SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

xQUARTERLY REPORT ~~UNDER~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2010~~

2011

oTRANSITION REPORT ~~UNDER~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________

~~COMMISSION FILE NUMBER 333-162102~~Commission File Number: 000-54321

(Exact Name of small business issuer as specified in its charter)

Nevada		68-0678185
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

(Address of principal executive offices) (Zip Code)

Issuer’s telephone ~~Number:~~number: ~~01186-351-7963988~~86-351-7963988

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of ~~November~~August 15, ~~2010~~2011, the issuer had ~~29,999,998~~30,014,528 outstanding shares of Common Stock.

		Page
	PART I
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheet as of June 30, 2011 (Unaudited) and December 31, 2010	3
	Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income for the Six Months Ended June 30, 2011 and June 30, 2010	4
	Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income for the Three Months Ended June 30, 2011 and June 30, 2010	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and June 30, 2010	6
	Notes to the Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of ~~Operation~~Operation.	2821
Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk~~Risk.	3427
Item ~~4T.~~4.	Controls and ~~Procedures~~Procedures.	3427

	PART II
Item 1.	Legal ~~Proceedings~~Proceedings.	3528
Item 1A.	Risk ~~Factors~~Factors.	3528
Item 2.	Unregistered Sales of Equity Securities and Use of ~~Proceeds~~Proceeds.	3528
Item 3.	Defaults Upon Senior ~~Securities~~Securities.	3528
Item 4.	(Removed and ~~Reserved)~~Reserved.	3528
Item 5.	Other ~~Information~~Information.	3528
Item 6.	~~Exhibits~~Exhibits.	3528

SIGNATURES		29

PART ~~1 -FINANCIAL~~I - FINANCIAL INFORMATION

~~ITEM~~Item 1. ~~FINANCIAL STATEMENTS~~Financial Statements.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	June 30, 2011			December 31, 2010
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	12,392,138		$	8,377,527
Inventory			79,468			109,945
Other current assets			1,481,952			241,067
Total Current Assets			13,953,558			8,728,539

LONG-TERM ASSETS:
Property, plant and equipment, net			26,766,934			26,462,897
Land use rights, net			5,317,657			5,265,351
Deposit paid for long-term assets			10,214,930			8,782,894
Total Long-Term Assets			42,299,521			40,511,142

TOTAL ASSETS		$	56,253,079		$	49,239,681
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts Payable		$	165,532		$	135,994
Other Payables			319,450			337,353
Refundable deposits			1,054,507			1,107,533
Prepaid Tuition			14,706,670			14,563,979
Home purchase down payment			861,594			823,095
Accrued expenses and other current liabilities			501,817			559,228
Total Current Liabilities			17,609,570			17,527,182

TOTAL LIABILITIES			17,609,570			17,527,182

STOCKHOLDERS’ EQUITY:
Common Stock, $0.001par value; 75,000,000 shares authorized; 30,014,528 and 30,000,005 issued and outstanding as of June 30, 2011 and December 31, 2010			30,015			30,000
Additional paid in capital			67,421			20,000
Retained earnings			36,686,492			30,656,680
Accumulated other comprehensive income			1,859,581			1,005,819

TOTAL STOCKHOLDERS’ EQUITY			38,643,509			31,712,499

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	56,253,079		$	49,239,681

The ~~unaudited condensed consolidated financial statement of the registrant for the three and nine months ended September 30, 2010 and 2009 follow. The condensed~~accompanying notes to these consolidated financial statements ~~reflect all adjustments which~~ are ~~in the opinion~~an integral part of ~~management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.~~these balance sheets.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive Income

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

September 30, December 31,
ASSETS 2010 2009
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 14,114,068 $ 5,099,860
Inventory 210,936 105,538
Due from related parties 3,719,381 3,014,906
Prepayments and other current assets 3,470,507 260,309
Total Current Assets 21,514,892 8,480,613

LONG-TERM ASSETS
Property and equipment, net 28,669,774 28,779,123
Land use rights, net 5,292,275 5,296,661
Total Long-Term Assets 33,962,049 34,075,784

TOTAL ASSETS $ 55,476,941 $ 42,556,397

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable $ 222,905 $ 205,024
Other payables 47,203 209,747
Refundable deposits 1,687,536 2,162,729
Prepaid tuition 20,231,919 15,820,999
Home purchase down payment 534,141 504,216
Accrued expenses and other current liabilities 577,784 733,540
Due to related parties 16,575 1,189,429
Total Current Liabilities 23,318,063 20,825,684

TOTAL LIABILITIES 23,318,063 20,825,684

SHAREHOLDERS’ EQUITY

Common stock, $0.001 par value; 75,000,000 shares authorized, 29,999,998 shares issued and outstanding at September 30, 2010, and December 31, 2009, respectively 30,000 30,000
Additional paid-in capital 2,754,079 2,754,079
Retained earnings 28,272,672 18,378,984
Accumulated other comprehensive income 1,102,127 567,650

TOTAL SHAREHOLDERS’ EQUITY 32,158,878 21,730,713

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 55,476,941 $ 42,556,397

~~See accompanying notes to the condensed consolidated financial statements.~~(Unaudited)

		For The Six Months Ended June 30,
		2011		2010

REVENUES
Tuition fee	$	8,681,294	$	8,368,146
Room and board		3,720,554		3,586,348
TOTAL REVENUES		12,401,848		11,954,494

COST OF REVENUES
Tuition costs		4,348,445		4,176,879
Room and board		1,863,620		1,790,091
TOTAL COST OF REVENUES		6,212,065		5,966,970

GROSS PROFIT		6,189,783		5,987,524

OPERATING EXPENSES
General and Administrative Expenses		174,283		71,308
TOTAL OPERATING EXPENSES		174,283		71,308

INCOME FROM OPERATIONS		6,015,500		5,916,216

OTHER INCOME (EXPENSE)
Interest Income		14,312		9,938

NET INCOME BEFORE INCOME TAXES	$	6,029,812	$	5,926,154

INCOME TAX EXPENSE		-		-

NET INCOME	$	6,029,812	$	5,926,154

Foreign currency translation, net of tax		853,762		156,355

COMPREHENSIVE INCOME	$	6,883,574	$	6,082,509


Earnings per Common Share: (June 30, 2010 Restated)
Basic	$	0.20	$	0.23

Diluted	$	0.20	$	0.23

Weighted Average Common Shares Outstanding: (June 30, 2010 Restated)
Basic		30,005,862		26,121,623

Diluted		30,005,862		26,121,623

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

~~CHINA BILINGUAL TECHNOLOGY~~China Bilingual Technology & ~~EDUCATION GROUP INC. AND SUBSIDIARIES~~Education Group Inc. and Subsidiaries

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~Condensed Consolidated Statements of Operations and Other Comprehensive Income

		For The Three Months Ended June 30,
		2011		2010

REVENUES
Tuition fee	$	4,398,772	$	4,195,712
Room and board		1,885,188		1,798,163
TOTAL REVENUES		6,283,960		5,993,875

COST OF REVENUES
Tuition costs		2,110,281		2,362,904
Room and board		904,407		1,012,673
TOTAL COST OF REVENUES		3,014,688		3,375,577

GROSS PROFIT		3,269,272		2,618,298

OPERATING EXPENSES
General and Administrative Expenses		65,947		53,977
TOTAL OPERATING EXPENSES		65,947		53,977

INCOME FROM OPERATIONS		3,203,325		2,564,321

OTHER INCOME (EXPENSE)
Interest Income		7,918		4,810

NET INCOME BEFORE INCOME TAXES	$	3,211,243	$	2,569,131

INCOME TAX EXPENSE		-		-

NET INCOME	$	3,211,243	$	2,569,131

Foreign currency translation, net of tax		542,225		116,906

COMPREHENSIVE INCOME	$	3,753,468	$	2,686,037


Earnings per Common Share: (June 30, 2010 Restated)
Basic	$	0.11	$	0.10

Diluted	$	0.11	$	0.10

Weighted Average Common Shares Outstanding: (June 30, 2010 Restated)
Basic		30,005,862		26,121,623

Diluted		30,005,862		26,121,623

For The Nine months Ended September 30,
2010 2009
(Unaudited) (Unaudited)
REVENUES
Tuition fee $ 13,240,999 $ 10,801,362
Room and board and other services 5,064,549 4,481,930
TOTAL REVENUES 18,305,548 15,283,292

COST OF REVENUES

Tuition cost (3,409,363 ) (3,511,764 )
Room and board and other service cost (3,162,630 ) (3,200,645 )
TOTAL COST OF REVENUES (6,571,993 ) (6,712,409 )

GROSS PROFIT
11,733,555 8,570,883

OPERATING EXPENSES

General and administrative (1,928,693 ) (1,117,119 )
TOTAL OPERATING EXPENSES (1,928,693 ) (1,117,119

INCOME FROM OPERATION
9,804,862 7,453,764

OTHER INCOME (EXPENSE)

Interest income 20,476 18,899
Interest expense - (71,681 )
Foreign exchange loss (4,044 ) -
Miscellaneous expense 72,394 30,354
INCOME BEFORE INCOME TAXES 9,893,688 7,431,336
INCOME TAXES - -
NET INCOME $ 9,893,688 $ 7,431,336

Earnings per Common Share
Basic $ 0.33 $ 0.25

Diluted $ 0.33 $ 0.25

Weighted Average Common Shares Outstanding
Basic 29,999,998 29,999,998

Diluted 29,999,998 29,999,998

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

~~See accompanying notes to the condensed consolidated financial statements.~~

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~China Bilingual Technology & Education Group Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For The Six Months Ended June 30,
	2011			2010
Cash flows from operating activities:
Net income	$	6,029,812		$	5,926,154
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation		550,104			540,918
Amortization		76,478			73,463
Loss on disposal of property and equipment		-			1,766
Stock-based compensation		83,250			-
Other current assets		(1,217,644	)		(147,751)
Inventories		32,796			(12,588)
Accounts payable		25,881			(24,546)
Other payables		(25,906	)		(37,145)
Accrued expenses		(105,311	)		(343,396)
Refundable deposits		(79,367	)		(253,568)
Prepaid tuition		(213,505	)		2,617,752
Home purchase		18,013			3,438

Net cash provided by (used in) operating activities		5,174,601			8,344,497

Cash flows from investing activities:
Deposits - long term assets		(1,197,805)			(103,182)
Fixed asset additions		(212,984)			-
Advances to related parties receivable		-			(366,488)
Proceeds from related parties receivables		61			-

Net cash used in investing activities		(1,410,728	)		(469,670)

Cash flows from financing activities:

Repayments of related party		-			(1,173,073)

Net cash provided by (used in) financing activities		-			(1,173,073)

Effect of exchange rate changes on cash		250,738			(74,636)

Net increase (decrease) in cash and cash equivalents		4,014,611			6,701,754

Cash and cash equivalents, beginning of year		8,377,527			5,099,860

Cash and cash equivalents, end of year	$	12,392,138		$	11,726,978

Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	-
Cash paid for taxes		-			-

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

For The Three Months Ended September 30,
2010 2009
(Unaudited) (Unaudited)
REVENUES
Tuition fee $ 4,625,534 $ 3,803,337
Room and board and other services 1,677,406 1,698,847
TOTAL REVENUES 6,302,940 5,502,184

COST OF REVENUES
Tuition cost (964,576 ) (1,017,490 )
Room and board and other service cost (909,869 ) (1,044,652 )
TOTAL COST OF REVENUES (1,874,445 ) (2,062,142 )
GROSS PROFIT 4,428,495 3,440,042
OPERATING EXPENSES
General and administrative (509,056 ) (379,460 )
TOTAL OPERATING EXPENSES (509,056 ) (379,460 )
INCOME FROM OPERATION 3,919,439 3,060,582
OTHER INCOME (EXPENSE)
Interest income 10,515 6,737
Interest expense - (24,473 )
Miscellaneous income 16,539 (530 )
INCOME BEFORE INCOME TAXES 3,946,493 3,042,316
INCOME TAXES - -
NET INCOME $ 3,946,493 $ 3,042,316

Earnings per Common Share

Basic $ 0.13 $ 0.10
Diluted $ 0.13 $ 0.10

Weighted Average Common Shares Outstanding

Basic 29,999,998 29,999,998

Diluted 29,999,998 29,999,998

~~See accompanying notes to the condensed consolidated financial statements.~~

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC. AND SUBSIDIARIES~~

China Bilingual Technology & Education Group Inc. and Subsidiaries

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~Notes to Condensed Consolidated Financial Statements

For The Nine Months
Ended September 30,

For The Three Months
Ended September 30,

(Unaudited) (Unaudited)
2010 2009 2010 2009
NET INCOME $ 9,893,688 $ 7,431,336 $ 3,946,493 $ 3,042,316
Foreign currency translation, net of tax 534,477 (296,892 ) 378,122 (352,386 )
TOTAL COMPREHENSIVE INCOME $ 10,428,165 $ 7,134,444 $ 4,324,615 $ 2,689,930

June 30, 2011 and 2010 (Unaudited)

~~See accompanying notes to the condensed consolidated financial statements.~~

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

For The Nine Months
Ended September 30,

2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited) (Unaudited)
Net income $ 9,893,688 $ 7,431,336
Depreciation and amortization of property and equipment 815,287 819,355
Amortization of land use rights 110,836 109,663
Loss on disposal of property and equipment 1,776 5,230

Changes in operating assets and liabilities:
(Increase) Decrease In:
Inventory (105,398 ) 84,588
Prepayments and other current assets (3,210,199 ) (2,709,306 )

Increase (Decrease) In:
Accounts payable 17,881 102,809
Other payables (162,544 ) (571,296 )
Refundable deposits (475,193 ) (176,638 )
Prepaid tuition 4,410,920 4,304,803
Home purchase down payment 29,925 (26,545 )
Accrued expenses and other current liabilities (155,755 ) (284,286 )
Net cash provided by operating activities $ 11,171,224 $ 9,089,713

