U. S. Securities and Exchange Commission


Washington, D. C. 20549





FORM 10-Q





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





For the quarterly period ended December 31, 2009





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





For the transition period from _____ to _____





Commission File No. 333-146796







HXT HOLDINGS, INC.


(Name of Registrant in its Charter)





Delaware
20-2188353(State of Other Jurisdiction of incorporation or organization)
(I.R.S. Employer I.D. No.)





c/o Warner Tech & Investment Corp. 100 Wall Street, 15thFloor, New York, NY 10005


(Address of Principal Executive Offices)





Issuer's Telephone Number: 212-232-0120





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





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.)  YesNo_





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





Large accelerated filer ___   Accelerated filer  ____      Non-accelerated filer  ___   Smaller reporting company _X_





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





As of February 5, 2010, we had 666,241 shares of common stock, par value $.001 per share issued and outstanding.







PART I. FINANCIAL INFORMATION





HXT HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(UNAUDITED)ASSETSDecember 31,2009

September 30,2009CURRENT ASSETS:Cash & cash equivalents

$
152,948


$
63,364Accounts receivable, net


134,865



100,399Inventory


43,395



14,135Other receivable


107,130



54,520Total current assets


438,339



232,417PROPERTY AND EQUIPMENT, NET


154,864



165,922TOTAL ASSETS

$
593,203


$
398,339LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT LIABILITIES:Accounts payable & accrued expenses

$
121,875


$
95,585Payroll payable


53,051



52,376Unearned revenue


556,375



456,423Related party payable


13,821



15,398Total current liabilities


745,123



619,781STOCKHOLDERS' DEFICIT:Preferred stock, $0.001 par value; Authorized shares 1,000,000,none issued and outstanding


-



-Common stock, $0.001 par value; Authorized shares 60,000,000,29,910,000 shares issued and 666,241 outstanding as of December 31, 200929,910,000 shares issued and 666,241 outstanding as of September 30, 2009


29,910



29,910Additional paid in capital


1,199,334



1,199,334Treasury stock


(29,244
)


(29,244
)Statutory reserve


57,103



57,103Accumulated other comprehensive income


320,815



320,801Accumulated deficit


(1,729,838
)


(1,799,347
)Total stockholders' deficit


(151,920
)


(221,443
)TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$
593,203


$
398,339The accompanying notes are an integral part of the unaudited consolidated financial statements.





2





HXT HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)For the three monthPeriods ended December 31,2009


2008Net revenues

$
320,497


$
157,436Cost of revenue


43,249



3,205Gross profit


277,249



154,231Operating expensesSelling expenses


51,232



77,390General and administrative expenses


47,021



114,489Research & development expenses


168,305



116,068Total operating expenses


266,558



307,947Income (Loss) from operations


10,690



(153,716
)Non-operating income (expense):Interest income


34



143Loss on sale of property


(981
)


-Other income


60,014



323Other expense


(248
)


(405
)Total non-operating income


58,819



62Net income (loss) before income tax


69,509



(153,654
)Net Income (Loss)


69,509



(153,654
)Foreign currency translation gain (loss)


14



(269
)Comprehensive Income (Loss)

$
69,523


$
(153,923
)Basic and diluted weighted average shares outstanding


666,241



29,910,000Basic and diluted net income (loss) per share

$
0.10


$
(0.01
)Basic and diluted weighted aerage shares outsanding are the same as there is no anti-dilutive effect.The basic and diluted net loss per share has been stated to retroactively 1:3 forward split in April 2009The accompanying notes are an integral part of the unaudited consolidated financial statements





3





HXT HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)For the three monthPeriods ended December 31,2009


2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)

$
69,509


$
(153,654
)Adjustments to reconcile net income (loss) to net cashprovided by operating activities:Depreciation


16,398



17,882Allowance for bad debts


-



50,904Loss on sale of property


981



-(Increase) / decrease in assets:Accounts receivable


(34,460
)


20,185Inventory


(29,254
)


