U. S. Securities and Exchange Commission


Washington, D. C. 20549





FORM 10-Q





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





For the quarterly period ended March 31, 2010





[  ]
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 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 May 15, 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)ASSETSMarch 31,2010


September 30,2009CURRENT ASSETS:Cash & cash equivalents

$
41,381


$
63,364Accounts receivable, net


185,185



100,399Inventory


15,298



14,135Other receivable


94,490



54,520Total current assets


336,354



232,417PROPERTY AND EQUIPMENT, NET


141,468



165,922TOTAL ASSETS

$
477,822


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

$
129,604


$
95,585Payroll payable


52,887



52,376Unearned revenue


442,110



456,423Related party payable


-



15,398Total current liabilities


624,601



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 March 31, 201029,910,000 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


320,821



320,801Accumulated deficit


(1,724,704
)


(1,799,347
)Total stockholders' deficit


(146,779
)


(221,443
)TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$
477,822


$
398,339The accompanying notes are an integral part of the consolidated financial statements.
  2
   HXT HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)For the three month


For the six monthperiods ended March 31


periods ended March 312010


2009


2010


2009Net revenues

$
402,476


$
363,636


$
722,973


$
521,055Cost of revenue


124,940



252,166



168,189



255,338Gross profit


277,536



111,470



554,784



265,717Operating expensesSelling expenses


61,231



99,884



112,463



177,276General and administrative expenses


65,467



89,738



112,488



204,238Research & development expenses


151,872



181,458



320,177



297,525Total operating expenses


278,570



371,079



545,128



679,038Income (loss)  from operations


(1,034
)


(259,609
)


9,656



(413,321
)Non-operating income (expense):Interest expense


-



(147
)


-



(146
)Interest income


59



97



93



240Loss on sale of property


-



-



(981
)


-Other income


6,239



310,089



66,253



310,370Other expense


(130
)


(199
)


(378
)


(603
)Total non-operating income


6,168



309,840



64,987



309,859Net Income (Loss)


5,134



50,231



74,643



(103,462
)Foreign currency translation gain (loss)


6



253



20



(15
)Comprehensive Income/(Loss)

$
5,140


$
50,484


$
74,664


$
(103,477
)Basic and diluted weighted average shares outstanding


666,241



29,585,069



666,241



29,749,320Basic and diluted net income (loss) per share

$
0.008


$
0.002


$
0.112


$
(0.003
)Basic and diluted weighted average shares outsanding are the same as there is no anti-dilutive effect.The accompanying notes are an integral part of the consolidated financial statements.
  3
  HXT HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)For the six monthperiod ended March 312010


2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)

$
74,643


$
(103,462
)Adjustments to reconcile net income (loss) to net cashprovided by operating activities:Depreciation


33,563



35,637Loss on sale of property


981Bad debt expense


-



57,341(Increase) / decrease in assets:Accounts receivable


(84,763
)


(38,797
)Inventory


(1,163
)


(12,419
)Other receivable


(39,958
)


(20,838
)Increase / (decrease) in current liabilities:Accounts payable & accrued expenses


34,010



(78,935
)Unearned revenue


(14,310
)


189,744Payroll payable


511



6,406Net cash provided by operating activities


3,514



34,677CASH FLOWS FROM INVESTING ACTIVITIES:Receipt of cash on disposal of property


58



-Acquisition of property & equipment


(10,155
)


(7,738
)Net cash used in investing activities


(10,097
)


(7,738
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from loan-officers


(15,394
)


-EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(6
)


11NET INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENTS


(21,982
)


26,950-CASH & CASH EQUIVALENTS, BEGINNING BALANCE


63,364



6,827CASH & CASH EQUIVALENTS, ENDING BALANCE

$
41,381


$
33,777Supplement disclosure of cash flow information:Income taxes paid

$
-


$
-Interest expenses paid

$
-


$
146The accompanying notes are an integral part of the consolidated financial statements.
  4
 HXT HOLDINGS, INC.  AND SUBSIDIARIES
 NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 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.
  The consolidated condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading.
  These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these consolidated condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended September 30, 2009.  The Company follows the same accounting policies in preparation of interim reports.  Results of operations for the interim periods are not indicative of annual results.
  
 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 March 31, 2010 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.
  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 March 31, 2010.
  
  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.
  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 March 31, 2010, unearned revenue is $442,110, and it includes $363,953 of customer deposit and $78,157 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 $320,177 and $297,525 forthe six months period ended March 31, 2010 and 2009, 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 March 31, 2010.
  