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment $ (153,847 ) $ (371,586 )
Proceeds from disposal of property and equipment 23,664 3,764
Advances to/due from related parties (704,474 ) (1,971,136 )
Net cash used in investing activities $ (834,657 ) $ (2,338,958 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to related parties (1,172,854 ) (1,961,639 )
Net cash used in financing activities $ (1,172,854 ) $ (1,961,639 )

INCREASE IN CASH AND CASH EQUIVALENTS $ 9,163,713 $ 4,789,116
Effect of exchange rate changes on cash (149,505 ) (412,505 )
Cash and cash equivalents at beginning of year 5,099,860 3,584,959

CASH AND CASH EQUIVALENTS AT END OF YEAR
$ 14,114,068 $ 7,961,570

SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid $ - $ 71,681

~~See accompanying notes to the condensed consolidated financial statements~~

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

NOTE 1 –- NATURE OF BUSINESS

Description of Business

China Bilingual Technology & Education Group ~~Inc.~~Inc (the “Company”). is an education company that owns and operates high-quality, K-12 private boarding schools in ~~China.~~The People’s Republic of China (“PRC”). Founded in 1998, the Company currently operates two schools encompassing kindergarten, elementary, middle and high school levels with ~~over 9,000~~approximately 9,500 students and ~~1,300~~1,500 faculty and staff. The Company’s schools are located in Shanxi and Sichuan Provinces and provide students with an innovative and high-quality education with a focus on fluency and cultural skills in both Chinese and English, as well as a strong core curriculum. The schools regularly rank among the top schools in their respective regions for ~~college entrance rates and~~ national college entrance exam ~~scores. The Company’s schools have earned excellent teaching reputations~~scores and ~~are recognized for~~college entrance rates. As the ~~suc cess of their students and strong faculty. As China~~PRC experiences rapid industrialization and economic growth, the government is focused on education as a means to increase worker productivity and raise the standard of living. Parents in ~~China’s~~the PRC’s new middle and upper classes are sending their children to receive private school education to give them an advantage in ~~China’s~~the PRC’s increasingly competitive workforce. The Company’s sector in education is not subject to corporate income tax, and the Company anticipates its growth will come from both organic growth through increased enrollment and expansion of its business model and teaching methods into new schools, which may be acquired by the Company.

Control by Principal Shareholders

The Company’s directors, executive officers and their affiliates or related parties, own beneficially and in the aggregate, the majority of the voting power of the outstanding shares of the common stock of the Company. Accordingly, the directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including increasing the authorized capital stock of the Company and the dissolution, merger or sale of the Company's assets or business.

~~Basis of Presentation~~Financial Statements Presented

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and related notes. The accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto for the year ended December 31, 2009 which are included in the Company’s Form 8K filed with the SEC on July 2, 2010.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the balance sheets of China Bilingual Technology & Education Group Inc. and subsidiaries as of September 30, 2010 and the results of their 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. The results of operations for the nine months ended September 30, 2010 and 2009 are not necessarily indicative of the results to be expected for the entire year.

The condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”).

~~On July 1, 2009,~~ The Company ~~adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10 (formerly Statement of Financial Accounting Standards (“SFAS”) No. 168,~~ ~~The FASB Accounting Standards Codification and Hierarchy of Generally Accepted Accounting Principles, a replacement of~~

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

~~NOTE 1 – NATURE OF BUSINESS (CONTINUED)~~

~~Basis of Presentation (Continued)~~

~~FASB Statement No. 162~~. ASC 105-10 establishes the FASB ASC as the source of authoritative accounting principles recognized by the FASB to be applied in preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“US GAAP”). The adoption of this standard had no impact on the Company’s consolidated financial statements.

~~The Company operates in two segments in accordance with accounting guidance FASB ASC Topic 280,~~ ~~Segment Reporting. Our Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280.~~

~~On June 30, 2010, Designer Export, Inc. (“DESG”),~~was incorporated in the State of Nevada, USA on March 31, 2009 under the name Designer Export, Inc. On June 30, 2010 the Company entered into a Share Exchange Agreement ~~(Agreement)~~(“Agreement”) with Kahibah Limited (“KL”), a British Virgin Islands (“BVI”) corporation and its shareholder. According to this Agreement, ~~DESG~~the Company acquired all the issued and outstanding common stock of KL. ~~DESG~~The Company issued 26,100,076 shares of its common stock, representing 87% of ~~DESG’s~~the Company’s issued and outstanding common stock after giving effect to the cancellation of 7,748,343 shares on June 30, 2010, to KL’s shareholders in exchange for 100% of the common stock of KL. After the closing of the transaction, ~~DESG~~the Company had a total of ~~29,999,998~~30,000,005 shares of common stock issued and outstanding, with KL’s shareholder owning 87% of the total issued and ~~outstan ding~~outstanding shares of ~~DESG’s~~the Company’s common stock, and the balance held by those who held shares of ~~DESG’s~~the Company’s common stock prior to the closing of the exchange. This ~~share exchange~~ transaction resulted in KL’s shareholders obtaining a majority voting interest in ~~DESG.~~the Company. All shares are shown effective of a 2.582781 forward stock ~~split.~~split as of July 14, 2010.

The acquisition of KL and the operations of its subsidiaries were accounted for as a reverse merger, whereby KL is the continuing entity for financial reporting purposes and is deemed, for accounting purposes, to be the acquirer of the Company. In accordance with the applicable accounting guidance for accounting for the business combination as a reverse merger, KL is deemed to have undergone a recapitalization, whereby KL is deemed to have issued common stock to the Company’s common equity holders. Accordingly, although the Company, as KL’s parent company, was deemed to have legally acquired KL, in accordance with the applicable accounting guidance for accounting for the transaction as a reverse merger and re-capitalization, KL is the surviving entity for accounting purposes and its assets and liabilities are recorded at their historical carrying amounts with no goodwill or other intangible assets recorded as a result of the accounting merger with the Company.

Pre-exchange Transaction Shares (post split)	11,648,272
Repurchase	(7,748,343	)
Issuance for KL Shareholders	26,100,076
Total Post-Exchange Shares	30,000,005

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

As part of the ~~Merger,~~acquisition, the ~~Company’s~~Company changed its name ~~changed from “Designer Export, Inc.”~~ to ~~“China~~China Bilingual Technology & Education Group Inc.” (“China Bilingual”).

The Share Exchange was accounted for as a “reverse merger” since the stockholders of KL own a majority of the outstanding shares of China Bilingual’s common stock immediately following the Share Exchange. Under accounting principles generally accepted in the United States, the share exchange is considered to be a capital transaction in substance, rather than a business combination. Thus the share exchange is equivalent to the issuance of stock by KL for the net monetary assets of China Bilingual, accompanied by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the share exchange was identical to that resulting from a reverse acquisition, except no goodwill was recorded. Under reverse takeover accounting, the post reverse acquisition comparative historical finan cial statements of legal acquirer, China Bilingual, are those of the legal acquire, KL, which is considered to be the accounting acquirer, and thus represent a continuation of the financial statements of KL. Share and per share amounts stated have been retroactively adjusted to reflect the ~~merger.~~acquisition. The accompanying financial statements present the historical financial condition, results of operations and cash flows of ~~the~~KL and its operating ~~company~~subsidiaries prior to the ~~capitalization.~~recapitalization.

~~Pre-exchange Transaction Shares~~	~~11,648,265~~	*
~~Repurchase~~	~~(7,748,343~~	)
~~Issuance for KL Shareholders~~	~~26,100,076~~
~~Total Post-Exchange Shares~~	~~29,999,998~~

*effectingThe historical consolidated financial statements of the Company are those of KL, and of the consolidated entities. The consolidated financial statements of the Company presented for the six months ended June 30, 2011 and 2010 included the financial statements of China Bilingual, KL, KL’s subsidiary Taiyuan Taiji, a ~~2.582781 forward stock split as~~wholly-foreign owned enterprise (“WOFE”) under the laws of ~~July 14, 2010~~the People's Republic of China (“PRC”), which owns 95% of the registered capital of Shanxi Taiji, an equity joint venture company organized under the laws of the PRC. Shanxi Taiji owns all of the registered capital of Shanxi Modern Bilingual School and Sichuan Guangan Experimental High School, both private non-enterprise entities incorporated under the laws of the PRC, collectively the “Subsidiaries.”

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

Since the ownership of KB and its Subsidiaries was substantially the same, the merger with each was accounted for as a transfer of equity interests between entities under common control, whereby the acquirer recognized the assets and liabilities of each Subsidiary transferred at their carrying amounts. The reorganization was treated similar to the pooling of interest method with carry over basis. Accordingly, the financial statements for KL and its Subsidiaries have been combined for all periods presented, similar to a pooling of interest. The reorganization of entities under common control was retrospectively applied to the financial statements of all prior periods when the financial statements are issued for a period that includes the date the transaction occurred. Intercompany transactions and balances are eliminated in consolidation.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

Principles of Consolidation

~~NOTE 2 –PRINCIPLES OF CONSOLIDATION~~

The condensed consolidated financial statements include the accounts of China Bilingual Technology & Education Group Inc. and the following ~~wholly-owned~~ subsidiaries:

Subsidiaries		State and Countries Registered In		% Ownership
Kahibah Limited	British Virgin Island		~~Percentage of~~ ~~Ownership~~	100	%
~~Kahibah Limited~~		~~British Virgin Island~~		~~100%~~
Taiyuan Taiji ~~Industry~~Kemao Development Co., Ltd.		People’s Republic of China		~~100%~~	100	%
Shanxi Taiji Industrial Development Co., Ltd.(i)		People’s Republic of China		~~100%~~	95	%
Shanxi Modern Bilingual School (ii)		People’s Republic of China		~~100%~~	100	%
Sichuan Guang’an ~~Shiyan Secondary~~Experimental High School (iii)		People’s Republic of China		~~100%~~	100	%

(i)

Shanxi Taiji ~~Industrial~~Kemao Development Co., Ltd. was incorporated as a limited liability company on July 25, 1997 under PRC law. It is currently 95% owned by Taiyuan Taiji and 5% owned by Ms. Ren ~~Bainv who has not yet~~Baiv. On November 25, 2009, Kahibah entered into a share exchange agreement to sell the remaining 5% ownership to Ms. Ren Baiv. Ms. Ren Baiv is the sister of Mr. Ren Zhiqing, the Company’s Chief Executive Officer. At December 31, 2010 Ms. Ren Baiv paid ~~her~~1 million Renminbi (“RMB”) as part of the capital ~~contribution as~~contribution. The 5% ownership is held by Ms. Ren Baiv on behalf of ~~September 30, 2010.~~the Taiyuan Taiji in accordance with local Chinese regulations, therefore no non-controlling interest is recognized. Shanxi Taiji is an equity joint venture under the laws of the PRC. The Shanxi Modern Bilingual School and Sichuan Guang’an ~~Experimental High~~Shiyan Secondary School (the “Schools”) hold the requisite governmental licenses to provide private educational services within their province in China. Each province sets its own licensing criteria and duration following the general guidelines established by the national government for education standards.

(ii)	Shanxi Modern Bilingual School (the “Shanxi School”) was established in 1998 by Shanxi Taiji. It operates as a private K-12 boarding school on a 3338 acre campus in Taiyuan City, Shanxi Province. The Shanxi School holds a three year provincial license to be renewed ~~March, 2011.~~May, 2013.

(iii)

Sichuan Guang’an Experimental High School (the “Sichuan School”) was established in 2002 by Shanxi Taiji. It operates as a private K-12 boarding school on a 1723 acre campus in Guang’an, Sichuan Province. The Sichuan School holds a four year provincial license to be renewed September, 2011.

All significant intercompany accounts and transactions have been eliminated in consolidation.

~~Effective January 1, 2009,~~

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

Management’s Representation of Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared by the ~~Consolidation Topic, ASC 810-10-45-16, revised~~Company without audit pursuant to the ~~accounting treatment for non-controlling minority interests~~rules and regulations of ~~partially-owned subsidiaries. Non-controlling minority interests represent~~ the ~~portion~~SEC. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements include all of ~~earnings that is not within~~ the ~~parent Company’s control. These amounts~~adjustments, which in the opinion of management are ~~now required~~necessary to ~~be reported as equity instead~~a fair presentation of ~~as a liability on the balance sheet. Additionally, this statement requires net income from non-controlling minority interests to be shown separately on the consolidated statements~~financial position and results of operations. ~~There were no significant non-controlling minority interests~~All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the ~~nine months ended September 30,~~audited financial statements at December 31, 2010 ~~and 2009.~~as filed in the Company Form 10-K filed with the SEC on March 31, 2011.

NOTE ~~3 –~~2 - USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Measurement, estimates and assumptions are used for, but not limited to, the selection of the useful lives of property and equipment, impairment of long-lived assets, fair values and revenue recognition. Management makes these estimates using the best information available at the time the estimates are made; however, actual results, when ultimately realized, could differ from those estimates. The current economic ~~environmen t~~environment has increased the degree of uncertainty inherent in these estimates and ~~assumption.~~assumptions.

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

NOTE ~~4 –~~3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. These accounting policies conform to US GAAP and have been consistently applied in the preparation of the consolidated financial statements.

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

The Company operates in two segments in accordance with accounting guidance FASB ASC Topic 280, Segment Reporting. Our Chief Executive Officer has been identified as the chief operating decision maker as defined by FASB ASC Topic 280.

(a)	Fair Value of Financial Instruments

The Company applies the provisions of accounting guidance, FASB ASC Topic 820 that requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of ~~September~~June 30, ~~2010,~~2011 and December 31, ~~2009~~2010 the fair value of cash and cash equivalents, other receivables, accounts payable, short term bank loans, and other payables approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates except for related party debt or receivables for which it is not ~~pract icable~~practicable to estimate fair value.

