Tarsier Ltd. - FORM 10-Q

Attached files

file	filename
EX-32 - Tarsier Ltd.	exhibit32.htm
EX-31.1 - Tarsier Ltd.	exhibit311.htm
EX-31.2 - Tarsier Ltd.	exhibit312.htm

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, 2011

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

For the transition period from _____ to _____

Commission File No. 0-54205

HXT HOLDINGS, INC.

(Name of Registrant in its Charter)

Delaware	20-2188353
(State of Other Jurisdiction of incorporation or organization)	(I.R.S. Employer I.D. No.)

NO. 5 FLOOR 6, BLOCK A, SKYWORTH BLDG.HI-TECH INDUSTRIAL PARK, NANSHAN DISTRICT SHENZHEN P.R. CHINA 518057

(Address of Principal Executive Offices)

Issuer's Telephone Number: 406-282-3188

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 No X

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes No_

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,"accelerated filer"and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer ___ Accelerated filer ____ Non-accelerated filer ___ 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

As of May 13, we had 666,241 shares of common stock, par value $.001 per share issued and outstanding.

PART I. FINANCIAL INFORMATION

HXT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
	March 31,2011			September 30,2010
CURRENT ASSETS:
Cash & cash equivalents	$	172,375		$	154,201
Accounts receivable, net		154,444			210,984
Inventory		6,561			6,479
Other receivable		155,305			96,149
Advances to suppliers		20,079			-
Deposits		-		-
Total current assets		508,764			467,814

PROPERTY AND EQUIPMENT, NET		84,796			94,266
INTANGIBLE ASSETS, NET		6,333			9,871

TOTAL ASSETS	$	599,893		$	571,951

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable & accrued expenses	$	76,377		$	88,826
Payroll payable		118,035			41,587
Unearned revenue		596,315			537,619
Related party payable		-			2,172
Total current liabilities		790,727			670,204

STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value; Authorized shares 1,000,000,
none issued and outstanding		-			-
Common stock, $0.001 par value; Authorized shares 60,000,000,
29,910,000 shares issued and 666,241 outstanding as of March 31, 2010
29,910,000 shares issued and 666,241 outstanding as of September 30, 2010		29,910			29,910
Additional paid in capital		1,199,334			1,199,334
Treasury stock		(29,244	)		(29,244	)
Statutory reserve		75,864			75,864
Accumulated other comprehensive income		316,924			318,917
Accumulated deficit		(1,783,622	)		(1,693,035	)
Total stockholders' deficit		-190,834			-98,253
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	599,893		$	571,951

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

HXT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	For the six month periods ended March 31						For the three month periods ended March 31
	2011			2010			2011			2010


Net revenues	$	749,734		$	722,973		$	277,318		$	402,476

Cost of revenue		139,987			168,189			6,515			124,940

Gross profit		609,747			554,784			270,803			277,536

Operating expenses
Selling expenses		239,951			112,463			170,558			61,231
General and administrative expenses		94,077			112,488			53,020			65,467
Research & development expenses		377,427			320,177			157,801			151,872
Total operating expenses		711,455			545,128			381,379			278,570

Income (loss) from operations		(101,708	)		9,656			(110,577	)		(1,034	)

Non-operating income (expense):
Interest expense		-			-			-			-
Interest income		665			93			325			59
Gain (loss) on sale of property					(981	)		-			-
Technology subsidy											-
Value added tax refund		9,999						557			-
Loss on sale of property		-									-
Other income		1,061			66,253			8			6,239
Other expense		(604	)		(378	)		(77	)		(130	)

Total non-operating income		11,121			64,987			813			6,168


Net Income (Loss)		-90,587			74,643			-109,763			5,134

Foreign currency translation gain (loss)		(1,993	)		20			(844	)		6

Comprehensive Income/(Loss)	$	-92,581		$	74,664		$	-110,607			5,140

Basic and diluted weighted average shares outstanding		666,241			666,241			666,241			666,241

Basic and diluted net income (loss) per share	$	(0.136	)	$	0.112		$	(0.165	)		0.008

Basic and diluted weighted average shares outsanding are the same as there is no anti-dilutive effect.
The accompanying notes are an integral part of the consolidated financial statements.

