UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended September 30, 2007

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

For the transition period            to

Commission File Number 000-50550

CHINACAST EDUCATION CORPORATION

(Exact Name of Small Business Issuer as Specified in Its Charter)

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

25 Fl. Qiang Sheng Mansion
No. 145 Pu Jian Road, Pudong District
Shanghai, 211217, People’s Republic of China
(Address of Principal Executive Offices)

(8621) 6864-4666
(Issuer’s Telephone Number, Including Area Code)

Great Wall Acquisition Corporation
Former Name If Applicable

     Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 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 27,292,641 shares of the Company’s common stock, par value $0.0001 per share, outstanding as of November 12, 2007.

     Transitional Small Business Disclosure Format (Check one): Yes o     No þ

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis or Plan of Operation		14
Item 3. Controls and Procedures		21
PART II — OTHER INFORMATION		22
Item 1. Legal Proceedings		22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		22
Item 3. Defaults Upon Senior Securities		22
Item 4. Submission of Matters To a Vote of Security Holders		22
Item 5. Other Information		22
Item 6. Exhibits		22
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2
EX-31.1 CEO Certification
EX-31.2 CFO Certification
EX-32.1 CEO Certification to Section 1350
EX-32.2 CFO Certification to section 1350

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, 2007						December 31, 2006
	US$			RMB			RMB
Assets
Current assets:
Cash and cash equivalents		41,034			307,752			278,067
Term deposits		57,006			427,543			442,921
Accounts receivable, net of allowance of RMB148 for both 2007 and 2006		4,406			33,048			41,692
Inventory — satellite communication related equipment and equipment accessories		431			3,231			3,067
Prepaid expenses and other current assets		865			6,491			5,199
Amounts due from related parties		245			1,838			2,583
Total current assets		103,987			779,903			773,529
Non-current deposits		147			1,099			—
Property and equipment, net		1,427			10,705			14,332
Acquired intangible assets, net		2,979			22,345			14,028
Long-term investments		1,779			13,339			5,114
Deferred tax assets		6			43			172
Non-current advances to a related party		16,285			122,139			129,866
Goodwill		259			1,943			3,538
Total assets		126,869			951,516			940,579
Liabilities, minority interest, and shareholders’ equity
Current liabilities:
Accounts payable		1,372			10,287			16,403
Accrued expenses and other current liabilities		10,302			77,260			96,204
Amounts due to related parties		24			183			4,469
Income taxes payable		3,823			28,671			42,769
Current portion of capital lease obligation		9			70			146
Total current liabilities		15,530			116,471			159,991
Non-current liabilities:
Capital lease obligation, net of current portion		—			—			37
Unrecognized tax benefits		3,453			25,899			—
Total non-current liabilities		3,453			25,899			37
Total liabilities		18,983			142,370			160,028
Minority interest		2,665			19,990			145,501
Contingencies (Note 12)
Shareholders’ equity:
Ordinary shares (US$0.0001 par value; 100,000,000 shares authorized in 2007 and 2006; 27,292,641 and 23,140,702 shares issued and outstanding in 2007 and 2006, respectively)		3			21			18
Additional paid-in capital		102,513			768,844			653,000
Statutory reserve		1,156			8,670			9,721
Accumulated other comprehensive loss		(787	)		(5,899	)		(2,762	)
Retained earnings (accumulated deficit)		2,336			17,520			(24,927	)
Total shareholders’ equity		105,221			789,156			635,050
Total liabilities, minority interest, and shareholders’ equity		126,869			951,516			940,579

See notes to unaudited condensed consolidated financial statements.

3

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

	For the three months ended September 30,									For the nine months ended September 30,
	2007			2007			2006			2007			2007			2006
	US$			RMB			RMB			US$			RMB			RMB
Revenues:
Service		5,066			37,992			32,652			14,135			106,014			91,464
Equipment		1,072			8,038			4,213			2,953			22,144			27,442
		6,138			46,030			36,865			17,088			128,158			118,906
Cost of revenues:
Service		(1,624	)		(12,178	)		(8,660	)		(4,436	)		(33,267	)		(30,254	)
Equipment		(1,062	)		(7,967	)		(4,521	)		(2,984	)		(22,378	)		(27,115	)
		(2,686	)		(20,145	)		(13,181	)		(7,420	)		(55,645	)		(57,369	)
Gross profit		3,452			25,885			23,684			9,668			72,513			61,537
Operating (expenses) income:
Selling and marketing expenses (including share-based compensation of RMB170 and RMBnil for the nine-month periods ended September 30 for 2007 and 2006, respectively, share-based compensation of RMB170 and RMBnil for the three-month periods ended September 30 for 2007 and 2006, respectively)		(231	)		(1,731	)		(653	)		(599	)		(4,496	)		(1,712	)
General and administrative expenses (including share-based compensation of RMB360 and RMB1,181 for the nine-month periods ended September 30 for 2007 and 2006, respectively, share-based compensation of RMB360 and RMB307 for the three-month periods ended September 30 for 2007 and 2006, respectively)		(1,657	)		(12,425	)		(9,657	)		(4,456	)		(33,423	)		(26,573	)
Foreign exchange loss		(149	)		(1,114	)		(817	)		(568	)		(4,257	)		(1,068	)
Management service fee		685			5,138			1,316			2,262			16,967			8,147
Total operating expenses, net		(1,352	)		(10,132	)		(9,811	)		(3,361	)		(25,209	)		(21,206	)
Income from operations		2,100			15,753			13,873			6,307			47,304			40,331
Interest income		819			6,140			3,632			1,728			12,962			6,232
Interest expense		(1	)		(4	)		(4	)		(4	)		(34	)		(14	)
Income before provision for income taxes, earnings in equity investments, and minority interest and discounted operations		2,918			21,889			17,501			8,031			60,232			46,549
Provision for income taxes		(604	)		(4,527	)		(3,497	)		(1,674	)		(12,559	)		(8,758	)
Income before earnings in equity investments, minority interest, and discontinued operations		2,314			17,362			14,004			6,357			47,673			37,791
Loss in equity investments		(31	)		(232	)		(318	)		(95	)		(711	)		(704	)
Minority interest		(39	)		(295	)		(2,584	)		(363	)		(2,719	)		(6,845	)
Income from continuing operations		2,244			16,835			11,102			5,899			44,243			30,242
Discontinued operations:
Income (loss) from discontinued operations, net of tax RMBnil for both 2007 and 2006		—			—			205			(19	)		(139	)		(1,235	)
Minority interest in discontinued operations, net of tax RMBnil for both 2007 and 2006		—			—			(1,152	)		(30	)		(230	)		(2,067	)
Loss on discontinued operations		—			—			(947	)		(49	)		(369	)		(3,302	)
Net income		2,244			16,835			10,155			5,850			43,874			26,940
Net income per share

