UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, ~~2009~~2010

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

For the transition period from ___________________ to ___________________

Commission file number

000-50240

China Ivy School, Inc.

(Exact name of registrant as specified in its charter)

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

1 Suhua Road, Shiji Jinrong Building Suite 801,

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

(Address of Principal Executive Offices) (Zip Code)

86-512-6762-5632

(Registrant's Telephone Number, Including Area Code)

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

Title of each class	Name of each exchange on which registered

None	Not applicable

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

Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. The aggregate market value of the common stock of the registrant held by non-affiliates (excluding shares held by directors, officers and others holding more than 5% of the outstanding shares of the class) was $2840,~~069~~098.46 00 based upon a closing sale price of $0.~~021~~03 on ~~May~~June 262, ~~2009~~2010, the last reported trade prior to June 30, ~~2009~~2010, as reported by Bloomberg Finance.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of March 313, ~~2010~~2011, the registrant had outstanding 22,582,~~541~~500 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE: None

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TABLE OF CONTENTS

PART I
		Page
Item 1.	Business	1
Item 1A.	Risk Factors	23
Item 2.	Properties	811
Item 3.	Legal Proceedings	811
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	812
Item 6.	Selected Financial and Other Data	913
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	1013
Item 8.	Financial Statements and Supplementary Data	1418
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	1419
Item 9A (T).	Controls and Procedures	1419
Item 9B.	Other Information	1621
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	1621
Item 11.	Executive Compensation	1823
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	1824
Item 13.	Certain Relationships and Related Transactions, and Director Independence	1925
Item 14.	Principal Accounting Fees and Services	2026
PART IV
Item 15.	Exhibits and Financial Statement Schedules	2026
Signatures		2127

Special Note Regarding Forward Looking Information

This report contains forward-looking statements that reflect management's current views and expectations with respect to our business, strategies, future results and events, and financial performance. All statements made in this report other than statements of historical fact, including statements that address operating performance, events or developments that management expects or anticipates will or may occur in the future, including statements related to future reserves, cash flows, revenues, profitability, adequacy of funds from operations, statements expressing general optimism about future operating results and non-historical information, are forward-looking statements. In particular, the words "believe," "expect," "intend," "anticipate," "estimate," "plan," "may," "will," variations of such words and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking. Readers should not place undue reliance on forward-looking statements which are based on management's current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences include those discussed in this report, particularly under the caption "Risk Factors." Except as required under the federal securities laws, we do not undertake any obligation to update the forward-looking statements in this report.

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PART I

Item 1. Business.

Introduction

We operate an educational facility under the name "Blue Tassel School" which provides a comprehensive curriculum required by the government of the People’s Republic of China, supplemented by a broad range of elective courses which may be chosen from by our students. To the present date, we have only operated within the People's Republic of China. As used in this report, the terms "we," "our," "Company" and "China Ivy Schools" refers to China Ivy Schools, Inc. and its wholly-owned subsidiaries. All information in this report gives effect to a 1 for 20 reverse stock split effected in December 2008.

The Company's functional currency is the Renminbi, which had an average exchange rate of $0.~~14396~~14475 and $0.~~14475during~~ 14774 during fiscal year ~~2008~~2009 and ~~2009~~2010, respectively.

BLUE TASSEL SCHOOL

Blue Tassel School ("BTS") is an education center located in Suzhou and organized under the laws of China. BTS is accredited by the Jiangsu Educational Committee as a boarding school comprising grades from kindergarten through senior school, including an international school. The five schools that comprise BTS are kindergarten, primary school, junior high school, senior high school, and international school.

The BTS International School has 15 foreign teachers with international teacher certification. They are primarily responsible for the teaching of English. BTS has built a cooperative relationship with other schools located in the United Kingdom, Australia, New Zealand and Hong Kong. The BTS International School has established preparatory classes with the BATH ACADEMY located in the United Kingdom, as the BLUE TASSEL-BATH ACADEMY. BTS has also established a program for exchange students, providing long- and short-term study abroad programs, exchange of teachers, sharing of resources, and collaboration of courses. The BTS Kindergarten has 3 classes for children aged 2-6 years, and has developed appropriate learning programs for such students which include art, music and musical instruments performance, dance, skating, and computer programming. In order to develop the potential abilities of its students, BTS provides diverse options for its students.

The BTS Primary School provides elementary education for children aged 6 -12 years and has 14 classes and 47 teachers in the six-year school.

The BTS Junior High School is a three-year middle school for children aged 12 - 15 years with 16 classes and 40 teachers.

The BTS Senior High School is a three-year high school for children aged 15 - 18 years with 24 classes and over 1,200 students. The curriculum and program are designed for preparing students to enter top tier universities.

BTS's education program includes compulsory level education, ample elective courses, activity courses, students' societies, clubs, and seminars presented by famous scholars and successful individuals. Large-scale social practices and educational activities compose a highly selective and personal curriculum, where children can fully develop their personalities and discover their potentials. The comprehensive education system of BTS includes science, art, multi-language, information technology, international understanding, ethics and behavior, adolescence, and ideal seminars. Interaction between students and instructors, an efficient learning environment, and small class teaching are the core ideas for attentive learning and effective study.

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BTS possesses facilities for teaching, learning, living, extracurricular activities and health care purposes. Such facilities are at the vanguard of our educational platform, including a Chinese-English library, e-reading room, computer lab, multi-functional network system, varieties of labs for group study and experimental use, halls for music rehearsal and scholarly presentations. In addition to academic facilities, BTS also has tennis courts, gyms, and other athletic facilities, as well as student apartments.

As of December 31, ~~2009~~2010, there were [1~~,810students~~.342] students enrolled at BTS. Our educational facilities are located in the city of Suzhou, in Jiangsu Province on the eastern coast of China. We are within two hours driving distance of Shanghai.

Our Corporate History

The Company was incorporated on September 14, 1999, in and under the laws of the state of Nevada. At the time of our incorporation we were engaged in the business of developing an internet computer software program known as Clear Switch, a program that processes submission of internet web page information to major internet search engines. We suspended these efforts due to our insufficient cash flow and inability to obtain financing to conduct further development of this software program.

On October 12, 2006 (the "Effective Date"), the Company entered into and consummated a Share Exchange Agreement with Brighter International Limited ("BIL"), Blue Tassel School ("BTS"), and the shareholders of BIL (the "BIL Shareholders"), pursuant to which the Company acquired BIL in exchange for the issuance of 2,762,500 shares of the Company’s common stock to the BIL Shareholders (the "Share Exchange Transaction"), which was divided proportionally among the BIL Shareholders in accordance with their respective ownership interests in BIL immediately before the completion of the Share Exchange Transaction.

As a result of the Share Exchange Transaction, a change of control of the Company occurred as of the Effective Date. Prior to the Effective Date, the controlling shareholder of Company was Xu Zuqiang, who held approximately 80% of the then issued and outstanding shares of Common Stock of the Company. As of the Effective Date, the BIL Shareholders became the controlling shareholders of the Company, owning in the aggregate 98% of the issued and outstanding shares of Common Stock of the Company as of the Effective Date. Yongqi Zhu ("Zhu"), the Company's present Chairman and Chief Executive Officer acquired 1,745,900 shares of the Common Stock of the Company. After giving effect to the Share Exchange Transaction, Zhu held 56.7% of the then-issued and outstanding shares of the Common Stock of the Company.

Prior to the closing of the Share Exchange Transaction, Zuqiang had been Chief Executive Officer, Chief Financial Officer, and sole director of the Company. Effective upon the filing and distribution of such documents as required under the Securities Exchange Act of 1934, as amended, and the expiration of all applicable grace periods, which occurred on November 12, 2006, Zhu (who prior to the Share Exchange Transaction was a shareholder of BIL), Qian Gao, Yipeng Lu, Fugeng Xia and Haiming Zhang were appointed, and Zuqiang resigned from, the Board of Directors of the Company and from his positions as Chief Executive Officer and Chief Financial Officer of the Company.

Competition

Our principal competitors in the education sector in our region are

Suzhou Foreign Language School(Kindergarten to Senior high)

Suzhou Zhenhua School(Junior High)

Suzhou Pingjiang School(Junior High)

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Also competing with us are the public schools in our region, examples of which are:

Suzhou Middle School

Wuxi Guanghua School.

Government Regulation

We are responsible for compliance with all laws relevant to education within the country, as administered by the Ministry of Education of the People’s Republic of China. These include, in pertinent part, the Education Law of the People's Republic of China, Higher Education Laws of the People's Republic of China, and the Vocational Education Laws of the People’s Republic of China. Standards of teacher qualification, facilities management and suitability, student assessment and program content are among the most important of the areas which are specified in these regulations.

Because of our arrangements with the Bath Academy, as well as with educational institutions in Hong Kong, Australia, and New Zealand, we are also regulated by the Ministry's Department of International Cooperation and Exchanges.

Item 1A. Risk Factors.

You should consider carefully each of the following business and investment risk factors and all of the other information in this report. If any of the following risks and uncertainties develop into actual events, the business, financial condition or results of our operations could be materially adversely affected. If that happens, the trading price of our shares of common stock could decline significantly. The risk factors below contain forward-looking statements regarding our business. Actual results could differ materially from those set forth in the forward-looking statements. See "Special Note Regarding Forward-Looking Information."

Risks Relating to Our Business

We depend on our students for our revenues, and any loss, cancellation, reduction, or interruption in our ability to provide educational services could harm our business.

In general, we have derived a material portion of our revenue from tuition payments from our students. If our student base were to be significantly reduced, our revenues and net income could significantly decline. Our success will depend on our continued ability to enroll significant numbers of new students. Any adverse change in our relationship with our students or employees may have a material adverse effect on our business. Although we are attempting to expand awareness of our services, we expect that our student enrollment will not change significantly in the near future. We cannot be sure that we will be able to retain our students or that we will be able to attract additional students, or that students will continue to enroll in our school in the same amounts as in prior years. Any reduction or interruption in the provision of educational services to our students, our inability to successfully enroll additional students, or future concessions in tuition rates or fees that we may have to make could significantly harm our business.

Attracting and retaining key personnel is an essential element of our future success.

Our future success depends to a significant extent upon the continued service of our executive officers, other key management, and our faculty, and on our ability to continue to attract, retain and motivate executive and other key employees, including those in managerial, technical, marketing and information technology support positions. Experienced teaching and technical, marketing and support personnel are in demand and competition for their talents is intense. The loss of the services of one or more of our key employees or our failure to attract, retain and motivate qualified personnel could have a material adverse effect on our business, financial condition and results of operations.

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If we lose the services of our chairman and chief executive officer, our business may suffer.

We are dependent on Mr. Yongqi Zhu, our chairman and chief executive officer. The loss of his services could materially harm our business because of the cost and time necessary to retain and train a replacement. Such a loss would also divert management attention away from operational issues. We do not have key-man term life insurance on Mr. Zhu.

Our inability to successfully manage the growth of our business may have a material adverse effect on our business, results of operations and financial condition.

We expect to experience growth in the number of employees and the scope of our operations as a result of internal growth and acquisitions. Such activities could result in increased responsibilities for management. Our future success will be highly dependent upon our ability to manage successfully the expansion of operations. Our ability to manage and support our growth effectively will be substantially dependent on our ability to implement adequate improvements to financial, inventory, management controls, reporting, order entry systems and other procedures, and hire sufficient numbers of financial, accounting, administrative, and management personnel.

Our future success depends on our ability to address potential market opportunities and to manage expenses to match our ability to finance operations. The need to control our expenses will place a significant strain on our management and operational resources. If we are unable to control our expenses effectively, our business, results of operations and financial condition may be adversely affected.

The unsuccessful integration of a business or business segment we acquire could have a material adverse effect on our results.

As part of our business strategy, we expect to acquire assets and facilities, some of which may not be related to or complementary to our operations. These acquisitions will involve risks commonly encountered in acquisitions. These risks include exposure to unknown liabilities of the acquired facilities, additional acquisition costs and unanticipated expenses. Our quarterly and annual operating results could fluctuate due to the costs and expenses of acquiring and integrating new facilities. We may also experience difficulties in assimilating the operations and personnel of acquired facilities. Our ongoing operations may be disrupted and our management's time and attention diverted from existing operations. Our acquisition strategy will likely require additional equity or debt financing, resulting in additional leverage or dilution of ownership. We cannot assure you that any future acquisition will be consummated, or that if consummated, that we will be able to integrate such acquisition successfully.

Our management is comprised almost entirely of individuals residing in the PRC with very limited English skills.

Our management is comprised almost entirely of individuals born and raised in the PRC. As a result of differences in culture, educational background and business experiences, our management may analyze, evaluate and present business opportunities and results of operations differently from the way they are analyzed, evaluated and presented by management teams of public companies in Europe and the United States. In addition, our management has very limited skills in English. Consequently, it is possible that our management team will emphasize or fail to emphasize aspects of our business that might customarily be emphasized in a different manner by comparable public companies from different geographical and political areas.

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We will face many of the difficulties that companies in the early stage may face.

We have a limited operating history as an education provider, which may make it difficult for you to assess our ability to identify merger or acquisition candidates and our growth and earnings potential. Therefore, we may face many of the difficulties that companies in the early stages of their development in new and evolving markets often face. We may continue to face these difficulties in the future, some of which may be beyond our control. If we are unable to successfully address these problems, our future growth and earnings will be negatively affected.

We cannot accurately forecast our future revenues and operating results, which may fluctuate.

Our short operating history and the rapidly changing nature of the markets in which we compete make it difficult to accurately forecast our revenues and operating results. Furthermore, our revenues and operating results may fluctuate in the future due to a number of factors, including the following:

· the success of identifying and completing mergers and acquisitions; · reduced demand for our educational services;

· ~~reduced~~difficulty ~~demand~~in ~~for~~keeping ~~our~~current ~~educational~~with ~~services~~changing technologies; · increased or uneven expenses, whether related to sales and marketing or administration;

· ~~difficulty~~deferral inof ~~keeping~~recognition ~~current~~of our revenue in accordance with ~~changing~~applicable ~~technologies~~accounting principles due to the time required to complete the academic year; and · costs related to possible acquisitions of technology or other educational facilities.

· increased or uneven expenses, whether related to sales and marketing or administration;

· deferral of recognition of our revenue in accordance with applicable accounting principles due to the time required to complete the academic year; and

· costs related to possible acquisitions of technology or other educational facilities.

Due to these factors, forecasts may not be achieved, either because expected revenues do not occur or because they occur at lower prices or on terms that are less favorable to us. In addition, these factors increase the chances that our results could be lower than the expectations of investors and analysts. If so, the market price of our stock would likely decline.

Risks Related to Doing Business in the People's Republic of China

Our business operations take place primarily in the People's Republic of China. Because Chinese laws, regulations and policies are changing, our Chinese operations will face several risks summarized below.

- Limitations on Chinese economic market reforms may discourage foreign investment in Chinese businesses.

The value of investments in Chinese businesses could be adversely affected by political, economic and social uncertainties in China. The economic reforms in China in recent years are regarded by China's central government as a way to introduce economic market forces into China. Given the overriding desire of the central government leadership to maintain stability in China amid rapid social and economic changes in the country, the economic market reforms of recent years could be slowed, or even reversed.

