UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form
10-Q





(Mark
One)





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





FOR THE
QUARTERLY PERIOD ENDED November 30, 2009





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





FOR THE
TRANSITION PERIOD FROM __________ TO __________





COMMISSION
FILE NUMBER: 333-148005





XODTEC
GROUP USA, INC.


(Exact
name of registrant as specified in its charter)





Nevada
            20-8009362(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)





2F.,
No.139, Jian 1st Rd., Jhonghe City,


Taipei
County 235, Taiwan (R.O.C.)


(Address
of principal executive offices, Zip Code)





011-886-2-2228-6276


(Registrant’s
telephone number, including area code)





(Former
name, former address and former fiscal year, if changed since last
report)





Copies
to:


Asher S.
Levitsky P.C.


Sichenzia
Ross Friedman Ference LLP


61
Broadway, 32nd Floor


New York,
New York 10006


Phone:
(212) 981-6767


Fax:
(212) 930-9725





Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes     T    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
definitions of “large accelerated filer,”  “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer     £
            Accelerated
      filer     £Non-accelerated
      filer     £
            Smaller
      reporting company     T





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





The
number of shares of registrant’s common stock outstanding, as of January 15,
2010 was 21,830,004.










XODTEC GROUP USA, INC.


For
the Quarter Ended November 30, 2009





Table
of Contents





Index
            PagePart I - Financial Information
            3Item 1 - Financial Statements
            3Condensed ConsolidatedBalance Sheet at
      November 30, 2009 (unaudited) and February 28,
      2009((Proforma)
            3Condensed Consolidated Statements of Operations and
      Comprehensive Income for the three and nine months ended November 30, 2009
      and 2008 (unaudited)
            4Condensed ConsolidatedStatements of Cash
      Flows for nine months ended November 30, 2009 and 2008
      (unaudited)
            6Notes to Condensed  Consolidated Financial Statements
      (unaudited)
            7Item 2- Management's Discussion And Analysis Of Financial
      Condition And Results Of Operations
            15Item 3  - Controls And Procedures
            19Part II- Other Information
            21Item 4 – Unregistered Sales of Equity Securities and Use of
      Proceeds
            21Item 5 – Exhibits
            21





FORWARD
LOOKING STATEMENTS





This
report contains forward-looking statements regarding our business, financial
condition, results of operations and prospects. Words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar
expressions or variations of such words are intended to identify forward-looking
statements, but are not deemed to represent an all-inclusive means of
identifying forward-looking statements as denoted in this report. Additionally,
statements concerning future matters are forward-looking
statements.





Although
forward-looking statements in this report reflect the good faith judgment of our
management, such statements can only be based on facts and factors currently
known by us. Consequently, forward-looking statements are inherently subject to
risks and uncertainties and actual results and outcomes may differ materially
from the results and outcomes discussed in or anticipated by the forward-looking
statements. Factors that could cause or contribute to such differences in
results and outcomes include, without limitation, those specifically addressed
under the headings “Risks Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our report on Form 8-K as
filed on April 24, 2009 and as amended by a current report on Form 8-K/A which
was filed on May 11, 2009, in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in this Form 10-Q and in other reports that
we file with the SEC.   You are urged not to place undue reliance
on these forward-looking statements, which speak only as of the date of this
report.





We file
reports with the SEC. The SEC maintains a website (www.sec.gov) that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, including us. You can also read
and copy any materials we file with the SEC at the SEC’s Public Reference Room
at 100 F Street, NE, Washington, DC 20549. You can obtain additional information
about the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.





We
undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this
report, except as required by law. Readers are urged to carefully review and
consider the various disclosures made throughout the entirety of this quarterly
report, which are designed to advise interested parties of the risks and factors
that may affect our business, financial condition, results of operations and
prospects.


2
 Table of Contents




XODTEC GROUP USA, INC.


Condensed
Consolidated BALANCE SHEETS





November 30,
            
            
            February 28,2009
            
            
            2009(Unaudited)
            
            
            (Pro
      forma)ASSETSCurrent
      assetsCash
      and cash equivalents
            
            $
            127,103
            
            
            $
            107,340Notes
      receivable, net
            
            
            -
            
            
            
            1,014Accounts
      receivable, net
            
            
            3,104,671
            
            
            
            510,702Other
      receivables
            
            
            110,044
            
            
            
            -Inventories
            
            
            293,757
            
            
            
            245,734Prepayments
            
            
            653,437
            
            
            
            145,705Other
      current assets
            
            
            -
            
            
            
            45,670Total
      current assets
            
            
            4,289,012
            
            
            
            1,056,165Property
      and equipment, net
            
            
            58,425
            
            
            
            69,974-Other
      AssetsDeposits
            
            
            65,826
            
            
            
            60,608Prepaid
      expense
            
            
            419,126
            
            
            
            27,282Deferred
      tax assets
            
            
            1,886Total
      assets
            
            $
            4,834,275
            
            
            $
            1,214,029LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesShort-term
      debt
            
            $
            55,702
            
            
            $
            23,029Accounts
      payable
            
            
            1,090,101
            
            
            
            384,450Other
      payable
            
            
            7,965
            
            
            
            11,013Accrued
      liabilities
            
            
            386,432
            
            
            
            100,880Tax
      payable
            
            
            -
            
            
            
            174,509Due
      to related party
            
            
            86,056
            
            
            
            655,586Total
      current liabilities
            
            
            1,626,256
            
            
            
            1,349,467Stockholders'
      equityPreferred
      stock, par value $0.001 per share, 10,000,000 shares authorized and 0
      shares issued and outstandingCommon
      stock( 225,000,000 authorized shares; 21,830,004 outstanding shares, at
      par value 0.001)
            
            
            21,830
            
            
            
            17,380Additional
      paid in capital
            
            
            3,712,212
            
            
            
            1,145,497Subscription
      receivable
            
            
            (360,750
            )
            
            
            -Retained
      earnings (deficit)
            
            
            (186,836
            )
            
            
            (939,351
            )Accumulated
      other comprehensive gain - translation adjustments
            
            
            21,563
            
            
            
            (358,964
            )Total
      stockholders' equity
            
            
            3,208,019
            
            
            
            (135,438
            )Total
      liabilities and stockholders' equity
            
            $
            4,834,275
            
            
            $
            1,214,029





See
accompanying notes to condensed consolidated financial
statements


3
 Table of Contents


XODTEC GROUP USA, INC.


Condensed
Consolidated STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME





Three
      Months EndedNovember 30,2009
              
              
              2008(Unaudited)
              
              
              (Pro
      forma)Revenues
              
              $
              7,370,924
              
              
              $
              1,543,988Cost
      of goods sold
              
              
              6,449,619
              
              
              
              746,798Gross
      profit
              
              
              921,305
              
              
              
              797,190Operating
      expenses:General
      and administrative expenses
              
              
              719,251
              
              
              
              183,348Issuance
      of equity for services
              
              
              469,000
              
              
              
              -Total
      operating expenses
              
              
              1,188,251
              
              
              
              183,348Net
      operating income (loss)
              
              
              (266,946
              )
              
              
              613,842Other
      income (expense)Interest
      income
              
              
              65
              
              
              
              3,056Interest
      expense
              
              
              (744
              )
              
              
              (1,060
              )Gain
      on exchange
              
              
              10,972
              
              
              
              -Other
      income (expense)
              
              
              2,831
              
              
              
              (1,559
              )Total
      other income
              
              
              13,124
              
              
              
              437Net
      income (loss) before income taxes
              
              
              (253,822
              )
              
              
              614,279Income
      taxes benefit
              
              
              (330,124
              )
              
              
              -Net
      income
              
              $
              76,302
              
              
              $
              614,279Translation
      adjustments
              
              
              442,180
              
              
              
              27Comprehensive
      income
              
              $
              518,482
              
              
              $
              614,306Net
      income per common share-
      Basic
              
              $
              0.00
              
              
              $
              0.04-
      diluted
              
              $
              0.00
              
              
              $
              0.04Weighted
      average common shares outstanding-
      Basic and
              
              
              20,903,081
              
              
              
              13,880,002-
      diluted
              
              
              21,101,055
              
              
              
              13,880,002





See
accompanying notes to condensed consolidated financial
statements


4
 Table of Contents


XODTEC
GROUP USA, INC.


