UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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





For
the quarterly period ended March 31, 2010





OR





o       TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE EXCHANGE ACT





For
the transition period from ______ to __________





COMMISSION
FILE NUMBER: 000-53672





XINDE TECHNOLOGY
COMPANY


(Exact
name of registrant as specified in its charter)





Nevada
              
              20-812712(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (IRS
      Employer
                Identification
      No.)





Number
363, Sheng Li West Street, Weifang, Shandong Province,


The People’s Republic of
China


(Address
of principal executive offices)





(011)
86-536-8322068


(Registrant’s
Telephone Number, Including Area Code)





Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).  Yes o     No
o





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





Large
      Accelerated Filer o
            Accelerated
      Filer o
            Non-Accelerated
      Filer o
            Smaller
      Reporting Company x





Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.  Yes  o No x





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date:  As of May 14, 2010, the registrant had
60,000,000 shares of common stock, par value $0.001 per share, issued and
outstanding.





TABLE
OF CONTENTS





PAGEPART
      I FINANCIAL INFORMATION
              F-1ITEM
      1. FINANCIAL STATEMENTS
              F-1-F-32ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
    OPERATION
              3ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
              14ITEM
      4. CONTROLS AND PROCEDURES
              14PART
      II OTHER INFORMATION
              15ITEM
      1. LEGAL PROCEEDINGS
              15ITEM
      1A. RISK FACTORS
              16ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS
              16ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
              16ITEM
      4. (REMOVED AND RESERVED)
              16ITEM
      5. OTHER INFORMATION
              16ITEM
      6. EXHIBITS
              16SIGNATURES
              18EXHIBIT
      31.1
              31.1EXHIBIT
      31.2
              31.2EXHIBIT
      32.1
              32.1EXHIBIT
      32.2
              32.2


2


PART
I


FINANCIAL
INFORMATION




ITEM
1. FINANCIAL STATEMENTS





PageCondensed
      Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and June 30,
      2009
              
              F-2Condensed
      Consolidated Statements of Income and Comprehensive Income for the Three
      and Nine Months Ended March 31, 2010 and 2009 (Unaudited)
              
              F-4Condensed
      Consolidated Statements of Cash Flows for the Nine Months Ended March 31,
      2010 and 2009 (Unaudited)
              
              F-6Notes
      to Condensed Consolidated Financial Statements for the Three and Nine
      Months Ended March 31, 2010 and 2009 (Unaudited)
              
              F-8-F-32


F-1


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





ASSETS


March 31,
                
                
                June 30,2010
                
                
                2009(Unaudited)CURRENT
      ASSETSCash
      and cash equivalents
                
                $
                200,424
                
                
                $
                127,576Accounts
      receivable, net of allowance for doubtful accounts of
                  $204,922
      and $157,642 as of March 31, 2010 and June 30, 2009,
      respectively
                
                
                38,714,637
                
                
                
                37,791,206Inventories
                
                
                18,743,949
                
                
                
                7,851,133Notes
      receivable from unrelated individuals
                
                
                47,615
                
                
                
                47,555Notes
      receivable from related individuals
                
                
                -
                
                
                
                556,630Bank
      acceptance notes
                
                
                15,188,269
                
                
                
                156,980Prepayments
      for goods
                
                
                270,062
                
                
                
                374,384Prepaid
      expenses and other receivables
                
                
                33,752
                
                
                
                28,101Due
      from employees
                
                
                235,506
                
                
                
                103,869Due
      from related parties
                
                
                4,593
                
                
                
                14,584Deferred
      taxes
                
                
                54,930
                
                
                
                52,735Total
      Current Assets
                
                
                73,493,737
                
                
                
                47,104,753LONG-TERM
      ASSETSPlant
      and equipment, net
                
                
                3,048,927
                
                
                
                2,740,763Land
      use rights, net
                
                
                949,114
                
                
                
                966,020Construction
      in progress
                
                
                681,675
                
                
                
                296,239Deposit
      for land use right
                
                
                152,895
                
                
                
                152,701Deferred
      taxes
                
                
                124,443
                
                
                
                122,772Total
      Long-Term Assets
                
                
                4,957,054
                
                
                
                4,278,495TOTAL
      ASSETS
                
                $
                78,450,791
                
                
                $
                51,383,248





See
accompanying notes to the condensed consolidated financial
statements


F-2


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





LIABILITIES AND
SHAREHOLDERS’ EQUITY


March
      31,
                
                
                June
      30,2010
                
                
                2009(Unaudited)CURRENT
      LIABILITIESAccounts
      payable
                
                $
                5,516,083
                
                
                $
                5,220,636Value
      added tax payable
                
                
                12,246,481
                
                
                
                89,611Other
      payables
                
                
                723,974
                
                
                
                1,436,101Short-term
      bank loans
                
                
                3,642,428
                
                
                
                2,758,314Customer
      deposits
                
                
                232,707
                
                
                
                313,447Notes
      payable, including related parties see Note 13
                
                
                612,425
                
                
                
                768,796Income
      tax payable
                
                
                5,596,440
                
                
                
                3,424,846Due
      to employees
                
                
                189,280
                
                
                
                616,719Due
      to related parties
                
                
                503,434
                
                
                
                844,549Accrued
      expenses and dividend payable
                
                
                924,616
                
                
                
                364,047Total
      Current Liabilities
                
                
                30,187,868
                
                
                
                15,837,066LONG-TERM
      LIABILITIESNotes
      payable to related parties
                
                
                360,600
                
                
                
                132,366Total
      Long-Term Liabilities
                
                
                360,600
                
                
                
                132,366TOTAL
      LIABILITIES
                
                
                30,548,468
                
                
                
                15,969,432COMMITMENT
      AND CONTINGENCIESSHAREHOLDERS’
      EQUITYCommon
      stock, $0.001 par value; 160,000,000 shares authorized; 60,000,000
                  and
      42,000,000 shares issued and outstanding at March 31, 2010 and June 30,
      2009, respectively
                
                
                60,000
                
                
                
                42,000Additional
      paid-in capital
                
                
                923,836
                
                
                
                1,055,432Retained
      earnings (the restricted portion is $204,069 at March 31, 2010 and June
      30, 2009)
                
                
                42,782,381
                
                
                
                30,216,707Accumulated
      other comprehensive income
                
                
                4,136,106
                
                
                
                4,099,677TOTAL
      SHAREHOLDERS’ EQUITY
                
                
                47,902,323
                
                
                
                35,413,816TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                
                $
                78,450,791
                
                
                $
                51,383,248





See
accompanying notes to the condensed consolidated financial
statements


F-3


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


CONDENSEDCONSOLIDATED
STATEMENTS OF INCOME AND


COMPREHENSIVE
INCOME


(UNAUDITED)





Three Months Ended
                                    
                                    
                                    Nine Months EndedMarch 31,
                                      2010
                                    
                                    
                                    March 31,
                                      2009
                                    
                                    
                                    March 31,
                                      2010
                                    
                                    
                                    March 31,
                                      2009REVENUES,
      NET
                                    
                                    $
                                    26,836,259
                                    
                                    
                                    $
                                    21,377,982
                                    
                                    
                                    $
                                    100,195,028
                                    
                                    
                                    $
                                    50,449,539COST
      OF GOODS SOLD
                                    
                                    
                                    (21,536,485
                                    )
                                    
                                    
                                    (18,148,659
                                    )
                                    
                                    
                                    (82,120,040
                                    )
                                    
                                    
                                    (44,009,164
                                    )GROSS
      PROFIT
                                    
                                    
                                    5,299,774
                                    
                                    
                                    
                                    3,229,323
                                    
                                    
                                    
                                    18,074,988
                                    
                                    
                                    
                                    6,440,375Selling
      and marketing
                                    
                                    
                                    784,740
                                    
                                    
                                    
                                    396,378
                                    
                                    
                                    
                                    2,066,833
                                    
                                    
                                    
                                    1,189,011General
      and administrative
                                    
                                    
                                    688,419
                                    
                                    
                                    
                                    144,026
                                    
                                    
                                    
                                    1,175,618
                                    
                                    
                                    
                                    600,457INCOME
      FROM CONTINUING OPERATIONS
                                    
                                    
                                    3,826,615
                                    
                                    
                                    
                                    2,688,919
                                    
                                    
                                    
                                    14,832,537
                                    
                                    
                                    
                                    4,650,907Interest
      expense, net
                                    
                                    
                                    (78,009
                                    )
                                    
                                    
                                    (103,383
                                    )
                                    
                                    
                                    (254,920
                                    )
                                    
                                    
                                    (286,875
                                    )Other
      income (expense), net
                                    
                                    
                                    15,510
                                    
                                    
                                    
                                    (1,309
                                    )
                                    
                                    
                                    14,718
                                    
                                    
                                    
                                    42,595INCOME
      FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
                                    
                                    
                                    3,764,116
                                    
                                    
                                    
                                    2,584,227
                                    
                                    
                                    
                                    14,592,335
                                    
                                    
                                    
                                    4,406,627INCOME
      TAXES
                                    
                                    
                                    486,401
                                    
                                    
                                    
                                    616,809
                                    
                                    
                                    
                                    2,175,159
                                    
                                    
                                    
                                    1,137,079INCOME
      FROM CONTINUING OPERATIONS
                                    
                                    
                                    3,277,715
                                    
                                    
                                    
                                    1,967,418
                                    
                                    
                                    
                                    12,417,176
                                    
                                    
                                    
                                    3,269,548DISCONTINUED
      OPERATIONGain
      from disposition of discontinued operation
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    148,498
                                    
                                    
                                    
                                    -INCOME
      FROM DISCONTINUED OPERATION
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    148,498
                                    
                                    
                                    
                                    -NET
      INCOME
                                    
                                    
                                    3,277,715
                                    
                                    
                                    
                                    1,967,418
                                    
                                    
                                    
                                    12,565,674
                                    
                                    
                                    
                                    3,269,548OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation gain
                                    
                                    
                                    8,380
                                    
                                    
                                    
                                    40,363
                                    
                                    
                                    
                                    36,429
                                    
                                    
                                    
                                    121,574OTHER
      COMPREHENSIVE INCOME
                                    
                                    
                                    8,380
                                    
                                    
                                    
                                    40,363
                                    
                                    
                                    
                                    36,429
                                    
                                    
                                    
                                    121,574COMPREHENSIVE
      INCOME
                                    
                                    $
                                    3,286,095
                                    
                                    
                                    $
                                    2,007,781
                                    
                                    
                                    $
                                    12,602,103
                                    
                                    
                                    $
                                    3,391,122




See
accompanying notes to the condensed consolidated financial
statements


F-4




XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


CONDENSEDCONSOLIDATED
STATEMENTS OF INCOME AND


COMPREHENSIVE
INCOME


(UNAUDITED)





Three
      Months Ended
                          
                          
                          Nine
      Months EndedMarch
      31,
                            2010
                          
                          
                          March
      31,
                            2009
                          
                          
                          March
      31,
                            2010
                          
                          
                          March
      31,
                            2009WEIGHTED
      AVERAGE SHARES OUTSTANDING BASIC AND DILUTED
                          
                          
                          60,000,000
                          
                          
                          
                          42,000,000
                          
                          
                          
                          48,175,182
                          
                          
                          
                          42,000,000INCOME
      PER SHARE FROM CONTINUING OPERATIONS, BASIC AND DILUTED
                          
                          $
                          0.06
                          
                          
                          $
                          0.05
                          
                          
                          $
                          0.26
                          
                          
                          $
                          0.08INCOME
      PER SHARE FROM NET GAIN FROM DISCONTINUED OPERATION, BASIC AND
      DILUTED
                          
                          $
                          0.00
                          
                          
                          $
                          0.00
                          
                          
                          $
                          0.00
                          
                          
                          $
                          0.00NET
      INCOME PER COMMON SHARE, BASIC AND DILUTED
                          
                          $
                          0.06
                          
                          
                          $
                          0.05
                          
                          
                          $
                          0.26
                          
                          
                          $
                          0.08




See
accompanying notes to the condensed consolidated financial
statements


F-5




XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE NINE MONTHS ENDED
MARCH 31, 2010 AND 2009


(UNAUDITED)





2010
                
                
                2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                
                $
                12,565,674
                
                
                $
                3,269,548Net
      income from discontinued operation
                
                
                (148,498
                )
                
                
                -Income
      from continuing operations
                
                
                12,417,176
                
                
                
                3,269,548Adjustments
      to reconcile net income to net cash provided by (used in) operating
      activities:Depreciation
      and amortization
                
                
                192,231
                
                
                
                193,107Provision
      for doubtful accounts
                
                
                121,965
                
                
                
                13,579Deferred
      taxes
                
                
                (3,865
                )
                
                
                7,328Gain
      on disposal of fixed assets
                
                
                -
                
                
                
                (7,772
                )Loss
      on settlement of accounts receivable and accounts payable for fixed
      assets
                
