U. S.
Securities and Exchange Commission
 Washington,
D. C. 20549
 
 FORM
10-K
 
 [X]
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the year period ended June 30, 2008
 
 [
       ]
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
transition period from _____ to _____
 
 Commission
File No. 0-27175
 
 CHINA SXAN BIOTECH,
INC.
 (Exact
name of registrant as specified in its Charter)
      Nevada
              95-4755369(State of Other
      Jurisdiction of incorporation or organization)
              (I.R.S. Employer
      I.D. No.)
  
 c/o American Union
Securities, Inc. 100 Wall Street, 15thFloor, New York, NY
10005
 (Address
of Principal Executive Offices)
 
 Issuer's
Telephone Number: 212-232-0120
 
 Indicate whether
the Registrant (1) has filed all reports required to be filed by
Sections 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. YesX           
No __
 
 Indicate
whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).  Yes
__            No   X
 
 APPLICABLE
ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of each of the Registrant's classes of common stock, as of the latest
practicable date:
  November
14, 2008:  Common Stock: 19,542,572 shares
 
 Transitional
Small Business Disclosure Format (check one):    Yes           NoX
   
 Transitional
      Small Business Disclosure Format:
              Yes____
              NoX
 
 DOCUMENTS INCORPORATED BY
REFERENCE: None
 
  
 FORWARD-LOOKING
STATEMENTS: NO ASSURANCES INTENDED
 
 In
addition to historical information, this Annual Report contains forward-looking
statements, which are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or
similar expressions. These forward-looking statements represent Management’s
belief as to the future of China Sxan Biotech.  Whether those beliefs
become reality will depend on many factors that are not under Management’s
control.  Many risks and uncertainties exist that could cause actual
results to differ materially from those reflected in these forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in the section entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Risk Factors That May
Affect Future Results.” Readers are cautioned not to place undue reliance on
these forward-looking statements. We undertake no obligation to revise or
publicly release the results of any revision to these forward-looking
statements.
  PART 1
 
 ITEM
1.  BUSINESS
 
 American SXAN Biotech,
Inc.
  American
SXAN Biotech, Inc. was organized under the laws of the State of Delaware in
2006.  It never initiated any business activity.  In October 2006
American SXAN acquired 100% of the registered capital stock of Tieli
XiaoXingAnling in exchange for equity in American SXAN.  Those shares
represent the only asset of American SXAN.
   Tieli XiaoXingAnling Forest
Frog Breeding Co., Ltd.
  Tieli
XiaoXingAnling was organized in 2003 in the City of Tieli, which is in the
Heilongjiang Province in northeast China.  Tieli XiaoXingAnling is
engaged in the business of breeding forest frogs, which are also known as snow
frogs or winter frogs, since they are traditionally harvested just prior to
their winter hibernation in order to maximize the frog’s fat content. Tieli
XiaoXingAnling has obtained patents from the government of China to produce
therapeutic wines and tonics from its forest frogs.  Tieli XiaoXingAnling
has been marketing its forest frog products since 2004 under the brand “Xiao
Xing’an Mountain.”
  
 The
desirable portion of the Chinese forest frog, known as “hasma,” is a combination
of the frog’s ovaries and surrounding fatty tissues.  Throughout Chinese
history, hasma has been used to treat respiratory problems such as coughing,
hemoptysis (expectoration of blood), and night sweats attributable to
tuberculosis.  Many Chinese residents also believe that forest frog hasma
improves immune function, aids in the treatment of neurasthenia, and slows
aging.
  Today,
however, the forest frog is classified as an endangered species in China.
 Commercial harvesting of forest frogs in the wild is prohibited by
national regulations.  To meet the continuing demand for hasma, therefore,
a domestic forest frog breeding industry has developed.  The mission of
Tieli XiaoXingAnling is to become the leader in this industry.
  Products
  In its
first two years of operations, Tieli XiaoXingAnling concentrated on the breeding
of forest frogs and sale of hasma.  However, the forest frog harvesting
season lasts only two months – October and November.  Our concentration,
therefore, led to extremely cyclical cash flow.  To alleviate that
situation, in 2006 we began to market products enriched with forest frog hasma.
 This will provide us a more even level of business operations through the
year.
  Our
product lines currently consist of:
  Forestfrog hasma.  We choose
the highest grade of our forest frog hasma, package it carefully, and sell it
directly to food markets.  We currently offer a 75 gram case for 735 RMB
(approx. $92).
 
 Forestfrog sanitarium liquor.
 There is a long tradition in China of “medicated wine,” including wine
designed to provide the health benefits of forest frogs.  Recently,
however, forest frog wine was often produced by soaking forest frog meat in
liquor – a process that provides none of the health benefits of the forest frog.
 With the cooperation of the Tieli City Forest Frog Research Institute, we
have obtained a national patent covering an effective method of producing forest
frog liquor.  Our technology involves extracting the beneficial elements
from the hasma, then dissolving them in fine sorghum liquor.  We offer a
240 gram bottle of our liquor for 88 RMB (approx. $12).
 
 Pigs.  In order to
produce the maggots that are an essential part of the forest frog diet, we built
a hogpen.  It now houses 3,000 pigs.  Marketing of the mature pigs
contributes to our revenues.
  
 Production
  Our
operations are located on a plantation in the XiaoXing ‘an Mountain district,
the location of the majority of China’s commercial forest frog production.
 Tieli XiaoXingAnling has farming rights to a semi-wild area of 360,000
m2,
from which we harvest forest frogs under a permit from the Province of
Heilongjiang.  In addition, we have ownership rights to a parcel of 145,000
m2,
on which we have located the following facilities:
  ● 2
 ●   
solar greenhouse (6,000 m2);
 ●   
maggot breeding workshop (1,500 m2);
 ●   
tenebrio Molitor Worm breeding workshop (400 m2);
 ●   
frog oil production line (800 m2);
 ●   
frog liquor production line; and
 ●   
associated farm facilities (e.g. water purification plant, winter pool, storage,
etc.)
  Within
the Tieli facility, we currently hold the following livestock:
  ●   
1.5 million two year old forest frogs;
 ●   
4.5 million one year old forest frogs; and
 ●   
3,000 pigs.
  With that
livestock, we are able to produce 2.5 tons of hasma each year.  We also
produce a quantity of pork products every year, although pork production is not
essential to our business plan.  Our primary purpose in owning pigs is to
utilize pig manure and pig blood for the production of maggots, which are one of
the two primary feedstocks for forest frogs.
  In
addition to our Tieli plantation, we have also obtained a 40 year land use
permit on a 5000 mu (@ 8,240 acres) parcel of forest land in Heli, which is
approximately 250 km from Tieli.  If we can obtain the necessary funds, we
plan to develop a 5 million frog facility on the Heli property in 2008, in order
to double our production capacity.
  The diet
of forest frogs consists primarily of maggots and of Tenebrio Molitor worms.
 Currently we are able to satisfy our requirements for maggots internally,
using the resources of our pig farm.  To grow the maggots we combine our
internal supply of pig manure with an industrial powder, wheat bran, pig blood,
and other feeds.  The diet of Tenebrio Molitor worms consists primarily of
wheat bran plus other feeds.  We have several ready sources for all of the
feedstocks that we require for our production activities.
  Marketing
  Tieli
XiaoXingAnling markets its products primarily through three regional
distribution centers: one in each of Guangzhou, Beijing and Shanghai.  In
addition, Tielo XiaoXingAnling has given two retailers franchises to market the
Xiao Xing’an Mountain products: Hongye (Shanghai) Company and Minjia (Xiamen)
Company.
 