4

	For the three months ended September 30,						For the nine months ended September 30,
	2007		2007		2006		2007		2007		2006
	US$		RMB		RMB		US$		RMB		RMB
Basic		0.08		0.62		0.61		0.22		1.67		1.62
Diluted		0.08		0.61		0.58		0.21		1.60		1.55
Weighted average shares used in computation:
Basic		27,266,564		27,266,564		16,657,872		26,315,541		26,315,541		16,657,872
Diluted		27,783,672		27,783,672		17,406,787		27,491,941		27,491,941		17,360,353

See notes to unaudited condensed consolidated financial statements.

5

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

	For the nine months ended September 30,
	2007			2007			2006
	US$			RMB			RMB
Cash flows from operating activities:
Net income		5,850			43,874			26,940
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes		17			129			130
Minority interest in continuing operations		363			2,719			6,845
Minority interest in discontinued operations		30			230			2,067
Depreciation and amortization		517			3,878			9,261
Amortization of deferred share-based compensation		71			530			1,181
Loss on disposal of property and equipment		—			—			7
Loss in equity investments		95			711			704
Changes in assets and liabilities:
Accounts receivable		747			5,604			(3,578	)
Inventory		(22	)		(164	)		(747	)
Prepaid expenses and other current assets		(237	)		(1,779	)		877
Amounts due from related parties		99			745			7,047
Accounts payable		(635	)		(4,761	)		5,595
Accrued expenses and other current liabilities		(5,605	)		(42,039	)		(2,024	)
Amounts due to related parties		(15	)		(115	)		187
Income taxes payable		547			4,098			7,870
Unrecognised tax benefits		459			3,443			—
Net cash provided by operating activities		2,281			17,103			62,362
Cash flows from investing activities:
Repayment from advance to related parties		1,223			9,170			21,812
Advance to related parties		(193	)		(1,443	)		—
Return of deposit for the purchase of equipment		—			—			2,800
Deposits for business acquisition		—			—			(10,000	)
Purchase of property and equipment		(206	)		(1,548	)		(973	)
Term deposits		2,050			15,378			(156,473	)
Advance received from disposal of cost method investment		1,600			12,000			—
Proceeds from disposal of discontinued operations, net of cash disposed of		(1,215	)		(9,113	)		—
Net cash provided by (used in) investing activities		3,259			24,444			(142,834	)
Cash flows from financing activities:
Repayment of capital lease obligation		(15	)		(111	)		(111	)
Repayment of advances from related parities		(567	)		(4,251	)		—
Capital distribution (Note 1)		(772	)		(5,793	)		—
Net cash used in financing activities		(1,354	)		(10,155	)		(111	)
Effect of foreign exchange rate changes		(228	)		(1,707	)		(5	)
Net increase (decrease) in cash and cash equivalents		3,958			29,685			(80,588	)
Cash and cash equivalents at beginning of the period		37,076			278,067			120,368
Cash and cash equivalents at end of the period		41,034			307,752			39,780

See notes to unaudited condensed consolidated financial statements.

6

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

1.	BASIS OF PREPARATION
	The accompanying unaudited condensed consolidated financial statements of ChinaCast Education Corporation (“CEC”), formerly Great Wall Acquisition Corporation (“Great Wall”)) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“US GAAP”) for complete financial statements and should be read in conjunction with the audited financial statements included in CEC’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006.
	In the opinion of the management of CEC, the accompanying unaudited condensed consolidated financial statements are prepared on the same basis as the audited financial statements, and these unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the results of the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results expected for any subsequent interim period or for CEC’s fiscal year ending December 31, 2007.
	The accompanying unaudited condensed consolidated financial statements include the accounts of CEC, its subsidiaries, and variable interest entities (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.
	Amounts in United States dollars (“US$”) are presented solely for the convenience of readers and an exchange rate of RMB7.5 to US$1 was applied as of September 30, 2007. Such transaction should not be construed to be the amounts that would have been reported under US GAAP.
	The Share Exchange Transaction
	On December 22, 2006, Great Wall consummated the voluntary conditional offer (the “Offer”) made in Singapore to acquire all of the outstanding ordinary shares of ChinaCast Communication Holdings Limited (“ChinaCast”). Pursuant to the terms of the Offer, ChinaCast shareholders had the option to receive either shares of CEC or a cash payment for each ChinaCast share tendered. On January 18, 2007, the closing date of the Offer, total shares acquired were 80.27%. Since Great Wall was not an operating company and the shareholders of ChinaCast control the combined company after the above transaction consummated on December 22, 2006 (the “Share Exchange Transaction”) the Share Exchange Transaction was accounted for as a recapitalization in which ChinaCast was the accounting acquirer. The cash consideration paid as part of the Offer was accounted for as a capital distribution. For purposes of the preparation of the consolidated financial statements, the remaining outstanding ordinary shares of ChinaCast not acquired by Great Wall were reported as minority interest for all the periods presented.
	During the nine months ended September 30, 2007, CEC acquired additional shares by issuing shares of CEC and cash amounted to RMB5,793 to certain original ChinaCast shareholders and increased its holdings to 100% of the outstanding ordinary shares of ChinaCast. The 19.73% of the additional shares acquired were accounted for on the same basis as the Share Exchange Transaction.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

7

In February 2007, the Financial Accounting Standard Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115”. SFAS No. 159 provides companies with an irrevocable option to report selected financial assets and liabilities at fair value. SFAS No. 159 requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of the company’s choice to use fair value on its earnings. It also requires entities to display the fair value of those assets and liabilities for which the company has chosen to use fair value on the face of the balance sheet. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted. The Company is currently evaluating whether the adoption of SFAS No. 159 will have a material effect on its consolidated financial condition or results of operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating whether the adoption of SFAS No. 157 will have a material effect on its consolidated financial position or results of operations.

