----

----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      DC 20549**

**______________**

**FORM      10-Q**

| x | **ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|---|---------------------------------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended March 31, 2007**

| o | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|---|-------------------------------------------------------------------------------------------------------------------------------------------|

**For      the transition period from ______ to ______.**

**Commission      file number: 001-33456**

**ORSUS      XELENT TECHNOLOGIES, INC. **

| **Delaware**(State                of incorporation) |   | **20-11998142**** **(I.R.S.                Employer Identification No.) |
|-----------------------------------------------------|--------|------------------------------------------------------------------------------|
|                                                |   |                                                                         |

**12**
**th**

**      Floor, Tower B, Chaowai MEN Office Building**

**26      Chaowai Street, Chaoyang Disc.**

**Beijing,      People’s Republic Of China 100020**

**86-10-85653777**

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

**Yes      **
**No      **

**Indicate      by check mark whether the registrant is an accelerated filer (as defined in      Rule      12-b2 of the Exchange Act).**

**Yes      **
**No      **

**Indicate      by check mark whether the registrant is a shell Registrant (as defined in Rule      12-b2 of the Exchange Act).**

**Yes      **
**No      **

**Indicate      the number of shares outstanding of each of the issuer’s classes of common      stock, as of the latest practicable date.**

| **Class**                                                  |   | **Outstanding                at May 11, 2007** |
|------------------------------------------------------------|--------|------------------------------------------------|
| **Common                Stock, $.001 par value per share** |   | **29,756,000****shares**                       |

----

----

**PART      I - FINANCIAL INFORMATION**

| **Item              1.** | **Financial                Statements.** |
|--------------------------|------------------------------------------|

**Orsus      Xelent Technologies, Inc.**

**Index      to Financial Statements**

|                                                                                         | Page   |
|----------------------------------------------------------------------------------------------|--------|
|                                                                                         |   |
| Condensed                  Consolidated Statements of Operations (Unaudited)                 | 2      |
|                                                                                         |   |
| Condensed                  Consolidated Balance Sheets (Unaudited)                           | 3      |
|                                                                                         |   |
| Condensed                  Consolidated Statement of Cash Flows (Unaudited)                  | 4      |
|                                                                                         |   |
| Consolidated                  Statement of Changes in Stockholders’ Equity (Unaudited) | 5      |
|                                                                                         |   |
| Notes                  to Condensed Consolidated Financial Statements                        | 6-9    |

----

**Orsus      Xelent Technologies, Inc.**

**Condensed      Consolidated Statements of Operations      (Unaudited)**

----

|                                                               |   |       |   |                                                              |   |
|--------------------------------------------------------------------|--------|------------|--------|-------------------------------------------------------------------|--------|
|                                                                    |   |       |   | **(Unaudited)**                                                   |   |
|                                                               |   |       |   | **Three                months ended****March                31,** |   |
|                                                               |   |       |   | **2007**                                                          |   | 2006 |   |
|                                                               |   | ***Note*** |   | ***US$’000***                                               |   | *US$’000* |   |
|                                                               |   |       |   |                                                              |   |   |   |
| **Operating                revenues**                              |   |       |   |                                                              |   | **20,009** |   |   | 8,367 |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
| **Operating                expenses:**                             |   |       |   |                                                              |   |   |   |   |   |   |
| Cost                of sales                                       |   |       |   |                                                              |   | **16,341** |   |   | 6,493 |   |
| Sales                and marketing                                 |   |       |   |                                                              |   | **113** |   |   | 444 |   |
| General                and administrative                          |   |       |   |                                                              |   | **1,374** |   |   | 189 |   |
| Research                and development                            |   |       |   |                                                              |   | **53** |   |   | 81 |   |
| Depreciation                                                       |   |       |   |                                                              |   | **52** |   |   | 25 |   |
| Allowance                for obsolete inventories                  |   |       |   |                                                              |   | **320** |   |   | **—** |   |
| Total                operating expenses                            |   |       |   |                                                              |   | **18,253** |   |   | 7,232 |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
| **Operating                income**                                |   |       |   |                                                              |   | **1,756** |   |   | 1,135 |   |
| Interest                expense                                    |   |       |   |                                                              |   | **(127** | **)** |   | **—** |   |
| Other                income, net                                   |   |       |   |                                                              |   | **2** |   |   | 2 |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
| **Income                before income taxes**                      |   |       |   |                                                              |   | **1,631** |   |   | 1,137 |   |
| Income                taxes                                        |   |       | *3*    |                                                              |   | **(384** | **)** |   | **—** |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
| **Net                income**                                      |   |       |   |                                                              |   | **1,247** |   |   | 1,137 |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
| Other                comprehensive income                          |   |       |   |                                                              |   | **—** |   |   | **—** |   |
|                                                               |   |       |   |                                                              |   | **1,247** |   |   | 1,137 |   |
|                                                                    |   |       |   |                                                              |   |   |   |   |   |   |
| **Earnings                per share:**                             |   |       | *2*    |                                                              |   |   |   |   |   |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
| Basic                                                              |   |       |   |                                                              |   | **4.19                cents** |   |   | 3.82                cents |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
| Weighted                average number of common stock outstanding |   |       |   |                                                              |   | **29,756,000** |   |   | 29,756,000 |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |
|                                                               |   |       |   |                                                              |   |   |   |   |   |   |