 We
currently have no backlog of firm orders for our products.  Instead we sell
out products directly from our inventory.
 
 Intellectual
Property
  Our
research and development department maintains a close association with the Tieli
Forest Frog Research Institute, as well as with the Wildlife Resource College of
Dongbei Forestry University. In this manner we strive to remain at the forefront
of forest frog breeding technology.  Over the years, our research team has
made significant discoveries regarding incubation techniques, gestation of
tadpoles and hibernation.  We have also made progress in the treatment of
various forest frog diseases.
 
 To date
our research and development efforts have resulted in three national patents,
covering the following inventions:
  ●   
Chinese forest frog sanitarium liquor
 
 ●   
a nutrient solution of forest frog amino acids
 
 ●   
a moisturizing lotion for facial care derived from forest
frogs.
  Within the next two years we intend to add to our product lines a number of
products incorporating forest frog derivatives into manufactured products.
 Our research and development team is currently working on the following
products:
  ●   
Beverages combining forest frog hasma with milk, honey and mineral
water;
  ●   
Calcium tablets made from forest frog bones;
  ●   
Chewable tables combining vitamins with nutrients derived from the forest frog;
and
  ●   
Moisturizing lotion derived from forest frog hasma and other
materials.
  Dongbei Forestry University
has a national patent for its “Snow Frog soft capsule” that it markets under the
brand “NALV.”  Our cooperative agreement with the University provides us
the right to market that product.
  Employees
  Tieli
XiaoXingAnling currently employs 40 individuals.  Six of our employees are
involved with administration and marketing.  The remainder is involved in
forest frog breeding, including research and development.  None of our
employees is a member of a collective bargaining unit.
 
 ITEM
2.  PROPERTIES
 
 Property
and equipment are stated at cost and depreciation is provided using the
straight-line method, less a base salvage value of 4% of the asset’s stated
cost, over 5 and 10 years. The carrying value of long-lived assets is evaluated
whenever changes in circumstances indicate the carrying amount of such assets
may not be recoverable.  If necessary, the Company recognizes an impairment
loss for the difference between the carrying amount of the assets and their
estimated fair value.  Fair value is based upon current and anticipated
future undiscounted cash flows.  Expenditures for maintenance and repairs
are charged to operations as incurred; additions, renewals and betterments are
capitalized.  Based upon its most recent analysis, the Company believes
that no impairment of property and equipment exists for the year ended June 30,
2006.
 ITEM
3. LEGAL PROCEEDINGS
  None.
 
 Item
4. SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS
  Not
applicable.
  
 PART
II
 
 ITEM
      5.
              MARKET
      FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
      BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES
 
 (a)
Market Information
 
 The
Company’s common stock is quoted on the OTC Bulletin Board under the symbol
“CSXB.OB.”  Set forth below are the high and low bid prices for each
of the eight quarters in the past two fiscal years.
  BidQuarter Ending
              
              High
              
              
              LowSeptember 30,
      2006
              
              $
              0.03
              
              
              $
              0.03December 
      31, 2006
              
              $
              0.04
              
              
              $
              0.03March 31,
      2007
              
              $
              0.07
              
              
              $
              0.05June 30,
      2007
              
              $
              0.05
              
              
              $
              0.02September
      30, 2007
              
              $
              0.57
              
              
              $
              0.24December 
      31, 2007
              
              $
              1.10
              
              
              $
              1.10March 31,
      2008
              
              $
              0.40
              
              
              $
              0.40June
      30, 2008
              
              $
              0.15
              
              
              $
              0.15
 
 (b)
Shareholders
 
 Our
shareholders list contains the names of 199 registered stockholders of record of
the Company’s Common Stock.
  (c)  Dividends
 
 The
Company has never paid or declared any cash dividends on its Common Stock and
does not foresee doing so in the foreseeable future.  The Company
intends to retain any future earnings for the operation and expansion of the
business.  Any decision as to future payment of dividends will depend
on the available earnings, the capital requirements of the Company, its general
financial condition and other factors deemed pertinent by the Board of
Directors
 
  (d)  Sale
of Unregistered Securities
  None.
  
 
 Item
      6
              Management’s
      Discussion and Analysis
 
 Results
of Operations
  For
the year ended June 30, 2008, our revenue reached $12,587,579, a 127% increase
from the $5,535,608 in revenue recorded during the year ended June 30,
2007. Similarly, during the three months ended June 30, 2008 our revenue
increased by 97%, from $3,328,112 to $6,561,541, our revenue in the
three months ended June 30, 2008 represented 52% of revenue for the full fiscal
year ended June. 2008. We commenced forest frog production in
2004.  Forest frogs reach maturity after two years, after which they
can be harvested.  So the initial inventory of forest frogs that we
accumulated in 2004 and 2005 became available for harvesting in the fall of 2006
and spring of 2007. Because we continued to hold an inventory of $2,076,016
at June 30, 2008, we expect our near term operations to approximate the
levels achieved in recent period, until we obtain the funds needed to
substantially expand our marketing and production.
  We
realized a gross margin of 37% on our sales in the fiscal year of 2008 and
26% on our sales in the quarter ended June 30, 2008.  This margin
ratio fell below the 60% margin that we achieved in the fiscal year of
2007.  The primary causes for the reduction were:
  ·
                increased
      prices for grain in China, which have increased our expense for feedstock;
      and·
                the
      increasing proportion of our sales attributable to manufactured products,
      which require more processing than sales of raw
  hasma.
  Our
gross margin will continue to dwindle in the next two years as we introduce even
more manufactured products into our product offerings.
  Our
selling, general and administrative expenses increased from $510,288 for the
fiscal year of 2007 to $1,455,800 for the fiscal year of 2008, and from
$95,522 in the three months ended June 30, 2008 to $416,119 in
the three months ended June 31, 2008.  The primary reasons
for the increase were
  ·
                increased
      administrative salaries, as we have developed a staff capable of managing
      our growing company;·
                increased
      selling expenses, related to the increase in our sales volume;
      and
 ·
                expenses
      incurred as a result of the merger of Tieli XiaoXingAnling into a U.S.
      public company.
  We
expect that in the next two years our selling, general and administrative
expense will remain at its current level or higher, as we will incur the
expenses attributable to being a U.S. public company and as we continue to
expand the focus of our business operations, necessitating a staff of skilled
administrators.
  Because
we are involved in husbandry, the government of China has allowed us to defer
payment of our income taxes until the end of this year.  Therefore we
have accrued the income tax expense on our Statement of Operations - $495,783
for the fiscal year of 2008 and $434,007 for the fiscal year of 2007 – but
recorded the tax as payable on our balance sheet.  We expect to
satisfy that payable during the winter.  During the next five years,
we will be entitled to a tax abatement by reason of becoming a foreign-owned
entity during the current fiscal year.  As a foreign owned entity,
Tieli XiaoXingAnling will be entitled to a two year income tax holiday, followed
by a 50% income tax reduction for the next three years.
  Our net income of fiscal year 2008 is $2,809,436, and the net income for
the three months ended June 30 2008 is $383,194.. While the net income
represented a increase of 16% over the fiscal 2007. The primary
reasons for the reduction in our earnings ratio were the reduction in gross
margin and increase in selling, general and administrative expenses discussed
earlier.
  Liquidity and Capital
Resources
  Since Tieli XiaoXingAnling was organized at the end of 2003, its operations have
been funded primarily by capital contributions from its shareholders (who
became, in July 2007, the controlling shareholders of China SXAN
Biotech).  In addition, the shareholders have made short-term,
non-interest bearing loans to Tieli XiaoXingAnling when it needed working
capital.  The result is that at March 31, 2008 the Company had
$7,408,847 in working capital.
  During
the fiscal year ended June 30, 2008, the operations of Tieli XiaoXingAnling
generated $124,782 in cash. This was caused by a large increase in
inventory during the year. It reflects the characteristic of the
Company’s operations.
  Management
intends to pursue a variety of sources for the funds required for those capital
investments, offering both debt and equity.  At the present time,
however, no commitment for funds has been received from any source.
 
