|                                  
|----------------------------------
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|Washington, D.C. 20549            
|                                  
|FORM 10-K                         

|  |                                                                                            
|- | -------------------------------------------------------------------------------------------
|x | Annual
 report pursuant to section 13 or 15(d) of the Securities Exchange Act of
 1934.    
|  | For the
 fiscal year ending December 31, 2010                                              
|  |                                                                                            
|  | Or                                                                                         
|  |                                                                                            
|o | Transition
 report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
 1934.
|  | For the
 transition period from ______________ to _____________.                           

|                                                       
|-------------------------------------------------------
|Commission file number 000-52347                       
|                                                       
|TSINGDA EEDU CORPORATION                               
|(Exact
 name of registrant as specified in its charter)

|                                                      |  |                        
|----------------------------------------------------- |  | -----------------------
|Cayman Islands                                        |  | N/A                    
|(State
 or other jurisdiction                         |  | (IRS
 Employer         
|of
 incorporation or organization)                    |  | Identification
 number)
|                                                      |  |                        
|No. 0620, Yongleyingshiwenhuanan Rd.,                 |  | 101105                 
|Yongledian Town, Tongzhou District, Beijing, PR China |  |                        
|(Address
 of Principal Executive Offices)             |  | (Zip
 Code)            

|                                                            
|------------------------------------------------------------
|+45-8842 9181                                               
|(Registrants
 Telephone Number, Including Area Code)       
|                                                            
|Securities
 registered pursuant to Section 12(b) of the Act:
|                                                            
|None                                                        
|                                                            
|Securities
 registered pursuant to Section 12(g) of the Act:
|                                                            
|Title of Each Class                                         
|Ordinary
 Shares, $.000384 par value                        

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 Exchange 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
Website, if any, every  Interactive Data File
required to be submitted and posted pursuant to rule 405 of the Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or 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 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.     x

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

|                          |                     |                         |                            
|------------------------- | ------------------- | ----------------------- | ---------------------------
|Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x

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

The aggregate market value
of the voting and non-voting common equity held by non-affiliates of the
registrant was approximately as of June 30, 2010 cannot be calculated because
there is no market for the issuers securities.

As of March 11, 2011, there
were 33,729,862 Ordinary Shares, par value $0.000384 per share, of the
registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

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TABLE OF CONTENTS

|         |  |                                                                                                               |  |   
|-------- |  | ------------------------------------------------------------------------------------------------------------- |  | --
|         |  | PART I                                                                                                        |  |   
|Item 1.  |  | Business                                                                                                      |  | 3 
|Item 1A. |  | Risk Factors                                                                                                  |  | 22
|Item 1B. |  | Unresolved Staff Comments                                                                                     |  | 32
|Item 2.  |  | Properties                                                                                                    |  | 32
|Item 3.  |  | Legal Proceedings                                                                                             |  | 33
|         |  |                                                                                                               |  |   
|         |  | PART II                                                                                                       |  |   
|Item 5.  |  | Market For Registrants Common Equity, Related
 Stockholder Matters and Issuer Purchases of Equity Securities |  | 33
|Item 6.  |  | Selected Financial Data                                                                                       |  | 33
|Item 7.  |  | Managements Discussion and Analysis of Financial
 Condition and Results of Operations                        |  | 34
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market
 Risk                                                   |  | 50
|Item 8.  |  | Financial Statements and Supplementary Data                                                                   |  | 50
|Item 9.  |  | Changes in and Disagreements with Accountants on
 Accounting and Financial Disclosure                         |  | 50
|Item 9A. |  | Controls and Procedures                                                                                       |  | 51
|Item 9B. |  | Other Information                                                                                             |  | 52
|         |  |                                                                                                               |  |   
|         |  | PART III                                                                                                      |  |   
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                        |  | 52
|Item 11. |  | Executive Compensation                                                                                        |  | 54
|Item 12. |  | Security Ownership of Certain Beneficial Owners and
 Management and Related Stockholder Matters               |  | 55
|Item 13. |  | Certain Relationships and Related Transactions                                                                |  | 56
|Item 14. |  | Principal Accounting Fees and Services                                                                        |  | 58
|         |  |                                                                                                               |  |   
|         |  | PART IV                                                                                                       |  |   
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                    |  | 59

2

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PART I

ITEM 1. BUSINESS

Market Information

General

Chinas education market is
substantial based on the sheer size of its population. According to information
published by the PRC government, it appears that our target population market
as of December 31, 2010 is approximately 360 million individuals. The group is
comprised of: infants and children below school age (6) - 160 million; primary
school students - 110 million; junior high school students - 60 million; and senior
high school students 30 million.

The importance of education
in China is grounded upon a number of factors. Confucian doctrines placed high
importance on education. Another factor which placed significant import on
education arose from Chinas one child policy implemented in 1979 in an
effort to control its staggering population. As a result of the one child
policy, many Chinese families believe that their future rests with the success
of their only child. Consequently, there is a strong parental push towards
education. Another factor contributing to the demand for education in China is
the need to support the enormous economic growth currently underway in the
country.

In the PRC, school
attendance is mandatory through junior high school. Beyond junior high school,
schooling is voluntary and students must pay for senior high school and any
post-secondary school. Senior high school students typically range in age from
15 to 19. Students in post-secondary schools (or any educational institution
beyond senior high school) typically range in age from 20 to 24. Moreover,
unlike public schooling in the United States, admission to prestigious public
high schools is premised on student qualification, including results from
entrance exams. Consequently, competition for prestigious high schools is
intense. In fact, the country has developed a keen awareness of the most
prestigious high school by region and countrywide. Many of the most prestigious
high schools are located in tier one cities, principally Beijing. These
prestigious high schools are the recipients of disproportionate governmental
funding which in turn attracts more competent teachers.

The use of online education
is trending favorably in China. Based on industry data, the market scale of
online education in 2008 in the PRC amounted to approximately $5.1 billion with
2012 projections reaching $10.6 billion. Moreover, the number of online
education learners in China will climb to 23.1 million in 2010, twice as many
as that in 2007. The Chinese online education market is expected to experience
average growth of 150% in the next five years.

(BAR CHART)

Shortage of funding

Chinas educational system
historically has been under-funded compared to the rest of the world. In 2008,
Chinas fiscal education expenditure was 3.48% of GDP compared with the world
average of 4.5% Recently, the PRC government has taken initiatives to improve
its educational system countrywide due principally to the recognition that the
countrys technological development ultimately rests on the level of
competency, or level of education, of its workforce. Yet despite these
initiatives, there remains a severe disparity in educational funding between
rural and urban areas in China as discussed below.

Funding disparity

Chinas vast territory and
large population have led to a significant disparity in public educational
offerings between urban and rural areas. According to official statistics,
there is a significant gap in the average education investment of students
between rich and poor provinces. The public funding disparity for primary
schools, junior high schools and senior high schools can range between 6-8
times more in the rich, urban areas compared with the poorer, rural areas.
Compared with first-tier cities in PRC, many rural areas lack qualified teacher
and training resources due principally to lack of funding from local
governments. In recent years, a series of positive measures have been taken by
related authorities to support the development of distance education. However,
the problem is still quite pronounced, and massive input from the private
sector is in demand.

3

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The Tsingda Learning Concept

General

We are an online provider of
supplementary educational services in China. Our website is http://www.eeduol.com.
The information contained on our websites does not form a part of this
prospectus. We rolled out our Tsingda Learning Center concept in 2006, and
more recently in late 2008, we introduced our web-based real-time interactive
learning platform called Tsingda Virtual Internet Classroom.

Our educational model is
depicted below:

(FLOW CHART)

Our educational services are
not accredited by the PRC Ministry of Education or any other governmental
agency. As such, our learning concept does not function as a substitute or
alternative to traditional government run schools, which are accredited by the
PRC Ministry of Education to grant diplomas and/or degrees, rather it has been
shaped to supplement learning provided by government run schools in the PRC. No
accrediting learning centers compete with us in our industry. Accredited
learning centers are traditional degree-granting schools and we are not at a
competitive disadvantage because we are not an accredited learning center.

For the year ended December
31, 2010, we had revenues of $27,447,545, as compared to revenues of
$14,650,863 for the year ended December 31, 2009, an increase of approximately
87%.

Learning Centers

As of December 31, 2009 and
after three years of operations, we had approximately 1,750 operating Tsingda
Learning Centers located in 1,300 cities and 23 provinces throughout the PRC.
Of the total amount, three were Company-owned with the remainder as franchised
operations. As of December 31, 2010, we had over 2,346 operating Tsingda
Learning Centers in 1,400 cities and 23 provinces. Of the total amount, 21 were
Company-owned with the remainder as franchised operations.

Our Tsingda Learning Centers
principally target elementary school (grades K-8) students and in most
instances are located in close proximity of a local elementary school. We
designed the rollout of our franchised learning centers to generally avoid the
tier one cities of Shanghai, Beijing, Chengdu, and Guangzhou. Instead, we are
geographically concentrated on the second and third tier cities. We believe
there are 50,000 2nd and 3rd tier cities in the PRC. We employed this strategy
because we believe that competition in these lower tier cities would be less
intense than first tier cities, but more importantly, we anticipated stronger
product demand in the rural areas due to disparity in educational funding
between the two areas.

While we concentrate our
franchise development efforts in the rural areas for reasons discussed above,
we located our initial Company-owned centers in close proximity to our
headquarters in Beijing. This allows us to exert greater operating control over
our own centers, as well as provide a nearby training center for new
franchisees. We plan on opening future Company-owned centers in other tier one
cities which will serve as regional training centers.

Our target customers are
students ranging from 6 to 18 years of age studying at elementary, junior and
senior high schools. Of our customers, 70% are elementary school students, 20%
are middle school students and 10% are high school students. Our marketing
methods consist of:

 Referrals from former
teachers. Approximately 50% of our franchisees are former school teachers and
they are active in their school district and community in encouraging students
to attend learning centers after school. They achieve this primarily through
passing leaflets and through word of mouth.

 Concentrated Advertising.
As stated above, learning centers generally distribute leaflets in front of
school and advertise on bulletin boards in high density residential areas.

 Activities. Learning
centers periodically hold recruitment conferences and free tours of online
content, etc. in public areas where parents and teachers are invited.

4

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 Mass Advertising. We
advertise on local and national television, local newspapers and magazines, and
on the Internet.

Although we do not recruit
students based on prior academic performance, regulations prohibiting a PRC
educational institution from recruiting students based on prior academic
performance do not apply to us.

Teaching at our learning
centers is solely delivered electronically via desktop computers housed at our
locations, either taught in live real time by a teacher at a remote location,
or from a pre-recorded course. Our proprietary courseware provides two core
curriculums: synchronous (or sync) courses and featured courses. Sync courses
match textbooks from local schools and are delivered synchronously with the
curriculum for these schools. Featured courses consist of learning programs
designed to bolster skills in core subjects such as math and English, among
others. Featured courses also prepare students for the highly competitive high
school and college entrance exams. Our courseware provides a broad learning
experience to the student. Learning modules includes classes directed by a wide
range of teachers, including renowned teachers from tier one cites, Q&A
sessions, and one on one teaching. Our courseware also features regular mock
tests and exams, and gap detection which determines student weakness and
automatically generates subsequent teaching aids. We also have digitized
textbooks for 97% of targeted schools in the PRC. We believe our courseware is
the most advanced in the industry and is a compelling learning regime
particularly for students from less populated areas where teaching resources
are limited.

In China, high school exams
and college entrance exams are conducted on a local and provincial level, and
are not standardized on a national level, such as its United States
counterpart, the SAT. In that regard, there are many different exams and our
students prepare for high school entrance exams by taking our courses that are
synchronized with the textbooks they are studying. The most popular of our
synchronous courses are keyed to the following textbooks:

|                  |  |                                                                  
|----------------- |  | -----------------------------------------------------------------
|Subject           |  | Textbook
 Editions/Publisher                                     
|                  |  |                                                                  
|                  |  |                                                                  
|Chinese
 Language |  | Remin University, Jiangsu
 Edition, Beijing Normal University    
|                  |  | Shanghai Edition, Hebei
 Edition, Hunan Edition                  
|Mathematics       |  | Remin University, Jiangsu
 Edition, Beijing Normal University    
|                  |  | Zhejiang Edition, Shanghai
 Edition, Hebei Edition,              
|                  |  | Remin University, Jiangsu
 Edition                               
|English           |  | Beijing Normal University,
 Zhejiang Edition, Foreign Language   
|                  |  | Teaching and Research
 Press, Yilin-Oxford English               
|Physics           |  | Remin University, Jiangsu
 Edition, Beijing Normal University    
|                  |  | Zhejiang Edition, Shanghai
 Edition, Hebei Edition, Hunan Edition
|Chemistry         |  | Remin University, Jiangsu
 Edition, Beijing Normal University    
|                  |  | Zhejiang Edition, Shanghai
 Edition, Hebei Edition, Hunan Edition

Our students prepare for
their college entrance exam by consuming our featured courses on subjects that
are typically covered in a provincial college entrance exam:

|                  |  |                                                                                                     
|----------------- |  | ----------------------------------------------------------------------------------------------------
|Subject           |  | Contents                                                                                            
|                  |  |                                                                                                     
|Chinese
 Language |  | Composition, Reading                                                                                
|Mathematics       |  | Focused Algebra, Mystery
 of Geometry                                                               
|English           |  | Listening training,
 Speaking training, Efficient Reading, Writing                                  
|Physics           |  | Focused Mechanics, Focused
 Electricity, Focused Optics, Focused Heat, Focused Atom                 
|Chemistry         |  | Chemistry Experiments                                                                               
|                  |  | Nan Kai University Chair,
 Mock test, Simulation Questions Analysis                                 
|Special
 Subject  |  | Huang Gang Chair, Mock
 test, Simulation Question Analysis                                          
|Academic
 Chair   |  | Chair of Middle School
 attached to China Normal University, Mock test, Simulation Question Analysis
|Psychological     |  | Psychological Counseling
 before University Entrance Exam, Case Study                               
|Counseling        |  |                                                                                                     

Online Virtual Classrooms

In the fourth quarter of
2008, we successfully developed a highly interactive, real-time, and
personalized learning platform called the Tsingda Internet Classroom. Tsingda
Internet Classroom has been designed to be online marketplace whereby buyers
(students) and sellers (teachers) are linked through our proprietary software
interface for the sole purpose of transacting educational related services. The
target audience is mainly high school students; however some classrooms are
oriented towards junior high and other students. Course subjects along with
pricing and presentations dates are posted to a presentation page on our
web-site by company qualified

5

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teachers. Our teacher roster
includes approximately 2,350 renowned teachers from tier one cities. These
teachers have achieved recognition based on awards from the Ministry of Education.
Interested students can browse presentation web-pages by teacher or subject
matter. Teacher credentials, course outline, pricing, presentation times, and
presentation mode (live or pre-recorded) also are displayed. Course purchases
are made electronically, and are delivered through a video feed which can be
viewed electronically by the student. More popular courses are recorded for
later presentation. Our online learning platform offers students from less
developed regions the opportunity to be able experience the teaching
disciplines of more experienced, including these renowned teachers from tier
one cities. Unlike the courseware provided at a learning center, virtual
classroom courses have not been designed to be synchronous. In most courses,
students can communicate electronically with teachers.

The Tsingda virtual
classroom was first launched for high school students, and later included
junior high and elementary students. As of the December 31, 2010, total
registered students and active students of the Tsingda virtual classroom were
428,550 and 84,126, respectively, and the number of certified teachers was
20,163. A significant portion of our existing student base and current revenues
of our virtual classroom is attributable to students who have attended or are
attending our learning centers.

Our Revenue Model

We generate revenues both
from our Company-owned and franchised learning centers and from the sale of
e-cards which are used to purchase our courses.

Tsingda Learning Centers

(FLOW CHART)

From franchised locations,
we receive (a) a one time, franchise licensing fee, (b) annual management fees
equal to 10% of the initial franchise licensing fee, (c) 18% of student
generated revenue from pre-recorded courses and 8% of student generated revenue
from real-time courses, and (d) 10% from the sale of reference books and
stationery products sold in the centers. We retain 100% of the revenue
generated at Company-owned locations.

Tsingda Learning Centers

As of December 31, 2010,
approximately 2,346 Tsingda Learning Centers are in operation in 1,400 cities
and 23 provinces in China. As of the December 31, 2010, total registered
students and active students of the Tsingda Learning Centers were 6,838,181 and
1,340,652 respectively. The map below depicts the concentration of Tsingda
Learning Centers by region as of December 31, 2010.

(MAP)

The following table reflects
the concentration of our learning center locations by city and province:

|         |  |         |  |         |  |         |  |         |  |          |  |          |  |           |  |        |  |         |  |        
|-------- |  | ------- |  | ------- |  | ------- |  | ------- |  | -------- |  | -------- |  | --------- |  | ------ |  | ------- |  | -------
|         |  | 1       |  | 2       |  | 3       |  | 4       |  | 5        |  | 6        |  | 7         |  | 8      |  | 9       |  | 10     
|         |  |         |  |         |  |         |  |         |  |          |  |          |  |           |  |        |  |         |  |        
|City     |  | Zibo    |  | Fuzhou  |  | Qingdao |  | Taiyuan |  | Binzhou  |  | Nanchong |  | Zhenzhou  |  | Chendu |  | Nantong |  | Wenzhou
|Number   |  | 32      |  | 27      |  | 26      |  | 22      |  | 21       |  | 20       |  | 19        |  | 18     |  | 18      |  | 17     
|         |  |         |  |         |  |         |  |         |  |          |  |          |  |           |  |        |  |         |  |        
|         |  | 1       |  | 2       |  | 3       |  | 4       |  | 5        |  | 6        |  | 7         |  | 8      |  | 9       |  | 10     
|         |  |         |  |         |  |         |  |         |  |          |  |          |  |           |  |        |  |         |  |        
|Province |  | Shandon |  | Jiangsu |  | Sichuan |  | Henan   |  | Zhejiang |  | Fujian   |  | Guangdong |  | Shanxi |  | Hubei   |  | Anhui  
|Number   |  | 229     |  | 157     |  | 137     |  | 121     |  | 108      |  | 105      |  | 103       |  | 83     |  | 82      |  | 81     

Key Features of Our Courseware

Key features of our
proprietary courseware are categorized as follows:

| |   |                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | Comprehensive Reference
 Library: We have
 digitized 97% of the teaching materials of all elementary, junior high and
 high schools in the PRC. The library allows for easy student reference to the
 familiar teaching materials.

6

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | o | Curriculum
 Matching Courseware: Early in its product
 development, we recognized that in the PRC, like most other developed or
 developing countries, teaching curriculum for the identical subject matter
 varies by region or province. Apart from digitizing substantially all of the
 relevant teaching materials, we have customized our teaching courseware to
 match local teaching materials. This means that a student in a Sichuan city
 learning center and a student in Nanjing city learning center will receive
 different courseware material on the same subject matter. We developed these
 customized learning materials in collaboration with regional teachers.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | o | Synchronous
 Courseware Delivery: The courseware delivers
 teaching materials to the student synchronously with curriculums from local
 schools. Students can drill down to lessons which coincide with current
 school classes.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | o | Diverse
 Teaching Disciplines. For any subject in our
 curriculum, students can select presentations from numerous teachers,
 including renowned teachers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | o | Gap
 Detection: Our proprietary courseware detects
 weaknesses in a students aptitude. During testing and Q&A sessions,
 incorrect answers generate subsequent questions specifically aimed at
 bolstering student weaknesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | o | Results
 Evaluation. The courseware is result oriented and
 thus provides scores on mock tests and practice sessions so that students or
 their parents can gauge performance. It also delivers progress reports on
 demand which indicate a students progress in a given subject over a period
 of time.                                                                                                                                                                                                                                                                                                                                                                          

We have
disclosed the titles of our courses and textbooks in Exhibit 99.1 to this
Amendment No. 1.

Our Curriculum

Learning
centers provide two core curriculums: synchronous (or sync) courses and
featured courses, and both are depicted below;

|                  |  |                                                                                                         
|----------------- |  | --------------------------------------------------------------------------------------------------------
|Basic Curriculums |  | Module                                                                                                  
|                  |  |                                                                                                         
|Sync courses      |  | Match local
 textbooks in subjects like English and math.                                               
|                  |  |                                                                                                         
|Featured courses  |  | Primary
 school English Primary school math                                                             
|                  |  |                                                                                                         
|                  |  | Primary
 school Olympic math                                                                            
|                  |  |                                                                                                         
|                  |  | Primary
 school literature                                                                              
|                  |  |                                                                                                         
|                  |  | Kid English
 series                                                                                     
|                  |  |                                                                                                         
|                  |  | Intensive
 teaching and drill series                                                                    
|                  |  |                                                                                                         
|                  |  | Composition
 series Video from famous school High school admission exam preparatory
 channel            
|                  |  | College
 admission exam preparatory channel Traditional Chinese cultures workshop Science
 and discovery

We also have
entered into licensing arrangements with third parties to provide
extracurricular materials that are delivered through video, audio and
animation. These presentations relate to such matters as Chinese and worldwide
culture, geography and history. While these extracurricular products do not
provide meaningful revenues to a learning center, they provide students with an
educational diversion from core subjects.

PRC Regulation of Franchise Businesses

We have made
all required filings and met all requirements under PRC law to legally operate
a franchise business in the PRC. The required filings include (i) copies of the
business license or enterprise registration certificate; (ii) a sample
franchise contract; (iii) a brochure for franchise operations; (iv) a marketing
plan; (v) written commitment and relevant materials proving that the relevant
provisions have been followed; and (vi) other documents and materials required
by relevant governing authorities.

7

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The legal
requirements to operate a franchise business in the PRC under the Regulation on
the Administration of Commercial Franchises require the franchisor to possess a
mature business model and the ability to provide long-term business guidance,
technical support, business training and other services to its franchisees. The
franchisor must have at least two direct sales stores, and have been engaged in
the business for more than a year. If this franchisor conducts its operations
within the scope of a single province, autonomous region, or municipality
directly under the PRC Central Government, it is required to file the required
legal documents with the relevant governing authorities of the province,
autonomous region or municipality directly under the PRC Central Government;
and if the franchisor conducts its operations within the scope of two or more
provinces, autonomous regions, or municipalities directly under the PRC Central
Government, it is required to file the required legal documents with the
competent commercial authority of the State Council.

Franchise and Company-owned Center Details

A typical
franchised learning center is approximately 100 to 300 square meters while
Company-owned locations are almost double in size at 300 to 800 square meters.
Each franchise center is staffed with 4-5 employees, while Company-owned
centers are staffed with 8-10 employees. The staff generally includes one
supervisor, with the remainder of staff consisting of counselors. Our
experience to date has been that most centers are owned and operated by former
teachers in the respective regions. Thus, these operators often times are
familiar with many of the families in the area and are able to promote the
centers attributes the local market.

Generally,
learning centers are located within close proximity of an elementary school,
and most students are able to walk from their school to the learning center.
Hours of operation are between 9:00 am to 8:30 pm each school day, however,
high student traffic generally occurs between 3:00 pm to 6:00 pm during the
school day. During winter recess (4 weeks) and summer recess (8 weeks), many
children of single or dual income parents arrive at the learning center in the
morning and leave in the evening. While at the learning centers, students can access
the learning center curriculum or our virtual classrooms. A typical franchise
center receives approximately 40-80 students per day, while a Company-owned
center receives approximately 80-100 students per day.

Each learning
center consists of three segregated areas, online
learning, counselor
guidance, and educational
productsdepicted as follows:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | Online
 Learning Area. Each franchised and Company-owned
 center generally supports 15 and 50 computers, respectively, in the online
 learning area. During periods of high student traffic, computers are
 accessible to students for a maximum of one hour. Students pay for courses
 exclusively through the Tsingda e-card, a re-chargeable debit card, which
 may be purchased at any learning center wish cash or via electronic bank
 transfer. Once a student enters his name, ID and password, our proprietary
 software immediately recognizes the students school, grade level, and
 proficiency, and instantaneously delivers a menu of teaching materials
 designed to match the students current curriculum. The menu includes sync
 and featured courses, practice sessions, online question and answer database,
 mock tests, and interactive question and answer sessions.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | o | Counselor
 Guidance Area. Students utilize the counselor guidance
 area to complete homework, take exams, or to perform workshop materials. The
 guidance area is supervised by counselor to ensure that students are not
 distracted by other students. In addition, parent meeting are held in this
 area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | o | Education
 Product Area. Each center provides an array of
 products available for sale to students, which include teaching materials
 complimentary to courseware, DVDs, books, learning toys, and general office
 supplies. Students also are able to purchase Tsingda e learning cards in
 this area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Courses can be
purchased under a variety of packages and pricing, including by day, by month,
and by semester. Typically, our learning centers hold four hour sessions for
elementary school students and three hour sessions for our middle and high
school students for our Monday through Friday programs. For our weekend
program, all sessions for all students are bifurcated into two separate two
hour segments.

Franchise Arrangements

Each franchise
agreement grants a specific territory to a franchisee which in turn requires
the franchisee to open a corresponding number of centers commensurate with such
territory as follows:

8

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|                           |   |           |                        
|-------------------------- | - | --------- | -----------------------
|Typical Number of
 Centers |   | Territory
|                           |   |          
|3                          |   |           | County                 
|5                          |   |           | Perfecture City        
|8                          | * |           | Provincial Capital City
|50                         | * |           | Province               

* The actual
number of centers for a Provincial Capital City and Province may vary depending
on certain factors determined by the Company and the franchisee.

For reference
purposes, the PRC consist of 23 provinces, 4 municipalities, 5 autonomous
regions and 2 special administrative regions. These administrative divisions
are further divided into prefectures with each prefecture consisting of
numerous counties and townships.

The term of
each franchise agreement is one year, and renewable annually by the parties.
Under the agreement, franchisees are required to pay an initial franchise
licensing fee of between $7,000 and $10,000 per location depending on franchise
territory, and thereafter franchisees pay an annual management fee equal to 10%
of their initial franchise licensing fee. Franchisees must maintain a
standardized signage, storefront and interior design, adhere to company pricing
policies for courseware, unified promotion activities and exclusively use
company generated materials, among other terms. Franchisees are required to
bear all the costs of owing and operating each center, including rent,
staffing, and marketing. The estimated cost to open a learning center for a
franchisee ranges from $40,000 to $60,000 inclusive of franchise payments to
the company, lease deposits, leasehold improvements, furniture, fixtures and
equipment (10-40 desktop computers). Franchisees also are required to obtain
necessary operating permits, and comply with applicable laws and regulations. Our
franchise attrition rate for 2009 and 2010 was 4.1% and 2.3%, respectively.

Tsingda Virtual Classroom

The Tsingda
Internet Classroom is a robust, multi-faceted on line educational platform
delivering educational services in the PRC. The virtual classroom has been
designed to be an online marketplace whereby buyers (students) and sellers
(teachers) are linked through its proprietary software for the sole purpose of
transacting educational related services. The platform currently targets mainly
high school students and to a lesser extent junior high school students. We
expect to apply this platform to other educational areas, such as a Chinese
language learning program that can be accessed worldwide, and adult vocational
training classes for use in the PRC. We do not have a timetable as when we plan
to introduce these other educational programs.

The Tsingda
virtual classroom was first launched for high school students, and later
included junior high and elementary students. As of December 31, 2010, total
registered students and active students were 428,550 and 84,126, respectively,
and the number of certified teachers was 20,163 (approximately 15% of which are
renowned). A significant portion of our existing student base and current
revenues of our virtual classroom is attributable to students who have attended
or are attending our learning centers.

Students
enroll in the system by providing relevant personal and educational
information, along with electronic bank information. Students log on to the platform
by entering an assigned user name and password. The software interface allows
students to browse the system by subject matter and teacher name. An interested
subscriber can enter the virtual classroom for a free trial of the first 5
minutes, after which the student can either log out or remain online and
his/her account will be charged for the class.

Our various
classrooms are depicted in the graphic below:

(FLOW CHART)

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | Renowned
 Teacher Classroom: The Company has attracted
 approximately 3,044 teachers who are classified as renowned, out of our
 20,163 total teachers (approximately 15%) to prepare and develop courses. A
 renowned teacher is generally one who has received a distinguished teacher
 award from the Ministry of Education and in our opinion has developed an
 outstanding reputation in the teaching community. These courses are well
 attended with attendance ranging from 1,000-10,000 students. The renowned
 teacher classroom enables student from the rural regions to experience the
 teaching disciplines of these teachers. Renowned teacher classrooms are often
 recorded for subsequent viewing by students.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | o | General
 Classroom: These classes are presented by qualified,
 albeit not renowned teachers. These classrooms are                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

9

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| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |   | designed for
 30 to 50 students. These classrooms are used for general courses, including
 mathematics, English, and physics.           
| |   |                                                                                                                                         
| | o | One-on-One
 Classroom: These are real time classrooms specially
 designed for students desiring personalized and private tutoring space.

All of the
classrooms are designed to be interactive whereby teacher and student can
communicate electronically through text messaging, audio feeds, and email,
however, due to the size of the Renowned Teacher Classroom, interactive
communications are limited. Our system also maintains records of the
teacher/student communications.

As mentioned
elsewhere herein, we recognized the disparity in the level of educational
services delivered by the government to the various regions in China. We
believe that our platform attempts to bridge the education gap by allowing
students from the poorer, less funded regions, to experience the disciplines of
other qualified teachers, including renowned teachers.

Teacher Arrangements

Qualifications of Teachers

We believe the
strength and future success of our virtual classroom is dependent upon the
qualifications of our faculty. As a result, we have implemented the following
practices designed at attain and maintain high teacher and subject matter
integrity;

| |   |                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | Background.
 We perform a series of background checks to verify academic credentials and
 employment history of each teacher. These checks include obtaining
 transcripts from schools and universities as well as phone interviews with
 colleagues.
| |   |                                                                                                                                                                                                                                                      
| | o | Experience.
 Each teacher must have at least a degree from a university or college
 recognized by the Ministry of Education.                                                                                                                         
| |   |                                                                                                                                                                                                                                                      
| | o | Course
 Subjects. Course subjects and course outlines are
 approved in advance to ensure that courses presented avoid sensitive
 political and social issues.                                                                                        
| |   |                                                                                                                                                                                                                                                      
| | o | Quality
 Control. We frequently monitors live sessions to
 ensure that teachers adhere to pre-approved course outlines and to assess
 overall teacher performance. We also monitor email exchanges between students
 and teachers.                   

As of December
31, 2010, we had over 20,163 qualified teachers.

Financial Arrangements with Teachers

We enter into
formal agreements with our qualified teachers. Under the agreement, qualified
teachers receive a percentage of subscription revenue from live courses and any
courses that are pre-recorded for later use. The percentage inuring to the
teacher is 60% for live courses and 10% for all pre-recorded classes. All
course materials prepared by teachers are property of the Company.

Qualified
teachers are afforded the flexibility to develop course content which they
perceive as receptive to students, subject to our approval. Teachers are then
able to post to the platform, specific information concerning one or more
classes offered to students. Relevant information includes the subject matter
of the class, date and time of the class, price of the class, and the
qualifications of the teacher. On any given day, a student can browse over
hundreds of classes on a variety of subject matters. More popular classes are English,
math and physics, however specialized subjects are also offered by some
teachers. Courses are presented live or pre-recorded from a prior live session.
Classes range between 0.5 to 1 hours longs. Pricing ranges between $1.5 and $50
per hour, again dependent upon class subject matter, level of difficulty, and
teacher qualification. The following table shows the average price for three
different types of courses we offer.

|                            |  |            |       |               |   |             |  |   |       | 
|--------------------------- |  | ---------- | ----- | ------------- | - | ----------- |  | - | ----- | 
|Type                        |  | Elementary |       | Middle School |   | High School | 
|                            |  |            |       |               |   |             | 
|One-to-one
 classroom       |  | $          | 11.76 |               | $ | 14.71       |  | $ | 17.65 | 
|Renowned
 Teacher Classroom |  | $          | 5.88  |               | $ | 7.35        |  | $ | 8.82  | 
|General
 Classroom          |  | $          | 8.82  |               | $ | 11.76       |  | $ | 14.71 | 

Our Growth Strategy

10

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Our growth and
expansion strategy for the next 6 to 12 months includes the following measures:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Increase the number of Company-owned learning centers. As of
 December 31, 2010, we have 21 Company-owned locations. Due to the size of
 Company-owned locations, we are able to absorb higher student traffic and
 generate higher overall revenues compared to franchised locations. We also
 recognize 100% of the revenue stream from these locations. We expect to
 complete construction of 9 Company-owned locations that are currently under
 construction and open approximately 30 additional Company-owned locations by
 December 2011. The aggregate estimated cost to open these locations is
 $4,000,000.                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | Increase the number of franchised learning centers.
 As of December 31, 2010, we had over 2,346 locations within 1,400 2nd
 and 3rd tier cities throughout China. We estimate that there are
 approximately 50,000 2nd and 3rd tier cities in the
 PRC. Our plan is to increase the number of franchised learning centers by
 increasing our advertising and marketing initiatives in an effort to attract
 more franchisees. Through early 2011, the Company has plans to open
 approximately 600 new franchised learning centers. In the next six months, we
 plan on spending approximately $1.2 million on a broad scale brand
 promotional campaign. This campaign will target a number of media outlets,
 including advertisements on regional television and in local newspapers in
 select markets, as well as holding periodic regional events in these markets,
 all of which will be designed to attract franchisees.

On average,
the total cost of opening a Company-owned learning center is approximately
$100,000 as described in further detail in the following table:

|                              |  |   |             | 
|----------------------------- |  | - | ----------- | 
|Interior
 decoration          |  | $ | 22,059      | 
|Equipments
 and facilities    |  | $ | 5,882       | 
|                              |  |   | 44,118/6    | 
|6-month Rent
 (paid up front) |  | $ | month       | 
|Deposit                       |  | $ | 7,353/month | 
|Miscellaneous                 |  | $ | 22,059      | 
|Total                         |  | $ | 101,471     | 
|                              |  |   |             | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Increase traffic to our virtual classrooms.
 We plan to allocate more capital resources to the marketing and promotion of
 our virtual classrooms. The above mentioned brand promotion campaign will
 include sponsoring events at prominent high-schools designed to promote our
 virtual classrooms, advertising in school newspapers, and to a lesser extent,
 subscribing to more per click ad space on selected Internet sites, such as
 Sina.com and Yahoo.com.cn. We also expect to experience increased traffic to
 our virtual classrooms coincident with our franchise expansion efforts. Since
 introduction of this platform, historical results have indicated that a
 majority of our virtual classroom subscribers have originated from our
 learning centers.

We plan to
establish additional learning centers in 2011 as follows:

|                                     |  |      |       | 
|------------------------------------ |  | ---- | ----- | 
|                                     |  | 2011 |      
|                                     |  |      |      
|New
 company-owned learning centers  |  |      | 39    | 
|Total company-owned learning centers |  |      | 60    | 
|New
 franchised learning centers     |  |      | 600   | 
|Total franchised learning centers    |  |      | 2,900 | 
|Total Learning Centers               |  |      | 2,960 | 

In order to
execute our plan of expanding our business operations we will need to (i)
increase the number of our learning centers, (ii) scale and adapt our existing
network infrastructure to accommodate increased systems traffic and (iii)
increase our marketing efforts. Through early 2011, we expect to open
approximately 600 additional franchised locations; in the next six months, we
plan on spending approximately $1.2 million on a broad scale brand promotional
campaign; and we will need significantly more computing power as traffic within
our system increases and our learning center locations expand. We will be
required to spend significant capital and resources to manage our additional
franchises, execute our promotional campaign and to purchase equipment, and
upgrade our technology and network infrastructure to handle increased Internet
traffic. In this regard, we have budgeted approximately $1.2 million for our
market campaign, approximately $1.4 million for IT expenditures, and
approximately 1.8 million to add and improve our course content in 2011. If we
fail to expend sufficient capital to execute our growth strategy, our operating
results will be harmed.

Marketing and Promotion

Our marketing
efforts target three principal areas; franchisees, students for our
Company-owned learning centers, and students for our virtual classrooms.

