SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





AMENDMENT
NO. 1 TO





FORM
10-Q





x
              QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
      1934





For
the quarterly period ended December 31, 2009





OR





 ̈
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
the transition period from ______ to __________





COMMISSION
FILE NUMBER: 001-34150





CHINA INFRASTRUCTURE
INVESTMENT CORPORATION


(Exact
name of registrant as specified in its charter)





Nevada
                
                88-0484183(State
      or other jurisdiction of incorporation or
                  organization)
                
                (IRS
      Employer Identification
No.)





Room
D, 2F, Building 12, Xinxin Huayuan, Jinshui Road, Zhengzhou, Henan
Province


The People’s Republic of
China


(Address
of principal executive offices)





(011)
86-375-2754377


(Registrant’s
Telephone Number, Including Area Code)





(Former
Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)





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




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T ('232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  ̈No  ̈




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




Large
Accelerated Filer  ̈ Accelerated Filer
 ̈ Non-Accelerated
Filer  ̈ 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   ̈ No x





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date:  As of February 10, 2010, the registrant
had 80,000,000 shares of common stock, par value $0.001 per share, issued and
outstanding.





EXPLANATORY
NOTE





China Infrastructure Investment
Corporation (the “Company”) is filing
this Amendment No. 1 to its Quarterly Report on Form 10-Q for the sole purpose
of disclosing a related party transaction by and between the Company and the Tai
Ao Expressway which had been erroneously omitted from the original filing
whereby the Company provided a corporate guarantee up to $9.5 million to the Tai
Ao Expressway.  The Company’s disclosure of this transaction impacts
previous disclosure in Notes 10 and 14 to the Company’s financial
statements.  The Company also included subsequent event disclosure to
the MD&A in this Amendment No. 1 and in Item 5.  All other Items
in this Amendment No. 1 remain unchanged.


- 2
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TABLE
OF CONTENTS





PART
      I FINANCIAL INFORMATION
                
                4ITEM
      1. FINANCIAL STATEMENTS
                
                4ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
    OPERATION
                
                29ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK
                
                38ITEM
      4. CONTROLS AND PROCEDURES
                
                39PART
      II OTHER INFORMATION
                
                39ITEM
      1. LEGAL PROCEEDINGS
                
                39ITEM
      1A. RISK FACTORS
                
                39ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS
                
                39ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
                
                39ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
                
                39ITEM
      5. OTHER INFORMATION
                
                39ITEM
      6. EXHIBITS
                
                40SIGNATURES
                
                42


- 3
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PART
I


FINANCIAL
INFORMATION




ITEM
1. FINANCIAL STATEMENTS




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


AND
SUBSIDIARIES





FINANCIAL
STATEMENTS


TABLE
OF CONTENTS




PageCONDENSED
      CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 (UNAUDITED) AND JUNE
      30, 2009
                        
                        F-1CONDENSED
      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS
      ENDED DECEMBER 31, 2009 AND 2008 (UNAUDITED)
                        
                        F-3CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS
      ENDED DECEMBER 31, 2009 AND 2008 (UNAUDITED)
                        
                        F-4NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX
      MONTHS ENDED DECEMBER 31, 2009 AND 2008 (UNAUDITED)
                        
                        F-5


- 4
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





ASSETS





December 31,
                      2009
                    
                    
                    June 30,
                      2009(Unaudited)CURRENT
      ASSETSCash
      and cash equivalents
                    
                    $
                    1,159,304
                    
                    
                    $
                    1,614,260Restricted
      cash
                    
                    
                    -
                    
                    
                    
                    3,550,761Notes
      receivable, net
                    
                    
                    107,511
                    
                    
                    
                    104,676Accounts
      receivable
                    
                    
                    516,957
                    
                    
                    
                    1,089,546Other
      receivables
                    
                    
                    143,210
                    
                    
                    
                    148,934Notes
      receivable from related parties
                    
                    
                    76,565,838
                    
                    
                    
                    151,332,301Advance
      to a related party
                    
                    
                    -
                    
                    
                    
                    32,680,154Other
      current assets
                    
                    
                    85,327
                    
                    
                    
                    940,712Total
      current assets
                    
                    
                    78,578,147
                    
                    
                    
                    191,461,344Notes
      receivable from a related party
                    
                    
                    76,963,068
                    
                    
                    
                    -Advance
      to a related party
                    
                    
                    32,716,481
                    
                    
                    
                    -Toll
      road infrastructures, net
                    
                    
                    434,275,724
                    
                    
                    
                    437,178,980Plant
      and equipment, net
                    
                    
                    15,447,347
                    
                    
                    
                    15,662,302Land
      use rights, net
                    
                    
                    46,318,137
                    
                    
                    
                    47,264,452Long-term
      investment
                    
                    
                    1,579,594
                    
                    
                    
                    1,577,840Deferred
      taxes
                    
                    
                    3,990,151
                    
                    
                    
                    4,725,650Total
      long-term assets
                    
                    
                    611,290,502
                    
                    
                    
                    506,409,224TOTAL
      ASSETS
                    
                    $
                    689,868,649
                    
                    
                    $
                    697,870,568





See
accompanying notes to the condensed consolidated financial
statements.


- 5
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





LIABILITIES AND
SHAREHOLDERS’ EQUITY





December 31,
                      2009
                    
                    
                    June 30,
                      2009(Unaudited)CURRENT
      LIABILITIESOther
      payables and accrued liabilities
                    
                    $
                    1,814,528
                    
                    
                    $
                    2,191,314Short-term
      bank loans
                    
                    
                    7,312,935
                    
                    
                    
                    7,304,815Current
      portion of long-term bank loans
                    
                    
                    30,240,449
                    
                    
                    
                    27,767,064Notes
      payable
                    
                    
                    438,776
                    
                    
                    
                    3,521,542Payable
      to contractors
                    
                    
                    20,828,652
                    
                    
                    
                    22,090,622Deferred
      taxes
                    
                    
                    8,441,335
                    
                    
                    
                    7,852,128Deferred
      revenue, current
                    
                    
                    82,047
                    
                    
                    
                    78,803Amount
      due to related party
                    
                    
                    731,294
                    
                    
                    
                    -Other
      current liabilities
                    
                    
                    163,327
                    
                    
                    
                    163,130Total
      current liabilities
                    
                    
                    70,053,343
                    
                    
                    
                    70,969,418LONG-TERM
      LIABILITIESLong-term
      bank loans
                    
                    
                    428,385,889
                    
                    
                    
                    440,585,554Deferred
      revenue, long-term
                    
                    
                    6,466,829
                    
                    
                    
                    6,502,203Total
      long-term liabilities
                    
                    
                    434,852,718
                    
                    
                    
                    447,087,757TOTAL
      LIABILITIES
                    
                    
                    504,906,061
                    
                    
                    
                    518,057,175CONTINGENCIESSHAREHOLDERS’
      EQUITYCommon
      stock, $.001 par value, 150,000,000 shares authorized, 80,000,000 shares
      issued and outstanding as of December 31, 2009 and June 30, 2009,
      respectively
                    
                    
                    80,000
                    
                    
                    
                    80,000Additional
      paid-in capital
                    
                    
                    141,394,003
                    
                    
                    
                    141,152,164Accumulated
      other comprehensive income
                    
                    
                    27,717,001
                    
                    
                    
                    27,516,099Retained
      earnings, (restricted portion was $43,234 at December 31, 2009 and June
      30, 2009)
                    
                    
                    15,771,584
                    
                    
                    
                    11,065,130Total
      Shareholders’ Equity
                    
                    
                    184,962,588
                    
                    
                    
                    179,813,393TOTAL
      LIABILITIES AND SHAREHOLDERS’ EQUITY
                    
                    $
                    689,868,649
                    
                    
                    $
                    697,870,568





See
accompanying notes to the condensed consolidated financial
statements.


- 6
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


CONDENSED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


(UNAUDITED)





Three Months Ended December 31,
                    
                    
                    Six Months Ended December 31,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008REVENUES
                    
                    $
                    11,606,494
                    
                    
                    $
                    12,101,788
                    
                    
                    $
                    25,185,736
                    
                    
                    $
                    27,502,808OPERATING
      COSTS
                    
                    
                    1,309,615
                    
                    
                    
                    2,466,673
                    
                    
                    
                    2,087,778
                    
                    
                    
                    3,671,134DEPRECIATION
      AND AMORTIZATION
                    
                    
                    2,101,442
                    
                    
                    
                    1,792,717
                    
                    
                    
                    4,489,220
                    
                    
                    
                    3,892,036GROSS
      PROFIT
                    
                    
                    8,195,437
                    
                    
                    
                    7,842,398
                    
                    
                    
                    18,608,738
                    
                    
                    
                    19,939,638General
      and administrative expenses
                    
                    
                    1,111,695
                    
                    
                    
                    1,501,042
                    
                    
                    
                    2,480,214
                    
                    
                    
                    2,842,944INCOME
      FROM OPERATIONS
                    
                    
                    7,083,742
                    
                    
                    
                    6,341,356
                    
                    
                    
                    16,128,524
                    
                    
                    
                    17,096,694OTHER
      INCOME (EXPENSES)Interest
      expense
                    
                    
                    (7,075,935
                    )
                    
                    
                    (8,918,410
                    )
                    
                    
                    (14,542,137
                    )
                    
                    
                    (18,181,363
                    )Interest
      income
                    
                    
                    2,143,809
                    
                    
                    
                    2,768,605
                    
                    
                    
                    4,269,607
                    
                    
                    
                    5,538,004Other
      income, net
                    
                    
                    216,917
                    
                    
                    
                    185,226
                    
                    
                    
                    499,891
                    
                    
                    
                    440,838INCOME
      FROM OPERATIONS BEFORE INCOME TAXES
                    
                    
                    2,368,533
                    
                    
                    
                    376,777
                    
                    
                    
                    6,355,884
                    
                    
                    
                    4,894,173INCOME
      TAX EXPENSE
                    
                    
                    (597,088
                    )
                    
                    
                    (94,194
                    )
                    
                    
                    (1,649,431
                    )
                    
                    
                    (1,301,072
                    )NET
      INCOME
                    
                    
                    1,771,445
                    
                    
                    
                    282,583
                    
                    
                    
                    4,706,454
                    
                    
                    
                    3,593,101OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation gain
                    
                    
                    9,908
                    
                    
                    
                    29,394
                    
                    
                    
                    200,902
                    
                    
                    
                    458,246OTHER
      COMPREHENSIVE INCOME
                    
                    
                    9,908
                    
                    
                    
                    29,394
                    
                    
                    
                    200,902
                    
                    
                    
                    458,246COMPREHENSIVE
      INCOME
                    
                    $
                    1,781,353
                    
                    
                    $
                    311,977
                    
                    
                    $
                    4,907,356
                    
                    
                    $
                    4,051,347WEIGHTED
      AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED
                    
                    
                    80,000,000
                    
                    
                    
                    80,000,000
                    
                    
                    
                    80,000,000
                    
                    
                    
                    80,000,000NET
      INCOME PER COMMON SHARE, BASIC AND DILUTED
                    
                    $
                    0.02
                    
                    
                    $
                    0.00
                    
                    
                    $
                    0.06
                    
                    
                    $
                    0.04





See
accompanying notes to the condensed consolidated financial
statements.


