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, 2006

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

For the transition period from ______ to ______.

                       Commission file number: 000-117718

                         ORSUS XELENT TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

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

                12th Floor, Tower B, Chaowai MEN Office Building
                        26 Chaowai Street, Chaoyang Disc.
                   Beijing, People's Republic Of China 100020
          (Address of principal executive offices, including zip code)

                                 86-10-85653777
              (Registrant's telephone number, including area code)

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 [ X ] No [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                Yes [ X ] No [ ]


Indicate by check mark whether the registrant is a shell  Registrant (as defined
in Rule 12b-2 of the Exchange Act).

                                Yes [ ] No [ X ]


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 15, 2006
-----------------------------------------          -----------------------------
 Common Stock, $.001 par value per share                 29,756,000 shares

<PAGE>

                        PART I --- FINANCIAL INFORMATION

Item 1.   Financial Statements.


Orsus Xelent Technologies, Inc.

Condensed Consolidated Statements of Operations
--------------------------------------------------------------------------------


                                                             (Unaudited)
                                                          Three months ended
                                                              March 31,
                                                      -------------------------
                                                          2006          2005
                                                 Note     US$'000       US$'000

Operating revenues:                                         8,367         1,500
                                                      -----------   -----------

Operating expenses:
    Cost of sales                                           6,493         1,188
    Sales and marketing                                       444           294
    General and administrative                                189           262
    Research and development                                   81            34
    Depreciation                                               25            26
                                                      -----------   -----------

    Total operating expenses                                7,232         1,804
                                                      -----------   -----------

Operating income (loss)                                     1,135          (304)
Interest expense                                             --             (21)
Other income, net                                               2           330
                                                      -----------   -----------

Income before income taxes                                  1,137             5
Income taxes                                       3         --            --
                                                      -----------   -----------

Net income                                                  1,137             5
                                                      ===========   ===========

Earnings per share:                                2

Basic                                                 $      0.04   $      0.00
                                                      ===========   ===========

Weighted average number of common stock outstanding    29,756,000    29,756,000
                                                      ===========   ===========



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


                                      -2-
<PAGE>
<TABLE>
<CAPTION>

Orsus Xelent Technologies, Inc.

Condensed Consolidated Balance Sheets
--------------------------------------------------------------------------------


                                                                As of         As of
                                                               March 31,     December 31,
                                                                 2006          2005
                                                         Note   US$'000       US$'000
                                                              (Unaudited)
<S>                                                           <C>           <C>
ASSETS
Current assets
    Cash and cash equivalents                                         888         2,974
    Accounts receivable - Trade                                    14,366        12,034
    Inventories                                                     4,452         4,460
    Trade deposit paid                                             14,377        10,580
    Advance to third party                                            707          --
    Other current assets                                              262           182
                                                              -----------   -----------

    Total current assets                                           35,052        30,230

Property, plant and equipment, net                                    845           781
                                                              -----------   -----------

Total assets                                                       35,897        31,011
                                                              ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Short-term bank loan                                    4         991          --
    Accounts payable - Trade                                        7,327         7,939
    Accrued expenses and other accrued liabilities                  2,599         2,238
    Trade deposits received                                         8,519         5,432
    Due to directors                                        6         320           320
    Provision for warranty                                             44           122
    Taxes payable                                                      21            21
                                                              -----------   -----------

    Total current liabilities                                      19,821        16,072
                                                              -----------   -----------

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,
    2006 andas of December 31, 2005                                    30            30
Additional paid-in capital                                          2,484         2,484
Dedicated reserves                                                  1,042         1,042
Other comprehensive income                                            349           349
Retained earnings                                                  12,171        11,034
                                                              -----------   -----------

Total stockholders' equity                                         16,076        14,939
                                                              -----------   -----------

Total liabilities and stockholders' equity                         35,897        31,011
                                                              ===========   ===========
</TABLE>



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


                                      -3-
<PAGE>
<TABLE>
<CAPTION>

Orsus Xelent Technologies, Inc.

Condensed Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------


                                                                         (Unaudited)
                                                                     Three months ended
                                                                          March 31,
                                                                    --------    --------
<S>                                                                 <C>         <C>
                                                                      2006        2005
                                                                     US$'000     US$'000
Cash flows used in operating activities
Net income                                                             1,137           5
Adjustments to reconcile net income to net cash used in operating
    activities:
    Depreciation                                                          25          26
Changes in assets and liabilities:
    Accounts receivable -trade                                        (2,332)      3,274
    Inventories, net                                                       8        (115)
    Trade deposit paid                                                (3,797)     (4,800)
    Other current assets                                                 (80)          1
    Trade deposit received                                             3,087        (935)
    Accounts payable - trade                                            (612)       (284)
    Provision for warranty                                               (78)        (57)
    Accrued expenses and other accrued liabilities                       361         183
                                                                    --------    --------

Net cash used in operating activities                                 (2,281)     (2,702)
                                                                    --------    --------

Cash flows (used in) from investing activities
    Purchase of property, plant and equipment                            (89)       (372)
    Repayment from a related company                                    --         3,319
    Increase in restricted cash                                         --          (347)
                                                                    --------    --------

Net cash (used in) from investing activities                             (89)      2,600
                                                                    --------    --------

Cash flows from financing activities
    Bank loan raised                                                     991        --
    Loan to third parties                                               (707)       --
                                                                    --------    --------

Net cash from financing activities                                       284        --
                                                                    --------    --------

Net decrease in cash and cash equivalents                             (2,086)       (102)
                                                                    --------    --------

Cash and cash equivalents, beginning of the period                     2,974         224
                                                                    --------    --------

Cash and cash equivalents, end of the period                             888         122
                                                                    ========    ========
</TABLE>



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


                                      -4-
<PAGE>

Orsus Xelent Technologies, Inc.