HXT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the six month periods ended March 31
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(90,587	)	$	74,643
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation		14,691			33,563
Loss on sale of property		-			981
Bad debt expense		-			-
(Increase) / decrease in assets:
Accounts receivable		59,830			(84,763	)
Inventory		26			(1,163	)
Other receivable		(57,326	)		(39,958	)
Increase / (decrease) in current liabilities:
Accounts payable & accrued expenses		(13,878	)		34,010
Unearned revenue		49,525			(14,310	)
Payroll payable		75,459			511
Net cash provided by operating activities		17,738			3,514

CASH FLOWS FROM INVESTING ACTIVITIES:
Receipt of cash on disposal of property		-			58
Acquisition of property & equipment		-			(10,155	)
Net cash used in investing activities		-			(10,097	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan-officers		(2,200	)		(15,394	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		2,636			(6	)

NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENTS		18,174			-21,982
					-
CASH & CASH EQUIVALENTS, BEGINNING BALANCE		154,201			63,364

CASH & CASH EQUIVALENTS, ENDING BALANCE	$	172,375		$	41,381

Supplement disclosure of cash flow information:
Income taxes paid	$	-		$	-
Interest expenses paid	$	-		$	-

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

HXT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

HXT Holdings, Inc. (formally China International Enterprises Corp.) (“the Company”, “HXT”, “We”, “Us”, “Our”) was incorporated in Delaware on January 13, 2005. On January 31, 2005, the Company entered into a Share Exchange Agreement, pursuant to which HXT acquired 100% of the outstanding stock of Heng Xing Technology Group Development Limited (XHT) from its three shareholders. XHT's only asset is 100% of the stock of Shenzhen Hengtaifeng Technology Co., Ltd., a PRC corporation hereinafter is referred to as “HTC”. 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 (“XHT”) is a British Virgin Islands Corporation, incorporated on May 28, 2004. The company is authorized to issue 50,000 shares of common stock of $1 par value. The company is a non-operative holding company of Shenzhen Hengtaifeng Technology Co. Ltd. (“HTC”). On December 14, 2004, XHT entered in to 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.

On August 15, 2005, the Company became a wholly owned subsidiary of American Wenshen Steel Group, Inc.

Effective July 30, 2007, the Company changed its fiscal year from December 31 to September 30.

As of March 31, 2009, American Wenshen Steel Group, Inc. distributed all of the 29,910,000 currently outstanding common stock of HXT Holdings to its stockholders. There were no proceeds from the distribution and neither American Wenshen nor HXT Holdings received any consideration in exchange for the shares distributed.

After the distribution, the Company is no longer a subsidiary of American Wenshen. The Company continues to be engaged indirectly in the specialized software industry in the People’s Republic of China through its indirectly wholly owned subsidiary, Shenzhen Hengtaifeng Technology Co., Ltd.

Certain of the holders of shares of American Wenshen Steel Group had previously agreed that they would surrender to the Company any shares of the Company’s common stock that were distributed to them by American Wenshen Steel Group. Accordingly, 29,243,759 shares were immediately surrendered to the treasury of the Company, leaving 666,241 shares outstanding at the close of business on March 31, 2009.

On April 7, 2009 the Company’s Board of Directors declared a three-for-one forward split of the outstanding shares.

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 September 30, 2009, the Company had incurred cumulative losses of $1,799,347 including net losses from operations of $215,065 for the year ended September 30, 2009. However, the company had net income from operations of $125,073 for the year ended September 30, 2010.

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 plans related to the company’s ability to continue as a going concern are as follows: Management has taken steps in the year ending September 30, 2009 to increase revenue and control expenses which it will continue for the fiscal year ending September 30, 2010. In addition, if it is determined that the additional capital is needed, the company will consider additional debt and equity financing where appropriate to meet such needs.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries XHT and HTC. All significant inter-company accounts and transactions have been eliminated in consolidation.

Cash and cash equivalents

Cash and cash equivalent consist of cash on deposit in banks and cash on hand. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents, for cash flow statement purposes. Cash includes cash on hand and demand deposits in accounts maintained with state owned banks within the PRC. Balances at financial institutions or state owned banks within the PRC are not insured.

