Chinacast Education 10-Q 2009 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2009

Or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from            to

Commission File Number: 000-50550

CHINACAST EDUCATION CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 20-0178991
(I.R.S. Employer Identification Number)

Suite 3316, 33/F, One IFC
1 Harbour View Street,
Central, Hong Kong
(Address of Principal Executive Offices)

(852) 2811 2389
(Registrant’s Telephone Number, Including Area Code)

Former name, former address and former fiscal year, if changed since last report

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ      Noo

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

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

Large accelerated filero  Accelerated filerþ  Non-accelerated filer  o
(Do not check if a smaller reporting company) Smaller reporting companyo 

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso      Noþ

     There were 38,351,198 shares of the Company’s common stock, par value $0.0001 per share, outstanding as of November 7, 2009.

TABLE OF CONTENTS

	Page
PART I —FINANCIAL INFORMATION		3
Item 1 .Financial Statements (unaudited)		3
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.Quantitative and Qualitative Disclosures About Market Risk		30
Item 4.Controls and Procedures		30
PART II —OTHER INFORMATION		32
Item 1.Legal Proceedings		32
Item 1A.Risk Factors		32
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3.Defaults Upon Senior Securities		32
Item 4.Submission of Matters to a Vote of Security Holders		32
Item 5.Other Information		32
Item 6.Exhibits		32
SIGNATURES		33
EXHIBIT INDEX

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share-related data)

					As of
	As of September 30,				December 31,
	2009		2009		2008
	US$		RMB		RMB
	(Note 1)				(Note 1)
Assets
Current assets:
Cash and cash equivalents		58,575		398,312		220,131
Term deposits		41,176		280,000		369,000
Accounts receivable		8,187		55,670		32,581
Inventories		251		1,705		1,419
Prepaid expenses and other current assets		951		6,468		8,987
Amounts due from related parties		307		2,088		2,488
Total current assets		109,447		744,243		634,606
Non-current deposits		561		3,818		686
Property and equipment, net		38,521		261,940		283,982
Land use rights, net		17,619		119,810		121,783
Acquired intangible assets, net		2,867		19,497		31,330
Deposits for investments		15,147		103,000		—
Long-term investments		567		3,854		5,224
Non-current advances to related party		14,354		97,606		110,217
Goodwill		45,784		311,332		311,331
Total assets		244,867		1,665,100		1,499,159
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		2,655		18,054		11,467
Accrued expenses and other current liabilities		13,346		90,751		132,807
Deferred revenues		15,808		107,492		84,372
Amount due to related party		77		528		1,127
Income taxes payable		9,413		64,009		50,594
Current portion of long-term bank borrowings		13,882		94,400		20,000
Current portion of capital lease obligation		190		1,289		1,191
Other borrowings		85		580		1,097
Total current liabilities		55,456		377,103		302,655
Non-current liabilities:
Long-term bank borrowings		7,941		54,000		58,400
Capital lease obligation, net of current portion		193		1,313		1,323
Deferred tax liabilities		2,826		19,214		21,030
Unrecognized tax benefits		7,412		50,403		44,612
Total non-current liabilities		18,372		124,930		125,365

3

							As of
	As of September 30,						December 31,
	2009			2009			2008
	US$			RMB			RMB
	(Note 1)						(Note 1)
Total liabilities		73,828			502,033			428,020
Commitments and contingencies (Note 13)
Shareholders’ equity:
Ordinary shares (US$0.0001 par value; 100,000,000 shares authorized; 38,351,198 and 35,648,251 shares issued and outstanding in 2009 and 2008, respectively)		4			29			27
Additional paid-in capital		145,580			989,945			948,352
Statutory reserve		4,135			28,117			28,117
Accumulated other comprehensive loss		(906	)		(6,159	)		(5,462	)
Retained earnings		18,877			128,361			55,526
Total ChinaCast Education Corporation shareholders’ equity	167,690				1,140,293			1,026,560
Noncontrolling interest		3,349			22,774			44,579
Total shareholders’ equity		171,039			1,163,067			1,071,139
Total liabilities and shareholders’ equity		244,867			1,665,100			1,499,159

See notes to unaudited condensed consolidated financial statements.

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CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share-related data)

	For the three months ended September 30,									For the nine months ended September 30,
	2009			2009			2008			2009			2009			2008
	US$			RMB			RMB			US$			RMB			RMB
	(Note 1)						(Note 1)			(Note 1)						(Note 1)
Revenues:
Service		11,917			81,040			70,856			33,806			229,886			181,869
Equipment		279			1,896			1,923			892			6,065			24,327
		12,196			82,936			72,779			34,698			235,951			206,196
Cost of revenues:
Service		(4,277	)		(29,077	)		(28,887	)		(12,528	)		(85,188	)		(71,369	)
Equipment		(275	)		(1,875	)		(1,898	)		(882	)		(6,001	)		(24,093	)
		(4,552	)		(30,952	)		(30,785	)		(13,410	)		(91,189	)		(95,462	)
Gross profit		7,644			51,984			41,994			21,288			144,762			110,734
Operating (expenses) income:
Selling and marketing expenses (including share-based compensation of RMB267 and RMB114 for the three months ended September 30 for 2009 and 2008, respectively, share-based compensation of RMB1,373 and RMB1,506 for the nine months ended September 30 for 2009 and 2008, respectively)		(135	)		(919	)		(2,001	)		(535	)		(3,640	)		(6,370	)
General and administrative expenses (including share-based compensation of RMB2,868 and RMB2,115 for the three months ended September 30 for 2009 and 2008, respectively, share-based compensation of RMB11,474 and RMB12,079 for the nine months ended September 30 for 2009 and 2008, respectively)		(1,958	)		(13,313	)		(16,577	)		(6,541	)		(44,472	)		(46,976	)
Foreign exchange gain (loss)		(8	)		(51	)		(392	)		10			65			(1,043	)
Management service fee		76			510			1,864			560			3,806			4,655
Other operating income (loss)		(18	)		(120	)		232			57			387			232
Total operating expenses, net		(2,043	)		(13,893	)		(16,874	)		(6,449	)		(43,854	)		(49,502	)

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	For the three months ended September 30,									For the nine months ended September 30,
	2009			2009			2008			2009			2009			2008
	US$			RMB			RMB			US$			RMB			RMB
	(Note 1)						(Note 1)			(Note 1)						(Note 1)
Income from operations		5,601			38,091			25,120			14,839			100,908			61,232
Interest income		314			2,134			4,191			1,018			6,923			15,764
Interest expense		(356	)		(2,421	)		(251	)		(822	)		(5,591	)		(437	)
Income before provision for income taxes and loss in equity investments		5,559			37,804			29,060			15,035			102,240			76,559
Provision for income taxes		(1,120	)		(7,619	)		(6,733	)		(3,101	)		(21,090	)		(16,601	)
Income before loss in equity investments		4,439			30,185			22,327			11,934			81,150			59,958
(Loss)gain in equity investments		(117	)		(793	)		182			(202	)		(1,370	)		(634	)
Net income		4,322			29,392			22,509			11,732			79,780			59,324
Less: Net income attributable to noncontrolling interest		(299	)		(2,036	)		(2,820	)		(1,021	)		(6,945	)		(5,661	)
Net income attributable to ChinaCast Education Corporation		4,023			27,356			19,689			10,711			72,835			53,663
Earnings per share
Net income attributable to ChinaCast Education Corporation per share:
Basic		0.11			0.76			0.63			0.30			2.03			1.87
Diluted		0.11			0.75			0.63			0.30			2.03			1.85
Weighted average shares used in computation:
Basic		36,133,233			36,133,233			31,373,482			35,814,325			35,814,325			28,695,241
Diluted		36,379,884			36,379,884			31,373,482			35,945,264			35,945,264			29,026,908

See notes to unaudited condensed consolidated financial statements.

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CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (Unaudited)
(In thousands, except share-related data)

	ChinaCast Education Corporation Shareholders
											Accumulated
					Additional						other						Total
	Ordinary				paid-in		Statutory		Retained		comprehensive			Noncontrolling			stockholders’
			Amount		capital		Reserve		earnings		loss			interest			Equity
	Shares		RMB		RMB		RMB		RMB		RMB			RMB			RMB
Balance at January 1, 2009		35,648,251		27		948,352		28,117		55,526		(5,462	)		44,579			1,071,139
Issuance of restricted shares of common stock for acquisition of additional interests in subsidiary		2,582,947		2		28,746		—		—		—			(28,748	)		—
Share-based compensation		120,000		—		12,847		—		—		—			—			12,847
Net income		—		—		—		—		72,835		—			6,945			79,780
Foreign currency translation adjustments		—		—		—		—		—		(697	)		(2	)		(699	)
Balance at September 30, 2009		38,351,198		29		989,945		28,117		128,361		(6,159	)		22,774			1,163,067
			US$	4	US$	145,580	US$	4,135	US$	18,877	US$	(906	)	US$	3,349		US$	171,039

See notes to unaudited condensed consolidated financial statements.

