U. S.
Securities and Exchange Commission


Washington,
D. C. 20549





FORM
10-Q





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




For
      the quarterly period ended June 30,
2009




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


For the
transition period from _____ to _____





Commission
File No. 0-51012





XINYINHAI
TECHNOLOGY, LTD.


(Exact
Name of Registrant as Specified in its Charter)




Utah
              87-0427336(State
      or Other Jurisdiction of
              (I.R.S.
      Employer I.D. No.)incorporation
      or organization)No.
      16 Dalian Road, Centralized Park Haping Road, Harbin Development Zone,
      China 150060(Address
      of Principal Executive Offices)86-451-868-11118Issuer's
      Telephone Number:





Indicate  by
check mark  whether the  Registrant  (1) has filed
all reports required to be filed by Sections 13 or 15(d) of
the  Securities Exchange Act of
1934  during  the  preceding  12
months  (or for such shorter  period  that the
Registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.  YesX  No ____




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




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




Large
      accelerated filer
              Accelerated
      filer
              Non-accelerated
      filer
              Small
      reporting companyX


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




APPLICABLE
ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of each of the Registrant's classes of common stock, as of the latest
practicable date:


August
13, 2009


Common
Voting Stock: 19,484,029











Xinyinhai
Technology, Ltd.


Condensed
Consolidated Financial Statements





For the
three and six months ended June 30, 2009 and 2008








Index to
Condensed Consolidated Financial Statements





PagesCondensed
      Consolidated Balance Sheets
              
              1Condensed
      Consolidated Statements of Income and Comprehensive Income
              
              2Condensed
      Consolidated Statements of Cash Flows
              
              3Notes
      to Condensed Consolidated Financial Statements
              
              4 -
      15











Xinyinhai
Technology, Ltd.


Condensed
Consolidated Balance Sheets


As
of June 30, 2009 and December 31, 2008


(Stated
in US Dollars)





June
      30,
                                                
                                                
                                                December
      31,2009
                                                
                                                
                                                2008(Unaudited)ASSETSCurrent
      AssetsCash and cash
      equivalents
                                                
                                                $
                                                632,654
                                                
                                                
                                                $
                                                495,060Tradereceivables (Net of allowance for doubtful
      accounts of $6,033 for 2009 and
      $6,024for
      2008)
                                                
                                                
                                                3,474,253
                                                
                                                
                                                
                                                2,901,909Inventories (Note
      6)
                                                
                                                
                                                1,990,703
                                                
                                                
                                                
                                                1,950,544Other receivable, deposits and
      prepayments (Note 7)
                                                
                                                
                                                3,158,174
                                                
                                                
                                                
                                                3,680,640Prepaid expenses (Note
      8)
                                                
                                                
                                                12,722
                                                
                                                
                                                
                                                87,693Total
      Current Assets
                                                
                                                
                                                9,268,506
                                                
                                                
                                                
                                                9,115,846Property,
      plant and equipment, net (Note 9)
                                                
                                                
                                                5,067,418
                                                
                                                
                                                
                                                5,103,480Land-use-right
                                                
                                                
                                                1,054,366
                                                
                                                
                                                
                                                1,069,546TOTAL
      ASSETS
                                                
                                                $
                                                15,390,290
                                                
                                                
                                                $
                                                15,288,872LIABILITIES
      AND EQUITYCurrent
      LiabilitiesTrade payable
                                                
                                                $
                                                926,546
                                                
                                                
                                                $
                                                899,141Customer
    deposits
                                                
                                                
                                                15,270
                                                
                                                
                                                
                                                117,221Other payable and accrued
      liabilities (Note 10)
                                                
                                                
                                                71,911
                                                
                                                
                                                
                                                652,170Value added tax
      payable
                                                
                                                
                                                42,654
                                                
                                                
                                                
                                                111,718Income tax
    payable
                                                
                                                
                                                55,260
                                                
                                                
                                                
                                                37,713TOTAL
      LIABILITIES
                                                
                                                
                                                1,111,641
                                                
                                                
                                                
                                                1,817,963COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITYCommon stock (Note
      11)
                                                
                                                
                                                19,484
                                                
                                                
                                                
                                                19,484Additional paid-in
      capital
                                                
                                                
                                                3,294,543
                                                
                                                
                                                
                                                3,294,543Retained
    earnings
                                                
                                                
                                                6,811,491
                                                
                                                
                                                
                                                6,184,913Statutory
    reserves
                                                
                                                
                                                1,383,733
                                                
                                                
                                                
                                                1,276,013Accumulated other comprehensive
      income
                                                
                                                
                                                1,312,935
                                                
                                                
                                                
                                                1,329,779TOTAL
      XINYINHAI TECHNOLOGY, LTD. STOCKHOLDERS’EQUITY
                                                
                                                
                                                12,822,186
                                                
                                                
                                                
                                                12,104,732NON-CONTROLLING
      INTEREST (NOTE 3)
                                                
                                                
                                                1,456,463
                                                
                                                
                                                
                                                1,366,177TOTAL
      LIABILITIES AND EQUITY
                                                
                                                $
                                                15,390,290
                                                
                                                
                                                $
                                                15,288,872




See the
accompanying notes to condensed consolidated financial
statements





1





Xinyinhai
Technology, Ltd.


Condensed
Consolidated Statements of Income and Comprehensive Income


For
the three and six months ended June 30, 2009 and 2008


(Unaudited)


(Stated
in US Dollars)





Three
      months ended June 30, (Unaudited)
                                                                                  
                                                                                  
                                                                                  Six
      months ended June 30, (Unaudited)2009
                                                                                  
                                                                                  
                                                                                  2008
                                                                                  
                                                                                  
                                                                                  2009
                                                                                  
                                                                                  
                                                                                  2008Revenues
      (Note 3)
                                                                                  
                                                                                  
                                                                                  2,111,659
                                                                                  
                                                                                  
                                                                                  
                                                                                  4,142,698
                                                                                  
                                                                                  
                                                                                  
                                                                                  4,508,640
                                                                                  
                                                                                  
                                                                                  
                                                                                  7,522,593Cost
      of revenues
                                                                                  
                                                                                  
                                                                                  (1,354,153
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (2,487,518
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (2,875,181
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (4,503,855
                                                                                  )Gross
      profit
                                                                                  
                                                                                  
                                                                                  757,506
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,655,180
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,633,459
                                                                                  
                                                                                  
                                                                                  
                                                                                  3,018,738Operating
      expensesSelling and distribution
      expenses
                                                                                  
                                                                                  
                                                                                  66,697
                                                                                  
                                                                                  
                                                                                  
                                                                                  107,288
                                                                                  
                                                                                  
                                                                                  