                
                61,638
                
                
                
                -(Increase)
      Decrease In:Accounts
      receivable
                
                
                (1,568,755
                )
                
                
                (6,428,181
                )Inventories
                
                
                (10,532,965
                )
                
                
                (894,827
                )Prepayments
      for goods
                
                
                104,321
                
                
                
                (187,545
                )Prepaid
      expenses and other receivables
                
                
                (3,316
                )
                
                
                59,702Due
      from employees
                
                
                (131,637
                )
                
                
                82,614Due
      from related parties
                
                
                9,991
                
                
                
                493,396Increase
      (Decrease) In:Accounts
      payable
                
                
                330,994
                
                
                
                (2,903,371
                )Value
      added tax payable
                
                
                12,156,870
                
                
                
                121,920Other
      payables
                
                
                (712,127
                )
                
                
                (5,211
                )Taxes
      payable
                
                
                2,171,594
                
                
                
                1,127,015Customer
      deposits
                
                
                (80,740
                )
                
                
                (1,263,848
                )Due
      to employees
                
                
                (427,440
                )
                
                
                208,041Due
      to related parties
                
                
                (341,115
                )
                
                
                117,579Accrued
      expenses
                
                
                567,388
                
                
                
                (39,986
                )Net
      cash provided by (used in) operating activities
                
                
                14,332,208
                
                
                
                (6,036,912
                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of plant and equipment
                
                
                (116,636
                )
                
                
                (120,606
                )Purchases
      of construction in progress
                
                
                (682,616
                )
                
                
                (186,511
                )Proceeds
      from disposal of fixed assets
                
                
                -
                
                
                
                56,306Proceeds
      from disposition of discontinued operation
                
                
                1,000
                
                
                
                -Reverse
      merger, net of cash acquired
                
                
                1,109
                
                
                
                -Notes
      receivable
                
                
                (14,464,592
                )
                
                
                8,925,020Net
      cash (used in) provided by investing activities
                
                $
                (15,261,735
                )
                
                $
                8,674,209





See
accompanying notes to the condensed consolidated financial
statements


F-6


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE THREE AND SIX MONTHS
ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





2010
                          
                          
                          2009CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from short-term loans
                          
                          $
                          3,216,172
                          
                          
                          $
                          583,201Repayments
      of short-term loans
                          
                          
                          (2,336,110
                          )
                          
                          
                          (1,027,892
                          )Repayments
      of notes payable
                          
                          
                          (1,498,655
                          )
                          
                          
                          (644,048
                          )Proceeds
      from notes payable
                          
                          
                          1,695,772
                          
                          
                          
                          867,512Repayments
      of long-term debt
                          
                          
                          (126,999
                          )
                          
                          
                          -Dividend
      payable
                          
                          
                          (6,819
                          )
                          
                          
                          38,985Dividend
      paid
                          
                          
                          -
                          
                          
                          
                          (2,562,096
                          )Net
      cash provided by (used in) financing activities
                          
                          
                          943,361
                          
                          
                          
                          (2,744,338
                          )NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                          
                          
                          13,834
                          
                          
                          
                          (107,041
                          )Effect
      of exchange rate changes on cash
                          
                          
                          59,014
                          
                          
                          
                          87,610Cash
      and cash equivalents at beginning of period
                          
                          
                          127,576
                          
                          
                          
                          164,435CASH AND CASH EQUIVALENTS AT END OF
      PERIOD
                          
                          $
                          200,424
                          
                          
                          $
                          145,004SUPPLEMENTARY
      CASH FLOW INFORMATION2010
                          
                          
                          2009Income
      taxes paid
                          
                          $
                          9,275
                          
                          
                          $
                          17,923Interest
      paid
                          
                          $
                          266,625
                          
                          
                          $
                          310,831





SUPPLEMENTAL
NON-CASH DISCLOSURES:





1.
              During
      the nine months ended March 31, 2010, accounts receivable with a carrying
      amount of $523,359 was settled by a fixed asset with a fair value of
      $95,023 and inventories with a fair value of $359,852, resulting in a loss
      of $68,484.





2.
              During
      the nine months ended March 31, 2010, accounts payable with a carrying
      amount of $36,547 was settled by a fixed asset with a net book value of
      $29,701, resulting in a gain of
$6,846.





3.
              During
      the nine months ended March 31, 2010 and 2009, $297,799 and $60,072 were
      transferred from construction in progress to plant and equipment,
      respectively.





See
accompanying notes to the condensed consolidated financial
statements


F-7


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 1 –ORGANIZATION AND PRINCIPAL ACTIVITIES





Wasatch
Food Services, Inc., (“Wasatch”) was incorporated under the laws of the State of
Nevada on December 20, 2006 to engage as a franchisee of certain restaurants in
the State of Idaho through its wholly owned subsidiary, Wasatch Food Services of
Idaho, Inc. ("Bajio"). On April 22, 2010, Wasatch Food Services, Inc. changed
its name to Xinde Technology Company.





Wasatch
was unsuccessful in developing Bajio into a profitable business. On December 28,
2009, Wasatch entered into a disposition agreement with Shaun Carter, an
individual. Pursuant to the agreement, the Company agreed to see all of its
interest in Bajio in consideration of a payment of $1,000 in addition to the
assumption by Bajio of liabilities $225,546 of Wasatch resulting in a gain of
$148,498. This transaction was completed on December 28, 2009. Also see Note
19.





Jolly
Promise Limited (“JPL”) was incorporated under the laws of the British Virgin
Islands (“BVI”) on July 2, 2008 and is a wholly-owned subsidiary of Welldone
Pacific Limited. (“WPL”), a BVI registered company.





On August
6, 2009, JPL entered into a share exchange agreement with the shareholder of
Hong Kong Sindhi Fuel Injection Co., Ltd. (“HKSIND”), a company incorporated in
Hong Kong. Pursuant to the share exchange agreement, JPL acquired all of the
issued and outstanding common stock of HKSIND. As a result of the share
exchange, HKSIND became a wholly-owned subsidiary of JPL.





On
October 24, 2009, HKSIND established a new company, Weifang Huajie Fuel
Injection System Co., Ltd. (“Huajie”), as the sole shareholder under the laws of
PRC.





Weifang
Xinde Fuel Injection System Co., Ltd. (“Xinde”) is an investment holding
company. The principal activities of Xinde and its subsidiaries are the design,
development, manufacture, and commercialization of fuel injection pumps,
injectors, multi-cylinder diesel engines and small generator units for the
People’s Republic of China (the “PRC”) and overseas markets.





On
November 13, 2009, all the shareholders of Xinde entered into a share exchange
agreement with Huajie to transfer all the shares of Xinde to Huajie for $116,418
in cash. Huajie is a new company established under the laws of the PRC solely by
HKSIND, a company incorporated in Hong Kong, on October 24, 2009. As a result of
the share exchange, Xinde became a wholly-owned subsidiary of Huajie. Huajie and
Xinde only act as holding companies with no operations or expenses, and
therefore, the business of Huajie will continue to be that of Xinde’s
wholly-owned subsidiaries, Weifang Hengyuan Oil Pump & Oil Fitting Co., Ltd.
("Hengyuan"), Weifang Jinma Diesel Engine Co., Ltd. (“Jinma”) and Weifang Huaxin
Diesel Engine Co., Ltd. (“Huaxin”).


F-8


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
1 - ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)





On
December 28, 2009, Wasatch Food Services Inc. (“Wasatch”) executed a share
exchange agreement by and between Wasatch, Jolly Promise Ltd. (“JPL”) and
Welldone Pacific Limited., a British Virgin Islands Company which owns 100% of
JPL (the “JPL’s shareholder”). Under the share exchange
agreement, Wasatch issued 42,000,000 shares of its common stock,
representing 70% of the Wasatch’s issued and outstanding common stock after
giving effect to the cancellation of 13,038,692 shares on December 28,
2009, to JPL’s shareholder in exchange for 100% of the common stock of JPL.
Prior to the transaction, Wasatch had a total of 18,000,000 shares of common
stock issued and outstanding. After the closing of the transaction,
Wasatch had a total of 60,000,000 shares of common stock issued and
outstanding, with JPL’s shareholder owning 70% of the total issued and
outstanding shares of Wasatch’s common stock, and the balance held by those who
held shares of Wasatch’s common stock prior to the closing of the exchange. This
share exchange transaction resulted in JPL’s shareholder obtaining a majority
voting interest in Wasatch.





After the
share exchange, JPL and its wholly-owned subsidiaries became a wholly-owned
subsidiary of Wasatch, and Xinde became the principal operating subsidiary. The
exchange transaction was accounted for as a reverse acquisition in accordance
with ASC 805-10 (formerly Statement of Financial Accounting Standards (“SFAS”)
No. 141 "Business Combinations". The acquisition is accounted for as the
recapitalization of Xinde. Accordingly, the condensed consolidated statements of
income include the results of operations of Xinde and its subsidiaries from July
1, 2009 and 2008, and the results of operations of Wasatch from the acquisition
date through December 31, 2009.





Details
of Wasatch and its subsidiaries (the “Company”) as of March 31, 2010 are as
follows:





Name
              
              Place and Date
                of
                Establishment/
                Incorporation
              
              Relationships
              
              Principal ActivitiesJolly
      Promise Ltd. (“JPL”)
              
              British
      Virgin Island
                July
      2, 2008
              
              Wholly-owned
      subsidiary of Wasatch
              
              Investment
      holding companyH.K.
      Sindhi Fuel Injection Co., Ltd (“HKSIND”)
              
              Hong
      Kong, PRC,
                June
      7, 2004
              
              Wholly-owned
      subsidiary of JPL
              
              Investment
      holding companyWeifang
      Huajie Fuel Injection Co., Ltd.
                (“Huajie”)
              
              Shandong,
      PRC
                October.
      24 2009
              
              Wholly-owned
      subsidiary of HKSIND
              
              Investment
      holding company


F-9


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
1 - ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)





Name
              
              Place and Date
                of
                Establishment/
                Incorporation
              
              Relationship
              
              Principal ActivitiesWeifang
      Xinde Fuel Injection System Co., Ltd.
                (“Xinde”)
              
              Shandong,
      PRC
                October
      29, 2007
              
              Wholly-owned
      subsidiary of Huajie
              
              Investment
      holding companyWeifang
      Hengyuan Oil Pump & Oil Fitting Co., Ltd. ("Hengyuan")
              
              Shandong,
      PRC,
                December
      21, 2001
              
              Wholly-owned
      subsidiary of Xinde
              
              Design,
      development, manufacture, and commercializing of fuel injection pump,
      diesel fuel injection systems and injectorsWeifang
      Jinma Diesel Engine Co., Ltd. (“Jinma”)
              
              Shandong,
      PRC
                September
      19, 2003
              
              Wholly-owned
      subsidiary of Xinde
              
              Manufacture
      and sale of multi-cylinder diesel engine and small generating
      unitsWeifang
      Huaxin Diesel Engine Co., Ltd. (“Huaxin”)
              
              Shandong,
      PRC
                October
      20, 2003
              
              Wholly-owned
      subsidiary of Xinde
              
              Manufacture
      and sale of multi-cylinder diesel engine and small generating
      units





Inter-company
accounts and transactions have been eliminated in consolidation.





NOTE 2 –BASIS OF
PRESENTATION





The
Company’s unaudited condensed consolidated financial statements and for the
three and nine months ended March 31, 2010 and 2009 have been prepared in
accordance with generally accepted accounting principles for interim financial
information and pursuant to the requirements for reporting on Rule 8-03 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements.





However,
such information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary for the fair
presentation of the condensed consolidated financial position and the
consolidated results of operations. Results shown for interim periods are not
necessarily indicative of the results to be obtained for a full year. The
condensed consolidated balance sheet information as of June 30, 2009 was derived
from the audited consolidated financial statements included in Form 8-K filed
with the Securities and Exchange Commission on December 29, 2009. These interim
condensed consolidated financial statements should be read in conjunction with
that report.


F-10


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 2 –BASIS OF
PRESENTATION (CONTINUED)





On July
1, 2009, The Company adopted Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 105-10 (formerly Statement of
Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards
Codification and Hierarchy of Generally Accepted Accounting Principles, a replacement
of FASB Statement No. 162). ASC 105-10 establishes the FASB ASC as the
source of authoritative accounting principles recognized by the FASB to be
applied in preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America (“U.S. GAAP”).
The adoption of this standard had no impact on the Company’s condensed
consolidated financial statements.





NOTE 3 –USE OF
ESTIMATES





The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the condensed
consolidated financial statements, and the reported amounts of revenue and
expenses during the reporting period. Management makes these estimates using the
best information available at the time the estimates are made; however actual
results when ultimately realized could differ from those estimates.





NOTE 4 –SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES





(a)
            Economic
      and Political Risks





The
Company’s operations are conducted in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC economy.





