China Executive Education 10-Q 2010 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2010

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: 000-54086

CHINA EXECUTIVE EDUCATION CORP.

(Exact Name of Registrant as Specified in Its Charter)

NEVADA	75-3268300
(State or Other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

Hangzhou MYL Business Administration Consulting Co. Ltd. Room 307, Hualong Business Building 110 Moganshan Road, Hangzhou, P.R. China	310005
(Address of Principal Executive Offices)	(Zip Code)

+86-571-8880-8109

(Registrant’s Telephone Number, Including Area Code)

On Demand Heavy Duty, Corp.

9916 Elbow Drive SW, Calgary Alberta, Canada T2V 1M5

(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.   Yes x  No o

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

Yes o          No o

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

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

 Yes o          No x

As of August 13, 2010, there were 22,760,200 shares of Common Stock of the Company outstanding.

TABLE OF CONTENTS
	Page
PART I - FINANCIAL INFORMATION	4
Item 1. Financial Statements.	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	40
Item 4. Controls and Procedures.	40
PART II - OTHER INFORMATION	42
Item 1. Legal Proceedings.	42
Item 1A. Risks Factors.	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	42
Item 3. Defaults Upon Senior Securities.	42
Item 4. [Removed and Reserved.]	42
Item 5. Other Information.	42
Item 6. Exhibits.	42
SIGNATURES	43

1

INTRODUCTION

Use of Certain Defined Terms

In this Form 10-Q, unless indicated otherwise, references to:

·   “Securities Act” refers to the Securities Act of 1933, as amended, and “Exchange Act” refer to the Securities Exchange Act of 1934, as amended;

·   “China” and “PRC” refer to the People’s Republic of China, and “BVI” refers to the British Virgin Islands;

·   “RMB” refers to Renminbi, the legal currency of China; and

·   “U.S. dollar,” “$” and “US$” refer to the legal currency of the United States.  For all U.S. dollar amounts reported, the dollar amount has been calculated on the basis that $1 = RMB6.8282 for its December 31, 2009 audited balance sheet, and $1 = RMB6.7814 for its June 30, 2010 unaudited balance sheet, which were determined based on the currency conversion rate at the end of each respective period.  The conversion rates of $1 = RMB6.8258 is used for the condensed consolidated statement of income and other comprehensive income and consolidated statement of cash flows for the second fiscal quarter of 2010, and $1= RMB6.8282 is used for the condensed consolidated statement of income and other comprehensive income and consolidated statement of cash flows for the fiscal year of 2009; both of which wer e based on the average currency conversion rate for each respective quarter.

2

Cautionary Statement Regarding Forward Looking Statements

The information contained in this report includes some statements that are not purely historical fact and that are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements include, but are not limited to, statements regarding our management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, available liquidity, our corporate strategy and operational plans.  The words or phrases “would be,” “will allow,” “expect to”, “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” or similar expressions are intended to identify forward-looking statements.

The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments.  There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results to be materially different from those expressed or implied by these forward-looking statements, 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, hir e, 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, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or any other circumstances after the date of such statement unless required by law. For additional information regarding these risks and uncertainties, see “Risk Factors”.

3

PART I

ITEM 1.   FINANCIAL STATEMENTS.

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

June 30, 2010

(Stated in US dollars)

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2010 (UNAUDITED) AND DECEMBER 31, 2009	5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND FROM INCEPTION APRIL 23, 2009 TO JUNE 30, 2009 (UNAUDITED)	6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (UNAUDITED)	7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	8 - 24

4

CHINA EXECUTIVE EDUCATION CORP.

 CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,2010			December 31, 2009
	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	6,692,589		$	6,381,770
Restricted cash		294,923			-
Accounts receivable, net of allowance		12,650			33,324
Other receivables		1,886,061			1,008,565
Advances to vendors		915,646			731,365
Total current assets		9,801,869			8,155,024
PROPERTY AND EQUIPMENT, NET		270,350			87,369
OTHER ASSET		-			91,505
TOTAL ASSETS		10,072,219			8,333,898
CURRENT LIABILITIES
Advance from customers		2,788,348			3,628,810
Taxes payable		812,684			537,541
Payroll payable		91,043			90,419
Other payables and accrued liabilities		317,760			592,788
Dividend payable		1,593,199			-
Total current liabilities		5,603,034			4,849,558
STOCKHOLDERS' EQUITY
Common Stock, $0.001 par value 70,000,000 shares authorized,
22,660,200 shares and 21,560,000 shares issued and outstanding
at June 30, 2010 and December 31, 2009, respectively		22,660			21,560
Additional paid-in capital		1,390,611			66,311
Statutory reserve		358,026			358,026
Retained earnings		2,895,544			3,131,806
Accumulated other comprehensive income (loss)		(146,295	)		1,592
Total stockholders' equity		4,520,545			3,579,295
Non-controlling interest		(51,361	)		(94,955	)
Total Equity		4,469,185			3,484,340
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	10,072,219		$	8,333,898

The accompanying notes are an intergral part of these condensed consolidated financial statements

5

CHINA EXECUTIVE EDUCATION CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three months ended June 30, 2010			From Inception (April 23, 2009) to June 30, 2009			Six months ended June 30, 2010			From Inception (April 23, 2009) to June 30, 2009
Revenues	$	4,596,776		$	1,874,937		$	9,042,408		$	1,874,937
Cost of revenue		767,357			908,085			2,282,101			908,085
Gross profit		3,829,420			966,852			6,760,306			966,852
Operating expenses
Selling expenses		654,758			65,265			1,373,859			65,265
General and administrative expenses		744,660			93,918			1,907,942			93,918
Total operating expenses		1,399,418			159,182			3,281,801			159,182
Income from operations		2,430,002			807,670			3,478,505			807,670
Other income (expenses)
Interest income (expenses)		4,713			(13,265	)		4,952			(13,265	)
Other income (expenses)		95,228			(4,345	)		95,228			(4,345	)
Total Other income(expenses)		99,941			(17,609	)		100,179			(17,609	)
Income before income taxes		2,529,943			790,061			3,578,684			790,061
Provision for income taxes		596,269			266,224			892,437			266,224
Net income		1,933,674			523,837			2,686,247			523,837
Less: net income attributable to non-controlling interest		61,067			(274,835	)		44,005			(274,835	)
Net income attributable to the Company		1,872,607			798,672			2,642,242			798,672
Comprehensive income
Total foreign currency translation gain (loss)		(149,328	)		252			(147,887	)		252
Less: foreign currency translation gain attributable     to non-controlling interest		(336	)		(64	)		(411	)		(64	)
Foreign currency translation gain (loss) attributable
to common stockholders		(149,664	)		188			(148,298	)		188
Comprehensive income attributable to the Company	$	1,722,943		$	798,860		$	2,493,944		$	798,860
Basic and diluted income per common share	$	0.09		$	0.02		$	0.12		$	0.02
Basic and diluted weighted average common shares outstanding		22,199,160			21,560,000			22,119,691			21,560,000
Cash dividends per common share	$	0.06		$	-		$	0.06		$	-

The accompanying notes are an intergral part of these condensed consolidated financial statements

6

CHINA EXECUTIVE EDUCATION CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(UNAUDITED)

	For the six months ended June 30
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,686,247		$	523,837
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		21,607			61
Stock issued for services		105,000			-
Changes in assets and liabilities
(Increase) decrease in -
Restricted cash		(293,008	)
Accounts receivable		20,768			-
Other receivables		(864,154	)		(352,662	)
Advances for vendor		(178,075	)		-
Increase (decrease) in -
Advance from customers		(859,864	)		1,962,191
Payroll Payable		-			5,591
Taxes payable		266,515			392,645
Other payables and accrued liabilities		(264,581	)		469,627
Net cash provided by operating activities		640,456			3,001,291
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property & equipment		(202,800	)		(3,305	)
Net cash used in investing activities		(202,800	)		(3,305	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder capital contributions		-			87,808
Dividend paid		(1,285,305	)		-
Proceeds from issuance of commom stock under a private placement		1,220,400			-
Net cash provided by (used in) financing activities		(64,905	)		87,808
EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS		(61,932	)		1,097
NET INCREASE IN CASH & CASH EQUIVALENTS		310,819			3,086,890
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD		6,381,770			-
CASH & CASH EQUIVALENTS, END OF PERIOD	$	6,692,589		$	3,086,890
Supplemental disclosures of cash flow information:
Income tax paid	$	702,812		$	-
Interest paid	$	-		$	-
Non-cash investing and financing activities
Common stock issued for services	$	105,000		$	-
Dividend declared	$	2,878,504		$	-

The accompanying notes are an intergral part of these condensed consolidated financial statements

7

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 1.   ORGANIZATION

China Executive Education Corp (the “Company”), formerly known as On Demand Heavy Duty Corp, is a corporation organized under the laws of the State of Nevada.