 Off-Balance
Sheet Arrangements
 
 Neither China SXAN Biotech nor Tieli XiaoXingAnling has any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on their financial condition or results of operations.
 
 Risk Factors That May Affect Future
Results
 
 You
should carefully consider the risks described below before buying our common
stock.  If any of the risks described below actually occurs, that event
could cause the trading price of our common stock to decline, and you could lose
all or part of your investment.
 
 Because
we are expanding the scope of our operations, unexpected factors may hamper our
efforts to implement our business plan.
  Until
recently, all of our business consisted of the sale of hasma – raw forest frog
fatty tissues.  We are currently expanding our business operations to
include products enriched with hasma, as well as tonics and wines made from
hasma.  This expansion will involve us in much broader marketing
operations.  It will also entail much more complex production operations.
 Because these are areas in which we have limited experience, problems may
occur with production or marketing that we have not anticipated, which would
interfere with our business, and prevent us from achieving
profitability.
 
 The
capital investments that we plan for the next two years may result in dilution
of the equity of our present shareholders.
  Our
business plan contemplates that we will invest approximately 85 million RMB in
our business during the next two years.  We will raise the funds for that
investment primarily by selling equity in our company.  At present we have
no commitment from any source for those funds.  We cannot determine,
therefore, the terms on which we will be able to raise the necessary funds.
 It is possible that we will be required to dilute the value of our current
shareholders’ equity in order to obtain the funds.  If, however, we are
unable to raise the necessary funds, our growth will be limited, as will our
ability to compete effectively.
 
 Competition
could prevent us from achieving a significant market position.
  There are
currently over 5,000 brands of medicinal tonics being sold in China.  The
struggle to gain brand recognition is complicated by the lack of government
regulation of health claims.  In order to achieve substantial market
presence, we will have to distinguish our brand from all of the others.  In
addition, if we are successful in establishing a strong market for our products,
other large, well-capitalized nutraceutical companies could be attracted by our
success we achieve, and develop similar products.  If a well-capitalized
company directed its financial strength toward competition with us, it could
achieve economies of scale that might permit it to market its products at lower
prices than ours.  If this occurred before we had established a significant
market awareness of our brand, we might be unable to compete effectively, and
would be unable to achieve profitability.
 
 
 A recession in China could
significantly hinder our growth.
  The
growing demand for our products has been swelled, in large part, by the recent
dramatic improvement in the standard of living in China.  The continued
growth of our market will depend on continuation of recent improvements in the
Chinese economy and the amount of disposable income available to the Chinese
population.  If the Chinese economy were to contract and money became
tight, individuals will be less able to pay premium prices for the benefits of
forest frog hasma.  Many financial commentators expect a recession to occur
in China in the near future.  The occurrence of a recession could
significantly hinder our efforts to implement our business plan.
 
 We are subject to the risk of
disease and natural disasters.
  Our
business involves the production of livestock.  We have not developed
alternative sources for raw materials.  If our forest frogs or, to a lesser
extent, our pigs, become diseased, we could suffer a significant loss of value.
 In addition, if our farms are damaged by drought, flood, storm, or the
other woes of farming, we will not be able to meet the demand for our products,
and are likely to suffer operating losses.  Such events could have both an
immediate negative effect on our financial results, as well as a long-term
negative effect on our ability to grow our business.
 
 Our
business and growth will suffer if we are unable to hire and retain key
personnel that are in high demand.
  Our
future success depends on our ability to attract and retain highly skilled
scientists, geneticists, agricultural manufacturing specialists, and marketing
personnel.  In general, qualified individuals are in high demand in China,
and there are insufficient experienced personnel to fill the demand.  In a
specialized scientific field, such as ours, the demand for qualified individuals
is even greater.  If we are unable to successfully attract or retain the
personnel we need to succeed, we will be unable to implement our business
plan.
 
 We
may have difficulty establishing adequate management and financial controls in
China.
  The
People’s Republic of China has only recently begun to adopt the management and
financial reporting concepts and practices that investors in the United States
are familiar with.  We may have difficulty in hiring and retaining
employees in China who have the experience necessary to implement the kind of
management and financial controls that are expected of a United States public
company.  If we cannot establish such controls, we may experience
difficulty in collecting financial data and preparing financial statements,
books of account and corporate records and instituting business practices that
meet U.S. standards.
 
 Government regulation may hinder our
ability to function efficiently.
  The
national, provincial and local governments in the People?痵 Republic of China are
highly bureaucratized.  The day-to-day operations of our business require
frequent interaction with representatives of the Chinese government
institutions.  The effort to obtain the registrations, licenses and permits
necessary to carry out our business activities can be daunting.
 Significant delays can result from the need to obtain governmental
approval of our activities.  These delays can have an adverse effect on the
profitability of our operations.  In addition, compliance with regulatory
requirements applicable to livestock farming and production may increase the
cost of our operations, which would adversely affect our
profitability.
  
  Capital outflow policies in China
may hamper our ability to pay dividends to shareholders in the United
States.
  The
People’s Republic of China has adopted currency and capital transfer
regulations. These regulations require that we comply with complex regulations
for the movement of capital. Although Chinese governmental policies were
introduced in 1996 to allow the convertibility of RMB into foreign currency for
current account items, conversion of RMB into foreign exchange for capital
items, such as foreign direct investment, loans or securities, requires the
approval of the State Administration of Foreign Exchange. We may be unable to
obtain all of the required conversion approvals for our operations, and Chinese
regulatory authorities may impose greater restrictions on the convertibility of
the RMB in the future. Because most of our future revenues will be in RMB, any
inability to obtain the requisite approvals or any future restrictions on
currency exchanges will limit our ability to pay dividends to our shareholders.
 