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


F-11


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(b)
            Fair
      Value of Financial Instruments





ASC
820-10 (formerly SFAS No. 157, Fair Value Measurements) establishes a
three-tier fair value hierarchy, which prioritizes the inputs used in measuring
fair value. The hierarchy prioritizes the inputs into three levels based on the
extent to which inputs used in measuring fair value are observable in the
market.





These
tiers include:





•
Level 1—defined as observable inputs such as quoted prices in active
markets;


•
Level 2—defined as inputs other than quoted prices in active markets that
are either directly or indirectly observable; and


•
Level 3—defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own
assumptions.





The
assets measured at fair value on a recurring basis subject to the disclosure
requirements of ASC 820-10 as of March 31, 2010 are as follows:





Fair Value Measurements at Reporting Date UsingCarrying
                    Value as of
                    March 31,
                    2010
                    (Unaudited)
                  
                  
                  Quoted Prices in
                    Active Markets
                    for Identical
                    Assets
                    (Level 1)
                  
                  
                  Significant
                    Other
                    Observable
                    Inputs
                    (Level 2)
                  
                  
                  Significant
                    Unobservable
                    Inputs
                    (Level 3)Bank
      acceptance notes
                  
                  $
                  15,188,269
                  
                  
                  $
                  15,188,269
                  
                  
                  $
                  -
                  
                  
                  $
                  -





The
carrying amounts of financial assets and liabilities, such as cash and cash
equivalents, accounts receivable, short-term loans, accounts payable, short-term
notes payable and other payables, approximate their fair values because of the
short maturity of these instruments. The fair value of the Company’s long-term
notes payable is estimated based on the current rates offered to the Company for
debt of similar terms and maturities. Under this method, the Company’s fair
value of long-term notes payable was not significantly different from the
carrying value at March 31, 2010 and June 30, 2009.





(c)
            Cash
      and Cash Equivalents





For
financial reporting purposes, the Company considers highly liquid investments
purchased with original maturity of three months or less to be cash
equivalents.


F-12


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(d)
            Inventories





Inventories
are stated at the lower of cost or net realizable value. The cost of raw
materials is determined on the basis of weighted average. The cost of finished
goods is determined on the weighted average basis and comprises direct
materials, direct labor and an appropriate proportion of overhead.





Net
realizable value is based on estimated selling prices less any further costs
expected to be incurred for completion and disposal.





(e)
            Prepayments





Prepayments
represent cash paid in advance to suppliers for purchases of raw
materials.





(f)
            Plant
      and Equipment





Plant and
equipment are carried at cost less accumulated depreciation and amortization.
Depreciation is provided over their estimated useful lives, using the
straight-line method. Leasehold improvements are amortized over the life of the
asset or the term of the lease, whichever is shorter.  Estimated
useful lives are as follows:





Buildings
              30
      yearsMachinery
              10
      yearsMotor
      vehicles
              5
      yearsOffice
      equipment
              5
      years





The cost
and related accumulated depreciation of assets sold or otherwise retired are
eliminated from the accounts and any gain or loss is included in the statement
of income. The cost of maintenance and repairs is charged to expense as
incurred, whereas significant renewals and betterments are
capitalized.





(g)
            Construction
      in Progress





Construction
in progress represents direct costs of construction or the acquisition cost of
buildings or machinery and design fees. Capitalization of these costs ceases and
the construction in progress is transferred to plant and equipment when
substantially all the activities necessary to prepare the assets for their
intended use are completed. No depreciation is provided until the assets are
completed and ready for their intended use.





(h)
            Land
      Use Rights





According
to the laws of China, land in the PRC is owned by the government and cannot be
sold to an individual or company.  However, the government grants the user
a “land use right” to use the land.  The land use right granted to the
Company is being amortized using the straight-line method over the lease term of
fifty years.


F-13


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(i)
            Impairment
      of Long-Term Assets





Long-term
assets of the Company are reviewed annually as to whether their carrying value
has become impaired, pursuant to the guidelines established in ASC
360-10. The Company considers assets to be impaired if the carrying value
exceeds the future projected cash flows from the related operations.  The
Company also re-evaluates the periods of amortization to determine whether
subsequent events and circumstances warrant revised estimates of useful lives.
There was no impairment for the nine months ended March 31, 2010 and
2009.





(j)
            Revenue
      Recognition





Revenue
represents the invoiced value of goods sold, recognized upon the shipment of
goods to customers. Revenue is recognized when all of the following criteria are
met:





-Persuasive
evidence of an arrangement exists,


-Delivery
has occurred or services have been rendered,


-The
seller's price to the buyer is fixed or determinable, and


-Collectability
is reasonably assured.





The
majority of the Company’s revenue results from sales contracts with distributors
and revenue is recorded upon the shipment of goods. Management conducts credit
background checks for new customers as a means to reduce the subjectivity of
collectability.





The
Company offers warranties on its products for periods between three and six
months after the sale. The Company does not estimate and accrue warranty
reserves because warranty claims have historically been minor in relationship to
the Company’s operating results. Warranty expenses related to product sales are
charged to the condensed consolidated statements of income and comprehensive
income in the period in which warranty claims occur. During the nine months
ended March 31, 2010 and 2009, warranty expense was $100,740 and $67,016,
respectively, and is included in selling and marketing expenses in the
accompanying condensed consolidated statements of income and comprehensive
income.





(k)
            Retirement
      Benefits





Retirement
benefits in the form of contributions under defined contribution retirement
plans to the relevant authorities are charged to expense as incurred. The
retirement benefits expense for the nine months ended March 31, 2010 and 2009
are $21,372 and $8,718, respectively. All the retirement benefits expenses are
included in general and administrative expenses.


F-14


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(l)
            Income
      Taxes





Deferred
tax assets and liabilities are recognized for the future tax consequence
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to be
applied to taxable income in the years in which those temporary differences are
expected to reverse. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of income in the period that
includes the enactment date. A valuation allowance is provided for deferred tax
assets if it is more likely than not these items will either expire before the
Company is able to realize their benefits, or that future deductibility is
uncertain. Also see Note 15.





(m)
            Foreign
      Currency Translation





The
accompanying condensed consolidated financial statements are presented in United
States dollars. The functional currency of the Company is the Renminbi (RMB).
Capital accounts of the consolidated financial statements are translated into
United States dollars from RMB at their historical exchange rates when the
capital transactions occurred. Assets and liabilities are translated at the
exchange rates as of balance sheet date. Income and expenditures are translated
at the average exchange rate of the quarter.





March31,
                    2010
                  
                  
                  June30,
                    2009
                  
                  
                  March31,
                    2009Period
      end RMB : US$ exchange rate
                  
                  
                  6.8361
                  
                  
                  
                  6.8448
                  
                  
                  
                  -Period
      average RMB : US$ exchange rate
                  
                  
                  6.8367
                  
                  
                  
                  -
                  
                  
                  
                  6.8456





The RMB
is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US$ at
the rates used in translation.





(n)
            Comprehensive
      Income





Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, all
items that are required to be recognized under current accounting standards as
components of comprehensive income are required to be reported in a financial
statement that is presented with the same prominence as other financial
statements. Comprehensive income includes net income and the foreign currency
translation gain.


F-15


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(o)
            Earnings
      Per Share





Basic
earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
There were no potentially dilutive securities for the three and nine month ended
March 31, 2010 and 2009.





(p)
            Segment





The
Company operates in one business segment, the design, development, manufacture,
and commercialization of fuel injection pumps, injectors, multi-cylinder diesel
engines and small generator units mainly in the PRC. The sales of the Company
outside of the PRC were insignificant for the three and nine months ended March
31, 2010 and 2009.





(q)
            Recent
      Accounting Pronouncements





Effective
January 1, 2009, the FASB issued ASC 810-10 (formerly SFAS No. 160),
Noncontrolling Interests in Condensed Consolidated Financial Statements. This
statement establishes accounting and reporting standards that require the
ownership interests in subsidiaries’ non-parent owners be clearly presented in
the equity section of the balance sheet; requires the amount of consolidated net
income attributable to the parent and to the noncontrolling interest be clearly
identified and presented on the face of the condensed consolidated statement of
income; requires that changes in a parent’s ownership interest while the parent
retains its controlling financial interest in its subsidiary be accounted for
consistently; requires that when a subsidiary is deconsolidated, any retained
noncontrolling equity investment in the former subsidiary be initially measured
at fair value and the gain or loss on the deconsolidation of the subsidiary be
measured using the fair value of any noncontrolling equity; requires that
entities provide disclosures that clearly identify the interests of the parent
and the interests of the noncontrolling owners. This statement is effective as
of the beginning of an entity’s first fiscal year that begins after December 15,
2008. The Company has determined that ASC 810-10 does not materially affect, or
is reasonably likely to materially affect its financial statements.





Effective
January 1, 2009, the FASB issued ASC 815-10 (formerly SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities, an amendment of FASB
Statement No. 133), which amends SFAS No.133 and expands disclosures to include
information about the fair value of derivatives, related credit risks and a
company's strategies and objectives for using derivatives. ASC 815-10 is
effective for fiscal periods beginning on or after November 15, 2008. The
Company has determined that ASC 815-10 does not materially affect, or is
reasonably likely to materially affect its financial
statements.


F-16


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(q)
            Recent
      Accounting Pronouncements
(Continued)





Effective
January 1, 2009, the Company adopted ASC 815-40 (formerly Emerging Issues Task
Force (“EITF”) Issue No. 07-05), Determining Whether an Instrument (or Embedded
Feature) is indexed to an Entity’s Own Stock. ASC 815-40 addresses the
determination of whether an instrument (or an embedded feature) is indexed to an
entity's own stock, which is the first part of the scope exception in paragraph
11(a) of FASB SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities (“SFAS 133”). If an instrument (or an embedded feature) that has the
characteristics of a derivative instrument under paragraphs 6–9 of SFAS 133 is
indexed to an entity's own stock, it is still necessary to evaluate whether it
is classified in stockholders' equity (or would be classified in stockholders'
equity if it were a freestanding instrument). Other applicable authoritative
accounting literature, including Issues ASC 815-40 (formerly EITF 00-19),
Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company’s Own Stock, and ASC 815-40 (formerly EITF 05-2), The
Meaning of “Conventional Debt Instrument” in Issue No. 00-19, provides guidance
for determining whether an instrument (or an embedded feature) is classified in
stockholders' equity (or would be classified in stockholders' equity if it were
a freestanding instrument).  The adoption of ASC 815-40 did not have a
material effect on the Company’s condensed consolidated financial statements as
of March 31, 2010.





On April
1, 2009, the FASB approved ASC 805-20 (formerly FSP FAS 141(R)-1), Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies, which amends Statement 141(R) and eliminates the distinction
between contractual and non-contractual contingencies. Under ASC 805-20, an
acquirer is required to recognize at fair value an asset acquired or liability
assumed in a business combination that arises from a contingency if the
acquisition-date fair value of that asset or liability can be determined during
the measurement period. If the acquisition-date fair value cannot be determined,
the acquirer applies the recognition criteria in ASC 450-10 (formerly SFAS No.
5, Accounting for Contingencies and Interpretation 14, “Reasonable Estimation of
the Amount of a Loss – and interpretation of FASB Statement No. 5,”) to
determine whether the contingency should be recognized as of the acquisition
date or after it. The Company is currently evaluating the potential impact of
adopting this statement.





ASC
320-10 (formerly FSP FAS 115-2 and FAS 124-2) amend the other-than-temporary
impairment guidance in U.S. GAAP for debt securities to make the guidance more
operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. It did not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. The Company is
required to adopt this ASC for interim and annual reporting periods ending after
June 15, 2009. This ASC does not require disclosures for periods presented for
comparative purposes at initial adoption. This ASC requires comparative
disclosures only for periods ending after initial adoption. The Company is
currently evaluating the potential impact of adopting this
statement.


F-17


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(q)
            Recent
      Accounting Pronouncements
(Continued)





On April
9, 2009, the FASB also approved ASC 825-10 (formerly FSP FAS 107-1 and APB
28-1), Interim Disclosures about Fair Value of Financial Instruments to require
disclosures about fair value of financial instruments in interim period
financial statements of publicly traded companies and in summarized financial
information required by ASC 825-10, Interim Financial Reporting. The Company is
required to adopt this ASC for interim and annual reporting periods ending after
June 15, 2009. This ASC does not require disclosures for periods presented for
comparative purposes at initial adoption. This ASC requires comparative
disclosures only for periods ending after initial adoption. The Company is
currently evaluating the potential impact of adopting this
statement.