On February 12, 2010, the Company acquired all of the outstanding capital stock of Surmounting Limit Marketing Adviser Limited (“SLM”), a Hong Kong Corporation,  through China Executive Education Corp., a Nevada corporation (the “Merger Sub”) wholly owned by the Company. SLM is a holding company whose only asset, held through a subsidiary, is 100% of the registered capital of Hangzhou MYL Business Administration Consulting Co., Ltd. (“MYL Business”), a limited liability company organized under the laws of the People’s Republic of China (“PRC”). Substantially all of SLM's operations are conducted in China through MYL Business, and through contractual arrangements with several of MYL Business’s affiliated entities in China, including Hangzhou MYL Commercial Servic es Co., Ltd. (“MYL Commercial”) and its subsidiaries. MYL Commercial is a fast-growing executive education company with dominant operation in Shanghai, the commercial center of China, providing comprehensive consulting services such as business administration, marketing strategy, designing of enterprise image, corporate investment and commerce, business conference as well as professional training programs designed to fit the needs of Chinese entrepreneurs to improve their leadership, management and marketing skills.

In connection with the acquisition, the Merger Sub issued 20 shares of the common stock of the Merger Sub which constituted no more than 10% ownership interest in the Merger Sub to the shareholders of SLM, in exchange for all the shares of the capital stock of SLM (the “Share Exchange” or “Merger”). The 20 shares of the common stock of the Merger Sub were converted into approximately 21,560,000 shares of the common stock of the Company so that upon completion of the Merger, the shareholders of SLM own approximately 98% of the common stock of the Company.

8

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 1.   ORGANIZATION (continued)

As part of the Merger, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), the Company transferred all of the outstanding capital of its subsidiary, On Demand Heavy Duty Holdings, Inc. (“Holdings”) to certain of its shareholders in exchange for the cancellation of  3,000,000 shares of the Company’s common stock (the “Split Off Transaction”). In addition, an aggregate of 3,070,000 shares were returned to the transfer agent for cancelation by other shareholders of Holdings. Following the Merger and the Split-Off Transaction, the Company discontinued its former business and is now engaged in the executive education business.

Upon completion of the Merger, there were 22,000,000 shares of the Company’s common stock issued and outstanding.

As a result of these transactions, persons affiliated with the SLM and MYL Business now own securities that in the aggregate represent approximately 98% of the equity in the Company. In addition, in connection with the change of control contemplated by the Share Exchange, the directors and officers of the Company resigned from their positions and new directors and officers affiliated with MYL Business controlled the Board of Directors. 

Consequently, the Company’s name was changed from “On Demand Heavy Duty Corp.” to the Merger Sub’s name “China Executive Education Corp.” in order to more effectively reflect the Company’s business and communicate the Company’s brand identity to customers.

The above mentioned merger transaction has been accounted for as a reverse merger under the purchase method of accounting since there was a change of control. Accordingly, SLM will be treated as the continuing entity for accounting purposes.  SLM did not commence business operations until April 2009.

9

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 1.   ORGANIZATION (continued)

SLM does not conduct any substantive operations of its own. Instead, through its subsidiary, MYL Business, it had entered into certain exclusive contractual agreements with Hangzhou MYL Commercial Services Co., Ltd.  (“MYL Commercial”), a company incorporated in Hangzhou City, Zhejiang Province, People’s Republic of China (“PRC”) on March 25, 2009.  Pursuant to these agreements, SLM is obligated to absorb a majority of the risk of loss from MYL Commercial’s activities and entitled it to receive a majority of its expected residual returns. In addition, MYL Commercial’s shareholders have pledged their equity interest in MYL Commercial to SLM, irrevocably granted SLM an exclusive option to purchase, to the extent permitted under PRC Law, all or part of the equity interests in M YL Commercial and agreed to entrust all the rights to exercise their voting power to the persons appointed by MYL Commercial. Through these contractual arrangements, the Company and SLM hold all the variable interests of MYL Commercial. Therefore, the Company is the primary beneficiary of MYL Commercial.

Based on these contractual arrangements, the Company believes that MYL Commercial should be considered as Variable Interest Entity (“VIE”) under ASC 510 “Consolidation of Variable Interest Entities, and Interpretation of ARB No. 51”. Accordingly, the Company consolidates MYL Commercial and its subsidiary’s results, assets and liabilities.

Note 2.   BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the full years.

10

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 2.   BASIS OF PRESENTATION (continued)

The condensed consolidated balance sheet information as of December 31, 2009 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.  The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes to thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

 The consolidated financial statements of the Company reflect the principal activities of the following subsidiaries. All material intercompany transactions have been eliminated.

Name of the entity	Place of Incorporation	Ownership Percentage
Summouting Limited Marketing Advisor Limited ("SLM")	Hong Kong, China	100%
Hangzhou MYL Business Administration Co., Ltd ("MYL Business")	Hangzhou, China	100%
Shanghai MYL Consulting Co., Ltd. ("MYL Consulting")	Shanghai, China	100%
Hangzhou MYL Commerical Service., Ltd. ("MYL Commerical")	Hangzhou, China	VIE

The accompanying consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America and include the accounts of all directly and indirectly owned subsidiaries listed above.

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Non-controlling interest

Non-controlling interest represents two minority shareholders’ 5% proportionate share of the results of the Company’s subsidiary Hangzhou MYL Commercial Services Co., Ltd., based on the contractual arrangements between the Company, MYL Commercial and its shareholders.

11

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, and disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates are used for, but not limited to, the selection of the useful lives of property and equipment, provision necessary for contingent liabilities, taxes and other similar charges. Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Actual results could differ from these estimates.

Fair value of financial instruments

ASC 820, Fair Value Measurements and Disclosures clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash, accounts receivable, advance to vendors, accounts payable and other accrued expenses, and advances from customers approximate their fair market value based on the short-term maturity of these instruments. The Company does not have any assets or liabilities that are required to be presented on the consolidated balance sheets at fair value in accordance with ASC 820.

12

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts receivable

Accounts receivable consists of balances due from the enterprises for the education services provided. Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible amounts. The Company does periodical reviews as to whether the carrying values of accounts have become impaired.  The assets are considered to be impaired if the collectability of the balances become doubtful, accordingly, the management estimates the valuation allowance for anticipated uncollectible receivable balances. When facts subsequently become available to indicate that the allowance provided requires an adjustment, then the adjustment will be classified as a change in estimate.  The Company determined that no allowance was considered necessary at June 30, 2010 and December 31, 2009 .

Advances to vendors

Advances to vendors consist of payments made and recorded in advance for featured lectures that have not been provided to or received by the Company from invited foreign speakers.  Featured lectures are generally provided to students within six to nine months after the advanced have been made.  Such advances are expensed through cost of revenue as the speeches are performed. Advances to vendors are reviewed periodically to determine whether their carrying value has become impaired. Advances to vendors as of June 30, 2010 and December 31, 2009 amounted to $915,646 and $731,365, respectively.

Property and equipment

Property and equipment are recorded at cost less accumulated depreciation and any impairment losses.  The cost of an asset comprises of its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.  Expenditure incurred after the fixed assets have been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the profit and loss account in the year in which it is incurred.

13

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, less any estimated residual value.  Estimated useful lives of the assets are as follows:

Computer electronics equipments	3 years
Other equipments	3 years
Leasehold improvements	2 years

Any gain or loss on disposal or retirement of a fixed asset is recognized in the profit and loss account and is the difference between the net sales proceeds and the carrying amount of the relevant asset. When property and equipment are retired or otherwise disposed of, the assets and accumulated depreciation are removed from the accounts and the resulting profit or loss is reflected in income.

Impairment of long-lived assets

In accordance with ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets.  Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary.  There was no impairment of long-lived assets during the six months ended June 30, 2010 and 2009.

14

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition

The Company recognizes revenue in accordance with ASC 605, which requires that revenue be recognized when it is earned and either realized or realizable. In general, the Company generates revenue from the delivery of professional services and  records revenues when the services are completed, already collected or collectability is reasonably assured, there is no future obligation and there is remote chance of future claim or refund to the customers. It is reported net of business taxes and refunds.

Income taxes

The Company utilizes ASC 740, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740-10-25 prescribes a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This Interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. There are no material uncertain tax positions as of June 30, 2010.

15

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currency translation

The Company’s financial information is presented in US dollars. The functional currency of the Company  is Renmini (“RMB”), the currency of the PRC.