Fair Value Measurements

Effective April 1, 2009, the FASB ASC Topic 820, Financial Instruments, requires disclosures about fair value of financial instruments in quarterly reports as well as in annual reports.

The FASB ASC Topic 820, Fair Value Measurements and Disclosures, clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements.

Various inputs are considered when determining the fair value of the Company’s financial instruments. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. These inputs are summarized in the three broad levels listed ~~below~~.below:

Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.

~~Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk,~~Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risks, etc.).

·	~~Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of financial instruments).~~

Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair market value of financial instruments.

The Company’s adoption of FASB ASC Topic 820 did not have a material impact on the Company’s consolidated financial statements.

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

~~NOTE 4-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~(a) Fair Value of Financial Instruments (continued)~~

~~Fair Value Measurements (continued)~~

measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The Company had no financial assets and/or liabilities carried at fair value on a recurring basis at ~~September~~June 30, ~~2010~~2011 and December 31, ~~2009.~~2010.

The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For many financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

(b)	Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments purchased with aan original maturity of three months or less to be cash equivalents. There are no restrictions to cash at ~~September~~June 30, ~~2010.~~2011. A substantial amount of the Company’s cash is held in bank accounts in the PRC and is not protected by the Federal Deposit Insurance Corporation (“FDIC”) insurance or any other similar insurance. Given the current economic environment and the financial conditions of the banking industry there is a risk that deposits may not be readily ~~available~~.available. Cash held in the PRC amounted to ~~$14,114,068~~$12,392,138 at ~~September~~June 30, ~~2010.~~2011. The PRC places limitations on expatriating cash out of the country, which may limit the Company’s ability to pay dividends.

(c)	Impairment of Long-Lived Assets

The Company’s long-lived assets and other assets (consisting of property and equipment and purchased land use rights) are reviewed for impairment in accordance with the guidance of the FASB ASC Topic 360-10, Property, Plant, and Equipment, and FASB ASC Topic 205, Presentation of Financial Statements. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such ~~a sset~~asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial ~~positions.~~position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Through ~~September~~June 30, ~~2010,~~2011, the Company had not experienced impairment losses on its long-lived assets. However, there can be no assurances that demand for the Company’s services will continue, which could result in an impairment of long-lived assets in the future.

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

~~NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

(d)	Income taxes

On March 16, 2007, the PRC National People’s Congress passed the PRC Enterprise Income Tax Law (“New EIT Law”) which became effective on January 1, 2008. Pursuant to the New EIT Law, a unified enterprise income tax rate of 25% and unified tax deduction standards will be applied consistently to both domestic-invested enterprises and foreign-invested enterprises.

Shanxi Taiji and Taiyuan Taiji are taxed pursuant to the New EIT Law with a unified enterprise income tax rate of 25%. Shanxi Taiji and Taiyuan Taiji did not pay any income taxes during the ~~year ended December 31, 2009 and for the nine~~six months ended ~~September~~June 30, 2010 and June 30, 2011 due to net losses experienced in the past reporting periods. The two entities may apply the past periods’ net operating losses to futures years’ profits in order to reduce tax liability. Since Shanxi Taiji and Taiyuan Taiji have minimal business operations, the two entities are unlikely to have profits in future periods. As a result, all deferred tax assets and liabilities are ~~diminimus,~~deminimus, and management would have a 100% valuation allowance for all deferred tax assets.

The subsidiaries of Shanxi Taiji, which were registered as private schools (the “school-subsidiaries”), are not subject to income taxes determined in accordance with the Law for Promoting Private Education (2003) and school-subsidiaries registered as private schools not requiring reasonable returns (similar to a not-for-profit entity) are treated as public schools and are generally not subject to enterprise income taxes. Therefore, the school-subsidiaries are tax exempt.

Kahibah Limited is exempt from income tax on all sources of income pursuant to the tax law in the British Virgin Islands. However, pursuant and subsequent to the reverse merger, the parent company in U.S. may pay tax in future years.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect ofon deferred ~~tax assets~~taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax ~~assets.~~assets and liabilities. The components of the deferred tax assets and liabilities are individually classified as current or non-current based on their characteristics. Deferred tax assets and liabilities are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

A provision has not been made at ~~September~~June 30, ~~2010~~2011 and ~~December 31, 2009~~2010 for U.S. or additional foreign withholding taxes of undistributed earnings of foreign subsidiaries because it is the present intention of management to reinvest the undistributed earnings indefinitely in foreign operations. Generally, such earnings become subject to U.S. tax upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability on such undistributed earnings.

The Company recognizes that virtually all tax positions in the PRC are not free of some degree of uncertainty due to tax law and policy changes by the government. However, the Company cannot reasonably quantify political risk factors and thus must depend on guidance issued by current government officials.

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

~~NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~(d)~~

~~Income taxes (continued)~~

Based on all known facts and circumstances and current tax law, the Company believes that the total amount of unrecognized tax benefits as of ~~September~~June 30, ~~2010~~2011 and ~~December 31, 2009,~~2010 is not material to its results of operations, financial condition or cash flows. The Company also believes that the total amount of unrecognized tax benefits as of ~~September~~June 30, ~~2010~~2011 and ~~December 31, 2009,~~2010, if recognized, would not have a material effect on its effective tax rate. The Company further believes that there are no tax positions for which it is reasonably possible, based on the current PRC tax law and policy, that the unrecognized tax benefits will significantly increase or decrease over the next twelve months producing, individually or in the aggregate, a material effect on the Company’s results of operations, ~~financia l~~financial condition or cash flows as of ~~September~~June 30, ~~2010~~2011 and ~~December 31, 2009.~~2010.

(e)	Revenue Recognition and Prepaid Tuition

In accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) Topic 13, Revenue Recognition, the Company recognizes revenues when it is realized or realizable and earned. The Company records revenues when the following four fundamental criteria under SAB 104 are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price to the customer is fixed or determinable, and (iv) collection of the resulting receivable is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as prepaid tuition.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

Revenues consist primarily of tuition and fees derived from providing meals and housing for students living on campus. Revenues from tuition and fees are recognized pro-rata (on a straight-line basis) over the relevant period attended by the student of the applicable grade or program. The school year runs ~~October~~September 1 through ~~September 30~~August 31 and prepaid tuition is recognized over the twelve-month period. If a student withdraws from a course or program within ~~three~~six months after the school year starts, the paid but unearned portion of the student’s tuition is 67% refunded. If a student withdraws after the first three months in a school year, no tuition will be refunded. As a result, the Company has recorded prepaid tuition as a current liability on the consolidated balance sheet in the event a student withdraws from school and the Company has to return a portion of the prepaid tuition. In past years there were minimal students who withdrew from a course or program before the end of a school year.

The Company normally receives prepaid tuition and fees from students at their initial admission or before the start of the school year on ~~October~~September 1. Some students will benefit from a discount of fees if they prepay tuition for two to three years of school term. Prepaid tuition is the portion of payments received but not earned and is reflected as a current liability in the accompanying consolidated balance sheets as such amounts are expected to be earned, but may be refundable within the next year.

The 2010 - 2011 ~~schools~~school year annual tuition, room & board and other fees, (the “School Fees”), are allocated based on grade level to the following categories:

Grade	Tuition		Cafeteria		Room		Others		Total
Kindergarten	$	1,463	$	658	$	73	$	146	$	2,340
Lower primary school		1,901		804		146		219		3,070
Higher primary school		1,901		951		146		219		3,217
Junior middle school		2,165		936		190		219		3,510
Senior middle school		2,457		980		219		293		3,949

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

~~NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~(e) Revenue Recognition and Prepaid Tuition (continued)~~

Below is a schedule of the prepaid School Fees as of ~~September~~June 30, 2011 and 2010, ~~including the number of students prepaid within the calendar year. Students are required~~Prepaid tuition expected to ~~prepay all School Fees in-full at the beginning of the school year~~be recognized into revenue for the ~~current year of studies from October 1, 2010 through September 30, 2011. Students may prepay in advance for future school~~next years ~~to lock-in a lower price increase for future periods.~~

Period
Tuition, R&B No. of Students - School Year
from Oct 1 to Dec 31 in 2010 $ 6,996,490 9,314 – 2011
from Jan 1 to Dec 31 in 2011 12,425,476 3,976 – 2012
from Jan 1 to Dec 31 in 2012 652,100 205 – 2013
from Jan 1 to Sep 30 in 2013 157,853 64 - 2014
Total $ 20,231,919 -
and thereafter is as following.

Period		June 30, 2011	December 31, 2010
2011		8,511,188	13,754,026
2012		6,029,351	652,100
2013		166,131	157,853
Total	$	14,706,670	14,563,979

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

Room and Board and Other Revenues

Room and board revenues represent student room income and cafeteria income. Revenues are recognized as sales occur or rental services are rendered. ~~During the nine and three months ended September 30, 2010 and 2009, the Schools recognized room and board income of $4,907,433 and $4,089,030, and $1,634,422 and 1,342,963 respectively.~~

Other revenues represent rental income earned from renting out apartments to faculty members and other miscellaneous revenues and fees, including tutoring, special lesson fees and registration fees. Other revenues represent less than 5% of total revenues. Rental income and other fees are recognized when the services are rendered. During the nine and three months ended September 30, 2010 and 2009, the Schools recognized other revenues of $157,116 and $392,900, and $42,984 and $355,884, respectively.

The following table shows the breakdown of revenues by segment during ~~the nine~~six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009 and for the three months ended September 30, 2010 and 2009:~~2010:

The Nine Months Ended September 30, The Three Months Ended September 30,
2010 2009 2010 2009
Revenue % Revenue % Revenue % Revenue %
Tuition $ 13,240,999 72.3 % $ 10,801,362 70.7 % $ 4,625,534 73.4 % $ 3,803,337 69.1 %
Room & Board and Other Rev. 5,064,549 27.7 % 4,481,930 29.3 % 1,677,406 26.6 % 1,698,847 30.9 %
Total $ 18,305,548 100 % $ 15,283,292 100 % $ 6,302,940 100 % $ 5,502,184 100 %

		For the Six months Ended June 30,
		2011				2010
		Revenue	%			Revenue	%
Tuition	$	8,681,294	70	%	$	8,368,146	70	%
Room & Board and Other Rev.		3,720,554	30	%		3,586,348	30	%
Total	$	12,401,848	100	%		11,954,494	100	%

(f)	Foreign Currency Translation

The Company’s principal country of operations is ~~The People’s Republic of China.~~the PRC. The financial position and results of operations of the Company are determined using the local currency (“Renminbi or RMB”) as the functional currency. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the balance sheet date. The results of operations are translated from Renminbi to US Dollar at the weighted average rate of exchange during the reporting period. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation

~~NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~(g)~~

~~Comprehensive Income~~

adjustments resulting from the translation of the financial statements into the reporting currency (“US Dollars”) are dealt with as a component of accumulated other comprehensive income.

Translation adjustments net of tax totaled ~~$534,477~~$853,762 and ~~($296,892), and $378,122 and ($352,386)~~$156,355, for the ~~nine and three~~six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009,~~2010, respectively.

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

As of ~~September 30,~~December 31, 2010 and ~~September~~June 30, ~~2009,~~2011, the exchange rate to the U.S. Dollar was RMB ~~6.7011~~6.6227 and RMB ~~6.8290,~~6.4635, respectively. The average exchange rate for the six months ended June 30, 2011 and 2010 was RMB 6.5399 and RMB 6.8260, respectively. The average exchange rate for the three months ended June 30, 2011 and ~~nine months ended September 30,~~ 2010 ~~and September 30, 2009~~ was RMB ~~6.7460~~6.499 and RMB ~~6.8305, and RMB 6.7692 and 6.8416, respectively.~~6.8068.

(g)	Comprehensive Income

The Company reports comprehensive income in accordance with FASB ASC Topic 220 Comprehensive Income, which established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements.

Total comprehensive income is defined as all changes in stockholders' equity during a period, other than those resulting from investments by and distributions to stockholders (i.e., issuance of equity securities and dividends). Generally, for the Company, total comprehensive income equals net income plus or minus adjustments for currency translation. The foreign currency translation, net of tax was $853,762 and $156,355, for the six months ended June 30, 2011 and 2010, respectively. Total comprehensive income represents the activity for a period net of related tax and was ~~an income of $10,428,165~~$6,883,574 and ~~$7,134,444, and $4,324,615 and $2,689,930~~$6,082,509, for the ~~nine and three~~six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009,~~2010, respectively.

While total comprehensive income is the activity in a period and is largely driven by net earnings in that period, accumulated other comprehensive income or loss (“AOCI”) represents the cumulative balance of other comprehensive income as of the balance sheet date. For the Company, AOCI is primarily the cumulative balance related to the currency adjustments and increased overall equity by ~~$1,102,127,~~$1,859,581, as of ~~September~~June 30, ~~2010.~~2011.

(h)	Concentrations, Risks, and Uncertainties

All of the Company’s operations are located in the PRC. There can be no assurance that the Company will be able to successfully continue to provide the services offered and failure to do so would have a material adverse effect on the Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic conditions, teacher salaries, competition, governmental and political conditions, and changes in regulations. Because the Company is dependent on trade in the PRC, the Company is subject to various additional political, economic and other uncertainties. Among other risks, the ~~Company̵ 7;s~~Company’s operations will be subject to risk of restrictions on transfer of funds, domestic and international customs, changing taxation policies, foreign exchange restrictions, and political and governmental regulations.

(i)	Advertising

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the six months ended June 30, 2011 and 2010 were not significant.

(j)	Research and Development

The Company expenses the cost of research and development as incurred. Research and development costs for the six months ended June 30, 2011 and 2010 were not significant.

