8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

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

Date of Report (Date of earliest event reported): April 17, 2008

ChinaCast Education Corporation

(Exact name of registrant as specified in charter)

Delaware
(State or other Jurisdiction of
Incorporation or Organization) 000-50550
(Commission File Number) 20-0178991
(IRS Employer
Identification No.)

15/F Reignwood Center,
No. 8 Yong An-Dongli
Jianguomenwai Avenue
Beijing 100022, , PRC
(Address of Principal Executive Offices and zip code)

(86 10) 6566 7788
(Registrant’s telephone
number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.01 Completion of Acquisition or Disposition of Assets.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EX-99.1 Unaudited condensed consolidated financial statements as of Mar 31, 2008
EX-99.2 Unaudited pro forma financial information

Item 2.01 Completion of Acquisition or Disposition of Assets.

     This Amendment No. 2 on Form 8-K/A amends the Form 8-K/A filed on May 30, 2008 which amended the Current Report on Form 8-K filed April 21, 2008 and includes amendments to the Unaudited Condensed Financial Statements of the acquired company for the three months ended March 31, 2008 and also includes the pro forma financial information permitted pursuant to item 9.01 of Form 8-K.

     As previously announced, on April 17, 2008, ChinaCast Education Corporation (the “Company”), received confirmation that on April 11, 2008, the Chongqing Municipal Bureau of the Administration for Industry accepted the consummation of the acquisition by Yu Pei Information Technology (Shanghai) Limited, the Company’s wholly owned subsidiary in China, of 80% of Hai Lai Education Technology Limited (“Hai Lai”) from Beijing Heng Tai Jufu Investment Limited (“Heng Tai”). Hai Lai holds 100% of the Foreign Trade and Business College of Chongqing Normal University (“FTBC”) and Hai Yuen Company Limited (“Hai Yuen”), a newly set up services company. FTBC is an independent, for-profit, private university affiliated with Chongqing Normal University. FTBC offers four-year bachelor’s degree and two-year diploma programs in finance, economics, trade, tourism, advertising, IT, music and foreign languages, all of which are fully accredited by the Ministry of Education.

     The Company paid RMB480 million (the “Purchase Price”) for 80% of Hai Lai. 50% of the Purchase Price was paid by April 7, 2008, 45% of the Purchase Price will be paid by the second quarter of 2008, and 5% of the Purchase Price will be paid on August 8, 2008. The source of the cash used for the acquisition was from working capital of the Company.

Item 9.01 Financial Statements and Exhibits.

Exhibit 99.1.

(a) Pro Forma Financial Information.

     The unaudited pro forma condensed consolidated financial statements of the Company and Hai Lai for the year ended December 31, 2007, and for the three months ended March 31, 2008, are filed herewith as Exhibit 99.2

(b) Exhibits. The following exhibits are provided as part of this Report.

99.1     Unaudited Condensed Financial Statements of Hai Lai for the three months ended March 31, 2008.

99.2     Unaudited Pro Forma Condensed Consolidated Financial Statements of the Company and Hai Lai for the year ended December 31, 2007, and for the three months ended March 31, 2008.

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 hereunto duly authorized.

	CHINACAST EDUCATION CORPORATION
Date: July 31, 2008	By:	/s/   Antonio Sena
		Name:	Antonio Sena
		Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1 (ii)

HAI LAI EDUCATION TECHNOLOGY LIMITED
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2008

HAI LAI EDUCATION TECHNOLOGY LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share-related data)

ASSETS

	As of March 31, 2008
	RMB
CURRENT ASSETS
Cash and cash equivalents		12,693
Prepaid expenses and other current assets		1,790
Total Current Assets		14,483
PROPERTY AND EQUIPMENT, NET		195,014
OTHER ASSETS
Land use rights, net		50,850
TOTAL ASSETS		260,347
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Deferred revenue		35,452
Dividends payable		1,186
Accrued expenses and other current liabilities		49,405
Income taxes payable		12,909
Total Current Liabilities		98,952
NON-CURRENT LIABILITIES
Notes payable		78,400
TOTAL LIABILITIES		177,352
COMMITMENTS AND CONTINGENCIES		—
SHAREHOLDERS’ EQUITY
Registered capital		25,000
Additional paid-in capital		9,719
Statutory reserve		8,354
Retained earnings		39,922
Total Shareholders’ Equity		82,995
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		260,347

