UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q


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

                For the quarterly period ended September 30, 2005

                                   000-117718
                            (Commission File Number)


                         Orsus Xelent Technologies, Inc.
             (Exact name of registrant as specified in its charter)


           Delaware                                              20-11998142
(State or other jurisdiction of                                 (IRS Employer
incorporation or organization)                               Identification No.)


                           6B Building 5, Yi Jing Yuan
                                  Chaoyang Disc
                   Beijing, People's Republic Of China 100020
               (Address of principal executive offices) (Zip Code)

                                 86-10-85613362
                           (Issuer's telephone number)

                             A-20G, Chengming Plaza
                      No. 2 Nan Da Street, Xicheng District
                   Beijing, People's Republic Of China 100035
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

                                 [X] Yes [ ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practical date.

                                   29,756,000


<PAGE>
<TABLE>
<CAPTION>

                        PART I --- FINANCIAL INFORMATION

Item 1. Condensed Consolidated Statement of Operations.


Orsus Xelent Technologies, Inc.

Condensed Consolidated Statements of Operations
==========================================================================================================

                                                      Three months ended           Nine months ended
                                                        September 30,                 September 30,
                                                  --------------------------    --------------------------
                                                         2005           2004           2005          2004
                                          Note        US$'000        US$'000        US$'000        US$'000
                                                  (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)
<S>                                               <C>            <C>            <C>            <C>

Operating revenues                                     13,164         37,853         16,604         52,917
                                                  -----------    -----------    -----------    -----------

Operating expenses:
    Cost of sales                                      10,358         30,287         13,257         42,592
    Sales and marketing                                   430          1,545          1,131          2,396
    General and administrative                            200            606            769            988
    Research and development                              195            267            337            456
    Depreciation                                           89            409            164            514
                                                  -----------    -----------    -----------    -----------

    Total operating expenses                           11,272         33,114         15,658         46,946
                                                  -----------    -----------    -----------    -----------

Operating profit                                        1,892          4,739            946          5,971

Interest expense                                         --              (88)           (25)           (90)
Other income, net                                          89             28            541             32
                                                  -----------    -----------    -----------    -----------

Income before income taxes and minority
    interest                                            1,981          4,679          1,462          5,913

Income taxes                                 3            (23)          --              (23)          --
                                                  -----------    -----------    -----------    -----------

Income before minority interest                         1,958          4,679          1,439          5,913

Minority interest                                        --               30           --              120
                                                  -----------    -----------    -----------    -----------

Net income                                              1,958          4,709          1,439          6,033
                                                  ===========    ===========    ===========    ===========

Earnings per share:                          2

Basic                                                    0.07           0.16           0.05           0.20
                                                  ===========    ===========    ===========    ===========

Weighted average number of common stock
    outstanding                                    29,756,000     29,756,000     29,756,000     29,756,000
                                                  ===========    ===========    ===========    ===========
</TABLE>






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
                                                                 September 30,   December 31,
                                                                          2005           2004
                                                          Note         US$'000        US$'000
                                                                   (Unaudited)
<S>                                                                <C>            <C>

ASSETS
Current assets
    Cash and cash equivalents                                            2,734            224
    Restricted cash                                                      1,623          2,333
    Accounts receivable - Trade                                         10,145          8,250
    Due from related company                                4             --            3,319
    Due from a director                                     4                6           --
    Inventories                                                          4,566          5,781
    Trade deposits paid                                                  8,333          8,126
    Other current assets                                                   352            210
                                                                   -----------    -----------

    Total current assets                                                27,759         28,243

Property, plant and equipment, net                                       1,193            778
                                                                   -----------    -----------

Total assets                                                            28,952         29,021
                                                                   ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Accounts payable - Trade                                            11,054         13,840
    Accrued expenses and other accrued liabilities                       2,033          1,103
    Trade deposits received                                              2,906          2,487
    Due to directors                                        4              311            311
    Provision for warranty                                                  88            182
    Provision for taxation                                                  23           --
                                                                   -----------    -----------

    Total current liabilities                                           16,415         17,923
                                                                   -----------    -----------