11

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We attract
franchisees by conducting regional seminars on a periodic basis in areas that
we have targeted for expansion, as well as advertising on regional television
and in local newspapers in these areas. These efforts have produced in excess
of 2,200 operating franchisees.

Our
Company-owned learning centers are in close proximity to schools and large
residential areas. We have been able to attract students to our learning
centers principally through the distribution of leaflets in the nearby areas.
We do not recruit students based on academic performance.

Traffic to our
virtual classrooms has been driven principally by students from our learning
centers. We expect to increase traffic to our virtual classrooms commensurate
with the numerical increase of our learning centers.

We will
continue the above stated marketing measures for the foreseeable future. In
addition, however, as mentioned herein, we plan on spending approximately $1.2
million on a broad scale brand promotional campaign during the next six months.
This campaign will create an overall brand awareness for our company and our
products, and we expect the program to reach potential franchisees and students
alike. Specifically, we intend to advertise on regional television and in local
newspapers in select markets, hold periodic regional events in these specific
markets, subscribe to more per click ad space on selected Internet sites, such
as Sina.com and Yahoo.com.cn, and advertise in school newspapers.

Through
December 31, 2011, we plan to spend approximately $4.7 million on marketing, as
described in further detail in the following table:

|                          |  |   |           | 
|------------------------- |  | - | --------- | 
|Recruitment
 of students  |  | $ | 1,764,706 | 
|Recruitment
 of franchise |  | $ | 735,294   | 
|Brand
 promotion          |  | $ | 441,176   | 
|Online
 Platform          |  | $ | 1,764,706 | 
|Total                     |  | $ | 4,705,882 | 

Competition

We do not have
direct competition from our business model of offering online educational
services at home and at learning centers. We face competition from online web
schools with respect to our virtual classroom model, such as China Edu,
although these schools are generally limited by the scope of classes offered
and the number of teachers available for presentation. China Edu offers only
pre-recorded courses broadcast online, targeting students aged three to
eighteen in tier 1 and tier 2 cities in China. The price point of China Edu is
between $176 to $426 per year. We differentiate our business from China Edu by
targeting students aged six through eighteen in tier 2 and tier 3 cities at a
substantially lower price point, by offering pre-recorded as well as live,
real-time online courses, consumable both at home and at franchised or
Company-owned learning centers.

Our business
also face competition from traditional offline cram schools, however, these
schools are fragmented throughout the country with concentration mainly in tier
one cities. The largest of such cram schools are Xueda, Juren and China TAL
Education, which are focused on serving the tier 1 cities. Because these
schools are fragmented, they have no more than 200 locations, all of which
locations are Company-owned. Further, they do not offer online courses, and their
teaching materials are not synchronized with official textbooks. We compete
with these cram schools by offering online courses at home and at learning
centers, courses synchronized with textbooks, a lower price point, and because
of our franchise model, are able to expand more quickly and to more markets
than the cram school business model. Accredited learning centers are
traditional degree-granting schools. As we are not an accredited learning
center, we do not compete with these institutions.

We believe our
current competitive advantages which will lead to potential future success are
as follows:

| |                                                                                                                                                                                                    |                                                                                                                         
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                   
| | Business
 Footprint and Reputation. We are the largest
 provider of supplementary educational teaching in the PRC and we have
 achieved industry acclaim for products and services.               
| |                                                                                                                                                                                                   
| | Management
 Experience. We have developed a strong management
 team which has demonstrated the ability to operate a highly successful
 business model.                                            
| |                                                                                                                                                                                                   
| | Scalability
 of Franchise Model. We believe that we have
 standardized an innovative, high quality teaching platform at our learning
 centers which allows for substantial geographical expansion.
| |                                                                                                                                                                                                   
| | Attributes
 of our Virtual Classrooms. Our virtual classrooms
 have numerous attributes, including                                                                                                
| |                                                                                                                                                                                                    |                                                                                                                         
| |                                                                                                                                                                                                    | No geographical limits. We allow students
 from anywhere in the PRC or elsewhere to subscribe to a wide menu of courses,

12

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| |  |                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | many of
 which are presented by renowned teachers.                                                                                            
| |  |                                                                                                                                               
| |  | Real-time Interaction. Many of our
 classrooms allow real-time interaction between the student and teacher.                                   
| |  |                                                                                                                                               
| |  | Learning on demand. We provide a wide menu
 of live and pre-recorded courses with a broad scheduling format, including
 weekends and holidays.

Employees

As of December
31, 2010, we had approximately 276 full time employees and seven officers,
including our chairman and chief executive officer. Our employees are not
represented by any collective bargaining agreement, and we have never
experienced a work stoppage. We believe we have good relations with our
employees. We also have contracts with third party software providers from time
to time to develop software applications in accordance with our specifications.

Properties

Our corporate
offices are located at No. 0620, Yongleyingshiwenhuanan Rd., Yongledian Town,
Tongzhou District Beijing under three year lease agreement terminating in 2012.
The office space consists of approximately 1,868 square meters. Annual rent for
fiscal year 2010 is expected to be approximately $360,963.

Equipment and Equipment Suppliers

Presently, the
Company owns over 281 servers which are located in Beijing, Sichun, Shandong,
Zhejiang and Tiejing. These servers are maintained under service agreements
with third parties. For each Company-owned learning center, the Company owns
between 40 to 50 desktop computers.

The Company
purchases its servers and computers from various large suppliers like Dell and
Lenovo, among others. The Company purchase products from its suppliers on an
as needed basis and presently does not believe the loss of any one supplier
will have an adverse effect on its business.

Software Development

Our learning
center and virtual classroom software has been developed internally by our
engineers and developers and through collaboration with third party developers.
We retain ownership to all work product developed internally and by third
parties. We will maintain this development strategy for future software
products. Our development team has expertise in software and database
programming, web application, browser, and desktop technologies.

Government Regulation

The Chinese
government regulates the education services industry and the substance of
Internet content. This section summarizes the principal Chinese regulations
relating to our businesses. We operate our business in China under a legal
framework that consists of the State Council, which is the highest executive
authority of the Chinese central government, and several ministries and
agencies under its authority, including the Ministry of Education, or MOE, the
State Administration of Foreign Exchange, or SAFE, the Ministry of Information
Industry, or MII, the State Administration for Industry and Commerce, or SAIC,
the Ministry of Civil Affairs, or MCA, and their respective authorized local
counterparts.

We have been
advised by our PRC counsel that, except for the license for broadcasting
audio-video programs through the Internet discussed below, for which we have
already applied, no consent, approval or license other than those already
obtained by our Chinese subsidiaries and affiliates is required under any of
the existing laws and regulations of China for our business and operations.

Regulations on Broadcasting Audio-Video
Programs through the Internet or Other Information Network

The State Administration of Radio, Film and Television, or SARFT, and
MII promulgated the Rules for Administration of Internet Video-Audio Programs
Service, or the Video-Audio Programs Rules, which became effective on January
31, 2008. The Video-Audio Programs Rules apply to the activities of broadcasting,
integration, transmission, downloading of audio-video programs with computers,
televisions or mobile phones as the main terminals and through various types of
information networks. Pursuant to the Video-Audio Programs Rules, a permit for
broadcasting audio-video programs through an information network is required to
engage

13

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in these Internet broadcasting
activities. On April 13, 2005, the State Council announced a policy on private
investments in businesses in China that relate to cultural matters, which
prohibits private investments in businesses relating to the dissemination of
audio-video programs through information networks. On December 24, 2010, we
obtained the License for Broadcasting Audio-Video Program through the Internet
issued by the State Administration of Radio Film and Television (license No.
0110588).

Educational
websites refers to websites of organizations providing education or
education-related information services to website visitors by means of a
database or online education platform connected via the Internet or an
educational television station. Online education schools refers to education
websites that issue educational certificates in connection with their providing
academic education services or training services.

On June 29,
2004, the State Council issued the Decision
on Setting Down Administrative Licenses for the Administrative Examination and
Approval Items Really Necessary to be Retained, which provides that
an administrative license is required for online education schools that
provide degrees to students, but not for educational websites that do not
provide degrees to students, such as Tsingda Education.

Regulations on
Operating Private Schools

The principal
regulations governing private education in China consist of the Education Law of China, The Law for Promoting Private Education (2003),
The Implementation Rules for the Law for
Promoting Private Education (2004) and the Regulations on Chinese-Foreign Cooperation in
Operating Schools. These regulations are summarized below.

Education Law of China

The Education Law of China, or theEducation Law, was enacted on March 18,
1995. TheEducation Law sets
forth provisions relating to the fundamental education systems of China,
including a system of pre-school education, primary education, secondary
education and higher education, a system of nine-year compulsory education and
a system of education certificates. The Education
Law requires the government to formulate plans for the development
of education and the establishment and operation of schools and other education
institutions. In principle, enterprises, social organizations and individuals
are encouraged to operate schools and other types of educational organizations
in accordance with Chinese laws and regulations. Nevertheless, no school or any
other accredited educational institution may be established for profit-making
purposes. However, private schools may be operated for reasonable returns, as
described in more detail below.

The Law for Promoting Private Education
(2003) and The Implementation Rules for the Law for Promoting Private Education
(2004)

TheLaw for Promoting Private Education (2003)
became effective on September 1, 2003, and its implementing regulations, The Implementation Rules for the Law for Promoting
Private Education (2004), became effective on April 1, 2004. Under
these regulations, private schools are defined as schools established by
individuals or private social organizations using private funds. Private
schools providing degree education, pre-school education, education for
self-study aid and other academic education are subject to approval by the
education authorities, while private schools engaging in occupational
qualification training and occupational skill training are subject to approvals
from the authorities in charge of labor and social welfare. An approved private
school will be granted an operating permit, and it must be registered with the
MCA or its local counterpart as a privately run non-enterprise legal person.

The operation
of private schools is highly regulated. For example, the types and amounts of
fees charged by private schools offering certifications must be approved by the
relevant governmental authority and be publicly disclosed, and the types and
amounts of fees charged by private schools that do not offer certifications
need only be filed with the relevant governmental authority and be publicly
disclosed.

Private
education is treated as a public welfare undertaking under the regulations.
Nonetheless, investors in a private school may elect to require reasonable
returns from the schools. Under the regulations, an election to establish a
private school as one requiring reasonable returns must be made in the articles
of association of the school. For schools that have made this election, the
amount of reasonable return that can be distributed to investors each year is
determined based on a percentage of the schools operating surplus, which is
equal to the schools annual net income less the aggregate amount of donations
received, government subsidies, if any, the amount required to be reserved for
the schools development fund and other expenses as required by the
regulations. This percentage is determined by the schools board of directors,
taking into consideration the following factors: (i) the schools tuition and
other fees, (ii) the ratio of the schools expenses used for educational
activities and improving the educational conditions to the total fees
collected; and (iii) the schools admission standards and educational quality.
Information relating to these factors must be publicly disclosed before the
schools board determines the percentage of the schools annual net balance
that can be distributed as reasonable returns. This disclosed information and
the decision to distribute reasonable returns must also be filed with the
approval authorities

14

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within 15 days
from the decision made by the board. However, none of the current Chinese laws
and regulations provides a formula or other guidelines for determining
reasonable returns. In addition, none of the current Chinese laws and
regulations sets forth different requirements or restrictions on a private
schools ability to operate its education business based on such schools
status as a school that requires reasonable returns or a school that has not
made this election. At the end of each fiscal year, private schools are
required to allocate a certain amount to their development fund for the
construction and maintenance of the school and the procurement and upgrade of
educational equipment. For private schools that require reasonable returns,
this amount must be no less than 25% of the annual net income or the annual
increase in the net assets of the school, while for other private schools, this
amount must be no less than 25% of the annual increase in the net assets of the
school, if any. Private schools that have not elected to require reasonable
returns are entitled to the same preferential tax treatment as public schools.
The regulations require that preferential tax treatment policies applicable to
private schools requiring reasonable returns to be formulated by the finance
authority, taxation authority and other authorities under the State Council,
but to date no such regulations have been promulgated by the relevant
authorities. We have received a legal opinion from our PRC counsel stating that
we are not a private school.

Regulations on
Chinese-Foreign Cooperation in Operating Schools

Chinese-foreign
cooperation in the operation of schools and training programs is governed by
the Regulations on Operating Chinese-Foreign
Schools, issued by the State Council in 2003 in accordance with the Education Law, the Occupational Education Law and the  Law for Promoting
Private Education.

The Regulations on Operating Chinese-foreign Schoolsand
its implementing regulations, the Implementing
Rules for the Regulations on Operating Chinese-foreign Schools, or
the Implementing Rules, which
were issued by the MOE in 2004, encourage substantive cooperation between
overseas educational organizations, which are required to have relevant
qualifications and experience in providing high-quality education, and Chinese
educational organizations to jointly operate various types of schools in China.

Permits for
Chinese-foreign cooperation in operating schools must be obtained from the
relevant education authorities or the authorities that regulate labor and
social welfare in China. Since all of our learning centers are operated by our
Chinese affiliated entity and not by us, we believe, based on an opinion
received from our PRC counsel, that we are not required to apply for these
permits.

Additionally,
the Regulations on Operating Chinese-Foreign
Schoolsand its Implementing
Rules require that the foreign party to Chinese-foreign cooperative
educational institutions or programs be a foreign educational institution,
and under those regulations, a for-profit company, such as us, cannot qualify
as a foreign educational institution. As a result, we cannot direct our
affiliates in China, and instead we are a service provider to these affiliates.

In August
2004, the MOE promulgated the Announcement
Regarding Re-Approval of Chinese-foreign Cooperative Educational Institutions
and Programs, which requires Chinese-foreign cooperative educational
institutions and programs that were established before July 1, 2004 (the
effective date for the Implementing Rules)
to obtain re-approval from the MOE.

In April 2007,
the MOE issued the Circular on Further Regulating Chinese-foreign Cooperative
Education Programs. The circular directs the local education authorities
generally to suspend the approval of any new Chinese-foreign cooperative
polytechnic education programs until the end of 2008. To ensure the quality of
the Chinese-foreign education programs, the circular emphasizes the regulatory
supervision of these programs and advises local education authorities to
closely supervise and monitor the existing programs, especially in recruiting
materials, advertisement, and issuance of degrees and diplomas, and directs
them to report and remedy any non-compliance by existing programs of the applicable
regulations.

Regulations on
Internet Information Services

The State
Council issued the Telecom Regulations and the Internet Information Services
Administrative Measures, or the Internet Information Measures, on September 25,
2000.

The Internet
Information Measures require that commercial Internet content providers, or
ICPs, must either obtain a license for Internet information services, or an ICP
license, from, or make an ICP filing with, the appropriate telecommunications
authorities to carry on any commercial Internet information services in China.
Generally, an ICP license is required to provide Internet information services
for profit-making purposes, whereas only an ICP filing is required to provide
Internet information services on a non-profit basis. We have received all
necessary approvals in this regard.

In July 2006,
the MII issued the Notice on Strengthening
Management of Foreign Investment in Operating Value-Added Telecom Services.
The notice prohibits Chinese ICPs engaged in providing value-added telecom
services from leasing, transferring or selling their ICP licenses or providing
facilities or other resources to illegal foreign investors. The notice requires
Chinese ICPs to directly

15

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own the
trademarks and domain names for the websites they operate, as well as servers
and other infrastructure used to support these websites. The notice also
requires Chinese ICPs to evaluate their compliance with the notice by November
1, 2006 and correct any non-compliance. A Chinese ICPs failure to complete the
procedures by November 1, 2006 could be the basis for revocation of its ICP
license.

Regulations Relating
to Information Security

On December
28, 2000, the National Peoples Congress enacted the Decisions Regarding Maintaining Internet Security, which
prohibits any use of the Internet that results in a breach of public security,
dissemination of socially destabilizing content or divulgence of state secrets.
The conduct prohibited is broadly defined under the decisions.

According to
other relevant regulations, ICPs must complete mandatory security filing
procedures with local public security authorities and must also report any
public dissemination of prohibited content.

Regulations on
Protection of the Right of Dissemination through Information Networks

On May 18,
2006, the State Council issued the Regulations
on Protection of the Right of Dissemination through Information Networks,
and they became effective on July 1, 2006. These regulations require that every
organization or individual who disseminates a third partys work, performance,
audio or visual recording products to the public through an information network
must obtain permission from, and pay compensation to, the copyright owner of
these products, unless otherwise provided under relevant laws and regulations.
The copyright owner may take technical measures to protect his or her right of
dissemination through information networks and any organization or individual
may not intentionally evade, destroy or otherwise assist others in evading
these protective measures unless permissible under law. These regulations also
provide that permission from and compensation for the copyright owner are not
required in the event of limited dissemination to teaching or research staff
for the purpose of school teaching or scientific research.

Regulations on
Copyright and Trademark Protection

China has
adopted legislation governing intellectual property rights, including
copyrights and trademarks. China is a signatory to the main international
conventions on intellectual property rights and became a member of the Agreement on Trade Related Aspects of Intellectual
Property Rights, or TRIPS,
upon its accession to the World Trade Organization in December 2001.

Copyright. The
National Peoples Congress amended its Copyright
Law in 2001 to widen the scope of works and rights that are eligible
for copyright protection. The amended Copyright
Law extends copyright protection to Internet activities, products
disseminated over the Internet and software products. In addition, there is a
voluntary registration system administered by the China Copyright Protection
Center.

Trademark. The Chinese Trademark Law, adopted in 1982 and
revised in 2001, protects the proprietary rights to registered trademarks. The
Trademark Office, which is under the SAIC, handles trademark registrations and
grants a ten-year term to registered trademarks, subject to renewal for another
ten years. Trademark license agreements must be filed with the Trademark Office
for recording. We have registered nine trademarks with the Trademark Office and
are in the process of registering additional marks. In addition, if a
registered trademark is recognized as a well-known trademark, the proprietary
right of the trademark holder may be extended beyond the registered sphere of
products and services of the trademark.

On November 5,
2004, the MII amended the Measures for
Administration of Domain Names for the Chinese Internet, or the Domain Name Measures. The Domain Name Measures regulate the
registration of domain names, such as the first tier domain name .cn. In
February 2006, China Internet Network Information Center, or CINIC, issued theImplementing Rules for Domain Name Registration and
the Measures on Domain Name Disputes Resolution, pursuant to which
CINIC can authorize a domain name dispute resolution institution to decide
disputes.

Regulation of the Software Industry

Policies to
Encourage the Development of Software

On June 24,
2000, the State Council issued Certain
Policies to Encourage the Development of Software and Integrated Circuit
Industries, or the Policies, to encourage the development of
software and integrated circuit industries in China and to enhance the ability
of PRC information technology companies to compete in the international market.
The Policies facilitate the development of software and integrated circuit
industries in China through various methods, including:

16

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| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 
 encouraging venture capital investments in the software industry and
 providing capital to software enterprises or assisting such software
 enterprises to raise capital overseas;                                                                                   
| |  providing
 tax incentives, including an immediate tax rebate for taxpayers who sell
 self-developed software products before 2010 in the amount of the statutory
 value-added tax that exceeds 3%, and a number of exemptions and reduced
 corporate income tax rates;
| |  providing
 government support, such as government funding in the development of software
 technology;                                                                                                                                                                 
| |  providing
 preferential treatments, such as credit facilities with low interest rates to
 enterprises that export software products;                                                                                                                                  
| |  adopting
 various strategies to ensure that the software industry has sufficient
 expertise; and                                                                                                                                                                      
| | 
 implementing measures to enhance intellectual property protection in China.                                                                                                                                                                                          

To qualify for
preferential treatments, an enterprise must be recognized as a software
enterprise by governmental authorities. A software enterprise is subject to
annual inspection, failure to pass such inspection in a given year would cause
the enterprise to lose the relevant benefits

Software Products
Administration

On October 27,
2000, the MIIT issued the Measures
Concerning Software Products Administration to regulate and
administer software products and facilitate the development of the software
industry in China. Pursuant to the Measures Concerning Software Products
Administration, all software products operated or sold in China must be duly
registered with and recorded by the relevant authorities, and no entity or
individual is allowed to sell unregistered and unrecorded software products. In
order to produce software products in China, a software producer is required to
have:

| |                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  the status
 of an enterprise legal person, which scope of operations must include
 computer software business (including technology development of software or
 production of software products);
| |  a fixed
 production site;                                                                                                                                                                        
| |  necessary
 conditions and technologies for producing software products; and                                                                                                                      
| |  quality
 control measures and capabilities for the production of software products.                                                                                                              

Software
developers or producers are allowed to sell their registered and recorded
software products independently or through agents, or by way of licensing.
Software products developed in China must be registered with local provincial
governmental authorities in  charge of the
information industry and subsequently filed with the taxation authority at the
same level and the MIIT. Imported software products, i.e., software developed overseas and sold or distributed
into China, must be registered with the MIIT. Upon registration, the software
products will be granted registration certificates. Each registration
certificate is valid for five years from the issuance date and may be renewed
upon expiry. The MIIT and other relevant authorities may carry out supervision
and inspection over the development, production, operation and import/export of
software products in and out of China.

On March 5,
2009, the MIIT promulgated the new Measures
Concerning Software Products Administration, or the New Measures,
which became effective on April 10, 2009. Under the New Measures, software
products operated or sold in China are not required to be registered or
recorded by relevant authorities, and software products developed in China
(including those developed in China on the basis of imported software) can
enjoy certain favorable policies when they have been registered and recorded.
The New Measures also eliminated the previous requirements set forth above.

Software Copyright

The State
Council promulgated the Regulations on the
Protection of Computer Software, or the Software Protection
Regulations, on December 20, 2001, which became effective on January 1, 2002.
The Software Protection Regulations were promulgated, among other things, to
protect the copyright of computer software in China. According to the Software
Protection Regulations, computer software that is independently developed and
attached to physical goods will be protected. However, such protection does not
apply to any ideas, mathematical concepts, processing and operation methods
used in the development of software solutions. Under the Software Protection
Regulations, PRC citizens, legal persons and organizations will enjoy copyright
protection for computer software that they have developed, regardless of whether
the software has been published. Foreigners or any person without a nationality
will enjoy copyright protection over computer software that they have
developed, as long as such computer software was first distributed in China.
Software of foreigners or any person without a nationality will enjoy copyright
protection in China under these regulations in accordance with a bilateral
agreement, if any, executed by and between China and the country to which the
developer is a citizen of or in which the developer resides, or in accordance
with an international treaty to which China is a party. Under the Software
Protection Regulations, owners of software copyright will enjoy the rights of
publication, authorship, modification, duplication, issuance, lease, transmission
on the information network, translation, licensing and transfer. Software
copyright protection takes effect on the day of completion of the softwares
development. The protection period for software developed by legal persons and
other organizations is fifty years and ends on December 31 of the fiftieth year
from the date the software solution was first published.

17

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However, the
Software Protection Regulations will not protect the software if it is not
published within fifty years from the date of the completion of its
development. Civil remedies available under the Software Protection Regulations
against copyright infringements include cessation of the infringement,
elimination of the effects, apology and monetary compensation. The copyright administrative
authorities may order the infringer to stop all infringing acts, confiscate
illegal gains, confiscate and destroy infringing copies, and may impose a fine
on the offender under certain circumstances.

Software Copyright
Registration

On February
20, 2002, the State Copyright Administration of the PRC promulgated and
enforced the Measures Concerning
Registration of Computer Software Copyright Procedures, or the
Registration Procedures, to implement the Software Protection Regulations and
to facilitate the development of Chinas software industry. The Registration
Procedures apply to the registration of software copyrights and software
copyright exclusive licensing contracts and assignment contracts. The
registrant of a software copyright will either be the copyright owner or
another person (a natural person, legal person or an organization) in whom the
software copyright becomes vested through succession, assignment or
inheritance. Upon registration, the registrant should be granted a registration
certificate by the China Copyright Protection Center.

Limitations on
Foreign Ownership of Our Businesses

The Foreign
Investment Industry Guidance Catalogue (amended in 2007), the Regulations on
Chinese-Foreign Cooperation in Operating School, the Implementation Measures
for the Regulations on Sino-Foreign Cooperation in Operating Schools and other
applicable laws and regulations limit foreign ownership in entities, or foreign
participation in entities, engaging in specified education activities by:

| |   |                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | requiring
 that the foreign party in any Chinese-foreign cooperation in operating
 schools be a qualified foreign educational institution;                                             
| |   |                                                                                                                                                                                        
| |  | requiring
 regulatory approval for any Chinese-foreign cooperation in operating schools;                                                                                               
| |   |                                                                                                                                                                                        
| |  | prohibiting
 foreign investment in schools providing compulsory education (that is, the
 first grade through the ninth grade, or primary school and junior high school
 education); and
| |   |                                                                                                                                                                                        
| |  | restricting
 foreign investment in educational websites.                                                                                                                               

Moreover, from
a practical perspective, the MOE will not approve any foreign investment or
participation in online degree education.

Our corporate
structure is designed to comply with current regulatory limitations on foreign
ownership and participation while engaging in our core business activities.

Operating License

Our business
is subject to regulation by governmental agencies in the PRC. Business and
company registrations are certified on a regular basis and must be in
compliance with the laws and regulations of the PRC and provincial and local
governments and industry agencies, which are controlled and monitored through
the issuance of licenses and certificates.

Tsingda
Education has received a license from the Beijing Administration for Industry
and Commerce. This business license enables us to conduct our business of
providing non-certified educational services. The registration No. is
10112006225438, and it is valid from October 24, 2003 through October 23, 2013.
Tsingda Management has received a license from the Beijing Administration for
Industry and Commerce which enables us to engage in business consulting,
education information services and organizing cultural exchanges activities
(excluding shows). This license is valid from November 26, 2007 to November 25,
2027. Once the terms expire, all the business licenses are renewable.

SAFE regulations on
overseas investment of Chinese residents and employee stock options

The SAFE
issued The Notice on Issues Relating to the
Administration of Foreign Exchange in Fund-Raising and Reverse Investment
Activities of Domestic Residents Conducted via Offshore Special Purpose
Companiesin October 2005, which became effective in November 2005,
and an implementing rule in May 2007, collectively SAFE Rules. According to
SAFE Rules, Chinese residents, including both legal persons and natural persons
and Chinese citizens and foreign citizens who reside in China, are required to
register with SAFE or its local branch before establishing or controlling any
company outside China, referred to in SAFE rules as an offshore special
purpose company, for the purpose of financing that offshore company with their
ownership interests in the assets of or their

18

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interests in
any Chinese enterprise. In addition, a Chinese resident that is a shareholder
of an offshore special purpose company is required to amend its SAFE
registration with the local SAFE branch with respect to that offshore special
purpose company in connection with the injection of equity interests or assets
of a Chinese enterprise in the offshore company or overseas fund raising by the
offshore company, or any other material change in the capital of the offshore
company, including any increase or decrease of capital, transfer or swap of
share, merger, division, long-term equity or debt investment or creation of any
security interest. The SAFE Rules apply retroactively. As a result, Chinese
residents who have established or acquired control of offshore companies that
have made onshore investments in China in the past were required to complete
the relevant registration procedures with the competent local SAFE branch. If
any resident of China failed to file its SAFE registration for an existing
offshore entity, any dividends remitted by the onshore entity to its overseas
parent since April 21, 2005 will be considered to be an evasion of foreign
exchange purchase rules, and the payment of the dividend will be illegal. As a
result of any illegal action of this type, both the onshore entity and its
actual controlling person(s) can be fined. In addition, failure to comply with
the registration procedures may result in restrictions on the relevant onshore
entity, including prohibitions on the payment of dividends and other
distributions to its offshore parent or affiliate and capital inflow from the
offshore entity. Chinese resident shareholders of the offshore entity may also
be subject to penalties under Chinese foreign exchange administration
regulations.

We have asked
our shareholders and beneficial owners who are Chinese residents to make the
necessary applications and filings as required under Circular 75 and other
related rules, as well as pursuant to the Escrow Agreement we entered into in
connection with our September 2010 private placement. However, due to
uncertainty concerning the reconciliation of Circular 75 with other approval or
registration requirements, it remains unclear how Circular 75, and any future
legislation concerning offshore or cross-border transactions, will be
interpreted, amended and implemented by the relevant government authorities. We
will attempt to comply, and attempt to ensure that our shareholders and
beneficial owners who are subject to these rules comply, with the relevant
requirements. However, we cannot provide any assurances that all of our
shareholders and beneficial owners who are Chinese residents will comply with
our request to make or obtain any applicable registrations or comply with other
requirements required by Circular 75 or other related rules. In addition,
certain of the holders of options to purchase our Ordinary Shares are Chinese
residents. We have been advised that it is unclear under SAFE Rules whether
these option holders would be deemed to be beneficial owners of our company for
the purposes of these rules as a result of holding these options. The failure
or inability of our Chinese resident shareholders or beneficial owners to
register with SAFE in a timely manner pursuant to SAFE Rules, or the failure or
inability of any future Chinese resident shareholders or beneficial owners to
make any required SAFE registration or comply with other requirements under
SAFE Rules may subject these shareholders or beneficial owners to fines or
other sanctions and may also limit our ability to contribute additional capital
into or provide loans to our Chinese subsidiaries, limit our Chinese
subsidiaries ability to pay dividends to us, repay  shareholder
loans or otherwise distribute profits or proceeds from any reduction in
capital, share transfer or liquidation to us, or otherwise adversely affect us.

On March 28,
2007, SAFE promulgated the Application
Procedure of Foreign Exchange Administration for Domestic Individuals
Participating in Employee Stock Option Holding Plan or Stock Option Plan of
Overseas Listed Company, or the Stock
Option Rule. The purpose of the Stock
Option Rule is to regulate foreign exchange administration of
Chinese citizens who participate in employee stock holding plans and stock
option plans of offshore listed companies. According to the Stock Option Rule, if a Chinese citizen
participates in any employee stock holding plan or stock option plan of an
offshore listed company, a Chinese domestic agent or the Chinese subsidiary of
the offshore listed company is required to file, on behalf of the individual,
an application with SAFE to obtain approval for an annual allowance with
respect to the purchase of foreign exchange in connection with stock holding or
stock option exercises. This restriction exists because a Chinese citizen may
not directly use offshore funds to purchase stock or exercise stock options.
Concurrent with the filing of the required application with SAFE, the Chinese
domestic agent or the Chinese subsidiary must obtain approval from SAFE to open
a special foreign exchange account at a Chinese domestic bank to hold the funds
required in connection with the stock purchase or option exercise, any returned
principal profits upon sales of stock, any dividends issued on the stock and
any other income or expenditures approved by SAFE. The Chinese domestic agent
or the Chinese subsidiary also is required to obtain approval from SAFE to open
an offshore special foreign exchange account at an offshore trust bank to hold
offshore funds used in connection with any employee stock holding plans.

All proceeds
obtained by a Chinese citizen from dividends acquired from the offshore listed
company through employee stock holding plans or stock option plans, or sales of
the offshore listed companys stock acquired through other methods, must be
remitted back to China after relevant offshore expenses are deducted. The
foreign exchange proceeds from these sales can be converted into Renminbi or
transferred to the individuals foreign exchange savings account after the
proceeds have been remitted back to the special foreign exchange account opened
at a Chinese bank. If stock options are exercised in a cashless exercise, the
Chinese individuals exercising them are required to remit the proceeds to the
special foreign exchange account.. If we or our Chinese employees fail to
comply with the Stock Option Rule,
we and/or our Chinese employees may face sanctions imposed by foreign exchange
authority or any other Chinese government authorities.

Foreign Exchange
Control and Administration

Foreign
exchange in China is primarily regulated by:

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| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| |  | The Foreign
 Currency Administration Rules (1996), as amended; and                                                     
| |  | The
 Administration Rules of the Settlement, Sale and Payment of Foreign Exchange
 (1996), or the Administration Rules.

Under the
Administration Rules, the Renminbi is convertible for current account items,
including the distribution of dividends, interest payments, and trade and
service-related foreign exchange transactions. Conversion of Renminbi into
foreign currency for capital account items, such as direct investment, loans,
investment in securities and repatriation of funds, however, is still subject
to the approval of SAFE. Under such rules, foreign-invested enterprises may
only buy, sell and remit foreign currencies at banks authorized to conduct
foreign exchange transactions after providing valid commercial documents and,
in the case of capital account item transactions, only after obtaining approval
from SAFE.

Under the
Foreign Currency Administration Rules, foreign invested enterprises are
required to complete the foreign exchange registration and obtain the
registration certificate. Tsingda Management has not complied with these
requirements. Tsingda Education and Tsingda Network are domestic enterprises
and do not have to comply with these requirements.

The value of
the Renminbi against the US dollar and other currencies may fluctuate and is
affected by, among other things, changes in Chinas political and economic
conditions. Historically, the conversion of Renminbi into foreign currencies,
including US dollars, has been based on rates set by the Peoples Bank of
China. On July 21, 2005, the PRC government changed its policy of pegging the
value of the Renminbi to the US dollar. Under the new policy, the Renminbi will
be permitted to fluctuate within a band against a basket of certain foreign
currencies. There remains significant international pressure on the PRC
government to adopt a substantial liberalization of its currency policy, which
could result in a further and more significant appreciation in the value of the
Renminbi against the US dollar.

Regulation on Mergers and Acquisitions

On August 8,
2006, six PRC regulatory agencies, including the China Securities Regulatory
Commission, or CSRC, promulgated the Regulation on Mergers and Acquisitions of
Domestic Companies by Foreign Investors, which became effective on September 8,
2006. This new regulation, among other things, has certain provisions that
purport to require offshore special purpose vehicles, or SPVs,  formed for the
purpose of listing and controlled by PRC individuals or companies, to obtain
the approval of the CSRC prior to listing their securities on an overseas stock
exchange. On September 21, 2006, the CSRC published on its official website a
notice specifying the documents and materials that are required to be submitted
for obtaining CSRC approval. In addition, under this new regulation, mergers and
acquisitions of equity or assets involving PRC enterprises by foreign investors
are subject to approval by the Ministry of Commerce or local branches or other
competent government authorities. If we continue our expansion through
acquiring PRC domestic companies by our offshore affiliates, we will be subject
to such approval requirement.

Failure to
comply with this new regulation may lead to sanctions by the Ministry of
Commerce or other PRC regulatory authorities that are provided for in other
relevant regulations governing foreign investment, foreign exchange, taxation,
business registration, securities, and administration of state-owned assets.

Dividend Distributions

Pursuant to
the Foreign Currency Administration Rules promulgated in 1996 and amended in
1997 and 2008, respectively, and various regulations issued by SAFE, and other
relevant PRC government authorities, the PRC government imposes controls on the
convertibility of the Renminbi into foreign currencies and, in certain cases,
the remittance of currency out of China.

Tsingda
Education and Tsingda Network are regulated by the laws governing
foreign-invested enterprises in the PRC. Accordingly, they are required to
allocate 10% of their after-tax profits based on PRC accounting standards each
year to their general reserves until the accumulated amount of such reserves
has exceeded 50% of their registered capital, after which no further allocation
is required to be made. As of December 31, 2009, the registered capitals of
Tsingda Education and Tsingda Network are $4,421,156 and $588,235,
respectively, and both companies have made the required allocations to the
general reserves. These reserve funds, however, may not be distributed to
equity owners except in accordance with PRC laws and regulations. We cannot
assure you that the PRC government authorities will not request our
subsidiaries to use their after-tax profits for their own development and
restrict our subsidiaries ability to distribute their after-tax profits to us
as dividends.

Pursuant to
the new EIT law and its implementing regulations, dividends payable by a
foreign-invested enterprise to its foreign investors will be subject to a 10%
withholding tax if the foreign investors are considered as non-resident
enterprises without any establishment or place within China or if the dividends
payable have no connection with the establishment or place of the foreign
investors within China, to the extent that the dividends are deemed China
sourced income, unless any such foreign investors jurisdiction of
incorporation has a tax treaty with China that provides for a different
withholding arrangement. The Marshall Islands, where our immediate holding
company is incorporated, does not have such a tax treaty with China. In
addition, pursuant to a notice

20

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jointly
promulgated by the Ministry of Finance and the State Administration of Taxation
of the PRC on February 22, 2008, distribution of accumulated profits of
foreign-invested enterprises arising before January 1, 2008 will be exempt from
withholding tax even if the distribution is made after January 1, 2008 but the
distribution of profits arising after January 1, 2008 will be subject to withholding
tax.