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

----

**Orsus      Xelent Technologies, Inc.**

**Condensed      Consolidated Balance Sheets      (Unaudited)**

----

|                                                                                                                                    |   |       |   |                                                         |   |                                                |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                                                                                                         |   |       |   | **As                of****March                31,****2007** |   | As                ofDecember                31,2006 |   |
|                                                                                                                                    |   | ***Note*** |   | ***US$’000***                                          |   | *US$’000*                                     |   |
|                                                                                                                                    |   |       |   | **(Unaudited)**                                              |   |                                                |   |
| **ASSETS**                                                                                                                              |   |       |   |                                                         |   |                                                |   |
| **Current                assets**                                                                                                       |   |       |   |                                                         |   |                                                |   |
| Cash                and cash equivalents                                                                                                |   |       |   |                                                         |   | **3,485**                                           |   |   | 2,421 |   |
| Accounts                receivable, net of allowance for doubtfulaccounts                of $Nil *(2006:                $230,000)*      |   |       |   |                                                         |   | **30,950**                                          |   |   | 31,425 |   |
| Inventories                                                                                                                             |   |       |   |                                                         |   | **640**                                             |   |   | 1,230 |   |
| Trade                deposit paid                                                                                                       |   |       |   |                                                         |   | **13,150**                                          |   |   | 8,989 |   |
| Advance                to third party                                                                                                   |   |       |   |                                                         |   | **—**                                         |   |   | 288 |   |
| Other                current assets                                                                                                     |   |       |   |                                                         |   | **102**                                             |   |   | 86 |   |
| Pledged                deposit                                                                                                          |   |       | *4*    |                                                         |   | **1,254**                                           |   |   | 1,128 |   |
|                                                                                                                                    |   |       |   |                                                         |   | **49,581**                                          |   |   |   |   |
| Total                current assets                                                                                                     |   |       |   |                                                         |   |                                                |   |   | 45,567 |   |
|                                                                                                                                    |   |       |   |                                                         |   |                                                |   |   |   |   |
| Property,                plant and equipment, net                                                                                       |   |       | *5*    |                                                         |   | **450**                                             |   |   | 320 |   |
| **Total                assets**                                                                                                         |   |       |   |                                                         |   | **50,031**                                          |   |   | 45,887 |   |
|                                                                                                                                    |   |       |   |                                                         |   |                                                |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                           |   |       |   |                                                         |   |                                                |   |   |   |   |
| **Current                liabilities**                                                                                                  |   |       |   |                                                         |   |                                                |   |   |   |   |
| Short-term                bank loan                                                                                                     |   |       | *6*    |                                                         |   | **8,571**                                           |   |   | 6,268 |   |
| Accounts                payable - Trade                                                                                                 |   |       |   |                                                         |   | **9,532**                                           |   |   | 10,964 |   |
| Accrued                expenses and other accrued liabilities                                                                           |   |       |   |                                                         |   | **6,631**                                           |   |   | 4,444 |   |
| Trade                deposits                received                                                                                   |   |       |   |                                                         |   | **1,000**                                           |   |   | 251 |   |
| Due                to directors                                                                                                         |   |       | *7*    |                                                         |   | **330**                                             |   |   | 330 |   |
| Provision                for warranty                                                                                                   |   |       |   |                                                         |   | **53**                                              |   |   | 53 |   |
| Tax                payables                                                                                                             |   |       |   |                                                         |   | **384**                                             |   |   | 1,294 |   |
| Total                current liabilities                                                                                                |   |       |   |                                                         |   | **26,501**                                          |   |   | 23,604 |   |
|                                                                                                                                    |   |       |   |                                                         |   |                                                |   |   |   |   |
| **Commitments                and contingencies**                                                                                   |   |       |   |                                                         |   |                                                |   |   |   |   |
| **Stockholders’                equity**                                                                                           |   |       |   |                                                         |   |                                                |   |   |   |   |
| Preferred                stock, US$0.001 par value:Authorized:                100,000,000 shares, no shares issued                      |   |       |   |                                                         |   | **—**                                         |   |   | **—** |   |
| Common                stock and paid-in capital, US$0.001 par value:Authorized:                100,000,000 shares                       |   |       |   |                                                         |   |                                                |   |   |   |   |
| Issued                and outstanding: 29,756,000 shares as of March 31, 2007 and as of                December                31, 2006 |   |       |   |                                                         |   | **30**                                              |   |   | 30 |   |
| Additional                paid-in capital                                                                                               |   |       |   |                                                         |   | **2,484**                                           |   |   | 2,484 |   |
| Dedicated                reserves                                                                                                       |   |       |   |                                                         |   | **1,042**                                           |   |   | 1,042 |   |
| Other                comprehensive income                                                                                               |   |       |   |                                                         |   | **975**                                             |   |   | 975 |   |
| Retained                earnings                                                                                                        |   |       |   |                                                         |   | **18,999**                                          |   |   | 17,752 |   |
| Total                stockholders’ equity                                                                                         |   |       |   |                                                         |   | **23,530**                                          |   |   | 22,283 |   |
| **Total                liabilities and stockholders’ equity**                                                                     |   |       |   |                                                         |   | **50,031**                                          |   |   | 45,887 |   |

