UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 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: 001-33771

CHINACAST EDUCATION CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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

Suite 08, 20/F, One International Financial Centre, 1 Harbour View Street,

Central, Hong Kong

(Address of Principal Executive Offices) (Zip Code)

(852) 3960 6506

(Registrant’s Telephone Number, Including Area Code)

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

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

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

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

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

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

There were 49,778,952 shares of the Company’s common stock, par value $0.0001 per share, outstanding as of November 5, 2010.

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	35
PART II — OTHER INFORMATION	36
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. (Removed and Reserved)	36
Item 5. Other Information	36
Item 6. Exhibits	36
SIGNATURES	37
EXHIBIT INDEX	38

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

CHINACAST EDUCATION CORPORATION

 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share-related data)

					As of
	As of September 30,				December 31,
	2010		2010		2009
	US$		RMB		RMB
	(Note 1)				(Note 1)
Assets
Current assets:
Cash and cash equivalents		60,471		405,153		327,628
Term deposits		89,552		600,000		507,000
Accounts receivable		7,470		50,050		53,828
Inventory		215		1,438		1,386
Prepaid expenses and other current assets		4,303		28,825		19,212
Amounts due from related parties		513		3,438		6,388
Deferred tax assets		102		682		1,010
Current portion of prepaid lease payments for land use rights		484		3,246		3,246
Total current assets		163,110		1,092,832		919,698
Non-current deposits		1,815		12,159		14,550
Property and equipment, net		109,179		731,498		516,938
Prepaid lease payments for land use rights - non-current		26,758		179,281		144,818
Acquired intangible assets, net		17,471		117,055		71,286
Long-term investments		450		3,015		3,101
Non-current advances to related party		14,874		99,665		99,727
Goodwill		114,737		768,741		503,771
Total assets		448,394		3,004,246		2,273,889

3

							As of
	As of September 30,						December 31,
	2010			2010			2009
	US$			RMB			RMB
	(Note 1)						(Note 1)
Liabilities and equity
Current liabilities:
Accounts payable (including accounts payable of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB1,705 and RMB719 as of September 30, 2010 and December 31, 2009, respectively)		5,938			39,782			16,061
Accrued expenses and other current liabilities (including accrued expenses and other liabilities of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB18,210 and RMB16,740 as of September 30, 2010 and December 31, 2009, respectively)		39,290			263,241			215,631
Deferred revenues (including deferred revenues of  the consolidated VIE without recourse  to ChinaCast Education Corporation of nil as of September 30, 2010 and December 31, 2009)		47,626			319,097			156,645
Income taxes payable (including income taxes payable of  the consolidated VIE without recourse  to ChinaCast Education Corporation of RMB4,179 and RMB2,293 as of September 30, 2010 and December 31, 2009, respectively)		13,998			93,793			68,731
Current portion of long-term bank borrowings (including current portion of long-term bank borrowings of  the consolidated VIE without recourse  to ChinaCast Education Corporation of nil as of September 30, 2010 and December 31, 2009)		25,075			168,000			104,400
Current portion of capital lease obligation (including current portion of capital lease obligation of  the consolidated VIE without recourse  to ChinaCast Education Corporation of nil as of September 30, 2010 and December 31, 2009)		196			1,313			1,323
Other borrowings (including other borrowings of  the consolidated VIE without recourse  to ChinaCast Education Corporation of nil as of September 30, 2010 and December 31, 2009)		224			1,500			200
Total current liabilities		132,347			886,726			562,991
Non-current liabilities:
Long-term bank borrowings (including long-term bank borrowings of  the consolidated VIE without recourse  to ChinaCast Education Corporation of nil as of September 30, 2010 and December 31, 2009)		16,418			110,000			134,000
Deferred tax liabilities – non-current (including deferred tax liabilities – non-current of  the consolidated VIE without recourse  to ChinaCast Education Corporation of nil as of September 30, 2010 and December 31, 2009)		8,150			54,606			30,923
Unrecognized tax benefits – non-current (including unrecognized tax benefits of the consolidated VIE without recourse to ChinaCast Education Corporation of RMB5,662 and RMB5,257 as of September 30, 2010 and December 31, 2009, respectively)		15,111			101,244			62,457
Total non-current liabilities		39,679			265,850			227,380
Total liabilities		172,026			1,152,576			790,371
Commitments and contingencies (Note 15)
Equity:
Ordinary shares (US$0.0001 par value; 100,000,000 shares authorized; 49,778,952 and 45,170,698 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively)		5			36			33
Additional paid-in capital		228,379			1,530,140			1,290,651
Statutory reserve		5,842			39,139			39,139
Accumulated other comprehensive loss		(599	)		(4,011	)		(6,055	)
Retained earnings		36,093			241,822			136,583
Total ChinaCast Education Corporation shareholders’ equity		269,720			1,807,126			1,460,351
Noncontrolling interest		6,648			44,544			23,167
Total equity		276,368			1,851,670			1,483,518
Total liabilities and equity		448,394			3,004,246			2,273,889

See notes to unaudited condensed consolidated financial statements.