Regulation of
Employment

On June 29,
2007, the National Peoples Congress promulgated the Employment Contract Law of
the Peoples Republic of China, or ECL, which became effective on January 1,
2008. On September 18, 2008, the State Council issued the Peoples Republic of
China Employment Contract Law Implementation Rules, or ECL Implementation
Rules, which became effective on September 18, 2008, the date of issuance. The
ECL and ECL Implementation Rules require employers to enter into written
contracts with their employees, restrict the use of temporary workers and aim
to give employees long-term job security.

Pursuant to
the ECL, employment contracts lawfully entered into prior to the implementation
of the ECL and continuing as of the date of its implementation will continue to
be valid. Where an employment relationship was established prior to the
implementation of the ECL but no written employment contract was entered into,
a contract must be entered into within one month after the ECLs implementation.

Regulations on
Franchise Businesses

On February 6,
2007, the State Council promulgated the Regulation on the Administration of
Commercial Franchisees, which became effective on May 1, 2007. This regulation
requires that any enterprise engaging in trans-provincial franchise business
shall register with the Ministry of Commerce, or MOC, and any enterprise
engaging in franchise business within one province shall register with the
provincial counterparts of MOC. On April 30, 2007, the MOC promulgated the
Administrative Measures for the Filing of Commercial Franchises, which set
forth in detail the procedures and documents required for the filing, including
among other things the franchise agreement, market plan trademarks, and patents
relating to the franchise.

According to
the Regulation on the Administration of Commercial Franchises, a franchisor
conducting franchise activities shall possess a mature business model and the
ability to provide long-term business guidance, technical support, business
training and other services to the franchisee. It shall have at least two
direct sales stores and have done the business for more than a year. If a
franchisor conducts its operations within the scope of a province, autonomous
region, or municipality, it must file legal documents with the competent
commercial authorities of the province, autonomous region or municipality. If a
franchisor conducts its operations within the scope of two or more provinces,
autonomous regions, or municipalities, it must file legal documents with the
competent commercial authority of the PRC state council. A franchisor must
submit the following documents and materials:

| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | copies of
 its business license or enterprise registration certificate;                                         
| |   |                                                                                                                 
| |  | a sample
 franchise contract;                                                                                   
| |   |                                                                                                                 
| |  | a brochure
 for franchise operations;                                                                           
| |   |                                                                                                                 
| |  | a market
 plan;                                                                                                 
| |   |                                                                                                                 
| |  | written
 commitments and relevant materials proving that the relevant filing
 provisions have been followed; and
| |   |                                                                                                                 
| |  | other
 documents and materials required by the relevant commercial authorities.                                 

21

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SPECIAL NOTE ON
FORWARD LOOKING STATEMENTS

In addition to historical information, this
Annual Report on Form 10-K contains forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those reflected in such
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, those discussed in the sections entitled Business,
Risk Factors, and Managements Discussion and Analysis of Financial
Condition and Results of Operations. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect managements
opinions only as of the date thereof. We undertake no obligation to revise or
publicly release the results of any revision of these forward-looking
statements. Readers should carefully review the risk factors described in this Annual
Report and in other documents that we file from time to time with the
Securities and Exchange Commission.

In some cases, you can identify
forward-looking statements by terminology such as may, will, should,
expects, plans, anticipates, believes, estimates, predicts,
potential, proposed, intended, or continue or the negative of these
terms or other comparable terminology. You should read statements that contain
these words carefully, because they discuss our expectations about our future
operating results or our future financial condition or state other
forward-looking information. There may be events in the future that we are
not able to accurately predict or control. You should be aware that the
occurrence of any of the events described in these risk factors and elsewhere
in this Annual Report could substantially harm our business, results of
operations and financial condition, and that upon the occurrence of any of
these events, the trading price of our securities could decline. Although we
believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, growth rates, levels of
activity, performance or achievements.

Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
report.

The foregoing does not represent an
exhaustive list of risks. Please see Risk Factors below for additional risks
which could adversely impact our business and financial performance. Moreover,
new risks emerge from time to time and it is not possible for our management to
predict all risks, nor can we assess the impact of all risks on our business or
the extent to which any risk, or combination of risks, may cause actual results
to differ from those contained in any forward-looking statements. All
forward-looking statements included in this Report are based on information
available to us on the date of this Report. Except to the extent required by
applicable laws or rules, we undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements contained throughout
this Report.

RISK FACTORS

Risks Relating to Our Business

We have a limited
operating history and we may not be able to sustain the growth in our business.

Our limited
operating history and the early stage of development of the online education
industry in which we operate makes it difficult to evaluate our business and
future prospects. Although our annual growth rate of sales revenue from 2008 to
2009 and 2009 to 2010 was approximately 101% and 87% respectively, and our
annual growth rate of pre-tax income was approximately 77.9% and 70.4% during
these same periods, there is no assurance that we will be able to sustain such
growth in the future. We may have negative growth, which in turn may impair our
business operations and profitability. Furthermore, our largest shareholder,
Tsing Da Century Education Technology Co., Ltd., a Belize corporation
controlled by Zhang Hui, our chairman and CEO, has entered into a securities
escrow agreement with respect to the 6,000,000 Ordinary Shares (the Escrowed
Shares) owned by it. If the Companys net income for the fiscal year 2011 is
less than $13,500,000, the escrow agent shall transfer to the investors in our
2010 private placement, on a pro-rata basis, an amount of Escrow Shares equal
to the percentage of variation from the 2011 performance threshold times the
total number of Escrow Shares. Any Escrow Shares not distributed to such
investors following the release of fiscal year 2011 information will be
returned to Tsing Da Century Education Technology Co., Ltd. Therefore, if we
cannot meet these performance targets, there may be a significant change in the
ownership of our outstanding shares.

The market for the
services that we provide is still emerging and evolving rapidly.

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The market for educational
services is still evolving in the PRC. Our success will depend to a large
extent on the perceived benefit that our services provide to our customers, who
are mainly students. Therefore we will need to increase awareness of our
products, protect our reputation and develop customer loyalty among our
customers, anticipate and adapt to changing conditions in the markets in which
we operate.

Increased funding of
educational programs by the local or national government may negatively impact
our business.

It is possible
that increased funding of educational programs would result in either greater
competition or reduced demand for our products and services. For example,
increased funding of educational programs may lead to nationwide student access
to online educational courses and services, as well as publicly available
state-sponsored learning centers. Increased online access could dramatically
increase the demand for online supplemental education, which could be expected
to lead to an increase in the number of private competitors we face. The
government may also determine to compete with us directly by offering
supplemental education services, and would be able to undercut our prices and
adversely affect the demand for our products and services.

Additional
funding of education may also reduce the overall demand for supplemental
education in the event such funds are used to better educate students in the
primary and secondary schools. To the extent the quality of education in
schools increases, the need for supplemental education may decrease. In any of
such events, we would expect our results of operations and future growth
prospects to be harmed.

We may have
difficulty expanding our business operations.

In order to
expand our business operations we will need to (i) increase the number of our
learning centers, (ii) scale and adapt our existing network infrastructure to
accommodate increased systems traffic and (iii) increase our marketing efforts.
Through 2011, we expect to open approximately 600 additional franchised
locations. We plan on a broad scale brand promotion campaign, and we will need
significantly more computing power as traffic within our system increases and
our learning center locations expand. We will be required to spend significant
capital and resources to manage our additional franchises, execute our
promotional campaign and to purchase equipment, and upgrade our technology and
network infrastructure to handle increased Internet traffic. In this regard, we
have budgeted approximately $1.2 million for our marketing campaign,
approximately $1.4 million for IT expenditures, and approximately $1.8 million
to add and improve our course content. We expect to generate this revenue
through our existing cash flow. If we fail to expend sufficient capital to
execute our growth strategy, our operating results will be harmed.

Problems with
content delivery services, bandwidth providers, data centers or other third
parties could harm our business, financial condition or results of operations.

Our business
relies significantly on third-party vendors, such as data centers, content
delivery services and bandwidth providers, while no single vendor is material
to our operations. If any third-party vendor fails to provide their services or
if their services are no longer available to us for any reason and we are not
immediately able to find replacement providers, our business, financial
conditions or results of operations could be materially adversely affected.

Additionally,
any disruption in network access or related services provided by these
third-party providers or any failure of these third-party providers to handle
current or higher volumes of use could significantly harm our business
operations. If our service is disrupted, we may lose revenues due to our
inability to provide services to our franchised learning centers and we may be
obligated to compensate these franchisees for their loss. Our reputation also
may suffer in the event of a disruption. Any financial or other difficulties
our providers face may negatively impact our business and we are unable to
predict the nature and extent of any such impact. We exercise very little
control over these third-party vendors, which increases our vulnerability to problems
with the servicesthey provide. Any errors, failures, interruptions or delays
experienced in connection with these third-party technologies and information
services could negatively impact our relationships with our franchisees and
materially adversely affect our brand reputation and our business, financial
condition or results of operations and expose us to liabilities to third
parties.

Our data centers are
vulnerable to natural disasters, terrorism and system failures that could
significantly harm our business operations and lead to client dissatisfaction.

In delivering
our solutions, we are dependent on the operation of our data centers and
bandwidth providers, which are vulnerable to damage or interruption from
earthquakes, terrorist attacks, war, floods, fires, power loss,
telecommunications failures, computer viruses, computer denial of service
attacks or other attempts to harm our system, and similar events. We do not
have insurance to cover any losses. Some of our systems are not fully redundant,
and our disaster recovery planning cannot account for all eventualities. The
occurrence of a natural disaster, a terrorist attack, a providers decision to
close a facility we are using without adequate notice or other unanticipated
problems at our data centers could result in lengthy interruptions in our
service. Interruptions in our service could

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reduce our
revenues and profits, and our brand reputation could be damaged if customers
believe our system is unreliable, which could have a material adverse affect on
our business, financial condition and results of operations.

Our business may be
adversely affected by malicious third-party software applications that
interfere with the function of our technology.

Our business
may be adversely affected by malicious software applications that make changes
to operating computers and interfere with our technology. These applications
may attempt to change users experience in using our virtual classrooms or
teaching modules at our learning centers, including changing configurations of
our user interface, or otherwise interfering with our ability to connect with
users. The interference may occur without disclosure to or consent from users,
resulting in a negative experience that users may associate with our solutions.
These software applications may be difficult or impossible to uninstall or
disable, may reinstall themselves and may circumvent other applications
efforts to block or remove them. If our efforts to combat these malicious
software applications are unsuccessful, our reputation may be harmed, and users
may be reluctant to use our services. This could result in a decline in usage
of our educational services and corresponding revenues, which would have a
material adverse effect on our business, financial condition and results of
operations.

If we fail to manage
our growth effectively, our business, financial condition and results of
operations could be materially adversely affected.

We have
experienced, and continue to experience, rapid growth in our operations and
headcount, which has placed, and will continue to place, significant demands on
our management, operational and financial infrastructure. If we do not
effectively manage our growth, the quality of our solutions and services could
suffer, which could negatively affect our brand and operating results. To
effectively manage this growth, we will need to continue to improve, among
other things:

| |   |                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our
 information and communication systems to ensure that our operations are well
 coordinated and that we can effectively communicate with our growing base of
 franchisees and users;
| |  | our systems
 of internal controls to ensure timely and accurate reporting of all of our
 operations; and                                                                               
| |  | our
 information technology infrastructure to maintain the effectiveness of our
 systems.                                                                                              

In order to
enhance and improve these systems we will be required to make significant
capital expenditures and allocation of valuable management resources. If the
improvements are not implemented successfully, our ability to manage our growth
will be impaired and we may have to make additional expenditures to address
these issues, which could materially adversely affect our business, financial
condition and results of operations.

Furthermore,
our largest shareholder, Tsing Da Century Education Technology Co., Ltd., a
Belize corporation controlled by Zhang Hui, our chairman and CEO, has entered
into a securities escrow agreement with respect to the Escrowed Shares. If the
Companys net income for the fiscal year 2011 is less than $13,500,000, the
escrow agent shall transfer to the investors in our 2010 private placement, on
a pro-rata basis, an amount of Escrow Shares equal to the percentage of
variation from the 2011 performance threshold times the total number of Escrow
Shares. Any Escrow Shares not distributed to such investors following the
release of fiscal year 2011 information will be returned to Tsing Da Century
Education Technology Co., Ltd. Therefore, if we cannot meet these performance
targets, there may be a significant change in the ownership of our outstanding
shares.

We may incur
significant costs to ensure compliance with United States corporate governance
and accounting requirements.

We may incur
significant costs associated with our public company reporting requirements,
costs associated with newly applicable corporate governance requirements,
including requirements under the Sarbanes-Oxley Act of 2002 and other rules
implemented by the Securities and Exchange Commission. We expect all of the
applicable rules and regulations to significantly increase our legal and
financial compliance costs and to make some activities more time consuming and
costly. We also expect that these rules and regulations will make it more
expensive for us to obtain director and officer liability insurance, and we may
be required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage. We currently estimate our
annual costs for such compliance to be approximately $280,000, however we
cannot predict the amount of future compliance costs or other additional costs
we may incur or the timing of such costs.

We are
currently evaluating and monitoring developments with respect to these newly
applicable rules, and we cannot predict or estimate the amount of additional
costs we may incur or the timing of such costs.

We are dependent
upon key personnel and the loss of key personnel, or the inability to hire or
retain qualified personnel, could have an adverse effect on our business and
operations.

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Our success is
heavily dependent on the continued active participation of our current executive
officers listed under Management. Loss of the services of one or more of our
officers could have a material adverse effect upon our business, financial
condition or results of operations. Further, our success and achievement of our
growth plans depend on our ability to recruit, hire, train and retain other
highly qualified technical and managerial personnel. Competition for qualified
employees among companies in the PRC is intense, and the loss of any of such
persons, or an inability to attract, retain and motivate any additional highly
skilled employees required for the expansion of our activities, could have a
materially adverse effect on us. The inability on our part to attract and
retain the necessary personnel and consultants and advisors could have a
material adverse effect on our business, financial condition or results of
operations.

As of December
31, 2010, we had a total of approximately 276 employees in our offices in the
PRC. However, there can be no assurance that we will be able to maintain a
prolonged good relationship with our existing or ex-employees and that no labor
disruptions will occur in the future. Should any industrial action or labor
unrest occur, our business operations could be adversely affected.

Potential claims
alleging infringement of third partys intellectual property by us could harm
our ability to compete and result in significant expense to us and loss of
significant rights.

Our operations
are technology driven, and we have sought patent and copyright protection for
our key software packages. However, we may confront, from time to time, third
parties that may assert patent, copyright, and other intellectual property
rights to these and other software packages which are important to our
business. Any claims that our products or processes infringe the intellectual
property rights of others, regardless of the merit or resolution of such
claims, could cause us to incur significant costs in responding to, defending,
and resolving such claims, and may divert the efforts and attention of our
management and technical personnel away from the business. As a result of such
intellectual property infringement claims, we could be required or otherwise
decide it is appropriate to pay third-party infringement claims; discontinue using
the technology or processes subject to infringement claims which would include
the software relating to our learning centers and virtual classrooms; develop
other technology not subject to infringement claims, which could be
time-consuming and costly or may not be possible; and/or license technology
from the third-party claiming infringement, which license may not be available
on commercially reasonable terms. The occurrence of any of the foregoing could
result in unexpected expenses or require us to recognize an impairment of our
assets, which would reduce the value of the assets and increase expenses. In
addition, if we are required to discontinue the use of existing software, our
revenue could be negatively impacted.

Risks Related to our Corporate Structure

Our principal
shareholder is able to control substantially all matters requiring a vote of
our shareholders and its interests may differ from the interests of our other
shareholders.

Tsing Da
Century Education Technology Co., Ltd., a Belize corporation (not to be
confused with Tsingda Technology, a BVI corporation, which is our
direct-wholly-owned subsidiary), is our majority shareholder and beneficially
owns approximately 33.8% of our issued and outstanding Ordinary Shares. Mr.
Zhang Hui, our Chairman and President, is an officer and majority owner of this
company. Therefore, Mr. Zhang is able to exert substantial control on all
matters requiring approval by our shareholders, including the election of our
directors and officers. This concentration of ownership may also have the
effect of discouraging, delaying or preventing a future change of control,
which could deprive our stockholders of an opportunity to receive a premium for
their shares as part of a sale of our company and might reduce the price of our
shares.

The contractual
agreements with Tsingda Education are not as effective as direct ownership.
Because we rely on Tsingda Education for our revenue, any termination of, or
disruption to, these contractual arrangements could detrimentally affect our
business.

Presently all
of our business operations are carried out by Tsingda Education, and its wholly
owned subsidiary, Tsingda Network. We do not own any equity interests in
Tsingda Education, but control and receive the economic benefits of its
business operations through various contractual arrangements. Through these
contractual arrangements, we have the ability to substantially control the
daily operations and financial affairs of Tsingda Education, as we are able to
appoint its senior executives and approve all matters requiring shareholder
approval. Accordingly, we consolidate Tsingda Education results, assets and
liabilities in our financial statements.

However, these
contractual agreements may be terminated under certain circumstances. Generally
the PRC has substantially less experience related to the enforcement of
contractual rights through its judiciary or the arbitration process as compared
to the United States or the Cayman Islands. This inexperience presents the risk
that the judiciary or arbitrators in the PRC may be reluctant to enforce
contractual rights, interpret these rights and remedies differently than what
was intended by the parties to the agreements, or find that such contractual
agreements do not comply with restrictions in current PRC laws. A PRC court may
also set aside an

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arbitration
award by reason of any defect the court considers to be present in the
arbitration proceeding, remedies at law may not be adequate and a PRC court may
not order specific performance. In addition, any legal proceeding may result in
substantial costs, disruptions to our business, damage to our reputation and
diversion of our resources.

If Tsingda
Education or its stockholders fail to perform their obligations under the
contractual arrangements, we may have to rely on legal remedies under PRC laws,
including seeking specific performance or injunctive relief, and claiming
damages, and there is a risk that we may be unable to obtain these remedies.
Therefore our contractual arrangements may not be as effective in providing
control over Tsingda Education as direct ownership. Because we rely on Tsingda
Education for our revenue, any termination of or disruption to these
contractual arrangements could detrimentally affect our business.

If the PRC
government determines that our agreements with these companies are not in
compliance with applicable regulations, our business in the PRC could be
adversely affected.

The Chinese
government restricts foreign investment in education and Internet-related
businesses, including distribution of content over the Internet. We cannot be
sure that the PRC government would view our operating arrangements to be in
compliance with PRC licensing, registration, restrictions on foreign investment
or other regulatory requirements, including without limitation the requirements
described in the Government Regulations section. If we are determined not to
be in compliance, the PRC government could levy fines, revoke our business and
operating licenses, require us to discontinue or restrict our operations,
restrict our right to collect revenues, block our website, require us to
restructure our business, corporate structure or operations, impose additional
conditions or requirements with which we may not be able to comply, impose
restrictions on our business operations or on our customers, or take other
regulatory or enforcement actions against us that could be harmful to our
business. We may also encounter difficulties in obtaining performance under or
enforcement of related contracts.

In addition,
our agreements are governed by the PRC laws and regulations. PRC laws and
regulations concerning the validity of the contractual arrangements are
uncertain, as many of these laws and regulations are relatively new and may be
subject to change, and their official interpretation and enforcement by the PRC
government may involve substantial uncertainty.

We may not be able
to consolidate the financial results of some of our affiliated companies or
such consolidation could materially adversely affect our operating results and
financial condition.

All of our
business is conducted through Tsingda Education which currently is considered
for accounting purposes a variable interest entity (VIE), and we are
considered the primary beneficiary, enabling us to consolidate our financial
results in our consolidated financial statements. We have also received a legal
opinion from our PRC legal counsel that the VIE Agreements are valid and
enforceable under PRC Laws. In the event that in the future a company we hold
as a VIE would no longer meet the definition of a VIE, or we are deemed not to
be the primary beneficiary, we would not be able to consolidate line by line
that entitys financial results in our consolidated financial statements for PRC
purposes. Also, if in the future an affiliate company becomes a VIE and we
become the primary beneficiary, we would be required to consolidate that
entitys financial results in our consolidated financial statements for PRC
purposes. If such entitys financial results were negative, this could have a
corresponding negative impact on our operating results for PRC purposes.
However, any material variations in the accounting principles, practices and
methods used in preparing financial statements for PRC purposes from the
principles, practices and methods generally accepted in the United States and
in the SEC accounting regulations must be discussed, quantified and reconciled
in financial statements for United States and SEC purposes.

We rely on certain
contractual agreements between Tsingda Management and Tsingda Education, and if
any of these agreements are terminated or unenforceable, our business and
operations will be materially and adversely affected. In the event of
termination or unenforceability of any of these agreements, our financial
condition, results of operations and future growth prospects may be materially
harmed.

We rely on the
VIE Agreements between our wholly-owned subsidiary, Tsingda Management, and our
variable interest entity, Tsingda Education to control Tsingda Education.

Under the
terms of the exclusive consulting services agreement Tsingda Management has the
exclusive right to provide business consulting and related services to Tsingda
Education in connection with its business operations. Under this agreement,
Tsingda Management owns the intellectual property rights arising from the
performance of these services, including, but not limited to, any trade
secrets, copyrights, patents, know-how, unpatented methods and processes and otherwise,
whether developed by Tsingda Management or Tsingda Education based on Tsingda
Managements provision of such services under the agreement. Tsingda Education
pays quarterly consulting service fees to Tsingda Management that are equal
100% of Tsingda Educations total net profit for such quarter. The consulting
services agreement is in effect from April 26, 2010 and continues indefinitely
unless terminated by (a) Tsingda Management upon a material breach by Tsingda
Education; (b) bankruptcy by either Tsingda Management or Tsingda Education;
(c) by either Tsingda Management or Tsingda Education in the event Tsingda
Management ceases operations or (d) by

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either Tsingda
Management or Tsingda Education in the event circumstances arise which
materially adversely affects the performance of either party under the
consulting agreement. Because 100% of our revenues are generated from Tsingda
Education pursuant to this agreement, if this agreement is terminated or not
enforceable, we will not be able to generate any revenues.

Under the
terms of the operating agreement by and among Tsingda Management, Tsingda
Education and the shareholders of Tsingda Education, Tsingda Management has the
right to direct the corporate policies regarding Tsingda Educations daily
operations and financial management, including the power to appoint the members
of Tsingda Educations board of directors as well as its executive officers.
The operating agreement is effective for an indefinite term under the laws of
the PRC, and may only be terminated by Tsingda Management. Because we rely on
the operating agreement to control the business operations of Tsingda
Education, if this agreement is terminated or not enforceable, we may lose the
ability to control the management and operations of Tsingda Education.

Under the
terms of the equity pledge agreement, Tsingda Education pledged all of its
assets to Tsingda Management for a term of two years following Tsingda
Education meeting all of its obligations under the consulting services agreement.
If this agreement is terminated or not enforceable, we may not have any
adequate security or remedy against Tsingda Education should Tsingda Education
breach its obligations under the consulting services agreement.

Under the
terms of the voting rights agreement by and among Tsingda Management, Tsingda
Education and the shareholders of Tsingda Education, the shareholders of
Tsingda Education irrevocably grant and entrust Tsingda Management, for the
maximum period of time permitted by PRC law, all voting rights in Tsingda
Education. Because we rely on the voting rights agreement to vote on all
matters submitted to Tsingda Educations shareholders for their approval, if
this agreement is terminated or not enforceable, shareholders of Tsingda
Education may take shareholder initiatives that may not be in our best
interests.

Under the
terms of the option agreement by and among Tsingda Management, Tsingda
Education and the shareholders of Tsingda Education, Tsingda Management has the
option to purchase from the shareholders of Tsingda Education, all the
outstanding shares of Tsingda Education. The option agreement is effective for
the maximum period allowable under the laws of the PRC, and may only be
terminated by Tsingda Management. In the event we are not able to control
Tsingda Education through our other contractual arrangement, we would need to
rely on the option agreement to purchase all the outstanding shares of Tsingda
Education. In such an event, if the option agreement is terminated or not enforceable,
then we may lose control of Tsingda Education.

Risks Related to Doing Business in China

PRC economic,
political and social conditions, as well as changes in any government policies,
laws and regulations, could adversely affect the overall economy in China or
the prospects of the education market, which in turn could adversely affect our
business.

Substantially
all of our operations are conducted in China, and substantially all of our
revenues are derived from China. Accordingly, our business, financial
condition, results of operations, prospects and certain transactions we may
undertake are subject, to a significant extent, to economic, political and
legal developments in China.

The PRC
economy differs from the economies of most developed countries in many
respects, including the amount of government involvement, level of development,
growth rate, control of foreign exchange and allocation of resources. While the
PRC economy has experienced significant growth in the past two to three
decades, growth has been uneven, both geographically and among various sectors
of the economy. Demand for our services may depend, in large part, on economic
conditions in China. Any slowdown in Chinas economic growth may cause families
to reduce the use of our services for their children, which in turn could
reduce our net revenues.

Although the
PRC economy has been transitioning from a planned economy to a more
market-oriented economy since the late 1970s, the PRC government continues to
play a significant role in regulating industry development by imposing ongoing
policies. The PRCgovernment also exercises significant control over Chinas
economic growth through the allocation of resources, controlling the incurrence
and payment of foreign currency-denominated obligations, setting monetary
policy and providing preferential treatment to particular industries or
companies. Changes in any of these policies, laws and regulations could
adversely affect the overall economy in China or the prospects of the education
market, which could harm our business.

The PRC
government has implemented various measures to encourage foreign investment and
sustainable economic growth and to guide the allocation of financial and other
resources, which have for the most part had a positive effect on our business
and growth. However, we cannot assure you that the PRC government will not
repeal or alter these measures or introduce new measures that will have a
negative effect on us.

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Chinas social
and political conditions are also not as stable as those of the United States
and other developed countries. Any sudden changes to Chinas political system
or the occurrence of widespread social unrest could have negative effects on
our business and results of operations. In addition, China has tumultuous
relations with some of its neighbors and a significant further deterioration in
such relations could have negative effects on the PRC economy and lead to
changes in governmental policies that would be adverse to our business
interests.

Failure to comply
with the United States Foreign Corrupt Practices Act could subject us to
penalties and other adverse consequences.

We are subject
to the United States Foreign Corrupt Practices Act, which generally prohibits
United States companies from engaging in bribery or other prohibited payments
to foreign officials for the purpose of obtaining or retaining business.
Foreign companies, including some that may compete with us, are not subject to
these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other
fraudulent practices occur from time-to-time in the PRC. We can make no
assurance, however, that our employees or other agents will not engage in such
conduct for which we might be held responsible. To date, we have taken no steps
to prevent violations of the FCPA other than the adoption of a code of ethics.
Although we intend to adopt a code of ethics to ensure compliance with the FCPA
and Chinese anti-corruption laws by all individuals involved with our company,
our employees or other agents may engage in such conduct for which we might be
held responsible. If our employees or other agents are found to have engaged in
such practices, we could suffer severe penalties and other consequences that
may have a material adverse effect on our business, financial condition and
results of operations.

PRC regulations
regarding offshore financing activities by PRC residents have undertaken
continuous changes which may increase the administrative burden we face and
create regulatory uncertainties that could adversely affect our business.

On August 8,
2006, the PRC Ministry of Commerce (MOFCOM), joined by the China Securities
Regulatory Commission (CSRC), the State Administration of Foreign Exchange
(SAFE) as well as other government agencies, released a Provisions for
Foreign Investors to Merge with or Acquire Domestic Enterprises (M&A
Regulation), which took effect September 8, 2006 and was amended in 2009.
These new rules significantly revised Chinas regulatory framework governing
onshore-to-offshore restructurings and foreign acquisitions of domestic
enterprises. These new rules reflect greater PRC government attention to
cross-border merger, acquisition and other investment activities, by confirming
MOFCOM as a key regulator for issues related to mergers and acquisitions in
China and requiring MOFCOM approval of a broad range of merger, acquisition and
investment transactions. According to the new M&A Regulation, a
related-party acquisition in which an offshore Company-owned or controlled by a
PRC resident acquires a domestic company controlled by the same PRC resident
shall be subject to the approval of MOFCOM.

Among other
things, the M&A Regulation also included new provisions to require that the
overseas listing of an offshore company which is directly or indirectly
controlled by a PRC resident for the purpose of overseas listing of such PRC
residents interests in a domestic company, known as a special purpose
company, must obtain the approval of CSRC prior to the listing.

We believe
that our current VIE structure avoids the acquisition transaction which is
directly the target under scrutiny of the M&A Regulation, including the
requirement of CSRC approval. No PRC regulatory authority has stated that this
type of structure is subject to the M&A Regulations and we know of no
similar VIE structure that has been reviewed under the M&A Regulations.
Thus, in its current practice, it appears the M&A Regulation does not apply
to our corporate structure.

However, the
application of this M&A Regulation remains uncertain since neither MOFCOM
nor CSRC has approved any Chinese companys foreign listing. There is no
consensus currently existing among the leading PRC law firms regarding the
scope and applicability of the MOFCOM or CSRC approval requirements. If the
MOFCOM, CSRC or other PRC regulatory body subsequently determines that the new
M&A Regulation applies to our situation and CSRCs approval was required
for an offering of our securities, we may face sanctions by the MOFCOM, CSRC or
other PRC regulatory agencies. In such event, these regulatory agencies may
impose fines and penalties on our operations in the PRC, limit our operating
privileges in the PRC, delay or restrict the repatriation of funds to our
offshore companies, or take other actions that could have a material adverse
effect on our business, financial condition, results of operations, reputation
and prospects, as well as the trading price of our securities.

We may be subject to
PRC penalties and may be required to forfeit $100,000 if our PRC resident
shareholders including Zhang Hui, our chairman and CEO, and Liu Juntao, our
Executive Vice President do not obtain SAFE Circular 75 approval of their
ownership of our shares.

Under PRC law,
a PRC resident is required to obtain approval from SAFE when such PRC resident
acquires securities of a foreign company. In that respect, all nineteen of our
PRC resident shareholders including Zhang Hui, our chairman and CEO, and Liu
Juntao, our Executive Vice President, are required to obtain SAFE approval of
the shares indirectly held by them. If they fail to obtain SAFE approval, we
may be subject to penalties under PRC law. Failure to obtain the approval may
result in restrictions on the Company,

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including
prohibitions on the payment of dividends and other distributions to its
offshore affiliates and capital inflow from the offshore entities.

We have
requested our shareholders and beneficial owners who may be subject to SAFE
rules to make the necessary applications, filings and amendments as required
under SAFE rules. We have advised these shareholders and beneficial owners to
comply with the relevant requirements. To date, the required filings are
underway for all of our PRC resident shareholders. However, we cannot provide
any assurance that all of our shareholders and beneficial owners who may be PRC
residents will comply with our request to make or obtain any applicable
registrations or comply with other requirements required by SAFE rules. Under
the terms of our Holdback Escrow Agreement, the failure or inability of Zhang
Hui or Liu Juntao (but not our other PRC resident shareholders) to make any
required registrations or comply with other requirements may result in the
forfeiture of $100,000 currently held in escrow for our benefit, may subject
such shareholders or beneficial owners to fines and legal sanctions and may
also limit our ability to contribute additional capital into or provide loans
to our PRC subsidiaries, limit the ability of our PRC subsidiaries to pay
dividends or otherwise distribute profits to us, or otherwise adversely affect
us.

Under the EIT Law,
we may be classified as a resident enterprise of the PRC. Such classification
could result in unfavorable tax consequences to us and our non-PRC
shareholders.

Under the EIT
Law, an enterprise established outside of China with de facto management
bodies within China is considered a resident enterprise, meaning that it can
be treated in a manner similar to a Chinese enterprise for enterprise income
tax purposes, although the dividends paid to one resident enterprise from
another may qualify as tax-exempt income. The implementing rules of the EIT
Law define de facto management as substantial and overall management and
control over the production and operations, personnel, accounting, and
properties of the enterprise. The EIT Law and its implementing rules are
relatively new and ambiguous in terms of some definitions, requirements and
detailed procedures, and currently no official interpretation or application of
this new resident enterprise classification is available; therefore, it is
unclear how tax authorities will determine tax residency based on the facts of
each case.

We have been
advised by our PRC legal counsel that we are, under the EIT Law, likely to be
classified as a resident enterprise and that we are exempt from PRC income
taxes because income from equity investments (such as dividends and bonuses)
between resident enterprises is tax exempt.

If any PRC
taxes apply to our non-PRC shareholders, a non-PRC shareholder may be entitled
to a reduced rate of PRC taxes under an applicable income tax treaty and/or a
foreign tax credit against such shareholders domestic income tax liability
(subject to applicable conditions and limitations). You should consult with your
own tax advisors regarding the applicability of any such taxes, the effects of
any applicable income tax treaties, and any available foreign tax credits. In
the event we become subject to the EIT Laws, our tax obligations can be
expected to increase, which would adversely affect our net income, results of
operations and future growth prospects.

Due to various
restrictions under PRC laws on the distribution of dividends by our PRC
operating companies, we may not be able to pay dividends to our shareholders.

The
Wholly-Foreign Owned Enterprise Law (1986), as amended and The Wholly-Foreign
Owned Enterprise Law Implementing Rules (1990), as amended and the Company Law
of the PRC (2006) contain the principal regulations governing dividend
distributions by wholly foreign owned enterprises. Under these regulations,
wholly foreign owned enterprises may pay dividends only out of their
accumulated profits, if any, determined in accordance with PRC accounting
standards and regulations. Additionally, such companies are required to set
aside a certain amount of their accumulated profits each year, if any, to fund
certain reserve funds. These reserves are not distributable as cash dividends
except in the event of liquidation and cannot be used for working capital purposes.
Tsingda Education and Tsingda Network are regulated by the laws governing
foreign-invested enterprises in the PRC. Accordingly, Tsingda Education and
Tsingda Network are required to allocate 10% of their after-tax profits based
on PRC accounting standards each year to their general reserves until the
accumulated amount of such reserves has exceeded 50% of their registered
capital, after which no further allocation is required to be made. If a
companys legal accumulations fund is not sufficient to make up for the losses
of the company from the previous year, the current years profits are first
used for making up the losses before the legal accumulations funds is drawn. As
of December 31, 2010, the registered capitals of Tsingda Education and Tsingda
Network are $4,421,156 and $588,235, respectively, and both companies have made
the required allocations to the general reserves. These reserve funds, however,
may not be distributed to equity owners except in accordance with PRC laws and
regulations. We cannot assure you that the PRC government authorities will not
request our subsidiaries to use their after-tax profits for their own
development and restrict our subsidiaries ability to distribute their
after-tax profits to us as dividends.

29

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The PRC government
also imposes controls on the conversion of RMB into foreign currencies and the
remittance of currencies out of the PRC. We may experience difficulties in
completing the administrative procedures necessary to obtain and remit foreign
currency for the payment of dividends from the Companys profits.

Furthermore,
if our subsidiaries or affiliates in China incur debt on their own in the
future, the instruments governing the debt may restrict its ability to pay
dividends or make other payments. If we or our subsidiaries are unable to
receive all of the revenues from our operations through these contractual or
dividend arrangements, we may be unable to pay dividends on our Ordinary
Shares.

Changes in PRC
regulations relating to tuitions may adversely affect our business.

Currently, we
are not regulated by the Ministry of Education of the PRC due to the fact that
we are a non-accredited learning center and do not offer certification
programs. The types and amounts of fees charged by private schools offering
certification programs must be approved by the relevant governmental authority
and be publicly disclosed, and the types and amounts of fees charged by private
schools that do not offer certification programs need only be filed with the
relevant governmental authority and be publicly disclosed. If the PRC
government decides to regulate private schools which do not offer certification
programs similar to their regulations of certification programs, set limits on
fees chargeable by us, or impose a special tax on our business, such events
could significantly affect our operations.

You may experience
difficulties in effecting service of legal process, enforcing foreign judgments
or bringing original actions in China based on United States or other foreign
laws against us, our management or the experts named in this current report.

