Angstrom Microsystems 10-Q 2008 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, 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: June 30, 2008

or

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

For the transition period from		to:
Commission File Number:	000-51163
ANGSTROM MICROSYSTEMS CORP.
(Exact name of registrant as specified in its charter)
Nevada			N/A
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)
25 Drydock Avenue, 7th Floor, Boston, MA  02210
(Address of principal executive offices) (Zip code)
617-695-0137
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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  [X ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    [   ] Yes   [   ] 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:  24,229,816 shares of common stock issued and outstanding as of August 13, 2008

PART I FINANCIAL INFORMATION

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 “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” 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, including the risks in the section entitled “Risks and Uncertainties”, 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 law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.  Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.  As used in this quarterly report, the terms “we”, “us”, “our”, and “Angstrom” mean Angstrom Microsystems Corp., unless the context clearly requires otherwise.

- 2 -

ITEM 1.  FINANCIAL STATEMENTS

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Interim Consolidated Balance Sheets (Unaudited)
		June 30,		December 31,
		2008		2007
ASSETS
Current
Cash and cash equivalents	$	5,539	$	11,674
Inventory, net		151,275		-
Prepaid and other assets		20,567		6,782
	$	177,381	$	18,456
Property and equipment, net		-		-
Patents		200,000		-
Goodwill		1,799,186		-
	$	2,176,567	$	18,456
LIABILITIES
Current liabilities
Bank indebtedness	$	18,759	$	-
Accounts payable		1,024,832		-
Accrued liabilities		312,692		43,669
Due to shareholders		123,310		169,754
		1,479,593		213,423
SHAREHOLDERS’ EQUITY (DEFICIENCY)
Authorized:
150,000,000 common voting stock with a par value of $0.001 per share
Issued:
24,229,816 common shares (December 31, 2007 – 13,952,000 common
shares)		24,230		13,952
Additional paid-in capital		2,500,348		90,998
Funds advanced for units subscribed		-		18,080
Accumulated other comprehensive income (loss)		(766)		(766)
Accumulated deficit		(1,826,838)		(317,231)
		696,974		(194,967)
$		2,176,567	$	18,456
Going Concern
The accompanying notes are an integral part of these interim consolidated financial statements.

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Interim Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)
		Three Months Ended					Six Months Ended
		June 30,					June 30,
		2008			2007		2008			2007
Revenue	$		29,692	$		-	$	29,692	$		-
Cost of Sales			21,824			-		21,824			-
Gross Profit			7,868			-		7,868			-
Expenses
Selling, general and administrative			282,312			14,866		330,857			25,350
Research and development			71,156			-		71,156			-
Stock based compensation			1,115,462			-		1,115,462			-
			1,468,930			14,866		1,517,475			25,350
Net loss for the period	$		(1,461,062)		$	(14,866) $ (1,509,607)			$		(25,350)
Basic and diluted loss
per common share		$	(0.06)		$	(0.00)	$	(0.08)		$	(0.00)
Weighted average number of
common shares outstanding			23,421,021	13,952,000				19,390,073	13,952,000
The accompanying notes are an integral part of these interim consolidated financial statements.

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Interim Consolidated Statements of Cash Flows
For the Three and Six Months Ended June 30, 2008 and 2007(Unaudited)
			Three Months Ended						Six Months Ended
			June 30,						June 30,
			2008			2007			2008			2007
Cash flow from operating activities
Net loss for the period	$	(1,461,062)		$	(14,866)			$	(1,509,607)	$	(25,350)
Items not affecting cash:
Stock based compensation		1,115,462					-		1,115,462				-
		(345,600)					(14,866)		(394,145)				(25,350)
Changes in non-cash working capital
Inventory		(12,302)					-		(12,302)				-
Prepaid expenses and other assets			24,422						(9,618)				5,000
Accounts payable and accrued liabilities		(768,822)					(15,750)		(723,560)				(38,944)
		(1,102,102)					(30,436)		(1,139,625)				(59,294)
Cash flow from financing activities
Advances(repayments) from(to) shareholders		(26,591)					25,844		(54,442)				58,926
Increase (decrease) in borrowings under
bank indebtedness, net			27,932				-		27,932				-
Net cash proceeds from issue of
common shares		1,106,000					-		1,160,000				-
		1,107,341					25,844		1,133,490				58,926
Effect of Foreign Exchange Rate Changes			-				(739)		-				(376)
Increase (decrease) in cash			5,239				(5,511)		(6,135)				744
Cash, beginning of period			300				11,536		11,674				6,769
Cash, end of period		$	5,539			$	11,674	$	5,539			$	6,025
Supplemental Information:
Interest paid		$	-		$		-	$	-		$		-
Income taxes paid		$	-		$		-	$	-		$		-

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

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Interim Consolidated Statement of Shareholders’ Equity (Deficiency)
For(Unaudited)the Period from January 1, 2007 to June 30, 2008(Unaudited)
						Accumulated
		Common Shares				Other
			Additional	Units Accumulated Comprehensive
	Shares Amount Paid-In Capital Subscribed Deficit					Income (Loss) Total
		$	$	$	$	$	$
Balance, December 31, 2006	13,952,000	13,952	90,998	-	(177,777)	(766)	(73,593)
Funds received for units subscribed	-	-	-	18,080	-	-	18,080
Net loss	-	-	-	-	(139,454)	-	(139,454)
Balance, December 31, 2007	13,952,000	13,952	90,998	18,040	(317,231)	(766)	(194,967)
Stock issued for cash at $0.001	2,100,000	2,100	69,980	(18,080)	-	-	54,000
Net Loss for quarter	-	-	-	-	(48,545)	(766)	(48,545)
Balance, March 31, 2008	16,052,000	16,052	160,978	-	(365,776)	(766)	(189,512)
Stock issued for cash at $0.001	1,250,000	1,250	1,104,750	-	-	-	1,106,000
Stock issued to acquire Angstrom
Microsystems Corp.	6,927,816	6,928	119,158	-	-	-	126,086
Current period vesting of employees’ options	-	-	1,115,462	-	-	-	1,115,462
Net loss for quarter	-	-	-	-	(1,461,062)	-	(1,461,062)
Balance, June 30, 2008	24,229,816	24,230	2,500,348	-	(1,826,838)	(766)	696,974

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

ANGSTROM MICORSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

1.	BASIS OF PRESENTAITON AND GOING CONCERN
	Angstrom Microsystems Corp. (formerly Angstrom Technologies Corp.) (the “Company” or “Angstrom”) was incorporated in the state of Nevada, U.S.A. on February 24, 2005 as Sanford Exploration, Inc. (“Sanford”). The Company’s mineral exploration operations had been conducted by its wholly-owned subsidiary, Sanford Exploration (Canada), Inc., which was incorporated in the Province of British Columbia, Canada on March 14, 2005. The Company was an Exploration Stage Company, as defined by Statement of Financial Accounting Standard ("SFAS") No.7, "Accounting and Reporting by Development Stage Enterprises," and the Company’s cumulative since inception disclosures had been included in its consolidated financial statements through December 31, 2007. As a result in the change of business described below, the Company is no longer considered a development stage company and, as such, all disclosure required under SFAS No. 7 have been discontinued.
	During the third quarter of 2007, Sanford announced its intention to divest of its mineral development business and engage exclusively in software development and computer technology. To facilitate this change of business, on February 1, 2008, Angstrom Technologies Corp. (“ATC”), a Nevada company, was incorporated as a wholly-owned subsidiary of Sanford. Effective February 19, 2008, ATC exchanged all of its outstanding shares for one common share of Sanford and the combined entity was continued under the name Angstrom Technologies Corp. As a result of an acquisition more fully described in note 2, the Company changed its name to Angstrom Microsystems Corp. effective April 21, 2008.
	These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of operations. The Company has generated minimal revenue since the inception, has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. As at June 30, 2008, the Company has accumulated losses of $1,826,838 since inception and has a working capital deficiency of $1,302,213.These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.	ACQUISTION OF ANGSTROM MICORSYSTEMS CORP.

