UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2010

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to _____________

Commission file number: 333-113564

WLG INC.

(Exact name of registrant as specified in its charter)

Delaware	20-0262555
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)

920 East Algonquin Road, Suite 120

Schaumburg, IL 60173

(Address of principal executive offices with zip code)

224-653-2800

(Registrant's telephone number, including area code)

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. x Yes ¨ 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)	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

On November 15, 2010, the registrant had 30,880,094 shares of common stock, $0.001 par value per share, issued and outstanding.

WLG Inc.

TABLE OF CONTENTS

Part I:	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009	F-1
	Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009	F-3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009	F-5
	Notes to Condensed Consolidated Financial Statements	F-6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures.	12

Part II:	Other Information	12
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 6.	Exhibits	12
Signatures		13

NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain statements in this report, including statements in the following discussion, may constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. This report on Form 10-Q contains forward-looking statements concerning WLG Inc. (“WLG,” the “Company” “we”, “our” or the “Group”) and its future operations, plans and other matters. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates“, or “does not anticipate”, “plans”, “estimates”, or “intends”, or stating that certain actions, events or results “may”, “could”, “might”, or “will” be taken or occur, or be achieved) are not statements of historical fact and may be “forward looking statements.”

The Company cautions readers regarding certain forward-looking statements in this document and in all of its communications to shareholders and others, including press releases, securities filings and all other communications. WLG also cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Such forward-looking statements are based on the beliefs of WLG's management as well as on assumptions made by and information currently available to WLG at the time such statements were made. Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual events or results to differ from those reflected in the forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements, as a result of either the matters set forth or incorporated in this report generally or certain economic and business factors, some of which may be beyond the control of WLG. These factors include adverse economic conditions, entry of new and stronger competitors, inadequate capital, unexpected expenses, failure to gain or maintain approvals for the sale and expansion of WLG's services in the jurisdictions where WLG conducts its business, or the failure to capitalize upon access to new markets and those factors referred to or identified in Item 1A of our Report on Form 10-K for the year ended December 31, 2009 and other factors that may be identified elsewhere in this report on Form 10-Q. WLG disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Part I: Financial Information

Item 1. Financial Statements

WLG Inc.

Consolidated Statements of Operations and Other Comprehensive Income

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

		Three months ended September 30,						Nine months ended September 30,
		2010			2009			2010			2009
	Note	US$			US$			US$			US$
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues:
Freight			33,917			20,638			88,573			50,690
Other services			18,005			19,437			48,630			50,359

Total revenues			51,922			40,075			137,203			101,049

Operating expenses
Cost of forwarding/customs			(43,874	)		(33,941	)		(116,442	)		(84,771	)
Selling and administrative			(7,007	)		(6,239	)		(20,487	)		(17,249	)
Depreciation and amortization			(237	)		(251	)		(680	)		(741	)

Total operating expenses			(51,118	)		(40,431	)		(137,609	)		(102,761	)

Income (Loss) from operations			804			(356	)		(406	)		(1,712	)

Other income (expense)
Interest income			1			-			2			1
Interest expense			(282	)		(154	)		(702	)		(456	)
Other income (expense), net			6			(6	)		82			141

Income (Loss) before income taxes			529			(516	)		(1,024	)		(2,026	)

Income tax provision			(180	)		(150	)		(124	)		(92	)

Net income (loss)			349			(666	)		(1,148	)		(2,118	)

Dividends on preferred stock			(23	)		(23	)		(68	)		(68	)

Income (Loss) applicable to common stock			326			(689	)		(1,216	)		(2,186	)

Other comprehensive income, net of taxes:
Foreign currency translation adjustment			227			128			174			287

Total comprehensive income (loss)			553			(561	)		(1,042	)		(1,899	)

The financial statements should be read in conjunction with the accompanying notes.

F-1

WLG Inc.

Consolidated Statements of Operations and Other Comprehensive Income

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

		Three months ended September 30,					Nine months ended September 30,
		2010		2009			2010			2009
	Note	US$		US$			US$			US$
		(unaudited)		(unaudited)			(unaudited)			(unaudited)

Weighted average number of common shares outstanding

Basic			30,880,094		31,400,094			30,975,332			31,400,094

Diluted			36,438,656		31,400,094			30,975,332			31,400,094

Net earnings (loss) per share:

Basic earnings (loss) per share	2		0.01		(0.02	)		(0.04	)		(0.07	)

Diluted earnings (loss) per share	2		0.01		(0.02	)		(0.04	)		(0.07	)

The financial statements should be read in conjunction with the accompanying notes.

F-2

WLG Inc.

Consolidated Balance Sheets

At September 30, 2010 and December 31, 2009

(Dollars in thousands except share data and per share amounts)

		At September 30, 2010		At December 31, 2009
	Note	US$		US$
		(unaudited)
ASSETS

Current assets
Cash and cash equivalents			3,431		1,899
Restricted cash			701		601
Trade receivables, net of allowance (2010:$625 ; 2009: $570)			22,490		16,906
Deposits, prepayments and other current assets			1,773		1,254
Prepaid tax			162		149

Total current assets			28,557		20,809

Property, plant and equipment, net			1,873		1,427
Deposits and other non-current assets			-		107
Deferred tax assets			429		288
Intangible assets, net			1,858		2,183
Goodwill			6,878		6,878

Total assets			39,595		31,692

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Bank overdraft	3		655		603
Trade payables			14,469		10,447
Other accrued liabilities			2,938		2,897
Bank loans - maturing within one year	3		6,443		4,725
Current portion of capital lease obligations			62		90
Due to a director	5		630		670
Loan from majority shareholder	5		1,000		-
Convertible promissory note	6		1,000		-
Income tax payable			180		117

Total current liabilities			27,377		19,549

Non-current liabilities
Non-current portion of capital lease obligations			81		35
Other non-current liabilities			196		187
Bank loan – maturing after one year	3		400		206

			677		428

The financial statements should be read in conjunction with the accompanying notes.

F-3

WLG Inc.

Consolidated Balance Sheets

At September 30, 2010 and December 31, 2009

(Dollars in thousands except share data and per share amounts)

		At September 30, 2010			At December 31, 2009
	Note	US$			US$
		(unaudited)

Commitments and contingencies	4		-			-

Series B convertible redeemable preferred stock, 1.7 million shares issued and outstanding (Redemption and liquidation value, $1,700)	7		1,700			1,700

Stockholders' equity
Preferred stock, $0.001 par value, 10 million (2009: 5 million) shares authorized,
- 2 million shares designated as Series A convertible redeemable preferred stock, 2 million shares issued and outstanding (Redemption and liquidation value $1,500),			2			2
- 1.7 million shares designated as Series B convertible redeemable preferred stock, 1.7 million shares issued and outstanding (see liabilities above),	7		-			-
- 978,000 shares designated as Series C convertible redeemable preferred stock, 978,000 shares issued and outstanding (Redemption and liquidation value $978),	8		1			-
- 4 million shares designated as Series D convertible redeemable preferred stock, none issued and outstanding	6		-			-
Common stock, $0.001 par value, 65 million (2009: 55 million) shares authorized, 31,400,094 (2009: 31,400,094) shares issued, 30,880,094 (2009: 31,400,094) shares outstanding			31			31
Additional paid-in capital			13,781			12,784
Statutory reserve	9		167			167
Treasury stock, at cost, 520,000 (2009: Nil) shares			(130	)		-
Accumulated other comprehensive income			413			239
- Foreign currency translation adjustments
Accumulated losses			(4,424	)		(3,208	)

Total stockholders' equity			9,841			10,015

Total liabilities and stockholders' equity			39,595			31,692

The financial statements should be read in conjunction with the accompanying notes.

F-4

WLG Inc.

Consolidated Statements of Cash Flows

Nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

	Nine months ended September 30,
	2010			2009
	US$			US$
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net loss		(1,148	)		(2,118	)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation		355			262
Amortization		325			479
Allowance for bad debts		183			455
Share-based compensation amortization		20			11

Changes in working capital:
Trade receivables		(5,646	)		(1,787	)
Deposits, prepayments and other current assets		(542	)		(153	)
Trade payables		4,022			1,816
Other accrued liabilities		90			495
Due to a director		(40	)		(54	)
Income tax payable		(91	)		(302	)

Net cash used in operating activities		(2,472	)		(896	)

Cash flows from investing activities:
Acquisitions of property, plant and equipment (Note)		(670	)		(369	)

Net cash used in investing activities		(670	)		(369	)

Cash flows from financing activities:
Restricted cash		(100	)		112
Bank overdraft		52			119
Net increase in bank loans		1,912			584
Capital lease obligations paid		(60	)		(53	)
Repayment to a director		(40	)		(375	)
Loan from majority shareholder		1,000			-
Issuance of convertible promissory note		1,000			-
Issuance of Series C convertible redeemable preferred stock		978			-
Dividend paid on preferred stock		(68	)		(68	)

Net cash provided by financing activities		4,674			319

Net increase (decrease) in cash and cash equivalents		1,532			(946	)
Cash and cash equivalents at beginning of period		1,899			2,402

Cash and cash equivalents at end of period		3,431			1,456

Note:

Major non-cash transaction

During the nine months ended September 30, 2010, the Group entered into finance lease arrangement not provided for in respect of assets with a total capital value at the inception of the lease of $78.

The financial statements should be read in conjunction with the accompanying notes.

F-5

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

1.	ORGANIZATION AND BASIS OF PRESENTATION

WLG Inc. (“WLG”, the “Company”, or the “Group”) was incorporated in the name of Wako Logistic, Inc., on December 2, 2003, pursuant to the laws of Delaware in the United States of America, with authorized and outstanding share capital of 100 million shares of common stock, par value of $0.001 per share. All outstanding common stock was issued to Mr. Christopher Wood (“Mr Wood”).

On January 8, 2004, WLG changed its name to Wako Logistics Group, Inc. On the same date, its authorized number of shares was reduced to 60 million shares, of which 55 million shares were common stock, and 5 million shares were preferred stock. 2 million shares, 1.7 million shares and 978,000 shares of the preferred stock were designated as Series A, B and C convertible redeemable preferred stock and issued in September 2005, June 2008 and June 2010 respectively. On September 24, 2010, WLG, filed a Certificate of Amendment to its Restated Certificate of Incorporation (the "Amendment") with the Secretary of State of the State of Delaware to increase the Company's authorized shares to 75 million shares, of which (a) 65 million shares are common stock, par value $.001 per share, and (b) 10 million shares are blank check preferred stock, par value $.001 per share. The Amendment does not make any other changes to the Restated Certificate of Incorporation. In September 2010, 4 million shares of the preferred stock were designated as Series D convertible redeemable preferred stock but unissued as of September 30, 2010.

Pursuant to the Share Exchange Agreements entered into between WLG and Mr. Wood (and his nominee) on January 18, 2004, WLG consummated a combination with Wako Express (H.K.) Company Limited (“WEHK”) and Wako Air Express (H.K.) Company Limited (“WAE”) (collectively, “Operating Subsidiaries”) by the issuance of 20,000,900 shares of WLG common stock to Mr. Wood in exchange for 100% of the outstanding stock of WEHK and WAE.

After the share exchanges, WLG became the parent and controlling company of the Operating Subsidiaries, and Mr. Wood became the controlling shareholder of WLG. In May 2010, Mr. Wood sold a sufficient number of his shares of WLG common stock to Jumbo Glory Limited (“Jumbo”), a privately held Hong Kong incorporated company, so that Jumbo acquired 51% of WLG’s common stock and became WLG’s controlling shareholder.

The transfer of Mr. Wood’s common stock in the Operating Subsidiaries to WLG was a reorganization of companies under common control and has been accounted for effectively as a pooling of interests.

WEHK was incorporated in Hong Kong on June 4, 1982. Since its inception, WEHK’s principal activity has been the provision of sea freight forwarding services.

WAE was incorporated in Hong Kong on February 24, 1989, and since that date, WAE’s principal activity has been the provision of air freight forwarding services.

In July and November 2004, the Group established two 100% owned subsidiaries, Wako Express (China) Co. Ltd. (“WE China”) in the People’s Republic of China (“PRC”) and Wako Express (China) Co. Limited (“WECCL”) in Hong Kong. WE China began business in China in February 2005 as a full-service freight forwarding company. WECCL had not commenced business as of September 30, 2010.

F-6

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

1.	ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

On April 1, 2005, WLG acquired 100% of the voting interests in Kay O’Neill (USA) LLC (“KON”), an Illinois limited liability company based in Chicago, Illinois. KON also had an office in Detroit, Michigan. KON changed its name to WLG (USA) LLC (“WLG (USA)”) in June 2005, and, as of the end of 2006, had discontinued the use of the name KON. The purchase price for KON consisted of a $1,000 cash payment and a professional fee of $50. WLG (USA) is a non-asset based freight forwarding company and provides freight forwarding and logistics services to its customers. Effective July 1, 2010, WLG (USA) merged with World Commerce Services LLC (“WCS”), which is a subsidiary of WLG and WLG (USA) ceased to exist as a business entity.

