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EX-5.1 - OPINION OF DIETERICH & MAZAREI (LEGAL COUNSEL) - WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP Corpwiei_ex51.htm
EX-5.2 - OPINION OF PRC LEGAL COUNSEL - WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP Corpwiei_ex52.htm
EX-23.2 - CONSENT OF AUDITOR - WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP Corpwiei_ex232.htm
As filed with the Securities and Exchange Commission on December 17 , 2010
Registration No. 333-163635


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No.  8  to
 
FORM S-1
 
SEC File # 333-163635
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
 Wonder International Education & Investment
Group Corporation
(Exact name of registrant as specified in its charter)
 
Arizona
 
8299
 
26-2773442
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number
)
 
(I.R.S. Employer
Identification No.
)
 
8040 E. Morgan Trail, #18, Scottsdale, AZ 85258
 (Address of Principal Executive Offices) (Zip Code)
 
480-966-2020
(Registrant’s telephone number, including area code)
 
Christopher Dieterich
Dieterich & Mazarei
11835 West Olympic Blvd., Suite 1235E
Los Angeles, California 90064
(Name and Address of Agent for Service)
 
Approximate date of proposed sale to the public: From time to time after the effective date of this registration statement, as shall be determined by the selling stockholders identified herein.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small 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 Smaller reporting company   þ
 


 
 

 
 
CALCULATION OF REGISTRATION FEE
 
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED
AMOUNT TO BE REGISTERED
PROPOSED MAXIMUM OFFERING PRICE PER SHARE (1)
PROPOSED MAXIMUM AGGREGATE OFFERING PRICE
AMOUNT OF REGISTRATION FEE
Common Stock Par Value $0.001
899,875
$6.00
$5,399,250
$301.28
 
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 of the Securities Act.

 
 
 
 
 

 
 
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
 
SUBJECT TO COMPLETION, Dated December 17 ,  2010
 
PRELIMINARY PROSPECTUS
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
 
899,875 SHARES
COMMON STOCK
 
The shareholder named in this prospectus is offering all of the shares of common stock offered through this prospectus as a dividend to its shareholders of record.

Our common stock is presently not traded on any market or securities exchange.
 
The purchase of the securities offered through this prospectus involves a high degree of risk. See Section Entitled “Risk Factors” on pages 3 through 13.
 
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
The shareholder will be distributing 899,875 of its shares to its shareholders of record and will not sell any of its shares in the open market. These shares, once distributed, will be restricted from re-sale for a period of one year.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
 

 
The Date of This Prospectus is:   December __ , 2010
 
 
 

 
TABLE OF CONTENTS
 
Title     Page  
       
Summary
    1  
Summary Financial Information     2  
Risk Factors
    3  
Forward-Looking Statements
    14  
Use of Proceeds
    14  
Determination of Offering Price
    14  
Dilution
    15  
Selling Security Holders
    15  
Plan of Distribution
    16  
Description of Securities
    17  
Interest of Named Experts and Counsel
    18  
Description of Business
    19  
Description of Property     24  
Legal Proceedings
    35  
Market for Common Equity and Related Stockholder Matters
    35  
Management Discussion and Analysis and Results of Operations
    37  
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    43  
Directors, Executive Officers, Promoters and Control Persons
    43  
Executive Compensation
    45  
Security Ownership of Certain Beneficial Owners and Management
    45  
Certain Relationships and Related Transactions
    46  
Disclosure of Commission Position of Indemnification for Securities Act Liabilities
    47  
Index to Financial Statements     F-1  

 
 

 

SUMMARY
 
Prospectus Summary This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Accordingly, you are urged to carefully review this prospectus in its entirety, including the risks of investing in our securities discussed under the caption “Risk Factors” and the financial statements before making an investment decision.
 
Except as otherwise specifically noted, all references in this prospectus to the “Company,” “we,” “us” and “our” refer to Wonder International Education & Investment Group Corporation, an Arizona corporation.
 
Summary Information about Wonder International Education & Investment Group Corporation
 
Wonder International Education & Investment Group Corporation (“US Wonder”) is a US holding company, incorporated in Arizona on April 21, 2008. On November 1, 2010, US Wonder acquired all of the outstanding capital stock of Anhui Lang Wen Tian Cheng Consulting & Management Co., Ltd. (“WFOE”), a Chinese company pursuant to the terms of an agreement (Attached hereto as Exhibit 10.11), such that WFOE became a wholly-owned subsidiary of US Wonder on that date. On November 3, 2010, WFOE entered into a series of agreements with China Wonder Education and Management Company, Ltd (“China Wonder”) including a Voting Right Proxy Agreement, Option Agreement, Equity Pledge Agreement, Consulting Services Agreement and Operating Agreement (collectively, the “VIE Agreements”), China Wonder wholly owns seven separate vocational training schools in seven provinces in China.  These schools are non-governmental vocational education institutions in China. Wonder’s core business is to provide IT education. Wonder's seven (7) vocational schools are in the following provinces of China: Anhui, Jiangsu, Zhejiang, Fujian, Henan, Hubei and Liaoning. Through our ownership of WFOE, we control China Wonder and the schools and have the ability to control any income produced by China Wonder. All dividends and other distributions declared payable on Wonder’s equity interests in WFOE in Renminbi may, under the current laws and regulations of the PRC be payable in foreign currency and may be freely be transferred out of the PRC.
 
Our business office is located at 8040 E. Morgan Trail, #18, Scottsdale, AZ 85258. Our fiscal year end is December 31. As of November, 2010, we had raised $ 0 through the sale of common stock. As indicated in our audited financial statements, at December 31, 2009 there was $ 925,011 of unrestricted cash, and outstanding liabilities of $16,588,529 for expenses related to the operations of our wholly owned subsidiaries. In the fiscal year ended December 31, 2009, we had a gross profit of $5,946,523 and a net income of $2,597,003.
 
This summary provides an overview of selected information contained in this prospectus. It does not contain all the information you should consider before making a decision to purchase the shares we are offering. You should very carefully and thoroughly read the more detailed information in this prospectus and review our financial statements.
 
The Offering:
 
Securities Being Offered:  Up to 899,875 shares of common stock.
 
Offering Price: The shareholder will be distributing 899,875 of its shares to its shareholders of record and will not sell any of its shares in the open market until the one year restriction is lifted.
 
Terms of the Offering   The shareholder will distribute all 899,875 shares to its shareholders through a dividend.  These shares will be issued on a pro-rata basis to all of those shareholders.  The shares distributed via dividend will be restricted against resale for a period of one year.
 
 
1

 
 
Securities Issued and to be Issued:  A total of 20,000,000 shares of our common stock have been issued. All of the common stock being registered under this prospectus will be distributed as dividend to the selling shareholder's shareholders for no consideration.
  
Use of Proceeds:   We will not receive any proceeds from the sale of the common stock by the selling shareholders.
 
Risk Factors
 
For a discussion of some of the risks you should consider before purchasing shares of our common stock, you are urged to carefully review and consider the section entitled “Risk Factors” beginning on page 3 of this prospectus.
 
SUMMARY FINANCIAL INFORMATION
 
Balance Sheet
 
   
December 31, 2009
   
December 31, 2008
 
   
(Audited)
   
(Audited)
 
             
Unrestricted cash
  $ 925,011     $ 301,236  
Total Assets
    31,479,617       38,390,721  
Liabilities
   
16,588,829
     
26,135,790
 
Total Stockholders’ Equity
   
14,491,088
     
12,254,931
 
 
Statement of Operations
 
   
Year Ended
December 31, 2009
   
Year Ended
December 31, 2008
 
             
Operating Income
  $
3,905,405
    $
4,213,292
 
Net Income
   
2,597,003
     
3,146,725
 
 
Balance Sheet
 
   
September 30,
2010
 
   
(Unaudited)
 
       
Unrestricted cash
 
$
1,869,512
 
Total Assets
   
39,386,380
 
Liabilities
   
22,123,485
 
Total Stockholders’ Equity
   
17,262,895
 

 
2

 

Statement of Operations
  
   
Nine Month
Period Ended
Sept. 30, 2010
   
Nine Month
Period Ended
Sept. 30, 2009
 
             
Gross Profit
 
$
5,262,051
   
$
4,828,413
 
Net Income
   
2,220,668
     
2,329,648
 
 
RISK FACTORS
 
Risks Related to Our Business
 
Although our Chinese subsidiary has been in operation for several years, Wonder was incorporated on April 17, 2008 and has a limited operating history.
 
         
There is no way to evaluate the likelihood of whether we will be able to operate our proposed business successfully.
 
         
If our business fails to develop in the manner we have anticipated, you will lose your investment in the shares.
 
         
If our business develops, management may be unable to effectively or efficiently operate our business unless we are able to employ sufficient and trained professional personnel to assist us in the operation of our business, in which event you will lose your investment in the shares.
 
The Chinese market for educational services is still emerging and evolving rapidly. If market acceptance of our products and services declines or fails to grow, our revenue growth may slow or we may experience a decrease in revenues.
     
As the Chinese market for educational services is still emerging, our success will depend to a large extent on our ability to convince our clients that our technologies and services are valuable.
         
 
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If demand for educational services does not grow to the extent we anticipate, our revenue growth may slow or we may experience a decrease in revenues.
 
If we need to raise additional funds, the funds may not be available when we need them.  We may be required to provide rights senior to the rights of our shareholders in order to attract additional funds and if we use equity securities to raise additional funds dilution to our shareholders will occur.
 
         
To the extent that we require additional funds, we cannot assure you that additional financing will be available when needed on favorable terms or at all, and if the funds are not available when we need them, we may be forced to terminate our business.
 
         
If additional funds are raised through the issuance of equity securities, the percentage ownership of our existing stockholders will be reduced; and those equity securities issued to raise additional funds may have rights, preferences or privileges senior to those of the rights of the holders of our common stock.
 
Compliance with rules and requirements applicable to public companies may cause us to incur increased costs, and any failure by us to comply with such rules and requirements could negatively affect investor confidence in us and cause the market price of our ADSs to decline.
         
As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and Nasdaq, have required changes in corporate governance practices of public companies. We expect these rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. Complying with these rules and requirements may be especially difficult and costly for us because we may have difficulty locating sufficient personnel in China with experience and expertise relating to U.S. GAAP and U.S. public-company reporting requirements, and such personnel may command high salaries relative to what similarly experienced personnel would command in the United States. If we cannot employ sufficient personnel to ensure compliance with these rules and regulations, we may need to rely more on outside legal, accounting and financial experts, which may be very costly. In addition, we will incur additional costs associated with our public company reporting requirements. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
 
Some of our competition will be from larger, more established and better financed companies, and if we are unable to successfully compete with other companies our business will fail.
 
      
If we are unable to implement our business expansions, some of our competitors will have greater financial resources, technical expertise and managerial capabilities than we do.
 
     ●  
If we are unable to overcome some of the competitive disadvantages, we will be forced to cease our business operations.
 
 
4

 
 
Market factors are out of our control.  As a result, we may not be able to market any of our educational products which may be developed.
 
         
The education industry, in general, is intensively competitive, and we are unable to provide any assurance that a ready market will exist of the sale of our products.
 
         
Numerous factors beyond our control may affect the marketability of any products developed.  The factors include market fluctuations, government regulations, including regulations relating to prices and taxes.
 
         
The exact effect of these factors cannot be accurately predicted, but the impact or any one or a combination thereof may result in our inability to generate any revenue, in which event you will lose your entire investment in the shares.
 
Risks Related to Our Common Stock
 
We are not listed or quoted on any exchange and we may never obtain such a listing or quotation.
 
         
There may never be a market for stock and stock held by our shareholders may have little or no value.  There is presently no public market in our shares. While we intend to contact a market maker for sponsorship of our securities, we cannot guarantee that such sponsorship will be approved and our stock listed and quoted for sale. Even if our shares are quoted for sale, buyers may be insufficient in numbers to allow for a robust market, it may prove impossible to sell your shares.
 
         
Even if we obtain a listing on an exchange and a market for our shares develops, sales of a substantial number of shares of our common stock into the public market by certain stockholders may result in significant downward pressure on the price of our common stock and could affect your ability to realize the current trading price of our common stock.
 
Our shareholders positions may be diluted through the issuance of additional shares.
 
         
Currently, we have issued a total of 20,000,000 shares of common stock. Additional issuances of equity securities may result in dilution to our existing stockholders. Our Articles of Incorporation authorize the issuance of up to 100,000,000 shares of common stock.
 
Our common stock is subject to the "penny stock" rules of the SEC.
 
         
Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
 
         
Because our stock may not be traded on a stock exchange or on the NASDAQ National Market or the NASDAQ Small Cap Market and because the market price of the common stock may be less than $5.00 per share, the common stock is classified as a "penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
 
 
5

 
 
         
That a broker or dealer approve a person's account for transactions in penny stocks; and
 
         
The broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
 
         
In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person and:
 
Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which:
 
Sets forth the basis on which the broker or dealer made the suitability determination; and;
 
The broker or dealer has received a signed, written agreement from the investor prior to the transaction.
 
         
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
 
         
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
 
A decline in the future price of our common stock could affect our ability to raise further working capital and adversely impact our operations.
 
Even if we are able to successfully list our stock for trading on the Nasdaq, AMEX or OTC Bulletin Board, we can have no assurances that a market will ever develop and if a market does develop we will have no control over the market price of our common stock. Any market price that does develop is likely to be highly volatile. Factors, including regulatory matters, concerns about our financial condition, operating results, litigation, government regulation, developments or disputes relating to current or future agreements or title to our claims may have a significant impact on the market price of our stock, causing the market price to decline. In addition, potential dilutive effects of future sales of shares of common stock by shareholders and by us could also have an adverse effect on the price of our securities.  Such a decline would seriously hinder our ability to raise additional capital and prevent us from fully implementing our business plan and operations.
 
 
6

 
 
Our directors and officers reside outside the United States.
 
All of our directors and officers reside outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.
 
Before a share dividend distribution being registered by this prospectus' selling shareholder, 100% of our shares of Common Stock are controlled by Principal Stockholders
 
After approval of this registration of a dividend to Eastbridge shareholders, 100% of our Common Stock will be owned by 1,605 stockholders of record. However, prior to this approval, 100% of our shares of common stock are owned or controlled by two shareholders, Eastbridge Investments Group Corp. and our Chairman, Mr. Chungui Xie, who is the beneficial owner of about 83% of our Common Stock. Such ownership by the Company's principal shareholder, executive officer and director may have the effect of delaying, deferring, preventing or facilitating a sale of the Company or a business combination with a third party.
 
Even taking into account the limitations of Rule 144, the future sales of restricted shares could have a depressive effect on the market price of the Company’s securities in any market, which may develop.
 
The 20,000,000 shares of Common Stock presently issued are “restricted securities” as that term is defined under the Securities Act of 1933, as amended, (the “Securities Act”) and in the future may be sold in compliance with Rule 144 of the Securities Act, or pursuant to a Registration Statement filed under the Securities Act. Rule 144 provides, in essence, that a person, who has not been an affiliate of the issuer for the past 90 days and has held restricted securities for six months of an issuer that has been reporting for a period of at least 90 days, may sell those securities so long as the Company is current in its reporting obligations.  After one year, non-affiliates are permitted to sell their restricted securities freely without being subject to any other Rule 144 condition.  Sales of restricted shares by our affiliates who have held the shares for six months are limited to an amount equal to one percent (1%) of the Company’s outstanding Common stock that may be sold in any three-month period. Additionally, Rule 144 requires that an issuer of securities make available adequate current public information with respect to the issuer. Such information is deemed available if the issuer satisfies the reporting requirements of sections 13 or 15(d) of the Securities and Exchange Act of 1934 (the “Securities Exchange Act”) or of Rule 15c2-11 there under.  There is no limitation on such sales and there is no requirement regarding adequate current public information. Sales under Rule 144 or pursuant to a Registration Statement filed under the Act, may have a depressive effect on the market price of our securities in any market, which may develop for such shares. However, these rules apply only to shares in a company that is not considered a “shell” entity.  In the event that the issuer is a “shell” entity, as we are, all shares must be held for one year from the date of distribution in order to be sold in compliance with Rule 144.
 
If shareholders sell a large number of shares all at once or in blocks, the value of our shares would most likely decline.
 
The Company has 20,000,000 shares of Common Stock outstanding as of the date of this prospectus. When these shares become freely tradeable, either through a future registration or exemption (such as that provided by Rule 144 which will be available one year after approval of this Registration Statement), the availability for sale of a large amount of shares may depress the market price for our Common Stock and impair our ability to raise additional capital through the public sale of Common Stock. The Company has no arrangement with any of the holders of our shares to address the possible effect on the price of the Company's Common Stock of the sale by them of their shares.
 
Risks Relating to Regulation of Our Business
 
Changes to preferential policies adopted by the Chinese government related to vocational education may negatively affect our business and results of operations.
 