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CHINACAST EDUCATION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

	For the nine months ended September 30,
	2009			2009			2008
	US$			RMB			RMB
	(Note 1)						(Note 1)
Cash flows from operating activities:
Net income		11,732			79,780			59,324
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,717			32,074			23,083
Share-based compensation		1,889			12,847			13,585
Loss (gain) on disposal of property and equipment		76			519			(232	)
Loss in equity investments		201			1,370			634
Changes in assets and liabilities:
Accounts receivable		(3,394	)		(23,080	)		(24,822	)
Inventories		(84	)		(570	)		(42	)
Prepaid expenses and other current assets		444			3,019			(2,302	)
Non-current deposits		(20	)		(133	)		1,640
Amounts due from related parties		846			5,751			960
Accounts payable		969			6,587			(3,022	)
Accrued expenses and other current liabilities		(2,037	)		(13,856	)		4,698
Deferred revenues		3,400			23,120			60,415
Amount due to related party		(88	)		(599	)		—
Income taxes payable		1,973			13,415			13,728
Deferred taxes liabilities		(267	)		(1,816	)		(1,611	)
Unrecognized tax benefits		851			5,791			1,529
Net cash provided by operating activities		21,208			144,219			147,565
Cash flows from investing activities:
Advance to related party		(2,941	)		(20,000	)		(149	)
Repayment from advance to related party		4,051			27,544			10,991
Purchase of property and equipment		(3,846	)		(26,153	)		(14,235	)
Purchase of subsidiaries, net of cash acquired		—			—			(465,507	)
Term deposits		13,088			89,000			187,768
Disposal of property and equipment		—			—			256
Deposits for investments		(15,147	)		(103,000	)		(19,000	)
Net cash used in investing activities		(4,795	)		(32,609	)		(299,876	)
Cash flows from financing activities:
Other borrowings raised		1,522			10,350			5,298
Other borrowing raised from related party		74			500			—
Repayment of other borrowings		(1,672	)		(11,367	)		(7,600	)
Repayment of Bank borrowings		18,882			128,400			—
Bank borrowings repaid		(8,588	)		(58,400	)		—
Guarantee deposit paid		(441	)		(3,000	)		—
Exercise of warrants		—			—			16,778
Repayment of capital lease obligation		13			88			(184	)
Collection of subscription receivable		—			—			87,670
Net cash provided by financing activities		9,790			66,571			101,962

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	For the nine months ended September 30,
	2009		2009		2008
	US$		RMB		RMB
	(Note 1)				(Note 1)
Effect of foreign exchange rate changes		—		—		(377	)
Net increase(decrease) in cash and cash equivalents		26,203		178,181		(50,726	)
Cash and cash equivalents at beginning of the period		32,372		220,131		138,610
Cash and cash equivalents at end of the period		58,575		398,312		87,884

See notes to unaudited condensed consolidated financial statements.

9

NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share-related data)

1.	BASIS OF PREPARATION
	The accompanying unaudited condensed consolidated financial statements of ChinaCast Education Corporation (“CEC”, formerly Great Wall Acquisition Corporation (“Great Wall”)) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“US GAAP”) for complete financial statements and should be read in conjunction with the audited financial statements included in CEC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
	In the opinion of the management of CEC, the accompanying unaudited condensed consolidated financial statements are prepared on the same basis as the audited financial statements and these unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results expected for any subsequent interim period or for CEC’s fiscal year ending December 31, 2009.
	The accompanying unaudited condensed consolidated financial statements include the accounts of CEC, its subsidiaries, and variable interest entities (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
	Significant Accounting Policies
	The accompanying unaudited condensed consolidated financial statements have been using the same accounting policies used in the preparation of the audited financial statements included in CEC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, except for the following additional accounting policies:
	(1) Adoption of authoritative pronouncement issued by Financial Accounting Standards Board (“FASB”) regarding the noncontrolling interest.
	Effective January 1, 2009, the Company adopted authoritative pronouncement issued by FASB regarding the noncontrolling interest. The adoption did not impact the condensed consolidated financial statements for the three and nine month periods ended September 30, 2009, except for the accounting requirements for acquisitions of additional interests in subsidiaries, and the presentation and disclosure requirements affecting all periods presented including (a) the noncontrolling interest has been reclassified to equity, (b) consolidated net income or loss has been adjusted to include the net income or loss attributable to the noncontrolling interest, (c) consolidated comprehensive income or loss has been adjusted to include the comprehensive income or loss attributable to the noncontrolling interest and (d) for each reporting period the Company must present a reconciliation at the beginning and end of the period of the carrying amount of total equity and equity attributable to the Company and the noncontrolling interest.
	(2) Adoption of authoritative pronouncement issued by the FASB regarding business combinations.
	Effective January 1, 2009, the Company adopted authoritative pronouncement issued by the FASB regarding business combinations. The adoption did not have a significant effect on the Company’s consolidated financial statements for the three and nine month periods ended September 30, 2009.
	Convenience Translation
	Amounts in United States dollars (“US$”) are presented solely for the convenience of readers and an exchange rate of RMB6.8 to US$1 was applied as of September 30, 2009. Such translation should not be construed to be the amounts that would have been reported under US GAAP.
	The Share Exchange Transaction
	On December 22, 2006, Great Wall consummated the voluntary conditional offer (the “Offer”) made in Singapore to acquire all of the outstanding ordinary shares of ChinaCast Communication Holdings Limited (“ChinaCast”). Pursuant to the terms of the Offer, ChinaCast shareholders had the option to receive either shares of CEC or a cash payment for each ChinaCast share tendered. On January 18, 2007, the closing date of the Offer, total shares acquired were 80.27%. Since Great Wall was not an operating company and the shareholders of ChinaCast control the combined company after the above transaction consummated on December 22, 2006 (the “Share Exchange Transaction”), the Share Exchange Transaction was accounted for as a recapitalization in which ChinaCast was the accounting

10

acquirer. The cash consideration paid as part of the Offer was accounted for as a capital distribution. The remaining outstanding ordinary shares of ChinaCast not acquired by Great Wall were reported as minority interest.

During the year ended December 31, 2007, CEC acquired additional shares by issuing shares of CEC and cash amounted to RMB5,793 to certain original ChinaCast shareholders and, as of July 11, 2007, CEC increased its holdings to 100% of the outstanding ordinary shares of ChinaCast. The 19.73% of the additional shares acquired were accounted for on the same basis as the Share Exchange Transaction.

2.	RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
	On April 9, 2009, the FASB issued authoritative pronouncement regarding interim disclosures about fair value of financial instruments”. This pronouncement amends FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments,” to require disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements of publicly traded companies. This pronouncement also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in summarized financial information at interim reporting periods. This pronouncement became effective on April 1, 2009. They do not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this pronouncement requires comparative disclosures only for periods ending after initial adoption. The adoption of this pronouncement did not have a material effect on the Company’s consolidated financial statements.
	On April 9, 2009, the FASB issued authoritative pronouncement regarding recognition and presentation of other-than-temporary impairments. This pronouncement amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This pronouncement does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This pronouncement became effective on April 1, 2009. They do not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this pronouncement requires comparative disclosures only for periods ending after initial adoption. The adoption of this pronoucement did not have a significant effect on the Company’s consolidated financial position or results of operations.
	On April 9, 2009, the FASB issued authoritative pronouncement regarding determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. This pronouncement provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, “Fair Value Measurements,” when the volume and level of activity for the asset or liability have significantly decreased. This pronouncement also includes guidance on identifying circumstances that indicate a transaction is not orderly. This pronouncement emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. This pronouncement became effective on April 1, 2009 and is applied prospectively. It does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this pronouncement requires comparative disclosures only for periods ending after initial adoption. The adoption of the Codification has no significant effect on the Company’s consolidated financial position or results of operations.
	On May 28, 2009, the FASB issued authoritative pronouncement regarding subsequent events. The objective of this pronouncement is to establish general standards for the accounting and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this pronouncement sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This pronouncement is effective for interim or annual periods ending after June 15, 2009. The adoption of the Codification has no significant effect on the Company’s consolidated financial position or results of operations.
	On June 12, 2009, the FASB issued authoritative pronouncement regarding amendments to FASB Interpretation No. 46(R) (“Fin 469R)”). This pronouncement is a revision to FIN 46(R) and changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This pronouncement retains the scope of FIN 46(R) with the addition of entities previously considered qualifying special-purpose entities, as the concept of these entities was eliminated in FASB Statement 166. The Statement is effective as of the beginning of the first fiscal year that begins after November 15, 2009. The Company is currently evaluating whether the adoption of this pronouncement will have a significant effect on its consolidated financial position or results of operations.
	On July 1, 2009, the FASB issued authoritative pronouncement, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162”, the FASB Accounting Standards Codification (the “Codification”) became the single source of authoritative nongovernmental US GAAP. The Codification is effective for interim and annual periods ending after September 15, 2009. The adoption of this pronouncement did not have a significant effect on the Company’s consolidated financial position or results of operations.

