UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K/A


(Amendment
No. 1)





(Mark
One)





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





For the
fiscal year ended December 31, 2009





or





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





For the
transition period from ___________________ to ___________________





Commission
file number


000-50240





China
Ivy School, Inc.


(Exact
name of registrant as specified in its charter)





Nevada
            
            98-0534456(State
      or other jurisdiction of
            
            (I.R.S.
      Employer Identification No.)incorporation
      or organization)





1 Suhua
Road, Shiji Jinrong Building Suite 801,


Suzhou Industrial Park,
Jiangsu Province, 215020, P.R. China


(Address
of Principal Executive Offices) (Zip Code)





86-512-6762-5632


(Registrant's
Telephone Number, Including Area Code)





Securities
registered pursuant to Section 12(b) of the Act:





Title of each class
            
            Name of each exchange on which
      registeredNone
            
            Not
      applicable





Securities
registered pursuant to section 12(g) of the Act:





Common
Stock





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes oNo x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes oNo x





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





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





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K o





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





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





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





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter. The aggregate market value of the common stock of the registrant held
by non-affiliates (excluding shares held by directors, officers and others
holding more than 5% of the outstanding shares of the class) was $28,069.46
based upon a closing sale price of $0.021 on May 26, 2009, the last reported
trade prior to June 30, 2009, as reported by Bloomberg Finance.





Indicate
the number of shares outstanding of each of the registrant's classes of common
stock, as of the latest practicable date. As of March 31, 2010, the registrant
had outstanding 22,582,541 shares of common stock.





DOCUMENTS
INCORPORATED BY REFERENCE: None









Explanatory
Note





This
amendment is being filed to include a portion of the report of the registrant’s
independent registered public accounting firm on the registrant’s audited
financial statements for the years ended December 31, 2009 and 2008 concerning
the registrant’s ability to continue as a “going concern,” which
was  inadvertently omitted from the original filing on April 1,
2010.





Item
      15. Exhibits.Exhibit
      No.
            Description2.2
            Share
      Exchange Agreement between Safe Cell Tab Inc. and Registrant (incorporated
      herein by reference to Exhibit 2 to the Registrant's Current Report on
      Form 8-K filed on September 4, 2003).2.3
            Amended
      Share Exchange Agreement between Safe Cell Tab Inc. and Registrant
      (incorporated herein by reference to Exhibit 2 to the Registrant's Current
      Report on Form 8-K/A filed on March 26, 2004).3.1
            Articles
      of Incorporation (incorporated herein by reference to Exhibit 3.1 to the
      Registrant's Registration Statement on Form SB-2 filed on January 26,
      2001).3.2
            Bylaws
      (incorporated herein by reference to Exhibit 3.2 (I) to the Registrant's
      Registration Statement on Form SB-2 filed on January 26,
      2001).3.3
            Amended
      Bylaws (incorporated herein by reference to Exhibit 3.2 II) to the
      Registrant's Registration Statement on Form SB-2 filed on January 26,
      2001).3.4
            Amended
      Bylaws (incorporated herein by reference to Exhibit 3 to the Registrant's
      Quarterly Report on Form 10-QSB filed on February 2,
  2004).3.5
            Certificate
      of Correction to the Certificate of Correction to the Articles of
      Incorporation (incorporated herein by reference to Exhibit 3.1 to the
      Registrant's Current Report on Form 8-K filed on August 29,
      2006).3.6
            Certificate
      of Designations to the Articles of Incorporation, designating Series A
      Convertible Preferred Stock (incorporated herein by reference to Exhibit
      3.2 to the Registrant's Current Report on Form 8-K filed
      on  August 29, 2006).3.7
            Certificate
      of Amendment to Articles of Incorporation changing the name from Claremont
      Technologies Corp. to China Ivy School, Inc.(incorporated herein by
      reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K
      filed on January 8, 2007).4.1
            2007
      Equity Incentive Plan (incorporated herein by reference to Exhibit 4.1(I)
      to the Registrant's Registration Statement on Form S-8 filed on January
      22, 2007).4.2
            Form
      of the Registrant’s 6% Convertible Note due June 30, 2010 (incorporated
      herein by reference to Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K filed on July 7, 2009).10.3
            Stock
      Purchase Agreement between Xu Zuqiang and Registrant (incorporated herein
      by reference to Exhibit 10.1 to the Registrant's Current Report on Form
      8-K filed on June 12, 2006).10.4
            Amendment
      to Stock Purchase Agreement between Xu Zuqiang and Registrant
      (incorporated herein by reference to Exhibit 10.1 to the Registrant's
      Current Report on Form 8-K filed on August 29,2006).10.6
            Share
      Exchange Agreement among Brighter International Limited, Blue Tassel
      School and the shareholders of Brighter International Limited and
      Registrant (incorporated herein by reference to Exhibit 10.1 to the
      Registrant's Current Report on Form 8-K filed on October 13,
      2006).10.7
            Standby
      Fixed Price Equity Distribution Agreement between certain investors and
      the Registrant (incorporated herein by reference to Exhibit 99.1 to the
      Registrant's Current Report on Form 8-K filed on May 31,
      2007).10.8
            Purchase
      and Sale Agreement dated as of March 6, 2009 by and among Su Zhou Blue
      Tassel School and Jianwei Wu, Wei Li, Surong Gong, Changgen Ma, Yongxia
      Tan, Junhua Tang, and Xuehui Jiang (incorporated herein by reference to
      Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on March
      9, 2009).  
  10.9
            Rescission
      Agreement rescinding Purchase and Sale Agreement dated as of March 6, 2009
      by and among the Registrant and Jianwei Wu, Wei Li, Surong Gong, Changgen
      Ma, Yongxia Tan, Junhua Tang, and Xuehui Jiang (incorporated herein by
      reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K
      filed on May 1, 2009).16.1
            Kabani
      & Company, Inc. letter regarding change of accountant (incorporated
      herein by reference to Exhibit 10.1 to the Registrant's Current Report on
      Form 8-K filed on June 26, 2008).21.1
            List
      of Subsidiaries (incorporated herein by reference to Exhibit 21.1 to the
      Registrant's Annual Report on Form 10-K for the fiscal year ended December
      31, 2008).31.1
            Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities
      Exchange Act of 1934.31.2
            Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities
      Exchange Act of 1934.32.1
            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.










SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to the report to be signed
on its behalf by the undersigned, thereunto duly authorized.





Dated:
May 14, 2010





CHINA
      IVY SCHOOL, INC.By:
            /s/ Yongqi
      ZhuYongqi
      ZhuChairman
      and Chief Executive Officer
              (principal
      executive officer)By:
            /s/ Jian
      XueJian
      XueChief
      Financial Officer
              (principal
      financial and accounting officer)










CHINA IVYSCHOOL, INC. AND SUBSIDIARIES





CHINA
IVY SCHOOL, INC. AND SUBSIDIARIES





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





PageReport
      of Independent Registered Public Accounting Firm
            F-1Consolidated
      Balance Sheets
              as
      of December 31, 2009 and December 31, 2008
            F-2Consolidated
      Statements of Operations and Comprehensive Loss
              for
      the Years ended December 31, 2009 and 2008
            F-3Consolidated
      Statements of Stockholders’ Equity
              for
      the Years ended December 31, 2009 and 2008
            F-4Consolidated
      Statements of Cash Flows
              for
      the Years ended December 31, 2009 and 2008
            F-5Notes
      to Consolidated Financial Statements
            F-6
      - F-17





Table of Contents





To the
Board of Directors and Stockholders of


China Ivy
School, Inc.





I have
audited the accompanying consolidated balance sheets of China Ivy School, Inc.
and subsidiaries (the "Company") as of December 31, 2009 and December 31, 2008
and the related consolidated statements of operations and comprehensive loss,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my
audit.





I
conducted my audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a reasonable
basis for my opinion.





In my
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of China Ivy School, Inc. and
subsidiaries as of December 31, 2009 and December 31, 2008 and the results of
their operations and cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.





The
accompanying financial statements referred to above have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company’s present financial condition raises
substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to this are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.





/s/ Michael T. Studer CPA
P.C.


Michael
T. Studer CPA P.C.





Freeport,
New York


March 31,
2010





F -
1
 Table of Contents





CHINA
      IVY SCHOOL, INC. AND SUBSIDIARIES(FORMERLY
      CLAREMONT TECHNOLOGIES CORP.)CONSOLIDATED
      BALANCE SHEETSAS
      OF DECEMBER 31, 2009 AND 20082009
            
            
            2008ASSETSCurrent
      AssetsCash
      and cash equivalents
            
            $
            46,187
            
            
            $
            58,984Advances
      made to vendors
            
            
            95,974
            
            
            
            -Prepaid
      expenses
            
            
            -
            
            
            
            3,971Receivable
      from related party
            
            
            2,790,207
            
            
            
            -Receivable
      from sale and leaseback of real property - related party
            
            
            1,156,639
            
            
            
            -Total
      Current Assets
            
            
            4,089,007
            
            
            
            62,955Property
      and equipment, net
            
            
            7,749,770
            
            
            
            8,471,639Receivable
      from sale and leaseback of real property - related party
            
            
            3,710,090
            
            
            
            6,026,246Total
      Assets
            
            $
            15,548,867
            
            
            $
            14,560,840LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      LiabilitiesBank
      borrowings
            
            $
            10,401,500
            
            
            $
            10,699,610Convertible
      notes payable
            
            
            1,560,000
            
            
            
            -Accounts
      payable and accrued expenses
            
            
            1,731,502
            
            
            
            938,120Payables
      to related parties
            
            
            719,341
            
            
            
            752,893Deferred
      revenue
            
            
            715,535
            
            
            
            930,100Total
      Current Liabilities
            
            
            15,127,878
            
            
            
            13,320,723Total
      Liabilities
            
            
            15,127,878
            
            
            
            13,320,723Stockholders'
      EquityPreferred
      stock, $0.001 par value; 50,000,000 shares authorized, none issued and
      outstanding as of December 31, 2009 and 2008
            
            
            -
            
            
            
            -Common
      stock, $0.001 par value; 100,000,000 shares authorized,3,082,500
      shares issued and outstanding as of December 31, 2009 and
    2008
            
            
            3,083
            
            
            
            3,083Additional
      paid in capital
            
            
            4,302,907
            
            
            
            4,302,907Statutory
      reserves
            
            
            480,813
            
            
            
            480,813Accumulated
      deficit
            
            
            (5,115,622
            )
            
            
            (4,300,694
            )Accumulated
      other comprehensive income
            
            
            749,808
            
            
            
            754,008Total
      Stockholders' Equity
            
            
            420,989
            
            
            
            1,240,117Total
      Liabilities and Stockholders' Equity
            
            $
            15,548,867
            
            
            $
            14,560,840





The
accompanying notes are an integral part of these consolidated financial
statements.





F -
2
 Table of Contents





CHINA
      IVY SCHOOL, INC. AND SUBSIDIARIES(FORMERLY
      CLAREMONT TECHNOLOGIES CORP.)CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)FOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 20082009
            
            
            2008Net
      revenue
            
            $
            6,334,781
            
            
            $
            6,080,777Operating
      expensesTeachers
      salaries and related expenses
            
            
            2,164,486
            
            
            
            1,789,290Professinal
      and consulting fees
            
            
            1,054,483
            
            
            
            1,897,765Rent
      and related expenses
            
            
            1,811,139
            
            
            
            1,481,290Depreciation
      and amortization
            
            
            901,348
            
            
            
            1,146,903Other
      general and administrative expenses
            
            
            1,015,240
            
            
            
            1,141,823Total
      operating expenses
            
            
            6,946,696
            
            
            
            7,457,071Loss
      from operations
            
            
            (611,915
            )
            
            
            (1,376,294
            )Other
      (income) expenseInterest
      income
            
            
            (1,379
            )
            
            
            (13,224
            )Interest
      expense
            
            
            686,870
            
            
            
            950,996Loss
      on sale of real property
            
            
            -
            
            
            
            5,169,294Accretion
      of discount on receivable from related party relating to sale of real
      property
            
            
            (482,478
            )
            
            
            (2,280,191
            )Total
      Other (Income) Expense
            
            
            203,013
            
            
            
            3,826,875Loss
      from continuing operations
            
            
            (814,928
            )
            
            
            (5,203,169
            )Loss
      from operations of discontinued entity
            
            
            -
            
            
            
            (7,226
            )Net
      loss
            
            
            (814,928
            )
            
            
            (5,210,395
            )Other
      comprehensive itemForeign
      currency translation adjustment
            
            
            (4,200
            )
            
            
            253,656Comprehensive
      loss
            
            $
            (819,128
            )
            
            $
            (4,956,739
            )Basic
      and diluted net loss per share:Continuing
      operations
            
            $
            (0.26
            )
            
            $
            (1.69
            )Operations
      of the discontinued entity
            
            
            -
            
            
            
            (0.00
            )Total
            
            $
            (0.26
            )
            
            $
            (1.69
            )Weighted
      average number of basic and diluted shares outstanding
            
            
            3,082,500
            
            
            
            3,082,500





The
accompanying notes are an integral part of these consolidated financial
statements.





