UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For
the Fiscal Year Ended June 30, 2010





Commission
File Number 001-34113





CHINA
INSONLINE CORP.


(Exact
name of registrant as specified in its charter)





Delaware
              
              74-2559866(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)





Flat/Room
42, 4F, New Henry House, 10 Ice House Street, Central, Hong Kong





(Address,
including zip code, of principal executive offices)





(011)
852-25232986


(Registrants’
telephone number, including area code)





Securities
Registered Under Section 12(b) of the Exchange Act:




Title
of each class Common Stock, par value $0.001 per share.  Name of
exchange on which registered:  The NASDAQ Capital Market.




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  ̈    No
x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act.    Yes  ̈    No
x




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




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
     Yes  ̈     No
 ̈




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ̈




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




Large
accelerated filer  ̈    Accelerated
filer  ̈     
Non-accelerated filer   ̈Smaller Reporting
Company x




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




The
aggregate market value of voting stock (which consists solely of shares of
common stock) held by non-affiliates of the registrant (excludes outstanding
shares beneficially owned by directors and officers and treasury shares) as of
December 31, 2009 and June 30, 2010 was approximately $13,097,728 and
$7,382,080, respectively, based upon the closing price of the common stock as
quoted by The NASDAQ Capital Market on such dates.




The
number of outstanding shares of the registrant’s Common Stock on September 30,
2010 was 46,000,000.





CHINA
INSONLINE CORP.


ANNUAL
REPORT ON FORM 10-K


FOR
THE YEAR ENDED JUNE 30, 2010





Index




TABLE OF
CONTENTS





PART
      I
                    
                    
                    1ITEM
      1.
                    
                    Business
                    1ITEM
      1A.
                    
                    Risk
      Factors
                    5ITEM
      1B.
                    
                    Unresolved
      Staff Comments
                    5ITEM
      2.
                    
                    Properties
                    5ITEM
      3.
                    
                    Legal
      Proceedings
                    6ITEM
      4.
                    
                    (Removed
      and Reserved)
                    6PART
      II
                    
                    
                    7ITEM
      5.
                    
                    Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                    7ITEM
      6.
                    
                    Selected
      Financial Data
                    8ITEM
      7.
                    
                    Management‘s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    8ITEM
      7A.
                    
                    Quantitative
      and Qualitative Disclosures about Market Risk
                    10ITEM
      8.
                    
                    Financial
      Statements and Supplementary Data
                    10ITEM
      9.
                    
                    Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosures
                    10ITEM 9A.
                    
                    Controls
      and Procedures
                    11ITEM
      9B.
                    
                    Other
      Information
                    12PART
      III
                    
                    
                    13ITEM
      10.
                    
                    Directors,
      Executive Officers, and Corporate Governance
                    13ITEM
      11.
                    
                    Executive
      Compensation
                    15ITEM
      12.
                    
                    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                    17ITEM
      13.
                    
                    Certain
      Relationships and Related Transactions, and Director
      Independence
                    17ITEM
      14.
                    
                    Principal
      Accountant Fees and Services
                    18PART
      IV
                    
                    
                    18ITEM
      15.
                    
                    Exhibits
      and Financial Statement Schedules
                    18







PART
I




ITEM
1. Business




Forward
Looking Statements




Statements
contained in this Annual Report on Form 10-K of China INSOnline Corp. (the
“Company” or
“CHIO”) that
are not purely historical are forward-looking statements and are being provided
in reliance upon the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. Words such as “anticipates”, “expects”,
“intends”, “plans”, "believes", "seeks", "estimates" or similar expressions
identify forward-looking statements. These forward-looking statements include
but are not limited to statements regarding the Company’s expectations of our
future liquidity needs, our expectations regarding our future operating results
including our planned increase in our revenue levels and the actions we expect
to take in order to maintain our existing customers and expand our operations
and customer base. All forward-looking statements are made as of the date of
filing this Report and are based on current management expectations and
information available to us as of such date. We assume no obligation to update
any forward-looking statement. It is important to note that actual results could
differ materially from historical results or those contemplated in the
forward-looking statements. Forward-looking statements involve a number of risks
and uncertainties, and include risks associated with our target markets and
risks pertaining to competition, other trend information and our ability to
successfully enhance our operations. All references to “China INSOnline Corp.”,
“us”, “we,” “our” or the “Company” in this Annual Report mean China INSOnline
Corp., a Delaware corporation, and all entities owned or controlled by China
INSOnline Corp., except where it is made clear that the term means only the
parent company. All tabular amounts are stated in US dollars.




History
of the Company




China
INSOnline Corp. was initially incorporated on December 23, 1988 as Lifequest
Medical, Inc. (“DEXT”) as a Delaware
corporation and commenced operations on January 1, 1989 as a distributor of
instruments, equipment and surgical supplies used in hand-assisted laparoscopic
surgery (“HALS”).  In
August 1992, we completed our initial public offering of our common stock, par
value $0.001 per share (“Common
Stock”).  In March 1999, we acquired Dexterity Incorporated, a
Delaware corporation (“Dexterity”), which
was located in the Philadelphia, Pennsylvania and had the exclusive rights to
the Dexterity Pneumo Sleeve and Dexterity Protractor proprietary instruments,
equipment and supplies used in HALS. In connection with this acquisition, we
changed our name from LifeQuest Medical, Inc. to Dexterity Surgical,
Inc.




On April
19, 2004, DEXT filed a voluntary petition for relief for reorganization (the
“Reorganization”)
under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in
the United States Bankruptcy Court for the Southern District of Texas Houston
Division. We underwent numerous operating changes and operated our business as a
“debtor-in-possession” under the jurisdiction of the Bankruptcy Court.  On
March 2, 2005, the Bankruptcy Court entered an Order confirming its First
Amended Plan of Liquidation.  In connection with that Plan, DEXT’s assets
were scheduled to be auctioned, which auction culminated in the sale of
substantially all of DEXT’s assets as approved by the Bankruptcy Court on March
17, 2006.  The First Amended Plan of Liquidation was subsequently
amended on March 2, 2006, by an order titled “Order Approving Modification of
the First Amended Plan” (the “Order”). The
amendments provided for in the Order included the Bankruptcy Court’s
authorization of a $50,000 Debtor-In-Possession Loan (the “DIP Loan”) for
payment of administrative expenses of the bankruptcy, which converted into
6,000,000 shares of Common Stock (the “Section 1145 Shares”)
and 3,000,000 warrants (the “Section 1145
Warrants”) under Section 1145 of the U.S. Bankruptcy Code at the option
of the holder(s) of the DIP Loan. Immediately prior to the Exchange (as defined
and discussed in detail herein below), the Section 1145 Warrants were cancelled.
For an additional $125,000, the Bankruptcy Court authorized the sale of
25,000,000 restricted shares of Common Stock to an investor for the payment of
both administrative claims and creditor claims. The Bankruptcy Court also
provided as follows:




·
            All
      of the old shares of the Company’s preferred stock, stock options and
      warrants shall be (and have been)
cancelled;




·
            The
      Company shall issue (and did issue) 29,800 new shares of Common Stock
      under Section 1145 of the U.S. Bankruptcy
Code;




·
            The
      Company shall issue up to 25,000 shares of Common Stock under Section 1145
      of the U.S. Bankruptcy Code to those persons deemed appropriate by the
      Directors (it was not necessary to issue these shares and therefore they
      have been cancelled); and




1




·
            Appoint
      new Board members, amend the Certificate of Incorporation to increase the
      authorized shares of Common Stock to 100,000,000, amend the Bylaws, change
      the fiscal year, execute a share exchange agreement and issue shares in
      which effective control or majority ownership is given, all without
      stockholder approval.




Pursuant
to the Bankruptcy Court Order, by filing a Certificate of Amendment to the
Certificate of Incorporation, the Company increased its authorized Common Stock,
and effected a 1-for-500 reverse split of all issued and outstanding Common
Stock. Immediately following the Exchange, there were 35,706,250 shares of
Common Stock issued and outstanding and 4,293,750 Section 1145 Shares issuable
pursuant to the Reorganization. As of September 30, 2010, all of the 4,293,750
Section 1145 Shares have been issued and 46,000,000 shares are now issued and
outstanding.




On
December 18, 2007 (the “Closing Date”), the
Company entered into a Share Exchange Agreement (the “Exchange Agreement”)
with Rise and Grow Limited, a Hong Kong limited company (“Rise & Grow”) and
Newise Century Inc., a British Virgin Islands company and sole stockholder of
Rise & Grow (the “Stockholder”). As a
result of the share exchange, DEXT acquired all of the issued and outstanding
securities of Rise & Grow, an inactive holding company, from the Stockholder
in exchange for Twenty-Six Million Four Hundred Thousand (26,400,000)
newly-issued shares of Common Stock, representing 73.94% of DEXT’s issued and
outstanding Common Stock (the “Exchange”) as of the
Closing Date and sixty-six percent (66%) of the total number of issued and
outstanding shares of Common Stock after the issuance of the remaining 4,293,750
“Section 1145” shares. As a result of the Exchange, Rise & Grow became our
wholly-owned and chief operating subsidiary.




On
October 28, 2008, the Company, through its subsidiary, acquired 100% ownership
of Guang Hua Insurance Agency Company Limited (“GHIA”), a limited
liability company organized under the laws of the PRC, in exchange for
US$5,846,244 (RMB40,000,000).  GHIA is an insurance agent company
which operates in the PRC.




June
2010 Sale of Subsidiaries




On June
30, 2010, the Company entered into a Share Purchase Agreement (the “Share Purchase
Agreement”) with Hong Kong Jing Nuo International Limited, a Hong Kong
limited company (the “Buyer”), a third
party not affiliated with the Company or any of the Company’s
subsidiaries.  Pursuant to the terms of the Share Purchase Agreement,
the Company sold to the Buyer, and the Buyer purchased from the Company (the
“Transaction”)
all of the issued and outstanding ownership shares of Rise & Grow, for
a purchase price equal to US$100,000. As a result of the Transaction, the
Company sold all of its interests in (1) Rise & Grow, (2) New Fortune
Associate (Beijing) Information Technology Co., Ltd. (“NFA”), a limited
liability company organized under the laws of the People’s Republic of China
(the “PRC”) and
a wholly owned subsidiary of R&G, and (3) Beijing ZYTX Technology Co., Ltd
(“ZYTX”), a
Variable Interest Entity (“VIE”) and a limited
liability company organized under the laws of PRC.  ZYTX was wholly
controlled by R&G through NFA, through a series of contractual
agreements.





In
anticipation of the Transaction, the Company engaged in an earlier transaction
on June 23, 2010 whereby all the issued and outstanding ownership interest of
Guang Hua Insurance Agency Company Limited (“GHIA”), a limited
liability company organized under the laws of the PRC, which was then a
wholly-owned subsidiary of Rise & Grow through  ZYTX acting as its
legal owner in the PRC, were transferred and sold, for consideration received,
to Ever Trend Investment Limited (“ETI”), a Hong Kong
limited company and a wholly owned subsidiary of the Company, and Beijing San
Teng Da Fei Technology Development Co., Ltd. (“STDF”), a company
organized under the laws of the PRC and a VIE controlled by ETI through its
wholly-owned PRC subsidiary Run Ze Yong Cheng (Beijing) Technology Co., Ltd., a
limited liability company organized under the laws of the PRC, pursuant to that
certain Share Purchase Agreement dated as of June 23, 2010 (the “Purchase Agreement”)
by and among Rise & Grow and ZYTX, together as the GHIA seller, and ETI and
STDF, together as the GHIA purchaser. The terms of the Purchase Agreement
allowed the Company to retain its ownership interest in GHIA notwithstanding the
Transaction consummated on June 30, 2010. As a result of the transaction
consummated on June 23, 2010, GHIA became a wholly-owned subsidiary of ETI
through STDF acting as its legal owner in the PRC.