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On August 28, 2009, the FASB issued ASU 2009-05 (previously exposed for comments as proposed FSP FAS 157-f) to provide guidance on measuring the fair value of liabilities under ASC 820. The ASU clarifies that the quoted price for the identical liability, when traded as an asset in an active market, is also a Level 1 measurement for that liability when no adjustment to the quoted price is required. In the absence of a Level 1 measurement, an entity must use one or more of the following valuation techniques to estimate fair value (in a manner consistent with the principles in ASC 820), which can be classified into two broad categories:

A valuation technique that uses a quoted price:

Of an identical liability when traded as an asset.

Of a similar liability or of a similar liability when traded as an asset.

Another valuation technique (e.g., a market approach or an income approach), including one of the following:

A technique based on the amount an entity would pay to transfer the identical liability.

A technique based on the amount an entity would receive to enter into an identical liability.

The ASU is effective for the first interim or annual reporting period beginning after the ASU’s issuance. The Company is currently evaluating whether the adoption will have a significant effect on its consolidated financial position or results of operations

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3.

ACQUISITION

On April 11, 2008, Yupei Training Information Technology Co., Ltd. (“YPSH”), the Company’s subsidiary in the People’s Republic of China (the “PRC”), consummated the acquisition of an 80% interest in Hai Lai Education Technology Limited (“Hai Lai”) from Beijing Heng Tai Jufu Investment Limited. Hai Lai holds the entire interest in the Foreign Trade and Business College of Chongqing Normal University (“FTBC”) and Hai Yuen Company Limited (“Hai Yuen”). FTBC is a private college affiliated with Chongqing Normal University. The consideration for the acquisition was RMB480,000. The acquisition was recorded using the purchase method of accounting and, accordingly, the acquired assets and liabilities were recorded at their fair market value at the date of acquisition. The purchase price allocation was as follows:

				Amortization
	RMB			period
Cash		10,343
Other current assets		323
Non-current deposits		523
Property and equipment and land use rights		334,227		4-50 years
Intangible assets:
Customer relationship		40,329		41 months
Goodwill		309,717
Bank and other borrowings		(65,000	)
Other current liabilities		(83,779	)
Deferred tax liabilities		(23,296	)
Long-term bank borrowings		(20,000	)
Unrecognized tax benefits		(6,837	)
Noncontrolling interest		(16,550	)
Total		480,000

The Company performed the purchase price allocation for the acquisition. The valuation analysis utilized and considered generally accepted valuation methodologies such as income, market and cost approach.

The Company believes that the acquisition furthers its strategy of expanding into the post-secondary bricks and mortar education market. The combination of these factors is the rationale for the excess of purchase price over the value of the assets acquired and liabilities assumed.

Pro forma     

The following supplemental unaudited pro forma results of operations for the three months and nine months ended September 30, 2008 presented the acquisition as if it had occurred on January 1, 2008. The unaudited pro forma results include estimates and assumptions regarding amortization of acquired intangible assets which the Company believes are reasonable. However, pro forma results are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the dates, indicated, or that may result in the future:

	For the three months		For the nine months ended
	ended September 30,		September 30,
	2008		2008
	RMB		RMB
Net revenues		72,779		236,492
Net income attributable to ChinaCast Education Corporation		23,288		54,914
Net income per share — basic		0.74		1.91
Net income per share — diluted		0.74		1.89

On September 18, 2009, YPSH consummated the acquisition of the entire interest in Chongqing Chaosheng Education and Investment Co., Ltd. (“Chaosheng”), which holds a 20% interest in Hai Lai, for a total purchase price of RMB135,000. In return, the Company issued 2,582,947 shares of its common stock to the parties designated by the original owners of Chaosheng. Upon Consummation of the above acquisition, YPSH effectively owns the 100% interest in Hai Lai.

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4.	NON-CURRENT DEPOSITS
	Non-current deposits consisted of the following:

	As of September		As of
	30,		December 31,
	2009		2008
	RMB		RMB
Rental deposits		298		166
Utilities deposits		270		270
Guarantee deposit		3,000		—
Other deposits		250		250
Total		3,818		686

Rental deposits represented office rental deposits for the Company’s daily operations. These deposits are classified into non-current deposits since they will not be refunded within one year.

Guarantee deposit represented a deposit placed with Chongqing Education Guarantee Co., Ltd. (“CQEG”), a long-term investment of the Company, which in turn provided guarantee in favor of the relevant bank for the Company’s bank borrowing of RMB30,000.

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5.	COMPREHENSIVE INCOME
	The components of comprehensive income for the periods presented were as follows:

	For the three months ended September 30,						For the nine months ended September 30,
	2009			2008			2009			2008
	RMB			RMB			RMB			RMB
Net income		29,392			22,509			79,780			59,324
Foreign currency translation adjustments		41			(75	)		(699	)		(321	)
Comprehensive income		29,433			22,434			79,081			59,003
Comprehensive income attributable to noncontrolling interest		(2,038	)		(2,820	)		(6,943	)		(5,661	)
Comprehensive income attributable to ChinaCast Education Corporation		27,935			19,614			72,138			53,342

6.	ACQUIRED INTANGIBLE ASSETS, NET
	Acquired intangible assets, net consisted of the following:

	As of September 30,			As of December 31,
	2009			2008
	RMB			RMB
Brand name usage right
Cost		22,532			22,532
Less: Accumulated amortization		(3,439	)		(3,004	)
Less: Impairment loss		(14,500	)		(14,500	)
		4,593			5,028
Customer relationship
Cost		40,329			40,329
Less: Accumulated amortization		(25,425	)		(14,027	)
		14,904			26,302
Acquired intangible assets, net		19,497			31,330

On August 30, 2007, the Company acquired 100% of the outstanding registered capital of Modern English Trademark Limited (“MET”), in exchange for cash of RMB22,532 (US$3,000). MET has no assets or liabilities except for a 10-year exclusive brand name usage right. The acquisition was recorded as an intangible asset, which is being amortized on a straight-line basis over 10 years. In 2008, an impairment loss amounting to RMB14,500 was recorded in relation to this brand name usage right.

For the three and nine month periods ended September 30, 2009, the Company recorded amortization expense in respect of the brand name usage right amounting to RMB145 and RMB435, respectively. The Company will record further amortization expenses in respect of brand name usage right of RMB145, RMB580, RMB580, RMB580, RMB580, RMB2,128 in 2009, 2010, 2011, 2012, 2013 and 2014 and thereafter, respectively.

On April 11, 2008, the Company acquired a customer relationship through an acquisition (see Note 3). The customer relationship is being amortized using accelerated amortization method over 41 months based on the estimated progression of the students through the respective courses, giving consideration to the revenue and cash flow associated.

For the three and nine month periods ended September 30, 2009, the Company recorded amortization expense in respect of the customer relationship amounting to RMB3,507 and RMB11,398, respectively. The Company will record further amortization expenses in respect of the customer relationship of RMB2,629, RMB8,767 and RMB3,508 in 2009, 2010 and 2011, respectively.