        The Chinese government has adopted preferential policies for the development of vocational schools in China, including “The Decision to Enhance the Promotion of the Reform and Development of Vocational Education” and “The Decision to Enhance the Development of Vocational Education” published by the State Council in September 2002 and October 2005, respectively. These decisions require all levels of government in China to intensify their support for vocational education and to gradually increase the financial resources that local and provincial governments allocate to vocational education. If these preferential policies were to be enhanced, it may negatively affect our business and results of operations.
 
We have limited recourse against our subsidiaries if anyone of them violates our contractual arrangements.
 
        We have limited direct recourse against our China subsidiaries if anyone of them violates these contractual arrangements. For example, they could refuse to operate the educational institutions in our group in an acceptable manner or pay the service fees due under our contractual arrangements. Because our contractual arrangements are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in China, if a subsidiary fails to perform its obligations under our contractual arrangements, we may have to rely on remedies under PRC law, including seeking specific performance and claiming damages. In addition, generally the PRC has substantially less experience related to the enforcement of contractual rights through its judiciary or the arbitration process as compared to the United States. This inexperience presents the risk that the judiciary or arbitrators in the PRC may be reluctant to enforce contractual rights, interpret these rights and remedies differently than what was intended by the parties to the agreements, or find that such contractual agreements do not comply with restrictions in current PRC laws. A PRC court may also set aside an arbitration award by reason of any defect the court considers to be present in the arbitration proceeding, remedies at law may not be adequate and a PRC court may not order specific performance. Additionally, contract interpretation and enforcement is not as developed as that in the United States and a contract dispute could be subject to uncertainties. In addition, any legal proceeding may result in substantial costs, disruptions to our business, damage to our reputation and diversion of our resources.
 
7

 
 
Risks Related to Doing Business in China
 
PRC economic, political and social conditions, as well as changes in any government policies, laws and regulations, could adversely affect the overall economy in China or the prospects of the education market, which in turn could adversely affect our business.
 
Substantially all of our operations are conducted in China, and substantially all of our revenues are derived from China. Accordingly, our business, financial condition, results of operations, prospects and certain transactions we may undertake are subject, to a significant extent, to economic, political and legal developments in China.
 
The PRC economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the PRC economy has experienced significant growth in the past two to three decades, growth has been uneven, both geographically and among various sectors of the economy. Demand for our products and services depend, in large part, on economic conditions in China. Any slowdown in China’s economic growth may cause our potential customers to delay or cancel their plans to participate in our educational services, which in turn could reduce our net revenues.
 
Although the PRC economy has been transitioning from a planned economy to a more market-oriented economy since the late 1970s, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over China’s economic growth through the allocation of resources, controlling the incurrence and payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Changes in any of these policies, laws and regulations could adversely affect the overall economy in China or the prospects of the education market, which could harm our business.
 
The PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation of financial and other resources, which have for the most part had a positive effect on our business and growth. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce new measures that will have a negative effect on us.
 
China’s social and political conditions are also not as stable as those of the United States and other developed countries. Any sudden changes to China’s political system or the occurrence of widespread social unrest could have negative effects on our business and results of operations. In addition, China has tumultuous relations with some of its neighbors and a significant further deterioration in such relations could have negative effects on the PRC economy and lead to changes in governmental policies that would be adverse to our business interests.
 
The PRC legal system embodies uncertainties that could limit the legal protections available to you and us.
 
Unlike common law systems, the PRC legal system is based on written statutes and decided legal cases have little precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation since then has been to significantly enhance the protections afforded to various forms of foreign investment in China. Our PRC operating subsidiaries are subject to laws and regulations applicable to foreign investment in China in general and laws and regulations applicable to foreign invested enterprises in particular. Our PRC subsidiaries are subject to laws and regulations governing the formation and conduct of domestic PRC companies. Relevant PRC laws, regulations and legal requirements may change frequently, and their interpretation and enforcement involve uncertainties. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract.
 
 
8

 
 
However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than under more developed legal systems. Such uncertainties, including the inability to enforce our contracts and intellectual property rights, could materially and adversely affect our business and operations. In addition, confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the PRC legal system, particularly with respect to the privatization of the education industry, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you.
 
The accredited education sector is subject to extensive regulation in China, and the educational institutions’ ability to conduct operation is highly dependent on their compliance with these regulatory frameworks.
 
We are a private vocational school and are not subject to the same regulations and restrictions as imposed on the regular accredited schools in China.
 
We are required to hold a variety of permits, licenses and certificates to conduct our business in China. We may not possess or update all the permits, licenses and certificates required for our business and may have to apply for permits, licenses and certificates in addition to the currently secured ones from time to time. In addition, there may be circumstances under which the approvals, permits, licenses or certificates granted by the governmental agencies are subject to change without substantial advance notice, and it is possible that we could fail to obtain the approvals, permits, licenses or certificates that are required to expand our business as we intend. If we fail to obtain or to maintain such permits, licenses or certificates or renewals are granted with onerous conditions, we could be subject to fines and other penalties and be limited in the number or the quality of the products or services that we would be able to offer. As a result, our business, result of operations and financial condition could be materially and adversely affected.
 
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against us, our management or the experts named in the prospectus.
 
We conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, all of our senior executive officers reside within China. As a result, it may not be possible to affect service of process within the United States or elsewhere outside China upon our senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. The PRC does not have treaties with the United States providing for the reciprocal recognition and enforcement of court judgments.
 
 
9

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

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

 
PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary’s ability to distribute profits to us, or otherwise adversely affect us.
 
SAFE issued a public notice in October 2005 requiring PRC residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies, referred to in the notice as an “offshore special purpose company.” PRC residents that are shareholders and/or beneficial owners of offshore special purpose companies established before November 1, 2005 are required to register with the local SAFE branch before March 31, 2006. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to file, update and modify his or her SAFE registration with the SAFE or its competent local branch, with respect to that offshore special purpose company in connection with any of its increase or decrease of capital, transfer of shares, merger, split, equity investment or creation of any security interest over any assets located in China. The SAFE regulations require retroactive approval and registration of direct or indirect investments previously made by PRC residents in offshore special purpose companies. To further clarify the implementation of Circular 75, SAFE issued Circular 106 in May, 2007. Under Circular 106, PRC subsidiaries of an offshore special purpose company are required to coordinate and supervise the filing of SAFE registrations by the offshore holding company’s shareholders who are PRC residents in a timely manner. We have requested our current shareholders and/or beneficial owners to disclose whether they or their shareholders or beneficial owners fall within the ambit of the SAFE notice and urge those who are PRC residents to register with the local SAFE branch as required under the SAFE notice. The failure of these shareholders and/or beneficial owners to timely amend their SAFE registrations pursuant to the SAFE notice or the failure of future shareholders and/or beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in the SAFE notice may subject such shareholders and/or beneficial owners to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary, limit our PRC subsidiary’s ability to distribute dividends to our company or otherwise adversely affect our business.
 
 
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If the China Securities Regulatory Commission, or CSRC, or another PRC regulatory agency determines that its approval is required in connection with this offering, this offering may be delayed or cancelled, or we may become subject to penalties.
 
On August 8, 2006, PRC regulatory agencies, including the CSRC, promulgated the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rule, which became effective on September 8, 2006. On June 22, 2009, the MOFCOM promulgated the amended Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Order 6”, together with M&A rule, the “New M&A Rules”), which became effective immediately. The M&A Rule, among other things, has certain provisions that require offshore special purpose vehicles, or SPVs, newly formed for the purpose of acquiring PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior to listing their securities on an overseas stock exchange. On September 21, 2006, pursuant to the New M&A Rules and other PRC Laws and regulations, the CSRC, in its official website, promulgated relevant guidance with respect to the issues of listing and trading of domestic enterprises’ securities on overseas stock exchanges, including a list of application materials with respect to the listing on overseas stock exchanges by SPVs. We believe that the M&A Regulations only apply to transactions involving "mergers and acquisitions of domestic enterprises by foreign investors," we believe that (i) the M&A Regulations are not applicable to our corporate structure based on control by contractual methods and (ii) CSRC approval is not required in the context of this offering, for the following reasons: (a) we established our PRC subsidiary, China WFOE, by means of direct investment, not through merger or acquisition of any PRC domestic companies and (b) we control our VIE and its subsidiaries through contractual arrangements, not through "mergers and acquisitions of domestic enterprises by foreign investors" as defined under the M&A Regulations. If the CSRC or another PRC regulatory agency subsequently determines that its approval is required for this offering, we may face sanctions by the CSRC or another PRC regulatory agency. If this happens, these regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, restrict or prohibit payment or remittance of dividends by our PRC subsidiary to us or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ordinary shares. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to delay or cancel this offering before settlement and delivery of the ordinary shares being offered by us.
 
The M&A Rule establishes more complex procedures for some acquisitions of PRC companies by foreign entities, which could make it more difficult for us to pursue growth through acquisitions in China.
 
The M&A Rule establishes additional procedures and requirements that could make some acquisitions of PRC companies by foreign entities, such as ours, more time-consuming and complex, including requirements in some instances that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign entity takes control of a PRC domestic enterprise. In the future, we may grow our business in part by acquiring complementary businesses. Complying with the requirements of the M&A Rule to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
 
PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans to our PRC subsidiary and PRC affiliated entity or to make additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
 
We are an offshore holding company conducting our operations in China through our PRC subsidiaries. We plan to make loans to our PRC subsidiary, whether currently in existence or to be formed in the future, and to the Management Company or other PRC affiliated entities formed in the future, or make additional capital contributions to our PRC subsidiary.
 
 
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Any loans we make to our PRC subsidiary cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange, or SAFE, or its local counterparts. Under applicable PRC law, the government authorities must approve a foreign-invested enterprise’s registered capital amount, which represents the total amount of capital contributions made by the shareholders that have registered with the registration authorities. In addition, the authorities must also approve the foreign-invested enterprise’s total investment, which represents the total statutory capitalization of the company, equal to the company’s registered capital plus the amount of loans it is permitted to borrow under the law. The ratio of registered capital to total investment cannot be lower than the minimum statutory requirement and the excess of the total investment over the registered capital represents the maximum amount of borrowings that a foreign invested enterprise is permitted to have under PRC law. The various applications could be time-consuming and their outcomes may be uncertain. Concurrently with the loans, we might have to make capital contributions to these subsidiaries to maintain the statutory minimum registered capital and total investment ratio, and such capital contributions involve uncertainties of their own, as discussed below. Furthermore, even if we make loans to our PRC subsidiary that do not exceed their current maximum amount of borrowings, we will have to register each loan with SAFE or its local counterpart for the issuance of a registration certificate of foreign debts. In practice, it could be time-consuming to complete such SAFE registration process.
 
Any loans we make to our PRC affiliated entity, which is treated as a PRC domestic company rather than a foreign-invested enterprise under PRC law, are also subject to various PRC regulations and approvals. Under applicable PRC regulations, international commercial loans to PRC domestic companies are subject to various government approvals.
 
We cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or PRC affiliated entity or with respect to future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund our PRC operations may be negatively affected, which could adversely and materially affect our liquidity and our ability to fund and expand our business.

Restrictions on currency exchange may limit our ability to utilize our revenues effectively and the ability of our PRC subsidiary to obtain financing.
 
Substantially all of our revenues and operating expenses are denominated in Renminbi (RMB). Restrictions on currency exchange imposed by the PRC government may limit our ability to utilize revenues generated in Renminbi to fund our business activities outside China, if any, or expenditures denominated in foreign currencies. Under current PRC regulations, Renminbi may be freely converted into foreign currency for payments relating to “current account transactions,” which include among other things dividend payments and payments for the import of goods and services, by complying with certain procedural requirements. Our PRC subsidiary may also retain foreign exchange in their respective current account bank accounts, subject to a cap set by SAFE or its local counterpart, for use in payment of international current account transactions.
 
 
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However, conversion of Renminbi into foreign currencies and of foreign currencies into Renminbi, for payments relating to “capital account transactions,” which principally includes investments and loans, generally requires the approval of SAFE and other relevant PRC governmental authorities. Restrictions on the convertibility of the Renminbi for capital account transactions could affect the ability of our PRC subsidiary to make investments overseas or to obtain foreign exchange through debt or equity financing, including by means of loans or capital contributions from us.
 
In August 2008, SAFE promulgated Circular 142, a notice regulating the conversion by Foreign Invested Enterprises or “FIEs” of foreign currencies into Renminbi by restricting how the converted Renminbi may be used. Circular 142 requires that Renminbi converted from the foreign currency-dominated capital of a FIE may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC unless specifically provided for otherwise. In addition, SAFE strengthened its oversight over the flow and use of Renminbi funds converted from the foreign currency-dominated capital of a FIE. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Violations of Circular 142 may result in severe penalties, including substantial fines as set forth in the SAFE rules.
 
Any existing and future restrictions on currency exchange may affect the ability of our PRC subsidiary or affiliated entity to obtain foreign currencies, limit our ability to utilize revenues generated in Renminbi to fund our business activities outside China that are denominated in foreign currencies, or otherwise materially and adversely affect our business.
 
Failure to file and pay income taxes in China may hinder the Company’s ability to conduct business.
 
In China, the failure to pay or file income taxes will significantly impact a company’s ability to operate.  In the event of a failure to pay taxes, penalties of 18% per year may be imposed and the Chinese government could get a priority lien against all of the Company’s assets.  Additionally, if a company is found to have deliberately avoided its tax obligations, the Company’s officers and/or directors may be found to be liable for the failure and jail terms could be imposed.  The Company has not paid most of the income taxes to which it is subject. As of September 30,2010,, the Company owes approximately $7,300,000 in back taxes plus applicable penalties. The Company may, therefore, become subject to all the consequences described above. These taxes and penalties have been charged to income on the Company financial statements, and are included in its liabilities.  Additionally, a possibility may exist that current or former employees or contractors might threaten to contact PRC authorities regarding potential regulatory violations unless the company makes certain payments or provides other benefits to such persons.  In that event, the Company would expedite its attempts to negotiate payment of any outstanding tax liabilities with the tax authorities
 
Furthermore, Chinese law requires an allocation of 10% of a company’s after tax profits to a Statutory Reserve Fund and 5% of a Statutory Public Welfare Fund.  Therefore, as required by the Chinese law that governs accounting, the Company allocates 10% of its after tax profits, if any, to a Statutory Reserve Fund and 5% to a Statutory Public Welfare Fund, as determined from year to year.  These funds are allocated appropriately until reserves reach 50% of Paid in Capital.  This allocation would decrease profits, if any, available for distribution to shareholders. In addition, Chinese law also requires an allocation of 25% of the  after tax profits of a private school. This requirement could reduce the amount of profit available for distribution to shareholders.
 
Under the EIT Law, we may be classified as a "resident enterprise" of China. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders.
 
Under the EIT Law and the EIT Implementation Rules, an enterprise established outside of the PRC with "de facto management bodies" within the PRC is considered a resident enterprise and is subject to enterprise income tax at the rate of 25% on its global income. The EIT Implementation Rules define the term "de facto management bodies" as "establishments that carry out substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc. of an enterprise." The State Administration of Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, on April 22, 2009. Circular 82 provides certain specific criteria for determining whether the "de facto management body" of a Chinese-controlled offshore incorporated enterprise is located in China. However, Circular 82 applies only to offshore enterprises controlled by PRC enterprises, not those invested in by PRC individuals, like our company. Currently there are no further detailed rules or precedents applicable to us governing the procedures and specific criteria for determining "de facto management body" for the company of our type. If the PRC authorities were to subsequently determine, or any future regulation provides, that we should be treated as a PRC resident enterprise, we would be subject to a 25% enterprise income tax on our global income, which will significantly increase our tax burden and could materially and adversely affect our financial condition and results of operations.
 
If we are considered a PRC resident enterprise for enterprise income tax purposes, dividends we pay with respect to our ordinary shares may be considered income derived from sources within the PRC and subject to PRC withholding tax of 10%. In addition, non-PRC shareholders may be subject to PRC tax on gains realized on the sale or other disposition of ordinary shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC shareholders would be able to claim the benefits of any tax treaties between their tax residence and the PRC in the event that we are considered as a PRC resident enterprise.
 
 
 
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FORWARD-LOOKING STATEMENTS
 
Our actual results may differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in this Risk Factors section and elsewhere in this prospectus.
 
This prospectus contains forward-looking statements as that term is used in federal securities laws, about our financial condition, results of operations and business that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. These statements include, among others:
 
         
statements concerning the benefits that we expect will result from our business activities and certain transactions that we have completed, such as increased revenues, decreased expenses and avoided expenses and expenditures; and
 
         
statement of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.
 
These statements may be made expressly in this document or with documents that we will file with the SEC. You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions used in this prospectus. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We caution you not to put undue reliance on these statements, which speak only as of the date of this Prospectus. Further, the information contained in this prospectus is a statement of our present intention and is based on present facts and assumptions and may change at any time and without notice based on changes in such facts or assumptions.
 