Notes to Condensed Consolidated Financial Statements
--------------------------------------------------------------------------------


1.   PREPARATION OF INTERIM FINANCIAL STATEMENTS

     The accompanying  unaudited condensed  consolidated financial statements as
     of March 31, 2006 and 2005 have been  prepared  based upon  Securities  and
     Exchange  Commission  ("SEC")  rules that  permit  reduced  disclosure  for
     interim periods and include, in the opinion of management,  all adjustments
     (consisting  of  normal   recurring   adjustments  and   reclassifications)
     necessary to present fairly the financial  position,  results of operations
     and cash flows for the periods presented.

     Certain information and footnote disclosures normally included in financial
     statements  prepared in accordance  with  accounting  principles  generally
     accepted in the United  States of America  ("USA")  have been  condensed or
     omitted.  These condensed  consolidated financial statements should be read
     in  conjunction  with the audited  financial  statements  and notes thereto
     incorporated  by reference in the Company's  Form 10-KSB for the year ended
     December 31, 2005 filed on April 3, 2006. The results of operations for the
     three-month  periods  ended  March  31,  2006 and 2005 are not  necessarily
     indicative of the operating results to be expected for the full year.

     The condensed  consolidated financial statements and accompanying notes are
     presented  in  United  States  dollars  and  prepared  in  conformity  with
     accounting  principles  generally  accepted  in the USA ("US  GAAP")  which
     requires  management to make certain  estimates and assumptions that affect
     the reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of financial statements and the reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from those estimates.


2.   EARNINGS PER SHARE

     Basic earnings per share is computed based upon the weighted average number
     of shares of common  stock  outstanding  during each period as re stated of
     the   reorganization  and   recapitalization.   The  29,756,000  shares  in
     connection  with the  recapitalization  were included in the computation of
     earnings  per  share as if  outstanding  at the  beginning  of each  period
     presented.

     The Company  had no  potential  common  stock  instruments  with a dilutive
     effect for any period  presented,  therefore basic and diluted earnings per
     share are the same.


3.   INCOME TAXES

     The Company is subject to income taxes on an entity basis on income arising
     in or derived from the tax  jurisdictions  in which it operates.  Provision
     for income and other related  taxes have been  provided in accordance  with
     the tax rates and laws in effect in the various countries of operations.

     No provision for withholding or United States federal or state income taxes
     or  tax  benefits  on  the  undistributed  earnings  and/or  losses  of the
     Company's   subsidiaries  has  been  provided  as  the  earnings  of  these
     subsidiaries,  in  the  opinion  of  the  management,  will  be  reinvested
     indefinitely. Determination of the amount of unrecognized deferred taxes on
     these earnings is not practical,  however, unrecognized foreign tax credits
     would be available to reduce a portion of the tax liability.


                                      -5-
<PAGE>

Orsus Xelent Technologies, Inc.

Notes to Condensed Consolidated Financial Statements
--------------------------------------------------------------------------------


3.   INCOME TAXES (CONTINUED)

     United First International Limited was incorporated in Hong Kong and has no
     assessable  profit for the periods  presented.  Orsus  Xelent  Trading (HK)
     Limited  ("OXTHK")was  also incorporated in Hong Kong and Hong Kong Profits
     Tax has been provided at the rate of 17.5% on OXTHK's estimated  assessable
     profits for the period.  Since Beijing Orsus Xelent  Technologies & Trading
     Co., Limited has registered as a wholly-owned foreign investment enterprise
     ("WOFIE"),  it is subject to tax laws applicable to WOFIE in the PRC and is
     fully  exempt  from  the PRC  enterprise  income  tax of 33% for two  years
     followed by a 50%  reduction  for the next three years,  commencing  fiscal
     year 2005.

     Reconciliation  from the expected  statutory  tax rate in PRC of 24% (2005:
     24%) is as follows:

                                             (Unaudited)
                                         Three months ended
                                              March 31,
                                         -------    -------
                                            2006       2005
                                               %          %

     Statutory rate - PRC                   24.0       24.0
     Tax exemption                         (27.8)     (24.0)
     Others                                  3.8        --
                                         -------    -------

     Effective tax rate                      --         --
                                         =======    =======


4.   SHORT-TERM BANK LOAN

     The bank loan was secured by the director, Mr. Liu Yu, repayable on January
     29, 2007 at interest rate 6.696% per annum.