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7.	BORROWINGS
	In June 2009, a bank borrowing amounting to RMB30,000 was raised. The bank borrowing carried interests at the benchmark interest rate announced by the People’s Bank of China plus 10% to 20% per annum and was secured by guarantees given by CQEG and by Hai Lai in favor of the relevant bank. In connection with the guarantee given by CQEG, the entitlement to tuition fees from students of FTBC and a deposit of RMB3,000 were pledged to CQEG. RMB10,000 of the borrowing will be repayable in September 2010, the remaining RMB20,000 will be repayable in June 2011.
	In August 2009, an aggregate amount of bank borrowings amounting to RMB40,000 was raised. The bank borrowings carried interests at the benchmark interest rate announced by the People’s Bank of China plus 10% to 20% per annum and were secured by guarantees given by CQEG and by Hai Lai in favor of the relevant bank. RMB6,000, RMB14,000 and RMB20,000 of the borrowings will be repayable in September 2010, September 2011 and August 2012. These borrowings were secured by either land use rights of FTBC or the entitlement to tuition fees from students of FTBC.
	A bank borrowing outstanding as of January 1, 2009 amounting to RMB20,000 was repayable in June 2009 under its original terms of the loan agreement. In June 2009, the Company entered into an agreement with the relevant bank that effectively extended the maturity of the borrowing to June 2010.
	During the nine months ended September 30, 2009, an aggregate amount of other borrowings amounting to RMB10,850 was raised. The borrowings carried interest at 6.31% per annum, were unsecured and fully repaid in September 2009.
8.	STOCK COMPENSATION PLAN
	Under the 2007 Omnibus Securities and Incentive Plan (“2007 Plan”) adopted in May 2007, the Company may grant any awards to eligible participants, including employees, directors or consultants, to purchase up to 2,500,000 ordinary shares.
	On July 11, 2007, the Company granted, under the 2007 Plan, 12,500 restricted shares to its employees at no consideration. The per share fair value of ordinary shares as of the grant date was US$5.65 (RMB42.75).
	On January 11, 2008, the Company agree to grant, under the 2007 Plan, restricted shares to its three directors at no consideration. Each of the three directors was entitled to 100,000 restricted shares of the Company’s common stock. The fair value of these restricted shares was determined based on the closing price on January 11, 2008 of US$6.25 (RMB45.38). For each of the three directors of CEC, 10,000, 30,000 and 60,000 restricted shares were/will be vested on February 9, 2008, February 9, 2009 and February 9, 2010, respectively. On June 25, 2009, 120,000 restricted shares were issued.
	On January 11, 2008, the Company granted, under the 2007 Plan, 1,200,000 share options on the Company’s common stock to selected employees at no consideration. The exercise price of the share options granted is US$6.30 and the expiry date is January 11, 2018. A total of 401,000, 401,000 and 398,000 share options were/will be vested on March 31, 2008, March 31, 2009 and March 31, 2010, respectively. Upon exercise of these share options, a total of 1,200,000 common stock will be issued.
	None of these shares based compensations have been forfeited up to September 30, 2009.
	A summary of the share option activity under 2007 Plan was as follows:

			Weighted
			Average
			Exercise
	Number		Price
	of options		US$
Options outstanding at January 1, 2007 and December 31, 2007		—		—
Granted		1,200,000		6.30
Exercised		—		—
Cancelled		—		—
Options outstanding at December 31, 2008		1,200,000		6.30
Granted		—		—
Exercised		—		—
Cancelled		—		—

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			Weighted
			Average
			Exercise
	Number		Price
	of options		US$
Options outstanding at September 30, 2009		1,200,000		6.30
Options exercisable at September 30, 2009		802,000		6.30

The per share fair value of options as of January 11, 2008, the grant date was as follows:

Ordinary shares	US$	2.67
	(RMB	19.33	)

The aggregate intrinsic value of share options outstanding and exercisable as of September 30, 2009 was US$1,164 and US$778, respectively.

The weighted average remaining contractual life is 8.25 years as of September 30, 2009.     

Total share-based compensation expenses amounting to RMB3,135 and RMB2,229 were recognized for the three-month periods ended September 30, 2009 and 2008, respectively. Total share-based compensation expenses amounting to RMB12,847 and RMB13,585 were recognized for the nine month periods ended September 30, 2009 and 2008, respectively.

There was RMB6,308 of total unrecognized compensation expense related to the stock based compensation arrangements for the restricted shares and share options as of September 30, 2009.

As of September 30, 2009, no other awards have been granted under the 2007 Plan.     

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9.	INCOME TAXES
	On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The new law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises. The new law provides a five-year transition period from its effective date for the entitled enterprises which were established before the promulgation date of the new tax law and which were entitled to a preferential tax treatment such as a reduced tax rate or a tax holiday. According to transitional rules published after the new income tax law, one of the Company’s major operating subsidiaries, CCT Shanghai, which was subject to the preferential tax rate of 15%, is now eligible to the phased-in rates: 18% in 2008, 20% in 2009, 22% in 2010, 24% in 2011, 25% in 2012 and thereafter.
	On April 11, 2008, the Company consummated the acquisition of an 80% interest in Hai Lai. Hai Lai holds the entire interest in FTBC and Hai Yuen. Hai Lai was incorporated in the PRC and is subject to PRC income tax rate of 25% since 2008. FTBC and Hai Yuen were incorporated in Chongqing of the PRC and are subject to the preferential tax rate of 15% until 2010 in accordance with the western development preferential policy.
	The Company considers itself to be permanently reinvested with respect to its investment in its foreign subsidiaries. Accordingly, no deferred income tax liability related to the unremitted earnings of its foreign subsidiaries has been included in the Company’s provision for income taxes. Upon distribution of subsidiaries earnings in the form of dividends or otherwise, the Company would be subject to a withholding tax calculated based on 10% of the gross amount of distribution.
	The Company adopted the authoritative pronouncement issued by FASB regarding accounting for uncertainty in income taxes on January 1, 2007. During the nine months ended September 30, 2009, the unrecognized tax benefits increased from RMB44,612 to RMB50,403.

10.	NET INCOME ATTRIBUTABLE TO CHINACAST EDUCATION CORPORATION PER SHARE
	Reconciliation of the basic and diluted net income per share is as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2009		2008		2009		2008
Numerator used in basic and diluted net income attributable to ChinaCast Education Corporation per share:
Income attributable to holders of ordinary shares	RMB27,356		RMB19,689		RMB72,835		RMB53,663
Shares (denominator):
Weighted average ordinary shares outstanding used in computing basic net income attributable to ChinaCast Education Corporation per share		36,133,233		31,373,482		35,814,325		28,695,241
Plus:
Incremental ordinary shares from assumed conversions of stock options and exercises of Underwriter Warrants and restricted shares granted to directors (Note 12)		246,651		—		130,939		331,667
Weighted average ordinary shares outstanding used in computing diluted net income attributable to ChinaCast Education Corporation per share		36,379,884		31,373,482		35,945,264		29,026,908
Net income attributable to ChinaCast Education Corporation per share—basic:	RMB0.76		RMB0.63		RMB2.03		RMB1.87
Net income attributable to ChinaCast Education Corporation per share —diluted:	RMB0.75		RMB0.63		RMB2.03		RMB1.85

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The diluted net income attributable to ChinaCast Education Corporation per share calculations for three and nine months periods ended September 30, 2009 have not included the outstanding Warrants, UPO, UPO Warrants (see Note 12) or the outstanding employee share options since they are either anti-dilutive or expired.

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11. SEGMENT INFORMATION

Since the acquisition of Hai Lai in April 2008, the Company has been organized as two business segments, the E-learning and training service Group (“ELG”), encompassing all the Company’s business operations before the acquisition, and the Traditional University Group (“TUG”), offering bachelor and diploma programs to students in the PRC. The Company follows the authoritative pronouncement issued by FASB regarding Disclosures about segments of an enterprise and related information, which establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer. The following were details of the Company’s reportable segments:

	For the three months ended September 30,				For the nine months ended September 30,
	2009		2008		2009		2008
	RMB		RMB		RMB		RMB
Revenues from external customers:
ELG		51,497		46,317		146,125		154,122
TUG		31,439		26,462		89,826		52,074
		82,936		72,779		235,951		206,196
Additional analysis of revenues from ELG by product or service:
Service		49,601		44,394		140,060		129,795
Equipment		1,896		1,923		6,065		24,327
		51,497		46,317		146,125		154,122
Additional analysis of revenues from ELG by business lines:
Post secondary education distance learning		28,857		24,274		81,308		71,082
K-12 and content delivery		16,047		16,220		48,310		49,500
Vocational training, enterprise/government training and networking services		6,593		5,823		16,507		33,540
		51,497		46,317		146,125		154,122
Income from operations:
ELG		27,117		16,768		70,720		46,207
TUG		10,974		8,352		30,188		15,025
		38,091		25,120		100,908		61,232

	As of September		As of December
	30, 2009		31, 2008
	RMB		RMB
Segment assets:
ELG		785,916		725,516
TUG		879,184		773,643
		1,665,100		1,499,159

The Company’s revenues and net income are substantially derived from the PRC. Most of the assets and capital expenditure of the

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Company are employed in the PRC.

There were no customers accounting for 10% or more of total net revenues for the three and nine months periods ended September 30, 2009.

One customers as of September 30, 2009 and four different customers as of December 31, 2008 each accounted for 10% or more of the Company’s accounts receivable balances, representing an aggregate of 15.3% and 55.4% of the Company’s accounts receivable balance at September 30, 2009 and December 31, 2008, respectively.

