U. S. Securities and Exchange Commission

Washington, D. C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2008

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

For the transition period from _____ to _____

Commission File No. 0-30058

AMERICAN WENSHEN STEEL GROUP, INC.

(Name of Small Business Issuer in its Charter)

Delaware	04-2621506
(State or Other Jurisdiction of incorporation or organization)	(I.R.S. Employer I.D. No.)

c/o American Union Securities, 100 Wall Street, 15th Floor, New York, NY 10005

(Address of Principal Executive Offices)

Issuer's Telephone Number: (212) 232-0120

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No ____

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 CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:

May 20, 2008

Common Stock: 20,478,400

Transitional Small Business Disclosure Format (check one): Yes No X

AMERICAN WENSHEN STEEL GROUP, INC. AND SUBSIDIARIES

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2008

	Page

Financial Statements :-

Consolidated Balance Sheets as of March 31, 2008 (Unaudited) and September 30, 2007	2

Consolidated Statements of Operations for the six months ended March 31, 2008 and 2007 (Unaudited)	3

Consolidated Statement of Cash Flows for the six months ended March 31, 2008 and 2007 (Unaudited)	4

Notes to the Consolidated Financial Statements (Unaudited)	5

AMERICAN WENSHEN STEEL GROUP, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS CHINA SOFTWARE TECHNOLOGY GROUP CO., LTD)
CONSOLIDATED BALANCE SHEETS

	March 31, 2008			September 30, 2007
	(Unaudited)
ASSETS

Current Assets
Cash and cash equivalents	$	35,364		$	15,664
Accounts receivable, net		480,831			172,688
Other receivable, net		31,484			225,367
Inventory, net of reserve for obsolescence		158,822			130,663
Loan to related parties		196,174			388,136
Advance to Suppliers		285,200			7,176
Other current assets		1,962			39,910
Total Current Assets		1,189,836			979,604

Property, Plant & Equipment, net		560,997			564,308

Intangible Assets, net		577,530			580,557

Goodwill		1,176,591			1,176,591

Assets of the entity held for disposal		1,677,568			1,970,743

Total Assets	$	5,182,522		$	5,271,804


LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expense	$	933,394		$	42,352
Other payable		160,758			80,390
Tax payable		129,132			87,219
Unearned revenue		7,919			-
Due to related party		76,932			323,035
Total Current Liabilities		1,308,136			532,997

Stockholders' Equity
Preferred stock
Class A, authorized shares 1,000,000 $0.001 par value, 434,377 shares issued and outstanding		-			434
Class B, authorized shares 20,000,000, no par value; none outstanding		-			-
Common stock
($0.001 par value, 100,000,000 shares authorized 20,487,400 (post-split)sharess issued and outstanding		20,478			8,915,403
Additional paid-in capital		8,895,911			-
Other comprehensive income		832,785			634,893
Accumulated deficit		(5,874,788	)		(4,811,923	)
Total Stockholders' Equity		3,874,386			4,738,807

Total Liabilities and Stockholders' Equity	$	5,182,522			5,271,804

AMERIAN WENSHEN STEEL GROUP, INC. AND SUBSIDIARIES
(FORMERLY KNOWN AS CHINA SOFTWARE TECHNOLOGY GROUP CO.,LTD)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	For the three month periods ended						For the six month periods ended
	March 31,						March 31,
	2008			2007			2008			2007

Net sales	$	426,753		$	943,239		$	610,250		$	1,071,580

Cost of sales		276,564			686,167			349,783			807,102

Gross profit		150,189			257,072			260,467			264,478

Operating expenses
Selling and marketing		2,637			(2,814	)		2,637			3,181
Research and development		-			-			-			-
General and administrative		734,471			38,945			874,488			191,851
Total operating expenses		737,107			36,130			877,124			195,031

Income (loss) from operations		(586,918	)		220,942			(616,657	)		69,447

Non-operating income (expenses)
Other expenses		(109	)		412			(211	)		(81	)

Net Income (loss) from continuing operations before income tax		(587,027	)		221,353			(616,868	)		69,366

Income tax		570			22,891			36,086			22,891

Net Income (loss) from continuing operations		(587,597	)		198,462			(652,954	)		46,475

Loss from entity held for disposal		(138,769	)		-			(409,911	)		-

Net Income (Loss)		(726,366	)		198,462			(1,062,865	)		46,475

Other Comprehensive Income (loss)
Foreign currency translation gain		110,780			60,824			197,892			130,675

Net comprehensive Income (loss)	$	(615,586	)	$	259,286			(864,973	)		177,150

Net loss per share from continuing operations	$	(0.03	)	$	0.42			(0.03	)		0.10
Net income per share from entity held for disposal	$	(0.01	)	$	-			(0.02	)		-
Basic & Diluted Loss per share	$	(0.04	)	$	0.42			(0.05	)		0.10

Basic and dilutive weighted average shares outstanding		20,477,835			477,835			20,477,835			477,835

AMERICAN WENSHEN STEEL GROUP, INC.
(FORMERLY KNOWN AS CHINA SOFTWARE TECHNOLOGY GROUP CO., LTD)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)