(k)	Basic and diluted earnings per share

Earnings per share is calculated in accordance with the ASC Topic 260, Earnings Per Share. Basic earnings per share is calculated dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is based on the assumption that all dilutive convertible shares, stock options, warrants and other equity awards were converted or exercised during the period. Dilution is computed by applying the treasury stock method. Under this method, warrants and options are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

Basic and diluted earnings per share were $0.20 and $0.20 per share and $0.23 and $0.23 per share, respectively for the six months ended June 30, 2011 and 2010. Basic and diluted earnings per share were $0.11 and $0.11 per share and $0.10 and $0.10 per share, respectively for the three months ended June 30, 2011 and 2010.

The earnings per share for the six month period and three month period ended June 30, 2010, as previously reported, for basic and diluted earnings per share was $0.20 and $0.20 per share and $0.09 and $0.09 per share, respectively. The earnings per share for these periods was recalculated to reflect the recapitalization of the Company at June 30, 2010. The earnings per share for June 30, 2010 has been restated to reflect weighted average shares outstanding of 26,121,673 common shares compared to 29,999,998 common shares.

(l)	Statement of Cash Flows

In accordance with ASC Topic 230, Statement of Cash Flows, cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

(m)	Reclassification

Certain reclassifications have been made to the 2010 consolidated financial statements to conform to the 2011 consolidated financial statement presentation. These reclassifications had no effect on net income or cash flows as previously reported.

(n)	Accounting Pronouncements

Accounting Standards Update (“ASU”) ASU No. 2010-09 (ASC Topic 855), which amends Subsequent Events Recognition and Disclosures, ASU No. 2009-16 (ASC Topic 860), which amends Accounting for Transfer of Financial Assets, ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-08, Earnings per Share, ASU No. 2009-12(ASC Topic 820), Investments in Certain Entities That Calculate Net Asset Value per Share, and various other ASU’s No. 2009-2 through ASU No. ~~2010-19~~2011-01 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

~~NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

issued. These updates have no current applicability to the Company, or their effect on the financial statements would not have been significant.

ASU No. 2011-02 through 2011-07 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant, except for ASU 2011-05 (ACS Topic 220 Comprehensive Income) which will affect the presentation of Comprehensive Income and is effective for periods after December 15, 2011 and early adoption is allowed.

In April 2010, the FASB issued Accounting Standard Update, 2010-17, Revenue Recognition-Milestone Method (Topic 605): “Milestone Method of Revenue Recognition-a consensus of the FASB Emerging Issues Task Force.” This is an update regarding the milestone method of revenue recognition. The scope of this update is limited to arrangements that include milestones relating to research or development deliverables. The update specifies criteria that must be met for a vendor to recognize consideration that is contingent upon achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. The criteria apply to milestones in arrangements within the scope of this update regardless of whether the arrangement is determined to have single or multiple deliverables or units of accounting. ~~;The~~The update will be effective for fiscal years, and interim periods within

those years, beginning on or after September 15, 2010. Early application is permitted. Companies can apply this guidance prospectively to milestones achieved after adoption. However, retrospective application to all prior periods is also permitted. This update is not expected to have a material impact on the Company’s financial statements.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

In March 2010, the FASB issued Accounting Standard Update, 2010-13, Compensation-Stock Compensation (Topic 718): “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades-a consensus of the FASB Emerging Issues Task Force.” This is an update regarding the effect of denominating the exercise price of a share-based payment ~~awards~~award in the currency of the market in which the underlying equity security trades and that currency is different from (1) entity’s functional currency, (2) functional currency of the foreign operation for which the employee provides services, and (3) payroll currency of the employee. The update clarifies that an employee share-based payment award with an exercise price denominated in the currency of a market ~~i n~~in which a substantial portion of the entity’s equity securities trades should be considered an equity award assuming all other criteria for equity classification are met. The update will be effective for interim and annual periods beginning on or after December 15, 2010, will be applied prospectively. Affected entities will be required to record a cumulative catch-up adjustment for all awards outstanding as of the beginning of the annual period in which the guidance is adopted. This update is not expected to have a material impact on the Company’s financial ~~statements.~~

~~NOTE 5~~– ~~INVENTORY~~statements

NOTE 4 - INVENTORY

Inventories ~~consisted of the following:~~

September 30,
2010
(Unaudited)

December 31,
2009

Course materials $ 174,049 $ 88,822
Low consumable tools 36,887 16,716
Total inventory $ 210,936 $ 105,538

~~A valuation allowance was not considered necessary because inventory was~~are stated at the lower of cost, determined on a weighted average basis, or net realizable ~~value at September 30, 2010.~~value. Net realizable value is ~~based on~~the estimated selling ~~prices less any further costs expected to be incurred~~price in the ordinary course of business. The Company’s inventories are typically school supplies used in the normal course of business. When inventories are consumed, their carrying amounts are expensed in the year used. Write-downs for ~~completion and disposal. No amount was written off during~~declines in net realizable value or for losses of inventories are recognized as an expense in the ~~three and nine months ended September 30, 2010 and 2009.~~

year of impairment or loss occurs. Inventories consisted of the following:

	June 30, 2011			December 31, 2010
Course materials	$	79,972		$	102,176
Low consumable tools		19,254			27,052
Total inventory	$	99,226		$	129,228
* Provision		(19,758	)		(19,283	)
Total		79,468			109,945

* The provision is an inventory allowance for aged inventory items

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

NOTE ~~6 –~~5 - PREPAYMENT AND OTHER CURRENT ASSETS

Prepayment and other current assets consisted of the following:

	September 30, 2010		December 31, 2009
	(Unaudited)				June 30, 2011		December 31, 2010
Advances to suppliers	$	76,107	$	20,475	$	6,308	$	108,440
Other prepaid		557,775		239,834		56,930		1,427
Deposit		2,836,625		-
Other receivable						1,418,714		131,200
Total	$	3,470,507	$	260,309	$	1,481,952	$	241,067

Other prepaid is primarily staff advances, travel, and the other related expenses to be charged to expenses as incurred. ~~The deposit balance as of September 30, 2010 is a good-faith, refundable deposit paid to begin preliminary negations toward the potential acquisition of a school.~~

~~NOTE 7 –DUE FROM/TO RELATED PARTIES~~

~~(a)~~

~~Due From Related Parties~~

September 30,
2010

December 31,
2009

(Unaudited)
Pan Mingxiao (ii) - $ 558,736
Ren Zhiqing (i) 1,164,080 -
Beijing Taiji Investment Co., Ltd. (iii) $ 2,555,301 2,456,170
Total due from related parties $ 3,719,381 $ 3,014,906

~~(b)~~

~~Due To Related Parties~~

September 30,
2010

December 31,
2009

(Unaudited)
Ren Zhiqing (i) $ - $ 1,189,429
Pan Mingxiao (ii) 16,575 -
Total due to related parties $ 16,575 $ 1,189,429

~~(i)~~

Ren Zhiqing is the president and a director of the Company, as well as the ultimate controlling shareholder of the Company. The amount due from Ren Zhiqing as of Septemer 30, 2010 represents a loan from the Shanxi School, which was unsecured, interest-free and payable upon demand that was granted to Mr. Ren in March, 2010. The Company repaid a loan from Mr. Ren in January, 2010. The amount due to Ren Zhiqing as of December 31, 2009 represented a loan to the Shanxi School, which was unsecured, interest-free and payable upon demand.

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

~~(ii)~~

Pan Mingxiao is an officer and director of the Company. The amount due from Pan Mingxiao as of December 31, 2009 represented a loan from the Sichuan School, which was unsecured, interest-free and payable upon demand, which was paid in March, 2010. The amount due to Pan Mingxiao as of September 30, 2010 represents a loan to the Sichuan School, which is unsecured, interest-free and payable upon demand.

~~(iii)~~

~~Beijing Taiji Investment Co., Ltd., (“Beijing Taiji”) is a company wholly-owned by Ren Zhiqing. The amount~~

due from Beijing Taiji as of September 30, 2010 represents a loan from the Company in 2006, which is interest-free and payable upon demand. The loan is secured by real estate properties owned by Mr. Ren.

NOTE 8–6 - LAND USE RIGHTS, NET

Land use rights, net consisted of the following:

	June 30, 2011			December 31, 2010
Cost of land use rights	$	6,190,601		$	6,041,788
Less: Accumulated amortization		(872,944	)		(776,437	)
Land use rights, net	$	5,317,657		$	5,265,351

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

September 30,
2010

December 31,
2009

(Unaudited)

Cost of land use rights $ 5,971,294 $ 5,875,770
Less: Accumulated amortization (679,019 ) (579,109 )
Land use rights, net $ 5,292,275 $ 5,296,661

Amortization expense for ~~the nine and three~~six months ended on ~~September~~June 30, 2011 and 2010 was $76,479 and ~~2009, were $110,836, $109,663, $37,072 and $36,614,~~$73,463 respectively.

Amortization expense for the next five years and thereafter is as follows:

2010	$	36,614
2011		146,456	$	152,958
2012		146,456		152,958
2013		146,456		152,958
2014		146,456		152,958
2015				152,958
Thereafter		4,669,837		4,552,867
Total	$	5,292,275	$	5,317,657

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

NOTE 97 - PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:

At Cost:	June 30, 2011			December 31, 2010
Buildings	$	30,081,668		$	29,358,549
Transportation equipment		928,580			970,352
Furniture & education equipment		3,702,031			3,485,503
Kitchen equipment		502,076			488,684
Computer and software		241,139			228,418
Total cost	$	35,455,494		$	34,531,506

Less : Accumulated depreciation		(8,688,560	)		(8,068,609	)

Property and equipment, net	$	26,766,934		$	26,462,897

For the six months ended June 30, 2011 and 2010, depreciation and amortization expenses were $550,109 and $540,918, respectively.

Property and equipment is located at the Company’s two school locations in Shanxi and Sichuan Provinces in the PRC and is recorded at cost less accumulated depreciation. Depreciation and amortization are calculated using the straight-line method over the expected useful life of the asset, after the asset is placed in service. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are generally expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.

The estimated useful lives for each major category of fixed assets are as follows:

Description	Useful Lives
Buildings	40 years
Transportation Equipment	10 years
Kitchen Equipment	5 years
Furniture, Education Equipment, Computers	3 years

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

NOTE 8 - DEPOSIT PAID FOR LONG-TERM ASSETS

The deposit balance paid for long term assets as of June 30, 2011 is a good-faith, refundable deposit of $10,211,186 paid toward the potential acquisition of a school. The deposit balance for the potential acquisition at December 31, 2010 was $8,782,894.

NOTE 9 - ~~PROPERTY AND EQUIPMENT, NET (CONTINUED)~~

~~For the nine and three months ended September 30, 2010 and 2009, depreciation and amortization expenses were $815,287 and $819,355, and $273,567 and $270,631, respectively.~~

~~NOTE 10 -~~ OTHER PAYABLE

Other payables included traveling and the related expenses incurred by employees on behalf of the ~~company.~~Company. These amounts are unsecured, non-interest bearing and generally are short term in nature.

NOTE ~~11 –~~10 - HOME PURCHASE DOWN PAYMENT

According to the ~~School’s~~Company’s Employee Welfare Policy, the ~~School~~Company may sign a home purchase agreement with teachers which would allow teachers to purchase home property at a discounted market rate. Pursuant to the home purchase agreement between the ~~School~~Company and teachers, teachers were given the right to purchase a home property upon their 8th8th year of service. There were two payment options:

(1) one-time full payment of the home purchase price based on the signed agreement; or (2) RMB 20,000 down payment with remaining balance to be paid in 8 equal annual installments until their 8th8th year of service. Those teachers who selected option (2) would be charged an interest of 7% if they do not make payment on time during the 8 year period. If teachers resign or leave the school for any reasons, they will be entitled to a refund based on the terms of the home purchase agreement. There were minimal refunds for ~~the three and nine~~six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009.~~2010. For accounting purposes, cash received from teachers through payment options (1) and (2) and late interest payments are recorded as ~~deposit~~deposits at the time ~~the School receives.~~of receipt. The ~~School r ecognizes~~Company recognizes profit when the sale is consummated.

The ~~School~~Company records the home purchase transactions in accordance to the deposit method pursuant to FASB ASC Topic 360-20, Real Estate Sales. Under the deposit method, the seller does not recognize any profit, does not record notes receivable, and continues to report in its financial statements the property which has been assumed by the buyer. Cash received from the buyer, including the initial investment and subsequent collections of principal and interest, is reported as a deposit. Interest collected that is subject to refund and is included in the deposit account before a sale is consummated is accounted for as part of buyer’s initial investment at the time the sale is consummated. There were no ~~apartments~~homes sold for the ~~three and nine~~six months ended ~~September~~June 30, 2011 and 2010, and ~~20 09, and~~as such the ~~School~~Company recognized no income from selling ~~apartments.~~homes. As of ~~September~~June 30, ~~2010~~2011 and December 31, ~~2009,~~2010, home deposits were ~~$534,141~~$861,594 and ~~$504,216,~~$823,095, respectively.

Since 2006, the School decided not to continue with the home purchase benefit and will not enter into any new home purchase agreements. Any teachers living in the School’s apartments without any signed home purchase agreement are required to pay monthly rent and monthly rent is directly deducted from teacher’s payroll. Such payroll deductions are recorded as rental income for the period it pays. During the nine and three months ended September 30, 2010 and 2009, the School recognized rental income of $25,286 and $21,227, and $8,507 and $7,197, respectively.

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

NOTE ~~12 –~~11 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

~~Others accrued expenses primarily included transportation expenses, utility fees, property management fees, and other miscellaneous accrued expenses.~~

NOTE ~~13 –~~12 - REFUNDABLE DEPOSITS

Students living on campus are required to pay a deposit of approximately RMB 60,000 at their initial admissions or before the start of the school year in September. If a student has any damages to the school housing, the repair and maintenance expense will be deducted directly from his or her student deposit. Any remaining balance in student deposits is fully refunded upon graduation or if students leave the school for any reasons. For the ~~three and nine~~six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009,~~2010, there were minimal damages to the school housing and no student deposit was deducted to pay for the repair and maintenance expense. As of ~~September~~June 30, ~~2010~~2011 and December 31, ~~2009,~~2010, refundable deposits were ~~$1,687,536~~$1,054,507 and ~~$2,162,729,~~$1,107,533, respectively.

