UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549








FORM
10-Q








x
            QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the quarterly period ended March 31, 2010




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





For the transition period from
______to______.





WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION


(Exact
name of registrant as specified in Charter)




TEXAS
                      
                      333-142908
                      
                      20-5933927(State
      or other jurisdiction of
                        incorporation
      or organization)
                      
                      (Commission
      File No.)
                      
                      (IRS
      Employee Identification
No.)





Rm
703, 7/F, Bonham Trade Centre, 50 Bonham Strand, Sheung Wan, Hong Kong,
China





(Address
of Principal Executive Offices)





00852-28549088


(Issuer
Telephone number)




(Former
Name or Former Address if Changed Since Last Report)





Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2)has been
subject to such filing requirements for the past 90 days. Yes x     Noo





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes oNo o





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




Large
      Accelerated Filer o
              Accelerated
      Filer o
              Non-Accelerated
      Filer o
              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 o     No x





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of May 10, 2010: 130,000,000 shares of common stock.







TABLE
OF CONTENTS





PART
      I FINANCIAL INFORMATIONITEM
      1.
                FINANCIAL
      STATEMENTS
                F-1ITEM
      2.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
                3ITEM
      3.
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                14ITEM
      4T.
                CONTROLS
      AND PROCEDURES
                14PART
      II OTHER INFORMATIONITEM
      1.
                LEGAL
      PROCEEDINGS
                15ITEM
      1A.
                RISK
      FACTORS
                15ITEM
      2.
                UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                15ITEM
      3.
                DEFAULTS
      UPON SENIOR SECURITIES
                15ITEM
      4.
                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITYHOLDERS
                15ITEM
      5.
                OTHER
      INFORMATION
                15ITEM
      6.
                EXHIBITS
                15SIGNATURES
                20




- 2
-


PART
I


FINANCIAL
INFORMATION





ITEM
1. FINANCIAL STATEMENTS





WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION


AND
SUBSIDIARIES





FINANCIAL
STATEMENTS


TABLE
OF CONTENTS





PageCONDENSED
      CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER
      31, 2009
                    
                    F-2CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
      FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
    (UNAUDITED)
                    
                    F-4CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31,
      2010 AND 2009 (UNAUDITED)
                    
                    F-5NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED
      MARCH 31, 2010 AND 2009 (UNAUDITED)
                    
                    F-7




F-1




WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
BALANCE SHEETS
 
 ASSETS
 
 March 31, 2010
                      
                      
                      December 31, 2009(Unaudited)CURRENT
      ASSETSCash
      and cash equivalents
                      
                      $
                      3,088,357
                      
                      
                      $
                      3,530,724Accounts
      receivable
                      
                      
                      2,705,886
                      
                      
                      
                      1,881,584Inventories
                      
                      
                      1,926,890
                      
                      
                      
                      1,839,146Prepayments
                      
                      
                      910,303
                      
                      
                      
                      688,117Other
      receivables and other assets
                      
                      
                      783,497
                      
                      
                      
                      683,010Deferred
      tax assets
                      
                      
                      -
                      
                      
                      
                      1,538Due
      from related parties
                      
                      
                      1,841,643
                      
                      
                      
                      1,113,643Total
      current assets
                      
                      
                      11,256,576
                      
                      
                      
                      9,737,762Vessels,
      net
                      
                      
                      41,829,165
                      
                      
                      
                      42,597,403Fixed
      assets, net
                      
                      
                      127,378
                      
                      
                      
                      151,041Deferred
      dry dock fees, net
                      
                      
                      8,754,797
                      
                      
                      
                      9,311,647Other
      intangible assets
                      
                      
                      3,657
                      
                      
                      
                      3,657Deferred
      tax assets
                      
                      
                      33
                      
                      
                      
                      -Total
      long-term assets
                      
                      
                      50,715,030
                      
                      
                      
                      52,063,748TOTAL
      ASSETS
                      
                      $
                      61,971,606
                      
                      
                      $
                      61,801,510
  See
accompanying notes to condensed consolidated financial statements.
 F-2
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
BALANCE SHEETS
  LIABILITIES AND
SHAREHOLDERS’ EQUITY
  March 31, 2010
                      
                      
                      December 31, 2009(Unaudited)CURRENT
      LIABILITIESAccounts
      payable
                      
                      $
                      7,023,404
                      
                      
                      $
                      6,893,862Short-term
      bank loan
                      
                      
                      1,170,070
                      
                      
                      
                      1,170,070Current
      portion of long-term loans
                      
                      
                      4,128,908
                      
                      
                      
                      4,128,908Current
      portion of long-term notes payable, net of discount of $669,557
                        and
      $693,012 at March 31, 2010 and December 31, 2009,
    respectively
                      
                      
                      387,848
                      
                      
                      
                      3,326,132Advances
      from customers
                      
                      
                      566,927
                      
                      
                      
                      793,334Payroll
      payable
                      
                      
                      910,644
                      
                      
                      
                      903,964Due
      to related parties
                      
                      
                      125,482
                      
                      
                      
                      20,907Taxes
      payable
                      
                      
                      43,105
                      
                      
                      
                      51,250Deferred
      revenue
                      
                      
                      143,083
                      
                      
                      
                      159,688Other
      current liabilities and accrued liabilities
                      
                      
                      2,023,288
                      
                      
                      
                      2,375,613Total
      current liabilities
                      
                      
                      16,522,759
                      
                      
                      
                      19,823,728LONG-TERM
      LIABILITIESLong-term
      loans
                      
                      
                      14,327,298
                      
                      
                      
                      15,359,535Long-term
      notes payable, net of discount of $1,249,105 and $1,407,170
                        at
      March 31, 2010 and December 31, 2009, respectively
                      
                      
                      5,400,514
                      
                      
                      
                      2,541,441Deferred
      tax liabilities
                      
                      
                      -
                      
                      
                      
                      1,150Total
      long-term liabilities
                      
                      
                      19,727,812
                      
                      
                      
                      17,902,126TOTAL
      LIABILITIES
                      
                      
                      36,250,571
                      
                      
                      
                      37,725,854COMMITMENTS
      AND CONTINGENCIESSHAREHOLDERS’
      EQUITYPreferred
      stock, $0.001 per share;  20,000,000 shares authorized; 0 share
      issued and outstanding
                      
                      
                      -
                      
                      
                      
                      -Common
      stock, $0.001 per share; 200,000,000 shares authorized, 130,000,000 shares
      issued and outstanding
                      
                      
                      130,000
                      
                      
                      
                      130,000Additional
      paid-in capital
                      
                      
                      3,322,966
                      
                      
                      
                      3,322,966Accumulated
      other comprehensive income
                      
                      
                      717,901
                      
                      
                      
                      716,805Retained
      earnings
                      
                      
                      21,550,168
                      
                      
                      
                      19,905,885Total
      Shareholders’ Equity
                      
                      
                      25,721,035
                      
                      
                      
                      24,075,656TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                      
                      $
                      61,971,606
                      
                      
                      $
                      61,801,510
  See
accompanying notes to condensed consolidated financial statements.
 F-3
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
STATEMENTS OF
 INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
 (UNAUDITED)
  Three Months Ended March 31,2010
                                                
                                                
                                                2009REVENUES
                                                
                                                $
                                                14,686,702
                                                
                                                
                                                $
                                                12,528,173COSTS
      AND EXPENSESVessel
      operating costs
                                                
                                                
                                                9,561,638
                                                
                                                
                                                
                                                11,454,217Service
      costs
                                                
                                                
                                                573,544
                                                
                                                
                                                
                                                1,268,861Depreciation
      and amortization
                                                
                                                
                                                1,707,097
                                                
                                                
                                                
                                                2,005,536General
      and administrative expenses
                                                
                                                
                                                738,892
                                                
                                                
                                                
                                                653,078Selling
      expenses
                                                
                                                
                                                100,214
                                                
                                                
                                                
                                                92,110TOTAL
      COSTS AND EXPENSES
                                                
                                                
                                                12,681,385
                                                
                                                
                                                
                                                15,473,802OTHER
      EXPENSESInterest
      expense, net
                                                
                                                
                                                342,979
                                                
                                                
                                                
                                                52,186Other
      expense, net
                                                
                                                
                                                10,116
                                                
                                                
                                                
                                                196,748INCOME
      (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
                                                
                                                
                                                1,652,222
                                                
                                                
                                                
                                                (3,194,563
                                                )INCOME
      TAX EXPENSE
                                                
                                                
                                                7,939
                                                
                                                
                                                
                                                1,322NET
      INCOME (LOSS)
                                                
                                                
                                                1,644,283
                                                
                                                
                                                
                                                (3,195,885
                                                )OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation gain (loss)
                                                
                                                
                                                1,096
                                                
                                                
                                                
                                                (45,990
                                                )COMPREHENSIVE
      INCOME (LOSS)
                                                
                                                $
                                                1,645,379
                                                
                                                
                                                $
                                                (3,241,875
                                                )WEIGHTED
      AVERAGE SHARES OUTSTANDING,BASIC AND
      DILUTED
                                                
                                                
                                                130,000,000
                                                
                                                
                                                
                                                130,000,000NET
      INCOME (LOSS) PER SHARE,BASIC
      AND DILUTED
                                                
                                                $
                                                0.01
                                                
                                                
                                                $
                                                (0.02
                                                )
  See
accompanying notes to condensed consolidated financial statements.
 F-4
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 
 Three Months Ended March 31,2010
                            
                            
                            2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income (loss)
                            
                            $
                            1,644,283
                            
                            
                            $
                            (3,195,885
                            )Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Depreciation
                            
                            
                            788,624
                            
                            
                            
                            836,164Amortization
      of deferred dry dock fees
                            
                            
                            918,473
                            
                            
                            
                            1,169,372Amortization
      of  long-term note payable discount
                            
                            
                            181,520
                            
                            
                            
                            3,938Deferred
      taxes
                            
                            
                            355
                            
                            
                            
                            963Loss
      on disposal of fixed assets
                            
                            
                            3,276
                            
                            
                            
                            -Changes
      in operating assets and liabilities:(Increase)
      Decrease In:Accounts
      receivable
                            
                            
                            (824,302
                            )
                            
                            
                            204,086Inventories
                            
                            
                            (87,744
                            )
                            
                            
                            1,034,135Prepayments
                            
                            
                            (222,186
                            )
                            
                            
                            (114,139
                            )Other
      receivables and other assets
                            
                            
                            (100,342
                            )
                            
                            
                            (12,865
                            )Deferred
      dry dock fees
                            
                            
                            (361,623
                            )
                            
                            
                            (565,074
                            )Increase
      (Decrease) In:Accounts
      payable
                            
                            
                            129,542
                            
                            
                            
                            (677,975
                            )Advances
      from customers
                            
                            
                            (226,407
                            )
                            
                            
                            188,938Payroll
      payable
                            
                            
                            6,680
                            
                            
                            
                            -Taxes
      payable
                            
                            
                            (8,145
                            )
                            
                            
                            (2,283
                            )Deferred
      revenue
                            
                            
                            (16,605
                            )
                            
                            
                            21,144Other
      current liabilities and accrued liabilities
                            
                            
                            (352,324
                            )
                            
                            
                            125,815Net
      cash provided by (used in) operating activities
                            
                            
                            1,473,075
                            
                            
                            
                            (983,666
                            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of fixed assets
                            
                            
                            -
                            
                            
                            
                            (513
                            )Net
      cash used in investing activities
                            
                            
                            -
                            
                            
                            
                            (513
                            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Repayments
      of  long-term loans
                            
                            
                            (1,032,237
                            )
                            
                            
                            (702,918
                            )Repayments
      of  long-term notes payable
                            
                            
                            (260,730
                            )
                            
                            
                            (95,605
                            )Repayments
      to related parties
                            
                            
                            (728,146
                            )
                            
                            
                            (2,286,260
                            )Advances
      from related parties
                            
                            
                            104,575
                            
                            
                            
                            1,725,995Net
      cash used in financing activities
                            
                            
                            (1,916,538
                            )
                            
                            
                            (1,358,788
                            )
  See
accompanying notes to condensed consolidated financial statements.
 F-5
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 AND
SUBSIDIARIES
 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
  Three Months Ended March 31,2010
                            
                            
                            2009NET
      DECREASE IN CASH AND CASH EQUIVALENTS
                            
                            
                            (443,463
                            )
                            
                            
                            (2,342,967
                            )Effect
      of exchange rate changes on cash
                            
                            
                            1,096
                            
                            
                            
                            (46,205
                            )Cash
      and cash equivalents at beginning of period
                            
                            
                            3,530,724
                            
                            
                            
                            8,233,588CASH AND CASH EQUIVALENTS AT END OF
      YEAR
                            
                            $
                            3,088,357
                            
                            
                            $
                            5,844,416SUPPLEMENTARY CASH FLOW
      INFORMATION:Interest
      paid
                            
                            $
                            342,979
                            
                            
                            $
                            48,248Income
      taxes paid
                            
                            $
                            13,789
                            
                            
                            $
                            2,030
  See
accompanying notes to condensed consolidated financial statements.
 F-6
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  1.
              ORGANIZATION
      AND PRINCIPAL ACTIVITIES
 
 Winland
Online Shipping Holdings Co. was incorporated under the laws of Texas on
November 17, 2006. On September 23, 2008, Trip Tech, Inc. changed its name to
Winland Online Shipping Holdings Corporation (“WLOL”).
 
 On August
12, 2008, Trip Tech, Inc. (“Trip Tech”) entered into a share exchange agreement
with SkyAce Group Limited (“SkyAce”) and Pioneer Creation Holdings Limited
(“PCH”). PCH is the sole shareholder of SkyAce. As a result of the share
exchange, Trip Tech acquired all of the issued and outstanding securities of
SkyAce from PCH in exchange for 76,925,000 newly-issued shares of Trip Tech’s
common stock, par value $0.001 per share and 1,000,000 shares of Series A
Preferred Stock, which such Preferred Shares would be converted into 30,000,000
shares of Common upon Trip Tech amending its Articles of Incorporation to
sufficiently increase the number of authorized shares of Common Stock in order
to effect such issuance. SkyAce became a wholly-owned subsidiary of WLOL. At the
time of the merger, WLOL had 23,075,000 shares of common stock. On September 23,
2008, the authorized shares were increased to 200,000,000 shares. On Octobers
23, 2008, 1,000,000 shares of preferred stock, par value of $0.001 were
converted into 30,000,000 shares of common stock. As a result, the total
outstanding shares of common stock increased to 130,000,000, and PCH owned
82.25% of the voting capital stock of WLOL.
 
 The
exchange transaction was accounted for as a reverse acquisition. The acquisition
was accounted for as the recapitalization of SkyAce. Accordingly, the condensed
consolidated and combined statements of income include the results of operations
of SkyAce from January 1, 2008, and the results of operations of WLOL from the
acquisition date through March 31, 2010.
 
 WLOL and
subsidiaries (the “Company”) is mainly engaged in a comprehensive range of
online and off-line international shipping services such as dry bulk shipping,
chartering, shipping agency, and international logistics.
 