F -
3
 Table of Contents





CHINA
      IVY SCHOOL, INC. AND SUBSIDIARIES(FORMERLY
      CLAREMONT TECHNOLOGIES CORP.)CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2009 and 2008Common
      StockNumber
      of Shares
            
            
            Amount
            
            
            Additional
      Paid in Capital
            
            
            Accumulated
      other Comprehensive Income (Loss)
            
            
            Statutory
      Reserves
            
            
            Retained
      Earning (Deficit)
            
            
            Total
      Stockholders' EquityBalance
      December 31, 2007
            
            
            3,082,500
            
            
            $
            3,083
            
            
            $
            4,113,446
            
            
            $
            500,352
            
            
            $
            480,813
            
            
            $
            909,701
            
            
            $
            6,007,395Spinoff
      of Safe Cell Tab Inc. on July 31, 2008
            
            
            -
            
            
            
            -
            
            
            
            189,461
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            189,461Foreign
      currency translation adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            253,656
            
            
            
            -
            
            
            
            -
            
            
            
            253,656Net
      loss for the year ended December 31, 2008
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (5,210,395
            )
            
            
            (5,210,395
            )Balance
      December 31, 2008
            
            
            3,082,500
            
            
            
            3,083
            
            
            
            4,302,907
            
            
            
            754,008
            
            
            
            480,813
            
            
            
            (4,300,694
            )
            
            
            1,240,117Foreign
      currency translation adjustment
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (4,200
            )
            
            
            -
            
            
            
            -
            
            
            
            (4,200
            )Net
      loss for the year ended December 31, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (814,928
            )
            
            
            (814,928
            )Balance
      - December 31, 2009
            
            
            3,082,500
            
            
            $
            3,083
            
            
            $
            4,302,907
            
            
            $
            749,808
            
            
            $
            480,813
            
            
            $
            (5,115,622
            )
            
            $
            420,989





The
accompanying notes are an integral part of these consolidated financial
statements.




F -
4
 Table of Contents





CHINA IVY SCHOOL, INC. AND
      SUBSIDIARIES(FORMERLY
      CLAREMONT TECHNOLOGIES CORP.)CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE YEARS ENDED DECEMBER 31, 2009 AND 20082009
            
            
            2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (814,928
            )
            
            $
            (5,210,395
            )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Depreciation
      and amortization
            
            
            901,348
            
            
            
            1,146,903Imputed
      rent and related expense
            
            
            1,625,300
            
            
            
            1,481,290Expenses
      paid by related party
            
            
            -
            
            
            
            3,731,418Accretion
      of discount on receivable from related party
            
            
            (482,478
            )
            
            
            (2,280,191
            )Loss
      on sale of real property
            
            
            -
            
            
            
            5,169,294Loss
      from operations of discontinued entity
            
            
            -
            
            
            
            7,226Changes
      in operating assets and liabilitiesAdvances
      made to vendors
            
            
            (95,974
            )
            
            
            -Decrease
      in other receivables
            
            
            -
            
            
            
            2,174Decrease
      in prepaid expenses
            
            
            3,971
            
            
            
            8,970Increase
      (decrease) in accounts payable and accrued expenses
            
            
            852,010
            
            
            
            (2,042,288
            )(Decrease)
      increase in deferred revenue
            
            
            (214,565
            )
            
            
            448,871Net
      cash provided by operating activities from continuing
      operations
            
            
            1,774,684
            
            
            
            2,463,272Net
      cash used in operating activities of the discontinued
    entity
            
            
            -
            
            
            
            (8,260
            )Net
      cash provided by operating activities
            
            
            1,774,684
            
            
            
            2,455,012CASH
      FLOWS FROM INVESTING ACTIVITIESAdvances
      made to related party
            
            
            (2,790,207
            )
            
            
            -Acquisition
      of property and equipment
            
            
            (194,422
            )
            
            
            (44,581
            )Net
      cash used in investing activities from continuing
    operations
            
            
            (2,984,629
            )
            
            
            (44,581
            )Net
      cash provided by (used in) investing activities of the discontinued
      entity
            
            
            -
            
            
            
            -Net
      cash used in investing activities
            
            
            (2,984,629
            )
            
            
            (44,581
            )CASH
      FLOWS FROM FINANCING ACTIVITIESRepayment
      of bank borrowings
            
            
            (19,484,500
            )
            
            
            (4,606,720
            )Proceeds
      from bank borrowings
            
            
            19,191,500
            
            
            
            -Proceeds
      from convertible notes
            
            
            1,560,000
            
            
            
            -Repayment
      of loans payable to related party
            
            
            (91,827
            )
            
            
            -Advances
      from related party
            
            
            -
            
            
            
            1,641,232Decrease
      in restricted cash secured for bank loans
            
            
            -
            
            
            
            685,500Net
      cash provided by (used in) financing activities from continuing
      operations
            
            
            1,175,173
            
            
            
            (2,279,988
            )Net
      cash provided by financing activities of the discontinued
      entity
            
            
            -
            
            
            
            7,716Net
      cash provided (used in) financing activities
            
            
            1,175,173
            
            
            
            (2,272,272
            )EFFECT
      OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
            
            
            21,975
            
            
            
            (307,062
            )NET
      DECREASE IN CASH AND CASH EQUIVALENTS
            
            
            (12,797
            )
            
            
            (168,903
            )CASH
      AND CASH EQUIVALENTS, BEGINNING BALANCE
            
            
            58,984
            
            
            
            227,887CASH
      AND CASH EQUIVALENTS, ENDING BALANCE
            
            $
            46,187
            
            
            $
            58,984SUPPLEMENTAL
      DISCLOSURES:Income
      tax payments
            
            $
            -
            
            
            $
            -Interest
      payments
            
            $
            622,456
            
            
            $
            950,996NON
      CASH TRANSACTIONS:Sale
      of real property in exchange for receivable from related
    party
            
            $
            -
            
            
            $
            11,228,703Spinoff
      of Safe Cell Tab, Inc.
            
