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 March 31, 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)Utah87-0427336(State or Other Jurisdiction of
incorporation or organization)(I.R.S.  Employer
Identification No.)  No. 16 Dalian Road, Centralized Park Haping Road, Harbin Development Zone, China    150060 (Address of Principal Executive Offices)86-451-868-11118(Registrants telephone number including area code)   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.  Yes [X]    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 company X Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes [X]    No [   ] 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: May 14, 2009 Common Voting Stock: 19,484,029


XINYINHAI TECHNOLOGY, LTD. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008    Index to Condensed Consolidated Financial Statements      PAGESCondensed Consolidated Balance Sheet1Condensed Consolidated Statements of Income and Comprehensive Income2Condensed Consolidated Statements of Cash Flows3Notes to Condensed Consolidated Financial Statements4 - 13


XINYINHAI TECHNOLOGY, LTD. CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2009 AND DECEMBER 31, 2008 (Stated in US Dollars)  March 31,December 31,20092008(Unaudited)(Audited)ASSETSCurrent AssetsCash and cash equivalents$765,897$495,060Bills receivable14,650-Trade receivables (Net of allowance for doubtful accountsof $6,024 in 2009 and 2008)2,834,0172,901,909Inventories (Note 6)1,851,9421,950,544Other receivable, deposits and prepayments (Note 7)3,502,3813,680,640Prepaid expenses (Note 8)50,88787,693Total Current Assets9,019,7749,115,846Property, plant and equipment, net (Note 9)5,096,1125,103,480Land-use-right1,061,2271,069,546TOTAL ASSETS$15,177,113$15,288,872LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade payable$1,017,964$899,141Customer deposits15,270117,221Other payable and accrued liabilities (Note 10)145,472652,170Income tax payable67,74437,713Value added tax payable64,628111,718TOTAL LIABILITIES1,311,0781,817,963COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYCommon stock (Note 11)19,48419,484Additional paid-in capital3,294,5433,294,543Retained earnings6,493,9966,184,913Statutory reserves1,334,2191,276,013Accumulated other comprehensive income1,313,3031,329,779TOTAL XINYINHAI TECHNOLOGY, LTD.
STOCKHOLDERS' EQUITY12,455,54512,104,732NONCONTROLLING INTERESTS (NOTE 3)1,410,4901,366,177TOTAL EQUITY13,866,03513,470,909TOTAL LIABILITIES AND EQUITY$15,177,113$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 MONTHS ENDED MARCH 31, 2009 AND 2008 (Unaudited) (Stated in US Dollars)   Three months ended March 31,20092008Revenues (Note 3)$2,396,981$3,379,895Cost of sales(1,521,028)(2,016,337)Gross profit875,9531,363,558Operating expensesSelling and distribution expenses121,26667,227General and administrative expenses286,113281,742Total expenses407,379348,969Income from operations468,5741,014,589Interest income5821,130Other income8,988-Income before income taxes and noncontrolling interests478,1441,015,719Income taxes (Note 4)(64,674)(135,413)Net income413,470880,306Net income attributable to noncontroling interests(46,181)(94,789)Net income attributable to Xinyinhai Technology, Ltd.$367,289$785,517Other comprehensive incomeForeign currency translation adjustments(16,476)711,323Comprehensive income$350,813$1,496,840Earnings per share attributable to Xinyinhai
Technology, Ltd. (Note 5): basic and diluted0.0190.034Weighted average number of common stock outstanding19,484,02922,925,344     See the accompanying notes to condensed consolidated financial statements  2   XINYINHAI TECHNOLOGY, LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Unaudited) (Stated in US Dollars)   Three months ended March 31,20092008Cash flows from operating activitiesNet income$367,289$785,517Adjustments to reconcile net income to net cash provided
by/(used in) operating activities:Bad debts written off6,034-Depreciation and amortization142,17896,388Noncontrolling interests46,18194,789Changes in operating assets and liabilitiesBills receivable(14,651)245,995Trade receivable63,940(1,486,084)Inventories95,950(358,034)Other receivable, deposits and prepayments167,218(259,771)Trade payable120,0562,862Bills payable-(245,995)Customers deposit(101,798)360,627Other payable and accrued liabilities(505,914)(87,222)Income tax payable26,969135,413Value added tax payable(43,825)(14,287)Net cash flows provided by/(used in)operating activities369,627(729,802)Cash flow from investing activitiesPayments to acquire property, plant and equipment andland-use-right(98,101)(107,185)Net cash flows used in investing activities(98,101)(107,185)Effect of foreign currency translation on cash and cash equivalents(689)92,676Net increase/(decrease) in cash and cash equivalents270,837(744,311)Cash and cash equivalents, beginning of period495,0601,308,877Cash and cash equivalents, end of period$765,897$564,566Supplemental disclosures for cash flow information :-Cash paid for :-Income taxes$42,598$       -   See the accompanying notes to condensed consolidated financial statements  3    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (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).  