Condensed
Consolidated STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME





Nine
      Months EndedNovember 30,2009
            
            
            2008(Unaudited)
            
            
            (Pro
      forma)Revenues
            
            $
            11,545,510
            
            
            $
            2,311,492Cost
      of goods sold
            
            
            8,387,986
            
            
            
            1,121,463Gross
      profit
            
            
            3,157,524
            
            
            
            1,190,029Operating
      expenses:General
      and administrative expenses
            
            
            1,486,108
            
            
            
            568,132Issuance
      of equity for services
            
            
            1,107,867
            
            
            
            -Total
      operating expenses
            
            
            2,593,975
            
            
            
            568,132Net
      operating income
            
            
            563,549
            
            
            
            621,897Other
      income (expense)Interest
      income
            
            
            137
            
            
            
            3,166Interest
      expense
            
            
            (1,829
            )
            
            
            (4,615
            )Gain
      on exchange
            
            
            1,855
            
            
            
            -Other
      income
            
            
            2,831
            
            
            
            -Total
      other income (expense)
            
            
            2,994
            
            
            
            (1,449
            )Net
      income before income taxes
            
            
            566,543
            
            
            
            620,448Income
      taxes benefit
            
            
            (185,972
            )
            
            
            -Net
      income
            
            $
            752,515
            
            
            $
            620,448Translation
      adjustments
            
            
            451,297
            
            
            
            27Comprehensive
      income
            
            $
            1,203,812
            
            
            $
            620,475Net
      income per common share-
      Basic
            
            $
            0.04
            
            
            $
            0.04-
      diluted
            
            $
            0.04
            
            
            $
            0.04Weighted
      average common shares outstanding-
      Basic and
            
            
            18,609,458
            
            
            
            13,880,002-
      diluted
            
            
            18,763,438
            
            
            
            13,880,002





See
accompanying notes to condensed consolidated financial
statements


5
 Table of Contents


XODTEC GROUP USA, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





Nine Months Ended
      November 30,2009
            
            
            2008(Unaudited)
            
            
            (Pro
      forma)Cash
      Flows from operating activities:Net
      income
            
            $
            752,515
            
            
            $
            620,448Adjustments
      to reconcile net income to net cash provided by (used in) operating
      activities:Depreciation
      and amortization
            
            
            28,703
            
            
            
            21,287Issuance
      of equity for services
            
            
            1,107,867
            
            
            
            -Changes
      in assets and liabilities:Accounts
      receivable
            
            
            (2,500,950
            )
            
            
            (733,407
            )Accounts
      payable
            
            
            730,994
            
            
            
            650,929Inventories
            
            
            (26,359
            )
            
            
            (11,585
            )Prepayments
            
            
            (365,744
            )
            
            
            (68,957
            )Tax
      payable
            
            
            (185,969
            )
            
            
            -Deferred
      income tax assets
            
            
            -
            
            
            
            4,194Accrued
      expense
            
            
            274,021
            
            
            
            41,083Other
      receivable
            
            
            (62,775
            )
            
            
            (15,286
            )Deferred
      charge
            
            
            (21,127
            )
            
            
            20,953Other
      payable
            
            
            1,243
            
            
            
            (83,928
            )Other
      current liabilities
            
            
            (10,705
            )
            
            
            (35,854
            )Total
      Adjustment
            
            
            (1,030,801
            )
            
            
            (210,571
            )Net
      cash provided by (used in) operating activities
            
            
            (278,286
            )
            
            
            409,877Cash
      Flows from Investing activities:Purchase
      of property & equipment
            
            
            -
            
            
            
            (37,815
            )Proceeds
      from sale of assets
            
            
            351
            
            
            
            -Net
      cash provided by (used in) investing activities
            
            
            351
            
            
            
            (37,815
            )Cash
      flows from financing activities:Increase
      (decrease) in short-term loan
            
            
            30,112
            
            
            
            (78,432
            )Payment
      of shareholder loans
            
            
            (614,205
            )
            
            
            (177,783
            )Proceeds
      from issuance of stock
            
            
            884,110
            
            
            
            -Net
      cash provided by (used in) financing activities
            
            
            300,017
            
            
            
            (256,215
            )Effect
      of exchange rate changes on cash and cash equivalents
            
            
            (2,319
            )
            
            
            (9,858
            )Net
      increase in cash
            
            
            22,082
            
            
            
            115,847Cash,
      beginning of period
            
            
            107,340
            
            
            
            68,582Cash,
      end of period
            
            $
            127,103
            
            
            $
            184,429Non
      cash activities:Issuance
      of equity as prepayment of professional fees
            
            $
            570,000
            
            
            $
            -Supplemental
      disclosures of cash flow information:Interest
      paid in cash
            
            $
            1,829
            
            
            $
            1,051Income
      taxes paid in cash
            
            $
            -
            
            
            $
            -





See
accompanying notes to condensed consolidated financial
statements


6
 Table of Contents




NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION





Xodtec
Group USA, Inc.  (“Company”) is a Nevada corporation incorporated on
November 29, 2006, under the name Sparking Events, Inc.  On June 28,
2009, the Company’s corporate name was changed to “Xodtec Group USA,
Inc.”





The
Company, through its subsidiaries, is engaged in the design, marketing and
selling of advanced lighting solutions which are designed to use less energy and
have a longer life than traditional incandescent, halogen, fluorescent light
sources.  The Company’s wholly-owned subsidiaries, Xodtec Technology
Co., Ltd. (“Xodtec”); Targetek Technology Co., Ltd. (“Targetek”); UP Technology
Co., Ltd. (“UP”), are organized under the laws of the Republic of China
(Taiwan).  The Company also owns a 35% interest in Radiant Sun
Development S.A., a company organized under the laws of the Independent State of
Samoa (“Radiant Sun”).





On April
1, 2009, in anticipation of the exchange agreement described in the following
paragraph, APlus International, Ltd., a Nevada limited liability company
(“APlus”), acquired all of the capital stock of Xodtec, Targetek and UP,
pursuant to agreements with the shareholders of each of these companies and
acquired a 35% interest in Radiant Sun pursuant to an agreement with the holders
of 35% of the capital stock of Radiant Sun.  As a result of these
agreements, the former shareholders of Xodtec, Targetek and UP and the former
holders of 35% of the stock of Radiant Sun were the sole members of
APlus.





On April
20, 2009, the Company entered into an exchange agreement with APlus and its
members pursuant to which the Company, then known as Sparking Events, Inc.
acquired all of the stock of Xodtec, Targetek and UP and APlus’ 35% interest in
Radiant Sun in exchange for 16,000,002 shares of common stock.  The
transaction pursuant to which the Company issued 16,000,002 shares of common
stock to the former members of APlus in exchange for all of the stock of Xodtec,
Targetek and UP and APlus’ 35% interest in Radiant Sun is referred to as the
reverse acquisition. The exchange agreement and other issuances of securities in
connection with the reverse acquisition are described in Note 9.





Simultaneously
with the reverse acquisition, the Company’s then principal stockholder
transferred to the Company for cancellation, for no consideration, 27,000,000
shares of common stock owned by him.





At the
time of the reverse acquisition, the Company was a blank check shell company and
was not engaged in any business.  Upon completion of the reverse
acquisition, the Company’s business became the business of Xodtec, Targetek and
UP.  Radiant Sun did not have any significant operations prior to the
reverse acquisition.





Under
generally accepted accounting principles, the acquisition by the Company of
Xodtec, Targetek and UP is equivalent to the acquisition by APlus of the
Company, then known as Sparking Events, Inc., with the issuance of stock by
APlus for the net monetary assets of the Company.  This transaction is
reflected as a recapitalization, and is accounted for as a change in capital
structure.  Accordingly, the accounting for the acquisition is
identical to that resulting from a reverse acquisition. Under reverse
acquisition accounting, the comparative historical financial statements of the
Company, as the legal acquirer, are those of the accounting acquirer,
APlus.   Since APlus was organized to acquire Xodtek, Targetek
and UP on April 1, 2009, and had no operations, the Company’s historical
financial statements reflect the operations of Xodtek, Targetek and UP prior to
April 1, 2009, the combined operations of APlus, Xodtek, Targetek and UP from
April 1, 2009 to April 20, 2009, and the combined operations of these companies
and the Company from April 20, 2009.  The accompanying financial
statements reflect the recapitalization of the shareholders’ equity as if the
transactions occurred as of the beginning of the first period
presented.  Thus, only the 16,000,002 shares of common stock issued to
the former APlus members are deemed to be outstanding for all periods reported
prior to the date of the reverse acquisition.   The 1,380,000
shares of common stock that were outstanding on April 20, 2009, after giving
effect to the cancellation of the 27,000,000 shares that were acquired by the
Company and cancelled, are treated as if they were issued on April 20, 2009, as
part of a recapitalization.





