U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
20549 FORM
10-Q [X] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
1934 For the quarterly
period ended June 30, 2009 [_] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
1934 For the transition
period from ______________________ to ______________________ Commission File
No. 333-134991 BAOSHINN
CORPORATION(Exact name of small business issuer as specified in its
charter) Nevada

20-3486523(State or other jurisdiction of
incorporation or formation)

(I.R.S. employer identification
number)  A-B 8/F Hart Avenue Tsimshatsui Kowloon, Hong Kong  N/A (Address of principal executive offices)
(Zip Code) Registrant's
telephone number: (852)
2815-1355_______________________________________________ Securities
registered under Section 12(b) of the Exchange Act: None.  Securities registered under Section 12(g) of
the Exchange Act: Common Stock, $.001 par value per share (Title of Class) Check whether the issuer (1)
filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes [ ] No [X] State the number of shares
outstanding of each of the issuer's classes of common equity, as of August 13,
2009: 21,400,000 shares of common stock. Transitional Small Business
Disclosure Format (check one):  Yes [ ] No [X]


BAOSHINN CORPORATIONUNAUDITED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS INDEX  PART I  FINANCIAL INFORMATION:  Item 1. Financial Statements
(Unaudited) 3  Condensed Consolidated
Statement of Operations (unaudited) for the six months ended June 30, 2009 and
June 30, 2008 5  Unaudited
Condensed Consolidated Statement of Financial Position at June 30, 2009 and
December 31, 2008 6  Consolidated Statement of Cash
Flows for the six months ended June 30, 2009 and June 30, 2008 7  Notes to Consolidated Interim
Financial Statements 8-26  Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations 27  Item 3. Quantitative and
Qualitative Disclosure About Market Risks 40  Item 4T. Controls and
Procedures 40  PART II  OTHER INFORMATION:  Item 1. Legal Proceedings 40  Item 1A. Risk Factors 41  Item 2. Unregistered Sales of
Equity Securities and Use of Proceeds 41  Item 3. Defaults Upon Senior
Securities 41  Item 4. Submission of Matters
to a Vote of Security 41  Item 5. Other Information 41  Item 6. Exhibits 42  Signatures 42  2


PART I  FINANCIAL INFORMATION Item 1. Financial Statements      Baoshinn
Corporation Unaudited Condensed Consolidated
Financial Statements For the Six Months Ended
June 30, 2009 and 2008 (Stated in US
Dollars)             3


These financial
statements have been prepared by Baoshinn Corporation (the Company)
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed and omitted in accordance
with such SEC rules and regulations. In the opinion of management, the
accompanying statements contain all adjustments necessary to present fairly the
financial position of the Company as of June 30, 2009, and its results of
operations, stockholders equity, and its cash flows for the six month ended
June 30, 2009. The results for these interim periods are not necessarily
indicative of the results for the entire year. It is suggested that the
accompanying financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
companys Annual Report on Form 10-K.


4


BAOSHINN CORPORATION UNAUDITED CONDENSED CONSOLIDATED INCOME
STATEMENT (Stated in US Dollars)   For 3
Months
Ended June
30
unaudited
For 6 Months
Ended June30,
unaudited2009
2008
2009


2008$
$
$


$Retail and Corporate revenue
5,361,701
8,526,280
11,682,222


17,281,421Commission
from travel booking services
42,688
43,300
113,027


63,533Incentive commissions
58,461
142,450
123,167


246,510Net sales
5,462,850
8,712,030
11,918,416


17,591,464Cost of sales
(5,147,900)
(8,311,890)
(11,273,789)


(16,842,591)Gross profit
314,950
400,140
644,627


748,873Other operating income  Note 5
10,284
15,824
22,787


31,904Depreciation
(6,809)
(9,110)
(14,210)


(20,459)Administrative
and other operating expenses
(328,570)
(428,018)
(663,420)


(934,560)Loss from operations
(10,145)
(21,164)
(10,216)


(174,242)Other non-operating income - Note 6
454
1,752
1,097


7,773Interest expenses  Note 7
(579)
(1,777)
(637)


(2,146)Loss before income taxes
(10,270)
(21,189)
(9,756)


(168,615)Income taxes - Note 8
-
-
-


-Net loss
(10,270)
(21,189)
(9,756)


(168,615)Non-controlling interest
1,318
-
2,220


-Net loss attributable to the Company
(8,952)
(21,189)
(7,536)


(168,615)Loss per share of common stock  Note 4- Basic
(0.042)cents
(0.099)cents
(0.035)cents


(0.758)cents- Diluted
(0.042)cents
(0.099)cents
(0.035)cents


(0.758)centsWeighted average number of common stock  Note
4- Basic
21,400,000
21,400,000
21,400,000


22,230,258- Diluted
21,400,000
21,400,000
21,400,000


22,230,258   See notes to unaudited condensed
consolidated financial statements


5





BAOSHINN CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEET (Stated in US Dollars)    At
June 30,

At Dec
312009

2008(unaudited)

(audited)$

$ASSETSCurrent AssetsCash and cash equivalents
196,194

217,453Accounts receivable
1,142,188

900,629Amount due from a related party
 Note 12
-

10,691Deposits, prepaid expenses and
other receivables  Note 9
911,286

940,238Total Current Assets
2,249,668

2,069,011Plant and equipment  Note
10
65,881

80,091TOTAL ASSETS
2,315,549

2,149,102LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESCurrent LiabilitiesAccounts payable
1,318,915

1,103,390Other payables and accrued
liabilities  Note 11
182,060

276,601Amounts due to related parties 
Note 12
58,057

2,838Total current liabilities
1,559,032

1,382,829TOTAL LIABILITIES
1,559,032

1,382,829COMMITMENTS AND CONTINGENCIES  Note
16STOCKHOLDERS EQUITYCommon stockPar value : 2009 - US$0.001Authorized: 2009  200,000,000
sharesIssued and outstanding: 2009 
21,400,000 shares
21,400

21,400Additional paid-in capital
1,766,763

1,766,763Accumulated other comprehensive
income
4,448

4,448Accumulated deficit
(1,205,867)

(1,198,331)TOTAL STOCKHOLDERS EQUITY OF THE
COMPANY
586,744

594,280NON-CONTROLLING INTERESTS
169,773

171,993TOTAL STOCKHOLDERS EQUITY
756,517

766,273TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY
2,315,549

2,149,102 See notes to
unaudited condensed consolidated financial statement


6


BAOSHINN CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS (Stated in US Dollars)  For 6 Months
Ended June
30
unaudited2009


2008$


$Cash flows from operating
activitiesNet
loss
(9,756)


(168,615)Adjustments
to reconcile net loss to net cash flowsprovided
by operating activities :Depreciation
14,210


20,459Stock
based compensation
-


22,800Changes in
operating assets and liabilities :Accounts
receivable
(241,559))


(503,153))Deposits,
prepaid expenses and other receivables
28,952


66,411Accounts
payable
215,525


345,308Other
payables and accrued liabilities
(94,541)


72,530Net cash flows used in operating
activities
(87,169)


(144,260)Cash flows from investing
activityAcquisition
of plant and equipment
-


(13,078)Net cash flows used in investing
activity
-


(13,078)Cash flows from financing
activitiesAmounts due
from related parties
10,691


-Amounts due
to related parties
55,219


217,887Net cash flows provided by
financing activities
65,910


217,887Net (decrease)/increase in cash
and cash equivalents
(21,259)


60,549Effect
of foreign currency translation on cash and cash equivalents
-


4,331Cash and cash equivalents -
beginning of period
217,453


200,116Cash and cash equivalents - end
of period
196,194


264,996Supplemental disclosures for
cash flow information :Cash paid for
:Interest
637


2,146Income
taxes
-


-     See notes to unaudited condensed
consolidated financial statements


7


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)  1. Corporation
information Baoshinn Corporation (the Company) was incorporated under the
laws of the State of Nevada on September 9, 2005, under the name of JML
Holdings, Inc.  The Company was formed as a "blind pool" or "blank check"
company whose business plan was to seek to acquire a business opportunity
through completion of a merger, exchange of stock, or other similar type of
transaction.  During the fiscal year ended June 30, 2006, the Company
issued 5,000,000 restricted common shares at $0.01 per share for total cash
consideration of $50,000.  On June 30, 2006, the Company consummated a
merger (the merger) with Bao Shinn International Express Limited (BSIE), a
privately-held Hong Kong corporation, by issuing 16,500,000 shares in the share
exchange transaction for 100% of the issued and outstanding shares of BSIE
common stock.  As a result of the share exchange transaction, BSIE became
our wholly-owned subsidiary. During the year ended June 30, 2008, the Company
issued 2,400,000 restricted common shares of $0.001 per share at a value of $0.3
per share with a net proceeds of approximately $624,000 and redeemed 2,500,000
restricted common shares and these shares are classified as not issued and
outstanding. The former stockholders of BSIE acquired 76.74% of the Companys
issued and outstanding common stock as a result of completion of the share
exchange transaction.  Therefore, although BSIE became the Companys
wholly-owned subsidiary, the transaction was accounted for as a recapitalization
of the Company, whereby BSIE is deemed to be the accounting acquirer and is
deemed to have adopted the Companys capital structure.  Since the Merger
was accounted for as a reverse acquisition, the accompanying consolidated
financial statements reflect the historical financial statements of BSIE, the
accounting acquirer, as adjusted for the effects of the exchange of shares on
its equity accounts, the inclusion of net liabilities of the accounting
subsidiary as of the date of the merger on their historical basis and the
inclusion of the accounting subsidiarys results of operations from that date.
Although the Company is the legal acquirer, BSIE will be treated as having
acquired the Company for accounting purposes and all of the operations reported
represent the historical financial statements of BSIE. On February 20, 2008, BSIE incorporated a wholly owned subsidiary,
Bao Shinn (China) Express Limited (BSCE) of 1,000,000 ordinary shares at
$0.128 per share. On July 16, 2008,Bao
Shinn Holidays Limited (BSHL) was incorporated with 3,000,000 ordinary shares
issued and paid at $0.128 per share.BSIE owns 55% of BSHL.