4

CHINACAST EDUCATION CORPORATION

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

 (In thousands, except share-related data)

	For the three months ended September 30,									For the nine months ended September 30
	2010			2010			2009			2010			2010			2009
	US$			RMB			RMB			US$			RMB			RMB
	(Note 1)						(Note 1)			(Note 1)						(Note 1)
Revenues:
Service		18,238			122,195			80,289			50,921			341,170			228,391
Equipment		436			2,924			1,896			441			2,955			6,065
		18,674			125,119			82,185			51,362			344,125			234,456
Cost of revenues:
Service		(9,157	)		(61,358	)		(28,468	)		(24,136	)		(161,713	)		(83,479	)
Equipment		(423	)		(2,832	)		(1,875	)		(423	)		(2,832	)		(6,001	)
		(9,580	)		(64,190	)		(30,343	)		(24,559	)		(164,545	)		(89,480	)
Gross profit		9,094			60,929			51,842			26,803			179,580			144,976
Operating (expenses) income:
Selling and marketing expenses (including share-based compensation of RMB nil and RMB267 for the three months ended September 30 for 2010 and 2009, respectively, share-based compensation of RMB410 and RMB1,373 for the nine months ended September 30 for 2010 and 2009, respectively)		(59	)		(394	)		(899	)		(254	)		(1,702	)		(3,442	)
General and administrative expenses (including share-based compensation of RMB1,922 and RMB2,868 for the three months ended September 30 for 2010 and 2009, respectively, share-based compensation of RMB6,114 and RMB11,474 for the nine months ended September 30 for 2010 and 2009, respectively)		(2,957	)		(19,817	)		(12,964	)		(7,816	)		(52,369	)		(43,603	)
Foreign exchange gain (loss)		(1	)		(4	)		(51	)		(83	)		(557	)		65
Management service fee		-			-			510			-			-			3,806
Gain from change in contingent consideration		1,413			9,467			-			1,413			9,467			-
Other operating income		(5	)		(34	)		41			27			180			548
Total operating expenses, net		(1,609	)		(10,782	)		(13,363	)		(6,713	)		(44,981	)		(42,626	)

5

	For the three months ended September 30,									For the nine months ended September 30,
	2010			2010			2009			2010			2010			2009
	US$			RMB			RMB			US$			RMB			RMB
	(Note 1)						(Note 1)			(Note 1)						(Note 1)
Income from operations		7,485			50,147			38,479			20,090			134,599			102,350
Interest income		572			3,829			2,134			1,540			10,316			6,922
Interest expense		(606	)		(4,058	)		(2,421	)		(1,585	)		(10,623	)		(5,591	)
Income before provision for income taxes and earnings in equity method investments		7,451			49,918			38,192			20,045			134,292			103,681
Provision for income taxes		(1,163	)		(7,792	)		(7,619	)		(4,110	)		(27,540	)		(21,090	)
Net income before earnings in equity investments		6,288			42,126			30,573			15,935			106,752			82,591
Loss in equity investments		(4	)		(26	)		(793	)		(13	)		(86	)		(1,370	)
Income from continuing operation, net of tax		6,284			42,100			29,780			15,922			106,666			81,221
Discontinued operations
Loss from discontinued operations, net of taxes of RMB nil for the three months and nine months ended September 30 for 2010 and 2009:		-			-			(388	)		-			-			(1,441	)
Net income		6,284			42,100			29,392			15,922			106,666			79,780
Less: Net income attributable to noncontrolling interest		(84	)		(559	)		(2,036	)		(213	)		(1,427	)		(6,945	)
Net income attributable to ChinaCast Education Corporation		6,200			41,541			27,356			15,709			105,239			72,835
Net income		6,284			42,100			29,392			15,922			106,666			79,780
Foreign currency translation adjustments		50			338			43			298			1,994			(697	)
Comprehensive income		6,334			42,438			29,435			16,220			108,660			79,083
Comprehensive income attributable to noncontrolling interest		(76	)		(510	)		(2,040	)		(206	)		(1,377	)		(6,945	)
Comprehensive income attributable to ChinaCast Education Corporation		6,258			41,928			27,395			16,014			107,283			72,138
Net income per share
Net income attributable to ChinaCast Education Corporation per share:
Basic		0.12			0.83			0.76			0.32			2.21			2.03
Diluted		0.12			0.82			0.75			0.32			2.18			2.03
Weighted average shares used in computation:
Basic		49,834,291			49,834,291			36,133,233			47,693,969			47,693,969			35,814,325
Diluted		50,370,903			50,370,903			36,379,884			48,176,902			48,176,902			35,945,264

See notes to unaudited condensed consolidated financial statements.