Winner Sea is a business company organized under the laws of the British Virgin Islands on January 12, 2006.  It has conducted no business and is a holding company whose only asset is 90% equity interest in Harbin Golden Sea.  Ms. Xie Guihong, a director of the Company, owns the remaining 10% equity interest in Harbin Golden Sea.  Harbin Golden Sea is a company located in Harbin City, Heilongjiang Province, the Peoples Republic of China (PRC).  Founded in 1998, Harbin Golden Sea has developed into a leading participant in the PRCs financial note printing industry.  It is one of the companies 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 Company ended 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) with the stockholders of Winner Sea whereby the stockholders of Winner Sea exchanged all their Winner Sea shares for 18,000,000 shares of the Companys common stock, representing 98.3% of the then outstanding stock of the Company.  The purchase method under reverse takeover accounting has been applied for the Share Exchange.  These consolidated financial statements issued under the name of the legal parent, Xinyinhai, are a continuation of the financial statements of Winner Sea, which include Winner Seas majority owned subsidiary Harbin Golden Sea.   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 earned approximately 22% 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.  Basis of presentation and consolidation  The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.  4    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   2. Description of business (Cont'd)  Basis of presentation and consolidation (Cont'd)  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.   3. Summary of significant accounting policies  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 condensed 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 receivable.  As of March 31, 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.  During the reporting periods, customers representing 10% or more of the Companys consolidated sales are:-  Three months ended
March 31,20092008Company A$208,696$426,564Company B450,716-Company C326,131-Company D-848,628Company E-343,736$985,543$1,618,928   5   XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   3. Summary of significant accounting policies (Contd)  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 are 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:  Depreciable lifeBuilding20 yearsPlant and machinery10 yearsFurniture, fixtures and equipment5 yearsMotor vehicles10 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.  Noncontrolling interests  Noncontrolling interests result from the consolidation of 90% owned subsidiary, Harbin Golden Sea, where the Company has control over its operations.  6    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   3. Summary of significant accounting policies (Contd)  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) Trading of equipment, plasma arc cutting machines, does not require significant modification or customization.  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.  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 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 March 31, 2009. The management is in the process of evaluating the impact these FSPs will have on the Companys financial statements upon adoption.   7    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   3. Summary of significant accounting policies (Contd)  Recently issued accounting standards (Cont'd)  In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities - an amendment to FASB Statement No. 133" (SFAS 161).  SFAS 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows.  Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows.  It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged.  The management is in the process of evaluating the impact that SFAS 161 will have on the Companys financial statements upon adoption.  In May 2008, the Financial Accounting Standards Board (FASB)issued SFAS No.162, The Hierarchy of Generally Accepted Accounting Principles.  Effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.  The Board does not expect that this Statement will result in a change in current practice. However, transition provisions have been provided in the unusual circumstance that the application of the provisions of this Statement results in a change in practice.  The adoption of this statement has no material effect on the Company's financial statements.  In December 2007, the FASB issued SFAS No. 160 Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become 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.  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 noncontrolling 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 will become 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.    