Pursuant to a Letter of Agreement signed February 20, 2008 and effective March 27, 2008, ATC formed Angstrom Acquisition Corp. (the “Subsidiary”), a wholly-owned subsidiary which acquired all of the issued and outstanding shares of Angstrom Microsystems Inc. (“AMI”), a software and computer technology business located in Boston, Massachusetts, in exchange for 6,927,816 common shares of the Subsidiary. Upon completion of this transaction, ATC, AMI and the Subsidiary merged and continued operations under the name Angstrom Microsystems Corp. The value attributed to the common shares (being $126,086) was based on the share price of the most recent private placement completed in January 2008. For accounting purposes, the acquisition is considered a purchase by the Company. The estimated fair value of the assets and liabilities assumed on the acquisition date and calculation of goodwill are as follows

Total assets		$	145,148
Total liabilities			(2,018,248)
Deficiency	$	(1,873,100)
Fair value - patents acquired $			(200,000)
Purchase Price		$	126,086
Goodwill	$	1,799,186

ANGSTROM MICORSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

3.	SIGNIFICANT ACCOUNTING POLICIES
	Basis of presentation
	The accompanying unaudited consolidated financial statements reflect all adjustments, which, in the opinion of management, are necessary to fairly state the Company's financial position and the results of its operations for the periods presented. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's audited financial statements for the fiscal year ended December 31, 2007. Footnote disclosure, which would substantially duplicate the disclosure contained in the Company's Form 10-K for the fiscal year ended December 31, 2007, has been omitted. The results of operations for the six-month period ended June 30, 2008 are not necessarily indicative of results for the entire year ending December 31, 2008.
	These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in US dollars. The Company's fiscal year-end is December 31.
	Principles of Consolidation
	The consolidated financial statements include the accounts and operations of Angstrom Microsystems Corp. (formerly Angstrom Technologies Corp.) and its wholly-owned, inactive subsidiaries Sanford Exploration (Canada), Inc., and United Access Communications, Inc. All inter-company accounts and transactions have been eliminated on consolidation.
	Use of Estimates
	The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Financial statement items subject to significant judgment include expense accruals, as well as income taxes and loss contingencies. Actual results could differ from those estimates.
	Revenue Recognition
	Revenue consists primarily of sales of rackmount servers. — Revenue from product sales is recognized in accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 104 (“SAB 104”),Revenue Recognition.Under SAB 104, revenue from product sales is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met upon shipment to customers. Revenue from consulting services is recognized as the services are performed. Brokerage fees are earned when the product is shipped to the ultimate customer. Revenues are recorded net of discounts, rebates and estimated returns. Customer payments received in advance of product shipments are recorded as unearned revenue. Shipping and handling costs incurred are included in the cost of revenue.
	The Company provides standard warranties for its product for a period of up to three years from the date of shipment. Estimated warranty obligations are recorded at the time of sale.

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

3.	SIGNIFICANT ACCOUNTING POLICIES - continued
	Cash and Cash Equivalents
	The Company considers all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents. At June 30, 2008 and December 31, 2007, the Company had no cash equivalents.
	Accounts Receivable
	The Company utilizes the allowance method for accounts receivable valuation, providing for allowances for estimated uncollectible accounts receivable. The Company routinely assesses the financial strength of its customers as part of its consideration of accounts receivable collectability by performing credit evaluations of customers. Trade receivables are not collateralized. As at June 30, 2008, the allowance for doubtful accounts was $0.
	Long-lived Assets
	In accordance with the Financial Accounting Standards Board ("FASB") SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.
	Inventory
	Inventory, comprised principally of raw materials, is stated at the lower of cost or market using the first-in, first-out (“FIFO”) method. This policy requires Angstrom to make estimates regarding the market value of our inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for its products.
	Property and Equipment

Property and equipment are carried at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to operations when incurred, while additions and betterments are capitalized. When assets are retired or disposed, the asset’s original cost and related accumulated depreciation are eliminated from accounts and any gain or loss is reflected in income. Depreciation and amortization is generally provided for by the straight-line method over the estimated useful lives of the assets as follows: Furniture and fixtures 5 years Computer equipment and software 3 years Leasehold improvements Shorter of estimated useful life or term of lease

Foreign Currency Translation

Gains and losses arising upon settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company’s functional currency is the U.S. dollar. Transactions in foreign currency are translated into U.S. dollars in accordance with the SFAS No. 52 as follows:

i.	monetary items at the rate prevailing at the balance sheet date;
ii.	non-monetary items at the historical exchange rate;
iii.	revenue and expenses at the average rate in effect during the applicable accounting period.

Translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders deficiency.

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes To Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

3.	SIGNIFICANT ACCOUNTING POLICIES - continued
	Financial Instruments
	The carrying values of the Company’s financial instruments, which comprise cash, inventory, bank indebtednesss, accounts payable and accrued liabilities and due to shareholders, approximate their fair values due to the immediate or short-term maturity of these instruments. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
	Research and Development and Computer Software Development Costs
	Costs incurred in the research and development of the Company’s products are expensed as incurred, except for certain software development costs. Costs associated with the development of computer software are expensed prior to establishment of technological feasibility (as defined by SFAS No. 86,” Accounting for Costs of Computer Software to be Sold, Leased or Otherwise Marketed”) and capitalized thereafter when significant to the Company’s financial position or results of operations. No software development costs were capitalized during the period ended June 30, 2008, since costs incurred subsequent to establishment of technological feasibility were not significant.
	Income Taxes
	Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109, "Accounting for Income Taxes," as of its inception. Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will be able to utilize the net operating losses carried forward in future years.
	Basic and Diluted Loss per Share
	The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share." The standard requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the reporting period using the treasury stock method and convertible preferred stock using the if- converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of convertible debt, stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Basic and diluted loss per share is computed using the weighted average number of common shares outstanding. Diluted EPS and the weighted average number of common shares exclude all dilutive potential shares since their effect would be anti-dilutive. At June 30, 2008, the Company excluded stock equivalents from its loss per share calculation as the effect was anti-dilutive.
	Stock-based Compensation
	Prior to January 1, 2006, the Company accounted for stock-based awards under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," using the intrinsic value method of accounting, under which compensation expense was only recognized if the exercise price of the Company's employee stock options was less than the market price of the underlying common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R) "Share Based Payments," using the modified retrospective transition method. The Company had not issued any stock options or share based payments prior to January 1, 2006. Accordingly, there was no effect on the Company's reported loss from operations, cash flows or loss per share as a result of adopting SFAS No. 123(R).

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

3.	SIGNIFICANT ACCOUNTING POLICIES - continued
	Advertising Costs
	Advertising costs are expensed as incurred. No advertising costs have been incurred by the Company to date.
	Comprehensive Income
	The Company has adopted SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and the display of comprehensive income, its components and accumulated balances. Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners or distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under the current accounting standards as a component of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income (loss) is displayed in the statement of shareholders' equity and in the balance sheet as a component of shareholders' equity.
	Recent Accounting Pronouncements
	In June 2006, the FASB issued FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statements No.109 ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a two-step method of first evaluating whether a tax position has met a more likely than not recognition threshold and, second, measuring that tax position to determine the amount of benefit to be recognized in the financial statements. FIN 48 provides guidance on the presentation of such positions within a classified statement of financial position as well as on derecognition, interest and penalties, accounting in interimperiods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this statement did not have a material effect on the Company's reported financial position or results of operations.
	In September 2006, the FASB issued Statement No. 157,Fair Value Measurements(“FAS 157”). The objective of FAS 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. FAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of FAS 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. In November 2007, the FASB announced an option to defer implementation of some of the requirements of this standard for certain non-financial assets and liabilities.
	Beginning January 1, 2008, the Company partially applied FAS 157 as allowed by FASB Staff Position (“FSP”) 157- 2, which delayed the effective date of FAS 157 for non-financial assets and liabilities. As of January 1, 2008 the Company has applied the provisions of FAS 157 to its financial instruments and the impact was not material. Under FSP 157-2, the Company will be required to apply FAS 157 to its non-financial assets and liabilities beginning January 1, 2009. Management is currently reviewing the applicability of FAS 157 to the Company’s non-financial assets and liabilities and the potential impact that application will have on its consolidated statements.