- Any change in policy by the Chinese government could adversely affect investments in Chinese businesses.

Changes in policy could result in imposition of restrictions on currency conversion, imports or the source of supplies, as well as new laws affecting joint ventures and foreign-owned enterprises doing business in China. Although China has been pursuing economic reforms, events such as a change in leadership or social disruptions that may occur upon the proposed privatization of certain state-owned industries, could significantly affect the government's ability to continue with its reform.

~~- We face economic risks in doing business in China.~~5

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We face economic risks in doing business in China.

As a developing nation, China's economy is more volatile than that of developed Western industrial economies. It differs significantly from that of the U.S. or a Western European country in such respects as structure, level of development, capital reinvestment, legal recourse, resource allocation and self-sufficiency. Only in recent years has the Chinese economy moved from what had been a command economy through the 1970s to one that during the 1990s encouraged substantial private economic activity. In 1993, the Constitution of China was amended to reinforce such economic reforms. The trends of the 1990s indicate that future policies of the Chinese government will emphasize greater utilization of market forces. For example, in 1999 the Government announced plans to amend the Chinese Constitution to recognize private property, although private business will officially remain subordinate to state-owned companies, which are the mainstay of the Chinese economy. However, we cannot assure you that, under some circumstances, the government's pursuit of economic reforms will not be restrained or curtailed. Actions by the central government of China could have a significant adverse effect on economic conditions in the country as a whole and on the economic prospects for our Chinese operations.

- The Chinese legal and judicial system may negatively impact foreign investors.

In 1982, the National People's Congress amended the Constitution of China to authorize foreign investment and guarantee the "lawful rights and interests" of foreign investors in China. However, China's system of laws is not yet comprehensive. The legal and judicial systems in China are still under development, and enforcement of existing laws is inconsistent. Many judges in China lack the depth of legal training and experience that would be expected of a judge in a more developed country. Because the Chinese judiciary is relatively inexperienced in enforcing the laws that exist, anticipation of judicial decision-making is more uncertain than would be expected in a more developed country. It may be impossible to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of another jurisdiction. China's legal system is based on written statutes; a decision by one judge does not set a legal precedent that is required to be followed by judges in other cases. In addition, the interpretation of Chinese laws may shift to reflect domestic political changes.

The promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors. However, the trend of legislation over the last 20 years has significantly enhanced the protection of foreign investment and allowed for more control by foreign parties of their investments in Chinese enterprises. We cannot assure you that a change in leadership, social or political disruption, or unforeseen circumstances affecting China's political, economic or social life, will not affect the Chinese government's ability to continue to support and pursue these reforms. Such a shift could have a material adverse effect on our business and prospects.

The practical effect of the People's Republic of China's legal system on our business operations in China can be viewed from two separate but intertwined considerations. First, as a matter of substantive law, the Foreign Invested Enterprise laws provide significant protection from government interference. In addition, these laws guarantee the full enjoyment of the benefits of corporate articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance, which are not qualitatively different from the general corporation laws of the several states. Similarly, the accounting laws and regulations of the People's Republic of China mandate accounting practices which are not consistent with U.S. Generally Accepted Accounting Principles. China's accounting laws require that an annual "statutory audit" be performed in accordance with People's Republic of China's accounting standards and that the books of account of Foreign Invested Enterprises are maintained in accordance with Chinese accounting laws. Article 14 of the Peoples Republic of China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned Enterprise to submit certain periodic fiscal reports and statements to designated financial and tax authorities, at the risk of business license revocation. Second, while the enforcement of substantive rights may appear less clear than United States procedures, Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies, which enjoy the same status as other Chinese registered companies in business-to-business dispute resolution. Generally, the Articles of Association provide that all business disputes pertaining to Foreign Invested Enterprises are to be resolved by the Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden, applying Chinese substantive law. Any award rendered by this arbitration tribunal is, by the express terms of the respective Articles of Association, enforceable in accordance with the "United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)." Therefore, as a practical matter, although no assurances can be given, the Chinese legal infrastructure, while different in operation from its United States counterpart, should not present any significant impediment to the operation of Foreign Invested Enterprises.

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Because our principal assets are located outside of the United States and all of our directors and executive officers reside outside of the United States, it may be difficult for you to enforce your rights based on the United States Federal securities laws against us and our officers and directors in the United States or to enforce judgments of United States courts against us or them in the People's Republic of China.

In addition, our operating subsidiaries and substantially all of our assets are located outside of the United States. You will find it difficult to enforce your legal rights based on the civil liability provisions of the United States Federal securities laws against us in the courts of either the United States or the People's Republic of China and, even if civil judgments are obtained in courts of the United States, to enforce such judgments in the courts of the People's Republic of China. In addition, it is unclear if extradition treaties in effect between the United States and the People's Republic of China would permit effective enforcement against us or our officers and directors of criminal penalties, under the United States Federal securities laws or otherwise.

- Economic Reform Issues

Although the Chinese government owns the majority of productive assets in China, during the past several years the government has implemented economic reform measures that emphasize decentralization and encourage private economic activity. Because these economic reform measures may be inconsistent or ineffectual, we are unable to assure you that:

· We will be able to capitalize on economic reforms; · The Chinese government will continue its pursuit of economic reform policies;

· The ~~Chinese~~economic ~~government~~policies, ~~will~~even ~~continue~~if ~~its~~pursued, ~~pursuit~~will ofbe ~~economic~~successful; ~~reform~~· Economic policies will not be significantly altered from time to time; and

· The economic policies, even if pursued, will be successful;

· Economic policies will not be significantly altered from time to time; and

Business operations in China will not become subject to the risk of nationalization.

Since 1979, the Chinese government has reformed its economic systems. Because many reforms are unprecedented or experimental, they are expected to be refined and improved. Other political, economic and social factors, such as political changes, changes in the rates of economic growth, unemployment or inflation, or in the disparities in per capita wealth between regions within China, could lead to further readjustment of the reform measures. This refining and readjustment process may negatively affect our operations.

Over the last few years, China's economy has registered a high growth rate. Recently, there have been indications that rates of inflation have increased. In response, the Chinese government recently has taken measures to curb this excessively expansive economy. These measures have included revaluations of the Chinese currency, the Renminbi (RMB), restrictions on the availability of domestic credit, and limited re-centralization of the approval process for purchases of some foreign products. These austerity measures alone may not succeed in slowing down the economy's excessive expansion or control inflation, and may result in severe dislocations in the Chinese economy. The Chinese government may adopt additional measures to further combat inflation, including the establishment of freezes or restraints on certain projects or markets.

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To date, reforms to China's economic system have not adversely impacted our operations and are not expected to adversely impact operations in the foreseeable future; however, there can be no assurance that the reforms to China's economic system will continue or that we will not be adversely affected by changes in China's political, economic, and social conditions and by changes in policies of the Chinese government, such as changes in laws and regulations, measures which may be introduced to control inflation, changes in the rate or method of taxation, imposition of additional restrictions on currency conversion and remittance abroad, and reduction in tariff protection and other import restrictions.

We are subject to risks associated with our operations which may affect our results.

The field of education in the PRC has drawbacks that the same industry does not have within the United States. For instance:

· In China, insurance coverage is a relatively new concept compared to that of the United States and for certain aspects of a business operation, insurance coverage is restricted or expensive. Workers compensation for employees in the PRC may be unavailable or, if available, insufficient to adequately cover such employees.

· The laws and regulations in the PRC set various standards regulating certain aspects of health and environmental quality, including, in some cases, the environment in which educational activities and teaching facilities may be located, or what methods, procedures or substances may be used in the conduct of certain classes. Violation of those standards could result in a temporary or permanent restriction by the PRC of our operations.

We cannot assure you that we will be able to adequately address any of these or other limitations.

Our earnings and, therefore our profitability, may be affected by price volatility.

We anticipate that the majority of our future revenues will be derived from providing educational services, and, as a result, our earnings are directly related to the prices of these services. There are many factors influencing the price of these services including expectations for inflation; regional demand and our ability to meet it; political and economic conditions; and labor costs. These factors are beyond our control and are impossible for us to predict. As a result, price changes may adversely affect our operating results.

Our educational business operations and related activities are subject to PRC government regulations concerning education.

We may have to make a significant financial commitment to ensure that we remain compliant with the regulations affecting education providers. Compliance with existing and future regulations may increase our operating costs and may adversely affect our operating results.

Risks Relating to our Common Stock and our Status as a Public Company

Since our chairman and chief executive officer owns a majority of our outstanding of common stock, and together with our other directors and officers and another stockholder in the aggregate own over 94% of our outstanding shares, you will not have the ability to determine the outcome of matters requiring stockholder approval.

Yongqi Zhu, our chairman and chief executive officer, beneficially owns approximately 56% of the outstanding shares of our common stock. In addition, another beneficial owner owns more than 26% of our outstanding shares of common stock and other officers and directors in the aggregate own approximately 12% of our common stock. As a result of this concentration of ownership, you and our other stockholders, acting alone, do not have the ability to determine the outcome of matters requiring stockholder approval, including the election of our directors or significant corporate transactions. In addition, this concentration of ownership, which is not subject to any voting restrictions, may discourage or thwart efforts by third parties to take-over or effect a change in control of our company that may be desirable for you and are other stockholders, and may limit the price that investors are willing to pay for our common stock.

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The price of our common stock may be affected by a limited trading volume and may fluctuate significantly.

There has been a limited public market for our common stock and we cannot assure you that an active trading market for our stock will develop or if developed, will be maintained. The absence of an active trading market may adversely affect our stockholders' ability to sell our common stock in short time periods, or possibly at all. In addition, we cannot assure you that you will be able to sell shares of common stock that you have purchased without incurring a loss. The market price of our common stock may not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the common stock in the future. In addition, the market price for our common stock may be volatile depending on a number of factors, including business performance, industry dynamics, and news announcements or changes in general economic conditions.

We have not and do not anticipate paying any dividends on our common stock; because of this our securities could face devaluation in the market.

We have paid no dividends on our common stock to date and it is not anticipated that any dividends will be paid to holders of our common stock in the foreseeable future. While our dividend policy will be based on the operating results and capital needs of the business, it is anticipated that any earnings will be retained to finance our future expansion and for the implementation of our business plan. As an investor, you should take note of the fact that a lack of a dividend can further affect the market value of our stock, and could significantly affect the value of any investment in our Company.

We will continue to incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance requirements.

As a public company we incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002, together with rules implemented by the Securities and Exchange Commission and applicable market regulators. These rules impose various requirements on public companies, including requiring certain corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these new compliance requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow management~~, and~~ ~~commencing in 2011 our independent registered public accounting firm,~~ to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts. If we are not able to comply with the requirements of Section 404 in a timely manner, or if our accountants later identify deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.

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Our Board of Directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stock holders and with the ability to adversely affect stockholder voting power and perpetuate the board's control over the Company.

Our certificate of incorporation authorizes the issuance of up to 50,000,000 shares of preferred stock. Our Board of Directors by resolution may authorize the issuance of preferred stock in one or more series with such limitations and restrictions as it may determine, in its sole discretion, with no further authorization by security holders required for the issuance thereof. The Board may determine the specific terms of the preferred stock, including: designations; preferences; conversions rights; cumulative; relative; participating; and optional or other rights, including: voting rights; qualifications; limitations; or restrictions of the preferred stock. The issuance of preferred stock may adversely affect the voting power and other rights of the holders of common stock. Preferred stock may be issued quickly with terms calculated to discourage, make more difficult, delay or prevent a change in control of our company or make removal of management more difficult. As a result, the Board of Directors' ability to issue preferred stock may discourage the potential hostile acquirer, possibly resulting in beneficial negotiations. Negotiating with an unfriendly acquirer may result in terms more favorable to us and our stockholders. Conversely, the issuance of preferred stock may adversely affect any market price of, and the voting and other rights of the holders of the common stock. We presently have no plans to issue any preferred stock.

We may issue shares of our capital stock or debt securities to complete an acquisition, which would reduce the equity interest of our stockholders or subject our company to risks upon default.

We may issue our securities to acquire companies or assets. Most likely, we will issue additional shares of our common stock or preferred stock, or both, to complete acquisitions. If we issue additional shares of our common stock or shares of our preferred stock, the equity interest of our existing stockholders may be reduced significantly, and the market price of our common stock may decrease. The shares of preferred stock we issue are likely to provide holders with dividend, liquidation and voting rights, and may include participation rights, senior to, and more favorable than, the rights and powers of holders of our common stock.

If we issue debt securities as part of an acquisition, and we are unable to generate sufficient operating revenues to pay the principal amount and accrued interest on that debt, we may be forced to sell all or a significant portion of our assets to satisfy our debt service obligations, unless we are able to refinance or negotiate an extension of our payment obligation. Even if we are able to meet our debt service obligations as they become due, the holders of that debt may accelerate payment if we fail to comply with, and/or are unable to obtain waivers of, covenants that require us to maintain certain financial ratios or reserves or satisfy certain other financial restrictions. In addition, financial and other covenants in the agreements we may enter into to secure debt financing may restrict our ability to obtain additional financing and our flexibility in operating our business.

We have significant indebtedness. We are significantly leveraged and our indebtedness is substantial in relation to our stockholders' equity. Our ability to make principal and interest payments will depend on future performance, which is subject to many factors, some of which are outside our control. In the case of a continuing default with respect to this indebtedness, the lender will have the right to foreclose on our assets, which would have a material adverse effect on our business. Payment of principal and interest on this indebtedness may limit our ability to pay cash dividends to stockholders and the documents governing this indebtedness prohibit the payment of cash dividends in certain situations. Our leverage may also adversely affect our ability to finance future operations and capital needs, may limit our ability to pursue business opportunities and may make our results of operations more susceptible to adverse economic conditions.

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Future sales of our common stock, or the perception that such sales could occur, could have an adverse effect on the market price of our common stock.

As of March 313, ~~2010~~2011, we had outstanding 22,582,~~541~~500 shares of common stock. There are a limited number of holders of our common stock. Future sales of our common stock, pursuant to a registration statement or Rule 144 under the Securities Act, or the perception that such sales could occur, could have an adverse effect on the market price of our common stock. The number of our shares available for sale pursuant to registration statements or Rule 144 is very large relative to the trading volume of our shares. Any attempt to sell a substantial number of our shares could severely depress the market price of our common stock. In addition, we may use our capital stock in the future to finance acquisitions and to compensate employees and management, which will further dilute the interests of our existing shareholders and could also depress the trading price of our common stock.

Our business may be adversely affected by conditions in the financial markets and economic conditions generally.

Changes in economic conditions worldwide and particularly in China make it difficult for us to accurately forecast and plan future business requirements, and could cause us to slow or reduce our business activities. Furthermore, during challenging economic times, we may face issues gaining timely access to financing or capital infusion, which could result in an impairment of our ability to continue our business activities. We cannot predict the timing, strength or duration of any economic slowdown or subsequent economic recovery, worldwide, in China, or in our industry.

These and other economic factors could have a material adverse effect on our financial condition and operating results. In addition, further negative market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, lessened demand for our products and services, and increased default rates among our clients. A worsening of these conditions would likely exacerbate the adverse effects of these difficult market conditions on us and others in our industry.