In
January 2010, the FASB issued guidance to amend the disclosure requirements
related to recurring and nonrecurring fair value measurements. The guidance
requires disclosure of transfers of assets and liabilities between Level 1 and
Level 2 of the fair value measurement hierarchy, including the reasons and the
timing of the transfers and information on purchases, sales, issuance, and
settlements on a gross basis in the reconciliation of the assets and liabilities
measured under Level 3 of the fair value measurement hierarchy. This guidance is
effective for the Company beginning March 1, 2010. The Company does not expect
the adoption will have an impact on its condensed consolidated financial
position or results of operations.




In April
2009, the FASB updated guidance related to fair-value measurements to clarify
the guidance related to measuring fair-value in inactive markets, to modify the
recognition and measurement of other-than-temporary impairments of debt
securities, and to require public companies to disclose the fair values of
financial instruments in interim periods. This updated guidance became effective
for the Company beginning June 1, 2009. The adoption of this guidance did not
have an impact on the Company’s consolidated financial position or results of
operations. See Note 4 (b) - Fair Value Measurements for the disclosure required
under the updated guidance.


F-18


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 5 –CONCENTRATIONS





(a)           Customers





The
Company’s major customers accounted for the following percentages of total sales
and accounts receivable as follows:





Sales
                      Nine Months Ended
                      March 31,
                    
                    
                    Accounts ReceivableMajor Customers
                    
                    2010
                    
                    
                    2009
                    
                    
                    March 31, 2010
                    
                    
                    June 30, 2009Company
      A
                    
                    
                    3.2
                    %
                    
                    
                    4.5
                    %
                    
                    
                    1.0
                    %
                    
                    
                    1.1
                    %Company
      B
                    
                    
                    2.4
                    %
                    
                    
                    -
                    
                    
                    
                    2.8
                    %
                    
                    
                    -Company
      E
                    
                    
                    2.2
                    %
                    
                    
                    -
                    
                    
                    
                    1.9
                    %
                    
                    
                    -Company
      C
                    
                    
                    2.2
                    %
                    
                    
                    -
                    
                    
                    
                    4.0
                    %
                    
                    
                    -Company
      D
                    
                    
                    2.2
                    %
                    
                    
                    -
                    
                    
                    
                    3.7
                    %
                    
                    
                    -Company
      F
                    
                    
                    -
                    
                    
                    
                    2.9
                    %
                    
                    
                    -
                    
                    
                    
                    1.0
                    %Company
      G
                    
                    
                    -
                    
                    
                    
                    4.2
                    %
                    
                    
                    -
                    
                    
                    
                    0.2
                    %Company
      H
                    
                    
                    -
                    
                    
                    
                    3.6
                    %
                    
                    
                    -
                    
                    
                    
                    0.7
                    %Company
      I
                    
                    
                    -
                    
                    
                    
                    3.3
                    %
                    
                    
                    -
                    
                    
                    
                    4.4
                    %





(b)           Suppliers





The
Company’s major suppliers accounted for the following percentages of total
purchases and accounts payable as follows:





Purchases
                    Nine Months Ended
                    March 31,
                  
                  
                  Accounts PayableMajor Suppliers
                  
                  2010
                  
                  
                  2009
                  
                  
                  March 31, 2010
                  
                  
                  June 30, 2009Company
      J
                  
                  
                  7.8
                  %
                  
                  
                  8.0
                  %
                  
                  
                  -
                  
                  
                  
                  1.0
                  %Company
      K
                  
                  
                  4.6
                  %
                  
                  
                  4.4
                  %
                  
                  
                  -
                  
                  
                  
                  -Company
      P
                  
                  
                  -
                  
                  
                  
                  2.7
                  %
                  
                  
                  -
                  
                  
                  
                  -Company
      L
                  
                  
                  2.9
                  %
                  
                  
                  -
                  
                  
                  
                  0.7
                  %
                  
                  
                  -Company
      M
                  
                  
                  2.0
                  %
                  
                  
                  -
                  
                  
                  
                  0.6
                  %
                  
                  
                  -Company
      N
                  
                  
                  3.8
                  %
                  
                  
                  5.1
                  %
                  
                  
                  3.7
                  %
                  
                  
                  1.1
                  %Company
      O
                  
                  
                  -
                  
                  
                  
                  8.4
                  %
                  
                  
                  -
                  
                  
                  
                  0.1
                  %


F-19


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 6 –INVENTORIES




Inventories
are summarized as follows:





March 31,
                    2010
                  
                  
                  June 30,
                    2009(Unaudited)Raw
      materials
                  
                  $
                  12,903,102
                  
                  
                  $
                  6,186,654Work-in-progress
                  
                  
                  5,157,546
                  
                  
                  
                  580,377Finished
      goods
                  
                  
                  683,301
                  
                  
                  
                  1,084,102Total
      inventories
                  
                  $
                  18,743,949
                  
                  
                  $
                  7,851,133





NOTE 7 –NOTES
RECEIVABLE FROM UNRELATED/RELATED INDIVIDUALS





Notes
receivable from unrelated/related individuals consist of the
following:





March 31,
                  2010
                
                
                June 30,
                  2009(Unaudited)Notes
      receivable from unrelated individuals:Due
      December 30, 2009, interest at 10% per annum(subsequently
      settled on its due date)
                
                
                $
                -
                
                
                $
                25,640Due
      December 30, 2009, interest at 10% per annum(subsequently
      settled on its due date)
                
                
                
                -
                
                
                
                21,915Due
      December 24, 2010, interest at 10% per annum
                
                
                
                25,673
                
                
                
                -Due
      December 24, 2010, interest at 10% per annum
                
                
                
                21,942
                
                
                
                -Total
                
                
                $
                47,615
                
                
                $
                47,555Notes
      receivable from related individuals:Due
      December 30, 2009, interest at 10% per annum
                (a)
                
                $
                -
                
                
                
                1,461Due
      March 31, 2010, interest at 7.2% per annum
                (b)
                
                
                -
                
                
                
                555,169Total
                
                
                $
                -
                
                
                $
                556,630





Notes
receivable from unrelated individuals are unsecured.





(a) This
note was due from Mr. Li Zengshan, who is the director and shareholder of the
Company. The balance represented a loan from the Company which was
unsecured.





(b) This
note was due from Mr. Jin Xin, who is director and shareholder of the Company.
The balance represented a loan from the Company which was
unsecured.


F-20


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 8 –BANK
ACCEPTANCE NOTES





March 31,
                  2010
                
                
                June 30,
                  2009(Unaudited)Bank
      acceptance notes (aggregated by month of maturity):Due
      July, 2009 (settled on its due date)
                
                $
                -
                
                
                $
                156,980Due
      April, 2010 (settled on its due date)
                
                
                3,492,690
                
                
                
                -Due
      May, 2010
                
                
                2,964,144
                
                
                
                -Due
      June, 2010
                
                
                4,109,575
                
                
                
                -Due
      July, 2010
                
                
                2,053,803
                
                
                
                -Due
      August, 2010
                
                
                1,631,047
                
                
                
                -Due
      September, 2010
                
                
                937,010
                
                
                
                -Total
                
                $
                15,188,269
                
                
                $
                156,980





NOTE 9 –DUE
FROM/TO RELATED PARTIES





(I)
            Due
      From Related Parties





March 31,
                    2010
                  
                  
                  June 30,
                    2009(Unaudited)Liu
      Huixiang
                  (g)
                  
                  $
                  4,593
                  
                  
                  $
                  -Jin
      Ping
                  (b)
                  
                  
                  -
                  
                  
                  
                  14,584Total
      due from related parties
                  
                  
                  $
                  4,593
                  
                  
                  $
                  14,584





(II)
            Due
      To Related Parties





March 31,
                    2010
                  
                  
                  June 30,
                    2009(Unaudited)Jin
      Xin
                  (a)
                  
                  $
                  -
                  
                  
                  $
                  395,406Liu
      Dianjun
                  (c)
                  
                  
                  391,764
                  
                  
                  
                  403,475Li
      Zengshan
                  (d)
                  
                  
                  65,327
                  
                  
                  
                  45,668Zhang
      Qixiu
                  (e)
                  
                  
                  32,182
                  
                  
                  
                  -Jin
      Wei
                  (f)
                  
                  
                  14,161
                  
                  
                  
                  -Total
      due to related parties
                  
                  
                  $
                  503,434
                  
                  
                  $
                  844,549





(III)
            Due
      From Employees





March 31,
                    2010
                  
                  
                  June 30,
                    2009(Unaudited)Current
                  
                  
                  $
                  235,506
                  
                  
                  $
                  103,869Total
      due from employees
                  (h)
                  
                  $
                  235,506
                  
                  
                  $
                  103,869


F-21


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 9 –DUE
FROM/TO RELATED PARTIES (CONTINUED)





(IV)
            Due
      To Employees





March 31,
                    2010
                  
                  
                  June 30,
                    2009(Unaudited)Current
                  
                  
                  $
                  189,280
                  
                  
                  $
                  616,719Total
      due to employees
                  (i)
                  
                  $
                  189,280
                  
                  
                  $
                  616,719





(a)
            Jin
      Xin is the shareholder of the Company and the chairman of Jinma, a
      subsidiary of the Company. The payable balance represented prepayments for
      goods paid by Jin Xin on behalf of the Company, which are unsecured,
      interest-free and has no fixed repayment
term.





(b)
            Jin
      Ping is the brother of Jin Xin, also see (a). The receivable balance
      represented a traveling advance, which was unsecured, interest-free and
      collectible on demand.





(c)
            Liu
      Dianjun is a shareholder of the Company and the chairman of Hengyuan, a
      subsidiary of the Company. The balances represent money advanced from Liu
      Dianjun, which are interest-free, unsecured and have no fixed repayment
      terms.





(d)
            Li
      Zengshan is a shareholder of the Company and the chairman of Huaxin, a
      subsidiary of the Company. The balances of $45,668 represent an unpaid
      dividend, and the additional balance of $19,659 represents business
      related expenses paid by Li Zengshan on behalf of the Company. The
      balances are interest-free, unsecured and has no fixed repayment term.
      Also see Note 16.





(e)
            Zhang
      Qixiu is the mother of Jin Xin, also see (a). The balance represents
      business related expenses paid by Zhang Qixiu on behalf of the Company,
      which are interest-free, unsecured and have no fixed repayment
      term.





(f)
            Jin
      Wei is the brother of Jin Xin, also see (a). The balance represents money
      advanced from Jin Wei, which is interest-free, unsecured and have no fixed
      repayment term.





(g)
            Liu
      Huixiang is the son of Liu Dianjun, also see (c). The balance represented
      the advance for daily business operation, which is unsecured,
      interest-free and receivable on
demand.





(h)
            Due
      from employees are interest-free, unsecured and have no fixed repayment
      terms. The Company provides these advances for business-related purposes
      only, including for the purchases of raw materials and business-related
      travel in the ordinary course of
business.





(i)
            Due
      to employees are interest-free, unsecured and have no fixed repayment
      terms. The amounts primarily represent business and traveling related
      expenses paid by sales personnel on behalf of the
  Company.


F-22


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 10 –LAND USE
RIGHTS, NET





Land use
rights consist of the following:





March 31,
                  2010
                
                
                June 30,
                  2009(Unaudited)Cost
      of land use rights
                
                $
                1,082,192
                
                
                $
                1,082,192Less:
      Accumulated amortization
                
                
                (133,078
                )
                
                
                (116,172
                )Land
      use rights, net
                
                $
                949,114
                
                
                $
                966,020





Amortization
expense for the nine months ended March 31, 2010 and 2009 was $16,906 and
$16,850, respectively.





Amortization
expense for the next five years and thereafter is as follows:





2010
      (three months)
                  
                  $
                  5,6342011
                  
                  
                  22,5422012
                  
                  
                  22,5422013
                  
                  
                  22,5422014
                  
                  
                  22,542Thereafter
                  
                  
                  853,312Total
                  
                  $
                  949,114





Two land
use rights with an aggregate net book value of $52,063 and $53,170 at March 31,
2010 and June 30, 2009, respectively, were registered in the names of two
management members of the Company. The Company’s local legal counsel has
confirmed the ownership of these two land use rights by the Company. The Company
estimates that the application for the transfer of the certificates of these two
land use rights will be completed by June, 2010. These two land use rights were
pledged as collateral for bank loans borrowed by Li Zengshan and Liu Dianjun
(both are shareholders and officers of the Company) in the amounts of $395,090
and $70,432, respectively. Also see Note 17.





At March
31, 2009 and June 30, 2009, the net book value of land use rights pledged as
collateral for bank loans was $739,170 and $752,059, respectively. Also see Note
12.