 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 $20 and $(15) for six months period ended March 31, 2010 and 2009, respectively.  Accumulated other comprehensive income amounted to $320,821 and $320,801 on March 31, 2010 and September 30, 2009, respectively.
  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 January 2010, FASB issued ASU No. 2010-01- Accounting for Distributions to Shareholders with Components of Stock and Cash. The amendments in this Update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount
of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this ASU did not have a material impact on its consolidated financial statements.
  
 In January 2010, FASB issued ASU No. 2010-02 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification. The amendments in this Update affect accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit
activity. The amendments also affect accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity. The amendments in this update are effective beginning in the period that an entity adopts SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51.” If an entity has previously adopted SFAS No. 160 as of the date the amendments in this update are
included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted SFAS No. 160. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
  In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers
in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as follows:
1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure
fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. These disclosures are effective for fiscal years
beginning after December 15, 2010, and for interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU, however, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
  In February 2010, FASB issued ASU No. 2010-9 –Amendments to Certain Recognition and Disclosure Requirements. This update addresses certain implementation issues related to an entity’s requirement to perform and disclose subsequent-events procedures, removes the requirement that public companies disclose
the date of their financial statements in both issued and revised financial statements. According to the FASB, the revised statements include those that have been changed to correct an error or conform to a retrospective application of U.S. GAAP. The amendment is effective for interim and annual reporting periods in fiscal year ending after June 15, 2010. The Company does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements.
  In March 2010, FASB issued ASU No. 2010-10 –Amendments for Certain Investment Funds. This update defers the effective date of the amendments to the consolidation requirements made by FASB Statement 167 to a reporting entity’s interest in certain types of entities. The deferral will mainly impact the evaluation
of reporting enterprises’ interests in mutual funds, private equity funds, hedge funds, real estate investment entities that measure their investment at fair value, real estate investment trusts, and venture capital funds. The ASU also clarifies guidance in Statement 167 that addresses whether fee arrangements represent a variable interest for all service providers and decision makers. The ASU is effective for interim and annual reporting periods in fiscal year beginning after November 15, 2009. The adoption
of this ASU did not have a material impact on the Company’s consolidated financial statements.
  
 In March 2010, FASB issued ASU No. 2010-11 –Scope Exception Related to Embedded Credit Derivatives. Embedded credit-derivative features related only to the transfer of credit risk in the form of subordination of one financial instrument to another are not subject to potential bifurcation and separate accounting
as clarified by recently issued FASB guidance. Other embedded credit-derivative features are required to be analyzed to determine whether they must be accounted for separately. This update provides guidance on whether embedded credit-derivative features in financial instruments issued by structures such as collateralized debt obligations (CDOs) and synthetic CDOs are subject to bifurcation and separate accounting. The guidance is effective at the beginning of a company’s first fiscal quarter beginning after
June 15, 2010. The Company does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements.
  3.INVENTORIES
  Inventories as of March 31, 2010 and September 30, 2009 consisted of the following:
  March 31,2010


September 30,2009Raw and packing materials

$
54,480


$
53,317Finished goods


1,609



1,609Work in process


283,407



283,407Total


339,496



338,333Less: Allowance for inventories


(324,198
)


(324,198
)Net Inventories

$
15,298


$
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 March 31, 2010 and September 30, 2009, respectively.
  4.    PROPERTY AND EQUIPMENT
  Net property and equipment as of March 31, 2010 and September 30, 2009 were as follows:
 March 31, 2010


September 30, 2009Building & improvement

$
41,613


$
41,612Machinery& equipment


224,103



227,050Vehicles


87,203



87,203Furniture and fixture


22,682



22,381Software


323,839



321,238Total


699,440



699,484Less: Accumulated depreciation


(557,972
)


(533,562
)Net Property & Equipment

$
141,468


$
165,922
  Depreciation expenses for the six months period ended March 31, 2010 and 2009 were $33,563 and $35,637, respectively.
  