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
    September 30, 2005 and as of December 31, 2004                          30             30
Additional paid-in capital                                               2,484          2,484
Dedicated reserves                                                       1,042          1,042
Retained earnings                                                        8,981          7,542
                                                                   -----------    -----------

Total stockholders' equity                                              12,537         11,098
                                                                   -----------    -----------

Total liabilities and stockholders' equity                              28,952         29,021
                                                                   ===========    ===========
</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
=====================================================================================

                                                                 Nine months ended
                                                                  September 30,
                                                           --------------------------
                                                                  2005           2004
                                                               US$'000        US$'000
                                                           (Unaudited)    (Unaudited)
<S>                                                        <C>            <C>
Cash flows from operating activities
Net income                                                       1,439          6,033
Adjustments to reconcile net income to net cash
    (used in) provided by operating activities:
    Depreciation                                                   164            514
    Loss on disposal of property, plant and equipment             --                7
    Loss on liquidation of a subsidiary                           --              120
    Minority interest                                             --             (120)
Changes in assets and liabilities:
    Accounts receivable - trade                                 (1,895)        (2,910)
    Inventories, net                                             1,215         (9,183)
    Trade deposits paid                                           (207)          (845)
    Other current assets                                          (142)            40
    Trade deposits received                                        419           --
    Accounts payable - trade                                    (2,786)        13,000
    Provision for warranty                                         (94)           299
    Accrued expenses and other accrued liabilities                 930            708
    Provision for taxation                                          23           --
                                                           -----------    -----------

Net cash (used in) provided by operating activities               (934)         7,663
                                                           -----------    -----------

Cash flows from investing activities
    Purchase of property, plant and equipment                     (579)        (1,263)
    Proceeds from sales of property, plant and equipment          --               43
    Repayment from a related company                             3,319            736
    Loan to a related company                                     --           (7,107)
    Decrease in restricted cash                                    710           --
    Advance to a director                                           (6)          --
                                                           -----------    -----------

Net cash provided by (used in) investing activities              3,444         (7,591)
                                                           -----------    -----------

Net increase in cash and cash equivalents                        2,510             72

Cash and cash equivalents, beginning of the period                 224            190
                                                           -----------    -----------

Cash and cash equivalents, end of the period                     2,734            262
                                                           ===========    ===========

</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 September 30, 2005 and 2004 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,  2004  filed on  February  11,  2005 and Form  8-K/A  for the
     information  of Xelent filed on May 19, 2005. The results of operations for
     the  nine-month   periods  ended  September  30,  2005  and  2004  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 restated as a
     result of the reorganization and  recapitalization  as described in Note 2.
     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.



                                       5
<PAGE>
<TABLE>
<CAPTION>

Orsus Xelent Technologies, Inc.

Notes to Condensed Consolidated Financial Statements
================================================================================



3.   INCOME TAXES (CONTINUED)

     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.

     UFI was  incorporated  in Hong Kong and has no  assessable  profit  for the
     periods  presented.  OXT was also  incorporated  in Hong Kong and Hong Kong
     Profits  Tax has been  provided  at the  rate of  17.5% on OXT's  estimated
     assessable  profits  for the  period.  Since  Xelent  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 33% (2004:
     33%) is as follows:

                                                                       Nine months ended
                                                                         September 30,
                                                                 --------------------------
                                                                        2005           2004
                                                                           %              %
                                                                 (Unaudited)    (Unaudited)

     <S>                                                         <C>            <C>
     Statutory rate - PRC                                               24.0           33.0
     Difference in tax rates in the countries that the Company
        operates                                                       (22.7)         (33.0)
     Tax exemption                                                      (0.6)          --
     Others                                                              0.9           --
                                                                 -----------    -----------

     Effective tax rate                                                  1.6           --
                                                                 ===========    ===========
</TABLE>

<TABLE>
<CAPTION>

4.   RELATED PARTY TRANSACTION

     a.   Name and relationship of related parties

          Related party        Relationship with the Company as of September 30, 2005
          -------------        ------------------------------------------------------
          <S>                  <C>
          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
</TABLE>



                                       6
<PAGE>
<TABLE>
<CAPTION>

Orsus Xelent Technologies, Inc.