(88,351
)Other receivable


(52,599
)


(18,808
)Advances to suppliers


-



(12,113
)Increase / (decrease) in current liabilities:Accounts payable & accrued expenses


26,285



54,405Unearned revenue


99,931



247,188Payroll payable


676



1,974Net cash provided by operating activities


97,467



119,612CASH FLOWS FROM INVESTING ACTIVITIES:Receipt of cash on disposal of property


58



-Acquisition of property & equipment


(6,381
)


(675
)Net cash used in investing activities


(6,323
)


(675
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from loan-officers


(1,577
)


-EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


18



214NET INCREASE IN CASH & CASH EQUIVALENTS


89,585



119,151CASH & CASH EQUIVALENTS, BEGINNING BALANCE


63,364



6,827CASH & CASH EQUIVALENTS, ENDING BALANCE

$
152,949


$
125,978Supplement disclosure of cash flow information:Income taxes paid

$
-


$
-Interest expenses paid

$
-


$
-The accompanying notes are an integral part of the unaudited consolidated financial statements.





4


1. ORGANIZATION AND DESCRIPTION OF BUSINESS
  HXT Holdings, Inc. (formally China International Enterprises Corp.) (“the Company”, “HXT”, “We”, “Us”, “Our”) was incorporated in Delaware on January 13, 2005.  On January 31, 2005, the Company entered into a Share Exchange Agreement, pursuant to which
HXT acquired 100% of the outstanding stock of Heng Xing Technology Group Development Limited (XHT) from its three shareholders.  XHT's only asset is 100% of the stock of Shenzhen Hengtaifeng Technology Co., Ltd., a PRC corporation hereinafter is referred to as “HTC”. The acquisition has been recorded as a recapitalization of XHT, with XHT being treated as the continuing entity. Effective August 16, 2006, the Company changed its name to HXT Holdings, Inc.
  Heng Xing Technology Group Development Limited (“XHT”) is a British Virgin Islands Corporation, incorporated on May 28, 2004. The company is authorized to issue 50,000 shares of common stock of $1 par value. The company is a non-operative holding company of Shenzhen Hengtaifeng Technology Co. Ltd. (“HTC”).
On December 14, 2004, XHT entered in to an agreement with all the shareholders of HTC to acquire all of the outstanding stock of HTC. The acquisition has been recorded as a recapitalization of HTC, with HTC being treated as the continuing entity.
  HTC was founded in Hi-tech Technology Industrial Park in the city of Shenzhen, Guangdong Province of People’s Republic of China in July 1995, under the name Shenzhen Guangba Trade Development Co., Ltd. HTC amended its name to Shenzhen Hengtaifeng Technology Co. Ltd. on May 12, 2000. HTC is primarily engaged
in developing and distributing software and hardware systems on housing fund, guarantee information management, and home plan management in the People’s Republic of China.
  On August 15, 2005, the Company became a wholly owned subsidiary of American Wenshen Steel Group, Inc.
  Effective July 30, 2007, the company changed its fiscal year from December 31 to September 30.
  As of March 31, 2009, American Wenshen Steel Group, Inc. distributed all of the 29,910,000 currently outstanding common stock of HXT Holdings to its stockholders.  There were no proceeds from the distribution and neither American Wenshen nor HXT Holdings received any consideration in exchange for
the shares distributed.
  After the distribution, the Company is no longer a subsidiary of American Wenshen. The Company will continue to be engaged indirectly in the specialized software industry in the People’s Republic of China through its indirectly wholly owned subsidiary, Shenzhen Hengtaifeng Technology Co., Ltd.
  Certain of the holders of shares of American Wenshen Steel Group had previously agreed that they would surrender to the Company any shares of the Company’s common stock that were distributed to them by American Wenshen Steel Group.   Accordingly, 29,243,759 shares were immediately surrendered
to the treasury of the Company, leaving 666,241 shares outstanding at the close of business on March 31, 2009.
  On April 7, 2009 the Company’s Board of Directors declared a three-for-one forward split of the outstanding shares. These financial statements have been retroactively restated to reflect these changes.
  