3.	DISCONTINUED OPERATIONS
	As of January 1, 2006, the Company had a 50% stake in Beijing Tongfang Digital Education Technology Limited (“Tongfang”) and Tongfang had a 51% stake in Beijing Tongfang Chuangxin Technology Limited (“Tongfang Chuangxin”). On February 9, 2007 (“Closing Date”), the Company completed the transaction under a sale and purchase agreement with Tongfang Co. Limited to dispose all of its shareholding in Tongfang in return for a 17.85% interest in Tongfang Chuangxin. As part of the consideration for the sale, the Company offset the RMB6,300 payable to Tongfang Co. Limited against the sale proceeds. No significant gain or loss was reported as a result of the sale. Tongfang ceased to be a subsidiary of the Company and the Company has accounted for its investment in Tongfang Chuangxin amounting to RMB8,936 under the cost method of accounting thereafter.
	The following is a summary of the net assets sold as of the Closing Date and December 31, 2006:

8

	As of		As of
	February 9, 2007		December 31, 2006
	RMB		RMB
Current assets of discontinued operations:
Cash and cash equivalents		9,113		7,432
Accounts receivable, net		2,715		2,994
Prepaid expenses and other current assets		1,732		1,428
		13,560		11,854
Non-current assets of discontinued operations:
Property and equipment, net		1,433		1,464
Acquired intangible assets, net		13,581		14,028
		15,014		15,492
Current liabilities of discontinued operations:
Accounts payable		1,355		1,355
Accrued expenses and other current liabilities		6,884		5,483
		8,239		6,838
Minority interest		6,694		6,463
Attributable goodwill		1,595		1,595

Summarized operating results from the discontinued operations included in the Company’s consolidated statements of operations are as follows for the three months and nine months ended September 30, 2007 and 2006.

	For the three months ended September 30,					For the nine months ended September 30,
	2007		2006			2007			2006
	RMB		RMB			RMB			RMB
Revenues		—		3,967			1,096			11,047
Income (loss) before provision of income taxes from discontinued operations		—		205			(139	)		(1,235	)
Provision for income taxes		—		—			—			—
Minority interest in discontinued operations		—		(1,152	)		(230	)		(2,067	)
Loss from discontinued operations, net of tax		—		(974	)		(369	)		(3,302	)
Reduction in net income per share of the Company — basic and diluted		—		(0.05	)		(0.01	)		(0.19	)

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

	As of September 30,2007		As of December 31,2006
	RMB		RMB
Rental deposits		1,099		—
		1,099		—

Rental deposits represented satellite rental deposit for ChinaCast satellite business operations and office rental deposits for the Company’s daily operations. These deposits are classified into non-current deposits since they cannot be withdrawn within one year.

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

	For the three months ended September 30,						For the nine months ended September 30,
	2007			2006			2007			2006
	RMB			RMB			RMB			RMB
Net income		16,835			10,155			43,874			26,940
Foreign currency translation adjustment		(222	)		(478	)		(3,137	)		(1,151	)
Comprehensive income		16,613			9,677			40,737			25,789

6. ACQUIRED INTANGIBLE ASSET, NET

9

On August 30, 2007, ChinaCast acquired 100% of the outstanding registered capital of Modern English Trademark Limited (“MET”), in exchange for cash of US$3 million, which is payable within 90 days from August 30, 2007 according to the sale and purchase agreement. The consideration has not been paid as of September 30, 2007 and was recorded under accrued expenses and other current liabilities. MET has no asset or liability except for a 10-year exclusive brand name usage right. The acquisition was recorded as an intangible asset, which is being amortized on a straight-line basis over 10 years.

	As of September 30,2007			As of December 31,2006
	RMB			RMB
Brand name usage right		22,532			—
Distance learning service agreements with universities		—			20,465
Training school operating right		—			271
Less: accumulated amortization		(187	)		(6,708	)
		22,345			14,028

	For the three months and nine months ended September 30, 2007, the Company recorded amortization expense in respect of the brand name usage right amounting to RMB187. The Company will record amortization expenses of RMB751, RMB2,253, RMB2,253, RMB2,253, RMB2,253 in 2007, 2008, 2009, 2010 and 2011, respectively.
	In 2005, the Company acquired certain agreements with universities and a training school operating right through the acquisition of Tongfang. The Company also recorded amortization expenses in respect of agreements with universities and a training school operating right amounting to RMBnil and RMB1,341 for the three months ended September 30, 2007 and 2006, respectively and RMB447 and RMB4,008 for the nine months ended September 30, 2007 and 2006, respectivley. In February 2007, Tongfang ceased to be a subsidiary of the Company and the Company has accounted for its investment in Tongfang Chuangxin under the cost method of accounting thereafter, the related agreements and operating right were no longer recorded as the Company’s intangible assets. The transaction was reported as discontinued operations (see Note 3).
7.	STOCK INCENTIVE PLAN
	2007 Omnibus Securities and Incentive Plan (“2007 Plan”)
	Under the 2007 Plan adopted in May 2007, the Company may grant any awards to eligible participates, including employees, directors or consultants, to purchase up to 2,500,000 ordinary shares.
	On July 11, 2007, the Company granted, under the 2007 Plan, 12,500 ordinary shares to its employees at no consideration. The per share fair value of ordinary shares as of the grant date was US$5.65. Total share-based compensation costs recognized in income were RMB530 and RMBnil for the three-month and nine-month periods ended September 30, 2007 and 2006 respectively.
	As of September 30, 2007, no other awards have been granted under the 2007 Plan.
8.	INCOME TAXES
	The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109” (“FIN 48”) on January 1, 2007. The total amount of unrecognized tax benefits as of the date of adoption was RMB23,337. As a result of the implementation of FIN 48, the Company recognized a RMB3,134 increase in the liability for unrecognized tax benefits which was accounted for as an increase to the January 1, 2007, balance of accumulated deficit. In addition, consistent with the provisions of FIN 48, the Company reclassified RMB20,203 unrecognized tax benefits from current to non-current because payment of cash is not anticipated within one year of the balance sheet date. Included in the balance of unrecognized tax benefits at January 1, 2007, are RMB23,337 of tax benefits that, if recognized, would affect the effective tax rate. As of January 1, 2007, the total amount of accrued interests were RMB5,628. The Company classifies interest as component of its income tax provision. The Company’s various tax years starting from 2001 to 2006 are remaining open in various taxing jurisdictions.
	On March 16, 2007, the National People’s Congress passed a new enterprise income tax law, which will take effect beginning January 1, 2008. The new law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises. The new law provides a five-year transition period from its effective date form those enterprises which were established before the promulgation date of the new tax law and which were entitled to a preferential tax treatment such as a reduced tax rate or a tax holiday. According to the new tax law, one of the Company’s major operating subsidiaries, ChinaCast Technology (Shanghai) Limited (“CCT Shanghai”), may no longer be able to enjoy the preferential tax rates presently offered to it because of its location in specially designed region. As the law was newly issued and no implementing rules have been promulgated to date, it is uncertain whether CCT Shanghai may continue to enjoy the reduced tax rate going forward. Nevertheless, this uncertainty does not have a material impact on the Company’s deferred tax position as of September 30, 2007 because the temporary differences between the tax basis of assets and liabilities of CCT Shanghai will be fully reversed as of December 31, 2007.
9.	NET INCOME PER SHARE
	Reconciliation of the basic and diluted net income per share is as follows:

10

	For the three months ended September 30,				For the nine months ended September 30,
	2007		2006		2007		2006
Numerator used in basic and diluted net income per share:
Income from continuing operations	RMB16,835		RMB11,102		RMB44,243		RMB30,242
Loss on discontinued operation	RMB-		RMB(947)		RMB(369)		RMB(3,302)
Income attributable to holders of ordinary shares	RMB16,835		RMB10,155		RMB43,874		RMB26,940
Shares (denominator):
Weighted average ordinary shares outstanding used in computing basic net income per share		27,266,564		16,657,872		26,315,541		16,657,872
Plus:
Incremental ordinary shares from assumed conversions of stock options and exercises of Warrants (Note 11)		517,108		748,915		1,176,400		702,481
Weighted average ordinary shares outstanding used in computing diluted net income per share		27,783,672		17,406,787		27,491,941		17,360,353
Net income per share-basic:
Income from continuing operations	RMB0.62		RMB0.67		RMB1.68		RMB1.82
Loss on discontinued operations	RMB-		RMB(0.06)		RMB(0.01)		RMB(0.20)
Net income	RMB0.62		RMB0.61		RMB1.67		RMB1.62
Net income per share-diluted:
Income from continuing operations	RMB0.61		RMB0.63		RMB1.61		RMB1.74
Loss on discontinued operations	RMB-		RMB(0.05)		RMB(0.01)		RMB(0.19)
Net income	RMB0.61		RMB0.58		RMB1.60		RMB1.55

	For periods prior to the Share Exchange Transaction, the number of shares included in the income per share calculations has been retroactively restated to reflect the number of shares to which ex-ChinaCast shareholders, who made acceptances in the Offer, are entitled. In addition, the diluted net income per share calculations have not included the outstanding UPO or the related warrants (Note 11) since the effect is anti-dilutive.
10.	SEGMENT INFORMATION
	The Company has one segment. The Company’s revenue and net income are substantially derived from provision of satellite bandwidth and network access services throughout the People’s Republic of China (the “PRC”). Most of the assets and capital expenditure of the Company are employed in the PRC. The Company’s chief operating decision maker is the Chief Executive Officer.
	Four customers contributed to RMB17,191, or 37.3% and RMB49,195, or 38.4%, of the Company’s total net revenues during the three months and nine months ended September 30, 2007, respectively, and the same four customers contributed to RMB11,830, or 32.1% and RMB50,422, or 42.4%, of the Company’s total net revenues during the three months and nine months ended September 30, 2006, respectively, as follows:

	For the three months ended September 30,				For the nine months ended September 30,
	2007		2006		2007		2006
	RMB		RMB		RMB		RMB
Customers:
A		7,894		—		21,286		—
B		4,056		4,047		12,176		12,263
C		5,241		5,231		15,733		15,849
D		—		2,552		—		22,310
Total		17,191		11,830		49,195		50,422

11

Three customers as of September 30, 2007 and two customers as of December 31, 2006 each accounted for 10% or more of the Company’s accounts receivable balances, representing an aggregate of 32.8% and 26.8% of the Company’s accounts receivable balances at September 30, 2007 and December 31, 2006, respectively.

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11.	WARRANTS AND UNIT PURCHASE OPTIONS
	In March 2004, the Company sold 4,515,975 units in its initial public offering. Each unit consists of one share of the Company’s common stock and two redeemable common stock purchase warrants (“Warrants”). Each Warrant will entitle the holder to purchase from the Company two shares of common stock at an exercise price of US$5 commencing on the consummation of the Share Exchange Transaction. In no event will the Company be required to net cash settle the warrant exercise.
	In connection with the initial public offering, the Company issued, for $100, an option (“UPO”) to the representative of the underwriters to purchase 400,000 units at an exercise price of US$9.90 per Unit. In addition, the warrants underlying such units are exercisable at US$6.95 per share.
	There was no remeasurement required for these assumed Warrants and UPO because such assumption is part of the recapitalization in connection with the Share Exchange Transaction. As of September 30, 2007, there were 400,000 UPO and 9,031,950 Warrants outstanding.

12. CONTINGENCIES

a)

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

b)

The Company may be subject to claims for rescission or other securities law claims resulting from the failure to disclose that the charter provision purporting to prohibit certain amendments was possibly inconsistent with Delaware’s General Corporation Law. The Company may also be subject to such claims as a result of inaccuracies in other disclosures, as follows: It may be argued that the IPO prospectus misstated the vote required by its charter to approve a business combination by providing that “[w]e will proceed with a business combination only if the public shareholders who own at least a majority of the shares of common stock sold in [that] offering vote in favor [of it] ...,” and that the Exchange Act reports have been inaccurate in describing ChinaCast as a leading provider of e-learning content (as opposed to being primarily a content carrier). On November 13, 2006, the Company filed a Current Report on Form 8-K with the SEC regarding this last item. The Company is unable to predict the likelihood that claims might be made with regard to the foregoing or estimate any amounts for which it might be liable if any such claim was made. As such, the Company has not recorded a liability for such possible rescission.