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. The safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995 does not apply to the offering made in this prospectus.
 
USE OF PROCEEDS
 
We will not receive any proceeds from the sale of the common stock offered through this prospectus by the selling shareholder.
 
DETERMINATION OF OFFERING PRICE
 
The selling shareholder will be distributing 899,875 of its shares to its shareholders of record and will not sell any of its shares in the open market.
 
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DILUTION
 
The common stock to be held by the receiving shareholders is common stock that has already been issued to Eastbridge. Accordingly, there will be no dilution to our existing shareholders.
 
SELLING SECURITY HOLDERS
 
The following table provides, as of the date of the declared effectiveness of this Registration Statement, information regarding the beneficial ownership of our common stock held by the selling shareholder, including:
 
1.   the number of shares owned prior to this offering;
2.   the total number of shares offered;
3.   the total number of shares owned upon completion of the offering; and
4.   the percentage owned upon completion of the offering.
 
None of the selling shareholders is a broker-dealer or affiliate of a broker dealer, however, the selling shareholder, Eastbridge Investment Group Corp. is an underwriter for the purpose of this offering and will be distributing all of the registered shares to its own shareholders on a pro-rata basis. Eastbridge Investment Group Corp. will not receive any payment for those shares and will not receive any commissions.
 
         
Total Number
of Shares to be
   
Total Shares
   
Percentage of
 
   
Shares Beneficially
   
Offered for Selling
   
Owned Upon
   
Shares Owned upon
 
Selling Stockholder
 
Owned Prior to Offering
   
Shareholders Account
   
Completion of Offering
   
Completion of Offering
 
                         
Eastbridge Invesment Group Corp.     3,400,000       899,875       2,500,125      
12.5
%
                                 
TOTAL     3,400,000       899,875       2,500,125      
12.5
 %
 
 
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PLAN OF DISTRIBUTION
 
We are registering the shares of Common Stock to permit the issuance of these shares to the shareholders described above as recipients of an Eastbridge-directed share dividend. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock. The selling stockholder will distribute these shares to its shareholders on a pro-rata basis. Subsequently, the dividend recipient may sell all or a portion of the shares of Common Stock beneficially owned by them from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker–dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent's commissions. The shares of Common Stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions:
 
on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
in the over-the-counter market;
in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
through the writing of options, whether such options are listed on an options exchange or otherwise;
in ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
through block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
in purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
through an exchange distribution in accordance with the rules of the applicable exchange;
in privately negotiated transactions;
through short sales;
through sales pursuant to Rule 144; However, this rule apply only to shares in a company that is not considered a “shell” entity.  In the event that the issuer is a “shell” entity, as we are, all shares must be held for one year from the date of distribution in order to be sold in compliance with Rule 144.
in which broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;
through a combination of any such methods of sale; and
by any other method permitted pursuant to applicable law.
 
 
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The selling stockholders may pledge or grant a security interest in some or all of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time pursuant Rule 144 or other applicable provision of the Securities Act of 1933, as amended. However, these rules apply only to shares in a company that is not considered a “shell” entity.  In the event that the issuer is a “shell” entity, as we are, all shares must be held for one year from the date of distribution in order to be sold in compliance with Rule 144.
 
Under the securities laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of Common Stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. There can be no assurance that the selling stockholder will sell any or all of the shares of Common Stock registered pursuant to the registration statement, of which this prospectus forms a part. After the one year restriction?
 
The selling stockholder and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of Common Stock by the selling stockholder and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares of Common Stock to engage in market-making activities with respect to the shares of Common Stock. All of the foregoing may affect the marketability of the shares of Common Stock and the ability of any person or entity to engage in market-making activities with respect to the shares of Common Stock. We will pay all expenses of the registration of the shares of Common Stock, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or "blue sky" laws.
 
DESCRIPTION OF SECURITIES

We currently have authorized capital of 100,000,000 shares, all shares of which are designated as common stock without par value, 20,000,000 shares of which are issued and outstanding. Our common stock is not listed for trading on any exchange.

Common Stock

As of December 14 , 2010, there were 20,000,000 shares of our common stock issued and outstanding, held by two (2) shareholders. However, upon approval of this registration statement and the intended Eastbridge dividend, 899,875 of these shares will be held by an additional 1,605 shareholders. These dividend shares will be issued upon declaration of effectiveness of this Registration Statement.
 
All shares of our common stock have equal voting rights and are entitled to one vote per share in all matters to be voted upon by our stockholders. The shares of common stock do not entitle their holders to any preemptive, subscription, conversion or redemption rights, and may be issued only as fully paid and non-assessable shares. Cumulative voting in the election of directors is not permitted, which means that the holders of a majority of the issued and outstanding shares of common stock represented at any meeting at which a quorum is present will be able to elect our entire board of directors if they so choose. In that event, the holders of the remaining shares of common stock will not be able to elect any directors. In the event of our liquidation, each stockholder is entitled to receive a proportionate share of the assets available for distribution to stockholders after the payment of liabilities and after distribution in full of preferential amounts, if any, to be distributed to holders of our preferred stock. Holders of shares of common stock are entitled to share pro rata in dividends and distributions with respect to the common stock when, as and if declared by our board of directors out of funds legally available for dividends. We have not paid any dividends on our common stock and intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy is subject to the discretion of the board of directors. All issued and outstanding shares of our common stock are fully paid and non-assessable. The transfer agent and registrar for our common stock is Jersey Transfer and Trust.

 
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Preferred Stock

The Company does not have an authorized class of preferred stock

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

Share Purchase Warrants

We have not issued and do not have outstanding any warrants to purchase shares of our common stock.

Options

We have not issued and do not have outstanding any options to purchase shares of our common stock.

Convertible Securities

We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant. Nor was any such person connected with the registrant as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

  The law firm of Dieterich & Mazarei has provided an opinion on the validity of our common stock.

 
 
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DESCRIPTION OF BUSINESS
 
Wonder International Education & Investment Group Corporation (“US Wonder”) is a US holding company, incorporated in Arizona on April 21, 2008. On November 1, 2010, Wonder acquired all of the outstanding capital stock of Anhui Lang Wen Tian Cheng Consulting & Management Co., Ltd. (“WFOE”), a Chinese company pursuant to the terms of an agreement (Attached hereto as Exhibit 10.11), such that WFOE became a wholly-owned subsidiary of Wonder on that date.  On November 3, 2010, WFOE entered into a series of agreements with Anhui Wonder Education and Management Company, Ltd (“China Wonder”) including a Voting Right Proxy Agreement, Option Agreement, Equity Pledge Agreement, Consulting Services Agreement and Operating Agreement (collectively, the “VIE Agreements”), China Wonder wholly owns seven separate vocational training schools in seven provinces in China.  These schools are now famous non-governmental vocational education institutions in China. Wonder’s core business is to provide IT education. China Wonder's seven (7) vocational schools are in the following provinces of China: Anhui, Jiangsu, Zhejiang, Fujian, Henan, Hubei and Liaoning.  Through our ownership of WFOE, we control China Wonder and the schools and have the ability to control any income produced by China Wonder.  All dividends and other distributions declared payable on Wonder’s equity interests in WFOE in Renminbi may, under the current laws and regulations of the PRC be payable in foreign currency and may be freely be transferred out of the PRC.
 
   u      
China Wonder’s core business goal is to provide educated IT students to the business community of China.  To meet this goal, Wonder has established an excellent vocational education system which includes two new education models, called the “1+3” training and the “Double Certificate” models.  Both education models have gained significant acceptance and reputation throughout China.


   u      
China Wonder’s market focus is in the vast rural areas of China and the students who do not pass the national high school exam or the entrance test for university acceptance.  There are more than five (5) million students each year that are candidates for China Wonder’s IT education. Wonder has established a strong marketing strategy to reach these students and to promote its IT education programs. Wonder currently graduates 12,000 students per year.

   u      
China Wonder has assembled a solid management team and a professional staff to execute their excellent business model and their plans to expand the business significantly. Wonder’s market strategies have been developed to take advantage of the large market potential in China.
 
Below is a photograph of some of China Wonder’s Chinese facilities in Hefei in Anhui province.
 
 
Wonder International Education & Investment Group Corporation
USA

 
 
 
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Organization Structure of Wonder:
 
Our organization is structured to abide by the laws of the PRC. Its structure is depicted below:
 
 
AWARDS & QUALIFICATION

         
Wonder was awarded the “Precursor of National Non-government Vocational Education institution” by the ministry of labor of the People’s Republic of China
         
Wonder was recognized as one of the “Top Ten IT Education Institutions” in China.
         
Wonder was assessed the “Excellent Training Center” by Macromedia in America.
         
Wonder was awarded the “Trustful Corporation”, “Reassurance Service Corporation”, “Full-satisfied Corporation”, “Perfect Service Corporation”, “Zonta Club” by Consumer Association of Anhui Province.
         
Wonder was assessed the “Excellent Authorized Training Center” and “Excellent Regional Support Center for ATC” by Microsoft.
         
Wonder was awarded the “Best Partner in Grand China” by Core in Canada.
         
Wonder was awarded the “Outstanding Achievement Award”, “Outstanding Corporation” and “Top Ten Corporation of Vocational Education Institution”
         
Wonder was assessed the “Top Ten Training Center” and “Best Partner in Five Years” by Adobe of America
         
Wonder was awarded with “Outstanding Achievement Award” and as “Excellent Training Center in Grand China” by Autodesk of America
         
Wonder was awarded the “Excellent Training Center of NIT” by ministry of education of the People’s Republic of China.
 
 
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EDUCATION MODEL AND CHARACTERISTICS

CURRICULUM SYSTEM

Wonder provides vocational training and employment service to its students. Wonder provides numerous IT classes in several different areas as noted below.  Many of  Wonder’s students come from rural areas of China.  Therefore, Wonder provides a comprehensive employment orientation and helps its students to find employment after their IT program is complete. Wonder’s primary target market is students who have not graduated from the high schools in China.
 
Classification of Curriculum System

Classification of Curriculum System of  Wonder

Classification
Education Course
1.Basic
General Training of Computer
2.Professional
Professional vocational education of computer application and design.
3.High-level
High-level training of Internet Technology, Cartoon and Games, Professional Programmer.
4.Expanded
IT education related vocational education such as Numerical Control Technology.
 
Training Curriculum Program

Training Curriculum Program
 
Department
Curriculum
Recruitment
IT-Application Department
Basics of Computer
Higher level than junior high school
Designer and Researcher
3-D advertisement Designer
Designer of Print Advertisement
Business Administration Assistant
Professional Secretary
E-Business & Marketing
Mechanics Dept.
Numerical Control Machine Tool
Students of high school or higher level than high school
Software Dept.
Professional programmer
Internet Dept.
Internet Engineer
Engineer of Information Security
Digital Art Dept.
E-Game Research Designer
Computer-art Designer
Environment-art Designer
Computer-based Costume Designer
Computer-based Movie & Cartoon Designer

 
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Recruitment Target & Students Distribution

Students who are recruited with junior high school certificates and higher will be mainly taught basic knowledge of computer applications.  Students with high school certificates and higher will learn about the professional use of a computer.

chart
 
The percentage of students is shown by the type of IT program study in the above graph.  Most students are in the Computer-based Art Design curriculum since this area has a large market demand and provides a significant employment opportunity.

CHARACTERISTICS OF THE EDUCATION MODEL

Particular & Inventory Cultivation Model

Wonder has created the “1+3” education model (“Training + Knowledge + Professionalism + Entrepreneurship”) which focuses its efforts on the students’ ability to put theory into practice and utilizing their entrepreneurship abilities, which are also taught by Wonder. By utilizing this very unique education model, Wonder has provided a significant number of talented students, skilled in computer technology.

Market Oriented Course Program
 
Wonder is focused on what the market needs and what employers require.  Wonder has established their course work to meet these needs in a timely and effective manner.

 
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Based on the needs of corporations and especially their need for talent and Wonder’s ability to look forward in IT technology, Wonder has created an excellent market oriented curriculum.  Wonder will revise its curriculum every six (6) months after receiving advice and feedback from employment agencies and their corporate partners.  Wonder will revise the curriculum taking into account the feedback and also utilizing their 16 years of teaching experience, by applying key design factors, and considering the projected revenue and cost for the new curriculum.  Wonder will also test the new curriculum by having its professors conduct the necessary tests with a risk assessment. By utilizing this model, Wonder has been using the most up-to-date and market-needed curriculum system while lowering the risk and cost of the program.
 
 
23

 
 
Education Support/Description of Property
 
Faculty
 
Currently, Wonder has 650 teachers who are sufficient to educate 20,000 students each year. Wonder also employs many part-time teachers.  Wonder currently graduates about 12,000 students per year so they have enough teacher capacity to grow the business during the next one to two years.
 
Hardware Facilities
 
There are over 8000 sets of computers in Wonder schools, and various kinds of laboratory classrooms are available, including: Auto-lectured labs, graphic design labs, in-house adorning and design labs, digital movie labs, television design labs, computer set-up and repair labs, internet labs, Cisco Network labs, program design labs and professional studios.
 
 
 
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Excellent Education Support

Ø  
Recommended institution by the ministry of education, labor, and information.
Ø  
Authorized  training center for Microsoft, Adobe, Cisco, Autodesk, Discreet and Macromedia
Ø  
Authorized training center for Corel, Solid works, CIW, Sun, Linux in Canada
Ø  
The only authorized training institution, internet technology school, ATA software school in Anhui Province for Microsoft
Ø  
Authorized training institution for the Chinese Anti-Hacker & Computer Virus Research Center
Ø  
Authorized test center for Prometric, which is the largest computer test service corporation, providing over 60 famous IT tests worldwide.
 
PROPRIETARY BUSINESS MODELS

 Double Certificates Education Model
 
China Wonder has launched the Double Certificates Education Model identified as “Ability + School Certificates”.  This model provides assistance to students of China Wonder who are taking classes through the self-study program, or the adult education program or through the off-campus program. China Wonder will also provide students, who pass the required tests, certificates authorized by a foreign institution and the National Junior College Degree. This model has been recognized and accepted throughout China since it provides opportunities for many students who cannot take the traditional classes.
 
Employment Referral System
 
China Wonder’s Employment Referral System
 
 
 

 
25

 
 
With student employment as a key strategy, China Wonder has set up the employment referral system.  After several years of development, China Wonder has established an excellent partnership with  many corporations and is able to secure  employment for almost all of  its students.  Of course, this is highly attractive to its students who are anxious to find jobs.
 
China Wonder’s Employment Center Distribution is depicted on the map below, with each red flag identifying a China Wonder Employment Center.


 
 
26

 

MARKET ANALYSIS

CURRENT SITUATION OF FOREIGN VOCATIONAL EDUCATION

Current vocational education in several main developed countries

Vocational education plays an important role in many developed countries’ education system, providing significant contributions to promote economic development, solve the country’s employment problems and improve young people’s abilities throughout the country. In many countries, the vocational education is very popular, especially in Germany, the United States, and Australia.  It is beginning to grow significantly in China as noted in the following paragraphs.

Forward-looking Review of vocational education in foreign countries

Vocational education tends to focus on the “fit” between the student’s talent and the company’s need.  It also depends on predicting the company’s vocational technology need, and the amount of participation by the corporation.

Focusing on technology exploration,

Several countries and regions have already published documents or reports to promote technology ability development. According to several reports by the European Union, the number of people with lower level technology or no professional knowledge totals approximately 80 million and are in the 25 to 64 age group. The amount equals the population of the largest country in EU-Germany.

To have vocational training be more accurate, countries in the EU pay great attention to the predictability of technical abilities. For example, there are systems such as Great Britain’s Technology Database, the “Studying Monitor System” in Norway, Technology Ability Prediction Method in Finland, and the Technology Cooperation Program of the French.

People-Oriented Vocational Education

The People-Oriented Vocational Education focuses on people’s career development, the vocational education guide, and providing flexibility and openness in communication.
 
First, this system focuses on people’s career development. This important focus coupled with the openness of the education system is the distinguishing feature of the people-oriented education system with Australia’s middle level to senior level positions in corporations. They focus on building the skills of individuals.  They emphasize the transformation from a general education to a vocational education to obtaining a university degree. For example, in Australia’s junior high school, students studying basic coursework can apply to study in the vocational education system. After obtaining the vocational education certificates, students can apply for study in a university. Several contracts have been signed between specific universities and some TAFE institutions, which allow students to finish the TAFE course, and then continue to study in the associated university. Once both sets of coursework have been completed and the appropriate tests passed, the students are able to get both the TAFE vocational education certificate and a bachelors degree from the associated university.
 
Second, this system focuses on the employment guide. Many countries in Europe, America and Australia pay great attention to their employment guide.  The career guide of America contains an introduction to the entire field of opportunities, details of related businesses, and information on the employment selection process and finally on how to prepare yourself for a specific field.  In Australia, there’s professional training and teaching in TAFE institutions concerning employment opportunities.
 