                                                                                  187,963
                                                                                  
                                                                                  
                                                                                  
                                                                                  174,515General and administrative
      expenses
                                                                                  
                                                                                  
                                                                                  232,675
                                                                                  
                                                                                  
                                                                                  
                                                                                  315,594
                                                                                  
                                                                                  
                                                                                  
                                                                                  518,788
                                                                                  
                                                                                  
                                                                                  
                                                                                  597,336Total expenses
                                                                                  
                                                                                  
                                                                                  299,372
                                                                                  
                                                                                  
                                                                                  
                                                                                  422,882
                                                                                  
                                                                                  
                                                                                  
                                                                                  706,751
                                                                                  
                                                                                  
                                                                                  
                                                                                  771,851Income
      from operations
                                                                                  
                                                                                  
                                                                                  458,134
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,232,298
                                                                                  
                                                                                  
                                                                                  
                                                                                  926,708
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,246,887Other
      income
                                                                                  
                                                                                  
                                                                                  7,423
                                                                                  
                                                                                  
                                                                                  
                                                                                  376,250
                                                                                  
                                                                                  
                                                                                  
                                                                                  16,411
                                                                                  
                                                                                  
                                                                                  
                                                                                  376,250Interest
      income
                                                                                  
                                                                                  
                                                                                  5,465
                                                                                  
                                                                                  
                                                                                  
                                                                                  294
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,047
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,424Income
      before income taxes and non-controlling
      interest
                                                                                  
                                                                                  
                                                                                  471,022
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,608,842
                                                                                  
                                                                                  
                                                                                  
                                                                                  949,166
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,624,561Income
      taxes (Note 4)
                                                                                  
                                                                                  
                                                                                  (58,001
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (167,938
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (122,675
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (303,351
                                                                                  )Net
      income
                                                                                  
                                                                                  
                                                                                  413,021
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,440,904
                                                                                  
                                                                                  
                                                                                  
                                                                                  826,491
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,321,210Net
      income attributable to non-controllinginterest
                                                                                  
                                                                                  
                                                                                  (46,012
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (117,556
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (92,193
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (212,345
                                                                                  )Net
      income attributable to Xinyinhai Technology,Ltd.
      stockholders
                                                                                  
                                                                                  
                                                                                  367,009
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,323,348
                                                                                  
                                                                                  
                                                                                  
                                                                                  734,298
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,108,865Net
      income
                                                                                  
                                                                                  
                                                                                  413,021
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,440,904
                                                                                  
                                                                                  
                                                                                  
                                                                                  826,491
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,321,210Other
      comprehensive (deficit)/incomeForeign
      currency translation adjustments
                                                                                  
                                                                                  
                                                                                  (368
                                                                                  )
                                                                                  
                                                                                  
                                                                                  229,700
                                                                                  
                                                                                  
                                                                                  
                                                                                  (16,844
                                                                                  )
                                                                                  
                                                                                  
                                                                                  941,023Comprehensive
      income
                                                                                  
                                                                                  
                                                                                  412,653
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,670,604
                                                                                  
                                                                                  
                                                                                  
                                                                                  809,647
                                                                                  
                                                                                  
                                                                                  
                                                                                  3,262,233Comprehensive
      deficit attributable to non-controlling
      interest
                                                                                  
                                                                                  
                                                                                  (45,975
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (140,526
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (90,509
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (306,447
                                                                                  )Comprehensive
      income attributable toXinyinhai Technology, Ltd.
      stockholders
                                                                                  
                                                                                  
                                                                                  366,678
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,530,078
                                                                                  
                                                                                  
                                                                                  
                                                                                  719,138
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,955,786Earnings
      per share attributable toXinyinhai
      Technology, Ltd. stockholders(Note 5) : basic and
      diluted
                                                                                  
                                                                                  $
                                                                                  0.02
                                                                                  
                                                                                  
                                                                                  $
                                                                                  0.07
                                                                                  
                                                                                  
                                                                                  $
                                                                                  0.04
                                                                                  
                                                                                  
                                                                                  $
                                                                                  0.10Weighted
      average number ofcommon stock
    outstanding
                                                                                  
                                                                                  
                                                                                  19,484,029
                                                                                  
                                                                                  
                                                                                  
                                                                                  19,359,853
                                                                                  
                                                                                  
                                                                                  
                                                                                  19,484,029
                                                                                  
                                                                                  
                                                                                  
                                                                                  21,131,609





See the
accompanying notes to condensed consolidated financial
statements





2




Xinyinhai
Technology, Ltd.


Condensed
Consolidated Statements of Cash Flows


For
the six months ended June 30, 2009 and 2008


(Stated
in US Dollars)





Six
      months ended June 30,
                                                    (Unaudited)2009
                                                  
                                                  
                                                  2008Cash
      flows from operating activitiesNet income attributable to
      Xinyinhai Technology Ltd. stockholders
                                                  
                                                  $
                                                  734,298
                                                  
                                                  
                                                  $
                                                  2,108,865Adjustments to reconcile net
      income attributable to Xinyinhai Technology Ltd. to net cash provided
      by/(used in) operating activities:Depreciation and
      amortization
                                                  
                                                  
                                                  311,160
                                                  
                                                  
                                                  
                                                  160,959Other income
                                                  
                                                  
                                                  (4,000
                                                  )
                                                  
                                                  
                                                  (376,250
                                                  )Non-controlling
      interest
                                                  
                                                  
                                                  92,193
                                                  
                                                  
                                                  
                                                  212,345Changes
      in operating assets and liabilitiesRestricted cash
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  391,478Trade
    receivables
                                                  
                                                  
                                                  (576,298
                                                  )
                                                  
                                                  
                                                  (2,418,655
                                                  )Inventories
                                                  
                                                  
                                                  (42,820
                                                  )
                                                  
                                                  
                                                  (899,980
                                                  )Other receivable, deposits and
      prepayments
                                                  
                                                  
                                                  517,359
                                                  
                                                  
                                                  
                                                  1,634,674Trade payable
                                                  
                                                  
                                                  28,631
                                                  
                                                  
                                                  
                                                  478,357Bills payable
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (391,478
                                                  )Customers
    deposits
                                                  
                                                  
                                                  (101,791
                                                  )
                                                  
                                                  
                                                  (63,229
                                                  )Other payable and accrued
      liabilities
                                                  
                                                  
                                                  (575,350
                                                  )
                                                  
                                                  
                                                  (24,638
                                                  )Income tax
    payable
                                                  
                                                  
                                                  17,600
                                                  
                                                  
                                                  
                                                  303,351Value added tax
      payable
                                                  
                                                  
                                                  (68,912
                                                  )
                                                  
                                                  
                                                  (141,891
                                                  )Net
      cash flows provided by operating activities
                                                  