8


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   2. Description of
business (Continued)  Bao Shinn International
Express Limited (BSIE), a wholly owned subsidiary of the Company, offers
extended travel services primarily focused on wholesale businesses and corporate
clients. BSIE is a ticket consolidator of major international airlines including
Thai Airways, Eva Airways, Dragon Air, Air China, China Southern Airlines and
China Eastern Airlines that provides travel services such as ticketing, hotel
and accommodation arrangements, tour packages, incentive tours and group
sightseeing services.  However, the Group
relies on the shareholder, Bao Shinn Express Company Limited, which is the
member of International Air Transport Association to supply air tickets and tour
packages from different airlines companies.  BSCE offers extended
travel services primarily focused on wholesale businesses and corporate clients
in the Mainland China.  BSHL offers extended
travel services primarily focused on corporate client in Hong Kong and the
Mainland China.   3. Going
concern  These financial
statements have been prepared in accordance with generally accepted principles
in the United States applicable to a going concern, which contemplates the
realization of assets and the satisfaction of liabilities and commitments in the
normal course of business. The Group has generated recurring losses resulting in
an accumulated deficit. The Group requires additional funds to maintain its
operations.  Management has reviewed
its operations for the past few years and the current travel industry market
conditions. Based on that review we plan to take the following actions to
improve our performance and to continue as a going concern.  Staff Redundancy  - The Group plans to
flatten organization structure by cutting senior management staff reducing staff
redundancy and decentralizing its operations. Meanwhile, support and
administration staffing has also been cut to keep back office costs down. Our
total staff was reduced from forty-eight (48) in May 2008 (highest) to thirty
five (35) in June 2009. Six (6) of the thirty-five (35) staff members are
non-operational staff (management and back office), the remaining twenty-nine
(29) are operational, plus the sales and marketing staff. In comparison to May,
2008, nine (9) of the forty eight (48) staff were non-operational and
thirty-nine (39) were operational, plus the sales marketing staff.  - As a result of staff
cuts, the Company has been able to downsize its office space. Office rental was
reduced from $11,860 per month to $7,897 in June 2009, representing a 33.4%
decrease in office rental expense.


9


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   3. Going concern
(Continued)  Operations
decentralized  - Effective from
September, 2008, management decided to decentralize operations in its main
wholesale business division and corporate division. Business decisions will be
made on a lower level within the business division instead of through a senior
management team. Management expects the decentralization will improve
flexibility and speed up the Company's response time to market changes. Each
business division head will have more discretion to make business decisions, and
at the same time each division head will be more accountable for their
performance.  - With the senior
management team's functions being shifted to lower organization levels. The
Company was paying a monthly management fee of $11,538 in April 2008 (highest),
compared to nil currently.  Business
Strategy  - As a result of
increased fuel prices, airlines have become increasingly competitive in Hong
Kong. Hong Kong is an international hub for long haul flights as well as short
distance destinations. Popular travel destinations are becoming less profitable,
because more airlines are competing for the same route. The Company, as a travel
agency, is dependent on airline commissions and market conditions for ticket
prices. The more competition, the less profit it can earn.  - The Company has
reviewed the market conditions, and decided to change its strategy by dealing
with new emerging airlines with new destinations. The Company has recently
developed a close relationship with Hong Kong Airlines which is primarily
focused on Mainland China travel destinations. As the Hong Kong Airbus travel
agency, the Company has less competition and is able to maintain a more stable
profit margin.  Management believes
that actions presently taken to revise the Groups operating and financial
requirements provide the opportunity for the Group to continue as a going
concern. The Companys shareholders agreed to provide continuing financial
supports to the Company in terms of a temporary loan. The agreements for
continuing financial support are verbal.   4. Summary of
significant accounting policies  Basis of
presentation and consolidation  The accompanying
consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the United States of
America.  The consolidated
financial statements include the accounts of the Company and its subsidiaries.
 All significant inter-company accounts and transactions have been
eliminated in consolidation.


10


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   4. Summary
of significant accounting policies (Continued)  Basis of
presentation and consolidation (Continued)  The results of
subsidiaries acquired or disposed of during the years are included in the
consolidated income statement from the effective date of acquisition or up to
the effective date of disposal.  The Company also
evaluates consolidation of entities under Financial Accounting Standards Board
(FASB) Interpretation No.46, Consolidation of Variable Interest Entities (FIN
46). FIN 46 requires management to evaluate whether an entity or interest is a
variable interest entity and whether the Company is the primary beneficiary.
Consolidation is required if both of these criteria are met. The Company does
not have any variable interest entities requiring consolidation.   Use of
estimates  In preparing financial
statements in conformity with accounting principles generally accepted in the
United States of America, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the dates of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting year.  These
accounts and estimates include, but are not limited to, the valuation of
accounts receivable, deferred income taxes and the estimation on useful lives of
plant and equipment.  Actual results could differ from those estimates.   Concentrations of credit
risk  Financial instruments
that potentially subject the Group to significant concentrations of credit risk
consist principally of accounts receivable.  In respect of accounts
receivable, the Group extends credit based on an evaluation of the customers
financial condition, generally without requiring collateral or other security.
 In order to minimize the credit risk, the management of the Group has
delegated a team responsibility for determination of credit limits, credit
approvals and other monitoring procedures to ensure that follow-up action is
taken to recover overdue debts.  Further, the Group reviews the recoverable
amount of each individual trade debt at each balance sheet date to ensure that
adequate impairment losses are made for irrecoverable amounts.  In this
regard, the directors of the Group consider that the Groups credit risk is
significantly reduced.   Concentrations of supplier
risk  The Group relies on
Thai Airways as its major supplier of air tickets and tour packages. If this
supplier became unwilling to cooperate with the Group, the Group would have to
find alternative resources, which could materially affect the Groups ability to
generate revenue and profitability.


11


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)  4. Summary of
significant accounting policies (Continued)  Cash and cash
equivalents  Cash and cash equivalents include all
cash, deposits in banks and other highly liquid investments with initial
maturities of six months or less.   Accounts
receivable  Accounts receivable are
stated at original amount less allowance made for doubtful receivables, if any,
based on a review of all outstanding amounts at the year end.  An allowance
is also made when there is objective evidence that the Group will not be able to
collect all amounts due according to original terms of receivables.  Bad
debts are written off when identified.  The Group extends unsecured credit
to customers in the normal course of business and believes all accounts
receivable in excess of the allowances for doubtful receivables to be fully
collectible.  The Group does not accrue interest on trade accounts
receivable.  The Group has a credit
policy in place and the exposure to credit risk is monitored on an ongoing basis
credit evaluations are preferred on all customers requiring credit over a
certain amount.  During the six (6)
months period ended June 30, 2009 and 2008, the Group did not experience any bad
debts and accordingly, did not make any allowance for doubtful debts.   Plant and
equipment  Plant and equipment are
stated at cost less accumulated depreciation.  Cost represents the purchase
price of the asset and other costs incurred to bring the asset into its existing
use.  Maintenance, repairs and betterments, including replacement of minor
items, are charged to expense; major additions to physical properties are
capitalized.  Depreciation of plant
and equipment is provided using the straight-line method over their estimated
useful lives at the following annual rates:  Furniture and
fixtures
20%Office
equipment
20%  Property and equipment
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to estimated undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. Assets to be disposed
of are separately presented in the balance sheet and reported at the lower of
the carrying amount or fair value less costs to sell, and are no longer
depreciated.