 
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The third part of this system is to set up a communication system between the university and vocational education systems. The system will include a credit transfer system, and a sharing of study and working experience between the university and vocational education systems.  Look at the following systems for additional details: the “Unit system” in Australia, the “Separation System and the Credit Approval System” of Chinese Taiwan, and the “Credit Transform System” in Great Britain.  All of these systems have excellent communication processes.

Professional Courses with professional Orientation

Several famous and popular education models in the world such as ability-based education, working career education and general knowledge education are all professionally-oriented.

GENERAL SUMMARY OF CHINESE VOCATIONAL EDUCATION

There are three levels in the vocational education system in China.  Education starts with the Junior Vocational Education school followed by the Secondary Vocational Education school and finally one moves to the Senior Vocational Education school.  The most popular is the Secondary Vocational Education school since it is directly linked to the development of China’s economy.

Statistically, the number of Secondary Vocational schools has increased 2.1 times versus the number of schools in 1978.  The number of students has also increased.  The number of students recruited for Secondary Vocational schools has increased 10.5 times while the number of in-school students increased 14.3 times.

 
 
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More than 80 million students from the Secondary Vocational Education schools and more than 20 million students from the Senior Vocational schools have graduated in the past 30 years.  At the same time, over 150 million people are taking part in various kinds of vocational education in China. In 2008, the Secondary Vocational Education program represented approximately 50% of the entire High School Education system in China and it continues to grow.

FORWARD-LOOKING REVIEW OF CHINESE VOCATIONAL EDUCATION

Chinese Government Encouraging Private Vocational Education

There are four kinds of Vocational Education schools currently in China divided by the different management systems.  They are: Nationally financed Vocational Education schools, Vocational Education schools managed by social organizations, Vocational schools managed by corporations and finally, the privately owned Vocational schools.  The Private Vocational Schools are the most popular in China.  Since capital is very scarce, the Chinese government is encouraging the founding of non-government owned or privately owned institutions for Vocational Education.

Market-oriented establishment of professions in vocational education school

The professions in a Vocational School are established by a combination of market demand and what is taught in that specific school. Currently, almost all of the professions in the vocational education school system are set up by utilizing the principles of market orientation and satisfaction of the development of the local economy.  The market is based on demand and only those professions that meet this demand survive.

Focusing on practical training methods

Chinese education has changed from an elite education system to a more popular education focused on vocational training. With the optimization of the industry structure and with more specialization required, a vocational education has become more important.  Practical skills are needed in the work place.  The vocational education system requires students to practice what they learn by putting into practice what they studied in the classroom.  Many of the students will seek more than one educational degree to meet the needs of the industry in their areas.

Setting up the training courses based on a company’s need to secure a talented workforce.

Vocational education schools usually set up the training courses based on a company’s talent need. As many employers request new staff with related working experience, the local vocational schools build a strong relationship with the employers; if necessary, the students will be taught specific skills to meet the needs of the employer.

There is a surplus of students from the rural parts of China.

During the past few years, there have been tens of thousands of laborers from rural areas transferred to cities to obtain jobs. However, most of them have very little education or practical training.

Since the cost to study in a vocational education school is much lower than any other education school, it is very economical for students from rural areas to choose a vocational education. To obtain a vocational education, students from the rural areas of China can have access to professional classes and have the possibility of working in large cities after graduation. Accordingly, the vocational-specific technologies education school plays an important role in the Chinese urbanization process.

 
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THE POTENTIAL OF “INFORMATION TECHNOLOGY (“IT”) EDUCATION” IN THE CHINESE MARKET

According to the Ministry of Education in China, there are 1,816,878 graduates of IT departments and 1,710,832 in-school students studying IT at vocational education schools in 2006.  As the IT industry develops, this will require that IT education have a rapid development as well.

The IT industry has grown in size to 51.9 billion dollars and is now 0.8% of China’s GDP.  Many IT companies and Research Centers have been created in China during the past few years.  Therefore the demand for IT talent has also grown significantly and individuals with IT skills are in great demand.  Please note the Demand versus Capacity table and the IT Supply and Demand graphs below.

   IT Demand vs. Capacity in China
 
 
Market size
Annual growth rate
IT Demand/year
Current Capacity
Interchange
   
250,000/year
4,000
Information preservation
5.6 billion RMB
10%~20%
30,000/year
500
e-business
 
100%
200,000/year
 
Information security
     
4,000
Network game
5 billion RMB
 
20,000/year
3,000
Software industry
 
35%
   
 


 
 
 
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TARGET MARKET ANALYSIS
 
China Wonder has significant advantages since their primary recruitment area is from Junior High Schools and High Schools from the rural areas of China.   Also, China Wonder has the resources to provide employment and career placement services once the student graduates from their vocational school.

Great market demand of vocational education after high school in China

With the improvement of Chinese high school education and limited education resources at the same time, there’s great market demand for vocational education. According to statistics from the Ministry of Education in China, 8.8 million students had been recruited by universities with the average enrollment ratio of 60.23 per cent of total possible students in 2006, in 2007 the quantity increased to 10.1 million while the ratio decreased to 54 per cent; in 2008 the quantity reached a culminating point of 10.5 million students and the ratio was 57.04 per cent.  Therefore, there is only a small improvement of Chinese Universities’ total capacity. Accordingly, there is great market demand for vocational education.
 
China Junior High and High School Enrollment

 
(Source: 2007-2009 China Vocational Education Industry Report)
 
 
 
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Great market demand of vocational education due to the transfer of rural labor

The Chinese government is faced with the task of moving a significant amount of rural labor to China’s larger cities as the country moves toward urbanization.  It is predicted that 15 to 20 million people from the rural areas of China will need to be transferred to the cities to meet the demands of the economy during the next 5 to 10 years.  Poor education throughout the country has hindered the realization of this process.  However, many believe that the expanding vocational education system will provide the necessary skills needed to meet the economic demands and will accelerate the urbanization of China.
 
The comparison between developed countries and China
 
 
Developed countries
China
Agriculture occupation
  3%—10%
49%
Tertiary occupation
50%—70%
14.5%
Urbanization
More than 80%
44.9%
Surplus labor in rural area
 
46.1%
 
The two charts below depict the current status of rural education in China.
 
The education condition of rural labor in China
 
 
 
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(Source: 2007-2009 China Vocational Education Industry Report)
 
 
The industry condition of rural labor
 
 
(Source: 2007-2009 China Vocational Education Industry Report)

There is great opportunity for the vocational education industry as the Chinese develop and build new villages and complete the urbanization process.

Currently, China is actively developing and implementing the New Village Construction program. This program is intended to accelerate the training of rural laborers who are transferring from their rural homes to the larger cities where many of the new jobs are located.
 
During this urbanization process, more highly educated rural laborers are needed.  However, amongst the rural laborers younger than 35 years old, less than 9.1 per cent have been professionally trained and less than 5 percent have taken part in the rural vocational education system. The lack of education is hindering the progress of the urbanization process and the New Village Construction program.
 
 
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The Chinese government has published several policies to promote the development of vocational education.   The Chinese government believes vocational education is a key program for speeding up the New Village Construction program and the urbanization process.  Vocational education is one of the most effective programs to improve the skills of the rural laborers as they transfer to critical jobs in the larger cities of China.
 
Training institutions that focus their attention on providing rural vocational education will see significant opportunities during the New Village Construction projects.  The size of this market is very significant for those who take advantage of the urbanization process in China. The Chinese government has initiated a series of policies to supply incentives to organizations to provide rural vocational education.  The State Department’s decision “to energetically develop vocational education” affirms the great opportunity that exists for those who devote themselves to the rural vocational education market.

Competition:
 
The vocational school market in China is very fragmented and there are many smaller players; the market is furthered fragmented into specialized sectors. There are vocational schools for the junior high school, high school and university graduates; there are vocational schools for learning foreign languages, industrial skills, service providers and computer technology technicians. China Wonder is in the computer IT technology sector. We mainly target our recruitment efforts at the junior and high school graduates who want to gain a set of pragmatic computer IT technology knowledge for their immediate employment needs. In the sector we are in, there are many competitors locally and nationally. Many of them are smaller in scale compared to ours. There are many factors a typical student would consider before choosing a vocation school; besides the curricula offered, the history, size and brand name of the institution are also among the considerations. China Wonder  is one of the better known vocational schools in the cities it now operates.
 
COMPETITIVE ADVANTAGES

China Wonder's core marketing competence lies in their existing channels to recruit new students. They rely heavily on their various recruitment centers and employment agencies to contact new students.
 
Wonder's Competitive Edge

 
 
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Management Team Advantage
 
China Wonder is the leader and main driver of improving China’s IT vocational education system. China Wonder has been developing its programs for 15 years and has developed a strong management team and staff structure.
Marketing Advantage
 
China Wonder’s target market is the rural population of China.  As noted above, the rural areas of China has large number of people who are looking for jobs in the larger cities but lack the skills needed for such job positions.  The market focus is the senior high school graduates located in the enormously populated rural areas of China.  China Wonder has a strong regional influence in these areas of China and places a larger emphasis on reaching the individuals who are looking to transfer to the Chinese cities and looking for jobs to improve their lives.  China Wonder’s Employment Referral System guarantees the rural laborers an education and jobs after graduation. This is a major factor in increasing China Wonder’s market position.
Product research Advantage
 
China Wonder can control and guarantee the education quality of their programs due to the Corporate Chain Management system that they employ in each branch school. After 15 years development, China Wonder has accumulated large numbers of competent teachers, which helps them create market demand and provides research capabilities. The qualifications and experiences of the staff ensure that the training courses will be improved constantly to meet the changing student learning needs and social manpower demands.

Enrollment Network Advantage
 
The substantial enrollment advertisements result in multi-level and high-impact media coverage toward the target market. China Wonder also has a strong sales team, including enrollment teams in all provinces of China and enrollment offices in all China Wonder schools.

Student's Employment Security Advantage
 
With 15 years vocational education, China Wonder has gained many experiences in brand consciousness, management and market orientation. The employment offices which are located in the major cities and IT-developed regions and the standard training model which is a great fit for the market demand have together ensured the 100% employment rate.

LEGAL PROCEEDINGS

Neither the Company nor any of its officers are involved in or contemplating any legal proceedings.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

No Public Market for Common Stock

There is presently no public market for our common stock. We anticipate applying for trading of our common stock on the Nasdaq, AMEX or OTC Bulletin Board maintained by FINRA at some future date. However, we can provide no assurance that our shares will be traded on the Nasdaq, AMEX or OTC bulletin board or any other market or, if traded, that a public market will materialize.
 
 
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Record Holders
 
As of November 24, 2010, there were two holders of record of our common stock.  Upon declaration of effectiveness of this registration statement approving the Eastbridge Share Dividend, there will be 1,605 shareholders of record.  The recipients of the dividend shares will receive their shares upon declaration of approval of this registration statement.
 
Rule 144 Shares

Of the total of 20,000,000 issued and outstanding shares of our common stock, none is currently available for resale to the public in accordance with the volume and trading limitations of Rule 144 of the Act. In general, under Rule 144 as currently in effect, an affiliate who has beneficially owned shares of a company's common stock for at least six months, provided that the company has been subject to the reporting requirements of the Securities Exchange Act of 1934 for a minimum of 90 days, is entitled to sell within any three month period a number of shares that does not exceed the greater of:

1.  
1% of the number of shares of the company's common stock then outstanding which, in our case, will equal 200,000 shares as of the date of this prospectus; or

2.  
the average weekly trading volume of the company's common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Non-affiliates who have beneficially owned shares, for a period of at least six months in a company that has been subject to the reporting requirements of the Securities Exchange Act of 1934 for a minimum ninety (90) days are not subject to the “volume limitations” set under rule 144(e).

Sales by affiliates under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the company.  Non-affiliates who have beneficially owned shares for a period of a year or longer are not subject to the currency of information requirements.
 
However, these rules apply only to shares in a company that is not considered a “shell” entity.  In the event that the issuer is a “shell” entity, as we are, all shares must be held for one year from the date of distribution in order to be sold in compliance with Rule 144.

Stock Option Grants

To date, we have not granted any stock options.

Registration Rights

We have not granted registration rights to the selling shareholders or to any other persons.

Dividends

While there are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends, we have not paid or declared any dividends on our common stock and we do not anticipate paying dividends on our common stock for the foreseeable future.

Equity Compensation Plan Information: No options have been granted under an Equity Compensation Plan or any other similar plan.

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

This filing contains a number of forward-looking statements which reflect management's current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, 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," "may," 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. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these 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 (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our next Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
 
Management's Discussion and Analysis of Financial Condition and Results of Operations

Fiscal year ended December 31, 2009 compared with December 31, 2008.

The following is an analysis of our revenues and gross profit, details and analysis of components of expenses, and changes in other financial factors of the year ended December 31, 2009, compared with those of the year ended December 31, 2008.

Revenues.

  
 
2009
   
% Sales
   
2008
   
% Sales
 
Revenues
  $ 10,871,759       100 %   $ 9,712,635       100 %
Cost of Sales
    4,925,236       45 %     4,006,191       41 %
Gross Profit
    5,946,523       55 %     5,706,444       59 %

Our revenues for the year 2009 were $10,871,759 which represents an increase of $1,159,124 or 11.9% from revenues of $9,712,635 for the comparable 2008 period. The growth of Company sales, although inhibited by the worldwide economic recession, occurred at all seven Company schools.  That growth is the combined result of heavy promotional activities and growth from relatively new facilities.  We expect further growth in 2010 which will be less affected by the recession.

 
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Expenses.

Selling and administrative expenses.
 
Selling and administrative expenses (which includes salaries and benefits, travel and promotion, technical support and related overhead) for 2009 were $2,025,966, which represents an increase of $277,046 from the expenses of the prior year.  Major items of expense of the two years are presented below.
 
   
2009
   
2008
 
             
Advertising
 
$
1,054,249
   
$
918,467
 
Salaries and benefits
   
249,746
     
279,955
 
Sales Tax
   
391,300
     
194,726
 
Office Expense
   
293,668
     
178,767
 
Other
   
52,155
     
177,005
 
 Total Expenses
 
$
2,041,118
   
$
1,748,920
 
 
Operating Income (Loss).
 
We generated operating income during 2009 of $3,920,557 compared with $4,213,292 in 2008.  The reasons for this reduction are discussed above.

Other Income and Expenses.
 
Other income was $513,873 in 2009, compared with $482,737 in 2008.  Interest expense was $78,122 in 2009, compared with $35,025 in 2008, reflecting an increase in the balance of short term loans.

Foreign currency translation adjustment.

The foreign currency translation adjustment, which is the impact of different foreign exchange rates applied to balance sheet accounts, versus those applied to income statement accounts, was a gain of $39,154 for 2009, which contrasts with a gain of $837,769 for the comparable 2008 period. The decrease reflects a slower growth in 2009 in the value of the Yuan (RMB) against the US Dollar.

 
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Total Comprehensive Income

For the 2009 year end period, we had a total comprehensive income of $3,326,623 compared with a total comprehensive income for 2008 of $4,500,764.  Total comprehensive income is the combined sum of net income and comprehensive income.  Since each of these decreased, the combined amount also decreased.

Income Per Share.

Income applicable to common stock holders was $0.13 per share in 2009 compared with $0.16 per share during 2008.  The change in income per share is reflective of the earnings decrease as the number of common shares subscribed has not changed.

Current trends in the industry

We have experienced a consistent trend of sales increases due to expansion of the numbers of our schools and increased government support for technical training.  We expect this trend to continue and, in order for us to retain our market share and increase and surpass revenue levels previously achieved, we will continue to expand the number of schools that we operate.  We will also focus on maintaining good government relations by providing what we believe to be a higher level and quality of service. We wish to attract new students by providing this level of service consistently.
 
We have been able to retain our market share and expect to increase our student base and level of sales with our existing methods of marketing, sales staff and the service we provide. We believe that service is the most important factor in our marketing mix. As mentioned above "Trends in the Market", with new developments in rural areas, the PRC will be supporting the training we provide.  We anticipate such developments will increase our sales significantly.
 
Liquidity and Capital Resources.

As of December 31, 2009, we had a working capital deficit of $12,820,407, compared to a working capital deficit of $10,089,933 as of December 31, 2008. The increase is due principally to an increase in the liability for income taxes and related penalties.
 
Over the next 12 months, we will require additional working capital of approximately $1,000,000 to sustain our working capital needs based on projected sales of $11,500,000:  See plans for expansion below for additional capital needs to grow the business.

Sources of Capital.

We expect our revenues generated from operations to cover our projected working capital needs; however, if additional capital is needed, we will explore financing through options such as shareholder loans. Shareholder loans are without stated terms of repayment. We have no formal agreement that ensures that we will receive such loans. In the event shareholder loans are not available, we may seek long or short term financing from local banks.
 