Notes to Condensed Consolidated Financial Statements
================================================================================



4.   RELATED PARTY TRANSACTION (CONTINUED)

     b.   Summary of related party balances

                                                                    As of            As of
                                                            September 30,     December 31,
                                                                     2005             2004
                                                     Note         US$'000          US$'000
                                                              (Unaudited)
                                                            -------------    -------------
     <S>                                                    <C>              <C>
     Due from related company
     Beijing Huan Yitong Tech & Trading Co., Ltd. *                  --              3,319
                                                            =============    =============

     Due to directors
     Mr. Wang Xin, Mr. Liu Yu and Mr. Wang Zhibin    (i)              311              311
                                                            =============    =============

     Due from a director
     Mr. Wang Xin                                    (i)                6             --
                                                            =============    =============

c.   Summary of related party transactions
                                                                   Nine months ended
                                                                     September 30
                                                            ------------------------------
                                                                     2005             2004
                                                                  USD'000          USD'000
                                                              (Unaudited)      (Unaudited)
                                                            -------------    -------------

     Repayment from related company
     Beijing Huan Yitong Tech & Trading Co., Ltd. *                 3,319             --
                                                            =============    =============

     Advance from related company
     Beijing Huan Yitong Tech & Trading Co., Ltd. *                  --              2,452
                                                            =============    =============

     Advance to a director
     Mr. Wang Xin                                                       6             --
                                                            =============    =============
</TABLE>

     Note:
     -----

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

     *    Ceased to be related party beginning on April 26, 2005.




                                       7
<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operation.


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND  PLAN  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

Universal Flirts Corp., was organized under the laws of State of Delaware in May
2004.  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  Securities
Exchange Agreement ("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.




                                       8
<PAGE>

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").

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.

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 TFT dual-color  display, 1
to 120-minute video recording,  300K to 2M pixel  photography,  MP3, MPEG4 and U
disk support, dual stereo speakers,  e-mail messaging,  multimedia messaging, 40
to 64 ring  tone  storage,  flip-phone  technology  and  innovative  lightweight
design.  Since the first  Orsus  cellular  launched  the  market in April  2004,
approximately  500,000  units  had  been  sold in the  year,  and it  represents
approximately 1% of the market in the People's Republic of China (the "PRC") for
cellular phones in 2004.

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

According to research  conducted by China Ministry of Information  Industry,  in
the first half of 2005, the PRC added 28 million cellular phone users,  bringing
total year-end subscribers to 363 million, the largest nation in the world. This
number is expected to reach over 500 million by 2007. With the market in the PRC
for cellular  phones  continues to develop,  Xelent is gradually  introducing an
advanced product line  incorporating  the new 3G (Third  Generation)  high-speed
mobile  technology.  This  technology  is expected to be approved by the Chinese
government in 2006. The PRC cellular market is expected to reach $120 billion by
the year end of 2005 by the China Ministry of Information Industry.


BUSINESS REVIEW

Since the 4th quarter 2004 the growth rate of the cellular  phones market in the
PRC  slowed  down as a result  from the  oversupply  of  cellular  phones in the
market.  The competition  came from the  counterfeit  cellular phones in the PRC
market which forced the domestic branded  manufacturers to clear  inventories by
prices cutting or stop production.  The tough  environment  remains in the first
three  quarters  of  this  year.  The  cellular  phones  market  in  the  PRC is
characterized by rapidly  changing  customer  preferences.  Cellular phones with
multi-media  function  replaced  camera  function  and became  the most  popular
products  in  2005.  Additionally,  foreign  brand  manufacturers  have put much
investment on the promotion of middle- to low-end  products.  They have launched
many more new  products  into the PRC market and spent more to  advertise on the
main media,  which have led foreign  manufacturers  grasp more market share from
domestic manufacturers.