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12.	WARRANTS AND UNIT PURCHASE OPTIONS
	In March 2004, Great Wall sold 4,515,975 units in its initial public offering. Each unit consists of one share of the Company’s common stock and two redeemable common stock purchase warrants (“Warrants”). Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of US$5 commencing on the consummation of the Share Exchange Transaction. In no event will the Company be required to net cash settle the warrant exercise.
	In April 2008, 50,100 Warrants had been exercised at an exercise price of US$5.
	In June and July 2008, the Company entered into agreements with Fir Tree Value Master Fund, L.P. and Fir Tree Capital Opportunity Master Fund, L.P. (collectively, “Fir Tree”), Sherleigh Associates Inc. Profit Sharing Plan and Sherleigh Associates Inc. Defined Benefit Pension Plan (collectively, “Sherleigh”) and Capela Overseas Ltd (“Capela”), (Fir Tree, Sherleigh and Capela, collectively, the “Warrantholders”), whereby the Company agreed to reduce the exercise price of the Warrants held by Fir Tree, Sherleigh and Capela from US$5.00 per share to US$4.25 per share. In connection with the reduction in the price of the Warrants, in June 2008, Fir Tree exercised in full an aggregate of 3,007,200 Warrants and Sherleigh exercised in full an aggregate of 411,882 Warrants. In July, Capela exercised in full an aggregate of 94,117 Warrants. As additional consideration for the Warrantholders exercising the Warrants in full as well as for the value of the Warrants, in June 2008 the Company issued 459,924 restricted shares of common stock of the Company to Fir Tree and 62,993 restricted shares of common stock of the Company to Sherleigh. In July, the Company issued 14,394 restricted shares of common stock of the Company to Capela.
	All the outstanding Warrants expired in March 2009.
	In connection with the initial public offering, Great Wall issued, for $100, a “UPO” to the representative of the underwriters to purchase 400,000 units at an exercise price of US$9.90 per unit. In addition, the warrants (“UPO Warrants”) underlying such units are exercisable at US$6.95 per share. In January 2008, the underwriters exercised the UPO to purchase 5,000 units.
	There was no remeasurement required for these assumed Warrants and UPO because such assumption is part of the recapitalization in connection with the Share Exchange Transaction.
	In connection with the share offering which was consummated in October 2008, the Company sold to the underwriter in December 2008, for nominal consideration, an aggregate of 255,000 Underwriter Warrants with a price of US$3.15 per share. The Underwriter Warrants will be exercisable for five years from the closing date of the share offering. There was no remeasurement required for these Underwriter Warrants since they do not provide for a net cash settlement.
	All the outstanding UPO and UPO Warrants expired during the nine months ended September 30, 2009. As of September 30, 2009, there were 255,000 Underwriter Warrants outstanding.

13. CONTINGENCIES

a)

On March 21, 2006, after obtaining the approval of its shareholders, the Company amended its certificate of incorporation, the effect of which was, among other things, to eliminate the provision of the certificate of incorporation that purported to prohibit the amendment of the “business combination” provisions contained therein and to extend the date before which the Company must complete a business combination, to avoid being required to liquidate, from March 23, 2006 to December 31, 2006. Because extending the period during which the Company could consummate a business combination was not contemplated by the initial public offering (“IPO”) prospectus, shareholders may have securities law claims against the Company for rescission (under which a successful claimant would have the right to receive the total amount paid for his or her shares, plus interest and less any income earned on the shares, in exchange for surrender of the shares) or damages (compensation for loss on an investment caused by alleged material misrepresentations or omissions in the sale of the security). Such claims might entitle shareholders asserting them to up to US$6.00 per share of common stock, based on the initial offering price of the public units comprised of stock and warrants, less any amount received from sale of the original warrants purchased with them and plus interest from the date of the IPO. A successful claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of his or her shares caused by the alleged violation (including, possibly, punitive damages), together with interest, while retaining the shares. The Company believes the shareholder claims for rescission or damages are remote. As such, the Company has not recorded a liability for such possible rescission. However, the Company cannot definitively predict whether shareholders will bring such claims, how many might bring them or the extent to which they might be successful.

b)

The Company may be subject to claims for rescission or other securities law claims resulting from the failure to disclose that the charter provision purporting to prohibit certain amendments was possibly inconsistent with Delaware’s General Corporation Law. The Company may also be subject to such claims as a result of inaccuracies in other disclosures, as follows: It may be argued that the IPO prospectus misstated the vote required by its charter to approve a business combination by providing that “[w]e will

22

proceed with a business combination only if the public shareholders who own at least a majority of the shares of common stock sold in [that] offering vote in favor [of it] ...,” and that the Exchange Act reports have been inaccurate in describing ChinaCast as a leading provider of e-learning content (as opposed to being primarily a content carrier). On November 13, 2006, the Company filed a Current Report on Form 8-K with the SEC regarding this last item. The Company is unable to predict the likelihood that claims might be made with regard to the foregoing or estimate any amounts for which it might be liable if any such claim was made. As such, the Company has not recorded a liability for such possible rescission.

14.	SUBSEQUENT EVENT
	The Company has performed an evaluation of the subsequent events review through November 9, 2009, which is the date the unaudited condensed consolidated financial statements were issued.
	On October 5, 2009, the Company made an announcement regarding the completion of its acquisition of the entire interest in East Achieve Limited, the holding company which owns the 100% indirect interest in Lijiang College for a total purchase price of RMB365,000. Lijiang College offers fully accredited bachelor degree and diploma courses in tourism, hospitality, language studies, computer engineering, economics, law, music, art and physical education.
	On October 12, 2009, the Company entered into an agreement with the China University of Petroleum (“CUP”) to establish a new entity. The entity will be held 60% by the Company, which will invest RMB30,000 and 40% by CUP, which will invest RMB20,000 and will provide e-learning service to students using CUP’s distance learning license.

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

Forward Looking Statements

Portions of the discussion and analysis below contain certain statements that are not descriptions of historical facts, but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include statements about our plans and objectives for future expansion, including into post-secondary brick and mortar education market; expectations for E-learning and training services the PRC; anticipated margins for our solutions; general and cyclical economic and business conditions, and, in particular, those in the PRC’s education market; our ability to enter into and renew key corporate and strategic relationships with our customers and suppliers; changes in the favorable tax incentives enjoyed by our PRC operating companies; and other statements containing forward looking terminology such as “may”, “expects”, “believes”, “anticipates”, “intends”, “projects”, “looking forward” or similar terms, variations of such terms or the negative of such terms. Such information is based upon various assumptions made by, and expectations of, our management that were reasonable when made but may prove to be incorrect. All of such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions which are subject to change. Accordingly, there can be no assurance that actual results will meet expectations and actual results may vary (perhaps materially) from certain of the results anticipated herein. For a further description of these and other risks and uncertainties, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings. The following discussion of our financial condition and results of operations should also be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Form 10-Q.

Overview

We were formed on August 20, 2003 to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a company having its primary operations in the PRC.

On December 22, 2006, we consummated the acquisition of ChinaCast Communication Holdings Limited (“CCH”). As of December 22, 2006, shareholders of CCH that had previously executed Letters of Undertaking with us with respect to the sale of their shares of CCH and that collectively held 239,648,953 shares of CCH or 51.22% of CCH’s outstanding shares accepted the voluntary conditional offer (the “Offer”) made in Singapore by DBS Bank, for and on our behalf, to acquire all of the outstanding ordinary shares of CCH. On January 18, 2007, at the end of the Offer period, acceptance of the Offer totaled 80.27% which is the basis we accounted for the acquisition. As a result of this acceptance of the Offer by CCH shareholders, CCH became our subsidiary and such acquisition qualified as a “business combination” under our amended and restated certificate of incorporation. During 2007, CEC acquired additional shares by issuing shares of CEC to certain original ChinaCast shareholders and increased its holdings to 100% of the outstanding ordinary shares of ChinaCast. The 19.73% of the additional shares acquired were accounted for on the same basis as the acquisition of the 80.27% shares.

We are subject to risks common to companies operating in China, including risks inherent in our distribution and commercialization efforts, uncertainty of foreign regulatory approvals and laws, the need for future capital and retention of key employees. We cannot provide assurance that we will generate revenues or achieve and sustain profitability in the future.

Critical Accounting Policies

For summary of the critical accounting policies and the significant judgments and estimates made on the part of the management, see item 7 of Form 10-K for the year ended December 31, 2008 filed by the Company on March 16, 2009. The following are accounting policies that were either new or were adopted during the nine months ended September 30, 2009.