12


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   4. Summary of
significant accounting policies (Continued)  Revenue
recognition  The Group recognizes
revenue when it is earned and realizable based on the following criteria:
persuasive evidence that an arrangement exists, services have been rendered, the
price is fixed or determinable and collectability is reasonably assured.  The Group also
evaluates the presentation of revenue on a gross versus a net basis through
application of Emerging Issues Task Force No. (EITF) 99-19, Reporting
Revenue Gross as a Principal versus Net as an Agent. The consensus of this
literature is that the presentation of revenue as the gross amount billed to a
customer because it has earned revenue from the sale of goods or services or the
net amount retained (that is, the amount billed to a customer less the amount
paid to a supplier) because it has earned a commission or fee is a matter of
judgment that depends on the relevant facts and circumstances. In making an
evaluation of this issue, some of the factors that should be considered are:
whether the Group is the primary obligor in the arrangement (strong indicator);
whether it has general inventory risk (before customer order is placed or upon
customer return) (strong indicator); and whether we have latitude in
establishing price. The guidance clearly indicates that the evaluations of these
factors, which at times can be contradictory, are subject to significant
judgment and subjectivity. If the conclusion drawn is that the Group performs as
an agent or a broker without assuming the risks and rewards of ownership of
goods, revenue should be reported on a net basis.  The Group has the following three
types of revenues: - Retail and corporate
travel service revenues, - Referral fee for travel
booking services, and - Incentive commission
from travel suppliers.  Retail and corporate travel service
revenues  Revenues from retail
and corporate travel services are recognized when the travel service provided by
the Group is completely delivered.  The Group presents revenue from such
transactions on a gross basis in the consolidated statements of operations, as
the Group acts as a principal, assumes inventory and credit risks, and has
primary obligations to the airlines or hotels for cancelled air tickets,
packaged tour products or hotel reservations.  The Group also has latitude
in determining the ticket prices.  The Group changes the product by
combining air ticket and hotel accommodations with local car transportation and
other ancillary services to make it a holiday package or business travel
solution for customers.


13


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   4. Summary of
significant accounting policies (Continued)  Revenue
recognition (Continued)  Referral fee for travel booking services  The Group receives
referral fee from travel product providers for booking travel services through
the Group. The itinerary and product price are generally fixed by the travel
product providers and the Group books the travel services on behalf of the
customers.  Referral fees from travel booking services rendered are
recognized as commissions after the services are rendered and collections are
reasonably assured.  The Group presents revenues from such transactions on
a net basis in the consolidated statements of operations, as the Group acts as
an agent, does not assume any inventory and credit risks, has no obligations for
cancelled airline or hotel ticket reservations, and does not have latitude in
determining the service prices.  Incentive commission from travel
suppliers  The Group earns an
incentive commission from many travel suppliers. Contracts with certain travel
suppliers contain discretionary escalating commissions that are paid to the
Group subject to achieving specific performance targets.  Such
discretionary escalating commissions are recognized on an accrual basis because
such commissions are usually paid in arrears and the Group can reasonably
estimate such commissions.  The Group presents revenues from such
transactions on a net basis in the statements of operations, as the Group acts
as an agent, does not assume any inventory risk, and has no obligations for
cancelled airline ticket reservations.   Advertising
expenses  Advertising expenses
are charged to expense as incurred.  3 months ended 30/06 6 months ended 30/06 2009 2008 2009 2008 $ $ $ $ 281 4,861 778 5,310   Income
Taxes  Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.


14


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)  4. Summary of
significant accounting policies (Continued)   Income Taxes (Continued)  In
June 2006, the FASB issued FASB interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of Statement of Financial
Accounting Standards No. 109 (FIN 48). FIN 48 clarifies the accounting for
uncertainty in tax positions. This interpretation requires that an entity
recognized in the consolidated financial statements the impact of a tax
position, if that position is more likely than not of being sustained upon
examination, based on the technical merits of the position. The adoption of FIN
48 did not have any impact on the Groups results of operations or financial
condition for the six (6) months ended June 30, 2009.  As of the date of
the adoption of FIN 48, the Group has no material unrecognized tax benefit which
would favorably affect the effective income tax rate in future periods.
 The Group has elected to classify interest and penalties related to
unrecognized tax benefits, if and when required, as part of income tax expense
in the consolidated statements of operations.   Comprehensive
income  Other comprehensive
income refers to revenues, expenses, gains and losses that under U.S. GAAP are
included in comprehensive income but are excluded from net income as these
amounts are recorded as a component of stockholders equity.  The Companys
other comprehensive income represented foreign currency translation
adjustments.   Foreign currency
translation  The functional currency
of the Group is Hong Kong dollars (HK$).  The Group maintains its
financial statements in the functional currency.  Monetary assets and
liabilities denominated in currencies other than the functional currency are
translated into the functional currency at rates of exchange prevailing at the
balance sheet dates.  Transactions denominated in currencies other than the
functional currency are translated into the functional currency at the exchanges
rates prevailing at the dates of the transaction.  Exchange gains or losses
arising from foreign currency transactions are included in the determination of
net income for the respective periods.


15


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   4.      Summary
of significant accounting policies (Continued)   Foreign currency
translation (Continued)  For financial reporting
purposes, the financial statements of the Group which are prepared using the
functional currency have been translated into United States dollars.
 Assets and liabilities are translated at the exchange rates at the balance
sheet dates and revenue and expenses are translated at the average exchange
rates and stockholders equity is translated at historical exchange rates.
 Any translation adjustments resulting are not included in determining net
income but are included in foreign exchange adjustment to other comprehensive
income, a component of stockholders equity.  Six months ended June 30,2009

2008Quarter end HK$ : US$ exchange
rate
7.751

7.801Average quarterly HK$ : US$ exchange
rate
7.751

7.800   Fair value of
financial instruments  The carrying values of
the Groups financial instruments, including cash and cash equivalents, trade
and other receivables, deposits, trade and other payables approximate their fair
values due to the short-term maturity of such instruments. The carrying amounts
of borrowings approximate their fair values because the applicable interest
rates approximate current market rates.   Basic and diluted
earnings per share  The Company computes
earnings per share (EPS) in accordance with Statement of Financial Accounting
Standards No. 128, Earnings per Share (SFAS No. 128), and SEC Staff
Accounting Bulletin No. 98 (SAB 98). SFAS No. 128 requires companies
with complex capital structures to present basic and diluted EPS. Basic EPS is
measured as the income or loss available to common shareholders divided by the
weighted average common shares outstanding for the period. Diluted EPS is
similar to basic EPS but presents the dilutive effect on a per share basis of
potential common shares (e.g., convertible securities, options, and warrants) as
if they had been converted at the beginning of the periods presented, or
issuance date, if later. Potential common shares that have an anti-dilutive
effect (i.e., those that increase income per share or decrease loss per share)
are excluded from the calculation of diluted EPS.  The calculation of diluted weighted average common shares
outstanding for the period ended June 30, 2009 is based on the estimate fair
value of the Companys common stock during such periods applied to options using
the treasury stock method to determine if they are dilutive.


16


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   4.     Summary of
significant accounting policies (Continued) The following tables are a reconciliation of the weighted average
shares used in the computation of basic and diluted earnings per share for the
periods presented:  3 months ended
June 30
6 months ended
June 302009

2008
2009

2008$

$
$

$Numerator for basic and diluted
earnings per share:Net loss
(8,952)

(21,189)
(7,536)

(168,615)Denominator:Basic weighted average shares
21,400,000

21,400,000
21,400,000

22,230,258Effect of
dilutive securities
-

-
-

-Diluted weighted average shares1
21,400,000

21,400,000
21,400,000

22,230,258Basic earnings/(loss) per share:
(0.042)cents

(0.099)cents
(0.035)cents

(0.758)centsDiluted earnings/(loss) per share:
(0.042)cents

(0.099)cents
(0.035)cents

(0.758)cents  1 Due to the
net loss in the period ended June 30 of 2009 and 2008, diluted shares used in
the diluted EPS calculation represent basic shares for the period ended June 30
of 2009 and 2008. Using actual diluted shares would result in anti-dilution.
There were no anti-dilutive shares for the three and six months ended June 30,
2009 and 2008, respectively.   Stock-Based Compensation  The
Company uses the fair value method for stock-based compensation granted to
employees of the Company. The fair value of stock options is determined by the
Black-Scholes Option Pricing Model with assumptions for risk-free interest
rates, dividend yields, volatility factors of the expected market price of the
Companys common shares and an expected life of the options.  During the quarter
ended June 30, 2009 and 2008, the Company did not record stock-based
compensation.


17


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   4.     Summary of
significant accounting policies (Continued)   Related parties
transactions  A related party is
generally defined as (i) any person that holds ten percent (10%) or more of the
Companys securities and their immediate families, (ii) the Groups management,
(iii) someone that directly or indirectly controls, is controlled by or is under
common control with the Group, or (iv) anyone who can significantly influence
the financial and operating decisions of the Group. A transaction is considered
to be a related party transaction when there is a transfer of resources or
obligations between related parties.   Recently issued
accounting pronouncements  In December 2007, the
FASB issued SFAS No. 141(R), Business Combinations and SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements  an amendment to
ARB No. 51. SFAS No. 141(R) and SFAS No. 160 require most
identifiable assets, liabilities, noncontrolling interests and goodwill acquired
in a business combination to be recorded at full fair value and require
noncontrolling interests (previously referred to as minority interests) to be
reported as a component of equity, which changes the accounting for transactions
with noncontrolling interest holders. Both statements are effective for periods
beginning on or after December 15, 2008, and earlier adoption is
prohibited. SFAS No. 141(R) will be applied to business combinations
occurring after the effective date. SFAS No. 160 will be applied
prospectively to all noncontrolling interests, including any that arose before
the effective date. We are currently evaluating the impact of adopting SFAS
No. 160 on our unaudited condensed consolidated financial statements.  In March 2008, the FASB
issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging
Activities, which requires enhanced disclosures about an entitys derivative
and hedging activities. This Statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008.
The Company does not expect the adoption of SFAS No.
161 will have a
material impact on the unaudited condensed consolidated financial
statements.  In May 2009, the FASB
issued SFAS No. 165, Subsequent Events, SFAS No. 165 sets forth; (1) the
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in financial statements, (2) the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements and (3) the disclosures that an
entity should make about events or transactions that occurred after the balance
sheet date.  Management has evaluated the period beginning July 1, 2009
through August 13, 2009, and concluded there were no events or transactions
occurring during this period that required recognition or disclosure in the
unaudited condensed consolidated financial statements.