                                       9
<PAGE>

In response to the fierce  competition  in the PRC cellular  phones  market,  we
enhanced the quality and  function of our  products to increase the  competitive
edge.  During the first three quarters of 2005,  multimedia  cellular phones are
the  mainstream  products  in the  market.  In the first half of this  year,  we
successfully  developed new platforms,  namely Agere,  SpreadTrum and MTK, which
enable us to develop a series of low to  moderately  priced new products  namely
70A(70+),   62+,  8205,  60+  and  M72,  with  innovative  functions,   such  as
multi-media, MPEG4, FM radio, stereo sound, over one mega pixels photography and
large memory  capacity,  to meet the rapid change in the market since July 2005.
We will  continue to launch new products  timely with advanced  features.  A two
mega pixel camera and intelligent handwriting PDA cellular phone is scheduled to
launch before first quarter of 2006.  Through the  introduction  of new products
with advanced  features and low and moderate price, our products and brand would
penetrate  the PRC market.  We believe our  revenues  could be  maintained  at a
steady growth rate in the coming quarter.

In this  quarter,  we  explored  an  opportunity  to  cooperate  with a domestic
telecommunication  operator and a cellular phone  manufacturer to participate in
the  production  of  CDMA  cellular   phone.   Through  the   cooperation   with
telecommunication   operator,   we   entered   into  CDMA   market.   Since  the
telecommunication  operators  in PRC are all big  corporation,  a good  business
relationship with those telecommunication operators could assist the development
of a stable  revenue  stream.  We will  foster  closer  cooperation  and  target
business opportunities with telecommunication operators continually.

To establish a more diversified revenue base, we also successfully developed the
trading  business  in  domestic  and Hong Kong  market.  Although,  the  trading
activities only attributed  minimal  revenues to us now, through the development
of  overseas  market,  the  risk of  concentration  in  single  market  could be
minimized and our brand could be further promoted.

To  increase  our  competitiveness,  we are  seeking  to apply for a license  to
produce our own GSM cellular phone. We planned to obtain our own license through
a joint venture with a domestic cellular phone  manufacturer,  namely Chang Zhou
Moben  Communication  Co., Ltd. This is a way to apply the license in a time and
cost saving manner.  In order to achieve our target as soon as possible,  we are
also exploring to cooperate with other domestic cellular phone  manufacturers in
this  aspect.  Although,  the  application  of the license is still at its early
stage,  we will make every  effort to obtain a license  to  produce  our own GSM
cellular phone.

Going  forward,  we will continue to adopt  effective  cost control  measures to
enhance  our  competitiveness,  launch new  products in timely  manner,  explore
business opportunities with telecommunication operators and develop the sales in
overseas  market.  We have confidence that our  profitability  will be continued
with stable growth since this quarter.



                                       10
<PAGE>
<TABLE>
<CAPTION>

Nine months ended September 30, 2005
-----------------------------------------------------------------------------------------------------
                           Nine months ended              Nine months ended               Comparison
                           September 30, 2005             September 30, 2004
-----------------------------------------------------------------------------------------------------
                             $' 000    % of revenue    $' 000    % of revenue    $'000        %
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
<S>                        <C>        <C>            <C>        <C>            <C>       <C>
Revenues                      16,604                    52,917                 (36,313)      -68.62%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Cost of sales               (13,257)         79.84%   (42,592)         80.49%    29,335       68.87%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Sales & Marketing
expenses                     (1,131)          6.81%    (2,396)          4.53%     1,265       52.80%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
General & Admin
expenses                       (769)          4.63%      (988)          1.87%       219       22.17%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
R&D expenses                   (337)          2.03%      (456)          0.86%       119       26.10%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Depreciation &
Amortization                   (164)          0.99%      (514)          0.97%       350       68.09%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Interest expenses               (25)          0.15%       (90)          0.17%        65       72.22%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Other income, net                541          3.26%         32          0.06%       509     1590.63%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Income (loss) before tax       1,462          8.81%      5,913         11.17%   (4,451)      -75.27%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Income taxes                    (23)          0.14%          -              -      (23)      100.00%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Minority interest                  -              -        120          0.23%     (120)     -100.00%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
Net income (loss)              1,439          8.67%      6,033         11.40%   (4,594)      -76.15%
-------------------------- ---------- -------------- ---------- -------------- --------- ------------
</TABLE>


CRITICAL ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES

Our discussion and analysis of 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 on 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.