5.   RELATED PARTY TRANSACTION

     a.   Name and relationship of related parties

          Related party       Relationship with the Company as of March 31, 2006
          -------------       --------------------------------------------------

          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


                                      -6-
<PAGE>
<TABLE>
<CAPTION>

Orsus Xelent Technologies, Inc.

Notes to Condensed Consolidated Financial Statements
--------------------------------------------------------------------------------


5.   RELATED PARTY TRANSACTION (CONTINUED)

     b.   Summary of related party balances

                                                                    As of           As of
                                                                  March 31,     December 31,
                                                                    2006            2005
                                                          Note     US$'000         US$'000
                                                                (Unaudited)
<S>                                                             <C>             <C>
          Due to directors
          Mr. Wang Xin, Mr. Liu Yu and Mr. Wang Zhibin     (i)           320             320
                                                                ============    ============

          Bank loan secured by a director
          Mr. Liu Yu                                                     991            --
                                                                ============    ============
</TABLE>

          Note:

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















                                      -7-
<PAGE>

Item 2.   Management's  Discussion  and  Analysis  of  Financial  Condition  and
          Results of Operations.

     The  following  is   management's   discussion   and  analysis  of  certain
significant  factors which have  affected our  financial  position and operating
results during the periods included in the accompanying  consolidated  financial
statements,  as  well  as  information  relating  to the  plans  of our  current
management.  This report includes  forward-looking  statements.  Generally,  the
words "believes,"  "anticipates,"  "may," "will," "should,"  "expect," "intend,"
"estimate,"  "continue,"  and similar  expressions  or the  negative  thereof or
comparable terminology are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including the matters
set  forth in this  report  or  other  reports  or  documents  we file  with the
Securities and Exchange  Commission from time to time,  which could cause actual
results or outcomes to differ  materially from those  projected.  Undue reliance
should not be placed on these forward-looking  statements which speak only as of
the date  hereof.  We undertake no  obligation  to update these  forward-looking
statements.

     The following  discussion and analysis  should be read in conjunction  with
our  consolidated  financial  statements and the related notes thereto and other
financial information contained elsewhere in this Form 10-Q.


OVERVIEW

     The Company was organized  under the laws of State of Delaware in May 2004,
under  the name of  "Universal  Flirts  Corp.".  On June 1,  2004,  the  Company
acquired all the issued and outstanding  shares of Universal  Flirts Inc., a New
York corporation, from Darrel Lerner, the sole shareholder, in consideration for
the issuance of 8,500,000  shares of the  Company's  common stock to Mr.  Lerner
pursuant to a stock exchange  agreement  between  Universal  Flirts Inc. and the
Company.  Pursuant to the purchase  and share  exchange  transaction,  Universal
Flirts Inc. became the wholly-owned subsidiary of the Company.

     Pursuant to Stock  Transfer  Agreement  dated March 29,  2005,  the Company
transferred  all of the common stock of Universal  Flirts,  Inc. to Mr.  Darrell
Lerner in exchange for the  cancellation  of 28,200,000  shares of the Company's
common stock. Immediately, the Company had 14,756,000 shares of its common stock
outstanding.

     On March 31,  2005,  Universal  Flirts  Corp.  completed  a stock  exchange
transaction  with the  stockholders  of United First  International  Limited,  a
company  incorporated  under the laws of Hong Kong  ("UFIL").  The  exchange was
consummated  under the laws of State of  Delaware  and  pursuant to the terms of
Exchange  Agreement dated effective as of March 31, 2005. In connection with its
acquisition  of UFIL,  the Company also  authorized  a 4-1 forward  split of its
common stock.

     Pursuant  to  the  Exchange   Agreement,   Universal  Flirts  Corp.  issued
15,000,000 shares of its common stock,  $0.001 par value, to the stockholders of
UFIL, representing  approximately 50.41% of the Company's issued and outstanding
common stock,  in exchange for  20,000,000  outstanding  shares of UFIL and cash
payment of $50,000 from UFIL.  Immediately  after giving effect to the exchange,
the Company had 29,756,000 shares of its common stock  outstanding.  Pursuant to
the exchange,  UFIL became a wholly-owned  subsidiary of the Company and most of
the Company's business  operations are now conducted through UFIL's wholly-owned
subsidiary,   Beijing  Orsus  Xelent   Technology  &  Trading   Company  Limited
("Xelent").


                                      -8-
<PAGE>

     On April 19, 2005, the Company,  formerly known as Universal  Flirts Corp.,
changed its list name to Orsus Xelent  Technologies,  Inc. The Company's new OTC
Bulletin Board symbol is ORXT and the new CUSIP Number is 68749U106.

     In July, 2005 a wholly owned  subsidiary,  namely Orsus Xelent Trading (HK)
Company  Limited  ("OXHK") was  incorporated  in Hong Kong.  This  subsidiary is
engaged  in the  trading  of  cellular  phones  and  accessories  with  overseas
customers.