	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss)	$	(1,062,865	)	$	46,475
Adjustments to reconcile net income (loss) from operations to net cash
provided by operating activities:
Depreciation and amortization		82,306			56,868
Bad debt		779,084			-
Stock option expenses		552			-
Changes in assets and liabilities:
(Increase) / decrease in assets:
Accounts receivable		(423,605	)		(33,225	)
Other receivable		220,154			253,877
Inventories		(18,390	)		(50,742	)
Other current assets		(561,559	)		(162,676	)
Increase / (decrease) in current liabilities:
Accounts payable and accrued expenses		862,066			238,126
Other payable		425,728			80,155
Tax payable		38,563			-
Net cash provided by operating activities from continuing operations		342,034			428,857
Net cash provided by operating activities of entity held for disposal		335,306			-
Net cash provided by operating activities		677,340			428,857

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(1,199	)		(50,595	)
Net cash used in investing activities from continuing operations		(1,199	)		(50,595	)
Net cash provided by investing activities of entity held for disposal		74,605			-
Net cash provided by investing activities		73,406			(50,595	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payment to return loans from related parties		(732,916	)		(608,462	)
Net cash provided by/(used in) financing activities from continuing operations		(732,916	)		(608,462	)
Net cash provided by (used in) financing activities of entity held for disposal		-			-
Net cash provided by (used in) financing activities		(732,916	)		(608,462	)

Effect of exchange rate on cash & cash equivalent		1,870			(19,276	)

Net increase (decrease) in cash & cash equivalents		19,700			(249,476	)

Cash & cash equivalents - beginning of year		15,664			466,699

Cash & cash equivalents - end of year	$	35,364		$	217,223

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest	$	-		$	-
Income taxes	$	-		$	-

AMERICAN WENSHEN STEEL GROUP, INC.. AND SUBSIDIARIES

(FORMERLY CHINA SOFTWARE TECHNOLOGY GROUP CO., LTD)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

American Wenshen Steel Group, Inc. (formally known as China Software Technology Group Co. Ltd,."we", "us", or the "Company") through its operating subsidiary, Chaoyang Liaogang Special Steel Co., Ltd. ("Chaoyang Liaogang"), a corporation organized under the laws of The People's Republic of China, is engaged in the business of manufacturing tungsten carbide steel, stainless steel, and die steel. All of Chaoyang Liaogang's business is currently in China. On October 9, 2007, the Company changed its name to American Wenshen Steel Group, Inc.

On Nov 14, 2006, American China Software Technology Group Co., Ltd (China Software) re-domiciled from Canada to Delaware.

American Wenshen Steel Group, Inc., (“American Wenshen”), a wholly owned subsidiary of the Company was incorporated on August 29, 2006 in the state of Delaware. It currently has no operations. American Wenshen owns all of the registered capital of Liaoning Wenshen Steel Mold Co. Ltd. (“Liaoning Wenshen”). Liaoning Wenshen is a wholly owned foreign entity incorporated in Shenyang, Liaoning Province, China in January, 2007.

Liaoning Wenshen owns all the registered capital of Chaoyang Liaogang Special Steel Co., Ltd. (“Chaoyang Liaogang Steel Co.”) which is established in Chaoyang City, Shenyang Province, China in October 2004

On July 30, 2007 China Software acquired 100% of the equity in American Wenshen pursuant to a merger agreement dated June 29, 2007 (“American Wenshen Merger”). Pursuant to the acquisition of American Wenshen, it became the wholly owned subsidiary of China Software. The former shareholders of American Wenshen received 434,377 shares of Series A Preferred Stock of China software, which will be convertible into 868,754,000 shares of common stock in exchange for all the issued and outstanding shares of American Wenshen. The Series A Preferred stock represents 97.58% of the voting power of the Company.

The acquisition of American Wenshen is accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of American Wenshen obtained control of the consolidated entity. Accordingly, the merger of the two companies is recorded as a recapitalization of American Wenshen, with American Wenshen being treated as the continuing operating entity. The historical financial statements presented herein will be those of American Wenshen. The continuing entity retained September 30 as its fiscal year end. The company recorded goodwill of $1,176,591 on reverse acquisition (Refer to Note 10).

China software is a holding company for HXT holdings, Inc. (formally China International Enterprises Corp., “HXT”).

On August 19, 2005, the China Software acquired 9,970,000 shares of common stock, par value $0.001 per share of HXT (formally know as China International Enterprises Inc.), representing 100% of the issued and outstanding capital stock of HXT under a share exchange agreement dated August 15, 2005 (the “Share Exchange”). Under the Share Exchange, China Software agreed to issue an aggregate of 638,080,000 shares of common stock of Moving Bytes to the HXT shareholders, representing 92.87% of the issued and outstanding capital shares of Moving Bytes, giving effect to the Share Exchange.

On January 31, 2005, HXT acquired 100% outstanding shares of XHT from its three shareholders in exchange of 9,000,000 shares of common stock of HXT representing 83.33% of its issued and outstanding common stock on the date of acquisition. The acquisition has been recorded as a recapitalization of XHT, with XHT being treated as the continuing entity. Effective August 16, 2006, the Company changed its name to HXT Holdings, Inc.