 Currency
fluctuations may adversely affect our operating results.
  Tieli
XiaoXingAnling generates revenues and incurs expenses and liabilities in
Renminbi, the currency of the People’s Republic of China.  However, as a
subsidiary of Advance Technologies, it will report its financial results in the
United States in U.S. Dollars.  As a result, our financial results will be
subject to the effects of exchange rate fluctuations between these currencies.
 From time to time, the government of China may take action to stimulate
the Chinese economy that will have the effect of reducing the value of Renminbi.
 In addition, international currency markets may cause significant
adjustments to occur in the value of the Renminbi.  Any such events that
result in a devaluation of the Renminbi versus the U.S. Dollar will have an
adverse effect on our reported results.  We have not entered into
agreements or purchased instruments to hedge our exchange rate
risks.
 
 We
have limited business insurance coverage.
  The
insurance industry in China is still at an early stage of development. Insurance
companies in China offer limited business insurance products, and do not, to our
knowledge, offer business liability insurance. As a result, we do not have any
business liability insurance coverage for our operations. Moreover, while
business disruption insurance is available, we have determined that the risks of
disruption and cost of the insurance are such that we do not require it at this
time. Any business disruption, litigation or natural disaster might result in
substantial costs and diversion of resources.
 
 Item
7.   Financial Statements
 
 The Company’s financial statements,
together with notes and the Independent Auditors’ Report, are set forth
immediately following Item 14 of this Form 10-KSB.
  Item
      8.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
 
 Not
Applicable
 
 Item
8A.  Controls and Procedures
 
 (a)           Evaluation of disclosure controls and
procedures.
 
 The term “disclosure controls and
procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files under the Securities
Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and
reported within required time periods. The Company’s management, with the
participation of the Chief Executive Officer and the Chief Financial Officer,
has evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by this annual report (the
“Evaluation Date”). Based on that evaluation, the Company’s Chief Executive
Officer and Chief Financial Officer have concluded that, as of the Evaluation
Date, such controls and procedures were effective.
 
 (b)           Changes in internal
controls.
 
 The term “internal control over
financial reporting” (defined in SEC Rule 13a-15(f)) refers to the process of a
company that is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. The Company’s management, with the participation of the Chief
Executive Officer and Chief Financial Officer, has evaluated any changes in the
Company’s internal control over financial reporting that occurred during the
fourth quarter of the year covered by this annual report, and they have
concluded that there was no change to the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
 
 (c)           Management’s
Report on Internal Control over Financial Reporting
 
 Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934.  We have assessed the effectiveness
of those internal controls as of June 30, 2008, using the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control –
Integrated Framework as a basis for our assessment.
 
 Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.  All internal
control systems, no matter how well designed, have inherent
limitations.  Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.
 
 A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects the Company’s
ability to initiate, authorize, record, process, or report external financial
data reliably in accordance with accounting principles generally accepted in the
United States of America such that there is more than a remote likelihood that a
material misstatement of the Company’s annual or interim financial statements
that is more than inconsequential will not be prevented or detected. In the
course of making our assessment of the effectiveness of internal controls over
financial reporting, we identified three material weaknesses in our internal
control over financial reporting.  These material weaknesses consisted
of:
  a.  Inadequate staffing and supervision
within the accounting operations of our company.  The
relatively small number of employees who are responsible for accounting
functions prevents us from segregating duties within our internal control
system.  The inadequate segregation of duties is a weakness because it
could lead to the untimely identification and resolution of accounting and
disclosure matters or could lead to a failure to perform timely and effective
reviews.
  b.  Lack of expertise in U.S accounting
principles among the personnel in our Chinese
headquarters.  Our books are maintained and our financial
statements are prepared by the personnel employed at our executive offices in
China.  None of our employees has substantial experience or
familiarity with U.S accounting principles.  The lack of personnel in
our China office who are trained in U.S. accounting principles is a weakness
because it could lead to improper classification of items and other failures to
make the entries and adjustments necessary to comply with U.S.
GAAP.
  Management
is currently reviewing its staffing and their training in order to remedy the
weaknesses identified in this assessment.  To date, we are not aware
of significant accounting problems resulting from these weaknesses; so we have
to weigh the cost of improvement against the benefit of strengthened
controls.  However, because of the above conditions, management’s
assessment is that the Company’s internal controls over financial reporting were
not effective as of June 30, 2007.
 
 This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
 
 Item
8B.  Other Information
 
 None.
  
 PART
III
 
 Item
      9.
              Directors,
      Executive Officers, Promoters, Control Persons and Corporate Governance;
      Compliance with Section 16(a) of the Exchange
  Act.
 
 The Board
of Directors has arranged to replace current management as soon as this Annual
Report is filed.  Currently, the officers and directors of the Company
are:
 
 Name
              Age
              Position with the Company
              Director SinceFeng
      Zhenxing
              56
              Chairman,
      Chief Executive Officer, Chief Financial Officer
              2007Feng
      Guowu
              47
              Director,
      Secretary
              2007
 
 All
directors hold office until the next annual meeting of our shareholders and
until their successors have been elected and qualify.  Officers serve at
the pleasure of the Board of Directors.
 
 Feng Zhen Xing has been
employed as General Manager of Tieli XiaoXingAnling since 2001.  Mr. Feng
has been engaged throughout his career in developing breeding techniques for
forest frogs.  He is currently a member of the Frog Professional Committee
of the China Wildlife Protection Association.  In 1982 Mr. Feng received an
Associates Degree in Water Affairs from the Heilongjiang Provincial Water
Affairs College.
 
 Feng Guo Wu has been employed
since 2006 as Chairman and President of XiaoXingAnling Biotech Co., Ltd., which
is engaged in breeding forest frogs and processing frog-based products.
 From 2003 to 2006 Mr. Feng was Chairman and President of Yili City
XiaoXingAnling, which also specializes in breeding forest frogs and processing
their products.  During this same period, 2003 to the present, Mr. Feng has
also served as Chairman of Jiamusi Pig Breeding Co., Ltd., which is engaged in
developing pig breeding technologies.  From 2000 to 2003 Mr. Feng was the
Director-General of the Jiamusi City Unemployment Insurance Bureau, an agency of
the municipal government.  For the past four years Mr. Feng has served as
Vice Chairman of the Heilongjiang Province Labor Association, a
quasi-governmental organization involved in labor coordination.  In 1974
Mr. Feng was awarded and Associates Degree in Aviation by the No. 7 Aviation
Institute of the People’s Liberation Army Air Force.  Mr. Feng is 46 years
old.
 
 Audit Committee;
Compensation Committee
 
 The Board of Directors has not yet
appointed an Audit Committee or a Compensation Committee, due to the small size
of the Board.  The Board of Directors does not contain an audit
committee financial expert, again due to the small size of the
Board.
 
 Code of
Ethics
 
 The
Company does not have a written code of ethics applicable to its executive
officers.  The Board of Directors has not adopted a written code of
ethics because there are so few executive officers of the Company.
 
 Section 16(a) Beneficial
Ownership Reporting Compliance
 
 None of
the officers, directors or beneficial owners of more than 10% of the Company’s
common stock failed to file on a timely basis the reports required by Section
16(a) of the Exchange Act during the year ended June 30, 2007.
  
 Item
10.  Executive Compensation
 
 The table below itemizes the compensation paid to Feng Zhen Xing and Feng Guo Wu
by Tieli XiaoXingAnling for services during the current and past two years.
 There was no officer of Tieli XiaoXingAnling whose salary and bonus for
services rendered during the year ended December 31, 2006 exceeded
$100,000.
 