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

----

**Orsus      Xelent Technologies, Inc.**

**Condensed      Consolidated Statements of Cash Flows      (Unaudited)**

----

|                                                                                                        |   |                                                              |        |
|-------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-------------|
|                                                                                                        |   | **(Unaudited)**                                                   |        |
|                                                                                                        |   | **Three                months ended****March                31,** |        |
|                                                                                                        |   | **2007**                                                          |        | 2006 |   |
|                                                                                                        |   | ***US$’000***                                               |        | *US$’000* |   |
| **Cash                flows used in operating activities**                                                  |   |                                                              |        |   |   |
| **Net                income**                                                                               |   |                                                              | **1,247**   |   |   | 1,137 |   |
| Adjustments                to reconcile net income to net cash used in operating                activities: |   |                                                              |        |   |   |   |   |
| Depreciation                                                                                                |   |                                                              | **52**      |   |   | 25 |   |
| Allowance                for obsolete inventories                                                           |   |                                                              | **320**     |   |   | **—** |   |
| Allowance                for doubtful account                                                               |   |                                                              | **1,341**   |   |   | **—** |   |
| Interest                expenses                                                                            |   |                                                              | **127**     |   |   | **—** |   |
| Changes                in assets and liabilities:                                                           |   |                                                              |        |   |   |   |   |
| Accounts                receivable -trade                                                                   |   |                                                              | **475**     |   |   | (2,332 | ) |
| Inventories,                net                                                                             |   |                                                              | **270**     |   |   | 8 |   |
| Trade                deposit paid                                                                           |   |                                                              | **(5,502**  | **)** |   | (3,797 | ) |
| Other                current assets                                                                         |   |                                                              | **(16**     | **)** |   | (80 | ) |
| Pledged                deposit                                                                              |   |                                                              | **(126**    | **)** |   | **—** |   |
| Trade                deposit received                                                                       |   |                                                              | **749**     |   |   | 3,087 |   |
| Accounts                payable - trade                                                                     |   |                                                              | **(1,432**  | **)** |   | (612 | ) |
| Provision                for warranty                                                                       |   |                                                              | **—** |   |   | (78 | ) |
| Accrued                expenses and other accrued liabilities                                               |   |                                                              | **2,187**   |   |   | 361 |   |
| Provision                for taxation                                                                       |   |                                                              | **(910**    | **)** |   |   |   |
| **Net                cash used in operating activities**                                                    |   |                                                              | **(1,218**  | **)** |   | (2,281 | ) |
|                                                                                                        |   |                                                              |        |   |   |   |   |
| **Cash                flows generated from (used in) investing                activities**                  |   |                                                              |        |   |   |   |   |
| Purchase                of property, plant and equipment                                                    |   |                                                              | **(182**    | **)** |   | (89 | ) |
| Loan                to third party                                                                          |   |                                                              | **288**     |   |   | (707 | ) |
| **Net                cash generated from (used in) investing                activities**                    |   |                                                              | **106**     |   |   | (796 | ) |