     The business operation of UFIL is primarily  undertaken by its wholly-owned
subsidiary,  Xelent.  Xelent have been engaged since May 2003 in the business of
designing for retail and wholesale  distribution  economically  priced  cellular
phones.   In  February   2004,   Xelent   registered   "ORSUS"  with  the  State
Administration for Industry and Commerce as its product trademark, also known as
"Orsus Cellular" within the industry.  Orsus cellular are traditionally equipped
with leading  features  including  1.8-inch to 2.2-inch CSTN and TFT  dual-color
display,  1 to 120-minute video recording,  300K to 3 million pixel photography,
MP3,  MPEG4  and  U  disk  support,  dual  stereo  speakers,  e-mail  messaging,
multimedia  messaging,  40 to 64  ring  tone  storage,  bar-phone  &  flip-phone
technology  and innovative  lightweight  design.  Xelent has sold  approximately
240,000 cellular phones in the PRC in 2005.

     According  to  a  research  conducted  by  China  Ministry  of  Information
Industry,  in 2005, new cellular phone users in the PRC increased by 58 million,
with total consumers  reaching 393 million.  Currently,  the PRC has the largest
number of cellular phone users in the world,  while the penetration  rate in the
PRC was  approximately  30%. The number of cellular phone users is also expected
to reach 500  million by 2007.  With the market in the PRC for  cellular  phones
continues  to  develop,  Xelent is  gradually  introducing  a series of advanced
cellular  phone  models  with R&D  platform,  manufacture  and  quality  control
technology,  incorporating with the new 3G (Third Generation) mobile technology.
On February 26, 2006, the  technology of TDS-CDMA has been announced  officially
as the 3G  technology  standard in the PRC.  This  technology  is expected to be
approved by the China government to put into the application  stage in 2006. The
PRC  cellular  market is expected to reach $120  billion by the year end of 2006
according to the China Ministry of Information Industry.


BUSINESS REVIEW

     In the first half of 2005, we  experienced  the slow down in growth rate of
the cellular phones market,  most of the domestic cellular phones  manufacturers
in the PRC were operated  with negative  growth and at loss in the first half of
2005  because  of  mismanagement,  lack  of  capital  and the  competition  from
counterfeit and "black market"  cellular  phones in the PRC market.  At the same
time,  the cellular  phones market  continues to change rapidly that a series of
innovative  functions  such as MP3,  FM  radio,  MPEG4,  large  memory  capacity
(function with dynamic memory card supported such as T-FLASH card, MINI SD card,
etc)  became the most  popular  products  in the second  half of 2005.  With the
development of 3G mobile technology in 2006, both the domestic and multinational
cellular phones  manufacturers  expect to seize this good  opportunity to launch
their own 3G mobile products. Based on our 2G and 2.5G cellular technologies and
our mature 3G solutions and chips providers, we will commence the development of
our 3G cellular  phone  products,  such as 3G PCBA,  which is a 3G  technologies


                                      -9-
<PAGE>
<TABLE>
<CAPTION>

development  platform  and 3G  cellular  phone  incorporating  with  the 3G PCBA
technologies  in the second half of 2006. We will seek to join into the TDS-CDMA
Industry League,  in order to enhance the application of 3G manufacture  license
in 2007.

     During the first quarter of 2006, we continued our diversification strategy
and  successfully  developed our CDMA products which resulted in increase in our
products mix. Through the closer  cooperation with  telecommunication  operator,
our CDMA products  contributed about 62.25% of our revenues during this quarter.
In this quarter,  multimedia cellular phones with fashionable  functions,such as
MP3 and MPEG4 ,continue to be popular and became the mainstream  products in the
PRC market.  Our efforts on the  development  of new platform and the technology
cooperation  with  cellular  phones  solution  providers  would  facilitate  the
development of the middle-class and low-end MP3 music cellular phones. We expect
such new models will be launched  into the market by the next  quarter.  The MP3
cellular phones are expected not only generate profits from the domestic market,
but also from the overseas market in this year.

The following table  summarizes our operation  result for the three months ended
March 31, 2006 and 2005:

------------------- -------------------------- --------------------------- -----------------------
                    Three  months ended March  Three  months ended March   Comparison
                    31, 2006                   31, 2005
------------------- -------------------------- --------------------------- -----------------------
                      $' 000     % of revenue     $' 000     % of revenue     $'000             %
------------------- --------- ---------------- ---------- ---------------- --------- -------------
<S>                 <C>       <C>              <C>        <C>              <C>       <C>
Revenues               8,367               ii      1,500               ii     6,867       457.80%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Cost of sales          6,493           77.60%      1,188           79.20%     5,305       446.55%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Sales & Marketing        444            5.31%        294           19.60%       150        51.02%
expenses
------------------- --------- ---------------- ---------- ---------------- --------- -------------
General & Admin          189            2.26%        262           17.47%       -73       -27.86%
expenses
------------------- --------- ---------------- ---------- ---------------- --------- -------------
R&D expenses              81            0.97%         34            2.27%        47       138.24%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Depreciation &            25            0.30%         26            1.73%        -1        -3.85%
Amortization
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Interest expenses        -ii            0.00%         21            1.40%       -21      -100.00%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Other income, net          2            0.02%        330           22.00%      -328       -99.39%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Income before tax      1,137           13.59%          5            0.33%     1,132     22640.00%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Income taxes             -ii            0.00%          -            0.00%         -         0.00%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
Net income             1,137           13.59%          5            0.33%     1,132     22640.00%
------------------- --------- ---------------- ---------- ---------------- --------- -------------
</TABLE>

CRITICAL ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES

     Our  discussion  and  analysis on our  financial  condition  and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities. On an on-going basis, we evaluate our estimates based on historical
experience  and various  other  assumptions  that are believed to be  reasonable
under  the  circumstances,  the  results  of which  form the  basis  for  making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates under different assumptions or conditions.