 2.
              LIQUIDITY
 
 The
Company improved its working capital balance during the quarter, however, there
was still a working capital deficit of $5,266,183 at March 31, 2010. The
improvement was principally due to the Company achieving net income of
$1,644,283 for the three months ended March 31, 2010. To improve liquidity, the
Company obtained an extension of the due date of two notes payable to related
parties amounting to $2,961,739 to July 19, 2012. See Note 10. Also, the Company
obtained commitments from certain shareholders and related parties to provide
working capital to the Company, if needed, in the form of notes payable or
personal loans.
  F-7
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  3.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING
POLICIES
 
 (a)
              Basis
      of Presentation
 
 The
unaudited condensed consolidated financial statements of Winland Online Shipping
Holdings Corporation have been prepared in accordance with U.S. generally
accepted accounting principles for interim financial information and pursuant to
the requirements for reporting on Form 10-Q, Accordingly, they do not include
all the information and footnotes required by accounting principles generally
accepted in the United States of America for annual financial statements.
However, the information included in these interim financial statements reflects
all adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for the fair presentation of the
consolidated financial position and the consolidated results of operations.
Results shown for interim periods are not necessarily indicative of the results
to be obtained for a full year. The condensed consolidated balance sheet
information as of December 31, 2009 was derived from the audited consolidated
financial statements included in the Company’s Annual Report on Form 10-K. These
interim financial statements should be read in conjunction with that
report.
 
 (b)
                Principles
      of Consolidation
 
 The
consolidated financial statements include the accounts of WLOL and its
subsidiaries and variable interest entities (“VIEs”) (the “Company”) as
follows:
 
 I.
Subsidiaries and Holding Companies:
 
 a)
              SkyAce is wholly-owned subsidiary
      of WLOL and incorporated under the law of British Virgin islands
      (“BVI”).
 
 b)
              Plentimillion Group Limited
      (“PGL”) is a wholly-owned subsidiary of SkyAce and incorporated in
      BVI.
 
 c)
              Best Summit Enterprise Limited
      (“BSL”) is a wholly-owned subsidiary of SkyAce and incorporated in
      BVI.
 
 d)
              Hong Kong Wallis Development
      Limited (“Wallis”) is registered in Hong Kong and is a wholly-owned
      subsidiary of BSL.
 
 e)
              Beijing Huate Xingye Technology
      Limited (“Huate”) was registered in the People’s Republic of China (“PRC”)
      on March 18, 2008 and is a wholly-owned subsidiary of
      Wallis.
 
 II.
Subsidiaries of PGL - Businesses in transportation and chartering:
 
 f)
              Winland Shipping Co., Limited, is
      registered in Hong Kong.
 
 g)
              Win Star Shipping Co., Limited,
      is incorporated and registered in St. Vincent and the Grenadines
      (“S.V.G.”).
 
 h)
              Bodar Shipping Co., Limited, is
      incorporated and registered in
S.V.G.
 
 i)
              Winland Dalian Shipping S.A. is
      incorporated in Panama and registered in Hong
  Kong,
 
 j)
              Treasure Way Shipping Limited is
      incorporated and registered in Hong
Kong.
 
 k)
              Win Eagle Shipping Co., Limited,
      is incorporated and registered in Valletta,
  Malta.
 
 l)
              Win Ever Shipping Co., Limited,
      is incorporated and registered in Valletta,
  Malta.
 
 m)
              Win Bright Shipping Co., Limited,
      is incorporated and registered in Valletta,
  Malta.
  F-8
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  3.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
 
 (b)
              Principles
      of Consolidation (Continued)
 
 II.
Subsidiaries of PGL - Businesses in transportation and chartering
(Continued)
 
 n)
              Kinki International Industrial
      Limited is registered in Hong Kong, managing chartering business of
      vessels.
 
 o)
              Bestline Shipping Limited is
      registered in Hong Kong, managing chartering business of
      vessels.
 
 p)
              Lancrusier Development Co.,
      Limited is registered in Hong Kong, management and accounting of the above
      companies.
 
 q)
              Win Glory S.A. is incorporated in
      Panama, registered in Hong
Kong.
 
 r)
              Win Grace Shipping Co., Limited
      is incorporated and registered in
Malta.
 
 s)
              Win Hope Shipping Co., Limited is
      incorporated and registered in
Malta.
 
 t)
              Win Moony Shipping Co., Limited
      is incorporated and registered in
Malta.
 
 u)
              Bodar Shipping S.A. is
      incorporated and registered in
Panama.
 
 v)
              Win Moony Shipping S.A. is
      incorporated and registered in
Panama.
 
 w)
              Bao Shun Shipping S.A. is
      incorporated and registered in
Panama.
 
 x)
              Winland International Shipping
      Co., Limited is incorporated and registered in Hong
      Kong.
 
 y)
              Fon
      Tai Shipping Co., Limited is incorporated and registered in Hong
      Kong.
 
 z)
              Won
      Lee Shipping Co., Limited is incorporated and registered in Hong
      Kong.
 
 III. VIEs
- Businesses in Shipping Agency, Freight Forwarding and Online
Services:
 
 To comply
with the People’s Republic of China (“PRC”) laws and regulations, the Company
provides substantially all its shipping agency and freight forwarding services
and online services in China via its VIEs. These VIEs are wholly-owned by
certain related parties or directors of the Company.
 
 The
following is a summary of the VIEs of the Company:
 
 y)
              Dalian Winland International
      Shipping Agency Co. Ltd. (“DWIS”) is incorporated under the laws of the
      PRC. The principal activity of DWIS is shipping agency
      services.
 
 z)
              Dalian Winland International
      Logistic Co. Ltd. (“DWIL”) is incorporated under the laws of PRC. The
      principal activity of DWIL is freight forwarding
      services.
 
 aa)
              Dalian Shipping Online Network
      Co. Ltd. (“DSON” or “Shipping Online”) is incorporated under the laws of
      PRC. The principal activities of DSON are providing online service for the
      members.
  F-9
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  3.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
 
 (b)
              Principles
      of Consolidation (Continued)
 
 On March
31, 2008, the Company entered into exclusive technical service agreements with
DWIS, DWIL and DSON under which the Company provides technical and other
services to DWIS, DWIL and DSON in exchange for substantially all net income of
DWIS, DWIL and DSON. All voting rights of DWIS, DWIL and DSON are assigned to
the Company, and the Company has the right to appoint all directors and senior
management personnel of DWIS, DWIL and DSON. In addition, shareholders of DWIS,
DWIL and DSON have pledged their equity interests in DWIS, DWIL and DSON as
collateral to the Company for the non-payment of the fees for technical and
other services due to the Company.
 
 The
Company applied the provision of ASC 810 (formerly SFAS No. 46R, Consolidation of Variable Interest
Entities ), a variable interest entity (“VIE”) to be consolidated by a
company if that company is subject to a majority of the risk of loss for the
VIEs or is entitled to receive a majority of  the VIEs’ residual
returns. As a result, DWIS, DWIL and DSON became the Company’s VIEs since
January 1, 2008.
 
 The
Company adopted ASC 805 (formerly SFAS No. 141), which requires the condensed
consolidated financial statements for the periods ended March 31, 2010 be
presented as though the transfer of net assets or exchange of VIEs’ interests
had occurred at the beginning of the period. Financial statements of the VIEs
are included in the Company’s condensed consolidated financial statements as of
March 31, 2010.
 
 Inter-company
balances and transactions have been eliminated in consolidation.
 
 (c) 
Concentrations
 
 The
Company’s major customers who accounted for the following percentages of total
revenue and accounts receivable are as follows:
  Sales
                                        
                                        
                                        Accounts ReceivableMajor
                                          Customers
                                        
                                        For The Three
                                          Months Ended March
                                          31, 2010
                                        
                                        
                                        For The Three Months
                                          Ended March 31, 2009
                                        
                                        
                                        March 31,
                                          2010
                                        
                                        
                                        December 31,
                                          2009(Unaudited)
                                        
                                        
                                        (Unaudited)
                                        
                                        
                                        (Unaudited)Company
      A
                                        
                                        
                                        5.27
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2.39
                                        %
                                        
                                        
                                        -Company
      B
                                        
                                        
                                        4.79
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2.30
                                        %
                                        
                                        
                                        -Company
      C
                                        
                                        
                                        4.65
                                        %
                                        
                                        
                                        8.70
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Company
      D
                                        
                                        
                                        4.05
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Company
      E
                                        
                                        
                                        -
                                        
                                        
                                        
                                        14.30
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Company
      F
                                        
                                        
                                        -
                                        
                                        
                                        
                                        8.43
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Company
      G
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2.15
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
  F-10
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
 3.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
 
 (c)
              Concentrations
      (Continued)
 
 The
Company’s major oil suppliers who accounted for the following percentages of
total oil purchases and total accounts payable are as follows:
  Oil Purchases
                                        
                                        
                                        Accounts PayableMajor
                                          Suppliers
                                        
                                        For The Three Months
                                          Ended March 31, 2010
                                        
                                        
                                        For The Three Months
                                          Ended March 31, 2009
                                        
                                        
                                        March 31,
                                          2010
                                        
                                        
                                        December 31,
                                          2009(Unaudited)
                                        
                                        
                                        (Unaudited)
                                        
                                        
                                        (Unaudited)Company
      H
                                        
                                        
                                        40.06
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1.37
                                        %
                                        
                                        
                                        -Company
      I
                                        
                                        
                                        13.77
                                        %
                                        
                                        
                                        49.74
                                        %
                                        
                                        
                                        2.57
                                        %
                                        
                                        
                                        -Company
      J
                                        
                                        
                                        12.91
                                        %
                                        
                                        
                                        13.29
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        0.39
                                        %Company
      K
                                        
                                        
                                        5.91
                                        %
                                        
                                        
                                        6.41
                                        %
                                        
                                        
                                        0.41
                                        %
                                        
                                        
                                        0.74
                                        %Company
      L
                                        
                                        
                                        5.42
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Company
      M
                                        
                                        
                                        -
                                        
                                        
                                        
                                        15.49
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        4.55
                                        %Company
      N
                                        
                                        
                                        -
                                        
                                        
                                        
                                        12.56
                                        %
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
 
 (d)
              Use
      of Estimates
 
 The
preparation of the condensed consolidated financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting periods.
Management makes these estimates using the best information available at the
time the estimates are made. Actual results could differ materially from those
estimates.
 
 (e)
              Fair Value of Financial
      Instruments
  Fair Value of Financial Instruments-  ASC 820-10 (formerly SFAS 157) establishes a three-tier fair
value hierarchy, which prioritizes the inputs used in measuring fair value. The
hierarchy prioritizes the inputs into three levels based on the extent to which
inputs used in measuring fair value are observable in the market.
  These
tiers include:
  (I)
              Level 1—defined as
      observable inputs such as quoted prices in active
      markets;
 (II)
              Level 2—defined as inputs
      other than quoted prices in active markets that are either directly or
      indirectly observable; and
 (III)
              Level 3—defined as
      unobservable inputs in which little or no market data exists, therefore
      requiring an entity to develop its own
  assumptions.
 
 The
carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable, and short-term bank loan approximate their fair values due to the
short-term nature of these instruments.
 
 The
carrying value of long-term loans and long-term notes payable approximate their
fair value due to the variable interest rates nature thereof. The fair values
are estimated based on the current rates offered to the Company for debt of
similar terms and maturities.
  F-11
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  3.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
 
 (f)
              Revenue
      Recognition
 
 Revenue
is recognized based on the following four criteria:
 
 (I)
              The
      amount of revenue can be measured
reliably;
 
 (II)
              It
      is probable that the economic benefits will flow to the
      Company;
 
 (III)
              The
      stage of completion at the balance sheet date can be measured
      reliably;
 
 (IV)
              The
      costs incurred, or to be incurred can be measured
  reliably.
 
 For dry
bulk shipping service, the allocation of revenue between reporting periods is
based on relative transit time in each reporting period with expenses recognized
as incurred.
 
 For
chartering brokerage services, sales are recognized when the ship leaves
port.
 
 For
shipping agency and freight forwarding services, sales are recognized when the
ship leaves port.
 
 For
online services, sales are recognized according to the stage of completion in
accordance with the service period defined in executed contracts.
 
 (g)
              Income
      Tax
 
 Deferred
tax assets and liabilities are recognized for the future tax consequence
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to be
applied to taxable income in the years in which those temporary differences are
expected to reverse. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of income in the period that
includes the enactment date. 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. Also see Note 12.
 
 (h)
              Earnings
      (Loss) Per Share
 
 Basic
earnings (loss) per share are computed by dividing income (loss) available to
common shareholders by the weighted-average number of common shares outstanding
during the period. Diluted earnings (loss) per share is computed similar to
basic earnings (loss) per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive. The Company does not have dilutive securities for the
three months ended March 31, 2010 and 2009.
 
 (i)
              Foreign
      Currency Translation
 
 Assets
and liabilities of foreign subsidiaries are translated into United States
dollars at currency exchange rates in effect at period-end and revenues and
expenses are translated at average exchange rates in effect for the period.
Gains and losses resulting from foreign currency transactions are included in
results of operations. Gains and losses resulting from translation of foreign
subsidiaries balance sheets are included as a separate component of
shareholders’ equity.
  March 31, 2010
                        
                        
                        December 31, 2009
                        
                        
                        March 31, 2009Period
      end RMB: US$ exchange rate
                        
                        
                        6.8361
                        
                        
                        
                        6.8372
                        
                        
                        
                        -Average
      period RMB: US$ exchange rate
                        
                        
                        6.8367
                        
                        
                        
                        -
                        
                        
                        
                        6.8499
  F-12
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  3.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
 
 (j)
              Comprehensive
      Income (Loss)
 
 Comprehensive
income (loss) is defined to include all changes in equity except those resulting
from investments by owners and distributions to owners. Among other disclosures,
all items that are required to be recognized under current accounting standards
as components of comprehensive income (loss) should be reported in a financial
statement that is presented with the same prominence as other financial
statements. The Company’s only current component of comprehensive income (loss)
is the foreign currency translation adjustment.
 
 (k)
              Reporting
      Segments
 
 Accounting
standards require public business enterprises to report information about each
of their operating business segments that exceed certain quantitative threshold
or meet certain other reporting requirements. Operating business segments have
been defined as a component of an enterprise about which separate financial
information is available and is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has determined that there are three reportable
segments: (1) Dry bulk shipping, (2) Chartering brokerage, and (3) Other
activities segment.
 
 Dry Bulk
Shipping Service - Dry bulk shipping service operates a fleet of thirteen
vessels that provides marine shipping services for dry and liquid bulk cargo
shipping. The segment contributed 63% and 40% of combined operating revenues for
the three months ended March 31, 2010 and 2009, respectively.
 
 Chartering
Brokerage Service - Chartering brokerage service provides ship chartering
services for unrelated shipping companies and shippers. The segment contributed
31% and 48% of consolidated operating revenues for the three months ended March
31, 2010 and 2009, respectively.
 