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

On September 15, 2010, the Company entered into a consulting agreement with its new Chief Financial Officer. The agreement is for a twelve month term. Under the terms of the agreement, the Chief Financial Officer is to be compensated $6,000 per month cash compensation and $6,000 per month stock compensation in restricted common shares to be awarded beginning January 1, 2011 on a quarterly basis.

Based on the fair market value at June 30, 2011 the stock award was for $18,000; the closing quoted stock price was $2.25 per share, therefore 8,000 shares will be awarded for the quarter ended June 30, 2011 on July 1, 2011 and $18,000 was booked as an accrued expense in the three month period ended June 30, 2011. To date the Company has issued 10,356 total shares to the Chief Financial Officer, which include the stock award of $18,000 or 4,800 shares at the December 31, 2010 fair market value of $3.75 per share and the stock award of $18,000 or 5,556 shares at the March 31, 2011 fair market value of $3.24 per share. The Company issued 10,356 shares to its Chief Financial Officer on April 18, 2011.

In January 2011, the Company entered consulting agreements with its three independent directors. The agreements are for a twelve month term. Under the terms of the agreements, each director is to be compensated $9,000 annually in cash compensation and $9,000 annually in stock compensation in restricted common shares to be awarded semi-annually.

Based on the fair market value at June 30, 2011 the stock awards for each director was $2,250; closing quoted stock price was $2.25 per share, therefore 1,000 shares will be awarded for the quarter ended June 30, 2011 on July 1, 2011 and $2,250 was booked as an accrued expense for each of the three directors in the three month period ended June 30, 2011. To date the Company has issued 1,389 shares to each of the three independent directors, which include the stock award $2,250 or 695 shares at the March 31, 2011 fair market value of $3.24 per share and the stock award of $1,562 or 694 shares at the June 30, 2011 fair market value of $2.25 per share. The directors will be issued an additional 306 shares for this period accounting for the total $2,250 at $2.25 per share due for the second quarter. The company issued 4,167 shares to its three independent directors on April 18, 2011.

On October 1, 2010, the Company entered into a consulting agreement with its financial controller. The agreement is for a twelve-month term. Under the terms of the agreement, the financial controller is to be compensated for 20,000 shares annually in restricted common shares to be awarded beginning on January 1, 2011 on a quarterly basis. The Company did not previously account for this stock award. Pursuant to the agreement, 15,000 shares will be awarded by the time of this report. Based on the closing quoted stock price of $2.25 per share at June 30, 2011, the 15,000 shares were valued at $33,750. No shares have been issued to date and $33,750 has been accrued as stock based compensation.

The above-mentioned securities were not registered under the Securities Act of 1933. The issuance of these shares was exempt from registration, in part pursuant to Regulation S and Regulation D under the Securities Act of 1933 and in part pursuant to Section 4(2) of the Securities Act of 1933.

Enterprise Income Tax (“EIT”)

On March 16, 2007, the National People’s Congress of China approved the Enterprise Income Tax Law of the People’s Republic of China (the “new EIT law”), which went into effective on January 1, 2008. In accordance with the relevant tax laws and regulations of the PRC, the applicable enterprise income tax rate for the Company is 25%.

Shanxi Taiji and Taiyuan Taiji are taxed pursuant to the New EIT Law with a unified enterprise income tax rate of 25%. Shanxi Taiji and Taiyuan ~~Taiyuan~~ Taiji did not pay any income taxes for the ~~three and nine~~six months ended ~~September~~June 30, ~~2010~~2011 due to these net losses experienced in the past reporting periods. The two entities may apply the past periods’ net operating losses to futures years’ profits in order to reduce tax liability. Since Shanxi Taiji and Taiyuan Taiji have minimal business operations, the two entities are unlikely to have profits in future periods.

The subsidiaries of Shanxi Taiji, which were registered as private schools (the “school-subsidiaries”), are not subject to income taxes determined in accordance with The Law for Promoting Private Education (2003) and those school-subsidiaries registered as private schools not requiring reasonable returns (similar to a not-for-profit entity) are treated as public schools and are generally not subject to enterprise income taxes. Therefore, the school-subsidiaries are tax exempt. As a result, all deferred tax assets and liabilities are ~~diminimus,~~de-minimus, and management would have a 100% valuation allowance for all deferred tax assets.

~~CHINA BILINGUAL TECHNOLOGY~~China Bilingual Technology & ~~EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

Education Group Inc. and Subsidiaries

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Notes to Condensed Consolidated Financial Statements

~~SEPTEMBER~~June 30, 2011 and 2010 ~~AND 2009 (UNAUDITED)~~

(Unaudited)

~~NOTE 14 – TAXES (CONTINUED)~~

Kahibah Limited is tax exempt from income tax on all sources of income pursuant to the tax law in the British Virgin Islands. However, pursuant and subsequent to the reverse merger, the parent company in U.S. will pay tax in future years.

Effective January 1, 2007, the Company adopted ASC 740-10, Accounting for Uncertainty in Income Taxes (formerly “FIN 48”, an interpretation of FASB statement No. 109), Accounting for Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740-10 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of ~~September~~June 30, ~~2010~~2011 and ~~December 31, 2009,~~2010, the Company does not have a liability for unrecognized tax benefits.

The Company’s ~~estimated~~operating subsidiaries are tax exempt, since primary and secondary education is not subject to income tax ~~savings for the nine and three months ended September 30, 2010 and 2009 are summarized as follows:~~

For The Nine Months
Ended September 30,

For The Three Months
Ended September 30,

2010
(Unaudited)

2009
(Unaudited)

2010
(Unaudited)

2009
(Unaudited)

Tax savings $ 2,473,422 $ 1,857,834 $ 986,623 $ 760,579
Benefit per share Basic: $ 0.08 $ 0.06 $ 0.03 $ 0.03

~~Had the Company’s tax exemption not been~~ in the ~~place for three and nine months ended September 30, 2010,~~PRC. As such, the Company ~~estimates the following pro-forma financial statement impact:~~

For The Nine Months
Ended September 30,

For The Three Months
Ended September 30,

2010
(Unaudited)

2009
(Unaudited)

2010
(Unaudited)

2009
(Unaudited)

Net income before tax provision, as reported $ 9,893,688 $ 7,431,336 $ 3,946,493 $ 3,042,316
Less tax provision exempted (2,473,422 ) (1,857,834 ) (986,623 ) (760,579 )
Pro-forma net income
$7,420,266　

$5,573,502　

$2,959,870　
$ 2,281,737
Pro-forma net income per share:
Pro-forma Basic earnings per share $ 0.25 $ 0.19 $ 0.10 $ 0.08
Pro-forma Diluted earnings per share $ 0.25 $ 0.19 $ 0.10 $ 0.08

and its subsidiaries have no deferred tax asset or liability.

~~CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2010 AND 2009 (UNAUDITED)~~

NOTE 15 –SEGMENT INFORMATION

		For The Six Months Ended June 30, 2011						For The Six Months Ended June 30, 2010
		Tuition fee		Room & Board		Total		Tuition fee		Room & Board		Total
Revenue	$	8,681,294	$	3,720,554		12,401,848	$	8,368,146	$	3,586,348		11,954,494
Cost of Revenue		4,348,445		1,863,620		6,212,065		4,176,879		1,790,091		5,966,970
Gross profit		4,332,849		1,856,934		6,189,783		4,191,267		1,796,257		5,987,524
Operating expenses		121,998		52,285		174,283		49,916		21,392		71,308
Operating profit	$	4,210,851		1,804,649		6,015,500		4,141,351		1,774,865		5,916,216

Segment assets	$	28,126,540	$	28,126,539	$	56,253,079	$	24,613,694	$	24,814,673	$	49,428,367
Segment liabilities	$	8,804,785	$	8,804,785	$	17,609,570	$	18,818,541	$	2,796,603	$	21,615,144

The Company operates in two business ~~segment,~~segments, educational and room and board services. ~~The Company also generates rental income; however, rental income of~~According to experience, the ~~Company was insignificant for nine and three months ended September 30, 2010 and 2009, which do not exceed the 10% quantitative threshold.~~

For The Nine Months Ended
September 30, 2010

For The Nine Months Ended
September 30, 2009

(Unaudited) (Unaudited)
Tuition fee Room & Board and Other Rev Total Tuition fee Room & Board and Other Rev Total

Revenue $ 13,240,999 $ 5,064,549 $ 18,305,548 $ 10,801,362 $ 4,481,930 $ 15,283,292
Costs of goods 3,409,363 3,162,630 6,571,993 3,511,764 3,200,645 6,712,409

Gross profit
9,831,636 1,901,919 11,733,555 7,289,598 1,281,285 8,570,883
Operating expenses 1,395,086 533,607 1,928,693 789,516 327,603 1,117,119
Operating profit $ 8,436,550 $ 1,368,312 $ 9,804,862 $ 6,500,082 $ 953,682 $ 7,453,764

Segment assets $ 27,637,500 $ 27,839,441 $ 55,476,941

Segment liabilities $ 20,664,153 $ 2,653,910 $ 23,318,063

~~Tuition~~tuition fee represented approximately ~~72.3% and~~ ~~70.7~~%70%, and room and board and other fee represented approximately ~~27.7% and~~ ~~29.3~~%30% of our total revenues in the ~~nine~~six months ended ~~September~~June 30, 2011 and 2010, ~~and 2009,~~ respectively.

~~CHINA BILINGUAL TECHNOLOGY~~China Bilingual Technology & ~~EDUCATION GROUP INC.~~ ~~AND SUBSIDIARIES~~

Education Group Inc. and Subsidiaries

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Notes to Condensed Consolidated Financial Statements

~~SEPTEMBER~~June 30, 2011 and 2010 ~~AND 2009 (UNAUDITED)~~

(Unaudited)

NOTE 15 –SEGMENT INFORMATION (CONTINUED)

	For The Three Months Ended September 30, 2010 (Unaudited)						For The Three Months Ended September 30, 2009 (Unaudited)						For The Three Months Ended June 30, 2011						For The Three Months Ended June 30, 2010
	Tuition fee		Room & Board and other fee		Total		Tuition fee		Room & Board and other fee		Total		Tuition fee		Room & Board		Total		Tuition fee		Room & Board		Total

Revenue	$	4,625,534	$	1,677,406	$	6,302,940	$	3,803,337	$	1,698,847	$	5,502,184	$	4,398,772	$	1,885,188		6,283,960	$	4,195,712	$	1,798,163		5,993,875
Costs of goods		964,576		909,869		1,874,445		1,017,490		1,044,652		2,062,142
Cost of Revenue														2,110,281		904,407		3,014,688		2,362,904		1,012,673		3,375,577
Gross profit		3,660,958		767,537		4,428,495		2,785,847		654,195		3,440,042		2,288,491		980,781		3,269,272		1,832,808		785,490		2,618,298
Operating expenses		373,581		135,475		509,056		262,298		117,162		379,460		46,163		19,784		65,947		37,784		16,193		53,977
Operating profit	$	3,287,377	$	632,062	$	3,919,439	$	2,523,549	$	537,033	$	3,060,582	$	2,242,328		960,997		3,203,325		1,795,024		769,297		2,564,321

Segment assets													$	28,126,540	$	28,126,539	$	56,253,079	$	24,613,694	$	24,814,673	$	49,428,367
Segment liabilities													$	8,804,785	$	8,804,785	$	17,609,570	$	18,818,541	$	2,796,603	$	21,615,144

~~Tuition~~The Company operates in two business segments, educational and room and board services. According to experience, the tuition fee represented approximately ~~73.4% and~~ ~~69.1~~%70%, and room and board and other fee represented approximately ~~26.6% and~~ ~~30.9~~%30% of our total revenues in the three months ended ~~September~~June 30, 2011 and 2010, ~~and 2009,~~ respectively.

NOTE ~~16–~~16 – EARNING PER SHARE

FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic earnings per share (EPS) computations.

Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no potentially dilutive securities for the ~~nine and~~ three months or six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009.~~2010.

The following table sets forth the computation of basic and diluted net income per share:

For The Nine months Ended September 30,
2010 2009
(Unaudited) (Unaudited)
Net income $ 9,893,688 $ 7,431,336
Basic weighted average outstanding
shares of common stock
29,999,998 29,999,998
Diluted weighted average common stock
and stock equivalents
29,999,998 29,999,998
Earnings per share:
Basic $ 0.33 $ 0.25
Diluted $ 0.33 $ 0.25

	For The Six Months Ended June 30,				For The Three Months Ended June 30,
	2011		2010		2011		2010
Net income	$	6,029,812	$	5,926,154	$	3,211,243	$	2,569,131
(June 30, 2010 Restated)
Basic weighted average outstanding shares of common stock		30,005,862		26,121,623		30,005,862		26,121,623
Diluted weighted average common stock and stock equivalents		30,005,862		26,121,623		30,005,862		26,121,623
Earnings per share: (June 30, 2010 Restated)
Basic	$	0.20	$	0.23	$	0.11	$	0.10
Diluted	$	0.20	$	0.23	$	0.11	$	0.10

China Bilingual Technology & Education Group Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2011 and 2010 (Unaudited)

For The Three Months Ended September 30,
2010 2009
(Unaudited) (Unaudited)
Net income $ 3,946,493 $ 3,042,316
Basic weighted average outstanding
shares of common stock
29,999,998 29,999,998
Diluted weighted average common stock
and stock equivalents
29,999,998 29,999,998
Earnings per share:
Basic $ 0.13 $ 0.10
Diluted $ 0.13 $ 0.10

NOTE 17 –- EMPLOYEE RETIREMENT BENEFITS AND POST RETIREMENT BENEFITS

According to the Shanxi and Sichuan Provincial regulations on state pension program, both employees and employers have to contribute toward pensions. The pension contributions range from 2% to 8% that was contributed by individuals (employees) and the Company is required to make contributions to the state retirement plan based on 20% of the employees’ monthly basic salaries. Employees in the PRC are entitled to retirement benefits calculated with reference to their basic salaries on retirement and their length of service in accordance with a government managed benefits plan. The PRC government is responsible for the benefit liability to these retired employees. During the ~~three and nine~~six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009,~~2010, the Company contributed ~~$141,317~~$91,929 and ~~$129,176, and $18,359 and $23,275~~$90,240 in pension contributions, ~~respe ctively.~~respectively.