RESULTS OF OPERATION

>>    Revenues

Our revenues  were  $16,604,000  for the Nine months ended  September  30, 2005,
representing  a decrease of 68.62% as  compared to the same period in 2004.  The
decrease was primarily  due to fierce  competition  of the market.  The cellular
phone manufactures'  enlarging  production  capability and accelerating speed of
new products launch, lead to the shorter products lifecycle and the over supply.
For the  purpose of meet to the  changing  market  demands,  in this  quarter we
developed  a series of new  products  with  innovative  functions  to extend our
product lines by using our newly developed platform ADI, SpreadTrum and MTK.

Comparing  with the 2nd  quarter  of  2005,  our  revenues  had  increased  from
US$1,940,000  to  US$13,164,000  this  quarter,  rising  up about  578.56%.  The
significant  rise in the revenues was  primarily  due to the  introduction  of a
series of new products with innovative  functions,  such as 70A, 62+, 8205, 60+,
M72 and M36. During the first three quarters in 2005, multimedia cellular phones
are the mainstream product in the market. We captured the latest demand trend of
domestic  consumption  market to launch the new  models  with  leading  features
including MP3, MPEG4, FM radio and large memory capacity. Such new products also
generated a higher profit margin to us.



                                       11
<PAGE>

During this quarter,  we also  cooperated  with  telecommunication  operator and
other cellular  phone  manufacturers  to provide  solution  consultation  in the
production of CDMA cellular phones, model C100. The solution consulting included
the knowledge of software  application,  field  testing,  mechanical and molding
design and marketing.  Through the co-operation with telecommunication  operator
and other cellular  phones  manufacturer,  we  participated in the CDMA cellular
phones  production and also built up a relationship  with the  telecommunication
operator,  which would  provide us an  opportunity  to develop a potential  CDMA
market,   and  also  generate  a  higher  profit  and  stable  orders  from  the
telecommunication  operator in future.  During this  quarter,  the sales of C100
were $2,970,000, represents 18% of our revenues.

In addition, during this quarter, we commenced cellular phone trading activities
with  domestic and overseas  customers.  In the  domestic  market,  although the
margin would be lower than the sales of self-produced  cellular phones, we still
can earn profit by using our existing strategic partners' sales networks. In the
overseas market, we have successfully  stepped out from PRC domestic market that
10,000 unit M18+ was sold to a customer in Hong Kong  during  this  quarter.  We
will further develop our product to overseas market,  including  Southeast Asia,
Hong Kong and Middle East so as to further broaden our profit base.

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

For the nine months ended September 30, 2005, products attributed over 5% of our
revenues are shown as follows:
--------------------------- ----------------------------------------------------
                            Nine months ended September 30, 2005
--------------------------- ----------------------------------------------------
                            $'000                       % of revenue
--------------------------- --------------------------- ------------------------
C100                        2,970                       17.89%
--------------------------- --------------------------- ------------------------
N108                        2,302                       13.86%
--------------------------- --------------------------- ------------------------
70A                         1,926                       11.60%
--------------------------- --------------------------- ------------------------
FG830                       1,364                       8.21%
--------------------------- --------------------------- ------------------------
N917                        978                         5.89%
--------------------------- --------------------------- ------------------------
M86                         865                         5.21%
--------------------------- --------------------------- ------------------------
M18+                        862                         5.19%
--------------------------- --------------------------- ------------------------
62+                         817                         4.92%
--------------------------- --------------------------- ------------------------

The sales of 70A and 62+  represents  16.52% of our revenues  which were the new
products launched into market during this quarter. In this quarter,  total sales
of new products were over $12,049,000, represented 72.57% of total revenues. The
sales of C100 amounting to $2,970,000,  represented 17.87% of revenues,  are the
cooperation with a telecommunication  operator. The trading activities generated
from the sales of N108 and N917 were $3,280,000  represented 19.75% of revenues.
Through the  introduction of new innovative  features models and the development
of new business  streams,  we believe,  our revenues  would have a stable growth
since this quarter.