2




A
graphical depiction of the Transaction and the transactions under the Purchase
Agreement is as follows:










Also in
connection with the Transaction, the Company’s subsidiary ZYTX entered into a
Tri-party Creditor’s Rights Transfer Agreement (“Creditor’s
Agreement”) with the Company’s subsidiary STDF and a third party, Beijing
Yingtong Jixun Sci-Tech Development Co., Ltd. (“YTJX”), a limited
liability company organized under the laws of the PRC.  At the time,
the Company had prepaid approximately US$20.5 million, to YTJX for wireless
Internet terminal products.  Pursuant to the Creditor’s Agreement,
ZYTX transferred and sold, for consideration received, a portion of its prepaid
account with YTJX to STDF, with YTJX’s express approval of the transfer.
Concurrently, ZYTX entered into a Software Copyright Transfer Agreement (“Software Agreement”)
with STDF, pursuant to which ZYTX transferred and sold, for consideration
received, certain software, copyright and intellectual property rights to STDF.
As a result of the Creditor’s Agreement and the Software Agreement, the Company
retained the certain assets of ZYTX, whose equity was subsequently sold to a
third party in the Transaction.




3




The
structure of the Company after the June 2010 transactions is illustrated as
follows:











Winding
Down of Operations





During
the quarter ended June 30, 2010, the Company began winding down its
operations.  During the fourth quarter ended June 30, 2010, the
Company did not have any operating income.  The weak economic market,
which resulted in a significant decline in revenues of all areas of the
Company’s business, led to the Company’s decision to wind down its
operations.  Thus, the Company currently has no business operations
and is considered a shell company.  Management is currently looking to
either sell shares of the Company to a third party through a reverse acquisition
or complete a business combination or other similar transaction.





The
Company currently has some nominal office equipment remaining on the
books.  The Company is currently looking for a buyer to purchase these
assets.





Going
Concern





We
received a report from our independent registered public accountants, relating
to our June 30, 2010 audited consolidated financial statements, containing an
explanatory paragraph regarding our ability to continue as a going
concern.





As a
company with no operating business, management believes that the Company will
not be able to generate operating cash flows sufficient to fund its operations
in the next twelve months . Based upon our current limited cash resources and
without the infusion of additional capital, management does not believe the
Company can operate as a going concern beyond one year.


4




Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Accordingly, our
consolidated financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should we be unable to continue as a going concern.





Since
winding down our operations in the quarter ended June 30, 2010, we have had no
continuing business operations. Accordingly, the results of our operations for
years ended June 30, 2010 and 2009 are not comparable.





Business
Operations Prior to Winding Down




Prior to
winding down our operations during the quarter ended June 30, 2010, we were an
Internet services and media company focused on the PRC insurance industry. The
Company primarily offered a network portal through its industry website, www.soobao.cn
(hereinafter also referred to as “Soobao”), to
insurance companies, agents and consumers for advertising, online inquiry, news
circulation, online transactions, statistic analysis and software
development.  This primarily entailed the offer of online insurance
products and services in China including (a) a network portal for the Chinese
insurance industry (www.soobao.cn),
offering industry professionals a forum for the advertising and promotion of
products and services, (b) website construction for marketing teams and others
in the insurance industry, (c) software development, (d) insurance agency
services whereby the Company generated sales commissions on motor vehicle
insurance, property insurance and life insurance and (e) accompanying client
support services.




Employees




As of
September 30, 2010, the Company had 7 full-time employees. None of
our employees are covered by a collective bargaining
agreement.




Intellectual
Property




We
currently do not own any trademarks or patents. In April 2007, the Company filed
for its website (www.soobao.cn) with
the Beijing Industrial Commercial Bureau.




Government
Regulation




Because
we currently have no business operations, produce no products nor provide any
services, we are not presently subject to any governmental regulation in this
regard.  However, in the event that we complete a business combination
transaction, we will become subject to all governmental approval requirements to
which the reorganized, merged or acquired entity is subject or may become
subject.





ITEM
1A.           Risk
Factors




Not
applicable




ITEM
1B.           Unresolved
Staff Comments




Not
applicable.




ITEM
2.              Properties




GHIA had
one (1) office during the year ended June 30, 2010 at Room 508 Shangdu
International Center, No.8 Dongdaqiao Road, Chaoyang District, Beijing,
China.  This was GHIA’s operating office, which consisted of
approximately one hundred and sixty seven (167)square
meters.  GHIA paid RMB 18,000 (US$2,698) per month to lease this
office during the fiscal year ended June 30, 2010.  At September 30,
2010, GHIA continues to use this same location as its office.


5




ITEM
3.              Legal
Proceedings




In the
normal course of business, we are named as defendant in lawsuits in which claims
are asserted against us. In our opinion, the liabilities, if any, which may
ultimately result from such lawsuits, are not expected to have a material
adverse effect on our financial position, results of operations or cash flows.
As of the date of filing this Report, there is no outstanding
litigation.




On March
15, 2010, the Wall Street Transcript Corp. (the “Plaintiff”) filed complaint
against China INSOnline Corp. regarding an invoice of $1,450 that was
outstanding since July 23, 2008, for certain webcasting services provided to the
Company at Collins Stewart Fourth Annual Growth Conference on July 8-10, 2008.
The Company settled with plaintiff on April 26, 2010.




ITEM
4. (Removed and Reserved)




None.




6


PART
II




ITEM
      5.
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities




Our
Common Stock is quoted on the NASDAQ Capital Market under the symbol “CHIO”. The
following table sets forth on a per share basis for the periods shown, the high
and low sales prices of our Common Stock. The quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.






Fiscal Year Ended June 30, 2009
                
                
                Fiscal Year Ended June 30, 2010Low
                
                
                High
                
                
                Low
                
                
                HighFirst
      Quarterended
      September 30
                
                $
                3.00
                
                
                $
                4.74
                
                
                $
                0.87
                
                
                $
                1.92Second
      Quarter ended December 31
                
                $
                1.09
                
                
                $
                3.69
                
                
                $
                0.62
                
                
                $
                1.64Third
      Quarterended
      March 31
                
                $
                0.17
                
                
                $
                1.69
                
                
                $
                0.40
                
                
                $
                0.95Fourth
      Quarter ended June 30
                
                $
                0.42
                
                
                $
                2.17
                
                
                $
                0.33
                
                
                $
                0.42


On
September 30, 2010, the closing price for our common stock, as reported by the
NASDAQ Capital Market, was $0.23 per share




Holders
of Common Equity




As of
September 30, 2010, we have an aggregate of 46,000,000 shares of our Common
Stock issued and outstanding and 251 stockholders of
record.




Dividends




We have
never declared or paid any cash dividends or distributions on our Common Stock.
We currently intend to retain our future earnings to support operations and to
finance future growth and expansion and, therefore, do not anticipate paying any
cash dividends on our Common Stock in the foreseeable future.




Securities
Authorized for Issuance under Equity Compensation Plans




The
following table discloses information as of June 30, 2010 with respect to
compensation plans (including individual compensation arrangements) under
which our equity securities are authorized for issuance.




(a)
                  
                  
                  (b)
                  
                  
                  (c)Plan Category
                  
                  Number of securities to
                    be issued upon exercise of
                    outstanding options,
                    warrants and rights
                  
                  
                  Weighted-average
                    exercise price of
                    outstanding options,
                    warrants and rights
                  
                  
                  Number of securities
                    remaining available for
                    future issuance under
                    equity compensation
                    plans (excluding
                    securities reflected in
                    column (a)Equity
      Compensation plans approved by security holders
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,000,000
                  (1)Equity
      Compensation plans not approved by security holders
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,000,000




(1) In
June 2010, the Company’s shareholders approved and adopted the 2010 Stock Option
Plan, which authorized the potential issuance of up to 6,000,000 shares of the
Company’s common stock to employees, directors and
consultants.  Options granted under the 2010 Stock Option Plan
generally have a term of ten years from the date of grant unless otherwise
specified in the option agreement. The 2010 Stock Option Plan expires in June
2020.




7




Options
and Warrants




As of
June 30 and September 30, 2010, we had no outstanding options or
warrants.




Transfer
Agent and Registrar




Our
transfer agent is Corporate Stock Transfer, located at 3200 Cherry Creek Drive
South, Suite 430, Denver, Colorado 80209. Their telephone number is (303)
282-4800.




Recent
Sales of Unregistered Securities




On
December 18, 2007 (the “Closing Date”), the
Company entered into a Share Exchange Agreement with Rise & Grow and
Newise Century Inc., a British Virgin Islands company and sole stockholder of
Rise & Grow. As a result of the share exchange, the Company acquired all of
the issued and outstanding securities of Rise & Grow from Newise in exchange
for 26,400,000 newly-issued shares of the Company’s common stock, representing
73.9% of the Company’s issued and outstanding Common Stock as of the Closing
Date.  We relied upon the exemption from registration under Rule 506
of Regulation D and Section 4(2) of the Securities Act of 1933, as amended
(“Section 4(2)”), in connection
with this issuance.




On July
8, 2010, the Company issued to two engineering consultants, options to purchase
an aggregate of up to 3,000,000 shares of the Company’s common stock as
compensation for IT consulting and advisory
services.  The  options had an exercise price of $0.001 per
share and were scheduled to expire on July 8, 2020.  On July 19, 2010,
the consultants exercised the options for 3,000,000 shares of the Company’s
common stock.  We relied upon the exemption from registration under
Section 4(2) in connection with these issuances.




On July
15, 2010, the Company issued to two financial consultants, options to purchase
an aggregate of up to 3,000,000 shares of the Company’s common stock as
compensation to provide public relationship services in (1) referring the
investment banks, funds, investors and potential merger and acquisition targets
to the Company and assisting the Company in negotiating the contractual terms,
(2) assisting the Company to make a marketing and investor relations plan to
improve the liquidity of stock, (3) arranging road shows for the Company and
meeting with potential investors and potential merger and acquisition targets,
and (4) providing other financial advisory and services as may be agreed upon by
the Consultant and the Company.  The  options had an
exercise price of $0.001 per share and were scheduled to expire on July 15,
2020.  On July 21, 2010, the financial consultants exercised the
options for 3,000,000 shares of the Company’s common stock.  We relied
upon the exemption from registration under Section 4(2) in connection with these
issuances.




ITEM
6. Selected Financial Data




Not
applicable.




ITEM
7. Management‘s Discussion and Analysis of Financial Condition and Results
of Operations




Forward
Looking Statements




The
following is management’s discussion and analysis of certain significant factors
which have affected our financial position and operating results during the
periods included in the accompanying consolidated financial statements, as well
as information relating to the plans of our current management. This report
includes forward-looking statements. Generally, the words “ believes ” “
anticipates ”, “ may ”, “ will ”, “ should ”, “ expect ”, “ intend ”, “ estimate
”, “ continue ” and similar expressions or the negative thereof or comparable
terminology are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, including the matters set forth
in this report or other reports or documents we file with the SEC from time to
time, which could cause actual results or outcomes to differ materially from
those projected. Undue reliance should not be place on these forward-looking
statements which speak only as of the date of filing this Report. We undertake
no obligation to update these forward-looking statements.




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


8




Overview





China
INSOnline Corp. was incorporated on December 23, 1988 as a Delaware corporation
and commenced operations on January 1, 1989.