|                                                                                                        |   |                                                              |        |   |   |   |   |
| **Cash                flows from financing activities**                                                     |   |                                                              |        |   |   |   |   |
| Interest                expenses                                                                            |   |                                                              | **(127**    | **)** |   | **—** |   |
| Borrowing                from banks                                                                         |   |                                                              | **2,303**   |   |   | 991 |   |
|                                                                                                        |   |                                                              |        |   |   |   |   |
| **Net                cash from financing activities**                                                       |   |                                                              | **2,176**   |   |   | 991 |   |
| **Net                increase (decrease) in cash and cash equivalents**                                     |   |                                                              | **1,064**   |   |   | (2,086 | ) |
| **Cash                and cash equivalents, beginning of the period**                                       |   |                                                              | **2,421**   |   |   | 2,974 |   |
| **Cash                and cash equivalents, end of the period**                                             |   |                                                              | **3,485**   |   |   | 888 |   |

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

----

**Orsus      Xelent Technologies, Inc.**

**Consolidated      Statements of Changes in Stockholders’ Equity      (Unaudited)**

----

|                                                   |   |                                   |           |             |   |                                 |   |                      |        |                                     |   |                     |   |
|--------------------------------------------------------|--------|----------------------------------------|----------------|------------------|--------|--------------------------------------|--------|---------------------------|-------------|------------------------------------------|--------|--------------------------|--------|
|                                                   |   | **Common                stock issued** |           |             |   |                                 |   |                      |        |                                     |   |                     |   |
|                                                   |   | **No.                of****shares**    |           |  **Amount** |   | **Additional****paid-in****capital** |   | **Dedicated****reserves** |        | **Other****compre****hensive****income** |   | **Retained****earnings** |   |  **Total** |   |
|                                                   |   |                                   |           | *US$’000*  |   | *US$’000*                      |   | *US$’000*           |        | *US$’000*                          |   | *US$’000*          |   | *US$’000* |   |
|                                                   |   |                                   |           |             |   |                                 |   |                      |        |                                     |   |                     |   |   |   |
| Balance                as of January 1, 2006           |   |                                   | 29,756,000     |             |   | 30                                   |   |                      | 2,484       |                                     |   | 1,042                    |   |   | 349 |   |   | 11,034 |   |   | 14,939 |   |
|                                                   |   |                                   |           |             |   |                                 |   |                      |        |                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net                income                              |   |                                   | **—**    |             |   | **—**                          |   |                      | **—** |                                     |   | **—**              |   |   | **—** |   |   | 6,718 |   |   | 6,718 |   |
|                                                   |   |                                   |           |             |   |                                 |   |                      |        |                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation adjustment |   |                                   | **—**    |             |   | **—**                          |   |                      | **—** |                                     |   | **—**              |   |   | 626 |   |   | **—** |   |   | 626 |   |
| Balance                as of December 31, 2006         |   |                                   | 29,756,000     |             |   | 30                                   |   |                      | 2,484       |                                     |   | 1,042                    |   |   | 975 |   |   | 17,752 |   |   | 22,283 |   |
|                                                   |   |                                   |           |             |   |                                 |   |                      |        |                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net                income                              |   |                                   | **—**    |             |   | **—**                          |   |                      | **—** |                                     |   | **—**              |   |   | **—** |   |   | 1,247 |   |   | 1,247 |   |
| **Balance                as of March 31, 2007**        |   |                                   | **29,756,000** |             |   | **30**                               |   |                      | **2,484**   |                                     |   | **1,042**                |   |   | **975** |   |   | **18,999** |   |   | **23,530** |   |