HAI LAI EDUCATION TECHNOLOGY LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share-related data)

	For the three months			For the three months
	ended			Ended
	March 31, 2008			March 31, 2007
	RMB			RMB
REVENUES		25,064			17,998
COST OF REVENUES		(11,119	)		(8,174	)
GROSS PROFIT		13,945			9,824
OPERATING EXPENSES
General and administrative expenses		(134	)		(121	)
INCOME FROM OPERATIONS		13,811			9,703
OTHER INCOME (EXPENSES)
Bank loan interest		—			(328	)
Interest paid to a shareholder		—			(465	)
Dividend received		—			29
Interest income		6			106
Total Other (Expenses) Income, net		6			(658	)
INCOME BEFORE TAXES		13,817			9,045
INCOME TAX EXPENSE		(2,078	)		(1,535	)
NET INCOME		11,739			7,510

HAI LAI EDUCATION TECHNOLOGY LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share-related data)

	For the three months			For the three months
	ended			ended
	March 31, 2008			March 31, 2007
	RMB			RMB
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		11,739			7,510
Adjusted to reconcile net income to cash provided by operating activities:
Depreciation		4,157			3,266
Amortization on land use rights		267			252
Changes in operating assets and liabilities
(Increase) decrease in:
Prepaid expenses and other current assets		698			(2,843	)
Increase (decrease) in:
Deferred revenues		(22,278	)		(16,856	)
Accrued expenses and other current liabilities		(5,482	)		(6,723	)
Income taxes payable		1,683			1,542
Net cash used in operating activities		(9,216	)		(13,852	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets and land use rights		(4,208	)		(2,508	)
Net cash used in investing activities		(4,208	)		(2,508	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable		—			(1,600	)
Net cash used in financing activities		—			(1,600	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		(13,424	)		(17,960	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		26,117			26,075
CASH AND CASH EQUIVALENTS AT END OF PERIOD		12,693			8,115

HAI LAI EDUCATION TECHNOLOGY LIMITED AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2008

1. BASIS OF PREPARATION

Hai Lai Education Technology Limited (“Hai Lai”) was incorporated on June 21, 2001 in the People’s Republic of China (“PRC”) as a limited liability company. The business activities of Hai Lai are science and education development and investment holding.

Foreign Trade Business College of Chongqing Normal University (“FTBC”), a wholly owned subsidiary of Hai Lai, was incorporated in the PRC on June 28, 2001. FTBC is an education and career preparation college that offers bachelor degree and diploma courses in finance, economics, trade, tourism management, advertising, languages, information technology and music. Revenue is generated primarily from student tuition fees and student boarding charges.

Hai Lai formed a wholly owned subsidiary, Hai Yuen Company Limited (“Hai Yuen’), in the PRC on July 30, 2007. Hai Yuen principally provides accommodation and catering services to students.

Hai Lai, FTBC and Hai Yuen are hereinafter referred to as (“the Company”).

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The accompanying 2008 unaudited condensed consolidated financial statements include the financial statements of Hai Lai, its 100% owned subsidiaries FTBC and Hai Yuen.

All significant inter-company transactions and balances have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. 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 management, the unaudited condensed consolidated financial statements contain all adjustments consisting only of normal recurring accruals considered necessary to present fairly the Company’s financial position at March 31, 2008, the results of operations for the three-month periods ended March 31, 2008 and 2007, and cash flows for the three months ended March 31, 2008. The results for the period ended March 31, 2008 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2008.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115 ”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “ Accounting for Certain Investments in Debt and Equity Securities ” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The adoption of SFAS No. 159 did not have a material effect on the Company's financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defined fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. In February 2008, the FASB released FASB Staff Position (FSP FAS 157-2 — Effective Date of FASB Statement No. 157), which delayed the effective date of SFAS No. 157 for all nonfinancial assets and liabilities, expect those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The effective date of SFAS No. 157 for all nonrecurring fair value measurements of nonfinancial assets and nonfinancial liabilities until fiscal years beginning after November 15. 2008. The adoption of SFAS No. 157 is not expected to have a material effect on the Company's financial statements.