We conduct
substantially all of our operations in China and substantially all of our
assets are located in China. In addition, all of our senior executive officers
reside within China. As a result, it may not be possible to effect service of
process within the United States or elsewhere outside of China upon our senior
executive officers, including with respect to matters arising under U.S.
federal securities laws or applicable state securities laws. Moreover, our PRC
counsel has advised us that the PRC does not have treaties with the United
States or many other countries providing for the reciprocal recognition and
enforcement of judgment of courts.

Governmental control
of currency conversion may affect the value of your investment.

The PRC
government imposes controls on the convertibility of RMB into foreign
currencies and, in certain cases, the remittance of currency out of China. We
receive substantially all of our revenues in RMB. Under our current structure,
our income is primarily derived from Tsingda Education. Shortages in the
availability of foreign currency may restrict the ability of our PRC
subsidiaries and our affiliated entity to remit sufficient foreign currency to
pay dividends or other payments to us, or otherwise satisfy their foreign
currency denominated obligations. Under existing PRC foreign exchange
regulations, payments of current account items, including profit distributions,
interest payments and expenditures from trade-related transactions, can be made
in foreign currencies without prior approval from the PRC State Administration
of Foreign Exchange by complying with certain procedural requirements. However,
approval from appropriate government authorities is required where RMB is to be
converted into foreign currency and remitted out of China to pay capital
expenses such as the repayment of bank loans denominated in foreign currencies.
The PRC government may also, at its discretion, restrict access in the future
to foreign currencies for current account transactions. If the foreign exchange
control system prevents us from obtaining sufficient foreign currency to
satisfy our currency demands, we may not be able to pay dividends in foreign
currencies to our shareholders.

Fluctuation in the
value of RMB may have a material adverse effect on your investment.

The value of
RMB against the U.S. dollar and other currencies may fluctuate and is affected
by, among other things, changes in political and economic conditions. Our
revenues and costs are mostly denominated in RMB, while a significant portion
of our financial assets are denominated in U.S. dollars. Our revenue is based
entirely on that generated by our affiliated entity in China. Any significant
fluctuation in value of RMB may materially and adversely affect our cash flows,
revenues, earnings and financial position, and the value of, and any dividends
payable on, our stock in U.S. dollars. For example, an appreciation of RMB
against the U.S. dollar would make any new RMB denominated investments or
expenditures more costly to us, to the extent that we need to convert U.S.
dollars into RMB for such purposes. An appreciation of RMB against the U.S.
dollar would also result in foreign currency translation losses for financial
reporting purposes when we translate our U.S. dollar denominated financial
assets into RMB, as RMB is our reporting currency.

We face risks
related to health epidemics and other outbreaks.

Our business
could be adversely affected by the effects of an epidemic or outbreak that will
cause social and economic disruptions in China, such as SARS or H1N1 flu. Any
prolonged recurrence of SARS, H1N1 or other adverse public health developments
in China may have a material adverse effect on our business operations as
schools may be closed for an extended period of time. For instance,

30

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health or
other government regulations adopted in response may require temporary closure
of our production facilities or of our offices. Such closures would severely
disrupt our business operations and adversely affect our results of operations.
We have not adopted any written preventive measures or contingency plans to
combat any future outbreak of SARS, H1N1 or any other epidemic.

Risks Related to an Investment in Our Securities

We are not listed or
quoted on any exchange and we may never obtain such a listing or quotation.

There is
presently no public market in our shares and there may never be a market for
our stock. Stock held by our shareholders may have little or no value. We
cannot guarantee that our stock will be listed on a securities exchange or if a
market for our stock listed will ever develop. Even if our shares are quoted
for sale, buyers may be insufficient in numbers to allow for a robust market,
and therefore, it may prove impossible to sell your shares.

To date, we have not
paid any cash dividends and no cash dividends will be paid in the foreseeable
future.

We do not
anticipate paying cash dividends on our Ordinary Shares in the foreseeable
future and we may not have sufficient funds legally available to pay dividends.
Even if the funds are legally available for distribution, we may nevertheless
decide not to pay any dividends. We intend to retain all earnings from our
operations.

The market price for
our Ordinary Shares may be highly volatile.

The market
price of our Ordinary Shares may be volatile due to certain factors, including,
but not limited to, market trends in PRC stock generally, quarterly
fluctuations in our financial and operating results; general conditions in the
PRC market; or changes in earnings estimates. Such volatility may make it more
difficult, if not impossible, to sell your shares in such quantity or at such
price as or when you determine. This volatility can be expected to harm our
stock price, our ability to raise money in capital markets and our future
growth prospects.

The application of
the penny stock rules could adversely affect the market price of our Ordinary
Shares and increase your transaction costs to sell those shares.

If the future
trading price of our Ordinary Shares is below $5 per share, the open-market
trading of our Ordinary Shares will be subject to the penny stock rules. The
penny stock rules impose additional sales practice requirements on
broker-dealers who sell securities to persons other than established customers
and accredited investors (generally those with assets in excess of $1,000,000
or annual income exceeding $200,000 or $300,000 together with their spouse).
For transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of securities and have received the
purchasers written consent to the transaction before the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
broker-dealer must deliver, before the transaction, a disclosure schedule
prescribed by the Securities and Exchange Commission relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, monthly statements must be sent disclosing recent
price information on the limited market in penny stocks. These additional
burdens imposed on broker-dealers may restrict the ability or decrease the
willingness of broker-dealers to sell our Ordinary Shares, and may result in
decreased liquidity for our Ordinary Shares and increased transaction costs for
sales and purchases of our Ordinary Shares as compared to other securities.

The market
price for our Ordinary Shares may be volatile and subject to wide fluctuations
in response to factors including the following:

| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | actual or
 anticipated fluctuations in our quarterly operating results;                                                               
| |  | changes in
 financial estimates by securities research analysts;                                                                      
| |  | announcements
 by us or our competitors of new products, acquisitions, strategic
 partnerships, joint ventures or capital commitments;
| |  | addition or
 departure of key personnel;                                                                                              
| |  | fluctuations
 of exchange rates between RMB and the U.S. dollar;                                                                      
| |  | intellectual
 property litigation;                                                                                                    
| |  | general
 economic or political conditions in China.                                                                                   

In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related
to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market
price of our stock.

31

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We may need
additional capital, and the sale of additional shares or other equity
securities could result in additional dilution to our shareholders.

We believe
that our current cash and cash equivalents, anticipated cash flow from
operations and the net proceeds from the private placement of Ordinary Shares
on September 16, 2010 will be sufficient to meet our anticipated cash needs for
the near future. We may, however, require additional cash resources due to
changed business conditions or other future developments, including any
investments or acquisitions we may decide to pursue. If our resources are
insufficient to satisfy our cash requirements, we may seek to sell additional
equity or debt securities or obtain a credit facility. The sale of additional equity
securities could result in additional dilution to our shareholders. The
incurrence of indebtedness would result in increased debt service obligations
and could result in operating and financing covenants that would restrict our
operations. We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.

If we fail to
maintain an effective system of internal controls, we may not be able to
accurately report our financial results or prevent fraud.

We are subject
to reporting obligations under the U.S. securities laws. The SEC, as required
by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every
public company to include a management report on such companys internal
controls over financial reporting in its annual report, which contains
managements assessment of the effectiveness of our internal controls over
financial reporting.

Our reporting
obligations as a public company will place a significant strain on our
management, operational and financial resources and systems for the foreseeable
future. Effective internal controls, particularly those related to revenue
recognition, are necessary for us to produce reliable financial reports and are
important to help prevent fraud. As a result, our failure to achieve and
maintain effective internal controls over financial reporting could result in
the loss of investor confidence in the reliability of our financial statements,
which in turn could harm our business and negatively impact the trading price
of our stock. Furthermore, we anticipate that we will incur considerable costs
and use significant management time and other resources in an effort to comply
with Section 404 and other requirements of the Sarbanes-Oxley Act.

Currently,
none of our employees, including our Chief Financial Officer, who is
responsible for preparing and supervising the preparation of our financial
statements, have any formal training in U.S. GAAP and SEC rules and
regulations. In that regard, we rely exclusively on our independent accountants
and our outside counsel for advice with respect to U.S. GAAP and SEC rules and
regulations. Therefore, there is a risk that our current or future financial
statements may not be properly prepared in accordance with U.S. GAAP or that our
current or future disclosures are not in compliance with SEC rules and
regulations.

ITEM 1B.
UNRESOLVED STAFF COMMENTS

None.

ITEM
2. PROPERTIES & INTELLECTUAL PROPERTY

We were
granted trademark protection from PRC authorities for the names and logo of
Tsingda Century and Tsingda Xiaoboshi.

A total of
eight patents have been filed with the PRC authorities with respect to various
aspects of our business, of which four of the applications have been granted
and four applications are pending.

|                                                                       |  |                |  |                                 |  |                         
|---------------------------------------------------------------------- |  | -------------- |  | ------------------------------- |  | ------------------------
|Description Appearance Design                                          |  | Patent No      |  | Term of the Patent              |  | Date Issued/Filed       
|                                                                       |  |                |  |                                 |  |                         
|Card
 (all-in-card for entrepreneurship training)                      |  | 200730161941.4 |  | July
 27, 2007 to July 26, 2017 |  | Issued:
 June 25, 2008  
|Card
 (Tsingda Learning Center)                                        |  | 200730161942.9 |  | July
 27, 2007 to July 26, 2017 |  | Issued:
 July 16, 2008  
|Card
 (all-in-card for early education)                                |  | 200730161943.3 |  | July
 27, 2007 to July 26, 2017 |  | Issued:
 June 25, 2008  
|Card
 (all-in-card for China education)                                |  | 200730161944.8 |  | July
 27, 2007 to July 26, 2017 |  | Issued:
 May 21, 2008   
|Computer-aided
 Children Evaluation and Guiding System                 |  | 2007101298785  |  | Pending                         |  | Filed:
 February 20 2009
|Computer-aided
 Children Care Pattern System                           |  | 2007101298770  |  | Pending                         |  | Filed:
 February 20 2009
|Distant
 Network Education Interactive Platform                        |  | 2007101298766  |  | Pending                         |  | Filed:
 February 20 2009
|Evaluation
 and Monitoring Method of Distant Online Education Platform |  | 2007101298751  |  | Pending                         |  | Filed:
 February 20 2009

We have
registered four software applications with the PRC authorities with respect to
various aspects of our business. Under PRC Copyright Law, a copyright protects
both the design of a software product and the name of the product. Copyrights
are granted for a term of 50 years from the date of first publication.

32

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|                                         |  |                  |  |                 
|---------------------------------------- |  | ---------------- |  | ----------------
|Name of the Software                     |  | Date of Filing   |  | Registration No.
|                                         |  |                  |  |                 
|Network Baomu Software V1.0              |  | May 20, 2007     |  | 2007SR14359     
|Tsingda Shouhushen Software V2.0         |  | December 1, 2008 |  | 2009SR014243    
|Tsingda Learning Center Software V1.0    |  | April 20, 2007   |  | 2009SR014242    
|Tsingda Internet Classroom Software V1.0 |  | July 15, 2008    |  | 2009SR014244    

ITEM
3. LEGAL PROCEEDINGS

From time to
time, we may become involved in various lawsuits and legal proceedings, which
arise, in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm our business. We are currently not aware
of any such legal proceedings or claims that we believe will have a material
adverse effect on our business, financial condition or operating results.

PART II

ITEM 5. 
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

(a) Market
Information.There is currently no market for our
ordinary shares.

(b) Record
Holders.As of March 11, 2011, there were 483
holders of record of our ordinary shares.

(c) Dividends.We
have not paid dividends on our ordinary shares in the past and do not
anticipate doing so in the foreseeable future. We currently intend to retain
future earnings, if any, to fund the development and growth of our business. In
addition, the Loan and Security Agreement with Access Capital requires that we
obtain their consent prior to paying any dividends.

(d) Sales of
Unregistered Securities

During the
period covered by this report we did not issue any other securities that were
not registered under the Securities Act of 1933, as amended, except previously
disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K.

ITEM 6. SELECTED
FINANCIAL DATA

We are a
smaller reporting company as defined by Regulation S-K and as such, are not
providing the information contained in this item pursuant to Regulation S-K.

33

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ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the
results of operations and financial condition of the Company for the fiscal
years ended December 31, 2010 and 2009, should be read in conjunction with the
notes to the financial statements that are included elsewhere herein. The
consolidated financial statements presented herein (and to which this
discussion relates) reflect the results of operations of Tsingda Technology (as
defined below) and its variable interest entities, for the fiscal years ended
December 31, 2010 and 2009 and reflect the acquisition of the Company pursuant
to the Share Exchange Agreement (as defined below) under the purchase method of
accounting. Subsequent to May 24, 2010, the operations of the Company reflected
the combined operations of the Company and Tsingda Technology (including
Tsingda Education and Tsingda Network). Our discussion includes forward-looking
statements based upon current expectations that involve risks and
uncertainties, such as our plans, objectives, expectations and intentions.
Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of
factors. We use words such as anticipate, estimate, plan, project,
continuing, ongoing, expect, believe, intend, may, will,
should, could, and similar expressions to identify forward-looking
statements. We undertake no obligation to revise or update any forward-looking
statements in order to reflect any event or circumstance that may arise after
the date of this report, except as required by law. Readers are urged to
carefully review and consider the various disclosures made throughout the
entirety of this quarterly report, which are designed to advise interested
parties of the risks and factors that may affect our business, financial
condition, results of operations and prospects.

COMPANY OVERVIEW

On May 24,
2010, Tsingda eEDU, f/k/a Compass Acquisition Corporation, and its controlling
shareholders entered into a share exchange agreement (Share Exchange
Agreement) with Tsing Da Century Education Technology Co. Ltd., a British
Virgin Islands business company (Tsingda Technology), and its
shareholders.

Tsingda
Technology owns 100% of the issued and outstanding capital stock of Beijing
Tsingda Century Management Consulting Ltd. (Tsingda Management), a
wholly foreign owned enterprise incorporated under the laws of the Peoples
Republic of China (PRC). On April 26, 2010, Tsingda Management entered
into a series of contractual agreements with Beijing Tsingda Century Investment
Consultant of Education Co. Ltd (Tsingda Education), a company
incorporated under the laws of the PRC, and its shareholders, in which Tsingda
Management effectively assumed management of the business activities of Tsingda
Education. Beijing Tsingda Century Network Technology Co. Ltd., a PRC company,
is a wholly owned subsidiary of Tsingda Education. The contractual arrangements
are comprised of a series of agreements, including a Consulting Services
Agreement, Operating Agreement, Proxy Agreement, and Option Agreement, through
which Tsingda Management has the right to advise, consult, manage and operate
Tsingda Education for a quarterly fee in the amount of 100% of Tsingda
Educations quarterly, after tax net profits. Additionally, Tsingda Educations
shareholders have pledged their rights, titles and equity interest in Tsingda
Education as security for Tsingda Management to collect consulting and service
fees through an Equity Pledge Agreement. In order to further reinforce Tsingda
Managements rights to control and operate Tsingda Education, Tsingda
Educations shareholders have granted Tsingda Management the exclusive right
and option to acquire all of their equity interests in Tsingda Education
through the Option Agreement.

As all of the
companies are under common control, this structure has been accounted for as a
reorganization of entities and the financial statements have been prepared as
if the reorganization had occurred retroactively.

Tsingda
Education, with its subsidiary Tsingda Network, is a leading provider of online
educational services in the PRC, offering classes through pre-recorded lessons
and in real-time via its Tsingda Vitrual Internet Classroom. To the best of its
knowledge, the Company believes it runs the largest chain of learning centers
in China in terms of the number of learning centers, known as Tsingda Learning
Centers. These educational centers principally target elementary school
students and consist mainly of franchised locations. As of December 31, 2010,
there were 2,346 Tsingda Learning Centers across China, which includes 21
Company-owned learning centers and 2,325 franchised learning centers. We also
have developed a robust, interactive educational platform which allows students
to search and subscribe to virtual classrooms offered by a wide range of
teachers in the PRC. Our students may choose to access our courses online
either at one of our learning centers, at home or at any other location that
has a computer with internet access.

We have
franchise agreements with each of our franchised locations. These franchise
agreements are typically effective for a one year term. The franchised
locations must conform to certain operating requirements of the Company, such
as the quality of products and services offered and participation of
promotional activities. Each franchised location pays an initial franchise licensing
fee to the Company as well as an annual management fee at the end of each
subsequent year. The Company offers discounted e-cards (used by our students to
purchase courses) to the franchised locations. Our franchisees pay an initial
franchise licensing fee of between $7,000 and $10,000 per location depending on
franchise territory, and thereafter, franchisees pay an annual management fee
equal to 10% of their initial franchise licensing fee. A franchisee receives
e-cards from the Company with a face value equal to five times the amount of
franchise and management fees paid. Our franchisees also have the option to
purchase additional e-cards at the same 80% discount. Franchisees earn revenues
from the sale of e-cards to students at face value. In other words, for every
dollar spent by our students, our

34

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franchisees
take eighty cents. With respect to the remaining twenty cents, the Company
splits this on a 40%-60% basis with teachers in connection with real-time
courses and on a 90%-10% basis with teachers in connection with pre-recorded
courses. Factoring the discount taken by our franchisees and revenue splitting
with our teachers, the Company earns 18% of revenues generated from sales of
e-cards used for pre-recorded courses and 8% of revenues generated from sales
of e-cards used for real-time courses from revenues generated from the sale of
e-cards. Each e-card has a specific serial number, and our IT server tracks the
opening and usage of these cards in real time. We use this information in order
to accurately allocate revenues among teachers. Beginning August 2010, the
Company began to generate revenue via the sale of reference materials and
publications.

Our financial
statements are prepared in US Dollars and in accordance with accounting
principles generally accepted in the United States. See Critical Accounting
Policies - Foreign Currency Translation below for information concerning the
exchange rates at the Renminbi (RMB) were translated into US Dollars (USD)
at various pertinent dates and for pertinent periods.

Recruitment of
Students

The following
table shows the change in the number of active students from 2008 to 2010.

|                                                           |  |    |         |    |  |         |  |    |         |  |  |         | 
|---------------------------------------------------------- |  | -- | ------- | -- |  | ------- |  | -- | ------- |  |  | ------- | 
|No. of active students increased for the specified quarter | 
|                                                           | 
|Year                                                       |  | Q1 |         | Q2 |  | Q3      |  | Q4 |        
|                                                           |  |    |         |    |  |         |  |    |        
|2008                                                       |  |    | 104,550 |    |  | 121,394 |  |    | 132,485 |  |  | 115,126 | 
|2009                                                       |  |    | 182,239 |    |  | 204,482 |  |    | 250,553 |  |  | 237,357 | 
|2010                                                       |  |    | 301,203 |    |  | 328,813 |  |    | 337,440 |  |  | 373,196 | 

Note: We
classify students who have provided us with their personal information as
registered. Registered students who have purchased an e-card or are using an
e-card to purchase our courses are classified as active. Students who have
purchased an e-card and have not used an e-card for more than one year are
de-classified from active status and classified as registered. The numbers in
the table above are calculated based on the number of newly active students
minus (-) the number of active students lost in the specified quarter.

Online Content

The Company
has continued to add new courses. For purposes of the following table, new
courses means (i) newly created courses that were not previously available and
(ii) previously available courses which have been revised or updated.

|                                                       |  |    |        |    |  |         |  |    |         |  |  |        | 
|------------------------------------------------------ |  | -- | ------ | -- |  | ------- |  | -- | ------- |  |  | ------ | 
|No. of new courses increased for the specified quarter | 
|                                                       | 
|Year                                                   |  | Q1 |        | Q2 |  | Q3      |  | Q4 |        
|                                                       |  |    |        |    |  |         |  |    |        
|2008                                                   |  |    | 79,521 |    |  | 150,210 |  |    | 100,154 |  |  | 76,471 | 
|2009                                                   |  |    | 60,000 |    |  | 78,652  |  |    | 68,015  |  |  | 15,332 | 
|2010                                                   |  |    | 91,200 |    |  | 90,524  |  |    | 74,200  |  |  | 98,496 | 

Courses Sold

|     |  |                                    |              |                         |  |                                         |  |                                  |           |  |  |       | 
|---- |  | ---------------------------------- | ------------ | ----------------------- |  | --------------------------------------- |  | -------------------------------- | --------- |  |  | ----- | 
|     |  | Tsingda Virtual Internet Classroom |              | Pre-recorded            | 
|     |  | Total Hours                        |              | Total Courses Purchased |  | Aggregate Number of 
 Courses Purchased |  | Total Unique Courses 
 Purchased |          
|2008 |  |                                    | 175,166.66   |                         |  | 289                                     |  |                                  | 4,039,013 |  |  | 2,203 | 
|2009 |  |                                    | 772,342.75   |                         |  | 481                                     |  |                                  | 5,511,754 |  |  | 3,672 | 
|2010 |  |                                    | 2,277,739.71 |                         |  | 977                                     |  |                                  | 7,176,115 |  |  | 6,869 | 

For our
Tsingda Virtual Internet Classroom platform, figures under the column Total
Courses Purchases represents the total number of different courses purchased
by at least one student and Total Hours represents the number of
student-hours purchased by our students. A single student attending a course
for one hour equals one student-hour. For example, through December 31, 2010, a
total of 977
courses were purchased by at least one student. Because multiple students may
be in attendance for our real-time courses, the purchase of these 977 courses by our students resulted
in an aggregate of approximately 2,277,739.71
student-hours.

For our
Pre-Recorded courses, figures under the column Total Unique Courses Purchased
represents the number of different courses purchased by our students and
Aggregate Number of Courses Purchases refers the aggregate number of times a
pre-recorded course was purchased. For example, through December 31, 2010, a
total of 6,869
different courses were purchased by our students. Because pre-recorded courses
may be purchased by different students over and over, these 6,869 courses were actually purchased
an aggregate of 7,176,115
times.

Sale of e-Cards

35

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The Company
has continued to see increased sales of e-cards, which are used by students to
purchase our course offerings.

|                                                     |  |    |               |    |  |               |  |    |               |  |  |               | 
|---------------------------------------------------- |  | -- | ------------- | -- |  | ------------- |  | -- | ------------- |  |  | ------------- | 
|Face value of e-cards sold for the specified quarter | 
|                                                     | 
|Year                                                 |  | Q1 |               | Q2 |  | Q3            |  | Q4 |              
|                                                     |  |    |               |    |  |               |  |    |              
|2008                                                 |  |    | 6,728,626.47  |    |  | 6,372,666.18  |  |    | 8,692,105.88  |  |  | 8,420,047.06  | 
|2009                                                 |  |    | 15,428,244.10 |    |  | 16,299,183.82 |  |    | 18,187,279.4  |  |  | 16,907,319.10 | 
|2010                                                 |  |    | 16,835,727.90 |    |  | 26,459,676.47 |  |    | 37,106,079.40 |  |  | 33,077,838.84 | 

Note: The
Company sells e-cards at an average discount of 80% to franchised learning
centers who then re-sell e-cards to students at face value. The face value of
e-cards sold refers to the amount paid by students.

Revenue Breakdown

For the fiscal
years 2008, 2009 and 2010, the tables below break down the source of our
revenues. We generate most of our revenues through franchise licensing fees,
management fees, sales of e-cards, and, beginning August 2010, the sale of
reference books and materials. Our franchisees pay an initial franchise
licensing fee of between $7,000 and $10,000 per location depending on franchise
territory, and thereafter, franchisees pay an annual management fee equal to
10% of their initial franchise licensing fee. A franchisee receives e-cards
from the Company with a face value equal to five times the amount of franchise
and management fees paid. Our franchisees also have the option to purchase
additional e-cards at the same 80% discount. Franchisees earn revenues from the
sale of e-cards to students at face value. In other words, for every dollar
spent by our students, our franchisees take eighty cents. With respect to the
remaining twenty cents, the Company splits this on a 40%-60% basis with
teachers in connection with real-time courses and on a 90%-10% basis with
teachers in connection with pre-recorded courses. Factoring the discount taken
by our franchisees and revenue splitting with our teachers, the Company earns
18% of revenues generated from sales of e-cards used for pre-recorded courses
and 8% of revenues generated from sales of e-cards used for real-time courses
from revenues generated from the sale of e-cards. Each e-card has a specific
serial number, and our IT server tracks the opening and usage of these cards in
real time. We use this information in order to accurately allocate revenues
among teachers.

2008 Revenue Breakdown (in Dollars)

|                                    |  |                 |           |                           |   |                                              |  |                                                                 |           |                              |   |           |  |       |   |  |   |         |  |   |            | 
|----------------------------------- |  | --------------- | --------- | ------------------------- | - | -------------------------------------------- |  | --------------------------------------------------------------- | --------- | ---------------------------- | - | --------- |  | ----- | - |  | - | ------- |  | - | ---------- | 
|Year                                |  | Licensing 
 Fee |           | Annual 
 Management 
 Fee |   | Pre-Recorded 
 Courses 
 (Sale of 
 e-Cards) |  | Tsingda 
 Virtual 
 Internet 
 Class Room 
 (Sale of 
 e-Cards) |           | Materials and 
 publications |   | Others    |  | Total |  
|                                    |  |                 |           |                           |   |                                              |  |                                                                 |           |                              |   |           |  |       |  
|Q1/2008                             |  | $               | 886,424   |                           | $ | 997                                          |  | $                                                               | 595,603   |                              |   |          |  |       |  |  | $ | 51,324  |  | $ | 1,534,348  | 
|Q2/2008                             |  | $               | 883,146   |                           | $ | 6,612                                        |  | $                                                               | 673,168   |                              |   |          |  |       |  |  | $ | 2,069   |  | $ | 1,564,995  | 
|Q3/2008                             |  | $               | 1,251,769 |                           | $ | 19,772                                       |  | $                                                               | 843,076   |                              | $ | 15,294    |  |       |  |  | $ | 4,691   |  | $ | 2,134,602  | 
|Q4/2008                             |  | $               | 990,222   |                           | $ | 67,753                                       |  | $                                                               | 791,058   |                              | $ | 139,264   |  |       |  |  | $ | 79,491  |  | $ | 2,067,788  | 
|Total                               |  | $               | 4,011,561 |                           | $ | 95,134                                       |  | $                                                               | 2,952,905 |                              | $ | 154,558   |  |       |  |  | $ | 137,575 |  | $ | 7,301,733  | 
|                                    |  |                 |           |                           |   |                                              |  |                                                                 |           |                              |   |           |  |       |   |  |   |         |  |   |            | 
|2009 Revenue Breakdown (in Dollars) | 
|                                    |  |                 |           |                           |   |                                              |  |                                                                 |           |                              |   |           |  |       |   |  |   |         |  |   |            | 
|Year                                |  | Licensing 
 Fee |           | Annual 
 Management 
 Fee |   | Pre-Recorded 
 Courses 
 (Sale of 
 e-Cards) |  | Tsingda 
 Virtual 
 Internet 
 Class Room 
 (Sale of 
 e-Cards) |           | Materials and 
 publications |   | Others    |  | Total |  
|                                    |  |                 |           |                           |   |                                              |  |                                                                 |           |                              |   |           |  |       |  
|Q1/2009                             |  | $               | 1,568,720 |                           | $ | 28,634                                       |  | $                                                               | 1,484,116 |                              | $ | 220,205   |  |       |  |  | $ | 50,247  |  | $ | 3,351,922  | 
|Q2/2009                             |  | $               | 1,705,551 |                           | $ | 26,494                                       |  | $                                                               | 1,514,852 |                              | $ | 258,088   |  |       |  |  | $ | 83,335  |  | $ | 3,588,320  | 
|Q3/2009                             |  | $               | 1,732,691 |                           | $ | 37,553                                       |  | $                                                               | 1,638,605 |                              | $ | 254,374   |  |       |  |  | $ | 279,184 |  | $ | 3,942,407  | 
|Q4/2009                             |  | $               | 1,806,543 |                           | $ | 29,706                                       |  | $                                                               | 1,645,104 |                              | $ | 275,970   |  |       |  |  | $ | 10,891  |  | $ | 3,768,214  | 
|Total                               |  | $               | 6,813,505 |                           | $ | 122,387                                      |  | $                                                               | 6,282,677 |                              | $ | 1,008,637 |  |       |  |  | $ | 423,657 |  | $ | 14,650,863 | 

36

---



|                                    |  |                 |           |                           |   |                                                |  |                                                                 |            |                              |   |           |  |       |           |  |   |        |  |   |            | 
|----------------------------------- |  | --------------- | --------- | ------------------------- | - | ---------------------------------------------- |  | --------------------------------------------------------------- | ---------- | ---------------------------- | - | --------- |  | ----- | --------- |  | - | ------ |  | - | ---------- | 
|2010 Revenue Breakdown (in Dollars) | 
|Year                                |  | Licensing 
 Fee |           | Annual 
 Management 
 Fee |   | Pre-
 Recorded 
 Courses 
 (Sale of 
 e-Cards) |  | Tsingda 
 Virtual 
 Internet 
 Class Room 
 (Sale of 
 e-Cards) |            | Materials and 
 publications |   | Others    |  | Total |          
|                                    |  |                 |           |                           |   |                                                |  |                                                                 |            |                              |   |           |  |       |          
|Q1/2010                             |  | $               | 1,308,823 |                           | $ | 37,968                                         |  | $                                                               | 2,136,709  |                              | $ | 161,697   |  |       |          |  | $ | 4,961  |  | $ | 3,650,158  | 
|Q2/2010                             |  | $               | 1,854,665 |                           | $ | 41,388                                         |  | $                                                               | 3,040,743  |                              | $ | 820,653   |  |       |          |  | $ | 7,862  |  | $ | 5,765,311  | 
|Q3/2010                             |  | $               | 2,947,794 |                           | $ | 42,067                                         |  | $                                                               | 3,865,578  |                              | $ | 1,095,375 |  | $     | 1,361,622 |  | $ | 4,366  |  | $ | 9,316,802  | 
|Q4/2010                             |  | $               | 2,293,865 |                           | $ | 43,504                                         |  | $                                                               | 3,670,276  |                              | $ | 1,037,906 |  | $     | 1,284,110 |  |   |       |  | $ | 8,329,660  | 
|Total                               |  | $               | 8,405,148 |                           | $ | 164,928                                        |  | $                                                               | 13,098,915 |                              | $ | 3,115,633 |  | $     | 2,645,731 |  | $ | 17,190 |  | $ | 27,447,545 | 

(1): Materials
and publications include reference books and materials, either self-branded or
cooperative. Sales of reference books and materials began in August, 2010.

Students must
use e-cards to purchase all online content, while the purchase of reference
books and materials are transacted in cash. The sales of reference books and
materials began in August, 2010, and account for approximately 9.6% of total revenue in 2010. While
the sale of e-cards continues to be the single biggest source of revenue,
franchise licensing fees and sales of reference materials make up a substantial
portion of our revenue.

PRC Regulation of Franchise Business

We have made
all required filings and met all requirements under PRC law to legally operate
a franchise business in the PRC. The required filings include (i) copies of the
business license or enterprise registration certificate; (ii) a sample
franchise contract; (iii) a brochure for franchise operations; (iv) a marketing
plan; (v) written commitment and relevant materials proving that the relevant
provisions have been followed; and (vi) other documents and materials required
by relevant governing authorities.

The legal
requirements to operate a franchise business in the PRC under the Regulation on
the Administration of Commercial Franchises require the franchisor to possess a
mature business model and the ability to provide long-term business guidance,
technical support, business training and other services to its franchisees. The
franchisor must have at least two direct sales stores, and have been engaged in
the business for more than a year. If this franchisor conducts its operations
within the scope of a single province, autonomous region, or municipality
directly under the PRC Central Government, it is required to file the required
legal documents with the relevant governing authorities of the province,
autonomous region or municipality directly under the PRC Central Government;
and if the franchisor conducts its operations within the scope of two or more
provinces, autonomous regions, or municipalities directly under the PRC Central
Government, it is required to file the required legal documents with the
competent commercial authority of the State Council.

Our Growth Strategy

Our growth and
expansion strategy for the next 6 to 12 months includes the following measures,
the cost of which is expected to come from our existing revenue stream:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Increase the number of Company-owned learning centers.As
 of December 31, 2010, we have 21 Company-owned locations. Due to the size of
 our Company-owned locations, we are able to absorb higher student traffic and
 generate higher overall revenues compared to franchised locations. We also
 recognize 100% of the revenue stream from these locations. For the year 2011,
 we plan to complete construction of 9 Company-owned locations that currently
 are under construction and open another 30 Company-owned locations. The
 aggregate estimated cost to open these locations is $4,000,000.                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Increase the number of franchised learning centers.
 As of December 31, 2010, we had 2,346 locations with over 1,400 of them
 located in 2nd and 3rd tier cities. We estimate there
 are approximately 50,000 2nd and 3rdtier cities in the
 PRC. Our plan is to increase the number of franchised learning centers by
 increasing our advertising and marketing initiatives in an effort to attract
 more franchisees. We plan on spending approximately $1.2 million on a broad
 scale brand promotional campaign. This campaign will target a number of media
 outlets, including advertisements on regional television and in local
 newspapers in select markets, as well as holding periodic regional events in
 these markets, all of which will be designed to attract franchisees. Through
 early 2011, the Company has agreements to open approximately 600 new
 franchised learning centers.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Increase traffic to our virtual classrooms.
 We plan to allocate more capital resources to the marketing and promotion of
 our virtual classrooms. The above mentioned brand promotion campaign will include
 sponsoring events at prominent high schools designed to promote our virtual
 classrooms, advertising in school newspapers, and to a lesser extent,
 subscribing to more per click ad space on selected Internet sites, such as
 Sina.com and Yahoo.com.cn. We also expect to experience increased traffic to
 our virtual classrooms coincident with our franchise expansion efforts. Since
 introduction of this platform, historical results have indicated that a
 majority of our virtual classroom subscribers have originated from our
 learning centers.                                                                                                                          

37

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We plan to
establish additional learning centers in 2011 as follows:

|                                     |  |      |       | 
|------------------------------------ |  | ---- | ----- | 
|                                     |  | 2011 |      
|                                     |  |      |      
|New
 company-owned learning centers  |  |      | 39    | 
|Total company-owned learning centers |  |      | 60    | 
|New
 franchised learning centers     |  |      | 600   | 
|Total franchised learning centers    |  |      | 2,900 | 
|Total
 Learning Centers              |  |      | 2,960 | 

On average,
the total cost of opening a Company-owned learning center is approximately
$100,000, as described in further detail in the following table:

|                              |  |   |                | 
|----------------------------- |  | - | -------------- | 
|Interior
 decoration          |  | $ | 22,059         | 
|Equipments
 and facilities    |  | $ | 5,882          | 
|6-month Rent
 (paid up front) |  | $ | 44,118/6 month | 
|Deposit                       |  | $ | 7,353/month    | 
|Miscellaneous                 |  | $ | 22,059         | 
|Total                         |  | $ | 101,471        | 

In order to
execute our plan of expanding our business operations, we will need to (i)
increase the number of our learning centers, (ii) scale and adapt our existing
network infrastructure to accommodate increased systems traffic and (iii)
increase our marketing efforts. Through 2011 we plan open approximately 600
additional franchised locations; in the next six months, we plan on spending
approximately $1.2 million on a broad scale brand promotional campaign; and we
will need significantly more computing power as traffic within our system
increases and our learning center locations expand. We will be required to
spend significant capital and resources to manage our additional franchises,
execute our promotional campaign and to purchase equipment, and upgrade our
technology and network infrastructure to handle increased Internet traffic. In
this regard, we have budgeted approximately $1.2 million for our market
campaign, approximately $1.4 million for IT expenditures, and approximately 1.8
million to add and improve our course content in 2011.

Marketing and Promotion

Our marketing
efforts target three principal areas; franchisees, students for our
Company-owned learning centers, and students for our virtual classrooms.

We attract
franchisees by conducting regional seminars on a periodic basis in areas that
we have targeted for expansion, as well as advertising on regional television
and in local newspapers in these areas. These efforts have produced in excess
of 2,300
operating franchisees. Our Company-owned learning centers are in close
proximity to schools and large residential areas. We have been able to attract
students to our learning centers principally through the distribution of
leaflets in the nearby areas.