 Other
activities - Other activities segment comprises shipping agency and freight
forwarding services, and online services. Shipping agency and freight forwarding
service provides transportation and logistic services to shippers in the PRC.
Online services provide internet services for members. These operating segments
were not separately reported as they do not meet any of the quantitative
thresholds under ASC 280-10 (formerly SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information). Other activities segment contributed
6% and 12% of consolidated operating revenues for the three months ended March
31, 2010 and 2009, respectively.
 Also see
Note 13.
 
 (l)
              Recent
      Accounting Pronouncements
 
 On July
1, 2009, the Company adopted Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 105-10 (formerly Statement of
Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards
Codification and Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162). ASC 105-10 establishes the FASB ASC as
the source of authoritative accounting principles recognized by the FASB to be
applied in preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America. The
adoption of this standard had no impact on the Company’s condensed
consolidated financial statements.
 
 Effective
January 1, 2009, the Company adopted ASC 805 (formerly SFAS No. 141 (R),
Business Combinations).
ASC 805 requires an acquirer to measure the identifiable assets acquired,
the liabilities assumed, and any noncontrolling interest in the acquiree at
their fair values on the acquisition date, with goodwill being the excess value
over the net identifiable assets acquired. The adoption of ASC 805 did not have
any effect on the Company’s condensed consolidated financial statements as of
March 31, 2010.
  F-13
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  3.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
 
 (l)
              Recent
      Accounting Pronouncements
(Continued)
 
 Effective
January 1, 2009, the Company adopted ASC 810-10 (formerly SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements). This Statement establishes accounting
and reporting standards that require the ownership interests in subsidiaries’
non-parent owners be clearly presented in the equity section of the balance
sheet; requires the amount of consolidated net income attributable to the parent
and to the noncontrolling interest be clearly identified and presented on the
face of the consolidated statement of income; requires that changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently; requires that when a
subsidiary is deconsolidated, any retained noncontrolling equity investment in
the former subsidiary be initially measured at fair value and the gain or loss
on the deconsolidation of the subsidiary be measured using the fair value of any
noncontrolling equity; requires that entities provide disclosures that clearly
identify the interests of the parent and the interests of the noncontrolling
owners. The adoption of ASC 810-10 did not have a significant effect on the
Company’s condensed consolidated financial statements as of March 31,
2010.
 
 Effective
January 1, 2009, the Company adopted ASC 815-10 (formerly SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities ), which amends SFAS No. 133 and
expands disclosures to include information about the fair value of derivatives,
related credit risks and a company's strategies and objectives for using
derivatives. The adoption of ASC 815-10 did not have a material effect on the
Company’s condensed consolidated financial statements as of March 31,
2010.
 
 Effective
January 1, 2009, the Company adopted ASC 815-40 (formerly Emerging Issues Task
Force (“EITF”) Issue No. 07-05, Determining Whether an Instrument
(or Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF
07-05”). ASC 815-40
addresses the determination of whether an instrument (or an embedded feature) is
indexed to an entity's own stock, which is the first part of the scope exception
in paragraph 11(a) of FASB SFAS No. 133 , Accounting for Derivative
Instruments and Hedging Activities (“SFAS 133”). If an instrument (or an
embedded feature) that has the characteristics of a derivative instrument under
paragraphs 6–9 of SFAS 133 is indexed to an entity's own stock, it is still
necessary to evaluate whether it is classified in stockholders' equity (or would
be classified in stockholders' equity if it were a freestanding instrument).
Other applicable authoritative accounting literature, including Issues EITF
00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company Own Stock, and EITF 05-2, The Meaning of “Conventional Debt
Instrument” in Issue No. 00-19, provides guidance for determining whether
an instrument (or an embedded feature) is classified in stockholders' equity (or
would be classified in stockholders' equity if it were a freestanding
instrument). ASC 815-40 does not address that second part of the scope exception
in paragraph 11(a) of SFAS 133. The adoption of ASC 815-40 did not have a
material effect on the Company’s condensed consolidated financial statements as
of March 31, 2010.
 
 On
April 1, 2009, the FASB approved ASC 805 (formerly FSP FAS 141(R)-1, Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies),
which amends Statement 141(R) and eliminates the distinction between contractual
and non-contractual contingencies. Under ASC 805, an acquirer is required to
recognize at fair value an asset acquired or liability assumed in a business
combination that arises from a contingency if the acquisition-date fair value of
that asset or liability can be determined during the measurement period. If the
acquisition-date fair value cannot be determined, the acquirer applies the
recognition criteria in SFAS No. 5, Accounting for Contingencies
and Interpretation 14, “Reasonable Estimation of the Amount of a Loss – and
interpretation of FASB Statement No. 5,” to determine whether the
contingency should be recognized as of the acquisition date or after it. The
adoption of ASC 805 did not have a material effect on the Company’s
condensed consolidated financial statements as of March 31,
2010.
  F-14
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  3.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
 
 (l)
              Recent
      Accounting Pronouncements
(Continued)
 
 ASC
320-10 (formerly FSP FAS 115-2 and FAS 124-2) amends the other-than-temporary
impairment guidance in U.S. GAAP for debt securities to make the guidance more
operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. It did not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. We are
required to adopt ASC 320-10 for our interim and annual reporting periods ending
after June 15, 2009. ASC 320-10 does not require disclosures for periods
presented for comparative purposes at initial adoption. ASC 320-10 requires
comparative disclosures only for periods ending after initial adoption. The
adoption of ASC 320-10 did not have a material effect on the Company’s
condensed consolidated financial statements as of March 31, 2010.
 
 On
April 9, 2009, the FASB also approved ASC 825-10 (formerly FSP FAS 107-1
and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments) to require
disclosures about fair value of financial instruments in interim period
financial statements of publicly traded companies and in summarized financial
information required by APB Opinion No. 28, Interim Financial Reporting .
We are required to adopt ASC 825-10 for our interim and annual reporting periods
ending after June 15, 2009. ASC 825-10 does not require disclosures for
periods presented for comparative purposes at initial adoption. ASC 825-10
requires comparative disclosures only for periods ending after initial adoption.
The adoption of ASC 825-10 did not have a material effect on the Company’s
condensed consolidated financial statements as of March 31, 2010.
 
 In April
2009, the FASB updated guidance related to fair-value measurements to clarify
the guidance related to measuring fair-value in inactive markets, to modify the
recognition and measurement of other-than-temporary impairments of debt
securities, and to require public companies to disclose the fair values of
financial instruments in interim periods. This updated guidance became effective
for the Company beginning June 1, 2009. The adoption of this guidance did not
have a material effect on the Company’s condensed consolidated financial
statements as of March 31, 2010.
 
 In June
2009, the FASB issued ASC 810-10 (formerly SFAS No. 167) Amendments to FASB
Interpretation No. 46(R), which require an enterprise to perform an analysis and
ongoing reassessments to determine whether the enterprises variable interest or
interests give it a controlling financial interest in a variable interest entity
and amends certain guidance for determining whether an entity is a variable
interest entity. It also requires enhanced disclosures that will provide users
of financial statements with more transparent information about an enterprises
involvement in a variable interest entity. ASC 810-10 is effective as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009 and for all interim reporting periods after that. The
adoption of ASC 810-10 did not have a material effect on the Company’s
condensed consolidated financial statements as of March 31, 2010.
 
 In
January 2010, the FASB issued guidance to amend the disclosure requirements
related to recurring and nonrecurring fair value measurements. The guidance
requires disclosure of transfers of assets and liabilities between Level 1 and
Level 2 of the fair value measurement hierarchy, including the reasons and the
timing of the transfers and information on purchases, sales, issuance, and
settlements on a gross basis in the reconciliation of the assets and liabilities
measured under Level 3 of the fair value measurement hierarchy. This guidance is
effective for the Company beginning March 1, 2010. The adoption of this guidance
did not have a material effect on the Company’s condensed consolidated financial
statements as of March 31, 2010.
  F-15
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  4.
              VESSELS
 
 The
Company’s current fleet consists of thirteen vessels as bulk carriers as of
March 31, 2010 and December 31, 2009. Among the thirteen vessels, two of them
denoted (a) were acquired by syndicated loans and are still under pledge, also
see Note 9; nine vessels denoted (b) were acquired through capital leases; a
vessel denoted (c) was acquired through long-term notes payable from related
parties, also see Note 10; and one remaining vessel denoted (d) was acquired
through a long-term loan and a long-term note payable, also see Notes 9 and
10.
 
 The
vessels of the Company consist of the following:
 
 March 31, 2010
                        
                        
                        December 31, 2009(Unaudited)At
      cost:Win
      Hope
                        
                        (b)
                        
                        $
                        2,679,285
                        
                        
                        $
                        2,679,285Win
      Ever
                        
                        (b)
                        
                        
                        1,737,966
                        
                        
                        
                        1,737,966Win
      Bright
                        
                        (b)
                        
                        
                        1,739,258
                        
                        
                        
                        1,739,258Win
      Eagle
                        
                        (b)
                        
                        
                        3,560,852
                        
                        
                        
                        3,560,852Win
      Glory
                        
                        (b)
                        
                        
                        2,503,697
                        
                        
                        
                        2,503,697Win
      Grace
                        
                        (b)
                        
                        
                        3,677,861
                        
                        
                        
                        3,677,861Win
      Moony
                        
                        (b)
                        
                        
                        3,682,178
                        
                        
                        
                        3,682,178Win
      Star
                        
                        (b)
                        
                        
                        3,336,600
                        
                        
                        
                        3,336,600Winland
      Dalian
                        
                        (a)
                        
                        
                        18,243,139
                        
                        
                        
                        18,243,139Win
      Honey
                        
                        (a)
                        
                        
                        4,500,000
                        
                        
                        
                        4,500,000Bodar
                        
                        (b)
                        
                        
                        4,985,441
                        
                        
                        
                        4,985,441Andong
                        
                        (c)
                        
                        
                        2,962,215
                        
                        
                        
                        2,961,739Baoshun
                        
                        (d)
                        
                        
                        20,881,125
                        
                        
                        
                        20,881,125$
                        74,489,617
                        
                        
                        $
                        74,489,141
 
 March 31, 2010
                                    
                                    
                                    December 31, 2009(Unaudited)Less:  Accumulated
      depreciationWin
      Hope
                                    
                                    (b)
                                    
                                    $
                                    2,069,747
                                    
                                    
                                    $
                                    2,009,463Win
      Ever
                                    
                                    (b)
                                    
                                    
                                    1,564,169
                                    
                                    
                                    
                                    1,564,169Win
      Bright
                                    
                                    (b)
                                    
                                    
                                    1,565,332
                                    
                                    
                                    
                                    1,565,332Win
      Eagle
                                    
                                    (b)
                                    
                                    
                                    3,204,767
                                    
                                    
                                    
                                    3,204,767Win
      Glory
                                    
                                    (b)
                                    
                                    
                                    2,199,677
                                    
                                    
                                    
                                    2,119,201Win
      Grace
                                    
                                    (b)
                                    
                                    
                                    3,310,075
                                    
                                    
                                    
                                    3,310,075Win
      Moony
                                    
                                    (b)
                                    
                                    
                                    3,313,961
                                    
                                    
                                    
                                    3,313,961Win
      Star
                                    
                                    (b)
                                    
                                    
                                    3,002,940
                                    
                                    
                                    
                                    3,002,940Winland
      Dalian
                                    
                                    (a)
                                    
                                    
                                    5,016,863
                                    
                                    
                                    
                                    4,743,216Win
      Honey
                                    
                                    (a)
                                    
                                    
                                    1,586,250
                                    
                                    
                                    
                                    1,522,969Bodar
                                    
                                    (b)
                                    
                                    
                                    4,486,897
                                    
                                    
                                    
                                    4,486,897Andong
                                    
                                    (c)
                                    
                                    
                                    836,390
                                    
                                    
                                    
                                    797,056Baoshun
                                    
                                    (d)
                                    
                                    
                                    503,384
                                    
                                    
                                    
                                    251,692$
                                    32,660,452
                                    
                                    
                                    $
                                    31,891,738Vessels,
      net
                                    
                                    
                                    
                                    $
                                    41,829,165
                                    
                                    
                                    $
                                    42,597,403
 
 Vessel
depreciation expense for the three months ended March 31, 2010 and 2009 was
$768,583 and $811,344 respectively.
  F-16
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  4.
              VESSELS
      (CONTINUED)
 
 The
Company pledged the following vessels as collateral against long-term loans.
Also see Note 9.
 
 March 31, 2010
                          
                          
                          December 31, 2009(Unaudited)Net Book ValueWinland
      Dalian
                          
                          $
                          13,226,276
                          
                          
                          $
                          13,499,923Win
      Honey
                          
                          
                          2,913,750
                          
                          
                          
                          2,977,031Baoshun
                          
                          
                          20,377,741
                          
                          
                          
                          20,629,433Total
                          
                          $
                          36,517,767
                          
                          
                          $
                          37,106,387
 
 Insurance
Costs:
 
 There are
four kinds of marine insurance for the Company which insures the vessels and
shipping business as follows:
 
 Insurance
                  
                  Coverage
                  
                  
                  Insurance Premium
                    For The Three Months Ended March 31,2010
                  
                  
                  2009(Unaudited)
                  
                  
                  (Unaudited)Hull
      insurance
                  
                  $
                  70,180,000
                  
                  
                  $
                  268,671
                  
                  
                  $
                  283,378Protection
      & indemnity insurance
                  
                  
                  98,400,000
                  
                  
                  
                  267,005
                  
                  
                  
                  241,602Freight
      demurrage and defense insurance
                  
                  
                  65,900,000
                  
                  
                  
                  24,103
                  
                  
                  
                  23,799Delay
      insurance
                  
                  
                  500,000
                  
                  
                  
                  -
                  
                  
                  
                  9,540Others
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  6,573Total
                  
                  
                  
                  
                  
                  $
                  559,779
                  
                  
                  $
                  564,892
 
 Insurance
costs are amortized on a straight-line basis over the beneficial periods and are
recorded in vessel expenses in the condensed consolidated statements of income
(loss) and comprehensive income (loss) for the three months ended March 31, 2010
and 2009. The premium expenses were $559,779 and $564,892 for the three months
ended March 31, 2010 and 2009, respectively. The prepayment for insurance was
$16,069 and $26,950 as of March 31, 2010 and December 31, 2009,
respectively.
 
