standard, "Reporting Comprehensive Income",
  codified with ASC 220, requires disclosure of all components of comprehensive
  income and loss on an annual and interim basis. Comprehensive income and loss
  is defined as the change in equity of a business enterprise during a period
  from transactions and other events and circumstances from non-owner sources.
  The Company's other comprehensive income arose from the effect of foreign currency
  translation adjustments.

•   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.

•   Research and Development Costs

Research and development costs are expensed to operations as incurred.

•   Income Tax

The Company accounts for income taxes in accordance with the
  standard, "Accounting for Income Taxes", codified with ASC 740. ASC
  740 requires an asset and liability approach for financial accounting and reporting
  for income taxes and allows recognition and measurement of deferred tax assets
  based upon the likelihood of realization of tax benefits in future years. Under
  the asset and liability approach, deferred taxes are provided for the net tax
  effects of temporary differences between the carrying amounts of assets and
  liabilities for financial reporting purposes and the amounts used for income
  tax purposes. A valuation allowance is provided for deferred tax assets if it
  is more likely than not these items will either expire before the Company is
  able to realize their benefits, or that future deductibility is uncertain.

F9

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•   Segment Information

The standard, Disclosures about Segments of an Enterprise and
Related Information, codified with ASC 280, requires certain financial and
supplementary information to be disclosed on an annual and interim basis for
each reportable segment of an enterprise. The Company believes that it operates
in one business segment (research, development, production, marketing and sales)
and in one geographical segment (China), as all of the Companys current
operations are carried out in China.

•   Foreign Currency Translation

The Companys functional currency is Chinese Renminbi (RMB)
and its reporting currency is the U.S. dollar. Transactions denominated in
foreign currencies are translated into U.S. dollars at the exchange rate in
effect on the date of the transactions. Exchange gains or losses on transactions
are included in earnings.

The consolidated financial statements of the Company are
translated into U.S. dollars in accordance with the standard, Foreign Currency
Translation, codified with ASC 830, using year-end rates of exchange for assets
and liabilities, and average rates of exchange for the period for revenues,
costs, and expenses and historical rates for equity. Translation adjustments
resulting from the process of translating the local currency consolidated
financial statements into U.S. dollars are included in determining comprehensive
income. At September 30, 2010 and December 31, 2009, the cumulative translation
adjustments of ($15,000) and ($15,605), respectively, were classified as items
of accumulated other comprehensive income (loss) in the stockholders equity
section of the balance sheet. For the nine months ended September 30, 2010 and
2009, other comprehensive income (loss) was $991 and ($184), respectively.

The exchange rates used to translate amounts in RMB into U.S.
dollars for the purposes of preparing the consolidated financial statements were
as follows: As of September 30, 2010 and December 31, 2009, the Company used the
period-end rates of exchange for assets and liabilities of $1 to RMB6.6912 and
$1 to RMB6.827, respectively. For the nine months ended September 30, 2010 and
2009, the Company used the periods average rate of exchange to convert
revenues, costs, and expenses of $1 to RMB6.8066 and $1 to RMB6.8324,
respectively. The Company used historical rates for equity.

•   Loss Per Share

Basic loss per share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding during each
period. Diluted earnings per share is computed by dividing net income by the
weighted average number of shares of common stock, common stock equivalents and
potentially dilutive securities outstanding during each period. At September 30,
2010, the Company had no common stock equivalents that could potentially dilute
future earnings per share; however, if present, a separate computation of
diluted loss per share would not have been presented, as these common stock
equivalents would have been anti-dilutive due to the Companys net loss.

•   Commitments and Contingencies

Liabilities for loss contingencies arising from claims,
assessments, litigation, fines and penalties and other sources are recorded when
it is probable that a liability has been incurred and the amount of the
assessment can be reasonably estimated.