Traffic to our
virtual classrooms has been driven principally by students from our learning
centers. We expect to increase traffic to our virtual classrooms commensurate
with the numerical increase in our learning centers.

We will
continue these marketing measures for the foreseeable future.

Through
December 31, 2011, we plan to spend approximately $4.7 million on marketing, as
described in further detail in the following table:

|                          |  |   |           | 
|------------------------- |  | - | --------- | 
|Recruitment
 of students  |  | $ | 1,764,706 | 
|Recruitment
 of franchise |  | $ | 735,294   | 
|Brand
 promotion          |  | $ | 441,176   | 
|Online
 Platform          |  | $ | 1,764,706 | 
|Total                     |  | $ | 4,705,882 | 

38

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Results of Operations (Unaudited) for the
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

The following
table sets forth key components of the Tsingda Educations results of
operations for the periods above indicated in dollars. The discussion following
the table addresses these results.

TSINGDA EEDU CORPORATION
(FORMERLY COMPASS ACQUISITOIN CORPORATION)
Consolidated Statements of Operations and Comprehensive Income
(Stated in US dollars)

|                                                     |  |                                  |            |      |   |            |  
|---------------------------------------------------- |  | -------------------------------- | ---------- | ---- | - | ---------- | -
|                                                     |  | For the Years Ended December 31, |           
|                                                     |  |                                  |           
|                                                     |  | 2010                             |            | 2009 |  
|                                                     |  |                                  |            |      |  
|                                                     |  |                                  |            |      |   |            |  
|Revenue                                              |  | $                                | 27,447,545 |      | $ | 14,650,863 |  
|Cost of revenue                                      |  |                                  | 6,011,094  |      |   | 2,231,202  |  
|                                                     |  |                                  |            |      |   |            |  
|Gross profit                                         |  |                                  | 21,436,451 |      |   | 12,419,661 |  
|                                                     |  |                                  |            |      |   |            |  
|Operating expenses                                   |  |                                  |            |      |   |            |  
|Selling expenses                                     |  |                                  | 6,199,618  |      |   | 3,460,803  |  
|General and administrative expenses                  |  |                                  | 3,205,802  |      |   | 1,900,063  |  
|                                                     |  |                                  |            |      |   |            |  
|Total operating expenses                             |  |                                  | 9,405,420  |      |   | 5,360,866  |  
|                                                     |  |                                  |            |      |   |            |  
|Income from operations                               |  |                                  | 12,031,031 |      |   | 7,058,795  |  
|Interest
 income                                     |  |                                  | 31,102     |      |   | 80,973     |  
|Realized
 gain from short-term investment            |  |                                  | 73,861     |      |   |           |  
|Other
 expense                                       |  |                                  | (257       | )    |   | (19,638    | )
|                                                     |  |                                  |            |      |   |            |  
|Income before income tax                             |  |                                  | 12,135,737 |      |   | 7,120,130  |  
|                                                     |  |                                  |            |      |   |            |  
|Income tax
 expenses                                 |  |                                  | 1,834,541  |      |   | 1,068,020  |  
|                                                     |  |                                  |            |      |   |            |  
|Net income                                           |  | $                                | 10,301,196 |      | $ | 6,052,110  |  
|                                                     |  |                                  |            |      |   |            |  
|Other comprehensive income/(loss)                    |  |                                  |            |      |   |            |  
|Foreign currency translation adjustments             |  |                                  | 721,997    |      |   | (40,113    | )
|                                                     |  |                                  |            |      |   |            |  
|Total comprehensive income                           |  | $                                | 11,023,193 |      | $ | 6,011,997  |  
|                                                     |  |                                  |            |      |   |            |  
|                                                     |  |                                  |            |      |   |            |  
|Earnings per share, basic and diluted                |  | $                                | 0.36       |      | $ | 0.25       |  
|Weighted average number of shares, basic and diluted |  |                                  | 28,242,518 |      |   | 24,402,278 |  

Revenues. For the
year ended December 31, 2010, we had revenues of $27,447,545 as compared to
revenues of $14,650,863 for the year ended December 31, 2009, an increase of
approximately 87%. Our revenue growth is due to an increase of the number of
franchised locations, along with the continued growth of the Companys Tsingda
Virtual Internet Classroom platform.

Cost of
revenue. For the year ended December 31, 2010, we had cost
of revenue of $6,011,094 as compared to cost of $2,231,202 for the year
ended December 31, 2009, an increase of approximately 169%. Our cost growth is
due to increases of depreciation of leasehold improvement, amortization, rent
expense for company owned learning centers, and other cost items.

Expenses. For the
year ended December 31, 2010, we had expenses, which are comprised of selling
and general and administrative expenses, of $9,405,420 as compared to expenses
of $5,360,866 for the year ended December 31, 2009, an increase of
approximately 75%.

Selling
expenses include salaries, advertising, and printing and meetings. For the year
ended December 31, 2010, we had selling

39

---



expenses of $6,199,618 as compared to
$3,460,803 for the comparable period from the prior year, an increase of 79%.
The increase in selling expenses is mainly a result of the Companys efforts to
increase its business through increased advertising.

General and
administrative expenses include rent, corporate salaries, and related expenses.
For the year ended December 31, 2010, we had general and administrative
expenses of $3,205,802 as compared to $1,900,063 for the comparable period from
the prior year. The increase is mainly driven by the increases in depreciation,
amortization and consulting expenses.

Realized gain on short-term investment.
Other income for year ended December 31, 2010 was $104,706 compared with $61,335
for the comparable period from the prior year. The increase in other income was
due to the realized gain of $73,861 from selling a matured short-term
investment during the year ended December 31, 2010 and decrease in interest
income.

Income Before Taxes.
Income before taxes for the year ended December 31, 2010 was $12,135,737 compared with $7,120,130 for the comparable period
from the prior year, which represents an increase of 70%. The increase was due to the various reasons stated above.

Net Income. We had
net income for the year ended December 31, 2010 of $10,301,196 compared with $6,052,110
for the prior twelve month period, an increase of 70%. The increase in net income was due to the various reasons
stated above.

Other Comprehensive Income.
We had other comprehensive income
of $721,997, and other
comprehensive loss of $40,113 for the year ended December 31,
2010 and December 31, 2009, respectively. The increase in other comprehensive
income was the result of foreign currency translation gain.

Total Comprehensive Income.
We had total comprehensive income of $11,023,193
and $6,011,997 for the year
ended December 31, 2010 and December 31, 2009, respectively, representing an
increase of 83%. The increase
in total comprehensive income was due to the various reasons stated above.

OFF-BALANCE SHEET ARRANGEMENTS

There are no
off-balance sheet arrangements between us and any other entity that have, or
are reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to Shareholders.

LIQUIDITY
AND CAPITAL RESOURCES

As of December
31, 2010, we had working capital of $11,381,531 compared with working
capital of $7,900,299 as of
December 31, 2009.

Changes in our
working capital are summarized as follows:

|                           |  |                              |            |                              |   |                              |  |   |           | 
|-------------------------- |  | ---------------------------- | ---------- | ---------------------------- | - | ---------------------------- |  | - | --------- | 
|                           |  | December 31, 2010
 (audited) |            | December 31, 2009
 (audited) |   | Increase in
 Working Capital | 
|                           |  |                              |            |                              |   |                              | 
|Total
 current assets      |  | $                            | 21,174,491 |                              | $ | 11,632,543                   |  | $ | 9,541,948 | 
|Total
 current liabilities |  |                              | 9,792,960  |                              |   | 3,732,244                    |  |   | 6,060,716 | 
|Working
 Capital           |  | $                            | 11,381,531 |                              | $ | 7,900,299                    |  | $ | 3,481,232 | 
|                           |  |                              |            |                              |   |                              |  |   |           | 

Our increase
in working capital is primarily attributable to a net increase in cash of
approximately $3,627,569,
the result of retaining operating cash flows, an increase in advances to
suppliers of $4,488,039, and an
increase in accounts receivable of $2,196,217,
partially offset by an increase in taxes payable of $3,063,977. Further, the increase in our working capital is
primarily as a result of increased net profits for the twelve month period
ending December 31, 2010. The increase in advances to suppliers was mainly for
prepayment of construction and renovation costs at Company-owned locations. The
increase in net profits is partially due to increasing scale of franchise system and partially due to
increased efforts to collect our accounts receivable. We experienced increased
consumption of our courses throughout the summer months. Revenue generated
during the summer months accounted for approximately 33.8% and 31% for 2010 and 2009, respectively.

Our primary
uses of cash have been for selling and marketing expenses, employee
compensation, and working capital. The main sources of cash have been revenues
from franchisees and from our Company-owned locations.

We believe the
following trends are reasonably likely to result in a material decrease in our
liquidity over the near to long term:

| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | An increase
 in working capital requirements to finance the growth of our Company-owned
 locations,                       
| |   |                                                                                                                           
| |  | Addition of
 administrative and marketing personnel as the business grows,                                                
| |   |                                                                                                                           
| |  | Increases in
 advertising, public relations and sales promotions for our franchising
 efforts in new and existing markets,
| |   |                                                                                                                           
| |  | Software
 development and the purchase of servers commensurate with student population
 growth, and                       

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| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | The cost of being a public
 company and the continued increase in costs due to governmental compliance
 activities.

The Company currently
generates cash flow through operations which we believe will be sufficient to
sustain current operations for at least the next year.

Cash flows from operations
are calculated based upon the local currencies using the average translation
rate. As a result, amounts related to assets and liabilities reported on the
statement of cash flows will not necessarily agree with changes in the
corresponding balances on the balance sheets.

The following summarizes the
key components of our cash flows for the year ended December 31, 2010 and 2009:

|                                           |  |                          |             |      |   |            |  
|------------------------------------------ |  | ------------------------ | ----------- | ---- | - | ---------- | -
|                                           |  | Year Ended
 December 31, |            
|                                           |  | 2010                     |             | 2009 |  
|                                           |  |                          |             |      |  
|Net cash provided by
 operating activities |  | $                        | 10,972,626  |      | $ | 3,159,852  |  
|Net cash consumed by
 investing activities |  | $                        | (16,630,096 | )    | $ | (4,887,929 | )
|Net cash provided by
 financing activities |  | $                        | 8,606,327   |      | $ | (131,562   | )
|Effect on cash of foreign
 exchange rates  |  | $                        | 678,712     |      | $ | 4,022      |  
|Net change in cash                         |  | $                        | 3,627,569   |      | $ | (1,855,617 | )
|Cash Balance (Beginning of
 Period)        |  | $                        | 458,645     |      | $ | 2,314,262  |  
|Cash Balance (End of
 Period)              |  | $                        | 4,086,214   |      | $ | 458,645    |  

The net cash provided by
operating activities for the year ended December 31, 2010 was $10,972,626, compared with $3,159,852 for the year ended December 31, 2009. The
increase in cash inflow was the primary cause of the increase in net income for
the year ended December 31, 2010 compared with the year ended December 31,
2009.

The net cash consumed by
investing activities for year ended December 31, 2010 was $16,630,096, compared with $4,887,929 for the year ended December 31, 2009. The
increase was primarily due to the additions to fix assets and intangible assets, which were
primarily composed of on-line teaching software and materials and payments for
leasehold improvements not completed on company-owned learning centers.

The net cash provided by
financing activities for the year ended December 31, 2010 was $8,606,327 compared with $(131,562) for the year ended December 31, 2009. The increase was primarily due to
the closing of a private placement of gross proceeds of about US $9.6
million in September 2010.

The effect on cash of
exchange rates was a gain
of $678,712 for the year ended December 31, 2010,
compared with a gain of $4,022 for the year ended December 31, 2009.

The difference between the
closing balance of cash and cash equivalents for the year ended December 31,
2010 and 2009 is due to the reasons mentioned above.

As of December 31, 2010, we
had working capital of $11,381,531
compared with working capital of
$7,900,299 as of December 31, 2009.

Our primary uses of cash have
been for selling and marketing expenses and employee compensation. The main
sources of cash have been revenues from franchisees and from our Company-owned
locations. The Company currently generates its cash flow through operations
which it believes will be sufficient to sustain current level operations for at
least the next twelve months.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis
of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amount of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We continually
evaluate our estimates, including those related to bad debts, inventories,
recovery of long-lived assets, income taxes, and the valuation of equity
transactions. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Any
future changes to these estimates and assumptions could cause a material change
to our reported amounts of revenues, expenses, assets and liabilities. Actual
results may differ from these estimates under different assumptions or
conditions. We believe the following critical accounting policies affect our
more significant judgments and estimates used in the preparation of the
financial statements.

A summary of significant
accounting policies is included in Note 2 to the audited consolidated financial
statements for the year ended December 31, 2010. Management believes that the application of
these policies on a consistent basis enables us to provide useful and

41

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reliable financial
information about our operating results and financial condition.

Variable Interest Entities

Pursuant to Financial
Accounting Standards Board Interpretation No. 46 (Revised), Consolidation of
Variable Interest Entities - an Interpretation of ARB No. 51 (FIN 46R) we
are required to include in our consolidated financial statements the financial
statements of variable interest entities. FIN 46R requires a variable interest
entity to be consolidated by a company if that company is subject to a majority
of the risk of loss for the variable interest entity or is entitled to receive
a majority of the variable interest entitys

42

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residual returns. Variable
interest entities are those entities in which we, through contractual
arrangements, bear the risk of, and enjoy the rewards normally associated with,
ownership of the entity, and therefore we are the primary beneficiary of the
entity.

Tsingda Education is
considered a variable interest entity (VIE), and we are the primary
beneficiary. On April 26, 2010, we entered into agreements with Tsingda
Education pursuant to which we receive a quarterly fee in an amount equal to
all of Tsingda Educations quarterly, after tax net profits. Tsingda Management
will supply the technology and administrative services needed to service
Tsingda Education.

The accounts of Tsingda
Education are consolidated in the accompanying financial statements pursuant to
FIN 46R. As a VIE, Tsingda Educations sales are included in our total sales,
its income from operations is consolidated with ours, and our net income
includes all of Tsingda Educations net income. We do not have any
non-controlling interest and accordingly, did not subtract any net income in
calculating the net income attributable to us. Because of the contractual
arrangements, we have pecuniary interest in Tsingda Education that requires
consolidation of Tsingda Educations financial statements with our financial
statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of PresentationThe accompanying consolidated financial statements have been
prepared in accordance with U.S, Generally Accepted Accounting Principles (US
GAAP).The Companys functional currency is the Chinese Renminbi (RMB);
however the accompanying financial statements have been translated and
presented in United States Dollars ($).

Consolidated Statements

The
accompanying consolidated financial statements include the accounts of the
Company, and its wholly owned subsidiaries, (Tsingda Technology, and Tsingda
Management), and Tsingda Century and its subsidiaries, Tsingda Network and
Tsingda Century Training School. All intercompany balances and transactions
have been eliminated in consolidation.

Use of Estimates

The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates. Significant items subject to such estimates and assumptions include
the useful lives of fixed assets; the allowance for doubtful accounts; the fair
value determination of financial and equity instruments, the reliability of
deferred tax assets; the recoverability of, intangible asset and property,
plant and equipment; and accruals for income tax uncertainties and other
contingencies. The current economic environment has increased the degree of
uncertainty inherent in those estimates and assumptions.

Reclassification Certain amounts in the consolidated financial statements for the prior
year have been reclassified to conform to the presentation of the current year
for the comparative purposes.

Risk and UncertaintiesTsingda
Century and Tsingda Network operate under the authority of business
licenses which were granted in 2003, and expire in 2023. Renewal of these
licenses will depend on the result of government inspections which are made to
ensure environmental laws are not breached.

The officers
of the Company control through direct ownership of most of the equity interests
of the Company. As a result, insiders will be able to control the outcome of
all matters requiring approval of equity owners and will be able to elect all
of the Company directors.

Cash and Cash EquivalentsFor Statement of Cash Flows purposes, the Company considers all cash
on hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with original
maturity of three months or less, when purchased, to be cash and cash equivalents.
The Company maintains cash with various banks and trust companies located in
China. Cash accounts are not insured or otherwise protected. Should any bank or
trust company holding cash deposits become insolvent, or if the Company is
otherwise unable to withdraw funds, the Company would lose the cash on deposit
with that particular bank or trust company.

Short-Term InvestmentsThe Company invested in a financial product, which is similar
to notes receivable, with maturity of four months, provided by a small
investment company in China in the year ended December 31, 2009. The short-term
investment is recorded at cost which

43

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approximates
the fair market value. As of December 31, 2010, the short-term investment has
been matured and fully collected with a gain.

Accounts Receivable
and Allowance For Doubtful AccountsAccounts receivable are recognized and carried at the
invoiced amount less an allowance for uncollectible accounts, as needed. In
establishing the required allowance, management considers historical losses
adjusted to take into account current market conditions and the customers
financial condition, the amount of receivables in dispute, and the current
receivables aging and current payment patterns. The Company reviews its
allowance for doubtful accounts monthly. Past due balances are reviewed
individually for collectability. Account balances are charged off against the
allowance after all means of collection have been exhausted and the potential
for recovery is considered remote.

Advance to SuppliersAdvance to suppliers represents the payments made and
recorded in advance for goods and services to be received. The Company makes
advances to suppliers for advertising, printing and other services and
products.

Fair Value of Financial InstrumentsThe carrying amounts of the Companys financial
instruments, which include cash, short term investments, accounts receivable
and other receivables, advances to suppliers, accounts payable, accrued
liabilities, and other liabilities, approximate their fair values at December
31, 2010.

Property and Equipment

Property and
equipment are stated at cost less accumulated depreciation. Depreciation on
property and equipment other than leasehold improvements is calculated on the
straight-line method over the estimated useful lives of the assets as set out
below:

|                                |  |                |   |                       |  |         | 
|------------------------------- |  | -------------- | - | --------------------- |  | ------- | 
|                                |  | Residual Value |   | Estimated Useful Life | 
|                                |  |                |   |                       | 
|Office
 furniture and equipment |  |                | 5 | %                     |  | 5 years | 
|Vehicles                        |  |                | 5 | %                     |  | 5 years | 

Intangible AssetsIntangibles are the cost of computerized video lessons
delivered both online and offline developed by the Company and the acquired
intangible assets with finite lives consist of courseware. All costs incurred
to establish the technological feasibility of a computer software product to be
sold, leased, or otherwise marketed are charged to expenses as incurred.
Development costs incurred after technological feasibility of a product has
been established and before product sales begin are capitalized and amortized
over the estimated life of the product, which thus far has been three
years, starting when product sales begin. Technological feasibility is deemed
to have been achieved when all the planning, designing, coding, and testing
activities necessary to establish that the product can be produced to meet its
design specifications have been completed, including functions, features, and
technical performance requirements. Acquired coursewares with finite lives are
carried at cost, less accumulated amortization and impairment. Amortization of
acquired coursewares is calculated on a straight-line basis over three years.

Impairment of
Long-Lived AssetsIn accordance with Impairment or Disposal of
Long-Lived Assets Subsections of FASB ASC Subtopic 360-10, Property, Plant, and Equipment - Overall,
long-lived assets, such as property, plant and equipment, and purchased
intangible assets subject to amortization, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If circumstances require a long-lived asset or
asset group be tested for possible impairment, the Company first compares
undiscounted cash flows expected to be generated by that asset or asset group
to its carrying value. If the carrying value of the long-lived asset or asset
group is not recoverable on an undiscounted cash flow basis, impairment is
recognized to the extent that the carrying value exceeds its fair value. Fair
value is determined through various valuation techniques including discounted
cash flow models, quoted market values and third-party independent appraisals,
as considered necessary.

Customer DepositsThe Company required certain amount of deposits from
its customers and franchised locations. The customer deposits are recorded as a liability
when the Company receives it and will be recognized as revenue after the
service is rendered.

Concentrations of Credit RiskFinancial instruments
which potentially subject the Company to concentrations of credit risk consist
of cash, short term investments, accounts receivable and advances to suppliers.
However, all Company assets are located in the PRC and Company cash balances
are on deposit at financial institutions in the PRC, the currency of which is
not free trading. Foreign exchange transactions are required to be conducted
through institutions authorized by the Chinese government and there is no
guarantee that Chinese currency can be converted to U.S. or other currencies.

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Recognition of Revenue

Online Courses

The Company
provides online education programs to its franchisees, agents and individual
customers. Revenue is realized through sales to franchisees and other agents of
rights to conduct education services. The Company authorized the franchised
locations to use its logo, all education programs and products and the Company
receives a onetime licensing fee, annual management fee, and 20% of student
generated revenue from the franchised location by providing them prepaid
e-cards of 5 times the cash amount. All the mentioned fees are revenues or
unearned revenues from the sale of e-cards. Revenue is recognized until the
services are consummated upon the e-cards are opened and used by the students
to purchase online education courses and is reported net of business tax. The
opening of cards is tracked by our IT system automatically and the revenue is
proportionally recognized based on the progress of the e-cards usage.

Virtual Internet Classroom

The Company
sold prepaid e-cards to the customers. Revenue is recognized until the services
are consummated upon the e-cards are opened and used by the students to
purchase online education courses and is reported net of business tax. The
opening of cards is tracked by our IT system automatically and the revenue is
proportionally recognized based on the progress of the e-cards usage.

Sales of Materials and Publications

The Company
started the sales of self-branded reference books and materials from August
2010. The revenue is recognized upon the products are delivered to the
customers. During the year ended December 31, 2010, the revenue generated from
sales of materials and publications was less than 10% of the total revenue.

Offline courses

Offline
courses are provided by the Company owned learning centers and the sales was
started from November 2010. The revenue is recognized based on the progress of
courses the students completed during the period. During the year ended
December 31, 2010, the revenue generated from providing offline courses is was
less than 10% of the total revenue.

AdvertisingThe Company expenses advertising costs as incurred.
Advertising is included in selling expenses for financial reporting. The
Company incurred advertising costs of $3,150,215 and $2,086,405 for the years
ended December 31, 2010 and 2009, respectively.

Income Taxes Income taxes are accounted for under the asset and liability method
pursuant to ASC 740 Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and tax loss and tax credit carry forwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the consolidated
statements of income in the period that includes the enactment date. A
valuation allowance is provided to reduce the amount of deferred tax assets if
it is considered more likely than not that some portion or all of the deferred
tax assets will not be realized.

ASC 740-10-25
clarifies the accounting for uncertain tax positions and requires that an
entity recognizes in the consolidated financial statements the impact of a tax
position, if that position is more likely than not of being sustained upon
examination, based on the technical merits of the position. Recognized income
tax positions are measured at the largest amount that is greater than 50%
likely of being realized. Changes in recognition or measurement are reflected
in the period in which the change in judgment occurs. The Company has elected
to classify interest and penalties related to unrecognized tax benefits, if and
when required, as a component of income tax expense in the consolidated
statements of income.

Other TaxesThe Company generates its income in China where
Business Tax, Income Tax, City Construction and Development Tax, and Education
Surcharge taxes are applicable.

Earnings per ShareBasic earnings per share are computed by dividing net
income by weighted average number of shares of common stock outstanding during
each period. Diluted earnings per share is computed by dividing net income by
the weighted average number of shares of common stock, common stock equivalents
and potentially dilutive securities outstanding during each period. At December
31, 2010 and 2009, the Company had no common stock equivalents that could
potentially dilute future earnings per share.

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The Companys
board of directors approved a three-for-one reverse stock split (the Reverse
Stock Split) of the Companys outstanding common stock on October 19, 2010.
References to shares in the consolidated financial statements and the
accompanying notes,
including, but not limited to, the number of shares and per share amounts, have
been adjusted to reflect the Reverse Stock Split on a
retroactive basis.

Foreign Currency Translation The financial position and results of operations of the Companys
subsidiaries in the PRC are measured using the Chinese currency Renminbi as the
functional currency, while the Companys reporting currency is the US dollar.
Balance sheet accounts with exception of equity of the subsidiaries are
translated at the prevailing exchange rate in effect at each period end, income
statement accounts are translated at the average rate of exchange during the
period, and equity accounts were stated at their historical exchange rate.
Exchange gains or losses arising from foreign currency transactions are
included in the determination of net income (loss) for the respective periods.
Translation adjustments are included in the accumulated other comprehensive
income in the consolidated statements of stockholders equity and comprehensive
income.

Other Comprehensive IncomeThe Company has adopted ASC220,Reporting Comprehensive Income, which establishes standards
for reporting and displaying comprehensive income, its components, and
accumulated balances in a full-set of general-purpose financial statements. The
Companys accumulated other comprehensive income represents the accumulated
balance of foreign currency translation adjustments.

Fair Value of
Financial InstrumentsASC 820 Fair Value Measurements and Disclosures,
adopted January 1, 2008, defines fair value, establishes a three-level
valuation hierarchy for disclosures of fair value measurement and enhances
disclosure requirements for fair value measures. The carrying amounts reported
in the balance sheets for current receivables and payables qualify as financial
instruments. Management concluded the carrying values are a reasonable estimate
of fair value because of the short period of time between the origination of
such instruments and their expected realization and if applicable, their stated
interest rate approximates current rates available. The three levels are
defined as follows:

| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1 -
 inputs to the valuation methodology are quoted prices (unadjusted) for
 identical assets or liabilities in active markets.                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                       
| |  | Level 2 -
 inputs to the valuation methodology include quoted prices for similar assets
 and liabilities in active markets, and inputs that are observable for the
 assets or liability, either directly or indirectly, for substantially the
 full term of the financial instruments.
| |   |                                                                                                                                                                                                                                                                                       
| |  | Level 3 -
 inputs to the valuation methodology are unobservable and significant to the
 fair value.                                                                                                                                                                                   

It is
managements opinion that as of December 31, 2010 and 2009, the estimated fair
values of the financial instruments were not materially different from their
carrying values as presented on the balance sheet. This is attributed to the
short maturities of the instruments and that interest rates on the borrowings
approximate those that would have been available for loans of similar remaining
maturity and risk profile at respective balance sheet dates. The carrying
amounts of short-term loans approximate their fair values because the
applicable interest rates approximate current market rates.

Related PartiesA party is considered to be related to the Company if
the party directly or indirectly or through one or more intermediaries,
controls, is controlled by, or is under common control with the Company.
Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its
management and other parties with which the Company may deal if one party
controls or can significantly influence the management or operating policies of
the other to an extent that one of the transacting parties might be prevented
from fully pursuing its own separate interests. A party which can significantly
influence the management or operating policies of the transacting parties or if
it has an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests is also a related party.

Products WarrantiesRefunds to students who withdraw from courses are
rarely made and are made only at the discretion of the Company. For this reason
and, since revenue is recognized only as services are provided, no provision is
needed for possible withdrawals.

Segment ReportingThe Company uses the management approach in determining
reportable operating segments. The management approach considers the internal
organization and reporting used by the Companys chief operating decision maker
for making operating decisions and assessing performance as the source for
determining the Companys reportable segments. The Companys chief operating
decision maker has been identified as the chief executive officer of the
Company who reviews financial information of separate operating

46

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segments based
on US GAAP. The chief operating decision maker now reviews results analyzed by
service line. This analysis is only presented at the revenue level with no
allocation of direct or indirect costs. Consequently, the Company has
determined that it has only one operating segment.

Recently Adopted Accounting Pronouncements

Management believes that none
of the recently adopted accounting pronouncements will have a material affect
on the Companys financial position, results of operations, or cash flows.

Effective July
1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (Now ASC
820), which provides guidance on how to measure assets and liabilities that use
fair value. ASC 820 applies whenever another U.S. GAAP standard requires (or
permits) measurement of assets or liabilities at fair value, but does not
expand the use of fair value to any new circumstances. The Company also adopted
FASB Staff Position (FSP) No.FAS 157-2, which allows the Company to partially
defer the adoption of ASC820. This FSP defers the effective date of ASC 820 for
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually), to fiscal years beginning after November
15,2008, and interim periods within those fiscal years. Nonfinancial assets and
nonfinancial liabilities include all assets and liabilities other than those
meeting the definition of a financial asset or financial liability as defined
in paragraph 6 of Statement No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities. The adoption of ASC 820 did not have an impact on
our financial statements.

In May 2009,
the FASB issued SFAS No. 165, Subsequent Events (Now ASC 855), which provides
guidance to 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. ASC 855 also requires entities to
disclose the date through which subsequent events were evaluated as well as the
rationale for why that date was selected. This disclosure should alert all
users of financial statements that an entity has not evaluated subsequent
events after that date in the set of financial statements being presented. ASC
855 is effective for interim and annual periods ending after June 15, 2009. The
adoption of ASC 855 did not have a material impact on the Companys financial
position, results of operations or cash flows.

In June 2009,
the FASB issued Update No. 2009-01, Generally Accepted Accounting Principles
(ASU 2009-01). ASU 2009-01 establishes The FASB Accounting Standards
Codification, or Codification, which became the source of authoritative GAAP
recognized by the FASB to be applied by nongovernmental entities. On the
effective date, the Codification superseded all then-existing non-SEC
accounting and reporting standards. All other non grandfathered non-SEC
accounting literature not included in the Codification will become non
authoritative. ASU 2009-01 is effective for interim and annual periods ending
after September 15, 2009. The adoption did not have any impact on the Companys
operating results, financial position or cash flows.

In December 2009, the FASB codified
Consolidations  Improvements to Financial Reporting by Enterprises Involved
with VIEs (ASU 2009-17), guidance which was issued by the FASB in June 2009.
The amendments in this Accounting Standards Update replace the
quantitative-based risks and rewards calculation for determining which
reporting entity, if any, has a controlling financial interest in a variable
interest entity with an approach focused on identifying which reporting entity
has the power to direct the activities of a variable interest entity that most
significantly impact the entitys economic performance and has (1) the
obligation to absorb losses of the entity or (2) the right to receive benefits
from the entity. An approach that is expected to be primarily qualitative will
be more effective for identifying which reporting entity has a controlling
financial interest in a variable interest entity. ASU 2009-17 is effective as
of the beginning of the interim period ended June 30, 2010. The adoption of
this standard did not have any material impact on the Companys consolidated
financial statements.

As part of the restructuring,
on April 26, 2010, Tsingda Management entered into a series of agreements with
Tsingda Century and its shareholders, including an Operating Agreement, Proxy
Agreement, Consulting Services Agreement, Equity Pledge Agreement and Option
Agreement, which entitled Tsingda Management to receive substantially all of
the economic benefits of Tsingda Century in consideration for consulting
services provided by Tsingda Management to Tsingda Century. The Option
Agreement allows Tsingda Management to acquire the shares of Tsingda Century
when permitted by the PRC laws. The Proxy Agreement provides Tsingda Management
with the voting rights of Tsingda Centurys shareholders and the Equity Pledge
Agreement pledges the shares in Tsingda Century to Tsingda Management without
transferring legal ownership in Tsingda Century to Tsingda Management. Under
the Consulting Services Agreement, Tsingda Management is the exclusive service
provider to Tsingda Century for services, including general business
operations, human resources and business development and Tsingda Century is
obligated to make regular payments

47

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for such services provided.
Under the Operating Agreement, Tsingda Century shall not conduct any
transactions which may materially affect its assets, obligations, rights or
operations without the written consent of Tsingda Management. Further, Tsinda
Century adopted a corporate policy suggested by Tsingda Management in connection
with Tsingda Centurys daily operations, financial management and the
employment and dismissal of its employees. Through these agreements, Tsingda
Management has the power to direct the activities that most significantly
impact the economic performance of Tsingda Century and Tsingda Century became a
variable interest entity (VIE) and is included in the consolidated Group.

Recent Financing

On September 16, 2010, we
entered into a Securities Purchase Agreement (Securities Purchase Agreement)
with certain accredited investors (Investors) pursuant to which we completed
an offering (Offering) of units (Units) for total gross proceeds of
$9,600,000. Each Unit is priced at $1.60 and consists of one (1) Ordinary
Share, and a Series A Stock Purchase Warrant (Warrants) to purchase 35% of
the number of Ordinary Shares purchased in the Offering. The initial Warrant
exercise price is $2.08 per share and the Warrant term is five (5) years. The
Warrant may be exercised on a cashless basis three (3) months after the
Ordinary Shares are listed on a major stock exchange or other exchange or
market described therein.

We entered into a Hold Back
Escrow Agreement with Zhong Hui Rong (Fujian) Fund Ltd, (the Lead Investor)
and an escrow agent under which we deposited $520,000 of the Offering proceeds
with the escrow agent. Increments of the escrowed amount will be released to
the Company upon the Company attaining the following respective milestones: (i)
$120,000 upon engaging an investor relations firm reasonably acceptable to the
lead Investor; (ii) $100,000 upon providing the lead Investor with evidence
that is reasonably satisfactory to the Lead Investor indicating that Circular
75 filings have been approved by the PRC Government, (iii) $100,000 upon
providing the Lead Investor with documentation demonstrating that the business
license of Beijing Tsingda Century Investment Consultant of Education Co., Ltd.
has been amended to clarify to the lead investors reasonable satisfaction that
the VIE Subsidiaries are properly authorized to engage in its current business;
and (vii) $200,000 upon providing the Lead Investor with written confirmation
that (a) an independent accounting firm reasonable satisfactory to the Lead
Investor has been engaged, and (b) a law firm reasonably satisfactory to the
Lead Investor has been retained in connection with our initial public offering.
If on June 30, 2011, any portion of the escrowed amount remains in escrow as a
result of our failure to satisfy any of the milestones, then the Lead Investor
can cause the release of the balance of the escrowed amount to the Investors,
on a pro rata basis. As of the date hereof, the $520,000 remains in escrow
subject to the Companys satisfaction of each of the above conditions.

In connection with the Offering,
our largest shareholder, Tsing Da Century Education Technology Co., Ltd., a
Belize corporation, placed preferred shares equal to 6,000,000 Ordinary Shares
in escrow on post three-for-one split basis (the Escrow Shares) and agreed to
transfer the Escrow Shares, in whole or in part as described below, to the
Investors on a pro rata basis in the event that we do not meet certain
performance targets for our fiscal years ending December 31, 2010 and December
31, 2011.

If the Companys net income
for the fiscal year 2011 is less than $13,500,000, the escrow agent shall
transfer to the investors of our 2010 private placement, on a pro-rata basis,
an amount of Escrow Shares equal to the percentage of variation from the 2011
performance threshold times the total number of Escrow Shares. Any Escrow
Shares remaining will be returned to the Companys largest shareholder. Net
income is as defined under United States generally accepted accounting
principles, provided, however, that net income as used for these purposes for
each of fiscal years 2010 and 2011 shall be increased by any cash or non-cash
charges incurred (i) as a result of the financing, including without
limitation, as a result of the issuance, exercise or any anti-dilution
adjustment of the Warrants and (ii) as a result of the release of the Escrow
Shares pursuant to the terms of the Securities Escrow Agreement.

We also entered into a
Founding Shareholder Lock-Up Agreement with our largest shareholder pursuant to
which the shareholder agreed to restrict the transfer of its Ordinary Shares
for 12 months from the listing date on any of: the NYSE, any tier of the NASDAQ
Stock Market, or the NYSE Amex (Listing Date), except that during the lock up
period, such shareholder may transfer an amount up to 5% of the Ordinary Shares
held by such shareholder. We also entered into a Six Month Lock Up Agreement
with various other shareholders pursuant to which these shareholders agreed to
restrict the transfer of their respective shares in the Company for 6 months
from the Listing Date, except that during the lock up period, each of these
shareholders may transfer an amount up to 5% of the Ordinary Shares held by
such shareholder. Finally, we entered into Initial Shareholder Lock-Up
Agreements with certain other shareholders pursuant to
which these shareholders agreed to restrict the transfer of their shares in the
Company for nine (9) months from the Listing Date, except that during the (i)
initial 6 months of the lock up period, each of these shareholders may transfer
an amount up to 5% of the Ordinary Shares held by such shareholder, and (ii)
final three months of the lock up period, each of these shareholders may
transfer an amount up to 20% of the Ordinary Shares held by such shareholder.