 5.
              FIXED
      ASSETS
 
 Fixed
assets consist of the following:
 
 March 31, 2010
                    
                    
                    December 31, 2009(Unaudited)At
      cost:Motor
      vehicles
                    
                    $
                    230,975
                    
                    
                    $
                    244,612Office
      equipment
                    
                    
                    198,282
                    
                    
                    
                    204,031Leasehold
      improvement
                    
                    
                    181,700
                    
                    
                    
                    181,671610,957
                    
                    
                    
                    630,314Less:  Accumulated
      depreciationMotor
      vehicles
                    
                    
                    161,173
                    
                    
                    
                    159,458Office
      equipment
                    
                    
                    167,765
                    
                    
                    
                    174,298Leasehold
      improvement
                    
                    
                    154,641
                    
                    
                    
                    145,517483,579
                    
                    
                    
                    479,273Fixed
      assets, net
                    
                    $
                    127,378
                    
                    
                    $
                    151,041
 
 Depreciation
expense for the three months ended March 31, 2010 and 2009 was $20,041 and
$24,820, respectively.
  F-17
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  6.
              DEFERRED
      DRY DOCK FEES
 
 Deferred
dry dock feesconsist of the
following:
 March 31, 2010
                          
                          
                          December 31, 2009(Unaudited)Cost
                          
                          $
                          18,298,871
                          
                          
                          $
                          17,608,753Less:
      Accumulated amortization
                          
                          
                          9,544,074
                          
                          
                          
                          8,297,106Deferred
      dry dock fees, net
                          
                          $
                          8,754,797
                          
                          
                          $
                          9,311,647
 
 Amortization
expense for the three months ended March 31, 2010 and 2009 was $918,473 and
$1,169,372, respectively.
 
 Amortization
expense for the next five years and thereafter is as follows:
 
 Period Ended March 31,
                            
                            Amount2011
                            
                            $
                            3,093,1802012
                            
                            
                            2,710,2912013
                            
                            
                            1,784,2602014
                            
                            
                            1,063,1862015
                            
                            
                            103,880Total
                            
                            $
                            8,754,797
 
 7.
              DUE
      TO/FROM RELATED PARTIES
 
 Due
to/from related parties consist of the following:
 
 (I)   Due From Related Parties
                            
                            
                            
                            
                            March 31, 2010
                            
                            
                            December 31, 2009(Unaudited)Winland
      Container Lines Ltd.
                            
                            
                            a)
                            
                            
                            $
                            1,143,658
                            
                            
                            $
                            1,097,384Dalian
      Winland Group Co., Ltd
                            
                            
                            b)
                            
                            
                            
                            697,985
                            
                            
                            
                            16,113Due
      from employees
                            
                            
                            c)
                            
                            
                            
                            -
                            
                            
                            
                            146Total
      due from related parties
                            
                            
                            
                            
                            
                            $
                            1,841,643
                            
                            
                            $
                            1,113,643
 
 (II)   Due To Related Parties
                                
                                
                                
                                
                                March 31, 2010
                                
                                
                                December 31, 2009(Unaudited)Dalian
      Winland Shipping Co., Ltd
                                
                                
                                d)
                                
                                
                                $
                                18,854
                                
                                
                                $
                                -Dalian
      Master Well Ship Management Co., Ltd
                                
                                
                                e)
                                
                                
                                
                                74,100
                                
                                
                                
                                7,200Winland
      Shipping Japan Co., Ltd
                                
                                
                                f)
                                
                                
                                
                                28,328
                                
                                
                                
                                13,707Rich
      Forth Investment Limited
                                
                                
                                g)
                                
                                
                                
                                4,200
                                
                                
                                
                                -Total
      due to related parties
                                
                                
                                
                                
                                
                                $
                                125,482
                                
                                
                                $
                                20,907
 
 a)
              Winland
      Container Lines Ltd. is controlled by the Chairman and Chief Executive
      Officer of the Company. The Company provided shipping agency and freight
      forwarding services to Winland Container Lines Ltd. For the three months
      ended March 31, 2010 and 2009, the Company recognized vessel management
      fees of $153,507, and $0, respectively; the Company recognized service
      revenue of $992,839 and $249,540, respectively. For the three months ended
      March 31, 2010 and 2009, the Company paid $1,362,482 and $3,131,533 of
      expenses to related ports and received $2,462,729 and $1,094,813 of
      payments from related ports on behalf of Winland Container Lines Ltd.,
      respectively. The outstanding balances at March 31, 2010 and December 31,
      2009 are interest-free, unsecured and they were subsequently
      settled.
  F-18
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  7.
              DUE
      TO/FROM RELATED PARTIES (CONTINUED)
 
 b)
              Dalian Winland Group Co., Ltd
      (“DWIG”) is controlled by the Chairman and Chief Executive Officer of the
      Company. The Company paid $9,356,152 and $6,298,440 of expenses on behalf
      of DWIG for the three months ended March 31, 2010 and 2009,
      respectively.  The Company collected $8,651,608 and $7,954,108
      on behalf of DWIG for the three months ended March 31, 2010 and 2009,
      respectively. For the three months ended March 31, 2010 and 2009, the
      Company recognized interest expense for long-term notes payable of $22,674
      and $22,642, respectively. Also see Note 10. The outstanding balances at
      March 31, 2010 and December 31, 2009 are interest-free, unsecured and have
      no fixed repayment term. They were subsequently
      settled.
 
 c)
              Due from employees are
      interest-free, unsecured and have no fixed repayment terms. The amounts
      due from employees primarily represent advances to sales personnel for
      business and travel related
expenses.
 
 d)
              Dalian Winland Shipping Co., Ltd
      (“DWSC”) is controlled by the Chairman and Chief Executive Officer of the
      Company. It operates as a vessel management company for the Company. It
      operated one and two vessels for the Company for the three months ended
      March 31, 2010 and 2009, respectively. The vessel management fees were
      $4,500 and $9,000 for the three months ended March 31, 2010 and 2009,
      respectively. The Company also recognized service revenue of $0 and
      $66,780 for the three months ended March 31, 2010 and 2009, respectively.
      For the three months ended March 31, 2010 and 2009, on behalf of DWSC, the
      Company paid $0 and $120,680, and received $0 and $99,414, respectively.
      The Company recognized interest expense for long-term notes payable of
      $14,354 and $14,334 for three months ended March 31, 2010 and 2009,
      respectively. See Note 10. The outstanding balance at March 31, 2010 is
      interest-free, unsecured and has no fixed repayment
      term.
 
 e)
              Dalian Master Well Ship
      Management Co., Ltd is controlled by the Chairman and Chief Executive
      Officer of the company. It operates as a vessel management company for the
      Company. The vessel management fees for the three months ended March 31,
      2010 and 2009 were $58,500 and $64,800, respectively. The Company paid $0
      and $12,175 on behalf of Dalian Master Well Ship Management Co., Ltd, for
      the three months ended March 31, 2010 and 2009, respectively. The Company
      collected $8,400 and $13,402 on behalf of Dalian Master Well Ship
      Management Co., Ltd, for the three months ended March 31, 2010 and 2009,
      respectively. The outstanding balances at March 31, 2010 and December 31,
      2009 are interest-free, unsecured, and have no fixed repayment
      term.
 
 f)
              Winland
      Shipping Japan Co., Ltd is controlled by the Chairman and Chief Executive
      Officer of the Company. The Company recognized agency service fees of
      $29,856 and $17,557 for the three months ended March 31, 2010 and 2009,
      respectively. The Company paid $43,377 and $98,596 on behalf of Winland
      Shipping Japan Co., Ltd, for the three months ended March 31, 2010 and
      2009, respectively. The Company collected $28,147 and $88,140 on behalf of
      Winland Shipping Japan Co., Ltd, for the three months ended March 31, 2010
      and 2009, respectively. The outstanding balances at March 31, 2010 and
      December 31, 2009 are interest-free, unsecured and have no fixed repayment
      term.
 
 g)
              Rich
      Forth Investment Limited is controlled by the relative of the Chief
      Executive Officer of the Company. It operates as a vessel management
      company for the Company. The vessel management fee was $12,600 and $0 for
      the three months ended March 31, 2010 and 2009, respectively. The Company
      paid $8,400 and $0 for the three months ended March 31, 2010 and 2009,
      respectively. The outstanding balance at March 31, 2010 is interest-free,
      unsecured and has no fixed repayment
term.
  F-19
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  8.
              SHORT-TERM
      BANK LOAN
 
 The
Company obtained a short-term bank loan from Shanghai Pudong Development Bank
for $1,170,070 on July 10, 2009. The loan principal is due on July 6, 2010. The
interest payment is due quarterly at an annual interest rate of 5.31%. Interest
expense was $15,730 for the three months ended March 31, 2010. The loan is
guaranteed by the Chairman and CEO of the Company.
 
 9.
              LONG-TERM
      LOANS
 
 Long-term
loans consist of the following:
  March 31, 2010
                      
                      
                      December 31, 2009(Unaudited)Loans
      from Dialease Maritime S.A.:Due
      on August 1, 2011, monthly interest payment is 1-month LIBOR plus 1.75%
      per annum, and the actual rate at March 31, 2010 is 2.26%, secured by the
      vessel Winland Dalian (also see Note 4), assignment of insurance of the
      vessel, and guaranteed by the Chairman of the Company. Principal is repaid
      every month in 72 equal installments from September 2005.
                      
                      $
                      2,991,540
                      
                      
                      $
                      3,519,456Due
      on July 21, 2012, monthly interest payment is 1-month LIBOR plus 1.75% per
      annum, and the actual rate at March 31, 2010 is 2.26%, secured by the
      vessel Win Honey (also see Note 4), assignment of insurance of the vessel,
      and guaranteed by the Chairman of the Company. Principal is repaid every
      month in 72 equal installments from August 2006.
                      
                      
                      1,633,304
                      
                      
                      
                      1,808,306Term
      of the loan is 7 years with interest at the 1-month LIBOR plus 2.30% per
      annum, and the actual rate at March 31, 2010 is 2.46%, monthly payment
      principal and interest is fixed at $109,773, initial payment on October
      24, 2009, secured by the vessel Baoshun (also see Note 4).
                      
                      
                      13,831,362
                      
                      
                      
                      14,160,681Total
      long-term loans
                      
                      
                      18,456,206
                      
                      
                      
                      19,488,443Less:
      Current portion
                      
                      
                      4,128,908
                      
                      
                      
                      4,128,908Long-term
      portion
                      
                      $
                      14,327,298
                      
                      
                      $
                      15,359,535
 
 Interest
expense for the three months ended March 31, 2010 and 2009 was $108,651 and
$44,310, respectively.
  F-20
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  9.
              LONG-TERM
      LOANS (CONTINUED)
 
 The
repayment schedule for the principal amount of long-term loans is as
follows:
 
 Period Ended March 31,
                      
                      Amount2011
                      
                      $
                      4,128,9082012
                      
                      
                      2,897,1602013
                      
                      
                      1,550,5642014
                      
                      
                      1,317,2762015
                      
                      
                      1,317,276Thereafter
                      
                      
                      7,245,022Total
                      
                      $
                      18,456,206
 
 10.
              LONG-TERM
      NOTES PAYABLE
 
 Long-term
notes payable consists of the following:
 March 31, 2010
                      
                      
                      December 31, 2009(Unaudited)Note
      payable to unrelated party:Sea
      Carrier Shipping Co., Ltd., net of discount of $1,918,662 and $2,100,182
      at March 31, 2010 and December 31, 2009, respectively, due September 25,
      2014, fixed repayment of $2,897 per day, monthly payment due one month in
      advance.
                      
                      
                      a)
                      
                      
                      $
                      2,826,623
                      
                      
                      $
                      2,905,834Subtotal
                      
                      
                      
                      
                      
                      
                      2,826,623
                      
                      
                      
                      2,905,834Notes
      payable to related companies:Dalian
      Winland Shipping Co. , Ltd. due July 19, 2012, at an interest rate of 5%
      per annum
                      
                      
                      b)
                      
                      
                      
                      1,148,131
                      
                      
                      
                      1,148,131Dalian
      Winland Group Co., Ltd. due July 19, 2012, at an interest rate of 5% per
      annum
                      
                      
                      c)
                      
                      
                      
                      1,813,608
                      
                      
                      
                      1,813,608Subtotal
                      
                      
                      
                      
                      
                      
                      2,961,739
                      
                      
                      
                      2,961,739Total
      long-term notes payable
                      
                      
                      
                      
                      
                      
                      5,788,362
                      
                      
                      
                      5,867,573Less:
      Current portion
                      
                      
                      
                      
                      
                      
                      387,848
                      
                      
                      
                      3,326,132Long-term
      portion
                      
                      
                      
                      
                      
                      $
                      5,400,514
                      
                      
                      $
                      2,541,441
 
 The
amortization of discount on note payable for the three months ended March 31,
2010 and 2009 was $181,520 and $3,938, respectively.
 
 The
long-term note denoted a) was used to purchase the vessel Baoshun. Also see Note
4.
 
 The
long-term notes obtained from DWSC and DWIG, two related parties, denoted b) and
c) were both used to purchase the vessel Andong. Also see Notes 4 and
7.
 
 Interest
expense for the three months ended March 31, 2010 and 2009 was $37,028 and
$36,976, respectively.
  F-21
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
   10.
              LONG-TERM
      NOTES PAYABLE (CONTINUTED)
 
 The
repayment schedule for long-term notes payable is as follows:
 
 Period Ended March 31,
                    
                    Amount2011
                    
                    $
                    387,8482011
                    
                    
                    500,7242012
                    
                    
                    3,601,4142013
                    
                    
                    817,9432014
                    
                    
                    480,433Total
                    
                    $
                    5,788,362
 
 11.
              COMMITMENTS
 
 The
Company leases office space under operating leases. Lease expense was $66,625
and $35,579 for the three months ended March 31, 2010 and 2009,
respectively.
 
 As of
March 31, 2010, future minimum payments required under non-cancelable leases
are:
 
 Period Ended March 31,
                    
                    Amount2011
                    
                    
                    141,9332012
                    
                    
                    30,367Total
                    
                    $
                    172,300
 
 12.
              INCOME
      TAX
 
 (a)
              Income
      Tax Expense
 
 Dalian
Winland International Shipping Agency Co. Ltd., Dalian Winland International
Logistic Co. Ltd. and Dalian Shipping Online Network Co. Ltd. are incorporated
under the laws of PRC and subjected by Chinese tax law. On March 16, 2007, the
National People’s Congress of China approved the Corporate Income Tax Law of the
People’s Republic of China (the “new CIT Law”), which was effective on January
1, 2008. Under the new CIT Law, the corporate income tax rate applicable to
these companies starting from January 1, 2008 is 25%.
 
 Winland
Shipping Co., Limited, Treasure Way Shipping Limited, Kinki International
Industrial Limited, Bestline Shipping Limited, Lancrusier Development Co.,
Limited, Winland International Shipping Co., Limited, Fon Tai Shipping Co.,
Limited and Won Lee Shipping Co., Limited are incorporated and registered in
Hong Kong. All the income derived from these companies is exempt from income tax
under the local tax law; there is no income tax expense for the three months
ended March 31, 2010 and 2009.
 