(1) Adoption of authoritative pronouncement issued by Financial Accounting Standards Board (the “FASB”) regarding the noncontrolling interest.

Effective January 1, 2009, we adopted authoritative pronouncement issued by FASB regarding the noncontrolling interest. The adoption did not impact the condensed consolidated financial statements for the quarter ended March 31, 2009, except for the presentation and disclosure requirements affecting all periods presented including (a) the noncontrolling interest has been reclassified to equity, (b) consolidated net income or loss has been adjusted to include the net income or loss attributable to the noncontrolling interest, (c) consolidated comprehensive income or loss has been adjusted to include the comprehensive income or loss attributable to the noncontrolling interest and (d) for each reporting period the Company must present a reconciliation at the beginning and end of the period of the carrying amount of total equity and equity attributable to the Company and the noncontrolling interest.

(2) Adoption of authoritative pronouncement issued by the FASB regarding business combinations.

Effective January 1, 2009, the Company adopted authoritative pronouncement issued by the FASB regarding business combinations. The adoption did not have a significant effect on our consolidated financial statements for the nine months ended September 30, 2009.

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Results of Operations

For the purpose of the discussion and analysis of the results of ChinaCast Education Corporation (“CEC”), its subsidiaries, and variable interest entities in this section, the consolidated group is referred to as the “Company”. The satellite operating entity, ChinaCast Company Limited, is referred to as “CCL”. CCL was not accounted for as a consolidated variable interest entity, because the Company was not considered to be the primary beneficiary of CCL. CCL’s registered branch in Beijing is referred to as “CCLBJ.” The US dollar figures presented below were based on the historical exchange rate of 1USD = 6.8RMB at September 30, 2009 for the three months and nine months ended September 30, 2009.

Since our acquisition of Hai Lai, we have been organized as two business segments, the E-learning and training service Group (the “ELG”), encompassing all the Company’s businesses before the acquisition, and the Traditional University Group (the “TUG”), offering bachelor and diploma programs to students in China.

The revenue of the Company for the three months and nine months ended September 30, 2009 amounted to RMB82.9 million (US$12.2 million) and RMB236.0 million (US$34.7 million), respectively representing an increase of 14.0% and 14.4% over the revenue of the corresponding period in 2008. The increase in revenue for the nine months ended September 30, 2009 was mainly due to the acquisition of Hai Lai, which forms the TUG, in the second quarter of 2008.

Revenue of the ELG amounted to RMB51.5 million (US$7.6 million) and RMB146.1 million (US$21.5 million) for the three months and nine months ended September 30, 2009, respectively, as compared to revenue of RMB46.3 million and RMB154.1 million of the ELG for the three months and nine ended September 30, 2008. Service income, mainly of a recurring nature amounted to RMB49.6 million (US$7.3 million) and RMB140.1 million (US$20.6 million) for the three months and nine months ended September 30, 2009, respectively, compared to RMB44.4 million and RMB129.8 million for the same periods in 2008. Equipment sales, mainly project based, amounted to RMB1.9 million (US$0.3 million) and RMB6.1 million (US$0.9 million) for the three months and nine months ended September 30, 2009, respectively, against RMB1.9 million and RMB24.3 million for the same periods last year. The following table provides a summary of the ELG’s revenue by business lines:

	Three Months ended
	September 30, 2009				September 30, 2008
(millions)	US$		RMB		RMB
Post secondary education distance learning		4.2		28.9		24.3
K-12 and content delivery		2.4		16.0		16.2
Vocational training, enterprise / government training and networking and English training services		1.0		6.6		5.8
Total ELG revenue		7.6		51.5		46.3

	Nine Months ended
	September 30, 2009				September 30, 2008
(millions)	US$		RMB		RMB
Post secondary education distance learning		12.0		81.3		71.1
K-12 and content delivery		7.1		48.3		49.5
Vocational training, enterprise / government training and networking and English training services		2.4		16.5		33.5
Total ELG revenue		21.5		146.1		154.1

Net revenue from post secondary education distance learning services increased from RMB71.1 million in the nine months ended September 30, 2008 to RMB81.3 million (US$12.0 million) in the nine months ended September 30, 2009. Net revenue from post secondary education distance learning services increased from RMB24.3 million in the three months ended September 30, 2008 to RMB28.9 million (US$4.2 million) in three months ended September 30, 2009. The total number of post-secondary students enrolled in courses using the Company’s distance learning platforms including contracts with CCLBJ, increased to 141,000 at September 30, 2009 from 131,000 at September 30, 2008. The increase was due to the continuous growth of students enrolled in distance learning degree courses with the universities.

25

The revenue from the K-12 and content delivery business decreased slightly by approximately 2.4% from RMB49.5 million for the nine months ended September 30, 2008 to RMB48.3 million (US$7.1 million) for the nine months ended September 30, 2009. The revenue from the K-12 and content delivery business decreased slightly by approximately 1.1% from RMB16.2 million for the three months ended September 30, 2008 to RMB16.0 million (US$2.4 million) for the three months ended September 30, 2009. The number of subscribing schools for K-12 distance learning services has stabilized at 6,500. The decrease in revenue was due to fluctuation in project-based revenues.

Net revenue from vocational and career training services, enterprise government training and networking and English language training services decreased from RMB33.5 million during the nine months ended September 30, 2008 to RMB16.5 million (US$2.4 million) during the nine months ended September 30, 2009. Net revenue from vocational and career training services, enterprise government training and networking and English language training services increased from RMB5.8 million during the three months ended September 30, 2008 to RMB6.6 million (US$1.0 million) during the three months ended September 30, 2009. The decrease for the nine months ended September 30, 2009 was mainly due to fluctuations in equipment sales, the nature of which is not recurring. Equipment sales included in the revenue of this business line amounted to RMB6.1 million (US$0.9 million) for the nine months ended September 30, 2009, against RMB24.3 million during the same period last year. The increase in revenue of this business line for the three months ended September 30, 2009 was mainly due to fluctuation in project-based service revenues.

TUG was newly established in the second quarter of 2008 after the acquisition of Hai Lai, and its revenue amounted to RMB31.4 million (US$4.6 million) and RMB89.8 million (US$13.2 million) in the three months and nine months ended September 30, 2009. TUG generated a revenue of RMB26.5 million for the third quarter of 2008. The increase in revenue in the third quarter of 2009 was a result of the increase in student enrollment. Foreign Trade and Business College of Chongqing Normal University (“FTBC”) had approximately 12,200 students as at September 30, 2009 and generated RMB28.2 million (US$4.2 million) tuition revenue in the third quarter of 2009. Other revenue of TUG, which comprises mainly accommodation and catering revenue, amounted to RMB3.2 million (US$0.5 million).

Cost of sales of the Company decreased by 4.5% from RMB95.5 million during the first three quarters of 2008 to RMB91.2 million (US$13.4 million) during the first three quarters of 2009. The decrease was due to the reduction in equipment sales. Cost of sales of the Company increased slightly by 0.5% from RMB30.8 million during the third quarter of 2008 to RMB31.0 million (US$4.6 million) during the third quarter of 2009. The increase was mainly due to the increase in depreciation of fixed assets.

ELG’s cost of materials decreased from RMB24.1 million during the first three quarters of 2008 to RMB6.0 million (US$0.9 million) during the first three quarters of 2009. The decrease was mainly due to fluctuations in equipment sales. ELG’s cost of materials was RMB1.9 million (US$0.3 million) during the third quarter of 2008 and during the third quarter of 2009. The cost of service for the ELG amounted to RMB28.3 million (US$4.2 million) for the nine months ended September 30, 2009, as compared to RMB35.2 million for the same period in 2008. The cost of service for the ELG amounted to RMB9.8 million (US$1.4 million) for the three months ended September 30, 2009, as compared to RMB11.1 million for the same period in 2008. The decrease in the third quarter of 2009 as compared to the same period of 2008 was mainly due to the scale down of the English language training service and a reduction in transponder bandwidth fee.

TUG’s cost of sales amounted to RMB19.2 million (US$2.8 million) and RMB56.9 million (US$8.4 million) for the three and nine months ended September 30, 2009, respectively, which comprises payroll to teaching staff, depreciation and amortization of the intangible asset. TUG’s cost of sales amounted to RMB17.8 million for the three months ended September 30, 2008. The increase in the third quarter of 2009 as compared to the same period in 2008 was due to increase in student enrollment.

ELG’s gross profit margin increased by 5.4 percentage points, from 71.9% in the third quarter of 2008 to 77.3% in the third quarter of 2009. The increase was due to the increase in economy of scale as well as the scale down of the English training service and the reduction in transponder bandwidth fee. TUG’s gross profit margin was 38.8% for the third quarter of 2009 as compared to 32.8% for the same period of 2008. The increase was mainly due to the increase in student enrollment and revenue.