- 7
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)




Six Months Ended December 31,2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                
                $
                4,706,454
                
                
                $
                3,593,101Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                
                
                4,800,637
                
                
                
                4,189,806Deferred
      taxes
                
                
                1,324,706
                
                
                
                1,054,598Deferred
      revenue
                
                
                (302,918
                )
                
                
                (301,840
                )Imputed
      interest
                
                
                263,480
                
                
                
                265,453Interest
      income
                
                
                (4,224,141
                )
                
                
                (5,502,570
                )Debt
      forgiveness by shareholder for expenses paid
                
                
                241,839
                
                
                
                -Changes
      in operating assets and liabilities:(Increase)
      Decrease In:Accounts
      receivable
                
                
                572,589
                
                
                
                1,434,967Other
      receivables
                
                
                5,724
                
                
                
                275,787Other
      current assets
                
                
                855,385
                
                
                
                520,797Increase
      (Decrease) In:Other
      payables and accrued liabilities
                
                
                (376,786
                )
                
                
                (2,692,452
                )Other
      current liabilities
                
                
                197
                
                
                
                (166,510
                )Net
      cash provided by operating activities
                
                
                7,867,166
                
                
                
                2,671,137CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of construction in progress
                
                
                -
                
                
                
                (848,587
                )Purchases
      of plant and equipment
                
                
                (181,136
                )
                
                
                (311,068
                )(Decrease)
      increase in payable to contractors
                
                
                (1,261,970
                )
                
                
                2,755,596Decrease
      in notes receivable from related parties for interest
                
                
                -
                
                
                
                10,967,199Decrease
      in notes receivable from related parties for principal
                
                
                2,193,441
                
                
                
                -Increase
      in advance to a related party
                
                
                -
                
                
                
                (10,967,399
                )Net
      cash provided by investing activities
                
                
                750,335
                
                
                
                1,595,741CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from long-term bank loans
                
                
                -
                
                
                
                17,913,556Repayments
      of long-term bank loans
                
                
                (10,244,832
                )
                
                
                (25,691,501
                )Proceeds
      from notes payable
                
                
                438,688
                
                
                
                -Repayments
      of notes payable
                
                
                (3,524,750
                )
                
                
                -Proceeds
      from a related party
                
                
                731,294
                
                
                
                -Restricted
      cash
                
                
                3,550,761
                
                
                
                -Net
      cash used in financing activities
                
                
                (9,048,839
                )
                
                
                (7,777,945
                )NET
      DECREASE IN CASH AND CASH EQUIVALENTS
                
                
                (431,338
                )
                
                
                (3,511,067
                )Effect
      of exchange rate changes on cash
                
                
                (23,618
                )
                
                
                (65,748
                )Cash
      and cash equivalents at beginning of period
                
                
                1,614,260
                
                
                
                5,769,344CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                
                $
                1,159,304
                
                
                $
                2,192,529SUPPLEMENTAL
      CASH FLOW INFORMATION:Interest
      paid
                
                $
                14,246,180
                
                
                $
                17,913,556




SUPPLEMENTAL
NON-CASH DISCLOSURES:





1.
            During the six months ended
      December 31, 2009 and 2008, $0 and $848,587 were transferred from
      construction in progress to toll road infrastructures,
      respectively.


See
accompanying notes to the condensed consolidated financial
statements.


- 8
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




1.     ORGANIZATION
AND PRINCIPAL ACTIVITIES




China
Infrastructure Investment Corporation (Formerly Learning Quest Technologies,
Inc.) and subsidiaries (“CIIC” or the “Company”) was incorporated under the laws
of the State of Nevada on January 11, 2001.




With the
approval from Henan Transportation Bureau and the State Development and
Revolution Committee of China [NO. 2003-1784], the Company is permitted to
construct and operate the toll road from Pingdingshan to Linru, Henan, China,
for 30 years from 2003. Pursuant to the permission from Henan Transportation
Bureau and Henan Development and Revolution Committee [NO. 2005-1885], the
Company is entitled to operate 6 toll gates. All the rates applicable to the
automobiles are defined by the Henan Transportation Bureau and Henan Development
and Revolution Committee.




The
principal activities of the Company are investment, construction, operation, and
management of the Pingdingshan – Linru section (“Pinglin Expressway”), and the
rent of petrol stations and service districts along the toll
roads.  Currently, all the operations of the Company are in the
People’s Republic of China (“PRC”).




2.     SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES




(a)           Principles
of Consolidation




On July
1, 2009, the Company adopted Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 105-10 (formerly Statement of
Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards
Codification and Hierarchy of Generally Accepted Accounting Principles, a
replacement of FASB statement No. 162). ASC 105-10 establishes the FASB
ASC as the source of authoritative accounting principles recognized by the FASB
to be applied in preparation of financial statements in conformity with
generally accepted accounting principles in the United States of America. The
adoption of this standards had no impact on the Company’s condensed consolidated
financial statements.




The
condensed consolidated financial statements include the accounts of China
Infrastructure Investment Corporation and the following
subsidiaries:




(i)
            Color Man Holdings Limited
      (“CMH”) (An inactive holding company, 100% subsidiary of
      CIIC).





(ii)
            Wise On China Limited (“WOCL”) (
      An inactive holding company,100% subsidiary of
  CMH)





(iii)
            Pingdingshan Pinglin Expressway
      Co., Ltd. (“Ping”) ( 100% subsidiary of
  WOCL)





Inter-company
accounts and transactions have been eliminated in
consolidation.


- 9
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CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




2.    
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





(b)         Concentrations




The
location of the toll road and the operations of the Company are solely in the
Henan Province, PRC.




The
Company has a concentration of related party receivables from Tai Ao Expressway
Co., Ltd. and Xinyang Expressway Co., Ltd. as of December 31, 2009 and June 30,
2009. Also see Note 4.




(c)          Economic
and Political Risks




The
Company’s operations are conducted in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC economy.




(d)         Use
of Estimates




The
preparation of the financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.




A
significant estimate of the Company is the estimate of future total traffic
volume. This estimate is used for the calculation of depreciation relating to
the toll road. Also see Note 2(g).




Management
makes these estimates using the best information available at the time the
estimates are made.  Actual results could differ materially from those
estimates.




(e)         Fair
Value of Financial Instruments




ASC
820-10 (formerly SFAS No. 157, fair value measurement)
establishes a three-tier fair value hierarchy, which prioritizes the inputs used
in measuring fair value. The hierarchy prioritizes the inputs into three levels
based on the extent to which inputs used in measuring fair value are observable
in the market.


- 10
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




2.    
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)




(e)         Fair
Value of Financial Instruments (continued)




These
tiers include:




•
Level 1—defined as observable inputs such as quoted prices in active
markets;


•
Level 2—defined as inputs other than quoted prices in active markets that
are either directly or indirectly observable; and


•
Level 3—defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own
assumptions.




The
assets measured at fair value on a recurring basis subject to the disclosure
requirements of ASC 820-10 as of December 31, 2009 are as
follows:


Fair Value Measurements at Reporting Date UsingCarrying value
                                            as of
                                            December 31,
                                            2009
                                          
                                          
                                          Quoted Prices in
                                            Active Markets
                                            for Identical
                                            Assets
                                            (Level 1)
                                          
                                          
                                          Significant Other
                                            Observable
                                            Inputs
                                            (Level 2)
                                          
                                          
                                          Significant
                                            Unobservable Inputs
                                            (Level 3)Cash
      and cashequivalents
                                          
                                          $
                                          1,159,304
                                          
                                          
                                          
                                          1,159,304
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -





Cash and
cash equivalents consist primarily of highly rated money market funds at a
variety of well-known institutions with original maturities of three months or
less. The original cost of these assets approximates fair value due to their
short term maturity. The Company does not maintain any bank accounts in the
United States of America.


- 11
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




2.    
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)




(f)         Plant
and Equipment




Plant and
equipment is carried at cost less accumulated depreciation and impairment
losses. Depreciation is provided over the estimated useful lives, using the
straight-line method.  Estimated useful lives of the plant and
equipment are as follows:




Motor
      vehicles
              
              8
      yearsMachinery
              
              8
      yearsOffice
      equipment
              
              6
      yearsToll
      stations and ancillary facilities
              
              27
      yearsCommunication
      and monitoring equipment
              
              10
      years




The cost
and related accumulated depreciation of assets sold or otherwise retired are
eliminated from the accounts and any gain or loss is included in the statement
of income. The cost of maintenance and repairs is charged to expense as
incurred, whereas significant renewals and betterments are
capitalized.




(g)         Toll
Road Infrastructures




Toll road
infrastructures are carried at cost less accumulated depreciation and
amortization. Depreciation and amortization of the toll road infrastructures are
calculated to write off their cost, commencing from the date of commencement of
commercial operation of the toll roads, based on the ratio of actual traffic
volume compared to the total expected traffic volume of the toll roads as
assessed by management each year. The total expected traffic volume is derived
from a traffic projection report prepared by an independent PRC organization.
Also see Note 2(d).




(h)         Construction
in Progress




Construction
in progress represents costs incurred in the construction of expressways and
bridges. The costs include development expenditures and other direct costs,
including interest cost on the related borrowed funds during the construction
period attributable to the development of plant and equipment and toll road
infrastructures. Construction in progress is transferred to the appropriate
category of plant and equipment and toll road infrastructures when completed and
ready for intended use. Depreciation commences when the assets are ready for
their intended use.


- 12
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




2.   
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)




(i)         Capitalized
Interest




The
Company capitalizes interest as a component of communication and monitoring
equipment and toll toad construction costs. No interest expense was capitalized
by the Company for the six months ended December 31, 2009 and 2008, since
construction was completed.




(j)        Land
Use Rights




According
to the laws of China, land in the PRC is owned by the Government and cannot be
sold to an individual or company.  However, the government grants the user
a “land use right” to use the land.   The land use rights granted
to the Company are being amortized when the toll road is ready to operate, using
the straight-line method over the approved toll road operating period of 27
years.




(k)        Impairment
of Long-Term Assets




Long-term
assets of the Company are reviewed annually as to whether their carrying value
has become impaired, pursuant to the guidelines established in ASC 360-10
(formerly SFAS No. 144). The Company considers assets to be impaired if the
carrying value exceeds the future projected cash flows from the related
operations.  The Company also re-evaluates the periods of amortization to
determine whether subsequent events and circumstances warrant revised estimates
of useful lives. There were no impairments for the six months ended December 31,
2009 and 2008.




(l)         Revenue
Recognition




Revenue
represents toll revenue net of business tax, and is recognized when all of the
following criteria are met:




-      The
amount of revenue can be measured reliably,




-      It
is probable that the economic benefits associated with the transaction will flow
to the enterprise,




-      The
costs incurred or to be incurred in respect of the transaction can be measured
reliably, and




-      Collectibility
is reasonably assured.




(m)         Rental
Income




The
Company rents gas stations, advertising booths and toll road service districts
to lessees. Rental income is measured at the fair value of the consideration
receivable and represents amounts receivable for services provided in the normal
course of business, net of discounts and sales tax. Also see Note
12.


- 13
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




2.    
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)




(n)         Retirement
Benefits




Retirement
benefits in the form of contributions under defined contribution retirement
plans to the relevant authorities are charged to operations as
incurred.  Retirement benefits amounting to $124,685 and $66,340 were
charged to operations for the six months ended December 31, 2009 and
2008.




(o)         Income
Taxes




Deferred
tax assets and liabilities are recognized for the future tax consequence
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to be
applied to taxable income in the years in which those temporary differences are
expected to reverse. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statement of income in the period that
includes the enactment date. A valuation allowance is provided for deferred tax
assets if it is more likely than not these items will either expire before the
Company is able to realize their benefits, or that future deductibility is
uncertain.  Also see Note 13.




(p)         Earnings
Per Share




Basic
earnings per share is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
There were no potentially dilutive securities for the six months ended December
31, 2009 and 2008.


- 14
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




2.    
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)




(q)         Foreign
Currency Translation




The
accompanying financial statements are presented in United States
dollars.  The functional currency of the Company is the Renminbi
(RMB).  The financial statements are translated into United States
dollars from RMB at year-end exchange rates as to assets and liabilities and
average exchange rates as to revenues and expenses. Capital accounts are
translated at their historical exchange rates when the capital transactions
occurred.