18


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   4.     Summary of
significant accounting policies (Continued)  Recently issued
accounting pronouncements (Continued)  In April 2009, the
Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP)
FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments.  This FSP amends Statement of Financial Accounting Standard
(SFAS) No. 107, Disclosures about Fair Value of Financial Instruments, and
requires disclosures about fair value of financial instruments for interim
reporting periods as well as in annual financial statements.  Additionally,
this FSP amends Accounting Principles Board (APB) Opinion No. 28, Interim
Financial Reporting, to require those disclosures in summarized financial
information at interim reporting periods.  These disclosures are required
for interim reporting periods ending after June 15, 2009.  The adoption of
FSP No. FAS 107-1 and APB No. 28-1 did not have a material impact to the
unaudited condensed consolidated financial statements.  In June 2009, the FASB
issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment
of SFAS No.  140.  SFAS No. 166 amends SFAS No. 140 to improve the
relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial reports about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferors continuing involvement in
transferred financial assets.  This Statement is effective as of the
beginning of each reporting entitys first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period, and for interim and annual reporting periods thereafter.  Earlier
application is prohibited.  The recognition and measurement provisions of
this Statement shall be applied to transfers that occur on or after the
effective date.  Management does not expect the adoption of SFAS No. 166
will have a material impact to the unaudited condensed consolidated financial
statements,   In June 2009, the FASB
issued SFAS No. 168, The FASB Accounting Standard Codification
(Codification) and the Hierarchy of Generally Accepted Accounting Principles,
effective for interim and annual reporting periods ending after September 15,
2009.  This statement replaces SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles, and establishes the Codification as the source
of authoritative accounting principles used in the preparation of financial
statements in conformity with generally accepted accounting principles.
 The Codification does not replace or affect guidance issued by the SEC or
its staff.  After the effective date of this statement, all
non-grandfathered non-SEC accounting literature not included in the Codification
will be superseded and deemed non-authoritative.  Management is currently
evaluating the impact of adopting SFAS No. 168 on the Groups unaudited
condensed consolidated financial statements.


19


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US
Dollars)   5. Other operating income  3 months
ended June 30

6
months ended June 302009

2008

2009
2008$

$

$
$GDS commission income
504

3,925

712
5,575Management service income
9,780

11,899

22,075
26,32910,284

15,824

22,787
31,904   6. Other non-operating income  3 months
ended June 30

6
months ended June 302009

2008

2009
2008$

$

$
$Gain on exchange
402

541

790
1,515Interest income
52

1,211

307
1,211Sundry income
-

-

-
5,047454

1,752

1,097
7,773   7. Interest expenses   3 months
ended June 30

6
months ended June 302009

2008

2009
2008$

$

$
$Interest expense
579

1,777

637
2,146


20


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)    8. Income taxes   The Company was subject
to Hong Kong profits or income tax at 16.5% for the quarter ended June 30, 2009
and 2008.  No provision for Hong
Kong profits tax has been made for any of the year presented as the Group does
not have any assessable profits during the period.  Deferred taxes are
determined based on the temporary differences between the financial statement
and income tax bases of assets and liabilities as measured by the enacted tax
rates which will be in effect when these differences reverse. The Group follows
Statement of Financial Accounting Standards Number 109 (SFAS 109), Accounting
for Income Taxes. SFAS No.109 and requires a valuation allowance, if any, to
reduce the deferred tax assets reported if, based on the weight of the evidence,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized, and therefore, a full valuation allowance has been
provided as of June 30, 2009 and June 30, 2008.  .  9. Deposits, prepaid expenses and
other receivables   At June 30

At Dec
312009

2008(unaudited)

(audited)$

$Security deposits to
suppliers[1]

745,820

772,247Prepayments and other
receivables

135,226

130,100Utility, rental and other
deposits

30,240

37,891911,286

940,238  [1]
Represents a deposit with the airline companies to allow the Group to issue an
agreed upon amount of air tickets per month.


21


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   10.     Plant and
equipment  At June
30,

At Dec
312009

2008(unaudited)

(audited)$

$CostFurniture and
fixtures


53,068

53,392Office
equipment


99,988

106,599153,056

159,991Accumulated depreciationFurniture and
fixtures


21,990

17,462Office
equipment


65,185

62,43887,175

79,900NetFurniture and
fixtures


31,078

35,930Office
equipment


34,803

44,16165,881

80,091  Depreciation expenses for the three (3) months ended 30 June, 2009
are $6,809 (three (3) months ended 30 June, 2008: $9,110).  Depreciation expenses for the January to June, 2009 are $14,210
(2008: $20,459).   11. Other payables and
accrued liabilities  At June 30

At Dec
312009

2008(unaudited)

(audited)$

$Sale deposits received


42,496

88,327Accrued expenses


107,352

154,961Other payables


32,212

33,313182,060

276,601


22


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   12. Amounts due
from/(to) related parties  Amounts due from/(to) related parties
for working capital are as follows:  At June 30,

At Dec
31,2009

2008(unaudited)

(audited)$

$Amount due from
shareholder


-

10,691Amounts due to shareholders


58,057

2,838  The amount due from
shareholder is temporary advance, interest free, unsecured and due on
demand.  The amounts due to
shareholders, represent advances from certain shareholders of the Company, are
interest-bearing at the rate of 5.5% (2008: 10%) per annum, unsecured and have
no fixed repayment terms.   13. Stock
options  The Company has stock
options plans that allow it to grant options to its key employees. Over the
course of employment, the Company issues vested or non-vested stock options to
an employee which is struck at US$0.35 per share. The exercise period of the
options commenced on June 30, 2008 and will expire on June 30, 2011.  The fair value of these
options at the date of grant was estimated to be $0.1533 and $0.1125 for vested
and non-vested options per unit respectively using the Black-Scholes option
pricing model with the following weighted average assumptions: expected life of
three years; risk-free interest rate of 3.07%; expected dividend yield of 0% and
an expected volatility of 47.77%. The stock-based compensation expense recorded
in the quarter ended June 30, 2009 and 2008 were nil, which was charged to the
consolidated statements of operations and credited to contributed surplus.


23


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   13. Stock options
(Continued)  WeightedWeighted

averageNumber of

average

remainingoptions

exercise
price

life$

(year)Exercisable as of January 1, 2009

155,000

0.35

2.25Exercisable
as of June 30, 2009

155,000

0.35

1.75  The total intrinsic value during the
quarter ended June 30, 2009 and 2008 were $nil as no options were exercised
during the respective period.   14. Concentration of credit  A substantial
percentage of the Group's sales are made to the following customers. Details of
the customers accounting for 10% or more of total net revenue are as follows:  Six months period ended
June 30,(unaudited)2009

2008Travel
Expert Limited (a Hong Kong incorporated travel agent)
11%

13%   Details of
the accounts receivable from the one customer with the largest receivable
balances at June 30, 2009 and December 31, 2008 are as follows:  Percentage of account
receivableJune 30, 2009

December
31,2008(unaudited)

(audited)Travel
Expert Limited (a Hong Kong incorporated travel agent)
18%

17%


24


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   15. Pension plans  The Group participates
in a defined contribution pension scheme under the Mandatory Provident Fund
Schemes Ordinance MPF Scheme for all its eligible employees in Hong Kong.  The MPF Scheme is
available to all employees aged 18 to 64 with at least sixty (60) days of
service in the employment in Hong Kong.  Contributions are made by the
Groups subsidiary operating in Hong Kong at 5% of the participants relevant
income with a ceiling of HK$20,000.  The participants are entitled to 100%
of the Groups contributions together with accrued returns irrespective of their
length of service with the Group, but the benefits are required by law to be
preserved until the retirement age of 65.  The only obligation of the Group
with respect to MPF Scheme is to make the required contributions under the
plan.  The assets of the
schemes are controlled by trustees and held separately from those of the Group.
 Total pension cost was $19,616 during six (6) months ended June 30, 2009
(six (6) months ended June 30, 2008: $22,486.)   16. Commitments and
contingencies  Operating leases
commitments  The Group leases office
premises under various non-cancelable operating lease agreements that expire at
various dates through years 2010 to 2011, with an option to renew the lease.
 All leases are on a fixed repayment basis.  None of the leases
includes contingent rentals.  Minimum future commitments under these
agreements payable as of June 30, 2009 are as follows:-  June 30