 
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There are two bank arrangements that we can use as sources of capital for our company.  They are as follows:
 
We have credit facilities with two local banks under which we can borrow up to $1,901,363.  Borrowing under one of these facilities totaled $438,776 at December 31, 2009; it bore interest at 5.76%.  Borrowing under the second facility totaled $1,462,587 at December 31, 2009; that facility requires interest at the prime rate of the Peoples’ Bank of China, plus 2%.
 
In addition, we have an over-draft arrangement with a local bank under which we can write post dated checks of up to $1,500,000.  There is a service charge for these checks but there is no interest charge.  The bank guarantees payment of these checks; the only obligation of the Company is to have funds continuously on deposit equal to the amount of checks not yet cleared.  The outstanding balances under this arrangement as of December 31, 2008 and December 31, 2009 were $1,896,647 and $1,462,587, respectively.
 
Plans for Expansion
 
Given sufficient funding, we expect to expand our operations throughout China by establishing additional schools. Each new school will have a full complement of staff.  The capital needed for each new school is about $1,500,000 and is not included in the working capital needs. On March 9, 2010, US Wonder entered into an Invesment Banking Engagement Agreement (the “Invesment Agreement”)with a New York City-based National Securities Corp. (“National”), which we hope will assist us to raise the capital needed for expansion. Pursuant to the terms of the Investment Agreement, National has agreed to provide Invesment Banking and Financial Advisory services to the Company, including an agreement to seek investment capital of up to $10 million.  As compensation for these services, the Company agreed to pay National a due diligence fee of $10,000 and will pay a Transaction Fee equal to 5% of the “Aggregate Consideration” paid at the closing of the transaction as well as a Financing Fee equal to 8% of all equity funding raised in private markets. Additionally, National will receive warrants for a number of shares equal to 8% of all shares sold. The Investment Agreement is attached as Exhibit 10.10 hereto.  
 
We do not know of any trends, events or uncertainties that are likely to have a material impact on our short-term or long-term liquidity other than those factors discussed above.

Material Commitments

We do not have any material commitments for capital expenditures other than what was discussed relating to establishment of new facilities.

Seasonal Aspects

Our business is seasonal in that sales are particularly low in the summer months, due to school vacations.  Sales are usually higher at the start of new semesters.

Off Balance Sheet Arrangements

We have no off balance sheet financing arrangements.


 
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Nine-month period ended September 30, 2010 compared with September 30, 2009.
 
The following is an analysis of our revenues and gross profit, details and analysis of components of expenses, and changes in other financial factors of the nine-month period ended September 30, 2010 compared with those of the nine-month period ended September 30, 2009.
 
   
2010
   
% of Sales
   
2009
   
% of Sales
 
Revenue
  $ 8,318,726       100 %   $ 7,539,909       100 %
Cost of Sales
    3,056,675       37 %     2,711,496       36 %
Gross Profit
    5,262,051       63 %     4,828,413       64 %
 

Our revenues in the nine month period ended September 30, 2010 were $8,318,726 which represents an increase of 9% compared with revenues of $7,539,909 in the same nine-month period of 2009. Sales were higher by $778,817 in the nine month-period ended September 30, 2010 compared with those of the same period in 2009. This sales reduction occurred despite a 36% increase in the number of students enrolled in the first quarter of 2010 compared with those enrolled in the 2009 first quarter. The number of students is a somewhat misleading statistic, however, as it includes a large increase in the number of part-time students. Tuition for part-time students is 10% that of full time students. Sales booked during the 2010 period were actually 13.5% higher than those booked in the 2009 period, but the amount deferred was considerably higher in 2010 than in 2009. Sales are deferred until services have been provided.

Cost of sales also increased, bringing the total  in this category to $3,056,675 compared with $2,711,496 for the nine-month period ended September 30, 2009.
 
Selling and Administrative Expenses

Selling and administrative expenses were $2,764,606 in the current nine-month period which is $503,355 more that the expenses of the comparable 2009 period. Major items of expense of the two  nine month periods  are listed below.
 
   
2010
   
2009
 
Advertising
  $ 1,139,005     $ 1,040,749  
Salaries and benefits
    472,919       340,625  
Sales tax
    412,506       266,457  
Office expense
    193,578       192,083  
                 
  
Considerable effort was expended during the 2010 period on student recruitment, which accounts for the significant increase in salaries and benefits. An increased number of students is the result of this effort. Unfortunately, a significant number of the new students were part time students with substantially lower rates of tuition.
 
Operating income  
 
Operating income generated by the Company during the 2010 period was $ 2,497,445, lower than the $ 2,567,162 generated in the comparable 2009 period.  
 
Other income and expense 
 
Other income increased by $418,300 in the current period from $1,065,061 in the 2009 period.  Dormitory fees were higher at our Anhui school.  Interest expense rose by $39,778 in the current period to $68,470.  The Company increase its borrowing in 2010 to help finance its planned expansion.
 
Income from continuing operations. 
 
There was a $98,866 increase in income before taxes from continuing operations.  
 
Income Per Share
 
Income applicable to common stock holders was $.11 per share during the current nine-month period compared with $.12 in the same period of 2009.  This change is similar to the change in net income noted above as the number of outstanding shares has not changed.

Liquidity and Capital Resources
 
We had a working capital deficit of $15,463,153 as of September 30, 2010, compared with a deficit of $12,820,407 at December 31, 2009. 
 
 
41

 
 
CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The application of GAAP involves the exercise of varying degrees of judgment. The resulting accounting estimates will not always precisely equal the related actual results. Management considers an accounting estimate to be critical if:

Assumptions are required to be made, and

Changes in estimates could have a material adverse effect on our financial statements.
 
The following accounting policies are the ones that we consider critical.
 
Revenue Recognition  
 
Revenue is recognized when product is delivered to customers. All students pre-pay for their education, generally on an annual or school-year basis.  The revenue is then recognized ratably as the classes occur.  No provision is made for any right of return that may exist as the payments are non-refundable.
 
Common Stock  
 
Common stock of the Company will occasionally by issued in return for services. Values will be assigned to these issuances equal to the market value of the common stock at measurement date. Measurement date is defined under pronouncement of the Financial Accounting Standards Board (FASB), which state the criteria to be used for the valuation of stock issued for goods and services.
 
Stock Options
 
Stock options, if issued, will be valued at fair value on the dates of issuance using a Black Scholes valuation model, in accordance with pronouncements of the FASB.
 
Other Comprehensive Income  
 
The company reports as other comprehensive income revenues, expenses, and gains and losses that are not included in the determination of net income. Resultant gains during the years 2009 and 2008 are the result of gains from translations of Chinese currency to U.S. dollars.
 
Foreign Currency Translation.  
 
All Company assets are located in China. There assets and related liabilities are recorded on the books of the Company in the currency of China (Renminbi), which is the functional currency. They are translated into US dollars as follows:

    (a)      
Assets and liabilities, at the rates of exchange in effect at balance sheet dates;
    (b)      
Equity accounts, at the exchange rates prevailing at the times of the transactions that established the equity accounts; and
    (c)      
Revenues and expenses, at the average rate of exchange for each reporting period.
 
        Gains and losses arising from these translations of foreign currency are included in other comprehensive income.

 
42

 
 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no changes to or disagreements with our certifying accountants.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following table sets forth the names and ages of our current directors and executive officers, their principal offices and positions and the date each such person became a director or executive officer.  The Board of Directors elects our executive officers annually.  Our directors serve one-year terms or until their successors are elected and accept their positions.  The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors.  There are no family relationships or understandings between any of the directors and executive officers.  In addition, there was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected as an executive officer.
 
Name of Director or Executive Officer
Age
Current Position and Office
Date Position Started& Term of Office
Chungui Xie
43
Chairman of the Board
April 17, 2008, One Yr.
Xiang Wei
41
Chief Executive Officer
May 1, 2008, One Yr.
WenMing Xie
41
Chief Financial Officer
May 1, 2008, One Yr.
  Eastbridge Investment Group Corp*    
Promoter
* Eastbridge Investment Group Corp is controlled by Keith Wong and Norman Klein
 
Chungcui Xie

Mr. Xie Chungui, is the founder and chairman of Wonder International Education & Investment Group Corporation (Scottsdale, Arizona), and founder of Wonder Education & Management Company (Anhui, China), a wholly owned subsidiary of the former.  Mr. Xie is the president of Li Hongzhang Research Society, honorary president of Liu Mingchuan Research Society, general director of Xu Beihong Education Foundation, branch director of China Association for Promoting Democracy in Hefei, NPC member in Hefei, vice-president of Anhui Computer Industry trade association and executive member of Anhui Association of Industry and Commerce.

Mr. Xie is constantly advancing with time, blazing new trails, exploring and perfecting the Wonder-style teaching method. He motivates Wonder's management to emphasize high quality teaching to their students. Mr. Xie founded the first computer school in Anhui and invented the now famous nationally "Wonder 1+3" teaching method. He is recognized as the leader in IT education in China. A few short years later since its founding, the network of China Wonder computer education had expanded to East China, Central China, North China, Northeast China and many other places. Mr. Xie now also co-operates with U.S. Microsoft , the United States sector Networks, Canada Quebec Board of Education, Indian Asian Institute of Information Technology , Charles-Tudor University in Australia, South Korea South Hanba University, Shuntianxiang University and many other famous universities.
 
 
43

 

Mr. Xie is a man of strong social responsibility and has the pioneering and innovative spirits. He supports China's plan for science and education; he has successfully demonstrated a successful civilian-run vocational institution. In the years 2004 and 2005, he was awarded the honorary title of “VIP of the Time in China Computer Education” in Beijing. In December 2004, he was honored as “The Most Influential Figure of China Private Education” by Education Association of China. From 2005 to 2007, he had been honored the titles of “20 Years’ Special Contribution Award of Anhui Consumer Rights Protection” and “Chinese Leader of Huizhou merchants”.

Xiang Wei

Mr. Wei Xiang (Frank Wei), CEO of Wonder International Educational & Investment Group Corp, the US holding company. Mr. Wei has a post graduate degree in engineering and master of Economic Laws.
 
Mr. Wei graduated from and then worked for Anhui University's Department of Chemistry since July 1991. From July 1991 to August 1996, he taught in the chemistry department of AU; in August 1996, he moved to Office of Educational Administration in A.U., responsible for the management of teaching and laboratory work. From August 1998 to April 2005, Mr. Wei had participated in the construction work of experimental materials and equipment management department in Anhui University. He took charge of the planning, design and construction work for the new campus center. In April 2005, he joined China Wonder Group.
 
While working full time at his various jobs, Mr. Wei had hosted computer related education programs at Hefei radio station, Hefei television station and Anhui People Radio Station. In July 1995, he originated the first computer topic program Computer Time, which lasted five consecutive sessions and had a great influence in the field of IT broadcasting.
 
Ever since Mr. Wei started working, he has always shown a great interest in China's IT vocational training. He had earlier participated in the curriculum design as well as teaching planning, market planning and publicity drives of many local vocational schools. He has a good understanding and rich management experience in China's current IT training market.  
 
After Mr. Wei joined China Wonder, he had also taken some responsibility in investment and financing due to the needs of his work. Mr. Wei has a good handle on China Wonder's investment, finance and legal matters.

WenMing Xie

Mr. Xie received his Bachelor of Science degree in 1989 from Fudan University.  From 1989 to 1999, he worked for the state government in Anhui as accountant. Since 1999, Mr. Xie has worked for Anhui Wonder Vocational School as vice principal and chief accountant and certified public accountant.

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. We have no significant employees other than the officers and directors described herein.

Stock Option Grants

We have not granted any stock options to the executive officers since our inception.

 
44

 
 
EXECUTIVE COMPENSATION

The following table sets forth the total compensation paid to or accrued, during the fiscal years ended December 31, 2007 to 2009 to the Company’s highest paid executive officers.
 
Summary Compensation Table
 
Name and
Position
 
YEAR
Salary
($) (1)
Bonus
($)
 
Stock
Awards ($)
Option
Awards
 
NonEquity
Incentive
Plan
Compensation ($)
Nonqualified
Deferred
Compensation
Earnings ($)
All Other
Compensation
($)
Chung Gui Xie,
2007
74,000 0 0 0 0 0 0
Chairman 2008 88,000 0 0 0 0 0 0
  2009 118,000 0 0 0 0 0 0
                 
 Xiang Wei, 2007 29,000 0 0 0 0 0 0
 CEO 2008 44,100 0 0 0 0 0 0
 
2009
59,000 0 0 0 0 0 0
                 
 Wen Ming Xie, 2007 26,000 0 0 0 0 0 0
 CFO 2008 36,700 0 0 0 0 0 0
 
2009
51,500 0 0 0 0 0 0
                 

    (1)      
All amounts are expressed in US Dollars, assuming that the RMB to US exchange rate is 6.8 RMB to 1 US Dollar.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table summarizes certain information regarding the beneficial ownership (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934 of the Company’s outstanding common stock as of July 31, 2009 by (i) each person known by the Company to be the beneficial owner of more than 5% of the Company’s outstanding common stock, (ii) each director of the Company, (iii) each person named in the Summary Compensation Table, and (iv) all current executive officers and directors as a group. Except as indicated in the footnotes below, the security and stockholders listed below possess sole voting and investment power with respect to their shares. The figures are based on a total of 20,000,000 common shares as of July 31, 2009.
 
 
45

 

Beneficial ownership means sole and shared voting power or investment power with respect to a security. In computing the number and percentage of shares beneficially owned by a person, shares of Common Stock subject to options and/or warrants currently exercisable, or exercisable at a later date, are counted as outstanding, but these shares are not counted as outstanding for computing the percentage ownership of any other person. At this time, however, there are no such optionsor warrants granted or outstanding.
 
IDENTITY OF PERSON
OR GROUP
ACTUAL AMOUNT OF SHARES OWNED
ACTUAL PERCENT OF SHARES OWNED
CLASS
Xie Chungui, Chairman
16,600,000
83.00%
 
Common
Xiang Wei
0
0.00%
 
Common
WenMing Xie
0
0.00%
 
Common
Eastbridge Investment Group Corp.
3,400,000
17.00%
 
Common
TOTAL
20,000,000
100.00%
 

Beneficial Ownership of Securities:
 
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, involving the determination of beneficial owners of securities, includes as beneficial owners of securities, any person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has, or shares, voting power and/or investment power with respect to the securities, and any person who has the right to acquire beneficial ownership of the security within sixty days through any means including the exercise of any option, warrant or conversion of a security.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
        The Company president controls a number of Chinese enterprises which are involved in the field of education and in other fields.  Advances were made to nine of these companies during the year 2009 and to seven of them during the year 2008.  In addition, advances were received from five of these companies during the year 2008 and from six of these companies during the year 2008.  Activity in these accounts during 2009 and 2008 is summarized below.
 
   
Advances To
   
Advances From
 
Balances December 31, 2007
 
$
11,521,109
   
$
1,794,630
 
Advances during 2008
   
15,511,272
     
2,090,777
 
Repayments during 2008
   
(10,926,893
)
   
(1,771,218
)
             
Balances, December 31, 2008
   
16,973,854
     
2,375,487
 
Advances during 2009
   
45,124,230
     
923,599
 
Repayments during 2009
   
(39,410,368
)
   
(1,098,197
)
             
Balances, December 31, 2009
 
$
22,687,716
   
$
2,200,889
 
 
These schedules are not additive, because the records are kept in the Chinese currency (RMB) and currency exchange rates have changed during these periods.
 
During the year 2006, the Company president advanced $37,000 to the Company.  That advance was repaid during 2009. 
 
During 2007 and 2008, payments were made on behalf of the Company president.  The outstanding balance of these was $526,000 at December 31, 2008; this balance was repaid during 2009.
 
During the year 2008, the Company purchased computers from one of the companies controlled by the Company president.  These purchases totaled $149,952.

Other than disclosed above, none of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with the Company or in any presently proposed transaction that has or will materially affect us:

*   Any of our directors or officers;
*   Any person proposed as a nominee for election as a director;
*   Any member of the immediate family of any of the foregoing persons.
 
 
46

 
 
It should be noted that none of the directors of the Company is independent.

Expenses and Meetings
 
All officers and directors will be reimbursed for any expenses incurred on our behalf, including travel, lodging and meals. They may also, at such time as we have sufficient revenues from operations of our business, receive a fee for Board meetings attended, including meetings of committees of our Board, however, no such fees have been paid as of the date of this filing.
 
Directors and officers attend board meetings at least once every month or up to 12 times per year. No directors or officers have attended less than 90% of the meetings. All directors and officers attended the previous year’s Annual General Meeting.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

The Arizona statutes provide, in effect, that any person made a party to any action by reason of the fact that he is or was a director, officer, employee or agent of the Company may and, in certain cases, must be indemnified by against, in the case of a non-derivative action, judgments, fines, amounts paid in settlement and reasonable expenses (including attorneys’ fees) incurred by him as a result of such action, and in the case of a derivative action, against expenses (including attorneys’ fees), if in either type of action he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and in any criminal proceeding in which such person had reasonable cause to believe his conduct was lawful. This indemnification does not apply, in a derivative action, to matters as to which it is adjudged that the director, officer, employee or agent is liable to the Company, unless upon court order it is determined that, despite such adjudication of liability, but in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnification for expenses.