13.	SUBSEQUENT EVENTS
	Effective on October 29 2007, CEC is listed on the Nasdaq Global Market.
	On August 30, 2007, CEC entered into an agreement with an independent third party to dispose of its 20% stake in Beijing Dongshi-ChinaCast Education Corporation (“Dongshi ChinaCast”) for a consideration of RMB12 million, which was recorded as a cost method investment with a carrying value of RMB1.73 million. The transaction was completed on October 9, 2007. As such, the gain on disposal of this cost method investment will be recorded in the last quarter of 2007.

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Item 2. Management’s Discussion and Analysis or Plan of Operation.

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

Overview

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

     On December 22, 2006, we consummated the acquisition of ChinaCast Communication Holdings Limited (“CCH”). As of December 22, 2006, shareholders of CCH that had previously executed Letters of Undertaking with us with respect to the sale of their shares of CCH and that collectively held 239,648,953 shares of CCH or 51.22% of CCH’s outstanding shares have accepted the voluntary conditional offer (the “Offer”) made in Singapore by DBS Bank, for and on our behalf, to acquire all of the outstanding ordinary shares of CCH. On January 18, 2007, at the end of the Offer period, acceptance of the Offer totaled 80.27% which is the basis we accounted for the acquisition. As a result of this acceptance of the Offer by CCH shareholders, CCH has become our subsidiary and such acquisition qualified as a “business combination” under our amended and restated certificate of incorporation. During the nine months ended September 30, 2007, CEC acquired additional shares by issuing shares of CEC to certain original ChinaCast shareholders and increased its holdings to 100% of the outstanding ordinary shares of ChinaCast. The 19.73% of the additional shares acquired were accounted for on the same basis as the Share Exchange Transaction.

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

Critical Accounting Policies

     For summary of the critical accounting policies and the significant judgements and estimates made on the part of the management, see item 6 of Form 10KSB for the year ended December 31, 2006 filed by the Company on April 17, 2007. The following are accounting policies that were either new or were adopted during the nine months ended September 30, 2007.

The tax contingency was previously assessed under FASB Statement No. 5. Effective on January 1, 2007, the Company adopted FIN 48. Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-that-not to be sustained upon audit by the relevant taxing authority based solely on technical merits of the associated tax position. The Company also elected the accounting policy that the interest and penalties recognized are classified as part of its income taxes. The unrecognized tax benefits, tax liabilities and accrued interest and penalties represent management’s estimates under the provisions of FIN 48.

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The Company established an English training service business line in the third quarter of 2007. The Company provides two types of tuition services to students. Students can attend English classes with unlimited access within a certain period of time generally from 2 to 12 months. The other type of classes limits the number of times students can access within a certain period of time generally from 3 to 12 months. Tuition fees are non-refundable for both types of tuition services. Revenues from the unlimited access classes are recognized on a straight-line basis over the service period. Revenues from the limited access classes are recognized on completion of the tuition period in the absence of available record supporting the number of times students attended classes during the tuition period.

Results of Operations

For the purpose of the discussion and analysis of the results of ChinaCast Education Corporation (“CEC”) and the listed group in Singapore (“CCH”) in this section, the consolidated group is referred to as the “Group”. CEC is sometimes referred to as the “Company”. The satellite operating entity, ChinaCast Company Limited, is referred to as “CCL” and its registered branch in Beijing is referred to as “CCLBJ.” The US dollar figures presented below were based on the historical exchange rate of 1USD = 7.5 at September 30 2007 for the 3 months and 9 months ended September 30 2007; 1USD = 7.81 at December 31 2006 for 2006; and 1USD = 8.00 at September 30 2006 for the 3 months and 9 months ended September 30 2006.

Three Months and Nine Months Ended September 30 2007 compared to the three Months and Nine Months Ended September 30 2006. The revenue of the Group for the three months and nine months ended September 30 2007 amounted to RMB46.0 million (US$6.1 million) and RMB128.2 million (US$17.1 million) respectively representing an increase of 24.9% and 7.8% over the revenue of the corresponding period in 2006. Service income, mainly of a recurring nature amounted to RMB38.0 million (US$5.1 million) for the 3 months ended September 30 2007 compared to RMB32.7 million (US$4.1 million) in the same period in 2006. Service income, mainly of a recurring nature, amounted to RMB106.0 million (US$14.1) for the nine months ended September 30 2007 compared to RMB91.5 million (US$11.4 million) in the same period in 2006. Equipment sales, mainly project based, amounted to RMB8.0 million (US$1.1 million) for the three months ended September 30 2007 against RMB4.2 million (US$0.5 million) during the same period last year. Equipment sales, mainly project based, amounted to RMB22.1 million (US$3.0 million) for the nine months ended September 30 2007 against RMB 27.4 million (US$3.4 million) during the same period last year. The following table provides a summary of the Group’s revenue by business lines:

	Three Months ended				Three Months Ended
	September 30, 2007				September 30, 2006
(millions)	RMB		US$		RMB		US$
Post secondary education distance learning		17.6		2.4		13.3		1.7
K-12 and content delivery		15.6		2.0		21.5		2.7
Vocational training, enterprise / government training and networking and English training services		12.8		1.7		2.1		0.2
Total revenue		46.0		6.1		36.9		4.6

	Nine Months ended				Nine Months Ended
	September 30, 2007				September 30, 2006
(millions)	RMB		US$		RMB		US$
Post secondary education distance learning		47.8		6.4		40.1		5.0
K-12 and content delivery		49.1		6.5		57.5		7.2
Vocational training, enterprise / government training and networking and English training services		31.3		4.2		21.3		2.7
Total revenue		128.2		17.1		118.9		14.9

Net revenue from post secondary education distance learning services increased from RMB40.1 million (US$5.0 million) in the nine months ended September 30, 2006 to RMB47.8 million (US$6.4 million) in nine months ended September 30, 2007. Net revenue from post secondary education distance learning services increased from RMB13.3 million (US$1.7million) in the three months ended September 30, 2006 to RMB17.6 million (US$2.4 million) in three months ended September 30, 2007. The total number of post-secondary students enrolled in courses using the Group’s distance learning platforms including contracts with CCLBJ but

15

excluding Tongfang Education’s students, increased to 121,000 at September 30, 2007 from 110,000 at the end of September 30, 2006. The increase was due to the continuous growth of students enrolled in distance learning degree courses with the universities.