$2010



72,1452011



4,98577,130  Rental expenses for the
six (6) months ended 30 June, 2009 were $47,386 (six 6) months ended 30 June,
2008: $63,654).   17. Related party
transactions  In the ordinary course
of business, BSIE, our wholly-owned subsidiary, purchases and sells air tickets
and tour packages from/to Bao Shinn Express Company Limited (BSEL). BSEL holds
38.6% of Baoshinn Corporations outstanding common stock.  The consolidated
income statement for the periods presented includes the following related party
transactions:


25


BAOSHINN CORPORATION  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Stated in US Dollars)   17. Related party
transactions (Continued)  Related party
Nature of relationship and
control
Description of
transactions
3 Months ended June
30
6 Months ended June
302009
2008
2009
2008(unaudited)
(unaudited)
(unaudited)
(unaudited)$
$
$
$Bao Shinn Express
Company Limited
Shareholder
38.6%
Sales of air tickets and tour packages
(24,621)
(46,984)
(76,224)
(157,077)Management service income
(9,778)
(11,899)
(22,621)
(19,543)Purchase of air tickets and tour packages
27,603
47,942
64,472
48,192Rent paid
-
385
641
16,140   18. Segment
Information  SFAS No.131, Disclosures about Segments of an Enterprise and
Related Information, establishes standards for reporting information about
operating segments in financial statements. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker, or
decision making group, in deciding how to allocate resources and in assessing
performance.  For
management purposes, the Group is regarded as a single segment, being engaged in
the provision of travel agent services. These principal activities and
geographical market are substantially based in Hong Kong and the Mainland China.
Accordingly, no geographical segment information is presented.


26





Item 2.  Management's Discussion and Analysis of
Financial Condition and Results of Operations. CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS This discussion
and analysis of our financial condition and results of operations includes
"forward-looking" statements that reflect our current views with respect to
future events and financial performance. We use words such as "expect,"
"anticipate," "believe," and "intend" and similar expressions to identify
forward-looking statements. You should be aware that actual results may differ
materially from our expressed expectations because of risks and uncertainties
inherent in future events and you should not rely unduly on these forward
looking statements. We disclaim any obligation to publicly update these
statements, or disclose any difference between its actual results and those
reflected in these statements. Reference in the following discussion to "our",
"us" and "we" refer to the operations of Baoshinn Corporation and its
subsidiaries ("the company"), except where the context otherwise indicates or
requires. The following
discussion of our financial condition and results of operations should be read
in conjunction with the audited financial statements and the notes to the
audited financial statements included in this annual report. This discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results may differ materially from those anticipated in
these forward-looking statements. Change in
fiscal year end In 2008 the
Company's fiscal year end was changed from March 30 to December 31. The current
period financial statements cover a six (6) months period from January 1, 2009
to June 30, 2009. Going Concern The accompanying
consolidated financial statements have been prepared assuming that we will
continue as a going concern. We have made a net loss of $7,536 for the six (6)
months ended June 30, 2009 and a net loss since inception of $1,205,867. On June
30, 2009 we had cash on hand of $196,194. These circumstances raise substantial
doubt about our ability to continue as a going concern. These doubts were
outlined in our independent auditor's report on our consolidated financial
statements for the nine months ended December 31, 2008,
which are included in annual report on Form 10-K. Although our consolidated
financial statements raise substantial doubt about our ability to continue as a
going concern, they do not include any adjustments relating to recoverability
and classification of recorded assets, or the amounts or classifications of
liabilities that might be necessary in the event we cannot continue as a going
concern. The Company's shareholders have verbally agreed to provide continuing
financial support to the Company for future losses it may incur. In this difficult
and challenging time, it is our intention to focus first on the things that we
can directly control, such as costs. It is our intention to eliminate
inefficiencies in operations to mitigate losses and to improve our chances for
profitability. At the same time, we are also working on new routes to generate
additional revenues, without increasing our need for additional cash. We hope to
generate a new segment of revenue flow, along with new routes by working with
local carriers on short haul flights. Management has
reviewed its operations for the past few years and the current travel industry
market conditions. Based on that review we plan to take the following actions to
improve our performance and to continue as a going concern. Staff Redundancy The Group plans to
flatten organization structure by cutting senior management staff reducing staff
redundancy and decentralizing its operations. Meanwhile, support and
administration staffing has also been cut to keep back office costs down. Our
total staff was reduced from forty-eight (48) in May 2008 (highest) to
thirty-five (35) in June 2009. Six (6) of the thirty-five (35) staff members are
non-operational staff (management and back office), the remaining  27    twenty-nine (29)
are operational, plus the sales and marketing staff. In comparison to May, 2008,
nine (9) of the forty-eight (48) staff were non-operational and thirty-nine (39)
were operational, plus the sales marketing staff. As a result of
staff cuts, the Company has been able to downsize its office space. Office
rental was reduced from $11,860 per month to $7,897 in June 2009, representing a
33.4% decrease in office rental expense. Operations
decentralized Effective from September, 2008, management
decided to decentralize operations in its main wholesale business division and
corporate division. Business decisions will be made on a lower level within the
business division instead of through a senior management team. Management
expects the decentralization will improve flexibility and speed up the Company's
response time to market changes. Each business division head will have more
discretion to make business decisions, and at the same time each division head
will be more accountable for their performance. With the senior
management team's functions being shifted to lower organization levels. The
Company was paying a monthly management fee of $11,538 in April 2008 (highest),
compare to nil currently. Business
Strategy As a result of
increased fuel prices, airlines have become increasingly competitive in Hong
Kong. Hong Kong is an international hub for long haul flights as well as short
distance destinations. Popular travel destinations are becoming less profitable,
because more airlines are competing for the same route. The Company, as a travel
agency, is dependent on airline commissions and market conditions for ticket
prices. The more competition, the less profit it can earn. The Company has
reviewed the market conditions, and decided to change its strategy by dealing
with new emerging airlines with new destinations. The Company has recently
developed a close relationship with Hong Kong Airlines which is primarily
focused on Mainland China travel destinations. As the Hong Kong Airbus travel
agency, the Company has less competition and is able to maintain a more stable
profit margin. Management
believes that actions presently taken to revise the Company's operating and
financial requirements provide the opportunity for the Company to continue as a
going concern. The Company's shareholders have agreed to provide continuing
financial supports to the Company in terms of a temporary loan. The agreements
for continuing financial support are verbal. Results of
Operations for the three (3) months ended June 30, 2009 compared to three (3)
months ended June 30, 2008.  Revenues For the three (3)
months ended June 30, 2009, the Company has experienced decrease in sales
revenues due to the global economic contraction, although the Company was
recognized by Eva Airline as its top selling agent in Hong Kong. Eva Airlines
operates both short haul routes within South East Asia and long haul routes
including North America and Europe. The company has also been appointed as a
first tier agent for two additional airlines, HongKong Airlines & HongKong
Express. Hong Kong Airlines mainly operates flights originating from Hong Kong
to destinations in Asian cities, including Bangkok, Kuala Lumpur, Manila, and
major cities in Japan. HongKong express mainly operates flights originating from
Hong Kong to mainland China's second tier cities, including Changsha, Fuzhou,
Hangzhou, Hefei, Guiyang etc. Our revenue
decreased $3,249,180 or 37.3% from $8,712,030 for the three (3) months ended
June 30, 2008 to $5,462,850 for the three (3) months ended June 30, 2009. The
decrease is mainly due to the downturn of global economy. We generate our
revenues primarily from retail and corporate business. For the three (3) months
ended June 30, 2009, we derived 98.1%, 0.8% and 1.1% of our revenues from our
retail & corporate clients, commission from travel booking services and
airline incentive commissions respectively. For the three (3) months ended June  28    30, 2008, we
derived 97.9%, 0.5% and 1.6% of our revenues from our retail & corporate
clients, commission from travel booking services and airline incentive
commissions respectively. The table below sets forth the
revenues from our principal lines of business for the periods indicated. 3
Months ended June 30, 2009
3 months ended June
30, 2008$
$Retail and Corporate revenue
5,361,701
8,526,280Commission from travel booking services
42,688
43,300Incentive commissions
58,461
142,450Total revenue
5,462,850
8,712,030 Retail and Corporate
Revenue Revenues from
retail and corporate travel services are recognized when the travel service
provided by the Company is completely delivered. The Company presents revenue
from such transactions on a gross basis in the consolidated statements of
operations, as the Company acts as a principal, assumes inventory and credit
risks, and has the primary obligation to the airlines or hotels for cancelled
air tickets, packaged tour products or hotel reservations. The Company also has
latitude in determining the service prices. The Company changes the product by
combining air ticket and hotel accommodations with local car transportation and
other ancillary services to make it a holiday package or business travel
solution for customers. Referral fees for travel
booking services We receive
referral fees from travel product providers for booking travel services. The
itinerary and product price are generally fixed by the travel product providers
and we book the travel services on behalf of the customers. Referral fees from
travel booking services rendered are recognized as commissions after the
services are rendered and collections are reasonably assured. We present
revenues from such transactions on a net basis in the consolidated statements of
operations, as we act as an agent, we do not assume any inventory and credit
risks, we have no obligations for cancelled airline or hotel ticket
reservations, and do not have latitude in determining the service prices. Incentive commission from
travel suppliers We earn an
incentive commission from many travel suppliers. Contracts with certain travel
suppliers contain discretionary escalating commissions that are paid to us
subject to achieving specific performance targets. Such discretionary escalating
commissions are recognized on an accrual basis because such commissions are
usually paid in arrears and we can reasonably estimate such commissions. Our
statement of operations presents revenues from such transactions on a net basis,
because we act as an agent, we do not assume any inventory risk, and we have no
obligation for cancelled airline tickets. Cost of Sales Costs of sales are costs directly
attributable to rendering our revenues, which consist primarily of payments for
travel costs to airlines and suppliers. Cost of revenues accounted for 94.2% of
our revenue in the three (3) months ended June 30, 2009 and 95.4% of our
revenues in the three (3) months ended June 30, 2008.  29    The table below sets forth the
cost of sales for the periods indicated.  3 months ended June
30, 2009
3 months ended June
30, 2008Total revenue
5,462,850