Stock
Distribution





On April
30, 2009, the Company’s Articles of Incorporation were amended to increase the
number of authorized shares of common stock from 75,000,000 to 225,000,000 and
to effect a 3-for-1 stock split.  The par value of $0.001 per share
was not changed as a result of the stock split.  All share and per
share references in these financial statements retroactively reflect this stock
split.





NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of Presentation





The
accompanying unaudited financial statements of the Company have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information required by
generally accepted accounting principles for audited financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the interim periods are not necessarily indicative of the
results for any future period. These statements should be read in conjunction
with the audited financial statements and notes thereto of Xodtec, Targetek and
UP for the year ended December 31,2008 and the unaudited proforma condensed
combined statements for the year ended February 28, 2009 which are filed as
exhibits to the Company report on Form 8-K/A which was filed with the Securities
and Exchange Commission on May 11, 2009. Certain reclassifications have been
made to the November 30, 2008 financial statements to conform to the November
30, 2009 presentation.  Such reclassifications are not material. The
results of the nine month period ended November 30, 2009 are not necessarily
indicative of the results to be expected for the full fiscal year ending
February 28, 2010.


7
 Table of Contents




The
balance sheet at February 28, 2009, reflects the combined balance sheet of
Xodtec, Targetek and UP at such date, with shareholders’ equity reflecting the
reverse acquisition as described in Note 1.  Radiant Sun has no
significant assets at February 28, 2009.





These
financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States.





Use
of Estimates





The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the amount of revenues and
expenses during the reporting periods. Management makes these estimates using
the best information available at the time the estimates are made. However,
actual results could differ materially from those results.





RevenueRecognition





The
Company’s revenue recognition policies are in compliance with ASC 605
(Originally issued as Staff Accounting Bulletin (SAB) 104). Sales revenue is
recognized at the date of shipment to customers when a formal arrangement
exists, the price is fixed or determinable, the delivery is completed, no other
significant obligations of the Company exist and collectability is reasonably
assured. Payments received before all of the relevant criteria for revenue
recognition are satisfied are recorded as unearned
revenue.   Discounts provided to customers by the Company at the
time of sale are recognized as a reduction in sales as the products are sold.
Sales taxes are not recorded as a component of sales.





Cost
of Sales





The cost
of sales represents, primarily, the cost of manufacturing by third party
manufacturers based on a contract price. , as well as warehousing costs,
transportation costs and salaries.





Accounts
Receivable





The
Company maintains reserves for potential credit losses on accounts
receivable.  Management reviews the composition of accounts receivable
and analyzes historical bad debts and customer creditworthiness as well as
changes in customer payment practices and the economic environment.





Inventories





Inventories
are stated at the lower of monthly-weighted-average cost or market value (net
realizable value).  Inventories are recorded at standard cost and
adjusted to approximate weighted-average cost on the balance sheet
date.





Fixed
assets





Fixed
assets are stated at cost. Major improvements and addition which can prolong the
service life of fixed assets are counted as capital expenditures and recorded as
fixed assets. Expenditures on regular repairs and maintenance are recorded as
expenses.





Fixed
assets are depreciated according to the service life and using the average
method, with one-year residual value. Additions are depreciated according to the
fixed assets’ service life. Major improvements are depreciated based on the
remaining service lives of fixed assets. While assets are continually in use
after the expiration of its service life, the residual values and service lives
are estimated and depreciated accordingly and continually. The gain (loss) on
disposal of assets is recognized as non-operating revenue (expenditure) in the
period of sale or disposal.


8
 Table of Contents




Subscription
Receivable





The
subscription receivable reflects the money due for shares of common stock sold
in July 2009 for which the Company had not received payment as of November 30,
2009.





Income
taxes





The
Company follows the liability method of accounting for income taxes in
accordance with ASC 740.  Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax balances. Deferred tax assets and
liabilities are measured using enacted or substantially enacted tax rates
expected to apply to the taxable income in the years in which those differences
are expected to be recovered or settled.  Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the date
of enactment or substantive enactment.





Net
Income per Share





The
Company calculates its basic and diluted earnings per share in accordance with
ASC 260. Basic earnings per share are calculated by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share is calculated by adjusting the weighted average outstanding
shares to assume conversion of all potentially dilutive warrants and options and
convertible securities. There were no convertible securities outstanding during
the three and nine months ended November 30, 2009.  The Company uses
the treasury stock method to reflect the potential dilutive effect of the
unvested stock options and unexercised warrants. In calculating the number of
dilutive shares outstanding, the shares of common stock underlying unvested
stock options are assumed to have been delivered on the grant date.





Three Months Ended
      November 30,
            
            
            Nine Months Ended
      November 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Net
      income
            
            $
            76,302
            
            
            $
            614,279
            
            
            $
            752,515
            
            
            $
            620,448Basic
      earnings per share:Basic
      weighted average share outstanding
            
            
            20,903,081
            
            
            
            13,880,002
            
            
            
            18,609,458
            
            
            
            13,880,002Basic
      earnings per common share
            
            $
            0.00
            
            
            $
            0.04
            
            
            $
            0.04
            
            
            $
            0.04Diluted
      earnings per share:Basic
      weighted average share outstanding
            
            
            20,903,081
            
            
            
            13,880,002
            
            
            
            18,609,458
            
            
            
            13,880,002Effect
      of dilutive warrants
            
            
            197,974
            
            
            
            -
            
            
            
            153,980
            
            
            
            -Diluted
      weighted average shares outstanding
            
            
            21,101,055
            
            
            
            13,880,002
            
            
            
            18,763,438
            
            
            
            13,880,002Diluted
      earnings per common share
            
            $
            0.00
            
            
            $
            0.04
            
            
            $
            0.04
            
            
            $
            0.04





Gain
on Exchange





Foreign-currency
transactions are recorded in New Taiwan dollars (“NTD”) at the rates of exchange
in effect when the transactions occur. Gains or losses resulting from the
application of different foreign exchange rates when cash in foreign currency is
converted into NTD, or when foreign-currency receivables or payables are
settled, are credited or charged to income in the year of conversion or
settlement. On the balance sheet dates, the balances of foreign-currency assets
and liabilities are restated at the prevailing exchange rates and the resulting
differences are charged to current income.


9
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Foreign
Currency Translation





The
financial statements are presented in United States dollars. The Company’s
subsidiaries maintain their books and records in NTD, which is the Company’s
functional currency.  In accordance with ASC 830, foreign denominated
monetary assets and liabilities are translated to their United States dollar
equivalents using foreign exchange rates which prevailed at the balance sheet
date.  Non-monetary assets and liabilities are translated at exchange
rates prevailing at the transaction date. Revenue and expenses are translated at
average rates of exchange during the periods presented.  Related
translation adjustments are reported as a separate component of stockholder’s
equity (deficit), whereas gains or losses resulting from foreign currency
transactions are included in results of operations. As of November 30, 2009 and
2008 the translation gain was $451,297 and $27.





Share
Based Expenses





ASC 718
requires a public entity to expense the cost of employee and non-employee
services received in exchange for an award of equity instruments. This statement
also provides guidance on valuing and expensing these awards, as well as
disclosure requirements of these equity arrangements.  The Company
expenses share-based costs in the period incurred.





Subsequent
Events





For
purposes of determining whether a post-balance sheet event should be evaluated
to determine whether it has an effect on the financial statements for the period
ending November 30, 2009, subsequent events were evaluated by the Company as of
February 12, 2010, the date on which the unaudited consolidated financial
statements at and for the quarter ended November 30, 2009, were
issued.