 5
  2    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Use of estimates
  The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
  Principles of consolidation
  The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries XHT and HTC. All significant inter-company accounts and transactions have been eliminated in consolidation.
  Cash and cash equivalents
  Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.
  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, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate
the adequacy of these reserves.  Reserves are recorded primarily on a specific identification basis. Allowance for doubtful debts amounted to $227,105 and $287,043 as of December 31, 2009 and September 30, 2009, respectively.
  Inventories
  Inventories comprised of software compact disk, computer server and macro-storage equipment. Inventories are valued at the lower of cost (determined on a weighted average basis) or market. The Management compares the cost of inventories with the market value and allowance is made for writing down the inventories
to their market value, if lower.
  Property & Equipment
  Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations.  Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of: 39 years for building, 5 or 7 years for machinery and equipments, and 7 years for vehicles.
  Software development costs
  The Company capitalizes certain computer software development costs in accordance with ASC  985 (previously SFAS No. 86), “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.”  Costs incurred internally to create a computer software product or
to develop an enhancement to an existing product are charged to expense when incurred as research and development expense until technological feasibility for the respective product is established. Thereafter, all software development costs are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers.
  6
 The Company makes on-going evaluations of the recoverability of its capitalized software projects by comparing the amount capitalized for each product to the estimated net realizable value of the product.  If such evaluations indicate that the unamortized software development costs exceed the net realizable
value, the Company writes off the amount which the unamortized software development costs exceed net realizable value. Capitalized and purchased computer software development costs are being amortized ratably based on the projected revenue associated with the related software or on a straight-line basis over three years, whichever method results in a higher level of amortization.
  Long-lived assets
  The Company applies ASC 360 (previously the Statement of Financial Accounting Standard No. 144.) “Accounting for the Impairment or Disposal of Long-Lived Assets" ASC 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from
the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
  The Company tests long-lived assets, including property, plant and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets
are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures
the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There was no impairment of long-lived assets for period ended December 31, 2009.
  Revenue recognition
  The Company's revenue recognition policies are in compliance with ASC 605 (previously Staff Accounting Bulletin 104). Sales revenue is recognized at the date of shipment to customers or services has been rendered 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.
  License Revenue.  The Company recognizes revenue from license contracts when a non-cancelable, non-contingent license agreement has been signed, the software product has been delivered, no uncertainties exists surrounding product acceptance, fees from the agreement are fixed and determinable and collection
is probable.  Any revenues from software arrangements with multiple elements are allocated to each element of the arrangement based on the relative fair values using specific objective evidence as defined in the SOPs.  If no such objective evidence exists, revenues from the arrangements are not recognized until the entire arrangement is completed and accepted by the customer.  Once the amount of the revenue for each element is determined, the Company recognizes revenues as each element
is completed and accepted by the customer.  For arrangements that require significant production, modification or customization of software, the entire arrangement is accounted for by the percentage of completion method, in conformity with ASC 605.
  7
 Services Revenue.  Revenue from consulting services is recognized as the services are performed for time-and-materials contracts and contract accounting is utilized for fixed-price contracts.  Revenue from training and development services is recognized as the services are performed.  Revenue
from maintenance agreements is recognized ratably over the term of the maintenance agreement, which in most instances is one year. Revenue from software services is recognized ratably over the service period.  Payment received in advance is recorded on the balance sheet as unearned revenue.
  As of December 31, 2009, unearned revenue is $556,375, and it includes $476,013 of customer deposit and $80,362 of unearned software service revenue. As of September 30, 2009, unearned revenue is $456,423, and it includes $391,377 of customer deposit and $65,046 of unearned software service revenue.
  Research and development costs
  Research and development costs are charged to operations as incurred and amounted to $168,305 and $116,068 forthe three months period ended December 31, 2009 and 2008, respectively.
  Stock-based compensation
  In December 2004, the FASB issued SFAS No. 123 (revised 2004), ‘‘Share-Based Payment’’ (‘‘SFAS 123R’’)(ASC 718), which requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based
method and the recording of such expense in the consolidated statements of operations. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC’s interpretation of ASC 718 (previously SFAS 123R) and the valuation of share-based payments for public companies. The Company has adopted ASC 718 (preciously SFAS 123R) and related FASB Staff Positions (“FSPs”) as of January 01, 2006 and will recognize stock-based compensation expense using the modified
prospective method.  The Company did not issue any stock based compensation during the period ended December 31, 2009.
  Income taxes
  The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
  The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized. If the Company is able to utilize more of its deferred
tax assets than the net amount previously recorded when unanticipated events occur, an adjustment to deferred tax assets would increase the Company net income when those events occur.
  Foreign currency transactions and comprehensive income
  Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section
of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of HTC is the Chinese Yuan or Renminbi (“RMB”). Foreign currency translation gain (loss) amounted to $14 and $(269) for three months period ended December 31, 2009 and 2008, respectively.  Accumulated other comprehensive income amounted to $320,815 and $320,801 on December 31, 2009 and September 30, 2009, respectively.
  8
 Earnings per share
  Earnings per share is calculated in accordance with ASC 260 (previously the Statement of financial accounting standards No. 128). Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares
and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
  Statement of cash flows
  In accordance with ASC 230 (previously the Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows,") cash flows from the Company's operations is calculated based upon the local currencies.  As a result, amounts related to assets and liabilities reported on the statement of cash flows
will not necessarily agree with changes in the corresponding balances on the balance sheet.
  Recent pronouncements
 