The financial statements of the Company have been translated into U.S. dollars in accordance with FASB ASC 830-30 “Translation of Financial Statements”. The financial information is first prepared in RMB and then is translated into U.S. dollars at period-end exchange rates as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in shareholders’ equity.

	June 30, 2010		June 30, 2009
Period end RMB: US$ exchange rate		6.7814		6.8307
Six months average RMB: US$ exchange rate		6.8258		6.8331

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation.

Comprehensive income

 In accordance with FASB ASC 220-10-55, comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company’s only components of comprehensive income during the six months ended June 30, 2010 and 2009 were net income and the foreign currency translation adjustment.

16

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings per share

The Company computes earnings per share (“EPS’) in accordance with ASC 260 “Earnings per Share” (“ASC 260”), and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).  ASC 260 requires companies with complex capital structures to present basic and diluted EPS.  Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period.  Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later.  Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

Statement of cash flows

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

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of accounts receivables and other receivables.  The Company does not require collateral or other security to support these receivables.  The Company conducts periodic reviews of its clients' financial condition and customer payment practices to minimize collection risk on accounts receivables.

17

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Risks and uncertainties

The operations of the Company are located in the PRC. Accordingly, the Company’s operations are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

 Recent accounting pronouncements

In February 2010, FASB issued ASU 2010-09 Subsequent Event (Topic 855) Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removes the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. All of the amendments in ASU 2010-09 are effective upon issuance of the final ASU, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010. The Company adopted ASU 2010-09 in February 2010.

18

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 4. RESTRICTED CASH

Restricted cash is cash set aside for a particular use or event and is subject to withdrawal restrictions.  The Company has a short-term contract with a local hotel to guarantee the Company to book hotel rooms or conference rooms for educational training purposes. Pursuant to the contract terms, the Company is required to maintain certain deposits, as restricted cash, with PRC bank, up to one year. Restricted cash amounted to $294,923 and $-0- as of June 30, 2010 and December 31, 2009, respectively.

Note 5. OTHER RECEIVABLES

Other receivables represent a short-term contract deposit with a local hotel in order for the Company to book hotel rooms or conference rooms at favorable rates to hold various meetings or provide training courses to students. Other receivables also include short-term advances made to certain managers, employees and internal units for business marketing and recruiting purposes. Such advances will be expensed as general and administrative costs as the planned marketing and recruiting tasks have been performed.  The Company has full oversight and control over such advanced amounts. As of June 30, 2010, no allowance for the uncollectible amounts was deemed necessary. The following table summarizes the balance of other receivables as of June 30, 2010 and December 31, 2009:

	As of		As of
	June 30,		December 31,
	2010		2009
	(Unaudited)
Marketing and recruiting advances	$	1,443,674	$	466,414
Contract deposit		442,387		542,151
Total	$	1,886,061	$	1,008,565

19

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 6. PROPERTY, PLANT AND EQUIPMENTS

As of June 30, 2010 and December 31, 2009, the detail of property, plant and equipments was as follows:

	June 30,			December 31,
	2010			2009
	(Unaudited)
Buildings	$	92,137			-
Computer electronics equipments		48,843			39,170
Other equipments		110,683			8,042
Leasehold improvements		48,054			47,291
Sub-total		299,717			94,503
Less: accumulated depreciation		(29,367	)		(7,134	)
Property, plant and equipment, net	$	270,350		$	87,369

Depreciation expense for the three and six months ended June 30, 2010 was $11,974, and 21,067, respectively. Depreciation expense for the three and six months ended June 30, 2009 was $61.

Note 7. ADVANCE FROM CUSTOMERS

Advance from customers represent amounts received in advance from students for tuition paid to attend the Company’s professional training courses and featured lectures. Advance from customers is refundable if the training doesn’t occur within the specified time. The Company recognizes these funds as a current liability until the revenue can be recognized. As of June 30, 2010 and December 31, 2009, the balance of advance from customers totaled $ 2,788,348 and $3,628,810, respectively.

20

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 8. TAXES

(a) Business sales tax

The Company is subject to 5% business sales tax on actual revenue generated.  It is the Company’s continuing practice to accrue 5% of the sales tax on estimated revenue and file tax return based on the actual result, as the local tax authority may exercise broad discretion in applying the tax amount.  As a result, the Company’s accrual sales tax may differ from the actual tax clearance.

(b) Corporation income tax (“CIT”)

The Company is governed by the Income Tax Law of the People’s Republic of China concerning the private-run enterprises, which are generally subject to tax at a new statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.  For the six months ended June 30, 2010 and 2009, the Company incurred income taxes of $892,437 and $266,224, respectively.

 (c) Taxes payable

As of June 30, 2010 and December 31, 2009, taxes payable consisted of the following:

	As of		As of
	June 30,		December 31,
	2010		2009
	(Unaudited)
Corproration income tax	$	597,643	$	403,989
Business tax		193,460		124,452
Other tax and fees		21,581		9,100
Total tax payable	$	812,684	$	537,541

21

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 9.  STOCKHOLDERS’ EQUITY

(a)   Common stock

Prior to the Share Exchange, the Company had 6,510,000 shares of common stock issued and outstanding at $.001 per share.

Before the closing of the Share Exchange transaction, the Company retired 3,000,000 shares of common stock in connection with the spin-off of the Company’s subsidiary, On Demand Heavy Duty Holdings, Inc. In addition, an aggregate of 3,070,000 shares were returned to the transfer agent for cancelation by other shareholders of Holdings. In connection with the Share Exchange consummated on February 12, 2010, the Company issued 21,560,000 shares of its common stock to SLM shareholder, so that upon completion of the Merger, the shareholders of SLM own approximately 98% of the common stock of the Company.

Upon completion of the Merger, there were 22,000,000 shares of the Company’s common stock issued and outstanding.

On March 29, 2010, the Company issued 50,000 common shares to a consulting firm for services rendered and recorded the fair value of $105,000 at the grant date.

On June 8, 2010, the Board of Directors of the Company, after careful consideration of the Company’s need for financing, the available alternatives to the Company to obtain that financing, and such other matters as it considered appropriate, decided to issue, on a private placement basis, a total of 610,200 shares of its common stock, par value of $0.001 at a selling price of $2.00 per share to a total of 60 authorized individuals. The Company raised $1,220,400 in total proceeds as a result of this issuance. The transactions took place under Regulation S.  (“Rules governing offers and sales outside the United States without registration under the Securities Act of 1933”), which only requires the buyers to be foreign nationals a nd the transactions are conducted overseas.  The investors do not have to be accredited.

As of June 30, 2010, there were a total of 22,660,200 shares of the Company’s common stock issued and outstanding.

22

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 9.  STOCKHOLDERS’ EQUITY (continued)

(b)   Statutory reserve

The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve is required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors.

The statutory surplus reserve fund is non-discretionary other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of shares currently held by them, provided that the remaining statutory surplus reserve balance after such issue is not less than 25% of the registered capital before the conversion.

Pursuant to the Company’s articles of incorporation, the Company is to appropriate 10% of its net profits as statutory surplus reserve. As of June 30, 2010, the balance of statutory surplus reserve was $358,026.

The discretionary surplus reserve may be used to acquire fixed assets or to increase the working capital to expend on production and operation of the business. The Company’s Board of Directors decided not to make an appropriation to this reserve for the six months ended June 30, 2010.

23

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 10.  DIVIDEND PAYMENT

On January 30, 2010, the Company’s Board adopted a resolution, which was subsequently amended on August 13, 2010, to declare a dividend payment of RMB 21,325,000 (approximate to $2,878,504) out of the retained earnings balance of Hangzhou MYL for the fiscal year ended December 31, 2009 to its sole shareholder, Surmounting Limited Marketing Adviser Limited (“SLM”).  On the same date, SLM also made a resolution to distribute the net tax amount of such dividend that SLM receives to Magic Dream Enterprises Ltd., a company incorporated under the laws of British Virgin Island.

Pursuant to the above mentioned Board Resolutions, on June 17, 2010, the Company paid dividends of RMB 8,787,500 (approximately $1,285,305) in cash to Magic Dream Enterprises Ltd. after 5% of dividend tax being paid to relevant Chinese tax authority.  The remaining balance of the dividends declared is expected to be paid in the third quarter of 2010.

The Company has not declared or paid dividends in the past and may choose to make additional distribution in the future. Any decision as to the payment of dividends will depend on the available earnings, the capital requirements of our Company, the Company’s general financial condition and other factors deemed pertinent by the Board of Directors.

Note 11. COMMITMENTS AND CONTINGENCIES

From time to time, the Company leases office spaces in Shanghai and Hangzhou in China to conduct its normal business activities, such as business administration, recruiting students, holding the business conferences and providing professional training courses or featured lectures to students.  The Company also has several rental arrangements which provide residential units to house key employees. These lease agreements are short-term in nature and will expire before October 2012.