NOTE 3.RECENT
ACCOUNTING PRONOUNCEMENTS





Effective
July 1, 2009, the FASB ASC became the single official source of authoritative,
nongovernmental U.S. GAAP. The historical U.S. GAAP hierarchy was eliminated and
the ASC became the only level of authoritative U.S. GAAP, other than guidance
issued by the SEC. The Company’s accounting policies were not affected by the
conversion to ASC. However, references to specific accounting standards in the
notes to our consolidated financial statements have been changed to refer to the
appropriate section of the ASC.





In June
2008, the FASB amended FASB Topic ASC 815, Sub-Topic 40, "Contracts in Entity’s
Own Equity” to clarify how to determine whether certain instruments or features
were indexed to an entity's own stock under ASC Topic 815. The amendment applies
to any freestanding financial instrument (or embedded feature) that has all of
the characteristics of a derivative, for purposes of determining whether that
instrument (or embedded feature) qualifies for the scope exception. It is also
applicable to any freestanding financial instrument (e.g., gross physically
settled warrants) that is potentially settled in an entity's own stock,
regardless of whether it has all of the characteristics of a derivative, for
purposes of determining whether to apply ASC 815.  The Company was
required to adopt this pronouncement on March 1, 2009. The adoption of this
pronouncement did not have a material effect on the Company’s financial
statements.





In April
2009, the FASB issued a pronouncement on what is now codified as FASB ASC Topic
805, Business
Combinations. This pronouncement provides new guidance that changes the
accounting treatment of contingent assets and liabilities in business
combinations under previous topic guidance.





In April
2009, the FASB issued a pronouncement on what is now codified as FASB ASC Topic
825, Financial
Instruments. This pronouncement amends previous topic guidance to require
disclosures about fair value of financial instruments for interim reporting
periods of publicly traded companies, as well as in annual financial statements.
The pronouncement was effective for interim reporting periods ending after June
15, 2009 and its adoption did not have any significant effect on the
consolidated financial statements.





In
December 2007, the FASB issued ASC 805 “Business Combinations” and 810
“Consolidation” (“ASC 810”), which require that ownership interests in
subsidiaries held by parties other than the parent, and the amount of
consolidated net income, be clearly identified, labeled and presented in the
consolidated financial statements.   ASC 805 and ASC 810 also
require that once a subsidiary is deconsolidated, any retained non-controlling
equity investment in the former subsidiary be initially measured at fair
value.  Sufficient disclosures are required to clearly identify and
distinguish between the interests of the parent and the interests of the
non-controlling owners.  ASC 805 and ASC 810 amend ASC 260 to provide
that the calculation of earnings per share amounts in the consolidated financial
statements will continue to be based on the amounts attributable to the parent.
ASC 805 and ASC 810 are effective for financial statements issued for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008, and require retroactive adoption of the presentation and
disclosure requirements for existing minority interests.  All other
requirements are applied prospectively.  The Company adopted ASC 805
and ASC 810 on March 1, 2009.


10
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In May
2009, the FASB issued a pronouncement on what is now codified as FASB ASC Topic
855, Subsequent Events. This pronouncement establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before the financial statements are issued or are available to be issued.
FASB ASC Topic 855 provides guidance on the period after the balance sheet date
during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial
statements and the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. The pronouncement was
effective for the Company during the annual period ended February 28,
2010.





In June
2009, the FASB issued ASC Topic 810-10, "Amendments to FASB Interpretation No.
46(R)" (“ASC 810-10”).  ASC 810-10 is intended to (1) address the
effects on certain provisions of FASB Interpretation No. 46 (revised December
2003), “Consolidation of Variable Interest Entities,” as a result of the
elimination of the qualifying special-purpose entity concept in ASC 860-20, and
(2) constituent concerns about the application of certain key provisions of
Interpretation 46(R), including those in which the accounting and disclosures
under the Interpretation do not always provided timely and useful information
about an enterprise's involvement in a variable interest entity.  This
statement will be effective for the Company on March 1, 2010.  The
Company does not expect the adoption of 810-10 to have a material impact on its
results of operations, financial condition or cash flows.





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), and the United States Securities and Exchange Commission did
not or are not believed to have a material impact on the Company's present or
future consolidated financial statements.





NOTE
4 – CAPITAL STOCK





The
Company’s authorized capital stock consists of 10,000,000 shares of preferred
stock, par value $0.0001 per share, and 225,000,000 shares of common stock, par
value $0.001 per share.  The board of directors has broad discretion
in determining the rights, preferences and privileges of the holders of one or
more series of preferred stock.





The
issuance of stock in connection with the reverse acquisition and other stock
issuances which were concurrent with the reverse acquisition are described in
Note 8.





Subsequent
to April 20, 2009, the Company issued the following:





On July
8, 2009, the Company sold a total of 1,000,000 shares of common stock to a group
of investors for $0.65 per share.  The total gross proceeds to the
Company is $650,000.  At November 30, 2009, the Company had received
$289,250, and the balance of $360,750 had not been paid and is treated as a
subscription receivable.





During
September, 2009, the Company issued 350,000 shares of its common stock, valued
at $469,000, to Emerging Equity Advisors for their professional
services.





On
October 5, 2009, the Company sold to one investor, for $700,000, 1,000,000
shares of common stock and warrants to purchase 1,000,000 shares of common stock
at an exercise price of $1.50 per share.  Pursuant to the subscription
agreement, the Company agreed that, for 18 months thereafter, it would not issue
any class or debt or equity which is convertible into common
stock.  If the Company issues common stock to any investor at a price
of less the $0.70 per share, then the Company is to issue to the investor such
number of additional shares as is equal to the amount of the investor’s purchase
($700,000) by the difference between $0.70 and the purchase price paid in the
subsequent offering. The value of warrants was determined by using the
Black-Scholes pricing model with the following assumptions:  discount
rate – 1.24%; dividend yield – 0%; expected volatility – 72% and term of 2.5
years.  The value of the Warrants was $435,493.





The
warrants are exercisable until September 25, 2012.  The holder of the
warrants has cashless exercise rights, commencing September 29, 2010, except
that the warrant may not be exercised on a cashless basis if the underlying
shares of common stock are subject to a current and effective registration
statement. The Company has the right to require the holder to exercise the
warrant on 35 trading days’ notice if the volume weighted average price of one
share of common stock is at least $2.50 and the trading volume is at least
50,000 shares, in each case for 25 consecutive trading days ending before the
Company gives notice of its demand that the warrant be exercised. The warrant
also prohibits exercise to the extent that such exercise would result in the
holder and the affiliates of the holder beneficially owning more than 4.9% of
the Company’s common stock, with beneficial ownership being determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended.  The Company has not treated the warrants as derivatives
under ASC Topic 815, Subtopic 40 since there is no monetary equivalence to the
holder.


11
 Table of Contents




On
November 19, 2009, the Company entered into a contract with a consultant
pursuant to which the consultant is to provide management and business
assistance to us for a three-year period.  Pursuant to the agreement,
the Company issued 600,000 shares of common stock.  The value of the
shares, $570,000, based on the closing price of the common stock of $0.95 on
November 19, 2009, is being amortized over the three-year term of the contract,
commencing December 1, 2009.





Warrant
activity for the nine months ended November 30, 2009, is summarized as
follows:





Shares
      subject to Warrants
            
            
            Weighted
      Average Exercise PriceBalance
      at February 28, 2009Granted
            
            
            2,750,000
            
            
            $
            1.30Exercised
            
            
            -Cancelled
            
            
            -Forfeited
      or expired
            
            
            (200,000
            )
            
            $
            0.65Balance
      at November 30, 2009
            
            
            2,550,000
            
            
            $
            1.35





The
following table summarizes the shares of common stock issuable upon exercise of
warrants outstanding at November 30, 2009:





Exercise
      Price
            
            
            Outstanding
      at November 30, 2009
            
            
            Weighted
      Average Remaining Contractual Live (Years)
            
            
            Number
      Exercisable at November 30, 2009$
            1.00
            
            
            
            750,000
            
            
            
            1.40
            
            
            
            750,000$
            1.50
            
            
            
            1,800,000
            
            
            
            2.19
            
            
            
            1,800,000





NOTE
5 – PREPAYMENT





This
account of prepayment represents can breakdown to the following
category:





PrepaymentsPrepaid
      operating expense
            
            
            226,294Advance
      to vendor
            
            
            427,143Total
            
            
            653,437





NOTE
6 – RELATED PARTY TRANSACTIONS





The
Company has received advances from its chairman. The outstanding balance due on
these advances was $26,077 on November 30, 2009, and $655,586 at February 28,
2009.  These advances were provided to the subsidiaries of the Company
prior to the reverse acquisition in April 2009.  During the nine
months ended November 30, 2009 and 2008, the Company repaid $629,509 and
$177,783, respectively. The amounts due to the related party are unsecured and
non-interest bearing with no set terms of repayment.