Heng Xing Technology Group Development Limited (the “XHT”) is a British Virgin Islands Corporation, incorporated on May 28, 2004. The company is a non-operative holding company of Shenzhen Hengtaifeng Technology Co. Ltd. (“HTC”).

On December 14, 2004, XHT entered into an agreement with all the shareholders of HTC to acquire all of the outstanding stock of HTC. The acquisition has been recorded as a recapitalization of HTC, with HTC being treated as the continuing entity.

HTC was founded in Hi-tech Technology Industrial Park in the city of Shenzhen, Guangdong Province of People’s Republic of China in July 1995, under the name Shenzhen Guangba Trade Development Co., Ltd. HTC amended its name to Shenzhen Hengtaifeng Technology Co. Ltd. on May 12, 2000. HTC is primarily engaged in developing and distributing software and hardware systems on housing fund, guarantee information management, and home plan management in the People’s Republic of China.

Subsequent to the American Wenshen Merger, the organization chart is as follows :-

Prior to the American Wenshen Merger, China Software assigned all of its pre-Merger business and assets to HXT Holdings, Inc., its wholly-owned subsidiary, and HXT Holdings assumed responsibility for all of the liabilities of China Software that existed prior to the Merger. It was also agreed that HXT Holdings, Inc. will file a registration statement with the Securities and Exchange Agreement that will, when declared effective, permit China Software to distribute all of the outstanding shares of HXT to the holders of its common stock. After the registration statement is declared effective, the Board of Directors of China Software will fix a record date, and shareholders of record on that date will receive the shares of HXT Holdings in proportion to their ownership of China Software common stock.

On Mar 23, 2006, the Company announced a 1:32 reverse split of its outstanding common shares. Both actions were approved by the Company's shareholders at a meeting held on March 7, 2006.

On October 12, 2007 the Company announced a 1:45 reverse split of its outstanding common stock . All actions were approved by the Board of Directors and the majority shareholders of the Company during Special Meeting of Shareholders held on October 9, 2007.

GOING CONCERN :-

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of its liabilities in the normal course of business. Through March 31, 2008, the Company had incurred cumulative losses of $5,874,788 including net losses from continuing operations of $652,954 for the six months ended March 31, 2008.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. Management devoted considerable effort during the period ended September 30, 2007, towards (i) obtaining additional equity and debt financing and (ii) evaluation of its distribution and marketing methods.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. All significant inter-company transactions and accounts have been eliminated in the consolidation. The functional currency is the Chinese Renminbi (CNY); however the accompanying financial statements have been translated and presented in United States Dollars (USD).

The consolidated condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-KSB for the year ended September 30, 2007. The Company follows the same accounting policies in preparation of interim reports. Results of operations for the interim periods are not indicative of annual results.

Principles of consolidation

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries American Wenshen, Liaoning Wenshen and Chaoyang Liaogang Steel Co. All significant inter-company accounts and transactions have been eliminated.

Foreign currency translation

The reporting currency is the U.S. dollar. The functional currency of the Company is the local currency, the Chinese Renminbi (“CNY”). The financial statements of the Company are translated into United States dollars in accordance with Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation”, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for the equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. At March 31, 2008 and September 30, 2007, the cumulative translation adjustment of $832,785 and $634,893, respectively, was classified as an item of other comprehensive income in the stockholders’ deficit section of the consolidated balance sheet. For the six months ended March 31, 2008 and 2007, accumulated other comprehensive income was $197,892 and $130,675, respectively.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

Risks and uncertainties

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Accounts and other receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. Allowance for doubtful debts amounted to $245,947 and $93,339 as of March 31, 2008 and September 30, 2007, respectively.

Inventories

Inventories are valued at the lower of cost (first-in, first-out) or market value. Management compares the cost of inventories with market value and an allowance is provided for the difference between recorded and market values.

Property and Equipment

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of: 40 years for building, 5 years for machinery, equipments and vehicles.

Fair Value of Financial Instruments

Statement of Financial Accounting Standard No. 107, "Disclosures about Fair Value of Financial Instruments", requires that the Company disclose estimated fair values of financial instruments.

The Company's financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables, advances to suppliers, accounts payable, other payable, tax payable, and related party advances and borrowings.

As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheet. This is attributed to the short maturities of the instruments and that interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective balance sheet dates.

Basic and Diluted Earnings Per Share

Earnings per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Revenue Recognition

In accordance wit SAB 104, revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from customers.

Statement of Cash Flows

In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Segment Reporting

Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. SFAS 131 has no effect on the Company’s consolidated financial statements as the Company consists of one reportable business segment. All revenue is from customers in People’s Republic of China. All of the Company’s assets are located in People’s Republic of China.

Recently Issued Accounting Standards

In September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The management is currently evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)’ This Statement improves financial reporting by requiring an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements:

a.	A brief description of the provisions of this Statement

b.	The date that adoption is required

c.	The date the employer plans to adopt the recognition provisions of this Statement, if earlier.

