Xiamen Lutong International Travel Agency Co., Ltd. - Quarter Report: 2010 March (Form 10-Q)

highlight_10q-033110.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

x QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF1934

For the Quarterly Period Ended March 31, 2010

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

Commission File No. 333-153575

HighLight Networks, Inc.

(Exact name of registrant as specified in its charter)

Nevada		26-1507527
(State of incorporation)		(IRS Employer Identification Number)

215 South Riverside Drive, Suite 12

Cocoa, Florida 32922

(321) 684-5721

(Address, including zip code, and telephone number,

including area code, of registrant's principal executive offices)

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

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days x Yes o No

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

o Large accelerated filer Accelerated filer

o Non-accelerated filer

x Smaller reporting company

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

The number of shares outstanding of the issuer's common stock, was 1,500,940 common shares as of March 31, 2010.

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result, "and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HIGHLIGHT NETWORKS, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)

				Period from
				June 21, 2007,
				(inception) to
	March 31			June 30,
A S S E T S	2010			2009
CURRENT ASSETS
Cash and cash equivalents	$	291			875
Prepaid Expenses		-			-
TOTAL CURRENT ASSETS		291			875

Marketable securities (available for sale)		4,010			4,010

TOTAL ASSETS	$	4,301			4,885



L I A B I L I T I E S & E Q U I T Y
CURRENT LIABILITIES
Accounts payable	$	-			-
TOTAL CURRENT LIABILITIES		-			-


STOCKHOLDERS' EQUITY
Common stock, par value $0.001
Authorized 150,000,000, issued and outstanding 1,508,000		1,508			1,508
Additional paid-in-capital		50,853			48,711
Accumulated deficit during development stage		(48,060	)		(45,334	)
TOTAL EQUITY		4,301			4,885

TOTAL LIABILITIES AND EQUITY	$	4,301			4,885






The accompanying condensed notes are an integral part of these financial statements.

HIGHLIGHT NETWORKS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)


													Period from
	Three Months Ended						Nine Months Ended						June 21, 2007
	March 31						March 31						March 31,
	2010			2009			2010			2009			2010

REVENUES	$	-		$	-		$	-		$	-			-

COST OF GOODS SOLD		-			-			-			-			-

GROSS PROFIT		-			-			-			-			-

E X P E N S E S
Consulting fees - other		-			-			1,500			13,500			37,000
Rent		-			-			-			1,200			3,400
General and administrative		525			-			1,226			4,230			5,660
Valuation impairment on marketable securities		-												2,000
TOTAL EXPENSES		525			-			2,726			18,930			48,060

LOSS FROM OPERATIONS		(525	)		-			(2,726	)		(18,930	)		(48,060	)


LOSS BEFORE INCOME TAXES		(525	)		-			(2,726	)		(18,930	)		(48,060	)

INCOME TAXES		-			-			-			-			-

NET LOSS	$	(525	)	$	-		$	(2,726	)	$	(18,930	)		(48,060	)


Basic and Diluted per share amounts:
Continuing operations	$Nil			$	(0.01	)	$Nil			$	(0.02	)	Nil
Basic and Diluted net loss	$Nil			$	(0.01	)	$Nil			$	(0.02	)	Nil

Weighted average shares outstanding (basic & diluted)		1,508,000			1,478,142			1,508,000			1,466,667			1,508,000



The accompanying condensed notes are an integral part of these financial statements.

HIGHLIGHT NETWORKS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

							Period from
							June 21, 2007
							(inception) to
	March 31,						March 31,
	2010			2009			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,726	)	$	(18,930	)	$	(48,060	)
Fair value of services provided by related parties					(24,180	)		37,400
Change in Payable					1,000			-
Impairment charges								2,000
Expenses paid by related parties								480
		(2,726	)		(42,110	)		(8,180	)


CASH FLOW FROM FINANCING ACTIVITES:
Proceeds from issuance of common stock		2,142			38,709			8,471
Cash generated by financing activites		2,142			38,709			8,471

Change in Cash		(584	)		(3,401	)		291

Cash and cash equivalents, beginning of period		875			5,000			-

Cash and cash equivalents, end of period	$	291		$	1,599		$	291





The accompanying condensed notes are an integral part of these financial statements.

HIGHLIGHT NETWORKS, INC.

(A Development Stage Company)

Notes to the Financial Statements

March 31, 2010

Nature of Development Stage Operations

Highlight Networks, Inc., (the "Company") was formed on June 21, 2007 as a Nevada corporation. The Company is a development stage, wireless broadband networking company in the business of planning, development and operation of both private and public access wireless broadband networking using WiFi (IEEE 802.11) and WiMAX (IEEE 802.16) wireless technologies to provide business and residential customers "last mile" connectivity. The Company's activities to date have consisted primarily of organizational and equity fund-raising activities. The Company has not yet commenced its principal revenue producing activities.