See Note
8 for in connection with the reverse acquisition and other stock issuances and a
stock purchase from the Company’s former principal shareholder and
director.


12
 Table of Contents




NOTE
7 – INCOME TAXES





The
Company did not provide any current or deferred U.S. federal income tax
provision or benefit for any of the periods presented because the Company has
experienced operating losses for U.S. federal income tax purposes since
inception. When it is more likely than not that a tax asset cannot be realized
through future income the Company must allow for this future tax
benefit.  The Company pays income taxes under the laws of the Republic
of China (Taiwan).  For the nine months ended November 30, 2009,
income tax expenses were as follows:





Nine
      Months Ended September 30,2009Domestic
            
            
            ForeignFederal
            
            
            State
            
            
            TaiwanCurrent
            
            
            
            
            
            
            
            
            -Deferred
            
            
            
            
            
            
            
            
            
            $
            185,972$
            185,972





The
Company recognizes deferred tax assets and liabilities for temporary differences
between the financial reporting and tax bases of its assets and liabilities.
Deferred assets are reduced by a valuation allowance when deemed
appropriate.





The tax
effects of existing temporary differences that give rise to significant portions
of deferred tax assets at November 30, 2009 was as follows:





Deferred Tax AssetsNet operating loss
      carryforwards
            
            
            Valuation allowance
            
            
            Net deferred tax assetsNovember 30, 2009:Foreign:$
            1,886
            
            
            
            -
            
            
            $
            1,886





The
Company has a benefit from income taxes  as a result of an
overestimate of income tax expense for the year ended February 28,
2008.





NOTE
8. – REVERSE ACQUISITION.





On April
20, 2009, the Company acquired APlus pursuant to the reverse
acquisition.  Pursuant to the exchange agreement between the Company,
APlus and the members of APlus, the Company issued 16,000,002 shares of common
stock in exchange for all of the stock of Xodtec, Targetek and UP and APlus’ 35%
interest in Radiant Sun.





Simultaneously
with the reverse acquisition, the Company’s then principal stockholder
transferred to the Company 27,000,000 shares of common stock for no
consideration.  These shares were cancelled.  As a result of
the reverse acquisition and the cancellation of the 27,000,000 shares from the
then principal shareholder, the former members of APlus beneficially owned
approximately 92% of the outstanding shares of our common stock upon completion
of the reverse acquisition.





In
connection with the reverse acquisition, the Company entered into the following
agreements.





On April
20, 2009, the Company issued 350,001 shares of common stock and two-year
warrants to purchase 250,000 shares of common stock at an exercise price of
$1.00 per share, for services rendered by Dragonfly Capital Partners, LLC
(“Dragonfly”) in connection with the Exchange.  The Company has agreed
to register the common stock issued to Dragonfly and the shares of common stock
issuable upon exercise of Dragonfly’s warrants. Using the Black-Scholes
valuation model, the value of these warrants is $34,191. The value of warrants
was determined by using the Black-Scholes pricing model with the following
assumptions:  discount rate – 0.735%; dividend yield – 0%; expected
volatility – 72% and term of 1.5 years.


13
 Table of Contents




On April
22, 2009 the Company entered into a financial advisory agreement with Unise
Investment Corp. (“Unise”) to provide financial consulting services in
consideration for 350,001 shares of common stock.





On April
23, 2009, the Company issued warrants to purchase 1,500,000 shares of common
stock to Unise Investment Corp. These warrants consist of six month warrants to
purchase 200,000 shares of common stock at an exercise price of $0.65 per share,
which expired unexercised on October 23, 2009, two-year warrants to purchase
500,000 shares of common stock at an exercise price of $1.00 per share and
two-year warrants to purchase 800,000 shares of common stock at an exercise
price of $1.50 per share.  The Company agreed to register the shares
of common stock underlying these warrants. Using the Black-Scholes valuation
model, the value of these warrants is $154,676. The value of warrants was
determined by using the Black-Scholes pricing model with the following
assumptions:  discount rate – 0.34% ~0.75%; dividend yield – 0%;
expected volatility – 72% and term of 6 months, 1.5 years and 1.5
years.





Dragonfly
and Unise both provided consulting service. The warrants issued were related an
operating expense to be included in general and administrative expenses in the
nine months ended November 30, 2009.





NOTE
9 SHORT-TERM DEBT





Short-term
debt consisted of the following at November 30, 2009 and February 28,
2009.





November 30, 2009
            
            
            February 28, 2009First
      Bank, interest at 4.94%, maturity date 7/1/2012
            
            $
            55,702
            
            
            $
            23,029





NOTE
10.  COMMITIMENTS AND CONTINGENCIES





The
Company rent offices under several operating leases. The Company minimum rent
for the future is following as :





Twelve
      months ending
            
            AmountsNovember
      30, 2010
            
            $
            146,304November
      30, 2011
            
            $
            119,260November
      30, 2012
            
            $
            28,494





NOTE
11.  SUBSEQUENT EVENTS





On
December 14, 2009, the Company filed a certificate of designation with respect
to a series of preferred stock, designated as the series A convertible preferred
stock, which consists of 8,000,000 shares.  The holders of the series
A preferred stock have no voting rights, except as required by law, except that
the vote of the holders of a majority of the outstanding shares of series A
preferred stock is required for an amendment to the certificate of designation
relating to the series A preferred stock.





Each
share of series A preferred stock is convertible into one share of common
stock.  The conversion rate is subject to adjustment in the event of a
stock dividend, split, distribution, reverse split, combination of shares or
other reclassification of shares.  The certificate of designation also
prohibits conversion to the extent that such conversion would result in the
holder and the affiliates of the holder beneficially owning more than 4.9% of
the Company’s common stock, with beneficial ownership being determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended.  In the event of liquidation, dissolution or winding up, the
holder of the series A preferred stock receive an initial payment of $0.01 per
shares, after which the holders of the common stock receive $0.01 per
share.  After the payment to the holders of the common stock, the
holders of the series A preferred stock shall participate with the holders of
the common stock and any other classes or series of capital stock that have
similar participation rights, as if the series A preferred stock, such other
classes or series of capital stock and the common stock were a single class of
capital stock with each share of series A preferred stock being deemed to be the
number of shares of common stock issuable upon conversion of the series A
preferred stock on the date of the liquidation and each share of each of such
other classes or series of capital stock being deemed to be the number of shares
of common stock issuable upon conversion of such class or series on the date of
liquidation.





As of
February 12, 2010, no shares of series A preferred stock were issued or
authorized for issuance.


14
 Table of Contents




ITEM
2- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS





We
design, market and sell advanced LED lighting products and solutions. Our
products cover a broad range of technically innovative outdoor lighting, indoor
general and accent lighting, and color-changing lighting lamps and fixtures that
are used for applications in commercial, architectural, residential,
hospitality, entertainment and consumer markets. We generate revenue from
selling our lighting products and solutions into commercial, architectural,
residential and other markets. Commercial sales include the lighting solution
design and applications of advanced LED lamps, fixtures, and associated control
systems. Architectural sales mainly focus on the installation of wall wash
lighting, light strips and display panels. Residential sales are addressed to
the replacement market for traditional energy-consuming lighting products such
as incandescent lamps, compact fluorescent lamps, and fluorescent
tubes.





Revenue
is derived from sales of our advanced lighting products and
systems.   In marketing our products, we sell LED products as
stand-alone items to customers who want to purchase the LED products without any
related services, and we provide project services, which include the design,
implementation and related consulting services as well as the LED
products.  We have recently commenced marketing our LED systems to
major potential customers under a program in which our revenue is based on the
savings the customer realizes from using our system rather than the customer’s
existing system.  Through November 30, 2009, we have not generated any
revenue from this type of sale.