                                      -10-
<PAGE>

RESULTS OF OPERATION

Revenues

     Our  revenues  were  $8,367,000  for the three months ended March 31, 2006,
representing  an increase of 457.80% as compared to the same period in 2005.  In
the first half of 2005, the PRC cellular phone market  experienced a reformation
stage.  The oversupply of cellular  phones,  mass  production of simple function
products and competition  from  counterfeit  and "black market"  cellular phones
caused the difficult operating environment. We were well positioned and adjusted
our direction in the second half of 2005 to diversify our product mix.  Although
we are not satisfied with our profitability,  we are in a right track to develop
CDMA products,  new  fashionable  functions and customized  products.  Of which,
super-slim  appearance  and PDA function  models are newly launched into market,
which enriched our products mix in the PRC cellular phones market.

     Through the closer co-operation with  telecommunication  operator and other
cellular phones  manufacturer,  we extended to manufacture  CDMA cellular phones
and obtained steady orders from the telecommunication operator by customization.
The revenues from the customized CDMA products has became a substantial  part of
our revenues in this quarter.

Breakdown by products
---------------------

For the three months ended March 31, 2006,  products  attributed over 10% of our
revenues are shown as follows:

------------------------- ------------------------------------------------------
                          Three months ended March 31, 2006
------------------------- ------------------------------------------------------
                                               $'000               % of revenue
------------------------- --------------------------- --------------------------
TDA6028                                        2,250                     26.89%
------------------------- --------------------------- --------------------------
C100                                           1,887                     22.55%
------------------------- --------------------------- --------------------------
X718                                           1,667                     19.93%
------------------------- --------------------------- --------------------------
C109                                           1,072                     12.81%
------------------------- --------------------------- --------------------------
D9000                                            985                     11.77%
------------------------- --------------------------- --------------------------

     The total revenues for the first quarter were amounted to $8,367,000, which
was  attributed  to the  products  launched  into market in the last  quarter of
2005.The  sales of CDMA  products had a great  increase  from  $1,443,000 in the
whole year of 2005 to $5,209,000,  which represented 62.25% of total revenues in
the first quarter of 2006.  The increase of revenues  were mainly  attributed to
the sales of TDA6028,  C100 and C109,  amounted to  $2,250,000,  $1,887,000  and
$1,072,000  respectively.  The sales of GSM  products  amounted  to  $3,158,000,
represented 37.75% of total revenues,  which are mainly generated from the sales
of X718 and D9000 amounting to $1,667,000 and $985,000. Through the co-operation
with Tian Feng Ju Yuan Technology  Company  Limited,  we  successfully  launched
TDA6028, a high-end cellular phone with PDA, GPRS,  2.8-inch TFT LCD handwriting
touch screen,  figure print  identification,  MPEG4,  extended scanner, RFID and
WIFI functions;  X718, a cellular phone with MPEG4, external memory card support
function  with  super-slim  appearance;  and D9000,  a low-end  product with PDA
function.  Additionally,  the CDMA products C100 and C109 were developed through


                                      -11-
<PAGE>
<TABLE>
<CAPTION>

the  cooperation  with  Dalian  Daxian   Communication   Company   Limited.   We
successfully  captured the demand of  consumers to launch our new products  with
innovative functions,  trendy appearance,  high quality and features riched with
reasonable price,  which are the main reasons that we can recover from the tough
operating environment in the first half of 2005.

Breakdown by customers
----------------------

---------------------------------------------- ---------------------------------
                                               Three months ended March 31, 2006
---------------------------------------------- ---------------------------------
                                                      $'000         % of revenue
---------------------------------------------- ------------- -------------------
CEC Cellular Limited                                  8,273               98.88%
---------------------------------------------- ------------- -------------------
Beijing Xingwang Shidai Tech & Trading                   94                1.12%
Co., Ltd.
---------------------------------------------- ------------- -------------------

     Our revenues were primarily derived from two major customers. For the three
months ended March 31, 2006, our revenues  generated  from CEC Cellular  Limited
("CECM") and Beijing  Xingwang  Shidai Tech & Trading Co.,  Ltd.  ("XWSD")  were
$8,273,000 and $94,000  respectively,  which representing a, 98.88% and 1.12% of
the revenue respectively. The revenues generated from CECM which represented the
substantial  part  of  our  revenues,  was  due  to  our  strengthening  of  the
receivables  management.  To reduce the credit risk on XWSD, we concentrated the
products supply to CECM which has better payment record.  Both CECM and XWSD are
distributors  and dealers in Mainland China, and their sales networks cover most
of the major  cities in PRC.  Because of  outstanding  balance  of Hebei  Mascot
Communication  Equipment  Co., Ltd  ("MASCOT")  over our credit  limit,  we have
frozen the trading with MASCOT until the clearance of the outstanding balance.