            $
            -
            
            
            $
            189,461





The
accompanying notes are an integral part of these consolidated financial
statements.





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 Table of Contents





CHINA IVY
SCHOOL, INC. AND SUBSIDIARIES


(FORMERLY
CLAREMONT TECHNOLOGIES CORP.)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1 -
DESCRIPTION OF
BUSINESS AND BASIS OF PRESENTATION





Organization





China Ivy
School, Inc. (formerly Claremont Technologies Corp.) (“China Ivy") was
incorporated on September 14, 1999 under the laws of the State of Nevada. China
Ivy acquired a wholly owned subsidiary Safe Cell Tab Inc. ("Safe Cell") on
August 22, 2003. Safe Cell was incorporated on May 9, 1996 under the laws of the
Province of British Columbia, Canada and engaged in distributing Wi-Fi License
and Mobius disposable cell phones.





On
October 12, 2006, China Ivy and the shareholders of Brighter International
Limited (“Brighter International”) entered into a Share Exchange Agreement in
which China Ivy acquired 100% of Brighter International's outstanding common
stock. Under the Share Exchange Agreement, the shareholders of Brighter
International received 2,762,500 newly issued common shares of the company. This
acquisition was accounted for as a reverse acquisition since after the
acquisition, the former shareholders of Brighter International held a majority
of the outstanding shares of China Ivy. The financial statements of the legal
acquirer were not significant.





Brighter
International Limited is an education investment enterprise and was incorporated
in accordance with the General Corporation Act of the State of Nevada on June 1,
2006. On June 15, 2006, Brighter International entered into an agreement with
Blue Tassel School, and pursuant to the agreement, all the shareholders of Blue
Tassel School transferred all their ownership interests in Blue Tassel School to
Brighter International. Prior to the acquisition, Brighter International and
Blue Tassel School had common shareholders owning the same percentage of
ownership in both companies. Therefore, the entities were under common control
before the acquisition. This acquisition was accounted for at historical cost in
a manner similar to the pooling of interests method. After the acquisition,
Brighter International owned 100% of the outstanding shares of Blue Tassel
School.





Blue
Tassel School was established on July 10, 2001 under the laws of the People’s
Republic of China (“PRC”). Blue Tassel School is an education center located in
Suzhou city, accredited by the Jiangsu Province Educational Committee as a
boarding school comprising grades from kindergarten through senior school,
including an international school. The five schools that comprise Blue Tassel
School are kindergarten, primary school, junior high school, senior high school,
and international school.





On July
31, 2008, the Company spun off its wholly owned subsidiary Safe Cell (now named
Cellteck Inc.) to its stockholders. The distribution was completed on August 21,
2008. Accordingly, the operations of Safe Cell have been presented as
"discontinued operations” in the accompanying condensed consolidated financial
statements.





Effective
January 14, 2009, the Company effectuated a 1 for 20 reverse stock split
(thereby reducing the issued and outstanding shares from 61,650,001 shares to
3,082,500 shares). The financial statements have been retroactively adjusted to
reflect this stock split.





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NOTE 2 -
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES





Principles of
Consolidation





The
accompanying consolidated financial statements include the accounts of China Ivy
and its subsidiaries Safe Cell, Brighter International, and Blue Tassel School
(collectively, the “Company”). All significant intercompany balances and
transactions have been eliminated in consolidation.





Basis of
Presentation





The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America.
The Company's reporting currency is the United States dollar.





Going
Concern





The
financial statements have been prepared on a “going concern” basis, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, as of December 31, 2009 and 2008, the
Company had cash of $46,187 and $58,984, respectively, and working capital
deficit of $11,038,871 and $13,257,768, respectively. The Company had
accumulated deficit of $5,115,622 and $4,300,694 as of December 31, 2009 and
2008, respectively. These factors create substantial doubt as to the Company’s
ability to continue as a going concern. The Company plans to improve its
financial condition through a debt or equity offering of its securities and /or
a business combination with another business entity. However, there is no
assurance that the Company will accomplish these objectives. The financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.





Foreign Currency
Transactions and Comprehensive Income (Loss)





The
functional currency of China Ivy is the United States dollar. The functional
currency of Blue Tassel School is the Chinese Renminbi (“RMB”). The reporting
currency of the Company is the United States dollar.





The
assets and liabilities of Blue Tassel School are translated into United States
dollars at period-end exchange rates. The revenues and expenses are translated
into United States dollars at average exchange rates for the periods. Resulting
translation adjustments are recorded as a component of accumulated other
comprehensive income within stockholders’ equity.





Transaction
gains or losses arising from exchange rate fluctuations on balances and
transactions denominated in a currency other than the functional currency are
included in the consolidated results of operations. There is no material foreign
currency transaction gains or losses for the years ended December 31, 2009 and
2008.





Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States ("GAAP") requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates,
and such differences may be material to the financial statements.





Reclassifications





Certain
prior year amounts have been reclassified to conform to the current year
presentation.





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Revenue
Recognition





The
revenues of the Company are tuition fees, accommodation fees and others. Tuition
fees and accommodation fees are collected in advance on or before the new
semester. Tuition fees are recognized as revenue proportionately as the
instructions are delivered, and are reported net of scholarships and tuition
refunds. Accommodation fees are recognized as revenue in proportion to semester
progressed through the end of the reporting period. Tuition and accommodation
fees paid in advance are recorded as deferred revenue.





Stock-Based
Compensation





Stock-based
compensation is accounted for at fair value in accordance with Accounting
Standards Codification (“ASC”) topic 718-10, Stock Compensation (formerly, SFAS
123(R), “Accounting for Stock-Based Compensation”). As of December 31, 2009 and
2008, no stock options or warrants have been granted and none are
outstanding.