Accounts 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 $218,590 and $212,729 as of March 31, 2011 and September 30, 2010, respectively.

Inventories

Inventories comprised of software compact disk, computer server and macro-storage equipment. Inventories are valued at the lower of cost (determined on a weighted average basis) or market. The Management compares the cost of inventories with the market value and allowance is made for writing down the inventories to their market value, if lower.

Property & 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:

Estimated Useful Life
Building	39 years
Vehicle	7 years
Machinery and equipment	5-7 years

Software development costs

The Company capitalizes certain computer software development costs in accordance with ASC 985 (previously SFAS No. 86), “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.” Costs incurred internally to create a computer software product or to develop an enhancement to an existing product are charged to expense when incurred as research and development expense until technological feasibility for the respective product is established. Thereafter, all software development costs are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers.

The Company makes on-going evaluations of the recoverability of its capitalized software projects by comparing the amount capitalized for each product to the estimated net realizable value of the product. If such evaluations indicate that the unamortized software development costs exceed the net realizable value, the Company writes off the amount which the unamortized software development costs exceed net realizable value. Capitalized and purchased computer software development costs are being amortized ratably based on the projected revenue associated with the related software or on a straight-line basis over three years, whichever method results in a higher level of amortization.

Long-lived assets

The Company applies ASC 360 (previously the Statement of Financial Accounting Standard No. 144.) “Accounting for the Impairment or Disposal of Long-Lived Assets" ASC 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

The Company tests long-lived assets, including property, plant and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There was no impairment of long-lived assets for the period ended March 31, 2011.

Revenue recognition

License Revenue. The Company recognizes revenue from license contracts when a non-cancelable, non-contingent license agreement has been signed, the software product has been delivered, no uncertainties exists surrounding product acceptance, fees from the agreement are fixed and determinable and collection is probable. Any revenues from software arrangements with multiple elements are allocated to each element of the arrangement based on the relative fair values using specific objective evidence as defined in the SOPs. If no such objective evidence exists, revenues from the arrangements are not recognized until the entire arrangement is completed and accepted by the customer. Once the amount of the revenue for each element is determined, the Company recognizes revenues as each element is completed and accepted by the customer. For arrangements that require significant production, modification or customization of software, the entire arrangement is accounted for by the percentage of completion method, in conformity with ASC 605.

Services Revenue. Revenue from consulting services is recognized as the services are performed for time-and-materials contracts and contract accounting is utilized for fixed-price contracts. Revenue from training and development services is recognized as the services are performed. Revenue from maintenance agreements is recognized ratably over the term of the maintenance agreement, which in most instances is one year. Revenue from software services is recognized ratably over the service period. Payment received in advance is recorded on the balance sheet as unearned revenue.

As of March 31, 2011, unearned revenue is $596,315, and it includes $439,175 of customer deposit and $157,140 of unearned software service revenue.

Research and development costs

Research and development costs are charged to operations as incurred and amounted to $377,427 and $320,177 for the six months period ended March 31, 2011 and 2010, respectively.

Stock-based compensation

The Company applies the accounting standard regarding accounting for stock compensation, which defines a fair-value-based method of accounting for stock based employee compensation and transactions in which an entity issues its equity instruments to acquire goods and services from employees and non-employees. The Company did not issue any stock based compensation during the period ended March 31, 2011.

Income taxes

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

The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized. If the Company is able to utilize more of its deferred tax assets than the net amount previously recorded when unanticipated events occur, an adjustment to deferred tax assets would increase the Company net income when those events occur.

Foreign currency transactions and comprehensive income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of HTC is the Chinese Yuan or Renminbi (“RMB”). Foreign currency translation gain (loss) amounted to $(1,993) and $20 for six months period ended March 31, 2011 and 2010, respectively. Accumulated other comprehensive income amounted to $316,924 and $318,917 on March 31, 2011 and September 30, 2010, respectively.

Earnings per share

Earnings per share is calculated in accordance with ASC 260 (previously the Statement of financial accounting standards 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.

Statement of cash flows

In accordance with ASC 230 (previously the 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.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These classifications have no effect on net income/loss.

Recent pronouncements.