Fiscal Year

The Company has chosen June 30 as the end of its fiscal year.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

Cash and Cash Equivalents

For financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents.

Valuation of Long-lived Assets

The Company reviews the recoverability of its long-lived assets, including buildings, equipment and intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company's ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

The Company amortizes the costs of other intangibles (excluding goodwill) over their estimated useful lives unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value based on either discounted cash flows or appraised values. Intangible assets with indefinite lives are tested for impairment, at least annually, and written down to fair value as required. At June 30, 2009, the Company has no impaired carrying value of its intangible assets.

Revenue and Expense Recognition

Revenue is recognized when earned rather than when received. Sales are recognized when a product is delivered or shipped to the customer and all material conditions relating to the sale have been substantially performed. Expenses are charged to operations as incurred.

Under certain circumstances, the Company recognizes revenue in accordance with the provisions of Statement of Financial Accounting Standards No. 139 and American Institute of Certified Public Accountants Statement of Position 00-2 (collectively referred to as "SOP 00-2").

Stock-based Compensation

Stock-based compensation is accounted for using the intrinsic value method prescribed in Accounting Principles Board, or APB, Opinion No. 25, "Accounting for Stock Issued to Employees," or APB25, and related interpretations. Under APB 25, compensation cost is measured as the excess, if any, of the closing market price of the Company's stock at the date of grant over the exercise price of the option granted. The Company recognizes compensation cost for stock options, if any, ratably over the vesting period. Generally, options are to be granted with an exercise price equal to the closing market price of the Company's stock on the grant date. Additional pro forma disclosures are to be provided as required under SFAS No.123, "Accounting for Stock-Based Compensation," or SFAS123, as amended by SFAS No. 148,"Accounting for Stock-Based Compensation-Transition and Disclosure an Amendment of FASB Statement No. 123," or SFAS 148, using the Black-Scholes pricing model. The value of the equity instrument shall be charged to earnings and in accordance with FASB Interpretation No. 28, "Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans is an interpretation of APB Opinions No. 15 and 25."

Earnings per Common Share

The Company has adopted the provisions of Statement of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128").SFAS128 replaces the previous "primary" and "fully-diluted" earnings per share with "basic" and "diluted" earnings per share. Unlike "primary" earnings per share that included the dilutive effects of options, warrants and convertible securities, "basic" earnings per share reflects the actual weighted average of shares issued and outstanding during the period. "Diluted" earnings per share are computed similarly to "fully diluted" earnings per share. In a loss year, the calculation for "basic" and "diluted" earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive.

Income Taxes

The Company must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

Deferred income taxes are recorded in accordance with SFAS No. 109, "Accounting for Income Taxes," or SFAS 109. Under SFAS No. 109, deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse. SFAS 109 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of net deferred tax assets is dependent upon generating sufficient taxable income in future years inappropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carry forwards.

The Company has determined it more likely than not that these timing differences will not materialize and has provided a valuation allowance against substantially all of its net deferred tax asset. The Company's management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If the assessment of the deferred tax assets or the corresponding valuation allowance were to change, the related adjustment to income would be recorded during the period in which the determination is made. The tax rate may also vary based on results and the mix of income or loss in domestic and foreign tax jurisdictions in which the Company operates.

In addition, the calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations. Recognition of liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions is based on estimates of whether, and to the extent to which, additional taxes will be due. If it is ultimately determined that payment of these amounts is unnecessary, the liability will be reversed and a tax benefit will be recognized during the period in which it is determined that the liability is no longer necessary. An additional charge in the provision for taxes will be recorded in the period in which it is determined that the recorded tax liability is less than the ultimate assessment is expected to be.

Start-up Costs

In April 1998, the American Institute of Certified Public Accountants issued Statement of Position No. 98-5, "Reporting for Costs of Start-Up Activities"("SOP 98-5"). Pursuant to this statement, the Company is required to expense all start-up costs related to new operations. Accordingly, the Company has expensed organization costs of $480.

Note 1 - Deferred Offering Costs

Deferred offering costs consists of expenses incurred that are directly related to a public offering. If funds are raised from the public offering, these costs will be offset against stockholders' equity. If no funds are raised, these costs will be expensed in full.