Item 2. Properties.

Our educational and principal operating facilities are located at 1 Suhua Road, Shiji Jinrong Building Suite 801, Suzhou Industrial Park, Jiangsu Province, 215020, P.R. China. Our facilities consist of twenty buildings with 50,113 square feet of space housed on approximately 92,000 square meters of land. The term of the lease expires March 2018 and the minimum rent for the next five years is $1,645,735 per annum.

Item 3. Legal Proceedings.

There are no pending legal proceedings to which we are a party or in which any of our directors, officers or affiliates, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us. Our property is not the subject of any pending legal proceedings.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Our Common Stock

Our common stock is traded in the over-the-counter market and is quoted on the OTC Bulletin Board under the symbol CIVS.OB. ~~Prior to December 29, 2008, the date we effected a 1-for-20 reverse stock split of our common stock, our common stock had been quoted under the symbol "CIVY.OB".~~

The prices set forth below reflect the quarterly high and low closing price information for shares of our common stock for the periods indicated. These quotations reflect inter-dealer prices, without retail markup, markdown or commission, and may not represent actual transactions. ~~The prices set forth below have been adjusted to reflect the 1-for-20 reverse stock split effected on December 29, 2008~~.

	High		Low
2010
First Quarter	$	0.09881	$	0.065
Second Quarter	$	0.11881	$	0.00588
Third Quarter	$	0.02	$	0.02
Fourth Quarter	$	0.02	$	0.02
2009
First Quarter	$	0.35	$	0.04
Second Quarter	$	0.09881	$	0.021
Third Quarter	$	0.479	$	0.04
Fourth Quarter	$	0.99887	$	0.07287

	High		Low
2008
First Quarter	$	4.10	$	1.60
Second Quarter	$	2.20	$	0.60
Third Quarter	$	1.06	$	0.60
Fourth Quarter	$	0.18	$	0.024
2009
First Quarter	$	0.35	$	0.04
Second Quarter	$	0.09881	$	0.021
Third Quarter	$	0.479	$	0.04
Fourth Quarter	$	0.99887	$	0.07287

As of March 3, 2011, our common stock was held of record by approximately 26 stockholders, some of whom may hold shares for beneficial owners and have not been polled to determine the extent of beneficial ownership.

As of March 31, 2010, our common stock was held of record by approximately 27 stockholders, some of whom may hold shares for beneficial owners and have not been polled to determine the extent of beneficial ownership.

We have never paid cash dividends on our common stock. Holders of our common stock are entitled to receive dividends, if any, declared and paid from time to time by the Board of Directors out of funds legally available. We intend to retain any earnings for the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Any future determination as to the payment of cash dividends will depend upon future earnings, results of operations, capital requirements, our financial condition and other factors that our Board of Directors may consider.

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Our Equity Compensation Plans

The following table provides information as of December 31, ~~2009~~2010 about our equity compensation plans and arrangements.

Equity Compensation Plan Information - December 31, ~~2009~~2010

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Equity compensation plans approved by security holders	none	none	none

Equity compensation plans not approved by security holders	none	n/a	0

Purchases of Equity Securities by the Company and Affiliated Purchasers

During the fourth quarter of our fiscal year ended December 31, ~~2009~~2010, neither we nor any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our common stock, the only class of our equity securities registered pursuant to section 12 of the Exchange Act.

Recent Sales of Unregistered Securities

~~Information concerning~~None ~~sales of unregistered securities during 2009 has been reported in our reports filed pursuant to Section 13(a) of the Exchange Act~~.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation

The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. All information presented herein is based on our fiscal years ended December 31, ~~2009~~2010 and ~~2008~~2009.

Results of Operations

Comparison of Revenue for the Years Ended December 31, ~~2009~~2010 and ~~2008~~2009

	2009		2008
	2010		2009
Revenue
Tuition fees	$	5,~~350~~699,~~069~~353	$	5,~~253~~350,~~656~~069
Accommodation fees		~~599~~487,~~243~~007		~~570~~599,~~454~~243
Other		~~385~~233,~~469~~947		~~256~~385,~~667~~469
Total Revenue	$	6,~~334~~420,~~781~~307	$	6,~~080~~334,~~777~~781

Net revenue for the year ended December 31, 2009 totaled $6,334,781, an increase of $254,004, or approximately 4% compared to $6,080,777 for the year ended December 31, 2008. The revenue from tuition fees was $5,350,069 for the year ended December 31, 2009, an increase of $96,413, or 2% compared to $5,253,656 for the year ended December 31, 2008. The increase in tuition fees was primarily attributable to the slight increase of fees for certain students. Our current enrollment (as of December 31, 2009) was 1,810 students, a decrease of 115 students, or 6%, compared to an enrollment of 1,925 students as of December 31, 2008.13

~~Comparison~~ Table of ~~Operating Expenses for the Years Ended December 31, 2009 and 2008~~Contents

Net revenue for the year ended December 31, 2010 totaled $6,420,307, an increase of $85,526 or 1% compared to $6,334,781 for the year ended December 31, 2009. The revenue from tuition fees was $5,699,353 for the year ended December 31, 2010, an increase of $349,284, or 7% compared to $5,350,069 for the year ended December 31, 2009.

	2009		2008
Operating Expenses
Teachers salaries and related expenses	$	2,164,486	$	1,789,290
Professional and consulting fees		1,054,483		1,897,765
Rental and related expenses		1,811,139		1,481,290
Depreciation and amortization expenses		901,348		1,146,903
Other general and administrative expenses		1,015,240		1,141,823
Total Operating Expenses	$	6,946,696	$	7,457,071

The revenue from accommodation fees was $487,007 for the year ended December 31, 2010, a decrease of $112,236, or 19% compared to $599,243 for the year ended December 31, 2009. The revenue from other fees was $233,946 for the year ended December 31, 2010, a decrease of $151,523, or 39% compared to $385,469 for the year ended December 31, 2009. The increase in revenues was primarily attributable to the increase in tuition fee income. Our current enrollment (as of December 31, 2010) was 1,342 students, a decrease of 468 students, or 26%, compared to an enrollment of 1,810 students as of December 31, 2009. The decrease in our enrolled student numbers resulted from a new regulation by the local education authority. Under the new regulation, students are now allowed to transfer from private school to public school without limitation, and allowed to enroll cross school district borders.

~~Operating~~Comparison ~~expenses for the year ended December 31, 2009 totaled $6,946,696, representing a decrease~~ of ~~$510,375,~~Operating ~~or 7%,~~Expenses ~~compared to $7,457,071~~ for the ~~year~~Years ~~ended~~Ended December 31, ~~2008.~~2010 The decrease in operating expenses was mainly attributable to a decrease in consulting expenses. The consulting expense was $899,531 in 2009, a decrease of $823,340 as compared to $1,722,871 in 2008. The increase in teachers’ salaries and ~~related expense was due to $439,200 in bonuses paid to teachers in~~ 2009. During 2009, $329,849 increase in rental and related expenses and $245,555 decrease in depreciation and amortization resulted from the sale and leaseback of our buildings and land use right in March 2008.

Comparison of Other Income and Expenses for the Years Ended December 31, 2009 and 2008

	2010		2009
Operating Expenses
Teachers salaries and related expenses	$	2,050,535	$	2,164,486
Professional and consulting fees		870,680		1,054,483
Rental and related expenses		1,890,701		1,811,139
Student expenses		609,950		-
Depreciation and amortization expenses		935,765		901,348
Other general and administrative expenses		711,401		1,015,240
Total Operating Expenses	$	7,069,032	$	6,946,696

~~Other income~~Operating ~~and~~expenses ~~expense~~ for the year ended December 31, ~~2009~~2010 totaled ~~a net expense of~~ $~~203~~7,~~013~~069,032, arepresenting ~~decrease~~an increase of $3122,~~623~~336,~~862~~ or 2%, compared to ~~net expense of~~ $36,~~826~~946,~~875~~696 for the year ended December 31, ~~2008~~2009. The ~~decreased~~increase ~~net~~in ~~other~~operating ~~expense~~expenses was mainly ~~resulted~~ ~~from~~attributable ~~the loss on sale and leaseback of real property~~ to athe ~~related~~increase ~~party~~ in ~~2008.~~student ~~(See Note 4 to Financial Statements)~~expenses. The ~~loss~~prices ~~represents the difference between the carrying value~~ of ~~the~~food ~~property sold~~ and ~~the~~other ~~fair~~supplies ~~value~~are ~~of the~~increasing ~~consideration~~continually ~~received~~due –to ~~i.e.,~~inflation ~~the~~in ~~present value of future cash inflows (lease payments)~~China. The Company ~~recorded~~was anot ~~loss~~able ofto ~~$5,169,294~~cover at the ~~date~~student ofrelated ~~the transaction.~~costs ~~The~~by ~~discount~~increasing ~~will~~student befees ~~accreted~~without inapproval ~~proportion to the payments received and will be recorded under the caption “accretion~~ of ~~discount” in~~ the ~~other~~ ~~income~~local ~~section~~authority. ~~During 2008, the accretion of discount totaled $2,280,191.~~ The ~~net~~increase ~~effect~~in ~~was~~student ~~that $2,889,103 of net other~~ expenses ~~were~~was ~~incurred for~~ the ~~year~~ ~~ended~~result ~~December~~of ~~31,~~price ~~2008~~control ~~related~~on tostudent ~~the~~fees ~~sale~~by ~~and leaseback of real property. During 2009,~~ the ~~accretion~~local ~~of discount of $482,478 was contained in other income~~authority. Interest expense totaling $686,870 in 2009, decreased $264,126, as compared to $950,996 in 2008. The decrease in interest expense resulted from lower average balances outstanding in 2009 compared to 2008.

10Comparison of Other Income and Expenses for the Year Ended December 31, 2010 and 2009

Other income and expenses consist of interest income, interest expense, loss on disposal of fixed assets and accretion of discount on receivable from leaseback. Other expense (net) for the year ended December 31, 2010 was $185,581, a decrease of $17,432, or 9%, compared to $203,013 for the year ended December 31, 2009. The decrease in other expense (net) was mainly attributable to the $14,488 reduction in interest expense.

Liquidity and Capital Resources

Cash has historically been generated from operations. Operations and liquidity needs are funded primarily through cash flows from operations and short-term borrowings. Cash and cash equivalents were $46217,~~187~~424 and $5846,~~984~~187 at December 31, ~~2009~~2010 and ~~2008~~ December 31, 2009, respectively.

Net cash provided by operating activities was $1,~~774~~341,~~684~~232 and $21,~~455~~774,~~012~~684 for the year ended December 31, ~~2009~~2010 and ~~2008~~2009, respectively. The decrease in net cash provided by operating activities in ~~2009~~2010 was due primarily to the Company’s $319,~~731~~378 increase in net loss and the $1,~~418~~115,758 reduction of the positive change in accounts payable and accrued expenses ~~paid~~($852,010 ~~by a~~increase ~~related~~in ~~party~~2009; $263,748 ~~Minglong~~decrease in 2010), offset partially by the increase in ~~2008~~the aschange ~~compared~~in todeferred revenue of $0432,692 in ~~2009.~~2010 ~~See~~($214,565 ~~Note~~decrease 4in ~~of Notes~~2009; to$218,127 ~~Consolidated~~increase ~~Financial~~in ~~Statements~~2010).

Net cash used by investing activities was $2,984,629 in 2009, compared to $44,581 in 2008. During 2009, the Company made advances of $2,790,207 to an entity owned by the Company’s Chief Executive Officer who is also a significant shareholder in the Company. These advances, $2,790,207, were repaid to the Company by the entity on March 30, 2010. There were no advances made to the aforementioned entity in 2008. During 2009, the Company acquired $194,422 of property and equipment, compared to $44,581 in 2008.14

~~Net~~Table ~~cash provided by financing activities was $1,175,173 in 2009, compared to $2,272,272 used in financing activates in 2008. During 2009, net repayment~~ of bank borrowings was $293,000, compared to $4,606,720 in 2008. During 2009, the Company repaid $91,827 of loans from related parties, compared to net proceeds of $1,641,232 from advances from the entity owned by the Chief Executive Officer/significant Company Shareholder described in the preceding paragraph in 2008. The Company received $1,560,000 from convertible notes in 2009.Contents

Net cash used in investing activities was $2,946,778 in 2010, compared to $2,984,629 in 2009. During 2010, the Company collected advances of $2,790,207 made in 2009 to an entity owned by the Company’s Chief Executive Officer who is also a significant shareholder in the Company. During 2010, the Company made new advances of $2,643,248 to this related party. On March 31, 2010, the Company made a temporary advance of $735,430 to its “key” employee. The advance was repaid in full on April 1, 2010. On May 24, 2010, the Company approved a major renovation plan with a total budget of RMB 26,000,000 ($3,939,520) for major renovation of school air-conditioning, landscaping and other school facilities. During May 2010, the Company signed three renovation contracts with three vendors, with a total value for the contracts amounting to RMB 25,160,000 ($3,812,243). As of December 31, 2010, RMB 20,120,000 ($3,048,582), 80% of contracted value, was paid. Other property additions were $53,285 and $194,422 for the year ended December 31, 2010 and 2009, respectively.

Net cash provided by financing activities was $2,073,129 and $1,175,173 for 2010 and 2009, respectively. During 2010, the Company borrowed $12,576,160 from a bank and a loan company and repaid $10,401,500 to a bank. The net bank and loan company borrowings were $2,174,660. The Company repaid $101,531 to other related parties in 2010. During 2009, the Company borrowed $19,191,500 from a bank and repaid $19,484,500 in bank borrowings. The net repayment was $293,000 in 2009. On June 30, 2009, the Company completed the sale of $1,560,000 principal amount of the Company's 6% Convertible Notes, due June 30, 2010 (the "Notes"). The Notes were sold to four related parties. On February 4, 2010, China Ivy issued a total of 19,500,000 shares of its common stock in full satisfaction of the $1,560,000 convertible notes. The Company also repaid $91,827 to other related parties in 2009.