•   New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB)
  issued a new standard regarding the accounting for transfers of financial assets
  amending the existing guidance on transfers of financial assets to, among other
  things, eliminate the qualifying special-purpose entity concept, include a new
  unit of account definition that must be met for transfers of portions of financial
  assets to be eligible for sale accounting, clarify and change the derecognition
  criteria for a transfer to be accounted for as a sale, and require significant
  additional disclosure. For the Company, this standard is effective for new transfers
  of financial assets beginning January 1, 2010. Because the Company historically
  does not have significant transfers of financial assets, the adoption of this
  standard is not expected to have a material impact on the Company’s consolidated
  results of operations or financial condition.

F10

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In June 2009, the FASB issued a new standard that revises the
  consolidation guidance for variable-interest entities. The modifications include
  the elimination of the exemption for qualifying special purpose entities, a
  new approach for determining who should consolidate a variable-interest entity,
  and changes to when it is necessary to reassess who should consolidate a variable-interest
  entity. For the Company, this standard was effective January 1, 2010. The adoption
  of this standard did not have a material impact on the Company’s consolidated
  results of operations or financial condition.

In October 2009, the FASB issued ASU No. 2009-13, "Multiple-Deliverable
  Revenue Arrangements" a consensus of the FASB Emerging Issues Task Force',
  that provides amendments to the criteria for separating consideration in multiple-deliverable
  arrangements. As a result of these amendments, multiple-deliverable revenue
  arrangements will be separated in more circumstances than under existing U.S.
  GAAP. The ASU does this by establishing a selling price hierarchy for determining
  the selling price of a deliverable. The selling price used for each deliverable
  will be based on vendor-specific objective evidence if available, third-party
  evidence if vendor-specific objective evidence is not available, or estimated
  selling price if neither vendor-specific objective evidence nor third-party
  evidence is available. A vendor will be required to determine its best estimate
  of selling price in a manner that is consistent with that used to determine
  the price to sell the deliverable on a standalone basis. This ASU also eliminates
  the residual method of allocation and will require that arrangement consideration
  be allocated at the inception of the arrangement to all deliverables using the
  relative selling price method, which allocates any discount in the overall arrangement
  proportionally to each deliverable based on its relative selling price. Expanded
  disclosures of qualitative and quantitative information regarding the application
  of the multiple-deliverable revenue arrangement guidance are also required under
  the ASU. The ASU does not apply to arrangements for which industry specific
  allocation and measurement guidance exists, such as long-term construction contracts
  and software transactions. For the Company, ASU No. 2009-13 is effective beginning
  January 1, 2011. The Company may elect to adopt the provisions prospectively
  to new or materially modified arrangements beginning on the effective date or
  retrospectively for all periods presented. The Company is currently evaluating
  the impact of this standard on its Company's consolidated results of operations
  and financial condition.

In October 2009, the FASB issued ASU No. 2009-14, "Certain
  Revenue Arrangements That Include Software Elements"a consensus of the
  FASB Emerging Issues Task Force', that reduces the types of transactions that
  fall within the current scope of software revenue recognition guidance. Existing
  software revenue recognition guidance requires that its provisions be applied
  to an entire arrangement when the sale of any products or services containing
  or utilizing software is considered more than incidental to the product or service.
  As a result of the amendments included in ASU No. 2009-14, many tangible products
  and services that rely on software will be accounted for under the multiple-element
  arrangements revenue recognition guidance rather than under the software revenue
  recognition guidance. Under the ASU, the following components would be excluded
  from the scope of software revenue recognition guidance: the tangible element
  of the product, software products bundled with tangible products where the software
  components and non-software components function together to deliver the product's
  essential functionality, and undelivered components that relate to software
  that is essential to the tangible product's functionality. The ASU also provides
  guidance on how to allocate transaction consideration when an arrangement contains
  both deliverables within the scope of software revenue guidance (software deliverables)
  and deliverables not within the scope of that guidance (non-software deliverables).
  For the Company, ASU No. 2009-14 is effective beginning January 1, 2011. The
  Company is currently evaluating the impact of this standard on its consolidated
  results of operations and financial condition.