F-23


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 11 –PLANT AND
EQUIPMENT, NET





Plant and
equipment consist of the following:


March 31,
                    2010
                  
                  
                  June 30,
                    2009(Unaudited)At
      cost:Buildings
                  
                  $
                  2,807,033
                  
                  
                  $
                  2,505,871Machinery
      and equipment
                  
                  
                  1,033,509
                  
                  
                  
                  988,414Office
      equipment
                  
                  
                  49,146
                  
                  
                  
                  40,279Motor
      vehicles
                  
                  
                  428,985
                  
                  
                  
                  301,1044,318,673
                  
                  
                  
                  3,835,668Less
      : Accumulated depreciationBuildings
                  
                  
                  (403,990
                  )
                  
                  
                  (336,677
                  )Machinery
      and equipment
                  
                  
                  (583,192
                  )
                  
                  
                  (507,106
                  )Office
      equipment
                  
                  
                  (34,184
                  )
                  
                  
                  (27,282
                  )Motor
      vehicles
                  
                  
                  (248,380
                  )
                  
                  
                  (223,840
                  )(1,269,746
                  )
                  
                  
                  (1,094,905
                  )Plant
      and equipment, net
                  
                  $
                  3,048,927
                  
                  
                  $
                  2,740,763





Depreciation
expense for the nine months ended March 31, 2010 and 2009 was $175,325 and
$176,246 respectively.





At March
31, 2010, the legal title to five motor vehicles and two office buildings with a
total net book value of $77,044 and $641,502 were registered in the names of
management members of the Company. The Company’s local legal counsel has
confirmed the ownership of the motor vehicles and office buildings by the
Company. The Company estimates the transfer of the legal titles of the other
four motor vehicles will be completed by the end of June, 2010.





Two
office buildings were pledged as collateral for bank loans borrowed by Li
Zengshan and Liu Dianjun (both are shareholders and officers of the Company) in
the amounts of $395,090 and $70,432, respectively. Also see Note
17.





Application
for ownership certificates of eleven buildings with an aggregate net book value
of $1,072,735 is in progress. The Company’s local legal counsel has confirmed
the ownership of the two buildings by the Company. The application for the
certificates of the buildings is expected to be completed in June,
2010.





At March
31, 2010 and June 30, 2009, the net book value of buildings pledged as
collateral for bank loans was $72,439 and $993,461, respectively. Also see Note
12.


F-24


XINDE
TECHNOLOGY COMPANY
 (FORMERLY
WASATCH FOOD SERVICES, INC.)
 AND
SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009
 (UNAUDITED)




NOTE 12 –SHORT-TERM BANK LOANS





Short-term
bank loans consist of the following:


March 31,
                  2010
                
                
                June 30,
                  2009(Unaudited)Weifang
      City Commercial Bank:Monthly
      interest only payments at 7.97% per annum, due May 14, 2010, secured by a
      land use right owned by the Company. Also see Note 10. (Repaid on August
      16, 2009 in advance)
                
                $
                -
                
                
                $
                292,194Rural
      Credit Cooperative:Monthly
      interest only payments at 7.97% per annum, due April 20, 2010, guaranteed
      by Weifang Tongxin Precision Rubber Products Co., Ltd. and Weifang Dachang
      Energy-Saving Equipment Co., Ltd. (Repaid on its due date)
                
                
                131,654
                
                
                
                131,487Bank
      of CommunicationsMonthly
      interest only payments at 8.22% per annum, due July 22, 2009, secured by a
      land use right owned by the Company. Also see Note 10. (Repaid on its due
      date)
                
                
                -
                
                
                
                464,589Monthly
      interest only payments at 8.22% per annum, due July 22, 2009, secured by a
      building owned by the Company. Also see Note 11. (Repaid on its due
      date)
                
                
                -
                
                
                
                993,461Monthly
      interest only payments at 5.84% per annum, due July 23, 2010, secured by a
      land use right owned by the Company and guaranteed by a shareholder, Liu
      Dianjun. Also see Note 10.
                
                
                146,282
                
                
                
                -Monthly
      interest only payments at 5.84% per annum, due July 23, 2010, secured by a
      building owned by the Company and guaranteed by a shareholder, Liu
      Dianjun. Also see Note 11.
                
                
                585,129
                
                
                
                -


F-25


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 12 –SHORT-TERM BANK LOANS (CONTINUED)





March 31,
                          2010
                        
                        
                        June 30,
                          2009(Unaudited)Weifang
      Commercial BankMonthly
      interest only payments at 9.7% per annum, due August 16, 2009, guaranteed
      by Weifang Hengyuan Oil Pump & Oil Fitting Co., Ltd. (Repaid on its
      due date)
                        
                        $
                        -
                        
                        
                        $
                        292,194Monthly
      interest only payments at 7.43% per annum, due June 17, 2010, guaranteed
      by Weifang Hengyuan Oil Pump & Oil Fitting Co., Ltd.
                        
                        
                        292,564
                        
                        
                        
                        -Monthly
      interest only payments at 7.43% per annum, due July 27, 2010, guaranteed
      by Weifang Hengyuan Oil Pump & Oil Fitting Co., Ltd.
                        
                        
                        585,129
                        
                        
                        
                        -Industrial
      and Commercial Bank of China:Monthly
      interest only payments at 5.84% per annum, due May 6, 2010, secured by a
      land use right owned by the Company. Also see Note 10.
                        
                        
                        511,988
                        
                        
                        
                        511,340Monthly
      interest only payments at 5.84% per annum, due April 20, 2010, secured by
      a land use right owned by the Company. Also see Note 10.
                        
                        
                        73,142
                        
                        
                        
                        73,049China
      Construction Bank:Monthly
      interest only payments at 5.84% per annum, due September 2, 2010, borrowed
      by Hengyuan, guaranteed by a shareholder, Liu Dianjun and
      Xinde.
                        
                        
                        731,412
                        
                        
                        
                        -Monthly
      interest only payments at 7.97% per annum, due October 19, 2010,
      guaranteed by Weifang Hengyuan Oil Pump & Oil Fitting Co.,
      Ltd.
                        
                        
                        292,564
                        
                        
                        
                        -Bank
      of China:Monthly
      interest only payments at 5.84% per annum, due February 10, 2010,
      guaranteed by Weifang Hengyuan Oil Pump & Oil fitting Co., Ltd. and by
      Li Zengshan, the CEO of Huaxin and his wife, Li Guimei
                        
                        
                        292,564
                        
                        
                        
                        -Total
                        
                        $
                        3,642,428
                        
                        
                        $
                        2,758,314





Interest
expense for short-term bank loans for the nine months ended March 31, 2010 and
2009 was $289,984 and $271,565 respectively.


F-26


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 13 –NOTES
PAYABLE





Notes
payable consist of the following:


March 31,
                  2010
                
                
                June 30,
                  2009(Unaudited)Notes
      payable to an unrelated individual:Due
      December 30, 2009, interest at 10% per annum (Settled on its due
      date)
                
                
                $
                -
                
                
                $
                131,487Due
      January 21, 2010, interest at 10% per annum (subsequently settled on its
      due date)
                
                
                
                -
                
                
                
                42,368Due
      December 24, 2010 interest at 10% per annum
                
                
                
                97,913
                
                
                
                -Due
      September 26, 2010 interest at 6% per annum
                
                
                
                90,695
                
                
                
                -Subtotal
                
                
                
                188,608
                
                
                
                173,855Notes
      payable to related individuals:Due
      May 12, 2010, interest at 5.76% per annum (Settled in
    advance)
                (a)
                
                
                -
                
                
                
                29,219Due
      May 12, 2010, interest at 5.76% per annum
                (a)
                
                
                32,507
                
                
                
                32,466Due
      December 30, 2009, interest at 10% per annum (Settled on its due
      date)
                (b)
                
                
                -
                
                
                
                94,963Due
      August 4, 2010, interest at 6.91% per annum
                (b)
                
                
                72,415
                
                
                
                -Due
      December 24, 2010, interest at 10% per annum
                (b)
                
                
                95,083
                
                
                
                -Due
      July 1, 2010, interest at 7.28% per annum
                (b)
                
                
                77,530
                
                
                
                -Subtotal
                
                
                
                277,535
                
                
                
                156,648Bank
      acceptance notes:Due
      August 2, 2009 (Settled on its due date)
                
                
                
                -
                
                
                
                438,293Due
      April 29, 2010 (Settled on its due date)
                
                
                
                146,282
                
                
                
                -Subtotal
                
                
                
                146,282
                
                
                
                438,293Total
                
                
                $
                612,425
                
                
                $
                768,796





(a)
              The
      notes are or were due to Mr. Liu Dianjun, a shareholder and officer of the
      Company. The current balance represents a loan to the Company which is
      unsecured.





(b)
              This
      note is due to Mr. Li Zengshan, a shareholder and officer of the Company.
      The current balances represent loans to the Company which are
      unsecured.





Notes
payable to an unrelated individual are unsecured.


F-27


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 14 –LONG
-TERM NOTES PAYABLE





Long-term
notes payable consists of the following:


March 31,
                  2010
                
                
                June 30,
                  2009(Unaudited)Notes
      payable to related individuals:Due
      August 4, 2014, monthly interest payment is 6.91% per annum. Principal is
      repaid every month in 60 equal installments from August 4,
      2009.
                (b)
                
                $
                322,675
                
                
                $
                -Due
      May 12, 2013, interest at 5.76% per annum (Settled in
    advance)
                (a)
                
                
                -
                
                
                
                76,505Due
      May 12, 2012, monthly interest payment is 5.76% per annum. Principal is
      repaid every month in 108 equal installments from May 15,
      2003.
                (a)
                
                
                37,925
                
                
                
                55,861Total
                
                
                $
                360,600
                
                
                $
                132,366





(a)
              The
      current note is due to Mr. Liu Dianjun, a shareholder and officer of the
      Company. The balance represents a loan to the Company to support business
      operations.





(b)
              This
      note is due to Mr. Li Zengshan, a shareholder and officer of the Company.
      The balance represents a loan to the Company to support business
      operations.





Notes
payable to related individuals are unsecured.





NOTE
15 – TAXES





(a)  Corporation
Income Tax (“CIT”)





On March
16, 2007, the National People’s Congress of China approved the Corporate Income
Tax Law of the People’s Republic of China (the “new CIT law”), which went into
effective on January 1, 2008. In accordance with the relevant tax laws and
regulations of PRC, the applicable corporate income tax rate for Hengyuan is
25%.  In 2009 and 2008, Jinma and Huaxin were defined by the local tax
bureau as tax payers subject to the “Verification Collection” method, according
to which the amount of income taxes paid is determined by the local tax bureau
based on certain criteria instead of applying the CIT rate of 25%. Therefore,
the amount of income tax assessed for Jinma and Huaxin under this Verification
Collection method differed from the normal computation by applying the CIT rate
of 25%.





Effective
January 1, 2007, the Company adopted ASC 740-10, Accounting for Uncertainty in
Income Taxes (formerly "FIN 48", an interpretation of FASB statement No. 109),
Accounting for Income Taxes. The interpretation addresses the determination of
whether tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements.


F-28


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 15 –TAXES
(CONTINUED)





Under ASC
740-10, the Company may recognize the tax benefit from an uncertain tax position
only if it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty percent likelihood of being realized upon ultimate settlement. ASC 740-10
also provides guidance on de-recognition, classification, interest and penalties
on income taxes, accounting in interim periods and requires increased
disclosures. As of March 31, 2010, the Company does not have a liability for
unrecognized tax benefits.





The
Company’s income tax expense for the nine months ended March 31, 2010 and 2009
are summarized as follows:





March 31,
                        2010
                      
                      
                      March 31,
                        2009Current:
                      
                      (Unaudited)
                      
                      
                      (Unaudited)Provision
      for CIT
                      
                      $
                      2,179,024
                      
                      
                      $
                      1,129,751Deferred:Provision
      for CIT
                      
                      
                      (3,865
                      )
                      
                      
                      7,328Income
      tax expense
                      
                      $
                      2,175,159
                      
                      
                      $
                      1,137,079





The
Company’s income tax expense differs from the “expected” tax expense for the
nine months ended March 31, 2010 and 2009 (computed by applying the CIT rate of
25% percent to income before income taxes) as follows:





March 31,
                    2010
                  
                  
                  March 31,
                    2009(Unaudited)
                  
                  
                  (Unaudited)Computed
      “expected” expense
                  
                  $
                  3,913,406
                  
                  
                  $
                  1,101,775Permanent
      differences
                  
                  
                  (52,394
                  )
                  
                  
                  (40,019
                  )Favourable
      tax rates
                  
                  
                  (1,685,853
                  )
                  
                  
                  75,323Income
      tax expense
                  
                  $
                  2,175,159
                  
                  
                  $
                  1,137,079


F-29


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 15 –TAXES
(CONTINUED)





The tax
effects of temporary differences that give rise to the Company’s net deferred
tax assets and liabilities as of March 31, 2010 and June 30, 2009 are as
follows:





March 31,
                    2010
                  
                  
                  June 30, 2009(Unaudited)Deferred
      tax assets:Current
      portion:Sales
                  
                  $
                  -
                  
                  
                  $
                  15,621Bad
      debt provision
                  
                  
                  51,231
                  
                  
                  
                  20,694Expenses
                  
                  
                  59,017
                  
                  
                  
                  54,703Subtotal
                  
                  $
                  110,248
                  
                  
                  $
                  91,018





March 31,
                    2010
                  
                  
                  June 30, 2009(Unaudited)Deferred
      tax liabilities:Current
      portion:Sales
      cut-off
                  
                  $
                  (34,540
                  )
                  
                  $
                  (19,065
                  )Others
                  
                  
                  (20,778
                  )
                  
                  
                  (19,218
                  )Subtotal
                  
                  
                  (55,318
                  )
                  
                  
                  (38,283
                  )Net
      deferred tax assets - current portion
                  
                  
                  54,930
                  
                  
                  
                  52,735





Deferred
      tax assets:Non-current
      portion:Depreciation
                  
                  
                  111,787
                  
                  
                  
                  99,921Amortization
                  
                  
                  12,656
                  
                  
                  
                  22,851Subtotal
                  
                  
                  124,443
                  
                  
                  
                  122,772Net
      deferred tax assets - non-current portion
                  
                  
                  124,443
                  
                  
                  
                  122,772Total
      net deferred tax assets
                  
                  $
                  179,373
                  
                  
                  $
                  175,507


F-30


XINDE
TECHNOLOGY COMPANY


(FORMERLY
WASATCH FOOD SERVICES, INC.)