The Company’s Bylaws provide for indemnification of officers and directors to the fullest extent permitted by Arizona law. Such indemnification applies in advance of the final disposition of a proceeding.

At present, there is no pending litigation or proceeding involving any director or officer as to which indemnification is being sought, nor is the Company aware of any threatened litigation that may result in claims for indemnification by any director or officer.
 
 
47

 
 
INDEX TO FINANCIAL STATEMENTS

Audited Financial Statements for the years ended December 31, 2009 and 2008
 
   
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets
F-3
Consolidated Statements of Income
F-4
Consolidated Statements of Changes in Shareholders’ Equity
F-5
Consolidated Statements of Cash Flows
F-6
Notes to Consolidated Financial Statements
F-7
   
Unaudited Financial Statements for Three and Ninth-Month Periods Ended September 30, 2010 and 2009
 
   
Consolidated Balance Sheets
F-20
Consolidated Statements of Income
F-21
Consolidated Statements of Cash Flows
F-22
Notes to Consolidated Financial Statements
F-23
 
 
F-1

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Board of Directors
Wonder International Education & Investment Group Corporation
 
We have audited the accompanying consolidated balance sheets of Wonder International Education & Investment Group Corporation as of December 31, 2009 and 2008, and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted the audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Wonder International Education & Investment Group Corporation as of December 31, 2009 and 2008, and the results of its operations and cash flows for the years ended December 31, 2009 and 2008 in conformity with U.S. generally accepted accounting principles.
 
As discussed in Note 3 to the financial statements, it was determined that accruals should be made to account for penalties that might be assessed for not timely filing income tax returns.  Accordingly, the 2009 and 2008 financial statements have been restated to include the effect of these accruals.
 
/s/Robert G. Jeffrey
ROBERT G. JEFFREY, Certified Public Accountants
November 22, 2010
 
Wayne, New Jersey
 
 
F-2

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
(Restated)
 
   
2009
   
2008
 
ASSETS
           
Current Assets:
           
    Cash
 
$
925,011
   
$
301,236
 
    Restricted cash
   
1,462,587
     
96,647
 
    Miscellaneous receivables
   
423,805
     
1,252,978
 
    Accrued interest receivable
   
-
     
239,292
 
    Deferred income taxes receivable
   
932,758
     
935,424
 
    Employee receivables
   
-
     
80,469
 
    Teaching supplies
   
23,961
     
6,510
 
Total current assets of continuing operations
   
3,768,122
     
2,912,556
 
                 
Current Assets of Discontinued Operations:
               
    Restricted cash
   
-
     
1,800,000
 
    Short term loans receivable
   
-
     
10,553,301
 
Total current assets of discontinued operations
   
-
     
12,353,301
 
Total current assets
   
3,768,122
     
15,265,857
 
                 
Fixed Assets:
               
    Building
   
4,305,905
     
4,295,225
 
    Computers and related furniture and equipment
   
3,454,755
     
3,439,414
 
    Vehicles
   
305,270
     
282,843
 
Total fixed assets
   
8,065,930
     
8,017,482
 
Less accumulated depreciation
   
3,042,151
     
2,351,363
 
Net fixed assets
   
5,023,779
     
5,666,119
 
                 
Other Assets:
               
    Advances to related parties
   
22,687,716
     
16,973,854
 
    Officer loans
   
-
     
484,891
 
Total other assets
   
22,687,716
     
17,458,745
 
                 
Total Assets
 
$
31,479,617
   
$
38,390,721
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current Liabilities:
               
    Bank loan payable
 
$
1,901,363
   
$
437,688
 
    Bank drafts payable
   
1,462,587
     
1,896,647
 
    Accounts payable
   
414,519
     
252,109
 
    Other accounts payable
   
1,271,328
     
756,798
 
    Advanced tuition payments
   
3,731,032
     
3,741,696
 
    Accrued liabilities
   
229,340
     
149,992
 
    Employee loans
   
-
     
30,549
 
    Advances from related parties
   
2,200,889
     
2,375,487
 
    Taxes payable
   
5,377,471
     
3,924,680
 
Total current liabilities of continuing operations
   
16,588,529
     
13,565,646
 
                 
Current Liabilities of Discontinued Operations:
               
    Short term loans payable
   
-
     
12,570,144
 
Total current liabilities
   
16,588,529
     
26,135,790
 
                 
Stockholders’ Equity:
               
    Common stock:  authorized, 100,000,000 shares without
               
        par value; issued and outstanding, 20,000,000 shares
   
5,858,782
     
5,858,782
 
    Retained earnings
   
4,277,030
     
2,718,828
 
    Earnings appropriated for statutory reserves
   
2,851,353
     
1,812,552
 
    Accumulated other comprehensive income
   
1,903,923
     
1,864,769
 
Total stockholders’ equity
   
14,891,088
     
12,254,931
 
Total Liabilities and Stockholders’ Equity
 
$
31,479,617
   
$
38,390,721
 
 
The accompanying notes are an integral part of these financial statements.
 
 
F-3

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(Restated)
 
   
2009
   
2008
 
Revenue
 
$
10,871,759
   
$
9,712,635
 
Cost of Sales
   
4,925,236
     
4,006,191
 
Gross Profit
   
5,946,523
     
5,706,444
 
                 
Other operating income
   
-
     
270,040
 
Other operating expense
   
-
     
(14,272
)
Selling and Administrative Expenses
   
(2,041,118
)    
(1,748,920
)
     Operating Income
   
3,905,405
     
4,213,292
 
 
Other Income and Expense:
               
     Other Income
   
513,873
     
482,737
 
     Interest Expense
   
(78,122
)
   
(35,025
)
     Other Expense
   
(707,679
)
   
(515,518
)
 
Income From Continuing Operations Before   Income Taxes
   
3,633,477
     
4,145,486
 
 
Provision for Income Taxes:
               
     Current Provision
   
1,082,339
     
903,073
 
     Deferred Provision
   
4,989
     
272,371
 
     Total Tax Provision
   
1,087,328
     
1,175,444
 
                 
Income From Continuing Operations
   
2,546,149
     
2,970,002
 
                 
Discontinued Operations:
               
     Income from discontinued component
   
67,805
     
235,578
 
     Provision for related income taxes
   
16,951
     
58,895
 
     Income from discontinued operations
   
50,854
     
176,683
 
Net income
   
2,597,003
     
3,146,725
 
 
Other comprehensive income – foreign currency
               
      translation adjustments
   
39,154
     
861,252
 
Total comprehensive income
 
$
2,636,157
   
$
4,007,977
 
 
Income Per Share -
               
     Basic and Diluted
 
$
.13
   
$
.16
 
 
Weighted average number of shares outstanding
   
20,000,000
     
20,000,000
 

The accompanying notes are an integral part of these financial statements.
 
 
F-4

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2009, and 2008
(Restated)
 
                           
Accumulated
       
                           
Other
       
   
Common Stock
   
Statutory
   
Retained
   
Comprehensive
       
   
Shares
   
Amount
   
Reserves
   
Earnings
   
Income
   
Total
 
Balance January 1, 2008
   
20,000,000
   
$
5,858,782
   
$
553,862
   
$
830,793
   
$
1,027,000
   
$
8,270,437
 
                                                 
Net income for year
                           
3,146,725
             
3,146,725
 
                                                 
Allocation of statutory reserves
                   
1,258,690
     
(1,258,690
)
           
-
 
                                                 
Other comprehensive income
                                   
837,769
     
837,769
 
                                     
Balance, December 31, 2008
   
20,000,000
     
5,858,782
     
1,812,552
     
2,718,828
     
1,864,769
     
12,254,931
 
                                                 
Net income for year
                           
2,597,003
             
2,597,003
 
                                                 
Allocation of statutory reserves
                   
1,038,801
     
(1,038,801
)
           
-
 
                                                 
Other comprehensive income
                                   
39,154
     
39,154
 
                                     
Balance, December 31, 2009
   
20,000,000
   
$
5,858,782
   
$
2,851,353
   
$
4,277,030
   
$
1,903,923
   
$
14,891,088
 
 
The accompanying notes are an integral part of these financial statements.

 
F-5

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2009 and 2008
(Restated)
 
   
2009
   
2008
 
CASH FLOWS FROM OPERATIONS:
           
Net income from continuing operations
 
$
2,561,301
   
$
2,970,042
 
Adjustments to reconcile net income to net cash
               
    provided by operating activities:
               
Charges not requiring the outlay of cash:
               
    Depreciation
   
684,574
     
678,318
 
    Decrease in advanced tuition payments
   
(19,956
)    
(1,089,486
)
    Deferred tax benefit
   
4,989
     
272,371
 
Changes in assets and liabilities:
               
    Decrease (increase) in employee receivables
   
80,626
     
(59,581
)
    Decrease (increase) in other receivables
   
659,709
     
(1,164,520
)
    (Increase) decrease in teaching supplies
   
(17,425
)
   
22,699
 
    Decrease (increase) in accrued interest receivable
   
239,757
     
(235,578
)
    Decreases in accounts payable
   
(60,375
)    
(4,815
)
     Increases  in other accounts payable
   
910,298
     
34,886
 
    Decreases in amounts due to employees
   
(30,608
)
   
(28,989
)
    Increases in taxes payable
   
1,420,169
     
969,874
 
    Increase (decrease) increase in accrued liabilities
   
72,592
     
(15,669
)
Increases in advances to related parties
   
(5,668,608
   
(4,607,079
)
Decrease (increase)   in advances from related parties
   
(180,408
   
 453,295
 
                 
Net Cash Provided ( Consumed) By Continuing Operating Activities
   
656,635
     
(1,804,332
                 
CASH FLOWS FROM DISCONTINUED OPERATIONS:
               
Net income from discontinued operations
   
50,854
     
176,683
 
Increase in taxes payable
   
16,951
     
58,895
 
Decrease( increase) in short term loans receivable
   
10,573,849
     
(10,389,520
                 
Cash Provided ( Consumed) By Discontinued Operating Activities
   
10,641,654
     
(10,153,942
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
                 
Purchases of fixed assets
   
(28,498
)
   
(240,346
)
Loans to officers
   
485,835
     
(407,339
)
Decrease in restricted cash
   
438,540
     
-
 
Increase in restricted cash
   
-
     
(1,896,647
Net Cash Consumed By Investing Activities of Continuing Operations
   
895,877
     
(2,544,332
)
                 
                 
CASH FLOWS FROM FINANCING ACTIVITIES:   
               
                 
Borrowings under short term loans
   
1,023,260
     
1,867,212
 
                 
Net Cash Provided By Financing Activities of Continuing Operations
   
1,023,260
     
1,867,212
 
                 
CASH FLOWS FROM FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS:
               
                 
Borrowings under short term loans
   
(12,594,620
)
   
12,375,063
 
                 
Cash Provided by Discontinued Financing Activities
   
(12,594,620
)
   
12,375,063
 
Effect on cash of exchange rate changes
   
(969
)
   
278,019
 
Net change in cash
   
623,775
     
18,362
 
Cash balance, beginning of period
   
301,236
     
282,874
 
                 
Cash balance, end of period
 
$
925,011
   
$
301,236
 
                 
 
The accompanying notes are an integral part of these financial statements.
 
 
F-6

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
1.  ORGANIZATION and BUSINESS
 
Organization and Business of the Company
 
The Company was organized in the state of Arizona on April 17, 2008, for the purpose of providing computer related IT education in The People’s Republic of China (PRC).  On April 26, 2008, the Company entered into an agreement (the Agreement) under which 20,000,000 shares of its common stock were exchanged for all the equity interests of Anhui Wonder Education & Investment Management Corporation (China Wonder), a company incorporated in the PRC.  This transaction has been accounted for as a reverse merger, with China Wonder treated as the acquiring company.  The Company had no assets or liabilities on the date of the merger, so no allocation of the purchase price was made.
 
Business
 
China Wonder was incorporated in the PRC, on April 1, 2008.  Its operations are headquartered in the city of Hefei, which is the capital of Anhui province.  It operates information technology schools through seven subsidiaries (see Note 2) in Hefei and in six other cities of the PRC.  Each of the seven subsidiaries of China Wonder is licensed by local authorities to operate a school.  Prior to the acquisition of China Wonder by the Company, the Company had no operating history and had no assets, liabilities, or equity.  As a result of entering into the Agreement, the shareholders of China Wonder became shareholders of the Company.
 
Coincident with the acquisition of the equity interests of China Wonder, on May 6, 2008 the Company entered into an Operating Agreement, a Proxy Agreement, and a Consulting Service Agreement with China Wonder, each of the seven operating companies, and the majority owner of Company common stock, who is also chairman of each of the Chinese companies.  The Operating Agreement provided, among other things, that the Chinese companies would conduct operations under the guidance of US Wonder, and that they would not conduct any transactions that might have a material affect on their assets, liabilities or company operations without written permission from US Wonder, The Proxy Agreement assigned to US Wonder the voting rights of the equity interests of the Chinese companies.  The Consulting Services Agreement provided that US Wonder would provide advice and assistance to the Chinese companies in all major aspects of their businesses.  The combination of the authority granted by these three agreements provided US Wonder with operational control of each of the Chinese companies.  US Wonder was to be compensated under the Consulting Services Agreement with fees equal to the profits of the Chinese companies.  The fees were to be calculated and paid at the end of each quarter in amounts equal to the net income as reported in the quarterly consolidated financial statements of China Wonder and its consolidated subsidiaries.
 
On Nov 1, 2010, the Company purchased a non-operating wholly owned foreign company in Hefei for $1,000 and made it a wholly owned subsidiary named Anhui Lang Wen Tian Cheng Consulting and Management Co., Ltd (Wonder WFOE). Wonder WFOE is a wholly foreign owned entity (as defined under PRC law) organized under PRC law and located in Anhui province of the PRC. Also on November 3, 2010, the Company, China Wonder, the seven operating companies, and the majority shareholder of Company common stock, terminated the contracts described in the preceding paragraph, and Wonder WFOE executed contracts similar to those described in the preceding paragraph with China Wonder, the seven operating companies, and the majority owner of Company common stock, with Wonder WFOE standing in the respective places in these contracts that was occupied in the old contracts by the Company. Simultaneously, the equity ownerships of China Wonder and the seven operating companies were disclaimed by the Company. The contracts mentioned above now give Wonder WFOE operational control of China Wonder and the seven operating companies.
 
The seven schools and China Wonder are obligated to Wonder WFOE under operating agreements, asset pledge arrangements, and a consulting agreement, as noted above, under which the Company controls the operations and cash flows of these Chinese companies, and realizes the benefits and assumes the risks of ownership of them. For these reasons the Company believes it meets the standards for consolidating these companies as specified in pronouncements of Financial Accounting Standards Board (FASB).
 
Risks and Uncertainties
 
China Wonder operates under the authority of a business license which was granted April 10, 2008 and expires April 10, 2028.  Renewal of the license will depend on the result of government inspections which are made to ensure environmental laws are not breached.
 
The officers of the Company control through direct ownership most of the outstanding stock of the Company.  As a result, insiders will be able to control the outcome of all matters requiring stockholder approval and will be able to elect all of the Company directors.
 
 
F-7

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Consolidated Statements
 
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, China Wonder, and the seven wholly owned subsidiaries of China Wonder, listed below. All intercompany balances and transactions have been eliminated in consolidation.
 
    Dates of Formation
     
 Anhui Wonder Computer Institute    01/06/06
 Fujian Wonder Computer School      04/30/05
 Henan Wonder Computer Institute   12/24/06
 Hubei Wonder Computer School        07/25/02
 Jiangsu Wonder Computer School    04/25/05
 Liaoning Wonder Computer School         05/10/07
 Zhejiang Wonder Computer School      08/29/03

Cash
 
For purposes of the statements of cash flows, the Company considers all short term debt securities purchased with a maturity of three months or less to be cash equivalents.
 
Concentrations Of Credit Risk
 
Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash, short term loans receivable and related accrued interest, and miscellaneous receivables.  However, all Company assets are located in the PRC and Company cash balances are on deposit at financial institutions in the PRC, the currency of which is not free trading.  Foreign exchange transactions are required to be conducted through institutions authorized by the Chinese government and there is no guaranty that Chinese currency can be converted to U.S. or other currencies.
 
Recognition Of Revenue
 
Revenue is recognized when product is delivered to customers.  All students pre-pay for the courses they take, generally on an annual or school year basis.  The revenue is then recognized ratably over those periods as classes occur.  No provision is made for any right of return that may exist as the payments are non-refundable.
 