8    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   4. Income taxes  The Company is subject to the United States of America tax law at a tax rate of 34%.  It had no taxable income for income tax purposes for the three months ended March 31, 2009 and 2008.  The Company has not provided deferred taxes on undistributed earnings of its non-U.S. subsidiaries as of March 31, 2009, as it is the Companys current policy to reinvest these earnings in non-U.S. operations.  Harbin Golden Sea is subject to PRC enterprise income tax that is computed according to the relevant laws and regulations in the PRC.  It is registered as a new and high technology enterprise in the Harbin region of the PRC and is entitled to a 50% preferential reduction of the income tax rate.  On May 1, 2006, Harbin Golden Sea became a wholly-owned foreign enterprise under a reorganization plan and the Taxation Bureau of Harbin City approved its income tax exemption.  The new arrangement of exemption began in the first two years after Harbin Golden Sea became profitable, being 2006 and 2007, and a 50% income tax reduction for the following three years, being 2008 through 2010.  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 the Taxation 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.  9    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   5. Earnings per share - basic and diluted  The basic and diluted earnings per share is calculated using the net income and the weighted average number of common stock outstanding during the reporting periods.  The basic and diluted earnings per share are the same as the warrants granted to external financial advisors were anti-dilutive.    6. Inventories  March 31,December 31,20092008(Unaudited)(Audited)Raw materials$1,212,247$1,303,481Work in progress199,958228,524Finished goods439,737418,539$1,851,942$1,950,544   7. Other receivable, deposits and prepayments  March 31,December 31,20092008(Unaudited)(Audited)Deposits$159,593$439,702Retention money39,55546,793Advances to staff263,818150,630Receivable for disposal of building3,003,2503,007,350Other receivables36,16536,165$3,502,381$3,680,640   8. Prepaid expenses  March 31,December 31,20092008(Unaudited)(Audited)Prepaid consultancy fees$218,000$673,000Amortization(167,113)(261,557)50,887411,443Termination of consulting agreements-(323,750)Amount to be amortized within one year$50,887$87,693   10    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)     9. Property, plant and equipment, net  March 31,December 31,20092008(Unaudited)(Audited)Buildings$3,582,858$3,499,037Plant and machinery2,698,4692,693,877Motor vehicles390,309389,602Furniture, fixtures and equipment89,12689,2486,760,7626,671,764Accumulated depreciation(1,664,650)(1,568,284)Property, plant and equipment, net$5,096,112$5,103,480  Included in buildings is the office building of RMB18,001,677 (equivalent to $2,640,846) acquired in 2008.  The new plant is located at No. 4 Yantai Road, Centralised Park, Haping Road, Harbin Development Zone, Harbin, China.  The previous plant is now used as warehouse.    10. Other payables and accrued liabilities  March 31,December 31,20092008(Unaudited)(Audited)Other payables$67,997$553,899Accrued statutory staff welfare and salaries22,31547,111Accrued liabilities55,16051,160$145,472$652,170   11. Stockholders equity  Common stock  No. of sharesAmountAuthorized:-Common stock at USD0.001 par value40,000,000$40,000Issued and outstanding:-As of March 31, 2009 and December 31, 200819,484,029$19,484   11    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   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 $3,206 and $1,461 for the three months ended March 31, 2009 and 2008 respectively.   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 ProductsTrading of EquipmentTotalThree months ended March 31,
(Unaudited)Three months ended March 31,
(Unaudited)Three months ended March 31,
(Unaudited)200920082009200820092008Revenues$1,860,077$2,400,563$536,904$979,332$2,396,981$3,379,895Segment profit$468,032$1,080,268$46,918$56,484$514,950$1,136,752March 31,December 31,March 31,December 31,March 31,December 31,200920082009200820092008(Unaudited)(Audited)(Unaudited)(Audited)(Unaudited)(Audited)Segment assets$10,689,188$10,895,494$643,875$558,250$11,333,063$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 March 31,