December 31,
                      2009
                    
                    
                    June 30,
                      2009
                    
                    
                    December 31,
                      2008Periods
      ended RMB: US$ exchange rate
                    
                    
                    6.8372
                    
                    
                    
                    6.8448
                    
                    
                    
                    -Average
      RMB:  US$ exchange rate for the three months
    ended
                    
                    
                    6.8360
                    
                    
                    
                    -
                    
                    
                    
                    6.8547Average
      RMB:  US$ exchange rate for the six months ended
                    
                    
                    6.8386
                    
                    
                    
                    -
                    
                    
                    
                    6.8630





(r)         Comprehensive
Income




Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners.  Among other
disclosures, all items that are required to be recognized under current
accounting standards as components of comprehensive income should be reported in
a financial statement that is presented with the same prominence as other
financial statements. The Company’s current component of comprehensive income is
the foreign currency translation adjustment.




(s)         Recent
Accounting Pronouncements




In
December 2008, the Financial Accounting Standards Board (” FASB”) approved ASC
715-20 (formerly FSP No. FAS 132(R)-1, Employers’ Disclosures about
Postretirement Benefit Plan Assets, which provides guidance on an
employer’s disclosures about plan assets of a defined benefit pension or other
postretirement plan. These disclosures include how investment allocation
decisions are made, information about major categories of plan assets,
significant concentrations of risks within plan assets, and fair value
measurements of plan assets. Our effective date is June 30, 2009. The
adoption of ASC 715-20did not have an impact on the Company’s financial
statements.





In
April 1, 2009, the FASB approved ASC 805-20 (formerly FSP FAS 141(R)-1,
Accounting for Assets Acquired
and Liabilities Assumed in a Business Combination That Arise from
Contingencies, which amends Statement 141(R) and eliminates the
distinction between contractual and non-contractual contingencies. Under ASC
805-20, an acquirer is required to recognize at fair value an asset acquired or
liability assumed in a business combination that arises from a contingency if
the acquisition-date fair value of that asset or liability can be determined
during the measurement period. If the acquisition-date fair value cannot be
determined, the acquirer applies the recognition criteria in SFAS No. 5,
Accounting for Contingencies and Interpretation 14, “Reasonable Estimation of
the Amount of a Loss – and interpretation of FASB Statement No. 5,” to
determine whether the contingency should be recognized as of the acquisition
date or after it. The adoption of ASC 805-10 did not have an impact on the
Company’s financial statements.


- 15
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)




(s)
            Recent
      Accounting Pronouncements
(continued)





ASC
320-10 (formerly FSP FAS 115-2 and FAS 124-2, amend the other-than-temporary
impairment guidance in U.S. GAAP for debt securities to make the guidance more
operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. It did not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. We are
required to adopt this FSP for our interim and annual reporting periods ending
after June 15, 2009. This FSP does not require disclosures for periods
presented for comparative purposes at initial adoption. The adoption of ASC
320-10 did not have an impact on the Company’s financial
statements.





On
April 9, 2009, the FASB also approved ASC 825-10 (formerly FSP FAS 107-1
and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments) to require
disclosures about fair value of financial instruments in interim period
financial statements of publicly traded companies and in summarized financial
information required by ASC 825-10, Interim Financial Reporting. We are required
to adopt this ASC for our interim and annual reporting periods ending after
June 15, 2009. This ASC does not require disclosures for periods presented
for comparative purposes at initial adoption.  The adoption of ASC
825-10 did not have an impact on the Company’s financial
statements.





In
February 2008, the FASB issued ASC 820-10 (formerly FSP SFAS 157-2, Effective
Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157,
Fair Value Measurement (“SFAS No. 157”), for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). ASC
820-10 establishes a framework for measuring fair value and expands disclosures
about fair value measurements. ASC 820-10 partially defers the effective date of
SFAS No. 157 to fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years for items within the scope of this FSP. The
adoption of SFAS No. 157 for all non-financial assets and non-financial
liabilities is effective for us beginning July 1, 2009. It’s not expected that
this adoption will have a material impact on the Company’s financial
statements.





In May
2009, the FASB issued ASC 855-10 (formerly SFAS No. 165, Subsequent Events.) ASC
855-10 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. ASC 855-10 is effective for interim and
annual periods ending after June 15, 2009. It’s not expected that this adoption
will have a material impact on the Company’s financial statements.





In June
2009, the FASB issued ASC 810-10 (formerly SFAS No. 167, Amendments to FASB Interpretation
No. 46(R)). ASC 810-10 requires an enterprise to perform an analysis and
ongoing reassessments to determine whether the enterprises variable interest or
interests give it a controlling financial interest in a variable interest entity
and amends certain guidance for determining whether an entity is a variable
interest entity. It also requires enhanced disclosures that will provide users
of financial statements with more transparent information about an enterprises
involvement in a variable interest entity. ASC 810-10 is effective as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009 and for all interim reporting periods after that, and is
not anticipated to have any material impact on the Company’s consolidated
financial statements. The Company is currently evaluating the impact of the
adoption of ASC 810-10.


- 16
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




3.
            NOTES
      RECEIVABLE




A)
Current notes receivable from unrelated companies consist of the
following:




December 31,
                      
                      
                      June 30,2009
                      
                      
                      2009(Unaudited)Notes
      receivable from unrelated companies
                      
                      $
                      887,512
                      
                      
                      $
                      884,677Less:
      Provision for doubtful accounts
                      
                      
                      780,001
                      
                      
                      
                      780,001$
                      107,511
                      
                      
                      $
                      104,676





On June
20, 2007, the Company loaned to Pingdingshan Traffic Administration $655,403.
The note is unsecured and was due December 20, 2007, bearing a 5.85% interest
rate per annum. On December 20, 2007, the Company entered into a renewal
agreement with Pingdingshan Traffic Administration, whereby the note was
extended to December 20, 2008 with a 7.47% interest rate per annum. Considering
the aging of the note receivable has exceeded two years and the Company has
never received the interest or principal from the note, the Company’s management
believes there is uncertainty as to collection of the note. A full provision
amounting to $780,001 was provided by the Company as of December 31,
2009.




On
January 22, 2009, the Company loaned to Pingdingshan Expressway Construction
Co., Ltd. $104,676. The note is unsecured and is due January 21, 2010, and bears
a 5.31% interest rate per annum.




Interest
income for the six months ended December 31, 2009 and 2008 was $2,718 and
$27,665, respectively.


- 17
-




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




4.
            NOTES
      RECEIVABLE FROM RELATED PARTIES




December 31,
                                  
                                  
                                  June 30,2009
                                  
                                  
                                  2009(Unaudited)B) Current notes receivable from related parties:Tai Ao Expressway Co., Ltd.Principal
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  70,130,050Interest
      receivable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  4,664,700-
                                  
                                  
                                  
                                  74,794,750Xinyang Expressway Co.,
Ltd.Principal
                                  
                                  
                                  69,747,776
                                  
                                  
                                  
                                  69,670,334Interest
      receivable
                                  
                                  
                                  6,726,915
                                  
                                  
                                  
                                  4,650,23776,474,691
                                  
                                  
                                  
                                  74,320,571Henan Ruijia Industry Co.,
    Ltd.Principal
                                  
                                  
                                  -
                                  
                                  
                                  
                                  2,191,445Interest
      receivable
                                  
                                  
                                  68,278
                                  
                                  
                                  
                                  25,53568,278
                                  
                                  
                                  
                                  2,216,980Henan Hairun Trade Co.,
Ltd.Interest
      receivable
                                  
                                  
                                  22,869
                                  
                                  
                                  
                                  -Total
      notes receivable from related parties
                                  
                                  $
                                  76,565,838
                                  
                                  
                                  $
                                  151,332,301C)
      Long-term note receivable from a related party:Tai Ao Expressway Co., Ltd.Principal
                                  
                                  $
                                  70,208,004
                                  
                                  
                                  $
                                  -Interest
      receivable
                                  
                                  
                                  6,755,064
                                  
                                  
                                  
                                  -76,963,068
                                  
                                  
                                  
                                  -$
                                  153,528,906
                                  
                                  
                                  $
                                  151,332,301





On June
26, 2008, Tai Ao Expressway Co., Ltd. (“Tai Ao”) entered into a renewal
agreement with the Company. Pursuant to the agreement, the note receivable from
Tai Ao was extended to June 29, 2010 with a 7.83% interest rate per annum.
Interest shall be paid annually and the principal shall be repaid at maturity.
The note receivable from Tai Ao is classified as a non-current asset
because the Company plans to settle this amount by acquiring Tai
Ao.




On June
26, 2008, Xinyang Expressway Co., Ltd. (“Xinyang”) entered into a renewal
agreement with the Company. Pursuant to the agreement, the note receivable to
Xinyang was extended to June 29, 2010 with a 7.83% interest rate per annum.
Interest is paid annually and the principal is repaid at
maturity.


- 18
-




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




4.
            NOTES
      RECEIVABLE FROM RELATED PARTIES
(CONTINUED)




On April
12, 2009, Henan Ruijia Industry Co., Ltd. (“Ruijia”) entered into an agreement
with the Company. Pursuant to the agreement, the Company provided a note
receivable for $2,191,445 to Ruijia. Such note receivable is due April 11, 2010,
and bears a 5.31% interest rate per annum. The principal and the interest are
repaid at maturity. On November 12, 2009, the Company received the principal of
such note receivable.




On July
28, 2009, Henan Hairun Trade Co., Ltd. (“Hairun”) entered into an agreement with
the Company. Pursuant to the agreement, the Company provided a note receivable
for $1,462,501 to Hairun. Such note receivable is due July 27, 2010, and bears a
5.31% interest rate per annum. The principal and the interest are repaid at
maturity. On November 12, 2009, the Company received the principal of such note
receivable.




The notes
receivable were provided to these companies for their construction and operation
working capital. Tai Ao, Xinyang and Ruijia are related to the Company through a
common shareholder of the Company. Hairun is a trading company substantially
controlled by Lin Jie, the vice president of operations of the Company. The
notes receivable are interest bearing and unsecured. Interest income was
$4,221,423 and $5,474,905 for the six months ended December 31, 2009 and 2008,
respectively.




On
September 27, 2009, the board of directors of the Company approved a share
purchase resolution. Pursuant to a letter of intent dated September 27, 2009,
the Company shall purchase at least 51% of Tai Ao. The consideration for such
purchase will be settled first with a credit to Xinyang, and then the remainder
in cash. If the Company successfully negotiates with Tai Ao’s shareholders, the
consideration will be determined in accordance with the audited net assets of
Tai Ao at the purchase date. If the Company consummates such transaction, Tai Ao
would become a subsidiary of the Company and as a result, the note issued and
the advance made by the Company to Tai Ao would be eliminated in the
consolidated financial statements of the Company. This transaction is expected
to be accounted for as an acquisition of a company under common control. Also
see Note 5.





5.
            ADVANCE
      TO A RELATED PARTY





December 31,
                      
                      
                      June 30,2009
                      
                      
                      2009Tai
      Ao Expressway Co., Ltd.
                      
                      $
                      32,716,481
                      
                      
                      $
                      32,680,154




The
Company made advances to suppliers on behalf of Tai Ao for the purchase of
construction materials commencing in 2006 in order to assist Tai Ao with its
working capital needs.




The
balances of $32,716,481 and $32,680,154 at December 31, 2009 and June 30, 2009,
respectively, are unsecured, interest free and due on demand.




The
advance to Tai Ao is classified as a non-current asset because the
Company plans to settle this amount by acquiring Tai Ao. Also see Note
4.