In January 2010, the FASB issued ASU No. 2010-6, "Improving
  Disclosures About Fair Value Measurements", that amends existing disclosure
  requirements under ASC 820 by adding required disclosures about items transferring
  into and out of Levels 1 and 2 in the fair value hierarchy; adding separate
  disclosures about purchases, sales, issuances, and settlements relative to Level
  3 measurements; and clarifying, among other things, the existing fair value
  disclosures about the level of disaggregation. For the Company, this ASU is
  effective for the first quarter of 2010, except for the requirement to provide
  Level 3 activity of purchases, sales, issuances, and settlements on a gross
  basis, which is effective beginning the first quarter of 2011. Since this standard
  impacts disclosure requirements only, its adoption will not have a material
  impact on the Companys consolidated results of operations or financial
  condition.

F11

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In February 2010, FASB issued ASU 2010-9 Subsequent Events (Topic
  855) Amendments to Certain Recognition and Disclosure Requirements ("ASU
  2010-9"). ASU 2010-9 amends disclosure requirements within Subtopic 855-10.
  An entity that is an SEC filer is not required to disclose the date through
  which subsequent events have been evaluated. This change alleviates potential
  conflicts between Subtopic 855-10 and the SEC's requirements. ASU 2010-9 is
  effective for interim and annual periods ending after June 15, 2010. The Company
  does not expect the adoption of ASU 2010-09 to have a material impact on its
  consolidated results of operations or financial position.

In April 2010, the FASB issued ASU No. 2010-17, Milestone Method
  of Revenue Recognition a consensus of the FASB Emerging Issues Task Force
  that recognizes the milestone method as an acceptable revenue recognition method
  for substantive milestones in research or development arrangements. This standard
  would require its provisions be met in order for an entity to recognize consideration
  that is contingent upon achievement of a substantive milestone as revenue in
  its entirety in the period in which the milestone is achieved. In addition,
  this ASU would require disclosure of certain information with respect to arrangements
  that contain milestones. For the Company, this standard would be required prospectively
  beginning January 1, 2011. The Company is currently evaluating the impact of
  this standard on 3Ms consolidated results of operations and financial
  condition.

In April 2010, the Financial Accounting Standard Board (“FASB”)
  issued Accounting Standards Update (“ASU”) 2010-13, Compensation
  – Stock Compensation (Topic 718): Effect of Denominating the Exercise
  Price of a Share-Based Payment Award in the Currency of the Market in Which
  the Underlying Equity Security Trades. ASU 2010-13 provides guidance on the
  classification of a share-based payment award as either equity or a liability.
  A share-based payment that contains a condition that is not a market, performance,
  or service condition is required to be classified as a liability. ASU 2010-13
  is effective for fiscal years, and interim periods within those fiscal years,
  beginning on or after December 15, 2010 and is not expected to have a significant
  impact on the Company’s financial statements.

In July 2010, the FASB issued an accounting standards update
  to require further disaggregated disclosures that improve financial statement
  users’ understanding of (1) the nature of an entity’s credit risk
  associated with its financing receivables and (2) the entity’s assessment
  of that risk in estimating its allowance for credit losses as well as changes
  in the allowance and the reasons for those changes. This update will be effective
  for the Company in the second quarter of fiscal 2011, except for the disclosures
  relating to activity that occurred during a reporting period which is effective
  for the Company in the third quarter of fiscal 2011. Since this update addresses
  only disclosures related to credit quality of financing receivables and the
  allowance for credit losses, it is not expected that the adoption of this update
  will have a material impact on the Company’s financial position, results
  of operations or cash flows.