.

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

3.	SIGNIFICANT ACCOUNTING POLICIES - continued
	Recent Accounting Pronouncements (continued)
	In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115." This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115,Accounting for Certain Investments in Debt and Equity Securities,applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157. As of January 1, 2008, the Company has applied the provisions of FAS 159 to its financial instruments and the impact was not material
	In December 2007, the FASB issued Statement No. 141(R),Business Combinations(“FAS 141R”), replacing FAS 141,Business Combinations(“FAS 141”). This statement retains the fundamental requirements in FAS 141 that the acquisition method of accounting (which FAS 141 termed thepurchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This Statement clarifies that acquirers are required to expense costs related to any acquisitions. FAS 141R will apply prospectively to business combinations for which the acquisition date is on or after fiscal years beginning December 15, 2008. Early adoption is prohibited. The Company has not yet evaluated the impact, if any, that FAS 141R will have on its financial statements. Determination of the ultimate effect of this statement will depend on the Company’s structure at the date of adoption.
	In December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51(“FAS 160”). FAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. FAS 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. FAS 160 also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. FAS 160 is effective for fiscal years beginning on or after December 15, 2008, with retrospective presentation and disclosure for all periods presented. Early adoption is prohibited. The Company currently has no entities or arrangements that will be affected by the adoption of FAS 160. However, determination of the ultimate effect of this pronouncement will depend on the Company’s structure at the date of adoption.
	In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities— an amendment of FASB Statement No. 133(“FAS 161”). This Statement requires enhanced disclosures about an entity’s derivative and hedging activities, including (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company currently has no entities or arrangements that will be affected by the adoption of FAS 161. However, determination of the ultimate effect of this pronouncement will depend on the Company’s structure at the date of adoption.

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

4.	MINERAL EXPLORATION PROPERTY
	By an Assignment Agreement dated August 15, 2005, the Assignor assigned, transferred and set over to the Company all rights, title, interest and benefits held by or granted to the Assignor in and to a purchase and sale agreement dated December 10, 2004, whereby the Assignor acquired an option to purchase a 100% interest in 11 unpatented mineral claims. The 11 mineral claims cover a total of 1,800 acres (728 hectares) located in the south end of Gillies Limit Township in the Larder Lake Mining Division of the Province of Ontario, Canada.
	The Company assumed and agreed to perform all obligations of the Assignor under the purchase and sale agreement as follows
	i.	$5,000 CDN payment to the Optionor upon execution of the agreement (paid by the Assignor);
	ii.	The Company shall pay the Optionor a further total of $50,000 CDN within three (3) months after the shares of the Company begin trading to the public on any stock exchange or quotation system in North America after the filing of a prospectus or registration statement, as applicable (trading date);
	iii.	The Company performed and recorded $10,000 CDN of assessment work on the mineral claims due in August 2005 and, at its option, shall perform such assessment work so as to keep the relevant mining claims and interests subject to the option provided for herein in good standing;
	iv.	Upon completion of all payments and obligations, the Optionor shall transfer a 100% interest in the mineral claims to the Company and the Company shall, thereupon, grant the Optionor a net smelter return royalty (“royalty”), subject to, at the Optionee’s discretion, the option of buying back up to 2% of the 3% royalty by paying $500,000 CDN to retire each such 0.5% portion of the royalty. The Company shall have a first right of refusal on the remaining 1% royalty held by the Optionor. The royalty or any part of it shall not be assignable without the consent of the Company (not to be unreasonably withheld), and any such assignment shall be subject to the buy- back and right of first refusal described above provided that the first 2% portion assigned shall be subject to the buy back.
	Effective August 5, 2007, the Company gave notice to termination the option agreement including a release payment of $20,603. This has been accepted by the assignor and a release was granted on October 30, 2007.
5.	PROPERTY AND EQUIPMENT
	Property and equipment consisted of the following:

		June 30,2008
		and
		December 31,
		2007
Furniture and fixtures	$	52,212
Computer equipment and software		111,565
Leasehold improvements		120,869
		284,646
Less: Accumulated depreciation		(284,646)
	$	-

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)
6	.	ACCRUED LIABILITIES
		Accrued liabilities consisted of the following:
			June 30, 2008			December 31,
						2007
		Accrued bonus to director	$	80,000	$	-
		Accrued payroll		69,458		-
		Accrued warrant reserve		57,000		-
		Accrued professional		35,500		25,808
		Accrued management fees		22,500		10,500
		Other		48,234		7,361
		Total	$	312,692	$	43,669
7	.	COMMON STOCK TRANSACTIONS

Private Placements

In December 2007, the Company entered into a subscription agreement to issue 600,000 units at $0.04 per unit each unit comprising one common share and one common share purchase warrant, for net proceeds of $18,080. Each share purchase warrant entitles the unit holder to purchase one common share for $0.06 on or before December 22, 2009. The units were issued subsequent to January 2008.

In January 2008, the Company closed a non-brokered private placement for 1,500,000 units at $0.04 per unit, each unit comprising one common share and one common share purchase warrant, for net proceeds of $54,000. Each share purchase warrant entitles the unit holder to purchase one common share for $0.06 on or before January 25, 2010.

In June 2008, Angstrom closed several private placements totaling 1,250,000 units at a price of $1.00 per unit for net proceeds of $1,106,000. Each unit comprised one common share of the Company and one-half share purchase warrant. One full purchase warrant is required to acquire one additional share at a price of $1.20 per share for a period of two years from the closing date.

Common Stock Split

On February 1, 2008, the Board of Directors approved a stock split on a basis of two new common shares for one old common share of the Company such that the authorized share capital of Sanford was increased from 75,000,000 to 150,000,000 and the corresponding issued and outstanding common shares increased from 8,026,000 to 16,052,000. Pursuant to SAB Topic 4c, all common share information presented in the accompanying consolidated financial statements and the notes thereto is retroactively presented on a post-conversion basis, including all share amounts and per share prices.

ANGSTROM MICROSYSTEMS CORP.

(Formerly Angstrom Technologies Corp.)

Notes to Interim Consolidated Financial Statements

June 30, 2008

(Unaudited)

8.STOCK PLANS AND STOCK BASED COMPENSATION

The Company adopted SFAS No. 123 (Revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”), under the modified-prospective transition method on January 1, 2006. SFAS No. 123(R) requires companies to measure and recognize the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value. Equity compensation expense recognized under the modified-prospective transition method of SFAS No. 123(R) includes share-based compensation determined by using the grant-date fair value in accordance with the original provisions of SFAS No. 123,“Accounting for Stock-Based Compensation”, for all share-based payments granted prior to and not yet vested as of January 1, 2006. It also includes share-based compensation estimated as of the grant date and based on the fair value of the award in accordance with SFAS No. 123(R), for all share-based payments granted after January 1, 2006.

SFAS No. 123(R) eliminates the ability to account for the award of these instruments under the intrinsic value method proscribed by Accounting Principles Board (“APB”) Opinion No. 25,“Accounting for Stock Issued to Employees”, and allowed under the original provisions of SFAS No. 123. Prior to the adoption of SFAS No. 123(R), the Company accounted for its stock option plans using the intrinsic value method in accordance with the provisions of APB Opinion No. 25 and related interpretations.