In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarify existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3.The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU. However, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In April 2010, the FASB issued Accounting Standards Update 2010-13, “Compensation—Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades,” or ASU 2010-13. ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial porting of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company does not expect the adoption of ASU 2010-17 to have a significant impact on its consolidated financial statements.

In July 2010, the FASB issued Accounting Standards Update 2010-20 which amends “Receivables” (Topic 310). ASU 2010-20 is intended to provide additional information to assist financial statement users in assessing an entity’s risk exposures and evaluating the adequacy of its allowance for credit losses. The disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. The amendments in ASU 2010-20 encourage, but do not require, comparative disclosures for earlier reporting periods that ended before initial adoption. However, an entity should provide comparative disclosures for those reporting periods ending after initial adoption. The Company does not expect the adoption of ASU 2010-20 to have a significant impact on its consolidated financial statements.

3. INVENTORIES

Inventories as of March 31, 2011 and September 30, 2010 consisted of the following:

	March 31, 2011			September 30, 2010
Raw and packing materials	$	61,877		$	60,886
Finished goods		1,670			1,642
Work in process		-			-
Total		63,547			62,528
Less: Allowance for inventories		(56,986	)		(56,049	)
Net Inventories	$	6,561		$	6,479

The allowance for inventories is made when the aging of inventory is over 1 year. The allowances for inventories were $56,986 and $56,049 on March 31, 2011 and September 30, 2010, respectively.

4. PROPERTY AND EQUIPMENT

Net property and equipment as of March 31, 2011 and September 30, 2010 were as follows:

	March 31, 2011			September 30, 2010
Building & improvement	$	43,172		$	42,463
Machinery& equipment		130,585			128,441
Vehicles		90,473			88,987
Furniture and fixture		23,922			23,529
Total		288,152			283,420
Less: Accumulated depreciation		(203,356	)		(189,153	)
Net Property & Equipment	$	84,796		$	94,266

Depreciation expenses for the six months period ended March 31, 2011 and 2010 were $11,002 and $11,963, respectively.

5. INTANGIBLE ASSETS

	March 31, 2011			September 30, 2010
Software	$	335,981		$	330,462
Less: Accumulated amortization		(329,648	)		(320,591	)
Software, net	$	6,333		$	9,871

Amortization expenses were $3,689 and $21,601 for the six months period ended March 31, 2011 and 2010, respectively.

AMORTIZATION EXPENSE

Estimated amortization expenses of intangible assets for the next five (5) twelve-month periods-ended March 31, are as follows:

March 31, 2012	$	1,367
March 31, 2013		1,367
March 31, 2014		1,367
March 31, 2015		1,367
March 31, 2016		865

6. OTHER RECEIVABLES

Other receivables as of March 31, 2011 and September 30, 2010 consisted of the following:

	March 31, 2011		September 30, 2010
Advances to other companies	$	11,608	$	4,678
Advances to employees		99,318		57,832
Value added tax receivable		44,379		33,639
Total	$	155,305	$	96,149

Advances to other companies amounted to $11,608 as of March 31, 2011 and $4,678 as of September 30, 2010. It includes advances to other unrelated parties, which are unsecured, interest free, and due on demand.

Advances to employees amounted to $99,318 and $57,832 as of March 31, 2011 and September 30, 2010, respectively. These advances are unsecured, interest free, and due on demand.

Loan receivable amounted to $0 as of March 31, 2011 and September 30, 2010,. The loan was first signed for a term from May 2005 to Mary 2006 and has been renewed from terms from May 2006 to May 2007 and from May 2007 to May 2008. No renewed loan agreement was signed after May 2008. This loan is unsecured, to an unrelated party, with interest rates of 7.02% for the year ended September 30, 2008. The interest incomes were $0 for the twelve month periods ended September 30, 2010 and 2009, respectively. In the last quarter of 2010, the unrelated party paid back $29,940 principal. The Allowance for the doubtful debts amounted to $297,648 and $287,989 as of March 31, 2011 and September 30, 2010.

Value added tax receivable is the 14% VAT tax refunded by the Company. VAT receivable amounted to $44,379 and $33,639 as of March 31, 2011 and September 30, 2010, respectively.