 Win Star
Shipping Co., Limited and Bodar Shipping Co., Limited are incorporated and
registered in St. Vincent and Grenadines. Win Eagle Shipping Co., Limited, Win
Ever Shipping Co., Limited, and Win Bright Shipping Co., Limited are
incorporated and registered in Valletta, Malta. These five companies obtained
tax exemptions from the local governments, so they did not have any tax expense
for the three months ended March 31, 2010 and 2009. Winland Dalian Shipping S.A.
and Win Glory S.A. are incorporated in Panama and are registered in HongKong.
Win Grace Shipping Co., Limited, Win Hope Shipping Co., Limited, Win Moony
Shipping Co., Limited are incorporated and registered in Valletta, Malta. Bodar
Shipping S.A., Win Moony Shipping S.A., and Bao Shun Shipping S.A. are
incorporated and registered in Panama. Since these companies are exempt from
income tax under the local tax law, they did not have any income tax for the
three months ended March 31, 2010 and 2009.
  F-22
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
  12.
              INCOME
      TAX (CONTINUED)
 
 (a)
              Income
      Tax Expense (Continued)
 
 Effective
January 1, 2007, the Company adopted ASC 740-10 (formerly FASB Interpretation
No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of FASB statement No.109,
Accounting for Income
Taxes). ASC 740-10 addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be recorded in the
financial statements. Under ASC 740-10, we may recognize the tax benefit from an
uncertainty tax position only if it is more likely than not that the tax
position will be sustained on examination by the taxing authorities, based on
the technical merits of the position. The tax benefits recognized in the
financial statements from such a position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement. ASC 740-10 also provides guidance on
de-recognition, classification, interest and penalties on income taxes,
accounting in interim periods and requires increased disclosures.
 Income
tax expense for the three months ended March 31, 2010 and 2009 is summarized as
follows:
 
 For The Three Months Ended March 31,2010
                          
                          
                          2009(Unaudited)
                          
                          
                          (Unaudited)Current
                          
                          $
                          7,584
                          
                          
                          $
                          359Deferred
                          
                          
                          355
                          
                          
                          
                          963Income
      tax expense
                          
                          $
                          7,939
                          
                          
                          $
                          1,322
 
 The
Company’s income tax expense differs from the “expected” tax expense for the
three months ended March 31, 2010 and 2009 (computed by applying the Hong Kong
CIT rate of 17.5% and PRC CIT rate of 25% to income before income taxes) as
follows:
 
 For The Three Months Ended March 31,2010
                    
                    
                    2009(Unaudited)
                    
                    
                    (Unaudited)Computed
      “expected” expense (benefit)
                    
                    $
                    293,999
                    
                    
                    $
                    (559,050
                    )Favorable
      tax rates
                    
                    
                    (286,060
                    )
                    
                    
                    560,372Income
      tax expense
                    
                    $
                    7,939
                    
                    
                    $
                    1,322
  F-23
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
   12.
              INCOME
      TAX (CONTINUED)
 
 (b)
              Income
      Tax Expense (Continued)
 
 The tax
effects of temporary differences that give rise to the Company’s net deferred
tax assets and liabilities as of March 31, 2010 and December 31, 2009 are as
follows:
 
 March 31, 2010
                          
                          
                          December 31, 2009(Unaudited)Deferred
      tax assets (liabilities):Current
      portion:General
      and administrative expenses
                          
                          $
                          89
                          
                          
                          $
                          -Service
      revenue and commissions
                          
                          
                          -
                          
                          
                          
                          2,434Valuation
      allowance-short term
                          
                          
                          (89
                          )
                          
                          
                          (732
                          )Other
      income
                          
                          
                          -
                          
                          
                          
                          (164
                          )Subtotal
                          
                          
                          -
                          
                          
                          
                          1,538Non-current
      portion:Depreciation
      expense
                          
                          
                          (36,977
                          )
                          
                          
                          (31,454
                          )Net
      operating loss
                          
                          
                          295,872
                          
                          
                          
                          135,585Valuation
      allowance
                          
                          
                          (258,862
                          )
                          
                          
                          (105,281
                          )Subtotal
                          
                          
                          33
                          
                          
                          
                          (1,150
                          )Net
      deferred tax assets
                          
                          $
                          33
                          
                          
                          $
                          388
 
 (b)
              Tax
      Holiday Effect
 
 For the
three months ended March 31, 2010 and 2009, the Hong Kong corporate income tax
rate was 17.5%. Certain subsidiaries of the Company which were registered in
Hong Kong are entitled to tax exemptions as long as they do not operate in Hong
Kong under the local tax law. Since these companies do not have operations in
Hong Kong, they did not have any income tax expense for the three months ended
March 31, 2010 and 2009.
 
 The
combined effects of the income tax expense exemptions and reductions available
to the Company for the three months ended March 31, 2010 and 2009 is as
follows:
 
 2010
                            
                            
                            2009(Unaudited)
                            
                            
                            (Unaudited)Tax
      holiday (benefit) expense
                            
                            $
                            (286,060
                            )
                            
                            $
                            560,372Basic
      net income (loss) per shareexcluding
      tax holiday effect
                            
                            $
                            0.01
                            
                            
                            $
                            (0.02
                            )
  F-24
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
   13.
              SEGMENT
      INFORMATION
 
 The
Company determined that there are three reportable segments: (1) Dry bulk
shipping, (2) Chartering brokerage, and (3) Other activities segment. The other
activities segment comprises shipping agency, freight forwarding services and
online services. These operating segments were not separately reported as they
do not meet any of the quantitative thresholds under ASC 280-10 (formerly SFAS
No. 131, Disclosures about Segments of an Enterprise and Related
Information).
 
 The
Company's segment information as of March 31, 2010 and December 31, 2009, and
for the three months ended March 31, 2010 and 2009 are as follows:
 
 Three Months Ended
                      March 31, 2010
                      (Unaudited)
                    
                    Dry Bulk
                      Shipping
                    
                    
                    Chartering
                      Brokerage
                    
                    
                    Other
                      Activities
                    
                    
                    Corporate
                      and
                      Eliminations
                    
                    
                    ConsolidatedSales
      to unaffiliated customers
                    
                    $
                    9,238,241
                    
                    
                    $
                    4,576,689
                    
                    
                    $
                    871,772
                    
                    
                    $
                    -
                    
                    
                    $
                    14,686,702Intersegment
      sales
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    23,272
                    
                    
                    
                    (23,272
                    )
                    
                    
                    -Net
      sales
                    
                    
                    9,238,241
                    
                    
                    
                    4,576,689
                    
                    
                    
                    895,044
                    
                    
                    
                    (23,272
                    )
                    
                    
                    14,686,702Costs
                    
                    
                    5,606,626
                    
                    
                    
                    3,978,284
                    
                    
                    
                    573,544
                    
                    
                    
                    (23,272
                    )
                    
                    
                    10,135,182Depreciation
      and amortization
                    
                    
                    1,687,663
                    
                    
                    
                    -
                    
                    
                    
                    19,434
                    
                    
                    
                    -
                    
                    
                    
                    1,707,097Other
      operating expenses
                    
                    
                    744,775
                    
                    
                    
                    90,813
                    
                    
                    
                    303,950
                    
                    
                    
                    60,602
                    
                    
                    
                    1,200,140Net
      income (loss)
                    
                    $
                    1,199,177
                    
                    
                    $
                    507,592
                    
                    
                    $
                    (1,884
                    )
                    
                    $
                    (60,602
                    )
                    
                    $
                    1,644,283March
      31, 2010
                      (Unaudited)Identifiable
      assets
                    
                    $
                    45,554,770
                    
                    
                    $
                    10,878,186
                    
                    
                    $
                    9,768,425
                    
                    
                    $
                    (4,229,775
                    )
                    
                    $
                    61,971,606
 
 Three Months Ended
                      March 31, 2009
                      (Unaudited)
                    
                    Dry Bulk
                      Shipping
                    
                    
                    Chartering
                      Brokerage
                    
                    
                    Other
                      Activities
                    
                    
                    Corporate
                      and
                      Eliminations
                    
                    
                    ConsolidatedSales
      to unaffiliated customers
                    
                    $
                    5,046,894
                    
                    
                    $
                    6,002,486
                    
                    
                    $
                    1,478,793
                    
                    
                    $
                    -
                    
                    
                    $
                    12,528,173Intersegment
      sales
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    61,103
                    
                    
                    
                    (61,103
                    )
                    
                    
                    -Net
      sales
                    
                    
                    5,046,894
                    
                    
                    
                    6,002,486
                    
                    
                    
                    1,539,896
                    
                    
                    
                    (61,103
                    )
                    
                    
                    12,528,173Costs
                    
                    
                    6,366,053
                    
                    
                    
                    5,149,267
                    
                    
                    
                    1,268,861
                    
                    
                    
                    (61,103
                    )
                    
                    
                    12,723,078Depreciation
      and amortization
                    
                    
                    1,948,232
                    
                    
                    
                    -
                    
                    
                    
                    57,304
                    
                    
                    
                    -
                    
                    
                    
                    2,005,536Other
      operating expenses
                    
                    
                    614,865
                    
                    
                    
                    46,794
                    
                    
                    
                    332,463
                    
                    
                    
                    -
                    
                    
                    
                    994,122Net
      (loss) income
                    
                    $
                    (3,882,256
                    )
                    
                    $
                    806,425
                    
                    
                    $
                    (118,732
                    )
                    
                    $
                    -
                    
                    
                    $
                    (3,194,563
                    )December
      31, 2009Identifiable
      assets
                    
                    $
                    44,537,934
                    
                    
                    $
                    10,900,478
                    
                    
                    $
                    9,340,286
                    
                    
                    $
                    (2,977,188
                    )
                    
                    $
                    61,801,510
  F-25
  WINLAND
ONLINE SHIPPING HOLDINGS CORPORATION
 SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMEENTS
 FOR THE THREE MONTHS ENDED
MARCH 31, 2010 AND 2009
   14.
              SEGMENT
      INFORMATION (CONTINUED)
 
 Information
for Company’s sales by geographical area for the three months ended March 31,
2010 and 2009 are as follows:
 
 For The Three Months Ended March 31,2010
                        
                        
                        2009(Unaudited)
                        
                        
                        (Unaudited)Sales
      to unaffiliated customers:Japan,
      Korea and Russia
                        
                        $
                        2,203,005
                        
                        
                        $
                        4,419,752PRC
                        
                        
                        5,140,346
                        
                        
                        
                        7,003,483Southern
      and Eastern Asia
                        
                        
                        5,874,681
                        
                        
                        
                        1,104,938Other
                        
                        
                        1,468,670
                        
                        
                        
                        -Total
                        
                        $
                        14,686,702
                        
                        
                        $
                        12,528,173
 
 15.
              LOAN
      FACILITIES
 
 On March
26, 2010, the Company obtained a term loan facility for $37 millions from China
Merchant Bank Co., Ltd. to finance two new vessel purchases. As of the date of
this filing, there were no drawdowns on the facility nor signed commitments to
purchase additional vessels.
 
 16.
              CONTINGENCIES
 
 The
Company signed a voyage charter contract with Sinoriches Global Ltd. on
June 11, 2007. The Company canceled the contract on June 18, 2007.
Sinoriches Global Ltd. filed an arbitration claim of $501,640 including interest
for the dispute. As of March 31, 2010, the case is in the process of exchanging
documents and evidence for arbitration. The Company does not believe the case
will result in a significant unfavorable outcome.
  F-26


ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND


RESULTS
OF OPERATIONS





Forward
Looking Statements





The
following is management’s discussion and analysis of certain significant factors
which have affected the financial position and operating results of Winland
Online Shipping Holdings Corporation (formerly Trip Tech, Inc. and hereinafter,
“Winland” or
“WLOL” and
together with its subsidiaries and its variable interest entities, the “Company”) during the
periods included in the accompanying consolidated and combinedfinancial
statements, as well as information relating to the plans of our current
management. This report includes forward-looking statements. Generally, the
words “believes” “anticipates”, “may”, “will”, “should”, “expect”, “intend”,
“estimate”, “continue” and similar expressions or the negative thereof or
comparable terminology are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including the matters
set forth in this report or other reports or documents we file with the U.S.
Securities and Exchange Commission (the “SEC”) from time to
time, which could cause actual results or outcomes to differ materially from
those projected. Undue reliance should not be placed on these forward-looking
statements which speak only as of the date hereof. We undertake no obligation to
update these forward-looking statements.





The
following discussion and analysis should be read in conjunction with our
consolidated and combined financial statements and the related notes thereto and
other financial information contained elsewhere in this report.





Acquisition
of SkyAce Group Limited





On August 12, 2008, Trip Tech, Inc.
(n/k/a WLOL and sometimes referred to herein as “Trip Tech” when
referring to the operations of the Company prior to the Exchange, as defined
below) entered into a Share Exchange Agreement with SkyAce Group Limited (“SkyAce”), a British
Virgin Islands company and Pioneer Creation Holdings Limited (“PCH”), a British
Virgin Islands company and the sole stockholder of SkyAce. As a result of the
share exchange, the Company acquired all of the issued and outstanding
securities of SkyAce from PCH in exchange for 76,925,000 newly-issued shares of
the Company’s common stock, par value $0.001 per share and 1,000,000 shares of
the Company’s Series A Preferred Stock which such preferred shares were
convertible into (and subsequently did convert into) 30,000,000 shares of common
stock (the “Exchange”).  On
August 12, 2008, PCH beneficially owned 82.25% of the voting capital stock of
the Company. As a result of the Exchange, SkyAce became a wholly-owned
subsidiary of WLOL.  On October 23, 2008, PCH converted its 1,000,000
shares of Series A Preferred Stock into 30,000,000 shares of common stock. As a
result, the total outstanding shares of common stock increased to 130,000,000,
and PCH now directly owns 82.25% of the voting capital stock of
WLOL.





The following is disclosure regarding
WLOL, SkyAce and SkyAce’s two wholly-owned subsidiaries: (a) Plentimillion Group
Limited (“PGL”), a British Virgin Islands holding company, the principal
business activities of which are (through its wholly-owned subsidiaries) ocean
transportation and chartering brokerage and (b) Best Summit Enterprise Limited
(“BSL” and
together with PGL, the “SkyAce Group”), a
British Virgin Islands holding company which controls (as is more fully
described below) (i) Dalian Winland International Shipping Agency Co. Ltd., a
company organized under the laws of the People’s Republic of China (“PRC”), the principal
activities of which include shipping agency services, booking cargo space,
storage of goods and customs declaration (“DWIS”), (ii) Dalian
Winland International Logistics Co. Ltd., a company organized under the laws of
the People’s Republic of China (“PRC”), the principal
activities of which include freight forwarding services and logistics shipping
agency services (“DWIL”) and (iii)
Dalian Shipping Online Network Co. Ltd., a company organized under the laws of
the PRC, the principal activities of which include online services for its
members (“DSON” or “Shipping Online”, and
together with DWIS and DWIL, the “Winland International
Group”).





Prior
Operations of Trip Tech





Trip Tech was incorporated in Texas on
November 17, 2006 to enter the online travel industry and to establish a large
scale, full service online travel company. Immediately prior to the Exchange,
Trip Tech was a development stage internet-based travel company operating with a
functional “branded” travel website. Since Trip Tech’s inception, Trip Tech
established its corporate existence as a publicly held corporation, raised
founder capital, and designed and installed a functional “branded” travel
website. As of the date immediately prior to the Exchange, Trip Tech had not
been able to raise additional funds through either debt or equity offerings. As
a result of the foregoing, Trip Tech began to explore its options regarding the
development of a new business plan and direction. On August 12, 2008, Trip Tech
consummated the Exchange with SkyAce and the Pioneer Creation Holdings
Limited.