In addition, FSP FAS 123(R)-1, “Classification and Measurement of Freestanding Financial Instruments Originally Issued in Exchange for Employee Services under FASB Statement No. 123(R)”, provides additional guidance regarding the accounting treatment for freestanding financial instruments originally issued as employee compensation. Specifically, this instrument would be subject to the recognition and measurement provisions of SFAS 123(R) throughout the instrument’s life, provided the terms of the instrument are not modified after the rights conveyed by the instrument no longer are dependent on whether the holder is an employee.

The guidance in this FSP supersedes FSP EITF 00-19-1, ”Application of EITF Issue No. 00-19 to Freestanding Financial Instruments Originally Issued as Employee Compensation”, and amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”. This FSP is effective upon initial adoption of SFAS 123(R).

Stock options employees and directors- On April 8, 2008, the Board of Directors adopted an Incentive Stock Option Plan (the “Plan”). Under the Plan, options to acquire shares of common stock of the Company may be granted to directors, officers, consultants and employees of the Company. A total of 10,000,000 shares of common stock are authorized for issuance under the Plan. The Company granted 734,470 options at an exercise price of $0.20 - $0.25, vesting on an annual basis, expiring 10 years after issuance. These stock options granted have been valued at $1,115,462, using the Black-Sholes option pricing model based upon the following assumptions: term of 5 years, risk free interest rates of 3.34%, a dividend yield of 0% and volatility rates of 119%.

The following is a summary of options activity during the period ended June 30, 2008:
	Number of Shares	Exercise Price
Balance, December 31, 2007	-		-
Options granted	734,470	$	0.20
Options exercised or cancelled	-		-
Balance, June 30, 2008	734,470		0.20
Number of options exercisable at June 30, 2008	-		-

An additional 3,700,000 options to purchase common stock of the Company were granted to an officer of the Company in April 2008 at an exercise price of $0.50 per share, expiring in 5 years, vesting according to the attainment of certain milestones of the Company’s operations. No value has been ascribed to these options.

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

9.INCOME TAXES

a)	Provision for Income Taxes - Current
	The difference between the actual income tax recovery and the expected corporate income tax recovery relates to losses not recognized. The following table summarizes the differences from the statutory rate of approximately 40% (2007 – 34%) to the Company’s current tax provision recorded.

		Six Months Ended		Six Months Ended
		June 30,		June 30,
		2008		2007
Loss before recovery of income taxes	$	(1,509,607)	$	(25,350)
Expected income tax recovery at statutory rates		(603,843)		(8,619)
Stock based compensation		446,185
Increase in valuation allowance with respect to
current period loss		157,658		8,619
Provision for income taxes - current	$	-	$	-

b)	Deferred Income Taxes
	The Company has provided a full valuation allowance against future tax assets at June 30, 2008 due to uncertainties in the Company’s ability to utilize the future tax benefits.
c)	Tax Loss Carry-forwards
	At June 30, 2008, the Company had approximately $4,300,000 of non-capital losses carried forward available to reduce future taxable income at various dates through 2028.
	10.RELATED PARTY TRANSACTIONS AND BALANCES

(a)	The Company entered into an agreement with a director to serve the Company and its subsidiary as an executive officer. In consideration, the Company has agreed to pay $500 U.S. per month. The agreement may be terminated by the director by giving 30 days written notice or by the Company at any time with 30 days written notice.
	Termination of the agreement by the Company requires the Company to make no other payments except for outstanding amounts of salary and expenses. Management fees of $NIL were incurred for the six months ended June 30, 2008 (2007 - $3,000).

ANGSTROM MICROSYSTEMS CORP.
(Formerly Angstrom Technologies Corp.)
Notes to Interim Consolidated Financial Statements
June 30, 2008
(Unaudited)

10.RELATED PARTY TRANSACTIONS AND BALANCES - continued

The Company entered into an agreement with a director to serve the Company and its subsidiary as an executive officer. The executive will not be compensated for the performance of these services until such a time as the Company begins to earn revenue. The agreement may be terminated by the director by giving 30 days written notice or by the Company at any time with 30 days written notice. Termination of the agreement by the Company requires the Company to make no other payments except for outstanding amounts of salary and expenses.

.

Both contracts were terminated in September 2007 and, effective October 11, 2007, the director resigned.

(b)	The Company entered into a one-year agreement commencing October 1, 2007 with a director to serve the Company and its subsidiary as an executive officer. In consideration, the Company has agreed to pay $36,000 U.S. per annum and a travel allowance of $500 U.S. per month. Management fees of $18,000 and a travel allowance of $3,000 were charged for the six months ended June 30, 2008 (2007 - $NIL) and the unpaid portion of these fees in the amount of $22,500 (2007- $NIL) is included in accrued liabilities.
(c)	The Company incurred costs associated with the issuance of shares in the amount of $150,000 for the six months ended June 30, 2008 (2007 - $0) from a Company related to a director of Angstrom.
(d)	The Company received advances from shareholders who are also directors. The advance is non-interest bearing, unsecured and without specific terms of repayment.
(e)	The Company has an agreement with an entity related to a director of Angstrom to assist in raising capital whereby two million options will be granted to purchase common shares of the Company at $0.25 per share, based on one option for each dollar of financing raised to a maximum of two million options, exercisable for a period of five years. This business will further provide consulting services to the Company for a minimum term of 12 months at $12,000 per month. The granting of the options and consulting contract take effect once the first tranche of $2,000,000 is raised. At June 30, 2008, this condition had not been satisfied and as such, the options have not been granted and no consulting fees charged. Upon completion of financing exceeding $3,000,000, the Company will issue to this party common shares equal to 8.5% of the total shares issued and outstanding capital stock of the Company.

The value of transactions with related parties is based on the exchange amounts, representing the amounts established and agreed on by the related parties.

11.CONTINGENCIES

At June 30, 2008, several of the Company’s trade creditors have filed suits or claims against Angstrom seeking repayment of unpaid invoices aggregating approximately $167,000. In addition, certain of these creditors have obtained default judgements against the Company. Angstrom, through its attorneys, has entered into negotiations with creditors representing the majority of the total amounts owed. The Company has reached firm or tentative agreements with the majority of these creditors and the accompanying financial statements reflect all material adjustments as a result of these agreements.

12.COMPARATIVE NUMBERS

Certain comparative numbers have been reclassified to conform with the presentation adopted in the current period.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Background

On March 27, 2008, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Angstrom Microsystems Inc. (“AMI”) and Angstrom Acquisition Corp. (“Angstrom Sub”), a private Delaware corporation formed for the purpose of acquiring all of the outstanding shares of AMI thereby merging Angstrom Sub and resulting in “Angstrom Microsystems Inc.” being a direct, wholly-owned subsidiary of Angstrom. Under the terms of the Merger Agreement we agreed, among other things, to issue up to 6,927,816 shares of our common stock to the shareholders of AMI on a basis of 1.1 Angstrom shares for each one AMI share held.  Effective April 9, 2008, we closed our acquisition of AMI and Angstrom Sub was merged into AMI with AMI being the sole surviving entity under the name “Angstrom Microsystems Inc.” and Angstrom Technologies Corp. being the sole shareholder of t he surviving entity.

Following the completion of the acquisition of AMI, we are now engaged in the business of software development and computer technology.   We specialize in Green computing solutions, providing blade servers and workstations uniquely designed for the energy-hungry datacenter sector. Angstrom provides software-based acceleration to significantly reduce the number of machines required to perform a given task. Angstrom combines this technology with novel cooling techniques to further reduce energy consumption in the datacenter. Fewer machines for the same performance coupled with less cooling power required per machine results in a more energy-efficient datacenter.