7. ACCOUNTS PAYABLE & ACCRUED EXPENSES

The Company had accounts payable and accrued expenses amounting to $76,377 and $88,826 as of March 31, 2011 and September 30, 2010, respectively. Accounts payable includes payable to vendors, and accrued expenses include accrued professional expenses.

8. RELATED PARTY TRANSACTIONS

Due to related party

The amount due to officer as of March 31, 2011 and September 30, 2010 were $0 and $2,172 respectively. The loan was unsecured, interest free and due on demand.

9. OTHER INCOME

Other income amounted to $1,061 and $66,253 for the six months period ended March 31, 2011 and 2010, respectively. Other income mainly consisted of recovery of bad debt for the six months period ended March 31, 2011 and 2010.

10. TAX PAYABLE

The Company utilizes ASC 740 (previously SFAS No. 109), "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The provision for taxes on earnings for the six month periods ended March 31, 2011 and 2010 consisted of:

	For the six month periods ended March 31, 2011
	2 0 11			2 0 10

TaxU.S. Statutory rates		34	%		34	%
Foreign income not recognized in USA	<34%>			<34%>
Chinese income taxes		25	%		25	%
Changes in valuation allowance	<25%>			<25%>
Effective tax rate		0	%		0	%

Deferred tax assets:

	March 31, 2011			March 31, 2010
Net operating loss	$	(1,449,516	)		(1,359,516	)
Total deferred tax assets		468,903			576,022
Less valuation allowance		(468,903	)		(576,022	)
	$	--		$	--

The Company had a net operating loss (“NOL”) carry forwards of approximately $1,449,516 and 1,359,516 for the periods ended March 31, 2011 and 2010, respectively. A 100% valuation allowance has been recorded for the deferred tax asset due to the uncertainty of its realization.

11. EMPLOYEE WELFARE PLAN

The Company has established its own employee welfare plan in accordance with Chinese law and regulations. The Company makes annual pre-tax contributions of 14% of all employees' salaries.

HTC is classified as a wholly-owned foreign enterprise under PRC law by virtue of its ownership by XHT. HTC has changed its employee welfare plan in accordance with Chinese law and regulations and does not make annual pre-tax contributions of 14% of all employees' salaries. The total expense amounted to $33,913 and $26,833 for the six months period ended March 31, 2011 and 2010, respectively.

12. STATUTORY RESERVE

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:

i) Making up cumulative prior years' losses, if any;

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

iii) Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective benefits to the Company's employees; and Statutory common welfare fund is no longer required per the new cooperation law executed in 2006.

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

In accordance with the Chinese Company Law, the Company has allocated 10% of its net income to surplus. The amount allocated to the surplus reserve were $18,761 and $0 for the years ended September 30, 2010 and 2009, respectively.

13. SHAREHOLDERS’ EQUITY

The Company has authorized (a) Sixty Million (60,000,000) shares of common stock, par value .001 per share and (b) One Million (1,000,000) shares of Preferred Stock, par value .001 per share.

As of September 30, 2009, 29,910,000 common shares were issued and 666,241 shares were outstanding, and no preferred stock was issued and outstanding.

On April 7, 2009 the Company’s Board of Directors declared a three-for-one forward split of the outstanding shares.

14. COMMITMENT

HTC has leased approximately 510 square meters of space used for its executive offices and operations in Shenzhen, China from Shenzhen Zhongze Shiji Co., Ltd. The lease is for a term of five year from October 1, 2007 to September 30, 2012. The monthly rent expense is $5,376 (excluding property management and area condition maintenance fees).

The rent expenses are $35,512 and $32,433 for the six months period ended March 31, 2011 and 2010, respectively.

Future lease commitments for the periods after September 30, 2010 are as follows:

2011		64,513
2012		48,385
Total	$	112,898

15. SUPPLEMENT DISCLOSURE OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as defined under the ASC 230 (previously the Financial Accounting Standard No. 95).

The interest expenses paid was $0 for the tix months period ended March 31, 2011 and 2010, respectively.

The Company did not paid income tax for the six months period ended March 31, 2011 and 2010, respectively.

16. 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.

17. MAJOR CUSTOMERS AND VENDORS

Major customers and vendors represent those who accounted for 10% or over of the Company’s total net revenue or purchase, respectively.