 In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the
United States recognized by the FASB to be applied to nongovernmental entities. The Codification is effective in the third quarter of 2009, and accordingly, the Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature. The Company does not believe that this will have a material effect on its consolidated financial statements.
  In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual
periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company’s consolidated financial statements.
  In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, “Accounting for Transfers of Financial Assets”) , which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related
to transferred financial assets. SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements.
  In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest
entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.
  In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price
in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and did not have
a significant impact on our consolidated financial statements.
  9
 In October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition – Multiple Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 updates the existing multiple-element revenue arrangements guidance currently
included in FASB ASC 605-25. The revised guidance provides for two significant changes to the existing multiple-element revenue arrangements guidance. The first change relates to the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units of accounting. This change will result in the requirement to separate more deliverables within an arrangement, ultimately leading to less revenue deferral. The second change modifies the manner in which the
transaction consideration is allocated across the separately identified deliverables. Together, these changes will result in earlier recognition of revenue and related costs for multiple-element arrangements than under previous guidance. This guidance also expands the disclosures required for multiple-element revenue arrangements.The Company does not believe that this will have a material effect on its consolidated financial statements.
 
 3.  INVENTORIES
  Inventories as of December 31, 2009 and September 30, 2009 consisted of the following:
 
 December 31,2009


September 30,2009Raw and packing materials

$
55,351


$
53,317Finished goods


1,609



1,609Work in process


310,633



283,407Total


367,593



338,333Less: Allowance for inventories


(324,198
)


(324,198
)Net Inventories

$
43,395


$
14,135
  The allowance for inventories is made when the aging of inventory is over 1 year. The allowances for inventories were $324, 198 on December 31, 2009 and September 30, 2009, respectively.
  4.    PROPERTY AND EQUIPMENT
  Net property and equipment as of December 31, 2009 and September 30, 2009 were as follows:
 December 31, 2009


September 30, 2009Building & improvement

$
41,612


$
41,612Machinery& equipment


220,629



227,050Vehicles


87,203



87,203Furniture and fixture


22,380



22,381Software


323,839



321,238Total


695,664



699,484Less: Accumulated depreciation


(540,800
)


(533,562
)Net Property & Equipment

$
154,864


$
165,922
  Depreciation expenses for the three months period ended December 31, 2009 and 2008 were $16,398 and $17,882, respectively.
 10
  5.
OTHER RECEIVABLE
  Other receivable as of December 31, 2009 and September 30, 2009 consisted of the following:
 