Rent expenses for the above rental arrangements total $181,036 and $391,169 for the three and six months ended June 30, 2010, respectively.

24

CHINA EXECUTIVE EDUCATION CORP. AND SUBSIDIARIES

(FORMERLY ON DEMAND HEAVY DUTY CORP)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

NOTE 11. COMMITMENTS AND CONTINGENCIES (continued)

The minimum obligations under such commitments (unless otherwise stated) for the years ended December until their expiration are summarized below:

2010	$	360,329
2011		592,353
2012		29,363
Total	$	1,164,395

NOTE 12.  WEIGHTED AVERAGE NUMBER OF SHARES

In February 2010, the Company entered into a share exchange transaction which has been accounted for as a reverse merger under the purchase method of accounting since there has been a change of control. The Company computes the weighted-average number of common shares outstanding in accordance with ASC 805, Business Combinations, which states that in calculating the weighted average shares when a reverse merger takes place in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (the accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement. The number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

China Executive Education Corp. is referred to herein as “we”, “us”, “our”, or the “Company.”  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 contains forward-looking statements.

The words or phrases “would be,” “will allow,” “expect to”, “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” or similar expressions are intended to identify forward-looking statements. Such statements include, among others, those statements concerning our expected financial performance, our corporate strategy and operational plans. Actual results could differ materially from those projected in the forward-looking statements 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 man age 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, we do not undertake, and we specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or any other circumstances after the date of such statement unless required by law. For additional information regarding these risks and uncertainties, see “Risk Factors”. Our consolidated financial statements have been pr epared 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.

COMPANY OVERVIEW

We are a fast-growing executive education company in China and mainly operate through MYL Business. We operate comprehensive training programs through our controlled companies and subsidiaries in Hangzhou and Shanghai, two prosperous and commercial cities of China. We provide Chinese business executives with systematic training in leadership development. We also provide highly effective personal skill development programs, such as, decision making skills, negotiation skills, presentation skills and people skills. Such practical skills development programs have been well accepted by increasing number of Chinese entrepreneurs, business executives and corporation senior management.

Our open-enrollment training programs include our proprietary training courses and featured lectures. Our proprietary training courses include one package of 7 courses for CEO and C-Level managers, as well as 21 leadership and personal development courses, which are on the topics of management skills, negotiation skills, leadership skills and public speaking skills, among other topics. Featured Lectures are delivered by world masters invited by us. Those world masters are experts or well-known speakers in each of their respective fields. Lectures are delivered to a large audience. MYL Business’s network of speaking professionals is a leading platform in China at inspiring audiences to new levels of motivation and commitment.

Since the formal launching of our operation in April 2009, our client base and sales revenue have increased. We have provided our training programs to approximately 2,874 of Chinese business owners and executives. They come from different provinces and from diverse industries. Some of our top corporate clients have millions of dollars in sales, such as Tieniu Group, Jiangsu Shenhua Real Estate Co., Ltd., Beijing Holliland Enterprise Investment Management Co., Ltd., WanLong Ski Resort, and Shenzhen Baoan Fenda Industrial Co., Ltd.

As of June 30, 2010 and December 31, 2009, we have generated sales revenue of RMB67.6 million (equivalent to USD 9.04 million) and RMB 62.44 million (equivalent to USD 9.14 million), respectively.  Our net income for the above periods was approximately $2.69 million and $3.31 million, respectively.

Management plans to continue the execution of our business expansion strategy that will result in increased market penetration of our educational services and expanded revenue growth in our 2010 fiscal year and beyond.  Part of this strategy involves increasing and improving our marketing activities, strengthening our sales force and solidifying our client network. 

26

Corporate History & Background

China Executive Education Corp., formerly known as On Demand Heavy Duty, Corp., is a corporation organized under the laws of the State of Nevada.

We were incorporated under the laws of the State of Nevada on May 9, 2008, under the name, On Demand Heavy Duty, Corp.  From our inception until our reverse acquisition of Surmounting Limit Marketing Adviser Limited, a Hong Kong corporation (“SLM”) on February 12, 2010, we were in the development stage as defined under Statement on Financial Accounting Standards No. 7, Development Stage Enterprises (“SFAS No.7”) and intended to commence business operations by purchasing and distributing eco-friendly building supplies for sale throughout Europe and North America.

On February 12, 2010, we acquired all of the outstanding capital stock of Surmounting Limit Marketing Adviser Limited (“SLM”), a Hong Kong Corporation,  through China Executive Education Corp., a Nevada corporation (the “Merger Sub”) wholly owned by the Company. SLM is a holding company whose only asset, held through a subsidiary, is 100% of the registered capital of Hangzhou MYL Business Administration Consulting Co., Ltd. (“MYL Business”), a limited liability company organized under the laws of the People’s Republic of China (“China” or “PRC”). Substantially all of SLM's operations are conducted in China through MYL Business, and through contractual arrangements with several of MYL Business affiliated entities in China, including Hangzhou MYL Commercial Ser vices Co., Ltd. (“MYL Commercial”) and its subsidiaries. MYL Commercial is a fast-growing executive education company with dominant operation in Shanghai, the commercial center of China, providing comprehensive consulting services such as business administration, marketing strategy, designing of enterprise image, corporate investment and commerce, business conference as well as professional training programs designed to fit the needs of Chinese entrepreneurs to improve their leadership, management and marketing skills.

In connection with the acquisition, the Merger Sub issued 20 shares of the common stock of the Merger Sub, which constituted no more than 10% ownership interest in the Merger Sub to the shareholders of SLM, in exchange for all the shares of the capital stock of SLM (the “Share Exchange” or “Merger”). The 20 shares of the common stock of the Merger Sub were converted into approximately 21,560,000 shares of the common stock of the Company so that upon completion of the Merger, the shareholders of SLM own approximately 98% of the common stock of the Company.

As part of the Merger, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), the Company transferred all of the outstanding capital of its subsidiary, On Demand Heavy Duty Holdings, Inc. (“Holdings”), to certain of its shareholders in exchange for the cancellation of 3,000,000 shares of the Company’s common stock (the “Split Off Transaction”). Following the Merger and the Split-Off Transaction, the Company discontinued its former business and is now engaged in the executive education business.

Upon completion of the Merger, there were 22,000,000 shares of the Company’s common stock issued and outstanding.

As a result of these transactions, persons affiliated with the SLM and MYL Business now own securities that in the aggregate represent approximately 98% of the equity in the Company. In connection with the change of control contemplated by the Share Exchange, the directors and officers of the Company resigned from their positions, and new directors and officers affiliated with MYL Business controlled the Board of Directors of the Company.

Consequently, our name was changed from “On Demand Heavy Duty, Corp.” to the Merger Sub’s name “China Executive Education Corp.” in order to more effectively reflect the Company’s business and communicate the Company’s brand identity to customers.

The above mentioned merger transaction has been accounted for as a reverse merger under the purchase method of accounting since there was a change of control. Accordingly, SLM will be treated as the continuing entity for accounting purposes.

On April 9, 2010, Company received approval from FINRA clearing Company’s name change from “On Demand Heavy Duty, Corp.” to “China Executive Education Corp.” in connection with the Merger on February 12, 2010.  According to FINRA’s approval, the name change took effect on April 12, 2010.  The Company’s new trading symbol on April 12, 2010 was changed from “ODHD. OB” to “CECX.OB” to effect the name change.

27

SLM does not conduct any substantive operations of its own. Instead, through its subsidiary, MYL Business, it entered into certain exclusive contractual agreements with Hangzhou MYL Commercial on March 25, 2009.  Pursuant to these agreements, SLM is obligated to absorb a majority of the risk of loss from MYL Commercial’s activities and entitled it to receive a majority of its expected residual returns. In addition, MYL Commercial’s shareholders have pledged their equity interest in MYL Commercial to SLM, irrevocably granted SLM an exclusive option to purchase, to the extent permitted under PRC Law, all or part of the equity interests in MYL Commercial and agreed to entrust all the rights to exercise their voting power to the persons appointed by MYL Commercial. Through these contractual arrangements, the Company and SLM hold all the variable interests of MYL Commercial. Therefore, the Company is the primary beneficiary of MYL Commercial.

Based on these contractual arrangements, we believe that MYL Commercial should be considered a Variable Interest Entity (“VIE”) under ASC 510 “Consolidation of Variable Interest Entities, and Interpretation of ARB No. 51”. Accordingly, the Company consolidates MYL Commercial and its subsidiary’s results, assets and liabilities.