                                                  
                                                  332,070
                                                  
                                                  
                                                  
                                                  973,908Cash
      flows from investing activitiesPayments
      to acquire property, plant and equipment andland use
      right
                                                  
                                                  
                                                  (193,341
                                                  )
                                                  
                                                  
                                                  (2,271,937
                                                  )Net
      cash flows used in investing activities
                                                  
                                                  
                                                  (193,341
                                                  )
                                                  
                                                  
                                                  (2,271,937
                                                  )Effect
      of foreign currency translation on cash and cash
    equivalents
                                                  
                                                  
                                                  (1,135
                                                  )
                                                  
                                                  
                                                  115,937Net
      increase/(decrease) in cash and cash equivalents
                                                  
                                                  
                                                  137,594
                                                  
                                                  
                                                  
                                                  (1,182,092
                                                  )Cash
      and cash equivalents - beginning of period
                                                  
                                                  
                                                  495,060
                                                  
                                                  
                                                  
                                                  1,308,877Cash
      and cash equivalents - end of period
                                                  
                                                  $
                                                  632,654
                                                  
                                                  
                                                  $
                                                  126,785Supplemental
      disclosures for cash flow informationInterest
      paid
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -Income
      taxes paid
                                                  
                                                  $
                                                  105,068
                                                  
                                                  
                                                  $
                                                  -




See the
accompanying notes to condensed consolidated financial statements





3





Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unudited)


(Stated
in US Dollars)








1.     
       Corporation information





(a)
            Xinyinhai
      Technology, Ltd. (“Xinyinhai” or the “Company”) was incorporated in Utah
      on October 18, 1985.  It currently has two subsidiaries, Winner
      Sea Group Limited (“Winner Sea”) and Harbin Golden Sea Technology Printing
      Co., Ltd. (“Harbin Golden Sea”).





WinnerSeais a business companyorganizedunder the laws of theBritish Virgin Islands(“BVI”)onJanuary12, 2006.  It has conducted
no businessandis a holding company whose
only asset is90% equity
interestinHarbinGoldenSea.Ms. Xie Guihong, a director of the Company, owns the
remaining 10% equity interest inHarbinGoldenSea.





HarbinGoldenSeais a company located inHarbin City,HeilongjiangProvince, the People’s Republic ofChina(“PRC”).Founded in 1998,HarbinGoldenSeahasdevelopedinto a leading participant in the
PRC’s financial note printing
industry.Itis one ofthecompanies to which the PRC government has
issued the Special Industry Operating Permit and the Government Securities and
Documents Duplicating Permit, which are the licenses required in order to be
engaged in printing bank vouchers in the PRC.





The Companyended its development stage after the
share exchange transaction as detailed in note 1(b) to the financial
statements.





(b)
            On June 29, 2006, the Company
      executed a share exchange agreement (the“Share Exchange”) withthe stockholders ofWinnerSeawherebythestockholdersofWinnerSeaexchangedalltheirWinnerSeashares for 18,000,000 shares of
      the Company’scommon stock, representing 98.3%
      of thethenoutstanding stockof the
      Company.





The purchase method under reverse
takeover accounting has been applied for theShareExchange.  These consolidated
financial statements issued under the name of the legalparent,Xinyinhai, are a continuation of the financial
statements ofWinnerSea, which includeWinnerSea’s majority owned subsidiaryHarbinGoldenSea.








2.          
  Description of business





The
Company, through Harbin Golden Sea, is a leading participant in PRC’s financial
notes printing industry.  It provides printing services whose quality
equals the highest standards worldwide and imports state-of-the-art printing
equipment from overseas that is installed on its advanced software systems, such
as anti-falsification software.





The
Company also earns approximately 17% of its revenue for the current reporting
period from its position as a distributor of plasma arc cutting machinery and
consumable parts.  The plasma arc cutting systems are designed to
provide metal workers with clean cuts for metal work that permits little
tolerance for error, and are well-known worldwide.




4




Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








3.          
  Summary of significant accounting policies





Basis of presentation and
consolidation





The
accompanying unaudited condensed consolidated financial statements of the
Company have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission (the “SEC”) including the instructions to
Form 10-Q and Regulation S-X.  Certain information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles in the United States of America
have been condensed or omitted from these statements pursuant to such rules and
regulation and, accordingly, they do not include all the information and notes
necessary for comprehensive consolidated financial statements and should be read
in conjunction with our audited consolidated financial statements for the year
ended December 31, 2008, included in our Annual Report on Form 10-K for the year
ended December 31, 2008.





In the
opinion of the management of the Company, all adjustments, which are of a normal
recurring nature, necessary for a fair statement of the results for the three
months and six months periods have been made.  Results for the interim
period presented are not necessarily indicative of the results that might be
expected for the entire fiscal year. The condensed consolidated financial
statements include the accounts of the Company and its subsidiaries. All
significant inter-company accounts and transactions have been eliminated in
consolidation.





Use of
estimates





In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the
consolidated financial statements, as well as the reported amounts of revenues
and expenses during the reporting periods.  These accounts and
estimates include, but are not limited to, the valuation of accounts receivable,
inventories and the estimation on useful lives of property, plant and
equipment.  Actual results could differ from those
estimates.





Concentrations
of credit risk





Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and cash equivalents and trade
receivables.  As of June 30, 2009 and December 31, 2008,
substantially all of the Company’s cash and cash equivalents were held by major
financial institutions located in the PRC, which management believes are of high
credit quality.  With respect to trade receivables, the Company
extends credit based on an evaluation of the customer’s financial condition,
generally without requiring collateral.  The Company maintains an
allowance for doubtful accounts of trade receivables.




5








Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








3.          
  Summary of significant accounting policies (Cont’d)




Concentrations
of credit risk(cont’d)




During
the reporting periods, customers representing 10% or more of the Company’s
consolidated sales are :-





Three
      months ended
                                  June
      30,
                                  (unaudited)
                                
                                
                                Six
      months ended
                                  June
      30,
                                  (unaudited)2009
                                
                                
                                2008
                                
                                
                                2009
                                
                                
                                2008Company
      A
                                
                                $
                                157,863
                                
                                
                                $
                                -
                                
                                
                                $
                                689,883
                                
                                
                                $
                                426,564Company
      B
                                
                                
                                146,116
                                
                                
                                
                                159,322
                                
                                
                                
                                146,116
                                
                                
                                
                                1,007,951Company
      C
                                
                                
                                200,312
                                
                                
                                
                                972,209
                                
                                
                                
                                368,384
                                
                                
                                
                                974,165$
                                504,291
                                
                                
                                $
                                1,131,531
                                
                                
                                $
                                1,204,383
                                
                                
                                $
                                2,408,680





Trade
receivables





The
Company extends unsecured credit to its customers in the ordinary course of
business but mitigates the associated risks by performing credit checks and
actively pursuing past due accounts.  An allowance for doubtful
accounts is established and recorded based on managements’ assessment of the
credit history with the customers and current relationships with
them.  Additional specific provision will be made against trade
receivables to the extent that they are considered to be doubtful.