For the nine months ended September 30, 2009, the Company received a management service fee of RMB3.8 million (US$0.6 million), as compared to RMB4.7 million during the nine months ended September 30, 2008. For the three months ended September 30, 2009, the Company received a management service fee of RMB0.5 million (US$0.08 million), as compared to RMB1.9 million during the three months ended September 30, 2008. The management service fee arose from various agreements with CCL that entitled the Company to the economic benefits of its Beijing Branch — CCLBJ. CCLBJ is in the process of transferring all its outstanding businesses, mainly in post secondary education distance learning, to the Company. The decrease in management fee was mainly due to the transfer of business from CCLBJ.

Selling and marketing expenses decreased from RMB6.4 million in the first three quarters of 2008 to RMB3.6 million (US$0.5 million) in the first three quarters of 2009. Selling and marketing expenses decreased from RMB2.0 million in the third quarter of 2008 to RMB0.9 million (US$0.1 million) in the third quarter of 2009. The decrease was due to the scale down of the English language training division as described in MD&A in the Form 10-K for the year ended December 31, 2008.

26

General and administrative expenses decreased slightly by 5.3% to RMB44.5 million (US$6.5 million) in the nine months ended September 30, 2009 from RMB47.0 million during the nine months ended September 30, 2008. General and administrative expenses decreased by 19.7% to RMB13.3 million (US$2.0 million) in the three months ended September 30, 2009 from RMB16.6 million during the three months ended September 30, 2008. The decrease was mainly due to the decrease in the professional expenses in general and administrative expenses, which decreased from RMB3.7 million in the third quarter of 2008 to RMB1.1 million (US$0.2 million) in the third quarter of 2009.

The Company has foreign exchange gain of RMB0.07 million (US$0.01 million) for the first three quarters of 2009 compared to a loss of RMB1.0 million during the first three quarters of 2008. The Company has foreign exchange loss of RMB0.05 million (US$0.01 million) for the third quarter of 2009 compared to a loss of RMB0.4 million during the third quarter of 2008. The change was a result of stabilization of the change in the RMB/US exchange rate and the reduction of the Company’s holding in US dollars.

Interest income decreased from RMB15.8 million in the first three quarters of 2008 to RMB6.9 million (US$1.0 million) in the first three quarters of 2009. Interest income decreased from RMB4.2 million in the third quarter of 2008 to RMB2.1 million (US$0.3 million) in the third quarter of 2009. The decrease in the third quarter of 2009 was due to the reduction in interest rate as well as a lower amount of the Company’s term deposits.

Interest expense increased from RMB0.4 million in the first three quarters of 2008 to RMB5.6 million (US$0.8 million) in the first three quarters of 2009. Interest expenses increased from RMB0.3 million in the third quarter of 2008 to RMB2.4 million (US$0.4 million) in the third quarter of 2009. Interest expense was mainly associated with the loan of the TUG to finance the construction of the campus. A large portion of interest payment in the third quarter of 2008 was capitalized and no interest payment was capitalized in the third quarter of 2009.

Overall, profit before income tax and loss in equity investments increased from RMB29.1 million in the three months ended September 30, 2008 to RMB37.8 million (US$5.6 million) in the three months ended September 30, 2009, an increase of 30.1%. The increase was mainly due the increase in revenue.

The Company recorded a loss in equity investments amounted to RMB0.8 million (US$0.1 million) in the third quarter of 2009 compared to a gain of RMB0.2 million in the third quarter of 2008.

Income taxes increased by 13.2% from RMB6.7 million in the third quarter of 2008 to RMB7.6 million (US$1.1 million) in the third quarter of 2009. The increase was due to the increase in business and a higher tax rate for the ELG.

Noncontrolling interest amounted to RMB2.0 million (US$0.3 million) for the three months ended September 30, 2009 as compared to RMB2.8 million for the three months ended September 30, 2008. The noncontrolling interest resulted mainly from the acquisition of Hai Lai, in which there was a 20% minority stake. On September 18, 2009, the Company acquired the 20% minority stake, which resulted in a reduction of the noncontrolling interest for the three months ended September 30, 2009 as compared to the same period in 2008.

Net income attributable to the Company increased by 38.9% to RMB27.4 million (US$4.0 million) in the three months ended September 30, 2009 from RMB19.7 million in the three months ended September 30, 2008.

On March 16, 2007, the National People’s Congress of China enacted a new tax law, under which foreign-invested enterprises and domestic companies will be subject to enterprise income tax at a uniform rate of 25% . The new tax law became effective on January 1, 2008. There is a transition period, during which enterprises may continue to enjoy existing preferential tax treatment or in which their tax rates may be gradually adjusted to 25%. Following the effectiveness of the new tax law, one of the Company’s major operating subsidiaries, CCT Shanghai, which was subject to the preferential tax rate of 15%, is now eligible to the phased-in rates, which is 18% in 2008, 20% in 2009, 22% in 2210, 24% in 2011, 25% in 2012 and thereafter.

27

Liquidity and Capital Resources

The following is a summary of the key items from the consolidated balance sheets.

					As of
	As of				December 31,
	September 30, 2009				2008
(millions)	RMB		US$		RMB
Cash and cash equivalents		398.3		58.6		220.1
Term deposits		280.0		41.2		369.0
Subtotal		678.3		99.8		589.1
Accounts receivable		55.7		8.2		32.6
Inventory		1.7		0.3		1.4
Prepaid expenses and other current assets		6.5		1.0		9.0
Total current assets		744.2		109.4		634.6
Non-current advances to a related party		97.6		14.4		110.2
Total assets		1,665.1		244.9		1,499.2

Cash and cash equivalents balances increased from RMB220.1 million as at December 31, 2008, to RMB398.3 million (US$58.6 million) as at September 30, 2009. The increase was mainly because of transfer from fixed deposits prior to the payment of acquisition consideration in the fourth quarter of 2009.

There was net cash generated from operating activities of RMB135.3 million (US$19.9 million) for the nine months ended September 30, 2009 as compared to net cash from operating activities of RMB147.6 million for the nine months ended September 30, 2008. In the first three quarters of 2009, there was an increase in accounts receivable in the current period which is mainly due to that several universities settled the payments near the end of year 2008 which is earlier than usual. There was a cash outflow in relation to the payment of accrued expenses and other current liabilities of RMB22.3 million in the nine months ended September, 2009. Revenue is recognized ratably throughout the periods services are provided, but payments may be received ahead of or behind the revenue being recognized. Payments received before recognition of revenue are recorded as deferred revenue while payments not received at the time goods and service have been provided are recorded as accounts receivable. For revenue related to project sales, the timing of payments depended upon the terms of the contracts.

Net cash used in investment activities in the nine months ended September 30, 2009 was RMB23.7 million (US$3.5 million), mainly reflecting the transfer from term deposit of RMB89.0 million (US$13.1 million) and the payment of the first tranche of the consideration in relation to the acquisition of the Lijiang College amounting to RMB100 million (US$14.7 million). For the nine months ended September 30, 2008, transfer from term deposit amounted to RMB187.8 million to finance the acquisition of Hai Lai, which resulted in a cash outflow of RMB465.5 million for the period.

Net cash provided by financing activities in the first nine months of 2009 was RMB66.6 million (US$9.8 million). New loans were obtained to finance the expansion of the capacity of FTBC.

The Company believes that its cash and cash equivalents balances, together with its access to financing sources, will continue to be sufficient to meet the working capital needs associated with its current operations on an ongoing basis, although that cannot be assured. Also, it is possible that the Company’s cash flow requirements could increase as a result of a number of factors, including unfavorable timing of cash flow events, the decision to increase investment in marketing and development activities or the use of cash for acquisitions to accelerate its growth.

Total assets at September 30, 2009 amounted to RMB1,665.1 million (US$244.9 million), an increase of 11.1%, when compared to the total assets amounting to RMB1,499.2 million at December 31, 2008. Total current assets increased by 17.3% to RMB744.2 million at September 30, 2009.

Accounts receivable increased from RMB32.6 million as at December 31, 2008 to RMB55.7 million (US$8.2 million) at September 30, 2009. The increase was due to the seasonal factor in the settlement of accounts receivable by the Company’s customers. Most of the business partners are long term customers and settle their accounts promptly. All accounts receivable are reviewed regularly and provisions have been made for any balances that are disputed or doubtful.

Inventory, mainly made up of satellite transmission and receiving equipment, increased slightly to RMB1.7 million (US$0.3 million) at September 30, 2009.