One customer accounted for 16% of the revenue for the six months period ended March 31, 2011. The Company has receivables of $30,440 to this customer on March 31, 2011.

Two major customers accounted for 23% of the revenue for the six month periods ended March 31, 2010. The Company has receivables of $45,330 to these customers on March 31, 2010.

Two major vendors provided 99% of the Company’s purchases for the six month periods ended March 31, 2011.

One major vendor provided 92% of the Company’s purchases for the six month periods ended March 31, 2010. The Company has payables of $92,414 to the vendor on March 31, 2010, respectively.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.

The following discussion and analysis discusses trends in the Company’s financial condition and results of operations for the six month periods ended March 31, 2011 and 2010.

You should read this section together with our consolidated financial statements and related notes appearing elsewhere in this annual report. This discussion contains predictive statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these predictive statements as a result of many factors, including, but not limited to, those set forth under "Risk Factors" and elsewhere in this annual report.

Results of Operations

Net Revenue

Total net sales for the six month periods ended March 31, 2011 were $749,734 compared to $722,973 for the six month periods ended March 31, 2010, representing an increase of $26,761 or 4%. The increase was due to a decrease of $125,526 in sales of our Housing Accumulation Fund software, and an increase of $152,287 in sales of our Credit Guarantee software.

The decrease of sales of our Housing Accumulation Fund software (which increased by $125,526, or 21%, from $589,750 for the six month periods ended March 31, 2010) was due to the decrease in completed contracts.

The increase of sales of our Credit Guarantee software (which increased by $152,287, or 114%, from $133,223 for the six month periods ended March 31, 2010) was due to the increase in completed contracts.

Cost of sales

Cost of sales for the six month periods ended March 31, 2011 were $139,987, representing a decrease of 17% from $168,189 for the six month periods ended March 31, 2010, primarily due to the decrease of $33,558 in cost of sales of our Housing Accumulation Fund software

The cost of sales of our Housing Accumulation Fund software decreased by $33,558, or 21%, to approximately $127,899 for the six month periods ended March 31, 2011 from approximately $161,457 for the six month periods ended March 31, 2010. The decrease due to the decrease of sales of our Housing Accumulation Fund software described above.

Gross Profit

Gross profit for the six month periods ended March 31, 2011 was $609,747, compared to $554,784 for the six month periods ended March 31, 2010, representing an increase of $54,963 or approximately 10%. The increase was primarily due to the increase in sales of our software and the decrease in cost of our Housing Accumulation Fund software described above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $711,455 for the six month periods ended March 31, 2011, or approximately 95% of net sales, compared to $545,128 or approximately 75% of net sales, for the six month periods ended March 31, 2010. The changes in selling, general and administrative expenses are attributable to a $18,411 decrease in general and administrative expenses, a $127,488 increase in selling expense and a $57,250 increase in research and development expense.

General and administrative expenses decreased by $18,411or 16% to $94,077 for the six month periods ended March 31, 2011 from $112,487 for the six month periods ended March 31, 2010. The decrease occurred because a $18,409 bad inventory reserve for the six month periods ended March 31, 2011

Selling expenses increased by $127,488, or 113% to $239,951 for the six month periods ended March 31, 2011 from approximately $112,463 for the six month periods ended March 31, 2010 because of a $90,215 increase for Salaries and Wages and a $20,854 increase for Allowance for AR.

Research and development expenses increased by $57,250, or 18% to $377,427 for the six month periods ended March 31, 2011 from approximately $320,177 for the six month periods ended March 31, 2010 because of a $54,600 increase for Salaries.

Income Taxes

From 2005 to 2007, we were exempt from 50% of our income taxes under relevant tax guidance, including the Provisional Regulations of the People's Republic of China on Income Tax and the Document of Reductions and Exemptions of Income Tax, as interpreted by the Shenzhen Tax Bureau. Under applicable tax regulations, our taxable income for the three month periods ended December 31, 2010 and 2009 are negative, so no income tax was incurred for those periods.