Our
ability to be successful is dependent upon our ability to offer customers
lighting solutions that require our know-how in designing a system to meet the
specific needs of the customer at a cost which is acceptable to the
customer.  To the extent that stand-alone LED products become
commodities with the customer looking solely to price, we will need to
distinguish ourselves by offering solutions of which the LED product is an
element.  At present, our gross margin on LED products is
significantly less than our gross margin on project-based lighting
solutions.  During the quarter ended November 30, 2009, our gross
margin was 12.3%, as compared with 27.3% for the nine months ended November 30,
2009, primarily because most of the revenue for the November 2009 quarter
resulted from the sale of LED products.  In addition, we are offering
low prices in an attempt to increase our market share.  However, to
the extent that we offer low prices for the LED products and are not able to
combine the low prices for the LED prices with a project which also requires our
services, our ability to operate profitably will be impaired, especially to the
extent that LED users do not seek services as part of a project.  We
cannot assure you that we will be successful in marketing projects which require
our know-how in the design of a lighting solution.





We
require significant cash for the development of our business.  In
offering project-based solutions and in offering lighting solutions where our
revenue is dependent on the customers’ cost savings is very capital intensive,
since we will have to finance both the LED products and the design and other
services significantly in advance of receipt of payment.  Our failure
to obtain the necessary funding will impair our ability to generate revenue from
this type of sale.  To the extent that we have to rely on the sale of
LED products, our margins, as well as our ability to operate profitably, will be
impaired.





Our
accounts receivable increased from $511,000 at February 28, 1009 to $3.1million
at November 30, 2009, reflecting our sales of $7.4 million for the three months
ended November 30, 2009.  At November 30, 2009, our accounts
receivables were outstanding for an average of 60 days.





We
believe that we are not dependent upon any customer or group of customers.
During the three and nine months ended November 30, 2009 and 2008, no customer
accounted for 10% or more of our revenues.





Our gross
profit is also affected by foreign currency exchange rates.  Our
products are presently manufactured in the People’s Republic of China and our
services are rendered in the Republic of China (Taiwan).  To the
extent that our sales are made to customers outside of China, our revenue will
be affected by changes in the exchange rates between the customer’s currency and
the Taiwan dollar.





Critical
Accounting Policies and Estimates





Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. We
continually evaluate our estimates, including those related to bad debts,
inventories, recovery of long-lived assets, income taxes, and the valuation of
equity transactions. We base our estimates on historical experience and on
various other assumptions that we believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Any future changes to these estimates and assumptions could cause
a material change to our reported amounts of revenues, expenses, assets and
liabilities. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies
affect our more significant judgments and estimates used in the preparation of
the financial statements.


15
 Table of Contents




Revenue
Recognition





Our
revenue recognition policies are in compliance with ASC 605 (Originally issued
as Staff Accounting Bulletin (SAB) 104). Sales revenue is recognized at the date
of shipment to customers when a formal arrangement exists, the price is fixed or
determinable, the delivery is completed, we have no other significant
obligations, and collectability is reasonably assured. Payments received before
all of the relevant criteria for revenue recognition are satisfied are recorded
as unearned revenue.  Discounts provided to customers by us at the
time of sale are recognized as a reduction in sales as the products are sold.
Sales taxes are not recorded as a component of sales.





Cost
of Sales





The cost
of sales represents, primarily, the cost of manufacturing by third party
manufacturers based on a contract price, as well as we provide some parts to our
manufacturer.





Accounts
Receivable





We
maintain reserves for potential credit losses on accounts
receivable.  Management reviews the composition of accounts receivable
and analyzes historical bad debts and customer creditworthiness as well as
changes in customer payment practices and the economic environment.





Inventories





Inventories
are stated at the lower of monthly-weighted-average cost or market value (net
realizable value).  Inventories are recorded at standard cost and
adjusted to approximate weighted-average cost on the balance sheet
date.





Fixed
assets





Fixed
assets are stated at cost. Major improvements and addition which can prolong the
service life of fixed assets are counted as capital expenditures and recorded as
fixed assets. Expenditures on regular repairs and maintenance are recorded as
expenses.  Fixed assets are depreciated according to the service life
and using the average method, with one-year residual value. Additions are
depreciated according to the fixed assets’ service life. Major improvements are
depreciated based on the remaining service lives of fixed assets. While assets
are continually in use after the expiration of its service life, the residual
values and service lives are estimated and depreciated accordingly and
continually. The gain (loss) on disposal of assets is recognized as
non-operating revenue (expenditure) in the period of sale or
disposal.





Income
Taxes





We follow
the liability method of accounting for income taxes in accordance with ASC
740.  Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax balances.  Deferred tax assets and liabilities
are measured using enacted or substantially enacted tax rates expected to apply
to the taxable income in the years in which those differences are expected to be
recovered or settled.  Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be
realized.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the date
of enactment or substantive enactment. As of November 30, 2009, our deferred tax
assets were offset by our income tax expense; therefore there is no income tax
expense.





Gain
on Exchange





Foreign-currency
transactions are recorded in New Taiwan dollars (“NTD”) at the rates of exchange
in effect when the transactions occur. Gains or losses resulting from the
application of different foreign exchange rates when cash in foreign currency is
converted into NTD, or when foreign-currency receivables or payables are
settled, are credited or charged to income in the year of conversion or
settlement. On the balance sheet dates, the balances of foreign-currency assets
and liabilities are restated at the prevailing exchange rates and the resulting
differences are charged to current income.


16
 Table of Contents




Foreign
Currency Translation





The
financial statements are presented in United States dollars. Our subsidiaries
maintain their books and records in NTD, which is our functional
currency.  In accordance with ASC 830, foreign denominated monetary
assets and liabilities are translated to their United States dollar equivalents
using foreign exchange rates which prevailed at the balance sheet
date.  Non-monetary assets and liabilities are translated at exchange
rates prevailing at the transaction date. Revenue and expenses are translated at
average rates of exchange during the periods presented.  Related
translation adjustments are reported as a separate component of stockholder’s
equity (deficit), whereas gains or losses resulting from foreign currency
transactions are included in results of operations.





Share
Based Expenses





ASC 718
requires a public entity to expense the cost of employee services received in
exchange for an award of equity instruments. This statement also provides
guidance on valuing and expensing these awards, as well as disclosure
requirements of these equity arrangements.  We expenses share-based
costs in the period incurred.





Results
of Operations





The
following table sets forth the results of our operations for the periods
indicated in dollars and as a percentage of revenues (dollars in
thousands):





Three Months Ended
      November 30,
            
            
            Nine Months Ended
      November 30,2009
            
            
            2008
            
            
            2009
            
            
            2008Dollars
            
            
            %
            
            
            Dollars
            
            
            %
            
            
            Dollars
            
            
            %
            
            
            Dollars
            
            
            %Revenues
            
            
            7,371
            
            
            
            100.0
            %
            
            
            1,544
            
            
            
            100.0
            %
            
            
            11,545
            
            
            
            100.0
            %
            
            
            2,311
            
            
            
            100.0
            %Cost
      of goods sold
            
            
            6,450
            
            
            
            87.5
            %
            
            
            747
            
            
            
            48.4
            %
            
            
            8,388
            
            
            
            72.7
            %
            
            
            1,121
            
            
            
            48.5
            %Gross
      profit
            
            
            921
            
            
            
            12.5
            %
            
            
            797
            
            
            
            51.6
            %
            
            
            3,158
            
            
            
            27.4
            %
            
            
            1,190
            
            
            
            51.5
            %Selling,
      general and administrative expenses
            
            
            719
            
            
            
            9.7
            %
            
            
            183
            
            
            
            11.9
            %
            
            
            1,486
            
            
            
            12.9
            %
            
            
            568
            
            
            
            24.6
            %Issuance
      of equity for services
            
            
            469
            
            
            
            6.4
            %
            
            
            0
            
            
            
            0.0
            %
            
            
            1,108
            
            
            
            9.6
            %
            
            
            0
            
            
            
            0.0
            %Operating
      income (loss)
            
            
            (267
            )
            
            
            (3.6
            )%
            
            
            614
            
            
            
            39.8
            %
            
            
            564
            
            
            
            4.9
            %
            
            
            622
            
            
            
            26.9
            %Interest
      expense, net
            
            
            (1
            )
            