 December 31, 2009


September 30, 2009Advances to other companies

$
15,919


$
15,489Advances to employees


59,514



31,279Value added tax receivable


31,697



7,752Total

$
107,130


$
54,520
  Advances to other companies amounted to $15,919 as of December 31, 2009. It includes advances to other unrelated parties, which are unsecured, interest free, and due on demand.
  Advances to employees amounted to $59,514.  These advances are unsecured, interest free, and due on demand.
  6.     ACCOUNTS PAYABLE & ACCRUED EXPENSES
  The Company had accounts payable and accrued expenses amounting to $121,875 and $95,585 as of December 31, 2009 and September 30, 2009, respectively. Accounts payable includes payable to vendors, and accrued expenses include accrued professional expenses.
  7.
REALTED PARTY TRANSACTIONS
  Due to related party
 The amount due to officer as of December 31, 2009 and September 30, 2009 were $13,821 and $15,398 respectively. The loan was unsecured, interest free and due on demand.
  8.
OTHER INCOME
  Other income amounted to $60,014 and 323 for the three month periods years ended December 31, 2009 and 2008, respectively.  Other income mainly consisted of recovery of bad debt for the three month periods ended December 31, 2009.
  11
 9.    TAX PAYABLE
  The Company utilizes ASC 740 (previously SFAS No. 109), "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are
recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
  The provision for taxes on earnings for the three month periods ended December 31, 2009 and 2008 consisted of:
 
 For the three month periods ended December 312 0 0 9


2 0 0 8Tax   Tax at statutory rate


34%



34%Foreign tax rate difference

<16%>


<19%>Net operating loss in other tax jurisdiction for where no benefit is realized

<18>


<15%>Effective tax rate


0%



0%
 
 Deferred tax assets:
 
 December 31, 2009


December 31, 2008Net operating income/(loss)

$
(1,359,516
)

$
(1,516,378
)Total deferred tax assets


576,022



582,360Less valuation allowance


(576,022
)


(582,360)$
--


$
--
 
 The Company had a net operating loss (“NOL”) carry forwards of approximately $1,359,516and 1,516,378 for the periods ended December 30, 2009 and 2008, respectively.  A 100% valuation allowance has been recorded for the deferred tax asset due to the uncertainty of its realization.
 
 12
  10.
EMPLOYEE WELFARE PLAN
  The Company has established its own employee welfare plan in accordance with Chinese law and regulations. The Company makes annual pre-tax contributions of 14% of all employees' salaries.
  HTC is classified as a wholly-owned foreign enterprise under PRC law by virtue of its ownership by XHT. HTC has changed its employee welfare plan in accordance with Chinese law and regulations and does not make annual pre-tax contributions of 14% of all employees' salaries. The total expense amounted to $8,822 and
$5,440 for the three month periods ended December, 2009 and 2008, respectively.
 
 11.   STATUTORY RESERVE
 
 As stipulated by the Company Law of the People's Republic of China (PRC), net income after taxation can only be distributed as dividends after appropriation has been made for the following:
  i) Making up cumulative prior years' losses, if any;
  ii) Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;
  iii) Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective benefits to the Company's employees; and Statutory common welfare fund
is no longer required per the new cooperation law executed in 2006.
  iv) Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.
  In accordance with the Chinese Company Law, the Company has allocated 10% of its net income to surplus. The amount allocated to the surplus reserve was $0 for the periods ended December 31, 2009 and 2008, respectively.
  12.     SHAREHOLDERS’ EQUITY
 