Effective October 1, 2005, WLG acquired all of the issued and outstanding shares of common stock of Asean Logistics, Inc. (“ALI”), a California corporation, in exchange for 250,000 restricted shares of WLG’s common stock. Concurrent with the acquisition, WLG, by way of a contribution to capital, transferred all of the ALI shares to WLG (USA).

ALI was a non-asset based freight forwarding company and provided freight forwarding services to its customers, which shipped products primarily between Asia and the United States. As of December 31, 2007, all of ALI’s administrative and accounting functions had been assumed by WLG (USA), and by June 30, 2008, all of ALI’s operations had been combined with those of WLG (USA).

On November 9, 2005, WLG (Australia) Pty Ltd. (“WLG (Aust)”), a wholly-owned Australian subsidiary of WLG, completed the acquisition of all the issued and outstanding common stock of Asean Cargo Services Pty Limited (“Asean”) in exchange for 3.5 million restricted shares of WLG’s common stock. An additional 1.3 million shares of WLG’s restricted common stock was issued to the sellers of Asean in 2007 in recognition of Asean achieving certain financial goals during the fifteen-month period ended December 31, 2006.

Founded in 1984 and based in Sydney, Australia, Asean also has offices in Melbourne and Brisbane and maintains relationships with cargo agents in all of Australia’s mainland states. Asean provides freight forwarding and logistics services, as well as customs brokerage services, to its customers, most of whom ship products primarily between Asia and Australia.

In February 2006, WLG formed two United Kingdom (“UK”) subsidiaries, WLG Holdings (UK) Limited (“WLG (UK) Holdings”) as a first tier subsidiary and WLG (UK) Limited (“WLG (UK)”) as a subsidiary of WLG (UK) Holdings. Effective September 15, 2006, WLG (UK) acquired for cash the operating assets and assumed limited liabilities of a division (“UK Division”) of a UK freight forwarding and logistics company (“U.K.Co.”). This UK Division, which operated in Manchester, UK, provided sea and air freight forwarding, customs clearance and warehouse logistics services, mostly to UK based customers. These activities are now carried on by WLG (UK).

F-7

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

1.	ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

On December 1, 2006, WLG (USA) acquired for cash all of the voting shares of Mares-Shreve & Associates, Inc. (“MSA”) and its wholly-owned subsidiary, Sea Systems Ocean Line, Inc., (“Sea Systems”) (collectively, the “MSA Group”). MSA, which was incorporated on May 15, 1979, in Washington, provides freight forwarding and customs brokerage services to its customers. Sea Systems, incorporated on February 26, 1991, in Washington, was a non-asset based freight forwarder and provided air and sea freight forwarding and related logistics services to its customers. As of June 30, 2008, all of Sea Systems’ operations had been combined with those of MSA. MSA mainly serves customers that ship products from Asia to the US. Effective December 31, 2009, MSA merged with WCS and MSA ceased to exist as a separate entity.

On July 31, 2007, the Group acquired all of the membership interests in WCS. WCS is based in Schaumburg, Illinois, and also has offices in New York, Atlanta and Los Angeles. It is a non-asset based freight forwarding company and provides a full range of logistics and customs brokerage services to its customers, specializing in freight imports from Asia, mostly by sea, with an emphasis on imports from China.

On December 7, 2007, the Company filed an amendment to the Company’s Restated Certificate of Incorporation to change the Company’s name from Wako Logistics Group, Inc. to WLG Inc., which became effective December 21, 2007.

As of September 30, 2010, all subsidiaries are wholly-owned and all material intercompany balances and transactions have been eliminated in consolidation.

The accompanying financial data as of September 30, 2010, and for the three and nine months ended September 30, 2010 and 2009, have been prepared by the Company without audit.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures herein are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2009.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

The unaudited, interim consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position as of September 30, 2010, and results of operations for the three and nine months ended September 30, 2010 and 2009, and cash flows for the nine months ended September 30, 2010 and 2009, have been made. The results of operations for the three and nine months ended September 30, 2010 and 2009, are not necessarily indicative of the operating results for the full year.

F-8

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

2.	EARNINGS (LOSS) PER SHARE

Earnings (Loss) per share were computed as follows:

	Three months ended September 30, 2010
	Income		Weighted average number of shares		Per share amount
	US$				US$
	(unaudited)				(unaudited)

Net income		349

Dividends on Series A convertible redeemable preferred stock		23		2,000,000		0.01

Basic earnings per share
Net income available to common stockholders		326		30,880,094		0.01

Effect of dilutive securities
Employee stock options (Note #)		-		124,823
Warrants (Note #)		-		-
Convertible promissory note		6		1,521,739
Series A convertible redeemable preferred stock (Note #)		-		-
Series B convertible redeemable preferred stock (Note #)		-		-
Series C convertible redeemable preferred stock		-		3,912,000

Diluted earnings per share
Net income available to common stockholders		332		36,438,656		0.01

F-9

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

2.	EARNINGS (LOSS) PER SHARE (CONTINUED)

	Nine months ended September 30, 2010
	Loss			Weighted average number of shares		Per share amount
	US$					US$
	(unaudited)					(unaudited)

Net loss		(1,148	)

Dividends on Series A convertible redeemable preferred stock		68			2,000,000		0.03

Basic loss per share
Net loss available to common stockholders		(1,216	)		30,975,332		(0.04	)

Effect of dilutive securities
Employee stock options (Note #)		-			-
Warrants (Note #)		-			-
Convertible promissory note (Note #)		-			-
Series A convertible redeemable preferred stock (Note #)		-			-
Series B convertible redeemable preferred stock (Note #)		-			-
Series C convertible redeemable preferred stock (Note #)		-			-

Diluted loss per share
Net loss available to common stockholders		(1,216	)		30,975,332		(0.04	)

F-10

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

2.	EARNINGS (LOSS) PER SHARE (CONTINUED)

	Three months ended September 30, 2009
	Loss			Weighted average number of shares		Per share amount
	US$					US$
	(unaudited)					(unaudited)

Net loss		(666	)

Dividends on Series A convertible redeemable preferred stock		23			2,000,000		0.01

Basic loss per share
Net loss available to common stockholders		(689	)		31,400,094		(0.02	)

Effect of dilutive securities
Employee stock options (Note #)		-			-
Warrants (Note #)		-			-
Series A convertible redeemable preferred stock (Note #)		-			-
Series B convertible redeemable preferred stock (Note #)		-			-

Diluted loss per share
Net loss available to common stockholders		(689	)		31,400,094		(0.02	)

F-11

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

2.	EARNINGS (LOSS) PER SHARE (CONTINUED)

	Nine months ended September 30, 2009
	Loss			Weighted average number of shares		Per share amount
	US$					US$
	(unaudited)					(unaudited)

Net loss		(2,118	)

Dividends on Series A convertible redeemable preferred stock		68			2,000,000		0.03

Basic loss per share
Net loss available to common stockholders		(2,186	)		31,400,094		(0.07	)

Effect of dilutive securities
Employee stock options (Note #)		-			-
Warrants (Note #)		-			-
Series A convertible redeemable preferred stock (Note #)		-			-
Series B convertible redeemable preferred stock (Note #)		-			-

Diluted loss per share
Net loss available to common stockholders		(2,186	)		31,400,094		(0.07	)

# :

For the three months ended September 30, 2010, weighted average number of shares outstanding was not increased by the 230,000 outstanding options, the 2,000,000 shares related to the Series A convertible redeemable preferred stock, the 500,000 shares of common stock issuable to the sellers of WCS upon conversion of the Series A convertible redeemable preferred stock and the 2,428,571 shares related to the Series B convertible redeemable preferred stock as the effect would be anti-dilutive. The Company’s potential obligation to issue 500,000 shares of common stock to the sellers of WCS terminated as of February 19, 2010. The Company’s 100,000 outstanding warrants expired in August 2010 and 15,000 outstanding options expired upon the termination of employment of two employees during the period.

F-12

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

2.	EARNINGS (LOSS) PER SHARE (CONTINUED)

For the nine months ended September 30, 2010, weighted average number of shares outstanding was not increased by the 630,000 outstanding options, the 2,000,000 shares related to the Series A convertible redeemable preferred stock, the 500,000 shares of common stock issuable to the sellers of WCS upon conversion of the Series A convertible redeemable preferred stock, the 2,428,571 shares related to the Series B convertible redeemable preferred stock, the 3,912,000 shares related to the Series C convertible redeemable preferred stock and the 4,000,000 shares related to the convertible promissory note as the effect would be anti-dilutive. The Company’s potential obligation to issue 500,000 shares of common stock to the sellers of WCS terminated as of February 19, 2010. The Company’s 100,000 outstanding warrants expired in August 2010 and 15,000 outstanding options expired upon the resignation of the employees during the period.

For the three and nine months ended September 30, 2009, common stock was not increased by the 2,000,000 shares of Series A convertible redeemable preferred stock, the 500,000 shares of common stock issuable to the sellers of WCS upon the conversion of the Series A convertible redeemable preferred stock, the exercise of the 100,000 outstanding warrants granted to a consultant in exchange for services rendered, the exercise of 395,000 outstanding stock options, and the 2,428,571 shares related to the Series B convertible redeemable preferred stock as the effect would be anti-dilutive.

3.	BANKING FACILITIES

The Group has bank facilities from creditworthy commercial banks as follows:

	At September 30, 2010		At December 31, 2009
	US$		US$
	(unaudited)
Facilities granted
- bank guarantees		1,152		1,145
- overdraft facility		655		603
- bank loans and revolving credit lines		8,461		5,909
- foreign exchange facilities		242		223
- lease facilities		242		223

Total bank facilities		10,752		8,103

F-13

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

3.	BANKING FACILITIES (CONTINUED)

The terms of the revolving loan and bank overdraft facilities, including the amounts and maturity dates, are set forth in agreements between the banks and the Group.

Bank guarantees of $545 will expire within one year from September 30, 2010, but may be renewed, provided the Group makes available the cash required by the banks to collateralize each guarantee. A bank guarantee of $133 and the overdraft facility have no expiry dates, but the bank or WLG may terminate either facility by giving 30 days notice to the other party. The remaining bank guarantee of $474 has no fixed expiration date and is cancelable and/or renewable at the option of the bank.

The bank loans and revolving loan facilities mature on various dates as follows: (i) $4,000 revolving credit facility on February 24, 2011 and (ii) loan facility of $3,880 is an on-going facility that is subject to review in 2010, and, by its terms, may be terminated by either the bank or WLG giving 30 days notice to the other party and (iii) two loan facilities of $258 and $323, which are repayable in 60 monthly installments ending December 2014 and January 2015, respectively.

The bank loans and revolving credit facilities of $8,461 are secured as follows: (i) $4,000 is secured by all of the assets of WCS and WLG (USA), including their accounts receivables as well as a guarantee provided by the Group’s parent company, and (ii) $3,880 is secured by Asean’s accounts receivable and a registered mortgage charge over the assets of Asean and (iii) $581 is secured by a guarantee provided by the Group’s parent company and a guarantee given by the Hong Kong Special Administrative Region Government.

Bank guarantees of $545 are collaterized by cash of $545. Another bank guarantee of $133 is secured by a letter of support from the Group’s parent company, and a registered mortgage debenture over all of Asean’s assets. The remaining bank guarantee of $474 is secured by a fixed and floating charge on all of the assets of WLG (UK) and by a guarantee of the Group’s parent company.

Asean’s overdraft facility of $655 is secured by (i) a comfort letter from the Group’s parent company and (ii) a registered mortgage debenture over all of Asean’s assets.

Asean has a foreign exchange facility of $242 and a leasing facility of $242, both as of September 30, 2010, had not been utilized. In addition, both the foreign exchange and leasing facility are secured by a comfort letter from the Group’s parent company. As of September 30, 2010, and December 31, 2009, the weighted average interest rates of the Group’s bank borrowings were 9.54% and 7.27% per annum, respectively.