The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The management is currently evaluating the effect of this pronouncement on financial statements.

In February of 2007 the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115.” The statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The company is analyzing the potential accounting treatment.

In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 seeks to reduce the diversity in practice associated with certain aspects of measuring and recognition in accounting for income taxes. In addition, FIN 48 requires expanded disclosure with respect to the uncertainty in income taxes and is effective as of the beginning of the 2008 fiscal year. Management is currently evaluating the effect of this pronouncement on financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted subject to specific requirements outlined in the new Statement. Therefore, calendar-year companies may be able to adopt FAS 159 for their first quarter 2007 financial statements.

The new Statement allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. FAS 159 also establishes presentation and disclosure requirements designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities. Management is currently evaluating the effect of this pronouncement on financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements”, which is an amendment of Accounting Research Bulletin (“ARB”) No. 51. This statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This statement changes the way the consolidated income statement is presented, thus requiring consolidated net income to be reported at amounts that include the amounts attributable to both parent and the noncontrolling interest. This statement is effective for the fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Based on current conditions, the Company does not expect the adoption of SFAS 160 to have a significant impact on its results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” This statement replaces FASB Statement No. 141, “Business Combinations.” This statement retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. This statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the statement. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS 160 to have a significant impact on its results of operations or financial position.

In March, 2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows.

FASB Statement No. 161 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk–related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important. Based on current conditions, the Company does not expect the adoption of SFAS 161 to have a significant impact on its results of operations or financial position.

NOTE 3. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.

The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

The Company does not maintain fire, theft or liability insurance. The Company is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; error and omissions and natural disasters.

NOTE 4. INVENTORY

Inventories as of March 31, 2008 and September 30, 2007 consist of the following:

	2008			2007
Raw Material	$	536,034		$	436,688
Finish Goods					24,228
Work in progress					22,786
		536,034			483,702
Less: Reserve for obsolescence		(377,213	)		(353,039	)
Total	$	158,882		$	130,663

NOTE 5. LOAN TO RELATED PARTIES

As of March 31, 2008 and September 30, 2007, the Company had a loan to related parties amounting to $196,174 and $388,136, respectively. The loan is non-interest bearing, unsecured and due on demand.

NOTE 6. OTHER CURRENT ASSETS

Other Receivables as of March 31, 2008 and September 30, 2007 are as summarized below :

	2008			2007
Loans receivable (interest free, unsecured and due on demand)	$	-		$	218,877
Deposits		16,413			15,361
Others		34,479			28,645
		50,892			262,883
Less : Allowance for Doubtful Debts		(19,407	)		(37,516	)
Total	$	31,484		$	225,367

NOTE 7. PROPERTIES AND EOUIPMENT

The balance of Company property and equipment as of March 31, 2008 and September 30, 2007 is summarized as follows:

	2008			2007

Office Equipment	$	18,961		$	17,746
Building		363,815			340,500
Production Equipment		206,601			193,680
Vehicles		160,034			148,286

		749,411			700,212

Less: Accumulated depreciation		(188,414	)		(135,904	)

Property and equipment, net	$	560,997		$	564,308

The Company incurred depreciation expense for the six months ended March 31, 2008 and 2007 are $41,356 and $19,619, respectively.

NOTE 8. INTANGIBLE ASSESTS - PATENTS

There are five patents that have been acquired from third parties in 2005. The Patents are being amortized over a 12 year period. At March 31, 2008, the net amount of the Patents was $577,530 after considering the accumulated amortization of $278,070. At September 30, 2007, the net amount of the Patents was $580,557 after considering the accumulated amortization of $220,211. The amortization expense was $40,950 & $37,249 and for the six months ended March 31, 2008 & 2007 respectively.

Amortization expense for the Company’s intangible assets over the next five fiscal years is estimated to be:

Year ended September 30,	Amount
2009	$	85,650
2010		85,650
2011		85,650
2012		85,650
2013		85,650

NOTE 9. GOODWILL

As per SFAS 141 Business Combinations if the issuer is a public company having business operations, consideration cost would be based on the aggregate fair value of the issuer's stock outstanding at date of acquisition. Such cost would be allocated to the fair value of net assets acquired and any resultant goodwill would be recognized. If the fair value of stock is below book value, noncurrent assets would be written down to eliminate an excess of net assets acquired over the fair value of the stock.

Based upon SFAS 141, as China Software with its wholly owned subsidiary HXT was a public company having business operations, goodwill was recognized as of the date of reverse acquisition.