Other income, net

     For the three months ended March 31, 2006,  other  income,  net was $2,000,
accounted  to  0.02%  of the  total  revenues.  Compared  to  $330,000  for  the
corresponding  period in last year, other income,had a decrease of 99.39%, which
is mainly due to an one-off royalty fee rebate in 2005.

Operating expenses

For the three  months  ended  March 31,  2006,  operating  expenses  amounted to
$7,232,000   mainly   include   sales  and  marketing   expenses,   general  and
administrative  expenses  and R & D  expenses  and  depreciation  were  shown as
follows:

------------------- -------------------------- -------------------------- ---------------------
                    Three months ended March   Three months ended March   Comparison
                    31, 2006                   31, 2005
------------------- -------------------------- -------------------------- ---------------------
                       $'000     % of revenue     $'000     % of revenue     $'000           %
------------------- --------- ---------------- --------- ---------------- --------- -----------
<S>                 <C>       <C>              <C>        <C>             <C>       <C>
Cost of sales          6,493           77.60%     1,188           79.20%     5,305     446.55%
------------------- --------- ---------------- --------- ---------------- --------- -----------
Sales & marketing        444            5.31%       294           19.60%       150      51.02%
------------------- --------- ---------------- --------- ---------------- --------- -----------
General & admin          189            2.26%       262           17.47%       -73     -27.86%
------------------- --------- ---------------- --------- ---------------- --------- -----------
R&D                       81            0.97%        34            2.27%        47     138.24%
------------------- --------- ---------------- --------- ---------------- --------- -----------
Depreciation              25            0.30%        26            1.73%        -1      -3.85%
------------------- --------- ---------------- --------- ---------------- --------- -----------
Total                  7,232               ii     1,804               ii     5,428     300.89%
------------------- --------- ---------------- --------- ---------------- --------- -----------
</TABLE>


                                      -12-
<PAGE>

Cost of sales
-------------

     For  the  three  months  ended  March  31,  2006,  our  cost of  sales  was
$6,493,000, representing 77.60% of revenue. Compared to the corresponding period
in 2005,  the cost of sales  percentage  to  revenues  had a decrease  of 1.60%.
Although the keen competition lead to cut price in old products,  we effectively
controlled the cost of sales through the control of raw materials used and lower
materials cost by negotiation with suppliers.

Sales and marketing expenses
----------------------------

     Sales and  marketing  expenses  mainly  represent  remunerations  for sales
personnel,  cost of provision for after-sales  services,  cost of development of
market and transportation costs.

     For the three  months ended March 31, 2006,  sales and  marketing  expenses
were  $444,000,  accounted  for  5.31% of the total  revenues,  as  compared  to
$294,000 and 19.6% of total revenues for the corresponding period in 2005. Sales
and  marketing   expenses  had  an  increase  of  51.02%  while  its  percentage
represented  on total revenues  decreased  from 19.6% to 14.29%  compared to the
corresponding  period  in  2005.  This is due to the  sharp  increase  on  total
revenues of 446.55%  and the  approximately  steady  absolute  expense.  A large
portion  of  sales  and  marketing   expenses  was  fixed   expenses,   such  as
remunerations  for sales personnel,  and other variable expenses were controlled
effectively.

R&D expenses
------------

     The R&D  expenses  was $81,000 for the three  months  ended March 31, 2006,
which  represents  0.97% of total  revenue,  compared  with  $34,000  and  2.27%
respectively  in the same  period  of  2005.  Compared  to the  period-to-period
increase  of R&D  expenses,  our sales  revenues  had a larger  period-to-period
increase, and the percentage represented in the total revenues decreased 1.30%.

     Our R&D  investment  would  allow us to have quick  response  to the market
change. In this quarter, we introduced newly developed models of cellular phones
with  innovative  functions,  which  cater  to the  customers'  demand,  such as
TDA6028,  X718.  We expect the  investment  in R&D  activities  will be continue
throughout  the  rest of the  year.  We  believe  that our R&D  activities  will
strengthen  our  technologies,  reduce the costs of existing  products  and also
provide future revenue streams through the launch of new innovative products.

General and administrative expenses
-----------------------------------

     General and  administrative  expenses primarily consist of compensation for
personnel,  depreciation, travel expenses, rental, materials expenses related to
ordinary administration and fees for professional services.

     For the three  months  ended March 31,  2006,  general  and  administrative
expenses were $189,000,  accounting for 2.26% of the total revenues, as compared
to $262,000,  and 17.47% of the total revenues for the  corresponding  period in
2005. General and administrative  expenses had a sharp decrease of 27.86%. Which
was mainly due to the compensation and insurance for personnel.  These are fixed
expenses  and do not change with the variety of our  revenues.  Besides,  and we
effectively  controlled other expenses by our management with the development of
the Company.