Advertising





Advertising
costs are expensed as incurred. Advertising expense for the years ended December
31, 2009 and 2008 were $46,923 and $83,272, respectively.





Research and
Development





In
accordance with the Accounting Standards Codification subtopic 730-10, Research
and Development (“ASC 730-10”) (formerly, SFAS No. 2, “Accounting For Research
and Development Costs”), the Company expenses all research and development costs
as incurred.





Segment
Information





ASC
280-10 (formerly, SFAS No. 131, “Disclosure About Segments of and Enterprise and
Related Information”), requires entity-wide disclosures about the products and
services an entity provides, the material countries in which it holds assets and
reports revenues, and its major customers. The Company operates as a single
segment and will evaluate additional segment disclosure requirements as it
expands its operations.





Income
Taxes





The
Company accounts for income taxes using the asset and liability method described
in ASC 740-10 (formerly, SFAS No. 109, “Accounting For Income Taxes”), the
objective of which is to establish deferred tax assets and liabilities for the
temporary differences between the financial reporting and the tax bases of the
Company’s assets and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled. A valuation allowance related to
deferred tax assets is recorded when it is more likely than not that some
portion or all of the deferred tax assets will not be realized.





Blue
Tassel School is governed by the Income Tax Laws of the PRC. Pursuant to the PRC
relevant laws and regulations and tax law, Blue Tassel School is exempt from
income tax.





Cash and Cash
Equivalents





Cash and
cash equivalents include cash on hand and cash in time deposits, certificates of
deposit and all highly liquid debt instruments with original maturities of three
months or less.





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Property and
Equipment





Property
and equipment are stated at cost. Expenditures for maintenance and repairs are
charged to earnings as incurred; additions, renewals and betterments are
capitalized. When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method for
substantially all assets with estimated lives of:





Buildings
            
            20
      yearsInfrastructure
      and leasehold improvements
            
            10
      yearsEquipment
            
            10
      yearsAutomobiles
            
            10
      yearsFurniture
      and fixtures
            
            5
      yearsComputer
      hardware and software
            
            5
      years





Fair Value of Financial
Instruments





The
Company’s financial instruments consist of cash and cash equivalents, receivable
from related party, receivable from sale and leaseback of real property -
related party, bank borrowings, convertible notes payable, accounts payable and
accrued expenses, and payables to related parties. The fair value of these
financial instruments approximate their carrying amounts reported in the
consolidated balance sheets due to the short term maturity of these instruments
or based upon market quotations of instruments with similar interest rates and
maturities.





Long-Lived
Assets





The
Company reviews its long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may no longer be
recoverable. When these events occur, the Company measures impairment by
comparing the carrying value of the long-lived assets to the estimated
undiscounted future cash flows expected to result from the use of the assets and
their eventual disposition. If the sum of the expected undiscounted cash flow is
less than the carrying amount of the assets, the Company would recognize an
impairment loss based on the fair value of the assets. Based on its review, the
Company believes that, as of December 31, 2009, there were no significant
impairments of its long-lived assets.





Net Loss Per Common
Share





The
Company has adopted ASC 260-10 (formerly, SFAS No. 128, “Earnings per Share”
(“EPS”)), which requires presentation of basic and diluted EPS on the face of
the income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation.





Basic
loss per share is computed by dividing net loss by the weighted average number
of common shares outstanding during the period.





Diluted
loss per share is computed similarly to basic loss per share except that it
includes the potential dilution that could occur if dilutive securities were
converted. Diluted loss per share is the same as basic loss per share, as the
effect of potentially dilutive securities (convertible notes payable) are
anti-dilutive.





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Recent Accounting
Pronouncements





Effective
for interim and annual periods ending after September 15, 2009, the FASB
Accounting Standards Codification (the “Codification”) is the single source of
authoritative literature of U.S. generally accepted accounting principles
(“GAAP”). The Codification consolidates all authoritative accounting literature
into one internet-based research tool, which supersedes all pre-existing
accounting and reporting standards, excluding separate rules and other
interpretive guidance released by the SEC. New accounting guidance is now issued
in the form of Accounting Standards Updates, which update the Codification. The
adoption of Codification did not result in any change in the Company’s
significant accounting policies.





In
May 2009, the FASB issued standards that establish general standards of
accounting for and disclosures of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued. These
standards require the disclosure of the date through which an entity has
evaluated subsequent events and the basis for that date, that is, whether the
date represents the date the financial statements were issued or were available
to be issued. This standard is effective in the first interim period ending
after June 15, 2009. This standard did not have any significant impact
on disclosures in the Company’s consolidated financial statements.





In
June 2009, the FASB issued authoritative guidance which eliminates the
exemption for qualifying special-purpose entities from consolidation
requirements, contains new criteria for determining the primary beneficiary of a
variable interest entity, and increases the frequency of required reassessments
to determine whether a company is the primary beneficiary of a variable interest
entity. The guidance is applicable for annual periods beginning after
November 15, 2009 and interim periods therein and thereafter. The Company
does not expect the adoption of this standard to have a material effect on its
consolidated financial position or results of operations.





In
June 2009, the FASB issued authoritative guidance which eliminates the
concept of a qualifying special-purpose entity, creates more stringent
conditions for reporting a transfer of a portion of a financial asset as a sale,
clarifies other sale-accounting criteria, and changes the initial measurement of
a transferor’s interest in transferred financial assets. The guidance is
applicable for annual periods beginning after November 15, 2009 and interim
periods therein and thereafter. The Company does not expect the adoption of this
standard to have a material effect on its consolidated financial position or
results of operations.





In August
2009, the FASB issued guidance on measuring liabilities at fair value. This
guidance amends the fair value measurements and disclosures by providing
additional guidance clarifying the measurement of liabilities at fair value.
This new accounting guidance is effective for reporting periods ending after
December 15, 2009. The Company is evaluating this new guidance and the possible
impact that the adoption of this new accounting guidance will have on its
consolidated financial statements.





Certain
other accounting pronouncements have been issued by the FASB and other standard
setting organizations which are not yet effective and have not yet been adopted
by the Company. The impact on the Company’s consolidated financial position and
results of operations from adoption of these standards is not expected to be
material.