AND
SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)





NOTE 15 –TAXES
(CONTINUED)





(b)  Tax
Holiday Effect





For the
nine months ended March 31, 2010 and 2009 the PRC corporate income tax rate was
25%. Certain subsidiaries of the Company are entitled to favorable tax rates for
the nine months ended March 31, 2010 and 2009.





The pro
forma combined effects of the favorable tax rates available to the Company for
the nine months ended March 31, 2010 and 2009 are as follows:




For the Nine Months Ended
                    Mar 31
                    (Unaudited)March 31 2010
                  
                  
                  March 31 2009Tax
      holiday effect
                  
                  $
                  (1,685,853
                  )
                  
                  $
                  75,323Basic
      net income (loss) per share effect
                  
                  $
                  (0.040
                  )
                  
                  $
                  0.002





(c)  Value
Added Tax (“VAT”)





Enterprises
or individuals, who sell commodities, engage in repair and maintenance or import
or export goods in the PRC are subject to a value added tax in accordance with
Chinese Laws. The value added tax standard rate is 17% of the gross sale price
and the Company records its revenue net of VAT. A credit is available whereby
VAT paid on the purchases of semi-finished products or raw materials used in the
production of the Company’s finished products can be used to offset the VAT due
on the sales of the finished products.





On
January 1, 2002, the export policy of VAT "Exemption, Credit and Refund" began
to apply to all exports by manufacture-based enterprises. In accordance with
this policy, exported goods are exempted from output VAT and the input VAT
charged for purchases of the raw materials, components and power consumed for
the production of the exported goods may be refunded. The refund rates of diesel
engine related products applicable to the Company are from 13% to
17%.





The VAT
payable was $12,246,481 and $89,611 at March 31, 2010 and June 30, 2009,
respectively.





NOTE
16 – DIVIDEND





For the
nine months ended March 31, 2009, the Company declared and paid cash dividends
of $2,562,096. Dividends payable relating to dividends declared prior to July 1,
2009 were $85,253 and $92,072 at March 31, 2010 and June 30, 2009, respectively.
Of the total dividends payable, $45,668 was due to a related party at March 31,
2010 and June 30, 2009. Also see Note 9(d).


F-31




XINDE
TECHNOLOGY COMPANY
 AND
SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2010 AND 2009
 (UNAUDITED)




NOTE 17 –CONTINGENCIES





On May
15, 2003, Hengyuan entered into a guarantee contract to serve as guarantor for
the bank loans borrowed by Mr. Liu Dianjun, a shareholder and officer of the
Company, from Industrial and Commercial Bank of China with a guarantee amount of
$70,432. Under this guarantee contract, a land use right and an office
building of Hengyuan were pledged for the bank loans. (Also see Notes 10 and
11)





On August
4, 2009, Hengyuan entered into a guarantee contract to serve as guarantor for
bank loans borrowed by Mr. Li Zengshan, a shareholder and officer of the
Company, from the Industrial and Commercial Bank of China with a guarantee
amount of $395,090. Under this guarantee contract, a land use right and an
office building of Hengyuan were pledged for the bank loans. (Also see Notes 10
and 11)





NOTE
18 – COMMITMENT





The
Company has a capital commitment of approximately $576,352 for the construction
of the new production line in connection with the new plant as of March 31,
2010.





NOTE 19 –DISCONTINUED OPERATION





On
December 28, 2009, Wasatch entered into a disposition agreement with Shaun
Carter, an individual. Pursuant to the agreement, the Company agreed to sell all
of its interest in its wholly owned subsidiary, Wasatch Food Services of Idaho,
Inc. (“Bajio”), in consideration of a payment of $1,000 in addition to the
assumption by Bajio of liabilities $225,546 of Wasatch resulting in a gain of
$148,498. This transaction was completed on December 28, 2009. Thereafter, Bajio
was no longer a consolidated subsidiary of the Company.





The
following represents the Bajio at the date of disposal:





December
                      29, 2009Bajio,
      net
                    
                    $
                    78,048Net
      assets
                    
                    
                    78,048Proceeds
      from disposition
                    
                    
                    1,000Assumption
      of liabilities
                    
                    
                    225,546226,546Gain
      from disposition of discontinued operation
                    
                    $
                    148,498





In
accordance with ASC 360-10 (formerly SFAS 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets,”) The gains from disposition of discontinued
operation of $148,498 are reflected in the Company’s condensed consolidated
statement of income and comprehensive income for the nine months ended March 31,
2010.


F-32


ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION




Forward
Looking Statements




The
following discussion of the financial condition and results of operations of
Xinde Technology Company (f/k/a Wasatch Food Services, Inc., the “Company” or “Xinde”) is based upon
and should be read in conjunction with our unaudited condensed consolidated
financial statements and their related notes included in this report. This
report contains 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 SEC 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.





Prior
Operations of the Company





Xinde was incorporated as “Wasatch Food
Services, Inc.” in Nevada in December 2006 to engage as a franchisee of
BAJIO® Mexican
Grill restaurants in the State of Idaho. In January 2007, the Company was
assigned certain rights under an area development agreement with Bajio, LLC (the
franchisor) that granted the Company the right to develop four BAJIO®
restaurant locations in Southern Idaho through December 31, 2009. In
October 2007, the Company entered into its first franchise agreement in
Boise, Idaho and thereafter entered into a lease, furnished and equipped the
space and opened for business in November 2007. The Company failed to open
any additional BAJIO®
restaurants within the time periods set forth in the area development agreement
and lost its right to develop such additional restaurants. During this time and
up to December 29, 2009, the Company conducted its operations solely through its
wholly-owned subsidiary, Bajio.





The Company executed a purchase
agreement to sell Bajio following the consummation of the share exchange
transaction described in the section below.





The
Share Exchange Transaction





On December 28, 2009 (the “Closing Date”), the
Company entered into a share exchange agreement, or the Exchange Agreement, with
Jolly Promise Limited, an investment holding company organized under the laws of
the British Virgin Islands (“Jolly”) and the
stockholder of Jolly, Welldone Pacific Limited, a limited company organized
under the laws of the British Virgin Islands (the “Stockholder”). As a
result of the share exchange, or the Exchange, the Company acquired all of the
issued and outstanding securities of Jolly from the Stockholder in exchange for
forty-two million (42,000,000) newly-issued shares of the Company common stock,
par value $0.001 per share (“Common Stock”).
Immediately following the Exchange, the Stockholder owned seventy percent (70%)
of the sixty million (60,000,000) issued and outstanding shares of voting
capital stock of the Company. As a result of the Exchange, Jolly became a
wholly-owned subsidiary of the Company.


3


Following
the Exchange, the corporate structure of the Company consisted of Jolly, a
wholly-owned subsidiary of the Company, Jolly’s wholly-owned subsidiary, Hong
Kong Sindhi Fuel Injection Company Limited, a Hong Kong company (“HKSind”), HKSind’s
wholly-owned subsidiary, Weifang Huajie Fuel Injection Company Limited, a
People’s Republic of China or PRC company (“Huajie”), Huajie’s
wholly-owned subsidiary, Weifang Xinde Fuel Injection System Company Limited, a
PRC company (“Weifang”) and
Weifang’s wholly-owned subsidiaries, Huaxin Diesel Engine Co., Ltd., a PRC
company (“Huaxin”), Hengyuan
Oil Pump and Oil Fitting Co., Ltd., a PRC company (“Hengyuan”) and Jinma
Diesel Engine Co., Ltd., a PRC company (“Jinma” and together
with Jolly, HKSind, Huajie, Weifang, Huaxin and Hengyuan, the “Subsidiaries”). The
principal business activities of the Company and its Subsidiaries consist of the
production and marketing of fuel injection systems, non-vehicle diesel engines,
and diesel generator technology.





The Company’s Common Stock is currently
traded on the Over-The-Counter Bulletin Board and on the Pink Sheets under the
symbol “WTFS.OB”.





On
April 22, 2010, the Company held a special meeting of its stockholders. At the
Special Meeting, the Company’s stockholders approved, by the requisite number of
votes, to effect the changing of the Company’s name from “Wasatch Food Services,
Inc.” to “Xinde Technology Company”.





Current
Operations of the Company




Introduction





The Company operates in one business
segment, the design, development, manufacture, and commercialization of fuel
injection pumps, injectors, multi-cylinder diesel engines and small generator
units mainly in the People’s Republic of China. However, our products compete in
three primary product segments, namely (1) fuel injection system products,
(2) diesel engine products and (3) generator products. We believe our
broad range of products (including non-vehicle diesel engines, diesel
generators, injection pumps, injectors and three-coupling components, and
agricultural machinery and construction machinery) greatly reduces our
comprehensive costs which in turn, increases our competitiveness.





Summary of the Company’s Current
Business




The Company is based in China’s
Shandong Province in the city of Weifang, where many large and medium-sized
diesel engine enterprises and relevant products and components manufacturers are
located. Weifang is also an important traffic center on the east coast in
northern China. We believe our location makes the purchase of raw materials and
sales of our products very convenient and reduces the costs associated with
sales while reducing freight costs.





We have developed fuel injection system
products that we believe will meet the Euro III Emissions Standard, which will
become most relevant in light of China’s initiative to implement the Euro III
Emissions Standard in July 2010. Furthermore, we believe that we are
China’s only company with exclusive intellectual property rights for fuel
injection systems meeting such Euro III Emissions Standard which could lead to
broad market appeal. Due to our strict technical standards and quality control
in production process, our products have become well-known brands in their
markets throughout China. Our Company has always placed quality control first
and we received our ISO9001 certification in 2005. Moreover, our products have
been deemed “inspection-free” goods. During China’s “Eleventh Five-Year Plan”
(2006 through 2010), we intend to implement and pass ISO/TS16949 standards which
are the most advanced in China’s automobile industry.





Our products feature a cost and price
advantage arising from our independently owned intellectual property. For
example, our integrated electromechanical electronically-controlled
high-pressure fuel injection system with common rail sells for RMB7,000
(US$1,029) per set as compared with products produced by some of our largest
competitors (BOSCH and DENSO) which offer comparable products for RMB15,000
(US$2,011) per set. As a result, we believe such products will quickly gain
market share and be instrumental in improving our competitive position and brand
influence.


4


We also have a long-term relationship
with Tianjin University’s Combustion Laboratory of Combustion Engines, a
national key laboratory located in Tianjin, China, which contributes to our
growing expertise and reputation in the field of integrated electromechanical
electronically-controlled high-pressure fuel injection systems with common rail
in China. In addition, we have an experienced team of in-house technicians which
contributes to our product’s technical content and ultimately, our core
competitiveness.





Through independent development,
cooperation and introduction, we have developed a variety of diesel engine
injector assemblies for Sitair, 170, 190 and 105 models as well as
multi-cylinder No. 1, BX, BXD, IIW and DT12/24-10X (electronic regulator)
injection pump assemblies and oil transfer pumps. In addition, we have fully
acquired the production process and technology for EGR (Exhaust Gas
Recirculation) diesel engines and gas power generators that are in growing
demand in the marketplace.





Each of the Subsidiaries has its own
marketing network. The Company’s goal is to utilize each of such networks to
create a countrywide network. The Company has made its after-sales service a
priority, setting up a special after-sales service management department to
provide users with after-sales services.





Our principal offices are located at
Number 363, Sheng Li West Street, Weifang, Shandong Province, The People’s
Republic of China, Telephone: (86) 536-8322068, Facsimile: (86)
852-28450504.