Note 4 - INVENTORIES

Inventories consist of the following:

|                                 |   | September 30, |   |   | December 31, |  
|-------------------------------- | - | ------------- | - | - | ------------ | -
|                                 |   | 2010          |   |   | 2009         |  
|                                 |   |               |   |   |              |  
|Raw Material                     | $ | 39,082        |   | $ | 38,305       |  
|Finished Goods                   |   | 70,286        |   |   | 68,887       |  
|                                 | $ | 109,368       |   | $ | 107,192      |  
|Less: Allowance for Obsolescence |   | (70,286       | ) |   | (68,887      | )
|                                 | $ | 39,082        |   |   | 38,805       |  

F12

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The provision on allowance for obsolescence was $0 for the nine
  months ended September 30, 2010 and 2009.

Note 5 - PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment consist of the following:

|                               |   | September 30, |   |   | December 31, |  
|------------------------------ | - | ------------- | - | - | ------------ | -
|                               |   | 2010          |   |   | 2009         |  
|                               |   |               |   |   |              |  
|Machinery and Equipment        | $ | 342,456       |   | $ | 335,640      |  
|Office Equipment               |   | 7,827         |   |   | 7,671        |  
|Vehicle                        |   | 7,024         |   |   | 6,884        |  
|Construction in Progress       |   | 139,571       |   |   | 136,794      |  
|                               |   | 496,878       |   |   | 486,989      |  
|Less: Accumulated Depreciation |   | (154,796      | ) |   | (125,778     | )
|                               | $ | 342,082       |   | $ | 361,211      |  

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 $26,015 and $25,917, including cost and
  operating expense, for the nine months ended September 30, 2010 and 2009, respectively.

Note 6 - GOVERNMENT GRANTS

Receipts of government grants to encourage research and
development activities which are non-refundable are credited to deferred income
upon receipt. The Company recognizes government grants income when the
government completes inspection on the regulated use of the grants by issuing
the certificate. There was no government grants income recognized for the nine
months ended September 30, 2010 or 2009. As of September 30 2010, government
grants of $111,060 were recorded as deferred income.

Note 7 - DUE TO SHAREHOLDERS

Due to shareholders consists of the following:

| |              |   | September 30, |  |   | December 31, | 
| | ------------ | - | ------------- |  | - | ------------ | 
| |              |   | 2010          |  |   | 2009         | 
| | Yukun Li     | $ | 22,761        |  | $ | 22,308       | 
| | Guomin Li    |   | 370,361       |  |   | 248,770      | 
| | Qingwei Zhou |   | 1,923         |  |   | 1,923        | 
| | Bing Xiao    |   | 6,000         |  |   | -            | 
| |              | $ | 401,045       |  | $ | 273,001      | 

F13

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Guomin Li has been a shareholder of Hongbo since November 2006.
  Guomin Li was also the Companys President, Chief Executive Officer, Chief
  Financial Officer, Principal Accounting Officer and Director before February
  22, 2010. Qingwei Zhou has been a shareholder of Chang-On since September 2006.
  Under the Agreement for the Share Exchange on December 29, 2006, Guomin Li and
  Qingwei Zhou acquired 17,400,000 and 36,600,000 shares of Gold Standard, Inc.
  respectively.

On February 22, 2010, Guomin Li sold 10,000,000 shares of the
  Company to Bing Xiao who also took over Guomin Lis positions as the Companys
  President, Chief Executive Officer, Chief Financial Officer, Principal Accounting
  Officer and Director.

Note 8 - COMMON STOCK

Under the Share Exchange Agreement, the Company issued to the
  shareholders of Chang-On 60,000,000 shares of common stock. The Company had
  1,307,366 shares of common stock issued and outstanding before the closing of
  the share exchange. On March 23, 2007, the Company filed an S-8 to register
  6,000,000 shares of common stock for stock based compensation (Note 9). The
  Company had a total of 67,307,366 shares issued and outstanding as of September
  30, 2010.

Note 9 - STOCK BASED COMPENSATION

On January 19, 2007, the Company entered into an agreement with
  Yaru Li for legal services in the 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 Islands 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
  Mu, Shiwei 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.