Bank Borrowings

The Company has borrowed $1012,~~401~~576,~~500~~160 and $10,~~699~~401,~~610~~500 from two banks and a loan company located in China under credit agreements as of December 31, ~~2009~~2010 and ~~2008~~2009, respectively. Borrowings under credit lines ~~consist~~consisted of the following:

	2009		2008
	2010		2009
Bank Borrowings
Bank and Loan Company Borrowings
Borrowings from Huaxia Bank Suzhou Branch
Interest at 5.103% per annum, due by September 18, 2009	$	-	$	6,009,370
Interest at 5.346% per annum, due by October 30, 2010	$	-	$	2,637,000
Interest at 5.841% per annum, due by September 12, 2009		-		2,784,830
Interest at 5.346% per annum, due by November 5, 2010		-		2,197,500
Interest at 5.346% per annum, due by October 30, 2010		2,637,000		-
Interest at 5.346% per annum, due by November 9, 2010		-		2,710,250
Interest at 5.346% per annum, due by November 5, 2010		2,197,500		-
Interest at 5.346% per annum, due by November 18, 2010		-		1,098,750
Interest at 5.346% per annum, due by November 9, 2010		2,710,250		-
Interest at 5.61% per annum, due by January 28, 2011		4,697,120		-
Interest at 5.346% per annum, due by November 18, 2010		1,098,750		-
Interest at 5.61% per annum, due by January 29, 2011		1,969,760		-
Borrowings from Huaxia Bank Subtotal		8,643,500		8,794,200
Interest at 5.838% per annum, due by November 18, 2011		2,272,800		-
Borrowings from Huaxia Bank Subtotal		8,939,680		8,643,500
Borrowings from Jiangsu Dongwu Rural Commercial Bank
Interest at 9.711% per annum, due by June 26, 2009		-		293,140
Interest at 6.903% per annum, due by June 12, 2011		303,040		293,000
Interest at 9.711% per annum, due by June 25, 2009		-		1,612,270
Interest at 6.903% per annum, due by June 12, 2011		1,363,680		1,465,000
Interest at 6.903% per annum, due by June 5, 2010		293,000		-
Borrowings from Dongwu Rural Commercial Bank Subtotal		1,666,720		1,758,000
Interest at 6.903% per annum, due by June 5, 2010		1,465,000		-
Borrowings from Suzhou Guorunfa Rural Small Loan Co. Ltd
Borrowings from Dongwu Rural Commercial Bank Subtotal		1,758,000		1,905,410
Interest at 13% per annum, due by November 15, 2011(unsecured)		1,969,760		-
Total borrowings		1012,~~401~~576,~~500~~160		10,~~699~~401,~~610~~500
Current portion		1012,~~401~~576,~~500~~160		10,~~699~~401,~~610~~500
Long term portion	$	-	$	-

On June 17, 2008, the Company entered into a credit agreement with Jiangsu Dongwu Rural Commercial Bank. The Company acquired a 2,000,000 RMB (approximately $~~293~~303,~~000~~040) credit line from June 17, 2008 to June 17, 2011. This credit line is secured by a 234 square meter residential unit and a 62 square meter land use right owned by Ti Yin and Yan Hong, the third party assigned by the bank.

On June 17, 2008, the Company entered into a credit agreement with Jiangsu Dongwu Rural Commercial Bank. The Company acquired a 11,000,000 RMB (approximately $1,611,500) credit line from June 17, 2008 to June 17, 2011. This credit line is secured by a 477 square meter residential unit and 837 square meter land use right owned by the Chief Executive Officer of the Company. As of December 31, 2009, the balance outstanding under this credit line was 10,000,000 RMB ($1,465,000).15

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On June 17, 2008, the Company entered into a credit agreement with Jiangsu Dongwu Rural Commercial Bank. The Company acquired a 11,000,000 RMB (approximately $1,666,720) credit line from June 17, 2008 to June 17, 2011. This credit line is secured by a 477 square meter residential unit and a 837 square meter land use right owned by the Chief Executive Officer of the Company.

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

On October 28, 2010, the Company received a RMB 31,000,000 ($4,697,120) borrowing from Huaxia Bank. The loan bore interest at 5.61% per annum and was due by January 28, 2011. On October 29, 2010, the Company received a RMB 13,000,000 ($1,969,760) borrowing from Huaxia Bank. The loan was a “working capital” loan that bore interest at 5.61% per annum and was due by January 29, 2011. On November 18, 2010, the Company received a RMB 15,000,000 ($2,272,800) borrowing from Huaxia Bank. The loan was a “working capital” loan that bears interest at 5.838% per annum and is due by November 18, 2011.

11From November 18 through November 23, 2010, the Company received a total of RMB 13,000,000 ($1,969,760) under a “working capital” line of credit agreement entered into on November 16, 2010 with Guorunfa Rural Small Loan Company. Under the line of credit agreement the Company may borrow a maximum of RMB 24,700,000 ($3,742,544) between November 16, 2010 and November 15, 2012, for which Minglong (Suzhou) Industry Co., Ltd. has currently pledged real estate located in Suzhou City, Peoples Republic of China. Minglong (Suzhou) is not required to re-provide sufficient collateral each time a fresh borrowing occurs under the line of credit during its 2 year term. The interest rate for each borrowing is fixed at the time the borrowing occurs. The interest rate for the 3 borrowings comprising the RMB 13,000,000 ($1,969,760) was set at 1.0833% per month.

Convertible Notes Payable

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

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

On ~~March 2~~February 4, 2010, China Ivy issued a total of 19,500,000 shares of its common stock in full satisfaction of the $1,560,000 convertible notes payable due to the four related parties discussed above. Consequently, the Company’s issued and outstanding common stock increased from 3,082,500 shares to 22,582,500 shares. Accrued interest in the amount of $62,956 was treated as additional paid in capital.

Going Concern

The financial statements have been prepared on a “going concern” basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as of December 31, ~~2009~~2010 and ~~2008~~December 31, 2009, the Company had cash of $46217,~~187~~424 and $5846,~~984~~187, respectively, and a working capital deficit of $1112,~~038~~255,~~871~~303 and $1311,~~257~~038,~~768~~871, respectively. The Company also had an accumulated deficit of $5,~~115~~949,~~622~~928 ~~and $4,300,694~~ as of December 31, ~~2009 and 2008, respectively~~2010. These factors ~~create~~raise substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition through a debt or equity offering of its securities and /or a business combination with another business entity. However, there is no assurance that the Company will accomplish these objectives. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amount and classification of liability that might be necessary should the Company be unable to continue as a going concern.

Historically, operations, short term financing and the sale of our company stock have been sufficient to meet our cash needs. Our school is a reputable school in the City of Suzhou. The tuition income will be relatively stable in the foreseeable future. We believe that we will be able to generate enough cash to cover our daily operating needs in the next twelve months. We will focus our efforts on reducing operating costs, especially administrative expenses, in the next twelve months. However, our actual working capital needs for the long and short term will depend upon numerous factors, including operating results, competition, and the availability of credit facilities, none of which can be predicted with certainty. Future expansion will be limited by the availability of capital.

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Critical Accounting Policies and Estimates

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all our significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

General

The Company’s Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

The Company’s revenue consists of tuition fees, donated tuition fees, accommodation fees and others. Those fees will usually be collected in advance at the beginning of a semester. Spring semester runs from February to July. Autumn semester runs from August to January. The Company prorates the fees collected to applicable months during the semester, recognizes revenue in the corresponding periods and records unrecognized fees collected as deferred income. As of December 31, ~~2009~~2010 and ~~2008~~December 31, 2009, the deferred revenue balance was $~~715~~933,~~535~~662 and $~~930~~715,~~100~~535, respectively ~~which represents fees applied for the month of January 2010 and 2009, respectively, and advance collections for the spring semester~~.

Fair Value of Financial Instruments

In connection with the determination of ~~accounts~~the receivable from sale and leaseback of real property - related party (Note 45), the Company used the following assumptions to calculate the present value at the date of the transactions: (1) annual rent payments of $1,603,405; (2) term of ten years; (3) interest rate of 7% per annum.

Foreign Currency Translation

The consolidated financial statements of the Company are translated pursuant to Accounting Standard Codification (“ASC”) 830, “Foreign Currency Matters.” The Company’s subsidiary, Blue Tassel School, is located and operates in China. The Chinese Yuan is the functional currency. The financial statements of Blue Tassel School are translated to U.S. dollars using period-end exchange rates (published by the Federal Reserve Bank) for assets and liabilities, and average exchange rates (published by the Federal Reserve Bank) for revenues, costs and expenses. Translation adjustments are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Transaction gains or losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the consolidated results of operations.

~~Recent Accounting Pronouncements~~17

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

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

In ~~June 2009~~ February 2010, the ~~FASB~~Company ~~issued~~adopted ~~authoritative~~an ~~guidance~~amendment ~~which~~to ~~eliminates~~previously ~~the exemption~~adopted ~~for~~accounting ~~qualifying~~guidance ~~special-purpose~~on ~~entities~~subsequent ~~from~~event ~~consolidation requirements~~disclosure, ~~contains~~which ~~new~~established ~~criteria~~standards ~~for~~of ~~determining~~accounting ~~the~~for ~~primary~~and ~~beneficiary~~disclosure of ~~a variable~~events ~~interest~~or ~~entity,~~transactions ~~and~~that ~~increases~~occur after the ~~frequency~~balance ofsheet ~~required~~date ~~reassessments to~~but ~~determine~~before ~~whether~~financial astatements ~~company~~are isissued ~~the~~or ~~primary~~available ~~beneficiary~~to ofbe aissued. ~~variable~~Under ~~interest entity.~~the ~~The~~amended guidance, the Company is ~~applicable~~no ~~for~~longer ~~annual~~required ~~periods~~to ~~beginning~~disclose ~~after November 15,~~the ~~2009~~date ~~and~~through ~~interim~~which ~~periods~~subsequent ~~therein~~events ~~and~~have ~~thereafter~~been evaluated. The ~~Company does not expect the~~ adoption of this ~~standard~~requirement todid not have a material ~~effect~~impact on ~~its consolidated~~the Company’s financial ~~position~~condition or results of operations.

~~In June~~ We adopted the accounting principles established by ASU 2009-17, ~~the~~Consolidations: ~~FASB~~Improvements ~~issued~~to ~~authoritative~~Financial ~~guidance~~Reporting ~~which~~by ~~eliminates~~Enterprises ~~the concept~~Involved ofwith aVariable ~~qualifying~~Interest ~~special-purpose~~Entities, ~~entity~~effective January 1, ~~creates~~2010. ~~more~~This ~~stringent conditions~~ASU requires an ongoing reassessment and replaces the quantitative-based risks and rewards calculation for determining which reporting aentity, ~~transfer~~if ofany, has a ~~portion~~controlling offinancial interest in a ~~financial~~variable ~~asset~~interest asentity (“VIE”) with a ~~sale, clarifies~~primarily ~~other~~qualitative ~~sale-accounting~~analysis. ~~criteria,~~The ~~and~~qualitative ~~changes~~analysis is based on identifying the ~~initial~~party ~~measurement~~that ~~of a~~has ~~transferor~~both the power to direct the activities that most significantly impact the VIE’s ~~interest~~economic inperformance ~~transferred~~(the ~~financial~~“power ~~assets~~criterion”) and the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE (the “losses/benefit criterion”). The ~~guidance~~party ~~is applicable~~that ~~for~~meets ~~annual~~both ~~periods~~these ~~beginning~~criteria ~~after~~is ~~November 15,~~deemed ~~2009~~to ~~and~~have ~~interim periods~~a ~~therein~~controlling ~~and~~financial ~~thereafter~~interest. The ~~Company~~party ~~does~~with ~~not~~the ~~expect~~controlling financial interest is considered to be the primary beneficiary and as a result is required to consolidate the VIE. The adoption of this ~~standard~~ tonew guidance did not have a material effect on ~~its~~our ~~consolidated~~ financial ~~position or results of operations~~statements.

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

~~Certain other~~In ~~accounting~~January ~~pronouncements~~2010, ~~have~~the ~~been~~Financial Accounting Standards Board issued byguidance which expands the ~~FASB~~required ~~and~~disclosures ~~other~~about ~~standard setting~~fair ~~organizations~~value ~~which~~measurements. ~~are~~This ~~not~~guidance ~~yet~~requires ~~effective~~disclosures ~~and~~about ~~have~~transfers ~~not~~of ~~yet~~investments ~~been~~between ~~adopted by~~levels in the ~~Company.~~fair ~~The~~value ~~impact~~hierarchy onand disclosures relating to the ~~Company’s~~reconciliation ~~consolidated~~of ~~financial~~fair ~~position~~value ~~and results~~measurements using significant unobservable inputs (level 3 investments). This guidance is effective for the Company as of ~~operations~~January ~~from~~1, 2011. The adoption of ~~these~~this ~~standards~~guidance iswill not ~~expected~~have toa be material impact on its financial condition or results of operations.

In April 2010, the FASB issued ASU 2010-13, “Compensation-Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades - a consensus of the FASB Emerging Issues Task Force,” or ASU 2010-13. ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this update do not expand the recurring disclosures required by Topic 718. Disclosures currently required under Topic 718 are applicable to a share-based payment award, including the nature and the term of share-based payment arrangements. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this guidance will not have a material impact on the Company’s financial condition or results of operations.

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

Off-Balance Sheet Arrangements

We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Item 8. Financial Information and Supplementary Data.

The financial information required by this item is attached hereto beginning on page F-1.

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Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

OnNot ~~June 23, 2008 the Company elected to terminate the services of Kabani & Company, Inc. as the Company's independent auditors.~~Applicable

Kabani & Company, Inc. performed the audits for the two year period ended December 31, 2007 and 2006, which did not contain any adverse opinion or a disclaimer of opinion, nor was the opinion as to either audit qualified or modified as to uncertainty, audit scope or accounting principles.

The decision to change accountants was approved by the Company's Board of Directors.

During the Company's fiscal years ended December 31, 2006 and December 31, 2007 and during any subsequent interim period prior to the June 23, 2008 termination as the Company's independent auditors, there were no disagreements with Kabani & Company, Inc, with respect to accounting or auditing issues of the type discussed in Item 304(a)(iv) of Regulation S-K.

On June 23, 2008, the Company's board of directors approved the engagement of the firm of Michael T. Studer CPA, P.C., (the "Studer Group") Suite 311, 18 East Sunrise Highway, Freeport, New York 11520 as the Company's independent auditors. Such appointment was accepted by Michael T. Struder, principal partner of the firm.

During the Company's fiscal years ended December 31, 2006 and December 31, 2007 and the subsequent interim period prior to engaging the Studer Group, neither the Company, nor any other person on the Company's behalf, had consulted with the Studer Group regarding the application of accounting principles to a specified transaction or the type of audit opinion that might be rendered on the Company's financial statements.

On June 24, 2008, Kabani & Company, Inc. was supplied a copy of this disclosure and requested that it furnish a letter to the Company, addressed to the SEC, stating that it agreed with the statements made herein or the reasons why it disagreed.

Item 9A(T). Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, under the supervision and with the participation of our management, including Mr. Yongqi Zhu, our Chairman and Chief Executive Officer, and Ms. Jian Xue, our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, ~~2009~~2010. Based on that evaluation, Mr. Zhu and Ms. Xue concluded that because of the material weakness in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, ~~2009~~2010.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in the rules of the Securities and Exchange Act of 1934.

Internal control over financial reporting refers to the process designed by, or under the supervision of Mr. Yongqi Zhu, our Chief Executive Officer, and MrMs. Jian Xue, our Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP, and includes those policies and procedures that:

(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, under the supervision of Mr. Yongqi Zhu, our Chief Executive Officer, and MrMs. Jian Xue, our Chief Financial Officer, conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under the framework in Internal Control - Integrated Framework, management concluded that the Company's internal control over financial reporting was not effective as of December 31, ~~2009~~2010.

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Our management concluded that there were several significant deficiencies that when combined, resulted in a material weakness in our internal controls over our ability to produce financial statements free from material misstatements. The material weakness resulted from a combination of the following significant deficiencies:

• Lack of documentation and review of financial information by our accounting personnel with direct oversight responsibility, and lack of analysis and reconciliation of certain accounts on a periodic basis, and the failure of the accounting system to provide information related to expenditures on a project-by-project basis;

• Lack of timely identification, research and resolution of accounting issues and lack of documentation of consideration of recent accounting pronouncements;

• Absence of documented controls over our related party transactions; and

• Lack of technical accounting expertise among senior financial staff regarding US GAAP and the requirements of the PCAOB, and regarding the preparation of draft financial statements.