F-14

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

3.	BANKING FACILITIES (CONTINUED)

	At September 30, 2010		At December 31, 2009
	US$		US$
	(unaudited)
Utilized
Committed lines
- bank guarantees		1,152		1,145
- overdraft facility		655		603
- bank loans and revolving credit lines		6,843		4,931

Total bank facilities utilized		8,650		6,679

4.	COMMITMENTS AND CONTINGENCIES

Commitments under operating leases

The Group rents office and warehouse space, staff quarters and certain office equipment under non-cancellable operating leases. The following table summarizes these approximate, future minimum lease payments for operating leases in effect as of September 30, 2010, and December 31, 2009:

	At September 30, 2010		At December 31, 2009
	US$		US$
	(unaudited)

Within one year		1,893		1,539
Over one year but not exceeding two years		1,604		1,038
Over two years but not exceeding three years		1,131		731
Over three years but not exceeding four years		1,014		472
Over four years but not exceeding five years		574		404
Over five years		729		984

Total operating lease commitments		6,945		5,168

The Group has obligations under various operating lease agreements ranging from 3 months to 8 years. Rent expense under operating leases for the nine months ended September 30, 2010 and 2009, was $1,428 and $1,280, respectively.

Cargo space commitments

The Group, in the course of its business, enters into agreements with various air and ocean freight carriers pursuant to which the Group commits to utilize a minimum amount of cargo space each year. As of September 30, 2010, and December 31, 2009, the obligations for the minimum amount of such cargo space to be utilized in the coming 12 months were $1,375 and $2,249, respectively.

F-15

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

4.	COMMITMENTS AND CONTINGENCIES (CONTINUED)

Contingencies – outstanding claims

The Group is subject to claims that arise primarily in the ordinary course of business. In general, such claims are covered by insurance policies issued for the Group’s businesses.

As of September 30, 2010, and December 31, 2009, and subject to the legal proceedings as described below, the aggregate, outstanding amount of claims was approximately $372 and $40. The Group believes that the ultimate liability, if any, for these claims, both filed and potential, will not have a material adverse effect on its financial position.

WCS has been named as a third-party defendant in pending proceedings filed in the United States District Court for the Southern District of New York and the United States District Court, Central District of California relating to claims arising out of the derailment of a Union Pacific train at Tyrone, Oklahoma on April 21, 2005. The total amount of damages sought equals approximately $6,800, including an unspecified amount for costs of delay, lost profit and lost revenue. In December 2009, WCS settled the case for $100, with an initial payment of $50 at the time of settlement and is obliged thereafter to make ten monthly payments of $5 each. During the first quarter of 2010, the cost of this settlement, as well as certain legal fees, has been reimbursed to the Group by the return of 520,000 shares of WLG’s common stock by a former shareholder of WCS. The 520,000 shares of WLG’s common stock is shown as treasury stock as at September 30, 2010.

5.	RELATED PARTY TRANSACTIONS

Name and relationship of related parties

Name		Relationship with the Group

Christopher Wood (“CW”)		Shareholder, director and officer of WLG
David Koontz (“DK”)		Officer of WLG until August 31, 2010
Join Wing Properties Limited (“JWP”)		CW is a shareholder and director of JWP
Jumbo Glory Limited (“Jumbo”)		Majority shareholder of WLG

Details of related parties

Name	Principal activities	Ownership
		Name of owner	% held

JWP	Leases property to CW	CW		100	%

F-16

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

5.	RELATED PARTY TRANSACTIONS (CONTINUED)

The following is a summary of the amounts included in the accompanying balance sheets:

	At September 30, 2010		At December 31, 2009
	US$		US$
	(unaudited)

Loan from majority shareholder (Note iii)		1,000		-

Due to a director (Note i and ii)
CW		630		670

Notes:

(i)

Amounts due to director are unsecured and interest-free, except for the director loan, which amounted to $570 and $600 as of September 30, 2010 and December 2009, respectively, (see note (ii) below), which was used as part of the consideration to acquire the membership interests of WCS, repayment of bank loans and working capital.

(ii)

On July 1, 2008, the Group issued a $600 promissory note to CW, dated July 1, 2008, (the “Note”) to set forth, among other things, the interest rate and repayment terms for $600 that CW had previously loaned to the Group. The Note bears interest at the rate of 12% per annum and was to be repaid in twelve monthly installments of $50, with the first installment due on January 31, 2009. Upon maturity of the Note, CW has agreed that payments due under the Note may be deferred on a month to month basis. Principal repayments of $30 had been made to CW as of September 30, 2010. The Note is secured by the Group’s assets and will become immediately due and payable upon the earlier to occur of (i) an event of default as defined in the Note, (ii) a change in control as defined in the Note, (iii) raising not less than $3,000 in new capital, and/or (iv) the termination of CW’s employment.

Under the original terms of this Note, it became due and payable as a result of the change of control of the Company that occurred in May 2010. However, CW and WLG agreed that commencing (i) June 1, 2010, and continuing until December 31, 2011, WLG may defer making principal payments to Mr. Wood under the Note, and (ii) commencing June 1, 2010, and extending through December 31, 2011, the annual interest rate on the Note shall be reduced from 12% to 0%. The Note shall be due and payable as of December 31, 2011.

(iii)

On June 3, 2010, WEHK issued a $1,000 promissory note to WLG’s majority shareholder which bears interest at 6% per annum and is due on June 3, 2011. No monthly payments of principal are due under the terms of this note.

F-17

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

5.	RELATED PARTY TRANSACTIONS (CONTINUED)

Additional details of transactions

	Three months ended September 30,				Nine months ended September 30,
	2010		2009		2010		2009
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
	US$		US$		US$		US$
Rent paid/payable
JWP		27		27		81		81

Summary of transactions for the nine months ended September 30, 2010 and 2009, with director/officer (unaudited):

	CW			DK			Total
	US$			US$			US$

At January 1, 2010		670			-			670
Interest accrued		160			-			160
Interest paid		(130	)		-			(130	)
Repayment of loan		(30	)		-			(30	)
Repayment of advance		(40	)		-			(40	)

At September 30, 2010		630			-			630

At January 1, 2009		615			375			990
Reclassification from accrued liabilities		60			-			60
Interest accrued		207			13			220
Interest paid		(184	)		(13	)		(197	)
Repayment of loan		-			(375	)		(375	)
Repayment of advance		(78	)		-			(78	)

At September 30, 2009		620			-			620

6.	CONVERTIBLE PROMISSORY NOTE

On August 27, 2010, WEHK issued a $1,000 promissory note to a third party which bears interest at 6% per annum and is due on August 27, 2011. No monthly payments of principal are due under the terms of this note. At any time prior to the maturity date, the promissory note holder may convert all or a portion of the principal amount into shares of Series D convertible redeemable preferred stock of WLG at a conversion price of $0.25 per share by sending written notice to the Company. The Series D Preferred Stock may be converted by the holder from time to time into a maximum of 4 million shares of the Company’s common stock.

F-18

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

7.	SERIES B CONVERTIBLE REDEEMABLE PREFERRED STOCK

On June 30, 2008, the Company entered into a conversion agreement with Christopher Wood, the Company’s Chief Executive Officer, director and controlling shareholder, pursuant to which Mr. Wood and the Company agreed to convert $1,700 of outstanding loans that Mr. Wood had made to the Company into 1.7 million shares of the Company’s Series B Convertible Redeemable Preferred Stock (“Series B Preferred Stock”). In connection therewith, in June 2008, the Company’s Board of Directors approved the designation of part of 5,000,000 shares authorized but unissued preferred stock of WLG into a new series of preferred stock consisting of 1,700,000 shares of preferred stock designated as Series B Preferred Stock, par value $0.001. The Series B Preferred Stock was issued on June 30, 2008. The Series B Preferred Stock may be converted by the holder at any time into shares of the Company’s common stock at a conversion price of $0.70 per share. The Series B Preferred Stock has a stated, redemption and liquidation value of $1.00 per share, and shall pay an annual, cumulative dividend equal to 12% of the stated value per share.

The Company may require a conversion in the event of a change in control of the Company. Commencing 24 months after the date of issuance of the Series B Preferred Stock, the Company has the right to redeem all or a portion of the then outstanding shares of Series B Preferred Stock at a price of $1.00 per share, subject to adjustment. In addition, commencing on the earlier to occur of 24 months after the issuance date, Mr. Wood’s retirement or his holding less than 50.1% of the outstanding common stock of the Company, Mr. Wood may cause the Company to redeem any or all of his outstanding shares of Series B Preferred Stock, at a price of $1.00 per share, subject to adjustment.

Pursuant to the waiver agreement dated June 1, 2010, WLG and CW have agreed to waive certain terms of the Series B Preferred Stock so that effective June 1, 2010, and extending through December 31, 2011, the annual dividend rate on the Series B Preferred Stock shall be reduced from 12% to 8% per annum. Due to the change in control of the Company that occurred in May 2010, CW had the right to require a redemption and the Company had the right to seek a conversion of the Series B Preferred Stock. Neither party exercised its conversion or redemptions rights for the Series B Preferred Stock.

For the nine months ended September 30, 2010 and 2009, the dividends on the Series B Preferred Stock were included in interest expense in the amounts of $130 and $153, respectively.

8.	SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK

On May 14, 2010, Jumbo transferred $978 to WLG which was later applied to the purchase of the Series C Preferred Stock. In June, 2010, WLG entered into a securities purchase agreement with Jumbo, the controlling shareholder of WLG, pursuant to which Jumbo purchased 978,000 shares of the Company’s newly issued Series C Convertible Redeemable Preferred Stock (“Series C Preferred Stock”). In connection therewith, in June 2010, the Company’s Board of Directors approved the designation of part of 5,000,000 shares authorized but unissued preferred stock of WLG into a new series of preferred stock consisting of 1,000,000 shares of preferred stock designated as Series C Preferred Stock, par value $0.001, and the Series C Preferred Stock was issued on June 3, 2010. The Series C Preferred Stock may be converted by the holder at any time into shares of the Company’s common stock at a conversion price of $0.25 per share. The Series C Preferred Stock has a stated, redemption and liquidation value of $1.00 per share, and shall not pay a cash dividend.

F-19

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

8.	SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK (CONTINUED)

The Company may require a conversion of the Series C Preferred Stock in the event of a change in control of the Company. Commencing 24 months after the date of issuance of the Series C Preferred Stock, the Company has the right to redeem all or a portion of the then outstanding shares of Series C Preferred Stock at a price of $1.00 per share, subject to adjustment. Since the issue of the Series C Preferred Stock no event has occurred that would allow the Company to require a conversion of the Series C Preferred Stock.

9.	STATUTORY RESERVE

WE China (“the PRC subsidiary”) is a wholly-owned foreign investment enterprise (“WOFIE”) registered in the PRC. Under the laws and regulations applicable to a WOFIE, such enterprises are required to maintain certain statutory reserves for specific purposes, which include a general reserve, an enterprise development fund and a staff welfare and bonus fund. The board of directors of the PRC Subsidiary shall make an annual determination based on its PRC statutory financial statements of the amount to be transferred to statutory reserves.

Minimum annual transfers to statutory reserves shall be at least 10% of a WOFIE’s after tax profit which shall be determined in accordance with PRC accounting rules and regulations. Annual transfers to the general reserve shall continue until such reserve balance reaches 50% of a WOFIE’s registered capital. The general reserve can only be utilized to offset prior years' losses or as additional paid-in capital. No distribution of the remaining general reserve shall be made other than upon liquidation of the PRC subsidiary.

No after tax profit has been appropriated to the general reserve in respect of the nine months ended September 30, 2010 and 2009, as the transfers are to be made based on the PRC Subsidiary’s statutory financial statements at the completion of its fiscal year.

10.	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Nine months ended September 30,
	2010			2009
	(unaudited)			(unaudited)
	US$			US$
Cash (refund) paid for:
Interest expense		702			456
Income taxes		(46	)		240

F-20

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

11.	SHARE-BASED PAYMENT

In April 2005, the board and stockholders of the Company approved the Wako Logistics Group, Inc. 2005 Stock Incentive Plan (the “Plan”). The Plan, which is effective until April 19, 2015, provides for awarding stock options, stock appreciation rights and restricted stock to our officers, employees, directors and consultants, as well as to officers, employees, directors and consultants who provide services to any of the Group’s subsidiaries or affiliates. The Plan is administered by our board, provided that the board may appoint a committee to administer the Plan. At the inception of the Plan, 4,000,000 shares of common stock were approved for the issuance of awards under the Plan, which amount shall be automatically increased (but not decreased) to 20% of the total number of the Company’s shares of common stock issued and outstanding on January 1st of each year beginning on January 1, 2006. Based on shares of common stock outstanding as of January 1, 2010, the number of shares reserved under the Plan is 6,280,019.

In general, stock options awarded under the Plan vest over three years and expire in a maximum of ten years from their effective dates. However, the Plan permits the board to grant options with varying terms, such as changing the vesting period, the term and/or exercise price. Once the board, under provisions of the Plan, grants an option, the Company will estimate the fair value of the option, and compensation expense will be recognized over the vesting period of the option.