On March 30, 2007, the Company entered into an agreement with I
&V Limited, a British Virgin Islands 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 Islands company,
for advisory services on the sales and distribution channels of certain
environmentally 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 Islands company, for advisory
services on the sales and distribution channels of certain environmentally
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, 2010 and 2009, $50,000
  and $217,500 of the above stock compensation were charged to operating expenses,
  respectively. $0 was recorded as deferred compensation as of September 30, 2010.

F14

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Note 10 - 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.

A significant percentage of the Companys business is generated
  from a small number of customers. However, due to the immaterial amount of revenue
  generated, the Company does not believe they are exposed to significant concentration
  of credit risk in this area.

Source of Supply 
  The Company purchases components for its products from a number of suppliers.
  However, on occasion, a customers specifications may require it to purchase
  components from a specific supplier. The Company does not have any long term
  contracts with any of its suppliers, and the Company believes that alternative
  suppliers are available. Although the Company has not been subject to shortages
  for any of its components, since it does not have long-term contracts, the Company
  may be subject to cutbacks and price increases which it may not be able to pass
  on to its customers in the event that the demand for components generally exceeds
  the capacity of its suppliers.

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 11 - 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, 2010 and 2009.

NOTE 12 - 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
  profits 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 profits after tax since commencement of
  operations.

F15

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Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations

Forward Looking Statements

This quarterly report contains forward-looking statements.
  These statements relate to future events or our future financial performance.
  In some cases, you can identify forward-looking statements by terminology such
  as "could", "may", "will", "should", "expect", "plan", "anticipate",
  "believe", "estimate", "predict", "potential" or the negative of these terms
  or other comparable terminology. These statements are only predictions and involve
  known and unknown risks, uncertainties and other factors that may cause our
  or our industry's actual results, levels of activity, performance or achievements
  to be materially different from any future results, levels of activity, performance
  or achievements expressed or implied by these forward-looking statements.

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. Except as required by applicable laws, including the
securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.

Our unaudited financial statements are stated in U.S. dollars and are prepared in accordance with generally accepted accounting principles in the United States. The following discussion should be read in conjunction with our financial statements and
the related notes that appear elsewhere in this quarterly report.

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 limited
  liability company incorporated under the laws of Hong Kong on September 8, 2006
  ("Chang-On HK").

Chang-On HK is a holding company with one asset: 61% of the
  share capital of Harbin Hongbo Environment Protection Material, Inc. ("Hongbo"),
  a company incorporated under the laws of China. The remaining 39% of the share
  capital of Hongbo is owned by Guomin Li (29%), our former President, Chief Executive
  Officer, Chief Financial Officer, Principal Accouting Officer and Director,
  and Su Yu (10%), our Director. Hongbo was incorporated in November 2004, and
  until September 2006 it was entirely engaged in developing its technology and
  manufacturing facility. From September 2006 to December 2006 it completed its
  first sales, realizing $43,023 in revenue. For the year ended December 31,
  2009 it generated net sales of $1,990. Because Hongbo has not yet produced
  significant revenues, it is still a development stage company for financial
  reporting purposes.

Hongbo manufactures construction materials from waste products (“SF material”). SF material is a composite of waste plastic and coal ash. Hongbo currently obtains the waste plastic from six recycling facilities in Harbin and obtains the
coal ash from the Harbin Power Station.

Results of Operations

Revenues

We did not generate any revenues during the three months ended
  September 30, 2010 or 2009. From our inception on November 26, 2004 to September
  30, 2010 we generated $93,776 in revenues, all of which was in the form of net
  sales of our SF materials. Since we are a development stage company, our revenue
  streams are not established and our product sales are therefore unstable. We
  anticipate that we will incur substantial losses for the foreseeable future
  and our ability to generate any revenues in the next 12 months is uncertain.

Expenses

During the three months ended September 30, 2010 we incurred
  total expenses of $18,969, including $3,546 in salaries, $3,593
  in water, electricity and gas expenses, $8,721 in depreciation, $3,000
  in professional fees and $109 in other expenses, whereas during the three
  months ended September 30, 2009 we incurred total expenses of $65,849, including
  $3,513 in salaries, $3,573 in water, electricity and gas expenses, $8,641
  in depreciation, $50,000 in stock compensation and $122 in other expenses.
  The decrease in our expenses for the three months ended September 30, 2010 was
  primarily due to a decrease in operations.