Over the next 12 months, we plan to continue development of our software and hardware products.  In addition, we intend to expand our sales force by direct hiring and/or strategic acquisitions.  Angstrom plans to continue building its Green computing brand and market it at tradeshows, publications and through partners.   We anticipate that we will have to raise additional funds through private placements of our equity securities and/or debt financing to complete our business plan. There is no assurance that the financing will be completed as planned or at all. We have not been successful raising the funding necessary to proceed with our business plan. Further, we believe that our company may have difficulties raising capital until we locate a prospective business opportunity through which we can pursue our plan of operation. If we are unable to secure adequate capital to continue our acquisit ion efforts, our shareholders may lose some or all of their investment and our business may fail.

Recent Corporate Developments

Since the end of our last quarter, we have experienced the following significant corporate developments:

1.

Following completion of all of the closing conditions of the Merger Agreement, on April 9, 2008, Angstrom Sub was merged into AMI with AMI being the sole surviving entity under the name “Angstrom Microsystems Inc.” and Angstrom Sub being the sole shareholder of the surviving entity.  Upon due delivery of an executed letter of transmittal, accredited investor certificate and old AMI share certificate, AMI stockholders shall receive up to an aggregate of 6,927,816 shares of our common stock representing approximately 30% of the issued and outstanding shares of the Company after issuance of the shares. Also in connection with the closing of the Merger Agreement, the Company issued 734,470 options to employees of AMI pursuant to the 2008 Incentive Stock Option Plan adopted by the Company at closing. Pursuant to the terms of the Merger Agreement, all of the shareholders of AMI which are to receive

- 4 -

securities of Angstrom in connection with the merger agree to use their best efforts for a two year period following closing of the transaction (the “Lock-Up Period”), not to directly or indirectly offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any ATC shares acquired or acquirable by them pursuant to the Merger Agreement. ATC agreed following the Lock-Up Period that it will register the ATC shares issued to the ATC shareholders upon request.

2.

In April, 2008, the Company approved a private placement of up to 3,000,000 units at a price of $1.00 per unit, with each unit consisting of one share and one share purchase warrant entitling the holder to purchase an additional share at a price of $1.20.  Effective April 10, 2008 we closed the first tranche of the offering and issued 1,250,000 units to three subscribers at a price of $1.00 per unit.  The units were issued to the subscribers  pursuant to Regulation S of the Securities Act of 1933 on the basis that each subscriber represented that they were not a “US Person” as such term is defined in Regulation S. Proceeds of the offering were used to repay debt and for working capital purposes.  

3.

Effective April 21, 2008, we changed our name from “Angstrom Technologies Corp.” to “Angstrom Microsystems Corp.”. The name change has been effected pursuant to a merger with our wholly owned subsidiary Angstrom Microsystems Corp. which was incorporated specifically for the purpose of changing our name.  The name change became effective with the Over-the-Counter Bulletin Board on May 2, 2008 under the new stock symbol “AGMS”.  Our new CUSIP number is035205 103.

4.

Effective May 2, 2008, in accordance with the terms of the Merger Agreement, we appointed Lalit Jain, Nand Todi, and To-Hon Lam as members of our board of directors.  Also effective May 2, 2008, we appointed Lalit Jain as our President. Mr. Jain is presently our President, Chief Executive Officer and chairman of the board of directors. Alpha Pang remains as Chief Financial Officer, Secretary, Treasurer and member of the Board.

During the quarter, we continued developing our next generation solutions based on feedback from our customers. We believe our cooling solutions have several advantages including the use of non-conducting, non-toxic, environmentally friendly liquid in cooling our blade servers. Since the quarter end we have entered into an initial software deal for our accelerated computing solution with a licensing component for each unit sold and a marketing component. We plan to expand our software sales while developing software needed to address the key media markets over the remainder of the fiscal year.

Plan of Operation

Over the next 12 months, we plan to continue development of our software and hardware products.  In addition, we intend to expand our sales force by direct hiring and/or strategic acquisitions.  Angstrom plans to continue building its Green Computing brand and market it at tradeshows, publications and through partners.   

Cash Requirements

Over the next 12 months we anticipate that we will incur the following operating expenses:

Expense		Amount
Office space	$	140,000

- 5 -

Professional fees	$	250,000
Travel expenses	$	80,000
General and administrative	$	200,000
Employee Salaries	$	1,000,000
Marketing and Sales	$	1,100,000
Research and Development	$	1,000,000
Consulting Fees	$	650,000
Total	$	4,420,000

Our estimated expenses over the next 12 months are approximately 4,420,000 and our - bank indebtedness as at June 30, 2008 is $13,220.    We will have to raise additional funds through private placements of our equity securities and/or debt financing to satisfy our working capital requirement and implement our business plan.. There is no assurance that the financing will be completed as planned or at all.

Results of Operation

The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the quarter ended June 30, 2008 which are included herein.  Our operating results for the quarters ended June 30, 2008 and 2007 are summarized as follows:

Expenses		Three Months Ended June 2008		Three Months Ended June 2007		Six Months Ended June 2008		Six Months Ended June 2007
Revenue	$	29,692	$	0	$	29,692	$	0
Gross Profit		7,868		0		7,868		0
Selling, general and administrative		282,312		14,866		330,857		25,350
Research and development		71,156		0		71,156		0
Stock based compensation		1,115,462		0		1,115,462		0
Loss for period	$	1,461,062	$	14,866	$	1,509,607	$	25,350

Revenues

 We had one sale from the acquisition date of April 9, 2008 to the end of the quarter in the amount of $29,962; this amount representing the sole revenue generated since our inception on February 24, 2005.Expenses

The increase in our general and administrative expenses for the period ended June 30, 2008 was primarily due to  our inclusion of the results of operations for AMI from the acquisition date.  Siginificant expenses for AMI were legal fees associated with the on-going resolution of our supplier claims of approximately $93,000 and wages of approximately $65,000.  The major component of our research and development costs was wages of approximately $34,000.

- 6 -

Liquidity and Capital Resources

Working Capital

		June 30, 2008		March 31, 2008	Change
Current Assets	$	177,381	$	41,122	331%
Current Liabilities	$	1,479,594	$	230,634	542%
Working Capital Surplus (Deficit)	$	(1,302,213)	$	(189,512)	587%

Cash Flows

		Three Months Ended June 30, 2008		Three Months Ended June 30, 2007		Six Months Ended June 30, 2008		Six Months Ended June 30, 2007
Cash flow from operating activities	$	(1,065,889)	$	(30,436)	$	(1,130,452)	$	(59,294)
Cash flow used in investing activities		0		0		0		0
Cash provided by financing activities		1,079,409		25,844		1,105,558		58,926
Foreign exchange effect on cash		0		(739)		0		(376)
Net increase (decrease) in cash	$	(13,520)	$	(5,511)	$	(24,894)	$	744

We were indebted to our bank in the amount of $13,220 and a working capital deficit of $1,302,213 as of June 30, 2008.  We anticipate that we will incur approximately $4,420,000 for operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next 12 months.  Accordingly, we will need to obtain additional financing in order to complete our full business plan.

Cash Used In Operating Activities

Cash used in operating activities was funded by $1,105,558 cash from financing activities.

Cash from Financing Activities

Cash generated by financing activities is attributable to the private placement financings of our common stock in January and April 2008 and advances from shareholders.

Going Concern

We have historically incurred losses and have incurred losses of $ 1,977,866 since inception.  Because of these historical losses, we will require additional working capital to develop our business operations.  We intend to raise additional working capital through private placements, public offerings, bank financing and/or advances from related parties or shareholder loans.

The continuation of our business is dependent upon obtaining further financing and achieving a break even or profitable level of operations.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current or future stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

- 7 -

There are no assurances that we will be able to either (i) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (ii) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements.  To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital.  No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us.  If adequate working capital is not available we may not increase our operations.