Effective January 15, 2007, the board approved and awarded stock options to three employees permitting them to purchase an aggregate of 20,000 shares of the Company’s common stock. The vesting period for the January 2007 options is 3 years, and these options are now fully vested. The options relating to purchase 15,000 shares of the Company’s common stock lapsed upon the termination of employment of two employees during the three and nine months ended September 30, 2010.

Effective January 8, 2008, the board approved and awarded stock options to an employee for the purchase of 25,000 shares of the Company’s common stock. The vesting period for the January 2008 options is 3 years.

Effective December 1, 2008, the board approved and awarded stock options to an employee for the purchase of 150,000 shares of Company’s common stock. The vesting period for December 2008 options is 2 years. The options lapsed upon the termination of employment of this employee during 2009.

Effective July 1, 2010, the board approved and awarded stock options to an employee for the purchase of 400,000 shares of the Company’s common stock. The option is now fully vested during the three and nine months ended September 30, 2010.

The Company accounts for stock-based compensation in accordance with FASB ASC 718, Compensation – Stock Compensation. Under FASB ASC 718, the compensation expense related to the fair value of stock options charged to the unaudited, consolidated statement of operations for the nine months ended September 30, 2010 and 2009, was $21 and $11, respectively. As of September 30, 2010, and December 31, 2009, the compensation expense related to non-vested options totaled $1 and $2, and is expected to be recognized over 3 months and 12 months, respectively. The total intrinsic value of the options outstanding and options exercisable as of September 30, 2010, and December 31, 2009, was zero. No tax benefit was recognized for the stock option expense recorded for the nine months ended September 30, 2010 and 2009.

F-21

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

(Dollars in thousands except share data and per share amounts)

11.	SHARE-BASED PAYMENT (CONTINUED)

The Company estimates the fair value of stock options using the Black-Scholes option pricing model, with the following assumptions:

	Options granted on
	August 1, 2005			January 15, 2007			January 8, 2008			December 1, 2008			July 1, 2010

Risk-free interest rate per annum		4.60	%		4.60	%		3.59	%		0.63	%		0.97	%
Expected life	2 years			3 years			3 years			2 years			Nil
Expected volatility (Note #)		45.00	%		57.79	%		46.00	%		5.03	%		11.98	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Post vesting terminations	No			No			No			No			No
Weighted average grant-date fair value (per share)	$	0.28		$	1.22		$	0.23		$	0.06		$	0.05

Note #:

The expected volatility is based on the underlying share price of WLG’s shares and a comparison to the volatility of the share price of peer companies.

The following table set forth the outstanding options granted under the Plan:

	Shares			Weighted ave. exercise price		Weighted ave. remaining contractual term (years)

Outstanding at April 30, 2005 (inception of Plan)		-			-
Granted in 2005		200,000			1.00

Outstanding at December 31, 2005		200,000			1.00		9.58
Granted in 2007		20,000			2.85

Outstanding at December 31, 2007		220,000			1.17		7.71
Granted in 2008		175,000			0.61

Outstanding at December 31, 2008		395,000			0.92		8.07
Forfeited in 2009		(150,000	)		0.60

Outstanding at December 31, 2009		245,000			1.12		5.95
Granted in 2010		400,000			0.13
Forfeited in 2010		(15,000	)		2.85

Outstanding at September 30, 2010		630,000			0.45		8.06

Exercisable at September 30, 2010		626,337			0.44		8.07

F-22

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

12.	SEGMENTS OF THE BUSINESS

(a)

Business segments

The Group operates mainly in three business segments, being the provision of (i) air forwarding, (ii) sea forwarding and (iii) customs brokerage services. The Group’s operations by air, sea and customs brokerage services are summarized in the following table:

(i)

During the three months ended September 30, 2010 and 2009 (unaudited)

	Air forwarding						Sea forwarding						Customs brokerage						Total
	Three months ended September 30						Three months ended September 30						Three months ended September 30						Three months ended September 30
	2010			2009			2010			2009			2010			2009			2010			2009
	US$			US$			US$			US$			US$			US$			US$			US$

Revenue		15,575			7,708			21,058			17,094			15,289			15,273			51,922			40,075
Costs of forwarding/customs		(12,582	)		(6,169	)		(17,429	)		(13,619	)		(13,863	)		(14,153	)		(43,874	)		(33,941	)
Depreciation		(32	)		(16	)		(71	)		(53	)		(25	)		(23	)		(128	)		(92	)
Interest income		-			-			1			-			-			-			1			-
Interest expense		(60	)		(15	)		(135	)		(42	)		(53	)		(28	)		(248	)		(85	)
Other segment income (expense)		9			5			44			(14	)		6			3			59			(6	)
Selling and administrative expense		(1,970	)		(1,154	)		(3,155	)		(3,315	)		(1,240	)		(1,280	)		(6,365	)		(5,749	)
Income tax provision		(121	)		(61	)		(52	)		(77	)		(7	)		(12	)		(180	)		(150	)

Segment income (loss)		819			298			261			(26	)		107			(220	)		1,187			52
Unallocated parent company expense																				(838	)		(718	)

Net income (loss)																				349			(666	)

Property, plant and equipment – additions		7			30			146			23			18			35			171			88

F-23

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

12.	SEGMENTS OF THE BUSINESS (CONTINUED)

(a) Business segments (Continued)

(ii)

During the nine months ended September 30, 2010 and 2009 (unaudited)

	Air forwarding						Sea forwarding						Customs brokerage						Total
	Nine months ended September 30						Nine months ended September 30						Nine months ended September 30						Nine months ended September 30
	2010			2009			2010			2009			2010			2009			2010			2009
	US$			US$			US$			US$			US$			US$			US$			US$

Revenue		39,305			17,162			56,926			45,701			40,972			38,186			137,203			101,049
Costs of forwarding/customs		(32,749	)		(13,476	)		(46,396	)		(35,862	)		(37,297	)		(35,433	)		(116,442	)		(84,771	)
Depreciation		(79	)		(43	)		(202	)		(158	)		(74	)		(61	)		(355	)		(262	)
Interest income		1			-			1			1			-			-			2			1
Interest expense		(123	)		(47	)		(287	)		(110	)		(132	)		(79	)		(542	)		(236	)
Other segment income (expense)		27			37			87			107			20			(3	)		134			141
Selling and administrative expense		(5,304	)		(3,148	)		(9,793	)		(9,614	)		(3,491	)		(3,310	)		(18,588	)		(16,072	)
Income tax (provision) benefit		(96	)		(42	)		(46	)		(95	)		18			45			(124	)		(92	)

Segment income (loss)		982			443			290			(30	)		16			(655	)		1,288			(242	)

Unallocated parent company expense																				(2,436	)		(1,876	)

Net loss																				(1,148	)		(2,118	)

Property, plant and equipment – additions		142			73			434			211			172			122			748			406

F-24

WLG Inc.

Notes to the Consolidated Financial Statements

Three and nine months ended September 30, 2010 and 2009

12.	SEGMENTS OF THE BUSINESS (CONTINUED)

(a) Business segments (Continued)

(iii) As of September 30, 2010, and December 31, 2009

Air forwarding

Sea forwarding

Customs brokerage

Total

At September

30, 2010

At December

31, 2009

At September

30, 2010

At December

31, 2009

At September

30, 2010

At December

31, 2009

At September

30, 2010

At December

31, 2009

US$

(unaudited)

Segment assets

9,957

5,150

13,410

10,122

7,432

7,340

30,799

22,612

Unallocated assets

8,796

9,080

Total assets

39,595

31,692

F-25

12.	SEGMENTS OF THE BUSINESS (CONTINUED)

(b)

The table below summarizes the percentage of the Group’s revenues during the three months and nine months ended September 30, 2010 and 2009, analyzed by geographical locations:

	Three months ended September 30,				Nine months ended September 30,
	2010		2009		2010		2009
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
	%		%		%		%
Revenues
Americas		32		33		32		35
Asia and others		34		23		32		22
Australia		30		37		31		35
Europe		4		7		5		8

		100		100		100		100

(c)

The Group made no sales during the three months and nine months ended September 30, 2010 and 2009, which qualified as sales to a major customer (defined as a customer where sales to it represent 10% or more of total revenues).

13.	FAIR VALUE DISCLOSURES

The carrying value of cash and cash equivalents, restricted cash, trade receivables, deposits, prepayments and other current assets, prepaid tax, trade payables, other accrued liabilities, amounts due to directors, bank overdraft and bank loans contained in the consolidated balance sheet approximates fair value.

F-26

14.	RECENT ACCOUNTING PRONOUNCEMENTS

In October 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force (“ASU 2009-13”). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services separately rather than as a combined unit and modifies the manner in which the transaction consideration is allocated across the separately identified deliverables. ASU 2009-13 significantly expands the disclosures requirements for multiple-deliverable revenue arrangements. ASU 2009-13 will be effective for the first annual reporting period beginning on or after September 15, 2010, and may be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially modified after the adoption date. Early adoption is permitted, provided that the guidance is retroactively applied to the beginning of the year of adoption. The Company is currently evaluating the impact this update will have on its consolidated financial statements.

In April 2010, the FASB issued ASU 2010-13, Compensation – Stock Compensation. This ASC provides amendments to FASB ASC 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trade should not be considered to contain a condition that is not a market, performance, or service condition. As a result, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this ASU is not expected to have a material impact on the Group’s financial statements.

In April 2010, the FASB issued ASU 2010-18, Receivables. The ASC provides amendments to FASB ASC 310 As a result, modifications of loans within a pool under the ASC do not result in the removal of those loans from the pool even it the modifications of those loans would otherwise be considered a troubled debt restructuring. Effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted. The adoption of this ASU is not expected to have a material impact on the Group’s financial statements.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. This ASU amends FASB ASC 820 to require a number of additional disclosures regarding fair value measurements. Specifically, this ASU requires entities to disclose: (1) the amount of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers; (2) the reasons for any transfers in or out of Level 3; and (3) information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. Except for the requirement to disclose information about purchases, sales, issuances, and settlements in the reconciliation of recurring Level 3 measurements on a gross basis, which is effective for fiscal years beginning after December 15, 2010, all the amendments to FASB ASC 820 made by this ASU are effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this ASU is not expected to have a material impact on the Group’s financial statements.

In May, 2010, the FASB issued ASU No. 2010-19, Foreign Currency (Topic 830), which provides guidance for disclosures where there are multiple exchange rates. A Venezuelan official rate and a parallel Bolivar exchange rate may result in a difference between actual US Dollar-denominated balances and reported balances. This update guides the required disclosure. This update has no effect on the Company’s current accounting practices or financial reporting.

F-27

14.	RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In July, 2010, the FASB issued ASU 2010-20, Receivables (Topic 310). The ASC provides updates to FASC ASC 310 to enhance disclosures about the credit quality of financing receivables and the allowance for credit losses. Existing disclosure guidance is amended to require an entity to provide a greater level of disaggregated information about the credit quality of its financing receivables and its allowance for credit losses. In addition, the amendments in this Update require an entity to disclose credit quality indicators, past due information, and modifications of its financing receivables. For public entities, the disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The adoption of this ASU is not expected to have material impact on the Company’s consolidated financial statements.

In September, 2010, the FASB issued ASU 2010-25, Defined Contribution Pension Plans (Topic 962). The ASC provides amendments to require that participant loans be classified as notes receivable from participants, which are segregated from plan investments and measured at their unpaid principal balance plus any accrued but unpaid interest. The amendments in this Update should be applied retrospectively to all prior periods presented, effective for fiscal years ending after December 15, 2010. Early adoption is permitted. This update has no effect on the Company’s current accounting practices or financing reporting.

15.	SUBSEQUENT EVENT REVIEW

The Company has evaluated subsequent events up to the date that these consolidated financial statements were approved and authorized for issue by the Board of Directors.

F-28

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

General

WLG Inc. (“WLG,” the “Company,” or the “Group”) is an international, non-asset based logistics company that provides air and ocean freight forwarding, contract logistics, customs brokerage and other supply chain management services to its customers from its offices in Hong Kong, the People's Republic of China (“PRC” or “China”), Australia, the United States (“US”), the United Kingdom (“UK”) and through a worldwide network of independent cargo agents.

WLG's business is conducted by its operating subsidiaries, which, as of September 30, 2010, included the following entities: Wako Express (HK) Co. Ltd. (“WEHK”), Wako Air Express (HK) Co. Ltd. (“WAE”), Wako Express (China) Co. Ltd. (“WE China”), Asean Cargo Services Pty Limited (“Asean”), WLG (UK) Limited (“WLG (UK)”) and World Commerce Services, LLC, (“WCS”) dba WLG USA LLC.