The calculation of goodwill is as follows :-

Fair value of the assets of China software & HXT Holdings as of the acquisition date :-

Current assets	$	2,117,436
Fixed Assets		125,083
Intangible Assets		126,048
		2,368,567
Current Liabilities		(319,772	)
Fair value of Net Assets		2,048,796

Fair value of the stock outstanding of China Software as of the acquisition date		3,225,386
477,835 post split shares of common stock @ FMV $6.75 (split adjusted)

Goodwill	$	1,176,591

The following is the proforma financial information of the Company assuming the transaction had been consummated at the beginning of the fiscal year ended September 30, 2007:

	For the year
	Ended September 30,
	2007
	(Unaudited)
Statement of Operations:
Revenues	$	1,162,555
Cost of Sales		868,755
Gross Profit		293,800

Operating Expenses		650,101

Income (loss) from operations		(356,301	)

Other income and (expenses)		(44,374	)

Net Income (loss) from continuing operations	$	(400,675	)

Net Income (loss) from entity held for disposal	$	(263,354	)

Net Income (loss)	$	(664,029	)

Earnings Per Share:
Basic	$	(1.39	)
Diluted	$	(1.39	)

Basic		477835
Diluted		477835

NOTE 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts Payable and Accrued expenses as of March 31, 2008 and September 30, 2007 are as follows:

	2008		2007

Accounts payable	$	913,682	$	16,433
Accrued Expenses		19,712		19,712
Total	$	933,394	$	42,352

NOTE 11. OTHER PAYABLE

Other Payables as of March 31, 2008 and September 30, 2007 are as follows:

	2008		2007

Loan payable (unsecured, interest free and due on demand)	$	87,621	$	40,414
Other payable		73,413		39,976
Total	$	161,034	$	80,390

NOTE 12. DUE TO RELATED PARTIES

Due to Related Parties was $76,932 and $323,035 as of March 31, 2008 and September 30, 2007, respectively. The loan is interest free, due on demand and unsecured.

NOTE 13. SHAREHOLDERS’ EQUITY

Prior to the Merger, China Software assigned all of its pre-Merger business and assets to HXT Holdings, Inc., its wholly-owned subsidiary, and HXT Holdings assumed responsibility for all of the liabilities of China Software that existed prior to the Merger.

On October 12, 2007 the Company announced a 1:45 reverse split of its outstanding common . All actions were approved by the Board of Directors and the majority shareholders of the Company during Special Meeting of Shareholders held on October 9, 2007.

During the six months ended March 31, 2008, the Company cancelled the preferred stock of 434,377 shares issued upon the reverse acquisition. The company issued 20million shares of common stock in exchange for the preferred stock.

NOTE 14 STOCK OPTIONS

The stock options summary for the six months ended March 31, 2008 is as follows (has been stated to retroactively effect a 45:1 reverse stock split in October 2007) :-

	Options outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding, September 30, 2007		240	$	43.20	$	-
Granted		-		-		-
Forfeited		-		-		-
Exercised		-		-		-
Outstanding, March 31, 2008		240	$	43.20	$	-

Following is a summary of the status of options outstanding at March 31, 2008:

Outstanding Options				Exercisable Options
Exercise Price	Options	Weighted Average Remaining Life	Weighted Average Exercise Price	Exercisable Options	Weighted Average Exercise Price
$43.20	240	1.94	$43.20	240	$43.20

Primarily as a result of adopting SFAS No. 123R, the Company recognized $552 in share-based compensation expense for the six months ended March 31, 2008. The impact of this share-based compensation expense on the Company’s basic and diluted earnings per share was $0.00 per share. The fair value of our stock options was estimated using the Black-Scholes option pricing model.

NOTE 15 STATUTORY RESERVES

As stipulated by the Company Law of the People's Republic of China (PRC), net income after taxation can only be distributed as dividends after appropriation has been made for the following:

1.	Making up cumulative prior years' losses, if any;

2.	Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;

3.	Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.

In accordance with the Chinese Company Law, the Company reserved $0 to the Statutory surplus reserve for six months ended March 31, 2008 on account of net loss in the three months ended March 31, 2008.

NOTE 16 - ENTITY HELD FOR DISPOSAL

As a result, HXT is reported as an entity held for disposal in the accompanying financials.

The acquisition of American Wenshen is accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of American Wenshen obtained control of the consolidated entity. Accordingly, the merger of the two companies is recorded as a recapitalization of American Wenshen, with American Wenshen being treated as the continuing operating entity. The historical financial statements presented herein will be those of American Wenshen. The continuing entity retained September 30 as its fiscal year end. Due to this, the operations of HXT are for the post acquisition period from July 30, 2007 through September 30, 2007 and no operations for HXT for the year ended September 30, 2006.

The components of loss from operations related to the entity held for disposal for the six months ended March 31, 2008 are shown below.

Net sales	$	433,618

Cost of sales		132,891

Gross profit		300,727

Operating expenses
Selling expenses		204,680
Research & development expenses		269,454
General and administrative		290,124
Total operating expenses		764,258

Loss from operations		(463,531	)

Non-operating expenses
Other income		38,264
Interest income		15,357

Net Loss before income tax		(409,911	)

Provision for Income tax		-

Net loss from entity held for disposal / spin off		(409,911	)

Assets and liabilities for the entity held for disposal as of March 31, 2008 are as follows:

Assets :-
Cash and cash equivalents	$	14,719
Accounts receivable, net		167,142
Other receivable		597,037
Inventory		502,316
Other current assets		458,716
Property, Plant & Equipment, net		225,736
Total Assets		1,965,666
Liabilities :-
Accounts payable and accrued expense		32,528
Unearned revenue		255,570
Total Liabilities		288,098

Net Assets Held for disposal / spin-off	$	1,677,568

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

Classification of HXT Holdings, Inc.