These conditions raise substantial doubt about our ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Application of Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

We have identified certain accounting policies, described below, that are most important to the understanding of our financial statements.

Uses of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Financial statement items subject to significant judgment include expense accruals, income taxes and loss contingencies.  Actual results could differ from those estimates.

Revenue Recognition

Revenue consists primarily of sales of rackmount servers. — Revenue from product sales is recognized in accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 104 (“SAB 104”),Revenue Recognition.Under SAB 104, revenue from product sales is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met upon shipment to customers. Revenue from consulting services is recognized as the services are performed.  Brokerage fees are earned when the product is shipped to the ultimate customer.  Revenues are recorded net of discounts, rebates and estimated r eturns.  Customer payments received in advance of product shipments are recorded as unearned revenue. Shipping and handling costs incurred are included in the cost of revenue.

The Company provides standard warranties for its product for a period of up to three years from the date of shipment. Estimated warranty obligations are recorded at the time of sale.

Long-lived Assets

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In accordance with the Financial Accounting Standards Board ("FASB") SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment.  The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset.  Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

Inventory

Inventory, comprised principally of raw materials, is stated at the lower of cost or market using the first-in, first-out (“FIFO”) method. This policy requires Angstrom to make estimates regarding the market value of our inventory, including an assessment of excess or obsolete inventory. The Company determines excess and obsolete inventory based on an estimate of the future demand and estimated selling prices for its products.

Research and Development and Computer Software Development Costs

Costs incurred in the research and development of the Company’s products are expensed as incurred, except for certain software development costs. Costs associated with the development of computer software are expensed prior to establishment of technological feasibility (as defined by SFAS No. 86,” Accounting for Costs of Computer Software to be Sold, Leased or Otherwise Marketed”) and capitalized thereafter when significant to the Company’s financial position or results of operations.  No software development costs were capitalized during the period ended June 30, 2008, since costs incurred subsequent to establishment of technological feasibility were not significant.

Cash and Cash Equivalents

We consider all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents.  As at June 30, 2008, we had no cash equivalents.

Foreign Currency Translation

Gains and losses arising upon settlement of foreign currency denominated transactions or balances are included in the determination of income.  Our functional currency is the U.S. dollar.  Transactions in foreign currency are translated into U.S. dollars in accordance with the SFAS No. 52,Foreign Currency Translation, as follows:

(i)	monetary items at the rate prevailing at the balance sheet date;
(ii)	non-monetary items at the historical exchange rate;
(iii)	revenue and expenses at the average rate in effect during the applicable accounting period.

Reported in other comprehensive income (loss), a separate component of shareholders’ deficiency, are certain foreign currency translation adjustments.

Financial Instruments

The carrying values of the our company’s financial instruments, which comprise cash, accounts payable and accrued liabilities and due to shareholder, approximate their fair values due to the immediate or short-term maturity of these instruments.  Our operations are in Canada which results in exposure to risks

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from changes in foreign currency rates and the degree of volatility of these rates.  We do not use derivative instruments to reduce our exposure to foreign currency risk.  Unless otherwise noted, it is management’s opinion that our company is not exposed to significant interest or credit risks in respect of its financial instruments.

Stock-based Compensation

Prior to January 1, 2006, the Company accounted for stock-based awards under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," using the intrinsic value method of accounting, under which compensation expense was only recognized if the exercise price of the Company's employee stock options was less than the market price of the underlying common stock on the date of grant.  Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R) "Share Based Payments," using the modified retrospective transition method.  The Company had not issued any stock options or share based payments prior to January 1, 2006.  Accordingly, there was no effect on the Company's reported loss from operations, cash flows or loss per share as a result of adopting SFAS No. 123(R).

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4.  CONTROLS AND PROCEDURES.

Controls and Procedures

As of June 30, 2008, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarter ended June 30, 2008 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

Other than as disclosed below, 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 or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

1.	Cooljag U.S.A. v. Angstrom Microsystems, Inc., Boston Municipal Court, docket number 07-01-CV-002041.  This is a default judgment against AMI in the amount of $14,997.74, exclusive of  interest and costs.
2.	Tester v. Angstrom Microsystems, Inc., San Diego County, Calif. Superior Court, Case No. 07-2007-00054558. This is a default judgment against AMI in San Diego County, CA Superior Court in the amount of $17,100  exclusive of interest and costs.

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3.	Zip Ship, Inc. v. Angstrom Microsystems, Inc.  This is a consent judgment against the company in the amount of $8,106.66 arising from unpaid invoices.
4.	Integrated Dynamic Metals Corporation and J & J Machine Company, LLC v. Angstrom Microsystems, Inc. and Lalit Jain., Boston Municipal Court, C.A. No. 08 01 CV 000958.  The suit is an action for goods and labor sold and delivered. The plaintiffs are demanding judgment in   the total amount of $16,678.02.
5.	Mercury Business Services, Inc. v. Angstrom Microsystems, Inc., Boston Municipal Court, C.A. No. 08 01 CV 001241.  The suit is an action for goods and labor sold and delivered. The plaintiff   is demanding judgment in the total amount of $4,684.74.
6.	DecisionOne Corp v. Angstrom Microsystems, Inc., Boston Municipal Court, C.A. No. 07 01 CV 6414.  The suit is an action for goods and labor sold and delivered. The plaintiff is demanding   judgment in the total amount of $6,770.54.
7.	Mike OConnell d/b/a K2 Logistics v. Angstrom Microsystems, Inc. and Lalit Jain, Boston Municipal Court, C.A. No. 08 05 SC 169.  The plaintiff seeks compensation for the provision of transportation services for under $2,000.
8.	Flextronics  Flextronics, through counsel, made a written demand for payment in the amount of $28,375.00 for unpaid invoices.
9.	University of Utah  University of Utah, through its general counsel, made written demand on Angstrom claiming that on or about October 18, 2006, Angstrom received an erroneous double payment from the University in the amount of $14,100.00.
10.	AirTrans Logistics, Inc.  This vendor made demand on Angstrom for goods sold and delivered in the amount of $11,127.25.  Accordingly, by letter dated March 12, 2008, this vendor made demand on Angstrom for $10,627.25, and has threatened the institution of suit.

ITEM 1A.  RISK FACTORS

This quarterly report contains forward-looking statements that include, among other things, statements of business objectives relating to our business, statements as to the revenue and profitability of our company as well as other statements of expectations, belief, business plans and strategies, anticipated developments and other matters that are not historical facts.  Our Directors caution potential investors that there are risks and uncertainties associated with the investment in our company and actual events or results may differ materially from those expressed or implied by the statements contained in this report.  Potential investors should carefully consider all the information set out in this report and in particular should evaluate the following risks before deciding to invest in our company.

Technological change and evolving industry standards

The information technology industry is a fast developing industry and it’s characterized by rapidly changing technology, evolving industry standards, emerging competition and frequent introductions of new products and services.  If companies in the IT industry do not keep up with the most up-to-date technologies, they may find it difficult to compete with others who are able to keep abreast of the changes.  There is no assurance that we will continue to be able to do so in the future.  Our business will

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be adversely affected if it is unable to successfully introduce new technology and enhancements and respond to rapid technology changes.

Our Directors believe that our company’s ability to compete successfully is also dependent upon the continued compatibility to its technology with products and architectures offered by other companies.  The introduction of new products or services by our company or our competitors and any change in industry standards could cause customers to defer or cancel purchases of existing products and services, which may have a material adverse effect on our business, financial condition and results of operation.  In addition, services or technologies developed by others could render our services or technologies uncompetitive or obsolete.  While attention is paid to perceive changed in major trends in the market, our company is still vulnerable to significant loss die to misinterpretation of market conditions.

Credit line risks

Our company requires credit line to compete deployments that are typically capital intensive.  We may not be able to obtain these credit lines from banks or other financial resources.  We may not be able to accept orders in such cases, and thus can significantly and negatively affect the sales revenues or margins of our company.  