- 19
-




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




6.
            TOLL
      ROAD INFRASTRUCTURES, NET




Toll road
infrastructures consist of the following:




December 31,
                        
                        
                        June 30,2009
                        
                        
                        2009(Unaudited)At cost:
                        
                        $
                        457,019,334
                        
                        
                        $
                        456,511,890Less:  Accumulated
      depreciation
                        
                        
                        22,743,610
                        
                        
                        
                        19,332,910Toll
      road infrastructures, net
                        
                        $
                        434,275,724
                        
                        
                        $
                        437,178,980





Depreciation
expense for the six months ended December 31, 2009 and 2008 was $3,388,530 and
$2,795,850, respectively. Also see Notes 2(d) and 2(g).




The
Company financed its construction of the toll road infrastructures substantially
through long-term loans from banks. These bank loans were secured by the toll
road operating right owned by the Company. Also see Note 11.




7.
            PLANT
      AND EQUIPMENT, NET




Plant and
equipment consist of the following:




December 31,
                        
                        
                        June 30,2009
                        
                        
                        2009(Unaudited)At cost:Toll
      station and ancillary facilities
                        
                        $
                        10,513,155
                        
                        
                        $
                        10,422,227Communication
      and monitoring equipment
                        
                        
                        5,799,018
                        
                        
                        
                        5,757,340Motor
      vehicles
                        
                        
                        1,496,483
                        
                        
                        
                        1,466,485Machinery
                        
                        
                        298,017
                        
                        
                        
                        297,686Office
      equipment
                        
                        
                        611,216
                        
                        
                        
                        572,39518,717,889
                        
                        
                        
                        18,516,133Less:  Accumulated
      depreciationToll
      station and ancillary facilities
                        
                        
                        1,306,808
                        
                        
                        
                        1,136,852Communication
      and monitoring equipment
                        
                        
                        669,391
                        
                        
                        
                        575,571Motor
      vehicles
                        
                        
                        895,336
                        
                        
                        
                        804,005Machinery
                        
                        
                        128,566
                        
                        
                        
                        110,376Office
      equipment
                        
                        
                        270,441
                        
                        
                        
                        227,0273,270,542
                        
                        
                        
                        2,853,831Plant
      and equipment, net
                        
                        $
                        15,447,347
                        
                        
                        $
                        15,662,302





Depreciation
expense for the six months ended December 31, 2009 and 2008 was $413,454 and
$398,857, respectively.


- 20
-




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




8.
            LAND
      USE RIGHTS




Land use
rights consist of the following:




December 31,
                        
                        
                        June 30,2009
                        
                        
                        2009(Unaudited)Cost
                        
                        $
                        53,777,721
                        
                        
                        $
                        53,718,010Less:
      Accumulated amortization
                        
                        
                        7,459,584
                        
                        
                        
                        6,453,558Land
      use rights, net
                        
                        $
                        46,318,137
                        
                        
                        $
                        47,264,452





Amortization
expense for the six months ended December 31, 2009 and 2008 was $998,653 and
$995,099, respectively.




Amortization
expense for the next five years and thereafter is as follows:




December
      31, 2010
                    
                    $
                    1,997,706December
      31, 2011
                    
                    
                    1,997,706December
      31, 2012
                    
                    
                    1,997,706December
      31, 2013
                    
                    
                    1,997,706December
      31, 2014
                    
                    
                    1,997,706Thereafter
                    
                    
                    36,329,607Total
                    
                    $
                    46,318,137




- 21
-




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




9.
            LONG-TERM
      INVESTMENT




December 31, 2009
                            
                            
                            June 30, 2009(Unaudited)Ownership
                              Interest
                            
                            
                            Net Book
                              Value
                            
                            
                            Ownership
                              Interest
                            
                            
                            Net Book
                              ValueAt cost:Pingdingshan
      City Credit Corporation
                            
                            
                            2.39
                            %
                            
                            $
                            1,579,594
                            
                            
                            
                            2.39
                            %
                            
                            $
                            1,577,840





The
Company invested in Pingdingshan City Credit Corporation (“PCCC”), a commercial
banking corporation established in 2005. The Company deposited Rmb20 million
(approximately $2.5 million) in December 2005 and then purchased 3% of the total
equity interest in PCCC in exchange for Rmb10 million (approximately $1.3
million) in 2007. As a consequence, Rmb10 million (approximately $1.3 million)
was refunded to the Company in 2007. As of September 30, 2009 and June 30, 2009,
the Company does not have more than a 20% interest in the investment and does
not exercise significant influence over the investee. The Company accounts for
the investment under the cost method.  Investment income is recognized
by the Company when the investee declares a dividend and the Company believes it
is collectible.  No dividend income was recognized for the six months
ended December 31, 2009 and 2008.




On March
29, 2006, Ping entered into a share purchase agreement with PCCC, a local
financial institution.  Pursuant to the agreement, the Company
obtained 3% of the total equity interest of PCCC with the consideration
amounting to Rmb10 million (approximately US$1.3 million). After PCCC increased
its share capital, the Company’s share of the total equity interest of the total
equity interest in PCCC was diluted to 2.39%. Management of the Company adopted
the cost method for the accounting of such investment.




10.
            SHORT-TERM
      BANK LOAN




Short-term
bank loan consist of the following:





December 31,
                      
                      
                      June 30,2009
                      
                      
                      2009Loan
      from China Minsheng Banking Corp., Ltd., due March 23, 2010, monthlyinterest
      only payments at 5.31% per annum, co-secured by Tai Ao Expressway Co.,Ltd.,
      the chief executive officer Mr. Li Xipeng and the expressway toll right
      ownedby
      the Company.
                      
                      $
                      7,312,935
                      
                      
                      $
                      7,304,815





Interest
expense for this loan for the six months ended December 31, 2009 and 2008 was
$194,120 and $0, respectively.





On
January 12, 2010, the Company received a loan from China Citic Bank, due January
11, 2011, in the amount of $7,314,112. Such loan requires monthly interest only
payments at 5.31% per annum.  Also on January 12, 2010, Tai Ao
Expressway Co., Ltd. entered into a guarantee agreement with China Citic
Bank.  Pursuant to the agreement, Tai Ao Expressway Co., Ltd. provided
corporate guarantees for the bank loan to the Company.  The guarantee
period is from January 12, 2010 to January 11, 2013.


- 22
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




11.
            LONG-TERM
      BANK LOANS




Long-term
bank loans consist of the following:





December 31,
                                      2009
                                    
                                    
                                    June 30,
                                      2009(Unaudited)Loan
      from National Development Bank of China Henan Branch, due May 20, 2017,
      bearing a 6.12% interest rate per annum, secured by the toll road
      operating right owned by the Company.  Principal is repaid every
      6 months in 20 unequal installments from November 2007, and interest is
      paid quarterly.
                                    
                                    $
                                    90,680,395
                                    
                                    
                                    $
                                    93,501,636Loan
      from Agricultural Bank of China, due November 20, 2011, bearing a 5.94%
      interest rate per annum, secured by the toll road operating right owned by
      the Company.  Principal is to be repaid every year in 2 equal
      installments from February 2010, and interest is paid
    monthly.
                                    
                                    
                                    29,251,741
                                    
                                    
                                    
                                    29,219,261Loan
      from Agricultural Bank of China, due March 20, 2012, bearing a 5.94%
      interest rate per annum, secured by the toll road operating right owned by
      the Company.  Principal is to be repaid on maturity, and
      interest is paid monthly.
                                    
                                    
                                    29,251,741
                                    
                                    
                                    
                                    29,219,261Loan
      from Industrial and Commercial Bank of China Pingdingshan Branch, due July
      21, 2020, bearing a 7.05% interest rate per annum, secured by the toll
      road operating right owned by the Company.  Principal is repaid
      every year in 13 unequal installments from November 2007, and interest is
      paid monthly.
                                    
                                    
                                    163,183,759
                                    
                                    
                                    
                                    170,316,152Loan
      from National Development Bank of China Henan Branch, due November 28,
      2022, bearing a 6.12% interest rate per annum, secured by the toll road
      operating right owned by the Company.  Principal is to be repaid
      every 6 months in 12 unequal installments from May 2017, and interest is
      paid quarterly.
                                    
                                    
                                    146,258,702
                                    
                                    
                                    
                                    146,096,308Total
      long-term bank loans
                                    
                                    
                                    458,626,338
                                    
                                    
                                    
                                    468,352,618Less:
      current portion
                                    
                                    
                                    30,240,449
                                    
                                    
                                    
                                    27,767,064Long-term
      portion
                                    
                                    $
                                    428,385,889
                                    
                                    
                                    $
                                    440,585,554




- 23
-





CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




11.
            LONG-TERM
      BANK LOANS (CONTINUED)




For the
six months ended December 31, 2009 and 2008, interest expense was $14,081,178
and $17,913,556, respectively.  No interest was capitalized as a
component of construction costs during the reporting periods.




According
to the loan agreements with National Development Bank of China Henan Branch, the
bank has the right to demand repayment of the loans in full if the Company
provides any guarantee to other third party debt that exceeds 70% of the
Company’s total assets. The Company did not provide any guarantees to the third
parties as of December 31, 2009 and June 30, 2009.  The repayment
schedule for the long-term bank loans is as follows:




December
      31, 2010
                    
                    $
                    30,240,449December
      31, 2011
                    
                    
                    40,004,680December
      31, 2012
                    
                    
                    54,630,551December
      31, 2013
                    
                    
                    27,315,275December
      31, 2014
                    
                    
                    27,315,275Thereafter
                    
                    
                    279,120,108Total
                    
                    $
                    458,626,338




- 24
-




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




12.
            DEFERRED
      REVENUE




December 31,
                          
                          
                          June 30, 20092009(Unaudited)Deferred
      revenue
                          
                          $
                          15,754,876
                          
                          
                          $
                          16,040,024Imputed
      interest discount
                          
                          
                          (9,206,000
                          )
                          
                          
                          (9,459,018
                          )Total
                          
                          
                          6,548,876
                          
                          
                          
                          6,581,006Less:
      current portion
                          
                          
                          82,047
                          
                          
                          
                          78,803Long-term
      portion
                          
                          $
                          6,466,829
                          
                          
                          $
                          6,502,203





The
Company rents four gas stations to Petro China Company Limited Pingdingshan
Branch (“PCCL”) from January 1, 2006 for 30 years. The Company received the
entire 30 year rental fee of $5,372,708 from PCCL in 2006. The amount received
was net of business tax.




The
Company imputed interest on the amount using an 8% discount rate, under the
effective interest rate method. The rental income recognized during the six
months ended December 31, 2009 and 2008 was $302,918 and $301,840 respectively.
The imputed interest for the six months ended December 31, 2009 and 2008 was
$263,480 and $265,453, respectively.




13.
            INCOME
      TAX




On March
16, 2007, the National People’s Congress of China approved the Corporate Income
Tax Law of the People’s Republic of China (the “new CIT Law”), which was
effective on January 1, 2008.Under the new CIT Law, the corporate income tax
rate applicable to the Company starting from January 1, 2008 will be 25%. The
new CIT Law has an impact on the deferred tax assets and liabilities of the
Company. The Company adjusted deferred tax balances as of December 31, 2009
based on their best estimates and will continue to assess the impact of such new
law in the future. The effects arising from the enforcement of the new CIT law
have been reflected in the accounts.




The
Company uses ASC 740-10 (formerly FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes). The Interpretation addresses the determination of whether tax
benefits claimed or expected to be claimed on a tax return should be recorded in
the financial statements. Under FIN 48, we may recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the
technical merits of the position. The tax benefits recognized in the financial
statements from such a position should be measured based on the largest benefit
that has a greater than fifty percent likelihood of being realized upon ultimate
settlement. ASC 740-10 also provides guidance on recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures. As of December 31, 2009, the Company did not
have a liability for unrecognized tax benefits.