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

----

**Orsus      Xelent Technologies, Inc.**

**Notes        to Condensed Consolidated Financial        Statements**

----

| **1.** | **PREPARATION                  OF INTERIM FINANCIAL                  STATEMENTS** |
|--------|-----------------------------------------------------------------------------------|

| **2.** | **EARNINGS                PER SHARE** |
|--------|---------------------------------------|

| **3.** | **INCOME                TAXES** |
|--------|---------------------------------|

----

**Orsus      Xelent Technologies, Inc.**

**Notes        to Condensed Consolidated Financial Statements **

----

| **3.** | **INCOME                  TAXES (CONTINUED)** |
|--------|-----------------------------------------------|

----

**Orsus        Xelent Technologies, Inc.**

**Notes          to Condensed Consolidated Financial Statements **

----

| **3.** | **INCOME                    TAXES                    (CONTINUED)** |
|--------|--------------------------------------------------------------------|

| **4.** | **PLEDGED                DEPOSIT** |
|--------|------------------------------------|

| **5.** | **PROPERTY,                PLANT AND EQUIPMENT, NET** |
|--------|-------------------------------------------------------|

|                                    |   | **(Unaudited)**                                              |     |                                                |   |
|-----------------------------------------|--------|--------------------------------------------------------------|----------|-----------------------------------------------------|--------|
|                                    |   | **As                of****March                31,****2007** |     | As                ofDecember                31,2006 |   |
|                                    |   | ***US$’000***                                          |     | *US$’000*                                     |   |
|                                    |   |                                                         |     |                                                |   |
| Moulds                                  |   |                                                         | **112**  |                                                |   | 107 |   |
| Leasehold                improvements   |   |                                                         | **115**  |                                                |   | 115 |   |
| Plant                and machinery      |   |                                                         | **18**   |                                                |   | 18 |   |
| Office                equipment         |   |                                                         | **266**  |                                                |   | 266 |   |
| Motor                vehicles           |   |                                                         | **266**  |                                                |   | 89 |   |
|                                    |   |                                                         | **777**  |                                                |   | 595 |   |
|                                    |   |                                                         |     |                                                |   |   |   |
| Accumulated                depreciation |   |                                                         | **(327** | **)**                                               |   | (275 | ) |
|                                    |   |                                                         | **450**  |                                                |   | 320 |   |

| **6.** | **SHORT-TERM                BANK LOAN** |
|--------|-----------------------------------------|

|   | The                bank loan is secured by the director, Mr. Liu Yu, and is repayable                on                February 19, 2008 at interest rate 7.67% per                annum. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Orsus      Xelent Technologies, Inc.**

**Notes          to Condensed Consolidated Financial Statements **

----

| **7.** | **RELATED                    PARTY                    TRANSACTION** |
|--------|---------------------------------------------------------------------|

|  | **a.** | **Name                and relationship of related                parties** |
|--|--------|----------------------------------------------------------------------------|

|                             |   |                                                                                                   |
|----------------------------------|--------|--------------------------------------------------------------------------------------------------------|
| **Related                party** |   | **Relationship                with the Company during the period ended March 31,                2007** |
|                             |   |                                                                                                   |
| Mr.                Wang Xin      |   | Director                and stockholder of the Company                                                 |
| Mr.                Liu Yu        |   | Director                and stockholder of the Company                                                 |
| Mr.                Wang Zhibin   |   | Director                and stockholder of the Company #                                               |

|  | **b.** | **Summary                of related party balances** |
|--|--------|------------------------------------------------------|