Corporate Structure

We conduct our operations in China through MYL Business and through contractual arrangements with several of MYL Business’s consolidated affiliated entities in China, including Hangzhou MYL Commercial and its subsidiaries.  The following chart reflects our current organizational structure:

*non-active subsidiaries with no operations.

Our Industry

We operate in China’s professional training industry, which is one of the fastest growing sectors in China’s education industry. According to the China Education Yearbook, China’s total educational expenditures were approximately RMB 214.8 billion in 2007 (approximately $178.6 billion), representing a compound annual growth rate, or CAGR, of approximately 15.4%, since 2000. The school system run by the State and local government accounts for over 60% of the funding and expenditure.

28

According to the Report of Investment Analysis and Prospect of China Training Industry 2010-2015, as of the end of 2007, the estimated size of the vocational training and professional training market was around  RMB 300 billion (approximately USD 44 billion). And as one of the major segments of the professional training industry, China’s executive training has emerged and grown rapidly in the last few years. The market was estimated with a size about RMB 2 billion (approximately $294 million) in 2002; then was increased to over RMB 16 billion (approximately 2.35 billion) in 2004, and jumped to RMB 30 billion (approximately $4.41 billion) in 2006.

China’s professional training industry has also been further divided in more sub-segments, such as career development training, foreign language training, technique and skills training and executive training. As Chinese companies and working force confront competition in the global market, the need for steady improvement of the skills and efficiency on different levels will stimulate continuing growth and demand for specialized professional education services in different fields.

Executive training is a special business segment. The target clients for executive training business are corporation executives, C-level managers and private business owners. The training programs mainly include leadership development, corporation strategy, decision making and other personal skill development. China’s executive education sector is characterized with the following nature:

(1)   Young and in early development stage. In comparison with other professional training segments, China’s executive training industry is young and just has 10 years history. It was first introduced by foreign education institute to top Chinese business schools in late 1990s, then expanded to the private sector with many active participants.

(2)   Strong market demand. Driven by the booming Chinese economy and spirit of entrepreneurism in the private business sector, demand for open-enrollment and easy access high-level education program from more than 6 million of Chinese private business owners and over 10 million business executives in China is strong.

(3)   Fragmented market. Because low entry barrier, now there are thousands of executive training providers in China. There is no dominant player in the national market yet. According to the study conducted by China Investment & Industry Research Center, there were more than 70,000 training companies nationwide, of which more than 10,000 located in Beijing and Shanghai.  However, few of them have generated RMB 10 million or more of sales revenue annually.

Competition

We face competition on two different fronts.  First is from the major Chinese university and business schools.  They provide EMBA program targeting on corporation executives and entrepreneurs.  The most popular EMBA programs available in China are from Euro-China International Business College in Shanghai, Cheung Kong Graduate School of Business, Tsinghua University and Shanghai Jiaotong University.  These universities’ EMBA programs provide their students with approximately 300 hours of formal in-class training programs in the curriculum and issue degree certificates to students at graduation.  The tuition ranges from RMB 60,000 (approximately USD 9,000) to RMB 568,000 (approximately USD 85,000) for the entire program.  The top business schools enroll 400–600 student s annually.  Due to the strict admission requirements, many young and less qualified candidates are turned away.  This increases market opportunities for Company’s programs.

Open-enrollment programs provided by private education institutions, like ours, have emerged and constituted serious competition to the top business schools that provide formal executive training programs.  These peer companies also constitute direct competition with us.  Jucheng Group (founded in 2003 in Shenzhen), Action Success International Education Group (founded in 2001 in Shanghai), and Sparta Group (founded in 2002 in Beijing) are the most prominent companies in our business sector.  We compete with them primarily on the basis of training courses, lecturers, prices, effectiveness of training execution and our brand name.  Since those three companies have been in business longer than us and they have cross-region presence, they possess their strength in market coverage and pricing.  0;We believe that we have a competitive advantage in our international network and broad offering.

Factors Affecting Our Results of Operation

The increase in our operating results was attributable to a number of factors, which include the strong market demand for quality executive training programs in China, and our effective execution of our business formation plan in Hangzhou and Shanghai.  We believe that our business model and quick establishment in the target market have given us a considerable advantage over our competitors.  We expect our business will continue its growth in the years to come, and our future growth will depend primarily on the following factors:

29

Increasing Domestic Spending in Executive Training in China

The demand for our training program is directly related to the training spending in China.  The increase in training spending is largely determined by the economic conditions in our country.  According to the data released by National Bureau of Statistics of China on January 21, 2010, China’s economy has expanded by 8.7% in 2009, and its annual growth rate has been in the range of 8% to 13% in the recent decade.  We believe the fast growing economy is going to generate more demand for professional training, including business executive training programs.  We expect the training spending in China will maintain its double-digit growth in the years to come.  However, we cannot give you any assurance that post growth will continue or stay the same.

Increasing Numbers of Private Businesses

According to the Report of Investment Analysis and Prospect of China Training Industry 2010-2015 by China Investment & Industry Research Center in January 2010, there were approximately 31.5 million of small and middle-sized business in China in 2006, increased by 11.2% compared to 2005, and in the coming three years, the number of small and middle-sized company is expected to keep growing at annual growth rate of 7%-8%.  It is estimated that by 2012, the number of small and middle-sized company will reach approximately 50 million.  The business owners and executives are eager to improve their skills of management, leadership, marketing, negotiating and investment skills.

Promotion of Our Brand Name to Attract More Clients Cross the Country

We plan to promote our brand name, Magic Your LifeTM in China.  We believe that the enhancement of public awareness to our brand name will help to broaden our client base all over China.

Network with and Retain More Featured Lecturers

Since Featured Lectures are one of the major revenue generating venues for us, we need to expand business networking and retain more top talent to our lecturer and guest speaker team.  In 2010, we intend to host more Featured Lectures or large session events to attract more enrollments and sell our programs to more clients.

New Training Program Offered for the Affluent Second Generation

As China becomes the country with the second largest number of billionaires and its number of highly affluent people increases, the inheritance of the wealth and business has become a big concern in the nation and for families.  We intend to develop and launch our special training programs for the children of the most affluent Chinese.  The program will help this specific group of clients to improve their business management skills and personal skills.  We believe that this business initiative will help to further expand our business in the coming years.

Intellectual Property

MYL Business has officially filed with the respective trademark offices in the PRC, Hong Kong, and the U.S. the application for registration of  (FORBOSS Business Mentor Group) as a registered trademark.  Such application is subject to review and authorization by the respective trademark offices.  In Hong Kong, the said application is pending as it has been challenged by third parties.  Ms. Chiayeh LIN, one of the management of MYL, has officially filed with the trademark office of the PRC the application for registration of  (Magic You Life) as registered trademark.  Such application is subject to review and authorization by the trademark office of the PRC.

Mr. Kaien Liang, our Chairman and the controlling shareholder of MYL, is of the author of the books Who Is The Next Magic? and Never Say Impossible, of which thousands of copies have been sold.  Meanwhile, Mr. Pokai Hsu, our Chief Operating Director, is the author of How to be No.1 in China.

Marketing

We market our executive training service directly to business executives. As of June 30, 2010, we had 282 sales and marketing personnel. Our sales team generates sales and sales leads through telemarketing campaigns, mass-mailing campaigns and business referrals. We also market our training program by organizing or sponsoring business seminars or other social and business events.

We will further increase the size of our sales and marketing team as we continue to grow our business and add more training programs.

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Employees

As of June 30, 2010, MYL Business had around 342 full-time employees, including 10 in research and development, 18 in the administration and human resources departments, 8 in the financial department, 7 in the customer service department, 17 in the network department and 282 in sales and marketing.

Growth Strategy

We intend to grow our business by pursuing the following:

Increase our market coverage. We expect to increase our market coverage through extensive telemarketing campaigns and mass mailings. We also intend to establish and expand our sales agent network in inland provinces of China. We believe there are undiscovered opportunities there.

Expand course offerings. We intend to expand our executive training program by adding more courses, such as Effective Corporation Finance Management, Strategic Investment and Capital Market Operation. We also intend to add our course offerings to the second generation of the affluent families.

Pursue strategic acquisitions. We intend to make strategic acquisitions to expand into other C-level management training segment, which has a large potential client base. We will also seek acquisition opportunities in other major commercial centers to expand our business presence.

Strengthen our international network. We intend to establish strategic alliances with major international executive training and leadership development institutions. Leveraging their capacity and bringing them to our classes will generate more value to our clients. We also seek the opportunity of business cooperation with major international education institutions and develop some jointly operated programs.

Recent Developments

As the number of entrepreneurs and affluent businessmen in China increases, we will continue to expand our network into the commercial cities of China to offer a different variety of business programs that serve their needs. We believe our proprietary business training programs serve a need in the rapidly changing and surging economy of China. Both our client base and sales have experienced continuous growth from month to month since our inception. At the same time, we look forward to collaborating with other education consulting companies to offer more courses to our clients in different regions of China, which we believe will continue to lead to a strong increase in the numbers of companies we can serve.