6

CHINACAST EDUCATION CORPORATION

 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)

 (In thousands, except share-related data)

	ChinaCast Education Corporation Shareholders
											Accumulated
					Additional						other
	Ordinary				paid-in		Statutory		Retained		comprehensive			Noncontrolling			Total
	Shares		Amount		capital		Reserve		earnings		loss			interest			equity
			RMB		RMB		RMB		RMB		RMB			RMB			RMB
Balance at January 1, 2010		45,170,698		33		1,290,651		39,139		136,583		(6,055	)		23,167			1,483,518
Issuance of shares of common stock		4,428,254		3		232,967		—		—		—			—			232,970
Share-based compensation		—		—		6,522		—		—		—			—			6,522
Issuance of vested shares		180,000		—		—		—		—		—			—			—
Noncontrolling interest contribution in joint venture		—		—		—		—		—		—			20,000			20,000
Net income		—		—		—		—		105,239		—			1,427			106,666
Foreign currency translation adjustments		—		—		—		—		—		2,044			(50	)		1,994
Balance at September 30, 2010		49,778,952		36		1,530,140		39,139		241,822		(4,011	)		44,544			1,851,670
			US$	5	US$	228,379	US$	5,842	US$	36,093	US$	(599	)	US$	6,648		US$	276,368

	ChinaCast Education Corporation Shareholders
											Accumulated
					Additional						other
	Ordinary				paid-in		Statutory		Retained		comprehensive			Noncontrolling			Total
	Shares		Amount		capital		reserve		Earnings		loss			interest			equity
			RMB		RMB		RMB		RMB		RMB			RMB			RMB
Balance at January 1, 2009		35,648,251		27		948,352		28,117		55,526		(5,462	)		44,579			1,071,139
Issuance of restricted shares of common stock for acquisition of additional interests in subsidiary		2,582,947		2		28,746		—		—		—			(28,748	)		—
Share-based compensation		120,000		—		12,847		—		—		—			—			12,847
Net income		—		—		—		—		72,835		—			6,945			79,780
Foreign currency translation adjustments		—		—		—		—		—		(697	)		(2	)		(699	)
Balance at September 30, 2009		38,351,198		29		989,945		28,117		128,361		(6,159	)		22,774			1,163,067
			US$	4	US$	140,580	US$	4,135	US$	18,877	US$	(906	)	US$	3,349		US$	171,039

See notes to unaudited condensed consolidated financial statements.

7

CHINACAST EDUCATION CORPORATION

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 (In thousands)

	For the nine months ended September 30,
	2010			2010			2009
	US$			RMB			RMB
	(Note 1)						(Note 1)
Cash flows from operating activities:
Net income		15,922			106,666			79,780
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		5,497			36,832			18,268
Amortization of acquired intangible assets		4,064			27,231			11,833
Amortization of land use rights		375			2,510			1,973
Share-based compensation		973			6,522			12,847
Loss on disposal of property, plant and equipment		-			-			519
Loss in equity investments		13			86			1,370
Changes in assets and liabilities:
Accounts receivable		720			4,823			(23,080	)
Inventory		(8	)		(52	)		(570	)
Prepaid expenses and other current assets		(538	)		(3,607	)		3,019
Non-current deposits		804			5,390			(133	)
Amounts due from related parties		440			2,950			5,751
Accounts payable		(397	)		(2,657	)		6,587
Accrued expenses and other current liabilities		(1,964	)		(13,158	)		(13,856	)
Deferred revenues		23,834			159,699			23,120
Amount due to related party		-			-			(599	)
Income taxes payable		2,934			19,656			13,415
Deferred tax assets		139			931			-
Deferred tax liabilities		(710	)		(4,765	)		(1,816	)
Unrecognized tax benefits		1,987			13,320			5,791
Net cash provided by operating activities		54,085			362,377			144,219
Cash flows from investing activities:
Advance to related party		-			-			(20,000	)
Purchase of subsidiaries, net of cash acquired		(55,876	)		(374,374	)
Cash received from noncontrolling interest for establishing joint venture		2,985			20,000
Repayment from advance to related party		9			62			27,544
Purchase of property and equipment		(8,165	)		(54,708	)		(26,153	)
Term deposits		(13,881	)		(93,000	)		89,000
Deposits for investments		(448	)		(3,000	)		(103,000	)
Net cash used in investing activities		(75,376	)		(505,020	)		(32,609	)

8

For the nine months ended September 30,
2010	2010	2009