- 25
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




13.
            INCOME
      TAX (CONTINUED)




Income
tax expense is summarized as follows:




Six Months Ended
                      December 31,2009
                    
                    
                    2008(Unaudited)
                    
                    
                    (Unaudited)Current
                    
                    $
                    741,972
                    
                    
                    $
                    254,229Deferred
                    
                    
                    907,459
                    
                    
                    
                    1,046,843Income
      tax expense
                    
                    $
                    1,649,431
                    
                    
                    $
                    1,301,072




The
Company’s income tax expense differs from the “expected” tax expense (computed
by applying the CIT rate of 25% percent to income before income taxes) as
follows:




Six Months Ended
                          December 31,2009
                        
                        
                        2008(Unaudited)
                        
                        
                        (Unaudited)Computed
      “expected” expense
                        
                        $
                        1,588,971
                        
                        
                        $
                        1,223,543Valuation
      allowance
                        
                        
                        60,460
                        
                        
                        
                        77,529Income
      tax expense
                        
                        $
                        1,649,431
                        
                        
                        $
                        1,301,072




- 26
-


CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




13.
            INCOME
      TAX (CONTINUED)




The tax
effects of temporary differences that give rise to the Company’s net deferred
tax assets and liabilities are as follows:




December
                          
                          
                          June 30,31, 2009
                          
                          
                          2009(Unaudited)Current
      portion:G&A
      expenses
                          
                          $
                          352,300
                          
                          
                          $
                          349,858Road
      maintenance costs
                          
                          
                          175,884
                          
                          
                          
                          438,142Other
      expenses
                          
                          
                          125,882
                          
                          
                          
                          125,742Tax
      loss carry forward
                          
                          
                          60,460
                          
                          
                          
                          -Valuation
      allowance
                          
                          
                          (60,460
                          )
                          
                          
                          -Net
      operating loss
                          
                          
                          -
                          
                          
                          
                          413,130Total
      deferred tax assets
                          
                          
                          654,066
                          
                          
                          
                          1,326,872Sales
      cut-off
                          
                          
                          (1,186,639
                          )
                          
                          
                          (999,885
                          )Interest
      income
                          
                          
                          (7,890,422
                          )
                          
                          
                          (7,478,740
                          )Interest
      expense
                          
                          
                          1,917
                          
                          
                          
                          (533,679
                          )Consulting
      fees
                          
                          
                          (3,225
                          )
                          
                          
                          (124,968
                          )Other
      expenses
                          
                          
                          (17,032
                          )
                          
                          
                          (41,728
                          )Total
      deferred tax liabilities
                          
                          
                          (9,095,401
                          )
                          
                          
                          (9,179,000
                          )Net
      deferred tax liabilities
                          
                          $
                          (8,441,335
                          )
                          
                          $
                          (7,852,128
                          )Non-current
      portion:Rental
      income
                          
                          $
                          159,175
                          
                          
                          $
                          112,064Capitalized
      interest
                          
                          
                          2,236,590
                          
                          
                          
                          2,234,106Amortization
                          
                          
                          1,864,896
                          
                          
                          
                          1,613,390Bad
      debts
                          
                          
                          2,694,817
                          
                          
                          
                          2,691,824Total
      deferred tax assets
                          
                          
                          6,955,478
                          
                          
                          
                          6,651,384Depreciation
                          
                          
                          (2,965,327
                          )
                          
                          
                          (1,925,734
                          )Total
      deferred tax liabilities
                          
                          
                          (2,965,327
                          )
                          
                          
                          (1,925,734
                          )Net
      deferred tax assets
                          
                          $
                          3,990,151
                          
                          
                          $
                          4,725,650




- 27
-




CHINA
INFRASTRUCTURE INVESTMENT CORPORATION


(FORMERLY
LEARNING QUEST TECHNOLOGIES, INC.) AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008
(UNAUDITED)




14.
            CONTINGENCIES




Litigation





The
Company entered into an agreement to purchase a land use right from Pingdingshan
No. 3 Cement Factory for $1,843,646. However, the Company was not informed that
such land use right was pledged by the cement factory as collateral for loans
from Pingdingshan Suburb Huancheng Credit Corporation
(“PSHCC”).  Pingdingshan No. 3 Cement Factory went bankrupt and PSHCC
who loaned them money then sued the Company for the loss of the collateral. On
July 13, 2006, judgment was made by the Henan Pingdingshan Intermediary Court in
which the Company was required to pay PSHCC $485,851. The amount was paid in
August 2006. The Company appealed the ruling to Henan Pingdingshan Intermediary
Court again. Pursuant to the final judgment made on April 25, 2008, the
compensating claim from PSHCC was rejected. Currently, the Company is in the
progress of pursuing receipt of the amount paid. While during the pursuing
progress, PSHCC appealed such final judgment to Henan Higher Court and is
waiting for the judgment. No receivable for the contingency was recorded as of
December 31, 2009 or June 30, 2009.





Guarantee





On
September 18, 2009, the Company entered into a guarantee agreement with China
Citic Bank Zhenzhou Branch (the “Bank”).  Pursuant to the agreement,
the Company provided corporate guarantees for bank loans to Tai Ao, with a debt
ceiling of Rmb65 million (approximately $9,508,345).  The guarantee
period is from September 18, 2009 to September 17, 2010.  Associated
with the corporate guarantee, Tai Ao also provided a cross guarantee for a bank
loan of the Company.  Also see Note 10.





The
Company’s management considered the risk of default by Tai Ao is remote and
therefore no liability for the guarantor’s obligation under the guarantee was
recognized as of December 31, 2009.  No fee was paid to Tai Ao for
their guarantee.




15.
            CONTRIBUTED
      CAPITAL




Contributed
capital, included in additional paid-in capital, represents the debt forgiveness
from a shareholder of the Company. One of the Company’s shareholders, Long
Triumph Investments Limited (“LTII”) paid certain expenses on behalf of the
Company. The debt associated with such expenses were forgiven by LTII for the
six months ended December 31, 2009.




16.
            SUBSEQUENT
      EVENTS




In
preparing the unaudited condensed consolidated financial statements, the Company
has evaluated all subsequent events and transactions for potential recognition
or disclosure through February 12, 2010, the date the unaudited condensed
consolidated financial statements were issued.




- 28
-


ITEM
2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION





Forward
Looking Statements




The
following discussion of our financial condition and results of operations is
based upon and should be read in conjunction with our consolidated financial
statements and their related notes included in this Report. This Report contains
forward-looking statements. Generally, the words “believes”, ”anticipates”,
“may”, “will”, “should”, “expect”, “intend”, “estimate”, “continue” and similar
expressions or the negative thereof or comparable terminology are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties, including the matters set forth in this report or other
reports or documents we file with the SEC from time to time, which could cause
actual results or outcomes to differ materially from those projected. Undue
reliance should not be placed on these forward-looking statements which speak
only as of the date hereof. We undertake no obligation to update these
forward-looking statements.




Business
Overview





The
Company is engaged in the investment, construction, operation and management of
the Pinglin Expressway toll road in the Province of Henan, China and the rental
of petrol stations and service districts along the toll roads.




With the
approval from Henan Communications Bureau and the State Development and Reform
Committee of China [NO. 2003-1784], the Company is permitted to construct
and operate the Pinglin Expressway in Henan, China for thirty (30) years from
2003. Pursuant to the permission from Henan Communications Bureau and Henan
Development and Reform Committee [NO. 2005-1885], the Company is entitled
to operate six toll gates. All the rates applicable to the automobiles are
defined by the Henan Communications Bureau and Henan Development and Reform
Committee.




The
Pinglin Expressway is a significant part of the Nanluo Expressway, a key
national trunk highway in China which connects Nanjing to
Luoyang.  The Nanluo Expressway links the northwestern regions to the
southeastern coastal regions of China. The construction of the Pinglin
Expressway started on October 23, 2003 and was completed in two (2) phases. The
first phase of the construction (covering a section of approximately 86
kilometers in length) linking Ruzhou and Pingdingshan in Henan Province, began
commercial operations on December 31, 2005.  On May 31, 2006, the
second phase of the construction (covering a section of approximately 21
kilometers in length) linking Pingdingshan to Yexian in Henan Province was
completed. With the operation of Pinglin Expressway the Nanluo Expressway became
completely operational.




The
Pinglin Expressway is a dual carriageway four lane expressway, the toll section
of which is 106 km in length. Toll revenue from vehicles passing through the
Expressway’s six toll gates (South Pingdingshan, Pingdingshan New Town, Baofeng,
Xiaotun, Ruzhou and Wenquan) is the primary source of the Company’s
revenue.  The Expressway is also located between two key cities,
Luoyang and Luohe. The Expressway extends from east to west, from Shilipu (the
end of the Luohe-Pingdingshan expressway), through Yexian and Pingdingshan and
then to New Xiying village at the joint of Pingdingshan and Luoyang. The road is
linked with the Lianhuo (Lianyungang-Huoerguosi) national highway in Luoyang,
and then extends to the southeast of Luohe City and connects with the
Beijing-Zhuhai national highway to form a convenient channel between Luoyang and
Luohe. In addition to the traffic flow of the line itself, we believe it also
attracts the traffic flow from the Lianhuo highway to Zhengzhou and then to the
Beijing-Zhuhai national highway to alter the route of the Pinglin
Expressway.  Furthermore, the Expressway extends east to link the
highway network of the Jiangsu and Anhui provinces and also links seaports,
including Shanghai.





The Company’s operating
revenue is generated through toll charges on vehicles that pass through the toll
gate. The standard of toll charges is approved and set by the provincial price
administrative bureau. The Company’s revenue is equal to the relevant standard
toll rate for the types of vehicles, multiplied by the relative miles of travel
through the Expressway which the Company is operating, and is cleared by the
Henan Expressway System Toll Collection Center each month (Henan Expressway has
a system of charges and a clearing center which calculates and allocates toll
charge income according to the charge standards and the miles of vehicle travel
in the Expressway). The Company specializes in the operation and management of
expressways, and maintenance projects are outsourced to professional road
construction enterprises.


- 29
-





The
Company began generating operating revenue in January 2006.  The
Expressway was not fully operational until June 2006, therefore our operating
income was low and growth was moderate. After several years of operations,
awareness of the Expressway and passenger and commercial vehicle traffic has
gradually increased. We believe that along with income growth in the future, the
profit earning capacity of the Company will improve steadily.




Enterprise
Strategy




Henan is
the province with the largest population in China.  However, its
urbanization rate is far below the national average level. With rapid economic
and social development and the accelerated process of urbanization in Henan,
demand is growing rapidly for infrastructure, such as the Expressway and other
transportation infrastructure, urban facilities such as heating, water supply,
and sewerage treatment. The existing infrastructure can no longer meet the needs
of the region’s social development.




Because
the Chinese government’s financial revenue growth is limited, its investment
alone is unable to build huge infrastructure projects in a relatively short
period of time. In order to attract other funding, local governments are willing
to grant to commercial companies the right to invest in the construction and
operation of projects, or directly sell the equity of the established
enterprises to recover their early input.




The
Company plans to invest in the construction and purchase of additional
expressways, thermoelectricity, water supply, sewage treatment facilities and
other infrastructure assets with good profit prospects in the next few years. In
doing so, it intends to seize the current historic opportunity of rapid
development of infrastructure in China and Henan.  We believe that
this will rapidly strengthen and expand the Company’s place in infrastructure
industries.  This should also create advantages of scale thereby
further reducing costs of operation.  The amount of investment in
infrastructure is often relatively large, and investment funds need to be in
position within two or three years in advance, therefore the amount of capital
from the Company’s operations alone cannot meet the demand for investment in the
future. The Company desires to actively participate in the capital markets and
to use various channels of financing to enhance its ability to raise funds,
thereby promoting and achieving its long-term development
strategies.