American Wenshen Steel Group owns two operating subsidiaries: Chaoyang Liaogang, which carries on its specialty steel operations, and Shenzhen Hengtaifeng Technology Co., Ltd., which carries on its computer systems operations. Shenzhen Hengtaifeng Technology Co., Ltd. is owned by HXT Holdings, Inc., a subsidiary of American Wenshen Steel Group. HXT Holdings has filed a registration statement with the Securities and Exchange Commission in contemplation of a distribution by American Wenshen Steel Group of its shares in HXT Holdings. For that reason, on the financial statements in this report, HXT Holdings and its subsidiaries have been categorized as an “entity held for disposal;” its net assets have been recorded on our balance sheet as “Assets of the entity held for disposal;” and the results of its operations have been recorded as an extraordinary item labeled “loss from entity held for disposal.’ The remainder of the financial statements reflects the assets and liabilities and results of operations of Chaoyang Liaogang.

Results of Operations

Chaoyang Liaogang commenced substantial production activity in the fall of 2006. Through December 31, 2006 its revenues consisted only of sales of small amounts of steel incidental to its development activities. Most of the $1,162,555 in revenue that Chaoyang Liaogang recorded for the year ended September 30, 2007 were realized in the three months ended March 31, 2007, when it made a large sale of special steel and one variety of die steel to one distributor, Shenyang Geshite Special Steel Co., Ltd., which is located nearby in the capital of Liaoning Province. In the first two months of fiscal 2008, we have been developing other customers for our products. As a result we have achieved revenue in each quarter, albeit modest. For the three months ended March 31, 2008 we realized $426,753 in revenue, a substantial reduction from the $943,239 that we realized in the second quarter of 2007, but from an expanded customer base. For the six months ended March 31, 2008 our revenues totaled $610,250.

Chaoyang Liaogang had not, prior to March 31, 2007, commenced production or sales of tungsten carbide steel, there was no tungsten carbide steel in its inventory at September 30, 2007, and we have not sold any to date. However, once we have acquired the funds to fully outfit our factory, we expect that tungsten carbide steel will produce a substantial portion of our revenue in future periods.

Chaoyang Liaogang’s gross margin for the three and six month periods ended March 31, 2008 was 35%% and 43% respectively. This ratio was substantially improved over the 25% gorss margin we realized in the first six months of 2007, and was closer to the ratios realized by our industry. Our gross margin remains less than optimal due to (a) our low sales volume, which leads to inefficiencies in the allocation of overhead expenses, and (b) the fact that we are using scrap steel for our primary raw material. In recent years the international market price for scrap steel has increased several-fold, making the reworking of scrap steel less substantially less profitable than it was at the beginning of the current decade. We expect our profit margins to increase significantly in the future, due to:

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increased sales volume, which will lead to more efficient use of our facilities;

·	introduction of tungsten carbide steel into our sales, which we will be able to market at a higher mark-up over cost than our other steel products; and

·	acquisition of sources of iron ore, which will lower our cost of raw materials.

Our general and administrative expenses rose from the nominal level we incurred in the first half of fiscal 2007 to amounts that in the first half of fiscal 2008 have exceeded our revenue. The primary reason for this increase has been our efforts to bring our factory into full production, which involves increased staff expenses. The secondary reason for the increase is the fact that we are now incurring the costs attendant to our status as a U.S. public company, which occurred in the summer of 2007.

In the future, we expect that our overall efficiencies will enable us to increase our sales volume at a rate that will be substantially greater than the accompanying increase in our general and administrative expenses. Sales and marketing expense, however, will increase as we expand our marketing program In addition, as noted below, we intend to raise money for capital investment: purchase of additional smelting equipment and development of an iron mining facility. To the extent that we obtain those funds as loans, our general and administrative expenses will be increased by (a) interest expense and (b) depreciation expense.

Because Chaoyang Liaogang recorded income under Chinese accounting principles for the first six months of fiscal 2008, we recorded income tax of $36,086, despite our lack of income. For the next several years, however, we will be entitled to substantial income tax abatements that the Chinese government affords to profitable foreign-owned enterprises. We can only obtain those abatements by applying for them after we meet the necessary criteria. As a result, our statement of operations will not reflect the effects of the abatements until some future date.

Our business operates entirely in Chinese Renminbi, but we will report our results in our SEC filings in U.S. Dollars. The conversion of our accounts from RMB to Dollars results in translation adjustments, which are reported as a middle step between net income/loss and net comprehensive gain/loss. The net income/loss is added to the retained earnings on our balance sheet; while the translation adjustment is added to a line item on our balance sheet labeled “other comprehensive income,” since it is more reflective of changes in the relative values of U.S. and Chinese currencies than of the success of our business. During the six months ended March 31, 2008 the unrealized gain on foreign currency translations added $197,892 to our accumulated other comprehensive income.