28

Prepaid expenses and other current assets decreased from RMB9.0 million as at December 31, 2008 to RMB6.5 million (US$1.0 million). The decrease was mainly due to the decrease of accrued interest income from fix deposits.

The Company also funded the operation of a related party, CCL, which held the satellite license before transferring it to the Company. The related party is still in the process of transferring its satellite related businesses to the Company. Amounts advanced to the related party were RMB97.6 million (US$14.4 million) as at September 30, 2009. As at December 31, 2008, the amount advanced was RMB110.2 million, the decrease is mainly due to repayment made.

On September 18, 2009, the Company closed a $19,765,950 private placement of 2,582,947 restricted shares of common stock of the Company (the “Shares”). The purchasers of the Shares were the former minority shareholders of The Foreign Trade and Business College of Chongqing Normal University. The sale of the Shares to each of the investors was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”) pursuant to Regulation S under the Act due to the fact that the offering of the Shares was not made in the United States and that each of the investors is a non-U.S. Person (as defined in the Act).

As at September 30, 2009, the Company had total long-term bank loans of RMB148.4 million (US$21.8 million). RMB94.4 million of the bank loans are expiring within one year were secured by pledge of certain land use rights and buildings in Hai Lai, the entitlement to accommodation income of the student apartments of FTBC and guarantees given by certain individuals. The rest RMB54.0 million of bank loan is expiring over one year which was secured by the guarantees provided by Chongqing Education Guarantee Co., Ltd. (“CQEG”) and Hai Lai. In consideration of the guarantees provided by CQEG, the entitlement to tuition fee of FTBC and a deposit of RMB3 million paid to CQEG were used as securities.

Off-Balance Sheet Arrangements

The Company has not entered any financial guarantees or other commitments to guarantee the payment obligations of any third parties.

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Exchange Risk

     Our reporting currency is the Renminbi (“RMB”). Transactions in other currencies are recorded in RMB at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are remeasured into RMB at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are recorded in our statements of operations as a component of current period earnings.

     The PRC State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of Renminbi into foreign currencies. The principal regulation governing foreign currency exchange in China is the Foreign Currency Administration Rules (1996), as amended, or the “Rules.” Under the Rules, once various procedural requirements are met, RMB is convertible for current account transactions, including trade and service-related foreign exchange transactions and dividend payments, but not for capital account transactions, including direct investment, loans or investments in securities outside China, without prior approval of the State Administration of Foreign Exchange of the People’s Republic of China, or its local counterparts.

     Since July 2005, the RMB has no longer been pegged to the U.S. dollar. Although currently the Renminbi exchange rate versus the U.S. dollar is restricted to a rise or fall of no more than 0.3% per day and the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, the PRC authorities may lift restrictions on fluctuations in the Renminbi exchange rate and lessen intervention in the foreign exchange market. As of the close of business on September 30, 2009, the exchange rate between the RMB and the U.S. dollar was RMB6.8 to US$1.

     We conduct substantially all of our operations through our PRC operating companies, and their financial performance and position are measured in terms of RMB. The majority of our net sales and purchases are denominated in RMB.

     Any devaluation of the RMB against the U.S. dollar would consequently have an adverse effect on our financial performance and asset values when measured in terms of U.S. dollars. In addition, from time to time we may have U.S. dollar denominated fixed deposits, and therefore a decoupling of the RMB may affect our financial performance in the future.

     We recognized a foreign exchange loss of approximately RMB0.05 million (US$0.01 million) and a foreign exchange gain of approximately RMB0.07 million (US$0.01 million) for the three months and nine months ended September 30, 2009, respectively. We do not currently engage in hedging activities, as such, we may in the future experience economic loss as a result of any foreign currency exchange rate fluctuations.

Interest Rate Risk

     We have a long history of investing excess cash under a conservative corporate policy that only allows investments in bank fixed deposits, with preservation of capital and liquidity as the primary objectives. For the three months and nine months ended September 30, 2009, we recorded an interest income of RMB2.1 million (US$0.3 million) and of RMB6.9 million (US$1.0 million), respectively. Any significant changes in interest rate might have an adverse effect on this interest income.

     We have short-term and long-term debt amounting to RMB148.4 million (US$21.8 million) as at September 30, 2009. Interest paid in the three months and nine months ended September 30, 2009 was RMB2.4 million (US$0.4 million) and RMB5.6 million (US$0.8 million), respectively. Any significant changes in interest rate might have an adverse effect on interest expense. There have been no material changes associated with the impact of inflation and concentration of credit risk from that previously disclosed in our 2008 Annual Report on
Form 10-K.

Inflation

     There have been no material changes associated with the impact of inflation from that previously disclosed in our 2008 Annual Report on Form 10-K.

Item 4. Controls and Procedures.

     We maintain “disclosure controls and procedures,” as such term is defined under Exchange Act Rule 13a-15(e) and 15d-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s 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 disclosures. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and in reaching a reasonable level of assurance our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2009. Based upon their evaluation and subject to the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2009 our disclosure controls and procedures were effective.

30

     There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter of 2009 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

31

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

     We are not currently a party to any pending material legal proceeding.

Item 1A. Risk Factors.

     There are no material changes from risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 16, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

     On September 18, 2009, we closed a $19,765,950 private direct investment in the Company by the former minority shareholders of The Foreign Trade and Business College of Chongqing Normal University, pursuant to which such investors purchased 2,582,947 restricted shares of common stock of the Company (the “Shares”) for a purchase price of $7.6524 per share. The sale of the Shares to each of these investors was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”) pursuant to Regulation S under the Act due to the fact that the offering of the Shares was not made in the United States and that each of the investors is a non-U.S. Person (as defined in the Act).

Item 3. Defaults Upon Senior Securities.

     None.

Item 4. Submission of Matters to a Vote of Security Holders.

     None.

Item 5. Other Information.

     None.

Item 6. Exhibits.

2.1	Share Transfer Agreement dated August 11, 2009 by and between Yupei Training Information Technology Co., Ltd. and Chongqing Chaosheng Education and Investment Co., Ltd. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated August 11, 2009)
2.2	Summary of Cancellation Agreement dated September 18, 2009 by and between Yupei Training Information Technology Co., Ltd. and Chongqing Chaosheng Education and Investment Co., Ltd. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K/A dated August 11, 2009)
2.3	Summary of Share Transfer Agreement dated September 18, 2009 by and between Yupei Training Information Technology Co., Ltd. and the shareholders of Chongqing Chaosheng Education and Investment Co., Ltd.(filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K/A dated August 11, 2009)
2.4	Share Transfer Agreement dated September 28, 2009 by and among ChinaCast Communication Holdings Limited, Xie Jiqing, East Achieve Limited, Shanghai Xijiu Information Technology Co., Ltd., China Lianhe Biotechnology Co., Ltd. and Lijiang College of Guangxi Normal University (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated September 28, 2009)
10.1	Share Purchase Agreement dated as of September 18, 2009 by and among Chinacast Education Corporation and the investors named therein (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K/A dated September 17, 2009)

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32

SIGNATURES

     Pursuant to the requirements 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.

	CHINACAST EDUCATION CORPORATION
	(Registrant)
Date: November 9, 2009	By:	/s/ Ron Chan Tze Ngon
	Name:	Ron Chan Tze Ngon
	Title:	Chairman of the Board,
	Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Antonio Sena
	Name:	Antonio Sena
	Title:	Chief Financial Officer and
	Secretary (Principal Financial Officer)

33

EXHIBIT INDEX

Exhibit No.	Description
2.1	Share Transfer Agreement dated August 11, 2009 by and between Yupei Training Information Technology Co., Ltd. and Chongqing Chaosheng Education and Investment Co., Ltd. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated August 11, 2009).
2.2	Summary of Cancellation Agreement dated September 18, 2009 by and between Yupei Training Information Technology Co., Ltd. and Chongqing Chaosheng Education and Investment Co., Ltd. (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K/A dated August 11, 2009).
2.3	Summary of Share Transfer Agreement dated September 18, 2009 by and between Yupei Training Information Technology Co., Ltd. and the shareholders of Chongqing Chaosheng Education and Investment Co., Ltd.(filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K/A dated August 11, 2009).
2.4	Share Transfer Agreement dated September 28, 2009 by and among ChinaCast Communication Holdings Limited, Xie Jiqing, East Achieve Limited, Shanghai Xijiu Information Technology Co., Ltd., China Lianhe Biotechnology Co., Ltd. and Lijiang College of Guangxi Normal University (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated September 28, 2009).
10.1	Share Purchase Agreement dated as of September 18, 2009 by and among ChinaCast Education Corporation and the investors named therein (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K/A dated September 17, 2009).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.