Based on
the operation and management of the Expressway, the Company desires to take full
advantage of free cash flow and capital market instruments to invest in the
construction or purchase of infrastructure assets and to exploit all the
advantages in management, government relationships and stockholder support to
make the Company a professional, continuously-growing infrastructure investment
operator.




In
addition, the Company intends to energetically push forward its standard
management, human-based services, establish an information management platform
and continue to improve the road conditions and traffic capacity so as to
provide travelers with a smooth, safe and comfortable traveling environment.
With the increasing influence of the Expressway on the substitution and division
of other transportation lines in the context of the great macroeconomic
environment which is resulting in continuous and rapid growth in China and given
the specific area where the roads are located, we believe that the Company’s
income from toll and profits will increase.





Significant Accounting Policies and
Estimates




We
prepare our financial statements in accordance with generally accepted
accounting principles in the United States, which require us to make estimates
and assumptions that affect the reported amounts of our assets and liabilities,
to disclose contingent assets and liabilities on the date of the financial
statements, and to disclose the reported amounts of revenues and expenses
incurred during the financial reporting period. We continue to evaluate these
estimates and assumptions that we believe to be reasonable under the
circumstances. We rely on these evaluations as the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Since the use of estimates is an integral component
of the financial reporting process, actual results could differ from those
estimates. Some of our accounting policies require higher degrees of judgment
than other in their application.




This
section should be read together with the Summary of Significant Accounting
Policies included as Note 2 to the consolidated financial statements included
herein.


- 30
-




We
determine the estimated useful lives and related depreciation charges for our
toll road infrastructures, property, plant and equipment. This estimate is based
on the historical experience of the actual useful lives of toll road
infrastructures, property, plant and equipment of a similar nature and functions
and the practice in similar industries. Toll road infrastructures, property,
plant and equipment are carried at cost less accumulated depreciation and
amortization. Depreciation and amortization of the toll road infrastructures are
calculated to write off their cost, commencing from the date of commencement of
commercial operations of the toll roads, based on the ratio of actual traffic
volume compared to the total expected traffic volume of the toll roads as
estimated by reference to traffic projection reports prepared by an independent
PRC organization each year. It could change significantly as a result of
technical innovations and competitor actions in response to severe industry
cycles. Other properties, plant and equipment are depreciated or amortized over
their estimated useful lives, using the straight-line method. We will increase
the depreciation charge where useful lives are less than previously estimated
lives, or we will write-off or write-down technically obsolete or non-strategic
assets that have been abandoned or sold.




Revenue
Recognition




The
Company’s revenue represents toll revenue net of business tax, and is recognized
when all of the following criteria are met:




·
            The amount of revenue can be
      measured reliably;





·
            It is probable that the economic
      benefits associated with the transaction will flow to the
      enterprise;





·
            The costs incurred or to be
      incurred in respect of the transaction can be measured reliably;
      and





·
            Collectibility is reasonably
      assured.





The
rental income is measured at the fair value of the consideration receivable and
represents amounts receivable for services provided in the normal course of
business, net of discounts and sales tax.




Fair
Value of Financial Instruments




The
Company’s financial instruments include restricted cash, accounts receivable,
notes receivable, due from related parties, other receivables, other payables
and accrued liabilities, short-term bank loans, payable to contractors, other
current liabilities and deferred taxes. We estimated that the carrying amount
approximates fair value due to their short-term nature. The fair value of the
Company’s long-term bank loans and deferred revenue are estimated based on the
current rates offered to the Company for debt of similar terms and
maturities.  The Company’s fair value of long-term bank loans and
deferred revenue was not significantly different from the carrying value at
December 31, 2009 and 2008.




Depreciation
of Toll Road Infrastructures





Toll road
infrastructures are carried at cost less accumulated depreciation and
amortization. Depreciation and amortization of the toll road infrastructures are
calculated to write off their cost, commencing from the date of commencement of
commercial operation of the toll roads, based on the ratio of actual traffic
volume compared to the total expected traffic volume of the toll roads as
assessed by management each year.  The total expected traffic volume
is derived from a traffic projection report prepared by an independent PRC
organization.




Impairment
of Long-Lived Assets




We review
periodically the carrying amounts of long-lived assets including toll road
infrastructures, property, plant and equipment, land use rights, construction in
progress, long-term investment and long-term deferred assets with finite useful
lives or beneficial periods, to assess whether they are impaired. We evaluate
these assets for impairment whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable such as a change of business
plan or a period of continuous losses. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to the
estimated undiscounted future cash flows expected to be generated by the asset.
If the carrying amount of an asset exceeds its projected future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of
the asset exceeds the fair value of the assets. In determining estimates of
future cash flows, significant judgment in terms of projection of future cash
flows and assumptions is required. There were no impairments for the three
months ended December 31, 2009 and 2008 or for the six months ended
December 31, 2009 and 2008.


- 31
-




Contingencies




In the
normal course of business, we are subject to contingencies, including legal
proceedings and claims arising out of the business that relate to a wide range
of matters. We recognize a liability for such contingency if we determine that
it is probable that a loss has incurred and a reasonable estimate of the loss
can be made. We may consider many factors in making these assessments, including
past history and the specifics of each matter. As we have not become aware of
any toll related claim since operations commenced, we have not recognized such a
liability for the three months ended December 31, 2009 and 2008 or for the
six months ended December 31, 2009 and 2008.




Recent
Accounting Pronouncements




In
December 2008, the Financial Accounting Standards Board (“FASB”) approved ASC
715-20 (formerly FSP No. FAS 132(R)-1, Employers’ Disclosures about
Postretirement Benefit Plan Assets, which provides guidance on an
employer’s disclosures about plan assets of a defined benefit pension or other
postretirement plan. These disclosures include how investment allocation
decisions are made, information about major categories of plan assets,
significant concentrations of risks within plan assets, and fair value
measurements of plan assets. Our effective date is June 30, 2009. The
adoption of ASC 715-20 did not have an impact on the Company’s financial
statements.




In
April 1, 2009, the FASB approved ASC 805-20 (formerly FSP FAS 141(R)-1,
Accounting for Assets Acquired
and Liabilities Assumed in a Business Combination That Arise from
Contingencies, which amends Statement 141(R) and eliminates the
distinction between contractual and non-contractual contingencies. Under ASC
805-20, an acquirer is required to recognize at fair value an asset acquired or
liability assumed in a business combination that arises from a contingency if
the acquisition-date fair value of that asset or liability can be determined
during the measurement period. If the acquisition-date fair value cannot be
determined, the acquirer applies the recognition criteria in SFAS No. 5,
Accounting for Contingencies and Interpretation 14, “Reasonable Estimation of
the Amount of a Loss – and interpretation of FASB Statement No. 5,” to
determine whether the contingency should be recognized as of the acquisition
date or after it. The adoption of ASC 805-10 did not have an impact on the
Company’s financial statements.




ASC
320-10 (formerly FSP FAS 115-2 and FAS 124-2, amend the other-than-temporary
impairment guidance in U.S. GAAP for debt securities to make the guidance more
operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. It did not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. We are
required to adopt this FSP for our interim and annual reporting periods ending
after June 15, 2009. This FSP does not require disclosures for periods
presented for comparative purposes at initial adoption. The adoption of ASC
320-10 did not have an impact on the Company’s financial
statements.





On
April 9, 2009, the FASB also approved ASC 825-10 (formerly FSP FAS 107-1
and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments) to require
disclosures about fair value of financial instruments in interim period
financial statements of publicly traded companies and in summarized financial
information required by ASC 825-10, Interim Financial Reporting. We are required
to adopt this ASC for our interim and annual reporting periods ending after
June 15, 2009. This ASC does not require disclosures for periods presented
for comparative purposes at initial adoption.  The adoption of ASC
825-10 did not have an impact on the Company’s financial
statements.





In
February 2008, the FASB issued ASC 820-10 (formerly FSP SFAS 157-2, Effective
Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157,
Fair Value Measurement (“SFAS No. 157”), for all non-financial assets and
non-financial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). ASC
820-10 establishes a framework for measuring fair value and expands disclosures
about fair value measurements. ASC 820-10 partially defers the effective date of
SFAS No. 157 to fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years for items within the scope of this FSP. The
adoption of SFAS No. 157 for all non-financial assets and non-financial
liabilities is effective for us beginning July 1, 2009. It’s not expected that
this adoption will have a material impact on the Company’s financial
statements.


- 32
-





In May
2009, the FASB issued ASC 855-10 (formerly SFAS No. 165, Subsequent Events). ASC
855-10 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. ASC 855-10 is effective for interim and
annual periods ending after June 15, 2009. It’s not expected that this adoption
will have a material impact on the Company’s financial statements.





In June
2009, the FASB issued ASC 810-10 (formerly SFAS No. 167, Amendments to FASB
Interpretation No. 46(R)). ASC 810-10 requires an enterprise to perform an
analysis and ongoing reassessments to determine whether the enterprises variable
interest or interests give it a controlling financial interest in a variable
interest entity and amends certain guidance for determining whether an entity is
a variable interest entity. It also requires enhanced disclosures that will
provide users of financial statements with more transparent information about an
enterprises involvement in a variable interest entity. ASC 810-10 is effective
as of the beginning of each reporting entity’s first annual reporting period
that begins after November 15, 2009 and for all interim reporting periods after
that, and is not anticipated to have any material impact on the Company’s
consolidated financial statements. The Company is currently evaluating the
impact of the adoption of ASC 810-10.





Results
of Operations




Results
of Operations for the Three Months Ended December 31, 2009 Compared to the
Three Months Ended December 31, 2008




The
following table sets forth a summary of certain key components of our results of
operations for the periods indicated, in dollars and as a percentage of
revenues.




Three Months Ended
                      December 31
                      (Unaudited)
                    
                    
                    Three Months Ended
                      December 31
                      (Unaudited)2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Revenues
                    
                    $
                    11,606,494
                    
                    
                    $
                    12,101,788
                    
                    
                    
                    100
                    %
                    
                    
                    100
                    %Operating
      costs
                    
                    
                    1,309,615
                    
                    
                    
                    2,466,673
                    
                    
                    
                    11.3
                    %
                    
                    
                    20.4
                    %Depreciation
      and amortization
                    
                    
                    2,101,442
                    
                    
                    
                    1,792,717
                    
                    
                    
                    18.1
                    %
                    
                    
                    14.8
                    %Gross
      profit
                    
                    
                    8,195,437
                    
                    
                    
                    7,842,398
                    
                    
                    
                    70.6
                    %
                    
                    
                    64.8
                    %General
      and administrative expenses
                    
                    
                    1,111,695
                    
                    
                    
                    1,501,042
                    
                    
                    
                    9.6
                    %
                    
                    
                    12.4
                    %Income
      from operations
                    
                    
                    7,083,742
                    
                    
                    
                    6,341,356
                    
                    
                    
                    61.0
                    %
                    
                    
                    52.4
                    %Interest
      expense, net
                    
                    
                    4,932,126
                    
                    
                    
                    6,149,805
                    
                    
                    
                    42.5
                    %
                    
                    
                    50.8
                    %Other
      income, net
                    
                    
                    216,917
                    
                    
                    
                    185,226
                    
                    
                    
                    1.9
                    %
                    
                    
                    1.5
                    %Income
      from operations before income taxes
                    
                    
                    2,368,533
                    
                    
                    
                    376,777
                    
                    
                    
                    20.4
                    %
                    
                    
                    3.1
                    %Income
      tax expense
                    
                    
                    597,088
                    
                    
                    
                    94,194
                    
                    
                    
                    5.1
                    %
                    
                    
                    0.8
                    %Net
      income
                    
                    
                    1,771,445
                    
                    
                    
                    282,583
                    
                    
                    
                    15.3
                    %
                    
                    
                    2.3
                    %




Revenues




Our
revenues are derived from the operation of the Expressway. Our revenues
decreased by approximately $0.5 million, or 4.1%, from approximately $12.1
million for the three months ended December 31, 2008 to approximately $11.6
million for the three months ended December 31, 2009. The decrease was
mainly due to an unprecedented heavy snow storm in November 2009. Severe
weather, harsh cold, heavy snow and freezing rain disrupted air, road and rail
transportation, which caused the Pinglin Expressway to close for a long time. As
a result, the converted average daily traffic volume decreased 1,089 units, or
8.2%, from 13,349 units for the three months ended December 31, 2008 to 12,260
units for the three months ended December 31, 2009.