The revenue from the K-12 and content delivery business decreased by approximately 27.4% from RMB21.5 million (US$2.7 million) for the three months ended September 30 2006 to RMB15.6 million (US$2.0 million) for the three months ended September 30 2007.The revenue from the K-12 and content delivery business decreased by approximately 14.6% from RMB57.5 million (US$7.2 million) for the nine months ended September 30 2006 to RMB49.1 million (US$6.5 million) for the nine months ended September 30 2007 mainly due to the drop in equipment sales and one-off project revenue in this business line. The number of subscribing schools for K-12 distance learning services has stabilized at 6,500.

Net revenue from vocational and career training services and enterprise government training and networking, and English training services increased from RMB2.1 million (US$0.2 million) during the three months ended September 30, 2006 to RMB12.8 million (US$1.7 million) during the three months ended September 30, 2007. The increase was mainly due to increase in equipment sales and the establishment of the English training service which contributed a revenue of RMB2.9 million (US$0.4 million) in the third quarter of 2007. Net revenue from vocational and career training services and enterprise government training and networking, and English training services increased from RMB21.3million (US$2.7million) during the nine months ended September 30,2006 to RMB31.3million (US$4.2million) during the nine months ended September 30, 2007. Equipment sales are projected-based and revenue generated from it varies from quarter-to-quarter and year-to-year depending on the timing of projects.

Cost of sales of the Group increased by 52.8% from RMB13.2 million (US$1.6 million) during the third quarter of 2006 to RMB20.1 million (US$2.7 million) during the third quarter of 2007. The increase was due to increase in equipment sales and the establishment of English training service. Cost of materials increased from RMB4.5 million (US$0.6 million) during the third quarter of 2006 to RMB8.0 million (US$1.1 million) during the third quarter of 2007. The newly established English training service has incurred a cost of service of RMB3.3 million (US$0.4 million) in the third quarter of 2007. Cost of sales of the Group decreased by 3.0% from 57.4 million (US$7.2 million) during the nine months ended September 30 2006 to RMB 55.6 million (US$7.4 million) during the nine months ended September 30 2007.

Gross profit margin decreased by 8.1 percentage points, from 64.3% in the third quarter of 2006 to 56.2% in the third quarter of 2007. The reduction was due to the establishment of the English training service in the third quarter of 2007. Gross profit margin increased by 4.8 percentage points, from 51.8% in the first nine months of 2006 to 56.6% in the first nine months of 2007.This increase was a result of the reduction in equipment sales, which has a low margin.

For the three months ended September 30, 2007, the Group received a management service fee of RMB5.1 million (US$0.7 million), as compared to RMB1.3 million (US$0.2 million) during the three months ended September 30, 2006. For the nine months ended September 30 2007, the Group received a management service fee of RMB 17.0 million (US$2.3million), as compared to RMB8.1million (US$1.0million) during the nine months ended September 30,2006. The management service fee arose from various agreements with CCL that entitled the Group to the economic benefits of its Beijing Branch — CCLBJ. CCLBJ is in the process of transferring all its outstanding businesses, mainly in post secondary education distance learning, to the Group. The growth in management service fee for the three months and nine months ended September 30 2007 was due to the organic growth of the projects remained in CCLBJ and the transfer of costs and expenses, in particular the transponder fee, to the Group.

Selling and marketing expenses increased from RMB0.7 million (US$0.08 million) in the third quarter of 2006 to RMB1.7 million (US$0.2 million) in the third quarter of 2007. Selling and marketing expenses increased from 1.7 million (US$0.2 million) in the nine months ended September 30, 2006 to RMB4.5 million (US$0.6 million) in the nine months ended September 30, 2007. The increase was due to the establishment of the English training business line in 2007. The English training business line is a consumer business and involves more direct sales and marketing activities when compared with the other business lines of the Group.

General and administrative expenses increased by 28.7% to RMB12.4 million (US$1.7 million) in the three months ended September 30, 2007 from RMB9.7 million (US$1.2 million) during the three months ended September 30, 2006. The increase was due to the increase in professional fee for being a listed company in the US after the Share Exchange Transaction. General and administrative expenses increased by 25.8% to RMB33.4 million (US$4.5 million) in the nine months ended September 30, 2007 from RMB26.6 million (US$3.3 million) during the nine months ended September 30,2006. In addition to the additional expenses associated with the establishment of the English training business line in 2007, there was also an increase in professional fees in the first nine months of 2007 when compared with the same period of 2006.

The Group has foreign exchange losses of RMB1.1 million (US$0.1 million) for the third quarter of 2007 compared to a loss of RMB0.8 million (US$0.1 million) during the third quarter of 2006. The Group has foreign exchange losses of RMB4.3million (US$0.6 million) for the first nine months of 2007 compared to a loss of RMB1.1 million (US$0.1 million) during the first nine months of 2006.The

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increase was a result of the continuous appreciation of the RMB against US dollars which the Group has considerable holdings and unable to convert to RMB due to the exchange control regulations in China.

Interest income increased significantly from RMB3.6 million (US$0.5 million) in the third quarter of 2006 to RMB 6.1 million (US$0.8 million) in the third quarter of 2007. Interest income increased from RMB6.2 million (US$0.8 million) in the first nine months of 2006 to RMB13.0 million (US$1.7 million) in the first nine months of 2007.The increase was mainly due to the increase in the Group’s cash and term deposits and the increase in interest rate in China.

Overall, profit before income tax increased from RMB17.5 million (US$2.2 million) in the three months ended September 30, 2006 to RMB21.9 million (US$2.9 million) in the three months ended September 30, 2007, an increase of 25.1%. Profit before income tax increased from RMB46.5 million (US$5.8 million) in the nine months ended September 30, 2006 to 60.2 million (US$8.0 million) in the nine months ended September 30,2007, a increase of 29.4%. The increase was mainly due to the increase in service revenue and the higher margin of the Group’s service revenue.

The Group’s share of loss in equity investments amounted to RMB0.2 million (US$0.03 million ) in the third quarter of 2007 compared to RMB0.3 million (US$0.04 million) in the third quarter of 2006.The Group’s share of earnings in equity investments amounted to RMB0.7 million (US$0.09million) in the first nine months of 2007 compared to RMB0.7 million(US$0.09 million) in the first nine months of 2006.