|                                                        |   |       |   | **(Unaudited)**                                              |   |                                                |   |
|-------------------------------------------------------------|--------|------------|--------|--------------------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                        |   |       |   | **As                of****March                31,****2007** |   | As                ofDecember                31,2006 |   |
|                                                        |   | ***Note*** |   | ***US$’000***                                          |   | *US$’000*                                     |   |
|                                                        |   |       |   |                                                         |   |                                                |   |
| **Due                to directors**                         |   |       |   |                                                         |   |                                                |   |
| Mr.                Wang Xin, Mr. Liu Yu and Mr. Wang Zhibin |   |       | *(i*   | *)*                                                          |   | **330**                                             |   |   | 330 |   |

|                                                   |   | **(Unaudited)**                                              |      |                                                |   |
|--------------------------------------------------------|--------|--------------------------------------------------------------|-----------|-----------------------------------------------------|--------|
|                                                   |   | **As                of****March                31,****2007** |      | As                ofDecember                31,2006 |   |
|                                                        |   | ***US$’000***                                          |      | *US$’000*                                     |   |
|                                                   |   |                                                         |      |                                                |   |
| **Bank                loans guaranteed by a director** |   |                                                         |      |                                                |   |
| Mr.                Liu Yu                              |   |                                                         | **8,571** |                                                |   | 6,268 |   |

|   | Note: |   |
|--------|-------|--------|
|  | (i) | The                amounts are unsecured, interest-free and repayable on                demand. |
|--|-----|-------------------------------------------------------------------------------------------------|

|  | # | Ceased                to be a director since February 7,                2007 |
|--|---|------------------------------------------------------------------------------|

----

| **Item                2.** | **Managements’                  Discussion and Analysis of Financial Conditions and Results of                  Operations** |
|----------------------------|------------------------------------------------------------------------------------------------------------------------------------|

**OVERVIEW**

----

----

**BUSINESS      REVIEW**

|                                            |   | **Three                months ended****March                31, 2007** |   | **Three                months ended****March                31, 2006** |   | **Comparison**                  |   |
|-------------------------------------------------|--------|------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                 |   | **$’                000**                                        |   | **%                of revenue**                                        |   | **$’                000** |   | **%                of revenue** |   | $’000 |   | % |   |
| Revenues                                        |   |                                                                   | 20,009 |                                                                   |   | —                         |   |   | 8,367 |   |   | — |   |   | 11,642 |   |   | 139.14 | % |
| Cost                of sales                    |   |                                                                   | 16,341 |                                                                   |   | 81.67                           | %      |   | 6,493 |   |   | 77.60 | % |   | 9,848 |   |   | 151.67 | % |
| Sales                & Marketing expenses   |   |                                                                   | 113    |                                                                   |   | 0.56                            | %      |   | 444 |   |   | 5.31 | % |   | -331 |   |   | -74.55 | % |
| General                & Admin expenses*    |   |                                                                   | 1,374  |                                                                   |   | 6.87                            | %      |   | 189 |   |   | 2.26 | % |   | 1,185 |   |   | 626.98 | % |
| R&D                expenses                 |   |                                                                   | 53     |                                                                   |   | 0.27                            | %      |   | 81 |   |   | 0.97 | % |   | -28 |   |   | -34.57 | % |
| Depreciation                & Amortization  |   |                                                                   | 52     |                                                                   |   | 0.26                            | %      |   | 25 |   |   | 0.30 | % |   | 27 |   |   | 108.00 | % |
| Allowance                for Obsolete Inventory |   |                                                                   | 320    |                                                                   |   | 1.60                            | %      |   | — |   |   | — |   |   | 320 |   |   | — |   |
| Interest                expenses                |   |                                                                   | 127    |                                                                   |   | 0.63                            | %      |   | — |   |   | — |   |   | 127 |   |   | — |   |
| Other                income, net                |   |                                                                   | 2      |                                                                   |   | 0.01                            | %      |   | 2 |   |   | 0.02 | % |   | — |   |   | — |   |
| Income                before tax                |   |                                                                   | 1,631  |                                                                   |   | 8.15                            | %      |   | 1,137 |   |   | 13.59 | % |   | 494 |   |   | 46.45 | % |
| Income                taxes                     |   |                                                                   | 384    |                                                                   |   | 1.92                            | %      |   | — |   |   | — |   |   | 384 |   |   | — |   |
| Net                income                       |   |                                                                   | 1,247  |                                                                   |   | 6.23                            | %      |   | 1,137 |   |   | 13.59 | % |   | 110 |   |   | 9.67 | % |

| * | General & Administrative expenses                includes an allowance for trading deposit receivables of                $1,215,000. |
|---|------------------------------------------------------------------------------------------------------------------------------------------|