Description
of the Company’s Business Segments




The Company’s products compete in three
primary product segments, namely (1) fuel injection system products,
(2) diesel engine products and (3) generator products. We believe our
broad range of products (including non-vehicle diesel engines, diesel
generators, injection pumps, injectors and three-coupling components, and
agricultural machinery and construction machinery) greatly reduces our
comprehensive costs which in turn, increases our competitiveness.




A list of our products and services can
be found in our Current Report on Form 8-K as filed with the SEC on December 29,
2009 and on our website at http://www.chinaxinde.cn.





Enterprise
Marketing Strategy and Methods of Distribution





We have established nationwide
marketing and after-sale service networks in China. We have established more
than twenty branches throughout China, including Fu’an, Guangzhou, Dongguan,
Jiangdu, Chengdu, Chongqing, Kunming, Taiyuan, Shenyang, Changsha and Urumchi.
The Company employs agents throughout China, who receive commissions on the
amount of products that they help the Company to sell. Agreements with such
agents are generally formed during national trade fairs or other types of trade
exhibitions. We pay for transportation expenses and the products are generally
delivered via road vehicles.





Mobile technicians operate our
after-sales network. Each is assigned to a different geographical
area.





Sources and Availability of Raw
Materials from Suppliers





No single supplier accounted for more
than 10% of the Company’s purchases and accounts payable for the nine months
ended March 31, 2009.


5


Key Customers





No single customer accounted for more
than 10% of the Company’s total revenue or accounts receivable for the nine
months ended March 31, 2009.





Critical
Accounting Policies and Estimates





We prepare our financial statements in
accordance with generally accepted accounting principles in the United States,
which require us to make estimates and assumptions that affect the reported
amounts of our assets and liabilities, to disclose contingent assets and
liabilities on the date of the financial statements, and to disclose the
reported amounts of revenues and expenses incurred during the financial
reporting period. We continue to evaluate these estimates and assumptions that
we believe to be reasonable under the circumstances. We rely on these
evaluations as the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Since
the use of estimates is an integral component of the financial reporting
process, actual results could differ from those estimates. Some of our
accounting policies require higher degrees of judgment than other in their
application.




This section should be read together
with the Summary of Significant Accounting Policies included as Note 4 to the
Condensed Consolidated Financial Statements included herein.




Inventories





Inventories
are stated at the lower of cost or net realizable value. The cost of raw
materials is determined on the basis of weighted average. The cost of finished
goods is determined on the weighted average basis and comprises direct
materials, direct labor and an appropriate proportion of overhead.





Net
realizable value is based on estimated selling prices less any further costs
expected to be incurred for completion and disposal.





Plant and Equipment





Plant and
equipment are carried at cost less accumulated depreciation and amortization.
Depreciation is provided over their estimated useful lives, using the
straight-line method. Leasehold improvements are amortized over the life of the
asset or the term of the lease, whichever is shorter.  Estimated
useful lives are as follows:





·
              Buildings
              30
      years·
              Machinery
              10
      years·
              Motor
      vehicles
              5
      years·
              Office
      equipment
              5
      years





The cost
and related accumulated depreciation of assets sold or otherwise retired are
eliminated from the accounts and any gain or loss is included in the statement
of income. The cost of maintenance and repairs is charged to expense as
incurred, whereas significant renewals and betterments are
capitalized.


6





Revenue Recognition





Revenue
represents the invoiced value of goods sold, recognized upon the shipment of
goods to customers. Revenue is recognized when all of the following criteria are
met:





·
                Persuasive
      evidence of an arrangement exists,·
                Delivery
      has occurred or services have been rendered,·
                The
      seller's price to the buyer is fixed or determinable,
  and·
                Collectability
      is reasonably assured.





The
majority of the Company’s revenue results from sales contracts with distributors
and revenue is recorded upon the shipment of goods. Management conducts credit
background checks for new customers as a means to reduce the subjectivity of
collectability.





The
Company offers warranties on its products for periods between three and six
months after the sale. The Company does not estimate and accrue warranty
reserves because warranty claims have historically been minor in relationship to
the Company’s
operating results. Warranty expenses related to product sales are charged to the
condensed consolidated statements of income and comprehensive income in the
period in which warranty claims occur.





Income
Taxes





Deferred
tax assets and liabilities are recognized for the future tax consequence
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to be
applied to taxable income in the years in which those temporary differences are
expected to reverse. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of income in the period that
includes the enactment date. A valuation allowance is provided for deferred tax
assets if it is more likely than not these items will either expire before the
Company is able to realize their benefits, or that future deductibility is
uncertain.





Comprehensive
Income





Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, all
items that are required to be recognized under current accounting standards as
components of comprehensive income are required to be reported in a financial
statement that is presented with the same prominence as other financial
statements. Comprehensive income includes net income and the foreign currency
translation (loss) gain.





Earnings
Per Share





Basic
earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
There were no potentially dilutive securities for the three and nine months
ended March 31, 2010 and 2009.


7


Recently Issued Accounting
Pronouncement





A description of recent accounting
pronouncements is set forth under “Recent Accounting Pronouncements” in Note 4
of the Notes to the Condensed Consolidated Financial Statements contained in
this Quarterly Report on Form 10-Q, and such description is incorporated herein
by reference. Such description contains all of the information required with
respect thereto.





Results
of Operations





Comparison
of Three Months Ended March 31, 2010 and 2009





The
following table sets forth a summary of certain key components of our results of
operations for the periods indicated, in dollars and as a percentage of
revenues.




For Three
                                            Months Ended
                                            March 31, 2010
                                          
                                          
                                          % Of
                                            Revenue
                                          
                                          
                                          For Three
                                            Months Ended
                                            March 31, 2009
                                          
                                          
                                          % Of
                                            Revenue
                                          
                                          
                                          Change In
                                            Amount
                                          
                                          
                                          Change In
                                            %REVENUES,
      NET
                                          
                                          $
                                          26,836,259
                                          
                                          
                                          
                                          100.00
                                          %
                                          
                                          $
                                          21,377,982
                                          
                                          
                                          
                                          100.00
                                          %
                                          
                                          $
                                          5,458,277
                                          
                                          
                                          
                                          25.53
                                          %COST
      OF GOODS SOLD
                                          
                                          
                                          (21,536,485
                                          )
                                          
                                          
                                          (80.25
                                          )%
                                          
                                          
                                          (18,148,659
                                          )
                                          
                                          
                                          (84.89
                                          )%
                                          
                                          
                                          (3,387,826
                                          )
                                          
                                          
                                          18.67
                                          %GROSS
      PROFIT
                                          
                                          
                                          5,299,774
                                          
                                          
                                          
                                          19.75
                                          %
                                          
                                          
                                          3,229,323
                                          
                                          
                                          
                                          15.11
                                          %
                                          
                                          
                                          2,070,451
                                          
                                          
                                          
                                          64.11
                                          %Selling
      and distribution expenses
                                          
                                          
                                          784,740
                                          
                                          
                                          
                                          2.92
                                          %
                                          
                                          
                                          396,378
                                          
                                          
                                          
                                          1.85
                                          %
                                          
                                          
                                          388,362
                                          
                                          
                                          
                                          97.98
                                          %General
      and administrative expenses
                                          
                                          
                                          688,419
                                          
                                          
                                          
                                          2.57
                                          %
                                          
                                          
                                          144,026
                                          
                                          
                                          
                                          0.68
                                          %
                                          
                                          
                                          544,393
                                          
                                          
                                          
                                          377.98
                                          %INCOME
      FROM OPERATIONS
                                          
                                          
                                          3,826,615
                                          
                                          
                                          
                                          14.26
                                          %
                                          
                                          
                                          2,688,919
                                          
                                          
                                          
                                          12.58
                                          %
                                          
                                          
                                          1,137,696
                                          
                                          
                                          
                                          42.31
                                          %Interest
      expense, net
                                          
                                          
                                          (78,009
                                          )
                                          
                                          
                                          (0.29
                                          )%
                                          
                                          
                                          (103,383
                                          )
                                          
                                          
                                          (0.48
                                          )%
                                          
                                          
                                          (25,374
                                          )
                                          
                                          
                                          (24.54
                                          )%Other
      income (expense), net
                                          
                                          
                                          15,510
                                          
                                          
                                          
                                          0.06
                                          %
                                          
                                          
                                          (1,309
                                          )
                                          
                                          
                                          (0.01
                                          )%
                                          
                                          
                                          16,819
                                          
                                          
                                          
                                          (1284.87
                                          )%INCOME
      FROM OPERATIONS BEFORE INCOME TAXES
                                          
                                          
                                          3,764,116
                                          
                                          
                                          
                                          14.03
                                          %
                                          
                                          2,584,227
                                          
                                          
                                          
                                          12.09
                                          %
                                          
                                          
                                          1,179,889
                                          
                                          
                                          
                                          45.66
                                          %INCOME
      TAXES
                                          
                                          
                                          486,401
                                          
                                          
                                          
                                          1.81
                                          %
                                          
                                          
                                          616,809
                                          
                                          
                                          
                                          2.89
                                          %
                                          
                                          
                                          130,408
                                          
                                          
                                          
                                          21.14
                                          %NET
      INCOME
                                          
                                          
                                          3,277,715
                                          
                                          
                                          
                                          12.22
                                          %
                                          
                                          1,967,418
                                          
                                          
                                          
                                          9.20
                                          %
                                          
                                          
                                          1,310,297
                                          
                                          
                                          
                                          66.60
                                          %





Revenues





Revenues
for the three months ended March 31, 2010 and 2009 were $26,836,259 and
$21,377,982, respectively. The increase in revenues of $5,458,277 was mainly
attributable to an increase in the domestic economy trend which led to a
dramatic increase in market demand, successful marketing efforts, retaining
existing customers, addition of large customers and the Company’s optimization
of its manufacturing capacity. The adoption of Chinese emission III standards
also increased market demand with respect to environmental friendly products as
compared to traditional diesel engines. As such, sales of our new environmental
friendly products increased, driven by such increased demand, and revenues
increased as compared to the same period in 2009.


8


Cost
of Sales




Cost of
sales was $21,536,485 for the three months ended March 31, 2010, an increase of
$3,387,826 or 18.67%, as compared with $18,148,659 for the three months ended
March 31, 2009. The total cost of sales increased generally in line with the
sales volume increase. Cost of sales as a percentage of total revenues were
80.25% and 84.89% for the three months ended March 31, 2010 and 2009,
respectively, with a decrease of approximately 4.64%. The slight decrease was
mainly attributable to the sales increase for products which have higher gross
margins.





Selling
and Distribution Expenses





Selling
and distribution expenses, increased from $396,378 in the three months ended
March 31, 2009 to $784,740 in the same period of 2010, representing a 97.98%
increase. The increase was primarily due to an increase in sales commissions as
a result of the Company’s expansion of its sales network.





General
and Administrative Expenses





General
and administrative expenses increased from $144,026 for the three months ended
March 31, 2009 to $688,419 in the same period of 2010, or a 377.98% increase.
The increase was primarily due to an increase in bonuses which were part of the
bonuses plan to the management.





Interest
Expense, Net





Net
interest expense declined by $25,374, or 24.54%, to $78,009 for the three months
ended March 31, 2010, compared with $103,383 for the same period in 2009. This
decrease was primarily attributable to an interest rate decline on bank loans
and an increase in interest income related to notes receivable.





Other
Income (Expense), Net





Other
income was $15,510 for the three months ended March 31, 2010 compared to other
expense of $1,309 for the three months ended March 31, 2009.





Net
Income





Net
income was $3,277,715 and $1,967,418 for the three months ended March 31, 2010
and 2009, respectively. Such increase was primarily attributable to the increase
in sales and gross margin.