Implementation of business plan may not be successful

Our Directors expect that there will be a period of rapid growth in the future as a result of the implementation of the Business Plan.  This could place significant strain on our company’s managerial, operational and financial resources.  To accommodate this growth, we must implement new or upgrade our existing operating and financial systems, procedures and controls.  Failure of our company to manage its expansion or to obtain adequate financing in a timely manner may result in increased expenses or affect the implementation of the Business Plan and in turn slow down the pace of growth and affect our financial position and profitability.

Reliance on key management

Our success is, to a substantial extent, attributable to the strategy and vision of our founder and the efforts of certain key members of its management team, in particular, Lalit Jain, CEO and President of Angstrom.  The details of the management team are set out in the section headed “Management Team” of this prospectus. In view of his knowledge and experience of our business, his continued involvement is important to the future prospects of our company.  Should he cease to be involved in our business operations, our profitability may be adversely affected.

Risk of infringement of intellectual property by third parties

Mr. Jain has filed U.S. provisional patent applications that he intends to license to our company.  At this point, we cannot guarantee whether these provisional patent applications will result in the issuance of a patent or patents.

Our success partially depends on its ability to protect its proprietary technologies and processes.  We relies upon patents, copyrights, and trade secrets, laws and will also rely upon confidentiality and non-disclosure agreements and other measures to establish and protect its proprietary rights to its technologies, products and services.  Such protection may not be able to preclude competitors from infringing our intellectual property rights in its technologies, products and services.  Despite such

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precaution, it may be possible for a third party to copy or otherwise obtain and use such contents and technologies without our authorization, or to develop such technology independently.  There can also be no assurance that other companies will not obtain patents similar to or challenge the patents obtained by us.  In addition, policing unauthorized use of our proprietary contents and technology is difficult and there can be no assurance that the steps taken by us will prevent misappropriation or infringement of its rights.  In addition, legal proceedings may be necessary in the future to enforce our intellectual property rights, to protect its trade secrets and confidential information or to determine the validity and scope of the proprietary rights of others.  This could result in substantial costs and diversion of our resources and could have a material adverse effect on its business, fin ancial condition and results of operations.  If a significant portion of our intellectual property is copies, reproduced or used without our authorization, our business may be adversely affected.

In developing our technologies, products and services, we have used various technologies or know-how which we believe are in the public domain, licensed to us or otherwise have the right to use.  There can be no assurance, however, that third parties will not institute patent or other intellectual property infringement claims against us with respect to such technologies, products and services.

Our directors are not aware of any alleged claims of infringement of patents, copyrights or other intellectual property rights held by third parties in respect of the products manufactured by us. Thus, our Directors are not able to ascertain to the intellectual property of others. Intellectual property litigation is expensive and time consuming, and successful infringement claims against us may result in substantial monetary liability or disruption to our business.

Demand for technical and marketing personnel

The success of our operations lies in our ability to attract and retain employees with the appropriate technical expertise or business experience.  A shortage of key staff may reduce our ability to expand.

Size of competitors

Our competitors are large and better established – such as IBM, HP and Dell.  Marketing of such competitors or introduction of similar products, regardless of our proven superiority in products, can result in a reduction of sales of our products.  This may result in an adverse effect to the our business.

We have a limited operating history and limited historical financial information upon which you may evaluate our performance.

We are in our early stages of development and face risks associated with a new company in a growth industry. We may not successfully address these risks and uncertainties or successfully implement our operating strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our common stock to the point investors may lose their entire investment. Even if we accomplish these objectives, we may not generate positive cash flows or the profits we anticipate in the future.

We will need substantial additional financing in the future to continue operations.

Our ability to continue present operations will be dependent upon our ability to obtain significant external funding. Additional sources of funding have not been established. We are exploring various financing alternatives.  There can be no assurance that we will be successful in securing such financing at acceptable terms, if at all. If adequate funds are not available from the foregoing sources, or if we

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determine it to otherwise be in our best interests, we may consider additional strategic financing options, including sales of assets.

We will rely on third-party suppliers and manufacturers to provide raw materials for and to produce our products, and we will have limited control over these suppliers and manufacturers and may not be able to obtain quality products on a timely basis or in sufficient quantity.

Substantially all of our products will be manufactured by unaffiliated manufacturers. We may not have any long-term contracts with our suppliers or manufacturing sources, and we expect to compete with other companies for raw materials, production and import quota capacity.

There can be no assurance that there will not be a significant disruption in the supply of raw materials from our intended sources or, in the event of a disruption, that we would be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or at all. In addition, we cannot be certain that our unaffiliated manufacturers will be able to fill our orders in a timely manner. If we experience significant increased demand, or need to replace an existing manufacturer, there can be no assurance that additional supplies of raw materials or additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any supplier or manufacturer would allocate sufficient capacity to us in order to meet our requirements. In addition, even if we are able to expand existing or find new manufacturing or raw material sources, we may encounter delay s in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. Any delays, interruption or increased costs in the supply of raw materials or manufacture of our products could have an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues and net income both in the short and long-term.

In addition, there can be no assurance that our suppliers and manufacturers will continue to provide raw materials and to manufacture products that are consistent with our standards. We may receive shipments of product that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of revenues resulting from the inability to sell those products and related increased administrative and shipping costs. In addition, because we do not control our manufacturers, products that fail to meet our standards or other unauthorized products could end up in the marketplace without our knowledge, which could harm our reputation in the marketplace.

We operate in a competitive industry and continue to be under the pressure of eroding gross profit margins, which could have a material adverse effect on our business.

The market for the products we intend to develop is very competitive and subject to rapid technological change. The prices for our intended products tend to decrease over their life cycle, which can result in decreased gross profit margins for us. There is also substantial and continuing pressure from customers to reduce their total cost for products. We expend substantial amounts on the value creation services required to remain competitive, retain existing business, and gain new customers, and we must evaluate the expense of those efforts against the impact of price and margin reductions.  If we are unable to effectively compete in our industry or are unable to maintain acceptable gross profit margins, our business could be materially adversely affected.

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Products developed by us may be found to be defective and, as a result, warranty and/or product liability claims may be asserted against us, which may have a material adverse effect on the company.

We may face claims for damages as a result of defects or failures in our present or future products. Our ability to avoid liabilities, including consequential damages, may be limited as a result of differing factors, such as the inability to exclude such damages due to the laws of some of the countries where we do business. Our business could be materially adversely affected as a result of a significant quality or performance issue in the products developed by us, if we are required to pay for the damages that result.

Products developed by us require proprietary protection

We seek to protect our products through trade names, trademarks, copyrights and licenses. Despite our efforts to protect and maintain our proprietary rights, there can be no assurance that we will be successful in doing so or that our competitors will not independently develop or patent products that are substantially equivalent or superior to our products.  

Infringement could lead to costly litigation and/or the need to enter into license agreements, which may result in increased operating expenses

Existing or future infringement claims by or against us may result in costly litigation or require us to license the proprietary rights of third parties, which could have a negative impact on our results of operations, liquidity and profitability.

We believe that our proprietary rights do not infringe upon the proprietary rights of others. As the number of titles in the industry increases, we believe that claims and lawsuits with respect to software infringement will also increase. From time to time, third parties have asserted that some of our titles infringed their proprietary rights. We have also asserted that third parties have likewise infringed our proprietary rights. These infringement claims have sometimes resulted in litigation by and against us. To date, none of these claims has negatively impacted our ability to develop, publish or distribute our software. We cannot guarantee that future infringement claims will not occur or that they will not negatively impact our ability to develop, publish or distribute our software.

Technology changes rapidly in our business and if we fail to anticipate or successfully implement new technologies or the manner in which people play our games, the quality, timeliness and competitiveness of our products and services will suffer.