 Year
              Salary
              Bonus
              Stock
                Awards
              Option
                Awards
              Other
                CompensationFeng
      Zhenxing
              2008
              $12,8202007
              $12,8202006
              $6,250
  Year
              Salary
              Bonus
              Stock
                Awards
              Option
                Awards
              Other
                CompensationFeng
      Guowu
              2008
              $12,8202007
              $12,8202006
              $6,250
 
  Item 11.  Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters
 There are
19,542,572 shares of our common stock outstanding on the date of this
report.  Except as otherwise indicated, we believe that the beneficial
owners of the common stock listed below have sole voting power and investment
power with respect to their shares,  subject to community property
laws where applicable.  Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange
Commission.
 
 In
computing the number of shares beneficially owned by a person and the percent
ownership of that person, we include shares of common stock subject to options
or warrants held by that person that are currently exercisable or will become
exercisable within 60 days. We do not, however, include these “issuable” shares
in the outstanding shares when we compute the percent ownership of any other
person.
 
 Name  of
                Beneficial Owner(1)
              Amount
      and Nature of
                Beneficial Ownership(2)
              Percentage of ClassFeng
      ZhenxingFeng
      GuowuAll
      officers and directors
                    (3
      persons)
  (1)    Except
      as otherwise noted, the address of each shareholder is 648 Weihai Road,
      Changchun, Jilin Province, P.R.
China.
 (2)    Except as otherwise noted, all shares are owned of
record and beneficially.
 (3)    Represents
      shares held of record by Warner Technology & Investment Corp., of
      which Mr. Zhou is the President and controlling
    shareholder.
 
  Item
12.  Certain Relationships and Related Transactions
    
 Item
13.  Exhibit List
 
 (a)
Financial Statements
  Report of
Independent Registered Public Accounting Firm
  Consolidated
Balance Sheet - June 30, 2008
  Consolidated
Statements of Operation – Years ended June 30, 2008 and 2007
  Consolidated
Statements of Stockholders’ Equity and Comprehensive Income - Years ended June
30, 2008 and 2007
  Consolidated
Statements of Cash Flows - Years ended June 30, 2008 and 2007
  Notes to
Consolidated Financial Statements
 
 (b)
Exhibit List
 
 3-a.
              Articles
      of Incorporation, and 1989 amendment. - filed as an exhibit to the
      Company’s Registration Statement on Form SB-2 (33-85218 C) and
      incorporated herein by reference.
 
 3-a(1)
              Amendment
      to Articles of Incorporation dated March 4, 1991, March 22, 1994, and
      November 18, 1994. - filed as an exhibit to the Company’s Registration
      Statement on Form SB-2 (33-85218 C) and incorporated herein by
      reference.
  3-b.
              By-laws. - filed as
      an exhibit to theCompany’s Registration Statement on Form SB-2
      (33-85218 C) and incorporated herein by
  reference.
  21
              Subsidiaries
 
 
 31
              Rule
      13a-14(a) Certification
 
 32
              Rule
      13a-14(b) Certification
  
 
 Item
14.  Principal Accountant Fees and Services
   China
Sxan Biotech, Inc.(the “Company”) engaged Patrizio & Zhao, LLC to serve as
its independent registered public accountant in November 2007.
 
 Audit
Fees
 
 Patrizio & Zhao, LLC billed $50,000.00 to the Company for
professional services rendered for the audit of fiscal 2008 financial statements
and review of the financial statements included in the 10-QSB filings for the
second and third quarters of fiscal 2008.
 
 Audit-Related
Fees
 
 Patrizio & Zhao, LLC billed $ -0- to the Company during fiscal
2008 for assurance and related services that are reasonably related to the
performance of the fiscal 2008 audit or review of the quarterly financial
statements.
 
 Tax Fees
 
 Patrizio & Zhao, LLC billed $ -0- to the Company during fiscal 2008 for
professional services rendered for tax compliance, tax advice and tax
planning.
 
 All Other Fees
 
 Patrizio & Zhao, LLC billed $ -0-  to the Company in fiscal
2008  for services not described above.
 
 It is the
policy of the Company that all services other than audit, review or attest
services must be pre-approved by the Board of Directors.  No such
services have been performed by Patrizio & Zhao, LLC.
 -
13 -
 China
Sxan Biotech Inc. and Subsidiary
 
 Consolidated
Financial Statements
 
 June
30, 2008 and 2007
         
  PageF - 2
              Report of
      Independent Registered Public Accounting Firm
              F-1F - 3
              Consolidated Balance
      Sheet as of June 30, 2008
              F-2F - 4
              Consolidated
      Statements of Operations for the Years Ended June 30, 2008 and
      2007
              F-3F - 5
              Consolidated
      Statements of Stockholders' Equity and Comprehensive Income for the Years
      Ended June 30, 2008 and 2007
              F-4F - 6
              Consolidated
      Statements of Cash Flows for the Years Ended June 30, 2008 and
      2007
              F-5F - 7 to F -
      14
              Notes to Condensed
      Financial Statement
              F-6
  
   
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Board of Directors and Stockholders
 China Sxan
Biotech Inc.:
 
 
 We have
audited the accompanying consolidated balance sheets of China Sxan Biotech Inc.
and subsidiaries (the “Company”) as of June 30, 2008 and 2007, and the related
statements of operations and comprehensive income, stockholders’ equity, and
cash flows for the years ended June 30, 2008 and 2007. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China Sxan Biotech Inc. and
subsidiaries as of June 30, 2008 and 2007, and the consolidated results of their
operations and comprehensive income and cash flows for the years ended June 30,
2008 and 2007 in conformity with accounting principles generally accepted in the
United States of America.
  
 /s/ Patrizio & Zhao,
LLC
 
 
 Parsippany,
New Jersey
 November
14, 2008
   F-1
 Consolidated Balance
Sheets
 2008
                
                
                2007Assets:Current
      assets:Cash and cash
      equivalents
                
                $
                23,203
                
                
                $
                4,892Accounts receivable, net of
      allowance of $-0- and$6,666
                
                
                -
                
                
                
                1,326,481Inventory
                
                
                2,076,016
                
                
                
                1,332,469Other receivables
                
                
                1,163,836
                
                
                
                678,344Advances to
    suppliers
                
                
                5,884,877
                
                
                
                1,877,554Prepaid expenses
                
                
                385
                
                
                
                151Total current
    assets:
                
                
                9,148,335
                
                
                
                5,219,891Property
      and equipment, net:
                
                
                695,163
                
                
                
                837,047Other
      assets:Intangible assets,
      net
                
                
                4,515,047
                
                
                
                4,155,315Total assets:
                
                $
                14,358,545
                
                
                $
                10,212,253Liabilities
      and stockholders’ equity:Current
      liabilities:Accounts payable and accrued
      expenses
                
                $
                249,212
                
                
                $
                425,875Income taxes
    payable
                
                
                1,216,130
                
                
                
                736,496Due from
    shareholders
                
                
                79,350
                
                
                
                225,474Other
      tax payable
                
                
                126,362
                
                
                
                -Other payables
                
                
                68,435
                
                
                
                -Total current
      liabilities:
                
                
                1,739,488
                
                
                