Bad debts
was written off when identified.  The Company does not accrue interest
on trade receivables.





Inventories





Inventories
are stated at the lower of cost or market.  Cost is determined on a
weighted average basis and includes all expenditures incurred in bringing the
goods to the point of sale and putting them in a saleable
condition.  In assessing the ultimate realization of inventories, the
management makes judgments as to future demand requirements compared to current
or committed inventory levels.





Property, plant and
equipment





Property,
plant and equipment are stated at cost less accumulated
depreciation.  Cost represents the purchase price of the asset and
other costs incurred to bring the asset into its existing use.





Depreciation
is provided to write off the cost of the assets to the estimated residual value
on a straight-line basis over their estimated useful lives as
follows:





6





Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)





3.        
    Summary of significant accounting policies
(Cont’d)





Property, plant and
equipment (Con’d)





Depreciable
      lifeBuilding
                      20
      yearsPlant
      and machinery
                      10
      yearsFurniture,
      fixtures and equipment
                      5
      yearsMotor
      vehicles
                      10
      years





Maintenance or repairs are charged to
expense as incurred.  Upon sale or disposition, the applicable
amounts of asset cost and accumulated depreciation are removed from the accounts
and the net amount less proceeds from disposal is charged or credited to
income.





Land-use-right





Land-use-right is stated at cost less
accumulated
amortization.  Amortization is provided using the straight-line method
over the remaining terms of the lease of 38 years.





Non-controlling
interest





Non-controlling
interest results from the consolidation of 90% owned subsidiary, Harbin Golden
Sea, where the Company has control over its operations.





Stock-based
compensation





The
Company adopted the SFAS No. 123R, "Share-Based Payment" using the modified
prospective method.  Under SFAS 123R, equity instruments issued to
service providers for their services are measured at the grant-date fair value
and recognized in the statement of income and comprehensive income over the
vesting period.





Revenue
recognition





The
Company derives revenues from the sales of printed products and trading of
equipment.  The Company recognizes its revenues net of related
business taxes and value added taxes and when persuasive evidence of an
arrangement exists, transfer of title has occurred or services have been
rendered, the selling price is fixed or determinable and collectibility is
reasonably assured.





(a)
            The
      Company recognizes revenue from the sale of printed forms upon delivery to
      the customers and the transfer of title and risk of
      loss.  Because the majority of products are customized to meet
      customer specifications, product returns are not
    significant.





(b)
            Revenue
      from sale of the equipment and associated spare parts is recognized at the
      time of delivery of products to customers and when the title and ownership
      are passed to the customers.  Revenue from the resale of
      equipment and associated spare parts is recognized on a gross basis
      pursuant to the guidance of EITF 99-19, since the Company is acting as a
      principal, rather than as another company’s agent.  The Company
      is a re-distributor of Hypertherm products, including the whole machines
      and the spare parts and responsible for the after-sale service, which
      include repair and maintenance of the machines. The Company also assigns
      its engineers to provide assistance to its customers if they have trouble
      setting up the machines or if the machines
  malfunction.





7




Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








3.       
     Summary of significant accounting policies
(Cont’d)





Basic and diluted earnings
per share





The
Company reports basic earnings per share in accordance with SFAS No. 128,
“Earnings Per Share”.  Basic earnings per share is computed using the
weighted average number of shares outstanding during the periods
presented.  The weighted average number of shares of the Company
represents the common stock outstanding during the periods.





Recently issued accounting
standards





In
June 2009, the FASB issued SFAS No. 168, “The FASB Accounting
Standards CodificationTM and the
Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB
Statement No. 162” (“SFAS 168”), which establishes the FASB Accounting
Standards Codification as the source of authoritative accounting principles
recognized by the FASB to be applied in the preparation of financial statements
in conformity with generally accepted accounting principles. SFAS 168 explicitly
recognizes rules and interpretive releases of the Securities and Exchange
Commission under federal securities laws as authoritative GAAP for SEC
registrants. SFAS 168 will become effective for financial statements issued for
interim and annual periods ending after September 15, 2009.





In
June 2009, the FASB issued SFAS No. 167, “Amendments to FASB
Interpretation No. 46(R)” (“SFAS 167”), which amends FASB Interpretation
No. 46(revised December 2003) to address the elimination of the
concept of a qualifying special purpose entity. SFAS 167 also replaces the
quantitative-based risks and rewards calculation for determining which
enterprise has a controlling financial interest in a variable interest entity
with an approach focused on identifying which enterprise has the power to direct
the activities of a variable interest entity and the obligation to absorb losses
of the entity or the right to receive benefits from the entity. Additionally,
SFAS 167 provides more timely and useful information about an enterprise’s
involvement with a variable interest entity. SFAS 167 shall be effective as of
the beginning of each reporting entity’s first annual reporting period that
begins after November 15, 2009, for interim periods within that first annual
reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited.





In June
2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial
Assets. SFAS 166 removes the concept of a qualifying special-purpose entity
(QSPE) from SFAS No. 140 (“SFAS 166”), Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities (SFAS 140) and removes the
exception from applying FIN 46R. This statement also clarifies the requirements
for isolation and limitations on portions of financial assets that are eligible
for sale accounting. This statement is effective for fiscal years beginning
after November 15, 2009. SFAS 166 is effective for the Company’s year beginning
January 1, 2010.





In
May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS
165”), which sets forth general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. SFAS 165 became effective after June
15, 2009. The adoption of this statement has no material effect on the Company's
financial statements.





8




Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








3. 
           Summary of
significant accounting policies (Cont’d)





Recently issued accounting
standards (cont'd)





In April 2009, the FASB issued FSP FAS
107-1 and APB 28-1, “Interim Disclosures about Fair Value of
Financial Instruments.”FSP
FAS 107-1 and APB 28-1 amends SFAS No. 107, “Disclosures about Fair Value of Financial
Instruments,”to require
disclosures about fair value of financial instruments for interim reporting
periods of publicly traded companies as well as in annual financial statements.
In addition, the FSP amends APB Opinion No. 28, “InterimFinancial Reporting,”to require those disclosures in
summarized financial information at interim reporting periods. The FSP is
effective for interim periods ending after June 15, 2009, with earlier adoption
permitted for periods ending after March 15, 2009. Adoption of FSP FAS 107-1 and APB
28-1 is not expected to have a material impact on the Company’s financial
statements.