(Unaudited)20092008Total consolidated revenue$2,396,981$3,379,895Total income for reportable segments$514,950$1,136,752Unallocated amounts relating to operations :-Amortization of prepaid expenses(36,806)(121,033)Income before income taxes$478,144$1,015,719    12    XINYINHAI TECHNOLOGY, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Stated in US Dollars)   13. Segment information (Cont'd)   March 31,December 31,20092008(Unaudited)(Audited)AssetsTotal assets for reportable segments$11,333,063$11,453,744Unallocated amounts relating to operations :-Prepaid expenses50,88787,693Building and land-use-right3,753,8853,708,052Other receivables36,11036,160Cash and cash equivalents3,1683,223Total$15,177,113$15,288,872  All of the Companys long-lived assets and customers are located in the PRC.  Accordingly, no geographic information is presented.   13   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 in China.  In the first quarter of 2009, this situation had a negative impact on both of our business segments.  Overall, our revenue in the three months ended March 31, 2009 decreased by 29% from the revenue achieved in the three months ended March 31, 2008.  The decrease was most dramatic in our equipment distribution business, where revenues declined by 45%.  The decline in equipment distribution reflected delays in the construction of new manufacturing facilities, 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 22% contribution to our overall revenue, 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 23% in the first quarter of 2009 compared to the first quarter 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.  As Chinas banking industry rapidly modernizes, our customers demand additional product offerings similar to those available to the banking industry in Europe and the U.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 37% gross margin realized by our subsidiary, Harbin Golden Sea, on sales in the first quarter of 2009 was lower than the 40% gross margin realized in the first quarter of 2008.  The reason for the fall-off was the sharp decline in profits from equipment sales in the first quarter of 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 business to grow faster than the equipment sales business.  If that occurs, overall gross margin should increase towards the higher margins that printing has historically produced. Our general and administration expenses did not differ materially from quarter to quarter.  This stability was achieved despite a 48% increase in depreciation and amortization, which was counterbalanced by the favorable results of our continuing efforts to achieve efficiencies in our operations.  Selling expenses, however, increased by 80%, from $67,227 to $121,266.  The increase reflected our efforts to sustain our sales momentum despite the effects of the recession. When demand for our products returns to prior levels, we expect that  14   the ratio of our selling expense to revenues will return to the lower levels that we consistently achieved in prior periods. Commencing in 2008, we are subject to preferential tax 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 quarter of 2008, causing an expense of $135,413, and at a 10% rate in the first quarter of 2009, causing an expense of $64,674. The operations of our subsidiary, Harbin Golden Sea, earned a net income of $461,800 during the first quarter of 2009.  However, because we own only 90% of Harbin Golden Sea, we deducted a noncontrolling interest of $46,181 before recognizing net income on our Statements of Income and Comprehensive Income.  After that deduction and taking into account the income and expenses incurred by the parent corporation, our net income for the first quarter of 2009 was $367,289, representing $0.019 per share, a 53% decrease from the net income we achieved in the first quarter of 2008. 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.  In the first quarter of 2009, the effect of converting our financial results to Dollars was to reduce our comprehensive income by $16,476.  Liquidity and Capital Resources Since our subsidiary, Harbin Golden Sea, 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, Harbin Golden Sea built its facilities and funded its operations, resulting in profitable operations for the past several years.  As a result, at March 31, 2009, we had working capital totaling $7,708,696 (an increase of $410,813 since the end of 2008) and no long-term liabilities. Our $369,627 in net cash flow from operations during the first quarter of 2009 approximated our net income of $367,289 during the quarter.  This stability occurred as our inventories and accounts receivable remained relatively stable, while we offset a decrease in other payables with monies collected on account of other receivables and trade receivables. Our cash position increased by $270,837 during the first quarter of 2009, as we slowed our growth to conserve cash.  Our only capital expenditure during the quarter was an addition of $98,101 to the equipment in our new manufacturing facility. Harbin Golden Seas business plan calls for significant investment in the growth of Harbin Golden Sea during 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.  15    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 March 31, 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 March 31, 2009 for the purposes described in this paragraph.  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 first 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    16    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: May 14, 2009 By:/s/ Tian Ling  Tian Ling, Chief Executive Officer  By: /s/ Du Song  Du Song, Chief Financial Officer, Chief Accounting Officer   17