 The Company has authorized (a) Sixty Million (60,000,000) shares of common stock, par value .001 per share and (b) One Million (1,000,000) shares of Preferred Stock, par value .001 per share.
 As of September 30, 2009, 29,910,000 common shares were issued and 666,241 shares were outstanding, and no preferred stock was issued and outstanding.
  On April 7, 2009 the Company’s Board of Directors declared a three-for-one forward split of the outstanding shares.
  13
 13.    COMMITMENT
  HTC has leased approximately 510 square meters of space used for its executive offices and operations in Shenzhen, China from Shenzhen Zhongze Shiji Co., Ltd. The lease is for a term of five year from October 1, 2007 to September 30, 2012. The monthly rent expense is $5,046 (excluding property management and area
condition maintenance fees).
  The rent expenses are $17,616 and $15,138,for the three month periods ended December 31, 2009 and 2008, respectively.
  Future lease commitments for theperiods after December 31, 2009 are as follows:
 2010
60,5522011
60,5522012
45,414Total
$166,518
  14.  SUPPLEMENT DISCLOSURE OF CASH FLOWS
  The Company prepares its statements of cash flows using the indirect method as defined under the ASC 230 (previously the Financial Accounting Standard No. 95).
  The interest expenses paid were $0 for the three month periods ended December 31, 2009 and 2008, respectively.
  The Company did not paid income taxfor the three month periods ended December 31, 2009 and 2008, respectively.
  15.  CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
  The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.
  The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe.  These include risks associated with, among others, the political, economic and legal environments and foreign currency      exchange.  The
Company’s results may be adversely affected by changes in governmental policies   with   respect   to   laws   and    regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
  The Company does not maintain fire, theft or liability insurance. The Company is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; error and omissions and natural disasters.
  16.  MAJOR CUSTOMERS AND VENDORS
  Major customers and vendors represent those who accounted for 10% or over of the Company’s total net revenue or purchase, respectively.
  Three major customers accounted for 43% of the revenue for the three month periods ended December 31, 2009.  The Company has receivables of $33,417 to these customers on December 31, 2009.
  No major customer accounted for 10% of the revenue for the three month periods ended December 31, 2008.
  One major vendor provided 91% of the Company’s purchases for the three month periods ended December 31, 2009.  The Company has payables of $55,807 to the vendor on December 31, 2009, respectively.
  Three major vendors provided 95% of the Company’s purchases for the three months period ended December 31, 2008.  The Company has payables of $56,210 to these vendors on December 31, 2008.
  The Company extends credit to its customers based upon its assessment of their credit worthiness and generally does not require collateral.
  14




The following discussion and analysis discusses trends in the Company’s financial condition and results of operations for the three month periods ended December 31, 2009 and 2008.





You should read this section together with our consolidated financial statements and related notes appearing elsewhere in this prospectus. This discussion contains predictive statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these predictive statements as a result
of many factors, including, but not limited to, those set forth under "Risk Factors" in Section 1A of the Company’s Annual Report on Form 10-K for the year ended September 30, 2009.





Overview





Because all of our operations are conducted by our subsidiary, HTF, this discussion of our financial results is based on the business results and financial condition of HTF.  HTF is a provider of special-use applications software and management-information systems integration services in the PRC, and develops and produces three kinds
of specialized software products:  Housing Accumulation Fund software, Credit Guarantee management software, and family planning software. Of these three products, Housing Accumulation Fund software and Credit Guarantee software are the major contributors to our revenue.





HTF has also been in the business of providing value-added systems integration services pursuant to its strategic alliances with other software companies.  In 2008, HTF’s strategic alliance with Lenovo ended when the cooperation agreement between the two parties expired and was not renewed.  As a result, we do not
expect to have any significant revenue from our systems integration services for the indefinite future.





Net Revenue





Total net sales for the three month periods ended December 31, 2009 were $320,497 compared to $157,436 for the three month periods ended December 31, 2008, representing an increase of $163,061or 104%. The increase was due to an increase of $41,211 in sales of our Credit Guarantee software, and an increase of $121,850 in sales of our Housing
Accumulation Fund software.





The increase of sales of our Credit Guarantee software (which increased by $41,211, or 67%, from $61,660 in the three month periods ended December 31, 2008) was due primarily to the completion of our new credit guarantee management software, which our research and development department had been developing since 2008.