Note 2 - Capital Stock

Description of Securities

Common Stock

The Company is authorized to issue 150,000,000 shares of common stock, with par value of $0.001 per share. As of March 31, 2010, a total of 1,500,940 shares of common stock were issued and outstanding. Holders of common stock are entitled to receive dividends, when and if declared by the board of directors, subject to prior rights of holders of any preferred stock then outstanding and to share ratably in the net assets of the company upon liquidation. Holders of common stock do not have preemptive or other rights to subscribe for additional shares. The articles of incorporation do not provide for cumulative voting. Shares of common stock have equal voting, dividend, liquidation and other rights, and have no preference, exchange or appraisal rights.

On June 21, 2007, the Company issued 500,000 shares of common stock, which are restricted as to transferability, to its founders and directors for $500 cash against current notes payable. On July 16, 2007, the Company issued 250,000 shares of common stock in exchange for $5,000 cash. In November, 2007, the Company split the common stock two for one, leaving 1,500,000 issued and outstanding.

Item 2. Management's Discussion and Analysis of financial Condition an Results of Operations

Highlight Networks, Inc. is a development stage, wireless broadband networking company in the business of planning, development and operation of both private and public access wireless broadband networks using WiFi (IEEE 802.11) and WiMAX (IEEE 802.16) wireless technologies to provide business and residential customers "last mile" connectivity.

(1)(2) Liquidity and Capital Resources. The Company's operations are limited due to the limited availability of cash on hand, which at the end of the interim period reported here was $291. The Company filed an S-1 Registration Statement under the Securities Act of 1933 which was effective on October 6, 2008 registering 100,000 shares of common stock at a priceof$5.10 per share. This offering is self underwritten and there is no assurance that a sufficient amount of shares will be sold to provide for the Company's plan of operation. To date the Company has issued 940 shares pursuant to this offering.

The Company has made no material commitment for capital expenditures. However, it expects to acquire equipment for wireless network operations within the next 12 months, to be paid for from the proceeds of its current public offering.

(3) Result of Operations. The company continued as a development stage company with no revenues for the reported interim period, which is the same result for the same period of the previous year. No revenues are expected until the installation and operation of its first wireless network. The Company had expenditures during the reported interim period of $2,726 which included transfer agent fees, accounting fees, bank fees and filing fees and office expenses.

(4) Off Balance Sheet Arrangements. The Company has no off balance sheet arrangements which have or are reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Our auditors have issued a going concern opinion indicating that because the Company may not have readily available resources to fund the Company through June 30, 2010, there is a substantial doubt as to the Company’s ability to continue as a going concern. The Company is dependent upon the continued ability to raise investment capital. There is no other assurance that sources of investment capital will be found. The company has no liquid reserves from which to fund operations in the event that such additional capital is not raised. In the event that additional capital investment is not forthcoming, the company will not be able to continue operations.

This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we collect contract payments due us and obtain additional capital from sources other than operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Registrant is a smaller reporting company as defined by Item 10(f)(1) and is not required to provide the information required by this Item.

Item 4T. Controls and Procedures

The Registrant carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e)and 15d-15(e)) as of March 31, 2010. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Mr. Perry West. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2010, our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the period ended March 31, 2010.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

The limited size of the company including a limited staff makes it extremely difficult to segregate duties in a way that will allow disclosure controls and procedures to be implemented in an effective way. The company continues to rely on contract and external professionals to assist in various tasks for disclosure. To the extent that the Company is able to add executive and professional staff with increased business, it will continue its efforts to create an effective system of disclosure controls and procedures.

a)	The Company lacks the financial infrastructure to account for complex transactions which may result in a greater than normal risk that material errors may occur in the financial statements and not be detected timely.

b)	The Company currently relies upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transactions.

c)	Lack of sufficient segregation of duties. Specifically, this material weakness is such that management must rely primarily on detective controls and controls could be strengthened by adding preventative controls to properly safeguard company assets.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, control scan be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes In conditions, or the degree of compliance with the policies or procedures may deteriorate.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not a party to any pending legal proceeding and we are not aware of any pending legal proceeding in which any of our officers or directors or any beneficial holders of 5% or more of our voting securities are adverse to or have a material interest adverse to the Company.

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

There were no unregistered sales of equity securities during the reported interim period.

Item 3. Defaults on Senior Securities

The Company has no outstanding Senior Securities.

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

No matters have been submitted to the Company's security holders for a vote, through the solicitation of proxies or otherwise during the interim period ended March 31. 2010.

Item 5. Other Information

None.

Item 6. Exhibits

31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

May 26, 2010

HighLight Networks, Inc.

By: /s/ Perry Douglas West

Perry Douglas West, CEO