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During the nine months ended September 30, 2010 we incurred
  total expenses of $110,154, including $10,578 in salaries, $14,269
  in water, electricity and gas expenses, $26,015 in depreciation, $50,000
  in stock compensation, $9,000 in professional fees and $292 in other
  expenses, whereas during the nine months ended September 30, 2009 we incurred
  total expenses of $278,203, including $10,538 in salaries, $23,889
  in water, electricity and gas expenses, $25,917 in depreciation, $217,500
  in stock compensation and $331 in other expenses. The decrease in our expenses
  for the nine months ended September 30, 2010 was primarily due to a decrease
  in operations.

From our inception on November 26, 2004 to September 30, 2010 we incurred total expenses of $3,577,226, including $132,917 in salaries, $132,390 in water, electricity and gas expenses, $191,909 in depreciation, $2,400,000 in
stock compensation, $345,962 in fixed assets impairment, $241,639 in intangibles writedown, $56,378 in professional fees, $22,578 in research and development expenses, and $35,540 in other expenses. Our professional fees consist
of legal, accounting and auditing fees.

Net Loss

During the three months ended September 30, 2010 we did not generate any revenues and we incurred a net loss of $18,969, compared to a net loss of $65,088 during the same period in fiscal 2009. Our net loss attributable to stock compensation
in these periods was $Nil and $50,000 respectively.

During the nine months ended September 30, 2010 we did not
  generate any revenues and we incurred a net loss of $110,154 compared to a net
  loss of $277,442 during the same period in fiscal 2009. Our net loss attributable
  to stock compensation in these periods was $50,000 and $217,500 respectively.

From our inception on November 26, 2004 to September 30, 2010 we incurred a net loss of $3,605,425, $2,400,000 of which was in the form of stock compensation.

Liquidity and Capital Resources

As of September 30, 2010, we had $71,895 in cash, $162,089 in total assets, $518,952 in total liabilities and a working capital deficit of $356,863. As of September 30, 2010, we had an accumulated deficit of $3,157,506.

We are dependent on funds raised through equity financing and proceeds from shareholder loans. Our net loss of $3,605,425 from our inception on November 26, 2004 to September 30, 2010 was funded primarily by such financing and loans, as well as
other capital contributions.

From our inception on November 26, 2004 to September 30, 2010
  we spent $402,770 on operating activities. During the nine months ended September
  30, 2010 we spent $77,374 on operating activities, whereas we spent $12,083
  on operating activities during the same period in fiscal 2009. The decrease
  in our expenditures on operating activities during the nine months ended September
  30, 2010 was primarily due to a decrease in operations.

From our inception on November 26, 2004 to September 30, 2010 we spent $710,118 on investing activities, all of which was in the form of the purchase of fixed assets. We did not spend any money on investing activities during the nine months
ended September 30, 2010 or 2009.

From our inception on November 26, 2004 to September 30, 2010 we received $1,156,095 from financing activities, which consisted of $274,103 in capital contribution and $977,830 in net proceeds from shareholder loans, less $70,844 in
distributions to shareholders. During the nine months ended September 30, 2010 we received $121,414 from financing activities, all of which was in the form of proceeds from shareholder loans, whereas we received $21,954 from financing
activities during the same period in fiscal 2009, all of which was also in the form of proceeds from shareholder loans.

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From our inception on November 26, 2004 to September 30, 2010
we also experienced a gain of $28,688 in connection with foreign exchange
translation. During the nine months ended September 30, 2010 we lost $29 due to
the effect of exchange rates, whereas we gained $1,248 due to the same effect
during the same period in fiscal 2009.