- 33
-




Operating
Costs




Our
operating costs mainly represent road maintenance costs, road management costs,
direct construction costs and labor costs associated with toll operations. For
the three months ended December 31, 2009, our operating costs sharply
decreased by approximately $1.2 million, or 46.9%, to approximately $1.3
million, compared to approximately $2.5 million for the three months ended
December 31, 2008. The decrease is mainly due to the decrease in our road
maintenance costs. Due to the decline in our revenues during the three months
ended December 31, 2009, costs related only to routine maintenance and
improvement of traffic signs and road surfaces were incurred.




Depreciation
and Amortization




Our total
depreciation and amortization related to toll operations increased by
approximately $0.3 million, or 17.2%, from approximately $1.8 million for the
three months ended December 31, 2008 to approximately $2.1 million for the
three months ended December 31, 2009.




Depreciation
of toll road infrastructures is calculated to write-off such cost on a
units-of-usage basis.  The Company recorded the depreciation based on
the ratio of actual traffic volume incurred during the period compared to the
total expected traffic volume of the toll roads during the operation licensing
period, as estimated.




Management
assessed the future total expected traffic volume at each period end.
Considering the current economic environment and the actual traffic volume
evolvement during the year ended June 30, 2009, compared to prior years’
estimate, management believed there was significant decline in future total
anticipated volume. Based on such estimation, the depreciation for the
three months ended December 31, 2009 increased 17.2% compared to the three
months ended December 31, 2008, by the calculation according to the
aforementioned units-of-usage basis.




Gross
Profit




Our gross
profit increased by approximately $0.4 million, or 4.5%, from approximately $7.8
million for the three months ended December 31, 2008 to approximately $8.2
million for the three months ended December 31, 2009.  Such gross
profit increase is primarily due to the decrease in our operating costs,
partially offset by the decrease in our revenues.




Gross
profit as a percentage of revenues increased from 64.8% for the three months
ended December 31, 2008 to 70.6% for the three months ended
December 31, 2009.




General
and Administrative Expenses




Our
general and administrative expenses mainly represent employee payroll and
welfare, traveling expenses, vehicle gasoline and maintenance costs,
entertainment expenses, consulting fees, provisions for doubtful accounts,
depreciation and miscellaneous taxes. General and administrative expenses
decreased by approximately $0.4 million, or 25.9%, from approximately $1.5
million for the three months ended December 31, 2008 to approximately $1.1
million for the three months ended December 31, 2009. Such decrease is primarily
due to the decrease in our consulting fees, amounting to approximately $0.3
million.




Interest
Expense, Net




Net
interest expense decreased by approximately $1.2 million, or 19.8%, from
approximately $6.1 million for the three months ended December 31, 2008 to
approximately $4.9 million for the three months ended December 31, 2009.
This decrease is primarily due to the decreased interest rate of our loans and
the decrease in our loan principal.  The People’s Bank of China
decreased the benchmark of the interest rate for long term loans over five years
from 7.83% for the three months ended December 31, 2008 to 5.94% for the three
months ended December 31, 2009. Accordingly, our lenders decreased their
interest rates to some degree. In addition, our loan principal decreased
approximately $4.7 million from December 31, 2008 to December 31, 2009, which
also decreased our interest expense.


- 34
-




Income
Tax Expense




Income
tax expense increased by approximately $0.5 million, or 533.9%, from
approximately $0.1 million for the three months ended December 31, 2008 to
approximately $0.6 million for the three months ended December 31, 2009, as
a result of the increase in our income from operations. Our effective tax rate
was 25% for both the three months ended December 31, 2009 and 2008.




Net
Income




Our net
income increased by approximately $1.5 million, or 526.9%, from approximately
$0.3 million for the three months ended December 31, 2008 to approximately
$1.8 million for the three months ended December 31, 2009. This increase is
primarily due to the decrease in our costs and expenses, partially offset by the
decrease in our revenues.




Results
of Operations for the Six Months Ended December 31, 2009 Compared to the
Six Months Ended December 31, 2008




The
following table sets forth a summary of certain key components of our results of
operations for the periods indicated, in dollars and as a percentage of
revenues.




Six Months Ended
                      December 31
                      (Unaudited)
                    
                    
                    Six Months Ended
                      December 31
                      (Unaudited)2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Revenues
                    
                    $
                    25,185,736
                    
                    
                    $
                    27,502,808
                    
                    
                    
                    100
                    %
                    
                    
                    100
                    %Operating
      costs
                    
                    
                    2,087,778
                    
                    
                    
                    3,671,134
                    
                    
                    
                    8.3
                    %
                    
                    
                    13.3
                    %Depreciation
      and amortization
                    
                    
                    4,489,220
                    
                    
                    
                    3,892,036
                    
                    
                    
                    17.8
                    %
                    
                    
                    14.2
                    %Gross
      profit
                    
                    
                    18,608,738
                    
                    
                    
                    19,939,638
                    
                    
                    
                    73.9
                    %
                    
                    
                    72.5
                    %General
      and administrative expenses
                    
                    
                    2,480,214
                    
                    
                    
                    2,842,944
                    
                    
                    
                    9.8
                    %
                    
                    
                    10.3
                    %Income
      from operations
                    
                    
                    16,128,524
                    
                    
                    
                    17,096,694
                    
                    
                    
                    64.1
                    %
                    
                    
                    62.2
                    %Interest
      expense, net
                    
                    
                    10,272,530
                    
                    
                    
                    12,643,359
                    
                    
                    
                    40.9
                    %
                    
                    
                    46.0
                    %Other
      income, net
                    
                    
                    499,891
                    
                    
                    
                    440,838
                    
                    
                    
                    2.0
                    %
                    
                    
                    1.6
                    %Income
      from operations before income taxes
                    
                    
                    6,355,884
                    
                    
                    
                    4,894,173
                    
                    
                    
                    25.2
                    %
                    
                    
                    17.8
                    %Income
      tax expense
                    
                    
                    1,649,431
                    
                    
                    
                    1,301,072
                    
                    
                    
                    6.5
                    %
                    
                    
                    4.7
                    %Net
      income
                    
                    
                    4,706,454
                    
                    
                    
                    3,593,101
                    
                    
                    
                    18.7
                    %
                    
                    
                    13.1
                    %




Revenues




Our
revenues are derived from the operation of the Expressway. Our revenues
decreased by approximately $2.3 million, or 8.4%, from approximately $27.5
million for the six months ended December 31, 2008 to approximately $25.2
million for the six months ended December 31, 2009. The decrease was mainly
due to an unprecedented heavy snow storm in November 2009. Severe weather, harsh
cold, heavy snow and freezing rain disrupted air, road and rail transportation,
which caused the Pinglin Expressway to close for a long time. As a result, the
converted average daily traffic volume decreased 1,632 units, or 10.8% from
15,087 units for the six months ended December 31, 2008 to 13,455 units for the
six months ended December 31, 2009.




Operating
Costs




Our
operating costs mainly represent the road maintenance costs, road management
costs, direct construction costs and labor costs associated with toll
operations. For the six months ended December 31, 2009, our operating costs
sharply decreased by approximately $1.6 million, or 43.1%, to approximately $2.1
million, compared to approximately $3.7 million for the six months ended
December 31, 2008. The decrease is mainly due to the decrease in our road
maintenance costs. Due to the decline in our revenues during the six months
ended December 31, 2009, costs related only to routine maintenance and
improvement of traffic signs and road surfaces were incurred.


- 35
-




Depreciation
and Amortization




Our total
depreciation and amortization related to toll operations increased by
approximately $0.6 million, or 15.3%, from approximately $3.9 million for the
six months ended December 31, 2008 to approximately $4.5 million for the
six months ended December 31, 2009.




Depreciation
of toll road infrastructures is calculated to write-off such cost on a
units-of-usage basis.  The Company recorded the depreciation based on
the ratio of actual traffic volume incurred during the period compared to the
total expected traffic volume of the toll roads during the operation licensing
period, as estimated.




Management
assessed the future total expected traffic volume at each period end.
Considering the current economy environment and the actual traffic volume
evolvement during the year ended June 30, 2009, compared to prior years’
estimate, management believed that there was significant decline in future total
anticipated volume. Based on such estimation, the depreciation for the six
months ended December 31, 2009 increased 15.3% compared to the six months ended
December 31, 2008, by the calculation according to the aforementioned
units-of-usage basis.




Gross
Profit




Our gross
profit decreased by approximately $1.3 million, or 6.7%, from approximately
$19.9 million for the six months ended December 31, 2008 to approximately
$18.6 million for the six months ended December 31, 2009.  Such
gross profit decrease is primarily due to the decrease in our revenues and the
increase in our depreciation and amortization, partially offset by the decrease
in our operating costs.




Gross
profit as a percentage of revenues increased from 72.5% for the six months ended
December 31, 2008 to 73.9% for the six months ended December 31,
2009.




General
and Administrative Expenses




Our
general and administrative expenses mainly represent employee payroll and
welfare, traveling expenses, vehicle gasoline and maintenance costs,
entertainment expenses, consulting fees, provisions for doubtful accounts,
depreciation and miscellaneous taxes. General and administrative expenses
decreased by approximately $0.3 million, or 12.8%, from approximately $2.8
million for the six months ended December 31, 2008 to approximately $2.5 million
for the six months ended December 31, 2009. Such decrease is primarily due to
the decrease in our consulting fees, amounting to approximately $0.2
million.




Interest
Expense, Net




Net
interest expense decreased by approximately $2.4 million, or 18.8%, from
approximately $12.6 million for the six months ended December 31, 2008 to
approximately $10.3 million for the six months ended December 31, 2009.
This decrease is primarily due to the decreased interest rate of our loans and
the decrease in our loan principal.  The People’s Bank of China
decreased the benchmark of the interest rate for long term loans over five years
from 7.83% for the six months ended December 31, 2008 to 5.94% for the six
months ended December 31, 2009. Accordingly, our lenders decreased their
interest rates to some degree. In other hand, our loan principal decreased
approximately $4.7 million from December 31, 2008 to December 31, 2009, which
also decreased our interest expense.




Income
Tax Expense




Income
tax expense increased by approximately $0.3 million, or 26.8%, from
approximately $1.3 million for the six months ended December 31, 2008 to
approximately $1.6 million for the six months ended December 31, 2009, as a
result of the increase in our income from operations. Our effective tax rate was
26% and 27% for the six months ended December 31, 2009 and 2008,
respectively.


- 36
-




Net
Income




Our net
income increased by approximately $1.1 million, or 31.0%, from approximately
$3.6 million for the six months ended December 31, 2008 to approximately
$4.7 million for the six months ended December 31, 2009. This increase is
primarily due to the decrease in our costs and expenses, partially offset by the
decrease in our revenues.




Liquidity
and Capital Resources




We
generally finance our operations through, to a substantial extent, operating
profit and a combination of borrowings from banks and capital contributions from
Wise On China Limited. During the reporting periods, we arranged a number of
bank loans to satisfy our financing needs. As of the date of this report, we
have not experienced any difficulty in raising funds by bank loans, and we have
not experienced any liquidity problems in settling our payables in the normal
course of business and repaying our bank loans when they fall
due.