During
the quarter ended June 30, 2010, the Company began winding down its
operations.




Sale
of Subsidiaries




On June
30, 2010, the Company entered into a Share Purchase Agreement (the “Share Purchase
Agreement”) with Hong Kong Jing Nuo International Limited, a Hong Kong
limited company (the “Buyer”), a third
party not affiliated with the Company or any of the Company’s
subsidiaries.  Pursuant to the terms of the Share Purchase Agreement,
the Company sold to the Buyer, and the Buyer purchased from the Company (the
“Transaction”)
all of the issued and outstanding ownership shares of Rise & Grow, for
a purchase price equal to US$100,000. As a result of the Transaction, the
Company sold all of its interests in (1) Rise & Grow, (2) New Fortune
Associate (Beijing) Information Technology Co., Ltd. (“NFA”), a limited
liability company organized under the laws of the People’s Republic of China
(the “PRC”) and
a wholly owned subsidiary of R&G, and (3) Beijing ZYTX Technology Co., Ltd
(“ZYTX”), a
Variable Interest Entity (“VIE”) and a limited
liability company organized under the laws of PRC.  ZYTX was wholly
controlled by R&G through NFA, through a series of contractual
agreements.


In
anticipation of the Transaction, the Company engaged in an earlier transaction
on June 23, 2010 whereby all the issued and outstanding ownership interest of
Guang Hua Insurance Agency Company Limited (“GHIA”), a limited
liability company organized under the laws of the PRC, which was then a
wholly-owned subsidiary of Rise & Grow through  ZYTX acting as its
legal owner in the PRC, were transferred and sold, for consideration received,
to Ever Trend Investment Limited (“ETI”), a Hong Kong
limited company and a wholly owned subsidiary of the Company, and Beijing San
Teng Da Fei Technology Development Co., Ltd. (“STDF”), a company
organized under the laws of the PRC and a VIE controlled by ETI through its
wholly-owned PRC subsidiary Run Ze Yong Cheng (Beijing) Technology Co., Ltd., a
limited liability company organized under the laws of the PRC, pursuant to that
certain Share Purchase Agreement dated as of June 23, 2010 (the “Purchase Agreement”)
by and among Rise & Grow and ZYTX, together as the GHIA seller, and ETI and
STDF, together as the GHIA purchaser. The terms of the Purchase Agreement
allowed the Company to retain its ownership interest in GHIA notwithstanding the
Transaction consummated on June 30, 2010. As a result of the transaction
consummated on June 23, 2010, GHIA became a wholly-owned subsidiary of ETI
through STDF acting as its legal owner in the PRC.





Also in
connection with the Transaction, the Company’s subsidiary ZYTX entered into a
Tri-party Creditor’s Rights Transfer Agreement (“Creditor’s
Agreement”) with the Company’s subsidiary STDF and a third party, Beijing
Yingtong Jixun Sci-Tech Development Co., Ltd. (“YTJX”), a limited
liability company organized under the laws of the PRC.  At the time,
the Company had prepaid approximately US$20.5 million, to YTJX for wireless
Internet terminal products.  Pursuant to the Creditor’s Agreement,
ZYTX transferred and sold, for consideration received, a portion of its prepaid
account with YTJX to STDF, with YTJX’s express approval of the transfer.
Concurrently, ZYTX entered into a Software Copyright Transfer Agreement (“Software Agreement”)
with STDF, pursuant to which ZYTX transferred and sold, for consideration
received, certain software, copyright and intellectual property rights to STDF.
As a result of the Creditor’s Agreement and the Software Agreement, the Company
retained the certain assets of ZYTX, whose equity was subsequently sold to a
third party in the Transaction.





Winding
Down of Operations





During
the quarter ended June 30, 2010, the Company began winding down its
operations.  During the fourth quarter ended June 30, 2010, the
Company did not have any operating income.  The weak economic market,
which resulted in a significant decline in revenues of all areas of the
Company’s business, led to the Company’s decision to wind down its
operations.  Thus, the Company currently has no business operations
and is considered a shell company.  Management is currently looking to
either sell shares of the Company to a third party through a reverse acquisition
or complete a business combination or other similar transaction.





The
Company currently has some nominal office equipment remaining on the
books.  The Company is currently looking for a buyer to purchase these
assets.


9




Going
Concern





We
received a report from our independent registered public accountants, relating
to our June 30, 2010 audited consolidated financial statements, containing an
explanatory paragraph regarding our ability to continue as a going
concern.





As a
company with no operating business, management believes that the Company will
not be able to generate cash flows sufficient for the next twelve months. Based
upon our current limited cash resources and without the infusion of additional
capital, management does not believe the Company can operate as a going concern
beyond one year.





Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Accordingly, our
consolidated financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should we be unable to continue as a going concern.





As a
result of winding down all our core operations during the quarter ended June 30,
2010, we have classified the results of our operations as discontinued
operations for all periods presented. Accordingly, the results of our operations
for years ended June 30, 2010 and 2009 are not comparable.





LIQUIDITY
AND CAPITAL RESOURCES





As of
June 30, 2010, the Company had approximately $92,092 in cash and cash
equivalents.  Since the Company ceased all business operations, in
order for us to continue as a going concern, we hope to obtain necessary
financing by ways of capital injection from potential investors as well as
seeking other growth opportunities by way of merger or acquisition. There can be
no assurance that we will be able to secure additional funding or that, if we
are successful in any of those actions, those actions will produce adequate cash
flow to enable us to meet all our future obligations.





Related
Party Transactions





During
the years ended June 30, 2010 and 2009, the Chairman of the Company, Mr. Wang
Zhenyu, made advances to the Company for working capital purposes.  At
June 30, 2010 and 2009, the amount outstanding was $403,600 and $253,506,
respectively.  As of September 30, 2010, the amount outstanding was
$317,506.  The outstanding amounts are non-interest bearing, unsecured
and have no fixed repayment terms.




Off-balance
Sheet Arrangements




None.





ITEM
7A.           Quantitative
and Qualitative Disclosures about Market Risk




Not
applicable.




ITEM
8. Financial Statements and Supplementary Data




Reference
is made to pages F-1 through F-18 comprising a portion of this Annual
Report on Form 10-K.




ITEM
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures




On August
4, 2010 (the “Dismissal Date”),
the Company notified Weinberg & Company, P.A. (“Weinberg”) that it was dismissing
Weinberg as its independent registered public accounting firm, effective
immediately. The Company's Board of Directors approved the dismissal of Weinberg
as the its independent registered public accounting firm.  Weinberg
audited the Company's financial statements for the fiscal years ended June 30,
2009 and 2008 and reviewed the subsequent interim quarters through the Dismissal
Date.  Weinberg's reports on the Company's financial statements did
not contain an adverse opinion or a disclaimer of opinion, nor were such reports
qualified or modified as to uncertainty, audit scope or accounting principles.
On August 5, 2010, the Company, with the Board's approval, engaged Friedman LLP
(“Friedman”) to serve as its
independent registered public accounting firm to audit the Company’s
consolidated financial statements for the fiscal year ended June 30, 2010 and to
issue a report on the Registrant’s financial statements for such fiscal
year.




10




During
the Company’s most recent two (2) fiscal years, as well as the subsequent
interim period through the Dismissal Date, there were no disagreements on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements if not resolved to the
satisfaction of Weinberg would have caused Weinberg to make reference in
connection with its opinion to the subject matter of the
disagreement.




Aside
from the matter identified below, during the Company’s most recent two (2)
fiscal years, as well as the subsequent interim period through the Dismissal
Date, Weinberg did not advise the Company of any of the matters identified in
Item 304(a)(1)(v)(A) - (D) of Regulation S-K.  During the most recent
two (2) fiscal years and during the subsequent interim period through the
Dismissal Date, there was one “reportable event,” as defined in Regulation S-K
Item 304(a)(1)(v). In performing the audit of the Company’s consolidated
financial statements for the fiscal year ended June 30, 2009, Weinberg advised
the Company’s management and the Board of Directors that it had identified the
following material weakness: there was a lack of sufficient accounting staff
which resulted in a lack of effective controls necessary for a good system of
internal control for financial reporting and there was a weakness in the
internal controls relating to the financial statement closing process which
resulted primarily from the fact that certain parts of the work of the Company’s
accounting staff may not be monitored or reviewed correctly. The material
weakness described above existed on June 30, 2009 and continued to exist as of
June 30, 2010.  For a further discussion of the foregoing material
weakness please refer to Item 9A of this Report.




ITEM
9A.           Controls
and Procedures




Evaluation
of Disclosure Controls and Procedures




Our
management, principally our chief financial officer and chief executive officer,
evaluated the effectiveness of our disclosure controls and procedures as of the
end of June 30, 2010.  Based on that evaluation, our management
concluded that our disclosure controls and procedures as of June 30, 2010 were
not effective such that the information required to be disclosed by us in
reports filed under the Securities Exchange Act of 1934 was not recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms.  Thus, our disclosure controls and procedures
did not include, without limitation, controls and procedures designed to ensure
that information required to be disclosed by us in reports that we file or
submit under the Securities Act were accumulated and communicated to our
management, including our chief executive officer and chief financial officer,
as appropriate to allow timely decisions regarding disclosure.  In
particular, we have identified the following material weakness of our internal
controls:




·
            There
      is a lack of sufficient accounting staff which results in a lack of
      effective controls necessary for a good system of internal control on
      financial reporting.




·
            There
      was a weakness in the internal control of the financial statements closing
      system.  This resulted primarily from the fact that certain
      parts of the work of our accounting staff and consultant may not be
      monitored or adequately reviewed.




·
            Our
      company’s accounting staff does not have sufficient technical accounting
      knowledge relating to accounting for complex U.S. GAAP
      matters.




Management’s
Annual Report on Internal Control over Financial Reporting




Our
management is responsible for establishing and maintaining adequate “internal
control over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities and Exchange Act of 1934, as amended) for the
Company.




In order
to determine whether our internal control over financial reporting is effective,
management has assessed such internal control over financial reporting as of
June 30, 2010.  This assessment was based on criteria for effective
internal control over financial reporting described in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”).




In
performing this assessment, management has identified the following material
weaknesses as of June 30, 2010:




·
            There
      is a lack of sufficient accounting staff which results in a lack of
      effective controls necessary for a good system of internal control on
      financial reporting.




11




·
            There
      was a weakness in the internal control of the financial statements closing
      system.  This resulted primarily from the fact that certain
      parts of the work of our accounting staff and consultant may not be
      monitored or adequately reviewed.




·
            Our
      company’s accounting staff does not have sufficient technical accounting
      knowledge relating to accounting for complex US GAAP
    matters.




As a
result of the material weakness in our internal control over financial
reporting, our management concluded that our internal control over financial
reporting as of June 30, 2010, was not effective based on the criteria set forth
by COSO in Internal Control – Integrated Framework.  A material
weakness in internal control over financial reporting is a deficiency, or a
combination of deficiencies, in internal control over financial
reporting.  This control deficiency could result in a misstatement of
the presentation and disclosure of our statement of operations that would result
in a material misstatement in our annual or interim financial statements that
would not be prevented or detected.  Accordingly, management
determined that this control deficiency constitutes a material weakness in our
internal control over financial reporting as of June 30,
2010.  Notwithstanding the existence of such material weakness in our
internal controls over financial reporting, our management, including our Chief
Executive Officer, believe that the financial statements included in this report
fairly present in all material respects our financial condition, results of
operations and cash flows for the periods presented.




This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial
reporting.  Management's report was not subject to attestation by the
company's registered public accounting firm pursuant to rules of  the
Securities and Exchange Commission that permit the company to provide only
management's report in this annual report.