                                       12
<PAGE>
<TABLE>
<CAPTION>

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

-------------------------------------------------- ------------------------------------
                                                   Nine months ended September 30, 2005
-------------------------------------------------- ------------------------------------
                                                   $'000            % of revenue
-------------------------------------------------- ---------------- -------------------
<S>                                                <C>              <C>
Beijing Xingwang Shidai Tech & Trading Co., Ltd.            11,479              69.13%
-------------------------------------------------- ---------------- -------------------
CEC Cellular Limited                                         2,372              14.29%
-------------------------------------------------- ---------------- -------------------
Hebei Mascot Communication Equipment Co., Ltd                1,875              11.29%
-------------------------------------------------- ---------------- -------------------
Others                                                         878               5.29%
-------------------------------------------------- ---------------- -------------------
</TABLE>

Our  revenues  were  primarily  derived  from  three  major  customers.  For the
nine-months ended September 30, 2005, our revenues mainly generated from Beijing
Xingwang Shidai Tech & Trading Co., Ltd. ("XWSD"), CEC Cellular Limited ("CECM")
and Hebei Mascot  Communication  Equipment Co., Ltd ("MASCOT") were $11,479,000,
$2,372,000 and $1,875,000 respectively, which representing a, 69.13%, 14.29% and
11.29% of the revenue  respectively.  We have established  strategic partnership
with CECM and XWSD for a long period of time,  both are  provincial and national
distributors  and dealers,  and the sales networks cover most of the main cities
all over the PRC. MASCOT is a newly developed provincial distributor,  its sales
networks  covers  most of the  main  cities  all the  PRC,  particularly  in the
northern region.

It is our primary policy to broaden our distribution  channels so as to minimize
the concentration  risk to few  distributors.  We will explore other opportunity
continually to further develop our  distribution  channels.  To enhance a health
competition,  MASCOT is  mainly  responsible  to  distribute  our old  products.
Through the cooperation with different strategic partners in different areas, we
believe further extend our distribution channels would stimulate our revenues in
short-run and also strengthen our brand awareness finally.

>>    OTHER INCOME, NET

For nine months ended  September  30, 2005,  other  income,  net were  $541,000,
accounting for 3.26% of the total revenues,  as compared to $32,000, or 0.06% of
total revenues for the  corresponding  period in 2004.  Other income,  net had a
sharp  period-to-period  increase  which is mainly  due to a royalty  fee rebate
amounting to US$309,000 in the 2nd quarter of 2005.




                                       13
<PAGE>
<TABLE>
<CAPTION>

>>    OPERATING EXPENSES

For the nine months ended September 30, 2005,  operating expenses mainly include
sales and  marketing  expenses,  general and  administrative  expenses and R & D
expenses and shown as follows:

------------------------- ------------------------ --------------------------- ------------------
                          Nine months ended        Nine months ended           Comparison
                          September 30, 2005       September 30, 2004
------------------------- ------------------------ --------------------------- ------------------
                            $'000    % of revenue    $'000     % of revenue     $'000      %
------------------------- --------- -------------- --------- ---------------- --------- ----------
<S>                       <C>       <C>            <C>       <C>              <C>       <C>
Cost of sales               13,257         79.84%    42,592           80.49%  (29,335)    -68.87%
------------------------- --------- -------------- --------- ---------------- --------- ----------
Sales & marketing            1,131          6.81%     2,396            4.53%   (1,265)    -52.80%
------------------------- --------- -------------- --------- ---------------- --------- ----------
General & admin                769          4.63%       988            1.87%     (219)    -22.17%
------------------------- --------- -------------- --------- ---------------- --------- ----------
R&D                            337          2.03%       456            0.86%     (119)    -26.10%
------------------------- --------- -------------- --------- ---------------- --------- ----------
Depreciation                   164          0.99%       514            0.97%     (350)    -68.09%
------------------------- --------- -------------- --------- ---------------- --------- ----------
Total                       15,658                   46,946                   (31,288)
------------------------- --------- -------------- --------- ---------------- --------- ----------
</TABLE>

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

For  the  nine  months  ended  September  30,  2005,  our  cost  of  sales  were
$13,257,000,  representing 79.84% of revenue, compared to $42,592,000 and 80.49%
of the corresponding  period of last year. Compared to the corresponding  period
in 2004,  the cost of sales had a  period-to-period  decrease  of 68.87%,  it is
varied in line with our sales revenues.  Although the fierce competition lead to
selling price cutting in old products,  the cost of sales percentage to revenues
can be maintained  through our  effectively  control of raw materials  used and,
lower materials price by negotiation with suppliers.