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Highlights of Fiscal Quarter Ended June 30, 2010

For the six months ended June 30, 2010, we have provided our training programs to approximately 2,741 of Chinese business owners and executives. They come from different provinces and from different industries.  

For the six months ended June 30, 2010, the gross margin of the Company was 75%. Total operating expenses were approximately $3,281,801 for the six months ended June 30, 2010, representing 36.29% of our revenues for the period indicated. We reported net income of $ 2,686,247 for the six months ended June 30, 2010. We expect to experience the ongoing positive trend in our financial performance to continue through fiscal year 2010 and beyond.

The increase in our revenue was attributable to a number of factors, which include the strong market demand for quality executive training programs in China and our effective execution of our business formation plan in Hangzhou and Shanghai. We believe that our business model and quick establishment in the target market have given us a considerable advantage over our competitors.

Basis of Presentation and Consolidation

The consolidated financial statements of our Company reflect the principal activities of the following subsidiaries. All material intercompany transactions have been eliminated.

Name of the entity	Place of Incorporation	Ownership Percentage
Summouting Limited Marketing Advisor Limited ("SLM")	Hong Kong, China	100%
Hangzhou MYL Business Administration Co., Ltd. ("MYL Business")	Hangzhou, China	100%
Shanghai MYL Consulting Co., Ltd. ("MYL Consulting")	Shanghai, China	100%
Hangzhou MYL Commerical Service., Ltd. ("MYL Commerical")	Hangzhou, China	VIE

Our consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America and include the accounts of all directly and indirectly owned subsidiaries listed above.

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DISSCUSSION OF OPERATION RESULTS

Three months ended June 30, 2010 vs. three months ended June 30, 2009

The results of our operations for the three months ended June 30, 2010 as compared to the prior comparative period are as follows:

	For The Three Months Ended June 30, 2010			From inception (April 23, 2009) to  June 30, 2009
Revenues	$	4,596,776		$	1,874,937
Cost of revenue		767,357			908,085
Gross profit		3,829,420			966,852
Operating expenses
Selling expenses		654,758			65,265
General and administrative expenses		744,660			93,918
Total operating expenses		1,399,418			159,182
Income from operations		2,430,002			807,670
Other income (expenses)
Interest income (expenses)		4,713			(13,265	)
Other income (expenses)		95,228			(4,345	)
Total Other income(expenses)		99,941			(17,609	)
Income before income taxes		2,529,943			790,061
Provision for income taxes		596,269			266,224
Net income		1,933,674			523,837
Less: net income attributable to non-controlling interest		61,067			(274,835	)
Net income attributable to the Company		1,872,607			798,672
Comprehensive income
Total foreign currency translation gain (loss)		(149,328	)		252
Less: foreign currency translation gain attributable to non-controlling interest		(336	)		(64	)
Foreign currency translation gain (loss) attributable to common stockholders		(149,664	)		188
Comprehensive income attributable to the Company	$	1,722,943		$	798,860
Basic and diluted income per common share	$	0.09		$	0.02
Basic and diluted weighted average common shares outstanding		22,199,160			21,560,000
Cash dividends per common share	$	0.06		$	-

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Revenue

For the three months ended June 30, 2010, the revenue increased by $2,721,839 or 145.17% as compared to the prior comparative period. The increase in our revenue was attributable to a number of factors, which include the strong market demand for quality executive training programs in China and our effective execution of our business formation plan in Hangzhou and Shanghai. We believe that our business model and quick establishment in the target market have given us a considerable advantage over our competitors. To be specific, the increase in the sales revenue was due to the following reasons: (1) during the three months ended June 30, 2009, we just started our business on April 23, 2009 and only had 11 training courses to be provided to students, which limited our sales point or opportunities, (2) during the three months ended June 30, 2 010, our Company became a public company and has earned greater brand image, and more than 22 courses have been designed and arranged to be provided to students, which increased our sales opportunities, (3) during the three months ended June 30, 2010, our Company has expanded its business operations in both Hangzhou and Shanghai, more than 1,177 students have attended our training courses or featured lectures, and we have initiated more than 10 promotion seminars to sell our training programs, and (4) more marketing and sales efforts as well as advertising have been performed during the three months ended June 30, 2010 as compared to the same period of 2009.

The following table sets forth the breakdown of our revenue sources for the periods indicated:

	For the three months ended
	June 30, 2010		June 30, 2009
Revenue from Proprietary Training Courses	$	1,681,498	$	1,274,235
Revenue from Featured Lectures		2,915,278		600,702
Total Revenue	$	4,596,776	$	1,874,937

Costs of sales

Cost of sales was decreased by $140,728 or 15.5% from $908,085 at June 30, 2009 as compared to $767,357 at June 30, 2010. This was because in the same period of 2009, our Company just started its business with pretty low brand name and lower market coverage at that time and more costs of sales was required to generate lower amount of sales revenue especially direct labor costs associated with business startup, student recruiting, as well as office and training space arrangement costs.  However, for the three months ended June 30, 2010, our company has already established its brand name and expanded its market coverage, as well as increased its work efficiency, accordingly, costs of sales decreased as compared to the same period of 2009.

Operating expenses

The following table sets forth a breakdown of our operating expenses for the periods indicated:

	For the three months ended
	June 30, 2010		June 30, 2009
General and Administrative Expenses	$	744,660	$	93,918
Selling Expenses		654,758		65,265
Total Operating Expenses	$	1,399,418	$	159,183

Total operating expenses were $1,399,418 for the three months ended June 30, 2010, representing a representing a 779.1%, or $1.24 million increase as compared to operating expenses of $159,183 for the three months ended June 30, 2009. The increase in our operating expenses for the three months ended June 30, 2010 as compared to the same period of 2009 was attributable to the following reasons: (1) The increases in advertising and marketing costs of $.58 million as we expanded our business and therefore were required to pay more consulting expenses to several outside companies who introduced or helped recruit students for us, as well as to pay for a labor lease to an outside company to lease certain marketing and sales representatives to conduct our business.  For the same period of 2009, we just started our business and did not incurred such expenses, and the only selling expense incurred during that period of time was advertising expense.  (2) General administrative expense increased $0.65 million primarily due to increased rent expense for hotels and conference room arrangement and consulting expense related to the our going public and up-listing efforts.  We also lease training centers or conference rooms or residential apartment for certain management members in Shanghai in order to conduct our business activities. In addition, our consulting expenses increased because we had to pay more legal and accounting expenses to attorneys, auditors as well as some other consultants in the United States after we became a public company in February 2010. As a result of the above mentioned reasons, our selling and general and adminstrative expenses increased for the three months ended June 30, 2010 as compared to the three months ended June 30, 2009.

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Our selling expenses primarily include sales commission paid to outside agents for student recruiting and salaries paid to out-source marketing and sales forces. We expect our selling and marketing expense to increase in the near future as we increase our sales efforts, launch more comprehensive training courses and target new markets to expand our operations.

Our general and administrative expenses principally include:

(1) Staff salaries and benefits;

(2) Traveling and entertainment expenses;

(3) Professional fees, such as consulting, audit and legal fees;

(4) Office spaces rent expenses; and

(5) Other associated fees.

We expect that our general and administrative expenses will increase as we expand our business and operations. In addition, as a result of the Company’s shares of common stock being quoted on the Over-the-Counter Bulletin Board, the Company will need to enhance our management’s skills and levels to adapt to the complex business environment because we will be subject to the rules and regulations of United States securities laws and corporate governance and internal controls. We believe that we will need to hire more personnel as our business continues to grow, and we believe that we will need to incur additional general and administrative costs in the near future.

Other income (expenses)

Other income primarily consists of interest income (expense) and government subsidy income or tax refund from relevant tax authority. For the three months ended June 30, 2010, we reported other income of $99,941, which included a tax refund made to us by Hangzhou local tax authority in the amount of $95,228 and interest income of $4,713. For the three months ended June 30, 2009, we reported other expenses of $17,609 which primarily consisted of interest expense paid to PRC banks. Other income (expenses) increased $117,550 for the three months ended June 30, 2010 as compared to the prior comparative period.

Income taxes

Our Company is governed by the Income Tax Law of the People’s Republic of China concerning the private-run enterprises, which are generally subject to tax at a new statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.  For the three months ended June 30, 2010 and 2009, we incurred income taxes of $596,269 and $266,224, respectively.