NOTE 3 -
RECEIVABLE FROM
RELATED PARTY





Minglong
Industry Co. Ltd. (“Minglong”) is one of the Company’s significant shareholders
and is controlled by the chief executive officer of the Company. Receivable from
related party in the amount of $2,790,207 as of December 31, 2009 represented
the net amount advanced to Minglong (see Notes 13 and 16). The receivable due
from Minglong is interest free and due on demand.





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NOTE 4 -
RECEIVABLE FROM SALE
AND LEASEBACK OF REAL PROPERTY - RELATED PARTY





On March
12, 2008, Blue Tassel School sold the land use right of 91,993.32 square meters
and twenty buildings of 50,113.81 square meters to its former shareholder
Minglong with the sales price of $5,563,692 and $10,405,554 respectively,
totaling $15,969,247 (RMB 111,829,458). Blue Tassel School leased back the land
use right and the buildings from Minglong from the date of sale.





The lease
payments equaled the total sales price of $15,969,247 (RMB 111,829,458). The
leases approximated $3.40 (RMB 24) per square meter annually, totaling
approximately $315,280 (RMB 2,207,840) per year for using the land and $35.60
(RMB 180) per square meter annually, totaling approximately $1,288,125 (RMB
9,020,486) per year for leasing the buildings. The total annual lease was to
approximate $1,603,405 (RMB 11,228,326) until a total of approximately
$15,969,247 (RMB 111,829,458) has been offset against the amount receivable from
related party over the 10 year term of the lease.





The total
receivable from related party on the date of sale and lease back was
$11,228,703. This amount represented the present value of the future cash
inflows (our lease payments) at the date of the transactions. Assumptions used
for the present value calculation were: (1) annual rent payments of $1,603,405;
(2) term of ten years; (3) interest rate of 7% per annum.





The
purpose of the sale and leaseback of the land use right and buildings was to
comply with a new regulation from the government of Suzhou City, Jiangsu
Province, China. According to the new regulation, "Public institutions like
schools, kindergartens, hospitals etc., educational facilities and health
facilities of social organizations and other lands for the use of other social
welfare cannot be used as collateral for bank loans". As in 2007 the land use
right and buildings were pledged for bank loans, the management of the Company
decided to sell the land use right and buildings to Minglong and then lease back
for the school use.





The loss
on the March 12, 2008 sale of real property was $5,169,294, as
follows:





Fair
      value of consideration received - $15,969,247 noninterest bearing
      receivable from Minglong due in annual installments of $1,603,405 until
      repaid (discounted at 7% interest rate)
            
            $
            11,228,703Effect
      of change in exchange rate
            
            
            45,893Net
      carrying value of land use right and buildings (less $113,057 foreign
      exchange translation adjustment)
            
            
            (16,443,890
            )Loss
      on sale of real property
            
            $
            (5,169,294
            )





For the
years ended December 31, 2009 and 2008, the receivable from sale and leaseback
of real property – related party changed as follows:





Balance
      due from Minglong at March 12, 2008 in connection with the sale and
      leaseback of real property, noninterest bearing
    (discounted)
            
            $
            11,228,703Amounts
      collected (See Note 13)
            
            
            (7,681,172
            )Accretion
      of discount on receivable
            
            
            2,280,191Foreign
      exchange translation adjustment
            
            
            198,524Balance
      at December 31, 2008
            
            
            6,026,246Amounts
      collected - during the year ended December 31, 2009
            
            
            (1,625,300
            )Accretion
      of discount on receivable
            
            
            482,478Foreign
      exchange translation adjustment
            
            
            (16,695
            )Balance
      at December 31, 2009
            
            
            4,866,729Less:
      current portion
            
            
            1,156,639Receivable
      from sale and leaseback of real property - related party
            
            $
            3,710,090





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NOTE 5 –
PROPERTY AND
EQUIPMENT





As of
December 31, 2009 and 2008, property, plant and equipment consist of the
following:





December
      31,
            
            
            December
      31,2009
            
            
            2008Infrastructure
      and leasehold improvements
            
            $
            11,237,638
            
            
            $
            11,065,511Educational
      equipment
            
            
            561,144
            
            
            
            544,394Automobiles
            
            
            28,834
            
            
            
            28,848Total
      property and equipment
            
            
            11,827,616
            
            
            
            11,638,753Accumulated
      depreciation
            
            
            (4,077,846
            )
            
            
            (3,167,114
            )Property
      and equipment, net
            
            $
            7,749,770
            
            
            $
            8,471,639





The
Company had depreciation expense of $901,348 and $1,146,903 for the years ended
December 31, 2009 and 2008, respectively.





NOTE 6 -
BANK
BORROWINGS





The
Company has borrowed $10,401,500 and $10,699,610 from two banks located in China
under credit agreements as of December 31, 2009 and 2008, respectively.
Borrowings under credit lines consist of the following:





2009
            
            
            2008Bank
      BorrowingsBorrowings from Huaxia Bank Suzhou
      BranchInterest
      at 5.103% per annum, due by September 18, 2009
            
            $
            -
            
            
            $
            6,009,370Interest
      at 5.841% per annum, due by September 12, 2009
            
            
            -
            
            
            
            2,784,830Interest
      at 5.346% per annum, due by October 30, 2010
            
            
            2,637,000
            
            
            
            -Interest
      at 5.346% per annum, due by November 5, 2010
            
            
            2,197,500
            
            
            
            -Interest
      at 5.346% per annum, due by November 9, 2010
            
            
            2,710,250
            
            
            
            -Interest
      at 5.346% per annum, due by November 18, 2010
            
            
            1,098,750
            
            
            
            -Borrowings
      from Huaxia Bank Subtotal
            
            
            8,643,500
            
            
            
            8,794,200Borrowings from Jiangsu Dongwu Rural Commercial
      BankInterest
      at 9.711% per annum, due by June 26, 2009
            
            
            -
            
            
            
            293,140Interest
      at 9.711% per annum, due by June 25, 2009
            
            
            -
            
            
            
            1,612,270Interest
      at 6.903% per annum, due by June 5, 2010
            
            
            293,000
            
            
            
            -Interest
      at 6.903% per annum, due by June 5, 2010
            
            
            1,465,000
            
            
            
            -Borrowings
      from Dongwu Rural Commercial Bank Subtotal
            
            
            1,758,000
            
            
            
            1,905,410Total
      borrowings
            
            
            10,401,500
            
            
            
            10,699,610Current
      portion
            
            
            10,401,500
            
            
            
            10,699,610Long
      term portion
            
            $
            -
            
            
            $
            -





On June
17, 2008, the Company entered into a credit agreement with Jiangsu Dongwu Rural
Commercial Bank. The Company acquired a 2,000,000 RMB (approximately $293,000)
credit line from June 17, 2008 to June 17, 2011. This credit line is secured by
a 234 square meter residential unit and 62 square meter land use right owned by
Ti Yin and Yan Hong, the third party assigned by the bank.