- 3
-





Our
common stock is currently traded on the Over-The-Counter Bulletin Board under
the symbol “WLOL”. Immediately prior to the Exchange, Trip Tech was considered a
“blank check” company with US$40,963 in assets and a net loss of US$34,965 for
the fiscal year ending February 29, 2008.  On the date of the closing of
the Exchange, the Company did not have any liabilities.





Current
Operations of the Company (General Development of Business)





SkyAce





SkyAce is a holding company founded in
the British Virgin Islands on September 22, 2006with no significant
operations. SkyAce was formed solely for the purpose of acquiring PGL
and BSL from Mr. Li Honglin and Ms. Xue Ying, each of whom had owned fifty
percent (50%) of both PGL and BSL and each of whom now own fifty
percent (50%) of SkyAce. SkyAce has authorized capital of US$50,000 consisting
of 50,000 ordinary shares authorized, two (2) of which are currently issued and
outstanding and held by Trip Tech as a result of the Exchange. Li Honglin, a
Director and the President of Winland, serves as a Director of SkyAce. Xue Ying,
a Director, the Chief Executive Officer and the Secretary of Winland, also
serves as a Director of SkyAce.





PGL





PGL is a holding company founded
in the British Virgin Islands on July 5, 2006. PGL was formed solely for
the purpose of acquiring each of the following wholly-owned subsidiaries from Li
Honglin and Xue Ying (both of whom previously owned fifty percent (50%) of each
of the following entities), which such transfers occurred between January 1,
2008 and March 31, 2008:





(a)
            Winland Shipping Co., Ltd., a
      company organized under the laws of Hong Kong on August 11, 2000
      (“Winland
      Shipping”);





(b)
            Kinki International Industrial
      Limited, a company organized under the laws of Hong Kong on May 2, 2006
      (“Kinki”);





(c)
            Bestline Shipping Limited, a
      company organized under the laws of Hong Kong on January 27, 1994
      (“Bestline”);





(d)
            Lancrusier Development Co.,
      Limited, a company organized under the laws of Hong Kong on July 11, 1995
      (“Lancrusier”);





(e)
            Win Star Shipping Co., Ltd., a
      company organized under the laws of St. Vincent and the Grenadines (“SVG”)
      on June 21, 2000 (“Win
      Star”);





(f)
            Bodar Shipping Co., Ltd., a
      company organized under the laws of SVG on January 7, 2004 (“Bodar”);





(g)
            Winland Dalian Shipping S.A., a
      company organized under the laws of Panama on June 8, 2005 (“Winland
      Dalian”);





(h)
            Treasure Way Shipping Limited, a
      company organized under the laws of Hong Kong on May 27, 2002
      (“Treasure
      Way”).





PGL acquired
the following additional entities in 2008:





(i)
            Win Eagle Shipping Co., Ltd., a
      company organized under the laws of Malta on July 29, 2002 (“Win
      Eagle”);




- 4
-





(j)
            Win Bright Shipping Co., Ltd. a
      company organized under the laws of Malta on February 8, 2002
      (“Win
      Bright”);





(k)
            Win Ever Shipping Co., Ltd., a
      company organized under the laws of Malta on February 8, 2002
      (“Win
      Ever”).





(l)
            Win Glory S.A., a company
      organized under the laws of Panama on April 2, 2003 (“Win
      Glory”).





(m)
            Win Moony Shipping Co., Ltd., a
      company organized under the laws of Malta on September 26, 2003
      (“Win
      Moony”).





PGL acquired
      the following entities in 2009:





(n)
            Win Grace Shipping Co., Ltd., a
      company organized under the laws of Malta on September 4, 2003
      (“Win
      Grace”).





(o)
            Win Hope Shipping Co., Ltd., a
      company organized under the laws of Malta on June 14, 2001 (“Win
      Hope”).





PGL established
      the following entities in 2009:





(p)
            Bodar Shipping S.A. is
      incorporated and registered in Panama on February 12, 2009 (“Bodar
      Shipping”).





(q)
            Win Moony Shipping S.A. was
      incorporated and registered in Panama on April 30, 2009 (“Win
      Shipping”).





(r)
            Bao Shun Shipping S.A. was
      incorporated and registered in Panama on June 10, 2009 (“Bao
      Shun”).





(s)
            Winland
      International Shipping Co., Limited is incorporated and registered in Hong
      Kong on August 27, 2009 ("Winland
      International").





PGL
      established the following entities in
2010:





(t)
            Fon
      Tai Shipping Co., Limited is incorporated and registered in Hong Kong on
      March 1, 2010 (“Fon
      Tai”).





(u)
              Won
      Lee Shipping Co., Limited is incorporated and registered in Hong Kong on
      March 1, 2010 (“Won
      Lee”).




PGL and
each of its wholly-owned subsidiaries set forth above (collectively, the “PGL Group”) are
engaged in ocean transportation of dry bulk cargoes worldwide through the
ownership and operation of dry bulk vessels. The principal business activities
of the PGL Group are ocean transportation and chartering. The operations of
each of the Company’s vessels are managed by Winland Shipping, while the
chartering businesses are managed by Kinki and Bestline. Winland International's
primary business is to develop and expand the global shipping
market. Lancrusier’s primary business is management and accounting, while
Win Star, Bodar, Winland Dalian, Treasure Way, Win Eagle, Win Bright, Win Ever,
Win Glory, Win Moony, Win Grace, Win Hope and Bao Shun collectively own 12 of
the Company’s vessels. Fon Tai and Won Lee will collectively finance and own two
new vessels.




- 5
-


BSL





SkyAce’s
wholly-owned subsidiary BSL was incorporated in the British Virgin Islands
on November 30, 2006. BSL sole business is to act as a holding company for
its wholly-owned subsidiary, Wallis Development Limited, a company organized
under the laws of Hong Kong on December 9, 2006 (“Wallis”). The sole
business of Wallis is to act as a holding company for its wholly-owned
subsidiary, Beijing Huate Xingye Keji Co., Ltd., a company organized under the
laws of the PRC on March 18, 2008 (“Beijing Huate”).
Beijing Huate was formed with the purpose of producing IT software, developing
new products and adopting advanced and applicable technology and scientific
management methods to create economic benefits for its stockholders. It does
this by controlling, through Exclusive Technical Consulting and Service
Agreements and related transaction documents dated as of March 31, 2008
(collectively, the “Service Agreements”,
each of which are referenced as Exhibits herein), DWIS, DWIL and
DSON.





In
compliance with the PRC’s foreign investment restrictions on internet
information services and other laws and regulations, the Company conducts all of
its internet information and media services and advertising in China through
DWIS, DWIL and Shipping Online, each a domestic variable interest entity
(also referred to in this Quarterly Report as a “VIE”). In accordance
with FASB Interpretation No. 46R “Consolidation of Variable Interest Entities”,
an Interpretation of Accounting Research Bulletin No. 51, a VIE is to be
consolidated by a company if that company is subject to a majority of the risk
of loss for the VIE or is entitled to receive a majority of the VIE’s residual
returns. Upon executing the Service Agreements, DWIS, DWIL and Shipping
Online (collectively also known as the “VIEs”) are all
considered VIEs and the Company, through its ownership and control of SkyAce,
BSL, Wallis and Beijing Huate, their primary beneficiary.





Pursuant
to the Service Agreements, Beijing Huate provides on-going technical services
and other services to the VIEs in exchange for substantially all net income of
the VIEs. In addition, the stockholders of the VIEs have pledged all of their
shares in the VIEs to Beijing Huate, representing one hundred percent (100%) of
the total issued and outstanding capital stock of the VIEs, as collateral for
non-payment under the Service Agreements or for fees on technical and other
services due thereunder. Beijing Huate also has the power to appoint all
directors and senior management personnel of the VIEs.




DWIS




Dalian Winland International Shipping
Agency Co., Ltd. (“DWIS”) was
incorporated under the laws of the PRC on December 5, 2002 by three (3)
investors, namely, Dalian Winland Industry Group Co., Ltd. (“DWIG”), Dalian
Winland Shipping Co., Ltd. (“DWSC”) and Dalian
Weihang Freight Forwarding Co., Ltd. (“DWFF”). At
establishment, the percentage of each party’s equity interest was 51%, 41.5% and
7.5%, respectively. DWIG was incorporated by Li Honglin and Xue Ying having a
60% and 40% interest, respectively. DWSC was incorporated by DWIG and Xue Ying
having a 60% and 40% interest, respectively. DWFF was incorporated by Li Honglin
and Xue Ying having a 66.7% and 33.3% interest, respectively. Thus, Li Honglin
and Xue Ying had owned a 50.5425% and 49.4575% of Winland International
indirectly at inception. According to a share trust instrument agreement
executed in February 2005, Li Honglin transferred 0.5425% of his interest in
Winland International to Xue Ying. Thereafter, Li Honglin and Xue Ying own 50%
each of Winland International.  The principal activities of Winland
International include shipping agency services, booking cargo space, storage of
goods, and declaration of customs.





DWIL




Dalian Winland International Logistics
Co., Ltd. (“DWIL”) was
incorporated under the laws of the PRC on July 28, 2003 by three (3) investors,
namely, DWIG, DWSC and Winland International. At establishment, the percentage
of each party’s equity interest was 51%, 47.6% and 1.4%, respectively, and Li
Honglin and Xue Ying owned 48.4436% and 51.5564% of DWIL indirectly at
inception, respectively. According to a share trust instrument agreement
executed in February 2005, Xue Ying transferred 1.5564% of her interest in
Winland Logistics to Li Honglin. Thereafter, Li Honglin and Xue Ying each owned
50% of Winland Logistics. The principal activities of Winland Logistics are
freight forwarding services logistics shipping agency services. DWIL owns one of
the Company’s vessels.





Shipping
Online




Dalian Shipping Online Network Co.,
Ltd. (“DSON” or
“Shipping
Online”) was incorporated under the laws of the PRC on February 20, 2003
by two (2) investors, namely, Li Honglin and Xue Ying. At establishment, the
percentage of each party’s equity interest was 80% and 20%, respectively.
According to a share trust instrument executed in February 2005, Li Honglin
transferred 30% of his interest of Shipping Online to Xue Ying. Thereafter, Li
Honglin and Xue Ying each owned 50% of Shipping Online. The principal activities
of Shipping Online are providing online services to its members. On
January 19, 2010, DWIL invested RMB500,000 in Shipping Online, increasing its
capitalization from RMB500,000 to RMB1,000,000. Thereafter, DWIL, Li Honglin and
Xue Ying owned 50%, 25% and 25% of the equity interests in Shipping Online as of
March 31, 2010, respectively.


- 6
-





Summary
of Current Business of the Company





The Company is a comprehensive, modern
international shipping company with its world headquarters based in China. The
Company is mainly engaged in a comprehensive range of international shipping and
logistics services such as bulk cargo transportation, chartering, shipping
agents, logistics, ship trading, spare parts supplies, crew recruitment and
shipping porter operation, as well as relevant industry news and data analysis
and advertising.





The Company's core business is
international bulk cargo transportation. It has an ocean shipping fleet of 13
vessels, with a self-owned carrying capacity of nearly 200,000
tons.  Through monthly voyage charters and time charters, the Company
can provide carrying capacity of about 1,000,000 tons with shipping lines to
major ports around the world.





In addition, the Company owns and
operates an industrial online portal called “Shipping Online” which is accessed
on the internet at http://www.sol.com.cn.
This website functions as a business platform, providing on-line and off-line
integrated international shipping and logistics services, such as bulk cargo
chartering, container booking, shipping agents, ship trading and building, spare
parts supplies, crew recruitment, as well as shipping news and data analysis;
the off-line operating team is made up of industrial elites and a logistics
network with branches in Beijing, Tianjin, Dalian, Yingkou, Qingdao,
Zhangjiagang, Lianyungang and Shanghai. These branches collectively provide a
full service system with a combination of integrated group and localized
branches.




Providing comprehensive shipping and
logistics services through the internet is not only the innovation and creation
of the Company, but is also the basis of the transition for the entire shipping
industry from a traditional business model to a modern business model. The
Company believes it will create a broad space for development and lead the
accelerated development of the entire shipping industry.





Our operating revenue in 2006 reached
US$59.2 million, of which the net profit was nearly US$7.4
million.  As the global shipping market experienced a breakthrough in
development, the Company achieved annual operating revenues of US$70.3 million
in 2007, net income of US$21.4 million, enjoying approximately 200% growth as
compared with 2006. The operating revenue of 2008 reached $85.6 million, net
income of $19.0 million. The operating revenue of 2009 was $50.2
million.  The operating revenue and net income for the three months
ended March 31, 2010 was 14.7 million and 1.6 million, respectively, compared
with operating revenue of 12.5 million, a net loss of 3.2 million for the
corresponding period of 2009, respectively.




The Company intends to steadily expand
its capacity and enlarge the size of its ocean transport fleet by acquiring
additional vessels or businesses at lower prices in light of the current slump
in the shipping market. The Company intends to continue to push forward with its
comprehensive shipping and logistics services with Shipping Online in order to
expand its market share.





On June 3, 2009, Winland Shipping and
Bao Shun Shipping S.A. entered into a Memorandum of Agreement (“MOA”) with Mario
Shipping Corporation (“MSC”) for the
purchase by the Company from MSC of a 2003 built handysize vessel (20,212 gross
tonnage, 10,948 net tonnage) known as “Bao Shun” for a price of
US$20,700,000.  On June 4, 2009, the MOA was amended to nominate Bao
Shun Shipping S.A. as the actual buyer that would remain fully responsible for
performing under the MOA, and on July 14, 2009 the MOA was further amended to
change the expected time of delivery to the period of July 14, 2009 to October
10, 2009 and to modify certain payment and interest terms.  On August 14,
2009, the Company paid ten percent (10%) of the purchase price for the vessel
(approximately US$2,070,000) in cash.





On September 25, 2009, the parties to
the MOA closed on the purchase of the vessel whereby the Company paid the
balance on the purchase price of US$18,630,000 as well as acquisition cost of
$181,125.  The Company funded $14,490,000 through a long-term loan
with Mitsubishi UFJ Lease & Finance Co., Ltd., which is secured by the
vessel “Bao Shun”, and funded $3,000,000 via a long-term note. The Company paid
the remaining balance of $1,321,125 in cash.  The loan is to be repaid
in eighty-four (84) monthly payments with an interest rate at the Japanese LIBOR
plus 2.3%.


- 7
-





Summary
of Significant Accounting Policies





Use
of Estimates





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





Revenue
Recognition





Revenue
is recognized based on the following four criteria:




(I)
            The amount of revenue can be
      measured reliably;





(II)
            It is probable that the economic
      benefits will flow to the
Company;





(III)
            The stage of completion at the
      balance sheet date can be measured
  reliably;





(IV)
            The costs incurred, or to be
      incurred can be measured
reliably.




For dry
bulk shipping service, the allocation of revenue between reporting periods is
based on relative transit time in each reporting period with expenses recognized
as incurred.





For
chartering brokerage services, sales are recognized when the ship leaves
port.





For
shipping agency and freight forwarding services, sales are recognized when the
ship leaves port.