Results
of Operations





Comparison of Nine Months Ended
March 31, 2010 and 2009


9


The
following table sets forth a summary of certain key components of our results of
operations for the periods indicated, in dollars and as a percentage of
revenues:




For Nine
                  Months
                  Ended March
                  31, 2010
                
                
                % Of
                  Revenue
                
                
                For Nine
                  Months
                  Ended March
                  31, 2009
                
                
                % Of
                  Revenue
                
                
                Change In
                  Amount
                
                
                Change
                  In %REVENUES,
      NET
                
                $
                100,195,028
                
                
                
                100.00
                %
                
                $
                50,449,539
                
                
                
                100.00
                %
                
                $
                49,745,489
                
                
                
                98.60
                %COST
      OF GOODS SOLD
                
                
                (82,120,040
                )
                
                
                (81.96
                )%
                
                
                (44,009,164
                )
                
                
                (87.23
                )%
                
                
                (38,110,876
                )
                
                
                86.60
                %GROSS
      PROFIT
                
                
                18,074,988
                
                
                
                18.04
                %
                
                
                6,440,375
                
                
                
                12.77
                %
                
                
                11,634,613
                
                
                
                180.65
                %Selling
      and distribution expenses
                
                
                2,066,833
                
                
                
                2.06
                %
                
                
                1,189,011
                
                
                
                2.36
                %
                
                
                877,822
                
                
                
                73.83
                %General
      and administrative expenses
                
                
                1,175,618
                
                
                
                1.18
                %
                
                
                600,457
                
                
                
                1.19
                %
                
                
                575,161
                
                
                
                95.79
                %INCOME
      FROM OPERATIONS
                
                
                14,832,537
                
                
                
                14.80
                %
                
                
                4,650,907
                
                
                
                9.22
                %
                
                
                10,181,630
                
                
                
                218.92
                %Interest
      expense, net
                
                
                (254,920
                )
                
                
                (0.25
                )%
                
                
                (286,875
                )
                
                
                (0.57
                )%
                
                
                (31,955
                )
                
                
                (11.14
                )%Other
      income  (expense), net
                
                
                14,718
                
                
                
                0.01
                %
                
                
                42,595
                
                
                
                0.08
                %
                
                
                (27,877
                )
                
                
                (65.45
                )%INCOME
      FROM OPERATIONS BEFORE INCOME TAXES
                
                
                14,592,335
                
                
                
                14.56
                %
                
                
                4,406,627
                
                
                
                8.73
                %
                
                
                10,185,708
                
                
                
                231.15
                %INCOME
      TAX
                
                
                2,175,159
                
                
                
                2.17
                %
                
                
                1,137,079
                
                
                
                2.25
                %
                
                
                1,038,080
                
                
                
                91.29
                %NET
      INCOME
                
                
                12,417,176
                
                
                
                12.39
                %
                
                
                3,269,548
                
                
                
                6.48
                %
                
                
                9,147,628
                
                
                
                279.78
                %





Revenues





Revenues
for the nine months ended March 31, 2010 and 2009 were $100,195,028 and
$50,449,539, respectively. The increase in revenues of $49,745,489 or 98.60% was
mainly attributable to the ability of the Company’s new products to meet market
demand. We optimized our production resources and increased our production lines
to include both traditional products and new products. The scope and diversity
of our products enabled us not only to satisfy additional orders, but also to
take advantage of new market opportunities as well. Due to our ability to
quickly respond to the market and the update of our product offerings, we had an
increase in sales.





Cost
of Sales





Cost of
goods sold was $82,120,040 for the nine months ended March 31, 2010, compared to
$44,009,164 for the nine months ended March 31, 2009. Expressed as a percentage
of revenues, cost of goods sold was 81.96% for the nine months ended March 31,
2010, compared to 87.23% for the nine months ended March 31, 2009. The decrease
in cost of goods sold as a percentage of revenues was mainly attributable to the
sales increase for products which have higher gross margins.


10


Selling
and Distribution Expenses





Selling
and distribution expenses, increased from $1,189,011 for the nine months ended
March 31, 2009 to $2,066,833 in the same period of 2010, representing a 73.83%
increase. It was mainly due to the increase in sales commissions as a result of
the Company’s expansion of its sales network.





General
and Administrative Expenses





General
and administrative expenses increased from $600,457 for the nine months ended
March 31, 2009 to $1,175,618 in the same period of 2010, or a 95.79% increase.
The increase was primarily due to an increase in bonus which was part of the
bonus plan to the management.





Other
Income (Expense), Net





Other
income, net was $14,718 for the nine months ended March 31, 2010 compared to
other income of $42,595 for the nine months ended March 31, 2009.





Interest
Expense, Net





Interest
expense was $254,920 and $286,875 for the nine months ended March 31, 2010 and
2009, respectively. Such decrease was primarily attributable to an interest rate
decline on bank loans and an increase in interest income related to notes
receivable.





Net
Income





Net
income was $12,417,176 and $3,269,548 for the nine months ended March 31, 2010
and 2009, respectively. Such increase was attributable to the Company’s
expansion and development of new products.





Liquidity
and Capital Resources





We generally finance our operations
through our operating profit and borrowings from banks.




During the reporting periods, we
arranged a number of bank loans to satisfy our financing needs. As of the date
of this report, we have not experienced any difficulty in raising funds through
bank loans, and we have not experienced any liquidity problems in settling our
payables in the normal course of business and repaying our bank loans when they
are due. We believe that the Company has adequate funds and capital with respect
to conducting its business over the next twelve months.


11


The following table sets forth the
summary of our cash flows, in dollars, for the periods indicated:





Nine Months Ended March 31
                          (Unaudited)2010
                        
                        
                        2009Net cash provided by (used in) operating activities
                        
                        $
                        14,332,208
                        
                        
                        $
                        (6,036,912
                        )Net
      cash (used in) provided by investing activities
                        
                        $
                        (15,261,735
                        )
                        
                        $
                        8,674,209Net
      cash provided by(used in) financing activities
                        
                        $
                        943,361
                        
                        
                        $
                        (2,744,338
                        )Net
      increase (decrease) in cash and cash equivalents
                        
                        $
                        13,834
                        
                        
                        $
                        (107,041
                        )Effect
      of exchange rate changes on cash
                        
                        $
                        59,014
                        
                        
                        $
                        87,610Cash
      and cash equivalents at beginning of period
                        
                        $
                        127,576
                        
                        
                        $
                        164,435Cash
      and cash equivalents at end of period
                        
                        $
                        200,424
                        
                        
                        $
                        145,004





We
believe that the level of financial resources is a significant factor for our
future development and accordingly, we may determine from time to time to raise
capital through private debt or equity financing to strengthen the Company’s
financial position, to expand our facilities and to provide us with additional
flexibility to take advantage of business opportunities.  No
assurances can be given that we will be successful in raising such additional
capital on terms acceptable to us.





Operating
Activities





Net cash
provided by operating activities was $14,332,208 for the nine months ended March
31, 2010, which is primarily attributable to our net income of $12,565,674
adjusted by net income from discontinued operation of $148,498 and non-cash
depreciation and amortization of $192,231, increase in VAT payables of
$12,156,870, increase in tax payable of  $2,171,594 and increase in
accrued expenses and dividend payable of $567,388, off-set by an increase in
inventories of $10,532,965, increase in accounts receivable of
$1,568,755,  decrease in other payables of $ 712,127, decrease in due
to employees of $427,440, and decrease in due to related parties of $341,115.
Net cash used in operating activities was $6,036,912 for the nine months ended
March 31, 2009, which is primarily attributable to our net income of $3,269,548
adjusted by non-cash depreciation and amortization of $193,107, decrease in due
from related parties of $493,396, increase in taxes payable of
$1,127,015,  increase in due to employees of $208,041, off-set by an
increase in accounts receivable of $6,428,181, decrease in accounts payable of
$2,903,371 and decrease in customer deposits of $1,263,848.





Investing
Activities





Net cash
used in investing activities was $15,261,735 for the nine months ended March 31,
2010, which was primarily attributable to an increase in notes receivable of
$14,464,592. Net cash provided by investing activities was $8,674,209 for the
nine months ended March 31, 2009, which was primarily attributable to the notes
receivable of $8,925,020.




Financing
Activities





Net cash
provided by financing activities was $943,361 for the nine months ended March
31, 2010, which was primarily attributable to our proceeds from short-term loans
of $3,216,172, proceeds from notes payable of $1,695,772, off-set by repayments
of notes payable of $1,498,655 and repayments of short-term loans of $2,336,110.
Net cash used in financing activities was $2,744,338 for the nine months ended
March 31, 2009, which was primarily attributable to our proceeds from short-term
loans of $583,201, and proceeds from notes payable of $867,512, off-set by
dividend paid of $2,562,096, repayments of short-term loans of $1,027,892 and
repayments of notes payable of $644,048.


12


Working
Capital





Our
working capital steadily increased to $43,305,869 as of March 31, 2010 as
compared to $31,267,687 as of June 30, 2009. This increase was attributable to
an increase in net income.





Off-Balance
Sheet Arrangements





We do not have any
outstanding derivative financial instruments, off-balance sheet guarantees,
interest rate swap transactions of foreign currency forward contracts.
Furthermore, we do not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit, liquidity or
market risk support to such entity. We do not have any variable interest in an
unconsolidated entity that provides financing, liquidity, market risk or credit
support to us or that engages in leasing, hedging or research and development
services with us.


13


ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




RMB
Appreciation





The
Company believes that inflation has not had a material effect on its operations
to date.  However, continued appreciation of the RMB against the
U.S. Dollar and its effect on the Company's export business, could have a
material adverse effect on the Company.  In the event of a material
adverse effect on the Company, our strategy would be to reduce our reliance on
exports and to increase domestic sales.





The
Company is Subject to Special Considerations do to its Operations in the
PRC





The
Company’s operations are conducted in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC economy.





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





ITEM
4. CONTROLS AND PROCEDURES




Disclosure
Controls and Procedures




Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, as
of the end of the fiscal quarter covered by this report. Based on this
evaluation, our management, including our principal executive officer and our
principal financial officer, concluded that our disclosure controls and
procedures were effective during, and as of the end of, the fiscal quarter
covered by this report, to ensure that information required to be disclosed by
us in the reports filed or submitted by us under the Exchange Act (i) is
recorded, processed, summarized and reported within the time period specified in
SEC rules and forms, and (ii) is accumulated and communicated to our management,
including our principal executive officer and our principal financial officer,
as appropriate to allow appropriate decisions on a timely basis regarding
required disclosure.




Internal
Control over Financial Reporting




There
were no changes in internal control over financial reporting that occurred
during the fiscal quarter covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.


14


PART
II


OTHER
INFORMATION




ITEM
1. LEGAL PROCEEDINGS




In the normal course of business, we
are named as defendant in lawsuits in which claims are asserted against us. In
our opinion, the liabilities, if any, which may ultimately result from such
lawsuits, are not expected to have a material adverse effect on our financial
position, results of operations or cash flows. As of March 31, 2010, there was
no pending or outstanding material litigation with the Company.





15




ITEM
1A. RISK FACTORS




Not required for a "smaller reporting
company".




ITEM
2. UREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




During the quarter ended March 31,
2010, the Company had no unregistered sales of equity
securities.





ITEM
3. DEFAULTS UPON SENIOR SECURITIES




None.





ITEM
4. (REMOVED AND RESERVED)




ITEM
5. OTHER INFORMATION




None.





ITEM
6. EXHIBITS




(a) Exhibits




EXHIBIT
                      NO.
                    
                    DESCRIPTION
                    
                    LOCATION2.1
                    
                    Share
      Exchange Agreement, dated December 28, 2009, by and among the
      Company, Jolly Promise Limited and Welldone Pacific Limited
                    
                    Incorporated
      by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K as
      filed with the SEC on December 29, 2009.3.1
                    
                    Articles
      of Incorporation of the Company
                    
                    Incorporated
      by reference to Exhibit 3.1 to the Registrant’s General Form for
      Registration of Securities on Form 10 as filed with the SEC on
      May 15, 20093.2
                    
                    Bylaws
      of the Company
                    
                    Incorporated
      by reference to Exhibit 3.2 to the Registrant’s General Form for
      Registration of Securities on Form 10 as filed with the SEC on
      May 15, 20093.3
                    
                    Memorandum
      and Articles of Association of Jolly Promise Limited, dated July 2,
      2008
                    
                    Incorporated
      by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K as
      filed with the SEC on December 29, 2009.3.4
                    
                    Certificate
      of Incorporation of Jolly Promise Limited
                    
                    Incorporated
      by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K as
      filed with the SEC on December 29,
2009.




16




EXHIBIT
                    NO.
                  
                  DESCRIPTION
                  
                  LOCATION10.1
                  
                  Stock
      Purchase Agreement between Shaun Carter and the company dated
      December 28, 2009
                  
                  Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on December 29, 2009.21
                  
                  List
      of Subsidiaries of the Company
                  
                  Incorporated
      by reference to Exhibit 21 to the Company’s Current Report on Form 8-K as
      filed with the SEC on December 29, 2009.31.1
                  
                  Certifications
      of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
                  
                  Provided
      herewith31.2
                  
                  Certifications
      of the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
                  
                  Provided
      herewith32.1
                  
                  Certification
      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
      the Sarbanes-Oxley Act Of 2002
                  
                  Provided
      herewith32.2
                  
                  Certification
      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
      the Sarbanes-Oxley Act Of 2002
                  
                  Provided
      herewith


17


SIGNATURES




Pursuant
to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this Quarterly Report on Form
10-Q report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Date: May
      17, 2010
                  By:
                  /s/ Dianjun LiuName:
      Dianjun LiuIts:
      President, Chief Executive
                    Officer
      and Principal Executive
                    OfficerDate: May
      17, 2010
                  By:
                  /s/
      Chenglin WangName:
      Chenglin WangIts:
      Chief Financial Officer,
                    Corporate
      Secretary, and Principal
                    Financial
      and Accounting
Officer


18