The above-noted material weaknesses were first noted in management's review for the year ended December 31, 2007. Although the Company has attempted to rectify these deficiencies, certain of them remain, and the Company will continue to seek to rectify them.

These weaknesses, which caused our management to conclude that our internal control over financial reporting was not effective as of December 31, 2007, have been significantly improved, and we expect additional steps to be implemented in the near term, will correct the material weaknesses described above.

Changes in Internal Control over Financial Reporting

In order to further enhance our internal controls, our management, with the participation of Mr. Zhu and Ms. Xue, has recommended the implementation of the following changes by the end of the second quarter of ~~2009~~2011:

• the restructuring of our relationships with related parties to address our controls over related party transactions;

• the hiring of additional accounting personnel to assist us in the timely identification, research and resolution of accounting issues and with our documentation processes;

• the hiring of additional high-level accounting personnel with experience in US GAAP to monitor all financial and accounting affairs throughout the Company; and

• the engagement of a third-party financial consulting firm to assist management in evaluating complex accounting issues on an as-needed basis, and the implementation of systems to improve control and review procedures over all financial statement and account balances.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.

15During the fiscal quarter ended December 31, 2010, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except as otherwise noted above.

During the fiscal quarter ended December 31, 2009, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except as otherwise noted above.20

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Item 9B. Other Information.

Not applicable.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance.

The following table sets forth information with respect to our directors and executive officers:

Name	~~Age~~	~~Position with the Company~~Age	Position with the Company
Yongqi Zhu	52	~~Director, Chief Executive Officer~~53	Director, Chief Executive Officer
Qian Gao	28	~~Director, Secretary~~29	Director, Secretary
Jian Xue	40	~~Chief Financial Officer~~41	Chief Financial Officer
Yipeng Lu	47	~~Director~~48	Director
Fugeng Xia	69	~~Director~~70	Director
Haiming Zhang	47	~~Director~~48	Director

The business experience of each director and executive officer of the Company is set forth below.

Yongqi Zhu -

Mr. Zhu graduated from Zuzhou University and Beijing University and received an MBA degree at Singapore Nanyang Technological University. He previously worked at several governmental departments of Wuxian, Jiangsu Province as office manager, deputy general manager and general manager. His outstanding performance at each of these positions led to a great deal of appreciation from his colleagues and community. With support from the government and with great enthusiasm for contributing to the education industry, Zhu started Blue Tassel School in 2001. Zhu also served as the manager of Brighter International Limited ("BIL").

Qian Gao -

Ms. Gao graduated from Foreign Yangzhou University in 2004, majoring in English. In 2003, while a student at Foreign Yangzhou University, Ms. Gao was chosen to continue her studies at Valdosta State University, located at Valdosta, Georgia, U.S.A. She worked at the Project Promotion Bureau of Suzhou Wuzhong Economic Development Zone, as a project manager and served as a vice director of the department from 2004 to 2006. In October 2006, she joined Brighter International Limited ("BIL").

Jian Xue -

Ms. Xue graduated from Nanjing Institute of Finance, majoring in accounting. Ms. Xue is an experienced accountant and worked at several of China's renowned accounting companies both as an accountant and as an auditor. Ms. Xue has also worked at Suzhou Governmental Chemical Union as an accounting specialist. From 1998 to 2002, she worked at Suzhou Jiatai Union, an accounting company, and served as office manager and deputy director. Ms. Xue has experience in the fields of administration management and financial management. In 2002, Ms. Xue joined BIL.

Yipeng Lu -

Mr. Lu began his teaching career at High School Affiliated to Nanjing Normal University after graduating from Nanjing Normal University in 1983. In 1989, as a representative of China's young teachers, Mr. Lu was chosen by China's Education Commission to continue his studies in Japan. During 1995 Mr. Lu served as the principal of the High School Affiliated to Nanjing Normal University. In July 2001 Mr. Lu, as one of the sponsors, joined BTS. Currently he is the principal of BTS; serves as vice-president of the provincial educational association; is a supervisor of post-graduate master students in the Chemistry Department of Nanjing Normal University; and is a visiting professor at Nanjing Xiaozhuang College. Since 1992 Mr. Lu has been recognized as one of Nanjing's top chemistry teachers and one of the top ten teachers in Nanjing. In 1997 he was recognized as the outstanding education specialist of Jiangsu Province and awarded the gold prize for excellence in education by Hong Kong's Bonington Education Foundation.

1621

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Fugeng Xia -

Mr. Xia was chosen as one of China's top educators in 1989. In 1992 he served as vice-principal of Suzhou No. 10 High School. At the same time, he was the director for the Olympic Mathematics Contests. Mr. Xia educated and coached a large number of students who won the first prize in the national and provincial Olympic Mathematics Contests. Mr. Xia has written more than ten theses which were published by important national level journals. Mr. Xia joined BTS in July of 2001. Currently he is not only the vice-principal of BTS, but also serves as a director of Jiangsu Provincial High School Mathematics Association, as well as being the vice-president of Suzhou High School Mathematics Association. In addition to his educational activities, Mr. Xia has been a standing member of the National People's Congress, and served as a representative in the tenth session of the Suzhou Municipal People's Congress.

Haiming Zhang -

Mr. Zhang graduated from Nanjing Normal University in 1983, and began his teaching career at High School Affiliated to Nanjing Normal University in 1992. He was the coach of the International Olympic Physics Contest in Nanjing for 10 years and trained and mentored a large number of students who won the first prize in national and provincial Olympic Physics Contests. Mr. Zhang was the director of the Dean's Office at High School Affiliated to Nanjing Normal University. Mr. Zhang, as one of the sponsors, joined Blue Tassel School in July 2001. Mr. Zhang has written more than ten theses which were published in distinguished national and provincial teaching journals in the fields of management, science and technology education, and physics.

All directors hold office until the next annual meeting of stockholders or until their successors have been elected and qualified, or their earlier death, resignation or removal. All officers are appointed annually by the board of directors and, subject to any existing employment agreement, serve at the discretion of the board.

Compensation of Directors

During the fiscal year ended December 31, ~~2009~~2010, we did not pay or accrue for any individual serving as a member of our Board of Directors (other than Mr. Zhu who receives compensation for serving as our chief executive officer), and none of our directors earned, any fees for serving as a member of our Board of Directors. The following table sets forth certain information regarding the compensation paid to our directors during the fiscal year ended December 31, ~~2009~~ 2010.

DIRECTOR COMPENSATION

Name (a)	Fees Earned or Paid in Cash ($) (b)	Stock Awards ($) (c)	Option Awards ($) (d)	Non-Equity Incentive Plan Compensation ($) (e)	Non-Qualified Deferred Compensation Earnings ($) (f)	All Other Compensation ($) (g)	Total ($) (j)
Qian Gao	None	None	None	None	None	None	None
Yipeng Lu	None	None	None	None	None	None	None
Fugeng Xia	None	None	None	None	None	None	None
Haiming Zhang	None	None	None	None	None	None	None

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Board Committees

Our Board of Directors has not established any committees. Since our common stock is quoted on the OTC Bulletin Board, the Board has no plans or need to establish an audit committee with a financial expert or a compensation committee to determine guidelines for determining the compensation of its executive officers or directors, who currently serve without compensation. For similar reasons, we have not adopted a written policy for considering recommendations from shareholders for candidates to serve as directors or with respect to communications from shareholders.

We intend to establish an Audit Committee and such other committees as may be required when sufficient members and resources are available. The Audit Committee will have a designated Audit Committee Financial Expert who will be responsible for reviewing the results and scope of the audit, and other services provided by the independent auditors. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish these committees.

Code of Ethics

The Company has not yet adopted a code of ethics to apply to its principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. The Company expects to prepare a Code of Ethics in the near future.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act, as amended, requires the Company's executive officers, directors and persons who beneficially own more than 10% of China Ivy's common stock to file reports of their beneficial ownership and changes in ownership (Forms 3, 4 and 5, and any amendment thereto) with the SEC. Executive officers, directors, and greater-than-ten percent holders are required to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of such forms received by it, the Company believes that all reports require to be filed pursuant to Section 16(a) of the Exchange Act by its directors, executive officers and beneficial owners of 10% or more of the common stock were timely made during the fiscal year ended December 31, ~~2009, except that the Form 4s reporting the acquisition of the Company’s 6% Convertible Notes due June 30,~~ 2010 ~~by Messrs~~. ~~Zhu, Zhang and Lu, as well as by Ming Long Industry Asia Co., Ltd., were filed 23 days late.~~

Item 11. Executive Compensation.

The following table sets forth information with respect to the amounts awarded to, earned by, or paid to, our chief executive officer for services provided in all capacities to us and our subsidiaries for the fiscal years ended December 31, 2009 and 2008. No other individual who served as an executive officer of our company was awarded, earned, or paid total compensation in excess of $100,000 for services provided in all capacities to us and our subsidiaries in those years.

Summary Compensation Table
Name and Principal Position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f)	Non-Equity Incentive ~~PlanCompensation~~Plan Compensation ($) (g)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)	All Other Compensation ($) (i)	Total ($) (j)
Yongqi Zhu,	2009	None	$144,750	None	None	None	None	None	$144,750
Yongqi Zhu, CEO	2010 2009	None None	None $144,750	None None	None None	None None	None None	None None	None $144,750
CEO	2008	None	$ 17,653	None	None	None	None	None	$17,653

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Outstanding Equity Awards at Fiscal Year-End Table

The Company does not have a pension plan, stock option plan, non-equity incentive plan or deferred compensation arrangement. We plan to implement a more comprehensive compensation program, which takes into account other elements of compensation, including but not limited to non-cash and other equity-based compensation such as stock options, but did not do so during the year ended December 31, ~~2009~~2010. We did not grant any stock options or make any other equity awards to Yongui Zhu, our Chief Executive Officer, during the fiscal year ended December 31, ~~2009~~2010, and Mr. Zhu did not own any outstanding stock options on December 31, ~~2009~~2010.

Item 12. Security Ownership of Certain Beneficial Owners and Management Related Stockholder Matters.

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 313, ~~2010~~2011 by: (i) each person who, to our knowledge, beneficially owns more than 5% of our common stock; (ii) each of our directors and officers; and (iii) all of our directors and executive officers as a group. As of March 313, ~~2010~~2011, we had outstanding 22,582,~~541~~500 shares of common stock. Unless otherwise noted below, we believe that all persons named in the table have sole voting and investment power with respect to all shares of Common Stock beneficially owned by them. For purposes hereof, a person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof upon the exercise of warrants or options or the conversion of convertible securities. Each beneficial owner's percentage ownership is determined by assuming that any warrants, options or convertible securities that are held by such person (but not those held by any other person) and which are exercisable within 60 days from the date hereof, have been exercised. The address of each of our directors and officers is 1 Suhua Road, Shiji Jinrong Building Suite 801, Suzhou Industrial Park, Jiangsu Province, 215020, P.R. China.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Common Stock

Owners of More than 5%:

Ming Long Industry Asia Company Limited		5,935,000		26.28	%
Room 1102-03 11/F,Kowloon Bldg.
555 Nathan Road,Mongkok,KL,HongKong

Our Directors and Officers:

Yongqi Zhu		12,683,650		56.17	%
Yipeng Lu		1,751,500		7.76	%
Haiming Zhang		875,750		3.88	%
Qian Gao		0		--
Jian Xue		0		--
Fugeng Xia		0		--
All Officers and Directors as a Group (6 persons):		15,310,900		67.81	%

Name of Beneficial Owner	Amount and Nature ofBeneficial Ownership		Percent of Common Stock
Owners of More than 5%:
Ming Long Industry Asia Company Limited		5,935,000		26.28	%
Room 1102-03 11/F,Kowloon Bldg.
555 Nathan Road,Mongkok,KL,HongKong
Our Directors and Officers:
Yongqi Zhu		12,683,650		56.17	%
Yipeng Lu		1,751,500		7.76	%
Haiming Zhang		875,750		3.88	%
Qian Gao		0		--
Jian Xue		0		--
Fugeng Xia		0		--
All Officers and Directors as a Group (6 persons):		15,310,900		67.81	%

Table of Contents

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The Company will sometimes receive funds from and advance funds to Mr. Yongqi Zhu, one of its significant shareholders and the Chief Executive Officer of the Company. As of December 31, 2010 and 2009, the balance due to Mr. Zhu was $617,810 and $660,741, respectively, which was included in payables to related parties. The balance due to Mr. Zhu is interest free and due on demand.

During 2009, the Company received $146,500 from Ms. Xue, Chief Financial Officer of the Company and returned $146,500 to Mr. Xue in the fourth quarter of 2009. As of December 31, 2010 and 2009, the balance due to Ms. Xue was $0 and $58,600, respectively, which was interest free and due on demand.

Until September 16, 2009, Ming Long Industry Asia Company Limited was controlled by Yongqi Zhu, the chief executive officer and a shareholder of the Company. On May 24, 2007 the Company obtained the Property Titles on twenty buildings and accompanying infrastructures located in Suzhou City Wuzhou Economy Development District from its shareholder Ming Long Industry Asia Company Limited, totaling 50,113.81 square meters, which were and are pledged under bank borrowings. The net historical value of the buildings transferred amounted to approximately $10,441,053 as of December 31, 2007.

On May 24, 2007, the Company obtained the National Land Use Right and house property title for the land, buildings and accompanying infrastructures where Blue Tassel School is operating from its shareholder Ming Long Industry Asia Company Limited. The piece of land totals 91,993.32 square meters, and was and is pledged under bank borrowings. The land use right will expire on January 17, 2051. The land use right was recorded at $5,516,431 net of accumulated amortization expense of $69,929 as of December 31, 2007.

On March 12, 2008, Blue Tassel School sold the Land Use Right of 91,993.32 square meters and twenty Buildings of 50,113.81 square meters to its shareholder Ming Long Industry Asia Company Limited with the sales price of $5,563,692 and $10,405,554 respectively, totaling $15,969,246 (RMB111,829,458). Blue Tassel School leased back the buildings from Ming Long Industry Asia Company Limited from the date of sale.

For the year ended December 31, 2009, the Company advanced net cash of $3,020,313 to Minglong. Minglong paid expenses of $156,734 and $73,372 on behalf of China Ivy during 2009 and 2008, respectively. A netted amount of $2,790,207 was recorded under the caption “Receivable from Related Party” as of December 31, 2009. During 2010, Minglong repaid the $2,790,207 to the Company and the Company advanced a net of $2,643,248 to Minglong. On March 30, 2011, the Company received payment of $3,833,456 from Minglong satisfying the interest free receivable of $2,643,248 at December 31, 2010, plus additional advances made by the Company to Minglong during the first quarter of 2011.

During 2010, Minglong paid expenses of $36,406 on behalf of the Company.