Rapid technology changes in our industry require us to anticipate, sometimes years in advance, which technologies we must implement and take advantage of in order to make our products and services competitive in the market. Therefore, we usually start our product development with a range of technical development goals that we hope to be able to achieve. We may not be able to achieve these goals, or our competition may be able to achieve them more quickly and effectively than we can. In either case, our products and services may be technologically inferior to our competitors’, less appealing to consumers, or both. If we cannot achieve our technology goals within the original development schedule of our products and services, then we may delay their release until these technology goals can be achieved, which may delay or reduce revenue and increase our development expenses. Alternatively, we may increase the resources employed in research and development in an attempt to accelerate our development of new technologies, either to preserve our product or service launch schedule or to keep up with our competition, which would increase our development expenses.

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From time to time we may become involved in other legal proceedings which could adversely affect us.

We are currently party to a number of legal proceedings listed below under the heading “Legal Proceedings”. There is no assurance that the outcome of our pending legal proceedings will be as expected and we could suffer significant losses due to any unfavourable judgments rendered in connection with the pending litigation. In addition we may become from time to time, subject to further legal proceedings, claims, litigation and government investigations or inquiries, which could be expensive, lengthy, and disruptive to normal business operations.  The outcome of any legal proceedings, claims, litigation, investigations or inquiries may be difficult to predict and could have a material adverse effect on our business, operating results, or financial condition.

Fluctuations in quarterly operating results lead to unpredictability of revenue and earnings

The timing of the release of our hardware and software products can cause material quarterly revenue and earnings fluctuations. A significant portion of revenue in any quarter may be derived from sales of new products introduced in that quarter or shipped in the immediately preceding quarter. If we are unable to begin volume shipments of a significant new product during the scheduled quarter our revenue and earnings will be negatively affected in that period. In addition, because a majority of the unit sales for a product typically occur in the first thirty to one hundred twenty days following its introduction, revenue and earnings may increase significantly in a period in which a major product is introduced and may decline in the following period or in a period in which there are no major product introductions.

Quarterly operating results also may be materially impacted by factors, including the level of market acceptance or demand for products and the level of development and/or promotion expenses for a product. Consequently, if net revenue in a period is below expectations, our operating results and financial position in that period are likely to be negatively affected, as has occurred in the past.

Our common stock may be affected by limited trading volume and may fluctuate significantly.

There has been no public market for our common stock and there can be no assurance an active trading market for our common stock will develop. This could adversely affect our shareholders’ ability to sell our common stock in short time periods or possibly at all.  Our stock price could fluctuate significantly in the future based upon any number of factors such as: general stock market trends; announcements of developments related to our business; fluctuations in our operating results; announcements of technological innovations, new products or enhancements by us or our competitors; general conditions in the markets we serve; general conditions in the U.S. or world economy; developments in patents or other intellectual property rights; the performance of our eligible portfolio companies; and developments in our relationships with our customers and suppliers. Substantial fluctuations in our stock price c ould significantly reduce the price of our stock.

Our common stock is traded on the "Over-the-Counter Bulletin Board," which may make it more difficult for investors to resell their shares due to suitability requirements.

Our common stock is currently quoted for trading on Over the Counter Bulletin Board (OTCBB) where we expect it to remain in the foreseeable future.  Broker-dealers often decline to trade in OTCBB stocks given the market for such securities are often limited, the stocks are more volatile, and the risk to investors is greater. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares. This could cause our stock price to decline.

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Trading of our stock may be restricted by the SEC’s “Penny Stock” regulations which may limit a stockholder’s ability to buy and sell our stock.

The U.S. Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors.” The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. T hese disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our share s.

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

In April, 2008, the Company approved a private placement of up to 3,000,000 units at a price of $1.00 per unit, with each unit consisting of one share and one share purchase warrant entitling the holder to purchase an additional share at a price of $1.20.  Effective April 10, 2008 we closed the first tranche of the offering and issued 1,250,000 units to three subscribers at a price of $1.00 per unit.  

The units were issued to the subscribers  pursuant to Regulation S of the Securities Act of 1933 on the basis that each subscriber represented that they were not a “US Person” as such term is defined in Regulation S. Proceeds of the offering were used to repay debt and for working capital purposes.  

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ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

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

None

ITEM 5.  OTHER INFORMATION

None

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ITEM 6.  EXHIBITS

Exhibits required by Item 601 of Regulation S-B

Exhibit Number	Description
(3)	(i) Articles of Incorporation; and (ii) Bylaws
3.1	Articles of Incorporation (incorporated by reference from our Form SB-2 filed on November 8, 2006)
3.2	Bylaws (incorporated by reference from our Form SB-2 filed on November 8, 2006)
3.3	Articles of Merger filed with the Nevada Secretary of State on February 8, 2008, effective February 19, 2008 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2008)
3.4	Certificate of Change filed with the Nevada Secretary of State on February 8, 2008, effective February 19, 2008 (incorporated by reference from our Current Report on Form 8-K filed on February 19, 2008)
3.5	Articles of Merger filed with the Nevada Secretary of State on April 21, 2008 (incorporated by reference from our Current Report on Form 8-K filed on May 2, 2008)
4.1	Form of Warrant Certificate for Offering completed January 25, 2008 (incorporated by reference from our Form 8-K filed on February 1, 2008)
(10)	Material Contracts
10.1	Agreement between Raven Resources Inc. and Emporio Explorations Corp. (incorporated by reference from our Form SB-2 filed on November 8, 2006)
10.2	Agreement between Emporio Explorations Corp. and Sanford Exploration (Canada) Inc. (incorporated by reference from our Form SB-2 filed on November 8, 2006)
10.3	General Release dated November 2, 2007 from Raven Resources Inc. (incorporated by reference from our Form 10-QSB filed on November 29, 2007)
10.4	Letter of Intent dated February 20, 2008 among Angstrom Technologies Corp.,  Angstrom Microsystems Inc. and the shareholders of Angstrom Microsystems Inc. (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.5	Agreement and Plan of Merger dated March 27, 2008 between Angstrom Acquisition Corp.. Angstrom Technologies Corp. and Angstrom Microsystems Inc. (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.6	Engagement Agreement Between Angstrom Microsystems Inc., Harbour Capital Management Group (1999) Inc. and Harbour Capital Ventures West LLC dated August 8, 2007 (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.7	Jain Employment Agreement (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.8	2008 Incentive Stock Option Plan (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.9	Registration Rights Agreement (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.10	Lock-Up Agreement (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.11	Assignment Agreement between Harbour Capital Management Group (1999) Inc., ATC and AMI assigning Harbour Capital Agreements rights to ATC (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)

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10.12	Licence Agreement between Lalit Jain and Angstrom Microsystems Inc. licensing rights to provisional patents (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
10.13	Consulting Agreement between Angstrom Microsystems, Inc. and Keith Johnson dated April 5, 2007 (incorporated by reference from our Current Report on Form 8-K filed on April 15, 2008)
(14)	Code of Ethics
14.1*	Code of Business Conduct and Ethics (incorporated by reference from our Annual Report on Form 10-KSB filed on April 2, 2008)
(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1*	Section 302 Certification under Sarbanes-Oxley Act of 2002
31.2*	Section 302 Certification under Sarbanes-Oxley Act of 2002
(32)	Section 1350 Certifications
32.1*	Section 906 Certification under Sarbanes-Oxley Act of 2002
32.2*	Section 906 Certification under Sarbanes-Oxley Act of 2002

*Filed herewith

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SIGNATURES

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

ANGSTROM MICROSYSTEMS CORP.

Lalit Jain

President and Chief Executive Officer
(Principal Executive Officer)

August 19, 2008

Alpha Pang

Chief Financial Officer, Treasurer and Secretary

(Principal Financial Officer and Chief Accounting Officer)

August 19, 2008