Changes
in Internal Control Over Financial Reporting




There
have been no changes in our internal control over financial reporting during the
quarter ended June 30, 2010 that has materially affected, or is reasonably
likely to materially affect, our internal controls over financial
reporting.




Currently,
the Company’s lack of income and finances has limited its ability to implement
any changes to its internal control over financial reporting and remedy the
material weaknesses that have been identified as of June 30,
2010.  However, in the future, if its financial position allows it,
the Company may consider changing its internal control over financial reporting
to improve the situation.




ITEM
9B.           Other
Information




On May 1,
2010, Mr. William Han resigned as the President of the Company due to personal
reasons. Mr. Han’s resignation was not a result of any disagreement with the
Company or any other matter.




12


PART
III




ITEM
10.            Directors,
Executive Officers, and Corporate Governance




Directors
and Executive Officers




As of
September 30, 2010, set forth below in the table as well as in the subsection
entitled “Biographies” are the names of our directors and officers, their ages,
all positions and offices that they hold with the Company, the period during
which they have served as such, and their business experience during at least
the last five (5) years. The Company has no “significant
employees.”




Name
                    
                    Age
                    
                    Position(s)Zhenyu
      Wang
                    
                    40
                    
                    Chairman
      of the Board and Chief Executive OfficerMingfei
      Yang
                    
                    27
                    
                    Chief
      Financial OfficerYuefeng
      Wang
                    
                    42
                    
                    DirectorYinan
      Zhang
                    
                    29
                    
                    DirectorXiaoshuang
      Chen
                    
                    46
                    
                    DirectorRenbin
      Yu
                    
                    47
                    
                    DirectorYong
      Bian
                    
                    37
                    
                    Director





Family
Relationships




There are
no family relationships between or among the members of the Board of Directors
or other executives. None of our directors and officers are directors or
executive officers of any company that files reports with the
SEC.




Biographies
(Business Experience)




Zhenyu Wang. Mr. Wang has
served as Chairman of the Board of the Company since January 4, 2008 and as its
Executive Director since September 2010.  From 2007 through 2010, Mr.
Wang served as the Chairman and Chief Executive Officer of ZYTX.  From
2004 through 2009, Mr. Wang also served as Chairman of Huayuan Runtong (Beijing)
Science and Technology Co., Ltd., General Manager of Huayuan Kaituo (Beijing)
Science and Technology Co., Ltd., Chairman of Beijing Putaika Guarding
Technology Co., Ltd. From 2001 through 2009, Mr. Wang served as Chairman of
Beijing Jinzheng Wantong Network Technology Development Co., Ltd. Prior to this,
Mr. Wang served as Chairman of Kaixin Jiye Investment Management Co., Ltd. from
November 1994 through July 2001. Mr. Wang earned a master’s degree (EMBA) from
Peking University.  The Company believes that Mr. Wang has the
qualifications and skills to serve as a Director based upon his technological
and business expertise and his years of experience in executive and managerial
positions with the Company and previous positions.




Mingfei Yang. Mr. Yang has
served as Chief Financial Officer of the Company since January 4, 2008 and has
served as Financial Department Manager of ZYTX since May 2007. Prior to that,
Mr. Yang worked as an accountant for Hua Yuan Run Tong (Beijing) Technology Co.,
Ltd. from June 2005 through May 2007, for Mongolia Guo Li Industries Co., Ltd.
from April 2003 through June 2005 and for Mongolia Xiao Fei Yang Food Chain Co.,
Ltd. from September 2002 through March 2003. Mr. Yang earned his Academic Degree
in Finance and Tax at Inner Mongolia Financial Institute.




Yuefeng Wang. Mr. Wang has
served as a Director of the Company since January 4, 2008 and he has served as
Chairman of Hua Yuan Run Tong (Beijing) Technology Co., Ltd. since February
2007. From March 2005 through January 2007 Mr. Wang served as Chairman,
Assistant and HR Director of Hua Yuan Run Tong (Beijing) Technology Co., Ltd.
Prior to that, Mr. Wang served as the HR Supervisor of Beijing Panasonic &
Putian Communications Equipment Co., Ltd. from August 2004 through February
2005. Prior to that, Mr. Wang served as President, Assistant and Manager of the
HR Department at BaoDing Chang An Car Manufacturing Co., Ltd. from July 1997
through August 2002. Mr. Wang earned his MBA at Tsinghua
University.  The Company believes that Mr. Wang has the qualifications
and skills to serve as a Director based upon his accounting and finance
expertise; his more than 15 years experience in the industry; and his experience
in executive and managerial positions.


13




Yinan Zhang. Ms. Zhang has
served as a Director of the Company since January 4, 2008 and currently serves
as president of Nautilus Creative Co., Ltd since June 2007. Prior to that, Ms.
Zhang served as Editor of Travel & Leisure Magazine, Chinese Edition from
October, 2006 through June, 2007, Prior to that, Ms. Zhang served as Editor of
Shanghai Weekly from October,2002 through September, 2003. Ms. Zhang earned her
masters degree in Arts et Sciences de l’enregistrement at the Université de
Marne-la-Vallée, France.  The Company believes that Ms. Zhang has the
qualifications and skills to serve as a Director based upon her significant
business experience, including a diversified background of managing and
directing insurance related companies.




Xiaoshuang Chen. Mr. Chen has
served as a Director of the Company since July 16, 2009.  Mr. Chen
recently served as Vice President of China Information Technology Development
Ltd., a Hong Kong listed company, since August 2008.  Prior to that,
from September 2006 to July 2008, Mr. Chen served as Deputy General Manager of
the Henan Lantian Group in the Henan Province of China.  From July
2001 to August 2006, Mr. Chen was employed by the XinAo Group to work for a
number of its subsidiaries. During this time, Mr. Chen served as Director and
Deputy General Manager of Hebei Veyong Bio-Chemical Co. Ltd., Chief Human
Resources Director of the XinAo Group, and Deputy General Manager of XinAo Gas
Holdings Limited.  Mr. Chen earned a master’s degree (EMBA) from
Peking University.  The Company believes that Mr. Chen has the
qualifications and skills to serve as a Director based upon his significant
business experience, including managing an insurance related technology
company.





Renbin Yu. Mr. Yu has served
as a Director of the Company since July 16, 2009.  Mr. Yu recently
served as Chairman of the Dalian Wanshan Golf Club since October
2006.  Prior to that, from July 2005 to October 2006, Mr. Yu has
served as General Manager of Dalian Water Sports Tourism Co.  From
September 1983 to July 2005, Mr. Yu served as Deputy Director of the Urban
Construction Bureau of Dalian.  Mr. Yu is Business Administration
graduate from Tsinghua University.  The Company believes that Mr. Yu
has the qualifications to serve as a Director based upon his education, along
with his wide range of business expertise, including a diversified background of
managing and directing insurance technology related companies.




Yong Bian.  Mr. Bian
has served as a Director of the Company since June 29, 2010.  Since
2009, Mr. Bian also served as the Deputy General Manager of New Fortune
Associate (Beijing) Information Technology Co., Ltd., formerly a wholly owned
subsidiary of our Company. Prior to that, from July 2007 to August 2009, Mr.
Bian was a Business Development Director at Beijing Holdings Information
Development Co., Ltd. and from July 2004 to July 2007 as a Senior Consultant at
Beijing Ninesage Consulting Co., Ltd. Mr. Bian earned a Bachelor of Science
degree from Da Lian University of Technology in 1993 and a MBA degree from
TsingHua University in 2004. The Company believes that Mr. Bian has the
qualifications and skills to serve as a Director based upon his significant
business experience, including managing an insurance technology related
company.




Section
16(a) Beneficial Ownership Reporting Compliance




Based
solely on a review of the copies of such forms furnished to us, we believe that
during the fiscal year ended June 30, 2010 all officers, directors and ten
percent (10%) beneficial owners who were subject to the provisions of Section
16(a) complied with all of the filing requirements during the year with the
exception of:  (1) Xiaoshuang Chen failed to timely file one Form 3,
(2) Renbin Yu failed to timely file one Form 3, and (3) Yong Bian failed to
timely file one Form 3.




Code
of Ethics




We have
adopted a Code of Ethics, as required by the rules of the SEC and NASDAQ. Our
Code of Ethics is referenced as Exhibit 14.1 hereto, and applies to all of our
directors, officers and employees.  We will provide to any person upon
request, without charge, a copy of the Code of Ethics. Such request is to be
submitted in writing to us at: China INSOnline Corp., Attention: Zhenyu Wang,
Room 42, 4F, New Henry House, 10 Ice House Street, Central, Hong
Kong.




Nomination
Procedures




There
were no material changes to the procedures by which security holders may
recommend nominees to our board of directors since filing the proxy statement on
Schedule 14A with the SEC on June 15, 2010.




Audit
Committee




We have
an audit committee established by and amongst our board of directors for the
purpose of overseeing our accounting and financial reporting processes and
audits of our financial statements. This Audit Committee is comprised of Mr.
Yuefeng Wang, Mr. Yinan Zhang and Mr. Xiaoshuang Chen. Our Board of Directors
has determined that Yuefeng Wang qualifies as an audit committee financial
expert. This qualification is based upon his education and experience, more
fully described above in his biography. Mr. Wang is independent as defined for
audit committee members under the NASDAQ Marketplace Rules.




14


ITEM 11.
            Executive
      Compensation




Summary
Compensation Table




The
following table sets forth compensation information for services rendered by our
chief executive officer during the last two (2) completed fiscal years (ended
June 30, 2010 and 2009). No other officer received more than $100,000 in total
compensation during those years.




Summary Compensation
Table




Name And
                          Principal
                          Function
                        
                        Year
                        
                        Salary
                        
                        
                        Bonus
                        
                        
                        Stock
                          Awards
                        
                        
                        Option
                          Awards
                        
                        
                        Non-Equity
                          Incentive
                          Plan
                          Compensation
                        
                        
                        Nonqualified
                          Deferred
                          Compensation
                          Earnings
                        
                        
                        All Other
                          Compensation
                        
                        
                        Total(a)
                        
                        (b)
                        
                        ($)
                          (c)
                        
                        
                        ($)
                          (d)
                        
                        
                        ($)
                          (e)
                        
                        
                        ($)
                          (f)
                        
                        
                        ($)
                          (g)
                        
                        
                        ($)
                          (h)
                        
                        
                        ($)
                          (i)
                        
                        
                        ($)
                          (j)Junjun
      Xu,
                          ChiefExecutiveOfficer(1)
                        
                        2009
                        
                        
                        37,554
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        37,5542010
                        
                        
                        14,155
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        -0-
                        
                        
                        
                        14,155
                        (2)





(1)
            Ms.
      Xu resigned from her positions as Chief Executive Officer and as a
      director on September 1, 2010.


(2)
            The
      disparity in Ms. Xu’s compensation between fiscal 2009 and 2010 is the
      result of a voluntary pay cut, which was taken in response to the
      Company’s declining financial
status.




Outstanding
Equity Awards At Fiscal Year End




None.




15


Compensation
of Directors




The
Registrant’s directors received compensation for their services as directors for
the years ended June 30, 2010 and June 30, 2009 are shown as table
below.  In addition, all directors are reimbursed for out-of-pocket
expenses in connection with attendance at Board’s and/or committee
meetings.