                                      -13-
<PAGE>

Gross profit and gross profit margin

     For the three months ended March 31, 2006, our gross profit was $1,874,000,
which  represented  an increase  of 500.64% as  compared to the gross  profit of
$312,000 in the same period in 2005.  Our gross profit  margin for the reporting
period increased from 20.80% in 2005 to 22.40% in 2006.

     The  increase  in  our  gross  profit  margin  under  keen  competition  is
attributable to:
1.   New products  with  innovative  functions  successfully  launched  into the
     market; generally new products would have a higher profit margin;
2.   Further development of the sales of CDMA product;  CDMA products have gross
     profit  margin  around 23%,  which is higher than our average  gross profit
     margin;
3.   We controlled usage of raw materials effectively and reduced materials cost
     by negotiation with suppliers, so as to control our direct cost.

Net income

     For the three months ended March 31,  2006,  our net income was  $1,137,000
representing   13.59%  of   revenue,   compared  to  $5,000  and  0.33%  of  the
corresponding  period in 2005. The  improvement of our profit is because we have
successful overcome of tough operating environment in the first half of 2005.


LIQUIDITY AND SOURCE OF CAPITAL

     We generally finance our operations from cash flow generated internally.

     As of March 31, 2006,, we had current assets of $35,052,000. Current assets
are mainly  comprised of  inventories  of  $4,452,000,  accounts  receivable  of
$14,366,000,  trade deposits and other  receivables  aggregated of  $14,377,000,
other current assets of $969,000 and restricted  cash, cash and cash equivalents
of $888,000. Current liabilities included accounts payable of $7,327,000,  trade
deposit received of $8,519,000,  accrued expenses and other accrued  liabilities
of  $2,599,000,   short-term  bank  loan  of  $991,000,   due  to  directors  of
$320,000,provision for warranty of $44,000 and tax payable of $21,000.

     We offer two trading terms to our customers,  i.e.  cash-on-delivery and on
credit term within 90 days. As of March 31, 2006, our accounts  receivable  were
$14,366,000,  compared to  $12,034,000  as of December 31, 2005. We offer credit
term within 90 days to our  customers who had a long-term  cooperation  with us,
such as CECM.

     As of March 31,  2006,  our  inventories  were  $4,452,000,  as compared to
$4,460,000 as of December 31, 2005. We have  critically and regularly  evaluated
our  inventories  and provision of slow-moving  inventories  was made,if any ,to
their estimated net realizable value.

     As of March 31, 2006, our cash and bank balances were mainly denominated in
Renminbi  ("RMB") and Hong Kong  Dollar.  Our revenue and  expenses,  assets and


                                      -14-
<PAGE>

liabilities  are  mainly   denominated  in  RMB.  Our  activities,   assets  and
liabilities are mainly  denominated in Renminbi,  any further possible inflation
of Renminbi  would be benefit to us. We consider  that the  exposure to exchange
fluctuations  is relatively low and therefore we have not engaged in any hedging
activity.


CASH FLOWS

     As of  March  31,  2006,  we  have  the  restricted  cash,  cash  and  cash
equivalents of $888,000,  compared to $2,974,000 as of December 31, 2005,  which
representing  an decrease of 70.14%.  It is mainly due to increase in advance to
our  materials  suppliers  and  increase in accounts  receivable  as a result of
growth in revenue during this quarter.

     Our gearing ratio,  calculated as total debts over total assets, was 55.22%
as of March 31, 2006, compared to 51.83% as of December 31, 2005.


CONTINGENT LIABILITIES

     As of March 31, 2006, we had not entered into any  guarantee  contracts nor
non-disclosed   contracts  which  will  affect  stockholders'  equity  or  share
structure.


OFF BALANCE SHEET ARRANGEMENTS

     As of March 31, 2006, we had no off balance sheet arrangements.












                                      -15-
<PAGE>
<TABLE>
<CAPTION>

CONTRACTUAL COMMITMENTS

     The Company is obligated to make future under various contracts,  including
purchase and operating  leases.  The Company does not have any long-term debt or
capital  lease  obligations.   The  following  table  summarized  the  Company's
contractual obligations at March 31, 2006, reported by maturity of obligation.