            
            (0.0
            )%
            
            
            2
            
            
            
            0.1
            %
            
            
            (2
            )
            
            
            (0.0
            )%
            
            
            (5
            )
            
            
            (0.2
            )%Gain
      on currency exchange
            
            
            11
            
            
            
            0.1
            %
            
            
            0
            
            
            
            0.0
            %
            
            
            2
            
            
            
            0.0
            %
            
            
            0
            
            
            
            0.0
            %Other
      income (expense), net
            
            
            3
            
            
            
            0.0
            %
            
            
            (2
            )
            
            
            (0.0
            )%
            
            
            3
            
            
            
            0.0
            %
            
            
            0
            
            
            
            0.0
            %Income
      tax benefit
            
            
            330
            
            
            
            0.4
            %
            
            
            0
            
            
            
            0.0
            %
            
            
            186
            
            
            
            0.2
            %
            
            
            0
            
            
            
            0.0
            %Net
      income
            
            
            76
            
            
            
            1.0
            %
            
            
            614
            
            
            
            39.8
            %
            
            
            752
            
            
            
            6.5
            %
            
            
            620
            
            
            
            26.8
            %





Revenues.Revenues
for the three months ended November 30, 2009 were $7,371,000, an increase of
$5,827,000 or almost 377.4% from revenues of $1,544,000 for the three months
ended November 30, 2008.  For the nine months ended November 30, 2009
revenues were $11,545,000, an increase of $9,234,000, or approximately 400% from
revenues of $2,311,000 for the nine months ended November 30,
2008.  The increase in revenue for the nine months ended November 30,
2009 compared with 2008 reflect the fact that we were in our early stage and had
just implemented our marketing plan, as well as market acceptance of our LED
products, resulting, in part, from our pricing policy in which we sought to
increase our market share through lower prices than our
competition.  Almost all our sales in the three months ended November
30, 2009 were sales of LED products on a stand-alone basis. During the nine
months ended November 30, 2009, approximately 21.8% of our sales related to
projects and approximately 78.2% of our sales were sales of LED products on a
stand-along basis.





Gross Profit/ Gross
Margin.  Our gross margin declined significantly in both nine
months ended November 30, 2009 and three months ended November 30,
2009.  For the nine months ended November 30, 2009 our gross margin
declined from 51.5% to 27.4%.  For the three months ended November 30,
2009 our gross margins declined from 51.6% to 12.5%. Our gross profit for the
three months ended November 30, 2009, was $921,000, compared with $797,000 for
three months ended November 30, 2008.  For the nine months ended
November 30, 2009, our gross profit was $3,158,000, as compared with $1,190,000
for the nine months ended November 30, 2008.  The decrease in gross
margin reflected the effects of our sales of LED products on a stand-alone basis
at a relatively low price, primarily in the November 2009 Quarter, which has the
effect of decreasing the gross margin for the nine months ended November 30,
2009 as well.


17
 Table of Contents




Selling, General and Administrative
Expenses.  The increases in selling, general and administrative
expenses, other than non-cash expenses from the issuance of equity for services,
were $535,000 from the quarter ended November 30, 2008 to the quarter ended
November 30, 2009 and of $918,000 from the nine months period ended November 30,
2008 to the nine months period ended November 30, 2009.  These
increases reflect additional expenses relating to our status as a public company
and stock-based compensation.  Prior to April 20, 2009, our
subsidiaries were operating as separate private companies and did not have the
level or nature of expenses that are associated with being a public
company.





Issuance of Equity for
Services.  Following the completion of the reverse acquisition
in April 2009, we issued shares of common stock and warrants to consultants for
services rendered during the three and nine months ended November 30,
2009.  The total value of the stock and warrants, which in included in
general and administrative expenses was $469,000 for the three months ended
November 30, 2009 and $1,108,000 for the nine months ended November 30,
2009.  All of these expenses related to agreements entered at or about
the time of the reverse acquisition and are fully expensed at November 30,
2009.  We had no comparable expenses in 2008.  On November
19, 2009, we entered into a three-year consulting contract pursuant to which we
issued 600,000 shares of common stock.  The value of the shares,
$570,000, is being amortized over the three-year term of the contract,
commencing December 1, 2009.





Other Income. Other income was
not material the three or nine months ended November 30, 2009 or
2008.





Income Tax Benefit.We pay income taxes
under the laws of the Republic of China (Taiwan).  We had an income
tax benefit of $330,000 for the three months ended November 30, 2009 and
$186,000 for the nine months ended November 30, 2009.  The income tax
benefit resulted from an overestimate of income tax due for the year ended
February 29, 2008.





Net Income. As a result of the
foregoing, our net income for the three months ended November 30, 2009 was
$76,000 or $0.00 per share (basic and diluted), as compared with $614,000, or
$0.04 per share (basic and diluted) for the three months ended November 30,
2008.  For the nine months ended November 30, 2009, our net income was
$752,000 or $0.04 per share (basic and diluted) as compared with $620,000 or
$0.04 per share (basic and diluted) for the nine months ended November 30,
2008.





Liquidity
and Capital Resources:





The
following table sets forth information as to the principal changes in the
components of working capital from February 28, 2009 to November 30, 2009
(dollars in thousands):





Category
            
            November 30,
      2009
            
            
            February 28,
      2009
            
            
            Change
      (in $)
            
            
            %
      ChangeCurrent
      assets:Cash
      and cash equivalents
            
            $
            127
            
            
            $
            107
            
            
            $
            20
            
            
            
            18.4
            %Notes
      receivable, net
            
            
            0
            
            
            
            1
            
            
            
            (1
            )
            
            
            (100.0
            )%Accounts
      receivable, net
            
            
            3,105
            
            
            
            511
            
            
            
            2,594
            
            
            
            507.9
            %Other
      receivables
            
            
            110
            
            
            
            0
            
            
            
            110
            
            
            
            -Inventories
            
            
            294
            
            
            
            246
            
            
            
            48
            
            
            
            19.5
            %Prepayments
            
            
            653
            
            
            
            146
            
            
            
            507
            
            
            
            348.5
            %Other
      current assets
            
            
            0
            
            
            
            46
            
            
            
            (46
            )
            
            
            (100.0
            )%Current
      liabilities:Short-term
      debt
            
            
            56
            
            
            
            23
            
            
            
            33
            
            
            
            141.9
            %Accounts
      payable
            
            
            1,090
            
            
            
            384
            
            
            
            706
            
            
            
            183.9
            %Accrued
      liabilities
            
            
            386
            
            
            
            101
            
            
            
            285
            
            
            
            283.1
            %Due
      to related party
            
            
            86
            
            
            
            656
            
            
            
            (570
            )
            
            
            (86.9
            )%Tax
      payable
            
            
            0
            
            
            
            174
            
            
            
            (174
            )
            
            
            (100.0
            )%Total
      current assets
            
            
            4,289
            
            
            
            1,056
            
            
            
            3,233
            
            
            
            306.2
            %Total
      current liabilities
            
            
            1,626
            
            
            
            1,349
            
            
            
            276.8
            
            
            
            20.5
            %Working
      capital
            
            
            2,663
            
            
            
            (293
            )
            
            
            2,956
            
            
            
            1,008.9
            %





Our
working capital increased from a deficiency of $(293,000) at February 28,
2009 to working capital of $2,663,000at November 30, 2009.  This
increase in working capital resulted primarily from a $2,593,969 increase in
accounts receivables, partially offset by a $705,651 increase in accounts
payable. The increase in accounts receivable reflects the significant increase
in sales during the nine months ended November 30, 2009.  At November
30, 2009, our accounts receivable were outstanding for an average of 60
days.  Our ratio of current assets to current liabilities was 2.64:1
at November 30, 2009.


18
 Table of Contents




For the
nine months ended November 30, 2009, our operations used cash of $(278,286), as
contrasted with cash generated from operation of of $409,877 for the nine months
ended November 30, 2008.   The large accounts receivable balance
at November 30, 2009, had a significant effect on our cash flows from operations
in the nine months ended November 30, 2009.