Liquidity and Capital Resources

The development and operations of Chaoyang Liaogang have been funded to date primarily by capital contributions and loans from its shareholders, primarily Yang Kuidong. As a result, at September 30, 2007 Chaoyang Liaogang had only $323,035 in debt, most of which was owed to Mr. Yang. In the six months ended March 31, 2008, Chaoyang Liaogang made payments to Mr. Yang that reduced its obligation to him by $246,103, to $76,932. Nevertheless, until we obtain a source of outside financing, we remain dependent on Mr. Yang as our primary source of working capital.

At March 31, 2008 Chaoyang Liaogang had a working capital deficit of $118,576, representing a $556,184 depletion of working capital since September 30, 2007. The reduction resulted primarily from the fact that our expenses exceeded our revenue during the six month period, a deficit that we financed by increasing our accounts payable, and from the fact that we reduced our obligations to our Chairman during the recent six month period.

Chaoyang Liaogang currently has sufficient capital resources to carry on its business as it is currently constituted, particularly as we can rely on the capital resources of our Chairman. However, our business plan calls for substantial capital investment over the next twelve months. We intend to expand the capacity of our factory by investing approximately $4.5 million in new capital equipment, specifically:

·	a 30 ton arc furnace - $2.5 million

·	a 30 ton heavy duty electric dregs furnace - $1.3 million

·	a 5 ton free-going hammer - $0.7 million

At the present time, we have received no commitments for the funds required for our planned capital investments. Obtaining those funds, if we can do so, will require that we issue substantial amounts of equity securities or incur significant debts. We believe that the expected return on those investments will justify the cost. However, our plan, if accomplished, will significantly increase the risks to our liquidity.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

Risk Factors That May Affect Future Results

You should carefully consider the risks described below before buying our common stock. If any of the risks described below actually occurs, that event could cause the trading price of our common stock to decline, and you could lose all or part of your investment.

Risk Factors Relating to the Business of Chaoyang Liaogang

Because our production operations have only recently commenced, unexpected factors may hamper our efforts to implement our business plan.

Our first significant sales volume occurred in the three months ended March 31, 2007. Even then, over 90% of our sales were to one customer, a local distributor of special steel. Since then our sales revenue has fallen short of our administrative expenses. Our business plan contemplates that we will engage in much broader marketing operations, involving a lengthy menu of product offerings. Implementation of that business plan will also entail much more complex production operations. Because these are areas in which we have limited experience, problems may occur with production or marketing that we have not anticipated, which would interfere with our business, and prevent us from achieving profitability.

Our profits will be limited unless we are able to secure a source of iron ore.

We currently manufacture our special steel by melting scrap steel. The price of scrap steel on the international market is much higher today than it was five years ago, and our expectation is that the price will remain high. Therefore, in order to achieve efficient operations, it will be necessary for us to develop the capacity to smelt iron ore to produce steel. Our plan is to obtain iron ore from our Chairman, Yang Kuidong, who owns certain undeveloped mining rights. Howwever, implementation of that plan will require that Mr. Yang make significant capital investments in order to develop his mining properties. If he is unable to obtain the necessary funds, or if our efforts to develop a source of iron ore are fruitless for any other reason, our profitability will be limited.

The capital investments that we plan for the next two years may result in dilution of the equity of our present shareholders.

Our business plan contemplates that we will invest approximately 35 million RMB ($4.5 million) in our manufacturing facility during the next years and an undetermined amount in creating a working capital reserve. We intend to raise a portion of the necessary funds by selling equity in our company. At present we have no commitment from any source for those funds. We cannot determine, therefore, the terms on which we will be able to raise the necessary funds. It is possible that we will be required to dilute the value of our current shareholders’ equity in order to obtain the funds. If, however, we are unable to raise the necessary funds, our growth will be limited, as will our ability to compete effectively.

Competition could prevent us from achieving a significant market position.

The special steel industry is populated by many large companies, many of which receive substantial state support and have capital assets that dwarf our own. Our efforts to secure a position in the market for special steel will be met by competition from Japanese and European producers of high quality special steels. We must also compete against lower grade steels that may attract customers who will sacrifice quality for price. Currently smelters in Russia and India are the source of significant competition at the lower end of the market. If a well-capitalized company directed its financial strength toward competition with us, it could achieve economies of scale that might permit it to market its products at lower prices than ours. If this occurred before we had established a significant market awareness of our brand, we might be unable to compete effectively, and would be unable to achieve profitability.

A recession in China could significantly hinder our growth.

The growing demand for special steel in China has been swelled, in large part, by the recent dramatic increases in industrial production in China. The continued growth of our market will depend on continuation of recent improvements in the Chinese economy. If the Chinese economy were to contract and investment capital became limited, manufacturers will be less able to pay premium prices for the higher quality special steels that we produce. Many financial commentators expect a recession to occur in China in the near future. The occurrence of a recession could significantly hinder our efforts to implement our business plan.

Increased environmental regulation could diminish our profits.