NOTE 18–SUBSEQUENT EVENT

Management has evaluated subsequent events ~~from September 30, 2010~~through the date these financial statements were issued and has concluded no events need to be reported during this period.

2720

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

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this ~~document. The following discussion~~report.

This report contains forward-looking ~~statements. The~~statements that involve risks and uncertainties. We generally use words ~~or phrases “would be,~~such as “believe,” “may,” “could,” “will, ~~allow,~~” “intend,” “expect, ~~to”, “intends to,~~” ~~“will likely result,~~“anticipate,” ~~“are expected to,~~“plan,” ~~“will continue,” “is anticipated,” “estimate,” or~~and similar expressions ~~are intended~~ to identify forward-looking ~~statements. Such~~ statements, ~~include, among others, those~~including statements ~~concerning~~regarding our ~~expected financial performance,~~ability to continue to generate new business based on our ~~corporate~~sales and marketing efforts, referrals and existing relationships, our financing strategy and ~~operational plans. Actual results could differ materia lly~~ability to access the capital markets and other risks discussed in our Risk Factor section included in our Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on March 31, 2011 materially from those ~~projected~~expressed in any forward-looking statements. We cannot assure you that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business or our operations in the way we expect. We caution readers not to place undue reliance on these forward-looking statements, which speak only as ~~a result~~ of a number of risks and uncertainties, including, among others: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether we are able to manage our planned growth efficiently and operate profitable operations, including whether our management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations; and (d) whether we are able to successfully fulfill our primary requirements for cash which are explained below under “Liquidity and Capital Resources”. Unless otherwise required by applicable law, wetheir dates. We do not ~~undertake, and we specifically disclaim any obligation,~~intend to update any of the forward-looking statements ~~to reflect occurrences, developments, unanticipated events or any other circumstances~~ after the date of ~~such statement unless~~this document to conform these statements to actual results or to changes in our expectations, except as required by law. For additional information regarding these risks and uncertainties, see “Risk Factors”. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. In addition, our consolidated financial statements and the financial data included in this document reflect the Merger and have been prepared as if our current corporate structure had been in place throughout the relevant periods.

~~Overview~~

~~On June 30, 2010, Designer Export, Inc. (“DESG”), incorporated in the State of Nevada, USA on March 31, 2009, entered into an Agreement~~Highlights and Plan of Merger (the “Merger Agreement”) with China Bilingual Education Acquisition, Inc., DESG’s wholly-owned subsidiary, Kahibah Limited (“KL”), a British Virgin Islands (“BVI”) corporation and its shareholders. Pursuant to the Merger Agreement, DESG acquired all the issued and outstanding common stock of KL. DESG issued 26,100,076 shares of its common stock, representing 87% of DESG’s issued and outstanding common stock after giving effect to the cancellation of 7,748,343 shares on June 30, 2010, to KL’s shareholders in exchange for 100% of the common stock of KL. After the closing of the transaction contemplated by the Merger Agre ement (the “Merger”), DESG had a total of 29,999,998 shares of common stock issued and outstanding, with KL’s shareholder owning 87% of the total issued and outstanding shares of DESG’s common stock, and the balance held by those who held shares of DESG’s common stock prior to the closing of the exchange. This share exchange transaction resulted in KL’s shareholders obtaining a majority voting interest in DESG. All shares are shown effective of a 2.582781 forward stock split.

~~As part of the Merger, the Company’s name changed from “Designer Export, Inc.” to “China Bilingual Technology Education Group Inc.” (“China Bilingual”).~~

The Merger was accounted for as a “reverse merger” since the stockholders of KL own a majority of the outstanding shares of China Bilingual’s common stock immediately following the Merger. Under accounting principles generally accepted in the United States, the Merger is considered to be a capital transaction in substance, rather than a business combination. Thus, the Merger is equivalent to the issuance of stock by KL for the net monetary assets of China Bilingual, accompanied by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the Merger was identical to that resulting from a reverse acquisition, except no goodwill was recorded. Under reverse takeover accounting, the post reverse acquisition comparative historical financial statements of the legal acquirer, C hina Bilingual, are those of the accounting acquirer, KL, which is considered to be the accounting acquirer, and thus represent a continuation of the financial statements of KL. Share and per share amounts stated have been retroactively adjusted to reflect the Merger. The accompanying financial statements present the historical financial condition, results of operations and cash flows of the operating company prior to the capitalization.Executive Summary

~~Pre-exchange Transaction Shares~~	~~11,648,265~~	*
~~Repurchase~~	~~(7,748,343~~	)
~~Issuance for KL Shareholders~~	~~26,100,076~~
~~Total Post-Exchange Shares~~	~~29,999,998~~

*effecting a 2.582781 forward stock split as of July 14, 2010

~~History of KL~~

The accompanying consolidated financial statements include the financial statements of KL and its subsidiaries. KL and its subsidiaries are wholly-owned by China Bilingual and are collectively referred to as the “Company.” The Company owns and operates high quality, K-12 private boarding schools providing bilingual educational services including full-curriculum primary and secondary schools in the PRC through its wholly owned subsidiaries. As of September 30, 2010, there were 29,999,998 shares of the Company’s $0.001 par value common stock issued and outstanding. The shareholders of KL own approximately 87% of the common stock of the Company.

KL was incorporated under the laws of the British Virgin Islands (“BVI”) on December 6, 2005. On June 25, 2009, Mr. Ren Zhiqing and Mr. Pan Mingxiao entered into a Purchase Agreement to acquire KL for $10,285. Since June 25, 2009, KL was 90% and 10% owned by Mr. Ren Zhiqing and Mr. Pan Mingxiao, respectively. For several months prior to the Recapitalization (described below), KL was a “shell company,” as defined by Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”), and its primary business operations involved seeking the acquisition of assets, property, or businesses that would be beneficial to it and its shareholders.

On August 14, 2009, KL established a new company, Taiyuan Taiji Industry Development Co., Ltd. (“Taiyuan Taiji”.) Taiyuan Taiji is a company incorporated in the PRC. KL is the sole shareholder of Taiyuan Taiji under the laws of the PRC. Taiyuan Taiji was organized pursuant to the laws of the PRC, for the purpose of acquiring Shanxi Taiji Industrial Development Co., Ltd. (“Shanxi Taiji”), a company formed on July 25, 1997 pursuant to the laws of the PRC.

On November 25, 2009, Taiyuan Taiji acquired Shanxi Taiji. This transaction was treated as a Recapitalization and Reverse Merger of Shanxi Taiji for financial reporting purposes. The effect of this Recapitalization was rolled back to the inception of Shanxi Taiji for financial reporting purposes. As a result, the historical financial statements of Shanxi Taiji become the historical financial statements of KL. Net equity of KL as of June 25, 2009 was less than 1% threshold, and thus the recapitalization effect was not presented on the consolidated statements of changes in shareholders’ equity for the years ended December 31, 2009.

Prior to November 25, 2009, Mr. Ren Zhiqing owned 90% of Shanxi Taiji, with the remaining balance being held by Mr. Pan Mingxiao. On November 25, 2009, the Company entered into a Share Exchange Agreement with Ms. Ren Bainv, a relative of Mr. Ren Zhiqing, which agreed to sell 5% ownership of Shaxi Taiji to Ms. Ren Bainv for $146,224. Since the Company has not yet received the capital contribution from Ms. Ren Bainv, the Company did not present non-controlling interest on its financial statements as of September 30, 2010 and December 31, 2009.

~~Description of Business~~

China Bilingual Technology & Education Group Inc. is an education company that owns and operates high-quality, K-12 private boarding schools in ~~China.~~the People’s Republic of China (“PRC”). Founded in 1998, the Company currently operates two schools encompassing kindergarten, elementary, middle and high school levels with ~~over 9,000~~approximately 9,500 students and ~~1,300~~1,500 faculty and staff. The Company’s schools are located in Shanxi and Sichuan Provinces and provide students with an innovative and high-quality education with a focus on fluency and cultural skills in both Chinese and English, as well as a strong core curriculum. The schools regularly rank among the top schools in their respective regions for ~~college entrance rates and~~ national college entrance exam ~~scores.~~scores and college entrance rates. The Company’s schools have earned excellent teaching reputations and are recognized for the ~~succ ess~~success of their students and strong faculty. As ~~China~~the PRC experiences rapid industrialization and economic growth, the government is focused on education as a means to increase worker productivity and raise the standard of living. Parents in ~~China’s~~the PRC’s new middle and upper classes are sending their children to receive private school education to give them an advantage in ~~China’s~~the PRC’s increasingly competitive workforce. The Company’s sector in education is not subject to corporate income tax, and the Company anticipates its growth will come from both organic growth through increased enrollment and expansion of its business model and teaching methods into new schools, which may be acquired by the Company.

The Company was incorporated under the laws of the State of Nevada on March 31, 2009 as Designer Export, Inc. On June 30, 2010, the Company completed its plan of merger and changed its name to China Bilingual Technology & Education Group Inc.

Results of Operations

~~Operation Results for~~For the Three Months Ended ~~September~~June 30, 2011 Compared to the Three Months Ended June 30, 2010 ~~and 2009~~

Revenues

The following table shows the breakdown of revenues by segment during the three months ended ~~September~~June 30, ~~2010~~2011 and ~~2009:~~2010:

	The Three Months Ended September 30,													For the Three Months Ended June 30,
	2010					2009								2011					2010
	Revenue		%			Revenue		%			% Change			Revenue		%			Revenue			%
Tuition	$	4,625,534		73.4	%	$	3,803,337		69.1	%		21.6	%	$	4,398,772		70	%		$	4,195,712		70	%
Room & Board and Other Rev.		1,677,406		26.6	%		1,698,847		30.9	%		(1.3	%)
Room & Board															1,885,188		30	%			1,798,163		30	%
Total	$	6,302,940		100	%	$	5,502,184		100	%		14.6	%	$	6,283,960		100	%		$	5,993,875		100	%

During the three months ended ~~September~~June 30, ~~2010,~~2011, we had total revenues of ~~$6,302,940,~~$6,283,960, an increase of ~~$800,756~~$290,085 or ~~14.6% as compared to~~4.8% from total revenues of $5,502,184 during the three months ended September 30, 2009. The increase was a primarily related to an increase in enrollment of 810 students and tuition during the period. Our average tuition increased approximately $300 or 10% to $3,350 per student from $3,050 per student$5,993,875 for the three months ended ~~September~~June 30, ~~2010~~2010. Our average tuition however increased $226 or approximately 7% per student between the three month periods ended June 30, 2011 and ~~2009, respectively.~~ June 30, 2010. Total enrollment between the periods decreased 363 students to 9,363 students at June 30, 2011 from 9,726 students at June 30, 2010. We phased-out 280 students that were part of an experimental program at our Sichuan school. The experimental program was to take local high school seniors or drop-outs (not our previous students) who could not score well on the college entrance exam and enroll them into our school to try to tutor them through the national college entrance exam known as the “GaoKao” exam (equivalent of the US S.A.T. test for college entrance). After experimenting with this program with some success for one year, our administration became concerned that this would pull down our average college entrance exam scores and college entrance rates, so the program was dropped. Our administration remains focused on improving our college entrance exam scores and college entrance rates since this is a key selling point for our schools. We have also raised our academic standards required to advance from middle school to our high school. Our minimum test scores have been raised and we dismissed 110 students during the period that could not advance to the high school level. Because of our strict academic standards we remain the leaders in our respective regions for sending students on to prestigious colleges with a high overall college acceptance rate.

During the three months ended ~~September~~June 30, ~~2010~~2011 room and ~~2009 room &~~ board increased ~~$291,459~~$87,025 or ~~21.7%~~4.8% to ~~$1,634,422~~$1,885,188 from ~~$1,342,963,~~$1,798,163 for the three months ended June 30, 2010, corresponding to the similar 7% price increase in tuition. Other revenues decreased to $312,900 or 87.9% to $42,984 from $355,884 because of an incentive plan instituted by the Schools to waive cert ain registration fees during the registration period to help the students off-set the tuition increase. The incentive allowed student with high passing marks a reduced registration fee at enrollment for the current school year if paid before September 30, 2010.

3021

Cost of Revenue

During the three months ended ~~September~~June 30, ~~2010,~~2011, our cost of revenue ~~was $1,874,445, as compared~~decreased $360,889 or 10.7% to ~~cost of revenue of $2,062,142 during~~$3,014,688 from $3,375,577 for the ~~three months ended September 30, 2009, a decrease of $187,697 or 9.1%.~~same period last year. The decrease in cost of revenue was primarily the result of a $325,972 decrease in the legal and professional fees included in overhead allocated to cost of ~~$120,000 in teacher’s salary because~~revenue. As a percentage of ~~newly hired teachers with lower salaries replacing older teachers with higher salaries who have left the schools. Also, boarding expenses~~total revenues, cost of revenues decreased ~~by $30,000 through tight cost controls.~~to 48.0% of revenues from 56.3% of revenues.