Income taxes increased by 29.5% from RMB3.5 million (US$0.4 million) in the third quarter of 2006 to RMB4.5 million (US$0.6 million) in the third quarter of 2007 as a result of higher profits. Income taxes increased by 43.4%from RMB8.8 million (US$1.1 million) in the first nine months of 2006 to RMB 12.6 million (US$1.7 million) in the first nine months of 2007 as a result of higher profits.

Minority interest amounted to RMB0.3 million (US$0.04 million) for the three months ended September 30,2007 as compared to RMB2.6 million (US$0.3 million) for the three months ended September 30,2006. Minority interest amounted to RMB2.7 million (US$0.4 million) for the nine months ended September 30,2007 as compared to RMB6.8 million (US$0.9 million) for the nine months ended September 30,2006. The minority interest in 2006 arose mainly as a result from the CCH shareholders who did not exchange for CEC. In July 2007, the Group has acquired 100% of CCH, which led to the reduction in minority interest.

Income from continuing operations amounted to RMB16.8 million (US$2.2million) in the three months ended September 30, 2007 compared to RMB11.1 million (US$1.4 million) in the three months ended September 30, 2006. Income from continuing operations amounted to RMB44.2 million (US$5.9 million) in the nine months ended September 30, 2007 compared to RMB30.2 million (US$3.8 million) in the nine months ended September 30, 2006.

In Feb 2007, the Group streamlined its beneficial holding in Tongfang Chuangxin by disposing its entire stake in Tongfang Education in exchange for a direct 17.85% stake in Tongfang Chuangxin and RMB6.3 million. As a result, the Group cannot consolidate the results of Tongfang Education and Tongfang Chuangxin. The consolidated result of Tongfang Education was shown as loss on discontinued operations for the three months and nine months ended September 30, 2006 and 2007 respectively. Net loss on discontinued operations amounted to RMB0.9 million (US$0.1 million) and RMBnil (US$nil) for the three months ended September 30, 2006 and 2007 respectively.Net loss on discontinued operations amounted to RMB3.3 million (US$0.4 million) and RMB0.3million (US$0.05 million) for the nine months ended September 30,2006 and 2007 respectively.

Net income increased significantly by 65.8% to RMB16.8 million (US$3.4 million) in the three months ended September 30,2007 from RMB10.2million (US$1.3 million) in the three months ended September 30,2006. Net income increased significantly by 62.9% to RMB43.9million (US$5.9 million) in the nine months ended September 30, 2007 from RMB26.9million (US$3.4 million) in the nine months ended September 30,2006. The increase are mainly due to the increase in service revenue, the improved margin as well as the drop in loss attributable to the discontinued operations.

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On March 16, 2007, the National People’s Congress of China enacted a new tax law, under which foreign-invested enterprises and domestic companies will be subject to enterprise income tax at a uniform rate of 25% . The new tax law will become effective on January 1, 2008. There will be a transition period, during which enterprises may continue to enjoy existing preferential tax treatment or in which their tax rates may be gradually adjusted to 25%. Following the effectiveness of the new tax law, some of our PRC subsidiaries and affiliated entities, may no longer be able to enjoy the preferential tax rates presently offered to them. As the law was newly issued and no implementing rules have been promulgated to date, we are still evaluating its impact on us.

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Liquidity and Capital Resources

The following is an extract of the key items from the consolidated balance sheets.

	As of				As of
	September 30, 2007				December 31, 2006
(millions)	RMB		US$		RMB		US$
Cash and cash equivalents		307.8		41.0		278.1		35.6
Term deposits		427.5		57.0		442.9		56.7
Subtotal		735.3		98.0		721.0		92.3
Accounts receivable		33.0		4.4		41.7		5.3
Inventory		3.2		0.4		3.1		0.4
Prepaid expenses and other current assets		6.5		0.9		5.2		0.7
Total current assets		779.9		104.0		773.5		99.0
Non-current advances to a related party		122.1		16.3		129.9		16.6
Total assets		951.5		126.9		940.6		120.4

Cash and bank balances together with term deposits increased from RMB721.0 million (US$92.3 million) as at December 31, 2006, to RMB735.3 (US$98.0) million as at September 30, 2007. The increase of approximately 2.0% was because of the profit earned.

There was a net cash generated from operating activities of RMB17.1 million (US$2.3 million) in the nine months ended September 30, 2007 as compared to a net cash generated from operating activities of RMB62.4 million (US$7.8 million) in the nine months ended September 30, 2006. This was mainly due to the profit earned and after payments of professional fees after the consummation of the acquisition exercise of CCH. Revenue is recognized ratably throughout the periods services are provided but payments may be received ahead of or behind the revenue being recognized. Payments received before recognition of revenue are recorded as deferred revenue while payments not received at the time goods and services have been provided are recorded as accounts receivable. For revenue related to project sales, the timing of payments depended upon the terms of the contracts.

Net cash generating from investment activities in the first nine months of 2007 was RMB18.7 million (US$2.5 million), mainly reflecting transfer from term deposit of RMB15.4 million (US$2.1 million). The Group received a deposit of RMB12 million (US$1.6 million) in relation to the disposal of Dongshi ChinaCast and paid RMB5.8 million (US$0.8 million) for acquiring the remaining stake in CCH in the third quarter of 2007. For the nine months ended September 30, 2006, transfer to term deposit amounted to RMB156.5 million (US$19.6 million) and a deposit of RMB10 million (US$1.3 million) was paid as a deposit for business acquisition.

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

Total assets at September 30, 2007 amounted to RMB951.5 million (US$126.9 million). At December 31, 2006, total assets were RMB940.6million (US$120.4 million), a increase of 1.2%. Total current assets increased by 0.8% to 779.9 million (US$104.0 million).

Account receivable decreased from RMB41.7 million (US$5.3 million) as at December 31, 2006 to RMB33.0 million (US$4.4 million) at September 30, 2007. Most of the business partners are long term customers and settle their accounts promptly. All account receivables are reviewed regularly and provisions have been made for any balances that are disputed or doubtful.

Inventory, mainly made up of satellite transmission and receiving equipment, increased slightly to RMB3.2 million (US$0.4 million) at September 30, 2007.

Prepaid expenses and other current assets increased from RMB5.2 million (US$0.7 million) as at December 31, 2006 to RMB6.5 million (US$0.9 million). The increase was mainly due to the increase in prepayment for project development.