WLG was incorporated in Delaware on December 2, 2003, under the name Wako Logistics, Inc., and, in January 2004, changed its name to Wako Logistics Group, Inc. In December 2007, we changed our name to WLG Inc. Under our certificate of incorporation, we were initially authorized to issue 100 million shares of common stock, par value $0.001 per share. On the date of our first name change, we reduced the number of authorized shares to 60 million, of which 55 million shares were designated as common stock, and 5 million shares were designated as blank check preferred stock. Immediately following the formation of WLG, Mr. Christopher Wood (“Mr. Wood”) became our sole shareholder. On September 24, 2010, we filed a certificate of amendment to our restated certificate of incorporation to increase the our authorized shares to 75 million shares, of which 65 million shares are common stock, and 10 million shares are blank check preferred stock.

Pursuant to certain Share Exchange Agreements entered into on January 18, 2004, between us and Mr. Wood (and his nominee), we consummated a combination with WEHK and WAE by issuing 20,000,900 shares of our common stock in exchange for 100% of the outstanding shares of common stock of WEHK and WAE. After these share exchanges, WEHK and WAE became wholly-owned subsidiaries of WLG. Following this transaction, Mr. Wood owned all 20,001,000 shares of our common stock then issued and outstanding. In two transactions occurring on February 8, 2010, and May 11, 2010, Mr., Wood sold a sufficient number of his shares of WLG’s common stock to Jumbo Glory Ltd. ("Jumbo"), a Hong Kong based private company, to allow it to acquire 51% of WLG’s common stock. Effective with the second transaction that was completed on May 11, 2010, Jumbo became the majority shareholder of WLG.

WEHK was incorporated in Hong Kong on September 4, 1982, and carries on the business of arranging sea freight shipments, both export and import, for its customers between Hong Kong and the rest of the world, with a concentration, historically, on the Asian-Australian trade lanes, and, more recently, on the trade lanes running from Asia to the US and Europe.

WAE was incorporated in Hong Kong on February 24, 1989. Its business is dedicated to handling air freight shipments, both export and import, between Hong Kong and the rest of the world, particularly to Australia, but also to the US and Europe.

All of our Asian operations have been conducted through our two Hong Kong based subsidiaries since January 18, 2004, (the date we acquired WEHK and WAE) and through WE China, following commencement of business by it in February 2005.

On April 1, 2005, we completed the acquisition of all of the voting interests in Kay O'Neill (USA) LLC, an Illinois limited liability company. Kay O'Neill operated a US based logistics business, which primarily served US customers by providing services similar to those offered by the Group in Asia and elsewhere. At the time of the acquisition, Kay O'Neill had only one office in the US, which was in Des Plaines, Illinois. As part of the process of creating brand identity for the Group in the United States, Kay O'Neill, on June 29, 2005, changed its name to WLG (USA) LLC and began immediately to operate as WLG (USA). In June of 2005, WLG (USA) opened an office in Taylor, Michigan. As of July 1, 2010, WLG (USA) merged with WCS and ceased to exist as a business entity.

Pursuant to the Closer Economic Partnership Agreement (“CEPA”) concluded in September 2003, between Hong Kong and the PRC, Hong Kong incorporated companies were granted the right to establish wholly-owned enterprises in China to provide a full-range of logistics services. In July 2004, our Hong Kong subsidiary, WEHK, which qualified under the provisions of the CEPA, formed WE China, a wholly-owned subsidiary in the PRC. WE China began operations in February 2005, and now provides logistics support and freight forwarding services for air and sea exports and imports between China and the rest of the world. WE China has nine offices in China, including offices in what we believe are four of China’s most important commercial centers: Beijing; Shanghai; Shenzhen and Guangzhou.

Effective October 1, 2005, WLG acquired all of the voting stock of ALI, a company incorporated in September 1999 in California and based in Torrance, California. ALI was a non-asset based freight forwarding company and provided traditional freight-forwarding services to its customers for shipments between Asia and the United States. As of June 30, 2008, all of ALI’s operations had been combined with those of WLG (USA). Prior to the acquisition, WLG and ALI worked closely together pursuant to the terms of an agency agreement.

On November 9, 2005, WLG, through a newly formed and wholly-owned Australian subsidiary, WLG (Australia) Pty Ltd. (“WLG Aust”), completed the acquisition of all of the issued and outstanding common stock of Asean, a non-asset based freight forwarding and logistics company. Incorporated in March 1984 and based in Sydney, Australia, Asean also has offices in Melbourne and Brisbane and maintains agency relationships with other freight and logistics companies in all of Australia's mainland states. Asean provides a full range of transportation, logistics and customs brokerage services to its customers, with an emphasis on shipments in the Asian-Australian trade lanes. Prior to WLG's acquisition of Asean, both companies had worked closely with each other for over 20 years, providing transportation and logistics services to the customers of the other through an agency agreement.

In February 2006, WLG formed two United Kingdom (“UK”) subsidiaries, WLG (UK) Holdings as a first tier subsidiary and WLG (UK) as a second tier subsidiary, to make acquisitions and conduct business in the UK. Effective September 15, 2006, WLG (UK) acquired the operating assets and assumed limited liabilities of a division (“UK Division”) of a UK freight forwarding and logistics company (“UK Co.”). At the date of this acquisition, UK Co. was in bankruptcy proceedings in the United Kingdom. As such, WLG (UK) purchased for cash the operating assets of UK Division on an “as is” and “where is” basis. This UK Division, which operated in Manchester, UK, provided sea and air freight forwarding and warehouse logistics services, mostly to UK based customers. These activities are now carried on by WLG (UK). Prior to this acquisition, the Group and UK Co. had worked together in a limited capacity with several mutual customers.

On December 1, 2006, we acquired all of the voting shares of MSA and its wholly-owned subsidiary, Sea Systems, (“MSA Group”). MSA, which was incorporated on May 15, 1979, in Washington, provides customs brokerage and freight forwarding services to its customers. Sea Systems, incorporated on February 26, 1991, in Washington, is a non-asset based freight forwarder and provided air and sea freight forwarding and related logistics services to its customers. The MSA Group mainly serves customers that ship products from Asia to the West Coast of the U.S. for onward shipment to locations throughout the country. Historically, the business of the MSA Group had been more focused on its customs brokerage practice rather than on its freight forwarding operations. Prior to its acquisition by WLG, the MSA Group and WLG had not worked together. As of the end of 2008, all of the activities of Sea Systems had been assumed by MSA, and, as of December 31, 2009, MSA merged with WCS and ceased to exist as a business entity.

Effective July 31, 2007, WLG acquired all of the membership interests of WCS in exchange for WLG common stock and cash. WCS, organized in Illinois in January 2004, is the successor to a company of the same name, which began business in 1976. Like its predecessor, WCS is a non-asset based freight forwarding company and provides a full range of air and sea freight forwarding, logistics and customs brokerage services. It serves a wide range of customers that primarily import products by sea from Asia, with a heavy emphasis on shipments from China. In addition to its head office in Schaumburg, Illinois, WCS has offices in Long Island, New York, and Los Angeles, California. Prior to the acquisition, the Group and WCS had not worked together. As of July 1, 2010, and following its merger with WLG (USA), WCS began to operate under the name of WLG USA, LLC.

With the exception of performing administrative, oversight and regulatory tasks, the Group’s parent company, WLG Inc., carries on no other business activities.

Overview

We are a global, non-asset based freight forwarder providing supply chain logistics services, including freight forwarding, customs brokerage and Value Added Services (“VAS”) to our customers. We do not own or operate any transportation assets such as aircraft, ships, trucks, river barges or railroads. Instead, we contract with companies that own and operate commercial transportation assets of all types as a means of providing both regional and international freight forwarding services to our customers.

As part of the services we perform, we coordinate the storage of raw materials, supplies, components and finished goods and arrange their shipment by air, sea, river, rail and road to and from most major production, trading and consumer locations throughout the world. Historically, the Group has concentrated on freight shipments originating in Asia, and mostly in Hong Kong and China for shipment to Australia and, to a lesser extent, to Europe. However, as a result of its US acquisitions, the Group is now focusing more of its attention on the US market.

Our revenues are generated from the air, sea and local freight transportation services that we arrange, customs brokerage services we perform and the VAS we provide such as scanning, pick and pack, price ticketing and the warehousing of goods. We believe that our customers benefit from the extensive experience we have in arranging the transportation of freight, performing customs clearance services and providing VAS in the many countries in which we operate and/or in which we maintain agency relationships. For our freight forwarding business, our experience allows us to focus on large cargo shipments, because these types of shipments normally require the use of advanced tracking systems and access to sophisticated logistical networks in many countries, which we have established over the past many years.

Freight Forwarding and Value Added Services (VAS)

Due to the volume of shipments we arrange, we are generally able to negotiate buy rates for transportation services that are lower than the rates our customers could negotiate directly with transportation providers. Often, the shipping rates we negotiate may be influenced by the volumes of freight that we arrange to have shipped. As a result, our customers, by having us arrange their freight shipments, may benefit from lower rates, and we, in turn, may benefit by increasing our revenues and operating profits.

A significant portion of the expenses for our freight business is variable and relates directly to the amounts and volumes of shipments we book. Direct transportation costs are our largest variable expense. Personnel costs represent the second largest expense for our freight operations. Over time, we have gained the necessary experience to allow us to project our staffing needs based on the number of customer orders we fulfill. Nonetheless, staff costs are less flexible than other variable costs so that, in the short term, we may not be able to adjust our staff levels for unexpected peaks and downturns in our business.

We derive a significant portion of our air freight revenues from the consolidation of cargo from a number of customers. In this segment of our business, we always seek to combine a mix of light and heavy cargo in order to optimize the ratios of weight and cubic capacity for all air freight shipments. In general, this improves our profitability on shipments where we are able to achieve this mix.

In order to ensure that we are able to maintain an “inventory” of cargo space on air carriers, we may have to commit to use a minimum amount of space with certain airlines prior to receiving orders from our customers. To the extent we do not use such space; we incur a liability to the airlines. In the normal course of our business, we seek to minimize the risk of loss from these minimum utilization contracts with the airlines by carefully gauging customer demand and by entering into arrangements with other freight forwarders whereby they take and pay for the excess cargo space that we are unable to fill. However, we do not have the ability to require our customers to ship minimum amounts, and, as such, we are not able to pass this risk on to our customers.

We also have contracts with ocean shipping lines pursuant to which the shipping lines provide us with a certain amount of container space at agreed rates over a period of time. Under the normal operating practices of this industry, shipping lines often do not charge freight forwarders for space they are unable to utilize. However, if an ocean shipping line did choose to enforce the stated terms of these contracts, we would incur a liability to the extent we did not use the allocated space or was unable to sell it to other freight forwarders.

As part of our freight forwarding business, we often provide Value Added Services (VAS) to our customers. The provision of VAS continues to be a necessary and important part of our business and may cover a wide range of supply chain services. As an example, we provide some or all of the following VAS to our customers: pick and scan; pick and pack; co-packing; bar code printing; labeling and price tagging at both the carton and item levels. At the carton level, each carton remains unopened, which makes this a simpler service than labeling individual products. In contrast, at the item level, each individual item may, as in the case of apparel, be processed by size and color, which requires advanced information technology capabilities.

VAS that we provide may also involve receiving goods from one or multiple factories on behalf of a customer - often an overseas retail buyer - and warehousing such goods prior to packing the goods in individual containers for shipment to the customer's distribution centers or retail outlets. Goods are often shipped “store ready”, meaning they are sorted and price-tagged, ready for sale in each retail location. We see the demand for VAS increasing because a large portion of a retailer's higher labor and storage costs may be “exported” to lower-cost locations, such as China, thus bypassing costly de-consolidation and distribution centers in the customer's home country. With the continuing economic downturn, we are seeing an increased interest on the part of our customers to seek low-cost logistics and distributions services. Thus, performing these services at the point of shipment in the country of manufacture may provide a more efficient and less costly means for a customer to store and distribute its products. Performance of VAS relies on the application of a wide range of information technologies, and requires an ability to receive, process and provide shipping and inventory information from and to our customers on a time-sensitive basis. Our billings for VAS vary with the type of services performed, but they are often based on a per-piece count measured by the actual number of units we store and prepare for shipment.

Customs Brokerage Operations

We have customs brokerage practices in our offices in Sydney, Australia, Manchester, England, Seattle, Washington, Los Angeles, California and Schaumburg, Illinois. In each location, we acquired an existing business. Customs brokerage services are performed both for freight and brokerage customers as well as for brokerage only customers. While the complexity of customs services may vary from one jurisdiction to another based on the specific governmental regulations of each country, the nature of the services are similar worldwide. In general, customs brokerage services include preparing all documentation required for the clearance of goods through customs and, for some customers, the collection of funds for the payment of import duties to the appropriate governmental agencies. In addition, as part of our customs work, we often provide ancillary services which may include assistance with customs examinations, advice on duty rates and regulations and the local delivery of goods.