8,712,030Cost of sales
(5,147,900)

(8,311,890)Gross profit
314,950

400,140 Gross Profit
and Gross Profit Margin Gross profit
decreased $85,190 or 21.3% from $400,140 for the three (3) months ended June 30,
2008 to $314,950 for the three (3) months ended in June 30, 2009. The gross
profit margin rate increased from 4.6% for the three (3) months ended June 30,
2008 to 5.8% for the three (3) months ended June 30, 2009. The increasing in
profit margin rate shows the positive affect of our new business strategy. The
Company has reviewed the market conditions, and decided to change its strategy
by dealing with new emerging airlines with new destinations. The Company has
recently developed a close relationship with Hong Kong Airlines, which is
primarily focused on Mainland China travel destinations. As the Hong Kong Airbus
travel agency, the Company has less competition and is able to maintain a more
stable profit margin. Operating
Expenses Overview Total operating
expenses for the three (3) months ended June 30, 2009 were $328,570 or 6.0% of
revenues, while the operating expenses for three (3) months ended June 30, 2008
were $428,018 or 4.8% of revenues. The decreases in dollar amount are mainly
attributable to a cost saving strategy, which significantly reduced other
salaries, commission, allowance and office rental operating expense, including
entertainment, printing and communication expenses. 3 months
ended June 30, 2009
% of
Revenue
3 months
ended June 30 2008
% of
RevenueSalaries,
commission, allowance
238,879
4.4%
285,953
3.2%Legal &
Professional fees
9,726
0.2%
12,533
0.1%Office
Rental
23,697
0.4%
33,663
0.4%Management
fee
-
-
25,000
0.3%Other
operating expenses
56,268
1.0%
70,869
0.8%328,570
6.0%
428,018
4.8% Salaries,
Commissions and Allowances Salary, commission
and allowance for the three (3) months ended June 30, 2009 were $238,879 or 4.4%
of revenues, while the Salary, commission and allowance for three (3) months
ended June 30, 2008 were $285,953 or 3.2% of revenues.The Group has
flattened organization structure by cutting senior management staff reducing
staff redundancy and decentralizing its operations. Meanwhile, support and
administration staffing has also been cut to keep back office costs down. Our
total staff was reduced from forty-eight (48) in May 2008 (highest) to
thirty-five (35) as at June 30, 2009.  30    Legal and
Professional Fees Legal &
professional fees for the three (3) months ended June 30, 2009 were $9,726 or
0.2% of revenues, while the legal & professional fees for the three (3)
months ended June 30, 2008 were $12,533 or 0.1% of revenues. The main reason for
the decrease was the due to lack of activities and cost saving in legal
expenses. Office Rental and
Building Management Fees Office rental and
building management fees for the three (3) months ended June 30, 2009 were
$23,697 or 0.4% of revenues, while the Office rental and building management
fees for three (3) months ended June 30, 2008 were $33,663 or 0.4% of revenues.
The decrease is mainly attributable to reduction in office space. Management
Fees There were no
management fees for the three (3) months ended June 30, 2009 compared to the
management fees for three (3) months ended June 30, 2008 which were $25,000or 0.3% of revenues. During the three (3) months ended June 30, 2008, the
management fees were paid for financial control advice, financial reporting
assistance and business strategic advice. Under the cost cut scheme management
decided to decentralize operations in its main wholesale business division and
corporate division. Business decisions were made on a lower level within the
business division instead of through a senior management team. Management
expects the decentralization will improve flexibility and speed up our response
time to market changes. As a result of these changes, management fee has been
eliminated totally during the three (3) months ended June 30 2009. Other General and
Administration Expenses Other expenses for
the three (3) months ended June 30, 2009 were $59,268or 1% of revenues,
while other expenses for three (3) months ended June 30, 2008 were $70,869or 0.8% of revenues. The decrease in other expenses is a result of our cost
cut strategy implemented in all business units. Other operating
income 3 months
ended

3 months
 endedJune 30,
2009

June 30,
2008$

$Commission income

504

3,925Management service income

9,780

11,89910,284

15,824 Commission
Income Commission income
for the three (3) months ended June 30, 2009 were $504 compared to $3,925 for
three (3) months ended June 30, 2008. During the three (3) months ended June 30,
2009, we increased the number of tickets booked through a lower percentage
commission booking system, which resulted in lower commissions. Commission income
is received by the Company from the Global Distribution Systems Supplier (GDS),
which is the booking system that links airlines, IATA and travel agencies. GDS
acts as an information medium between the Airlines and Travel agencies. Travel
consultants check seat availability and fare conditions, and make reservations
through GDS. GDS also links Airline and Travel Agencies through IATA's Bill and
Settling Plans (BSP). Once the ticket is issued from IATA through the GDS
system, travel agencies will settle the payment with airlines through IATA's
fortnightly BSP Payment. Each GDS system
has a different layout, and different user manual and command. Airlines can
choose to link with one or a few GDS. The Company currently has 4 GDS's
installed; they are "Amadeus", "Worldspan", "Travelsky"  31    and "Abacus". A
GDS will normally provide equipment and install their system onsite for a travel
agency. The travel agency must generally sign an agreement with each GDS
supplier which details the usage and reward scheme. Some GDS suppliers require
travel agencies to maintain a minimum usage volume, otherwise the travel agency
will have to pay fees for the equipment. GDS suppliers also encourage travel
agencies to book tickets through their system by rewarding travel agencies on
the number of tickets booked in a certain period of time. The Company
encourages its consultants to use the GDS that has the best compensation
structure, however, a balance between operational efficiency is also considered.
Some airlines are more user friendly with a specific GDS, also with each travel
consultancy's experience with different systems, the
Company leaves it to the consultant's discretion to choose the GDS it uses. Management
Service Income Management service
income represents compensation from a related party, Bao Shinn Express Company
Limited ("BSEL"). BSEL currently holds 38.55% of the company's outstanding
common stock. The Company has provided management services to BSEL on business
operations and general travel industry knowledge. Management service income from
BSEL was $9,780 in the three (3) months ended June 30, 2009, compared to $11,899
in the three (3) months ended June 30, 2008. The Company recognizes the
management service as "other operating income", as the Company's management team
is part of its operation team. Accordingly, the revenue generated by the
management team is considered part of the Company's operations. Other non-operating
income  3 months
ended June 302009

2008(unaudited)