In April2009, the FASB issued FSP FAS No. 115-2
and FAS No. 124-2, “Recognition of Other-Than-Temporary
Impairments, or FSP FAS No.115-2 and FAS No. 124-2. FSP FAS No. 115-2 and FAS No. 124-2 amends the
other-than-temporary impairment guidance in SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, for debt securities and the
presentation and disclosure requirements of other-than-temporary
impairments on debt and equity securities in the financial statements. FSP FAS
No. 115-2 and FAS No. 124-2 is effective for interim and annual reporting
periods ending after June 15, 2009, with early adoption permitted
forperiods ending after March 15,
2009. The adoption of this standard has no material effect on the Company's
financial statements.





In April
2009, the FASB issued three FASB Staff Positions (FSP’s) to provide additional
application guidance and enhance disclosures regarding fair value measurements
and impairments of securities. FSP FAS 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly,” provides
guidelines for making fair value measurements more consistent with the
principles presented in SFAS No.157. FSP FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments,” enhances consistency in
financial reporting by increasing the frequency of fair value disclosures. FSP
FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments,” provides additional guidance designed to create greater clarity
and consistency in accounting for and presenting impairment losses on
securities. These three FSP’s are effective for interim and annual periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009. We adopted the provisions of these FSP’s for the period
ending June 30, 2009. The adoption
of this standard has no material effect on the Company's financial
statements.





In April
2009, the FASB issued FSP No. 141R-1 “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies”
(“FSP 141R-1”). FSP 141R-1 amends the provisions in FASB Statement 141R for the
initial recognition and measurement, subsequent measurement and accounting, and
disclosures for assets and liabilities arising from contingencies in business
combinations. FSP 141R-1 eliminates the distinction between contractual and
non-contractual contingencies, including the initial recognition and measurement
criteria in Statement 141R and instead carries forward most of the provisions in
SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent
assets and contingent liabilities acquired in evaluating the impact of SFAS
141(R). The management is in the process of evaluating the impact of adopting
this standard on the Company’s financial statements.





9





Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








3. Summary
of significant accounting policies (Cont’d)





Recently issued accounting
standards (cont'd)





InApril2008, the FASB issued FASB staff
position (“FSP”) FAS 142-3, Determination of the Useful
Life of Intangible Assets (“FSP 142-3”). FSP FAS 142-3 amends the factors an
entity should consider in developing renewal or extension assumptions used in
determining the useful life of recognized intangible assets under FASB Statement
No.142, “Goodwill and Other Intangible
Assets”. This new guidance
applies prospectively to intangible assets that are acquired
individually or with a group of other assets in
business combinations and asset acquisitions. FSP FAS 142-3 is effective for
financial statements issued for fiscal years and interim periods beginning after
December 15, 2008. Early adoption is prohibited. The adoption of this standard has no material
effect on the Company's financial statements.





In
December 2007, the FASB issued SFAS No. 160 “Non-controlling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51”. SFAS 160
establishes accounting and reporting standards for the non-controlling interest
in a subsidiary and for the deconsolidation of a subsidiary. The guidance became
effective for the fiscal year beginning after December 15, 2008. The adoption of
this statement has no material effect on the Company's financial statements,
except for classification in the balance sheet.





In
December 2007, the FASB issued SFAS No. 141 (Revised) “Business Combinations”.
SFAS No. 141 (Revised) establishes principles and requirements for how the
acquirer of a business recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree. The statement also provides guidance for recognizing
and measuring the goodwill acquired in the business combination and determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. The
guidance became effective for the fiscal year beginning after December 15, 2008.
This statement has no material effect on the Company's financial statements upon
adoption.





4.          
  Income
taxes





The Companyis subject totheUnited Statesof Americatax lawat a tax rate of 34%.  Ithad no taxable income for incometax purposes for thethree andsix months ended June 30, 2009 and
2008.  The Company has not provided deferred taxes on undistributed
earnings of its non-U.S.subsidiariesas of June 30, 2009 and December 31,
2008, as it is the Company’s current policy toreinvest these earnings in non-U.S.
operations.





WinnerSeawas incorporated in the BVI and, under
the current law of the BVI, it is not subject to income
taxes.





HarbinGoldenSeais subject to PRCenterpriseincome taxthatis computed according to the
relevant laws and
regulations in the PRC.It isregistered as a new and high technology
enterprise in theHarbinregionof the PRC andis entitled to a 50% preferential
reduction of the income tax rate.On May 1, 2006,HarbinGoldenSeabecame a wholly-owned foreign enterprise under areorganizationplan andtheTaxation Bureau of Harbin City approveditsincome tax exemption.  The new
arrangement of exemptionbegan in the first two years afterHarbinGoldenSeabecame profitable, being 2006and 2007,anda 50% income tax reduction for the
following three years, being 2008through 2010.





10




Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








4.       
     Income taxes(Cont’d)





On March
16, 2007, the PRC’s legislative body, the National People’s Congress, adopted
the unified enterprise income tax ("EIT") Law.  This new tax law
replaces the existing separate income tax laws for domestic enterprises and
foreign-invested enterprises and became effective on January 1,
2008.  Under the new tax law, a unified income tax rate is set at 25%
for both domestic enterprises and foreign-invested
enterprises.  However, there will be a transition period for
enterprises, whether foreign-invested or domestic, that are currently receiving
preferential tax treatments granted by relevant tax
authorities.  Enterprises that are subject to an enterprise income tax
rate lower than 25% may continue to enjoy the lower rate and will transit into
the new tax rate over a five year period beginning on the effective date of the
EIT Law.  Enterprises that are currently entitled to exemptions for a
fixed term will continue to enjoy such treatment until the exemption term
expires.  Preferential tax treatment will continue to be granted to
industries and projects that qualify for such preferential treatments under the
new tax law.  Accordingly, as approved by theTaxation Bureau of Harbin City,
Harbin Golden Sea was still entitled to two years’ exemption from the first
profit making calendar year of operations after offset of accumulated taxable
losses, followed by a 50% tax reduction for the immediate next three calendar
years (“tax holiday”).  The tax holiday of Harbin Golden Sea commenced
in the fiscal financial year of 2006.  Accordingly, Harbin Golden Sea
was subject to preferential tax rate of 9% for 2008, 10% for 2009 and 11% for
2010 respectively.





5.      
      Earnings per share - basic and
diluted





The basic and diluted earnings pershare is calculated using
the net income and the weighted average number of common stock outstanding
during the reporting periods.





Thebasic and diluted earnings per share
are the same as thewarrants granted to external financial advisors were anti-dilutive.