The increase of sales of our Housing Accumulation Fund software (which increased by $121,850, or 127%, from $95,777 in the three month periods ended December 31, 2008) was due to the completion of our new housing accumulation fund software, which our research and development department had been developing since 2008.





Cost of sales





Cost of sales for the three month periods ended December 31, 2009 wasy $43,249, representing an increase of 1249% from $3,205 for the three month periods ended December 31, 2008, primarily due to the increase in cost of sales of our Housing Accumulation Fund software.





The cost of sales of our Housing Accumulation Fund software increased by $37,544, or 13,652%, to $37,819 for the three month periods ended December 31, 2009 from  $275 for the three month periods ended December 31, 2008. The increase was primarily due to the increase in sales.





15


Gross Profit





Gross profit for the three month periods ended December 31, 2009 was  $277,249, compared to $154,231 for the three month periods ended December 31, 2008, representing an increase of $123,018or approximately 80%. The increase was primarily due to the increase in sales of our Credit Guarantee software and our Housing Accumulation
Fund software described above.





Selling, General and Administrative Expenses





Selling, general and administrative expenses were $266,558 for the three month periods ended December 31, 2009, or approximately 83% of net sales, compared to  $307,947 or approximately196% of net sales, for the three month periods ended December 31, 2008.





The changes in selling, general and administrative expenses are attributable to a $67,468 decrease in general and administrative expenses, a $26,158 decrease in selling expense and to a $52,237 increase in research and development expense.





General and administrative expenses decreased by $67,468, or 59% to $47,021 for the three month periods ended December 31, 2009 from  $114,489 for the three month periods ended December 31, 2008. The decrease was primarily due to the reduction in Allowance for the three month periods ended December 31, 2009.





As of December 31, 2009, allowance for accounts receivable was $227,105, allowance for other receivables was $306,261, allowance for inventory was $324,198 and allowance for Security deposit was $5,868.





Selling expenses decreased by $26,158, or 34% to $51,232 for the three month periods ended December 31, 2009 from  $77,390 for the three month periods ended December 31, 2008 because of a decrease for Publicity and Promotion expense.





Research and development expenses increased by $52,237, or 45% to $168,305 for the three month periods ended December 31, 2009 from  $116,068 for the three month periods ended December 31, 2008 because of an increase for traveling expense.




Income Taxes





We utilize ASC 740 (previously SFAS No. 109), "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in financial statements or tax returns. Under this method, deferred tax liabilities or assets are recognized for the
estimated future tax consequences of current differences between the tax base of an asset or liability and the financial reporting amount attributed to that asset or liability at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.





The Company had a net operating loss carry forwards of  $1,359,516 and $1,516,378 for the periods ended December 30, 2009 and 2008, respectively. A 100% valuation allowance has been recorded for the deferred tax asset due to the uncertainty of its realization. Under applicable tax regulations, even though the company had net
income of $69,509 in the three month periods ended December 31, 2009, due to net loss carry forwards from previous year, our taxable income for the three month periods ended December 31, 2009 and 2008 was negative, so no income tax was incurred for those periods.





16


Liquidity and Capital Resources





Cash and Cash Equivalents





Cash and cash equivalents increased from $63,364 as of September 30, 2009 to $152,948 as of December 31, 2009. This increase was due to an increase in cash provided by operating activities of $97,466 and a decrease in acquisition of property & equipment of $6,323.





Cash Provided in Operating Activities





Net cash provided in operating activities during the three month periods ended December 31, 2009 and 2008 was $97,466 and $119,612, respectively. Net cash exceeded our net income primarily due to  an increase in customer deposits of $99,931 and, an increase in accounts payable and accrued expense of $26,285.  This offset  an
increase in Accounts receivable of $34,460, a increase  in Inventory of $29,254 and an increase in other receivable of $52,599. The increase in Accounts payable and accrued expense was primarily due to amounts owed to our largest vendor.