In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, “ Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 ”. This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company’s financial.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We did not expect the adoption of SFAS 161 to have a material impact on our results of operations of financial condition.

3. INCOME TAX

The Company was incorporated in the PRC and is subject to PRC income tax which is computed according to the relevant laws and regulations in the PRC. The applicable tax rate has been 25% (2007 - 33%).

Hai Yuen, wholly owned subsidiary of Hai Lai, was incorporated in Chongqing of the PRC and subject to PRC income tax which is computed according to the western development preferential policy. Hai Yuen is entitled to an income tax reduction. According to the document of reductions approved by the local tax bureau, the income tax rate was reduced from 25% (2007 - 33%) to 15% on a permanent basis.

FTBC, wholly owned subsidiary of Hai Lai, was incorporated in Chongqing of the PRC and a PRC income tax is accrued at a rate of 15% according to the western development preferential policy.

4. COMMITMENTS

As at March 31, 2008, the Company had purchase commitments for capital projects in progress of approximately RMB270,000.

5. SEGMENT INFORMATION

The Company operates in one segment. The Company’s revenue and net income are derived from the operation of a university in the PRC. 100% of the Company’s assets were located in the PRC.

6. SUBSEQUENT EVENTS

On February 11, 2008, pursuant to an Acquisition Agreement, China Yu Pei Information Technology (Shanghai) Limited, a wholly owned subsidiary of ChinaCast Education Corporation acquired 80% of Hai Lai from Beijing Heng Tai Jufu Investment Limited for RMB480,000,000 (US$65,750,000). This transaction closed on April 11, 2008.

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA FINANCIAL INFORMATION

On April 17, 2008, the ChinaCast Education Corporation (“the Company”) received confirmation that on April 11, 2008, the Chongqing Municipal Bureau of the Administration for Industry accepted the consummation of the acquisition by Yu Pei Information Technology (Shanghai) Limited, the Company’s wholly owned subsidiary in China, of 80% of Hai Lai Education Technology Limited (“Hai Lai” ) from Beijing Heng Tai Jufu Investment Limited (“Heng Tai”). Hai Lai holds 100% of the Foreign Trade Business College of Chongqing Normal University (“FTBC”) and Hai Yuen Company Limited (“Hai Yuen”), a newly set up services company. FTBC is an independent, for-profit, private university affiliated with Chongqing Normal University. FTBC offers four-year bachelor’s degree and two-year diploma programs in finance, economics, trade, tourism, advertising, IT, music and foreign languages, all of which are fully accredited by the Ministry of Education.

The Company paid RMB480 million (USD $68.6 million, (using an exchange rate of USD$1 equal to RMB7)) (the “Purchase Price”) for 80% of Hai Lai. 50% of the Purchase Price was paid by April 7, 2008, 45% of the Purchase Price will be paid by the second quarter of 2008, and 5% of the Purchase Price will be paid on August 8, 2008. The source of the cash used for the acquisition was from working capital of the Company.

The following unaudited pro forma consolidated condensed financial statements reflect the acquisition using the purchase method of accounting. The pro forma adjustments are based upon available information and assumptions that the Company believes are reasonable. The pro forma adjustments are preliminary and have been prepared to illustrate the estimated effect of the acquisition. Consequently, the amounts reflected in the unaudited pro forma consolidated condensed financial statements are subject to change, and the final amounts may differ substantially.

The unaudited pro forma consolidated condensed balance sheet as of March 31, 2008 gives effect to the Hai Lai acquisition as if it was completed on that date, and was derived from the historical unaudited balance sheet of Hai Lai as of March 31, 2008, consolidated with ChinaCast’ historical unaudited balance sheet as of March 31, 2008.

The unaudited pro forma consolidated condensed statement of operations for the year ended December 31, 2007 illustrates the effect of the acquisition of Hai Lai as if it had occurred on January 1, 2007, and was derived from the historical audited statement of operations for Hai Lai for the year ended December 31, 2007, consolidated with ChinaCast’ historical audited statement of operations for the year ended December 31, 2007.

The unaudited pro forma consolidated condensed statement of operations for the three months ended March 31, 2008 illustrates the effect of the acquisition of Hai Lai as if it had occurred on January 1, 2008 and combines the historical unaudited statement of operations of ChinaCast for the three months ended March 31, 2008 and the historical unaudited statement of operations of Hai Lai through the date of acquisition.