As part of our customs practice, we may be required, because of competitive pressures, to advance funds on behalf of our clients to pay the duty on their import shipments. These advances represent a considerable use of cash and do carry a credit risk for us. For this reason, we maintain stringent checks on the creditworthiness of all brokerage customers. Normally, countries have electronic payment procedures which allow importers to make payments directly to the government customs agency, and we have implemented programs to encourage and assist our customers to use these payment facilities. If our customers do remit customs duties directly to their respective governmental agencies, we benefit by not outlaying our cash, as well as avoiding the credit risk on the cash advances we might otherwise provide.

The net income we earn from our brokerage practices is generally less than the net income we earn from our freight-forwarding and VAS operations. However, operating a brokerage practice gives us a competitive advantage in some locations and a level playing field in others, which helps us to attract and retain more profitable freight forwarding and VAS customers.

Generally, billings for customs brokerage services are based on the number of freight clearances we perform for a particular customer and may often include the costs and mark-up for ancillary services such as arranging for the local delivery of goods and the preparation, pick-up and delivery of documentation for such shipments. The amounts we bill are normally similar to what other brokerage companies charge in a specific geographical area. Personnel costs are the largest expense for this segment of our business. Lastly, because this part of our business tends to be stable and recurring, we are able to estimate with a fair degree of certainty what our personnel needs are for each of our customs practices.

Global Agency Network

WLG maintains a wide network of independent cargo agents in many cities around the world. All of our arrangements with these agents are on a non-exclusive basis. And, under these arrangements, none of the agents is authorized to make commitments or to execute any contracts on our behalf. In most cases, the fees earned for transporting a shipment from the point of origin to the point of destination are shared 50:50 with our overseas agents, whether the shipment originates with us or the overseas agent. In some cases, billings to and from out agents may include additional charges for other transportation and logistics services.

At the latest count, we work with over 600 overseas agents which have offices in strategic cities around the world. As a result, we may be represented by more than one agent in many cities, and we do not generally need to rely on a single agent in any one city.

In addition to performing freight forwarding support services for us, these agents are an important sales and marketing resource. By relying on these agents to help us obtain new business and market our services, we may be able to expand our global activities without the costs typically associated with the ownership and maintenance of company-owned offices. Given the importance of overseas cargo agents to our business, we think it is critical that senior management be involved on a regular basis to maintain and strengthen these working relationships. Our mutual goal is to provide and receive increased business through our network of cargo agents. Lastly, our costs to retain these agency relationships are nominal, and mostly include only management time and travel costs. However, because we normally have to split our fees with these cargo agents, the profit we earn per job is less than what we would earn if our own offices handled both the import and export sides of a shipping transaction. In addition, it is more difficult to ensure the same level of service to a customer when part of the work for a shipment is performed by an independent agent.

Results of Operations

THREE MONTHS ENDED SEPTEMBER 30, 2010 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2009.

Results of Operations

Group revenues for the three months ended September 30, 2010, increased by about $11.85 million, from approximately $40.07 million to $51.92 million or 30%, when compared with the same period in 2009. Our Hong Kong based-operations reported increased revenues of $6.07 million, and revenues from our China offices increased by $2.43 million. Our US operations reported a combined increase in revenues of $3.44 million, and Asean’s revenues grew by $0.61 million. Revenues in our UK operations declined by $0.70 million.

Gross profit for the Group increased from $6.13 million for the three months ended September 30, 2009, to $8.05 million for the same period in 2010, for an increase of $1.92 million, or about 31%. The increase is primarily due to higher volumes of freight shipped by our existing customers and the continued introduction of new customers. Of this increase in gross profit, approximately $0.92 million is attributable to our Hong Kong operations, about $45,000 is from our offices in China, roughly $0.69 million is from our US operations and $0.45 million is from Asean. Gross profit in the UK fell by $0.19 million in this quarter compared to the third quarter of 2009.

The Group's gross margin increased slightly from 15.3% for the three months ended September 30, 2009, to 15.5% for the same period in 2010.

Total operating expenses increased to about $7.24 million for the three months ended September 30, 2010, as compared to approximately $6.49 million for the same period in 2009, for an increase of $0.75 million. Of the total growth in operating expenses, approximately $0.41 million is attributable to compensation expense which has increased primarily because of a net increase in headcount. Total compensation expense for the third quarter of 2010 was $4.67 million, which compares to $4.27 million at the end of the third quarter of 2009. The Group had 348 employees as of the end of September 2009, and this number has grown to 365 persons as of September 30, 2010. Most of the additional headcount resulted from salary increases and an increase in staff in Hong Kong, China and Australia as the headcount for our US operations declined by 15 persons on a quarter to quarter comparison. Other selling and administrative costs increased by approximately 18% from $1.97 million for the three months ended September 30, 2009 to $2.33 million for the three months ended September 30, 2010, which, when combined with the increase in personnel costs, resulted in a total increase of approximately $0.76 million in operating costs, not including amortization and depreciation. Amortization and depreciation expense decreased from $0.25 million for the three months ended September 30, 2010 to $0.24 million for the three months ended September 30, 2010. Most of this reduction relates to a decrease in the amortization for WCS’s customer list. In 2009, we recorded a $0.72 million impairment charge to reflect a decline in the value of WCS’s customer list, and this has resulted in less monthly amortization expense for this asset. See Other Operating Expenses below.

After the provision of income taxes, the Group posted a net income of $0.35 million for the three months ended September 30, 2010, compared to a net loss of $0.67 million for the same period in 2009. Hong Kong and China’s operations reported a combined net income of $0.99 million for the three months ended September 30, 2010, compared to net income of $0.53 million for the same period in 2009, for an increase in net income of $0.46 million. Our US operations recorded a combined net income of $0.18 million for the three months ended September 30, 2010, compared to a net loss of $0.67 million for the same period in 2009. Asean reported a net income of $0.12 million for the three months ended September 30, 2010, compared to net income of $0.18 million for the same period in 2009. WLG (UK) reported a net loss of $0.10 million for the three months ended September 30, 2010, compared to net income of $9,000 for the same period in 2009. The parent company’s loss increased to $0.84 million (before allocation of expenses to the operating companies) for the three months ended September 30, 2010, compared to $0.72 million for same period in 2009. Most of the increase in loss for the parent company is due to higher salaries for management personnel that joined in the Group in January and March of 2010.

Segment Information

Air freight operations: Revenues from our air freight operations increased from $7.71 million for the three months ended September 30 2009, to about $15.58 million for the same period in 2010, for an increase of $7.87 million. Our Hong Kong and China operations reported a combined increase in revenues of $6.24 million, increasing from $4.98 million for the three months ended September 30, 2009, to revenues of $11.22 million for the same period in 2010. In addition, our US air freight revenues increased by $1.56 million for the three months ended September 30, 2010 as compared to the same period in 2009. Our remaining subsidiaries reported a net increase of approximately $0.07 million in their air freight revenues for the three months ended September 30, 2010, compared to the same period in 2009.

Cost of sales for our air freight operations increased by $6.41 million from $6.17 million for the three months ended September 30, 2009, to $12.58 million for the same period in 2010, mainly as a result of an increase in the volumes of cargo shipped and to significant increases in rates charged by the airlines.

The Group’s gross profit margin for its air freight business decreased from 20.0% for the three months ended September 30, 2009, to 19.2% for the same period in 2010.

Segment overhead for our air freight operations was $1.24 million for the three months ended September 30, 2009, which compares to $2.17 million for the same period in 2010. Our operating costs increased in order to handle the higher volumes of freight shipped in 2010 compared to 2009, and to compensation costs for new personnel added to our offices in Hong Kong and China.

Net segment income for our air freight operations is approximately $0.82 million for the three months ended September 30, 2010, compared to net income of $0.30 million for the same period in 2009. For the three months ended September 30, 2010, our Hong Kong and China air freight operations reported a combined net income of approximately $0.76 million, compared to combined net income of approximately $0.36 million for the same period in 2009, for an increase of $0.40 million. In addition, our USA operations posted net incomes of $34,000 for the third quarter of 2010, compared to net losses of $98,000 for the same period in 2009. Asean and our UK operation reported a net income of $23,000 and $7,000 for the three months ended September 30, 2010, compared to a net income of $37,000 and $3,000 for the same period in 2009.

Sea freight operations: Revenues from our sea freight operations increased from approximately $17.09 million in the three months ended September 30, 2009, to $21.06 million for the same period in 2010, for an increase of $3.97 million, or about 23%. Our China and Hong Kong operations reported increases in revenues of $0.92 million and $1.34 million, respectively for the three months ended September 30, 2010 as compared to the same period in 2009. In addition, Asean posted an increase in revenues of $0.90 million. Our US operations reported a net increase in their sea freight revenues of approximately $1.12 million, while revenues in our UK business declined by about $0.31 million.

Cost of sales for our sea freight operations increased from $13.62 million for the third quarter of 2009 to $17.42 million for the same period in 2010, due to an increase in the volumes of cargo shipped and significant increases in shipping rates and surcharges.

The Group’s gross profit margin decreased from 20.3% for the three months ended September 30, 2009 to 17.2% in 2010.

Total segment overhead attributable to our sea freight business decreased by $0.13 million, from approximately $3.50 million for the three months ended September 30, 2009, to $3.37 million for the same period in 2010.

Our sea freight operations posted a net income of approximately $0.26 million for the three months ended September 30, 2010, compared to net loss of $27,000 for the same period in 2009. In the third quarter of 2010, our Hong Kong and China operation reported a combined net income of $0.23 million, which compares to net income of $0.18 million for the same period in 2009. In addition, Asean and our US operations posted net incomes of $61,000 and $63,000, respectively, for the three months ended September 30, 2010, compared to a net income of $0.10 million and a net loss of $0.30 million for the same period in 2009. WLG (UK) reported a net loss of $99,000 for the third quarter of 2010, compared to a net loss of $5,000 for the same period in 2009.

Customs brokerage services: Asean, WLG (UK) and our US operations each have divisions which provide customs brokerage services. For the three months ended September 30, 2010, revenues from customs brokerage services totaled approximately $15.29 million, compared to $15.27 million for the same period in 2009. Direct and administrative costs for this segment totaled about $15.18 million, producing a net income of $0.11 million for the three months ended September 30, 2010, compared to a net loss of $0.22 million for the same period in 2009.

Other Operating Expenses

Salaries and allowances

Salaries and related expenses increased by $0.40 million, from $4.27 million for the three months ended September 30, 2009 to $4.67 million for the same period in 2010. Compensation expense increased in our Australian and Asian operating locations, including our parent company, and decreased in both the US and UK locations. The increase in salary costs for our operations in Asia is due to salary increases granted in 2010 and the increase in staff. Parent company salary costs increased as a result of adding management personnel. Asean’s compensation expense increased due to additions to its warehouse staff, salary increases given to staff and a strengthening of the Australian currency against the US dollar. Salary costs in our US and UK operations declined due to a reduction in headcount and a change in the mix of employees.

Rent

Rent expense for our facilities remained the same, being about $0.58 million for the three month period ended September 30, 2010, compared to $0.49 for the three months ended September 30, 2009. The increase is mainly attributable to the new warehouse facilities of Asean.

Other selling and administrative expenses

Other SG&A expense totaled about $1.76 million for the three months ended September 30, 2010, compared to $1.47 million for the same period in 2009, for an increase of $0.29 million. The increase in SG&A expenses was incurred to accommodate the growth in our business.

Depreciation and Amortization

For the three months ended September 30, 2010, depreciation expense for property, plant and equipment was $0.13 million, compared to $92,000 for the same period in 2009, for an increase of $37,000. Asean acquired new office equipment and furniture and fixtures which increased its depreciation expense by about $26,000.

Amortization expense is attributable to the customer lists acquired in the acquisitions of WLG (USA), Asean, WLG (UK) and WCS. In connection with the acquisition of WLG (USA), we recorded a customer list asset of $0.51 million, which is now being amortized on a straight-line basis over 4 years. Asean's customer list was valued at $1.56 million and is being amortized on a straight-line basis over 8 years. WLG (UK)'s customer list was valued at $0.83 million and was being amortized over 5 years. In 2009, WLG (UK)’s customer list became fully amortized due to prior amortization and a reduction in carrying value of $0.60 million, resulting from the cancellation of an earn-out arrangement. WCS’s customer list was valued at $2.84 million and is being amortized over 9 years. In addition, the Group periodically reviews the book value and estimated useful lives of its intangible assets to ensure that the rate of amortization is consistent with the expected pattern of economic benefits to be received from its intangible assets. This review for 2009 resulted in the Group recognizing an impairment charge of $0.72 million to WCS’s customer list. In 2008, a similar review indicated that the remaining useful lives for the intangible assets of WLG (USA) and WLG (UK) were 4 years and 5 years, respectively. Due to this review, the useful lives of the intangible assets of WLG (USA) and WLG (UK) were extended from 1.25 years to 4 years and from 3 years to 5 years, respectively, effective from January 1, 2009. For the three months ended September 30, 2010, amortization expense totaled $0.11 million, and is attributable to WLG (USA), Asean and WCS in the approximate amounts of $8,000, $49,000 and $51,000, respectively. Amortization expense for the three months ended September 30, 2009, was $0.16 million and related to WLG (USA), Asean, WLG (UK) and WCS in the approximate amounts of $8,000, $49,000, $24,000 and $79,000, respectively.