Placement Agent

Maxim Group, LLC (Maxim), a
FINRA broker/dealer, acted as our placement agent in connection with the
Offering. On March 12, 2010, Beijing Tsingda Century Investment Consultant of
Education Co., Ltd., our variable interest entity, entered into an exclusive placement
agent agreement, as amended, with Maxim which had a term through October 31,
2010. Since the initial term is now completed, either party may terminate the
agreement with 30 days advance notice. Maxim received an effective cash
commission of $411,000 (or approximately 4.3% of the proceeds of the Offering)
and warrants equal to 4.5% of the number of Ordinary Shares sold

48

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in the Offering (or 364,500
Ordinary Shares). The warrant term is five years and is exercisable at any time
beginning on March 16, 2011. The exercise price is $110% of the offering price
of the Units (or $1.76). We are required to register the Maxim warrants. We
also agreed to indemnify Maxim against certain liabilities, including
liabilities under the Securities Act. In addition, we reimbursed Maxim for
$25,000 as reasonable out of pocket expenses.

49

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ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a
smaller reporting company as defined by Regulation S-K and as such, are not
providing the information contained in this item pursuant to Regulation S-K.

ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

Reference is
made to pages F-1 through F-23 comprising a portion of this Annual Report on
Form 10-K.

ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Prior to our
reverse acquisition transaction with Tsingda Technology, our independent
registered public accounting firm was PMB Helin Donovan, LLP (PMB), while
Tsingda Managements independent registered public accounting firm was Jeffrey
& Company.

On August 23,
2010, we dismissed PMB Helin Donavan, LLP (PMB) as our independent registered
public accounting firm. The Board of Directors of the Company approved such
dismissal on August 19, 2010.

The Companys
Board of Directors participated in and approved the decision to change our
independent registered public accounting firm.

PMBs reports
on the financial statements of the Company for the years ended June 30, 2009
and 2008 did not contain an adverse opinion or a disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope, or accounting
principles.

In connection
with the audit and review of the financial statements of the Company through
August 23, 2010, there were no disagreements on any matter of accounting
principles or practices, financial statement disclosures, or auditing scope or
procedures, which disagreements if not resolved to their satisfaction would
have caused them to make reference in connection with PMBs opinion to the
subject matter of the disagreement.

In connection
with the audited financial statements of the Company for the years ended June
30, 2009 and 2008 and interim unaudited financial statement through August 23,
2010, there have been no reportable events with the Company as set forth in
Item 304(a)(1)(v) of Regulation S-K.

Engagement of Jeffrey & Company.

On August 19,
2010, the Board appointed Jeffrey & Company as the Companys new
independent registered public accounting firm. The decision to engage Jeffrey
& Company was approved by the Companys Board of Directors on August 19,
2010.

Prior to
August 19, 2010, we did not consult with Jeffrey & Company regarding (1)
the application of accounting principles to a specified transactions, (2) the
type of audit opinion that might be rendered on our financial statements, (3)
written or oral advice was provided that would be an important factor
considered by us in reaching a decision as to an accounting, auditing or
financial reporting issues, or (4) any matter that was the subject of a
disagreement between us and its predecessor auditor as described in Item
304(a)(1)(iv) or a reportable event as described in Item 304(a)(1)(v) of
Regulation S-K.

We provided
PMB with a copy of this disclosure on August 23, 2010, and provided PMB with
the opportunity to furnish us with a letter addressed to the SEC stating
whether it agrees with the statement made by us herein in response to Item
304(a) of Regulation S-K and, if not, stating the respect in which it does not
agree. A letter from PMB dated August 23, 2010 was filed by us as Exhibit 16.1
to our current report on Form 8-K on August 23, 2010.

Dismissal of Jeffrey & Company and
Engagement of Malone & Bailey LLP

On October 14,
2010, we dismissed Jeffrey & Company, as our independent registered public
accounting firm and appointed Malone Bailey LLP as its new independent
registered public accounting firm. Since the Company does not have an audit or
similar committee, the termination of Jeffrey & Company and the appointment
of Malone Bailey LLP as the Companys new independent registered public
accounting firm was approved by the Companys board of directors.

Jeffrey &
Companys report on the financial statements of the Company for the fiscal
years ended December 31, 2009 and 2008 contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principle.

50

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During the
fiscal years ended December 31, 2009 and 2008 and through October 14, 2010,
there have been no disagreements with Jeffrey & Company (as defined in Item
304(a)(1)(iv) of Regulation S-K) on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Jeffrey & Company,
would have caused it to make reference thereto in any of its reports.

During the
fiscal years ended December 31, 2009 and 2008 and through October 14, 2010,
there were no reportable events as defined in Regulation S-K Item 304(a)(1)(v).

During the
fiscal years ended December 31, 2009 and 2008 and through October 14, 2010,
neither the Company nor anyone on behalf of the Company has consulted with
Malone Bailey LLP regarding either:

1. The
application of accounting principles to specified transactions, either
completed or proposed; or the type of audit opinion that might be rendered on
the Companys financial statements, and neither was a written report provided
to the Company nor was oral advice provided that Malone Bailey LLP concluded
was an important factor considered by the Company in reaching a decision as to
an accounting, auditing or financial reporting issue; or

2. Any matter
that was either the subject of a disagreement or a reportable event, as each
term is defined in Items 304(a)(1)(iv) or (v) of Regulation S-K, respectively.

ITEM 9A. CONTROLS
AND PROCEDURES

Evaluation of controls and procedures

As of the end
of the period covered by this Annual Report, the Companys management, with the
participation of the Companys Chief Executive Officer and Chief Financial
Officer (the Certifying Officers), conducted evaluations of the Companys
disclosure controls and procedures. As defined under Sections 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange
Act), the term disclosure controls and procedures means controls and other
procedures of an issuer that are designed to ensure that information required
to be disclosed by the issuer in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commissions rules and forms. Disclosure controls and
procedures include without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuers management, including the Certifying Officers, to allow timely
decisions regarding required disclosures. Based on this evaluation, the
Certifying Officers have concluded that the Companys disclosure controls and
procedures were not effective to ensure that material information is recorded,
processed, summarized and reported by management of the Company on a timely
basis in order to comply with the Companys disclosure obligations under the
Exchange Act and the rules and regulations promulgated thereunder. The Chief
Executive Officers and Chief Financial Officers conclusion regarding the
Companys disclosure controls and procedures is based solely on managements
conclusion that there is a material weakness in the Companys internal control
over financial reporting.

Managements Report on Internal Controls Over
Financial Reporting

Our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), are responsible for
establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange
Act of 1934, as amended (the Exchange Act).

Internal
control over financial reporting is promulgated under the Exchange Act as a
process designed by, or under the supervision of, our CEO and CFO and effected
by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:

| |   |                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Pertain to the maintenance of records that in reasonable detail
 accurately and fairly reflect the transactions and dispositions of our
 assets;                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                          
| |  | Provide reasonable assurance that transactions are recorded as
 necessary to permit preparation of financial statements in accordance with
 generally accepted accounting principles, and that our receipts and
 expenditures are being made only in accordance with authorizations of our
 management and directors; and
| |   |                                                                                                                                                                                                                                                                                                                          
| |  | Provide reasonable assurance regarding prevention or timely
 detection of unauthorized acquisition or disposition of our assets that could
 have a material effect on the financial statements.                                                                                                                          

Readers are
cautioned that internal control over financial reporting, no matter how well
designed, has inherent limitations and may not

51

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prevent or
detect misstatements. Therefore, even effective internal control over financial
reporting can only provide reasonable assurance with respect to the financial
statement preparation and presentation.

Our
management, under the supervision and with the participation of our CEO and
CFO, has evaluated the effectiveness of our disclosure controls and procedures
and internal controls over financial reporting as defined in Exchange Act Rules
13a-15(e) and (f) and 15d-15(e) and (f) as of the end of the period covered by
this Report based upon the framework in Internal ControlIntegrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on such evaluation, our management has made an assessment that
there is the following material weakness in our internal control over financial
reporting as of December 31, 2010:

Currently,
none of our employees, including our Chief Financial Officer, who is
responsible for preparing and supervising the preparation of our financial
statements, have any formal training in U.S. GAAP and SEC rules and
regulations. In that regard, we rely exclusively on our independent accountants
and our outside counsel for advice with respect to U.S. GAAP and SEC rules and
regulations.

Changes in internal control over financial reporting

No
significant changes were made in our internal control over financial reporting
during the Companys fourth quarter of 2010 that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over
financial reporting.

ITEM 9B. OTHER
INFORMATION

Not
applicable.

PART III

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

MANAGEMENT

Directors and Executive Officers

The following
table sets forth the name, age, and position of our executive officers and
directors. Executive officers are elected annually by our Board of Directors.
Each executive officer holds his office until he resigns, is removed by the
Board, or his successor is elected and qualified. Directors are elected annually
by our stockholders at the annual meeting. Each director holds his office until
his successor is elected and qualified or his earlier resignation or removal.

|               |  |     |  |                                                                           
|-------------- |  | --- |  | --------------------------------------------------------------------------
|NAME           |  | AGE |  | POSITION                                                                  
|               |  |     |  |                                                                           
|Zhang Hui      |  | 44  |  | Chairman of
 the Board of Directors, Chief Executive Officer and President
|Liu Juntao     |  | 48  |  | Executive
 Vice President and Director                                    
|Kang
 Chungmai |  | 40  |  | Secretary
 and Chief Financial Officer                                    
|Norm Klein     |  | 60  |  | Director                                                                  
|David
 Bolocan |  | 46  |  | Director                                                                  
|Bi Cheng       |  | 53  |  | Director                                                                  

Zhang Huiestablished
Tsingda Education in 2003, and has been its chairman, chief executive officer
since its inception. From 1999 to 2003, he was vice president of Singapore
Holding Group, during when he has integrated management methods and cultural
diversity under different background efficiently, and then setting up a new
branch for Singapore Holding Group-Holding Technology (Shenzhen) Co., Ltd. From
1995 to 1999, Mr. Zhang worked as the newsroom director and vice chief editor
of China technology information magazine, successfully hatching the publication
of the best choice of Chinese excellently expertise, Chinese diathesis
education, Chinese innovation education and China education research. He
graduated from Wuhan University of Technology in 1989.

Liu Juntao has been
the executive vice-president of Tsingda Education since its inception. Prior to
his employ with Tsingda, he had over 10 years of administrative work for
government. He also spent 5 years in private industry in the PRC where worked
in product development, market exploiting and customer service. Mr. Liu
graduated from Huazhong Agriculture University in 1983.

Kang Chungmai has
been the chief financial officer and secretary of Tsingda Education since
January 2010. From 2004 to 2007, he worked as managing director in Zero2IPO
Group in Beijing a financial consulting firm. From 1999 to 2002, he served as
CFO in

52

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Optoma
Electronics (the largest TFT-LCD backlight and DLP projector producer in the
world). From 1996 to 1999, he served as financial manager in Far Eastern
Department Stores (the largest chain of department stores in the Greater China
Region) based in Taipei. He had broad experiences in general financial
management, debt and equity financing, foreign exchange hedging, offshore
holding structure design, and investment evaluation. Mr. Kang holds his master
degree in International Finance from the University of Westminster, London, UK
in 1996. He also expects to receive the PhD degree in Management from the
University of Edinburgh, Edinburgh, Scotland in 2010.

Norm Klein, director, has over twenty years of experience working in manufacturing and
process controls with major companies. Since 2001, Mr. Klein has acted as the
Chief Financial Officer, Chief Operating Officer, and Investor Relations
Officer for Eastbridge Investment Group Corporation [OTCBB: EBIG], a consulting
firm. Prior to that, Mr. Klein worked with corporations such as Clorox,
Honeywell, Dreyers Ice Cream, and Ingersol Rand Corporation, where Mr. Klein
provided consulting expertise in strategic planning, financial management,
marketing and selling, manufacturing and process controls. Mr. Klein holds a
Bachelors Degree in Mechanical Engineering from Rose Hulman Institute and a
Masters Degree in Business Administration from the University of Iowa.

David Bolocan,
director, is a retail banking and marketing executive who has held positions at
Sun Trust, Washington Mutual, JPM Chase and Bank of America. Since 2008, Mr.
Bolocan has been a consumer banking products executive at Sun Trust.
Previously, Mr. Bolocan was a consumer banking products executive at Washington
Mutual (2007 to 2008) and JP Morgan Chase (2006 to 2007). From 2001 to 2006,
Mr. Bolocan was an Executive Vice President at Bank of America, and its
predecessor, MBNA. Mr. Bolocan is the author of ten books on popular business
software packages. Mr. Bolocan holds a Master Degree in management sciences
from the Massachusetts Institute of Technology and a Bachelors Degree in
Computer Science and Economics from Harvard University.

Bi Cheng director,
has been a professor and doctoral advisor at Peking University since 2004. Mr.
Bi is also a researcher in the China National Institute for Educational
Research and a member of the Academic Committee and vice principal of the China
Principal Development School. During his career, Mr. Bi has hosted and
participated in more than 40 state level projects, published twelve scholarly
treatises, compiled educational documents and dictionaries, and released over
200 thesis papers. Mr. Bi received his Ph.D. from the Education Department of
Beijing Normal University in 1988.

We believe
that Zhang Hui, as chairman and chief executive officer, and Liu Juntao as
executive vice president of our business since its inception in 2003, are each
qualified to and should be a director of Tsingda eEDU Corporation. Mr. Zhang
and Mr. Liu have both been instrumental in establishing Tsingda Education and
overseeing its operations. We also believe Mr. Klein, Mr. Bolocan and Mr, Bi
are each qualified and should be on our board of directors. Mr. Klein and Mr.
Bolocan bring to the Company valuable expertise and knowledge of United States
corporate governance, and Mr. Bi is a respected academic in the field of
education that would contribute to the Boards diversity.

Directors are
elected until their successors are duly elected and qualified.

There are no
family relationships among our directors or officers.

To the best of
our knowledge, none of our directors or executive officers, including Nautilus
Global Partners and Mid-Ocean Consulting who were promoters of the Company from
the time of our incorporation to the time of its merger with Tsingda
Technology, and Eastbridge Investment Group Corporation, who is a promoter of
the Company, has been convicted in a criminal proceeding, excluding traffic
violations or similar misdemeanors, or has been a party to any judicial or
administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws, except for
matters that were dismissed without sanction or settlement. Except as set forth
in our discussion below in Certain Relationships and Related Transactions,
none of our directors, director nominees or executive officers has been
involved in any transactions with us or any of our directors, executive
officers, affiliates or associates which are required to be disclosed pursuant
to the rules and regulations of the SEC.

Code of Ethics

We currently
do not have a code of ethics that applies to our officers, employees and
directors, including our Chief Executive Officer and Chief Financial Officer,
however, we intend to adopt one in the near future.

53

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ITEM 11. EXECUTIVE
COMPENSATION

EXECUTIVE COMPENSATION

The following
table sets forth information concerning all cash and non-cash compensation
awarded to, earned by or paid to the named persons for services rendered in all
capacities during the noted periods. No other executive officer received total
annual salary and bonus compensation in excess of $100,000.

SUMMARY COMPENSATION TABLE

|                                 |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 
|-------------------------------- |  | ---- | ---- | ------------ | - | ----------- |  | -------------------- | - | --------------------- |  | ----------------------------- |  | ----------- | - |  |  | - |  | - | ------ | 
|Name andPrincipalPosition        |  | Year |      | Salary 
 ($) |   | Bonus 
 ($) |  | Stock 
 Awards 
 ($) |   | Option 
 Awards 
 ($) |  | All Other 
 Compensation
 ($) |  | Total 
 ($) |  
|                                 |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 
|Zhang Hui(1)                     |  |      | 2010 |              | $ | 55,385      |  |                      | 0 |                       |  | 0                             |  |             | 0 |  |  | 0 |  | $ | 55,385 | 
|Chairman, President, and         |  |      | 2009 |              | $ | 55,385      |  |                      | 0 |                       |  | 0                             |  |             | 0 |  |  | 0 |  | $ | 55,385 | 
|Chief Executive Officer          |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 
|                                 |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 
|Kang Chungmai(1)                 |  |      | 2010 |              | $ | 46,225      |  |                      | 0 |                       |  | 0                             |  |             | 0 |  |  | 0 |  | $ | 46,225 | 
|Chief Financial Officer          |  |      | 2009 |              |   | 0           |  |                      | 0 |                       |  | 0                             |  |             | 0 |  |  | 0 |  |   | 0      | 
|                                 |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 
|Joseph Rozelle(2)                |  |      | 2009 |              |   | 0           |  |                      | 0 |                       |  | 0                             |  |             | 0 |  |  | 0 |  |   | 0      | 
|Former President and Chief       |  |      |      |              |   | 0           |  |                      | 0 |                       |  | 0                             |  |             | 0 |  |  | 0 |  |   | 0      | 
|Financial Officer and
 Secretary |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 
|                                 |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 
|Karl Brenza(3)                   |  |      | 2009 |              |   | 0           |  |                      | 0 |                       |  | 0                             |  |             | 0 |  |  | 0 |  |   | 0      | 
|Former Chief Executive
 Officer  |  |      |      |              |   |             |  |                      |   |                       |  |                               |  |             |   |  |  |   |  |   |        | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On May 24,
 2010, we acquired Tsingda Technology in a reverse acquisition transaction
 that was structured as a share exchange and in connection with that
 transaction, Mr. Zhang Hui became our Chief Executive Officer and President
 and Kang Chungmai became our Chief Financial Officer. Prior to the effective
 date of the reverse acquisition, Mr. Zhang and Mr. Kang held the same
 positions with Tsingda Education, respectively. The annual compensation shown
 in this table includes the amounts Mr. Zhang received from Tsingda Education prior
 to the consummation of the reverse acquisition. Mr. Kang was hired by Tsingda
 Education in January 2010 and his annual salary is approximately $46,225.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2) | Mr. Joseph
 Rozelle resigned from the offices of President and Chief Financial Officer on
 May 20, 2010, and resigned as Secretary on May 24, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3) | Mr. Karl
 Brenza was appointed as Chief Executive Officer on May 20, 2010, and resigned
 from such office on May 24, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Employment Agreements.

Except as
noted below, there are no agreements or understandings for any of our executive
officers or directors to resign at the request of another person and no officer
or director is acting on behalf of nor will any of them act at the direction of
any other person.

54

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On January 1,
2010, we entered into an employment agreement with Mr. Zhang, our President and
Chairman. Pursuant to the agreement, Mr. Zhang has agreed to work exclusively
for the Company during the term and will receive a monthly salary of
approximately $4,400. The agreement expires on December 31, 2019.

Grants of Plan-Based Awards

No plan-based
awards were granted to any of our named executive officers during the fiscal
year ended December 31, 2010.

Outstanding Equity Awards at Fiscal Year End

No unexercised
options or warrants were held by any of our named executive officers at
December 31, 2010. No equity awards were made during the fiscal year ended
December 31, 2010.

Option Exercises and Stock Vested

No options to
purchase our capital stock were exercised by any of our named executive
officers, nor was any restricted stock held by such executive officers vested
during the fiscal year ended December 31, 2010.

Pension Benefits

No named
executive officers received or held pension benefits during the fiscal year
ended December 31, 2010.

Nonqualified Deferred Compensation

No
nonqualified deferred compensation was offered or issued to any named executive
officer during the fiscal year ended December 31, 2010.

Potential Payments Upon Termination or Change
in Control

Our executive
officers are not entitled to severance payments upon the termination of their
employment agreements or following a change in control.

Compensation of Directors

No member of
our Board of Directors received any compensation for his services as a director
during the fiscal year ended December 31, 2010.

Compensation Committee Interlocks and Insider
Participation

During the
fiscal year 2010 we did not have a standing compensation committee. Our Board
of Directors was responsible for the functions that would otherwise be handled
by the compensation committee. All directors participated in deliberations
concerning executive officer compensation, including directors who were also
executive officers, however, none of our executive officers received any compensation
during the last fiscal year. None of our executive officers has served on the
Board of Directors or compensation committee (or other committee serving an
equivalent function) of any other entity, any of whose executive officers
served on our Board or Compensation Committee.

ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following
table sets forth certain information, as of the date hereof, with respect to
the beneficial ownership of the outstanding Ordinary Shares by (i) any holder
of more than five percent (5%); (ii) each of our executive officers and
directors; and (iii) our directors and executive officers as a group. Except as
otherwise indicated, each of the stockholders listed below has sole voting and
investment power over the shares beneficially owned.

55

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|                                                      |  |                                                   |            |                       |  |      |  
|----------------------------------------------------- |  | ------------------------------------------------- | ---------- | --------------------- |  | ---- | -
|Name and Address of
 Beneficial Owner                 |  | Number of Ordinary
 Shares
 Beneficially Owned(1) |            | Percent
 Of Class (2) | 
|                                                      |  |                                                   |            |                       | 
|                                                      |  | Officers and Directors                            |            |                       | 
|                                                     
|Zhang Hui
 (3)
 President and Chairman                |  |                                                   | 11,422,706 |                       |  | 33.8 | %
|Liu
 Juntao(3)
 Executive Vice President and Director |  |                                                   | 11,422,706 |                       |  | 33.8 | %
|Kang
 Changmai
 Chief Financial Officer and Secretary |  |                                                   | 0          |                       |  | 0    |  
|Norm Klein
 (6)
 Director                             |  |                                                   | 2,079,740  |                       |  | 6.2  | %
|David
 Bolocan
 Director                              |  |                                                   | 0          |                       |  | 0    |  
|Bi Cheng
 Director                                    |  |                                                   | 0          |                       |  | 0    |  
|All officers
 and directors as a group (3 persons)    |  |                                                   | 13,502,446 |                       |  | 40.0 | %
|                                                      |  |                                                   |            |                       |  |      |  
|5% or greater shareholders                           
|Zhong Hui
 Rong Fund Ltd. (4)                         |  |                                                   | 2,531,250  |                       |  | 7.5  | %
|Yangyi Yu(5)                                          |  |                                                   | 2,193,750  |                       |  | 6.4  | %
|Eastbridge
 Investment Group Corp.(6)                 |  |                                                   | 2,079,740  |                       |  | 6.2  | %
|Tsing Da
 Century Education Technology Co., Ltd. (3)  |  |                                                   | 11,422,706 |                       |  | 33.8 | %

|    |                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Beneficial
 ownership is determined in accordance with the rules of the SEC and generally
 includes voting or investment power with respect to securities. Each of the
 beneficial owners listed above has ownership of, and voting power and
 investment power with respect to, our Ordinary Shares. For each beneficial
 owner above, any options exercisable within 60 days have been included in the
 denominator.
|(2) | Based on
 33,729,862 Ordinary Shares issued and outstanding as of the date hereof.                                                                                                                                                                                                                                                                                                                                    
|(3) | Tsing Da
 Century Education Technology Co., Ltd., a Belize corporation, is the record
 owner of such shares. Mr. Zhang, our Chairman and President, and Mr. Liu, our
 Executive Vice President and Director, own 81.7% and 18.3%, respectively, of
 this entity. Accordingly, both Mr. Zhang and Mr. Liu may be deemed to be the
 beneficial owner of shares owned by such reporting person.                          
|(4) | Mr. Su Jie
 is the President of Zhong Hui Rong Fund Ltd. The amount includes stock
 purchase warrants to acquire 656,250 Ordinary Shares.Address of the person
 is:Room1803, Building13, Court 58,Qingta West Road, Fengtai District,
 Beijing,100071                                                                                                                                                                 
|(5) | The amount
 includes stock purchase warrants to acquire 568,750 Ordinary Shares.Address
 of the person is:c/o Tsingda Century Invest Tech. Co. Ltd.7th Fl CapitalDevel Twr, ZhongguangchunHaidian Dist, Beijing PRC 100080                                                                                                                                                                                            
|(6) | Norm Klein
 is Chief Operating Officer, Chief Financial Officer and Investor Relations
 Officer of Eastbridge Investment Group Corp. 
 Address of the person is: 
 8040 E. Morgan Trail Unit 18 
 Scottsdale, Arizona 85258                                                                                                                                                                                           

ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Compass

On March 1,
2008, the Company consolidated the authorized ordinary share capital of the
Company from 50,000,000 Ordinary Shares of $0.0001 par value each to 39,062,500
Ordinary Shares of $0.000128 par value each. This resulted in every shareholder
as of March 1, 2008 receiving 0.78125 Ordinary Shares for every ordinary share
previously held. This was treated as a stock split for U.S. GAAP

56

---



purposes, and
all share and per share data is presented as if the consolidation took place as
of the date of inception, September 27, 2006. On March 1, 2008, we also
consolidated our authorized preference share capital from 1,000,000 preference
shares of $0.0001 par value each to 781,250 preference shares of $0.000128 par
value.

Promoters and certain control persons.

On September
27, 2006, the Company issued 1,000,000 and 100,000 Ordinary Shares,
respectively, to Nautilus Global Partners and Mid-Ocean Consulting Limited
(subsequently adjusted to 781,250 and 78,125) at a price of $0.0001 per share.
Mr. Rozelle, a former President and director of the Company, is the President
of Nautilus Global Partners, LLC. Nautilus Global Partners and Mid-Ocean
Consulting Limited were promoters of the Company from the time of the Companys
incorporation to the time of its merger with Tsingda Technology.

On March 12,
2010, Tsingda Education entered into an agreement with Maxim Group, LLC
(Maxim), a FINRA registered broker dealer, to act as a placement agent on a
best efforts basis in connection with a proposed private placement offering of
Tsingda Education and its affiliates and subsidiaries. Under the Agreement,
Maxim is entitled to receive 8% of the gross proceeds of the offering and stock
purchase warrants equal to eight percent of the number of securities sold in
the offering. The term of the warrants is five years, although not exercisable
for the initial six months, and are exercisable at 110% of the per share
offering price. We are required to register the Maxim warrants. Tsingda
Education also is obligated to pay reasonable fees and expenses of Maxim not to
exceed $50,000. We also agreed to indemnify Maxim against certain liabilities,
including liabilities under the Securities Act. As a result of the September
16, 2010 financing, we paid Maxim as full compensation under the agreement,
cash commissions of $411,000 (or 4.3% of the proceeds from the offering) and
issued a stock purchase warrant to acquire 364,500 Ordinary Shares. The warrant
term is five years and is exercisable at any time after six months from closing
at an exercise price is $1.76. In addition, we reimbursed Maxim for $25,000 as
its reasonable out of pocket expenses.

On May 17,
2010, we issued an aggregate of 915,086 Ordinary Shares (adjusted to reflect
the 3 for 1 reverse split) to MJR Holdings, Inc., Christopher Fiore, Clifford
Teller and Karl Brenza, our former Chief Executive Officer, for an aggregate
purchase price of $30,000. The forgoing parties are affiliates of Maxim.

Pursuant to
the Tsingda transaction, and as described elsewhere herein, on May 24, 2010,
the Company issued 244,022.78 preferred shares of Compass to the Tsingda shareholders
in exchange for 100% of the outstanding shares of Tsingda Technology. The
Company also issued 2,079,740 Ordinary Shares to Eastbridge Investment Group
Corporation in exchange for certain considerations provided by Eastbridge
Investment Group Corporation, who is a promoter of the Company.

Tsingda Transactions

Tsingda
Technology owns 100% of the issued and outstanding capital stock of Beijing
Tsingda Century Management Consulting Ltd. (Tsingda Management), a wholly
foreign owned enterprise incorporated under the laws of the Peoples Republic
of China (PRC). On April 26, 2010, Tsingda Management entered into a series
of contractual agreements with Beijing Tsingda Century Investment Consultant of
Education Co. Ltd (Tsingda Education), a company incorporated under the laws
of the PRC, and its shareholders, in which Tsingda Management assumed
management of the business activities of Tsingda Education and has the right to
appoint all executives and senior management and the members of the board of
directors. The contractual arrangements are comprised of a Consulting Services
Agreement, Operating Agreement, Equity Pledge Agreement, and Option Agreement,
through which Tsingda Management has the right to advise, consult, manage and
operate Tsingda Education for a quarterly fee in the amount of 100% of Tsingda
Educations quarterly, after tax net profits. Additionally, Tsingda Educations
Shareholders have pledged their rights, titles and equity interest in Tsingda
Education as security for Tsingda Management to collect consulting and services
fees provided to Tsingda Education through an Equity Pledge Agreement. In order
to further reinforce Tsingda Managements rights to control and operate Tsingda
Education, Tsingda Educations shareholders have granted Tsingda Management the
exclusive right and option to acquire all of their equity interests in Tsingda
Education through an Option Agreement.

Advances were
made during 2008 and 2009 to Mr. Zhang Hui, our chief executive officer and to
Mr. Liu Juntao, our executive vice president, both of whom are equity
shareholders of Tsing Da Century Education Technology Co., Ltd., a Belize
corporation, which is the Companys largest shareholder. The outstanding
balance of such advances was $1,996,821 and $186,747 respectively at December
31, 2008. Additional advances of $299,734 and $6,584 were made during 2009 and
repayments of $1,836,257 and $177,864 were received, leaving balances of
$460,716 and $15,468 at December 31, 2009. As of March 31, 2010, all advances
were paid back to Tsingda Education.

Other than
employment, none of the following persons has any direct or indirect material
interest in any transaction to which we are a party since our last fiscal year
or in any proposed transaction to which we are proposed to be a party:

57

---



|    |                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) | Any of our
 directors or officers;                                                                                                                                                                          
|(B) | Any proposed
 nominee for election as our director;                                                                                                                                                         
|(C) | Any person
 who beneficially owns, directly or indirectly, shares carrying more than 10%
 of the voting rights attached to our Ordinary Shares; or                                                          
|(D) | Any relative
 or spouse of any of the foregoing persons, or any relative of such spouse,
 who has the same house as such person or who is a director or officer of any
 parent or subsidiary of our company.

ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES

The following
table sets forth fees billed to us by our independent registered public
accounting firms during the fiscal years ended December 31, 2010 and December
31, 2009 for: (i) services rendered for the audit of our annual financial
statements and the review of our quarterly financial statements; (ii) services
by our independent registered public accounting firms that are reasonably
related to the performance of the audit or review of our financial statements
and that are not reported as Audit Fees; (iii) services rendered in connection
with tax compliance, tax advice and tax planning; and (iv) all other fees for
services rendered.

|                    |  |                    |         |                    |   |        | 
|------------------- |  | ------------------ | ------- | ------------------ | - | ------ | 
|                    |  | December
 31, 2010 |         | December
 31, 2009 |  
|                    |  |                    |         |                    |  
|Audit Fees          |  | $                  | 60,000  |                    | $ | 85,000 | 
|Audit Related
 Fees |  |                    | 46,000  |                    |   |       | 
|Tax Fees            |  |                    | 4,500   |                    |   | 8,800  | 
|All Other
 Fees     |  |                    |        |                    |   |       | 
|                    |  |                    |         |                    |   |        | 
|                    |  | $                  | 110,500 |                    | $ | 93,800 | 
|                    |  |                    |         |                    |   |        | 

Audit
Committee Policies

The Board of Directors is
solely responsible for the approval in advance of all audit and permitted non-audit
services to be provided by the independent auditors (including the fees and
other terms thereof), subject to the de minimus exceptions for non-audit
services provided by Section 10A(i)(1)(B) of the Exchange Act, which services
are subsequently approved by the Board of Directors prior to the completion of
the audit. None of the fees listed above are for services rendered pursuant to
such de minimus exceptions.

58

---



Part IV

ITEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES

EXHIBIT INDEX

|             |  |                                                                                                                                                                                                           |             | 
|------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | 
|Exhibit
 No. |  |                                                                                                                                                                                                           | Description | 
|             |  |                                                                                                                                                                                                           |             | 
|3.1          |  | Memorandum
 and Articles of Association of the Company.(1)                                                                                                                                               
|3.2          |  | Amended
 Memorandum of Association of the Company.(2)                                                                                                                                                    
|3.3          |  | Memorandum
 of and Articles of Association of Tsing Da Century Education Technology Co.
 Ltd.(3)                                                                                                         
|4.1          |  | Form of
 Warrant.(5)                                                                                                                                                                                     
|4.2          |  | Form of
 Placement Agent Warrant.(5)                                                                                                                                                                     
|5.1          |  | Opinion of
 Shu Jin Law Firm (7)                                                                                                                                                                         
|10.1         |  | Consulting
 Services Agreement dated April 26, 2010(3)                                                                                                                                                   
|10.2         |  | Operating
 Agreement dated April 26, 2010(3)                                                                                                                                                             
|10.3         |  | Option
 Agreement dated April 26, 2010(3)                                                                                                                                                                
|10.4         |  | Voting
 Rights Proxy Agreement dated April 26, 2010(3)                                                                                                                                                   
|10.5         |  | Equity
 Pledge Agreement dated April 26, 2010(3)                                                                                                                                                         
|10.6         |  | Share
 Exchange Agreement dated May 24, 2010 by and among Compass Acquisition
 Corporation and its controlling shareholders, and Tsing Da Century Education
 Technology Co. Ltd. and its shareholders (4)
|10.7         |  | Securities
 Purchase Agreement dated September 16, 2010 by and among the Company and certain
 investors.(5)                                                                                              
|10.8         |  | Registration
 Rights Agreement dated September 16, 2010 by and among the Company and
 certain investors.(5)                                                                                              
|10.10        |  | Holdback
 Escrow Agreement dated September 16, 2010, by and among the Company, Zhong
 Hui Rong (Fujian) Fund, Ltd. and Collateral Agents, LLC.(5)                                                        
|10.11        |  | Six Month
 Lock-Up Agreement dated September 16, 2010 by and among the Company and
 certain shareholders.(5)                                                                                             
|10.12        |  | Initial
 Shareholder Lock-Up Agreement dated September 16, 2010 by and among the
 Company and certain shareholders.(5)                                                                                   
|10.13        |  | Initial
 Shareholder Lock-Up Agreement dated September 16, 2010 by and among the
 Company and Eastbridge Investment Group Corp.(5)                                                                       
|10.14        |  | Founding
 Shareholder Lock-Up Agreement dated September 16, 2010 by and between the
 Company and Tsingda Century Education Technology Co. Ltd.(5)                                                        
|10.15        |  | Securities
 Escrow Agreement dated September 16, 2010 by and among the Company, Maxim
 Group, LLC, Tsing Da Century Technology Co. Ltd., and Collateral Agents,
 LLC.(5)                                 
|10.16        |  | Agreement
 dated March 12, 2010 by and between Maxim Group, LLC and Beijing Tsingda
 Century Investment Consultant of Education Co., Ltd.(5)                                                             
|10.17        |  | Translation
 of Form of Franchise Agreement.(6)                                                                                                                                                          
|10.18        |  | Translation
 of Employment Agreement with Mr. Zhang.(6)                                                                                                                                                  
|10.19        |  | Services
 Agreement by and between the Company and Eastbridge Investment Group
 Corporation dated May 17, 2010.(10)                                                                                      
|21.1         |  | List of
 Subsidiaries.(6)                                                                                                                                                                                
|31.1         |  | Certification
 of Registrants Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
 of the Securities Exchange Act of 1934. (9)                                                                 
|31.2         |  | Certification
 of Registrants Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
 of the Securities Exchange Act of 1934. (9)                                                                 
|32.1         |  | Certification
 of Registrants Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b)
 of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. (9)                                      
|32.2         |  | Certification
 of Registrants Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b)
 of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. (9)                                      
|99.1         |  | Index of
 Tsingda Courses (8)                                                                                                                                                                            
|99.2         |  | Addresses of
 Company-owned learning centers (7)                                                                                                                                                         

(1)
Incorporated herein by reference to the Form 10 Registration Statement filed on
December 4, 2006. (2) Incorporated herein by reference to the Form 10-Q Quarterly Report
filed on May 15, 2008.
(3) Incorporated herein by reference to the Form 8-K Current Report filed on
May 28, 2010.
(4) Incorporated by reference to the Form 8-K/A Current Report filed on June 3,
2010.
(5) Incorporated by reference to the Form 8-K Current Report filed on September
23 2010. (6) Incorporated herein by reference to the Registration Statement on
Form S-1 (Registration No. 333-169877) filed on October 12,

59

---



2010. (7) Incorporated herein by reference to the Registration Statement on
Form S-1/A filed on December 28, 2010. (8) Incorporated herein by reference to the Registration Statement on
Form S-1/A (Registration No. 333-169877) filed on December 3, 2010.
(9) Filed Herewith
(10) Incorporated herein by reference to the Registration Statement on Form
S-1/A (Registration No. 333-170885) filed on January 4, 2011.