 5.OTHER RECEIVABLE
  Other receivable as of March 31, 2010 and September 30, 2009 consisted of the following:
  March 31, 2010


September 30, 2009Advances to other companies

$
13,771


$
15,489Advances to employees


46,899



31,279Value added tax receivable


33,820



7,752Total

$
94,490


$
54,520
  Advances to other companies amounted to $13,771 as of March 31, 2010. It includes advances to other unrelated parties, which are unsecured, interest free, and due on demand.
  Advances to employees amounted to $46,899.  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 $129,604 and $95,585 as of March 31, 2010 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 March 31, 2010 and September 30, 2009 were $0 and $15,398 respectively. The loan was unsecured, interest free and due on demand.
  8.OTHER INCOME
  Other income amounted to $66,253 and 310,370 for the six month periods ended March 31, 2010 and 2009, respectively.  Other income mainly consisted of recovery of bad debt for the six month periods ended March 31, 2010.
  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 six month periods ended March 31, 2010 and 2009 consisted of:
  For the six month periods ended March 312 0 10


2 0 0 9TaxTax 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:
  March 31, 2010


March 31, 2009Net operating income/(loss)

$
(1,413,628
)

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


598,770



582,360Less valuation allowance


(598,770
)


(582,360
)$
--


$
--
  The Company had a net operating loss (“NOL”) carry forwards of approximately $1,413,628 and 1,516,378 for the periods ended March 31, 2010 and 2009, respectively.  A 100% valuation allowance has been recorded for the deferred tax asset due to the uncertainty of its realization.
  
 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 $26,833
and $11,564 for the six month periods ended March 31, 2010 and 2009, 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 March 31, 2010 and 2009, 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 March 31, 2010, 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.    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 $33,996 and $26,258,for the six month periods ended March 31, 2010 and 2009, respectively.
  Future lease commitments for theperiods after March 31, 2010 are as follows:
  2010


45,4142011


60,5522012


45,414Total

$
151,380
  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 and $146 for the six month periods ended March 31, 2010 and 2009, respectively.
  The Company did not paid income taxfor the six month periods ended March 31, 2010 and 2009, 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.
  Two major customers accounted for 23% of the revenue for the six month periods ended March 31, 2010.  The Company has receivables of $45,330 to these customers on March 31, 2010.
  Two major customers accounted for 50% of the revenue for the six month periods ended March 31, 2009.  The Company has receivables of $49,807 to these customers on March 31, 2009.
  One major vendor provided 92% of the Company’s purchases for the six month periods ended March 31, 2010.  The Company has payables of $92,414 to the vendor on March 31, 2010, respectively.
  Two major vendors provided 88% of the Company’s purchases for the six months period ended March 31, 2009.  The Company has payables of $12,528 to these vendors on March 31, 2010.
  The Company extends credit to its customers based upon its assessment of their credit worthiness and generally does not require collateral.
  
  16




The following discussion and analysis discusses trends in the Company’s financial condition and results of operations for the six month periods ended March 31, 2010 and 2009.
 
 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 in Section 1A ("Risk Factors") 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 four
kinds of specialized software products:  Housing Accumulation Fund software, Credit Guarantee management software, family planning software and property management software. Of these four 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.
 
 Results of Operations
  HXT HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFor the six month periods ended March 31, 2010 and 2009For the six monthperiods ended March 312010


2009Net revenues


$
722,973


$
521,055Cost of revenue



168,189



255,338Gross profit



554,784



265,717Operating expensesSelling expenses



112,463



177,276General and administrative expenses



112,488



204,238Research & development expenses



320,177



297,525Total operating expenses



545,128



679,038Income (loss)  from operations



9,656



(413,321
)Non-operating income (expense):Interest expense



-



(146
)Interest income



93



240Loss on sale of property



(981
)


-Other income



66,253



310,370Other expense



(378
)


(603
)Total non-operating income



64,987



309,859Net Income (Loss)



74,643



(103,462
)Foreign currency translation gain (loss)



20



(15
)Comprehensive Income/(Loss)


$
74,664


$
(103,477
)Basic and diluted weighted average shares outstanding



666,241



29,749,320Basic and diluted net income (loss) per share


$
0.112


$
(0.003
)
  Net Revenue
  Total net sales for the six month periods ended March 31, 2010 were  $722,973 compared to  $521,055 for the six month periods ended March 31, 2009, representing an increase of $201,918 or 39%. The increase was due to an increase of $17,056 in sales of our Credit Guarantee software, and an increase of $184,862
in sales of our Housing Accumulation Fund software.
 
 The increase in sales of our Credit Guarantee software (which increased by $17,056, or 15%, from $116,167 in the six month periods ended March 31, 2009) was due primarily to the new credit guarantee management software which our research and development department  completed in 2009.
 
 The increase in sales of our Housing Accumulation Fund software (which increased by $184,862 or 47%, from $394,414 in the six month periods ended March 31, 2009) was due to the new housing accumulation fund software which our research and development department  completed in 2009.
 17
 Cost of sales
 
 Cost of sales for the six month periods ended March 31, 2010 were  $168,189 representing a decrease of 34% from  $255,338 for the six month periods ended March 31, 2009, primarily due to the decrease in cost of sales of our Housing Accumulation Fund software.
 