6.       
     Inventories





June
      30,
                        
                        
                        December
      31,2009
                        
                        
                        2008(Unaudited)Raw
      materials
                        
                        $
                        1,153,878
                        
                        
                        $
                        1,303,481Work
      in progress
                        
                        
                        277,761
                        
                        
                        
                        228,524Finished
      goods
                        
                        
                        559,064
                        
                        
                        
                        418,539$
                        1,990,703
                        
                        
                        $
                        1,950,544




11





Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)





7.          
  Other receivable, deposits and prepayments





June
      30,
                      
                      
                      December
      31,2009
                      
                      
                      2008(Unaudited)Deposits
                      
                      $
                      236,614
                      
                      
                      $
                      439,702Retention
      money
                      
                      
                      57,135
                      
                      
                      
                      46,793Advances
      to staff
                      
                      
                      264,564
                      
                      
                      
                      150,630Receivable
      for disposal of building (Note)
                      
                      
                      2,563,696
                      
                      
                      
                      3,007,350Other
      receivables
                      
                      
                      36,165
                      
                      
                      
                      36,165$
                      3,158,174
                      
                      
                      $
                      3,680,640





Note:





The
“receivable for disposal of building” arose from a contract under which the
Company sold a building.  The contract provided that the Buyer should
pay RMB 5,950,000 on the day the Company signed the contract. The remaining
balance should be settled in two installments:  RMB 10,250,000 by June
30, 2009, and RMB 10,250,000 by December 31, 2009. At that time, the Company did
not foresee any risks associated with future payment as the contract is legally
executed. Based on review of the creditworthiness of the Buyer, management was
confident that the Buyer would meet the payment terms.  Hence no
allowance was suggested at December 31, 2008.





By June
30 2009, the Buyer had paid the Company RMB 3,000,000 of the RMB 10,250,000 due
on that date. The remaining RMB 7,250,000 is outstanding, because the Buyer
increased its investment in 2009 for their business development, which resulted
in tightened cash flow. On June 30, 2009 the Company made a supplemental
agreement with the Buyer, in which the Buyer has agreed to settle the entire
balance before December 31, 2009.  If it fails to meet the revised
payment terms, it is mandatory that the Buyer pay the Company at an interest
rate which is 20% higher than the general bank interest rate during the extended
period.





The
Company has not reserved against this receivable because the Company believes
that it is unlikely the Buyer would fail to meet the payment terms, due to the
penalties involved.  By the end of 2009, if the Buyer does not meet
the revised payment terms, the Company will reconsider the necessity for an
allowance.





8.          
  Prepaid expenses




June
      30,
                                
                                
                                December
      31,2009
                                
                                
                                2008(Unaudited)Prepaid
      consultancy fees
                                
                                $
                                218,000
                                
                                
                                $
                                673,000Amortization
                                
                                
                                (205,278
                                )
                                
                                
                                (261,557
                                )12,722
                                
                                
                                
                                411,443Termination
      of consulting agreements
                                
                                
                                -
                                
                                
                                
                                (323,750
                                )$
                                12,722
                                
                                
                                $
                                87,693





12




Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








9.  
          Property, plant and
equipment, net




June
      30,
                                
                                
                                December
      31,2009
                                
                                
                                2008(Unaudited)Building
                                
                                $
                                3,659,411
                                
                                
                                $
                                3,499,037Plant
      and machinery
                                
                                
                                2,715,537
                                
                                
                                
                                2,693,877Motor
      vehicles
                                
                                
                                390,309
                                
                                
                                
                                389,602Furniture,
      fixtures and equipment
                                
                                
                                90,660
                                
                                
                                
                                89,2486,855,917
                                
                                
                                
                                6,671,764Accumulated
      depreciation
                                
                                
                                (1,788,499
                                )
                                
                                
                                (1,568,284
                                )Property,
      plant and equipment, net
                                
                                $
                                5,067,418
                                
                                
                                $
                                5,103,480





10.           Other
payables and accrued liabilities





June
      30,
                      
                      
                      December
      31,2009
                      
                      
                      2008(Unaudited)Other
    payables
                      
                      $
                      39,094
                      
                      
                      $
                      553,899Accrued statutory staff welfare
      and salaries
                      
                      
                      22,657
                      
                      
                      
                      47,111Accrued
      liabilities
                      
                      
                      10,160
                      
                      
                      
                      51,160$
                      71,911
                      
                      
                      $
                      652,170





11.           Stockholders’equity





Common stock





No. of
    shares
                        
                        
                        AmountAuthorized:-Common stock at USD0.001 par
      value
                        
                        
                        40,000,000
                        
                        
                        $
                        40,000Issued and
      outstanding:-As ofJune 30, 2009and December 31,
      2008
                        
                        
                        19,484,029
                        
                        
                        $
                        19,484





12.           Defined
contribution plan





The
Company has a defined contribution plan for all its qualified employees in the
PRC.  The Company and its employees are each required to make
contributions to the plan at the rates specified in the plan.  The
only obligation of the Company with respect to retirement scheme is to make the
required contributions under the plan.  No forfeited contribution is
available to reduce the contribution payable in future years.  The
defined contribution plan contributions were charged to the statement of income
and comprehensive income.  The Company contributed $5,649 and $4,279
for the six months ended June 30, 2009 and 2008 respectively.





13




Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








13.           Segment
information





The
Company currently operates in two reportable segments, Sales of printed products
and trading of equipment.  The accounting policies of the segments are
the same as described in the summary of significant accounting
policies.  The Company evaluates segment performance based on income
from operations.  As a result, the components of operating income for
one segment may not be comparable to another segment.  The following
is a summary of the Company’s segment information :





Printing
      Products
                        
                        
                        Trading
      of Equipment
                        
                        
                        TotalSix
      months ended June 30,
                          (Unaudited)
                        
                        
                        Six
      months ended June 30,
                          (Unaudited)
                        
                        
                        Six
      months ended June 30,
                          (Unaudited)2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Revenues
                        
                        $
                        3,749,970
                        
                        
                        $
                        5,064,902
                        
                        
                        $
                        758,670
                        
                        
                        $
                        2,457,691
                        
                        
                        $
                        4,508,640
                        
                        
                        $
                        7,522,593Segment
      profit
                        
                        $
                        950,923
                        
                        
                        $
                        2,409,333
                        
                        
                        $
                        75,177
                        
                        
                        $
                        452,642
                        
                        
                        $
                        1,026,100
                        
                        
                        $
                        2,861,975





Three
      months ended June 30,
                          (Unaudited)
                        
                        
                        Three
      months ended June 30,
                          (Unaudited)
                        
                        
                        Three
      months ended June 30,
                          (Unaudited)2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Revenues
                        