DIRECTOR COMPENSATIONName
                                    
                                    Fees
                                      Earned
                                      or Paid in
                                      Cash
                                    
                                    
                                    Stock
                                      Awards
                                    
                                    
                                    Option
                                      Awards
                                    
                                    
                                    Non-Equity
                                      Incentive Plan
                                      Compensation
                                    
                                    
                                    Nonqualified
                                      Deferred
                                      Compensation
                                      Earnings
                                    
                                    
                                    All Other
                                      Compensation
                                    
                                    
                                    Total($)
                                    
                                    
                                    ($)
                                    
                                    
                                    ($)
                                    
                                    
                                    ($)
                                    
                                    
                                    ($)
                                    
                                    
                                    ($)
                                    
                                    
                                    ($)EXISTING:Zhenyu
      Wang2009
                                    
                                    
                                    14,641
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    14,6412010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)Yuefeng
      Wang2009
                                    
                                    
                                    14,641
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    14,6412010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)Yinan
      Zhang2009
                                    
                                    
                                    14,641
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    14,6412010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)Xiaoshuang
      Chen2009
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -2010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)Renbin
      Yu2009
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -2010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)Yong
      Bian2009
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -2010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)RESIGNED:Junjun
      Xu2009
                                    
                                    
                                    14,641
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    14,6412010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)Chunsheng
      Zhou2009
                                    
                                    
                                    14,641
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    14,6412010
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    (1)





(1) Due
to the Company’s declining financial status during the fiscal year ended June
30, 2010, each of the directors agreed to serve on the Company’s board without
receipt of any compensation.




Employment
Agreements




On
September 1, 2010, pursuant to his appointment as chief executive officer, the
Company and Mr. Wang entered into an employment agreement whereby Mr. Wang will
receive an annual salary of $240,000. In return Mr. Wang will devote his full
time and attention to the Company and during his employment will not engage in
any other business activities. (The employment agreement does not prohibit Mr.
Wang from investing in other businesses, provided that, such investments do not
require his active involvement in such companies’ operations.) In addition Mr.
Wang agreed that during his employment he will not disclose confidential
information, including trade secrets, outside the Company. The Company may
terminate Mr. Wang’s employment upon 30 days prior written notice, thereupon the
Company must provide Mr. Wang a severance payment of $20,000 at termination. Mr.
Wang may also terminate his employment upon 30 days prior written notice,
however, in such event a severance payment will not be made. The Company may
also terminate Mr. Wang’s employment upon 30 days prior written notice if the
Company undergoes a change of control, dissolution or bankruptcy
event.




16


ITEM
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters




The
following table sets forth each person known by us to be the beneficial owner of
five (5%) percent or more of the Common Stock of the Company, all directors
individually and all directors and officers as a group as of September 30, 2010.
Each person named below has sole voting and investment power with respect to the
shares shown unless otherwise indicated.




Name and Address of
                          Beneficial Owner(1)
                        
                        Amount of
                          Direct
                          Ownership
                        
                        
                        Amount of
                          Indirect
                          Ownership
                        
                        
                        Total
                          Beneficial
                          Ownership
                        
                        
                        Percentage of
                          Class(2)Zhenyu
      Wang, Chairman of the Board
                        
                        
                        16,008,960
                        
                        
                        
                        -
                        
                        
                        
                        16,008,960
                        
                        
                        
                        34.8
                        %Mingfei
      Yang, Chief Financial Officer
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        %Yuefeng
      Wang, Director
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        %Yinan
      Zhang, Director
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        %Xiaoshuang
      Chen, Director
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        %Renbin
      Yu, Director
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        %Yong
      Bian, Director
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        %All
      directors and officers as a group (7 persons)
                        
                        
                        16,008,960
                        
                        
                        
                        
                        
                        
                        
                        16,008,960
                        
                        
                        
                        34.8
                        %5%
      ShareholdersYanling
      Chen
                          Room
      704, Zhenxing District Yijing Street, 33# No.2,
                          Dandong
      City, Liaoning Province, China
                        
                        
                        2,999,040
                        
                        
                        
                        -
                        
                        
                        
                        2,999,040
                        
                        
                        
                        6.5
                        %Junjun
      Xu
                        
                        
                        5,280,000
                        
                        
                        
                        -
                        
                        
                        
                        5,280,000
                        
                        
                        
                        11.5
                        %Room
      807, Block A, Ding Xiu Xin Yuan
                          No
      1.Nanli Shiliu Yuan, Fengtai District
                          Beijing,
      100075 , China




(1)            Unless
otherwise noted, each beneficial owner has the same address as the
Company.




(2)           Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission. Under those rules and for purposes of the table above (a)
if a person has decision making power over either the voting or the disposition
of any shares, that person is generally deemed to be a beneficial owner of those
shares; (b) if two or more persons have decision making power over either the
voting or the disposition of any shares, they will be deemed to share beneficial
ownership of those shares, in which case the same shares will be included in
share ownership totals for each of those persons; and (c) if a person held
options to purchase shares that were exercisable on, or became exercisable
within 60 days of September 30, 2010, that person will be deemed to be the
beneficial owner of those shares and those shares (but not shares that are
subject to options held by any other stockholder) will be deemed to be
outstanding for purposes of computing the percentage of the outstanding shares
that are beneficially owned by that person.




ITEM 13.
            Certain
      Relationships and Related Transactions, and Director
      Independence




Transactions
With Related Persons




During
the years ended June 30, 2010 and 2009, the Chairman of the Company, Mr. Wang
Zhenyu, made advances to the Company for working capital purposes.  At
June 30, 2010 and 2009, the amount outstanding was $403,600 and $253,506,
respectively.  As of September 30, 2010, the amount outstanding was
$317,506.  The outstanding amounts are non-interest bearing, unsecured
and have no fixed repayment terms.




17


Director
Independence




The
following directors are independent pursuant to NASDAQ rules and the rules of
the SEC: Yinan Zhang, Yuefeng Wang, Renbin Yu and Xiaoshuang Chen. The following
directors are not independent: Zhenyu Wang and Yong Bian. All of the members of
our Audit Committee, Compensation Committee and Nominating Committee are
independent pursuant to the NASDAQ rules.




ITEM 14.
            Principal
      Accountant Fees and Services




The
following is a summary of the fees billed to us by Friedman LLP and Weinberg
& Company, P.A. for services rendered to us with respect to the fiscal years
ended June 30, 2010 and 2009, respectively:




Friedman LLP
                
                
                Weinberg & Company, P.A.
                
                
                Weinberg & Company, P.A.Fee Category
                
                Fiscal Year Ended June 30, 2010
                
                
                Fiscal Year Ended June 30, 2010
                
                
                Fiscal Year Ended June 30, 2009Audit
      Fees
                
                $
                110,000
                
                
                $
                75,000
                
                
                $
                182,000Audit-related
      fees
                
                
                -
                
                
                
                -
                
                
                
                -Tax
      fees
                
                
                -
                
                
                
                -
                
                
                
                -All
      other fees
                
                
                -
                
                
                
                -
                
                
                
                -Total
      Fees
                
                $
                110,000
                
                
                $
                75,000
                
                
                $
                182,000





Audit Fees. The fees for
services rendered by Friedman LLP were for the audit of our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended June 30, 2010. Weinberg & Company, P.A.’s fees for services were for
the audit of our consolidated financial statements included in our Annual Report
on Form 10-K for the year ended June 30, 2009, and reviews of our interim
condensed consolidated financial statements included in our three Quarterly
Reports on Form 10-Q during each of the years ended June 30, 2010 and 2009.
Audit fees for both firms included services that are normally provided by them
in connection with regulatory filings or engagements, including consents
provided with respect to registration statements we filed with the Securities
and Exchange.




Audit
Committee Pre-Approval




The
policy of the Audit Committee is to pre-approve all audit and non-audit services
provided by the independent accountants. These services may include audit
services, audit-related services, tax fees, and other services. Pre-approval is
generally provided for up to one year and any pre-approval is detailed as to the
particular service or category of services. The Audit Committee has delegated
pre-approval authority to certain committee members when expedition of services
is necessary. The independent accountants and management are required to
periodically report to the full Audit Committee regarding the extent of services
provided by the independent accountants in accordance with this pre-approval
delegation, and the fees for the services performed to date. All of the services
described above in this Item 14 were approved in advance by the Audit Committee
during the fiscal year ended June 30, 2010.




PART
IV




ITEM 15.
            Exhibits
      and Financial Statement Schedules




(a)
            Financial
      Statements and Schedules





The
financial statements are set forth under Item 8 of this Annual Report.
Financial statement schedules have been omitted since they are either not
required, not applicable, or the information is otherwise included.




18


(b)
            Exhibits





EXHIBIT
                NO.
              
              DESCRIPTION
              
              LOCATION3.1
              
              Certificate
      of Incorporation (as amended) of Dexterity Surgical, Inc.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 20073.2
              
              Certificate
      of Amendment to the Company’s Certificate of Incorporation, dated February
      26, 2008
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q for the period
      ended March 31, 20083.3
              
              Amended
      and Restated Bylaws of the Company
              
              Incorporated
      by reference to the Company’s Quarterly Report on Form 10-Q for the period
      ended March 31, 20083.4
              
              Certificate
      of Incorporation of Rise and Grow Limited
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 20073.5
              
              Certificate
      of Incorporation of ZBDT (Beijing) Technology Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 20073.6
              
              Company
      Charter of ZBDT (Beijing) Technology Co., Ltd.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.1
              
              Share
      Exchange Agreement, dated December 17, 2007, by and among Dexterity
      Surgical, Inc., Rise and Grow Limited and Newise Century
    Inc.
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.2
              
              Exclusive
      Technology Consultation Service Agreement, dated September 28, 2007, by
      and between ZBDT and ZYTX
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.3
              
              Exclusive
      Interest Purchase Agreement, dated September 28, 2007, by and between ZBDT
      and Zhenyu Wang
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.4
              
              Exclusive
      Interest Purchase Agreement, dated September 28, 2007, by and between ZBDT
      and Junjun Xu
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.5
              
              Equity
      Interest Pledge Agreement, dated September 28, 2007, by and between ZBDT
      and Zhenyu Wang
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.6
              
              Equity
      Interest Pledge Agreement, dated September 28, 2007, by and between ZBDT
      and Junjun Xu
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.7
              
              Power
      of Attorney, dated September 28, 2007, executed by Zhenyu Wang in favor of
      ZBDT
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.8
              
              Power
      of Attorney, dated September 28, 2007, executed by Junjun Xu in favor of
      ZBDT
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on December 20, 200710.9
              
              Share
      Purchase Agreement, effective as of October 28, 2008, by and among Rise
      and Grow Limited, ZYTX Technology Co., Ltd., Bian Yong and Li
      Zhong
              
              Incorporated
      by reference to the Company’s Current Report on Form 8-K as filed with the
      SEC on November 3, 200810.10
              
              Share
      Purchase Agreement dated June 23, 2010, by and among Rise and Grow
      Limited, Beijing Zhiyuan Tianxia Sci-tech Development Co., Ltd., Ever
      Trend Investment Limited and Beijing San Teng Da Fei Technology Co.,
      Ltd.
              
              *




19





10.11
              
              Tri-party
      Creditor’s Right Transfer Agreement dated June 29, 2010, by and among
      Beijing Zhiyuan Tianxia Sci-tech Development Co., Beijing Yingtong Jixun
      Sci-tech Development Co., Ltd. and Beijing Santeng Dafei Sci-tech
      Development Co., Ltd.
              
              *10.12
              
              Software
      Copyright Transfer Agreement dated June 29, 2010, between Beijing Zhiyuan
      Tianxia Sci-tech Development Co. and Beijing Santeng Dafei Sci-tech
      Development Co., Ltd.
              