 
F-8

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
 
Fair Value of Financial Instruments
 
The carrying amounts of the Company’s financial instruments, which include cash, short term loans and related interest, other receivables, bank loans payable, accounts payable, accrued liabilities, other liabilities, and advances from affiliated companies, approximate their fair values at December 31, 2009.
 
Fixed Assets
 
Fixed assets are recorded at cost.  Depreciation is computed using the straight line method, with lives of fifty years for buildings, five years for computers and related equipment and furniture, and eight to ten years for automobiles.
 
Taxes
 
China Wonder generates its income in China where Value Added Tax, Income Tax, City Construction and Development Tax, and Education Surcharge taxes are applicable.  Neither the Company nor China Wonder conducts any operations in the U.S.; therefore, U.S. taxes are not applicable.
 
Use Of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures 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 estimated.
 
Common Stock
 
Common stock of the Company will occasionally be issued in return for services.  Values will be assigned to these issuances equal to the market values of the common stock at measurement dates.  Measurement date is defined under pronouncements of the FASB which state the criteria to be used for the valuation of stock issued for goods and services.
 
Stock Options
 
Stock options, if issued, will be valued at fair value on the dates of issuance using a Black Scholes valuation model, in accordance with pronouncements of the FASB.
 
 
F-9

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
 
Recently Adopted Accounting Pronouncements
 
Management believes that none of the recently adopted accounting pronouncements will have a material affect on the Company financial position, results of operations, or cash flows.
 
Other Comprehensive Income
 
The Company reports as other comprehensive income revenues, expenses, and gains and losses that are not included in the determination of net income.  Resultant gains during the years 2009 and 2008 are all the result of gains from translations of Chinese currency amounts to U.S. dollars.
 
Foreign Currency Translation
 
All Company assets are located in China.  These assets and related liabilities are recorded on the books of the Company in the currency of China (Renminbi), which is the functional currency.  They are translated into US dollars as follows:
 
(a)  Assets and liabilities, at the rates of exchange in effect at balance sheet dates;
 
(b)  Equity accounts, at the exchange rates prevailing at the times of the transactions that   established the equity accounts; and
 
(c)  Revenues and expenses, at the average rate of exchange for each reporting period.
 
Gains and losses arising from this translation of foreign currency are included in other comprehensive income.
 
Product Warranties
 
Refunds to students who withdraw from courses are rarely made and are made only at the discretion of the Company.  For this reason and, since revenue is recognized only as services are provided, no provision is needed for possible withdrawals.
 
 
F-10

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
 
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
 
Net Income Per Share
 
The Company computes net income per common share in accordance with pronouncements of the FASB and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).  Under these provisions, basic and diluted net income per common share are computed by dividing the net income available to common shareholders for each period by the weighted average number of shares of common stock outstanding during the period.  The number of weighted average shares outstanding as well as the amount of net income per share are the same for basic and diluted per share calculations for all periods reflected in the accompanying financial statements.
 
Advertising Cost
 
The Company expenses advertising costs when an advertisement occurs.  Amounts expensed were $1,054,249 during 2009 and $646,818 during 2008.
 
Segment Reporting
 
Management treats the operations of the Company as one segment.
 
3.  RESTATEMENTS
 
During an internal review on July 13, 2010, the Company determined that a restatement of its financial statements for the years ended December 31, 2009 and 2008 was necessary to account for penalties that might be assessed for not timely filing all of its income tax returns.  The effects of these restatements on previously issued Company financial statements are detailed below. The corrections to the balance sheet and statement of changes in equity now reflect an additional  25% allocation of after tax proficts required for private schools.
 
BALANCE SHEET - DECEMBER 31, 2008
 
   
Previously
         
As
 
   
Reported
   
Adjustments
   
Restated
 
Other accounts payable
  $ -     $ 756,798 (1)   $ 756,798  
Accrued liabilities
    156,284       (6,292 )     149,992  
Total current liabilities of continuing operations
    12,815,140       750,506       13,565,646  
    Total current liabilities
    25,385,284       750,506       26,135,790  
                         
Retained earnings
    4,469,642       (617,969 )(3)     2,718,828  
              (1,132,845 )(6)        
Earnings appropriated for statutory reserves
    788,761       (109,054 )(4)     1,812,552  
              1,132,845 (6)        
Accumulated other comprehensive income
    1,888,252       (23,483 )     1,864,769  
                         
Total stockholders’ equity
  $ 13,005,437     $ (750,506 )   $ 12,254,931  
 
 
 
F-11

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
3.  RESTATEMENTS (CONT’D)
 
BALANCE SHEET - DECEMBER 31, 2009
 
   
Previously
         
As
 
   
Reported
   
Adjustments
   
Restated
 
Miscellaneous receivables
  $ 593,449     $ (169,644 )(2)   $ 423,805  
                         
Total current assets of continuing operations
    3,937,766       (169,644 )     3,768,122  
                         
Total current assets
    3,937,766       (169,644 )     3,768,122  
                         
Total assets
  $ 31,649,261     $ (169,644 )   $ 31,479,617  
                         
Other accounts payable
    -       1,440,972 (1)     1,271,328  
              (169,644 )(2)        
           
 
         
Total current liabilities of continuing operations
    15,317,201       1,271,328       16,588,529  
                         
Total current liabilities
    15,317,201       1,271,328       16,588,529  
                         
Retained earnings
    7,274,967       (1,215,841 )(3)     4,277,030  
              (1,782,096 )(6)        
Earnings appropriated for statutory reserves
    1,283,818       (214,561 )(4)     2,851,353  
              1,782,096 (6)        
                         
Accumulated other comprehensive income
    1,914,493       (10,570 )     1,903,923  
                         
Total stockholders’ equity
    16,332,060       (1,440,972 )     14,891,088  
                         
Total Liabilities and Stockholders’ Equity
  $ 31,649,261     $ (169,644 )   $ 31,479,617  
 
 
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
 
   
Previously
         
As
 
   
Reported
   
Adjustments
   
Restated
 
Other expenses
  $ (22,731 )   $ (492,787 )(1)   $ (515,518 )
                         
Income from continuing operations before income taxes
    4,638,273       (492,787 )     4,145,486  
                         
Income from continuing operations
    3,462,829       (492,787 )     2,970,042  
                         
Net income
    3,639,512       (492,787 )     3,146,725  
Other comprehensive income (loss)
                       
                         
Total comprehensive income
  $ 4,500,764     $ (492,787 )   $ 4,007,977  
 
 
 
F-12

 

WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
3.  RESTATEMENTS (CONT’D)
 
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009
 
   
Previously
         
As
 
   
Reported
   
Adjustments
   
Restated
 
                   
Selling and administrative expenses
  $ 2,025,966     $ (15,152 )   $ 2,041,118  
                         
Operating income
    3,920,557       (15,152 )     3,905,405  
                         
Other expense
    (19,452 )     (688,227 )(1)     (707,679 )
                         
Income from continuing operations before tax
    4,336,856       (703,379 )     3,633,477  
                         
Income from continuing operations
    3,249,528       (703,379 )     2,546,149  
                         
Net income
    3,300,382       (703,379 )     2,597,003  
                         
Other comprehensive income
    26,241       12,913       39,154  
                         
Total comprehensive income
  $ 3,326,623     $ (690,466 )   $ 2,636,157  
 
STATEMENT OF CHANGES IN EQUITY
YEARS ENDED DECEMBER 31, 2008 AND DECEMBER 31, 2009
 
   
Previously
         
As
 
   
Reported
   
Adjustments
   
Restated
 
Balance 1/1/2008
                 
                   
Statutory reserves
  $ 242,834     $ (35,136 )(3)   $ 553,682  
              346,164 (6)        
                         
Retained earnings
    1,376,057       (199,100 )(3)     830,793  
              (346,164 )(6)        
                         
Total equity 1/1/2008
    8,504,673       (234,236 )     8,270,437  
                         
Net income for 2008
    3,639,512       (492,787 )(1)     3,146,725  
Allocation to reserves
    (545,927 )     73,918 (4)     (1,258,690 )
              (786,681 )(6)        
                         
Statutory reserves
    545,927       (73,918 )(4)     1.258,690  
              786,681 (6)        
                         
Other comprehensive income
    861,252       (23,483 )     837,769  
                         
Balance 12/31/2008
    13,005,437       (750,506 )     12,254,931  
                         
Net income for 2009
    3,300,382       (703,379 )(1)     2,597,003  
Allocation to reserves
    (495,057 )     105,107 (4)     (1,039,801 )
              (648,851 )(6)        
Statutory reserves
    495,057       (105,107 )(4)     1.038,801  
              648,851 (6)        
Other comprehensive income
    26,241       12,913       39,154  
                         
Balance 12/31/2009
  $ 16,332,060     $ (1,440,972 )   $ 14,891,088  
 
 
 
F-13

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
3.  RESTATEMENTS (CONT’D)
 
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2008
 
   
Previously
         
As
 
   
Reported
   
Adjustments
   
Restated
 
                   
Net income
  $ 3,462,829     $ (492,787 )(1)   $ 2,970,042  
                         
Decrease in accounts payable
    (462,142 )     457,327 (2)     (4,815 )
Increase in other accounts payable
    -       34,886 (1)(2)     34,886  
Increase in advances to related parties
    (6,176,528 )     1,569,449 (2)     (4,607,079 )
Decrease in advances from related parties
    1,569,449       (1,116,154 )(2)(5)     453,295  
    Cash Consumed by Continuing Operating Activities
    (2,256,953 )     452,721       (1,804,232 )
                         
Increase in short term loans receivable
    -       (10,389,520 )(2)     (10,389,520 )
    Cash provided (consumed) by discontinued
                       
        operating activities
    235,578       (10,389,520 )     (10,153,942 )
                         
Increase in short term loans receivable
    (10,389,520 )     10,389,520 (2)     -  
    Cash consumed by Discontinued Investing Activities
    (10,389,520 )     10,389,520       -  
                         
Borrowings under short term loans
    1,672,044       195,168 (2)     1,867,212  
    Cash Provided by Financing Activities of
                     
        Continuing Operations
    1,672,044       195,168       1,867,212  
                         
Borrowings under short terms loans
    12,570,144       (195,081 )(2)     12,375,063  
    Cash Provided by Discontinued Financing Activities
  $ 12,570,144     $ (195,081 )     12,375,063  

STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2009
 
   
Previously
         
As
 
   
Reported
   
Adjustments
   
Restated
 
                   
Net income
  $ 3,249,528     $ (688,227 )(1)   $ 2,561,301  
                         
Increase (decrease) in accounts payable
    161,696       (222,071 )(2)     (60,375 )
Increase in other accounts payable
    -       910,298 (1)(2)     910,298  
           
 
         
Cash Consumed by Continuing Operating Activities
  $ 656,635     $ -     $ 656,635  
 
Explanations for adjustments
 
1)  Accrual of penalties on income taxes.
2)  Reclassification.
3)  Cumulative amount of penalties on income taxes offset by reduction of earnings allocated to statutory reserves.  These were not previously recorded.
4)  Reduction in amounts allocated to statutory reserves, caused by the recording of income tax penalties.
5)  Correction of an error on the original statement.
6)  Reflects an additional 25% allocation of profits for a private school under Chinese law.
 
 
F-14

 
 
    WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
 4.  STATUTORY RESERVE
 
As required by the Chinese law that governs accounting, the Company allocates 10% of its after tax profits, if any, to a Statutory Reserve Fund and 5% to a Statutory Public Welfare Fund, as determined from year to year.  These funds are allocated appropriately until reserves reach 50% of Paid in Capital. In addition, Chinese law requires an allocation of 25% of the after tax profits of a private school to a Development Fund. The Company has made these allocations of after tax profits.
 
5.  RELATED PARTY TRANSACTIONS
 
The Company president controls a number of Chinese enterprises which are involved in the field of education and in other fields.  Advances were made to nine of these companies during the year 2009 and to seven of them during the year 2008.  In addition, advances were received from five of these companies during the year 2008 and from six of these companies during the year 2008.  Activity in these accounts during 2009 and 2008 is summarized below.
 
 
F-15

 
 
   
Advances To
   
Advances From
 
Balances December 31, 2007
 
$
11,521,109
   
$
1,794,630
 
Advances during 2008
   
15,511,272
     
2,090,777
 
Repayments during 2008
   
(10,926,893
)
   
(1,771,218
)
             
Balances, December 31, 2008
   
16,973,854
     
2,375,487
 
Advances during 2009
   
45,124,230
     
923,599
 
Repayments during 2009
   
(39,410,368
)
   
(1,098,197
)
             
Balances, December 31, 2009
 
$
22,687,716
   
$
2,200,889
 
 
These schedules are not additive, because the records are kept in the Chinese currency (RMB) and currency exchange rates have changed during these periods.
 
During the year 2006, the Company president advanced $37,000 to the Company.  That advance was repaid during 2009. 
 
During 2007 and 2008, payments were made on behalf of the Company president.  The outstanding balance of these was $526,000 at December 31, 2008; this balance was repaid during 2009.
 
During the year 2008, the Company purchased computers from one of the companies controlled by the Company president.  These purchases totaled $149,952.
 
6.  RENTALS UNDER OPERATING LEASES
 
The Company conducts its operations from its principal business office in Hefei, China.  These offices are owned by the Company president and are operated without charge.  If rent were charged for this space, it would be $3,591 per month.  Three of the schools rent classroom and office space under operating leases.  Leases for two of these schools expire more than one year after December 31, 2008.  Future rent for these leases is presented below:
 
2010
 
$
152,461
 
2011
   
31,611
 
 
7.  BANK LOANS
 
The Company has two short term bank loans.  The balances at December 31, 2009 and 2008 were$1,901,363 and $437,688, respectively.  One of the loans ($438,776) bears interest at 5.76%; the second loan ($1,462,587) bears interest at the prime rate of the People’s Bank of China, plus 2%. 
 
 
F-16

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
8.  BANK DRAFTS PAYABLE
 
The Company has an arrangement, similar to a letter of credit, with a Chinese bank under which drafts are drawn to satisfy Company obligations.  These drafts are usually due in less than one year and payment is guaranteed by the bank.  The Company is required to continuously have funds on deposit with the bank equal to the drawn drafts.  There is no interest charged for these drafts, but the bank charges a fee for this service.  Drafts totaling $1,462,587 were outstanding at December 31, 2009.   
 
9.  SMALL LOAN BUSINESS
 
During the year 2008, the Company began a small loan business.  Loans totaling $10,756,709 were made during 2008; of this amount, $10,553,301 remained outstanding at December 31, 2008.  These loans bore interest at a rate of 1.64% per month.  They were financed by borrowings which did not require the payment of interest; the outstanding balances of these loans totaled $12,570,144 at December 31, 2008.  They were fully paid during 2009.  Interest income generated by this small loan business was $235,578 during 2008 and $67,805 during 2009.  Since this business is unrelated to the basic business of the Company, it was discontinued during 2009 and turned over to an entity controlled by the Company president.
 
10.  INCOME TAXES
 
The Company is required to file income tax returns in both the United States and China.  Its operations in the United States have been insignificant and income taxes have not accrued.  In China, the Company is responsible to file tax returns for each of its eight subsidiaries.
 
The Company has not filed all of the tax returns that are required in China.  It has, however, recognized its obligations for income taxes and related penalties by accruing appropriate expenses and liabilities on the financial statements.  The Company is in the process of negotiating with taxing authorities to which it is responsible to bring its filing status current.  It does not expect resultant settlements to exceed the amounts accrued. (see also Note  #12)
 
The Company has one class of transactions that causes the recognition of a significant deferred tax benefit:  The Company recognizes revenue only as it is earned; for income tax purposes, however, revenue is recognized as it is collected, resulting in the accrual of taxes before the income is recognized on the financial statements. Under pronouncements of the FASB, deferred tax assets may be recognized unless it is more likely than not that the tax benefit will not be realized.  The Company recorded deferred tax assets in 2009 and 2008 of $932,758 and $935,424, respectively. 
 
A reconciliation of the taxes calculated by applying the Chinese statutory rate to pre tax income with the provisions for income taxes is presented below.
 
   
2009
   
2008
 
Taxes calculated using statutory rates
 
$
930,929
   
$
1,029,473
 
Effect of  non deductible expenses
   
172,057
     
123,197
 
 Other factors
 
(15,658)
   
22,774
 
Provisions for income tax
 
$
1,087,328
   
$
1,175,444
 
 
11.  EXPENSES
 
Major items included in Selling & Administrative expenses were the following:
 
   
2009
   
2008
 
Advertising
 
$
1,054,249
   
$
918,467
 
Office expense
   
293,668
     
178,767
 
Salaries and benefits
   
249,746
     
279,955
 
Sales tax
   
391,300
     
194,726
 
Other
   
52,155
     
177,005
 
Total
 
$
2,041,118
   
$
1,748,920
 
 
 
F-17

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
 
 
12.  SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
 
Cash was paid for interest of 2009 and 2008 in the amounts of $ 56,454 and $36,542.
 