                        $
                        1,889,893
                        
                        
                        $
                        2,664,339
                        
                        
                        $
                        221,766
                        
                        
                        $
                        1,478,359
                        
                        
                        $
                        2,111,659
                        
                        
                        $
                        4,142,698Segment
      profit
                        
                        $
                        482,891
                        
                        
                        $
                        1,329,065
                        
                        
                        $
                        28,259
                        
                        
                        $
                        396,158
                        
                        
                        $
                        511,150
                        
                        
                        $
                        1,725,223





June
      30,
                    
                    
                    December
      31,
                    
                    
                    June
      30,
                    
                    
                    December
      31,
                    
                    
                    June
      30,
                    
                    
                    December
      31,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008(Unaudited)
                    
                    
                    
                    
                    
                    (Unaudited)
                    
                    
                    
                    
                    
                    (Unaudited)Segment
      assets
                    
                    $
                    10,679,979
                    
                    
                    $
                    10,895,494
                    
                    
                    $
                    890,854
                    
                    
                    $
                    558,250
                    
                    
                    $
                    11,570,833
                    
                    
                    $
                    11,453,744





A
reconciliation is provided for unallocated amounts relating to corporate
operations which is not included in the segment information.





Three
      months ended June 30,
                            (Unaudited)
                          
                          
                          Six
      months ended June 30,
                            (Unaudited)2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008Total
      consolidated revenue
                          
                          $
                          2,111,659
                          
                          
                          $
                          4,142,698
                          
                          
                          $
                          4,508,640
                          
                          
                          $
                          7,522,593Total
      income for reportable segments
                          
                          $
                          511,150
                          
                          
                          $
                          1,725,223
                          
                          
                          $
                          1,026,100
                          
                          
                          $
                          2,861,975Unallocated
      amounts relating tooperations
      :Amortization of prepaid
      expensesand
      professional fee
                          
                          
                          (40,128
                          )
                          
                          
                          (116,381
                          )
                          
                          
                          (76,934
                          )
                          
                          
                          (237,414
                          )Income
      before income taxes andNon-controlling
      interest
                          
                          $
                          471,022
                          
                          
                          $
                          1,608,842
                          
                          
                          $
                          949,166
                          
                          
                          $
                          2,624,561




14




Xinyinhai
Technology, Ltd.


Notes
to Condensed Consolidated Financial Statements


For
the three months and six months ended June 30, 2009 and 2008
(Unaudited)


(Stated
in US Dollars)








13.           Segment
information (Cont’d)




June
      30,
                          
                          
                          December
      31,2009
                          
                          
                          2008(Unaudited)AssetsTotal
      assets for reportable segments
                          
                          $
                          11,570,833
                          
                          
                          $
                          11,453,744Unallocated
      amounts relating to operations :-Prepaid
expenses
                          
                          
                          12,722
                          
                          
                          
                          87,693Building and
      land-use-right
                          
                          
                          3,767,472
                          
                          
                          
                          3,708,052Other
    receivables
                          
                          
                          36,110
                          
                          
                          
                          36,160Cash and cash
      equivalents
                          
                          
                          3,153
                          
                          
                          
                          3,223Total
                          
                          $
                          15,390,290
                          
                          
                          $
                          15,288,872





All of
the Company’s long-lived assets and customers are located in the
PRC.  Accordingly, no geographic information is
presented.





14. Subsequent
Events





Effective
this quarter, the Company implemented SFAS No. 165. This standard establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued. The adoption
of SFAS 165 did not impact our financial position or results of operations. The
Company evaluated all events or transactions that occurred after June 30, 2009
up through August 14, 2009, the date these financial statements were issued.
During this period the Company did not have any material recognizable subsequent
events.





15





ITEM
      2.
            MANAGEMENT
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





Results of
Operations




The current global recession has reduced
demand for capital goods inChina.  As of the first
six months of 2009, this
situation had a negative impact on both of our business
segments.  Overall, our revenue during the six months ended June 30,
2009 decreased by 40% to $4,508,640 from $ 7,522,593 achieved during the six
months ended June 30, 2008.  Our revenue during the three months ended
June 30, 2009 decreased by 49% to $2,111,659 from $ 4,142,698 achieved during
the three months ended June 30, 2008.  The decrease was most dramatic
in our equipment distribution business, where revenues declined by69% to $758,670 during the six months
ended June 30, 2009 from $2,457,691 during the same period of 2008, and from $1,478,359 during the second
quarter of 2008 to $221,766 during the second quarter of 2009.  The decline in equipment
distribution reflected delays in the construction of new
manufacturing facilitiesinChina, as potential customers wait to see
whether demand for their products is revived.  The decline reversed a
surge in equipment sales that we had experienced in 2008, and returned this
business segment to a 17%
contribution to our overall revenue during the first six months ended June 30,
2009, a level similar to our experience in 2007 and 2006.  The future
of this business segment will depend, in part, on the success of the recent
economic stimulus initiated by the Government of
China.




Revenue from our printing business fell
by 26% to $3,749,970 during the six months ended June 30, 2009, compared to
$5,064,902 during the same period of 2008. During the three months ended June
30, 2009, the revenue from
our printing business decreased by 29% to $1,889,893, compared to $2,664,339
during the same period of 2008.  The decline occurred, in part, due to
the weakening of the Chinese banking industry, as many of our customers are
conserving cash pending stabilization of the international
credit markets.  The decline also occurred because we moved our entire
production operation to a larger facility at the end of 2008, which interfered
with our printing business.  Today, however, our new facility is
fully operational, and we expect the
traditional growth of our printing business to be renewed.




Over the longer term, the continued
revenue growth in our printing services business will require further capital
investment.  AsChina’s banking industry rapidly modernizes, our customers demand
additional product offerings similar to those available to the banking industry
in Europe and theU.S.Our ability to meet that
demand will determine the long term growth of our
business.  Immediately, the development of these new products will require
substantial capital investment.  For that purpose, we are currently
exploring financing possibilities, but have not yet received a commitment for
the funds.




The 36% gross margin realized by our
subsidiary, Harbin Golden
Sea, on sales during the six and three months ended June 30, 2009 was lower than
the 40% gross margin realized during the six and three months ended June 30,
2008.  The reason for the fall-off was the sharp decline in profits
from equipment sales duringthe six and three months ended June 30,
2009.  The decline in demand for our cutting machinery forced us to
price our sales aggressively, which reduced margins on equipment sales in the
recent quarter.  Our expectation for the future is that our gross
margin from printing services will average
approximately 45%, albeit within a range of 35% to 50%, depending on the
components of the business.  If we obtain the funding necessary to
expand our printing capacity, we expect the printing portion of its
businessto grow faster than the equipment sales
business.  If that occurs, overall gross margin should increase
towards the higher margins that printing has historically
produced.