              *10.13
              
              Share
      Purchase Agreement dated June 30, 2010, between China INSOnline Corp. and
      Hong Kong Jing Nuo International Limited.
              
              Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on July 6, 2010.10.14
              
              Employment
      Agreement dated September 1, 2010, between China INSOnline Corp. and
      Zhenyu Wang.
              
              Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on September 3, 2010.10.15
              
              2010
      Stock Option Plan
              
              Incorporated
      by reference to Exhibit 99.1 to the Company’s Registration Statement on
      Form S-8 as filed with the SEC on July 1, 2010.14.1
              
              Code
      of Ethics
              
              Incorporated
      by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K
      as filed with the SEC on September 29, 200816.1
              
              Auditor’s
      Letter
              
              Incorporated
      by reference to Exhibit 16.1 to the Company’s Annual Report on Form 10-K
      as filed with the SEC on September 29, 200816.2
              
              Auditor
      Letter of K.P. Cheng & Co.
              
              Incorporated
      by reference to Exhibit 16.2 to the Company’s Annual Report on Form 10-K
      as filed with the SEC on October 13, 200916.3
              
              Auditor’s
      Letter
              
              Incorporated
      by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on August 10, 2010.23.1
              
              Consent
      of Friedman LLP
              
              *23.2
              
              Consent
      of Weinberg & Company, P.A.
              
              *31.1
              
              Certifications
      of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              *31.2
              
              Certifications
      of the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              *32
              
              Certification
      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
      the Sarbanes-Oxley Act Of 2002
              
              *99.1
              
              Audit
      Committee Charter of the Company
              
              Incorporated
      by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on February 27, 200899.2
              
              Compensation
      Committee Charter of the Company
              
              Incorporated
      by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K
      as filed with the SEC on February 27, 200899.3
              
              Corporate
      Governance and Nominating Committee Charter of the Company
              
              Incorporated
      by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K
      as filed with the SEC on February 27,
2008




20





99.4
              
              Audited
      Financial Statements of Guang Hua Insurance Agency Company Limited for the
      Years Ended June 30, 2008 and 2007
              
              Incorporated
      by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on January 9, 200999.5
              
              Unaudited
      Condensed Financial Statements of Guang Hua Insurance Agency Company
      Limited for the Three Months Ended September 30, 2008 and
    2007
              
              Incorporated
      by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K
      as filed with the SEC on January 9, 200999.6
              
              China
      INSOnline Corp. and Subsidiaries Unaudited Condensed Combined Pro Forma
      Financial Statements For The Year Ended June 30, 2008 And As Of And For
      The Three Months Ended September 30, 2008
              
              Incorporated
      by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K
      as filed with the SEC on January 9,
2009


*
Provided herewith.


21


SIGNATURES




In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on our behalf by the
undersigned, thereunto duly authorized.




CHINA
      INSONLINE CORP.Date:
      October 13, 2010By:
              /s/Zhenyu WangZhenyu
      WanChief
      Executive Officer, Principal Executive Officer and
                Chairman
      of The Board/s/Mingfei YangMingfei
      YangChief Financial Officer, Principal Financial and Accounting
                Officer




In
accordance with the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the dates indicated.




Signatures
              
              Title
              
              Date/s/Zhenyu Wang
              
              Chief
      Executive Officer, Principal
              
              October
      13, 2010Zhenyu
      Wang
              
              Executive
      Officer and Chairman of the Board/s/Mingfei Yang
              
              Chief
      Financial Officer, Principal
              
              October
      13, 2010Mingfei
      Yang
              
              Financial
      and Accounting Officer/s/Yuefeng Wang
              
              Director
              
              October
      13, 2010Yuefeng
      Wang/s/Yinan Zhang
              
              Director
              
              October
      13, 2010Yinan
      Zhang/s/Renbin Yu
              
              Director
              
              October
      13, 2010Renbin
      Yu/s/Yong Bian
              
              Director
              
              October
      13, 2010Yong
      Bian





/s/Xiaoshuang Chen
              
              Director
              
              October
      13, 2010Xiaoshuang
      Chen




22


CHINA
INSONLINE CORP.




AND




SUBSIDIARIES




Consolidated
Financial Statements


For
The Years Ended June 30, 2010 and 2009




F-1


CHINA
INSONLINE CORP.




AND




SUBSIDIARIES


TABLE
OF CONTENTS


PageREPORTS
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
                        
                        F-3CONSOLIDATED
      BALANCE SHEETS AS OF JUNE 30, 2010 AND 2009
                        
                        F-5CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)  FOR THE
      YEARS ENDED JUNE 30, 2010 AND 2009
                        
                        F-6CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY(DEFICIENCY)  FOR THE YEARS
      ENDED JUNE 30, 2010 AND 2009
                        
                        F-7CONSOLIDATED
      STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2010 AND
      2009
                        
                        F-8NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                        
                        F-9




F-2









F-3





F-4




CHINA
INSONLINE CORP.
 AND
SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
  June
      30,
                            2010
                          
                          
                          June
      30,
                            2009ASSETSCash
      and cash equivalents
                          
                          $
                          92,094
                          
                          
                          $
                          1,217,085Current
      assets of discontinued operations
                          
                          
                          103,822
                          
                          
                          
                          13,662,598Total
      Current Assets
                          
                          
                          195,916
                          
                          
                          
                          14,879,683Non-current
      assets of discontinued operations
                          
                          
                          29,529
                          
                          
                          
                          14,775,006TOTAL
      ASSETS
                          
                          $
                          225,445
                          
                          
                          $
                          29,654,689LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIENCY)Current
      liabilities of discontinued operations
                          
                          $
                          809,861
                          
                          
                          $
                          9,490,359TOTAL
      CURRENT LIABILITIES
                          
                          
                          809,861
                          
                          
                          
                          9,490,359COMMITMENTS
      AND CONTINGENCYSTOCKHOLDERS’
      EQUITY (DEFICIENCY)Common
      stock, $.001 par value; 100,000,000 shares authorized;
                            40,000,000
      shares issued and outstanding as of June 30, 2010 and 2009
                          
                          
                          40,000
                          
                          
                          
                          40,000Additional
      paid-in capital
                          
                          
                          86,360
                          
                          
                          
                          86,360(Accumulated
      deficit) retained earnings
                          
                          
                          (1,451,677
                          )
                          
                          
                          19,291,210Accumulated
      other comprehensive income
                          
                          
                          740,901
                          
                          
                          
                          746,760Total
      Stockholders’ (deficiency) equity
                          
                          
                          (584,416
                          )
                          
                          
                          20,164,330TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
                          
                          $
                          225,445
                          
                          
                          $
                          29,654,689
 
 F-5
  CHINA
INSONLINE CORP.
 AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 AND
COMPREHENSIVE INCOME (LOSS)
  Year
      Ended
                      June
      30, 2010
                    
                    
                    Year
      Ended
                      June
      30, 2009(LOSS)
      INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
                    
                    
                    (20,742,887
                    )
                    
                    
                    9,177,601OTHER
      COMPREHENSIVE LOSSForeign
      currency translation loss
                    
                    
                    (5,859
                    )
                    
                    
                    (13,398
                    )COMPREHENSIVE
      INCOME
                    
                    $
                    (20,748,746
                    )
                    
                    $
                    9,164,203NET
      (LOSS) INCOME PER SHARE FROM DISCONTINUED OPERATIONS, NET OF
      TAX-
      BASIC AND DILUTED
                    
                    $
                    (0.52
                    )
                    
                    $
                    0.23WEIGHTED
      AVERAGE SHARES OUTSTANDING-
      BASIC AND DILUTED
                    
                    
                    40,000,000
                    
                    
                    
                    40,000,000
  F-6
  CHINA
INSONLINE CORP.
 AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
 YEARS
ENDED JUNE 30, 2010 AND 2009
  Common
      Stock
                            
                            
                            Additional
                              Paid-in
                            
                            
                            (Accumulated
                              Deficit)
                              Retained
                            
                            
                            Accumulated
                              Other
                              ComprehensiveShares
                            
                            
                            Par
      Value
                            
                            
                            Capital
                            
                            
                            Earnings
                            
                            
                            Income
                            
                            
                            TotalBALANCE,
      JUNE 30, 2008
                            
                            
                            40,000,000
                            
                            
                            $
                            40,000
                            
                            
                            $
                            86,360
                            
                            
                            $
                            10,113,609
                            
                            
                            $
                            760,158
                            
                            
                            $
                            11,000,127Foreign
      currency translation loss
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (13,398
                            )
                            
                            
                            (13,398
                            )Net
      income
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            9,177,601
                            
                            
                            
                            -
                            
                            
                            
                            9,177,601BALANCE,
      JUNE 30, 2009
                            
                            
                            40,000,000
                            
                            
                            $
                            40,000
                            
                            
                            $
                            86,360
                            
                            
                            $
                            19,291,210
                            
                            
                            $
                            746,760
                            
                            
                            $
                            20,164,330Foreign
      currency translation loss
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (5,859
                            )
                            
                            
                            (5,859
                            )Net
      loss
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (20,742,887
                            )
                            
                            
                            -
                            
                            
                            
                            (20,742,887
                            )BALANCE,
      JUNE 30, 2010
                            
                            
                            40,000,000
                            
                            
                            $
                            40,000
                            
                            
                            $
                            86,360
                            
                            
                            $
                            (1,451,677
                            )
                            
                            $
                            740,901
                            
                            
                            $
                            (584,416
                            )
 
 F-7
  CHINA
INSONLINE CORP.
 AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
  Year
      Ended
                                June
      30, 2010
                              
                              
                              Year Ended
                                June
      30, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss) income from discontinued operations
                              
                              $
                              (20,742,887
                              )
                              
                              $
                              9,177,601Adjustments
      to reconcile net (loss) income to net cash provided by (used in) operating
      activities:Amortization
                              
                              
                              1,381,744
                              
                              
                              
                              440,011Depreciation
                              
                              
                              61,848
                              
                              
                              
                              106,992Loss
      (Gain) on disposal of fixed assets
                              
                              
                              9,606
                              
                              
                              
                              (72,711
                              )Deferred
      tax provision (benefit)
                              
                              
                              61,798
                              
                              
                              
                              (166,673
                              )Provision
      for doubtful accounts
                              
                              
                              62,292
                              
                              
                              
                              26,397(Gain)
      on disposal of subsidiaries
                              
                              
                              (565,908
                              )
                              
                              
                              -Impairment
      of goodwill
                              
                              
                              4,473,787
                              
                              
                              
                              -Impairment
      of software
                              
                              
                              9,290,464
                              
                              
                              
                              -Write-off
      of prepayment
                              
                              
                              10,633,610
                              
                              
                              
                              -Changes
      in operating assets and liabilities, net of effects of
      acquisition:Accounts
      receivable
                              
                              
                              7,700,607
                              
                              
                              
                              (1,085,023
                              )Other
      receivables
                              
                              
                              (597,987
                              )
                              
                              
                              5,055Prepayments
      and deposits
                              
                              
                              (15,017,986
                              )
                              
                              
                              (4,213,071
                              )Accounts
      payable
                              
                              
                              (150,364
                              )
                              
                              
                              138,353Other
      payables and accrued liabilities
                              
                              
                              (1,614,661
                              )
                              
                              
                              1,345,465Taxes
      payable
                              
                              
                              4,466,262
                              
                              
                              
                              3,351,193Deferred
      revenue
                              
                              
                              -
                              
                              
                              
                              (63,583
                              )Net
      cash provided by (used in) operating activities
                              
                              
                              (547,775
                              )
                              
                              
                              8,990,006CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of subsidiary, net of cash acquired
                              