The pro forma consolidated condensed financial statements should be read in conjunction with the historical audited financial statements and notes thereto of ChinaCast contained in its 2007 Annual Report on Form 10-K SB, filed with the Securities and Exchange Commission on March 31, 2008, the historical unaudited financial statements and notes thereto of ChinaCast contained in its March 31, 2008 Quartely Report on Form 10-Q filed with the Securities and Exchange Commission on May 12, 2008 and the historical audited financial statements and notes thereto of Hai Lai which are included as Exhibit 99.1 to this Current Report on Form 8-K. The unaudited pro forma consolidated condensed financial statements do not include any pro forma adjustments relating to costs of integration that the consolidated company may incur as such adjustments.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had occurred as of the date or during the period presented nor is it necessarily indicative of future operating results or financial position.

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 31, 2008

	Historical			Historical		Pro Forma					Pro Forma
	ChinaCast			Hai Lai		Adjustments			Notes		Consolidated
	RMB			RMB		RMB					RMB
	(In thousands, except share-related data)
Assets
Cash and cash equivalents		135,814			12,693		—					148,507
Term deposits		621,076			—		(480,000	)	(a	)		141,076
Accounts receivable, net		53,682			—		—					53,682
Inventory		1,993			—		—					1,993
Income taxes recoverable					—		—					—
Prepaid expenses and other current assets		9,187			1,790		—					10,977
Amount due from related parties		3,448			—		—					3,448
Total current assets		825,200			14,483		(480,000	)				359,683
Non-current assets:
Non-current deposits		1,087			—		—					1,087
Property and equipment, net		10,387			195,014		20,523		(c	)		225,924
Land use rights, net		—			50,850		86,275		(c	)		137,125
Acquired intangible assets, net		21,218			—		45,049		(d	)		66,267
Long term investments		10,757			—		—					10,757
Non-current advances to a related party		111,097			—		—					111,097
Goodwill		1,652			—		284,534		(b	)		286,186
Total assets		981,398			260,347		(43,619	)				1,198,126
Liabilities, minority interest and shareholders’ equity
Current liabilities:
Account payable		19,256			—		—					19,256
Deferred revenue		—			35,452		—					35,452
Dividends payable		—			1,186		—					1,186
Accrued expenses and other current liabilities		56,831			49,405		—					106,236
Income tax payable		34,441			12,909		(6,470	)	(k	)		40,880
Current portion of capital lease obligation		—			—		—
Amount due to a shareholder		—			—		—
Total current liabilities		110,528			98,952		—					203,010
Notes payable		—			78,400		—					78,400
Deferred tax liability		—			—		22,777		(j	)		22,777
Unrecgnized tax benefits		28,016			—		6,470		(k	)		34,486
Total non-current liabilites		28,016			78,400		22,777					135,663
Total liabilities		138,544			177,352		22,777					338,673
Minority interests		20,896			—		16,599		(i	)		37,495
Shareholders’ equity:
Share capital		21			25,000		(25,000	)	(e	)		21
Additional paid-in capital		778,119			9,719		(9,719	)	(e	)		778,119
Statutory reserve		17,433			8,354		(8,354	)	(e	)		17,433
Accumulated other comprehensive loss		(5,388	)		—							(5,388	)
Retained earnings (Accumulated deficit)		31,773			39,922		(39,922	)	(e	)		31,773
Total shareholders’ equity		821,958			82,995		(82,995	)				821,958
Total liabilities, minority interest and shareholders’ equity		981,398			260,347		(43,619	)				1,198,126