For the
nine months ended November 30, 2009, our cash flow from investing activities was
nominal. Our cash flow from financings activities for the nine months ended
November 30, 2009 was $300,017, reflecting net proceeds of $884,110 from the
sale of stock and warrants and an increase in short-term debt of $30,112, which
was offset by the payment of $614,205 to a shareholder for loans incurred prior
to the reverse acquisition.   For the nine months ended November
30, 2008, our net cash flow used in financing activities was $(256,215), of
which $177,783 represented payment of a shareholder loan and $78,432 represented
payment of short-term debt.





Our
business plan is based on increasing our sales of projects that include services
as well as LED units and in marketing to major potential customers of lighting
solutions that utilize LED lighting in a program in which we are paid based on
the customer’s savings generated by our program.  Both of these
programs are very cash intensive since we will be required to develop the
program pay the cost of the LED units before we receive payment, and we do not
expect that we will be able to receive progress payments, if any, which will
cover our costs.





We would
seek to develop a financing program whereby customers who purchase a lighting
solution based on the savings generated would be able to finance the
purchase.  However, before we would be able to obtain any such
financing, we would need to demonstrate to the banks or other financing sources
that this type of plan can generate the necessary cash flow to pay the financing
from the savings.  Since we have not yet installed any lighting
solutions under such programs, we have not been able to demonstrate the
financial viability of the program. We are currently bidding on a project for
such a program, and, if we obtain the contract and deliver a lighting solution
that generates the anticipated cash flow to us, we will be in a better position
to obtain project financing.  However, we cannot assure you that we
will be able to demonstrate that the project can generate the cash flow required
by a bank or other financing source.





In
addition to project financing, we require additional capital to enable us to
develop our business and to increase our sales of lighting solutions and reduce
our reliance on sales of LED units, which were our principal source of revenue
for the November 2009 Quarter.  We cannot assure you that we will be
able to obtain sufficient financing.   To the extent that we
issue securities in a financing, our shareholders will be subject to
dilution.





During
the nine months ended November 30, 2009, we raised gross proceeds of $884,110
from the private placement of our common stock and warrants.  We used
these funds for working capital.  If we are unable to obtain either
debt or equity financing, it will be difficult for us to develop our business as
contemplated by our business plan.  Although we believe that we have
sufficient working capital which, together with anticipated revenue, would
provide us with sufficient funds to enable us to operate for at least a year, we
may have difficulty in marketing and selling our higher-margin lighting
solutions.  To the extent that our business is dependent upon
stand-alone sales of LED units, it will be difficult for us to grow, since the
sale of such products does not generate a significant gross margin, as is
reflected in the results of operations for the November 30, 2009
quarter.





Our
products are manufactured in the People’s Republic of China by third-party
manufacturers.  Our products are sold in the People’s Republic of
China and the Republic of China (Taiwan) and we are seeking to market products
in the international market.





ITEM 4 – CONTROLS AND PROCEDURES





Our
management, including Yao-Ting Su, our chief executive officer, and Pi-Chu Lin,
our chief financial officer, evaluated the effectiveness of the design and
operation of our disclosure controls and procedures as of November 30,
2009.





Disclosure
controls and procedures refer to controls and other procedures designed to
ensure that information required to be disclosed in the reports we file or
submit under the Securities Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC and
that such information is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating our disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating and
implementing possible controls and procedures.


19
 Table of Contents




Management
conducted its evaluation of disclosure controls and procedures under the
supervision of our chief executive officer and our chief financial officer.
Based on that evaluation, our management, including Mr. Su and Ms. Lin,
concluded that because of the significant deficiencies in internal control over
financial reporting described below, our disclosure controls and procedures were
not effective as of November 30, 2009.





Based
upon that evaluation, our chief executive officer and chief financial officer
concluded that there were material weaknesses in our internal controls over
financial reporting as of the end of the period covered by this
report.  In making this assessment, our management used the criteria
set forth by the Committee of Sponsoring Organizations (“COSO”) of the Treadway
Commission in Internal Control — Integrated Framework. Our management concluded
that, as of February 28, 2009, our internal control over financial reporting was
not effective based on these criteria.  Our chief executive officer
and chief financial officer identified weaknesses related to our accounting
personnel’s ability to identify various accounting and disclosure issues,
account for transactions that include an equity-based component, and prepare
financial statements and footnotes in accordance with U.S. GAAP.  At
the end of our most recent fiscal year, February 28, 2009, and until April 2009,
when we completed the reverse acquisition, we were operating as three
privately-owned companies whose operations were not consolidated for financial
reporting purpose.  Our business is located in the Republic of China
and our products are manufactured for us by third parties in the People’s
Republic of China.  Until the quarter ended May 31, 2009, our
financial statements were prepared in accordance with GAAP as practiced in the
Republic of China.





At or
about the completion of the reverse acquisition, we entered into agreements with
consultants pursuant to which we issued equity securities for services
rendered.  Subsequent to the reverse acquisition, we completed a
financing in which we issued stock and warrants.  These events
presented complex accounting issues which were new to our financial
staff.  Furthermore, we do not have a large accounting department and
it has been difficult for us to hire qualified personnel who understand English
and Chinese and are familiar with both U.S. GAAP and Republic of China
GAAP.  Additionally, from the completion of the reverse acquisition
until January 2010, our chief financial officer was the wife of our chief
executive officer.  We are addressing these issues by reviewing and
revising our internal accounting policies and procedures, expanding the
resources allocated to our accounting department, and hiring outside accounting
advisors.  We expect resolution of these matters may take several
months.  Accordingly, based on the foregoing, the certifying officers
have concluded that our disclosure controls and procedures are not effective at
this time.





The
conclusion of chief executive officer and chief financial officer regarding our
disclosure controls and procedures is based solely on management’s conclusion
that our internal control over financial reporting was not
effective.





Our
material weaknesses related to:





·
            An
      insufficient complement of personnel in our corporate accounting and
      financial reporting function with an appropriate level of technical
      accounting knowledge, experience, and training in the application of US
      GAAP commensurate with our complex financial accounting and reporting
      requirements and materiality
thresholds.





·
            Lack
      of familiarity with the accounting treatment of the issuance of equity in
      consideration of services rendered and with the accounting aspects of
      reverse acquisition accounting.





·
            Lack
      of internal audit function - the monitoring function of internal control
      is not well performed due to insufficient resources. In addition, the
      scope and effectiveness of internal audit function have yet to be
      developed.





·
            Lack
      of written policies and procedures relating to periodic review of current
      policies and procedures and their
  implementation.





·
            The
      absence of an audit committee comprised of independent
      directors.





As a
result of these weaknesses, we were not able to file our Form 10-Q for the
quarter ended November 30, 2009 on time, and we will restate our financial
statements for the quarters ended May 31, 2009 and August 30, 2009.





Remediation
and Changes in Internal Control over Financial Reporting





Our
management has discussed the material weaknesses in its internal control over
financial reporting with the board of directors, and we are in the process of
developing and implementing remediation plans to address the material
weaknesses. As an initial step, we engaged an independent accounting firm which
is not related to our independent registered accounting firm, to assist us in
the preparation of our financial statements and the development and
implementation of a system of internal controls.


20
 Table of Contents




Other
than as described above, management does not believe that there have been any
other changes in our internal control over financial reporting, which have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.





PART
IIOTHER INFORMATION





ITEM4– UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





On
November 19, 2009, we entered into a contract with a consultant pursuant to
which he is to provide management and business assistance to us for a three-year
period.  Pursuant to the agreement, we issued 600,000 shares of common
stock to said consultant.  The value of the shares, $570,000, based on
the closing price of the common stock of $0.95 on November 19, 2009, is being
amortized over the three-year term of the contract.  In the event of
the termination of the contract, the unamortized shares are
forfeited.





ITEM
5 – EXHIBITS





a)
Exhibit index





Exhibit
            Description
      of the Exhibit





31.1
            Rule
      13a-14(a)/15d-14(a) certification by the chief executive
      officer.





31.2
            Rule
      13a-14(a)/15d-14(a) certification by the chief financial
      officer.





32.1
            Section
      1350 certification by the chief executive officer and chief financial
      officer.


21
 Table of Contents


SIGNATURES





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








XODTEC
      GROUP USA, INC.Date:     February
      12, 2010
            /s/Yao-Ting
    SuYao-Ting
      SuChief
      Executive OfficerDate:     February
      12, 2010
            /s/ Pi Chu LinPi
      Chu LinChief
      Financial Officer






22