                              
                              (1,840
                              )
                              
                              
                              (5,715,919
                              )Repayment
      from a former shareholder of a newly acquired subsidiary
                              
                              
                              -
                              
                              
                              
                              1,019,759Acquisition
      of software
                              
                              
                              (727,121
                              )
                              
                              
                              (731,433
                              )Prepayments
      for software
                              
                              
                              -
                              
                              
                              
                              (6,981,952
                              )Acquisition
      of fixed assets
                              
                              
                              -
                              
                              
                              
                              (118,780
                              )Proceeds
      on disposal of fixed assets
                              
                              
                              7,509
                              
                              
                              
                              130,563Net
      cash used in investing activities
                              
                              
                              (721,452
                              )
                              
                              
                              (12,397,762
                              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Advance
      from a director
                              
                              
                              150,094
                              
                              
                              
                              71,455Net
      cash provided by financing activities
                              
                              
                              150,094
                              
                              
                              
                              71,455NET
      DECREASE IN CASH AND CASH EQUIVALENTS
                              
                              
                              (1,119,133
                              )
                              
                              
                              (3,336,301
                              )Effect
      of exchange rate changes on cash
                              
                              
                              (5,858
                              )
                              
                              
                              (14,467
                              )Cash
      and cash equivalents, at beginning of the year
                              
                              
                              1,217,085
                              
                              
                              
                              4,567,853CASH
      AND CASH EQUIVALENTS, END OF THE YEAR
                              
                              $
                              92,094
                              
                              
                              $
                              1,217,085SUPPLEMENTARY
      CASH FLOW INFORMATION:Interest
      paid
                              
                              $
                              -
                              
                              
                              $
                              -Income
      taxes paid
                              
                              $
                              -
                              
                              
                              $
                              -
  F-8
  CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
   1.           Organization
and Principal Activities
 
 China
INSOnline Corp. (“CHIO”),
formerly known as Dexterity Surgical, Inc. (“Dexterity Surgical”) was incorporated
on December 23, 1988 as a Delaware corporation and commenced operations on
January 1, 1989. In August 1992, Dexterity Surgical completed an initial public
offering of its common stock par value $0.001 per share (“Common Stock”), which at such time was
trading on The Over-The-Counter Bulletin Board. In March 2008, Dexterity
Surgical, Inc. changed its name to China INSOnline Corp.  On July 1,
2008, CHIO’s Common Stock was approved by the NASDAQ to trade on the NASDAQ
Capital Market under the symbol “CHIO”.
 
 On
December 18, 2007, Dexterity Surgical, Rise and Grow Limited (“Rise & Grow”) and Newise Century
Inc., the sole stockholder of Rise & Grow (the “Shareholder”) consummated a share
exchange agreement (the “Share Exchange
Agreement”) pursuant to which the Shareholder transferred to Dexterity
Surgical, and Dexterity Surgical acquired from the Shareholder, all of the
capital stock of Rise & Grow (the “Shares”), which Shares constitute 100%
of the issued and outstanding capital stock of Rise & Grow, in exchange for
26,400,000 shares of Common Stock, which shares now constitute 66% of the fully
diluted outstanding shares of Common Stock.  This share exchange
transaction resulted in the Shareholder obtaining a majority voting interest in
Dexterity Surgical.  Generally accepted accounting principles require
that a company whose shareholders retain the majority interest in a combined
business be treated as the acquirer for accounting purposes, resulting in a
reverse acquisition.  Accordingly, the share exchange transaction has
been accounted for as a recapitalization of Dexterity Surgical.
 
 Rise
& Grow was formed on February 10, 2006 as a Hong Kong limited
company.  Zhi Bao Da Tong (Beijing) Technology Co., Ltd (“ZBDT”), a company registered in the
People’s Republic of China (the “PRC” or “China”), was established and
incorporated by Rise & Grow and commenced business on September 6,
2007.  Rise & Grow’s sole business is to act as a holding company
for ZBDT.
 
 ZBDT was
formed by Rise & Grow for the purpose of developing computer and network
software and related products and to promote the development of high-tech
industries in the field of Chinese information technology.  In
compliance with the PRC’s foreign investment restrictions on Internet
information services and other laws and regulations, ZBDT conducts all of our
Internet information and media services and advertising in China through ZYTX, a
domestic Variable Interest Entity (“VIE”).  It does this by
controlling Beijing ZYTX Technology Co., Ltd (“ZYTX”), through an Exclusive Technical
Consulting and Service Agreement (the “Consulting Agreement”) and related
transaction documents dated as of September 28, 2007 (collectively, the “Service Agreements”).  ZBDT
did not conduct any business for the Company and was sold to third party in
connection with the June 30, 2010 transaction.
  F-9
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 ZYTX, a
company registered in the PRC on October 8, 2006, is an Internet e-business
development, online advertisement publishing and related online servicing
company, which focuses on the PRC insurance industry.  With localized
web sites targeting Greater China, ZYTX provides a platform through its web
site, www.soobao.cn, to consumers, agents and insurance companies for online
transaction, advertising, online inquiry, news circulation, statistic analysis
and software development.  ZYTX also provides online insurance agent
services including car, property and life insurance to customers in the
PRC.
  According
to the Consulting Agreement, ZBDT has the exclusive right to provide technical
consulting and other services to ZYTX, effectively restricting and controlling
the operations of ZYTX.  The terms of the agreement granted rights to
ZBDT to solely and exclusively possess all intellectual property of ZYTX which
comprise the core value and assets of ZYTX (ultimately, solely and exclusively
possessed by the Company).
 
 On
October 28, 2008, Rise & Grow and ZYTX acquired Guang Hua Insurance Agency
Company Limited (“GHIA”), a
limited liability company organized under the laws of the PRC, through a share
exchange which resulting in Rise & Grow obtaining 100% of the voting and
beneficial interest in GHIA.
 
 On April
2, 2009, Zhi Bao Da Tong (Beijing) Technology Co., Ltd (“ZBDT”) changed its name into New
Fortune Associate (Beijing) Information Technology Co Ltd. (“NFA”).
 
 On
January 14, 2010, the Company acquired a Hong Kong limited company, Ever Trend
Investment Limited (“ETI”), for
investment holding purpose.  Before the acquisition, ETI was dormant
and has no business activity.
  On March
25, 2010, Run Ze Yong Cheng (Beijing) Technology Co. Limited (“RZYC”), a company registered in the
PRC, was established and incorporated by ETI as a wholly foreign owned
enterprise for future business development purposes.  ETI’s sole
business is to act as a holding company for RZYC.  RZYC was formed by
ETI for the purpose of future business development.  As at June 30,
2010, RZYC has not commenced any business operation period.
 
 In
compliance with the PRC’s foreign investment restrictions on insurance agent
services and other laws and regulations, RZYC acquired Beijing San Teng Da Fei
Technology Development Co., Ltd. (“STDF”), a company registered in the
PRC on December 3 ,
2009 in order to conduct insurance related business in
China.  STDF is a variable interest entity of RZYC through an
Exclusive Technical Consulting and Service Agreement (the “STDF Consulting Agreement”) in which
RZYC has exclusive rights to provide technical consulting services to STDF as
well as possess all intellectual property of STDF which comprise the core value
and assets of STDF.  In addition, the equity purchase agreement by and
between the owners of STDF gave RZYC the exclusive and irrevocable right to
acquire 100% of the equity interests of STDF as well as the right
to  control the operating activities and the shareholding structure of
STDF.
  F-10
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 In
December 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Update (“ASU”) 2009-17,
“Consolidations (Topic 810) – Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities” (“ASU 2009-17”). Effective
February 1, 2010, the Company adopted ASU 2009-17, which requires an
enterprise to perform an analysis to determine whether the enterprise’s variable
interest or interests give it a controlling financial interest in a VIE. This
analysis identifies the primary beneficiary of a variable interest entity as the
enterprise that has (1) the power to direct the activities of a variable
interest entity that most significantly impact the entity’s economic performance
and (2) the obligation to absorb losses of the entity that could
potentially be significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be significant to the
variable interest entity. In addition, the required changes provide guidance on
shared power and joint venture relationships, remove the scope exemption for
qualified special purpose entities, revise the definition of a variable interest
entity, and require additional disclosures.  The Company assesses the
terms contained in the Consulting Agreement and Service Agreements between ZBDT
and ZYTX, the agreements between RZYC and STDF and determines that ZYTX and STDF
are VIEs.
 
 On June
23, 2010, GHIA was transferred to STDF from ZYTX and on June 30, 2010, the
Company entered into an agreement with a third party to dispose Rise &
Grow and its subsidiaries NFA and its VIE ZYTX for a cash consideration of
US$100,000.
  The
Company accounted for the winding down of the business as discontinued
operations as it meets the criteria set forth in FASB Codifications (“ACS”) 205 “Discontinued
Operations.”
 
 The
consolidated financial statements included the accounts of CHIO and the
following subsidiaries.   Inter-company accounts and transactions
have been eliminated in consolidation:
  Rise
& Grow – 100% subsidiary of CHIO during the year ended June 30, 2010 but was
disposed on June 30, 2010;
  ETI –
100% subsidiary of CHIO;
  NFA –
100% subsidiary of Rise & Grow during the year ended June 30, 2010 but was
disposed together with Rise & Grow on June 30, 2010;
  F-11
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 RZYC –
100% subsidiary of ETI;
  ZYTX
– a VIE of NFA.  ZYTX was disposed together with Rise & Grow
and NFA on June 30, 2010;
  STDF
– a VIE of RZYC.
  GHIA –
100% subsidiary of ETI through STDF to act as legal owner in China.
 
 Inter-company
accounts and transactions have been eliminated in consolidation.
  The
Company ceased all of its core operations by June 30, 2010. The financial
results have been classified as discontinued operations in the consolidated
statements of operations for all periods presented. The assets and liabilities
of this business are reflected as assets and liabilities of discontinued
operations in the consolidated balance sheets for all periods presented. See
Note 5 for additional information regarding discontinued
operations.
  2.           Going Concern
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. The Company ceased all operations,
experienced significant operating losses and has negative capital deficiency as
of June 30, 2010. This raised substantial doubt about its ability to continue as
a going concern. The Company's existence is dependent upon management's ability
to obtain additional financings.  The Company is actively pursuing
additional capital injections from potential investors as well as seeking other
growth opportunities by way of merger or acquisition.  In addition,
the Chairman of the Company will continue to provide necessary funding in order
to enable the Company to continue operations for the next twelve months. The
accompanying consolidated financial statements do not include any adjustments
that might result from this uncertainty.
  3.           Summary
of Significant Accounting Policies
 
 (a)          Use
of Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting
period.  Actual results could differ from those
estimates.
  F-12
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (b)          Principles of
consolidation
 
 Pursuant
to ASC Topic 810, we are required to include in our consolidated financial
statements the financial statements of variable interest entities. ASC Topic 810
requires a variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss for the variable interest
entity or is entitled to receive a majority of the variable interest entity’s
residual returns. Variable interest entities are those entities in which we,
through contractual arrangements, bear the risk of, and enjoy the rewards
normally associated with ownership of the entity, and therefore we are the
primary beneficiary of the entity.
 
 The
consolidated financial statements include the accounts of ZYTX (disposed in June
2010) and GHIA since they are deemed variable interest entities and the Company
is the primary beneficiary.
 
 (c)          Fair
Value of Financial Instruments
 
 The
Company adopted ASC 820, "Fair Value Measurements" on January 1, 2008 for
all financial assets and liabilities and nonfinancial assets and liabilities
that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). ASC 820 defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair value
measurements. ASC 820 defines fair value as the price that would be received
from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair
value measurements for assets and liabilities required or permitted to be
recorded at fair value, the Company considers the principal or most advantageous
market in which it would transact and it considers assumptions that market
participants would use when pricing the asset or liability.
 