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

Sales and marketing expenses mainly represent the free-gift and product model to
customers and dealers respectively,  cost of provision for after-sales services,
remunerations for sales personnel and development of market.

For the nine months ended September 30, 2005, sales and marketing  expenses were
$1,131,000,  accounting  for  6.81%  of  the  total  revenues,  as  compared  to
$2,396,000,  or 4.53% of total  revenues for the  corresponding  period in 2004.
Sales and marketing expenses had a  period-to-period  decrease of 52.80% and the
percentage  represented  in the total  revenues  increased  from  4.53% to 6.81%
compared  to the  corresponding  period in 2004 are due to the  total  revenue's
decrease and the approximately steady absolute expense. A large portion of sales
and  marketing  expenses was fixed  expenses,  such as  remunerations  for sales
personnel.   Compared  to  the  period  ended  June  30,  2005,  the  percentage
represented in the total revenues decreased from 20.38% to 6.81% is due to sharp
recovery of our revenues,  and we effectively  controlled the cost of marketing,
including  remunerations  for sales  personnel  and  development  of market  and
free-gift and product model to customers and dealers.

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

The R&D cost was $337,000 for the nine months ended  September  30, 2005,  which
represents 2.03% of total revenue, compared with $456,000 and 0.86% respectively
in the same period in 2004.  R&D  expenses  incurred  in the nine  months  ended
September 30, 2004 mainly represented the ADI platform  development  expense and



                                       14
<PAGE>

several models of mobile phone research  expense.  R&D expenses  incurred in the
nine months ended  September 30, 2005 mainly for the  development  cost on AGERE
and MTK platform,  some innovative  features function,  such as MP3, MPEG4 and U
disk could be developed with utilization of these new platforms.

Our R&D investment  would allow us to respond to the market change  quickly.  We
introduced  many  models of  cellular  phones  with  innovative  functions  this
quarter, such as OS70+, M62+, OX8205. We expect the investment in R&D activities
would be  continued  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  consist  primarily  of  compensation  for
personnel,   travel   expenses,   materials   expenses   related   to   ordinary
administration and fees for professional services.

For the nine  months  ended  September  30,  2005,  general  and  administrative
expenses were $769,000,  accounting for 4.63% of the total revenues, as compared
to  $988,000,  or 1.87% of the total  revenues for the  corresponding  period in
2004.  General  and  administrative  expenses  had  a  period-to-period  sharply
decrease  of 22.17%.  The  period-to-period  sharp  decrease  were mainly due to
reduction of  compensation  for  personnel by  simplifying  personnel  and lower
personnel  compensation,  and reduction of daily expense by  economizing  travel
expenses and administrative expense.


>>    GROSS PROFIT AND GROSS MARGIN

For the nine months ended  September 30, 2005, our gross profit was $ 3,347,000,
which  represented  a  decrease  of 67.58% as  compared  to the gross  profit of
$10,325,000  in the same  period in 2004.  Our gross  margin  for the  reporting
period increased slightly from 19.51% in 2004 to 20.15% in 2005.

Slightly increase in our gross margin under a fierce competition is attributable
to:
1.   New products successfully launched into the market,  generally new products
     with innovative functions would have a higher profit margin;
2.   Change in our products  mix.  Although our gross  margin  decreased  due to
     price  reduction for sales  promotion,  it is compensated by the high gross
     margin new products such as CDMA cellular  phone C100.  Overall,  the gross
     margin has slightly increased;
3.   We controlled  usage of raw  materials  effectively  and reduced  materials
     price by negotiation with suppliers, so as to control our cost of sales.