General and Administrative Expenses

General and administrative expenses, totaled $~~509,056~~$65,947 during the three months ended ~~September~~June 30, ~~2010~~2011 as compared to ~~$379,460~~$53,977 for the three months ended ~~September~~June 30, ~~2009.~~2010. The increase of ~~$129,596~~11,970, or ~~34.2%~~22.2% in general and administrative expense was ~~mainly attributed~~primarily due to ~~additional fees paid for going~~ public ~~such as, $20,000 for attorney’s fees, $40,000 for audit fees, and $50,000 for investor relations fees.~~

~~Interest Expense~~

~~Interest expense decreased from $ 24,473~~company expenses incurred during the three months ended ~~September~~June 30, ~~2009 to $0 for~~2011, including legal and accounting fees and investor relations fees.

Interest expense

We have had no short term or long term debt outstanding and therefore, have no interest expense during the three ~~month~~months ended ~~September~~June 30, 2011 and 2010. ~~The decreased interest expense resulted from the bank loan of Shanxi Taiji paid-off on Oct 9th, 2009, so the interest for three month ended September 30, 2010 is nil.~~

Net Income

~~As a result of the factors described above, we had net~~Net income ~~attributable to common shareholders in the amount of $3,946,493~~ for the three months ended ~~September~~June 30, 2011, increased $642,112 or 25.0% to $3,211,243 from $2,569,131 for the three months ended June 30, 2010, ~~as compared with $3,042,316~~due to the reasons set forth above.

Earnings per share during the three months ended ~~September~~June 30, ~~2009. The increase of $904,177 or 29.7% in net income was mainly attributed to the increase of the revenue through higher enrollment.~~

~~Earnings~~2011, increased $0.01 per share ~~increased during the three months ended September 30, 2010~~or 8.8% to ~~$0.13~~$0.11 per share from $0.10 per share during the three months ended ~~September~~June 30, ~~2009.~~2010. Basic and diluted earnings per share are the same since the Company has no outstanding dilutive instruments, including warrants, options or convertible debt.

Comprehensive Income

Our business operates primarily in Chinese Renminbi (“RMB”), but we report our results in U.S. Dollars. The conversion of our accounts from RMB to U.S. Dollars results in translation adjustments. As a result, ofwe had a currency translation adjustment gain of ~~$378,122~~$542,225 during the three months ended ~~September~~June 30, ~~2010,~~2011, as compared to a ~~loss~~gain of ~~$352,386~~$116,906 during the three months ended ~~September~~June 30, ~~2010 due to the 1.3% currency devaluation between the periods, our~~2010. Our comprehensive income ~~was $4,324,615~~increased $1,067,431 or 39.7% to $3,753,468 during the three months ended ~~September~~June 30, ~~2010, an increase of $1,634,685 or 60.7%~~2011, as compared with ~~$2,689,930~~$2,686,037 during the three months ended ~~September~~June 30, ~~2009.~~2010.

~~Operation Results of~~For the ~~Nine months~~Six Months Ended ~~September~~June 30, 2011 Compared to the Six Months Ended June 30, 2010 ~~and 2009~~

The following table shows the breakdown of revenues by segment during the ~~nine~~six months ended ~~September~~June 30, ~~2010~~2011 and ~~2009:~~

The Nine Months Ended
September 30,

2010 2009
Revenue % Revenue % % Change
Tuition $ 13,240,999 72.3 % $ 10,801,362 70.7 % 22.6 %
Room & Board and Other Rev. 5,064,549 27.7 % 4,481,930 29.3 % 13.0 %
Total $ 18,305,548 100 % $ 15,283,292 100 % 19.8 %
2010:

		For the Six Months Ended June 30,
		2011			2010
		Revenue	%		Revenue	%
Tuition	$	8,681,294	70%	$	8,368,146	70%
Room & Board		3,720,554	30%		3,586,348	30%
Total	$	12,401,848	100%	$	11,954,494	100%

During the ~~nine~~six months ended ~~September~~June 30, ~~2010,~~2011, we had total revenues of ~~$18,305,548,~~$12,401,848, an increase of ~~$3,022,256~~$447,354 or ~~19.8% as compared to compared to~~3.7% from total revenues of ~~$15,283,292 during~~$11,954,494 for the ~~nine~~six months ended ~~September~~June 30, ~~2009. The increase was a primarily related to an increase in enrollment of 810 students.~~2010. Our average tuition ~~also~~however increased $226 or ~~7.2% over~~approximately 7% per student between the six months periods ended June 30, 2011 and June 30, 2010. Total enrollment between the periods decreased 363 students to ~~$3,352 per student~~9,363 students at June 30, 2011 from ~~$3,126 per student~~9,726 students at June 30, 2010. We phased-out 280 students that were part of an experimental program at our Sichuan school. The experimental program was to take local high school seniors or drop-outs (not our previous students) who could not score well on the college entrance exam and enroll them into our school to try to tutor them through the national college entrance exam known as the “GaoKao” exam (equivalent of the US S.A.T. test for college entrance). After experimenting with this program with some success for one year, our administration became concerned that this would pull down our average college entrance exam scores and college entrance rates, so the program was dropped. Our administration remains focused on improving our college entrance exam scores and college entrance rates since this is a key selling point for our schools. We have also raised our academic standards required to advance from middle school to our high school. Our minimum test scores have been raised and we dismissed 110 students during the period that could not advance to the high school level. Because of our strict academic standards we remain the leaders in our respective regions for sending students on to prestigious colleges with a high overall college acceptance rate.

During the six months ended June 30, 2011 room and board increased $134,209 or 3.7% to $3,720,554 from $3,586,348 for the ~~nine~~six months ended ~~September~~June 30, 2010, ~~and 2009, respectively. During the nine months ended September 30, 2010 and 2009 room & board increased $818,403 or 20.0% to $4,907,433 from $4,089,030,~~ corresponding to the similar 7% price increase in tuition. Other revenues decreased to $235,784 or 60.0% to $157,116 from $392,900 primarily due to an incentive plan instituted by the Schools to waive certain registrat ion fees during the registration period to help the students off-set the tuition increase. The incentive allowed student with high passing marks a reduced registration fee at enrollment for the current school year if paid before September 30, 2010. The Schools maintained other fees during the school year and only reduced the registration fees, which had the greatest impact during the three months ended September 30, 2010.

During the ~~nine~~six months ended ~~September~~June 30, ~~2010,~~2011, our cost of revenue ~~was $6,571,993, as compared~~increased $245,095 or 4.1% to ~~cost of revenue of $6,712,409 during~~$6,212,065 from $5,966,970 for the ~~nine months ended September 30, 2009, a decrease of $140,416 or 2.1%.~~same period last year. The ~~decrease~~increase in cost of revenue was primarily the result of increased labor costs for teacher salaries and insurance, as labor rates continue to increase in China. We also upgraded certain programs during this period to include new books and equipment as well as expanded our administration in anticipation of acquiring a ~~decrease~~new school facility, which are expensed in the cost of ~~$140,000~~revenue for the period. All direct costs associated with education, room and board are included in ~~teacher’s salary because~~cost of ~~newly hired teachers with lower salaries replacing older teachers with higher salaries who have left the schools.~~revenue. As a percentage of total revenues, cost of revenues increased to 50.1% of revenues from 49.9% of revenues.

General and Administrative Expenses

General and administrative expenses, totaled ~~$1,928,693~~$174,283 during the ~~nine~~six months ended ~~September~~June 30, ~~2010~~2011, as compared to ~~$1,117,119~~$71,308 for the ~~nine~~six months ended ~~September~~June 30, ~~2009.~~2010. The increase of ~~$ 811,574~~$102,975, or ~~72.7%~~144.4% in general and administrative expense was ~~mainly attributed~~primarily due to ~~additional fees paid for going~~ public ~~such as $360,000 for purchasing~~company expenses incurred during the ~~public entity - DESG, $130,000 for attorney’s fees, $160,000 for audit~~six months ended June 30, 2011, including legal and accounting fees and ~~$50,000 for~~ investor relations fees. During the six months ended June 30, 2010, we were not a public company.

Interest expense

~~Interest~~We have had no short term or long term debt outstanding and therefore, have no interest expense ~~decreased from $71,681~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2009 to $0 for the nine month ended September 30,~~2011 and 2010. ~~The decreased interest expense resulted from the bank loan of Shanxi Taiji paid-off on Oct 9th, 2009, so the interest for nine month ended September 30, 2010 is nil.~~

Net Income

~~As a result of the factors described above, we had net~~Net income ~~attributable to common shareholders in the amount of $9,893,688~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2010, as compared with $7,431,336 during~~2011, increased $103,658 or 1.8% to $6,029,812 from $5,926,154 for the ~~nine~~six months ended ~~September~~June 30, ~~2009. The increase in of $2,462,352 or 33% was mainly attributed to the increase of the revenue through higher enrollment.~~2010.

Earnings per share ~~increased~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2010~~2011 decreased $0.03 per share or 11.1% to ~~$0.33~~$0.20 per share from ~~$0.25~~$0.23 per share during the ~~nine~~six months ended ~~September~~June 30, ~~2009.~~

2010. Basic and diluted earnings per share are the same since the Company has no outstanding dilutive instruments, including warrants, options or convertible debt.

Comprehensive Income

Our business operates primarily in Chinese Renminbi (“RMB”), but we report our results in U.S. Dollars. The conversion of our accounts from RMB to U.S. Dollars results in translation adjustments. As a result, ofwe had a currency translation adjustment gain of ~~$534,477~~$853,762 during the ~~nine~~six months ended ~~September~~June 30, ~~2010,~~2011, as compared to a ~~loss~~gain of ~~$296,892~~$156,355 during the ~~nine~~six months ended ~~September~~June 30, ~~2010 due to the 3.6% currency devaluation between the periods, our~~2010. Our comprehensive income ~~was $10,428,165~~increased $801,065 or 13.2% to $6,883,574 during the ~~nine~~six months ended ~~September~~June 30, ~~2010,~~2011, as compared with ~~$7,134,444~~$6,082,509 during the ~~nine~~six months ended ~~September~~June 30, ~~2009.~~2010.

Liquidity and Capital Resources

Presently, our cash and cash equivalents are ~~$14,114,068.~~$12,392,138. Our principal source of liquidity comes from prepaid tuition, and room and board from students that attend our schools. AsThe Company has no accounts receivable because tuition is prepaid up-front at the beginning of ~~September 30, 2010, we had negative working capital of $1,803,171, as compared to negative working capital of $15,224,463 as of September 30, 2009.~~the school year. Based on our current operating plan, we believe that our existing resources, including cash flow generated from operations as well as available bank loans, will be sufficient to meet our working capital requirement for our current operations. In order to fully implement our business plan and continue our growth, however, we will require additional capital either from our shareholders or from outside sources, although there is no assurance that we will be able to obtain additional capital at ~~s uitable~~suitable terms if and when it is needed.

We have paid a deposit for the acquisition of a school facility as a good-faith, refundable deposit of $10,211,186 paid toward the potential acquisition of a school as of June 30, 2011.

Cash Flows from Operating Activities

Cash used in operating activities decreased $3,169,896 or 38.0% to $5,174,601 for the six months ended June 30, 2011 compared to $8,344,497 provided by operating activities for the six months ended June 30, 2010. The decrease is primarily because of cash used in the payments toward accounts payable, accrued expenses and refundable deposits.

~~Cash Flows from Operating Activities~~

Cash provided by operating activities was $11,171,224 for the nine months ended September 30, 2010 as compared to $9,089,713 provided by operating activities for the nine months ended September 30, 2009. The increase in cash provided by operations is due primarily to the $2,462,352 increase in net income from increased enrollment of 810 students attending our schools, as well as the tuition increase during the none months ended September 30, 2010.

Cash Flows from Investing Activities

Cash used in investing activities ~~was ($834,657)~~decreased $941,058 or 200.4% to $1,410,728 for the ~~nine~~six months ended ~~September~~June 30, ~~2010~~2011, as compared to $469,670 used in the six months ended June 30, 2010. The decrease in cash used inby investing activities ~~of ($2,338,958)~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2009. The decrease~~2011 resulted primarily from the $1,197,805 additional payment as part of ~~cash used in investing activities is mainly attributable to~~the good-faith, refundable deposit toward the potential acquisition of a decrease in advances to related parties in 2010 versus 2009. A related party borrowed $704,474 during the nine months ended September 30, 2010 compared to cash advanced to related parties of $1,971,136 during the nine months ended September 30, 2009.new school facility.

Cash Flow from Financing Activities

Cash used in financing activities ~~total ($1,172,854)~~decreased $1,173,073 or 100% to $0 for the ~~nine~~six months ended ~~September~~June 30, ~~2010~~2011 as compared to ~~($1,961,639) provided for~~$1,173,073 used in the ~~nine~~six months ended ~~September~~June 30, ~~2009.~~ 2010. This is primarily due to the $1,173,073 repayment of a related party receivable in 2010.

The ~~decrease in~~following is a summary of our cash ~~used~~flows provided by (used in) operating, investing, and financing activities ~~resulted primarily from repayments to related parties of $1,173,000~~ during the ~~nine months ended September 30, 2010.~~periods indicated:

	For the Six Months Ended June 30,
	2011			2010

Cash at beginning of period	$	8,377,527		$	5,099,860
Net cash provided by (used in) operating activities		5,174,601			8,344,497
Net cash provided by (used in) investing activities		(1,410,728	)		(469,670	)
Net cash provided by (used in) financing activities		-			(1,173,073	)
Effect of exchange rate changes on cash		250,738			(74,636)
Cash at end of period	$	12,392,138		$	11,726,978

As described herein, we anticipate the completion of an acquisition of an additional school facility by the beginning of the 2011 – 2012 school year. We expect to continue to expand our enrollment base utilizing the excess capacity at our existing schools in addition to marketing and expanding enrollment at the proposed school facility to be acquired. Our strategy is to leverage our strong academic reputation to develop additional business. We are also actively seeking opportunities to expand our business that we consider accretive to earnings. We intend to grow our business model through the acquisition of existing schools to increase our total enrollment. To that end, the Company has paid $10,211,186 as a good-faith, refundable deposit to begin preliminary negotiations toward the potential acquisition of a school. In order to fully implement our business plan and continue our growth, however, we will require additional capital either from our shareholders or from outside sources, although there is no assurance that we will be able to obtain additional capital at suitable terms if and when it is needed.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships that are currently material or reasonably likely to be material to our financial position or results of operations.