60

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board
of Directors and Shareholders of
Tsingda eEDU Corporation (Formerly Compass Acquisition Corporation)
Cayman Islands

We have audited the accompanying consolidated balance sheet of Tsingda
eEDU Corporation and its Subsidiaries (the Company) as of December 31, 2010,
and the related consolidated statements of operations and comprehensive income,
shareholders equity, and cash flows for the year then ended. In connection
with our audit for the consolidated financial statements, we have also audited
the condensed parent company financial statements for the year ended December
31, 2010. These consolidated financial statements and condensed parent company
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform an audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. 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. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2010, and the results of its operations and cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, the related condensed
parent company financial statements, when considered in relation to the
consolidated financial statements taken a whole, presents fairly, in all
material aspects, the information set forth therein.

/s/
MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
March 11, 2011

F-1

---



JEFFREY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
61 BERDAN AVENUE
WAYNE, NEW JERSEY 07470
Report of Independent Registered Public Accounting Firm

Board of Directors
Tsingda eEDU Corporation (formerly Compass Acquisition Corporation)

We have
audited the accompanying consolidated balance sheet of Tsingda eEDU
Corporation (formerly Compass Acquisition Corporation) as of December 31,
2009, and the related consolidated statement of income, changes in
stockholders equity, and cash flows, for the years ended December 31, 2009.
These financial statements are the responsibility of the Company management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted
the audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate under the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. 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. We believe that our
audit provides a reasonable basis for our opinion.

In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Tsingda eEDU
Corporation as of December 31, 2009, and the consolidated results of its
operations and its cash flows for the year ended December 31, 2009 in
conformity with U. S. generally accepted accounting principles.

/s/ Jeffrey
& Company
January 11, 2011
JEFFREY & COMPANY
Wayne, New Jersey

F-2

---



TSINGDA EEDU CORPORATION
(FORMERLY COMPASS ACQUISITION CORPORATION)
Consolidated Balance Sheets
(Stated in US dollars)

|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ------------------ | - | ---------- | 
|                                                                                                                                                                                      |  | December 31,
 2010 |            | December 31,
 2009 |  
|                                                                                                                                                                                      |  |                    |            |                    |  
|ASSETS                                                                                                                                                                                |  |                    |            |                    |   |            | 
|Current assets                                                                                                                                                                        |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Cash and cash equivalents                                                                                                                                                             |  | $                  | 4,086,214  |                    | $ | 458,645    | 
|Short-term investment                                                                                                                                                                 |  |                    |           |                    |   | 2,018,370  | 
|Accounts receivable, net                                                                                                                                                              |  |                    | 6,555,936  |                    |   | 4,228,510  | 
|Advances to suppliers                                                                                                                                                                 |  |                    | 8,488,751  |                    |   | 3,880,307  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Other receivables                                                                                                                                                                     |  |                    | 1,103,083  |                    |   | 374,243    | 
|Receivable from escrow account                                                                                                                                                        |  |                    | 520,000    |                    |   |           | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Shareholder advances                                                                                                                                                                  |  |                    | 37,749     |                    |   | 476,220    | 
|Inventory                                                                                                                                                                             |  |                    |           |                    |   | 40,558     | 
|Deferred tax assets                                                                                                                                                                   |  |                    | 382,758    |                    |   | 155,690    | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Total Current Assets                                                                                                                                                                  |  |                    | 21,174,491 |                    |   | 11,632,543 | 
|Advances for leasehold improvements                                                                                                                                                   |  |                    | 6,604,628  |                    |   |           | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Property and equipment, net                                                                                                                                                           |  |                    | 10,652,830 |                    |   | 2,757,387  | 
|Intangible assets, net                                                                                                                                                                |  |                    | 5,021,983  |                    |   | 2,853,766  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|TOTAL ASSETS                                                                                                                                                                          |  | $                  | 43,453,932 |                    | $ | 17,243,696 | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|LIABILITIES & SHAREHOLDERS EQUITY                                                                                                                                                    |  |                    |            |                    |   |            | 
|                                                                                                                                                                                     
|Current Liabilities                                                                                                                                                                   |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Accounts payable                                                                                                                                                                      |  |                    | 305,165    |                    |   | 36,910     | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Customer deposit                                                                                                                                                                      |  |                    | 1,642,642  |                    |   | 270,229    | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Taxes payable                                                                                                                                                                         |  |                    | 5,070,919  |                    |   | 1,946,542  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Accrued and other liabilities                                                                                                                                                         |  |                    | 222,512    |                    |   | 440,631    | 
|Deferred revenue                                                                                                                                                                      |  |                    | 2,551,722  |                    |   | 1,037,932  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Total Current Liabilities                                                                                                                                                             |  |                    | 9,792,960  |                    |   | 3,732,244  | 
|Commitment and Contingencies                                                                                                                                                          |  |                    |            |                    |   |            | 
|SHAREHOLDERS EQUITY                                                                                                                                                                  |  |                    |            |                    |   |            | 
|Preferred stock: 781,250 shares of $.000128
 par value authorized; None shares issued and outstanding                                                                                 |  | $                  |           |                    | $ |           | 
|                                                                                                                                                                                     
|Common stock (par value $0.000384 per
 share; 100,000,000 shares authorized; 33,729,862 and 24,402,278 shares issued
 and outstanding as of December 31, 2010 and 2009, respectively) |  |                    | 12,952     |                    |   | 9,370      | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Additional paid in capital                                                                                                                                                            |  |                    | 13,523,180 |                    |   | 4,400,435  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Statutory reserves                                                                                                                                                                    |  |                    | 2,398,464  |                    |   | 1,329,032  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Retained earnings                                                                                                                                                                     |  |                    | 16,762,941 |                    |   | 7,531,177  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Accumulated other comprehensive income                                                                                                                                                |  |                    | 963,435    |                    |   | 241,438    | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|TOTAL
 SHAREHOLDERS EQUITY                                                                                                                                                           |  |                    | 33,660,972 |                    |   | 13,511,452 | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|TOTAL
 LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                           |  | $                  | 43,453,932 |                    | $ | 17,243,696 | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 

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

F-3

---



TSINGDA EEDU CORPORATION
(FORMERLY COMPASS ACQUISITOIN CORPORATION)
Consolidated Statements of Operations and Comprehensive Income
(Stated in US dollars)

|                                                     |  |                                  |            |      |   |            |  
|---------------------------------------------------- |  | -------------------------------- | ---------- | ---- | - | ---------- | -
|                                                     |  | For the Years Ended December 31, |           
|                                                     |  |                                  |           
|                                                     |  | 2010                             |            | 2009 |  
|                                                     |  |                                  |            |      |  
|                                                    
|Revenue                                              |  | $                                | 27,447,545 |      | $ | 14,650,863 |  
|Cost of revenue                                      |  |                                  | 6,011,094  |      |   | 2,231,202  |  
|                                                     |  |                                  |            |      |   |            |  
|Gross profit                                         |  |                                  | 21,436,451 |      |   | 12,419,661 |  
|                                                     |  |                                  |            |      |   |            |  
|Operating expenses                                   |  |                                  |            |      |   |            |  
|Selling expenses                                     |  |                                  | 6,199,618  |      |   | 3,460,803  |  
|General and administrative expenses                  |  |                                  | 3,205,802  |      |   | 1,900,063  |  
|                                                     |  |                                  |            |      |   |            |  
|Total operating expenses                             |  |                                  | 9,405,420  |      |   | 5,360,866  |  
|                                                     |  |                                  |            |      |   |            |  
|Income from operations                               |  |                                  | 12,031,031 |      |   | 7,058,795  |  
|                                                     |  |                                  |            |      |   |            |  
|Interest
 income                                     |  |                                  | 31,102     |      |   | 80,973     |  
|Realized
 gain from short-term investment            |  |                                  | 73,861     |      |   |           |  
|Other
 expense                                       |  |                                  | (257       | )    |   | (19,638    | )
|                                                     |  |                                  |            |      |   |            |  
|Income before income tax                             |  |                                  | 12,135,737 |      |   | 7,120,130  |  
|Income tax
 expenses                                 |  |                                  | 1,834,541  |      |   | 1,068,020  |  
|                                                     |  |                                  |            |      |   |            |  
|Net income                                           |  | $                                | 10,301,196 |      | $ | 6,052,110  |  
|                                                     |  |                                  |            |      |   |            |  
|Other comprehensive income/(loss)                    |  |                                  |            |      |   |            |  
|Foreign currency translation adjustments             |  |                                  | 721,997    |      |   | (40,113    | )
|                                                     |  |                                  |            |      |   |            |  
|Total comprehensive income                           |  | $                                | 11,023,193 |      | $ | 6,011,997  |  
|                                                     |  |                                  |            |      |   |            |  
|                                                     |  |                                  |            |      |   |            |  
|Earnings per share, basic and diluted                |  | $                                | 0.36       |      | $ | 0.25       |  
|                                                     |  |                                  |            |      |   |            |  
|Weighted average number of shares, basic and diluted |  |                                  | 28,242,518 |      |   | 24,402,278 |  

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

F-4

---



TSINGDA EEDU CORPORATION
(FORMERLY COMPASS ACQUISITION CORPORATION)
Consolidated Statement of Shareholders Equity
(Stated in US dollars)

|                                                                                           |  |        |              |        |                              |                    |  |   |                    |   |   |           |  |                                           |         |   |   |            |   |   |            |  
|------------------------------------------------------------------------------------------ |  | ------ | ------------ | ------ | ---------------------------- | ------------------ |  | - | ------------------ | - | - | --------- |  | ----------------------------------------- | ------- | - | - | ---------- | - | - | ---------- | -
|                                                                                           |  |        |              |        |                              |                    |  |   |                    |   |   |           |  | Accumulated
 Other
 Comprehensive
 Income |         |   |   |            |   |   |           
|                                                                                           |  |        |              |        | Additional
 Paid-in
 Capital |                    |  |   |                    |   |   |           |  | Total
 Shareholders
 Equity              |        
|                                                                                           |  |        | Common Stock |        |                              | Statutory
 Reserve |  |   | Retained
 Earnings |   |  
|                                                                                           |  | Shares |              | Amount |                              |                    |  |   |                    |  
|                                                                                           |  |        |              |        |                              |                    |  |   |                    |   |   |           |  |                                           |        
|Balance as of December 31, 2008                                                            |  |        | 24,402,278   |        | $                            | 9,370              |  | $ | 4,400,435          |   | $ | 421,215   |  | $                                         | 281,551 |   | $ | 2,386,884  |   | $ | 7,499,455  |  
|Net income for the year                                                                    |  |        |             |        |                              |                   |  |   |                   |   |   |          |  |                                           |        |   |   | 6,052,110  |   |   | 6,052,110  |  
|Allocation of retained earnings to statutory reserve                                       |  |        |             |        |                              |                   |  |   |                   |   |   | 907,817   |  |                                           |        |   |   | (907,817   | ) |   |           |  
|Foreign currency translation adjustment                                                    |  |        |             |        |                              |                   |  |   |                   |   |   |          |  |                                           | (40,113 | ) |   |           |   |   | (40,113    | )
|                                                                                           |  |        |              |        |                              |                    |  |   |                    |   |   |           |  |                                           |         |   |   |            |   |   |            |  
|                                                                                          
|Balance as of December 31, 2009                                                            |  |        | 24,402,278   |        | $                            | 9,370              |  | $ | 4,400,435          |   | $ | 1,329,032 |  | $                                         | 241,438 |   | $ | 7,531,177  |   | $ | 13,511,452 |  
|                                                                                           |  |        |              |        |                              |                    |  |   |                    |   |   |           |  |                                           |         |   |   |            |   |   |            |  
|Issuance of 332,759shares in connection with the share exchange transactionon May 24, 2010 |  |        | 332,759      |        |                              | 128                |  |   |                   |   |   |          |  |                                           |        |   |   |           |   |   | 128        |  
|Issuance of 915,085 shares to Maxim Group on May 17, 2010                                  |  |        | 915,085      |        |                              | 351                |  |   | 29,649             |   |   |          |  |                                           |        |   |   |           |   |   | 30,000     |  
|Issuance of 2,079,740 shares to Eastbridge Investment Corporation on
 May 17, 2010         |  |        | 2,079,740    |        |                              | 799                |  |   |                   |   |   |          |  |                                           |        |   |   |           |   |   | 799        |  
|Issuance of 6,000,000 shares on September 16, 2010                                         |  |        | 6,000,000    |        |                              | 2,304              |  |   | 9,597,696          |   |   |          |  |                                           |         |   |   |            |   |   | 9,600,000  |  
|Stock issuance cost related to the private placement on September 16,
 2010                |  |        |             |        |                              |                   |  |   | (504,600           | ) |   |          |  |                                           |         |   |   |            |   |   | (504,600   | )
|Net income for the year                                                                    |  |        |             |        |                              |                   |  |   |                   |   |   |          |  |                                           |        |   |   | 10,301,196 |   |   | 10,301,196 |  
|Allocation of retained earnings to statutory reserve                                       |  |        |             |        |                              |                   |  |   |                   |   |   | 1,069,432 |  |                                           |        |   |   | (1,069,432 | ) |   |           |  
|Foreign currency translation adjustment                                                    |  |        |             |        |                              |                   |  |   |                   |   |   |          |  |                                           | 721,997 |   |   |           |   |   | 721,997    |  
|                                                                                           |  |        |              |        |                              |                    |  |   |                    |   |   |           |  |                                           |         |   |   |            |   |   |            |  
|Balance as of December 31, 2010                                                            |  |        | 33,729,862   |        | $                            | 12,952             |  | $ | 13,523,180         |   | $ | 2,398,464 |  | $                                         | 963,435 |   | $ | 16,762,941 |   | $ | 33,660,972 |  
|                                                                                           |  |        |              |        |                              |                    |  |   |                    |   |   |           |  |                                           |         |   |   |            |   |   |            |  

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

F-5

---



TSINGDA EEDU CORPORATION
(FORMERLY COMPASS ACQUISITION CORPORATION)
Consolidated Statements of Cash Flows
(Stated in US dollars)

|                                                                                   |  |                                 |             |      |   |            |  
|---------------------------------------------------------------------------------- |  | ------------------------------- | ----------- | ---- | - | ---------- | -
|                                                                                   |  | For the years ended December 31 |            
|                                                                                   |  |                                 |            
|                                                                                   |  | 2010                            |             | 2009 |  
|                                                                                   |  |                                 |             |      |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                               |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|Net income                                                                         |  | $                               | 10,301,196  |      | $ | 6,052,110  |  
|                                                                                   |  |                                 |             |      |   |            |  
|Adjustments
 to reconcile net income to net cash provided by operating activities: |  |                                 |             |      |   |            |  
|Depreciation and amortization                                                      |  |                                 | 2,356,930   |      |   | 1,075,980  |  
|Changes in
 operating assets and liabilities:                                      |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|Accounts receivable                                                                |  |                                 | (2,196,217  | )    |   | (1,979,699 | )
|                                                                                   |  |                                 |             |      |   |            |  
|Advances to suppliers                                                              |  |                                 | (4,488,039  | )    |   | (3,407,580 | )
|Prepaid expenses                                                                   |  |                                 |            |      |   | 75,078     |  
|                                                                                   |  |                                 |             |      |   |            |  
|Other receivables                                                                  |  |                                 | (689,354    | )    |   | (76,540    | )
|Inventories                                                                        |  |                                 | 41,817      |      |   | (14        | )
|                                                                                   |  |                                 |             |      |   |            |  
|Deferred tax assets                                                                |  |                                 | (222,237    | )    |   | 78,094     |  
|Accounts payable                                                                   |  |                                 | 267,110     |      |   | 16,234     |  
|Customer deposit                                                                   |  |                                 | 1,364,028   |      |   | 195,708    |  
|                                                                                   |  |                                 |             |      |   |            |  
|Accrued and other liabilities                                                      |  |                                 | (276,039    | )    |   | 311,892    |  
|Deferred revenue                                                                   |  |                                 | 1,449,454   |      |   | (520,630   | )
|Taxes payable                                                                      |  |                                 | 3,063,977   |      |   | 1,339,219  |  
|                                                                                   |  |                                 |             |      |   |            |  
|CASH
 PROVIDED BY OPERATING ACTIVITIES                                             |  |                                 | 10,972,626  |      |   | 3,159,852  |  
|                                                                                   |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                               |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|Purchase of
 property, plant and equipment                                         |  |                                 | (8,673,220  | )    |   | (1,501,212 | )
|                                                                                   |  |                                 |             |      |   |            |  
|Addition of
 intangible assets                                                     |  |                                 | (4,006,992  | )    |   | (2,529,710 | )
|                                                                                   |  |                                 |             |      |   |            |  
|Payments for
 leasehold improvements not completed                                 |  |                                 | (6,461,403  | )    |   |           |  
|Cash used in
 short-term investments                                               |  |                                 |            |      |   | (2,845,939 | )
|Cash
 received from short-term investment matured                                  |  |                                 | 2,068,100   |      |   |           |  
|Collection
 of advances/loan to related parties                                    |  |                                 | 443,419     |      |   | 1,822,543  |  
|Long-term
 prepaid expenses                                                        |  |                                 |            |      |   | 166,389    |  
|                                                                                   |  |                                 |             |      |   |            |  
|CASH USED IN
 INVESTING ACTIVITIES                                                 |  |                                 | (16,630,096 | )    |   | (4,887,929 | )
|                                                                                   |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                               |  |                                 |             |      |   |            |  
|Proceeds from stock issuance                                                       |  |                                 | 9,630,927   |      |   |           |  
|                                                                                   |  |                                 |             |      |   |            |  
|Payment for stock issuance cost                                                    |  |                                 | (504,600    | )    |   |           |  
|                                                                                   |  |                                 |             |      |   |            |  
|Payment in the escrow account                                                      |  |                                 | (520,000    | )    |   |           |  
|Repayment of bank loans                                                            |  |                                 |            |      |   | (131,562   | )
|                                                                                   |  |                                 |             |      |   |            |  
|CASH
 PROVIDED BY/ (USED IN) FINANCING ACTIVITIES                                  |  |                                 | 8,606,327   |      |   | (131,562   | )
|                                                                                   |  |                                 |             |      |   |            |  
|Effect of
 exchange rate changes on cash and cash equivalents                      |  |                                 | 678,712     |      |   | 4,022      |  
|                                                                                   |  |                                 |             |      |   |            |  
|NET INCREASE (DECREASE) IN CASH                                                    |  |                                 | 3,627,569   |      |   | (1,855,617 | )
|                                                                                   |  |                                 |             |      |   |            |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                     |  | $                               | 458,645     |      | $ | 2,314,262  |  
|                                                                                   |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                           |  | $                               | 4,086,214   |      | $ | 458,645    |  
|                                                                                   |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|Supplementary
 Disclosures for Cash Flow Information:                              |  |                                 |             |      |   |            |  
|                                                                                   |  |                                 |             |      |   |            |  
|Interest
 paid                                                                     |  | $                               |            |      | $ | 2,956      |  
|                                                                                   |  |                                 |             |      |   |            |  
|Income taxes
 paid                                                                 |  | $                               | 138,709     |      | $ | 806,391    |  
|                                                                                   |  |                                 |             |      |   |            |  

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

F-6

---



TSINGDA EEDU CORPORATION(FORMERLY COMPASS ACQUISITION CORPORATION) Notes to the Consolidated Financial
Statements
For the years ended December 31, 2009 and 2010

NOTE 1- ORGANIZATION AND BUSINESS OPERATIONS

Tsingda Century Investment Consultant of Education Co., Ltd. (Tsingda
Century) was incorporated on October 23, 2003, in Beijing, the Peoples
Republic of China (the PRC). Beijing Tsingda Century Network Technology Co.,
Ltd. (Tsingda Network), the wholly owned subsidiary of Tsingda Century was
incorporated in the PRC on February 14, 2004. Tsingda Century and its subsidiary
provide high quality offline and online educational services for students
ranging from six to eighteen years of age in the PRC. Tsingda eEDU Corporation
(Tsingda eEDU or the Company, formerly Compass Acquisition Corporation)
was incorporated in the Cayman Islands on September 27, 2006. The Company was
originally organized as a blank check company to investigate and acquire a
target company or business seeking the advantages of being a publicly held
corporation.

Tsing Da Century Education Technology Co., Ltd. (Tsingda Technology)
was incorporated on December 11, 2009, in the British Virgin Islands, to serve
as the intermediate holding company.

Tsingda Century Beijing Management Consulting Co., Ltd. (Tsingda
Management) was incorporated on November 26, 2007 and was serving as the
wholly owned foreign enterprise (WOFE) of Tsingda Technology.

On April 22, 2010, Tsingda Century Training School (Tsingda School)
was incorporated in Beijing, the PRC, and it is a wholly owned subsidiary of Tsingda
Century.

As part of the restructuring, on April 26, 2010, Tsingda Management
entered into a series of agreements with Tsingda Century and its shareholders,
including an Operating Agreement, Proxy Agreement, Consulting Services
Agreement, Equity Pledge Agreement and Option Agreement, which entitled Tsingda
Management to receive substantially all of the economic benefits of Tsingda
Century in consideration for consulting services provided by Tsingda Management
to Tsingda Century. An Option Agreement allows Tsingda Management to acquire
the shares of Tsingda Century when permitted by the PRC laws. The Proxy
Agreement provides Tsingda Management with the voting rights of Tsingda
Centurys shareholder and Equity Pledge Agreement pledges the shares in Tsingda
Century to Tsingda Management without transferring legal ownership in Tsingda
Century to Tsingda Management. Under the Consulting Services Agreement, Tsingda
Management is the exclusive service provider, to Tsingda Century, for services,
including general business operation, human resources, business development and
Tsingda Century is obligated to make regular payments for such services
provided. Under the Operating Agreement, Tsingda Century shall not conduct any
transactions which may materially affect the assets, obligations, rights or the
operations, without the written consent of Tsingda Management and Tsingda
Century accepted Tsingda Managements corporate policy provide by Tsingda
Management in connection with Tsingda Centurys daily operations, financial
management and the employment and dismissal of Tsingda Centurys employees.
Through those agreements, Tsingda Management has the power to direct the
activities that most significantly impact the economic performance of Tsingda
Century and Tsingda Century became a variable interest entity (VIE) and is
included in the consolidated group.

As all of the companies are under common control, this structure has
been accounted for as a reorganization of entities under common control and the
financial statements have been prepared as if the reorganization had occurred
retroactively.

On May 24, 2010, the Company and its controlling shareholders entered
into a share exchange agreement (the Agreement) with Tsingda Technology and all
of the shareholders of Tsingda Technology. Under the Agreement, the Company
acquired 100% of the outstanding equity interests of Tsingda Technology in
exchange for 244,022.78 preferred shares of the Company. Each such share of
preferred stock was convertible into 100 ordinary shares of the Company at such
time as the number of authorized ordinary shares is increased. The transaction
was closed in May 2010 and was accounted for as a reverse merger with a shell
company and a recapitalization of Tsingda Technology. Tsingda eEDU Corporation
is the accounting acquiree. Tsingda Tecknology is the accounting acquirer and
the surviving entity

On November 15, 2010, the Companys shareholders approved the change of
the Companys name from Compass Acquisition Corporation to Tsingda eEDU
Corporation and the name change is effective immediately following the
shareholders approval.

The corporate structure of the Company is as follows:

F-7

---



TSINGDA EEDU CORPORATION(FORMERLY COMPASS ACQUISITION CORPORATION) Notes to the Consolidated Financial
Statements (Continued) 
For the years ended December 31, 2009 and 2010

(FLOW CHART)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared
in accordance with U.S, Generally Accepted Accounting Principles (US
GAAP). The Companys functional currency is the Chinese Renminbi (RMB);
however the accompanying financial statements have been translated and
presented in United States Dollars ($).

BASIS OF
CONSOLIDATION

The accompanying consolidated financial statements include the accounts
of the Company, and its wholly owned subsidiaries, (Tsingda Technology, and
Tsingda Management), and Tsingda Century and its subsidiaries, Tsingda Network
and Tsingda Century Training School. All intercompany balances and transactions
have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates. Significant items subject to such estimates and
assumptions include the useful lives of fixed assets; the allowance for
doubtful accounts; the fair value determination of financial and equity instruments,
the reliability of deferred tax assets; the recoverability of, intangible asset
and property, plant and equipment; and accruals for income tax uncertainties
and other contingencies. The current economic environment has increased the
degree of uncertainty inherent in those estimates and assumptions.

RECLASSIFICATION

Certain amounts in the consolidated financial statements for the prior
year have been reclassified to conform to the presentation of the current year
for the comparative purposes.

RISKS AND UNCERTAINTIES

Tsingda Century and Tsingda Network operate under the authority of
business licenses which were granted in 2003, and expire in 2023. Renewal of
these licenses will depend on the result of government inspections which are
made to ensure environmental laws are not breached.

The officers of the Company control through direct ownership of most of
the equity interests of the Company. As a result, insiders will be able to
control the outcome of all matters requiring approval of equity owners and will
be able to elect all of the Company directors.

F-8

---



TSINGDA EEDU CORPORATION(FORMERLY COMPASS ACQUISITION CORPORATION) Notes to the Consolidated Financial
Statements (Continued) 
For the years ended December 31, 2009 and 2010

CASH AND CASH EQUIVALENTS

The Company considers all cash on hand and in banks, including accounts
in book overdraft positions, certificates of deposit and other highly-liquid
investments with original maturity of three months or less, when purchased, to
be cash and cash equivalents. The Company maintains cash with various banks and
trust companies located in China. Cash accounts are not insured or otherwise
protected. Should any bank or trust company holding cash deposits become
insolvent, or if the Company is otherwise unable to withdraw funds, the Company
would lose the cash on deposit with that particular bank or trust company.

SHORT-TERM INVESTMENTS

The Company invested in a financial product, which is similar to notes
receivable, with maturity of four months, provided by a small investment
company in China in the year ended December 31, 2009. The short-term investment
is recorded at cost which approximates the fair market value. As of December
31, 2010, the short-term investment has been matured and fully collected with a
gain of $73,861.

ACCOUNTS RECEIVABLE
AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are recognized and carried at the invoiced amount
less an allowance for uncollectible accounts, as needed. In establishing the
required allowance, management considers historical losses adjusted to take
into account current market conditions and the customers financial condition,
the amount of receivables in dispute, and the current receivables aging and
current payment patterns. The Company reviews its allowance for doubtful
accounts monthly. Past due balances are reviewed individually for
collectability. Account balances are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is
considered remote.

ADVANCE TO SUPPLIERS

Advance to suppliers represents the payments made and recorded in
advance for goods and services to be received. The Company makes advances to
suppliers for advertising, printing and other services and products.

FAIRE VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Companys financial instruments, which
include cash, short term investments, accounts receivable and other
receivables, advances to suppliers, accounts payable, accrued liabilities, and
other liabilities, approximate their fair values at December 31, 2010 and 2009.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated
depreciation. Depreciation on property and equipment other than leasehold
improvements is calculated on the straight-line method over the estimated
useful lives of the assets as set out below:

|                                |  |  |                |   |  |                       | 
|------------------------------- |  |  | -------------- | - |  | --------------------- | 
|                                |  |  | Residual Value |   |  | Estimated Useful Life | 
|                                |  |  |                |   |  |                       | 
|Office
 furniture and equipment |  |  | 5              | % |  | 5 years               | 
|Vehicles                        |  |  | 5              | % |  | 5 years               | 

F-9

---



TSINGDA EEDU CORPORATION(FORMERLY COMPASS ACQUISITION CORPORATION) Notes to the Consolidated Financial
Statements (Continued) 
For the years ended December 31, 2009 and 2010

INTANGIBLE ASSETS

Intangibles are the cost of computerized video lessons delivered both
online and offline developed by the Company and the acquired intangible assets
with finite lives consist of courseware. All costs incurred to establish the
technological feasibility of a computer software product to be sold, leased, or
otherwise marketed are charged to expenses as incurred. Development costs
incurred after technological feasibility of a product has been established and
before product sales begin are capitalized and amortized over the
estimated life of the product, which thus far has been three years, starting
when product sales begin. Technological feasibility is deemed to have been
achieved when all the planning, designing, coding, and testing activities
necessary to establish that the product can be produced to meet its design
specifications have been completed, including functions, features, and
technical performance requirements. Acquired coursewares with finite lives are
carried at cost, less accumulated amortization and impairment. Amortization of
acquired coursewares is calculated on a straight-line basis over three years.

IMPAIRMENT OF
LONG-LIVED ASSETS

In accordance with Impairment or Disposal of Long-Lived Assets
Subsections of FASB ASC Subtopic 360-10, Property,
Plant, and Equipment - Overall, long-lived assets, such as property,
plant and equipment, and purchased intangible assets subject to amortization,
are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If
circumstances require a long-lived asset or asset group be tested for possible
impairment, the Company first compares undiscounted cash flows expected to be
generated by that asset or asset group to its carrying value. If the carrying
value of the long-lived asset or asset group is not recoverable on an
undiscounted cash flow basis, impairment is recognized to the extent that the
carrying value exceeds its fair value. Fair value is determined through various
valuation techniques including discounted cash flow models, quoted market
values and third-party independent appraisals, as considered necessary.

CUSTOMER DEPOSITS

The Company required certain amount of deposits from its customers and
franchised locations. The customer deposits are recorded as a liability
when the Company receives it and will be recognized as revenue after the service
is rendered.

REVENUE RECOGNITION

Online Courses

The Company
provides online education programs to its franchisees, agents and individual
customers. Revenue is realized through sales to franchisees and other agents of
rights to conduct education services. The Company authorized the franchised
locations to use its logo, all education programs and products and the Company
receives a onetime licensing fee, annual management fee, and 20% of student
generated revenue from the franchised location by providing them prepaid
e-cards of 5 times the cash amount. All the mentioned fees are revenues or
unearned revenues from the sale of e-cards. Revenue is recognized until the
services are consummated upon the e-cards are opened and used by the students
to purchase online education courses and is reported net of business tax. The
opening of cards is tracked by our IT system automatically and the revenue is
proportionally recognized based on the progress of the e-cards usage.

Virtual Internet Classroom

The Company sold prepaid e-cards to the customers. Revenue is
recognized until the services are consummated upon the e-cards are opened and
used by the students to purchase online education courses and is reported net
of business tax. The opening of cards is tracked by our IT system automatically
and the revenue is proportionally recognized based on the progress of the
e-cards usage.

Sales of Materials and Publications

The Company started the sales of self-branded reference books and
materials from August 2010. The revenue is recognized upon the products are
delivered to the customers. During the year ended December 31, 2010, the
revenue generated from sales of materials and publications is less than 10% of
the total revenue.

Offline courses

Offline tutorial courses are provided by the Company owned learning
centers and the sales was started from November 2010. The revenue is recognized
based on the progress of courses the students completed during the period.
During the year ended December 31,

F-10

---



2010, the revenue generated from providing offline courses is far below
10% of the total revenue.

ADVERTISING

The Company expenses advertising costs as incurred. Advertising is
included in selling expenses for financial reporting. The Company incurred
advertising costs of $3,150,215 and $2,086,405 for the years ended December 31,
2010 and 2009, respectively.

F-11

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION) 
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

INCOME TAXES

Income taxes are accounted for under the asset and liability method
pursuant to ASC 740 Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and tax loss and tax credit carry forwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the consolidated
statements of income in the period that includes the enactment date. A
valuation allowance is provided to reduce the amount of deferred tax assets if
it is considered more likely than not that some portion or all of the deferred
tax assets will not be realized.

ASC 740-10-25 clarifies the accounting for uncertain tax positions and
requires that an entity recognizes in the consolidated financial statements the
impact of a tax position, if that position is more likely than not of being
sustained upon examination, based on the technical merits of the position.
Recognized income tax positions are measured at the largest amount that is
greater than 50% likely of being realized. Changes in recognition or
measurement are reflected in the period in which the change in judgment occurs.
The Company has elected to classify interest and penalties related to
unrecognized tax benefits, if and when required, as a component of income tax
expense in the consolidated statements of income.

OTHER TAXES

The Company generates its income in China where Business Tax, Income
Tax, City Construction and Development Tax, and Education Surcharge taxes are
applicable.

EARNINGS PER SHARE

Basic earnings per share are computed by dividing net income by
weighted average number of shares of common stock outstanding during each
period. Diluted earnings per share is computed by dividing net income by the
weighted average number of shares of common stock, common stock equivalents and
potentially dilutive securities outstanding during each period. At December 31,
2010 and 2009, the Company had no common stock equivalents that could
potentially dilute future earnings per share.

The Companys board of directors approved a three-for-one reverse stock
split (the Reverse Stock Split) of the Companys outstanding common stock on
October 19, 2010. References to shares in the consolidated financial statements
and the accompanying notes, including, but not limited to, the number of shares
and per share amounts, have been adjusted to reflect the Reverse Stock Split on
a retroactive basis.

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

The financial position and results of operations of the Companys subsidiaries
in the PRC are measured using the Chinese currency Renminbi as the functional
currency, while the Companys reporting currency is the US dollar. Balance
sheet accounts with exception of equity of the subsidiaries are translated at
the prevailing exchange rate in effect at each period end, income statement
accounts are translated at the average rate of exchange during the period, and
equity accounts were stated at their historical exchange rate. Exchange gains
or losses arising from foreign currency transactions are included in the
determination of net income (loss) for the respective periods. Translation
adjustments are included in the accumulated other comprehensive income in the
consolidated statements of shareholders equity and comprehensive income.

COMPREHENSIVE INCOME

The Company has adopted ASC220,Reporting Comprehensive Income, which establishes standards for
reporting and displaying comprehensive income, its components, and accumulated
balances in a full-set of general-purpose financial statements. The Companys
accumulated other comprehensive income represents the accumulated balance of
foreign currency translation adjustments.

F-12

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION) 
Notes to the Consolidated Financial Statements (Continued) 
For the years ended December 31, 2009 and 2010

FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820 Fair Value Measurements and Disclosures, adopted January 1,
2008, defines fair value, establishes a three-level valuation hierarchy for disclosures
of fair value measurement and enhances disclosure requirements for fair value
measures. The carrying amounts reported in the balance sheets for current
receivables and payables qualify as financial instruments. Management concluded
the carrying values are a reasonable estimate of fair value because of the
short period of time between the origination of such instruments and their
expected realization and if applicable, their stated interest rate approximates
current rates available. The three levels are defined as follows:

| |   |                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1 -
 inputs to the valuation methodology are quoted prices (unadjusted) for
 identical assets or liabilities in active markets.                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                       
| |  | Level 2 -
 inputs to the valuation methodology include quoted prices for similar assets
 and liabilities in active markets, and inputs that are observable for the
 assets or liability, either directly or indirectly, for substantially the
 full term of the financial instruments.
| |   |                                                                                                                                                                                                                                                                                       
| |  | Level 3 -
 inputs to the valuation methodology are unobservable and significant to the
 fair value.                                                                                                                                                                                   

It is managements opinion that as of December 31, 2010 and 2009, the
estimated fair values of the financial instruments were not materially
different from their carrying values as presented on the balance sheet. This is
attributed to the short maturities of the instruments and that interest rates
on the borrowings approximate those that would have been available for loans of
similar remaining maturity and risk profile at respective balance sheet dates.
The carrying amounts of short-term loans approximate their fair values because
the applicable interest rates approximate current market rates.

RELATED PARTIES

A party is considered to be related to the Company if the party
directly or indirectly or through one or more intermediaries, controls, is
controlled by, or is under common control with the Company. Related parties
also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests. A party which can significantly influence
the management or operating policies of the transacting parties or if it has an
ownership interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the transacting parties
might be prevented from fully pursuing its own separate interests is also a
related party.

PRODUCTS WARRANTIES

Refunds to students who withdraw from offline tutorial courses are
rarely made and are made only at the discretion of the Company. For this reason
and, since revenue is recognized only as services are provided, no provision is
needed for possible withdrawals.