Net income

As a result of the above factors, we reported net income of $ 1,933,674 for the three months ended June 30, 2010, as compared to net income of $523,837 for the three months ended June 30, 2009. Net income increased by $1.4 million or 269.1% for the three months ended June 30, 2010. The increase in our net income was primarily attributable to the increase in our sales revenue and decrease in our costs of sales as discussed above.  We expect to experience the ongoing positive trend in our financial performance through fiscal year 2010 and beyond.

Other comprehensive income

We operate primarily in the PRC and the functional currency of our operating subsidiary is the Chinese Renminbi (”RMB”).  The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

The financial information is first prepared in RMB and then is translated into U.S. dollars at period-end exchange rates as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in shareholders’ equity.

For the three months ended June 30, 2010, other comprehensive income resulted from the currency translation loss amounted to $149,328.  For the three months ended June 30, 2009, other comprehensive income resulted from the currency translation gain of $252.

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Six months ended June 30, 2010 vs. six months ended June 30, 2009

The results of our operations for the six months ended June 30, 2010 as compared to the prior comparative period are as follows:

	For The Six Months Ended June 30, 2010			From inception (April 23, 2009) to  June 30, 2009
Revenues	$	9,042,408		$	1,874,937
Cost of revenue		2,282,101			908,085
Gross profit		6,760,306			966,852
Operating expenses
Selling expenses		1,373,859			65,265
General and administrative expenses		1,907,942			93,918
Total operating expenses		3,281,801			159,182
Income from operations		3,478,505			807,670
Other income (expenses)
Interest income (expenses)		4,952			(13,265	)
Other income (expenses)		95,228			(4,345	)
Total Other income(expenses)		100,179			(17,609	)
Income before income taxes		3,578,684			790,061
Provision for income taxes		892,437			266,224
Net income		2,686,247			523,837
Less: net income attributable to non-controlling interest		44,005			(274,835	)
Net income attributable to the Company		2,642,242			798,672
Comprehensive income
Total foreign currency translation gain (loss)		(147,887	)		252
Less: foreign currency translation gain attributable to non-controlling interest		(411	)		(64	)
Foreign currency translation gain (loss)  attributable to common stockholders		(148,298	)		188
Comprehensive income attributable to the Company	$	2,493,944		$	798,860
Basic and diluted income per common share	$	0.12		$	0.02
Basic and diluted weighted average common shares outstanding		22,119,691			21,560,000
Cash dividends per common share	$	0.06		$	-

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Revenue

For the six months ended June 30, 2010, the revenue increased by $7.1 million or 382% as compared to the prior comparative period. The increase in our revenue was attributable to a number of factors, which include the strong market demand for quality executive training programs in China and our effective execution of our business formation plan in Hangzhou and Shanghai. We believe that our business model and quick establishment in the target market have given us a considerable advantage over our competitors. To be specific, the increase in the sales revenue was due to the following reasons: (1) during the six months ended June 30, 2009, we just started our business on April 23, 2009 and only had 11 training courses to be provided to students, which limited our sales point or opportunities. Our actual operating period only included th ree months period rather than six months period as compared to that of 2010, (2) during the six months ended June 30, 2010, our Company became a public company and has earned greater brand image, and more than 22 courses have been designed and arranged to be provided to students, which increased our sales opportunities, (3) during the six months ended June 30, 2010, our Company has expanded its business operations in both Hangzhou and Shanghai, more than 2,741 students have attended our training courses or featured lectures, and we have initiated more than 22 promotion seminars to sell our training programs, and (4) more marketing and sales efforts as well as advertising have been performed during the six months ended June 30, 2010 as compared to the same period of 2009.

The following table sets forth the breakdown of our revenue sources for the periods indicated:

	For the six months ended
	June 30, 2010		June 30, 2009
Revenue from Proprietary Training Courses	$	3,915,450	$	1,274,235
Revenue from Featured Lectures		5,126,958		600,702
Total Revenue	$	9,042,408	$	1,874,937

Costs of sales

For the six months ended June 30, 2010, our cost of sales increased by $1,374,016 or 151% as compared to the prior comparative period. The increase in our costs of sales was primarily due to our increased sales revenue. The increase in our costs of sales was also affected by the fact that we just started our business in April 2009 and only three months period was actually included in the prior comparative period as compared to the six months ended June 30, 2010 .

Operating expenses

The following table sets forth a breakdown of our operating expenses for the periods indicated:

	For the six months ended
	June 30, 2010		June 30, 2009
General and Administrative Expenses	$	1,907,942	$	93,918
Selling Expenses		1,373,859		65,265
Total Operating Expenses	$	3,281,801	$	159,183

Total operating expenses were $3,281,801 for the six months ended June 30, 2010, representing a representing a 1,962%, or $3.1 million increase as compared to operating expenses of $159,183 for the six months ended June 30, 2009. The increase in our operating expenses for the six months ended June 30, 2010 as compared to the same period of 2009 was attributable to the following reasons: (1) The increases in advertising and marketing costs of $1.3 million as we expanded our business and therefore were required to pay more consulting expenses to several outside companies who introduced or helped recruit students for us, as well as to pay for a lease to an outside company to lease certain marketing and sales representatives to conduct our business.  For the same period of 2009, we just started our business and did not incurred such expenses, and the only selling exp ense incurred during that period of time was advertising expense.  (2) General administrative expense increased $1.8 million primarily due to increased rent expense for hotels and conference room arrangement and consulting expense related to the our going public and up-listing efforts.  We also lease training centers or conference rooms or residential apartment for certain management members in Shanghai in order to conduct our business activities. In addition, our consulting expenses increased because we had to pay more legal and accounting expenses to attorneys, auditors as well as some other consultants in the United States after we became a public company in February 2010.

Our selling expenses primarily include sales commission paid to outside agents for student recruiting and salaries paid to out-source marketing and sales forces. We expect our selling and marketing expense to increase in the near future as we increase our sales efforts, launch more comprehensive training courses and target new markets to expand our operations.

Our general and administrative expenses principally include:

(1) Staff salaries and benefits;

(2) Traveling and entertainment expenses;

(3) Professional fees, such as consulting, audit and legal fees;

(4) Office spaces rent expenses; and

(5) Other associated fees.

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We expect that our general and administrative expenses will increase as we expand our business and operations. In addition, as a result of the Company’s shares of common stock being quoted on the Over-the-Counter Bulletin Board, the Company will need to enhance our management’s skills and levels to adapt to the complex business environment because we will be subject to the rules and regulations of United States securities laws and corporate governance and internal controls. We believe that we will need to hire more personnel as our business continues to grow, and we believe that we will need to incur additional general and administrative costs in the near future.

Other income (expenses)

Other income primarily consists of interest income (expense) and government subsidy income or tax refund from relevant tax authority. For the six months ended June 30, 2010, we reported other income of $100,179, including a tax refund made to us by Hangzhou local tax authority in the amount of $95,228 and interest income of $4,952.  For the six months ended June 30, 2009, we reported other expenses of $17,609 which primarily consisted of interest expense paid to PRC banks. Other income (expenses) increased $117,788 for the six months ended June 30, 2010 as compared to the prior comparative period.

Income taxes

Our Company is governed by the Income Tax Law of the People’s Republic of China concerning the private-run enterprises, which are generally subject to tax at a new statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.  For the six months ended June 30, 2010 and 2009, we incurred income taxes of $892,437 and $266,224, respectively.

Net income

As a result of the above factors, we reported net income of $ 2,686,247 for the six months ended June 30, 2010, as compared to net income of $523,837 for the six months ended June 30, 2009. Net income increased by $2.16 million or 412.8% for the six months ended June 30, 2010. The increase in our net income was primarily attributable to the increase in our sales revenue as discussed above.  We expect to experience the ongoing positive trend in our financial performance through fiscal year 2010 and beyond.

Other comprehensive income

We operate primarily in the PRC and the functional currency of our operating subsidiary is the Chinese Renminbi (”RMB”).  The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

The financial information is first prepared in RMB and then is translated into U.S. dollars at period-end exchange rates as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in shareholders’ equity.

For the six months ended June 30, 2010, other comprehensive income resulted from the currency translation loss amounted to $148,887.  For the six months ended June 30, 2009, other comprehensive income resulted from the currency translation gain amounted to $252.

LIQUIDITY AND CAPITAL RESOURCES

To date, we have financed our operations primarily through cash flows from operations, as well as borrowings from the members of our management.

Total current assets increased by $1,646,845 from $8,155,024 as of December 31, 2009 to $9,801,869 as of June 30, 2010.  The primary changes in our current assets during this period were from changes in cash and other receivables.  The increase in our cash from $6,381,770 at December 31, 2009 to $6,987,512 at June 30, 2010 was because our increased sales and rapid collection made more cash to be available and used in our operations. The increase of other receivables from $1,008,565 as of December 31, 2009 to the amount of $1,886,061 as of June 30, 2010 was due to the increased short-term advances made to certain employees and internal units to ensure sales and marketing activities as well as student-recruiting were performed in a timely manner.