For
online services, sales are recognized according to the stage of completion in
accordance with the service period defined in executed contracts.





Recent
Accounting Pronouncements





On July 1, 2009, the Company adopted
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 105-10 (formerly Statement of Financial Accounting Standards (“SFAS”)
No. 168, The FASB Accounting Standards Codification and Hierarchy of Generally
Accepted Accounting Principles, a replacement of FASB Statement No. 162). ASC
105-10 establishes the FASB ASC as the source of authoritative accounting
principles recognized by the FASB to be applied in preparation of financial
statements in conformity with generally accepted accounting principles in the
United States of America. The adoption of this standard had no impact on
the Company’s condensed consolidated financial statements.





Effective January 1, 2009, the Company
adopted ASC 805 (formerly SFAS No. 141 (R), Business Combinations). ASC
805 requires an acquirer to measure the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at their
fair values on the acquisition date, with goodwill being the excess value over
the net identifiable assets acquired. The adoption of ASC 805 did not have any
effect on the Company’s condensed consolidated financial statements as of March
31, 2010.


- 8
-


Effective January 1, 2009, the Company
adopted ASC 810-10 (formerly SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements). This Statement establishes accounting
and reporting standards that require the ownership interests in subsidiaries’
non-parent owners be clearly presented in the equity section of the balance
sheet; requires the amount of consolidated net income attributable to the parent
and to the noncontrolling interest be clearly identified and presented on the
face of the consolidated statement of income; requires that changes in a
parent’s ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently; requires that when a
subsidiary is deconsolidated, any retained noncontrolling equity investment in
the former subsidiary be initially measured at fair value and the gain or loss
on the deconsolidation of the subsidiary be measured using the fair value of any
noncontrolling equity; requires that entities provide disclosures that clearly
identify the interests of the parent and the interests of the noncontrolling
owners. The adoption of ASC 810-10 did not have a significant effect on the
Company’s condensed consolidated financial statements as of March 31,
2010.





Effective January 1, 2009, the Company
adopted ASC 815-10 (formerly SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities ), which amends SFAS No. 133 and
expands disclosures to include information about the fair value of derivatives,
related credit risks and a company's strategies and objectives for using
derivatives. The adoption of ASC 815-10 did not have a material effect on the
Company’s condensed consolidated financial statements as of March 31,
2010.





Effective January 1, 2009, the Company
adopted ASC 815-40 (formerly Emerging Issues Task Force (“EITF”) Issue No.
07-05, Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock
(“EITF 07-05”). ASC
815-40 addresses the determination of whether an instrument (or an embedded
feature) is indexed to an entity's own stock, which is the first part of the
scope exception in paragraph 11(a) of FASB SFAS No. 133 , Accounting for Derivative
Instruments and Hedging Activities (“SFAS 133”). If an instrument (or an
embedded feature) that has the characteristics of a derivative instrument under
paragraphs 6–9 of SFAS 133 is indexed to an entity's own stock, it is still
necessary to evaluate whether it is classified in stockholders' equity (or would
be classified in stockholders' equity if it were a freestanding instrument).
Other applicable authoritative accounting literature, including Issues EITF
00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company Own Stock, and EITF 05-2, The Meaning of “Conventional Debt
Instrument” in Issue No. 00-19, provides guidance for determining whether
an instrument (or an embedded feature) is classified in stockholders' equity (or
would be classified in stockholders' equity if it were a freestanding
instrument). ASC 815-40 does not address that second part of the scope exception
in paragraph 11(a) of SFAS 133. The adoption of ASC 815-40 did not have a
material effect on the Company’s condensed consolidated financial statements as
of March 31, 2010.





On April 1, 2009, the FASB
approved ASC 805 (formerly FSP FAS 141(R)-1, Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies),
which amends Statement 141(R) and eliminates the distinction between contractual
and non-contractual contingencies. Under ASC 805, an acquirer is required to
recognize at fair value an asset acquired or liability assumed in a business
combination that arises from a contingency if the acquisition-date fair value of
that asset or liability can be determined during the measurement period. If the
acquisition-date fair value cannot be determined, the acquirer applies the
recognition criteria in SFAS No. 5, Accounting for Contingencies
and Interpretation 14, “Reasonable Estimation of the Amount of a Loss – and
interpretation of FASB Statement No. 5,” to determine whether the
contingency should be recognized as of the acquisition date or after it. The
adoption of ASC 805 did not have a material effect on the Company’s
condensed consolidated financial statements as of March 31, 2010.





ASC 320-10 (formerly FSP FAS 115-2 and
FAS 124-2) amends the other-than-temporary impairment guidance in U.S. GAAP for
debt securities to make the guidance more operational and to improve the
presentation and disclosure of other-than-temporary impairments on debt and
equity securities in the financial statements. It did not amend existing
recognition and measurement guidance related to other-than-temporary impairments
of equity securities. We are required to adopt ASC 320-10 for our interim and
annual reporting periods ending after June 15, 2009. ASC 320-10 does not
require disclosures for periods presented for comparative purposes at initial
adoption. ASC 320-10 requires comparative disclosures only for periods ending
after initial adoption. The adoption of ASC 320-10 did not have a material
effect on the Company’s condensed consolidated financial statements as of March
31, 2010.


- 9
-


On April 9, 2009, the FASB also
approved ASC 825-10 (formerly FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value
of Financial Instruments) to require disclosures about fair value of
financial instruments in interim period financial statements of publicly traded
companies and in summarized financial information required by APB Opinion
No. 28, Interim Financial
Reporting . We are required to adopt ASC 825-10 for our interim and
annual reporting periods ending after June 15, 2009. ASC 825-10 does not
require disclosures for periods presented for comparative purposes at initial
adoption. ASC 825-10 requires comparative disclosures only for periods ending
after initial adoption. The adoption of ASC 825-10 did not have a material
effect on the Company’s condensed consolidated financial statements as of March
31, 2010.





In April 2009, the FASB updated
guidance related to fair-value measurements to clarify the guidance related to
measuring fair-value in inactive markets, to modify the recognition and
measurement of other-than-temporary impairments of debt securities, and to
require public companies to disclose the fair values of financial instruments in
interim periods. This updated guidance became effective for the Company
beginning June 1, 2009. The adoption of this guidance did not have a material
effect on the Company’s condensed consolidated financial statements as of March
31, 2010.





In June 2009, the FASB issued ASC
810-10 (formerly SFAS No. 167) Amendments to FASB Interpretation No. 46(R),
which require an enterprise to perform an analysis and ongoing reassessments to
determine whether the enterprises variable interest or interests give it a
controlling financial interest in a variable interest entity and amends certain
guidance for determining whether an entity is a variable interest entity. It
also requires enhanced disclosures that will provide users of financial
statements with more transparent information about an enterprises involvement in
a variable interest entity. ASC 810-10 is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after November 15,
2009 and for all interim reporting periods after that. The adoption of ASC
810-10 did not have a material effect on the Company’s condensed
consolidated financial statements as of March 31, 2010.





In January 2010, the FASB issued
guidance to amend the disclosure requirements related to recurring and
nonrecurring fair value measurements. The guidance requires disclosure of
transfers of assets and liabilities between Level 1 and Level 2 of the fair
value measurement hierarchy, including the reasons and the timing of the
transfers and information on purchases, sales, issuance, and settlements on a
gross basis in the reconciliation of the assets and liabilities measured under
Level 3 of the fair value measurement hierarchy. This guidance is effective for
the Company beginning March 1, 2010. The adoption of this guidance did not have
a material effect on the Company’s condensed consolidated financial statements
as of March 31, 2010.





Results
of Operations for the Three Months Ended March 31, 2010 Compared With the Three
Months Ended March 31, 2009 (in U.S. dollars, except otherwise as
indicated)





For
      The Three Months Ended March 31,2010
                        
                        
                        2009
                        
                        
                        Increase
      (Decrease)Amount
                        
                        
                        %
      of
                          Revenues
                        
                        
                        Amount
                        
                        
                        %
      of
                          Revenues
                        
                        
                        In
      Amount
                        
                        
                        In
      %Revenues
                        
                        
                        14,686,702
                        
                        
                        
                        100.00
                        %
                        
                        
                        12,528,173
                        
                        
                        
                        100.00
                        %
                        
                        
                        2,158,529
                        
                        
                        
                        17.2
                        %Vessel
      operating expenses
                        
                        
                        9,561,638
                        
                        
                        
                        65.1
                        %
                        
                        
                        11,454,217
                        
                        
                        
                        91.4
                        %
                        
                        
                        (1,892,579
                        )
                        
                        
                        -16.5
                        %Service
      costs
                        
                        
                        573,544
                        
                        
                        
                        3.9
                        %
                        
                        
                        1,268,861
                        
                        
                        
                        10.1
                        %
                        
                        
                        (695,317
                        )
                        
                        
                        -54.8
                        %Depreciation
      and amortization
                        
                        
                        1,707,097
                        
                        
                        
                        11.6
                        %
                        
                        
                        2,005,536
                        
                        
                        
                        16.0
                        %
                        
                        
                        (298,439
                        )
                        
                        
                        -14.9
                        %General
      and administrative expenses
                        
                        
                        738,892
                        
                        
                        
                        5.0
                        %
                        
                        
                        653,078
                        
                        
                        
                        5.2
                        %
                        
                        
                        85,814
                        
                        
                        
                        13.1
                        %Selling
      expenses
                        
                        
                        100,214
                        
                        
                        
                        0.7
                        %
                        
                        
                        92,110
                        
                        
                        
                        0.7
                        %
                        
                        
                        8,104
                        
                        
                        
                        8.8
                        %Interest
      expense, net
                        
                        
                        342,979
                        
                        
                        
                        2.3
                        %
                        
                        
                        52,186
                        
                        
                        
                        0.4
                        %
                        
                        
                        290,793
                        
                        
                        
                        557.2
                        %Other
      expense, net
                        
                        
                        10,116
                        
                        
                        
                        0.1
                        %
                        
                        
                        196,748
                        
                        
                        
                        1.6
                        %
                        
                        
                        (186,632
                        )
                        
                        
                        -94.9
                        %Income
      tax expense
                        
                        
                        7,939
                        
                        
                        
                        0.1
                        %
                        
                        
                        1,322
                        
                        
                        
                        0.0
                        %
                        
                        
                        6,617
                        
                        
                        
                        500.5
                        %Net
      income (loss)
                        
                        
                        1,644,283
                        
                        
                        
                        11.2
                        %
                        
                        
                        (3,195,885
                        )
                        
                        
                        -25.5
                        %
                        
                        
                        4,840,168
                        
                        
                        
                        -151.5
                        %Weighted
      Average Shares Outstanding
                        
                        
                        130,000,000
                        
                        
                        
                        
                        
                        
                        
                        130,000,000
                        
                        
                        
                        
                        
                        
                        
                        -
                        
                        
                        
                        0.0
                        %Net
      income (loss) per share
                        
                        
                        0.01
                        
                        
                        
                        
                        
                        
                        
                        (0.02
                        )
                        
                        
                        
                        
                        
                        
                        0.03
                        
                        
                        
                        -150.0
                        %




- 10
-




Revenues




Our
revenues are derived from the operation of:


·
            Dry bulk
      shipping


·
            Chartering
      brokerage


·
            Other activities which represent
      shipping agency services, freight forwarding services, and online
      services.





Of the
total revenues, dry bulk shipping, chartering brokerage and other activities
contributed 63%, 31% and 6% for the three months ended March 31, 2010,
respectively, compared with 40%, 48%, and 12% for the comparable period in 2009,
respectively.





For the
three months ended March 31, 2010, total revenues increased by approximately
$2.2 million, or 17.2%, to $14.7 million from $12.5 million for the three months
ended March 31, 2009. This increase resulted from the strong performance of our
dry bulk shipping segment which increased $4.2 million, or 83.0%, offset by a
chartering brokerage decline of $1.4 million, or 23.8%; and other activities
decline of $0.6 million, or 41.0%.





The
increase in the dry bulk shipping segment was driven by the acquisition of a new
vessel in September 25, 2009 and reflected the improvement of the global
shipping market from the financial crisis and economic recession in place since
late 2008.  The Baltic Dry Index, a leading indicator of the global
dry bulk shipping market, rose approximately 100% for the three months ended
March 31, 2010 as compared with the same period of 2009.  The decrease
in other segments was due to the continued impact of a challenging
economy.





Among
other activities, online services grew significantly. We believe this growth
reflected the management’s strategic decision to implement and market the
shipping online portal more aggressively at the beginning of 2009.




Vessel
Operating Expenses





Vessel
operating expenses include mainly fuel costs, port fees and crew wages which
were incurred in the operation of dry bulk shipping, and vessel chartering costs
which were incurred in the business of chartering brokerage. For the three
months ended March 31, 2010, vessel operating expenses decreased by $1.9
million, or 16.5%, to $9.6 million, compared with $11.5 million for the
comparable period in 2009. This decrease is principally attributable to more
vessels employed under time charters that required the charters to
bear  all fuel the vessels consume and the port charges, offset by the
increased dry bulk shipping business volume which resulted in the increase in
fuel and related consumption.





Service
Costs





Service
costs were incurred in the operation of other activities in our freight
forwarding services. For the three months ended March 31, 2010, service costs
decreased by $0.7 million, or 54.8%, to $0.6 million, compared with $1.3 million
for the comparable period in 2009. This decrease was in line with the decreased
revenue generated from the operation of our freight forwarding
services.





Depreciation
and Amortization





Depreciation
of vessels and amortization of deferred dry dock fees decreased by approximately
$0.3 million, or 14.9%, to $1.7 million for the three months ended March 31,
2010, compared with $2.0 million for the same period in 2009. This decrease is
attributable to the decreased amortization of dry dock fees.





General
and Administrative Expenses





General
and administrative expenses, which included mainly wages and professional
service fees, increase by approximately $0.09 million, or 13.1%, to $0.74
million for the three months ended March 31, 2010 from $0.65 million for the
same period in 2009.  The increase is mainly attributable to the
hiring of new employees.


- 11
-


Selling
Expenses





Selling
expenses were commissions paid to promote our dry bulk shipping and chartering
brokerage business, which reflected the management’s strategy of expanding the
business initiated at the beginning of 2009. For the three months ended March
31, 2010, selling expenses were $0.1 million, slightly greater than the $0.09
million for the corresponding period in 2009.





Interest
Expense, Net





Net
interest expense increased significantly by $0.29 million, or 557.2%, to $0.34
million for the three months ended March 31, 2010, compared with approximately
$0.05 million for corresponding period in 2009. The increase is primarily
attributable to the new long-term loan and note payable initiated by our
purchase of a new vessel in late 2009.




Other
Expense, Net





Other
expense decreased by approximately $0.19 million, or 94.9%, to $0.01 million for
the three months ended March 31, 2010, compared with $0.20 million for the three
months ended March 31, 2009. This decrease is mainly attributable to the
currency translation resulting from other activities.





Income
Tax Expense





Income
tax was imposed on the taxable income from other activities. For the three
months ended March 31, 2010, income tax expense was $0.008 million as compared
with $0.001 million for the same period in 2009. This difference is mainly
attributable to the decrease in revenue generated from the other activities
segment of our business.