The
following table sets forth the summary of our cash flow, in dollars, for the
periods indicated:




Six Months Ended December 312009
                          
                          
                          2008Net
      cash provided by operating activities
                          
                          $
                          7,867,166
                          
                          
                          $
                          2,671,137Net
      cash provided by investing activities
                          
                          
                          750,335
                          
                          
                          
                          1,595,741Net
      cash used in financing activities
                          
                          
                          (9,048,839
                          )
                          
                          
                          (7,777,945
                          )Net
      decrease in cash and cash equivalents
                          
                          
                          (431,338
                          )
                          
                          
                          (3,511,067
                          )Effect
      of exchange rate changes on cash
                          
                          
                          (23,618
                          )
                          
                          
                          (65,748
                          )Cash
      and cash equivalents at beginning of period
                          
                          
                          1,614,260
                          
                          
                          
                          5,769,344Cash
      and cash equivalents at end of period
                          
                          $
                          1,159,304
                          
                          
                          $
                          2,192,529




Operating
Activities




Net cash
provided by operating activities was approximately $7.9 million for the six
months ended December 31, 2009, as compared to $2.7 million for the six
months ended December 31, 2008.  This increase is primarily due
to the increase in our net income and to a lesser extent, the delay of payment
of relevant expenditures.




Investing
Activities




Net cash
provided by investing activities was approximately $0.8 million for the six
months ended December 31, 2009 as compared to approximately $1.6 million for the
six months ended December 31, 2008.  This decrease is primarily
due to the fact that we settled more payables with our contractors during the
six months ended December 31, 2009, as compared to the six months ended December
31, 2008, which resulted in a net cash outflow of approximately $4.0 million
during the periods, partially offset by a decrease in capital expenditures of
approximately $1.0 million and a repayment from a related party of approximately
$2.2 million during the period ended December 31, 2009.




Financing
Activities




Net cash
used in financing activities was $9.0 million for the six months ended
December 31, 2009, as compared to approximately $7.8 million for the six
months ended December 31, 2008. Such change is primarily due to the fact
that we repaid more long-term bank loans during the six months ended
December 31, 2009, as compared to the six months ended December 31,
2008.


- 37
-




Working
Capital




Our
working capital decreased by approximately $112.0 million from approximately
$120.5 million as of June 30, 2009 to approximately $8.5 million as of
December 31, 2009.  This was primarily due to a decrease in
current notes receivable from a related party, an advance to a related party,
accounts receivable, restricted cash, cash and cash equivalents and other
current assets of approximately $74.8 million, $32.7 million, $0.6 million, $3.6
million, $0.5 million and $0.9 million, respectively, and an increase in current
portion of long-term bank loans and amount due to related party of approximately
$2.5 million and $0.7 million, respectively, partially offset by an decrease in
notes payable, payable to contractors and other payables and accrued liabilities
of approximately $3.1 million, $1.3 million and $0.4 million,
respectively.




The
Company currently generates its cash flow through operations and the Company
believes that its cash flow generated from operations will be sufficient to
sustain operations for the next twelve (12) months. From time to time, the
Company may explore new expansion opportunities and funding sources from which
our management may consider seeking external funding and financing.




Capital
Expenditures




We made
capital expenditures of approximately $0.2 million and $1.2 million for the six
months ended December 31, 2009 and 2008, respectively. Capital expenditures
principally consisted of toll road infrastructures, toll stations and ancillary
facilities, communication and monitoring equipment and other equipment related
to our toll operations. If we are permitted to construct and operate a new toll
road or invest other toll road companies, we may require additional
funds.  We have no current plans to construct or invest in any new
toll road companies at this time.




Off-Balance
Sheet Arrangements




We do not
have any outstanding derivative financial instruments, off-balance sheet
guarantees, interest rate swap transactions or foreign currency forward
contracts. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in
an unconsolidated entity that provides financing, liquidity, market risk or
credit support to us or that engages in leasing, hedging or research and
development services with us.





Subsequent
Event





On
January 12, 2010, Tai Ao Expressway Co., Ltd. entered into a guarantee agreement
with China Citic Bank.  Pursuant to the agreement, Tai Ao Expressway
Co., Ltd. provided corporate guarantees for a bank loan to the
Company.  The guarantee period is from January 12, 2010 to January 11,
2013.




ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Interest
Rate Risk




Our
exposure to interest rate risk for changes in interest rates relates primarily
to the interest expense incurred by the bank loans and the interest income
generated by the loans to our related parties or bank deposits. We have not used
any derivative financial instruments in our investment portfolio or for cash
management purposes. Interest-earning instruments carry a degree of interest
rate risk. We have not been exposed nor do we anticipate being exposed to
material risks due to changes in interest rates. However, our future interest
expense or interest income may increase of expectations due to changes in
interest rates in the PRC.




Foreign
Exchange Risk




We do not
hold any derivative instruments and do not engage in any hedging activities.
Because most of our purchases and sales are made in RMB, any exchange rate
change affecting the value of the RMB relative to the U.S. dollar could have an
effect on our financial results as reported in U.S. dollars. If the RMB were to
depreciate against the U.S. dollar, amounts reported in U.S. dollars would be
correspondingly reduced. If the RMB were to appreciate against the U.S. dollar,
amounts reported in U.S. dollars would be correspondingly
increased.


- 38
-




ITEM
4. CONTROLS AND PROCEDURES




Disclosure
Controls and Procedures




Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures, as defined in Rule 13a-15(e) under the Exchange
Act. Based on this evaluation, our management, including our principal executive
officer and our principal financial officer, concluded that our disclosure
controls and procedures were effective as of the fiscal quarter covered by this
Report, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act (i) is recorded, processed,
summarized and reported within the time period specified in SEC rules and forms,
and (ii) is accumulated and communicated to our management, including our
principal executive officer and our principal financial officer, as appropriate
to allow appropriate decisions on a timely basis regarding required
disclosure.




Internal
Control over Financial Reporting




There
were no changes in internal control over financial reporting that occurred
during the fiscal quarter covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.




PART
II


OTHER
INFORMATION




ITEM
1. LEGAL PROCEEDINGS




In the
normal course of business, we are named as defendant in lawsuits in which claims
are asserted against us. In our opinion, the liabilities, if any, which may
ultimately result from such lawsuits, are not expected to have a material
adverse effect on our financial position, results of operations or cash flows.
As of the date hereof, there is no outstanding litigation with the Company
except as set forth below.




ITEM
1A. RISK FACTORS




Not
required for a “smaller reporting company”.




ITEM
2. UREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




During
the quarter ended December 31, 2009, the Company had no unregistered sales of
equity securities.




ITEM
3. DEFAULTS UPON SENIOR SECURITIES




None.




ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS




None.




ITEM
5. OTHER INFORMATION




On
January 12, 2010, Tai Ao Expressway Co., Ltd. entered into a guarantee agreement
with China Citic Bank.  Pursuant to the agreement, Tai Ao Expressway
Co., Ltd. provided corporate guarantees for a bank loan to the
Company.  The guarantee period is from January 12, 2010 to January 11,
2013.


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ITEM
6. EXHIBITS




(a)
            Exhibits




EXHIBIT NO.
                            
                            DESCRIPTION
                            
                            LOCATION3.1
                            
                            Articles
      of Incorporation of Learning Quest Technologies, Inc.
                            
                            Incorporated
      by reference to Exhibit 3.01 to the Company’s Form 10-SB as filed with the
      SEC on December 17, 2004.3.2
                            
                            Amended
      and Restated Bylaws of China Infrastructure Investment Corporation, dated
      as of May 21, 2008.
                            
                            Incorporated
      by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K as
      filed with the SEC on May 22, 2008.3.3
                            
                            Certificate
      of Incorporation of Color Man Holdings Limited
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.3.4
                            
                            Certificate
      of Incorporation of Wise On China Limited
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.3.5
                            
                            Certificate
      of Incorporation of Pingdingshan Pinglin Expressway Co., Ltd.
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.3.6
                            
                            Company
      Charter of Color Man Holdings Limited (Memorandum of Association and
      Articles of Association
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.3.7
                            
                            Company
      Charter of Wise On China Limited
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.3.8
                            
                            Articles
      of Association of Pingdingshan Pinglin Expressway Co., Ltd.
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.1
                            
                            Share
      Exchange Agreement, dated February 8, 2008, by and among Learning Quest
      Technologies, Inc., Color Man Holdings Ltd. and Joylink Holdings
      Ltd.
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.2
                            
                            Chartered
      Rights Agreement on Pingdingshan-Linru Expressway Project, dated April 10,
      2003, by and between Pingdingshan Pinglin Expressway Co., Ltd. and
      Pingdingshan Bureau of Communications
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.3
                            
                            Loan
      Contract of the Year 2004, dated December 28, 2004, by and between the
      China Development Bank and Pingdingshan Pinglin Expressway Co.,
      Ltd.
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.4
                            
                            Loan
      Contract of the Fixed Assets (No. YBZ No. 0054, 2005), dated July 29,
      2005, by and between The Pingdingshan Branch of Industrial and Commerical
      Bank of China and Pingdingshan Pinglin Expressway Co.,
Ltd.
                            
                            Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.




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10.5
              
              Loan
      Contract, dated February 25, 2005, by and between the Agricultural Bank of
      China, Xinhua Branch of Pingdingshan City and Pingdingshan Pinglin
      Expressway Co., Ltd.
              
              Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.6
              
              Loan
      Contract of the Year 2007, dated September 28, 2007, by and between the
      China Development Bank and Pingdingshan Pinglin Expressway Co.,
      Ltd.
              
              Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.7
              
              Loan
      Contract, dated June 7, 2005, by and between the Agricultural Bank of
      China, Xinhua Branch of Pingdingshan City and Pingdingshan Pinglin
      Expressway Co., Ltd.
              
              Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.8
              
              General
      Loan Contract, dated November 29, 2004, by and between the China
      Development Bank and Pingdingshan Pinglin Expressway Co.,
    Ltd.
              
              Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.10.9
              
              Loan
      Contract of the Fixed Assets (No. YBZ No. 0051, 2005), dated July 29,
      2005, by and between The Pingdingshan Branch of Industrial and Commerical
      Bank of China and Pingdingshan Pinglin Expressway Co.,
Ltd.
              
              Incorporated
      by reference to that Company’s Current Report on Form 8-K as filed with
      the SEC on February 11, 2008.14.1
              
              Code
      of Ethics
              
              Incorporated
      by reference to the Company’s Annual Report on Form 10-K as filed with the
      SEC on September 29, 200816.1
              
              Auditor
      Letter
              
              Incorporated
      by reference to the Company’s Annual Report on Form 10-K as filed with the
      SEC on September 29, 200831.1
              
              Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002
              
              Provided
      herewith31.2
              
              Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002
              
              Provided
      herewith32.1
              
              Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002
              
              Provided
      herewith32.2
              
              Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002
              
              Provided
      herewith99.1
              
              Audit
      Committee Charter of the Company
              
              Incorporated
      by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on May 22, 200899.2
              
              Compensation
      Committee Charter of the Company
              
              Incorporated
      by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K
      as filed with the SEC on May 22, 200899.3
              
              Corporate
      Governance and Nominating Committee Charter of the Company
              
              Incorporated
      by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K
      as filed with the SEC on May 22,
2008




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SIGNATURES




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




Date: June 28,
      2010
                      By:
                      /s/
      Li XipengName:
      Li XipengChief
      Executive Officer, PrincipalExecutive
      Officer and Chairman of the BoardDate: June 28,
      2010
                      By:
                      /s/
      Zhang ChunxianName:
      Zhang ChunxianChief
      Financial Officer, PrincipalFinancial
      and Accounting Officer and Director




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