On December 31, 2009, the Company entered into a one year lease agreement with Minglong to continue use of current office space located at 1 Suhua Road, Shiji Jinrong Building, Suite 801, Suzhou Industrial Park, Jiangsu Province, P.R. China. The rent and related maintenance expense was RMB 1,569,163 ($237,760) per annum. On December 31, 2010, the Company renewed the lease to December 31, 2011 with the same terms.

In exchange for a $448,000 convertible note payable by the Company to Minglong (Asia), Minglong (Asia) acquired 5,600,000 shares of Company common stock in February 2010, resulting in it being a 26% owner in the Company at December 31, 2010. Mr. Zhu is a 56% owner in the Company at December 31, 2010.

Director Independence

Since all of our directors are employed by Blue Tassel School or us, none of our directors is “independent,” as that term is defined in Rule 10A-3 of the Exchange Act.

1925

Table of Contents

Item 14. Principal Accountant Fees and Services.

The following table sets forth the fees accrued or paid to Michael T. Studer, CPA, P.C., the Company's independent registered public accounting firm during fiscal years 2009 and ~~2008~~2010.

	Fiscal Year Ended
	December 31, 2009	~~December 31, 2008~~	December 31, 2010
Audit Fees	$ 60,000	~~$50,000~~	$ 60,000
Audit-Related Fees	None	~~None~~	None
Tax Fees	None	~~None~~	None
All Other Fees	None	~~None~~	None

Item 15. Exhibits.
Exhibit No.	Description
2.2	Share Exchange Agreement between Safe Cell Tab Inc. and Registrant (incorporated herein by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K filed on September 4, 2003).
2.3	Amended Share Exchange Agreement between Safe Cell Tab Inc. and Registrant (incorporated herein by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K/A filed on March 26, 2004).
3.1	Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Registrant's Registration Statement on Form SB-2 filed on January 26, 2001).
3.2	Bylaws (incorporated herein by reference to Exhibit 3.2 (I) to the Registrant's Registration Statement on Form SB-2 filed on January 26, 2001).
3.3	Amended Bylaws (incorporated herein by reference to Exhibit 3.2 II) to the Registrant's Registration Statement on Form SB-2 filed on January 26, 2001).
3.4	Amended Bylaws (incorporated herein by reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-QSB filed on February 2, 2004).
3.5	Certificate of Correction to the Certificate of Correction to the Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on August 29, 2006).
3.6	Certificate of Designations to the Articles of Incorporation, designating Series A Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on August 29, 2006).
3.7	Certificate of Amendment to Articles of Incorporation changing the name from Claremont Technologies Corp. to China Ivy School, Inc.(incorporated herein by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on January 8, 2007).
4.1	2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.1(I) to the Registrant's Registration Statement on Form S-8 filed on January 22, 2007).
4.2	Form of the Registrant’s 6% Convertible Note due June 30, 2010 (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on July 7, 2009).
10.3	Stock Purchase Agreement between Xu Zuqiang and Registrant (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on June 12, 2006).
10.4	Amendment to Stock Purchase Agreement between Xu Zuqiang and Registrant (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on August 29,2006).
10.6	Share Exchange Agreement among Brighter International Limited, Blue Tassel School and the shareholders of Brighter International Limited and Registrant (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on October 13, 2006).
10.7	Standby Fixed Price Equity Distribution Agreement between certain investors and the Registrant (incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on May 31, 2007).
10.8	Purchase and Sale Agreement dated as of March 6, 2009 by and among Su Zhou Blue Tassel School and Jianwei Wu, Wei Li, Surong Gong, Changgen Ma, Yongxia Tan, Junhua Tang, and Xuehui Jiang (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on March 9, 2009).
10.9	Rescission Agreement rescinding Purchase and Sale Agreement dated as of March 6, 2009 by and among the Registrant and Jianwei Wu, Wei Li, Surong Gong, Changgen Ma, Yongxia Tan, Junhua Tang, and Xuehui Jiang (incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on May 1, 2009).
16.1	Kabani & Company, Inc. letter regarding change of accountant (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on June 26, 2008).
21.1	List of Subsidiaries (incorporated herein by reference to Exhibit 21.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

2026

Table of Contents

SIGNATURES

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

Dated: March 31, ~~2010~~2011

	CHINA IVY SCHOOL, INC.


	By:	/s/ Yongqi Zhu
		Yongqi Zhu
		Chairman and Chief Executive Officer (principal executive officer)


	By:	/s/ Jian Xue
		Jian Xue
		Chief Financial Officer (principal financial and accounting officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant on March 31, ~~2010~~ 2011 in the capacities indicated.

Signature Title /s/Yongqi Zhu Chairman, Chief Executive Officer (principal executive officer) and a Director Yongqi Zhu /s/Jian Xue Chief Financial Officer (principal financial and accounting officer) Jian Xue /s/ Qian Gao Director Qian Gao /s/ ~~Xipeng~~Yipeng Liu Director ~~Xipeng~~Yipeng Liu /s/ ~~Fuqeng~~Fugeng Xia Director ~~Fuqeng~~Fugeng Xia /s/ Haiming Zhang Director Haiming Zhang

2127

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CHINA IVY SCHOOL, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-12
Consolidated Balance Sheets as of December 31, 2009 and December 31, 2008	F-2
Consolidated Balance Sheets as of December 31, 2010 and 2009	F-3
Consolidated Statements of Operations and Comprehensive Lossfor the Years ended December 31, 2009 and 2008	F-3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2010 and 2009	F-4
Consolidated Statements of Stockholders’ Equityfor the Years ended December 31, 2009 and 2008	F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2010 and 2009	F-5
Consolidated Statements of Cash Flowsfor the Years ended December 31, 2009 and 2008	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009	F-6
Notes to Consolidated Financial Statements	F-67 - F-17

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

China Ivy School, Inc.

I have audited the accompanying consolidated balance sheets of China Ivy School, Inc. and subsidiaries (the "Company") as of December 31, ~~2009~~2010 and December 31, ~~2008~~ 2009 and the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.

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

~~statements are~~In ~~free~~my ofopinion, ~~material~~the ~~misstatement.~~consolidated Anfinancial ~~audit~~statements ~~includes~~referred ~~examining~~to above present fairly, onin aall ~~test~~material ~~basis~~respects, ~~evidence~~ ~~supporting~~ the ~~amounts~~financial ~~and~~position ~~disclosures~~of inChina ~~the~~Ivy ~~financial~~School, ~~statements~~Inc. ~~An audit~~and ~~also~~subsidiaries ~~includes~~as ~~assessing~~of ~~the~~December ~~accounting~~31, ~~principles~~2010 ~~used~~and December 31, 2009 and ~~significant estimates~~the ~~made~~results byof ~~management,~~their asoperations ~~well~~and ascash ~~evaluating~~flows for the ~~overall~~years ~~financial statement~~then ~~presentation.~~ended Iin ~~believe~~conformity ~~that~~with myaccounting ~~audit~~principles ~~provides~~generally aaccepted ~~reasonable~~in ~~basis~~the ~~for my~~United ~~opinion~~States.

InThe ~~my opinion,~~accompanying ~~the consolidated~~ financial statements referred to above ~~present~~have ~~fairly, in~~been ~~all~~prepared ~~material~~assuming ~~respects,~~that the ~~financial~~Company ~~position~~will ofcontinue ~~China~~as ~~Ivy~~a ~~School,~~going ~~Inc~~concern. ~~and subsidiaries~~As asdiscussed ofin ~~December~~Note ~~31,~~2 ~~2009~~to ~~and~~the ~~December~~financial 31statements, ~~2008~~the ~~and~~Company’s ~~the~~present ~~results~~financial ~~of their~~condition ~~operations~~raises ~~and~~substantial ~~cash~~doubt ~~flows~~about ~~for~~its ~~the~~ability ~~years~~to ~~then~~continue ~~ended~~as a going concern. Management’s plans in ~~conformity~~regard ~~with accounting~~to ~~principles~~this ~~generally~~are ~~accepted~~also described in Note 2. The financial statements do not include any adjustments that might result from the ~~United~~outcome ~~States~~of this uncertainty.

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

Michael T. Studer CPA P.C.

Freeport, New York

March 31, ~~2010~~ 2011

F - 12

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

Table of Contents

CHINA IVY SCHOOL, INC. AND SUBSIDIARIES

(FORMERLY CLAREMONT TECHNOLOGIES CORP.)

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2010 AND 2009

	2010			2009

ASSETS
Current Assets
Cash and cash equivalents	$	217,424		$	46,187
Advances made to vendors		-			95,974
Receivable from related party		2,643,248			2,790,207
Receivable from sale and leaseback of real property - related party		1,196,272			1,156,639
Total Current Assets		4,056,944			4,089,007
Property and equipment, net		10,881,542			7,749,770
Receivable from sale and leaseback of real property - related party		2,640,949			3,710,090
Total Assets	$	17,579,435		$	15,548,867

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank and loan company borrowings	$	12,576,160		$	10,401,500
Convertible notes payable		-			1,560,000
Accounts payable and accrued expenses		2,184,615			1,731,502
Payables to related parties		617,810			719,341
Deferred revenue		933,662			715,535
Total Current Liabilities		16,312,247			15,127,878

Total Liabilities		16,312,247			15,127,878

Stockholders' Equity
Preferred stock, $0.001 par value; 50,000,000 shares authorized, none issued and outstanding as of December 31, 2010 and 2009		-			-
Common stock, $0.001 par value; 100,000,000 shares authorized, 22,582,500 and 3,082,500 shares issued and outstanding as of December 31, 2010 and 2009, respectively		22,583			3,083
Additional paid in capital		5,906,363			4,302,907
Statutory reserves		480,813			480,813
Accumulated deficit		(5,949,928	)		(5,115,622	)
Accumulated other comprehensive income		807,357			749,808
Total Stockholders' Equity		1,267,188			420,989

Total Liabilities and Stockholders' Equity	$	17,579,435		$	15,548,867

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

F - 23

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

Table of Contents

CHINA IVY SCHOOL, INC. AND SUBSIDIARIES

(FORMERLY CLAREMONT TECHNOLOGIES CORP.)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

	2010			2009

Net revenue	$	6,420,307		$	6,334,781

Operating expenses
Teachers salaries and related expenses		2,050,535			2,164,486
Student expenses		609,950			-
Professional and consulting fees		870,680			1,054,483
Rent and related expenses		1,890,701			1,811,139
Depreciation and amortization		935,765			901,348
Other general and administrative expenses		711,401			1,015,240
Total operating expenses		7,069,032			6,946,696

Loss from operations		(648,725	)		(611,915	)

Other (income) expense
Interest income		(1,192	)		(1,379	)
Interest expense		672,382			686,870
Loss on disposal of property and equipment		6,835			-
Accretion of discount on receivable from related party relating to sale of real property		(492,444	)		(482,478	)
Total Other (Income) Expense		185,581			203,013

Loss Before Income Tax		(834,306	)		(814,928	)
Provision for income tax		-			-

Net Loss		(834,306	)		(814,928	)

Other comprehensive item
Foreign currency translation adjustment		57,549			(4,200	)

Comprehensive income (loss)	$	(776,757	)	$	(819,128	)

Basic and diluted net loss per share:	$	(0.04	)	$	(0.26	)

Weighted average number of basic and diluted shares outstanding		20,766,062			3,082,500

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

F - 34

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

Table of Contents

CHINA IVY SCHOOL, INC. AND SUBSIDIARIES

(FORMERLY CLAREMONT TECHNOLOGIES CORP.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

	Common Stock				Additional		Accumulated Other Comprehensive			Statutory		Accumulated			Total Stockholders'
	Number of Shares		Amount		Paid in Capital		Income (Loss)			Reserves		Deficit			Equity
Balance December 31, 2008		3,082,500	$	3,083	$	4,302,907	$	754,008		$	480,813	$	(4,300,694	)	$	1,240,117
Foreign currency translation adjustment		-		-		-		(4,200	)		-		-			(4,200	)
Net loss for the year ended December 31, 2009		-		-		-		-			-		(814,928	)		(814,928	)
Balance - December 31, 2009		3,082,500		3,083		4,302,907		749,808			480,813		(5,115,622	)		420,989
Conversion of convertible notes		19,500,000		19,500		1,540,500		-			-		-			1,560,000
Satisfaction of accrued interest on conversion of convertible notes		-		-		62,956		-			-		-			62,956
Foreign currency translation adjustment		-		-		-		57,549			-		-			57,549
Net loss for the year ended December 31, 2010		-		-		-		-			-		(834,306	)		(834,306	)
Balance - December 31, 2010		22,582,500	$	22,583	$	5,906,363	$	807,357		$	480,813	$	(5,949,928	)	$	1,267,188

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

F - 45

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

Table of Contents

CHINA IVY SCHOOL, INC. AND SUBSIDIARIES

(FORMERLY CLAREMONT TECHNOLOGIES CORP.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2010

	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(834,306	)	$	(814,928	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		935,765			901,348
Imputed rent and related expense		1,658,873			1,625,300
Accrued interest on convertible notes		16,156			-
Accretion of discount on receivable from related party		(492,444	)		(482,478	)
Loss from disposal of property and equipment		6,835			-
Changes in operating assets and liabilities
Decrease (increase) in advances made to vendors		95,974			(95,974	)
Decrease in prepaid expenses		-			3,971
(Decrease) increase in accounts payable and accrued expenses		(263,748	)		852,010
Increase (decrease) in deferred revenue		218,127			(214,565	)
Net cash provided by operating activities		1,341,232			1,774,684

CASH FLOWS FROM INVESTING ACTIVITIES
Payments relating to major campus renovation plan		(3,048,582	)		-
Acquisition of property and equipment		(53,285	)		(194,422	)
Proceeds from disposal of assets		8,130			-
Advances made to related party		-			(2,790,207	)
Advances to "key" and other employees		(738,762	)		-
Repayment of advances to "key" and other employees		738,762			-
Collection of prior year's advances made to related party		2,790,207			-
New advance made to related party		(2,643,248	)		-
Net cash used in investing activities		(2,946,778	)		(2,984,629	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank and loan company borrowings		12,576,160			19,191,500
Repayment of bank borrowings		(10,401,500	)		(19,484,500	)
Proceeds from convertible notes		-			1,560,000
Repayment of payable to other related parties		(101,531	)		(91,827	)
Net cash( used in) provided by financing activities		2,073,129			1,175,173

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(296,346	)		21,975
NET INCREASE IN CASH AND CASH EQUIVALENTS		171,237			(12,797	)
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE		46,187			58,984
CASH AND CASH EQUIVALENTS, ENDING BALANCE	$	217,424		$	46,187

Supplemental Disclosures of Cash Flow Information:
Income tax payments	$	-		$	-
Interest payments	$	609,426		$	622,456
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Renovation remaining balance payable	$	763,661		$	-
Conversion of 6% convertible notes	$	1,560,000		$	-
Satisfaction of accrued interest on conversion of convertible notes	$	62,956		$	-

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

F - 56

Table of Contents

CHINA IVY SCHOOL, INC. AND SUBSIDIARIES

(FORMERLY CLAREMONT TECHNOLOGIES CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Organization

China Ivy School, Inc. (formerly Claremont Technologies Corp.) (“China Ivy") was incorporated on September 14, 1999 under the laws of the State of Nevada. China Ivy acquired a wholly owned subsidiary Safe Cell Tab Inc. ("Safe Cell") on August 22, 2003. Safe Cell was incorporated on May 9, 1996 under the laws of the Province of British Columbia, Canada and engaged in distributing Wi-Fi License and Mobius disposable cell phones. On July 31, 2008, the Company spun off Safe Cell to its stockholders.