We utilize ASC 740 (previously SFAS No. 109), "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in financial statements or tax returns. Under this method, deferred tax liabilities or assets are recognized for the estimated future tax consequences of current differences between the tax base of an asset or liability and the financial reporting amount attributed to that asset or liability at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company has recorded a 100% valuation allowance for its deferred tax assets, since there is no certainty that the Company will achieve sufficient taxable income to take advantage of the deferred tax assets.

Liquidity and Capital Resources

Cash and Cash Equivalents

Cash and cash equivalents increased from $154,201as of September 30, 2010 to $172,375 as of March 31, 2011. This increase was due to an increase in cash provided by operating activities of $17,738 and a decrease in Proceed from loan-officers of $2,200.

Cash Provided in Operating Activities

Net cash provided in operating activities during the six month periods ended March 31, 2011 was $17,738, compared to $3,514 for the six month periods ended March 31, 2010, representing an increase of $14,224 or approximately 405%. The increase was a result of a decrease in Accounts receivable $59,830.

Net cash used in investing activities during the six month periods ended March31, 2011 and 2010 were 0 and $10,097, respectively. Net cash used in investing activities during the six month periods ended March 31, 2010 was due to we purchased some property and equipment.

Net cash used in financing activities during the six month periods ended March 31, 2011 and 2010 were $2,200 and $15,394, respectively. Net cash used in financing activities was due to pay back loans to offers.

Accounts Receivable

The decrease in accounts receivable from $210,984 as of September 30, 2010 to $154,444 as of March 31, 2011 is primarily attributable to the payment from our customers.

Inventory

For the six month periods ended March 31, 2011, inventory increased from $6,479 to $6,561.

Reserves are recorded primarily on a specific identification basis. Allowance for inventory amounted to $56,985 as of March 31, 2011.

Other Receivable

The increase in Other receivables from $96,149 as of September 30, 2010 to $155,305 as of March 31, 2011 is primarily attributable to an increase of $41,486 in Advances to employees, an increase of $6,930 in Advances to other company and an increase of $10,740 in Value added tax receivable. These advances are unsecured, interest free, and due on demand.

The Company maintains reserves for other receivable. Reserves are recorded primarily on a specific identification basis. Allowance for other receivable amounted to $297,648 as of March 31, 2011.

Advances to suppliers

For the six month periods ended March 31, 2011, Advance to suppliers increased from $0 to $20,079.

The increase in Advance to suppliers is primarily attributable to the payment to our vendors.

Accounts Payable

Accounts payable and accrued expenses decreased from $88,826 as of September 30, 2010 to $76,377 as of March 31, 2011.

The decrease in Accounts payable is primarily attributable to the payment to our vendors.

Payroll Payable

Payroll payable increased from $41,587 as of September 30, 2010 to $118,035 as of March 31, 2011, primarily as a result of a expense for holiday to our employees and the increase of salary to our employee.

Unearned revenue

The Company's revenue recognition policies are in compliance with ASC 605 (previously Staff Accounting Bulletin 104). Sales revenue is recognized at the date of shipment to customers or when services have been rendered 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 unearned revenue. As of March 31, 2011, unearned revenue is $596,315 and it includes $439,175 of customer deposits and $157,140 of unearned software service revenue. Software service revenue was approximately $85,532 and $98,134 during the six month periods ended March 31, 2011 and 2010, respectively. Unearned revenue as of March 31, 2011 and 2010 was $596,315 and $537,619, respectively.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this quarterly report, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures. 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 HXT Holdings Inc. 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 HXT Holdings 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 HXT Holdings system of disclosure controls and procedures was effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Exchange Act, and the rules and regulations promulgated hereunder.

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 HXT Holdings' second fiscal quarter of 2011 that has materially affected or is reasonably likely to materially affect HXT Holdings internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

There has been no material change from the risk factors included in Section 1A of the Company's Annual Report on Form 10-K for the year ended September 30, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

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 quarter ended March 31, 2011

Item 3. Defaults Upon Senior Securities

None

Item 4. Reserved

Item 5. Other Information

None

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.

HXT HOLDINGS, INC.

Date: May 16, 2011		By: /s/Yuanqing Li
		Yuanqing Li, Chief Executive Officer

Tarsier Ltd. - FORM 10-Q - May 16, 2011

Attached files

Tarsier Ltd. Reports