During the first quarter of 2007, the Group has disposed of Tongfang Education in exchange for a 17.85% direct stake in Tongfang Chuangxin. As a result, the intangible assets and goodwill amounting to RMB1.6 million (US$0.2 million) were eliminated. The direct

19

stake in Tongfang Chuangxin was recorded as a long term investment, which increased from RMB5.1 million (US$0.7 million) as at December 31, 2006 to RMB8.9 million (US$1.2 million) as at September 30, 2007.

The Group also funded the operation of a related party, CCL, which held the satellite license before transferring it to the Group. The related party is still in the process of transferring its satellite related businesses to the Group. Amounts advanced to the related party were RMB122.1 million (US$16.3 million) as at September 30, 2007. As at December 31, 2006, the amount advanced was RMB129.9 million (US$16.6 million), the decrease is mainly due to repayment made.

     On December 7, 2006, we entered into a Credit Facility Agreement (the “Facility Agreement”), with certain lenders and DBS Bank Ltd, as Administrative Agent (“Agent”). The Facility Agreement established a secured credit facility under which we could have borrowed up to S$62,000,000 in two tranches. We entered into the Facility Agreement in connection with our acquisition of the outstanding shares of CCH. We were permitted to use the proceeds of loans under the Facility Agreement only for the acquisition of outstanding shares of CCH and to pay fees, interest and other expenses related to such acquisition. Any loans under the Facility Agreement bore interest pursuant to a formula as set forth in the Facility Agreement. Tranche A Loans under the Facility Agreement were permitted to be made at the time on of the fulfillment of the conditions to funding set forth in the Facility Agreement (the “Effective Date”) and ending on December 27, 2006. Tranche A Loans were not, in the aggregate, permitted to exceed the amount formerly held in our trust account with Continental Stock Transfer & Trust Company after paying any amounts for the conversion of our shares to cash owing to shareholders who exercised their conversion rights in connection with the acquisition of CCH. Tranche A Loans were to mature on the date which was seven days after the date on which such Tranche A Loans are made. Tranche B Loans under the Facility Agreement were permitted to be made at any time from and after the Effective Date until February 8, 2007. Tranche B Loans mature on June 4, 2007.

     A loan under the Facility Agreement may be repaid without penalty at any time prior to the maturity date for each loan, however, we must prepay any loan under the Facility Agreement under a number of circumstances, in particular (a) upon the issuance or sale by us of any of its capital stock, warrants, options or any other security interest representing an equity interest, (b) upon the disposition of any shares of CCH, (c) upon the deposit into our account at the Agent of any amounts currently held in trust by us pursuant to our initial public offering (IPO). In addition to customary representations and warranties and events of default, additional events of default occur if (a) at anytime after December 31, 2006 we cease to own at least 50.0% of CCH and (b) the shares of CCH cease to be listed on the Singapore Exchange Securities Trading Limited (SGX). Payment of outstanding advances may be accelerated, at the option of the Agent, should we default in our obligations under the Facility Agreement.

     Obligations under the Facility Agreement are secured by all of our assets pursuant to a Security Agreement entered into on December 7, 2006 between us and the Agent. The obligations under the Facility Agreement are further secured by a Deed of Share Charge and Deed of Charge over Accounts both dated December 7, 2006 between us and the Agent. We did not make any Tranche A Loans or Tranche B Loans.

The Group had no other borrowings at September 30, 2007 other than a financial lease of an insignificant amount.

Off-Balance Sheet Arrangements

Except for the Facility Agreement described above, the Group does not have financial guarantees or other commitments to guarantee the payment obligations of any third parties.

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Item 3. Controls and Procedures.

     We maintain “disclosure controls and procedures,” as such term is defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and in reaching a reasonable level of assurance our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2007. Based upon their evaluation and subject to the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2007 our disclosure controls and procedures were effective at the reasonable assurance level in ensuring that material information relating to us is made known to the Chief Executive Officer and Chief Financial Officer by others within our company during the period in which this report was being prepared.

     There were no changes in our internal controls or in other factors during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

     On December 22, 2006, we consummated the acquisition of CCH. On that date, shareholders of CCH that had previously executed Letters of Undertaking with us with respect to the sale of their shares and that collectively held 239,648,953 shares of CCH or 51.22% of CCH’s outstanding shares accepted the voluntary conditional Offer made in Singapore by DBS Bank, for and on our behalf, to acquire all of the outstanding ordinary shares of CCH. As a result of this acceptance of the Offer by the CCH shareholders that previously executed the Letters of Undertaking, CCH become our subsidiary and such acquisition qualified as a “business combination” under our amended and restated certificate of incorporation. Each of the CCH shareholders who accepted the Offer received 0.04697048 new share of our common stock in exchange for each share of CCH tendered by such shareholder. As of January 18, 2007, the date of the close of the Offer we had issued to the former CCH shareholders in connection with the Offer, a total of 17,624,727 shares of our common stock in offshore transactions in reliance on Regulation S of the Securities Act. As of February 12, 2007 we issued to Hughes Network Systems LLC, a former CCH shareholder 2,957,573 shares of our common stock in exchange for 62,966,736 shares of CCH held by such shareholder. These shares were issued to Hughes, an “accredited investor”, in an exempted transaction under Section 4(2) of the Securities Act. On April 10, 2007, CEC acquired 20,265,000 additional shares by the issuance of 951,853 CEC common shares and increased its holdings to 98.06% of the outstanding ordinary shares of CCH. On July 11, 2007, CEC acquired 9,074,161 additional shares and increased its holdings to 100% of the outstanding ordinary shares of CCH.

Item 3. Defaults Upon Senior Securities.

     Not applicable.

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

     Not applicable.

Item 5. Other Information.

     None.

Item 6. Exhibits.

               31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

               31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

               32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

               32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

     In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHINACAST EDUCATION CORPORATION (Registrant)
Date: November 13, 2007		By:	/s/ Ron Chan Tze Ngon
		Name:	Ron Chan Tze Ngon
		Title:	Chairman of the Board,
		Chief Executive Officer (Principal Executive Officer)
		By:	/s/ Antonio Sena
		Name:	Antonio Sena
		Title:	Chief Financial Officer and
		Secretary (Principal Financial Officer)

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