Critical Accounting Policies and Estimates

The discussion and analysis of the Company’s results of operations and liquidity and capital resources are based on the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. In connection with the preparation of consolidated financial statements, the Company is required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. The assumptions, estimates and judgments included within these estimates are based on historical experience, current trends and other factors the Company believes to be relevant at the time the consolidated financial statements were prepared. On a regular basis, the accounting policies, assumptions, estimates and judgments are reviewed to ensure that the consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from the assumptions and estimates, and such differences could be material.

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions are used for, but are not limited to: (1) asset impairments (2) revenue recognition. Future events and their effects cannot be predicted with certainty, and accordingly, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates these assumptions and estimates on an ongoing basis and may employ outside experts to assist with these evaluations. Actual results could differ from the estimates that have been used.

Significant accounting policies are discussed in Note 4, Summary of Significant Accounting Policies, to the accompanying consolidated financial statements. The Company believes the following accounting policies are the most critical to aid in fully understanding and evaluating the Company’s reported financial results, as they require management to make difficult, subjective or complex judgments, and to make estimates about the effect of matters that are inherently uncertain.

Impairment analysis for long-lived assets and intangible assets

The Company’s long-lived assets and other assets (consisting of property and equipment and purchased intangible assets) are reviewed for impairment in accordance with the guidance of the FASB Topic ASC 360, “Property, Plant, and Equipment”, and FASB ASC Topic 205 “Presentation of Financial Statements”. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Through June 30, 2011, the Company had not experienced impairment losses on its long-lived assets.

Revenues consist primarily of tuition and fees derived from providing meals and housing for students living on campus. Revenues from tuition and fees are recognized pro-rata (on a straight-line basis) over the relevant period attended by the student of the applicable grade or program. The school year runs September 1 through August 31 and prepaid tuition is recognized over the twelve-month period. If a student withdraws from a course or program within three months after the school year starts, the paid but unearned portion of the student’s tuition is 67% refunded. If a student withdraws after the first six months in a school year, no tuition will be refunded. As a result, the Company has recorded prepaid tuition as a current liability on the consolidated balance sheet in the event a student withdraws from school and the Company has to return a portion of the prepaid tuition. In past years there were minimal students who withdrew from a course or program before the end of a school year.

The Company normally receives prepaid tuition and fees from students at their initial admission or before the start of the school year on September 1. Some students will benefit from a discount of fees if they prepay tuition for two to three years of school term. Prepaid tuition is the portion of payments received but not earned and is reflected as a current liability in the accompanying consolidated balance sheets as such amounts are expected to be earned, but may be refundable within the next year.

Management has discussed the development and selection of these critical accounting policies with the Board of Directors and the Board has reviewed the disclosures presented above relating to them.

~~ITEM~~Item 3. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~Quantitative and Qualitative Disclosures About Market Risk.

~~N/A~~Not required for smaller reporting companies.

~~ITEM 4T.~~Item 4. Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND ~~PROCEDURES.~~PROCEDURES

~~Evaluation~~We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of ~~Disclosure Controls~~1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and ~~Procedures. Under~~reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of June 30, 2011, we carried out an evaluation, under the supervision and with the participation of our ~~management, including our President,~~Chief Executive Officer, Ren Zhiqing, and Chief Financial Officer, ~~and Secretary, we evaluated~~Michael Toups, of the effectiveness of the design and operation of our disclosure controls and ~~procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by~~procedures. Based on this ~~report. Based upon that~~ evaluation, our ~~President,~~Chief Executive Officer and Chief Financial Officer ~~and Secretary~~ concluded that our disclosure controls and procedures ~~as of the end of the period covered by this report~~ were effective ~~such~~to ensure that ~~the~~ information required to be disclosed by us in our periodic reports ~~filed under the Securities Exchange Act of 1934~~ is ~~(i)~~ recorded, processed, summarized and reported, within the time periods specified ~~in the SEC’s rules~~for each report and ~~forms and (ii)~~that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

~~Changes~~CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in ~~Internal Control Over Financial Reporting. During~~ the ~~most recent quarter ended September 30, 2010, there has been no change in our~~Company's internal control over financial reporting ~~(as defined in Rule 13a-15(f) and 15d-15(f) under~~have come to management's attention during the ~~Exchange Act) )~~Company's second fiscal quarter that ~~has~~have materially affected, or ~~is reasonably~~are likely to materially affect, ~~our~~the Company's internal control over financial reporting.

PART IIII—OTHER INFORMATION

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

~~ITEM~~Item 1A. ~~RISK FACTORS.~~Risk Factors.

~~N/A~~Not required for smaller reporting companies.

~~None.~~Recent Sales of Unregistered Securities

Based on the fair market value at June 30, 2011 the stock awards for each director was $2,250; closing quoted stock price was $2.25 per share, therefore 1,000 shares will be awarded for the quarter ended June 30, 2011 on July 1, 2011 and $2,250 was booked as an accrued expense for each of the three directors in the three month period ended June 30, 2011. To date the Company has issued 1,389 shares to each of the three independent directors, which include the stock award of $2,250 or 695 shares at the March 31, 2011 fair market value of $3.24 per share and the stock award of $1,562 or 694 shares at the June 30, 2011 fair market value of $2.25 per share. The directors will be issued an additional 306 shares for this period accounting for the total $2,250 at $2.25 due for the second quarter. The company issued 4,167 shares to its three independent directors on April 18, 2011.

On October 1, 2010, the Company entered into a consulting agreement with its financial controller. The agreement is for a twelve-month term. Under the terms of the agreement, the financial controller is to be compensated for 20,000 shares annually in restricted common shares to be awarded beginning on January 1, 2011 on a quarterly basis. The Company did not previously account for this stock award. Pursuant to the agreement, 15,000 shares will be awarded by the time of this report. Based on the closing quoted stock price of $2.25 per share at June 30, 2011 the 15,000 shares were valued at $33,750. No shares have been issued to date and $33,750 has been accrued as stock based compensation.

~~ITEM~~Item 3. ~~DEFAULTS UPON SENIOR SECURITIES.~~Defaults Upon Senior Securities.

Exhibit Number		Description of Exhibit

31.1		Section 302 Certification of Principal Executive Officer
31.2		Section 302 Certification of Principal Financial Officer
32.1		Section 906 Certification of Principal Executive Officer
32.2		Section 906 Certification of Principal Financial Officer
EX-101.INS		XBRL INSTANCE DOCUMENT
EX-101.SCH		XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
EX-101.CAL		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB		XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

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


	CHINA BILINGUAL TECHNOLOGY & EDUCATION GROUP INC.

Date: ~~November~~August 15, ~~2010~~2011	By:	/s/ Ren Zhiqing
		Ren Zhiqing Chairman and Chief Executive Officer (Principal Executive ~~Officer and Principal Financial~~ Officer)

Date: ~~November~~August 15, ~~2010~~2011	By:	/s/ Michael Toups
		Michael Toups Chief Financial Officer (Principal Financial and Accounting Officer)

	September 30, 2010			December 31, 2009
	(Unaudited)
At cost:
Buildings	$	31,423,644		$	30,798,131
Transportation equipment		954,668			830,885
Furniture & education equipment		3,431,022			3,388,716
Kitchen equipment		482,966			473,352
Computer and software		225,745			218,357
Total cost		36,518,045			35,709,441

Less : Accumulated depreciation		(7,848,271	)		(6,930,318	)

Property and equipment, net	$	28,669,774		$	28,779,123

	September 30, 2010		December 31, 2009
	(Unaudited)
						June 30, 2011		December 31, 2010
Accrued payroll	$	442,863	$	458,134	$	438,707	$	528,095
Individual taxes withholding		4,345		4,827		6,202		13,133
Others		130,576		270,579		56,908		18,000
Total	$	577,784	$	733,540	$	501,817	$	559,228

	September 30,		December 31,
ASSETS	2010		2009
	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	14,114,068	$	5,099,860
Inventory		210,936		105,538
Due from related parties		3,719,381		3,014,906
Prepayments and other current assets		3,470,507		260,309
Total Current Assets		21,514,892		8,480,613

LONG-TERM ASSETS
Property and equipment, net		28,669,774		28,779,123
Land use rights, net		5,292,275		5,296,661
Total Long-Term Assets		33,962,049		34,075,784

TOTAL ASSETS	$	55,476,941	$	42,556,397


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	222,905	$	205,024
Other payables		47,203		209,747
Refundable deposits		1,687,536		2,162,729
Prepaid tuition		20,231,919		15,820,999
Home purchase down payment		534,141		504,216
Accrued expenses and other current liabilities		577,784		733,540
Due to related parties		16,575		1,189,429
Total Current Liabilities		23,318,063		20,825,684

TOTAL LIABILITIES		23,318,063		20,825,684
SHAREHOLDERS’ EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized, 29,999,998 shares issued and outstanding at September 30, 2010, and December 31, 2009, respectively		30,000		30,000
Additional paid-in capital		2,754,079		2,754,079
Retained earnings		28,272,672		18,378,984
Accumulated other comprehensive income		1,102,127		567,650

TOTAL SHAREHOLDERS’ EQUITY		32,158,878		21,730,713
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	55,476,941	$	42,556,397

	For The Nine months Ended September 30,
	2010			2009
	(Unaudited)			(Unaudited)
REVENUES
Tuition fee	$	13,240,999		$	10,801,362
Room and board and other services		5,064,549			4,481,930
TOTAL REVENUES		18,305,548			15,283,292
COST OF REVENUES
Tuition cost		(3,409,363	)		(3,511,764	)
Room and board and other service cost		(3,162,630	)		(3,200,645	)
TOTAL COST OF REVENUES		(6,571,993	)		(6,712,409	)
GROSS PROFIT		11,733,555			8,570,883
OPERATING EXPENSES
General and administrative		(1,928,693	)		(1,117,119	)
TOTAL OPERATING EXPENSES		(1,928,693	)		(1,117,119
INCOME FROM OPERATION		9,804,862			7,453,764
OTHER INCOME (EXPENSE)
Interest income		20,476			18,899
Interest expense		-			(71,681	)
Foreign exchange loss		(4,044	)		-
Miscellaneous expense		72,394			30,354
INCOME BEFORE INCOME TAXES		9,893,688			7,431,336
INCOME TAXES		-			-
NET INCOME	$	9,893,688		$	7,431,336

Earnings per Common Share
Basic	$	0.33		$	0.25

Diluted	$	0.33		$	0.25

Weighted Average Common Shares Outstanding
Basic		29,999,998			29,999,998

Diluted		29,999,998			29,999,998

	For The Nine Months Ended September 30,					For The Three Months Ended September 30,
	(Unaudited)					(Unaudited)
	2010		2009			2010		2009
NET INCOME	$	9,893,688	$	7,431,336		$	3,946,493	$	3,042,316
Foreign currency translation, net of tax		534,477		(296,892	)		378,122		(352,386	)
TOTAL COMPREHENSIVE INCOME	$	10,428,165	$	7,134,444		$	4,324,615	$	2,689,930

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	$	(153,847	)	$	(371,586	)
Proceeds from disposal of property and equipment		23,664			3,764
Advances to/due from related parties		(704,474	)		(1,971,136	)
Net cash used in investing activities	$	(834,657	)	$	(2,338,958	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to related parties		(1,172,854	)		(1,961,639	)
Net cash used in financing activities	$	(1,172,854	)	$	(1,961,639	)

INCREASE IN CASH AND CASH EQUIVALENTS	$	9,163,713		$	4,789,116
Effect of exchange rate changes on cash		(149,505	)		(412,505	)
Cash and cash equivalents at beginning of year		5,099,860			3,584,959
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	14,114,068		$	7,961,570

SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid	$	-		$	71,681

Period		Tuition, R&B	No. of Students - School Year
from Oct 1 to Dec 31 in 2010	$	6,996,490	9,314 – 2011
from Jan 1 to Dec 31 in 2011		12,425,476	3,976 – 2012
from Jan 1 to Dec 31 in 2012		652,100	205 – 2013
from Jan 1 to Sep 30 in 2013		157,853	64 - 2014
Total	$	20,231,919	-

	The Nine Months Ended September 30,										The Three Months Ended September 30,
	2010					2009					2010					2009
	Revenue		%			Revenue		%			Revenue		%			Revenue		%
Tuition	$	13,240,999		72.3	%	$	10,801,362		70.7	%	$	4,625,534		73.4	%	$	3,803,337		69.1	%
Room & Board and Other Rev.		5,064,549		27.7	%		4,481,930		29.3	%		1,677,406		26.6	%		1,698,847		30.9	%
Total	$	18,305,548		100	%	$	15,283,292		100	%	$	6,302,940		100	%	$	5,502,184		100	%

	September 30, 2010 (Unaudited)		December 31, 2009
Course materials	$	174,049	$	88,822
Low consumable tools		36,887		16,716
Total inventory	$	210,936	$	105,538

	For The Nine Months Ended September 30,				For The Three Months Ended September 30,
	2010 (Unaudited)		2009 (Unaudited)		2010 (Unaudited)		2009 (Unaudited)
Tax savings	$	2,473,422	$	1,857,834	$	986,623	$	760,579
Benefit per share Basic:	$	0.08	$	0.06	$	0.03	$	0.03

	The Nine Months Ended September 30,
	2010					2009
	Revenue		%			Revenue		%			% Change
Tuition	$	13,240,999		72.3	%	$	10,801,362		70.7	%		22.6	%
Room & Board and Other Rev.		5,064,549		27.7	%		4,481,930		29.3	%		13.0	%
Total	$	18,305,548		100	%	$	15,283,292		100	%		19.8	%