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Total current liabilities as of June 30, 2010 amounted to $5,603,034 as compared to $4,849,558 at December 31, 2009. The increase in current liabilities was primarily because,  on January 30, 2010, our Board of Directors adopted a resolution, which was subsequently amended on August 13, 2010, to declare dividends in the total amount of RMB 21,325,000 (equivalent to $2,878,504) out of the retained earnings balance of Hangzhou MYL for the fiscal year ended December 31, 2009 to its sole shareholder, Surmounting Limited Marketing Adviser Limited (“SLM”).  On the same date, SLM also made a resolution to distribute the net tax amount of such dividend that SLM received to Magic Dream Enterprises Ltd., a company incorporated under t he laws of British Virgin Island.  Pursuant to the above mentioned Board Resolutions, on June 17, 2010, we paid dividends of RMB 8,787,500 (approximately $1,285,305) in cash to Magic Dream Enterprises Ltd. after 5% of dividend tax being paid to relevant Chinese tax authority.  The remaining balance of the dividends declared is recorded as dividend payable and it expected to be paid in the third quarter of 2010.

Based on our current operating plan, we believe that existing cash and cash equivalents balances, as well as cash forecast by management to be generated by operations will be sufficient to meet our working capital and capital requirements for our current operations.

DISSCUSSION OF CASH FLOWS

Comparison of cash flows results for the six months ended June 30, 2010 and 2009 respectively is summarized as follows:

	For the six months ended June 30
	2010			2009
Cash flow from operating activities	$	640,456		$	3,001,291
Cash flow from investing activities	$	(202,800	)	$	(3,305	)
Cash flow from financing activities	$	(64,905	)	$	87,808

Operating Activities

Net cash from in operating activities during the six months ended June 30, 2010 amounted to $640,456, which consists of our net income of $2,686,247, adds back noncash adjustments of $126,607 and offset by net changes in operating assets and liabilities due to our expanded operating activities, including increase in our other receivables of $864,154.  The increase was due to increased short-term advances made to certain employees and internal units to ensure the recruitment of students was performed in a timely manner; an increase in our advance to vendors of $178,075, which primarily represents payments made and recorded in advance for featured lectures that have not been provided to or received by the Company from invited foreign speakers;  as well as a decrease of advance from customers in the amount of $859,864 which wa s attributable to increased sales resulted in recognition of the related amounts as revenues after meeting all conditions of revenue recognition method.

Net cash provided by operating activities decreased by $2.36 million or 368.6% for the six months ended June 30, 2010 as compared to the prior comparative period.

Investing Activities

Net cash used in investing activities in the six months ended June 30, 2010 amounted to $202,800, representing the addition of a building as well as some equipment into our Company’s fixed assets. 

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2010 amounted to $64,905, including a dividend payment of $1,285,305 and proceeds from issuance of common shares under a private placement of $1,220,400.  On January 30, 2010, our Board of Directors adopted a resolution, which was subsequently amended on August 13, 2010, to declare dividends in the total amount of RMB 21,325,000 (equivalent to $2,878,504) out of the retained earnings balance of Hangzhou MYL for the fiscal year ended December 31, 2009 to its sole shareholder, Surmounting Limited Marketing Adviser Limited (“SLM”).  On the same date, SLM also made a resolution to distribute the net tax amount of such dividend that SLM received to Magic Dream Enter prises Ltd., a company incorporated under the laws of British Virgin Island.  Pursuant to the above mentioned Board Resolutions, on June 17, 2010, we paid dividends of RMB 8,787,500 (approximately $1,285,305) in cash to Magic Dream Enterprises Ltd. after 5% of dividend tax being paid to relevant Chinese tax authority.  The remaining balance of the dividends declared is recorded as dividend payable and it expected to be paid in the third quarter of 2010.

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On June 8, 2010, the Board, after careful consideration of the Company’s need for financing, the available alternatives to the Company to obtain that financing, and such other matters as it considered appropriate, decided to issue, on a private placement basis, a total of 610,200 shares of its common stock, at a selling price of $2.00 per share to a total of 60 authorized individuals. The Company raised $1,220,400 in total proceeds as a result of this issuance.

 Net cash provided by financing activities amounted to $87,808, for the six months ended June 30, 2009, which represented capital contribution by our shareholders.

Off-Balance Sheet Arrangements

As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have: (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Critical Accounting Policies

See “ Note 3. Summary of Significant Accounting Policies ” in “ Item 1. Financial Statements ” herein for a discussion of the critical accounting pronouncements adopted in this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

See “Note 3. Summary of Significant Accounting Policies” in “Item 1. Financial Statements” herein for a discussion of the new accounting pronouncements adopted in this Quarterly Report on Form 10-Q.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10- Q (the “Evaluation Date”). The evaluation of our disclosure controls and procedures included a review of our processes and the effect on the information generated for use in this Quarterly Report on Form 10-Q. In the course of this evaluation, we sought to identify any material weaknesses in our disclosure controls and procedures and to confirm that any necessary corrective action, including process improveme nts, was taken. The purpose of this evaluation is to determine if, as of the Evaluation Date, our disclosure controls and procedures were operating effectively such that the information, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) was recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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As of June 30, 2010, the Company’s Chief Executive Officer and its Chief Financial Officer have concluded that, as of that date, the Company’s controls and procedures were not effective due to some significant deficiencies (as defined in Public Company Accounting Oversight Board Standard No. 2) in the Company’s internal controls over financial reporting. This is due to the fact that the Company lacks sufficient personnel with the appropriate level of knowledge, experience and training in the application of U.S. generally accepted accounting principals (“U.S. GAAP”) standards, especially related to complicated accounting issues. This could cause the Company to be unable to fully identify and resolve certain accounting and disclosure issues that could lead to a failure to maintain effective controls over prepar ation, review and approval of certain significant account reconciliation from Chinese GAAP to U.S. GAAP and necessary journal entries.

The Company has relatively small number of professionals employed by the Company in bookkeeping and accounting functions, which prevents the Company from appropriately segregating duties within its internal control systems. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.

Based on the control deficiency identified above, we have designed and plan to implement, or in some cases have already implemented, the specific remediation initiatives described below:

● We are evaluating the roles of our existing accounting personnel in an effort to realign the reporting structure of our internal auditing staff in China that will test and monitor the implementation of our accounting and internal control procedures.

● We are in the process of completing a review and revision of the documentation of the Company’s internal control procedures and policies.

● We will begin implementation an initiative and training in China to ensure the importance of internal controls and compliance with established policies and procedures are fully understood throughout the organization and will provide additional U.S. GAAP training to all employees involved with the performance of or compliance with those procedures and policies.

● We will implement a formal financial reporting process that includes review by our Chief Executive Officer and the full Board of Directors of financial statements prior to filing with the SEC.

● We will increase our accounting and financing personnel resources, by retaining more U.S. GAAP knowledgeable financial professionals.

The remedial measures being undertaken may not be fully effectuated or may be insufficient to address the significant deficiencies we identified, and there can be no assurance that significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified or occur in the future. If additional significant deficiencies (or if material weaknesses) in our internal controls are discovered or occur in the future, among other similar or related effects: (i) the Company may fail to meet future reporting obligations on a timely basis, (ii) the Company’s consolidated financial statements may contain material misstatements, and (iii) the Company’s business and operating results may be harmed.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not operating effectively.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting for the six months ended June 30, 2010 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.

ITEM 1A.  RISK FACTORS.

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On May 30,2010, the Company entered into a Securities Purchase Agreement with certain foreign investors relating to the issuance and sale of up to an aggregate of 610,200 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), in a private placement transaction (the “Private Placement”) pursuant to Section 4(2) of the Securities Act and Regulation S promulgated thereunder.  The Company sold an aggregate of 610,200 Shares in the Private Placement at a price of $2.00 per Share.  The aggregate gross proceeds received by the Company in the Private Placement was $1,220,400.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.

There were no defaults upon senior securities during the three-month period ended on June 30, 2010.

ITEM 4.   [REMOVED AND RESERVED.]

ITEM 5.   OTHER INFORMATION.

None.

ITEM 6.   EXHIBITS.

(a) Exhibits

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a).
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a).
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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.

	CHINA EXECUTIVE EDUCATION CORP.
Date: August 18, 2010	By: /s/ Kaien Liang
	Kaien Liang
	Chief Executive Officer and Chairman
Date: August 18, 2010	By: /s/ Zhiwei Huang
	Zhiwei Huang
	Chief Financial Officer

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