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

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

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

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

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

F - 6

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

Basis of Presentation

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

Going Concern

The financial statements have been prepared on a “going concern” basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as of December 31, ~~2009~~2010 and ~~2008~~December 31, 2009, the Company had cash of $46217,~~187~~424 and $5846,~~984~~187, respectively, and a working capital deficit of $1112,~~038~~255,~~871~~303 and $1311,~~257~~038,~~768~~871, respectively. The Company also had an accumulated deficit of $5,~~115~~949,~~622~~928 ~~and $4,300,694~~ as of December 31, ~~2009 and 2008, respectively~~2010. These factors ~~create~~raise substantial doubt as to the Company’s ability to continue as a going concern. The Company plans to improve its financial condition through a debt or equity offering of its securities and /or a business combination with another business entity. However, there is no assurance that the Company will accomplish these objectives. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

F-7

Table of Contents

Foreign Currency Transactions and Comprehensive Income (Loss)

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

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

Transaction gains or losses arising from exchange rate fluctuations on balances and transactions denominated in a currency other than the functional currency are included in the consolidated results of operations. There is no material foreign currency transaction ~~gains~~gain or ~~losses~~loss for the years ended December 31, ~~2009~~2010 and ~~2008~~ 2009.

Use of Estimates

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

Reclassifications

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

F - 7

Revenue Recognition

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

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) topic 718-10, Stock Compensation ~~(formerly, SFAS 123(R), “Accounting for Stock-Based Compensation”)~~. As of December 31, ~~2009~~2010 and ~~2008~~ December 31, 2009, no stock options or warrants have been granted and none are outstanding.

Advertising

Advertising costs are expensed as incurred. Advertising ~~expense~~costs were not material for the years ended December 31, ~~2009~~2010 and ~~2008 were $46,923 and $83,272, respectively~~2009.

Research and Development

In accordance with ~~the~~ASC ~~Accounting Standards Codification subtopic~~ 730-10, Research and Development ~~(“ASC 730-10”) (formerly~~, ~~SFAS~~the ~~No.~~Company 2,expenses ~~“Accounting~~all ~~For~~research ~~Research~~ and ~~Development~~development ~~Costs”),~~costs ~~the~~as ~~Company~~incurred. ~~expenses~~There ~~all~~were no research and development costs as incurred for the years ended December 31, 2010 and 2009.

F-8

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Segment Information

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

Income Taxes

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

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

Cash and Cash Equivalents

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

F - 8

Property and Equipment

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

Buildings		20 years
Infrastructure and leasehold improvements		10 years
Equipment		10 years
Automobiles		10 years
Furniture and fixtures		5 years
Computer hardware and software		5 years

Fair Value of Financial Instruments

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

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash ~~flow~~flows is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. Based on its review, the Company believes that, as of December 31, 2010 and 2009, there were no significant impairments of its long-lived assets.

F-9

Table of Contents

Net Loss Per Common Share

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

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

Diluted net income (loss) per share is computed similarly to basic net income (loss) per share except that it includes the potential dilution that could occur if dilutive securities were converted. ~~Diluted~~Dilutive ~~loss~~securities ~~per~~having ~~share~~an isanti-dilutive ~~the~~effect ~~same~~on asdiluted ~~basic~~net loss per common share, (such as the ~~effect~~ ofconvertible ~~potentially~~notes ~~dilutive~~payable ~~securities~~ (~~convertible~~see ~~notes~~Note ~~payable~~7) from June 30, 2009 to February 4, 2010) are ~~anti-dilutive~~ excluded from the calculation.

FRecently ~~- 9~~Adopted Accounting Standards

~~Recent~~In ~~Accounting Pronouncements~~February 2010, the Company adopted an amendment to previously adopted accounting guidance on subsequent event disclosure, which established standards of accounting for and disclosure of events or transactions that occur after the balance sheet date but before financial statements are issued or available to be issued. Under the amended guidance, the Company is no longer required to disclose the date through which subsequent events have been evaluated. The adoption of this requirement did not have a material impact on the Company’s financial condition or results of operations.

~~Effective for~~We ~~interim~~adopted ~~and~~the ~~annual~~accounting ~~periods~~principles ~~ending~~established ~~after~~by ~~September 15,~~ASU 2009-17, ~~the~~Consolidations: ~~FASB Accounting~~Improvements ~~Standards~~to ~~Codification~~Financial (Reporting by Enterprises Involved with Variable Interest Entities, effective January 1, 2010. This ASU requires an ongoing reassessment and replaces the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity (“~~Codification~~VIE”) with a primarily qualitative analysis. The qualitative analysis is based on identifying the ~~single~~party ~~source~~that ~~of authoritative~~has ~~literature~~both ofthe ~~U.S.~~power ~~generally~~to ~~accepted~~direct ~~accounting~~the ~~principles~~ activities that most significantly impact the VIE’s economic performance (the “~~GAAP~~power criterion”). ~~The~~and ~~Codification~~the ~~consolidates~~obligation ~~all~~to ~~authoritative~~absorb ~~accounting~~losses ~~literature into~~from ~~one~~or ~~internet-based~~the ~~research~~right ~~tool,~~to ~~which~~receive ~~supersedes~~benefits ~~all~~of ~~pre-existing accounting~~the ~~and~~VIE ~~reporting~~that ~~standards,~~could ~~excluding~~potentially ~~separate~~be ~~rules~~significant ~~and~~to ~~other interpretive~~the ~~guidance~~VIE ~~released~~(the by“losses/benefit ~~the~~criterion”). ~~SEC~~The party that meets both these criteria is deemed to have a controlling financial interest. ~~New~~The ~~accounting~~party ~~guidance~~with the controlling financial interest is ~~now~~considered ~~issued in~~to be the ~~form~~primary ofbeneficiary ~~Accounting~~and ~~Standards~~as ~~Updates,~~a ~~which~~result ~~update~~is required to consolidate the ~~Codification~~VIE. The adoption of ~~Codification~~this new guidance did not ~~result in~~have ~~any~~a ~~change in~~material ~~the~~effect ~~Company’s significant~~on ~~accounting~~our ~~policies~~financial statements.

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

In ~~June 2009~~ January 2010, the ~~FASB~~Financial ~~issued~~Accounting ~~authoritative~~Standards Board issued guidance which ~~eliminates~~expands the ~~exemption~~ ~~for~~required ~~qualifying~~disclosures ~~special-purpose~~about ~~entities~~fair ~~from~~value ~~consolidation requirements,~~measurements. ~~contains~~This ~~new~~guidance ~~criteria~~requires ~~for~~disclosures ~~determining~~about ~~the~~transfers ~~primary~~of ~~beneficiary~~investments ofbetween ~~a variable~~levels ~~interest~~in ~~entity,~~the ~~and~~fair ~~increases~~value ~~the~~hierarchy ~~frequency~~and ofdisclosures ~~required~~relating ~~reassessments~~ to ~~determine~~the ~~whether~~reconciliation aof ~~company~~fair isvalue ~~the~~measurements ~~primary~~using ~~beneficiary~~significant ofunobservable ainputs ~~variable~~(level ~~interest entity~~3 investments). ~~The~~This guidance is ~~applicable~~effective for ~~annual~~the ~~periods~~Company ~~beginning~~as ~~after November 15,~~of ~~2009~~January ~~and~~1, ~~interim periods therein and thereafter~~2011. The ~~Company does not expect the~~ adoption of this ~~standard~~guidance towill not have a material ~~effect~~impact on its ~~consolidated~~ financial ~~position~~condition or results of operations.

In ~~June 2009~~ April 2010, the FASB issued ~~authoritative~~ASU ~~guidance~~2010-13, ~~which~~“Compensation-Stock ~~eliminates~~Compensation (Topic 718) - Effect of Denominating the ~~concept~~ Exercise Price of a ~~qualifying~~Share-Based ~~special~~Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades -~~purpose~~ ~~entity~~a consensus of the FASB Emerging Issues Task Force,” ~~creates~~or ~~more~~ASU ~~stringent conditions~~2010-13. ~~for~~ASU ~~reporting~~2010-13 aprovides ~~transfer~~amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a ~~financial~~condition ~~asset~~that asis not a ~~sale~~market, ~~clarifies~~ ~~other~~performance, ~~sale-accounting~~or ~~criteria~~service condition. Therefore, ~~and~~an ~~changes~~entity ~~the~~would ~~initial~~not ~~measurement~~classify of such an award as a ~~transferor’s~~liability ~~interest~~if init ~~transferred~~otherwise ~~financial~~qualifies ~~assets~~as equity. The ~~guidance~~amendments ~~is applicable~~in ~~for~~this ~~annual~~update ~~periods~~do ~~beginning~~not ~~after~~expand ~~November 15~~the recurring disclosures required by Topic 718. Disclosures currently required under Topic 718 are applicable to a share-based payment award, ~~2009~~including the nature and ~~interim periods~~the ~~therein~~term ~~and~~of ~~thereafter~~share-based payment arrangements. The ~~Company~~amendments ~~does~~in ~~not~~this ~~expect~~update ~~the~~are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this ~~standard~~ toguidance will not have a material ~~effect~~impact on ~~its~~the ~~consolidated~~Company’s financial ~~position~~condition or results of operations.

In August 2009, the FASB issued guidance on measuring liabilities at fair value. This guidance amends the fair value measurements and disclosures by providing additional guidance clarifying the measurement of liabilities at fair value. This new accounting guidance is effective for reporting periods ending after December 15, 2009. The Company is evaluating this new guidance and the possible impact that the adoption of this new accounting guidance will have on its consolidated financial statements.F-10

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

NOTE 3 - RECEIVABLE FROM RELATED PARTY

Minglong Industry Co. Ltd. (“Minglong”) is one of the Company’s significant shareholders and is controlled by the chief executive officer of the Company. Receivable from related party, inrepresenting the net amount ofadvanced to Minglong (see Note 13), was $2,643,248 and $2,790,207 as of December 31, ~~2009~~2010 ~~represented the net amount advanced to Minglong (see Notes 13~~ and ~~16)~~2009, respectively. The receivable due from Minglong is interest free and due on demand.

F - 10

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

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

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

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

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

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

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

~~For the years ended December 31, 2009 and 2008, the receivable from sale and leaseback of real property – related party changed as follows:~~F-11

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

Table of Contents

FFrom ~~- 11~~March 12, 2008 to December 31, 2010, the receivable from sale and leaseback of real property – related party changed as follows:

Balance due from Minglong at March 12, 2008 in connection with the
sale and leaseback of real property, noninterest bearing (discounted)	$	11,228,703

Amounts collected (See Note 13)		(7,681,172	)
Accretion of discount on receivable		2,280,191
Foreign exchange translation adjustment		198,524
Balance at December 31, 2008		6,026,246
Amounts collected - during the year ended December 31, 2009		(1,625,300	)
Accretion of discount on receivable		482,478
Foreign exchange translation adjustment		(16,695	)
Balance at December 31, 2009		4,866,729
Amounts collected - during the year ended December 31, 2010		(1,658,873	)
Accretion of discount on receivable		492,444
Foreign exchange translation adjustment		136,921
Balance at December 31, 2010		3,837,221
Less: current portion		1,196,272
Receivable from sale and leaseback of real property - related party	$	2,640,949

NOTE 5 – PROPERTY AND EQUIPMENT

As of December 31, ~~2009~~2010 and ~~2008~~December 31, 2009, property, plant and equipment ~~consist~~consisted of the following:

	December 31,			December 31,
	2010			2009
	2009			2008
Infrastructure and leasehold improvements	$	15,434,952		$	11,237,638
Infrastructure and leasehold improvements	$	11,237,638		$	11,065,511
Educational equipment		516,376			561,144
Educational equipment		561,144			544,394
Automobiles		46,489			28,834
Automobiles		28,834			28,848
Total property and equipment		15,997,817			11,827,616
Total property and equipment		11,827,616			11,638,753
Accumulated depreciation		(5,116,275	)		(4,077,846	)
Accumulated depreciation		(4,077,846	)		(3,167,114	)
Property and equipment, net	$	10,881,542		$	7,749,770
Property and equipment, net	$	7,749,770		$	8,471,639

The Company had depreciation expense of $~~901~~935,~~348~~765 and $1901,~~146,903~~348 for the years ended December 31, ~~2009~~2010 and ~~2008~~2009, respectively.

~~NOTE~~On 6May ~~- BANK BORROWINGS~~24, 2010, the Company approved a major campus renovation plan with a total budget of RMB 26,000,000 ($3,939,520). In May 2010, the Company executed three contracts with three vendors for (1) central air conditioning system installation (RMB 12,300,000, or $1,863,696), (2) installation of 2,925 trees (RMB 7,280,000, or $1,103,066), and (3) renovation upgrade of school cafeteria (RMB 5,580,000, or $845,482), or for a total of RMB 25,160,000 ($3,812,243). By September 30, 2010, a total of RMB 20,120,000 ($3,048,582) had been paid to the three contractors as required advances under the contracts. The first contract provides for the work to be finished in August 2010 and provides for payments to the contractor of 80% in advance (RMB 9,840,000, or $1,490,957, was paid in June 2010), 10% within one year after project completion (RMB 1,230,000, or $186,370), and 10% within two years of project completion (RMB 1,230,000 or $186,370). The second contract provides for the work to be finished in September 2010 and provides for payments to the contractor of 80% in advance (RMB 5,820,000, or $881,846, was paid in June 2010), 10% within six months after project completion (RMB 728,000 or $110,307), and 10% within one year after project completion (RMB 732,000, or $110,307). The third contract provides for the work to be finished in September 2010 and provides for payments to the contractor of 80% in advance (RMB 4,460,000, or $675,779, was paid in June 2010), 10% within six months after project completion (RMB 558,000, or $84,548), and 10% within one year after project completion (RMB 562,000, or $85,154).

The Company has borrowed $10,401,500 and $10,699,610 from two banks located in China under credit agreements as of December 31, 2009 and 2008, respectively. Borrowings under credit lines consist of the following:F-12

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

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OnDue ~~June 17,~~to ~~2008~~inclement weather, the ~~Company~~campus ~~entered~~renovation ~~into~~project awas ~~credit~~completed ~~agreement~~in ~~with~~November ~~Jiangsu Dongwu Rural Commercial Bank~~2010. The ~~Company~~full ~~acquired~~amount aof 2RMB 25,~~000~~160,000 ~~RMB~~ (~~approximately~~ $~~293~~3,~~000~~812,243) ~~credit~~ ~~line~~was ~~from~~recorded ~~June~~as ~~17,~~leasehold ~~2008 to June 17, 2011~~improvements. ~~This~~The ~~credit~~remaining ~~line~~balance isof ~~secured~~RMB ~~by a~~5,040,000 ~~234 square meter residential unit and 62 square meter land use right owned by Ti Yin and Yan Hong~~($763,661) ~~the~~was ~~third~~included ~~party~~in ~~assigned~~accounts ~~by the bank~~payable.