 The
Company’s financial instruments include prepayment and deposits, other payables
and accrued liabilities, amount due to director, income tax payable. We
estimated that the carrying amount approximates fair value due to their
short-term nature. The Company does not have any assets or liabilities measured
at fair value on a recurring or a non-recurring basis.
 
 (d)          Cash
and Cash Equivalents
 
 The
Company considers all highly liquid investments purchased with original maturity
of three months or less to be cash and cash equivalents.
  F-13
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (e)          Revenue
Recognition
 
 The
Company ceased all of its core operations as of June 30,
2010.  Historically, the Company earned revenues primarily through
online advertising and software development.  As a result of
management’s decision to wind down all of its business operations during fiscal
year 2010, all revenues are included in the Income/loss from discontinued
operations on the statements of operations for all period
presented.
 
 Advertising
revenues are derived mainly from online advertising arrangements, which allow
advertisers to place advertisements on particular areas of the Company’s web
sites, in particular formats and over particular periods of
time.  Such arrangements have generally included some combination of
website construction service (service fee is recognized when the web site is
complete); Website advertising (revenues recognized ratably over the display
period of the advertisement, typically one year), and website maintenance
services (revenue is recognized ratably over the contract period).
 
 Software
development revenue is recognized in accordance with ASC 985-605, "Software,"
when the outcome of a contract for software development can be estimated
reliably, contract revenue and costs are charged to income by reference to the
stage of completion of the contract activity at the balance sheet date, as
measured by the proportion that costs incurred to date bear to estimated total
costs for each contract.  When the outcome of a contract cannot be
estimated reliably, contract costs are recognized as an expense in the period in
which they are incurred. Contract revenue is recognized to the extent of
contract costs incurred that it is probable will be
recoverable.  Where it is probable that the total contract costs will
exceed total contract revenue, the expected loss is recognized as an expense
immediately.
 
 (f)          Foreign
Currency Translation
 
 The
accompanying financial statements are presented in United States
dollars.  The functional currencies of the Company are the Renminbi
(“RMB”) and the Hong Kong Dollar
(“HKD”).  The
financial statements are translated into United States Dollars (“US$” or “$”) from RMB and US$ from HKD at
years-end exchange rates as to assets and liabilities and average exchange rates
as to revenues and expenses.  Capital accounts are translated at their
historical exchange rates when the capital transactions occurred.
 
 June 30, 2010
                      
                      
                      June 30, 2009Period
      end RMB: US$ exchange rate
                      
                      6.8086
                      
                      
                      6.8319Period
      average RMB: US$ exchange rate
                      
                      6.8367
                      
                      
                      6.8072Period
      end HKD: US$ exchange rate
                      
                      7.7847
                      
                      
                      7.7501Period
      average HKD: US$ exchange rate
                      
                      7.7614
                      
                      
                      7.7646
  F-14
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (g)          Income
Taxes
 
 The Company accounts for income taxes
using the asset and liability method. Deferred taxes are provided for the net
tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. A valuation allowance is provided for deferred tax assets if it is
more likely than not these items will either expire before the Company is able
to realize their benefits, or that future utilization is uncertain.
 
 (h)          Comprehensive
Income
 
 Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, all
items that are required to be recognized under current accounting standards as
components of comprehensive income should be reported in a financial statement
that is presented with the same prominence as other financial statements. The
Company’s current components of comprehensive income are net income and the
foreign currency translation adjustment.
 
 (i)          Loss/Earnings
Per Share
 
 Basic
loss/earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
There were no dilutive securities outstanding for the years
presented.
 
 (j)          Goodwill
and Intangible Assets
  In accordance withASC 805, “Business Combination” and FASB ASC
Topic 350, “Intangibles-Goodwill and Other”, the Company accounts for business
combinations using the purchase method of accounting and accordingly, the assets
and liabilities of the acquired entities are recorded at their estimated fair
values at the acquisition date. Goodwill represents the excess of the purchase
price over the fair value of net assets, including the amount assigned to
identifiable intangible assets. Pursuant to this guidance, the Company does not
amortize the goodwill balance and instead, performs an annual impairment review
to assess the fair value of goodwill over its carrying value. Identifiable
intangible assets with finite lives are amortized over their useful lives.
Goodwill is tested annually for impairment during the fourth quarter or earlier
upon the occurrence of certain events or substantive changes in
circumstances.
  The Company performs an impairment
review of its indefinite-lived intangible assets when events occur which
trigger the need for an earlier impairment review.  In connection with
the winding down all of the Company’s operations and the sales of
subsidiaries, the Company recognized  impairment charge of $4,473,787
on goodwill derived from the acquisition of ZYTX.  It also recognized
impairment charges of $ 9,290,464 on software.
  F-15
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (k)          Segment
 
 Historically
the Company operated in three business segments, including software development,
online insurance advertising, and insurance agency. As a result of management’s
decision to wind down its operations in 2010, all segment operations are
presented as discontinued operations for the years ended June 30, 2010 and
2009.
 
 (l)          Reclassifications
 
 The
Company has reclassified certain balances in the prior year on the balance sheet
and income statement primarily related to discontinued operations to conform to
the current year presentation. The amounts reclassified had no effect on
retained earnings or net income (Also see Note 5).
 
 4.           Recent
Accounting Pronouncements
 
 In
January 2010, the FASB issued guidance to amend the disclosure requirements
related to recurring and nonrecurring fair value measurements. The guidance
requires disclosure of transfers of assets and liabilities between Level 1 and
Level 2 of the fair value measurement hierarchy, including the reasons and the
timing of the transfers and information on purchases, sales, issuance, and
settlements on a gross basis in the reconciliation of the assets and liabilities
measured under Level 3 of the fair value measurement hierarchy. This guidance is
effective for the Company beginning July 1, 2010. The Company does not expect
the adoption will have an impact on its consolidated financial position or
results of operations. The Company is subject to the examination by PRC tax
authorities for fiscal year 2009 and 2010.
  5.           Discontinued
Operations
 
 The
assets and liabilities from discontinued operations at June 30, 2010 and 2009
was as follows:
  June
      30,
                              2010
                            
                            
                            June
      30,
                              2009ASSETS
      OF DISCONTINUED OPERATIONSAccounts
      receivable, net of allowance for doubtful accounts
                            
                            $
                            -
                            
                            
                            $
                            7,764,537Prepayments
      and deposits
                            
                            
                            3,822
                            
                            
                            
                            5,428,848Other
      receivable
                            
                            
                            100,000
                            
                            
                            
                            2,385Deferred
      taxes
                            
                            
                            -
                            
                            
                            
                            466,828Total
      current assets of discontinued operations
                            
                            
                            103,822
                            
                            
                            
                            13,662,598Fixed
      assets, net
                            
                            
                            29,529
                            
                            
                            
                            212,591Software,
      net
                            
                            
                            -
                            
                            
                            
                            2,963,136Prepayments
      for software
                            
                            
                            -
                            
                            
                            
                            6,981,952Goodwill
                            
                            
                            -
                            
                            
                            
                            4,473,787Deposits
                            
                            
                            -
                            
                            
                            
                            78,093Deferred
      taxes
                            
                            
                            -
                            
                            
                            
                            65,447Total
      non-current assets of discontinued operations
                            
                            
                            29,529
                            
                            
                            
                            14,775,006TOTAL
      ASSETS OF DISCONTINUED OPERATIONS
                            
                            
                            133,351
                            
                            
                            
                            28,437,604LIABILITIES
      OF DISCONTINUED OPERATIONSAccounts
      payable
                            
                            $
                            -
                            
                            
                            $
                            150,514Other
      payables and accrued liabilities
                            
                            
                            399,956
                            
                            
                            
                            2,735,625Amount
      due to director
                            
                            
                            403,600
                            
                            
                            
                            253,506Income
      taxes payable
                            
                            
                            6,305
                            
                            
                            
                            6,260,070Deferred
      taxes
                            
                            
                            -
                            
                            
                            
                            90,644TOTAL
      LIABILITIES OF DISCONTINUED OPERATIONS
                            
                            $
                            809,861
                            
                            
                            $
                            9,490,359
  F-16
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 6.           Related
Parties Transactions
 
 During
the years ended June 30, 2010 and 2009, the Chairman of the Company, Mr.
Wang Zhenyu, made advances to the Company for operational needs.  At
June 30, 2010 and 2009, the amount outstanding was $403,600 and $253,506,
respectively.  The outstanding amounts are non-interest bearing,
unsecured and have no fixed repayment terms.
 
 During
the year ended June 30, 2009, ZYTX entered into the agreement with Beijing
Enterprises UniCard Co., Ltd. ("UniCard"), which Mr. Zhenyu Wang, the
Chairman of the Company is also the Chairman of UniCard.  For the year
ended June 30, 2009, the Company rented office space to UniCard for $131,758 and
the Company also sold fixed assets to UniCard for $130,563.
  7.           Taxes
 
 Corporation
Income Tax (“CIT”)
 
 Historical
the Company did not generate any taxable income outside of the PRC. The
Company’s operational subsidiary  ZYTX was incorporated in PRC. The
Management does not expect to repatriate ZYTX’s net income back to US in the
near future; therefore ZYTX is governed by the Income Tax Law of the People’s
Republic of China concerning the private-run enterprises. The Company has not
recorded a provision for U.S. federal income taxes for the years ended June 30,
2010 and 2009 due to the net operating loss carry forward in the United States.
The Company's tax return for fiscal tax year ending December 31, 2009 is subject
to examination by federal and state tax authorities.
  F-17
 CHINA INSONLINE
CORP.
 CHINA
INSONLINE AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 On
March 16, 2007, the National People’s Congress of China approved the new
Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), which was effective
from January 1, 2008.  Prior to January 1, 2008, the CIT
rate applicable to the Company’s subsidiary in the PRC was 33%. As from January
1, 2008, the applicable CIT rate for the Company’s subsidiaries and VIEs
incorporated in PRC, which include NFA, ZYTX, RZYC, STDF and GHIA are
25%.
 
 In
connection with the sales of three subsidiaries, Rise & Grow, NFA and ZYTX
on June 28, 2010, the third party buyer agreed to assume $11,083,398 of income
tax payable, along with $379,833 of deferred tax assets.  The Company
had $6,305 of income tax payable related to GHIA which remained on the books and
included in the current liabilities of discontinued operations on the balance
sheet as of June 30, 2010.
  8.           Commitments
and Contingency
 
 (a)          Lease
Commitments
 
 The Company’s office operating lease
will expire in 2011 with the remaining lease payment of approximate
$18,506.
 
 (b)          Pledge
of common stock by a significant shareholder
 
 Mr.
Zhenyu Wang, a significant shareholder, entered into a loan agreement dated
January 8, 2010 with Argyll Investments, LLC, and pledged 2,000,000 common stock
of the Company to secure a personal loan of $554,400 at interest rate of 4% per
annum for 36 months, full recourse note.
 
 Mr.
Zhenyu Wang, a significant shareholder, entered into a loan agreement dated
February 16, 2010 with Argyll Investments, LLC, and pledged 2,000,000 common
stock of the Company to secure a personal loan of $705,600 at interest rate of
4% per annum for 36 months, full recourse note.
  9.           Subsequent
event
 
 On
September 27, 2010, the Company entered into a letter of intent with a PRC
company to consummate a reverse acquisition within one year, subject to due
diligence.
 
 F-18