Interest Expense

Interest expense grew from $0.15 million for the three months ended September 30, 2009, to $0.28 million for the same period in 2010, for an increase of about $0.13 million. Asean’s interest expense was higher by $38,000 as a result of increases in its bank borrowings and related interest rates,. WCS’s interest expense increased from $26,000 for the three months ended September 30, 2009, to about $0.11 million for the same period in 2010. The increase in WCS’s interest expense is due to higher bank borrowing and significantly higher interest rates. WEHK and WAE obtained new bank loans at the beginning of 2010 and incurred interest expense of $7,000 for this new debt. In addition, WEHK incurred interest of $30,000 for a loan of $1 million from a shareholder and for a promissory note of $1 million. Interest expense for the director’s loans and Series B Preferred Stock decreased from $69,000 for the three months ended September 30, 2009, to $34,000 for the same period in 2010, due to a decrease in the interest rate. All director loans and the Series B Preferred Stock through June 1, 2010, carried an interest and dividend rate of 12% per annum. Subsequent to that date, the interest rate on the director’s loan became nil, and the dividend rate on the Series B Preferred Stock was reduced to 8%.

Provision for Income Taxes

A provision of income tax of $0.18 million was recorded for the three months ended September 30, 2010, compared to income tax expenses of about $0.15 million provided for the same period in 2009. Income tax of $0.16 million, was provided on the combined net incomes of $0.94 million for our Hong Kong and China operation, for an effective tax rate of 17%. WLG (UK) reported a net loss of $0.17 million and recorded no tax benefit. Asean reported a net loss of $0.13 million and recorded an income tax benefit of $7,000. The US operations of WLG (USA) is included in a US consolidated federal income tax return with the Group's parent company, and, together, these companies reported a consolidated pre-tax loss of approximately $0.11 million, which included amortization expense of $0.10 million that is not deductible for income tax purposes. No federal tax benefit was provided for the US losses, but the US companies did record an expense for state income tax of about $29,000.

In October 2009, WLG received notification from the US Internal Revenue Service (IRS) that they would be reviewing WLG’s 2007 federal income tax return. At the present time, no material effect to WLG is expected although the audit remains ongoing.

NINE MONTHS ENDED SEPTEMBER 30, 2010 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2009.

Results of Operations

Group revenues for the nine months ended September 30, 2010, increased by about $36.15 million from approximately $101.05 million to $137.20 million, when compared with the same period in 2009. Our Hong Kong based-operations reported increased revenues of $14.27 million, while revenues from our China offices increased by $7.44 million. Our US operations reported a combined increase in revenues of $7.60 million and Asean’s revenues grew by $7.89 million. Revenues in our UK operations declined by $1.05 million.

Gross profit increased from $16.28 million for the nine months ended September 30, 2009, to $20.76 million for the same period in 2010, for an increase of $4.48 million, or about 28%. The increase is primarily due to higher volumes of freight shipped by our existing customers and the continued introduction of new customers. Of this increase in gross profit, approximately $1.73 million is attributable to our Hong Kong and China operations, $1.22 million is from our US operations and $2.17 million is from Asean. Gross profit in the UK fell by $0.64 million in the first three quarters of 2010, when compared to the same period in 2009.

The Group's gross margin declined from 16.1% for the nine months ended September 30, 2009, to 15.1% for the same period in 2010.

Total operating expenses increased to about $21.17 million for the nine months ended September 30, 2010, as compared to approximately $17.99 million for the same period in 2009, for an increase of $3.18 million. Of the total growth in operating expenses, approximately $1.93 million is attributable to compensation expense which increased because of a net increase in headcount. Total compensation expense for the first three quarters of 2010 was $13.89 million, which compares to $11.96 million for the first three quarters of 2009. The Group had 348 employees as of the end September 2009, and this number has grown to 365 persons as of September 30, 2010. Most of the additional headcount is in Hong Kong, China and Australia. Compared to the nine months ended September 30, 2009, the headcount for our US operations declined by 15 persons. Other selling and administrative costs increased by approximately 25% from $5.29 million to $6.60 million, which, when combined with the increase in personnel costs, resulted in a total increase of approximately $3.24 million in operating costs, not including amortization and depreciation. Amortization and depreciation expense decreased from $0.74 million to $0.68 million. Most of this reduction relates to a decrease in the amortization for WCS’s customer list. In 2009, we recorded a $0.72 million impairment charge to reflect a decline in the value of WCS’s customer list, and this has resulted in less monthly amortization expense for this asset. See Other Operating Expenses below.

After the provision of income taxes, the Group recorded a net loss of $1.15 million for the nine months ended September 30, 2010, compared to a net loss of $2.12 million for the same period in 2009. Hong Kong and China’s operations reported a combined net income of $1.48 million for the nine months ended September 30, 2010, compared to net income of $1.24 million for the same period in 2009, for an increase of $0.24 million. Our US operations recorded a net loss of $50,000 for the nine months ended September 30, 2010, compared to a net loss of $1.47 million for the same period in 2009. Asean reported a net income of $0.18 million for the nine months ended September 30, 2010, compared to net loss of $17,000 for the same period in 2009. WLG (UK) reported a net loss of $0.32 million for the nine months ended September 30, 2010, compared to a net income of $5,000 for the same period in 2009. The parent company’s loss increased to $2.44 million (before allocation of expenses to the operating companies) for the nine months ended September 30, 2010, compared to $1.88 million for same period in 2009.

Segment Information

Air freight operations: Revenues from our air freight operations increased from $17.16 million for the first three quarters of 2009 to about $39.30 million for the same period in 2010, for an increase of $22.14 million. Our Hong Kong and China operations reported a combined increase in revenues of $16.75 million, increasing from $10.89 million for the nine months ended September 30, 2009, to $27.64 million for the same period in 2010. In addition, our US air freight revenues increased by $5.09 million, compared to the same period in 2009. Our remaining subsidiaries reported a net increase in their air freight revenues of approximately $0.30 million for the first nine months of 2010, compared to the same period in 2009.

Cost of sales for our air freight operations increased by $19.27 million from $13.48 million for the nine months ended September 30, 2009, to $32.75 million for the same period in 2010, mainly as a result of an increase in the volumes of cargo shipped and significant increases in rates charged by the airlines.

The Group’s gross profit margin for its air freight business decreased from 21.5% for the nine months ended September 30, 2009, to 16.7% for the same period in 2010.

Segment overhead for our air freight operations was $3.24 million for the nine months ended September 30, 2009, which compares to $5.57 million for the same period in 2010. Our operating costs increased in order to handle the higher volumes of freight shipped in 2010 compared to 2009, and to the compensation costs for new personnel added to our offices in Hong Kong and China.

Net segment income for our air freight operations is approximately $0.98 million for the nine months ended September 30, 2010, compared to net income of $0.44 million for the same period in 2009. For the nine months ended September 30, 2010, our Hong Kong and China air freight operations reported a combined net income of approximately $1.05 million, compared to combined net income of approximately $0.67 million for the same period in 2009, for an increase of $0.38 million. In addition, our UK and USA operations posted net losses of $93,000 and $14,000, respectively, for the first three quarters of 2010, compared to net losses of $40,000 and $0.13 million for the same period in 2009. Asean reported a net income of $34,000 for the nine months ended September 30, 2010, compared to a net loss of $62,000 for the same period in 2009.

Sea freight operations: Revenues from our sea freight operations increased from approximately $45.70 million in the nine months ended September 30, 2009, to $56.93 million for the same period in 2010, for an increase of $11.23 million. Our China and Hong Kong operations reported increases in revenues of $2.08 million and $2.89 million, respectively. In addition, Asean posted an increase in revenues of $5.97 million. Our US operations reported an increase in their sea freight revenues of approximately $0.99 million, and revenues in our UK business declined by about $0.70 million.

Cost of sales for our sea freight operations increased from $35.86 million for the first three quarters of 2009 to $46.40 million for the same period in 2010, due to an increase in the volumes of cargo shipped and significant increases in shipping rates and surcharges.

The Group’s gross profit margin decreased from 21.5% for the nine months ended September 30, 2009 to 18.5% in 2010.

Total segment overhead attributable to our sea freight business increased by $0.37 million, from approximately $9.87 million for the nine months ended September 30, 2009, to $10.24 million for the same period in 2010.

Our sea freight operations posted a net income of approximately $0.29 million for the nine months ended September 30, 2010, compared to a net loss of $30,000 for the same period in 2009. For the nine months ended September 30, 2010, Hong Kong and China reported net incomes of $0.43 million, which compares to net incomes of $0.57 million, for the same period in 2009. In addition, Asean posted a net income of $95,000 for the nine months ended September 30, 2010, compared to a net income of $0.13 million for the same period in 2009. WLG (UK) and our US operation reported net losses of $0.21 million and $23,000, respectively, for the first three quarters of 2010, compared to a net income of $93,000 and a net loss of $0.82 million for the same period in 2009.

Customs brokerage services: Asean, WLG (UK) and our US operation each have a division that provides customs brokerage services. For the nine months ended September 30, 2010, revenues from customs brokerage services totaled approximately $40.97 million, compared to $38.19 million for the same period in 2009, for an increase of about $2.78 million. Direct and administrative costs for this segment totaled about $40.96 million, producing a net income of $16,000 for the nine months ended September 30, 2010, compared to a net loss of $0.66 million for the same period in 2009.

Other Operating Expenses

Salaries and allowances

Salaries and related expenses increased by $1.93 million, from $11.96 million for the nine months ended September 30, 2009, to $13.89 million for the same period in 2010. Compensation expense increased in our Australian and Asian operating locations, including our parent company, and decreased in both the US and UK locations Salary costs for our operations in Asia increased by about $0.95 million for the first nine months of 2010, compared to the same period in 2009, mainly due to salary increases granted in 2010 and to the increase in staff. Parent company salary costs increased in the first nine months of 2010 by about $0.49 million over the same period last year as a result of adding management personnel in the first three months of 2010. Asean’s compensation costs in the first three quarters of 2010 increased by $1.33 million, when compared to the same period in 2009, and the increase is due to salary adjustments, an increase in warehouse staff and a strengthening of the Australian currency against the US dollar. Salary costs in our US and UK operations declined due to a reduction in headcount and a change in the mix of employees.

Rent

Rent expense for our facilities increased by approximately $0.13 million to about $1.50 million for the nine months ended September 30, 2010, compared to rent expense of $1.37 million for the same period in 2009. The increase is mainly attributable to the new warehouse facilities of Asean.

Other selling and administrative expenses

Other SG&A expense totaled about $5.10 million for the nine months ended September 30, 2010, compared to $3.92 million for the same period in 2009, for an increase of $1.18 million. The increase in SG&A expenses was incurred to accommodate the growth in our business.

Depreciation and Amortization

For the nine months ended September 30, 2010, depreciation expense for property, plant and equipment was $0.36 million, compared to $0.26 million for the same period in 2009, for an increase of about $0.1 million. Asean acquired new office equipment and furniture and fixtures which increased its depreciation expense by about $65,000 for the first three quarters of 2010, compared to the same period in 2009.