(unaudited)$

$Gain on exchange
402

541Interest income
52

1,211454

1,752 Gain on
exchange The exchange gain
was $402 for the three (3) months ended June 30, 2009 compared to $541 in the
three (3) months ended June 30, 2008. The Company pays
overseas suppliers in their currency, and charges its customers in HK dollars,
with the exchange rate determined at the point of invoicing. Because of the
timing difference between payments and receipts, the Company incurs exchange
differences in transactions with overseas suppliers. The Company recognizes the
gain or loss as "non-operational income or expense", as this is not from
operations. Interest Income Interest income
was $52 for the three (3) months ended June 30, 2009, compared to $1,211 for the
three (3) months ended June 30, 2008. This interest was earned from bank savings
and fixed deposit accounts. The Company considers it non-operational income.  32    Interest
Expense Interest expense
was $579 for the three (3) months ended June 30, 2009, compared to $1,777 for
the three (3) months ended June 30, 2008. This was attributable to the fact that
the outstanding principal balance on loans from former shareholders was
significantly reduced. Net Profit Our net loss was
$8,952 for the three (3) months ended June 30, 2009, compared to net loss of
$21,189 for the three (3) months ended June 30, 2008. The improvement in our
performance despite the downturn in global economic conditions is mainly due to
our business strategy change initiated from last year. Results of
Operations for the Six (6) Months ended June 30, 2009 compared to Six (6) Months
ended June 30, 2008. Revenues Our revenue
decreased $5,673,048 or 32.2% from $17,591,464 for the six (6) months ended June
30, 2008 to $11,918,416 for the six (6) months ended June 30, 2009. The decrease
is mainly due to the downturn of global economy. We generate our revenues
primarily from retail and corporate business. For the six (6) months ended June
30, 2009, we derived 98.1%, 0.9% and 1.0% of our revenues from our retail &
corporate clients, commission from travel booking services and airline incentive
commissions respectively. For the six (6) months ended June 30, 2008, we derived
98.2%, 0.4% and 1.4% of our revenues from our retail & corporate clients,
commission from travel booking services and airline incentive commissions
respectively. The table below sets forth the
revenues from our principal lines of business for the periods indicated. 6
months ended June 30, 2009
6
months ended June 30, 2008$
$Retail and Corporate revenue
11,682,222
17,281,421Commission from travel booking services
113,027
63,533Incentive commissions
123,167
246,510Total revenue
11,918,416
17,591,464 Retail and Corporate
Revenue Revenues from
retail and corporate travel services are recognized when the travel service
provided by the Company is completely delivered. The Company presents revenue
from such transactions on a gross basis in the consolidated statements of
operations, as the Company acts as a principal, assumes inventory and credit
risks, and has the primary obligation to the airlines or hotels for cancelled
air tickets, packaged tour products or hotel reservations. The Company also has
latitude in determining the service prices. The Company changes the product by
combining air ticket and hotel accommodations with local car transportation and
other ancillary services to make it a holiday package or business travel
solution for customers. Referral fees for travel
booking services We receive
referral fees from travel product providers for booking travel services. The
itinerary and product price are generally fixed by the travel product providers
and we book the travel services on behalf of the customers. Referral fees from
travel booking services rendered are recognized as commissions after the
services are rendered and collections are reasonably assured. We present
revenues from such transactions on a net basis in the consolidated statements of
operations, as we act as an agent, we do not assume any inventory and credit
risks, we  33    have no
obligations for cancelled airline or hotel ticket reservations, and do not have
latitude in determining the service prices. Incentive commission from
travel suppliers We earn an
incentive commission from many travel suppliers. Contracts with certain travel
suppliers contain discretionary escalating commissions that are paid to us
subject to achieving specific performance targets. Such discretionary escalating
commissions are recognized on an accrual basis because such commissions are
usually paid in arrears and we can reasonably estimate such commissions. Our
statement of operations presents revenues from such transactions on a net basis,
because we act as an agent, we do not assume any inventory risk, and we have no
obligation for cancelled airline tickets. Cost of Sales Costs of sales are costs directly
attributable to generating our revenues, which consist primarily of payments for
travel costs to airlines and suppliers. Cost of revenues accounted for 94.6% of
our revenue in the six (6) months ended June 30, 2009 and 95.7% of our revenues
in the six (6) months ended June 30, 2008. The table below sets forth the
cost of sales for the periods indicated.  6 months ended June
30, 2009
6 months ended June
30, 2008Total revenue
11,918,416

17,591,464Cost of sales
(11,273,789)

(16,842,591)Gross profit
644,627

748,873 Gross Profit
and Gross Profit Margin Gross profit
decreased $104,246 or 13.9% from $748,873 for the six (6) months ended June 30,
2008 to $644,627 for the six (6) months ended in June 30, 2009. The gross profit
margin rate increased from 4.3% for the six (6) months ended June 30, 2008 to
5.4% for the six (6) months ended June 30, 2009. The increasing in profit margin
rate shows the positive affect of our new business strategy. The Company has
reviewed the market conditions, and decided to change its strategy by dealing
with new emerging airlines with new destinations. The Company has recently
developed a close relationship with Hong Kong Airlines, which is primarily
focused on Mainland China travel destinations. As the Hong Kong Airbus travel
agency, the Company has less competition and is able to maintain a more stable
profit margin. Operating
Expenses Overview Total operating
expenses for the six (6) months ended June 30, 2009 were $663,420 or 5.6% of
revenues, while the operating expenses for six (6) months ended June 30, 2008
were $934,560 or 5.3% of revenues. The decreases in dollar amount are mainly
attributable to a cost saving strategy, which significantly reduced other
salaries, commission, allowance and office rental operating expense, including
entertainment, printing and communication expenses.  34     6 months
ended June 30, 2009
% of
Revenue
6 months
ended June 30 2008
% of
RevenueSalaries,
commission, allowance
485,908
4.1%
604,134
3.4%Legal &
Professional fees
20,065
0.2%
28,832
0.2%Office
Rental
47,386
0.4%
63,654
0.4%Management
fee
-

49,882
0.3%Stock
compensation expenses
-

22,800
0.1%Other
operating expenses
110,061
0.9%
165,258
0.9%663,420
5.6%
934,560
5.3% Salaries,
Commissions and Allowances Salary, commission
and allowance for the six (6) months ended June 30, 2009 were $485,908 or 4.1%
of revenues, while the salary, commission and allowance for six (6) months ended
June 30, 2008 were $601,134 or 3.4% of revenues.The Group has flattened
organization structure by cutting senior management staff reducing staff
redundancy and decentralizing its operations. Meanwhile, support and
administration staffing has also been cut to keep back office costs down. Our
total staff was reduced from forty-eight (48) in May 2008 (highest) to
thirty-five (35) as at June 30, 2009. Legal and
Professional Fees Legal &
professional fees for the six (6) months ended June 30, 2009 were $20,065 or
0.2% of revenues, while the legal & professional fees for the six (6) months
ended June 30, 2008 were $28,832 or 0.2% of revenues. The main reason for the
decrease was the due to lack of activities and cost saving in legal
expenses. Office Rental and
Building Management Fees Office rental and
building management fees for the six (6) months ended June 30, 2009 were $47,386
or 0.4% of revenues, while the Office rental and building management fees for
the six (6) months ended June 30, 2008 were $63,654 or 0.4% of revenues. The
decrease is mainly attributable to reduction in office space. Management
Fees There was no
management fees for the six (6) months ended June 30, 2009 compared to the
management fees for the six (6) months ended June 30, 2008, which were
$49,882or 0.3% of revenues. During the six (6) months ended June 30,
2008, the management fees were paid for financial control advice, financial
reporting assistance and business strategic advice. Under the cost cut scheme
management decided to decentralize operations in its main wholesale business
division and corporate division. Business decisions were made on a lower level
within the business division instead of through a senior management team.
Management expects the decentralization will improve flexibility and speed up
our response time to market changes. As a result of these changes, all
management fees were eliminated for the six (6) months ended June 30 2009. Other General and
Administration Expenses Other expenses for
the six (6) months ended June 30, 2009 were $110,061or 0.9% of revenues,
while other expenses for six (6) months ended June 30, 2008 were $165,258 or
0.9% of revenues. The decrease in other expenses is a result of our cost cut
strategy implemented in all business units.  35    Stock Based
Compensation The Company has
stock option plans that allow it to grant options to its key employees. Over the
course of employment, the Company issues vested or non-vested stock options to
an employee with an exercise price of US$0.35 per share. The exercise period of
the options commenced on March 31, 2008 and will expire on March 31, 2011. The fair value of
these options at the date of grant was estimated to be $0.1533 and $0.1125 for
vested and non-vested options per unit respectively using the Black-Scholes
option pricing model with the following weighted average assumptions: expected
life of three years; risk-free interest rate of 3.07%; expected dividend yield
of 0% and an expected volatility of 47.77%. The stock-based compensation expense
recorded in the six (6) months ended June 30, 2009 and 2008 were nil and
$22,800, respectively, which was charged to the consolidated statements of
operations and credited to contributed surplus. Other operating
income 6 months
ended

6 months
 endedJune 30,
2009

June 30,
2008$

$Commission income

712

5,575Management service income

22,075

26,32922,787

31,904 Commission
Income Commission income
for the six (6) months ended June 30, 2009 were $712 compared to $5,575 for six
(6) months ended June 30, 2008. During the six (6) months ended June 30, 2009,
we increased the number of tickets booked through a lower percentage commission
booking system, which resulted in lower commissions. Management
Service Income Management service
income represents compensation from a related party, Bao Shinn Express Company
Limited ("BSEL"). BSEL currently holds 38.55% of the company's outstanding
common stock. The Company has provided management services to BSEL on business
operations and general travel industry knowledge. Management service income from
BSEL was $22,075 in the six (6) months ended June 30, 2009, compared to $26,329
in the six (6) months ended June 30, 2008. The Company recognizes the
management service as "other operating income", as the Company's management team
is part of its operation team. Accordingly, the revenue generated by the
management team is considered part of the Company's operations.  36    Other non-operating
income  6 months
ended June 302009

2008(unaudited)