Net
Income (Loss)





Net
income increased by approximately $4.8 million, or 151.5%, to a net income of
$1.6 million for the three months ended March 31, 2010 from a net loss of $(3.2)
million for the same period in 2009. This increase is primarily attributable to
the increased revenues, decreased vessel operating expenses, service costs,
depreciation and amortization expenses and other expenses, partially offset by
the cumulative effect of other factors, as previously mentioned.





As a
percentage of revenue, net income was 11.2% compared with a net loss of (25.5%)
for the three months ended March 31, 2010 and 2009, respectively. This change
was a reflection of the macro-economic environment recovering from the global
economic recession.





Net
Income (Loss) Per Share





For both
basic and diluted shares, net income (loss) per share increased by $0.03, or
150%, to net income of $0.01per share for the three months ended March 31, 2010
from a net loss of $(0.02) per share for the same period of
2009.  This increase is attributable to the increase in net income of
$4.8 million for the three months ended March 31, 2010.





Liquidity
and Capital Resources





Working
Capital





We
had a working capital deficit of $5.3 million at March 31, 2010 as compared to a
working capital deficit of $10.1 million at December 31, 2009. This is
principally attributable to the increase in net income of $4.8 million and also
due to the decreased current portion of long-term notes payable with maturity
extended from 2010 to 2012.  To improve liquidity, the Company changed
the registration of the flags of two of its vessels.  As a result of
the new flag registrations, dry dock fees continued to decrease (while the
vessels continued to meet certification and inspection standards).  To
increase its cash resources, the Company obtained commitments from certain
shareholders and related parties to provide working capital to the Company, if
needed, in the form of notes payable or personal loans.  We expect
that our working capital will continue to increase and liquidity will continue
to improve as the shipping industry recovers.  We believe the Company
has sufficient cash to sustain operations for the next twelve
months.


- 12
-





Operating
Activities





For the
three months ended March 31, 2010, our cash provided by operating activities was
approximately $1.5 million. This is primarily attributable to our net income of
$1.6 million adjusted by amortization of $0.9 million and depreciation of $0.8
million; offset by increased accounts receivable of $0.8 and dry docking cost of
$0.4 million, and decreased other current liabilities and accrued liabilities of
$0.4 million.




For the
three months ended March 31, 2009, cash used in operating activities of $1.0
million was primarily attributable to (i) our net loss of $3.2 million adjusted
by amortization of $1.2 million and depreciation of $0.8 million; (ii) increased
dry docking costs of $0.6 million; (iii) decreased accounts payable of $0.7
million, offset by decreased inventories of $1.0 million.




Investing
Activities





For the
three months ended March 31, 2010, the Company had no cash used in or provided
by investment activities. For the three months ended March 31, 2009, only
immaterial cash was used in investing activities.





Financing
Activities





Net cash
used in our financing activities was $1.9 million for the three months ended
March 31, 2010. This amount is mainly attributable to repayments to long-term
loans, long-term notes payable, and related parties of $1.0 million, $0.3
million, and $0.7 million, respectively, offset by advances from related parties
of $0.1 million.





For the
three months ended March 31, 2009, net cash used in financing activities was
$1.4 million, mainly attributable to repayment of long-term loans, long-term
notes payable, and related parties of $0.7 million, $0.1 million, and $2.3
million, respectively; offset by advances from related parties of $1.7
million.





Capital
Expenditures and Resources





We will
make major capital expenditures in the event we purchase new vessels. We
expect we will incur other major capital expenditures on developing our shipping
online portal and marketing our shipping online services. We expect other
capital expenditures to include funding dry dockings of our fleet to preserve
the quality of our vessels as well as to comply with international shipping
standards and environmental laws and regulations.





We intend
to finance capital expenditures on vessel acquisitions through bank loans. On
March 26, 2010, the Company obtained a term loan facility in the amount of $37
million toward the financing of two new vessel purchases. There is no signed
commitment to purchase additional vessels as of the date of this filing. We
intend to finance other capital expenditures mainly from cash flows from our
operations, and from notes payable and personal loans, if needed. We believe
that cash flow from our operations will continue to improve as the Company
continues to bring in profits and the shipping industry begins to recover. We
believe that the existing cash and resources from our credit facilities are
sufficient to meet our projected operating requirements for next twelve
months.





Material
Commitments/Tabular Disclosure of Contractual Obligations





The
repayment schedule for the principal amount of long-term loans is as
follows:





Period Ended March 31,
                      
                      Amount2011
                      
                      $
                      4,128,9082012
                      
                      
                      2,897,1602013
                      
                      
                      1,550,5642014
                      
                      
                      1,317,2762015
                      
                      
                      1,317,276Thereafter
                      
                      
                      7,245,022Total
                      
                      $
                      18,456,206




- 13
-





The
repayment schedule for long-term notes payable is as follows:





Period Ended March 31,
                  
                  Amount2011
                  
                  $
                  387,8482011
                  
                  
                  500,7242012
                  
                  
                  3,601,4142013
                  
                  
                  817,9432014
                  
                  
                  480,433Total
                  
                  $
                  5,788,362




As of
March 31, 2010, future minimum payments required under non-cancelable leases
are:




Period Ended March 31,
                  
                  Amount2011
                  
                  
                  141,9332012
                  
                  
                  30,367Total
                  
                  $
                  172,300





Off-Balance
Sheet Arrangements





None.





ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not
required for a “smaller reporting company”.





ITEM
4. CONTROLS AND PROCEDURES





Disclosure
Controls and Procedures





Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rule 13a-15(e) under the Exchange
Act. Based on this evaluation, our management, including our principal executive
officer and our principal financial officer, concluded that our disclosure
controls and procedures were effective as of the fiscal quarter covered by this
report, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act (i) is recorded, processed,
summarized and reported within the time period specified in SEC rules and forms,
and (ii) is accumulated and communicated to our management, including our
principal executive officer and our principal financial officer, as appropriate
to allow appropriate decisions on a timely basis regarding required
disclosure.





Internal
Control over Financial Reporting





There
were no changes in internal control over financial reporting that occurred
during the fiscal quarter covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.


- 14
-


PART
II - OTHER INFORMATION





ITEM
1.  LEGAL PROCEEDINGS





In the
normal course of business, we are named as a defendant in lawsuits in which
claims are asserted against us. In our opinion, the liabilities, if any, which
may ultimately result from such lawsuits, are not expected to have a material
adverse effect on our financial position, results of operations or cash flows.
As of March 31, 2010, the claim of approximately $501,640(including interest) by
Sinoriches Global Ltd. in connection with a voyage charter contract dispute is
in arbitration.





ITEM
1A. RISK FACTORS





Not
required for a "smaller reporting company".





ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





None.





ITEM
3. DEFAULTS UPON SENIOR SECURITIES





None.





ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS





None.





ITEM
5. OTHER INFORMATION





On March 26, 2010, the Company obtained
a term loan facility of $37 million from China Merchant Bank Co., Ltd. to
finance two new vessel purchases. As of the date of this filing, there were no
drawdowns on the facility nor signed commitment to purchase additional
vessels.





ITEM
6. EXHIBITS





(a) Exhibits:




EXHIBIT
                      NO.
                    
                    DESCRIPTION
                    
                    LOCATION2.1
                    
                    Share
      Exchange Agreement, dated August 12, 2008, by and among Trip Tech, Inc.,
      SkyAce Group Limited and Pioneer Creation Holdings Limited
                    
                    Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.1
                    
                    Articles
      of Incorporation of Trip Tech, Inc.
                    
                    Incorporated
      by reference to Exhibit 3.1 to the Company’s Registration Statement on
      Form SB-2 as filed with the SEC on May 14, 20073.2
                    
                    Amended
      and Restated Bylaws of Trip Tech, Inc. dated as of August 27,
      2008
                    
                    Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on September 29, 20083.3
                    
                    Memorandum
      and Articles of Associationof SkyAce Group
      Limited
                    
                    Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.4
                    
                    Certificate
      of Incorporation of SkyAce Group Limited
                    
                    Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12,
2008


- 15
-





3.5
                
                Memorandum
      and Articles of Association of Plentimillion Group Limited
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.6
                
                Certificate
      of Incorporation of Plentimilllion Group Limited
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.7
                
                Memorandum
      and Articles of Association of Best Summit Enterprises
    Limited
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.8
                
                Certificate
      of Incorporation of Best Summit Enterprises Limited
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.9
                
                Memorandum
      and Articles of Association of Wallis Development Limited
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.10
                
                Certificate
      of Incorporation of Wallis Development Limited
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.11
                
                Articles
      of Association of Beijing Huate Xingye Keji Co. Ltd.
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.12
                
                Certificate
      of Incorporation of Beijing Huate Xingye Keji Co. Ltd.
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.13
                
                Certificate
      of Correction to Trip Tech’s Articles of Incorporation, dated August 11,
      2008
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 20083.14
                
                Certificate
      of Amendment to Certificate of Incorporation of the Company, dated
      September 24, 2008
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on September 29, 20083.15
                
                Certificate
      of Corporate Resolutions Designating Series A Preferred Stock of the
      Company, dated August 12, 2008
                
                Incorporated
      by reference to Exhibit 3.15 to the Company’s Annual Report on Form 10-K
      as filed with the SEC on March 31, 200910.1
                
                Exclusive
      Technology Consultation Service Agreement, dated March 31, 2008, by and
      among Beijing Huate Xingye Keji Co. Ltd. and Winland
      International
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.2
                
                Exclusive
      Technology Consultation Service Agreement, dated March 31, 2008, by and
      among Beijing Huate Xingye Keji Co. Ltd. and Winland
    Logistics
                
                Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12,
2008


- 16
-





10.3
              
              Exclusive
      Technology Consultation Service Agreement, dated March 31, 2008, by and
      among Beijing Huate Xingye Keji Co. Ltd. and Shipping
    Online
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.4
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and among
      Wallis Development Limited, Dalian Winland International Shipping Agency
      Co., Ltd. and Dalian Winland Group Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.5
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and among
      Wallis Development Limited, Dalian Winland International Shipping Agency
      Co., Ltd. and Dalian Weihang Logistic Agent Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.6
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and among
      Wallis Development Limited, Dalian Winland International Shipping Agency
      Co., Ltd. and Dalian Winland Shipping Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.7
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and between
      Wallis Development Limited, Dalian Winland International Logistics Co.,
      Ltd. and Dalian Winland Group Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.8
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and between
      Wallis Development Limited, Dalian Winland International Logistics Co.,
      Ltd. and Dalian Winland Shipping Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.9
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and between
      Wallis Development Limited, Dalian Winland International Logistics Co.,
      Ltd. and Dalian Winland International Shipping Agency Co.,
      Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.10
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and among
      Wallis Development Limited, Dalian Shipping Online Network Co., Ltd. and
      Li Honglin
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.11
              
              Exclusive
      Equity Interest Purchase Agreement, dated March 31, 2008, by and among
      Wallis Development Limited, Dalian Shipping Online Network Co., Ltd. and
      Xue Ying
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.12
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Dalian Winland Group Co.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.13
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Dalian Winland Shipping Co.,
      Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 2008


- 17
-





10.14
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Dalian Weihang Logistic Agent Co.,
      Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.15
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Dalian Winland International Logistics Co.,
      Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.16
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Dalian Winland Group Co.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.17
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Winland Shipping Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.18
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Li Honglin
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.19
              
              Equity
      Interest Pledge Agreement, dated March 31, 2008, by and between Beijing
      Huate Xingye Keji Co. Ltd. and Xue Ying
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.20
              
              Powers
      of Attorney, dated March 31, 2008, executed by Dalian Winland Group Co.,
      Ltd., Dalian Winland Shipping Co., Ltd. and Dalian Weihang Logistic Agent
      Co., Ltd. in favor of Beijing Huate Xingye Keji Co. Ltd. For Dalian
      Winland International Shipping Agency Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.21
              
              Powers
      of Attorney, dated March 31, 2008, executed by Dalian Winland Group Co.,
      Ltd., Dalian Winland Shipping Co., Ltd. and Dalian Winland International
      Shipping Agency Co., Ltd. in favor of Beijing Huate Xingye Keji Co. Ltd.
      for Dalian Winland International Logistics Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.22
              
              Powers
      of Attorney, dated March 31, 2008, executed by Li Honglin and Xue Ying in
      favor of Beijing Huate Xingye Keji Co. Ltd. and Dalian Shipping Online
      Network Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on August 12, 200810.23
              
              Memorandum
      of Agreement, dated June 3, 2009, by and between Mario Shipping
      Corporation and Winland Shipping Co. Ltd.
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q as filed with
      the SEC on November 13, 200910.24
              
              Addendum No.
      1 to Memorandum of Agreement dated June 4, 2009 (Bao
      Shun)
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q as filed with
      the SEC on November 13,
2009


- 18
-





10.25
              
              Addendum
      No. 2 to Memorandum of Agreement dated July 14, 2009 (Bao
      Shun)
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q as filed with
      the SEC on November 13, 200910.26
              
              Loan
      Agreement (Mitsubishi UFJ Lease Finance Co., Ltd.)
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q as filed with
      the SEC on November 13, 200910.27
              
              Amendment
      to Loan Agreement (Mitsubishi UFJ Lease Finance Co., Ltd.)
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q as filed with
      the SEC on November 13, 200910.28
              
              First
      Preferred Panamanian Ship Mortgage
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q as filed with
      the SEC on November 13, 200910.29
              
              Deed
      of Guarantee
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q as filed with
      the SEC on November 13, 200931.1
              
              Certifications
      of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              Provided
      herewith31.2
              
              Certifications
      of the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              Provided
      herewith32.1
              
              Certification
      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
      the Sarbanes-Oxley Act Of 2002
              
              Provided
      herewith32.2
              
              Certification
      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
      the Sarbanes-Oxley Act Of 2002
              
              Provided
      herewith99.1
              
              Audit
      Committee Charter, dated January 15, 2009
              
              Incorporated
      by reference Exhibit 99.1 to the Company’s Current Report on Form 8-K as
      filed with the SEC on January 20, 200999.2
              
              Compensation
      Committee Charter, dated January 15, 2009
              
              Incorporated
      by reference Exhibit 99.2 to the Company’s Current Report on Form 8-K as
      filed with the SEC on January 20, 200999.3
              
              Corporate
      Governance and Nominating Committee Charter, dated January 15,
      2009
              
              Incorporated
      by reference Exhibit 99.3 to the Company’s Current Report on Form 8-K as
      filed with the SEC on January 20,
2009




- 19
-





SIGNATURES





Pursuant
to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this Amendment No. 1 to Form
10-Q to be signed on its behalf by the undersigned, thereunto duly
authorized.




Date: May
      12, 2010
                      By:
                      /s/
      Xue YingName:
                      Xue
      YingIts:
                      Chief
      Executive Officer, Principal Executive Officer,
                        Secretary
      and DirectorDate: May
      12, 2010
                      By:
                      /s/
      Jing YanName:
                      Jing
      YanIts:
                      Chief
      Financial Officer, Principal Financial and
                        Accounting
      Officer




- 20
-