16




During the six months ended June 30,
2009, we reduced our totalexpensesby 8.4%to$706,751,compared to $771,851 during the
sameperiod of2008. This reduction was achieved
despite a 48% increase in depreciation and amortizationand $13,448 increase in our selling and
distribution expenses during the first six months of 2009.  These increases werecounterbalanced by the favorable
results of our continuing efforts to achieve efficiencies in our
operations, leading toa decrease of $78,548in our general and administration
expensesfor the first half
of 2009.Likewise, our total expensesduring the three months ended June 30,
2009 was reducedby 29%to $299,372,compared to $422,882 during the same
period of 2008. When demand for our products returns to prior levels, we expect
that the ratio of our selling expense to revenues will returnto the lower levels that we consistently
achieved in prior periods.




Commencing in 2008, webecamesubject to preferentialChinese incometax rates of 9% for 2008, 10% for 2009
and 11% for 2010, respectively.  As a result of this government
allowance, we were taxed at
a 9% rate in the first six months of 2008, causing an expense of $303,351, and
at a 10% rate in the first quarter of 2009, causing an expense of $122,675. The
reductionin our tax
liabilitywas attributed to
our decreasedincomeduring the sixmonths ended June 30, 2009, compared to
the same period of 2008.




The operations of our subsidiary,HarbinGoldenSea, earned a net income of $921,930during the first six months of 2009 and
$460,125during the second quarter of 2009.  However, because
we own only 90% ofHarbinGoldenSea, we deducted a “noncontrolling interest”of $92,193and $46,012respectivelyduring the six and three months ended
June 30, 2009before recognizing net income on our
Statements of Income and Comprehensive Income.  Afterthat deduction and taking into account
the income and expenses incurred by the parent corporation, our net income for
the first six months and second quarter of 2009 was $734,298and $367,009, respectively, representing $0.04 and
$0.02 per share.




Our business operates primarily in
Chinese RMB, but we report our results in our SEC filings in U.S.
Dollars.  The conversion of our accounts from RMB to Dollars results
in translation adjustments, which are reported as a middle step between net
income and comprehensive income.  The net income is added to the
retained earnings on our balance sheet; while the translation adjustment is
added to a line item on our balance sheet labeled “accumulated other
comprehensive income,” since it is more reflective of changes in the relative
values of U.S. and Chinese currencies than of the success of our
business.  During the six and three months ended June 30, 2009, the
effect of converting our financial results to Dollars was to reduce our
comprehensive income by $16,844 and $368.





Liquidity and Capital
Resources




Since our subsidiary,HarbinGoldenSea, was organized in 1998, the growth of
its operations has been funded by contributions to capital by our Chairman, Mrs.
Tian.  With the $2.4 million that she invested,HarbinGoldenSeabuilt its facilities and funded its
operations, resulting in profitable operations for the past several
years.  As a result, at June 30, 2009, we had working capital totaling
$8,156,865 (an increase of
$858,982since the end of
2008) and no long-term
liabilities.




17




Our $332,070in net cash flow from operations during
the six months ended June 30, 2009was less than half ofour net income of $734,298during thesame period.The primary reason for the discrepancy
was the $576,298increase in our trade receivables during
2009.  In 2008 and the first six months of 2009 our trade
receivables have increased disproportionately to our sales due to the ongoing
international financial crisis.  Our customers are primarily Chinese
banks, and the restriction of international credit lines has adversely affected
their liquidity.  To assist them in meeting their cash obligations, we
have extended the credit terms afforded to the majority of our
customers.  This led to the disproportionate increase in our trade
receivables.  As we enter the second half of 2009, there is increased
availability of credit within the international banking system, and our
customers are better able to meet their payment obligations.  We
anticipate, therefore, that our trade receivables will decrease in future
periods until swelled by increased sales.




Our cash position increased by
$137,594during the first six monthsof 2009, as we slowed our growth to
conserve cash.  Our only capital expenditure during the first six
months of 2009wasthe use of $193,341 to
increasethe equipment in
our new manufacturing facility.




HarbinGoldenSea’s business plan calls for significant
investment in the growth ofHarbinGoldenSeaduring 2009.  We plan to
purchase new equipment for our new production facility.  We also plan to
invest in the development of additional product lines, although the amount that
we apply to that purpose will depend on our success in obtaining investment
capital.  To date, however, we have not received any commitment of
funds.




Off-Balance Sheet
Arrangements




We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition or results of operations.





ITEM
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not applicable.





ITEM
      4.
            CONTROLS
      AND PROCEDURES





Evaluation of Disclosure Controls
and Procedures.  Tian Ling, our Chief Executive Officer, and Du
Song, our Chief Financial Officer, carried out an evaluation of the
effectiveness of the Company’s disclosure controls and procedures as of June 30,
2009.  Pursuant to Rule13a-15(e) promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, “disclosure
controls and procedures” means controls and other procedures that are designed
to insure that information required to be disclosed by the Company in the
reports that it files with the Securities and Exchange Commission is recorded,
processed, summarized and reported within the time limits specified in the
Commission’s rules.  “Disclosure controls and procedures” include,
without limitation, controls and procedures designed to insure that information
the Company is required to disclose in the reports it files with the Commission
is accumulated and communicated to our Chief Executive Officer and Chief
Financial Officer as appropriate to allow timely decisions regarding required
disclosure.  Based on his evaluation, Mrs. Tian and Ms. Du concluded
that the Company’s system of disclosure controls and procedures was effective as
of June 30, 2009 for the purposes described in this paragraph.





18




Changes in Internal
Controls.  There was no change in internal controls over
financial reporting (as defined in Rule 13a-15(f) promulgated under the
Securities Exchange Act or 1934) identified in connection with the evaluation
described in the preceding paragraph that occurred during the Company’s second
fiscal quarter that has materially affected or is reasonably likely to
materially affect the Company’s internal control over financial
reporting.





PART
II   -   OTHER INFORMATION





Item
1A      Risk Factors





There have been no material changes
from the risk factors disclosed in response to Item 1A to Part I of our Annual
Report on Form 10-K for the year ended December 31, 2008.





Item
6.       Exhibits




31.1
              Rule
      13a-14(a) Certification – Chief Executive
  Officer


31.2
            Rule
      13a-14(a) Certification – Chief Financial
  Officer


32
            Rule
      13a-14(b) Certification





SIGNATURES





Pursuant
to the  requirements  of the Securities  Exchange
Act of 1934, the Registrant  has
duly  caused  this  Report  to
be  signed  on its  behalf by the undersigned
thereunto duly authorized.





XINYINHAI
      TECHNOLOGY, LTD.Date:
      August 13, 2009
              By:
              /s/ Tian
      LingTian
      Ling, Chief Executive OfficerBy:
              /s/ Du
      SongDu
      Song, Chief Financial Officer






19