FNOTE 6 - 12 BANK AND LOAN COMPANY BORROWINGS

~~On June 17, 2008, the Company entered into a credit agreement with Jiangsu Dongwu Rural Commercial Bank.~~ The Company ~~acquired~~has aborrowed 11$12,~~000~~576,~~000~~160 ~~RMB~~and ~~(approximately~~ $110,~~611~~401,500) ~~credit~~from ~~line~~two ~~from~~banks ~~June~~and ~~17,~~a ~~2008~~loan tocompany ~~June~~located ~~17,~~in ~~2011.~~China ~~This~~under credit ~~line~~agreements ~~is secured~~as byof aDecember ~~477~~31, ~~square~~2010 ~~meter residential unit~~ and ~~837~~2009, ~~square~~respectively. ~~meter~~Borrowings ~~land~~under ~~use right~~credit ~~owned~~lines byconsisted ~~the Chief Executive Officer~~ of the ~~Company. As of December 31, 2009, the Company borrowed 10,000,000 RMB ($1,465,000).~~following:

	2010		2009
Bank and Loan Company Borrowings
Borrowings from Huaxia Bank Suzhou Branch
Interest at 5.346% per annum, due by October 30, 2010	$	-	$	2,637,000
Interest at 5.346% per annum, due by November 5, 2010		-		2,197,500
Interest at 5.346% per annum, due by November 9, 2010		-		2,710,250
Interest at 5.346% per annum, due by November 18, 2010		-		1,098,750
Interest at 5.61% per annum, due by January 28, 2011		4,697,120		-
Interest at 5.61% per annum, due by January 29, 2011		1,969,760		-
Interest at 5.838% per annum, due by November 18, 2011		2,272,800		-
Borrowings from Huaxia Bank Subtotal		8,939,680		8,643,500
Borrowings from Jiangsu Dongwu Rural Commercial Bank
Interest at 6.903% per annum, due by June 12, 2011		303,040		293,000
Interest at 6.903% per annum, due by June 12, 2011		1,363,680		1,465,000
Borrowings from Dongwu Rural Commercial Bank Subtotal		1,666,720		1,758,000
Borrowings from Suzhou Guorunfa Rural Small Loan Co. Ltd
Interest at 13% per annum, due by November 15, 2011(unsecured)		1,969,760		-
Total borrowings		12,576,160		10,401,500
Current portion		12,576,160		10,401,500
Long term portion	$	-	$	-

On June 17, 2008, the Company entered into a credit agreement with Jiangsu Dongwu Rural Commercial Bank. The Company acquired a 2,000,000 RMB (approximately $303,040) credit line from June 17, 2008 to June 17, 2011. This credit line is secured by a 234 square meter residential unit and a 62 square meter land use right owned by Ti Yin and Yan Hong, the third party assigned by the bank.

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

On October 28, 2010, the Company received a RMB 31,000,000 ($4,697,120) borrowing from Huaxia Bank. The loan bore interest at 5.61% per annum and was due by January 28, 2011. On October 29, 2010, the Company received a RMB 13,000,000 ($1,969,760) borrowing from Huaxia Bank. The loan was a “working capital” loan that bore interest at 5.61% per annum and was due by January 29, 2011 (see Note 16). On November 18, 2010, the Company received a RMB 15,000,000 ($2,272,800) borrowing from Huaxia Bank. The loan was a “working capital” loan that bears interest at 5.838% per annum and is due by November 18, 2011.

From November 18 through November 23, 2010, the Company received a total of RMB 13,000,000 ($1,969,760) under a “working capital” line of credit agreement entered into on November 16, 2010 with Guorunfa Rural Small Loan Company. Under the line of credit agreement the Company may borrow a maximum of RMB 24,700,000 ($3,742,544) between November 16, 2010 and November 15, 2012, for which Minglong (Suzhou) Industry Co., Ltd. has currently pledged real estate located in Suzhou City, Peoples Republic of China. Minglong (Suzhou) is not required to re-provide sufficient collateral each time a fresh borrowing occurs under the line of credit during its 2 year term. The interest rate for each borrowing is fixed at the time the borrowing occurs. The interest rate for the 3 borrowings comprising the RMB 13,000,000 ($1,969,760) was set at 1.0833% per month.

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NOTE 7 - CONVERTIBLE NOTES PAYABLE

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

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

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The Company's accounts payable and accrued expenses as of December 31, ~~2009~~2010 and ~~2008~~ 2009 are summarized as follows:

	2009		2008
	2010		2009
Accounts payable	$	~~490~~1,~~001~~216,941	$	~~563~~490,~~312~~001
Accrued wages		~~120~~129,~~776~~492		~~109~~120,~~903~~776
Accrued consulting fees		~~883~~763,~~384~~661		-883,384
Accrued interest on convertible notes payable		~~46,800~~-		-46,800
Other accrued expenses		~~190~~74,~~541~~521		~~264~~190,~~905~~541
Total accounts payable and accrued expenses	$	12,~~731~~184,~~502~~615	$	~~938~~1,~~120~~731,502

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

FOn ~~- 13~~June 15, 2010, the Company authorized to contract with 56 consultants to provide various education consulting services for the Company from July 1, 2010 to December 31, 2010. Accordingly, consulting fees of RMB 5,040,000 ($763,661) were accrued as of December 31, 2010

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NOTE 9 - PAYABLES TO RELATED PARTIES

Payables to related parties ~~consist~~as of December 31, 2010 and 2009 consisted of the following:

	2009		2008
	2010		2009
Payable to Minglong (See Note 13)	$	-	$	73,372
Payable to Chief Financial Officer (See Note 13)	$	-	$	58,600
Payable to Chief Financial Officer (See Note 13)		58,600		-
Payable to Mr. Yongqi Zhu		617,810		660,741
Payable to Mr. Yongqi Zhu		660,741		679,521
Total Payable to Related Parties	$	617,810	$	719,341
Total Payable to Related Parties	$	719,341	$	752,893

Payable to ~~Minglong~~Chief Financial Officer in the amount of $7358,~~372~~600 as of December 31, ~~2008~~2009 represented the net balance of ~~payments~~loans ~~made~~from bythe ~~Minglong~~Chief onFinancial ~~behalf~~Officer of the Company ~~(see Note 3)~~. The payable was interest free and due on demand. The payable was paid in full during the first quarter of 2010.

Payable to Mr. Yongqi Zhu, the Chief ~~Financial~~Executive Officer inof the ~~amount~~Company, ofwas $58617,~~600~~810 and $660,741 as of December 31, 2010 and 2009 , respectively. The payable represented the net balance of loans from ~~the~~Mr. ~~Chief~~Zhu ~~Financial~~advanced ~~Officer~~to of the Company. The ~~payable~~balance due to Mr. Zhu is interest free and due on demand. ~~$58,628 of this payable was included in accounts payable and accrued expenses as of December 31, 2008.~~

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

NOTE 10 - DEFERRED REVENUE

The Company’s revenue consists of tuition fees, accommodation fees and others. Those fees will usually be collected in advance at the beginning of a semester. Spring semester runs from February to July. Autumn semester runs from August to January. Spring semester tuition is collected starting from December. Autumn semester tuition is collected starting from May. The Company prorates the fees collected to applicable months during the semester, recognizes revenue in the corresponding periods and records unrecognized fees collected as deferred income. As of December 31, ~~2009~~2010 and ~~2008~~ 2009, the deferred revenue balance totaled $~~715~~933,~~535~~662 and $~~930~~715,~~100~~535, respectively.

NOTE 11 - STATUTORY RESERVES

Statutory reserves ~~consist~~as of December 31, 2010 and 2009 consisted of the following:

	2009		2008
	2010		2009
Statutory surplus reserve	$	307,853	$	307,853
Statutory common welfare fund		172,960		172,960
Total	$	480,813	$	480,813

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

FAs ~~- 14~~an educational institution, the Blue Tassel School has an option not to make these appropriations. For the year ended December 31, 2010 and 2009, the Company did not make any appropriations to the statutory reserves.

As an educational institution, the Blue Tassel School has an option not to make these appropriations. For the year ended December 31, 2009 and 2008, the Company did not make any appropriations to the statutory reserves.F-15

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NOTE 12 - ACCUMULATED OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income (loss), included in stockholders' equity at December 31, ~~2009~~2010 and ~~2008~~2009, ~~are~~ were as follows:

	Foreign Currency Translation Adjustments
	Foreign Currency
Balance at December 31, 2007	$	500,352
	Translation Adjustments
Change during the year ended December 31, 2008		253,656
Balance at December 31, 2008	$	754,008
Balance at December 31, 2008		754,008
Change during the year ended December 31, 2009		(4,200	)
Balance at December 31, 2009	$	749,808
Change during the year ended December 31, 2010		57,549
Balance at December 31, 2010	$	807,357

NOTE 13 - RELATED PARTY TRANSACTIONS

~~During 2008,~~The ~~the~~ Company ~~received~~will sometimes receive funds from and ~~advanced~~advance funds to Mr. Yongqi Zhu, one of its significant shareholders and the Chief Executive Officer of the Company. As of December 31, ~~2009~~2010 and ~~2008~~2009, the balance due to Mr. Zhu was $~~660~~617,~~741~~810 and $~~679~~660,~~521~~741, respectively, which was included in payables to related parties (see Note 9). The balance due to Mr. Zhu is interest free and due on demand.

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

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

For the year ended December 31, 2009, the Company advanced net cash of $3,020,313 to Minglong. Minglong paid expenses of $156,734 and $73,372 on behalf of China Ivy during ~~the year ended December 31,~~ 2009 and 2008, respectively. A netted amount of $2,790,207 was recorded under the caption “Receivable from Related Party” as of December 31, 2009. ~~(See~~During ~~Note~~2010, ~~16)~~Minglong repaid the $2,790,207 to the Company and the Company advanced a net of $2,643,248 to Minglong.

FDuring ~~- 15~~2010, Minglong paid expenses of $36,406 on behalf of the Company.

On December 31, 2009, the Company entered into a one year lease agreement with Minglong to continue use of current office space located at 1 Suhua Road, Shiji Jinrong Building, Suite 801, Suzhou Industrial Park, Jiangsu Province, P.R. China. The rent and related maintenance expense is $234,543 (RMB 1,569,163) per annum. See Note 14.

As discussed in Note 7, in exchange for a $448,000 convertible note payable by the Company to Minglong (Asia), Minglong (Asia) acquired 5,600,000 shares of Company common stock in February 2010, resulting in it being a 26% owner in the Company at December 31, 2010. Mr. Zhu is a 56% owner in the Company at December 31, 2010.

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NOTE 14 - COMMITMENTS

Operating Lease Obligations

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

~~Aggregate minimum~~On ~~future~~December 31, 2009, the Company entered into a one year lease ~~payments~~agreement ~~under~~with ~~operating~~Minglong ~~leases~~to ascontinue use of current office space located at 1 Suhua Road, Shiji Jinrong Building, Suite 801, Suzhou Industrial Park, Jiangsu Province, P.R. China. The rent and related maintenance expense was RMB 1,569,163 ($237,760) per annum. On December 31, ~~2009~~2010, ~~for each~~the ofCompany renewed the ~~next~~lease ~~five~~to ~~years~~December ~~and~~31, ~~thereafter~~2011 ~~are~~with asthe ~~follows:~~same terms.

Period ending December 31,	Minimum lease payments
2010	$	1,644,949
2011		1,644,949
2012		1,644,949
2013		1,644,949
2014		1,644,949
Thereafter		5,688,782
Total	$	13,913,527

Rent expense and related maintenance expenses totaled $1,890,701 and $1,811,139 for the years ended December 31, 2010 and 2009, respectively.

Aggregate minimum future lease payments under operating leases as of December 31, 2010 for each of the next five years and thereafter are as follows:

Period ending December 31,	Minimum lease payments
2011	$	1,939,076
2012		1,701,316
2013		1,701,316
2014		1,701,316
2015		1,701,316
Thereafter		3,827,961
Total	$	12,572,301

Consulting Agreements

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

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

On June 13, 2008, the Company executed an 18 month consulting agreement with Beijing JP Investment Advisors Limited (the “Advisors”). For consideration of 30,000 RMB ($4,392) per month, the Advisors provided services related to business development, marketing research, and prospective acquisitions. The consulting agreement was terminated on December 31, 2009.

On June 15, 2010, the Company authorized to contract with 56 consultants to provide various education consulting services for the Company from July 1, 2010 to December 31, 2010. Total estimated consulting fees, which have been accrued over the six months ended December 31, 2010, are RMB 5,040,000 ($763,661). For the years ended December 31, ~~2009~~2010 and ~~2008~~2009, consulting fees expense was $~~899~~752,~~531~~445 and $1899,~~722~~531,~~877,~~ respectively.

NOTE 15 ~~- DISCONTINUED OPERATIONS~~– SUBSEQUENT EVENT

On ~~July 31~~January 27, ~~2008~~2011, the Company ~~spun~~repaid ~~off~~a ~~its~~RMB ~~wholly~~31,000,000 ~~owned subsidiary Safe Cell~~ (~~now named Cellteck Inc.~~$4,697,120) toborrowing ~~its~~from ~~stockholders.~~Huaxia ~~Accordingly,~~Bank ~~the~~due ~~operating~~January ~~results~~28, of2011. ~~Safe Cell~~On ~~before~~January ~~the spinoff on July 31~~30, ~~2008~~2011 ~~is reported as discontinued operations in~~ the ~~accompanying~~Company ~~consolidated~~repaid ~~financial~~a ~~statements.~~RMB ~~The~~13,000,000 ($~~189~~1,~~461~~969,760) ~~negative stockholders’~~borrowing ~~equity~~from ofHuaxia ~~Safe~~Bank ~~Cell~~due atJanuary ~~July 31~~29, ~~2008 has been added to additional paid-in capital~~2011.

FOn ~~- 16~~January 27, 2011, the Company received a RMB 15,000,000 ($2,272,800) borrowing from Huaxia Bank. The loan is a “working capital” loan which bears interest at 6.10% per annum and is due by January 27, 2012. On January 31, 2011, the Company received a RMB 15,000,000 ($2,272,800) borrowing from Huaxia Bank. The loan is a “working capital” loan which bears interest at 6.10% per annum and is due by January 31, 2012. On February 1, 2011, the Company received a RMB 14,000,000 ($2,121,280) borrowing from Huaxia Bank. The loan is a “working capital” loan which bears interest at 6.10% per annum and is due by February 1, 2012. The loans from Huaxia Bank are secured by the land use right of Blue Tassel School and four buildings totaling 20,926.86 square meters of the School.

~~For~~On March 30, 2011, the ~~year~~ ~~ended~~Company received payment of RMB 25,300,000 ($3,833,456) from Minglong Industry Co. satisfying an interest free advance receivable of $2,643,248 at December 31, ~~2008~~2010 discussed in Notes 3 and 13 above, ~~loss~~plus ~~from~~additional ~~operations~~advances ofmade ~~discontinued~~by the Company to that entity ~~consisted~~ during the first quarter of: 2011.

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

F-17

NOTE 16 – SUBSEQUENT EVENT

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

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

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

F - 17

Filing Compare · CHINA IVY SCHOOL, INC.