                1,387,848Stockholders’
      equity:Series A convertible preferred
      stock, $0.001 par value,100,000,000
      shares authorized, 27,011,477 shares issuedand
      outstanding, respectively
                
                
                27,001
                
                
                
                27,001Common stocks, $0.001 par value,
      100,000,000 sharesauthorized,
      19,542,572 issued and outstanding
                
                
                19,543
                
                
                
                19,543Additional paid-in
      capital
                
                
                4,466,731
                
                
                
                4,620,826Retained earnings
                
                
                6,169,574
                
                
                
                3,360,137Statutory reserve
                
                
                378,782
                
                
                
                378,782Accumulated other comprehensive
      income
                
                
                1,139,307
                
                
                
                418,109Total stockholders’
      equity:
                
                
                12,619,057
                
                
                
                8,824,409Total Liabilities and
      Stockholders' Equity:
                
                $
                14,358,545
                
                
                $
                10,212,253
 
 Consolidated
Statements of Operations and Comprehensive Income (Loss)
 
 2008
                    
                    
                    2007Revenue:
                    
                    $
                    12,587,579
                    
                    
                    $
                    5,535,608Cost
      of goods sold:
                    
                    
                    7,830,672
                    
                    
                    
                    2,207,496Gross
      profit:
                    
                    
                    4,756,907
                    
                    
                    
                    3,328,112Selling,
      general and administrative:
                    
                    
                    1,455,800
                    
                    
                    
                    510,288Income
      from operations:
                    
                    
                    3,301,108
                    
                    
                    
                    2,817,824Other
      income (expense):Other income, net
                    
                    
                    378
                    
                    
                    
                    13,065Non-operation
    income
                    
                    
                    4,351
                    
                    
                    
                    13,110Interest income (expense),
      net
                    
                    
                    (618
                    )
                    
                    
                    (743
                    )Total other income
      (expense):
                    
                    
                    4,111
                    
                    
                    
                    25,432Income
      before provision for income tax:
                    
                    
                    3,305,219
                    
                    
                    
                    2,843,256Provision
      for income tax:
                    
                    
                    495,783
                    
                    
                    
                    434,007Net
      income:
                    
                    
                    2,809,436
                    
                    
                    
                    2,409,249Other
      comprehensive income:Foreign currency translation
      adjustment
                    
                    
                    1,139,307
                    
                    
                    
                    366,483Comprehensive
      income:
                    
                    $
                    3,948,743
                    
                    
                    $
                    2,775,732Net
      income per share:Basic
                    
                    $
                    0.14
                    
                    
                    $
                    0.09Diluted
                    
                    $
                    0.14
                    
                    
                    $
                    0.05Weighted
      average shares ofcommon
      stock:Basic
                    
                    
                    20,072,209
                    
                    
                    
                    10,910,858Diluted
                    
                    
                    20,072,209
                    
                    
                    
                    20,072,209
 
 F-3
 Consolidated
Statements of Stockholders’ Equity
 
 AccumulatedAdditional
                    
                    
                    
                    
                    
                    
                    
                    
                    other
                    
                    
                    TotalCapital
                    
                    
                    Common
      Stock
                    
                    
                    Series
      A Preferred Stock
                    
                    
                    Paid
      in
                    
                    
                    Statutory
                    
                    
                    Retained
                    
                    
                    Comprehensive
                    
                    
                    Stockholders’Contributed
                    
                    
                    Number
                    
                    
                    Par Value
                    
                    
                    Number
                    
                    
                    Par Value
                    
                    
                    Capital
                    
                    
                    Reserve
                    
                    
                    Earnings
                    
                    
                    Income
                    
                    
                    EquityBalance
      at June 30, 2006
                    
                    $
                    4,376,180
                    
                    
                    _
                    
                    
                    $ _
                    
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    137,857
                    
                    
                    $
                    1,191,813
                    
                    
                    $
                    51,626
                    
                    
                    $
                    5,748,476Contributed
    capital
                    
                    
                    300,200
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    300,200Net income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,409,925
                    
                    
                    
                    -
                    
                    
                    
                    2,409,925Statutory
    reserve
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    240,925
                    
                    
                    
                    (240,925
                    )
                    
                    
                    -
                    
                    
                    
                    -Other comprehensive
      income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    366,482
                    
                    
                    
                    366,482Balance
      at June 30, 2007
                    
                    
                    4,667,380
                    
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    378,782
                    
                    
                    $
                    3,360,137
                    
                    
                    $
                    418,108
                    
                    
                    $
                    8,824,407Common stock issued
      inrecapitalization
                    
                    
                    -
                    
                    
                    
                    27,011,477
                    
                    
                    
                    27,011
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    27,011Series A preferred
      stocks
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    19,542,572
                    
                    
                    
                    19,453
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    19,453Effect of reverse
      merger
                    
                    
                    (4,667,380
                    )
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    4,466,731
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (200,649
                    )Net income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,809,436
                    
                    
                    
                    -
                    
                    
                    
                    2,809,436Other comprehensive
      income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,139,307
                    
                    
                    
                    1,139,307Balance
      at June 30, 2008
                    
                    
                    -
                    
                    
                    
                    27,011,477
                    
                    
                    $
                    27,011
                    
                    
                    
                    19,542,572
                    
                    
                    $
                    19,453
                    
                    
                    $
                    4,466,731
                    
                    
                    $
                    378,782
                    
                    
                    $
                    6,169,573
                    
                    
                    $
                    1,557,415
                    
                    
                    $
                    12,619,055
 
 F-4
 Consolidated
Statements of Cash Flows
 
 2008
                    
                    
                    2007Cash
      flows from operating activities:Net
      Income
                    
                    $
                    2,809,436
                    
                    
                    $
                    2,409,249Adjustments
      to reconcile net income to net cashProvided
      (used) by operating activities:Depreciation
                    
                    
                    246,343
                    
                    
                    
                    193,485Amortization
                    
                    
                    93,998
                    
                    
                    
                    83,016Intangible assets
                    
                    
                    
                    
                    
                    
                    -Non-cash capital
      contribution
                    
                    
                    
                    
                    
                    
                    -Bad debt expense
                    
                    
                    
                    
                    
                    
                    6,493Changes in assets and
      liabilities:Accounts
      receivable
                    
                    
                    1,458,528
                    
                    
                    
                    (1,298,576
                    )Other
      receivables
                    
                    
                    (405,677
                    )
                    
                    
                    (120,482
                    )Inventory
                    
                    
                    (589,483
                    )
                    
                    
                    (614,197
                    )Advances
      to suppliers
                    
                    
                    (3,749,866
                    )
                    
                    
                    (1,828,866
                    )Prepaid
      expenses
                    
                    
                    165
                    
                    
                    
                    462Accounts
      payable and accrued expenses
                    
                    
                    (227,198
                    )
                    
                    
                    340,380Income
      taxes payable
                    
                    
                    393,541
                    
                    
                    
                    544,944Other
      taxes payable
                    
                    
                    124,638
                    
                    
                    
                    -Other
      payables
                    
                    
                    (27,795
                    )
                    
                    
                    -Total
adjustments:
                    
                    
                    (2,684,654
                    )
                    
                    
                    (2,693,341
                    )Net cash used by operating
      activities:
                    
                    
                    124,782
                    
                    
                    