During the nine months ended September 30, 2010 we experienced
  an increase in cash of $44,011 due to a combination of our operating, investing
  and financing activities, and in particular, the proceeds we received from shareholder
  loans.

We anticipate that our expenses over the next 12 months
(beginning December 2010) will be approximately $900,000 as described in the
table below. These estimates may change significantly depending on the nature of
our business activities and our ability to raise capital from our shareholders
or other sources.

|Description                                                                           | Potential Completion 
      Date | Estimated 
      Expenses ($)
|------------------------------------------------------------------------------------- | -------------------------------- | -----------------------------
|                                                                                      |                                  |                              
|Research and development costs for further
      products and manufacturing processes | 12 months                        | 250,000                      
|Salaries                                                                              | 12 months                        | 25,000                       
|Utility expenses                                                                      | 12 months                        | 25,000                       
|Investor relations costs                                                              | 12 months                        | 80,000                       
|Marketing expenses                                                                    | 12 months                        | 400,000                      
|Professional fees                                                                     | 12 months                        | 60,000                       
|Other administrative expenses                                                         | 12 months                        | 60,000                       
|Total                                                                                 |                                  | 900,000                      

Our other administrative expenses for the year will consist
primarily of transfer agent fees, bank and interest charges and general office
expenses. The professional fees are related to our regulatory filings throughout
the year and include legal, accounting and auditing fees.

Based on our planned expenditures, we will require
approximately $822,000 (a total of $900,000 less our approximately $78,000 in
cash as of September 30, 2010) to proceed with our business plan over the next
12 months. If we secure less than the full amount of financing that we require,
we will not be able to carry out our complete business plan and we will be
forced to proceed with a scaled back business plan based on our available
financial resources.

We intend to raise the balance of our cash requirements for the
next 12 months from private placements, shareholder loans or possibly a
registered public offering (either self-underwritten or through a
broker-dealer). If we are unsuccessful in raising enough money through such
efforts, we may review other financing possibilities such as bank loans. At this
time we do not have a commitment from any broker-dealer to provide us with
financing. There is no assurance that any financing will be available to us or
if available, on terms that will be acceptable to us.

Even though we plan to raise capital through equity or debt
financing, we believe that the latter may not be a viable alternative for
funding our operations as we do not have sufficient tangible assets to secure
any such financing. We anticipate that any additional funding will be in the
form of equity financing from the sale of our common stock. However, we do not
have any financing arranged and we cannot provide any assurance that we will be
able to raise sufficient funds from the sale of our common stock to finance our
operations. In the absence of such financing, we may be forced to abandon our
business plan.

Going Concern

Our financial statements for the three months ended September
30, 2010 have been prepared on a going concern basis and contain an additional
explanatory paragraph in Note 2 which identifies issues that raise substantial
doubt about our ability to continue as a going concern. Our financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

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We have not generated limited revenues, have achieved losses
since our inception, and rely upon the sale of our common stock and proceeds
from shareholder loans to fund our operations. If we are unable to raise equity
or secure alternative financing, we may not be able to continue our operations
and our business plan may fail.

If our operations and cash flow improve, management believes
that we can continue to operate. However, no assurance can be given that
management's actions will result in profitable operations or an improvement in
our liquidity situation. The threat of our ability to continue as a going
concern will cease to exist only when our revenues have reached a level able to
sustain our business operations.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Basis of Presentation

These consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America (U.S. GAAP) and are presented in U.S. dollars.

These consolidated financial statements have been prepared in
accordance with U.S. GAAP for interim financial information and the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by U.S. GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the financial position, results of operations and cash flows for the interim
periods have been included. These consolidated financial statements should be
read in conjunction with the consolidated financial statements of the Company
for the year ended December 31, 2009 and notes thereto contained in the Annual
Report on Form 10-K/A of the Company filed with the United States Securities and
Exchange Commission (the SEC) on April 23, 2010. Interim results are not
necessarily indicative of the results for the full year.

Principles of Consolidation

These 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 operations is Reminbi (RMB).