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2008

	Historical			Historical			Pro Forma					Pro Forma
	ChinaCast			Hai Lai			Adjustments			Notes		Consolidated
	RMB			RMB			RMB					RMB
	(In thousands, except share-related data)
Revenues:
Service		40,205			25,064			—					65,269
Equipment		19,289			—			—					19,289
		59,494			25,064			—					84,558
Cost of revenues:
Service		(11,986	)		(11,119	)		(6,607	)		(g) (h)		(29,712	)
Equipment		(19,105	)		—			—					(19,105	)
		(31,091	)		(11,119	)		(6,607	)				(48,817	)
Gross profit		28,403			13,945			(6,607	)				35,741
Operating (expenses) income:
Selling and marketing expenses		(3,487	)		—			—					(3,487	)
General and administrative expenses		(18,216	)		(134	)		—					(18,350	)
Foreign exchange loss		(465	)		—			—					(465	)
Management service fee		798			—			—					798
Total operating expenses, net		(21,370	)		(134	)		—					(21,504	)
Income from operations		7,033			13,811			(6,607	)				14,237
Impairment loss on cost method investment		—			—			—					—
Gain on disposal of cost method investment		—			—			—					—
Interest income		5,852			6			(3,765	)		(f)		2,093
Interest expense		(4	)		—			—					(4	)
Other expense		—			—			—					—
Income before provision for income taxes, earnings in equity investments, and minority interest		12,881			13,817			(10,372	)				16,326
Provision for income taxes		(3,859	)		(2,078	)		991			(l)		(4,946	)
Net income before earnings in equity investments and minority interest		9,022			11,739			(9,381	)		(l)		11,380
Earnings in equity investments		(408	)		—			—					(408	)
Minority interest		(384	)		—			(2,348	)		(i)		(2,732	)
Net income		8,230			11,739			(11,729	)				8,240
Net income per share
Basic		0.30											0.30
Diluted		0.29											0.29
Weighted average shares used in computation:
Basic		27,297,256											27,297,256
Diluted		28,292,257											28,292,257

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007

	Historical			Historical			Pro Forma					Pro Forma
	ChinaCast			Hai Lai			Adjustments			Notes		Consolidated
	RMB			RMB			RMB					RMB
	(In thousands, except share-related data)
Revenues:
Service		148,903			85,289			—					234,192
Equipment		38,827			—			—					38,827
		187,730			85,289			—					273,019
Cost of revenues:
Service		(45,823	)		(45,779	)		(23,001	)	(g	) (h)		(114,603	)
Equipment		(39,678	)		—			—					(39,678	)
		(85,501	)		(45,779	)		(23,001	)				(154,281	)
Gross profit		102,229			39,510			(23,001	)				118,738
Operating (expenses) income:
Selling and marketing expenses		(6,640	)		—			—					(6,640	)
General and administrative expenses		(55,145	)		(949	)		—					(56,094	)
Foreign exchange loss		(4,179	)		—			—					(4,179	)
Management service fee		18,035			—			—					18,035
Total operating expenses, net		(47,929	)		(949	)		—					(48,878	)
Income from operations		54,300			38,561			(23,001	)				69,860
Impairment loss on cost method investment		—			—			—					—
Gain on disposal of cost method investment		10,270			—			—					10,270
Interest income		20,156			304			(13,286	)	(f	)		7,174
Interest expense		(38	)		(1,879	)		—					(1,917	)
Dividends received		—			29			—					29
Income before provision for income taxes, earnings in equity investments, and minority interest		84,688			37,015			(36,287	)				85,416
Provision for income taxes		(21,263	)		(5,612	)		3,450		(l	)		(23,425	)
Net income before earnings in equity investments and minority interest		63,425			31,403			(32,837	)				61,991
Earnings in equity investments		(1,155	)		—			—					(1,155	)
Minority interest		(3,242	)		—			(6,281	)	(i	)		(9,523	)
Income from continuing operations		59,028			31,403			(39,118	)				51,313
Discontinued operations
Income from discontinued operations, net of taxes		(139	)		—			—					(139	)
Minority interest in discontinued operations, net of taxes		(230	)		—			—					(230	)
Loss on discontinued operations		(369	)		—			—					(369	)
Net income		58,659			31,403			(39,118	)				50,944
Net income per share
Basic		2.21											1.92
Diluted		2.10											1.82
Weighted average shares used in computation:
Basic		26,567,240											26,567,240
Diluted		27,975,731											27,975,731

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS

     The unaudited pro forma consolidated condensed statements of operations for the year ended December 31, 2007 and the three months ended March 31, 2008 were prepared by combining the Company’s historical statements of operations for the year ended December 31, 2007 and the three months ended March 31, 2008 with GFT’s historical results from continuing operations for the year ended December 31, 2007 and the period from January 1, 2008 to March 5, 2008, respectively, giving effect to the acquisition as though it was completed on January 1, 2007. Certain historical information of GFT has been reclassified to conform to the presentation of the Company’s historical statements.