                    (284,092
                    )Cash
      flows from investing activitiesAcquisition of property and
      equipment
                    
                    
                    (15,439
                    )
                    
                    
                    (85,101
                    )Net cash used by investing
      activities:
                    
                    
                    (15,439
                    )
                    
                    
                    (85,101
                    )Cash
      flows from financing activities:Proceeds from sale of common
      stock
                    
                    
                    -
                    
                    
                    
                    303,773Proceeds (repayments) of
      stockholders’ loans
                    
                    
                    (220,848
                    )
                    
                    
                    67,340Net cash provided by financing
      activities:
                    
                    
                    (220,848
                    )
                    
                    
                    371,113Effect
      of foreign currency translation on cash:
                    
                    
                    129,817
                    
                    
                    
                    189Net
      increase in cash and cash equivalents:
                    
                    
                    18,311
                    )
                    
                    
                    2,109Cash
      and cash equivalents – beginning:
                    
                    
                    4,892
                    
                    
                    
                    2,783Cash
      and cash equivalents – ending:
                    
                    $
                    23,203
                    
                    
                    $
                    4,892
 
 F-5
 
 CHINA
SXAN BIOTECH INC.
 
 Notes
to Consolidated Financial Statements
 June
30, 2008 and 2007
 
 NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
 
 China
SXAN Biotech, Inc. (the “Company”, formerly Advance Technologies, Inc.), a
Nevada corporation, was incorporated on June 16, 1969. On July 10, 2007, the
Company acquired the outstanding capital stock of American SXAN Biotech, Inc., a
Delaware corporation (“American SXAN”). American SXAN is a holding company that
on Oct 31, 2006 acquired 100% of the stock of Tieli Xiaoxinganling Forest
Breeding Co., Ltd.  (“Tieli Xiaoxinganling”), a corporation organized
under the laws of The People’s Republic of China. Tieli Xiaoxinganling is
engaged in the business of manufacturing and marketing wines and tonics derived
from domesticated forest frogs.
 
 "The
Company" was organized under the laws of the State of Delaware under the name
PWB Industries, Inc.; the articles of incorporation were issued June 16, 1969.
The name was changed to Sun Energy, Inc., which merged with Sto Med, Inc. on
February 22, 1996 and changed its name to Sto Med, Inc. and domicile to the
State of Nevada. Sto Med Inc. changed its name to Advance Technologies, Inc. on
August 23, 1997. On September 27, 1999 the Company acquired Seacrest Industries
of Nevada, also known as Infrared Systems International. On September 4, 2007
the name of the Company was changed to China SXAN Biotech, Inc.
 
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 PRINCIPLES
OF CONSOLIDATION
 
 The
consolidated financial statements include the accounts of the parent company and
the subsidiaries.  Intercompany accounts and transactions have been
eliminated in consolidation.
 
 BASIS
OF PRESENTATION
 
 The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the Unites States of America
(GAAP).
 
 CASH
AND CASH EQUIVALENTS
 
 In
accordance with Statement of Financial Accounting Standards No. 95, "Statement
of Cash Flows," the Company considers all highly liquid instruments with
original maturities of three months or less to be cash and cash
equivalents.
 
 ACCOUNTS
RECEIVABLE
 
 The
Company’s sales terms allow for payments to be made for up to one
year.   Management reviews customer credit worthiness, current
economic trends and changes in customer payment patterns to evaluate the need
for reserves.  Allowance for doubtful accounts amounted to $6,666 at
June 30, 2007.
 
 INVENTORY
 
 Inventories
are stated at the lower of cost or net realizable value.  Cost is
calculated on the weighted-average basis and includes all costs to acquire and
other costs incurred in bringing the inventories to their present location and
condition.  We evaluate the net realizable value of our inventories on a
regular basis and record a provision for loss to reduce the computed
weighted-average cost if it exceeds the net realizable value.
 
 F-6
 
 CHINA
SXAN BIOTECH INC.
 
 Notes
to Consolidated Financial Statements (Continued)
 June
30, 2008 and 2007
 
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 PROPERTY
AND EQUIPMENT
 
 Property
and equipment are stated at cost and depreciation is provided using the
straight-line method, less a base salvage value of 4% of the assets’ stated
cost, between 5 to 10 years. The carrying value of long-lived assets is
evaluated whenever changes in circumstances indicate the carrying amount of such
assets may not be recoverable.  If necessary, the Company recognizes
an impairment loss for the difference between the carrying amount of the assets
and their estimated fair value.  Fair value is based upon current and
anticipated future undiscounted cash flows.  Expenditures for
maintenance and repairs are charged to operations as incurred; additions,
renewals and betterments are capitalized.  Based upon its most recent
analysis, the Company believes that no impairment of property and equipment
exists for the year ended June 30, 2007.
 
 VALUATION
OF LONG-LIVED ASSETS
 
 The
Company adopted Statement of Financial Accounting Standards No.
144,  "Accounting for the Impairment or Disposal of Long-Lived Assets"
("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. Per SFAS 144, the Company is
required to periodically evaluate the carrying value of long-lived assets and to
record an impairment loss when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amounts.
 
 In that
event, a loss is recognized based on the amount by which the carrying amount
exceeds the fair market value of the long-lived assets.  Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal.  Based
on its review, the Company is of the opinion that as of June 30, 2008 there were
no significant impairments of its long-lived assets.
 
 REVENUE
RECOGNITION
 
 The
Company recognizes revenue at the date of shipment to customers when a formal
arrangement exists, the price is fixed or determinable, the delivery is
completed, no other significant obligations of the company exist and
collectibility is reasonably assured.
 
 ADVERTISING
COSTS
 
 The
Company expenses the cost of advertising as incurred. Advertising costs for the
years ended June 30, 2008 and 2007 were insignificant.
 
 INCOME
TAXES
 
 Deferred
income taxes are computed using the asset and liability method, such that
deferred tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between financial reporting amounts and
the tax basis of existing assets and liabilities based on currently enacted tax
laws and tax rates in effect in the People’s Republic of China for the periods
in which the differences are expected to reverse.  Income tax expense
is the tax payable for the period plus the change during the period in deferred
income taxes.  A valuation allowance is provided when it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.  No differences were noted between the book and tax bases of
the Company’s assets and liabilities, respectively.  Therefore, there
are no deferred tax assets or liabilities for the year ended June 30,
2008.
 
 The
Company is subject to PRC Enterprise Income Tax at a rate of 15% of net
income.  Given that the Company is doing business in the husbandry
industry, the Company is allowed to delay paying income taxes until September
30, 2007.  The Company has been accruing income tax since its
inception.
 
 F-7
 CHINA
SXAN BIOTECH INC.
 
 Notes
to Consolidated Financial Statements (Continued)
 June
30, 2008 and 2007
 
 NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
 FAIR
VALUE OF FINANCIAL INSTRUMENTS
 
 The
Company considers the carrying amounts reported in the balance sheet for current
assets and current liabilities qualifying as financial instruments and
approximating fair value.
 