Use of Estimates

In preparing these consolidated 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. The Company
regularly evaluates estimates and assumptions related to obsolete inventory,
useful life and recoverability of long lived assets, and goodwill. The Company
bases its estimates and assumptions on current facts, historical experience and
various other factors that it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities and the accrual of costs and expenses that are
not readily apparent from other sources. The actual results experienced by the
Company may differ materially and adversely from the Companys estimates. To the
extent there are material differences between the estimates and the actual
results, future results of operations will be affected.

Fair Value of Financial Instruments

The Company adopted the standard Fair Value Measurements,
codified with ASC 820 and effective January 1, 2008. The provisions of ASC 820
are to be applied prospectively.

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ASC 820 clarifies that fair value is an estimate of the exit
price, representing the amount that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants
(i.e. the exit price at the measurement date). Under ASC 820, fair value
measurements are not adjusted for transaction cost. ASC 820 provides for use of
a fair value hierarchy that prioritizes inputs to valuation techniques used to
measure fair value into three levels:

Level 1: Unadjusted quoted prices in active markets for
identical assets or liabilities.

Level 2: Input other than quoted market prices that are
observable, either directly or indirectly, and reasonably available. Observable
inputs reflect the assumptions market participants would use in pricing the
asset or liability and are developed based on market data obtained from sources
independent of the Company.

Level 3: Unobservable inputs. Unobservable inputs reflect the
assumptions that the Company develops based on available information about what
market participants would use in valuing the asset or liability.

An asset or liabilitys level within the fair value hierarchy
is based on the lowest level of any input that is significant to the fair value
measurement. Availability of observable inputs can vary and is affected by a
variety of factors. The Company uses judgment in determining fair value of
assets and liabilities and Level 3 assets and liabilities involve greater
judgment than Level 1 and Level 2 assets or liabilities.

Loss Per Share

Basic loss per share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding during each
period. Diluted earnings per share is computed by dividing net income by the
weighted average number of shares of common stock, common stock equivalents and
potentially dilutive securities outstanding during each period. At September 30,
2010, the Company had no common stock equivalents that could potentially dilute
future earnings per share; however, if present, a separate computation of
diluted loss per share would not have been presented, as these common stock
equivalents would have been anti-dilutive due to the Companys net loss.

Item 3. Quantitative and Qualitative Disclosures About
Market Risk

As a smaller reporting company, we are not required to provide
the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in
Rule 13a-15(e) and Rule 15d-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 rules and forms of the SEC, 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.

As of the end of the period covered by this report, our
management, with the participation of our chief executive officer and chief
financial officer, carried out an evaluation of the effectiveness of our
disclosure controls and procedures. Based upon this evaluation, our management
concluded that our disclosure controls and procedures were not effective.

Changes in Internal Control

During the three months ended September 30, 2010 there were no
changes in our internal control over financial reporting that materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

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PART II  OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered beneficial shareholder, is
an adverse party or has a material interest adverse to our interest.

Item 2. Unregistered Sales of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

Item 5. Other Information

None

Item 6. Exhibits

|Exhibit |                                                                  
|------- | -----------------------------------------------------------------
|Number  | Description                                                      
|        |                                                                  
|(31)    | Rule 13a-14(a)/15d-14(a) Certifications                          
|        |                                                                  
|31.1*   | Section
      302 Certifications under Sarbanes-Oxley Act of 2002
|        |                                                                  
|(32)    | Section 1350 Certifications                                      
|        |                                                                  
|32.1*   | Section
      906 Certifications under Sarbanes-Oxley Act of 2002

* Filed herewith.

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SIGNATURES

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

|Date: November 15, 2010 | Chang-On International, Inc.
|----------------------- | ----------------------------

| | /s/
      Bing Xiao                                      
| | ---------------------------------------------------------
| | Bing Xiao                                                
| | President, Chief Executive Officer, Chief
      Financial
| | Officer, Principal Accounting Officer, Director          

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