Cash was paid for income taxes in the amounts of $2,137 in 2009 and $7,742 in 2008.
 
Except for the reverse merger described in Note 1, there was no non cash financing or investing activity during either 2009 or 2008.
 
13.  CONTINGENCIES
 
Consistent with business practices in China, the Company carries no insurance except for auto insurance.
 
As noted in Note 10, the Company is in negotiations with taxing authorities in the PRC to bring its filing status current.  Although the Company does not expect its total obligation to exceed the tax liabilities recorded on the balance sheet, penalties could be assessed of up to 18% per year (not compounded). These penalties could total $1,440,972 as of December 31, 2009. They are included in other accounts payable on the balance sheet. Charges of $ 688,227 and $ 492,787, respectively, are included in non operating expense on the 2009 and 2008 statements of income. In addition to these potential penalties, other consequences are possible. Although the Company does not expect any adversity beyond having to pay the income taxes, the potential exists for the PRC government to obtain a priority lien against all Company assets and to pursue criminal charges against it’s officers and directors.
 
 
F-18

 
 
14.  SUBSEQUENT EVENTS
 
In May 2009, the FASB issued a pronouncement which established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  The Company included the requirements of this guidance in the preparation of the accompanying consolidated financial statements, and concluded its review on the date of issuance of these financial statements.
 
A recent pronouncement of the FASB requires regular analysis of the relationship between the Company and its operating subsidiaries to determine that it continues to have a controlling financial interest in those operating companies. This analysis will focus on determining that the Company has each of the following relationships with its operating subsidiaries:
 
A.  The power to direct the activity that most significantly impacts the entity’s economic performance; and
 
B.  That it has the obligation to absorb losses of the operating companies that could potentially be significant and the right to receive benefits from the operating companies that could potentially be significant.
 
The Company does not expect that this analysis will change its obligation to consolidate the subsidiaries at anytime in the foreseeable future.
 
 
F-19

 
 
WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
CONSOLIDATED BALANCE SHEETS
 
   
September 30, 2010
   
December 31, 2009
 
   
(Unaudited)
   
(Audited)
 
ASSETS
           
Current Assets:
           
    Cash
 
$
1,869,512
   
$
925,011
 
    Restricted cash
   
-
     
1,462,587
 
    Miscellaneous receivables
   
3,218,240
     
423,805
 
    Deferred income taxes receivable
   
1,484,144
     
932,758
 
    Teaching supplies
   
88,436
     
23,961
 
Total current assets
   
6,660,332
     
3,768,122
 
                 
                 
Fixed Assets:
               
    Plant property and equipment
   
8,248,474
     
8,065,930
 
    Less accumulated depreciation
   
3,491,395
     
3,042,151
 
Net fixed assets
   
4,757,079
     
5,023,779
 
                 
Other Assets:
               
    Advances to related parties
   
27,968,969
     
22,687,716
 
Total other assets
   
27,968,969
     
22,687,716
 
                 
Total Assets
 
$
39,386,380
   
$
31,479,617
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current Liabilities:
               
    Bank loan payable
 
$
447,888
   
$
1,901,363
 
    Bank drafts payable
   
2,985,921
     
1,462,587
 
    Accounts payable
   
-
     
414,519
 
    Other accounts payable
   
2,469,007
     
1,271,328
 
    Advanced tuition payments
   
5,936,576
     
3,731,032
 
    Accrued liabilities
   
474,332
     
229,340
 
    Advances from related parties
   
2,434,259
     
2,200,889
 
    Taxes payable
   
7,375,502
     
5,377.471
 
Total current liabilities
   
22,123,485
     
16,588,529
 
                 
                 
Stockholders’ Equity:
               
    Common stock:  authorized, 100,000,000 shares without
               
        par value; issued and outstanding, 20,000,000 shares
   
5,858,782
     
5,858,782
 
    Retained earnings
   
7,946,694
     
6,059,126
 
    Earnings appropriated for statutory reserves
   
1,402,360
     
1,069,257
 
    Accumulated other comprehensive income
   
2,055,059
     
1,903,923
 
Total stockholders’ equity
   
17,262,895
     
14,891,088
 
 
               
Total Liabilities and Stockholders’ Equity
 
$
39,386,380
   
$
31,479,617
 
 
The accompanying notes are an integral part of these financial statements.
 
 
F-20

 

WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For The Nine Month Periods Ended September 30,
(Unaudited)
 
 
2010
 
2009
 
Revenue
 
$
8,318,726
   
$
7,539,909
 
Cost of Sales
   
3,056,675
     
2,711,496
 
Gross Profit
   
5,262,051
     
4,828,413
 
                 
Expenses:
               
Selling and Administrative Expenses
   
2,764,606
     
2,261,251
 
     Operating Income
   
2,497,445
     
2,567,162
 
 
Other Income and Expense:
               
     Other Income
   
1,483,361
     
1,065,061
 
     Interest Expense
   
(68,470
   
(28,692
)
     Other Expense
   
(724,586
)
   
(514,647
)
 
Income From Continuing Operations Before   Income Taxes
   
3,187,750
     
3,088,884
 
 
Provision for Income Taxes:
               
     Current Provision
   
1,489,867
     
1,186,369
 
     Deferred Provision
   
(522,785
   
(325,452
         Total Tax Provision
   
967,082
     
860,917
 
                 
Net Income From Continuing Operations
   
2,220,668
     
2,227,967
 
                 
Discontinued Operations:
               
     Income from discontinued component
   
-
     
135,574
 
     Provision for related income taxes
   
-
     
33,893
 
 
               
Net Income From Discontinued Operations
   
-
     
101,681
 
 
               
Net income
   
2,220,668
     
2,329,648
 
 
Other comprehensive income – foreign
               
      currency translation adjustments
   
151,136
     
257,205
 
Total comprehensive income
 
$
2,371,804
   
$
2,586,853
 
 
Income Per Share -
               
     Basic and Diluted
 
$
.11
   
$
.12
 
 
Weighted average number of shares outstanding
   
20,000,000
     
20,000,000
 
 
The accompanying notes are an integral part of these financial statements.
 
 
F-21

 

WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Month Periods Ended September 30,
(Unaudited)
 
   
2010
   
2009
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income from continuing operations
 
$
2,220,688
   
$
2,227,967
 
Adjustments to reconcile net income to net cash
               
    provided (consumed) by operating activities:
               
Charges not requiring the outlay of cash:
               
    Depreciation
   
379,367
     
532,164
 
    Increase (decrease) in advanced tuition payments
   
2,091,128
     
1,301,808
 
    Deferred tax benefit
   
(522,782
   
(325,452
Changes in assets and liabilities:
               
    Decrease in employee receivables
   
-
     
80,606
 
    Increases in other receivables
   
(2,931,193
)
   
(1,780,818
)
    Increases in teaching supplies
   
(62,887
)
   
(3,738
)
    Increase in accrued interest receivable
   
-
     
-
 
    Decrease in accounts payable
   
-
     
(20,733
    Increases  in other accounts payable
   
735,166
     
648,693
 
    Decrease in amounts due to employees
   
-
     
(30,601
)
    Increases in taxes payable
   
1,853,621
     
1,366,232
 
    Increases in accrued liabilities
   
236,060
     
175,230
 
    Increases in loans to related parties
   
(4,726,614
)
   
(1,610,515
    Increase (decrease) in loans from related parties
   
184,407
     
(1,064,029
)
Net Cash Provided (Consumed) By Continuing Operations
   
(543,039
)
   
1,496,814
 
                 
CASH FLOWS FROM DISCONTINUED OPERATING ACTIVITIES:
               
Net income from discontinued operations
   
-
     
101,973
 
Increase in taxes payable
   
-
     
31,867
 
Decrease in accrued interest receivable
   
-
     
239,700
 
                 
Cash Provided By Discontinued Operations
   
-
     
373,540
 
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of fixed assets
   
(14,778
)
   
279
 
Loans to officers
   
-
     
485,719
 
Decrease in restricted cash
   
1,467,050
     
-
 
Increase in restricted cash
   
-
     
-
 
Net Cash Provided By Investing Activities of Continuing Operations
   
1,452,272
     
485,998
 
                 
CASH FLOWS FROM INVESTING ACTIVITIES OF DISCONTINUED
               
   OPERATIONS:
               
                 
Repayments of loans receivable
   
-
     
10,571,331
 
                 
Cash Provided by Discontinued Investing Operations
   
-
     
10,571,331
 
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
                 
Repayments of short term loans
   
(1,462,837
)
   
(438,496
Borrowings under short term loans
   
1,462,837
     
1,461,512
 
Net Cash (Consumed) Provided By Financing Activities of Continuing Operations
   
-
     
1,023,016
 
                 
CASH FLOWS FROM FINANCING ACTIVITIES OF DISCONTINUED
               
   OPERATIONS:
               
 
               
Repayments of short term loans
   
-
     
(12,590,294
)
 
               
Cash Consumed by Discontinued Financing Operations
   
-
     
(12,590,294
)
                 
Effect on cash of exchange rate changes
   
35,268
     
14,442
 
Net change in cash
   
944,501
     
1,374,847
 
 
               
                 
Cash balance, beginning of period
   
925,011
     
2,188,254
 
                 
Cash balance, end of period
 
$
1,869,512
   
$
3,563,101
 
 
The accompanying notes are an integral part of these financial statements.
 
 
F-22

 

WONDER INTERNATIONAL EDUCATION & INVESTMENT GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2010
(Unaudited)

1.  BASIS OF PRESENTATION
 
The unaudited interim financial statements of Wonder International Education & Investment Group Corporation (“the Company”) as of September 30, 2010 and for the nine month periods ended September 30, 2010 and 2009 have been prepared in accordance with U.S. generally accepted accounting principles.  In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of such periods.  The results of operations for the nine month period ended September 30, 2010 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2010.
 
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading.  The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2010.
 
2.  SUPPLEMENTAL CASH FLOW INFORMATION:
 
Cash paid for interest during the nine month periods ended September 30, 2010 and September 30, 2009 was $68,218 and $28,692, respectively. Cash paid for income taxes during the nine month periods ended September 30, 2010 and September 30, 2009 was $3,461 and $1,676, respectively.
 
There were no noncash investing or financing activities during either of the periods presented.
 
3.  DETAILS OF EXPENSES
 
Details of expenses incurred during the nine month periods ended September 30, 2010 and 2009 are presented below:
 
   
Nine Month
Period Ended
   
Nine Month
Period Ended
 
   
9/30/10
   
9/30/09
 
Advertising
  $ 1,139,005     $ 1,040,749  
Sales tax
    412,506       266,457  
Management salary and benefits
    244,351       24,368  
Marketing staff salary and benefits
    228,568       148,542  
Office expense
    193,578       192,083  
Publicity
    126,187       92,541  
Consumable materials
    115,953       122,496  
Recruitment
    -       133,805  
Other expenses
    304,458       240,210  
                 
    $ 2,764,606     $ 2,261,251  
 
 
 
F-23

 
 
PART II
 
INFORMATION NOT REQUIRED IN THE PROSPECTUS
 
Eastbridge Investment Group Corporation is paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.

Indemnification of Directors and Officers
 
Under provisions of the certificate of incorporation and bylaws of the registrant, directors and officers will be indemnified for any and all judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys fees, in connection with threatened, pending or completed actions, suits or proceedings, whether civil, or criminal, administrative or investigative (other than an action arising by or in the right of the registrant), if such director or officer has been wholly successful on the merits or otherwise, or is found to have acted in good faith and in a manner he or she reasonably believes to be in or not opposed to the best interests of the registrant, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In addition, directors and officers will be indemnified for reasonable expenses in connection with threatened, pending or completed actions or suits by or in the right of registrant if such director or officer has been wholly successful on the merits or otherwise, or is found to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the registrant, except in the case of certain findings by a court that such person is liable for negligence or misconduct in his or her duty to the registrant unless such court also finds that such person is nevertheless fairly and reasonably entitled to indemnity.
 
RECENT SALES OF UNREGISTERED SECURITIES
 
The shares to be issued were allocated by Eastbridge Investment Group Corp. as a dividend to their shareholders.  However, these shares will not be issued to these holders until such time as the United States Securities and Exchange Commission declares this Registration Statement to be effective.
 
EXHIBITS
 
3.1  
Certificate of Incorporation filed with State of Arizona, April 17, 2008*
 
3.2  
Bylaws*
 
5.1 Opinion of Dieterich & Mazarei (Legal Counsel)
 
5.2 Opinion of PRC Legal Counsel
 
10.1
Common Stock Exchange Agreement between the Company, EastBridge Investment Group Corp. and Anhui Wonder Education & Investment Management Corporation, dated April 26, 2008* (terminated)
 
10.2
Equity Pledge Agreement* (terminated)
 
10.3
Proxy Agreement* (terminated)
 
10.4
Operating Agreement* (terminated)
 
10.5
Loan Agreement with Shanghai Pudong Development Bank, dated July 6, 2009 (2)
 
10.6
Loan Agreement with Huishang Bank (2)
 
10.7
Loan Agreement with Hangzhou Bank (2)
   
10.8
Common Stock Exchange Agreement between Wonder China and Seven Schools, dated July 13, 2010 (2)
 
10.9
Consulting Agreement between the Company and Wonder China, dated April 26, 2010 (2)
    
10.10
Capital Raise Agreement, dated  March 9, 2010 (3)
 
10.11
Business Acquisition Agreement by and between the Company and Norman Paul Klein for the purchase of Anhui Lang Wen Tian Cheng Consulting & Management Co. (“WOFE”), dated November 1, 2010  (4)

10.12
Equity Pledge Agreement by and among WOFE, Wonder China, Anhui Computer Training School, Hubei Computer Training School, Jiangson Computer Training School, Zhejiang Computer Training School, Henan Computer Training School, Fujian Computer Training School, Liaoning Computer Training School, and Chun Gui Xie, dated November 3, 2010  (4)
 
10.13
Operating Agreement by and among WOFE, Wonder China, Anhui Computer Training School, Hubei Computer Training School, Jiangson Computer Training School, Zhejiang Computer Training School, Henan Computer Training School, Fujian Computer Training School, Liaoning Computer Training School, and Chun Gui Xie, dated November 3, 2010  (4)

10.14
Consulting Services Agreement by and among WOFE, Wonder China, Anhui Computer Training School, Hubei Computer Training School, Jiangson Computer Training School, Zhejiang Computer Training School, Henan Computer Training School, Fujian Computer Training School, Liaoning Computer Training School, and Chun Gui Xie, dated November 3, 2010  (4)

10.15
Proxy Agreement by and among WOFE, Wonder China, Anhui Computer Training School, Hubei Computer Training School, Jiangson Computer Training School, Zhejiang Computer Training School, Henan Computer Training School, Fujian Computer Training School, Liaoning Computer Training School, and Chun Gui Xie, dated November 3, 2010
 
Consent of Dieterich and Mazarei (Legal Counsel) (included in opinion listed as Exhibit 5.1)*
 
Consent of Auditor (filed herewith)

*Filed with S-1 Registration Statement on December 9, 2009
(2) Filed as Exhibits to Amendment Number 4 to the Company’s S-1 Registration Statement on July 26, 2010
(3) Filed as an Exhibit to Amendment Number 6 to the Company's S-1 Registration Statement on August 13, 2010
(4) Filed as an Exhibit to Amendment Number 7 to the Company S-1 Registration Statement on November 26, 2010
 
 
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UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any registration statement or prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the registration statement or prospectus any facts or events arising after the effective date of the registration statement (or the most recent post effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for determining our liability under the Securities Act to any purchaser in the initial distribution of the securities, we undertake that in a primary offering of our securities pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, we will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) any preliminary prospectus or prospectus that we file relating to the offering required to be filed pursuant to Rule 424 (Section 230.424 of this chapter);

(ii) any free writing prospectus relating to the offering prepared by or on our behalf or used or referred to by us;

(iii) the portion of any other free writing prospectus relating to the offering containing material information about us or our securities provided by or on behalf of us; and

(iv) any other communication that is an offer in the offering made by us to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling person sin connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
 
 
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SIGNATURES

 
 Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto authorized on December 17 , 2010.
 

   
Wonder International Education & Investment Group Corp.
 
       
   
/s/  Xiang Wei    
 
   
Chief Executive Officer and Director
 
 
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated:


SIGNATURE
 
CAPACITY IN WHICH SIGNED
 
DATE
         
/s/ Chungcui Xie
 
Chairman of the Board
 
December 17 , 2010
Chungcui Xie
       
/s/ Xiang Wei
 
Chief Executive Officer
 
 
December 17 , 2010
Xiang Wei
       
/s/ WenMing Xie
 
Chief Financial Officer/Controller
 
 
December 17 , 2010
WenMing Xie
       
 
 
 
 
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