1. Acquisition

     On April 17, 2008, the ChinaCast Education Corporation (“the Company”) received confirmation that on April 11, 2008, the Chongqing Municipal Bureau of the Administration for Industry accepted the consummation of the acquisition by Yu Pei Information Technology (Shanghai) Limited, the Company’s wholly owned subsidiary in China, of 80% of Hai Lai Education Technology Limited (“Hai Lai” ) from Beijing Heng Tai Jufu Investment Limited (“Heng Tai”). Hai Lai holds 100% of the Foreign Trade Business College of Chongqing Normal University (“FTBC”) and Hai Yuen Company Limited (“Hai Yuen”), a newly set up services company. FTBC is an independent, for-profit, private university affiliated with Chongqing Normal University. FTBC offers four-year bachelor’s degree and two-year diploma programs in finance, economics, trade, tourism, advertising, IT, music and foreign languages, all of which are fully accredited by the Ministry of Education.

     The Company paid RMB480 million (USD $68.6 million, (using an exchange rate of USD$1 equal to RMB7)) (the “Purchase Price”) for 80% of Hai Lai. 50% of the Purchase Price was paid by April 7, 2008, 45% of the Purchase Price will be paid by the second quarter of 2008, and 5% of the Purchase Price will be paid on August 8, 2008. The source of the cash used for the acquisition was from working capital of the Company.

     The Company has completed a preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed at the date of acquisition included as adjustment notes 2(b). It is possible that the purchase price allocation will be adjusted upon finalization of the accounting for the acquired assets.

     The amortizable intangibles include RMB45.0 million of acquired customer relationship. Useful live of 41 months has been assigned to the customer relationship intangible. The identifiable intangible asset and goodwill are not deductible for tax purposes.

2. Pro forma adjustments made by ChinaCast in connection with the preparation of the unaudited pro forma consolidated condensed balance sheet as of March 31, 2008 and the unaudited pro forma consolidated condensed statement of operations for the year ended December 31, 2007 and three months ended March 31, 2008 are as follows:

(a)	To reduce term deposits on the RMB480 million of cash utilized by the Company to fund the acquisition
(b)	Purchase price allocation:
	The purchase price for the acquisition amounted to RMB480 million. The estimated purchase price has been preliminarily allocated as follows based on the assets and liabilities acquired as of March 31, 2008:
	Estimated fair value of net tangible assets acquired and liabilities assumed:

	RMB
Cash		12,693
Other current assets		1,790
Property and equipment and land use rights		245,864
Fair value adjustment for property and equipment and land use rights		106,798
Deferred revenue		(35,452	)
Other current liabilities		(63,500	)
Bank loan		(78,400	)
				189,793
Intangible assets acquired
Customer relationship				45,049
Minority interest				(16,599	)
Deferred tax liability				(22,777	)
Goodwill				285,448
Total purchase price				480,000

(c)	To adjust fair value of property and equipment and land use rights based upon the preliminary allocation of the purchase price
(d)	To record intangible asset, namely customer relationship, obtained in the transaction based upon the preliminary allocation of the purchase price. Customer relationship is related to existing students who will continue their courses until graduation.
(e)	To eliminate Hai Lai’s common stock, additional paid-in-capital, statutory reserve and retained earnings
(f)	To reduce interest income on the RMB480 million of cash utilized by the Company to fund the acquisition
(g)	To record the amortization of expense of intangible asset obtained in the transaction based upon the preliminary allocation of the purchase price. The amount being amortized for customer relationship is computed using the accelerated amortization method based on the estimated progression of the students through the respective courses, giving consideration to the revenue and cash flow associated.
(h)	To record the increase in depreciation of property and equipment and amortization of land use rights, after fair value adjustments, based upon the preliminary allocation of the purchase price
(i)	To record minority interest in Hai Lai
(j)	To record deferred tax liabilities as a result of the fair value adjustments for property and equipment, land use rights and the intangible asset
(k)	To record unrecognized tax benefits in accordance with the FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income Taxes — an interpretation of SFAS No. 109” (“FIN 48”)
(l)	To reflect the net tax effects of temporary differences between the carrying amount of property and equipment, land use rights and the intangible asset for financial reporting purposes and the amounts used for income tax purposes.