Net cash used in investing activities during the three month periods ended December 31, 2009 was $6,323 and net cash used in operating activities during the three month periods ended December 31, 2008 was $675. Net cash used in investing activities during the three month periods ended December 31, 2009 was due to a purchase of property
and equipment.




Net cash used in financing activities during the three month periods ended December 31, 2009 was $1,577 and net cash used in financing activities during the three month periods ended December 31, 2008 was $0.





Accounts Receivable





The increase in accounts receivable from $100,399 as of September 30, 2009 to $134,865 as of December 31, 2009 is primarily attributable to the decrease in the Allowance for 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, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.
Reserves are recorded primarily on a specific identification basis. Allowance for doubtful debts amounted to $227,105 as of December 31, 2009.





Inventory





For the three month periods ended December 31, 2009, inventory increased from $14,135 to $43,395. This increase is primarily attributable to the increase in Project in process.


The Company maintains reserves for potential inventory losses. Reserves are recorded primarily on a specific identification basis. Allowance for inventory amounted to $324,198 as of December 31, 2009.




Other Receivable





Other receivables amounted to $107,130 as of December 31, 2009 increased from $54,520 as of September 30, 2009.This increase is primarily attributable to the increase in loans receivable from employees.


The Company maintains reserves for other receivable. Reserves are recorded primarily on a specific identification basis. Allowance for other receivable amounted to $306,261 as of December 31, 2009.





17


Accounts Payable





Accounts payable and accrued expenses decreased from $95,585 as of September 30, 2009 to $121,875 as of December 31, 2009, primarily as a result of increase in our Account payable.





Payroll Payable





Payroll payable increased from $52,376 as of September 30, 2009 to $53,051 as of December 31, 2009.





Unearned revenue





The Company's revenue recognition policies are in compliance with ASC 605 (previously Staff Accounting Bulletin 104). Sales revenue is recognized at the date of shipment to customers or when services have been rendered when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant
obligations of the Company exist and collectibility is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. As of December 31, 2009, unearned revenue was $556,375, and it included $476,013 of customer deposits and $80,362 of unearned software service revenue. Software service revenue was approximately $67,013 and $42,323 during the three month periods ended December 31, 2009 and 2008, respectively. Unearned revenue as
of December 31, 2009 and 2008 was $556,375 and $456,423, respectively.





Off-Balance Sheet Arrangements





The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on their financial condition or results of operations.








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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not applicable.





ITEM 4.  CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures.





As of the end of the period covered by this quarterly report, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures. Pursuant to Rule13a-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934,
“disclosure controls and procedures” means controls and other procedures that are designed to insure that information required to be disclosed by HXT Holdings Inc. in the reports that it files with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time limits specified in the Commission’s rules.  “Disclosure controls and procedures” include, without limitation, controls and procedures designed to insure that information HXT
Holdings is required to disclose in the reports it files with the Commission is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that HXT Holdings’ system of disclosure controls and procedures was effective to ensure that material information is recorded, processed, summarized
and reported by our management on a timely basis in order to comply with our disclosure obligations under the Exchange Act, and the rules and regulations promulgated hereunder.





Changes in Internal Controls.





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





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PART II   -   OTHER INFORMATION





Item 1.        Legal Proceedings





None





Item 1A.     Risk Factors





There has been no material change from the risk factors included in Section 1A of the Company’s Annual Report on Form 10-K for the year ended September 30, 2009.





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





(c) Unregistered sales of equity securities





None.





(e) Purchases of equity securities





The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the quarter ended December 31, 2009





Item 3.        Defaults Upon Senior Securities





None





Item 4.        Submission of Matters to a Vote of Security Holders





None





Item 5.     Other Information





None





Item 6.        Exhibits





31.1

Rule 13a-14(a) Certification – CEO31.2

Rule 13a-14(a) Certification – CFO32

Rule 13a-14(b) Certification





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SIGNATURES





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





HXT HOLDINGS, INC.





Date: February 11, 2010
By: /s/Yuanqing LiYuanqing Li, Chief Executive Officer




























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