Amortization expense is attributable to the customer lists acquired in the acquisitions of WLG (USA), Asean, WLG (UK) and WCS. In connection with the acquisition of WLG (USA), we recorded a customer list asset of $0.51 million, which is now being amortized on a straight-line basis over 4 years. Asean's customer list was valued at $1.56 million and is being amortized on a straight-line basis over 8 years. WLG (UK)'s customer list was valued at $0.83 million and was being amortized over 5 years. In 2009, WLG (UK)’s customer list became fully amortized due to prior amortization and a reduction in carrying value of $0.60 million resulting from the cancellation of an earn-out arrangement. WCS’s customer list was valued at $2.84 million and is being amortized over 9 years. In addition, the Group periodically reviews the book value and estimated useful lives of its intangible assets to ensure that the rate of amortization is consistent with the expected pattern of economic benefits to be received from its intangible assets. This review for 2009 resulted in the Group recognizing an impairment charge of $0.72 million to WCS’s customer list. In 2008, a similar review indicated that the remaining useful lives for the intangible assets of WLG (USA) and WLG (UK) were 4 years and 5 years, respectively. Due to this review, the useful lives of the intangible assets of WLG (USA) and WLG (UK) were extended from 1.25 years to 4 years and from 3 years to 5 years, respectively, effective from January 1, 2009. For the nine months ended September 30, 2010, amortization expense totaled $0.32 million, and is attributable to WLG (USA), Asean and WCS in the approximate amounts of $24,000, $146,000 and $154,000, respectively. Amortization expense for the nine months ended September 30, 2009 was $0.48 million and related to WLG (USA), Asean, WLG (UK) and WCS in the approximate amounts of $24,000, $146,000, $74,000 and $236,000, respectively.

Interest Expense

Interest expense grew from $0.46 million for the nine months ended September 30, 2009, to $0.70 million for the same period in 2010, for an increase of about $0.24 million. Asean’s interest expense was higher by $98,000, mainly as a result of increases in its bank borrowings and interest rates as well as a strengthening of Australia's currency against the US dollar. WCS’s interest expense increased from $70,000 for the nine months ended September 30, 2009, to about $0.23 million for the same period in 2010. The increase in WCS’s interest expense is due to higher bank borrowing, significantly higher interest rates and other charges attributable to the new loan facility it obtained at the end of February 2010. WEHK and WAE obtained new bank loans at the beginning of 2010 and incurred interest expense of $21,000 for this debt. In addition, WEHK incurred interest of $30,000 for a loan of $1 million from a shareholder and for a promissory note of $1 million. Interest expense for the director’s loans and Series B Preferred Stock decreased from $0.22 million for the nine months ended September 30, 2009, to $0.16 million for the same period in 2010, as one of the loans was fully repaid in 2009. All director loans and the Series B Preferred Stock until June 1, 2010, carried an interest and dividend rate of 12% per annum. Subsequent to that date, the interest rate on the director’s loan became nil, and the dividend rate on the Series B Preferred Stock was reduced to 8%.

Provision for Income Taxes

A provision for income taxes of $0.12 million was recorded for the nine months ended September 30, 2010, compared to income tax expenses of about $92,000 provided for the same period in 2009. Income tax of $0.19 million was provided on combined net incomes of our Hong Kong and China operations of $1.12 million, for an effective tax rate of 17%. WLG (UK) reported a net loss of $0.52 million and recorded no tax benefit. Asean reported a net loss of $0.48 million and recorded an income tax benefit of $0.11 million. WLG (USA) are included in a US consolidated federal income tax return with the Group's parent company, and, together, these companies reported a consolidated pre-tax loss of approximately $1.14 million, which included amortization expense of $0.30 million that is not deductible for income tax purposes. No federal tax benefit was provided for the US losses, but the US companies did record an expense for state income tax of about $39,000.

LIQUIDITY AND CAPITAL RESOURCES

Our operations used cash of approximately $2.48 million for the nine months ended September 30, 2010, compared to cash of $0.9 million used by operations for the same period in 2009. During the first nine months of 2010, cash was provided by the following sources: amortization and depreciation expense of $0.68 million; provision for bad debts of $0.18 million; an increase in trade payables of $4.02 million; an increase in accrued liabilities of $90,000 and other non-cash item of $20,000. Major components that used cash for operations during the first nine months of 2010 include: net loss of $1.15 million; increase in trade receivables of $5.65 million; increases in deposits and prepayments of $0.54 million; decrease in due to director of $40,000 and a decrease in income tax payable of $91,000.

Net cash provided by financing activities totaled about $4.68 million for the nine months ended September 30, 2010, compared to net cash of $0.32 million provided by financing activities for the same period in 2009. Cash provided by financing activities in the first nine months of 2009 included an increase in bank debt of $0.70 million and a decrease in restricted cash of $0.11 million. Cash used by financing activities in the nine months of 2009 included a repayment of capital lease obligation of $53,000; repayment to loan from director of $0.38 million and cash dividends of $68,000 paid on preferred stock. Cash provided by financing activities for the nine months ended September 30, 2010, included increase in bank debts of $1.96 million, two loans of each of $1.0 million, the purchase of $0.98 million of the Company’s Series C Preferred stock by the Group’s new majority shareholder. Cash used by financing activities for the nine months ended September 30, 2010 included an increase in restricted cash of $0.10 million, repayment of a loan from a director of $40,000; repayment of capital lease obligations of $60,000; and cash dividends of $68,000 paid on preferred stock.

As of September 30, 2010, certain banks in Hong Kong and China had issued bank guarantees of $0.54 million to several airlines on behalf of WAE and WE China. With these guarantees, the airlines, in turn, grant credit terms to WAE and WE China. In general, payments for air freight shipments must be made to the airlines prior to the time we receive payments from our customers. These guarantees are secured by cash of approximately $0.54 million held in restricted bank accounts.

An Australian bank has provided a guarantee of about $0.13 million in favor of the owner of the office premises occupied by Asean. In addition, a UK bank has provided a guarantee of $0.47 million to the UK Customs and Excise Department for the benefit of WLG (UK). In return for this guarantee, the UK Customs and Excise Department grants credit terms to WLG (UK). A parent company guarantee has been given to the UK bank. In addition, a parent company guarantee has been given as support for the rental obligations related to WLG (UK)’s office and warehouse facilities. This latter guarantee is limited to an amount equal to three years rent plus rates at the date the guarantee is enforced. As of September 30, 2010, our contingent obligation under this guarantee was about $0.91 million, plus assessed rates.

In January 2010, WEHK borrowed $0.32 million for use as general working capital, and this loan is repayable in equal installments over five years. As of September 30, 2010, the outstanding balance of this loan was $0.28 million.

In December 2009, WAE borrowed $0.26 million for use as general working capital, and this loan is repayable in equal installments over five years. As of September 30, 2010, the outstanding balance of this loan was $0.22 million.

During 2010, WEHK issued a promissor note in the aggregate principal amount of $1.0 million to a majority shareholder. The promissory notes carried an interest rate at 6% per annum. In addition, in August 2010, WEHK received a loan of $1.0 million from an individual. The terms of the loan have not been set forth in a promissory note, however WEHK and the lender have agreed that the loan will bear interest at a rate of 6% per annum and be convertible into newly designated shares of WLG preferred stock at a conversion price of $0.25 per share.

Asean has a revolving loan facility in the face amount of approximately $3.88 million, which is secured by, and based on, 100% and 80% of its accounts receivable, respectively. It also has an overdraft facility with a limit of about $0.65 million. At September 30, 2010, Asean's bank debt under its revolving loan and overdraft facilities was $2.46 million and $0.65 million, respectively, with interest rates of approximately 10.43% for the receivables line and 9.53% for the overdraft facility. Asean's bank, in addition to having a charge over all of its accounts receivable, holds a first registered mortgage over all of its remaining assets. Asean’s overdraft facility is guaranteed by the Group’s parent company.

During 2008, WCS had a revolving loan facility from a bank in the face amount of $3.0 million. This facility, which was secured in part by all of the trade receivables of WCS, MSA and WLG (USA), allowed borrowings equal to 80% of the eligible receivables of all three companies. The loan facility was renewed in October 2009 in the face amount of $2.5 million, but was subsequently reduced to $2.08 million when it was renewed in November 2009. This loan facility expired on February 28, 2010, and was not renewed. In February 2010, WCS and WLG (USA) obtained a revolving banking facility of $3.0 million from another lender, and this new facility will expire in February 2011. This new loan facility, which permits borrowings equal to 78% of eligible receivables and carries a minimum interest rate of 9.5% per annum, is secured by all of the assets of WCS and WLG (USA) and by a guarantee from the Group’s parent company. In addition, an origination and commitment fee totaling 2% of the loan facility, a monthly collateral management fee of 0.35% per month of the outstanding loan balance and certain other charges are payable for this loan facility. Effective July 6, 2010, WCS’s bank amended the $3.0 million revolving loan facility to increase it by $1.0 million to a face amount of $4.0 million. In exchange for the additional credit facility of $1.0 million, WCS paid an origination fee to the bank equal to 1% of $1.0 million, and paid all of the bank’s legal fees in connection with amending the loan agreement. As of September 30, 2010, our US companies owed approximately $3.88 million to the bank.

In our past reports, we have expressed a strong intent to continue executing our business plan, which, among other things, called for us to make strategic acquisitions to supplement our internal growth. In 2005, we completed the acquisitions of three freight forwarding and logistics companies, one of which had a customs brokerage business. We followed this in 2006 by acquiring two freight forwarding and customs brokerage companies. In July of 2007, we acquired WCS, which operates both a freight forwarding business and customs brokerage practice. In May of 2009, we hired approximately 10 individuals that had previously worked with an international freight forwarding company in New York. Several of the new employees have strong business connections in Asia and specialize in air-freight shipments in the US-Asia trade lanes. We paid no cash to hire these individuals, but we did incur some capital costs and also added office space to our existing branch office in New York. Late in 2009 and during the first quarter of 2010, we added over twenty new employees to our operations in Hong Kong and China without incurring any outlay of funds, except for on-going salaries. All of these individuals previously worked for a large multi-national freight forwarding and logistics company and have strong backgrounds in sales, air-freight forwarding and logistics. During the first nine months of 2010, the Group raised additional operating funds by selling a new Series C Preferred Stock and a 6% note to Jumbo Glory Ltd., its majority shareholder, in the amounts of $1.0 million and $1.0 million, respectively. During the third quarter of 2010, the Group sold a 6% note to an individual investor in the amount of $1.0M. The Group will continue to look for opportunities to raise additional funds to order to grow our existing business and improve our profitability.

Our approximate contractual cash obligations as of September 30, 2010, for the periods shown are set forth in the table below and are expected to equal approximately $0.58 million per month over the following twelve months.

	Payments Due by Period (in thousands)
Contractual Obligations	Total		Less than 1year		1-3 years		4-5 years		After 5 years
Short-term debt	$	2,570	$	2,000	$	570		—		—
Facilities rental and equipment leases	$	6,945	$	1,893	$	2,735	$	1,588	$	729
Cargo space commitments	$	1,375	$	1,375		—		—		—
Redeemable preferred stock	$	1,700		1,700	$	—		—		—
Total contractual cash obligations	$	12,590	$	6,968	$	3,305	$	1,588	$	729

During the periods ended September 30, 2010 and 2009, we have not engaged in any:

material off-balance sheet activities, including the use of structured finance or special purpose entities;

trading activities in non-exchange traded contracts.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable because the Company is a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's principal executive officer and principal financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as Amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. In the course of such evaluation, the principal executive and principal financial officers noted that during the period covered by this Quarterly Report on Form 10-Q, certain information required to be included in Current Reports on Form 8-K did not become available on a timely basis. This was determined to be attributable to the changes in the control of the Company and its management during this period, and to a number of transactions connected with the change in control and in management and to raising additional operating funds. The Company’s management believes it has addressed this situation. In light of the foregoing, and based on the evaluation by the Company’s principal executive and principal financial officers, the Company's principal executive officer and principal financial officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective, as of the end of the period covered by this Report on Form 10-Q, in ensuring that material information relating to the Company required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported on a timely basis.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the period covered by the Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II: Other Information

Item 1. Legal Proceedings.

During the three months ended September 30, 2010, there have been no material changes to legal proceedings from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2009

Items 1A. Risk Factors. There have been no material changes in the Risk Factors set forth in our Annual Report on Form10-K for the year ended December 31, 2009.

Item 5. Other Information.

In August 2010, WEHK received a loan of $1.0 million from an individual. The terms of the loan have not been set forth in a promissory note, however WEHK and the lender have agreed that the loan will bear interest at a rate of 6% per annum and be convertible into newly designated shares of WLG preferred stock.

Item 6. Exhibits.

Exhibits

3.1		Second restated certificate of incorporation.

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule15d-14(a)).

31.2		Certification of the Chief Financial Officer to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 15d-14(a).

32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 15d-14(b)).

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WLG INC.

Date: November 15, 2010	By:	/s/ Andrew Jillings
		Andrew Jillings
		Chief Executive Officer, ( Principal Executive Officer)

Date: November 15, 2010	By:	/s/ Edmund Pawelko
		Edmund Pawelko
		Chief Financial Officer, (Principal Financial Officer)

EXHIBIT INDEX

Exhibit Number		Description of Exhibit

3.1		Second restated certificate of incorporation.

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(Rule 15d-14(a)).

31.2		Certification of the Chief Financial Officer to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule15d-14(a)).

32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 15d-14(b)).

WLG INC 10-Q