The production of steel involves the production of pollutants. At the present time our operations comply with all applicable government regulations designed to protect the environment. There is increasing concern in China, however, over the degradation of the environment that has accompanied its recent industrial growth. It is likely that additional government regulation will be introduced in order to protect the environment. Compliance with such new regulations could impose on us substantial costs, which would reduce our profits.

Our business and growth will suffer if we are unable to hire and retain key personnel that are in high demand.

Our future success depends on our ability to attract and retain highly skilled engineers, production supervisors, and marketing personnel. In general, qualified individuals are in high demand in China, and there are insufficient experienced personnel to fill the demand. In a specialized scientific field, such as ours, the demand for qualified individuals is even greater. If we are unable to successfully attract or retain the personnel we need to succeed, we will be unable to implement our business plan.

We may have difficulty establishing adequate management and financial controls in China.

The People’s Republic of China has only recently begun to adopt the management and financial reporting concepts and practices that investors in the United States are familiar with. We may have difficulty in hiring and retaining employees in China who have the experience necessary to implement the kind of management and financial controls that are expected of a United States public company. If we cannot establish such controls, we may experience difficulty in collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet U.S. standards.

Government regulation may hinder our ability to function efficiently.

The national, provincial and local governments in the People’s Republic of China are highly bureaucratized. The day-to-day operations of our business require frequent interaction with representatives of the Chinese government institutions. The effort to obtain the registrations, licenses and permits necessary to carry out our business activities can be daunting. Significant delays can result from the need to obtain governmental approval of our activities. These delays can have an adverse effect on the profitability of our operations. In addition, compliance with regulatory requirements applicable to steel production may increase the cost of our operations, which would adversely affect our profitability.

Capital outflow policies in China may hamper our ability to pay dividends to shareholders in the United States.

The People’s Republic of China has adopted currency and capital transfer regulations. These regulations require that we comply with complex regulations for the movement of capital. Although Chinese governmental policies were introduced in 1996 to allow the convertibility of RMB into foreign currency for current account items, conversion of RMB into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of the State Administration of Foreign Exchange. We may be unable to obtain all of the required conversion approvals for our operations, and Chinese regulatory authorities may impose greater restrictions on the convertibility of the RMB in the future. Because most of our future revenues will be in RMB, any inability to obtain the requisite approvals or any future restrictions on currency exchanges will limit our ability to pay dividends to our shareholders.

Currency fluctuations may adversely affect our operating results.

Chaoyang Liaogang generates revenues and incurs expenses and liabilities in Renminbi, the currency of the People’s Republic of China. However, as a subsidiary of American Wenshen, it will report its financial results in the United States in U.S. Dollars. As a result, our financial results will be subject to the effects of exchange rate fluctuations between these currencies. From time to time, the government of China may take action to stimulate the Chinese economy that will have the effect of reducing the value of Renminbi. In addition, international currency markets may cause significant adjustments to occur in the value of the Renminbi. Any such events that result in a devaluation of the Renminbi versus the U.S. Dollar will have an adverse effect on our reported results. We have not entered into agreements or purchased instruments to hedge our exchange rate risks.

We have limited business insurance coverage.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products, and do not, to our knowledge, offer business liability insurance. As a result, we do not have any business liability insurance coverage for our operations. Moreover, while business disruption insurance is available, we have determined that the risks of disruption and cost of the insurance are such that we do not require it at this time. Any business disruption, litigation or natural disaster might result in substantial costs and diversion of resources.

American Wenshen is not likely to hold annual shareholder meetings in the next few years.

Management does not expect to hold annual meetings of shareholders in the next few years, due to the expense involved. The current members of the Board of Directors were appointed to that position by the previous directors. If other directors are added to the Board in the future, it is likely that the current directors will appoint them. As a result, the shareholders of American Wenshen will have no effective means of exercising control over the operations of American Wenshen.

ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2008. Pursuant to Rule13a-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, “disclosure controls and procedures” means controls and other procedures that are designed to insure that information required to be disclosed by American Wenshen Steel Group in the reports that it files with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time limits specified in the Commission’s rules. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to insure that information American Wenshen Steel Group is required to disclose in the reports it files with the Commission is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that American Wenshen Steel Group’s system of disclosure controls and procedures was effective as of March 31, 2008 for the purposes described in this paragraph.

Changes in Internal Controls. There was no change in internal controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act or 1934) identified in connection with the evaluation described in the preceding paragraph that occurred during American Wenshen Steel Group’s second fiscal quarter that has materially affected or is reasonably likely to materially affect American Wenshen Steel Group’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 2. Changes in Securities and Small Business Issuer Purchase of Equity Securities

None.

(e) Purchases of equity securities

The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the 2nd quarter of fiscal 2008.

Item 6. Exhibits

31.1	Rule 13a-14(a) Certification – CEO

31.2	Rule 13a-14(a) Certification – CFO

32 Rule 13a-14(b) Certification

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.

AMERICAN WENSHEN STEEL GROUP, INC.

Date: May 20, 2008

By: /s/ Yang Kuidong

Yang Kuidong, Chief Executive Officer

By: /s/ Zhang Liwei

Zheng Liwei, Chief Financial Officer

American Wenshen Steel Group, Inc. 10-Q