F -
12
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On June
17, 2008, the Company entered into a credit agreement with Jiangsu Dongwu Rural
Commercial Bank. The Company acquired a 11,000,000 RMB (approximately
$1,611,500) credit line from June 17, 2008 to June 17, 2011. This credit line is
secured by a 477 square meter residential unit and 837 square meter land use
right owned by the Chief Executive Officer of the Company. As of December 31,
2009, the Company borrowed 10,000,000 RMB ($1,465,000).





The loans
from Huaxia Bank are secured by the land use right of Blue Tassel School and
four buildings totaling 20,926.86 square meters of the School.





NOTE 7 -
CONVERTIBLE NOTES
PAYABLE





On June
30, 2009, the Company completed the sale of $1,560,000 principal amount of the
Company's 6% Convertible Notes, due June 30, 2010 (the "Notes"). The Notes were
sold to four related parties ($920,000 to the Company’s chief executive officer,
$448,000 to Minglong, and $192,000 to two other Company directors) outside the
United States in a private transaction exempted from the registration
requirements of the Securities Act of 1933 pursuant to Regulation D. The Notes
accrue interest at the rate of 6% per annum and were to mature on June 30, 2010.
The four related parties paid an aggregate of $1,560,000 for their
Notes.





Holders
of the Notes could at any time convert all or any portion of the principal
amount of the Notes into shares of the Company's Common Stock at a conversion
price, subject to adjustment, initially equal to eight cents ($0.08) per share.
No interest is payable on any portion of a Note converted into Common Stock.
Should the conversion price decrease or increase, the number of shares of Common
Stock issuable upon conversion of the Notes would have proportionately increased
or decreased, as the case may be. In the event of default by the Company in its
obligations under the Notes, Holders can, at their option, declare the principal
of the Note and the interest accrued thereon to be immediately due and
payable.





On March
2, 2010, China Ivy issued a total of 19,500,000 shares of its common stock in
full satisfaction of the $1,560,000 convertible notes payable due to the four
related parties discussed above.





NOTE 8 -
ACCOUNTS PAYABLE AND
ACCRUED EXPENSES





The
Company's accounts payable and accrued expenses as of December 31, 2009 and 2008
are summarized as follows:





2009
            
            
            2008Accounts
      payable
            
            $
            490,001
            
            
            $
            563,312Accrued
      wages
            
            
            120,776
            
            
            
            109,903Accrued
      consulting fees
            
            
            883,384
            
            
            
            -Accrued
      interest on convertible notes payable
            
            
            46,800
            
            
            
            -Other
      accrued expenses
            
            
            190,541
            
            
            
            264,905Total
      accounts payable and accrued expenses
            
            $
            1,731,502
            
            
            $
            938,120





On
December 31, 2009, the Company authorized consulting fee payments totaling
$846,788 to 56 consultants who provided various education consulting services to
the Company during 2009. The consulting fees were accrued in December 2009 and
were paid in full on February 5, 2010.





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NOTE 9 -
PAYABLES TO RELATED
PARTIES





Payables
to related parties consist of the following:





2009
            
            
            2008Payable
      to Minglong (See Note 13)
            
            $
            -
            
            
            $
            73,372Payable
      to Chief Financial Officer (See Note 13)
            
            
            58,600
            
            
            
            -Payable
      to Mr. Yongqi Zhu
            
            
            660,741
            
            
            
            679,521Total
      Payable to Related Parties
            
            $
            719,341
            
            
            $
            752,893





Payable
to Minglong in the amount of $73,372 as of December 31, 2008 represented the net
balance of payments made by Minglong on behalf of the Company (see Note 3). The
payable was interest free and due on demand.





Payable
to Chief Financial Officer in the amount of $58,600 as of December 31, 2009
represented the net balance of loans from the Chief Financial Officer of the
Company. The payable is interest free and due on demand. $58,628 of this payable
was included in accounts payable and accrued expenses as of December 31,
2008.





Payable
to Mr. Yongqi Zhu, the Chief Executive Officer of the Company, was $660,741 and
$679,521 as of December 31, 2009 and 2008, respectively. The balance due to Mr.
Zhu is interest free and due on demand.





NOTE 10 -
DEFERRED
REVENUE





The
Company’s revenue consists of tuition fees, accommodation fees and others. Those
fees will usually be collected in advance at the beginning of a semester. Spring
semester runs from February to July. Autumn semester runs from August to
January. The Company prorates the fees collected to applicable months during the
semester, recognizes revenue in the corresponding periods and records
unrecognized fees collected as deferred income. As of December 31, 2009 and
2008, the deferred revenue balance totaled $715,535 and $930,100,
respectively.





NOTE 11 -
STATUTORY
RESERVES





Statutory
reserves consist of the following:





2009
            
            
            2008Statutory
      surplus reserve
            
            $
            307,853
            
            
            $
            307,853Statutory
      common welfare fund
            
            
            172,960
            
            
            
            172,960Total
            
            $
            480,813
            
            
            $
            480,813





As
stipulated by the Company Law of the People's Republic of China (PRC), net
income after taxation can only be distributed as dividends after appropriation
has been made for the following: i. Making up cumulative prior years' losses, if
any; ii. Allocations to the "Statutory surplus reserve" of at least 10% of
income after tax, as determined under PRC accounting rules and regulations,
until the fund amounts to 50% of Blue Tassel School's registered capital; iii.
Allocations of 5-10% of income after tax, as determined under PRC accounting
rules and regulations, to Blue Tassel School's "Statutory common welfare fund",
which is established for the purpose of providing employee facilities and other
collective benefits to the School's employees; and iv. Allocations to the
discretionary surplus reserve, if approved in the stockholders' general
meeting.