SEGMENT REPORTING

The Company uses the management approach in determining reportable
operating segments. The management approach considers the internal organization
and reporting used by the Companys chief operating decision maker for making
operating decisions and assessing performance as the source for determining the
Companys reportable segments. The Companys chief operating decision maker has
been identified as the chief executive officer of the Company who reviews
financial information of separate operating segments based on US GAAP. The
chief operating decision maker now reviews results analyzed by service line.
This analysis is only presented at the revenue level with no allocation of
direct or indirect costs. Consequently, the Company has determined that it has
only one operating segment.

F-13

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Management believes that none of the recently adopted accounting
pronouncements will have a material effect on the Company financial position,
results of operations, or cash flows.

Effective July 1, 2008, the Company adopted SFAS No. 157, Fair Value
Measurements (Now ASC 820), which provides guidance on how to measure assets
and liabilities that use fair value. ASC 820 applies whenever another U.S. GAAP
standard requires (or permits) measurement of assets or liabilities at fair
value, but does not expand the use of fair value to any new circumstances. The
Company also adopted FASB Staff Position (FSP) No.FAS 157-2, which allows the
Company to partially defer the adoption of ASC820. This FSP defers the
effective date of ASC 820 for nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), to fiscal years beginning
after November 15,2008, and interim periods within those fiscal years.
Nonfinancial assets and nonfinancial liabilities include all assets and
liabilities other than those meeting the definition of a financial asset or
financial liability as defined in paragraph 6 of Statement No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities. The adoption of
ASC 820 did not have an impact on our financial statements.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (Now ASC
855), which provides guidance to 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. ASC 855 also
requires entities to disclose the date through which subsequent events were
evaluated as well as the rationale for why that date was selected. This
disclosure should alert all users of financial statements that an entity has
not evaluated subsequent events after that date in the set of financial
statements being presented. ASC 855 is effective for interim and annual periods
ending after June 15, 2009. The adoption of ASC 855 did not have a material impact
on the Companys financial position, results of operations or cash flows.

In June 2009, the FASB issued Update No. 2009-01, Generally Accepted
Accounting Principles (ASU 2009-01). ASU 2009-01 establishes The FASB
Accounting Standards Codification, or Codification, which became the source of
authoritative GAAP recognized by the FASB to be applied by nongovernmental
entities. On the effective date, the Codification superseded all then-existing
non-SEC accounting and reporting standards. All other non grandfathered non-SEC
accounting literature not included in the Codification will become non
authoritative. ASU 2009-01 is effective for interim and annual periods ending
after September 15, 2009. The adoption did not have any impact on the Companys
operating results, financial position or cash flows.

In December 2009, the FASB codified Consolidations  Improvements to
Financial Reporting by Enterprises Involved with VIEs (ASU 2009-17), guidance
which was issued by the FASB in June 2009. The amendments in this Accounting
Standards Update replace the quantitative-based risks and rewards calculation
for determining which reporting entity, if any, has a controlling financial
interest in a variable interest entity with an approach focused on identifying
which reporting entity has the power to direct the activities of a variable
interest entity that most significantly impact the entitys economic
performance and has (1) the obligation to absorb losses of the entity or
(2) the right to receive benefits from the entity. An approach that is
expected to be primarily qualitative will be more effective for identifying
which reporting entity has a controlling financial interest in a variable
interest entity. The adoption of this standard will have no material impact on the
Companys consolidated financial statements.

NOTE 3  ACCOUNTS RECEIVABLE

As of December 31, 2010 and 2009, accounts receivable consisted of the
following:

|                                 |  |                    |           |                    |   |           |  
|-------------------------------- |  | ------------------ | --------- | ------------------ | - | --------- | -
|                                 |  | December 31,
 2010 |           | December 31,
 2009 |  
|                                 |  |                    |           |                    |  
|                                 |  |                    |           |                    |   |           |  
|Accounts
 receivable             |  | $                  | 6,555,936 |                    | $ | 4,529,511 |  
|Allowance
 for doubtful accounts |  |                    |          |                    |   | (301,001  | )
|                                 |  |                    |           |                    |   |           |  
|Accounts receivable, net         |  | $                  | 6,555,936 |                    | $ | 4,228,510 |  
|                                 |  |                    |           |                    |   |           |  

F-14

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

The change in the allowance for doubtful accounts is as follows:

|                              |  |                    |          |                    |   |         | 
|----------------------------- |  | ------------------ | -------- | ------------------ | - | ------- | 
|                              |  | December 31,
 2010 |          | December 31,
 2009 |  
|                              |  |                    |          |                    |  
|                              |  |                    |          |                    |  
|Beginning balance             |  | $                  | 301,001  |                    | $ | 256,486 | 
|Provision
 during the period  |  |                    |         |                    |   | 44,515  | 
|Collection
 during the period |  |                    | (301,001 | )                  |   |        | 
|                              |  |                    |          |                    |   |         | 
|Ending balance                |  | $                  |         |                    | $ | 301,001 | 
|                              |  |                    |          |                    |   |         | 

NOTE 4 - ADVANCES TO SUPPLIERS

Advances to suppliers represent amounts prepaid for advertising,
network, rent, store construction and decoration:

|                                      |  |                    |           |                    |   |           | 
|------------------------------------- |  | ------------------ | --------- | ------------------ | - | --------- | 
|                                      |  | December 31,
 2010 |           | December 31,
 2009 |  
|                                      |  |                    |           |                    |  
|Advance for lease-hold improvement    |  | $                  |          |                    | $ | 3,071,433 | 
|Advance for
 advertising and printing |  |                    | 3,466,970 |                    |   | 11,993    | 
|Advance for
 network service          |  |                    | 2,304,492 |                    |   | 292,517   | 
|Others                                |  |                    | 2,717,289 |                    |   | 504,364   | 
|                                      |  |                    |           |                    |   |           | 
|Total                                 |  | $                  | 8,488,751 |                    | $ | 3,880,307 | 
|                                      |  |                    |           |                    |   |           | 

NOTE 5 - OTHER ACCOUNTS RECEIVABLE

Other accounts receivable represent the advances to employees and
deposits paid to property management companies.

NOTE 6  SHAREHOLDER ADVANCES

Shareholder advances represent the loans provided to one shareholder
and executive with no interest and the repayment is due upon request.

NOTE 7- PROPERTYAND EQUIPMENT, NET

Property and equipment at December 31, 2010 and 2009 consisted of the
following:

|                                  |  |                    |            |                    |   |           |  
|--------------------------------- |  | ------------------ | ---------- | ------------------ | - | --------- | -
|                                  |  | December 31,
 2010 |            | December 31,
 2009 |  
|                                  |  |                    |            |                    |  
|                                  |  |                    |            |                    |  
|Office
 furniture                 |  | $                  | 7,595      |                    | $ | 5,107     |  
|Office
 equipment                 |  |                    | 3,710,405  |                    |   | 3,044,064 |  
|Vehicles                          |  |                    | 143,017    |                    |   | 34,976    |  
|Leasehold
 improvement            |  |                    | 1,152,683  |                    |   | 101,450   |  
|Construction
 in progress         |  |                    | 6,844,359  |                    |   |          |  
|                                  |  |                    |            |                    |   |           |  
|Total property and equipment      |  |                    | 11,858,059 |                    |   | 3,185,597 |  
|                                  |  |                    |            |                    |   |           |  
|                                  |  |                    |            |                    |   |           |  
|Accumulated depreciation          |  |                    | (1,205,229 | )                  |   | (428,210  | )
|                                  |  |                    |            |                    |   |           |  
|                                  |  |                    |            |                    |   |           |  
|Total property and equipment, net |  | $                  | 10,652,830 |                    | $ | 2,757,387 |  
|                                  |  |                    |            |                    |   |           |  

F-15

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

Depreciation expense for the years ended December 31, 2010 and 2009
were allocated to the following expense items respectively:

|                            |  |                    |         |                    |   |         | 
|--------------------------- |  | ------------------ | ------- | ------------------ | - | ------- | 
|                            |  | December 31,
 2010 |         | December 31,
 2009 |  
|                            |  |                    |         |                    |  
|                            |  |                    |         |                    |  
|COGS                        |  | $                  | 101,880 |                    | $ | 33,798  | 
|Selling
 expense            |  |                    | 1,399   |                    |   |        | 
|General and
 administrative |  |                    | 643,321 |                    |   | 314,482 | 
|                            |  |                    |         |                    |   |         | 
|Total                       |  | $                  | 746,600 |                    | $ | 348,280 | 
|                            |  |                    |         |                    |   |         | 

NOTE 8  INTANGIBLE ASSETS, NET

Intangible assets at December 31, 2010 and 2009 consisted of the
following:

|                           |  |                    |            |                    |   |            |  
|-------------------------- |  | ------------------ | ---------- | ------------------ | - | ---------- | -
|                           |  | December 31,
 2010 |            | December 31,
 2009 |  
|                           |  |                    |            |                    |  
|                           |  |                    |            |                    |  
|Self-developed
 courseware |  | $                  | 379,435    |                    | $ | 267,937    |  
|Purchased
 courseware      |  |                    | 6,507,896  |                    |   | 2,964,901  |  
|Management
 software       |  |                    | 874,610    |                    |   | 680,542    |  
|Purchased
 technology      |  |                    | 150,996    |                    |   | 146,259    |  
|                           |  |                    |            |                    |   |            |  
|Intangible assets, total   |  |                    | 7,912,937  |                    |   | 4,059,639  |  
|Accumulated
 amortization  |  |                    | (2,890,954 | )                  |   | (1,205,873 | )
|                           |  |                    |            |                    |   |            |  
|                          
|Intangible assets, net     |  | $                  | 5,021,983  |                    | $ | 2,853,766  |  
|                           |  |                    |            |                    |   |            |  

The amortization expenses for the years ended December 31, 2010 and
2009 are $1,610,330
and $727,700, respectively.

NOTE 9  PRIVATE PLACEMENT

On September 16, 2010, the Company entered into a Securities Purchase
Agreement (Securities Purchase Agreement) with certain investors
(Investors) pursuant to which the Company completed an offering (Offering)
of units (Units) for total gross proceeds of $9,600,000. Each Unit is priced
at $1.60 and consists of one (1) ordinary share, par value $0.000384 per share
(Ordinary Shares), and a Series A Stock Purchase Warrant (Warrants) to
purchase 0.35 of one Ordinary Share. The initial Warrant exercise price is $2.08
per share on a post split basis. An aggregate of 6,000,000 units were sold,
resulted in the sale of 6,000,000 Ordinary Shares and Warrants to purchase
2,100,000 Ordinary Shares at $2.08.

In connection with the private placement, the Company held back and
placed in an escrow account an aggregate amount of $520,000, pursuant to the
agreement entered with the Lead Purchaser of the Offering. The escrowed amount
will be proportionally released upon the Company satisfying one or all
conditions as set forth below prior to June 30, 2011.

| |     |                                                                                                                                                                                                                                                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | At such time as the Company engages an investor relations firm
 reasonably acceptable to the Lead Purchaser;                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                               
| | (b) | At such time as the Company provides the Lead Purchaser with evidence
 that is reasonably satisfactory to the Lead Purchaser indicating that
 Circular 75 filings have been approved by the PRC government;                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                               
| | (c) | At such time as the Company provides the Lead Purchaser with
 documentation demonstrating that the business license of the Beijing Tsingda
 Century Investment Consultant of Education Co., Ltd. has amended to clarify
 to the Lead Purchasers reasonable satisfaction that the VIE subsidiaries are
 properly authorized to engage in its current business;
| |     |                                                                                                                                                                                                                                                                                                                                                               
| | (d) | At such time as the Company provides the Lead Purchaser with written
 confirmation that (i) an independent auditing firm reasonably satisfactory to
 the Lead Purchaser has been engaged; and (ii) a law firm reasonably
 satisfactory to the Lead Purchaser has been engaged in connection with the
 Companys initial public offering.                      

F-16

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

NOTE 10  SHAREHOLDERS EQUITY

On May 17, 2010, the Company issued 915,085 ordinary shares (adjusted
to reflect the 3 for 1 reverse split) for $30,000 in cash to a group associated
with the firm that is the placement agent of a private placement offering of
Company equity securities, which offering is described in the following
paragraphs. Also on May 17, 2010, the Company issued 2,079,740 ordinary shares
(adjusted to reflect the 3 for 1 reverse split) to Eastbridge Investment Group
Corporation, in return for services. The value of these shares, $1,477,000, was
charged to expense prior to the reverse merger.

On May 24, 2010, the Company and its controlling shareholders entered
into a share exchange agreement (the Agreement) with Tsingda Technology and all
of the shareholders of Tsingda Technology. Under the Agreement, the Company
acquired 100% of the outstanding equity interests of Tsingda Technology in
exchange for 244,022.78 preferred shares of the Company. Each such share of
preferred stock was convertible into 100 ordinary shares of the Company at such
time as the number of authorized ordinary shares is increased. The transaction
was closed in May 2010 and was accounted for as a reverse merger with a shell
company and a recapitalization of Tsingda Technology. Tsingda eEDU Corporation
is the accounting acquiree. Tsingda Technology is the accounting acquirer and
the surviving entity.

On November 15, 2010, the Companys shareholders approved a
three-for-one reverse split of the Companys issued and outstanding Ordinary
Shares (and to increase the amount of the Companys authorized Ordinary Shares
from thirty-nine million sixty-two thousand five hundred shares (39,062,500);
to one hundred million (100,000,000) shares.

As result of the reverse split and increase in share capital, the par
value of the Companys Ordinary Shares change from US$0.000128 per share to
US$0.000384 per share and the Companys total number of authorized Ordinary
Shares authorized increased to 100,000,000 Ordinary Shares. At the same time,
all the preferred stock automatically converted to ordinary shares at the ratio
of one share of preferred stock to 100 ordinary shares.

All ordinary share data has been retroactively restated for the periods
presented to reflect the Reverse Stock Split.

NOTE 11 - STATUTORY RESERVE

In accordance with the relevant laws and regulations of the PRC, the
Companys PRC subsidiaries are required to transfer 10% of their respective
after tax profit, as determined in accordance with PRC accounting standards and
regulations, to a general reserve fund until the balance of the fund reaches
50% of the registered capital of the respective subsidiary. The transfer to
this general reserve fund must be made before distribution of dividends can be
made. As of December 31, 2010, the registered capitals of Tsingda Century and
Tsingda Network are $4,421,156 and $588,235, respectively, and both companies
have made the required allocations to the general reserves. As of December 31,
2010 and 2009, the PRC subsidiaries had appropriated $1,955,454 and $886,021, respectively
to the general reserve funds, which are restricted from being distributed to
the Company. General reserve funds are restricted for set off against losses,
expansion of production and operation or increase in registered capital of the
respective company. These reserves are therefore not available for distribution
except in liquidation.

Further, the PRC subsidiaries may, at the discretion of the enterprise,
make appropriations to a staff welfare and bonus reserve in accordance with the
relevant laws and regulations in the PRC. The appropriation to staff welfare
and bonus reserve is recognized as an expense as it is a current liability to
the employees. For the years ended December 31, 2010 and 2009, the PRC
subsidiaries made appropriations to the staff welfare and bonus reserve of $0
and $443,010, respectively.

NOTE 12 - RELATED PARTY TRANSACTIONS

As of December 31, 2010 and 2009, the advances to shareholders and
executives are $37,749 and $476,220, respectively. During the year ended
December 31, 2010 and 2009, the additional advances were paid the shareholders
executives at amount of $234,315 and $302,426, respectively; and the repayments
to the Company were amounted to $688,209 and $2,015,205, respectively.

Management subsequently evaluated this transaction and determined that
the transfers violated Section 402 of the Sarbanes-Oxley Act of 2002.
Management is taking actions to reduce and eliminate such transactions.

F-17

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

NOTE 13 - INCOME TAXES

The Company is incorporated in the Cayman Islands, and is not subject
to tax on income or capital gain under the current laws of the Cayman Islands.
In addition, upon payment of dividends by the Company to its shareholders, no
Cayman Islands withholding tax is imposed. The Companys other subsidiaries are
subject to income tax as described below.

British Virgin
Islands (BVI)

Under the current laws of BVI, our BVI subsidiaries are not subject to
tax on income or capital gain. In addition, payments of dividends by our BVI
subsidiaries to their shareholders are not subject to withholding tax in the
BVI.

PRC

Prior to January 1, 2008, the Company was governed by the previous
Income Tax Law (the Previous Tax Law) of China. Under the Previous Tax Law,
the Companys PRC subsidiaries, Tsingda Management, Tsingda Century and Tsingda
network, were entitled various preferential tax treatments.

On March 16, 2007, the National Peoples Congress passed the new
Enterprise Income Tax law (the new EIT law) which imposes a single income tax
rate of 25% for most domestic enterprises and foreign investment enterprises.
The new EIT law was effective as of January 1, 2008. The new EIT law
provides a five-year transition period from its effective date for those
enterprises which were established before March 16, 2007 and which were entitled
to a preferential lower tax rate under the then effective tax laws or
regulations, as well as grandfathering tax holidays. Further, according to the
new EIT law, entities that qualify as High and New Technology Enterprises are
entitled to the preferential EIT rate of 15%. Tsingda Century has received
approval for the status as a High and New Technology Enterprises. The status
is valid for three years starting from June 2009 and will be renewed after
evaluation by relevant government authorities every three years. Further, on
December 26, 2007, the PRC government passed the detailed implementing
rules which allow enterprises to continue to enjoy their unexpired tax holiday
under the previous income tax laws and rules. As a result, under the new EIT
law, Tsingda Centurys tax rate are 15% for the calendar years from 2010 to
2012 and subject to renewal of the status of High and New Technology
Enterprises after calendar year 2012; and Tsingda Network and Tsingda Schools
tax rates are 25%. Tsingda Managements tax rates are 22% and 24% for 2010 and
2011 and 25% thereafter. For the year ended December 31, 2010 and 2009, Tsingda
Management, Tsingda Network and Tsingda School did not generate any taxable
income.

The new EIT Law also provides that an enterprise established under the
laws of foreign countries or regions but whose de facto management body is
located in the PRC be treated as a resident enterprise for PRC tax purposes and
consequently be subject to the PRC income tax at the rate of 25% for its
worldwide income. The Implementing Rules of the new EIT Law merely defines the
location of the de facto management body as the place where the exercising,
in substance, of the overall management and control of the production and
business operation, personnel, accounting, properties, etc., of a non-PRC
company is located. On April 22, 2009, the PRC State Administration of
Taxation further issued a notice entitled Notice Regarding Recognizing
Offshore-Established Enterprises Controlled by PRC Shareholders as Resident
Enterprises Based on Their Place of Effective Management. Under this notice, a
foreign company controlled by a PRC company or a group of PRC companies shall
be deemed as a PRC resident enterprise, if (i) the senior management and
the core management departments in charge of its daily operations mainly
function in the PRC; (ii) its financial decisions and human resource
decisions are subject to decisions or approvals of persons or institutions in
the PRC; (iii) its major assets, accounting books, company seals, minutes
and files of board meetings and shareholders meetings are located or kept in
the PRC; and (iv) more than half of the directors or senior management
personnel with voting rights reside in the PRC. Based on a review of surrounding
facts and circumstances, the Company does not believe that it is likely that
its operations outside of the PRC should be considered a resident enterprise
for PRC tax purposes. However, due to limited guidance and implementation
history of the new EIT Law, should the Company be treated as a resident
enterprise for PRC tax purposes, the Company will be subject to PRC tax on
worldwide income at a uniform tax rate of 25% retroactive to January 1,
2008.

The new EIT Law also imposes a withholding income tax of 10% on
dividends distributed by a foreign invested enterprise to its immediate holding
company outside of China, if such immediate holding company is considered as a
non-resident enterprise without any establishment or place within China or if
the received dividends have no connection with the establishment or place of
such immediate holding company within China, unless such immediate holding
companys jurisdiction of incorporation has a tax treaty with China that
provides for a different withholding arrangement. Such withholding income tax
was exempted under the previous income tax regulations. The Cayman Islands,
where the Company is incorporated, does not have such tax treaty with China.

F-18

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

The provision for taxes on earnings consisted of:

|                                  |  |                    |           |                    |   |           | 
|--------------------------------- |  | ------------------ | --------- | ------------------ | - | --------- | 
|                                  |  | December 31,
 2010 |           | December 31,
 2009 |  
|                                  |  |                    |           |                    |  
|PRC
 Enterprise Income Tax        |  | $                  | 1,834,541 |                    | $ | 1,068,020 | 
|United
 States Federal Income Tax |  |                    |          |                    |   |          | 
|                                  |  |                    |           |                    |   |           | 
|Income tax, net                   |  | $                  | 1,834,541 |                    | $ | 1,068,020 | 
|                                  |  |                    |           |                    |   |           | 

Income tax expense, which is all incurred in the PRC, consists of:

|                                      |  |                    |           |                    |   |           | 
|------------------------------------- |  | ------------------ | --------- | ------------------ | - | --------- | 
|                                      |  | December 31,
 2010 |           | December 31,
 2009 |  
|                                      |  |                    |           |                    |  
|Current
 income tax expense           |  | $                  | 2,061,609 |                    | $ | 989,925   | 
|Deferred
 income tax expense(benefit) |  |                    | (227,068  | )                  |   | 78,095    | 
|                                      |  |                    |           |                    |   |           | 
|Income tax, net                       |  | $                  | 1,834,541 |                    | $ | 1,068,020 | 
|                                      |  |                    |           |                    |   |           | 

A reconciliation between the income tax computed at the U.S. statutory
rate and the Companys provision for income tax is as follows:

|                                        |  |                    |     |                    |  |     |  
|--------------------------------------- |  | ------------------ | --- | ------------------ |  | --- | -
|                                        |  | December 31,
 2010 |     | December 31,
 2009 | 
|                                        |  |                    |     |                    | 
|U.S. Federal
 income tax statutory rate |  |                    | 35  | %                  |  | 35  | %
|PRC
 Statutory rate (25%) difference    |  |                    | -10 | %                  |  | -10 | %
|Preferential
 tax rate                  |  |                    | -10 | %                  |  | -10 | %
|                                        |  |                    |     |                    |  |     |  
|Effective tax rate                      |  |                    | 15  | %                  |  | 15  | %
|                                        |  |                    |     |                    |  |     |  

The tax effect of temporary differences that gives rise to significant
portions of the deferred income tax assets are presented below:

|                           |  |                    |         |                    |   |         | 
|-------------------------- |  | ------------------ | ------- | ------------------ | - | ------- | 
|                           |  | December 31,
 2010 |         | December 31,
 2009 |  
|                           |  |                    |         |                    |  
|Deferred tax assets:       |  |                    |         |                    |   |         | 
|Deferred revenue           |  | $                  | 382,758 |                    | $ | 155,690 | 
|                           |  |                    |         |                    |   |         | 
|Deferred tax assets, total |  | $                  | 382,758 |                    | $ | 155,690 | 
|                           |  |                    |         |                    |   |         | 

Accounting for Uncertainty in Income Taxes

The Company adopted the provisions of Accounting for Uncertainty in
Income Taxes on January 1, 2007. The provisions clarify the accounting for
uncertainty in income taxes recognized in an enterprises financial statements
in accordance with the standard Accounting for Income Taxes, and prescribes a
recognition threshold and measurement process for financial statement
recognition and measurement of a tax position taken or expected to be taken in
a tax return. The provisions of Accounting for Uncertainty in Income Taxes also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.

F-19

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

Based on the Companys evaluation, the Company has concluded that there
are no significant uncertain tax positions requiring recognition in its
financial statements.

The Company may from time to time be assessed interest or penalties by
major tax jurisdictions. In the event it receives an assessment for interest
and/or penalties, it will be classified in the financial statements as tax
expense.

NOTE 14 - COMMITMENTS AND CONTINGECIES

Lease Obligations

The Company has entered into multiple lease agreements for the lease of
premises for company directly owned learning centers. As of December 31, 2010,
the Companys commitments for minimum lease payments under these un-revocable
operating leases for the next five years are as follows:

|                         |  |              |            | 
|------------------------ |  | ------------ | ---------- | 
|Year ending December 31, |  | Payments Due |           
|                        
|2011                     |  | $            | 4,583,755  | 
|                        
|2012                     |  |              | 5,165,630  | 
|                        
|2013 to 2015             |  |              | 12,241,591 | 
|                         |  |              |            | 
|Total                    |  | $            | 21,990,976 | 
|                         |  |              |            | 

Tax issues

The tax authority of the PRC Government conducts periodic and ad hoc
tax filing reviews on business enterprises operating in the PRC after those
enterprises had completed their relevant tax filings, hence the Companys tax
filings may not be finalized. It is therefore uncertain as to whether the PRC
tax authority may take different views about the Companys tax filings which
may lead to additional tax liabilities.

NOTE 15 - CONCENTRATIONS

Major Customers and Vendors

For the year ended December 31, 2010 and 2009, no individual customers
contributed more than 10% of the Companys revenue.

For the year ended December 31, 2010, purchase (net of VAT) from 2 vendors accounted for 27.3%
of the total net purchase of the Company. For the year ended December 31, 2009,
purchase (net of VAT) from 3 vendors accounted for 71.24% of the total net purchase
of the Company.

NOTE 16  OPERATING RISKS

Lack of Insurance

The Company could be exposed to liabilities or other claims for which
the Company would have no insurance protection. The Company does not currently
maintain any business interruption insurance, products liability insurance, or
any other comprehensive insurance policy except for property insurance policies
with limited coverage. As a result, the Company may incur uninsured liabilities
and losses as a result of the conduct of its business. There can be no
guarantee that the Company will be able to obtain additional insurance coverage
in the future, and even if it can obtain additional coverage, the Company may
not carry sufficient insurance coverage to satisfy potential claims. Should
uninsured losses occur, any purchasers of the Companys common stock could lose
their entire investment.

Country Risk

The
Company has significant operating risk in the PRC. The operating results of the
Company may be adversely affected by changes in the political and social
conditions in the PRC and by changes in Chinese government policies with
respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things. The Company can give no assurance that those
changes in political and other conditions will not result in have a material
adverse effect upon the Companys business and financial condition.

F-20

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION)
Notes to the Consolidated Financial Statements (Continued)
For the years ended December 31, 2009 and 2010

Exchange Risk

The
Company cannot guarantee the Renminbi and US dollar exchange rate will remain
steady, therefore the Company could post the same profit for two comparable
periods and post higher or lower profit depending on exchange rate of Renminbi
and US dollar. The exchange rate could fluctuate depending on changes in the
political and economic environments without notice.

Credit Risk

Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash, short term investments, accounts
receivable and advances to suppliers. However, all of the assets of Tsingda
Century, Tsingda Network and Tsingda Century Training School, are located in
the PRC and cash balances are on deposit at financial institutions in the PRC,
the currency of which is not free trading. Foreign exchange transactions are
required to be conducted through institutions authorized by the Chinese government
and there is no guarantee that Chinese currency can be converted to U.S. or
other currencies.

NOTE 17 -CONDENSED PARENT COMPANY
FINANCIAL INFORMATION

Basis of Presentation

The condensed parent company financial
statements have been prepared in accordance with Rule 12-04, Schedule I of
Regulation S-X, as the restricted net assets of the subsidiaries of Tsingda
eEDU Corporation exceed 25% of the consolidated net assets of Tsingda eEDU
Corporation. The ability of the Companys Chinese operating subsidiaries to pay
dividends may be restricted due to the foreign exchange control policies and
availability of cash balances of the Chinese operating subsidiaries. Because
substantially all of the Companys operations are conducted in China and a
substantial majority of its revenues are generated in China, a majority of the
Companys revenue being earned and currency received are denominated in
Renminbi (RMB). RMB is subject to the exchange control regulation in China,
and, as a result, the Company may be unable to distribute any dividends outside
of China due to PRC exchange control regulations that restrict its ability to
convert RMB into US Dollars.

The condensed parent company financial statements have been prepared
using the same accounting principles and policies described in the notes to the
consolidated financial statements, with the only exception being that the
parent company accounts for its subsidiaries using the equity method. Refer to
the consolidated financial statements and notes presented above for additional
information and disclosures with respect to these financial statements.

F-21

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION) 
Notes to the Consolidated Financial Statements (Continued) 
For the years ended December 31, 2009 and 2010

|                                            
|--------------------------------------------
|TSINGDA EEDU CORPORATION                    
|(FORMERLY COMPASS ACQUISITION CORPORATION)
|Condensed Parent Company Balance Sheets     
|(Stated in US dollars)                      

|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ---------- | ------------------ | - | ---------- | 
|                                                                                                                                                                                      |  | December 31,
 2010 |            | December 31,
 2009 |  
|                                                                                                                                                                                      |  |                    |            |                    |  
|ASSETS                                                                                                                                                                                |  |                    |            |                    |   |            | 
|Current assets                                                                                                                                                                        |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Receivable from escrow account                                                                                                                                                        |  | $                  | 520,479    |                    | $ |           | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Investment in subsidiaries                                                                                                                                                            |  |                    | 33,140,493 |                    |   | 13,511,452 | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|TOTAL ASSETS                                                                                                                                                                          |  |                    | 33,660,972 |                    |   | 13,511,452 | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|SHAREHOLDERS EQUITY                                                                                                                                                                  |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Preferred stock: 781,250 shares of $.000128
 par value authorized; None shares issued and outstanding                                                                                 |  | $                  |           |                    | $ |           | 
|Common Stock (par value $0.000384 per
 share; 100,000,000 shares authorized; 33,729,862 and 24,402,278 shares issued
 and outstanding as of December 31, 2010 and 2009, respectively) |  |                    | 12,952     |                    |   | 9,370      | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Additional paid in capital                                                                                                                                                            |  |                    | 13,523,180 |                    |   | 4,400,435  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Statutory reserve                                                                                                                                                                     |  |                    | 2,398,464  |                    |   | 1,329,032  | 
|Accumulated other comprehensive income                                                                                                                                                |  |                    | 963,435    |                    |   | 241,438    | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|Retained deficits                                                                                                                                                                     |  |                    | 16,762,941 |                    |   | 7,531,177  | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|TOTAL SHAREHOLDERS EQUITY                                                                                                                                                            |  |                    | 33,660,972 |                    |   | 13,511,452 | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                            |  | $                  | 33,660,972 |                    | $ | 13,511,452 | 
|                                                                                                                                                                                      |  |                    |            |                    |   |            | 

F-22

---



TSINGDA EEDU CORPORATION 
(FORMERLY COMPASS ACQUISITION CORPORATION) 
Notes to the Consolidated Financial Statements (Continued) 
For the years ended December 31, 2009 and 2010

|                                                 
|-------------------------------------------------
|TSINGDA EEDU CORPORATION                         
|(FORMERLY COMPASS ACQUISITON CORPORATIOIN)     
|Condensed Parent Company Statements of Operations
|(Stated in US dollars)                           

|                                                  |  |                                  |             |      |   |            |  
|------------------------------------------------- |  | -------------------------------- | ----------- | ---- | - | ---------- | -
|                                                  |  | For the Years Ended December 31, |            
|                                                  |  |                                  |            
|                                                  |  | 2010                             |             | 2009 |  
|                                                  |  |                                  |             |      |  
|Operating Expenses                                |  |                                  |             |      |   |            |  
|                                                 
|General and administrative expenses               |  |                                  | 10,475      |      |   |           |  
|                                                  |  |                                  |             |      |   |            |  
|Total expenses                                    |  |                                  | 10,475      |      |   |           |  
|                                                 
|Other income                                      |  |                                  | 62          |      |   |           |  
|Equity in undistributed income of subsidiaries    |  |                                  | 10,301,196  |      |   | 6,052,110  |  
|                                                  |  |                                  |             |      |   |            |  
|Net income                                        |  | $                                | 10,290,783  |      | $ | 6,052,110  |  
|                                                  |  |                                  |             |      |   |            |  
|                                                  |  |                                  |             |      |   |            |  
|Condensed Parent Company Statements of Cash Flows |  |                                  |             |      |   |            |  
|(Stated in US Dollars)                            |  |                                  |             |      |   |            |  
|                                                  |  |                                  |             |      |   |            |  
|                                                  |  | For the years ended December 31  |            
|                                                  |  |                                  |            
|                                                  |  | 2010                             |             | 2009 |  
|                                                  |  |                                  |             |      |  
|                                                  |  |                                  |             |      |   |            |  
|CASH FLOWS FROM OPERATING ACTIVITIES              |  |                                  |             |      |   |            |  
|                                                  |  |                                  |             |      |   |            |  
|Net income                                        |  | $                                | 10,290,783  |      | $ | 6,052,110  |  
|Other income                                      |  |                                  | (479        | )    |   |            |  
|Equity in undistributed income of
 subsidiaries   |  |                                  | (10,301,196 | )    |   | (6,052,110 | )
|                                                  |  |                                  |             |      |   |            |  
|CASH USED IN
 OPERATING ACTIVITIES                |  |                                  | (10,892     | )    |   |           |  
|                                                  |  |                                  |             |      |   |            |  
|                                                  |  |                                  |             |      |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES              |  |                                  |             |      |   |            |  
|Investment in subsidiaries                        |  |                                  | (8,595,435  | )    |   |           |  
|                                                  |  |                                  |             |      |   |            |  
|CASH USED IN
 INVESTING ACTIVITIES                |  |                                  | (8,595,435  | )    |   |           |  
|                                                  |  |                                  |             |      |   |            |  
|                                                  |  |                                  |             |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES              |  |                                  |             |      |   |            |  
|Proceeds from issuance of shares                  |  |                                  | 9,630,927   |      |   |           |  
|Payment for stock issuance cost                   |  |                                  | (504,600    | )    |   |           |  
|Payment in escrow accounts                        |  |                                  | (520,000    | )    |   |           |  
|                                                  |  |                                  |             |      |   |            |  
|CASH USED IN
 FINANCING ACTIVITIES                |  |                                  | 8,606,327   |      |   |           |  
|                                                  |  |                                  |             |      |   |            |  
|                                                  |  |                                  |             |      |   |            |  
|NET INCREASE (DECREASE) IN CASH                   |  |                                  |            |      |   |           |  
|                                                  |  |                                  |             |      |   |            |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR    |  | $                                |            |      | $ |           |  
|                                                  |  |                                  |             |      |   |            |  
|                                                  |  |                                  |             |      |   |            |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR          |  | $                                |            |      | $ |           |  
|                                                  |  |                                  |             |      |   |            |  

F-23

---



SIGNATURES

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

Dated: March
11, 2011

| |                         
| | ------------------------
| | /s/ Zhang
 Hui          
| |                         
| | Zhang Hui               
| | Chief
 Executive Officer

Pursuant to
the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|                   |  |                               |  |                
|------------------ |  | ----------------------------- |  | ---------------
|Signature          |  | Title                         |  | Date           
|                   |  |                               |  |                
|                   |  |                               |  |                
|/s/ Zhang
 Hui     |  | Chief
 Executive Officer      |  | March 11,
 2011
|                   |  | and Chairman
 of the Board    |  |                
|Zhang Hui          |  |                               |  |                
|                   |  |                               |  |                
|/s/ Kang
 Chungmai |  | Chief
 Financial Officer and  |  | March 11,
 2011
|                   |  | Secretary                     |  |                
|Kang
 Chungmai     |  |                               |  |                
|                   |  |                               |  |                
|/s/ Liu
 Juntao    |  | Executive
 Vice President and |  | March 11,
 2011
|                   |  | Director                      |  |                
|Liu Juntao         |  |                               |  |                
|                   |  |                               |  |                
|/s/ Norm
 Klein    |  | Director                      |  | March 11,
 2011
|                   |  |                               |  |                
|Norm Klein         |  |                               |  |                
|                   |  |                               |  |                
|/s/ David
 Bolocan |  | Director                      |  | March 11,
 2011
|                   |  |                               |  |                
|David
 Bolocan     |  |                               |  |                
|                   |  |                               |  |                
|/s/ Bi Cheng       |  | Director                      |  | March 11,
 2011
|                   |  |                               |  |                
|Bi Cheng           |  |                               |  |                

---