(unaudited)$

$Gain on exchange
790

1,515Interest income
307

1,211Sundry Income
-

5,0471,097

7,773 Gain on
exchange The exchange gain
was $790 for the six (6) months ended June 30, 2009 compared to $1,515 in the
six (6) months ended June 30, 2008. The Company pays
overseas suppliers in their currency, and charges its customers in HK dollars,
with the exchange rate determined at the point of invoicing. Because of the
timing difference between payments and receipts, the Company incurs exchange
differences in transactions with overseas suppliers. The Company recognizes the
gain or loss as "non-operational income or expense", as this is not from
operations. Interest Income Interest income
was $307 for the six (6) months ended June 30, 2009, compared to $1,211 for the
six (6) months ended June 30, 2008. This interest was earned from bank savings
and fixed deposit accounts. The Company considers it non-operational income. Sundry Income Sundry income was
$0 for the six (6) months ended June 30, 2009, compared to $5,047 for the six
(6) months ended June 30, 2008. Sundry income is
mainly from IATA BSP Fund reimbursement. IATA BSP Fund is a fund created when
IATA collects $0.38 (HK $3.00) per air ticket from travel agencies at the time
each travel agency issues an air ticket with IATA. IATA BSP Fund was established
to protect airlines when travel agencies go bankrupt and are unable to meet the
payment obligation to the airlines. The fund will be used to recover the debt to
airlines from the bankrupted travel agency. IATA BSP Fund has a ceiling of
$1.28M (HK $10M), when the ceiling is reached, IATA will reimburse the
additional collections to all participating travel agencies proportionally. The
Company's sundry income is the reimbursement from the IATA BSP Fund, and the
amount is calculated monthly by IATA. The Company considers the income as
non-operational income, as it is not part of its operation activities. Interest
Expense Interest expense
was $637 for the six (6) months ended June 30, 2009, compared to $2,146 for the
six (6) months ended June 30, 2008. This was attributable to the fact that the
outstanding principal balance on loans from former shareholders was
significantly reduced.  37    Net Profit Our net loss was
$7,536 for the six (6) months ended June 30, 2009, compared to net loss of
$168,615 for the six (6) months ended June 30, 2008. The improvement in our
performance despite the downturn in global economic conditions is mainly due to
our business strategy change initiated from last year. Liquidity and
Capital Resources We have not
generated positive cash flows from operating activities. Our primary sources of
capital have been from sales and issuances of equity securities. Our primary use
of capital has been for the expansion and development of our business, and the
associated need for increased working capital. Our working capital requirements
are expected to increase in line with the growth of our business. We have no
lines of credit or other bank financing arrangements. We expect that working
capital requirements will be funded through a combination of our existing funds,
cash flow from operations, private loans, issuance of equity and debt
securities. Additional issuances of equity and debt securities will result in
dilution to our current common stockholders. The Company's former shareholders
agreed to provide continuing financial support to the Company in the form of a
temporary loan. The agreements for continuing financial support are verbal. The
temporary loans outstanding due to our shareholders as of June 30, 2009 was
$58,057. These temporary loans were unsecured with no fixed term of repayment
during the six (6) months ended June 30, 2009. Interest was paid at the rate of
5.5% per annum during the six (6) months ended June 30, 2009 compare to 10%
during the year ended December 31, 2008. Operating
Activities Net cash used in
operating activities was $87,169 for the six (6) months ended June 30, 2009,
compared to net cash used in operating activities of $144,260 for the six (6)
months ended June 30, 2008. The decreases in cash usage during operating
activities are primarily due to better profit margin and better working capital
management. For the six (6) months ended June 30, 2009, working capital
increased $4,454 from $686,182 on December 31, 2008 to $690,636 on June 30,
2009. Investing
Activities Net cash used in
investing activities was $0 for the six (6) months ended June 30, 2009, compare
to $13,078 for the six (6) months ended June 30, 2008. The company has no
investment activity for the six (6) month end June 30, 2009. The cash used for
the six (6) month ended June 30, 2008 was mainly for the purchase of new
computer equipment and computer software for our new subsidiaries. Financing
Activities Net cash provided
by financing activities was $65,910 for the six (6) months ended June 30, 2009,
compare to $217,887 for the six (6) months ended June 30, 2008. The decrease is
mainly due to the decrease in the amount of shareholder short term loan. In
accordance with our SEC registration statement effective on April 3, 2007, the
Company issued 2,400,000 common shares at a price of $0.3 per share on September
28, 2007, which raised gross proceeds of $720,000 and net proceeds of $624,000.
Part of the money raised was used to repay loans from former shareholders. The
Company redeemed 2,500,000 common shares for $0 on December 30, 2007 and such
shares were thereafter classified as authorized, but unissued. For the six (6)
months ended June 30, 2009 there was no financing activities other than
shareholder short term loan. Financing Our
Capital Expenditures The Company was
planning to implement its business plan for expanding into the China market. Due
to the global economic down turn, the plan was on hold until we see an
improvement in the business environment. The initial investment is expected to
be approximately US$1,200,000. These funds will be used for setting up a China
flagship company in Shanghai. Expenditures are expected to include obtaining
travel licenses, office renovation, purchase of  38    communication
equipment, purchase of computers and office equipment. An additional investment
of US$1,500,000 will be required as the working capital for the Shanghai
office. The new flagship
company will be registered in Shanghai and will serve as our China headquarters.
We subsequently plan to open branch offices in Beijing, Guangzhou, Chongqing and
Kunming. As a marketing
tool, an "On-line travel" business team will be set up in Shanghai. The team
will include the IT specialist for development of a travel booking system to
China. Off-Balance
Sheet Arrangements For the six (6)
months ended June 30, 2009, and the six (6) months ended June 30, 2008, the
Company did not engage in any off-balance sheet activities or have any
relationships or arrangements with unconsolidated entities established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow or limited purposes. Further, we have not guaranteed any obligations of
unconsolidated entities nor do we have any commitment or intent to provide
additional funding to any such entities. Related Party Transactions Loans from
shareholders represent temporary advances from certain present and former
shareholders of the company. The loans are unsecured and have no fixed terms of
repayment. Interest was charged at the rate of 5.5% per annum during the six (6)
months ended June 30, 2009, compared to 10% for the year ended December 31,
2008. Amounts due from/(to) related
parties for working capital are as follows:  At Mar 31

At Dec
31(unaudited)

(audited)2009

2008$

$Amount
due from a shareholder


-

10,691Amounts due to shareholders


58,057

2,838  In the ordinary
course of business, BSIE, our wholly-owned subsidiary, purchases and sells air
tickets and tour packages from/to Bao Shinn Express Company Limited ("BSEL").
BSEL holds 38.55% of Baoshinn Corporation's outstanding common stock. The
consolidated income statement for the periods presented includes the following
related party transactions:  39     Related party
Nature of relationship and
control
Description of transactions
6 months ended June
302009
2008(unaudited)
(unaudited)$
$Bao Shinn Express
Company Limited
Shareholder
38.55%
Sales of air tickets and tour packages
(76,224)
(157,077)Management service income
(22,621)
(19,543)Purchase of air tickets and tour packages
64,472
48,192Rent paid
641
16,140  Item
3. Quantitative and
Qualitative Disclosure About Market Risks. Not
Applicable. Item
4T. Controls and
Procedures. (a) Evaluation of disclosure
controls and procedures. As required by paragraph (b) of Rules 13a-15 or 15d-15 under the
Securities Exchange Act of 1934, the Company's principal executive officer and
principal financial officer have evaluated the Company's disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as
of the end of the period covered by this Quarterly Report on Form 10-Q. Based on
this evaluation these officers have concluded that as of the end of the period
covered by this Quarterly Report on Form 10-Q, our disclosure controls and
procedures were effective and were adequate to insure that the information
required to be disclosed by the Company in reports it files or submits under the
Exchange Act were recorded, processed, summarized and reported within the time
period specified in the Commission's rules and forms.  It is also important
to point out that all internal control systems, no matter how well designed,
have inherent limitations and may not prevent or detect misstatements.
 Therefore even those systems determined to be effective can only provide
reasonable assurance with respect to financial reporting reliability and
financial statements preparation and presentation. (b) Changes in internal
controls. There have been no
significant changes in our internal controls or other factors that could
significantly affect such controls and procedures subsequent to the date we
completed our evaluation. Therefore, no corrective actions were taken. PART II - OTHER
INFORMATION Item
1. Legal
Proceedings. To the best
knowledge of the Companys officers and directors, the Company is currently not
a party to any pending legal proceeding.  40    Item
1A. Risk Factors. There have been no
material changes to the risk factors previously disclosed under item 1 of the
Companys Registration Statement on Form SB-2 As filed with the United States
Securities and Exchange Commission on June 14, 2006. 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 Security Holders. No matter was
submitted during the quarter ending June 30, 2009, to a vote of the Company's
shareholders, through the solicitation of proxies or otherwise. Item
5. Other
Information. None.   41





Item
6. Exhibits and Reports
of Form 8-K.  (a) Exhibits *3.1 Certificate of Incorporation *3.2 Amended and Restated Certificate of Incorporation *3.3 By-laws *4.0 Stock Certificate 31.1 Certification pursuant to Section 302 of Sarbanes Oxley Act of
2002 31.1 Certification pursuant
to Section 302 of Sarbanes Oxley Act of 2002 32.1 Certification pursuant
to Section 906 of Sarbanes Oxley Act of 2002 32.2 Certification pursuant
to Section 906 of Sarbanes Oxley Act of 2002  * Filed as an
exhibit to the Company's registration statement on Form SB-2, as filed with the
Securities and Exchange Commission on June 14, 2006, and incorporated herein by
this reference. (b) Reports of
Form 8-K None.  SIGNATURES In accordance with
Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, there unto duly authorized. Dated:
 August 13, 2009 BAOSHINN
CORPORATON  By:  /s/ Sean
Webster Name:  Sean Webster Title: President