 FOREIGN
CURRENCY TRANSLATION AND TRANSACTIONS
 
 The
financial position and results of operations of the Company’s foreign
subsidiaries are determined using local currency (Chinese Yuan) as the
functional currency.  Assets and liabilities of the subsidiaries are
translated at the prevailing exchange rate in effect at each year
end.  Contributed capital accounts are translated using the historical
rate of exchange when capital is injected.  Income statement accounts
are translated at the average rate of exchange during the
year.  Translation adjustments arising from the use of different
exchange rates from period to period are included in the cumulative translation
adjustment account in shareholders' equity. Gains and losses resulting from
foreign currency transactions are included in operations.
 
 USE
OF ESTIMATES
 
 The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses, and related disclosures at the date of the
financial statements and during the reporting period. Actual results could
differ from those estimates.
 
 NOTE
3 – OTHER RECEIVABLES
 
 Other
receivables represent advances made to third parties for non-operating
purposes.  They are unsecured and non-interest
bearing.  Management is of the opinion that the reported amounts will
be fully collected and therefore, no allowance is deemed necessary.
 
 NOTE
4 – INVENTORY
 
 Inventory
at June 30, 2008 and 2007 consisted of the following:
 2008
                    
                    
                    2007Food
      for frogs
                    
                    $
                    28,049
                    
                    
                    $
                    148,834Food
      for pigs
                    
                    
                    29,541
                    
                    
                    
                    50,266Frogs
      in process
                    
                    
                    305,259
                    
                    
                    
                    86,125Pigs
      in process
                    
                    
                    278,499
                    
                    
                    
                    122,502Packaging
      supplies
                    
                    
                    -
                    
                    
                    
                    260,107Finished
      goods
                    
                    
                    1,434,668
                    
                    
                    
                    664,635Total
                    
                    $
                    2,076,016
                    
                    
                    $
                    1,332,469
 NOTE
5 – ADVANCES TO SUPPLIERS
 
 As a
common business practice in China, the Company is required to make advance
payments to certain suppliers for purchase of raw material. Such advances are
interest-free and unsecured.
 
 F-8
 CHINA
SXAN BIOTECH INC.
 
 Notes
to Consolidated Financial Statements (Continued)
 June
30, 2008 and 2007
 
 NOTE
6 – PROPERTY AND EQUIPMENT, NET
 
 Property
and equipment at June 30, 2008 and 2007 consisted of the following:
 2008
                    
                    
                    2007Buildings
                    
                    $
                    1,234,117
                    
                    
                    $
                    1,280,322Equipment
                    
                    
                    254,444
                    
                    
                    
                    46,058Breeding
      livestock
                    
                    
                    1,223
                    
                    
                    
                    1,176Construction
      in progress
                    
                    
                    9,704
                    
                    
                    
                    9,3311,499,488
                    
                    
                    
                    1,336,887Less:
      accumulated depreciation
                    
                    
                    804,326
                    
                    
                    
                    459,840Total
                    
                    $
                    695,163
                    
                    
                    $
                    4,837,047
 Depreciation
expense for the years ended June 30, 2008 and 2007 was $246,343 and $193,485,
respectively.
 
 NOTE
7 – INTANGIBLE ASSETS, NET
 
 Net
intangible assets at June 30, 2008 and 2007 were as follows:
  Rights
      to use land
                    
                    $
                    4,707,245Less:
      accumulated amortization
                    
                    
                    (168,853
                    )Total
                    
                    $
                    4,538,391
  The
Company's office and production sites are located in Tieli City and Jiamusi
City, Heilongjiang Province, PRC.  The Company leases land per a real
estate contract with the government of the People's Republic of China for a
period from 2003 through 2057. Per the People's Republic of China's governmental
regulations, the Government owns all land.
 
 The
Company has recognized the amounts paid by a shareholder for the acquisition of
rights to use land as an intangible asset (“Rights to use land”) and a non-cash
capital contribution. The Company is amortizing the asset over a period of fifty
(50) years.
 
 Amortization
expense for the Company’s intangible assets for the years ended June 30, 2008
and 2007 amounted to $70,793 and $83,016, respectively.
 
 The
following is a list of approximate amortization expense for the Company’s
intangible assets over their useful lives:
  $
                    88,5962009
                    
                    
                    88,5962010
                    
                    
                    88,5962011
                    
                    
                    88,5962012
                    
                    
                    88,5962013
      and thereafter
                    
                    
                    4,095,411Total
                    
                    $
                    4,538,391
 
 NOTE
8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
 The
carrying value of accounts payable and accrued expenses approximate fair value
due to the short-term nature of the obligations.
 
 NOTE
9– DUE TO STOCKHOLDERS
 
 Loans
from stockholders are short-term in nature, unsecured and non-interest
bearing.
 
 F-9
 CHINA
SXAN BIOTECH INC.
 
 Notes
to Consolidated Financial Statements (Continued)
 June
30, 2008 and 2007
 
 NOTE
10– SUPPLEMENTAL CASH FLOW DISCLOSURES
 
 Cash paid
for interest was $646 and $743 and $0 and $434,00 for income taxes during the
years ended June 30, 2008 and 2007, respectively.
 
 NOTE
11 – EMPLOYEE WELFARE PLAN
 
 The
Company has established an employee welfare plan in accordance with Chinese law
and regulations. The Company makes annual contributions of 14% of all employees'
salaries to the employee welfare plan.
 
 NOTE
12– STATUTORY COMMON WELFARE FUND
 
 As
stipulated by the People’s Republic of China (PRC), net income after taxation
can only be distributed as dividends after appropriation has been made for the
following:
 
 (i).
                    Making
      up cumulative prior years’ losses, if
any;
 
 (ii).
                    Allocations
      to the “Statutory surplus reserve” of at least 10% of income after tax, as
      determined under PRC accounting rules and regulations, until the fund
      amounts to 50% of the Company's registered
  capital;
 
 (iii).
                    Allocations
      of 5-10% of income after tax, as determined under PRC accounting rules and
      regulations, to the Company's “Statutory common welfare fund”, which is
      established for the purpose of providing employee facilities and other
      collective benefits to the Company's
employees;
 
 (iv).
                    Allocations
      to the discretionary surplus reserve, if approved in the shareholders’
      general meeting.
 
 The
Company did not provide a reserve for the welfare fund for the years ended June
30, 2008 and 2007, respectively.
 
 NOTE
13 – RISK FACTORS
 
 Five
major customers accounted for approximately 70% of the net revenue for the year
ended June 30, 2008 and four major customers accounted for approximately 68% of
the net revenue for the year ended June 30, 2007.
 
 The
Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC as well as by the general
state of the PRC’s economy. The Company's business may be influenced by changes
in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
 
 NOTE
14 - CONCENTRATIONS OF CREDIT RISK
 
 Financial
instruments which potentially subject the Company to credit risk consist
principally of cash on deposit with a financial institution of
$23,203.
 
 NOTE
15 - SUBSEQUENT EVENTS
  Not applicable
 F
- 10
  SIGNATURES
  In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
   China
Sxan Biotech, Inc.
   By: /s/ Feng Zhenxing
 Feng
Zhenxing
 Chief Executive Officer and Chief Financial Officer
   In
accordance with the Exchange Act, this Report has been signed below
on November 14, 2008 by the following persons, on behalf of the Registrant
and in the capacities and on the dates indicated.
   
 /s/ Feng Zhenxing
 Feng
Zhengxing
 Chief
Executive Officer and Chief
Financial Officer