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As an
educational institution, the Blue Tassel School has an option not to make these
appropriations. For the year ended December 31, 2009 and 2008, the Company did
not make any appropriations to the statutory reserves.





NOTE 12 -
ACCUMULATED OTHER
COMPREHENSIVE INCOME





Balances
of related after-tax components comprising accumulated other comprehensive
income (loss), included in stockholders' equity at December 31, 2009 and 2008,
are as follows:





Foreign
      Currency Translation AdjustmentsBalance
      at December 31, 2007
            
            $
            500,352Change
      during the year ended December 31, 2008
            
            
            253,656Balance
      at December 31, 2008
            
            
            754,008Change
      during the year ended December 31, 2009
            
            
            (4,200
            )Balance
      at December 31, 2009
            
            $
            749,808





NOTE 13 -
RELATED PARTY
TRANSACTIONS





During
2008, the Company received funds from and advanced funds to Mr. Yongqi Zhu, one
of its significant shareholders and the Chief Executive Officer of the Company.
As of December 31, 2009 and 2008, the balance due to Mr. Zhu was $660,741 and
$679,521, respectively, which was included in payables to related parties. The
balance due to Mr. Zhu is interest free and due on demand.





During
2009, the Company received $146,500 from Ms. Xue, Chief Financial Officer of the
Company and returned $146,500 to Mr. Xue in the fourth quarter of 2009. As of
December 31, 2009, the balance due to Ms. Xue was $58,600, which is interest
free and due on demand. (See Note 9).





Minglong
is a former shareholder of Blue Tassel School. It is controlled by Mr. Zhu, the
chief executive officer of the Company. On March 12, 2008, the Company sold a
91,993 square meters land use right and twenty buildings of 50,114 square meters
to Minglong. The Company leased back the land use right and buildings pursuant
to a 10 year lease from Minglong at the date of sale (See Note 4).





During
2008, the Company recorded rent expense of $1,296,466 to offset the scheduled
amount due from related party in connection with the sale and leaseback of real
property. Also, the Company received net cash inflow of $2,518,999 from
Minglong. In addition, Company expenses of $2,181,385 and consulting fees of
$1,684,322 were paid by Minglong. The Company agreed to apply and treat the
above items totaling $7,681,172 as collections of the receivable from related
party in connection with the sale and lease back of real property (See Note
4).





For the
year ended December 31, 2009, the Company advanced net cash of $3,020,313 to
Minglong. Minglong paid expenses of $156,734 and $73,372 on behalf of China Ivy
during the year ended December 31, 2009 and 2008, respectively. A netted amount
of $2,790,207 was recorded under the caption “Receivable from Related Party” as
of December 31, 2009 (See Note 16).





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15
 Table of Contents





NOTE 14 -
COMMITMENTS





Operating Lease
Obligations





Blue
Tassel School leases a land use right and 20 buildings located in Suzhou City
Wuzhong Economy Development District from Minglong, the former shareholder of
Blue Tassel School (Note 4). The term of the lease agreement is 10 years
starting March 12, 2008. The lease is considered an operating lease. Rent
expense and related maintenance expenses for the year ended December 31, 2009
and the period March 12, 2008 to December 31, 2008 was $1,811,139 and
$1,481,290, respectively.





Aggregate
minimum future lease payments under operating leases as of December 31, 2009 for
each of the next five years and thereafter are as follows:





Period
      ending
              December
      31,
            
            Minimum
      lease
              payments2010
            
            $
            1,644,9492011
            
            
            1,644,9492012
            
            
            1,644,9492013
            
            
            1,644,9492014
            
            
            1,644,949Thereafter
            
            
            5,688,782Total
            
            $
            13,913,527





Consulting
Agreements





In 2008,
the Company engaged over 50 individuals (the “Consultants”) to provide various
education consulting services for the Company. The agreements for 2008 provided
for the payment of minimum consulting fees to the Consultants totaling
$1,684,332 (RMB 11,700,000) for the service period January 1, 2008 to December
31, 2008.





In 2009,
the Company renewed one year service contracts with 56 consultants to provide
various education consulting services for the Company. On December 31, 2009, the
Company authorized consulting fee payments totaling $846,788 to the 56
consultants who provided various education consulting services to the Company
during 2009. The consulting fees were accrued in December 2009 and were paid in
full on February 5, 2010.





On June
13, 2008, the Company executed an 18 month consulting agreement with Beijing JP
Investment Advisors Limited (the “Advisors”). For consideration of 30,000 RMB
($4,392) per month, the Advisors provided services related to business
development, marketing research, and prospective acquisitions.





For the
years ended December 31, 2009 and 2008, consulting fees expense was $899,531 and
$1,722,877, respectively.





NOTE 15 -
DISCONTINUED
OPERATIONS





On July
31, 2008, the Company spun off its wholly owned subsidiary Safe Cell (now named
Cellteck Inc.) to its stockholders. Accordingly, the operating results of Safe
Cell before the spinoff on July 31, 2008 is reported as discontinued operations
in the accompanying consolidated financial statements. The $189,461 negative
stockholders’ equity of Safe Cell at July 31, 2008 has been added to additional
paid-in capital.





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16
 Table of Contents





For the
year ended December 31, 2008, loss from operations of discontinued entity
consisted of:





2008Sales,
      net
            
            $
            6,771Cost
      of sales
            
            
            -Gross
      profit
            
            
            6,771Selling,
      general and administrative expenses
            
            
            (13,997
            )Net
      loss from operations of discontinued entity
            
            $
            (7,226
            )





NOTE 16 –
SUBSEQUENT
EVENT





On March
2, 2010, China Ivy issued a total of 19,500,000 shares of its common stock in
full satisfaction of the $1,560,000 convertible notes payable due to the four
related parties disclosed in Note 7, increasing the issued and outstanding
shares of China Ivy common stock from 3,082,500 shares to 22,582,500
shares.





On March
30, 2010, the Company received payment of RMB 20,000,000 ($2,930,000) from
Minglong Industry Co. substantially satisfying an interest free advance
receivable of $2,790,207 at December 31, 2009 due the Company discussed in Notes
3 and 13 above.





The
Company has evaluated subsequent events through the date of filing of this Form
10-K and has determined that there were no additional subsequent events to
recognize or disclose in these financial statements.









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