**CRITICAL      ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES **

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**RESULTS      OF OPERATION**

**Revenues**

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|       |   | **Three                months ended****March                31, 2007** |   |
|------------|--------|------------------------------------------------------------------------|--------|
|            |   | **$’000**                                                        |   | **%                of revenue** |   |
| **D8110**  |   |                                                                   | 6,735  |   |   | 33.66 | % |
| **C8000**  |   |                                                                   | 6,287  |   |   | 31.42 | % |
| **M5**     |   |                                                                   | 3,991  |   |   | 19.95 | % |
| **M6**     |   |                                                                   | 2,908  |   |   | 14.53 | % |
| **Others** |   |                                                                   | 88     |   |   | 0.44 | % |
| **Total**  |   |                                                                   | 20,009 |   |   | 100 | % |

|                                                                |   | **Three                months ended****March                31, 2007** |   |
|---------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|
|                                                                |   | **$’000**                                                        |   | **%                of revenue** |   |
| Beijing                Xingwang Shidai Tech & Trading Co., Ltd. |   |                                                                   | 20,009 |   |   | 100 | % |

**Other      income **

----

**Operating      expenses**

|                                                    |   | **Three                months ended****March                31, 2007** |   | **Three                months ended****March                31, 2006** |   | **Comparison**  |   |
|---------------------------------------------------------|--------|------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|-----------------|--------|
|                                                         |   | **$’000**                                                        |   | **%                of revenue**                                        |   | **$’000** |   | **%                of revenue** |   | **$’000** |   | **%** |   |
| Cost                of sales                            |   |                                                                   | 16,341 |                                                                   |   | 81.67           | %      |   | 6,493 |   |   | 77.60 | % |   | 9,848 |   |   | 151.67 | % |
| Sales                & marketing exp.               |   |                                                                   | 113    |                                                                   |   | 0.56            | %      |   | 444 |   |   | 5.31 | % |   | -331 |   |   | -74.55 | % |
| General                & admin. exp.                |   |                                                                   | 159    |                                                                   |   | 0.79            | %      |   | 189 |   |   | 2.26 | % |   | -30 |   |   | -15.87 | % |
| R&D                                                 |   |                                                                   | 53     |                                                                   |   | 0.26            | %      |   | 81 |   |   | 0.97 | % |   | -28 |   |   | -34.57 | % |
| Depreciation                                            |   |                                                                   | 52     |                                                                   |   | 0.26            | %      |   | 25 |   |   | 0.30 | % |   | 27 |   |   | 108.00 | % |
| Allowance                for trading deposit receivable |   |                                                                   | 1,215  |                                                                   |   | 6.07            | %      |   | — |   |   | — |   |   | 1,215 |   |   | — |   |
| Allowance                for Obsolete Inventory         |   |                                                                   | 320    |                                                                   |   | 1.60            | %      |   | — |   |   | — |   |   | 320 |   |   | — |   |
| Total                                                   |   |                                                                   | 18,253 |                                                                   |   | 91.22           | %      |   | 7,232 |   |   | 86.44 | % |   | 11,021 |   |   | 152.32 | % |

----

| 1.   | The                keen competition from the domestic cellular manufactures and the                overseas                cellular providers by the strategy of                price-cutting. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Increase                in the sales of low-ended products, the demand of the low ended products                was stimulated by the reduction of monthly charges by the                telecommunication operators. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Compared                with the average gross profit margin of 18.9% in 2006, the gross                profit                margin in the first quarter in 2007 kept steady, which is mainly                because                we increased our payment of deposit to the manufactures in order                to get a                favorable price. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Net      Income**