>>    NET INCOME

For the nine months ended September 30, 2005, our net income was $1,439,000,  as
compared to net income of $6,033,000  of the same period in 2004.  The recession
in our  profit  is due to the tough  environment  since  the 4th  quarter  2004.
Comparing  with the 2nd quarter of 2005,  our net income had  increased  sharply
from net loss US$524,000 to net income US$1,958,000



                                       15
<PAGE>

>>    LIQUIDITY AND SOURCE OF CAPITAL

We generally finance our operations from cash flow generated internally.

As of September 30, 2005, we had current assets of  $27,759,000.  Current assets
are mainly  comprised of  inventories  of  $4,566,000,  accounts  receivable  of
$10,145,000,  trade deposits and other receivables aggregated of $8,333,000, and
restricted  cash, cash and cash equivalents of $4,357,000.  Current  liabilities
comprised accounts payable of $11,054,000, trade deposit received of $2,906,000,
accrued expenses and other accrued  liabilities of $2,033,000,  due to directors
of $311,000, and provision for warranty of $88,000.

We offer two trading terms to our customers, i.e. cash-on-delivery and on credit
term within 90 days.  As of September  30, 2005,  our accounts  receivable  were
$10,145,000, compared to $5,658,000 as of June 30, 2005. A large increase in the
accounts  receivable is due to significant  growth in revenue  generated  during
this 3rd quarter.  We strictly  request our customers to settle the  outstanding
receivables  before  new  order is made.  There is no  particular  change in our
credit policy that three months credit period is offered to XWSD, and two months
credit period is offered to our new distributor, MASCOT.

As of September  30,  2005,  our  inventories  were  $4,566,000,  as compared to
$5,781,000 as of  December.31,  2004,  which  represented  moderate  decrease of
21.02%.  The  main  reason  for this  decrease  is due to  reduction  of the old
materials'  inventories.  We stimulated the old type products' sales by reducing
the selling price. Furthermore, we modify our old products, such as OS70, M62 by
adding new functions (such as MP3, MPEG4 etc.) on old products. As a result, our
slow  moving  materials  have been used up  Modification  will be carried out to
further utilize our existing  materials.  In the future,  we will critically and
regularly  evaluate our  inventories to consider if any provision is required to
reduce the value of the excess or obsolete  inventories  to their  estimated net
realizable value.

As of September 30, 2005, our cash and bank balances were mainly  denominated in
Renminbi  ("RMB") and Hong Kong  Dollar.  Our revenue and  expenses,  assets and
liabilities  are  mainly  denominated  in RMB.  Renminbi  had been  pledged at a
relative  constant  rate to the United  States  dollar  for the  entire  period.
Although  Renminbi had been slightly  appreciated  against the US dollar in July
2005, as a result of the pegging Renminbi against a basket of currencies instead
of pegging to the US dollar,  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 has not engaged in any hedging activity.

>>    CASH FLOWS

As of September 30, 2005, we have the restricted cash, cash and cash equivalents
of  $4,357,000,   compared  to  $2,557,000  as  of  December  31,  2004,   which
representing  an increase of 70.39%.  It is mainly due to the  repayment  from a
related  company in the first quarter of 2005.  $1,895,000  increase in accounts
receivable  and $2,786,000  decrease in accounts  payable are due to significant
growth in revenue during this 3rd quarter.  In addition,  $1,215,000 decrease in
inventories is due to the clearance of old products by price cutting.




                                       16
<PAGE>

Our gearing ratio, calculated as total debts over total assets, was 56.70% as of
September 30, 2005,  53.87% as of June 30, 2005,  and 61.76% as of September 30,
2004 respectively.


>>    CONTINGENT LIABILITIES

As of September 30, 2005,  we had not entered into any  guarantee  contracts nor
any  non-disclosed  contracts  which will affect  stockholders'  equity or share
structure.



















                                       17
<PAGE>

                          PART II --- OTHER INFORMATION

Item 1.  Legal Proceedings.

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

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

         (a)      The information required is set forth in the Registrant's Form
                  10-Q for the period ended June 30, 2005,  and is  incorporated
                  herein by reference.

         (b)      None

         (c)      None

Item 3.  Defaults Upon Senior Securities.

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  Company  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:  November 16, 2005




















                                       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