 The cost of sales of our Housing Accumulation Fund software decreased by $88,670, or 35%, to  $161,457 for the six month periods ended March 31, 2010 from  $250,127 for the six month periods ended March 31, 2009. The decrease was primarily due to the decrease in sales of hardware.
 Gross Profit
 
 Gross profit for the six month periods ended March 31, 2010 was $554,784, compared to $265,717 for the six month periods ended March 31, 2009, representing an increase of $289,067or approximately 109%. 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 $545,128 for the six month periods ended March 31, 2010, or approximately 75% of net sales, compared to $679,038 or approximately 130% of net sales, for the six month periods ended March 31, 2009.
 
 The changes in selling, general and administrative expenses are attributable to a $91,750 decrease in general and administrative expenses, a $64,813 decrease in selling expense and to a $22,652 increase in research and development expense.
 
 General and administrative expenses decreased by $91,750, or 45% to $112,488 for the six month periods ended March 31, 2010 from  $204,238 for the six month periods ended March 31, 2009.
 
 The decrease was primarily due to the reduction in Allowance for the six month periods ended March 31, 2010.
 
 As of March 31, 2010, allowance for accounts receivable was $227,105, allowance for other receivables was $306,261, and allowance for inventory was $324,198.
 
 Selling expenses decreased by $64,813, or 37% to $112,463 for the six month periods ended March 31, 2010 from  $177,276 for the six month periods ended March 31, 2009 because of a decrease for Publicity and Promotion expense.
 
 Research and development expenses increased by $22,652, or 8% to $320,177 for the six month periods ended March 31, 2010 from  $297,525 for the six month periods ended March 31, 2009 because of an increase for traveling expense.
 18
 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 (“NOL”) carry forwards of  $1,413,628and $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, although
the Company had net income of $74,643 in the six month periods ended March 31, 2010, due to net loss carry forwards from previous year, our taxable income for the six month periods ended March 31, 2010 and 2009 were negative, so no income tax was incurred for those periods.
 
 Liquidity and Capital Resources
 
 Cash and Cash Equivalents
 
 Cash and cash equivalents decreased from $63,364 as of September 30, 2009 to $41,381 as of March 31, 2010. Since there was a modest amount of cash provided by our operations, the decrease in cash was due primarily to our use of $10,155 to  acquire property & equipment of $10,155 and a loan of $15,394 to one of our officers.
 
 Cash Provided in Operating Activities
 
 Net cash provided in operating activities during the six month periods ended March 31, 2010 and 2009 were $3,514 and $34,677, respectively. Net cash used in investing activities during the six month periods ended March 31, 2010 was $10,097 and net cash
used in investing activities during the six month periods ended March 31, 2009 was $7,738. Net cash used in investing activities during the six month periods ended March 31, 2010 was due to we purchased some property and equipment. Net cash used in financing activities during the six month periods ended March 31, 2010 was $15,394 and net cash used in financing activities during the six month periods ended March 31, 2009 was $0.
Net cash used in financing activities during the six month periods ended March 31, 2010 was due to pay back loans to offers.
 
 Accounts Receivable
 
 The increase in accounts receivable from $100,399 as of September 30, 2009 to $185,185 as of March 31, 2010 is primarily attributable to the decrease in 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 March 31, 2010 and $287,043 at December 31, 2009.
 
 19
 Inventory
 
 For the six month periods ended March 31, 2010, inventory increased from $14,135 to $15,298. 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 March 31, 2010.
  Other Receivable
 
 Other receivables increase $39,989 from $54,520 as of September 30, 2009 to $94,490 as of March 31,2010. This increase is primarily attributable to the increase in loans receivable from employee. 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 March 31, 2010.
 
 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 March 31, 2010, unearned revenue is $442,110, and it includes $363,953 of customer deposits and $78,157 of unearned software service revenue. Software service revenue was approximately $98,134 and $47,738 during the six month periods ended March 31, 2010 and 2009, respectively. Unearned revenue as of March
31, 2010 and 2009 was $442,110 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.








20





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’ second fiscal quarter that has materially affected or is reasonably
likely to materially affect HXT Holdings’ internal control over financial reporting.





21


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 March 31, 2010





Item 3.        Defaults Upon Senior Securities





None





Item 4.        Reserved





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





22





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: May 17, 2010
By: /s/Yuanqing LiYuanqing Li, Chief Executive Officer




























23