                                                               Payments due by period
                                               -----------------------------------------------------
Contractual Obligations                          Total    Less than                        More than
                                                            1 year   1-3 years  3-5 years   5 years
--------------------------------               ---------  ---------  ---------  ---------  ---------
<S>                                            <C>        <C>        <C>        <C>        <C>
                                               $    '000  $    '000  $    '000  $    '000  $    '000

Long-term Debt Obligations
                                                     --         --         --         --         --
Capital Lease Obligations
                                                     --         --         --         --         --
Operating Lease Obligations
                                                      36         25         11        --         --
Purchase Obligations
                                                     104        104        --         --         --
Other long-term liabilities reflected on the
   registrant's balance sheet under GAAP             --         --         --         --         --

                                               ---------  ---------  ---------  ---------  ---------

Total
                                                     140        129         11        --         --
                                               =========  =========  =========  =========  =========
</TABLE>












                                      -16-
<PAGE>

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

     Market  risk is the  sensitivity  of income to changes in  interest  rates,
foreign exchanges, commodity prices, equity prices and other market-driven rates
or prices. We are not presently engaged in and, if a suitable business target is
not identified by us prior to the prescribed liquidation date of the trust fund,
we may not engage in, any substantive commercial business.  Accordingly,  we are
not and,  until such time as we consummate a business  combination,  we will not
be, exposed to risks associated with foreign exchange rates,  commodity  prices,
equity prices or other  market-driven  rates or prices.  The net proceeds of our
initial public  offering held in the trust fund have been invested only in money
market funds meeting certain  conditions under Rule 2a-7  promulgated  under the
Investment  Company Act of 1940. Given our limited risk in our exposure to money
market funds, we do not view the interest rate risk to be significant.

     The Company considers Renminbi as its functional  currency as a substantial
portion of the Company's business activities are based in Renminbi. However, the
Company has chosen the United States dollar as its reporting currency.

     Transactions  in currencies  other than the functional  currency during the
period are translated  into the functional  currency at the applicable  rates of
exchange  prevailing  at the  time  of the  transactions.  Monetary  assets  and
liabilities  denominated  in  currencies  other  than  functional  currency  are
translated  into  functional  currency  at the  applicable  rates of exchange in
effect at the balance sheet date.  Exchange gains and losses are recorded in the
combined statements of operations.

     For translation of financial statements into the reporting currency, assets
and  liabilities  are translated at the exchange rate at the balance sheet date,
equity  accounts are  translated at  historical  exchange  rates,  and revenues,
expenses,  gains and losses are  translated  at the  weighted  average  rates of
exchange prevailing during the period.

     Translation  adjustments,  when  material  resulting  from this process are
recorded in accumulated other comprehensive  income (loss) within  stockholders'
equity.

Item 4.   Controls and Procedures.

     The Company maintains  disclosure controls and procedures that are designed
to ensure  that  information  required  to be  disclosed  in our  reports  filed
pursuant  to the  Securities  Exchange  Act of 1934,  as amended,  is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's  rules,  regulations  and  related  forms,  and that such  information  is
accumulated and  communicated to our principal  executive  officer and principal
financial officer, as appropriate,  to allow timely decisions regarding required
disclosure.

     The Company, under the supervision of our chief executive officer and chief
financial officer,  carried out an evaluation of the effectiveness of the design
and operation of its disclosure  controls and procedures as of the balance sheet
date.  Based upon that  evaluation,  management,  including our chief  executive
officer and chief  financial  officer,  concluded that the Company's  disclosure
controls and  procedures  were  effective  in alerting it in a timely  manner to
information relating to the Company required to be disclosed in this report.


                                      -17-
<PAGE>

     During the  period,  there  were no  significant  changes  in our  internal
controls  over  financial  reporting  that  have  materially  affected,  or  are
reasonably  likely to materially  affect our internal  controls  over  financial
reporting.


                          PART II --- OTHER INFORMATION

Item 1.   Legal Proceedings.

     There is no litigation pending or threatened against the Registrant,  other
than certain legal proceedings arising in the ordinary course of business,  none
of which are expected to have a material  impact on the  Registrant's  financial
condition, operating results or liquidity.

Item 1A.  Risk Factors.

          None

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

          (a)  None.

          (b)  None.

          (c)  None.

Item 3.   Defaults Upon Senior Securities.

          (a)  None.

          (b)  None.

Item 4.   Submission of Matters to a Vote of Security Holders.

          None

Item 5.   Other Information.

          None

Exhibits.

          Exhibits:
          ---------

          31.1             Certification  pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 302 of the Sarbanes-Oxley
                           Act of 2002 (Chief Executive Officer).

          31.2             Certification  pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 302 of the Sarbanes-Oxley
                           Act of 2002 (Chief Accounting Officer).

          32.1             Certification  pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002 (Chief Executive Officer).

          32.2             Certification  pursuant to 18 U.S.C. Section 1350, as
                           adopted pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002 (Chief Accounting Officer).


                                      -18-
<PAGE>

                                   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.

                                                 ORSUS XELENT TECHNOLOGIES, INC.


                                              By: /s/ Wang Xin
                                                 -------------------------------
                                                 Wang Xin
                                                 Chief Executive Officer

DATED:  May 18, 2006















                                      -19-
<PAGE>

Exhibit Number                         Description of Document
---------------     ------------------------------------------------------------

     31.1           Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant  to Section 302 of the  Sarbanes-Oxley  Act of 2002
                    (Chief Executive Officer). *

     31.2           Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant  to Section 302 of the  Sarbanes-Oxley  Act of 2002
                    (Chief Accounting Officer). *

     32.1           Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002
                    (Chief Executive Officer). *

     32.2           Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002
                    (Chief Accounting Officer). *

-------------------
* filed herewith















                                      -20-