----

**LIQUIDITY      AND SOURCE OF CAPITAL**

----

**CASH      FLOWS**

**CONTINGENT      LIABILITIES **

**OFF      BALANCE SHEET ARRANGEMENTS**

----

**CONTRACTUAL      COMMITMENTS**

|                                                                                                                   |   |  **Payments due by period** |    |
|------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|
| **Contractual Obligations**                                                                                       |   |  **Total**                                 |    | **Less than****1 year** |   | **1-3 years** |   | **3-5 years** |   | **More than****5 years** |   |
|                                                                                                                   |   | $’000                                     |    | $’000 |   | $’000 |   | $’000 |   | $’000 |   |
|                                                                                                                        |   |                                       |    |   |   |   |   |   |   |   |   |
| Long-term                Debt Obligations                                                                              |   |                                            | 8,571   |   |   | 8,571 |   |   | — |   |   | — |   |   | — |   |
| Capital                Lease Obligations                                                                               |   |                                            | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Operating                Lease Obligations                                                                             |   |                                            | 73      |   |   | 73 |   |   | — |   |   | — |   |   | — |   |
| Purchase                Obligations                                                                                    |   |                                            | 3,888   |   |   | 3,888 |   |   | — |   |   | — |   |   | — |   |
| Other                long-term liabilities reflected on the registrant’s balance sheet under                GAAP |   |                                            | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Total                                                                                                                  |   |                                            | 12,532  |   |   | 12,532 |   |   | — |   |   | — |   |   | — |   |

| **Item              3.** | **Quantitative                and Qualitative Disclosures About Market                Risk.** |
|--------------------------|-----------------------------------------------------------------------------------------------|

----

| **Item              4T.** | **Controls                and Procedures.** |
|---------------------------|---------------------------------------------|

**PART      II - OTHER INFORMATION**

| **Item              1.** | **Legal                Proceedings.** |
|--------------------------|---------------------------------------|

| **Item              1A.** | **Risk                Factors.** |
|---------------------------|----------------------------------|

| **Item              2.** | **Unregistered                Sales of Equity Securities and Use of                Proceeds.** |
|--------------------------|------------------------------------------------------------------------------------------------|

|  | (a) | None. |
|--|-----|-------|

|  | (b) | None. |
|--|-----|-------|

|  | (c) | None. |
|--|-----|-------|

| **Item              3.** | **Defaults                Upon Senior Securities.** |
|--------------------------|-----------------------------------------------------|

----

| **Item              4.** | **Submission                of Matters to a Vote of Security                Holders.** |
|--------------------------|----------------------------------------------------------------------------------------|

| **Item              5.** | **Other                Information.** |
|--------------------------|---------------------------------------|

| **Item              6.** | **Exhibits.** |
|--------------------------|---------------|

| **Exhibit****Number** |   | **Exhibit                Description**                                                                                                        |
|-----------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                       |   |                                                                                                                                          |
| 31.1                  |   | Certification                of Principal Executive Officer under Section 302 of the Sarbanes-Oxley                Act                of 2002 |
|                  |   |                                                                                                                                          |
| 31.2                  |   | Certification                of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley                Act of 2002               |
|                  |   |                                                                                                                                          |
| 32.1                  |   | Certification                of Principal Executive Officer under Section 906 of the Sarbanes-Oxley                Act                of 2002 |
|                  |   |                                                                                                                                          |
| 32.2                  |   | Certification                of Principal Accounting Officer under Section 906 of the Sarbanes-Oxley                Act of 2002               |

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**SIGNATURES**

**ORSUS      XELENT TECHNOLOGIES, INC.**

----

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**INDEX      TO EXHIBITS**

| **Exhibit****Number** |   | **Exhibit                  Description**                                                                                                            |
|-----------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |   |                                                                                                                                                |
| 31.1                  |   | Certification                  of Principal Executive Officer under Section 302 of the Sarbanes-Oxley                  Act                  of 2002 |
|                  |   |                                                                                                                                                |
| 31.2                  |   | Certification                  of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley                  Act of 2002                 |
|                  |   |                                                                                                                                                |
| 32.1                  |   | Certification                  of Principal Executive Officer under Section 906 of the Sarbanes-Oxley                  Act                  of 2002 |
|                  |   |                                                                                                                                                |
| 32.2                  |   | Certification                  of Principal Accounting Officer under Section 906 of the Sarbanes-Oxley                  Act of 2002                 |

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