HARBIN, China, Nov. 16 /PRNewswire-Asia-FirstCall/ -- China
Education Alliance, Inc. (NYSE Amex: CEU) today announced strong
financial results for the three and nine months ended September 30,
2009. The Company will host a conference call Tuesday, November 17,
2009, at 10:00 a.m. EST to discuss these results. Financial
Highlights for the Three Months Ended September 30, 2009 -- Total
revenue increased 43.3% year-over-year to $10.23 million, compared
to revenue of $7.15 million in the third quarter of fiscal 2008. --
Net income increased 51.4% year-over-year to $4.17 million,
compared to net income of $2.76 million in the third quarter of
fiscal 2008. -- EPS was $0.16 per fully diluted share, compared to
EPS of $0.11 per fully diluted share in the third quarter of fiscal
2008. -- Operating income totalled $4.44 million, compared to an
operating income of $2.86 million in the third quarter of 2008. --
Gross profit rose 42.7% to $8.22 million or 80.4% of sales,
compared to 80.7% of sales or $5.76 million in the third quarter of
2008. "We are very pleased to report another strong quarter as
demand for our high-quality educational services and our vocational
training programs in China remains high," said Xiqun Yu, Chief
Executive Officer of China Education Alliance, Inc. "The
educational sector in China continues to experience rapid growth
since quality education is so vital to meeting the demands of an
ever-modernizing infrastructure. We see these quarterly results as
further validation of the effectiveness of our business model and
our expansion plans as well as validation of our commitment to
providing the highest level of quality educational services to
students and adults. We expect enrollment for our online
educational services and our training centers will continue to grow
rapidly and will be key drivers of our growth in the coming years."
Financial results for the three months ended September 30, 2009
China Education Alliance reported total revenue of $10.23 million
for the third quarter ended September 30, 2009, an increase of
43.3% compared to $7.15 million for the third quarter of 2008. The
Company's online education business generated 56.4% of its total
revenue in the third quarter of 2009 compared to 63.2% for the same
prior-year period. Its training center business generated 37.7% of
total revenue in the third quarter of 2009 compared to 28.3% for
the same prior-year period; its advertising business division
generated the remaining 6.0% of total revenue in the third quarter
of 2009, compared to 8.5% for the same prior-year period. Online
education revenue was $5.77 million for the third quarter of 2009,
an increase of 32.9% compared to $4.34 million for the third
quarter of 2008. During 2008 and 2009, the Company added several
new programs for vocational studies and certification programs,
which provided new revenue sources for its online education
business. Training center revenue in the third quarter of 2009 was
$3.85 million, up 90.8% from $2.02 million in the third quarter
last year. Advertising revenue was approximately $0.61 million for
the third quarter of 2009, decreased by 22.6% from $0.79 million in
the third quarter last year. Net income for the third quarter of
fiscal 2009 was $4.17 million, representing an increase of 51.4%
over third quarter 2008 net income of $2.76 million. The increase
was largely the result of strong development in the Company's
online division and training center division. Diluted earnings per
share was $0.16, compared with $0.11 in the same period last year.
Operating income in the third quarter of fiscal 2009 increased to
$4.44 million, from $2.86 million in the same period a year ago.
Operating margin was 43.4% in the third quarter of fiscal 2009.
Overall cost of sales increased 45.3% to $2.01 million in the third
quarter of fiscal 2009, compared to $1.38 million for the same
period in fiscal 2008. Gross profit increased to $8.22 million in
the third quarter of fiscal 2009, an increase of 42.7% from $5.76
million for the same quarter in fiscal 2008. Gross margin for the
third quarter of fiscal 2009 was 80.4%, as compared to 80.7% for
the same quarter a year ago. The online education gross margin
decreased to 78.8% in the third quarter of fiscal 2009 from 84.6%
for the same period in fiscal 2008. The training center gross
margin increased to 80.9% for the third quarter of fiscal 2009 from
67.0% for the same period last year. Advertising gross margin was
92.0% in the third quarter of fiscal 2009, down from 94.0% of the
third quarter of last year. Selling expenses increased 30.9% to
approximately $3.08 million for the third quarter of fiscal 2009,
compared to $2.35 million in the third quarter of 2008, due to
increased expenses in building our marketing team and higher debit
card agency expenses. General and administrative ("G&A")
expenses were approximately $0.43 million for the third quarter of
fiscal 2009, an increase from $0.29 million in the third quarter of
fiscal 2008, primarily due to an increase in salaries and office
expenses in the third quarter of fiscal 2009 compared to the prior
year. As a percentage of revenue, G&A expenses at 4.2% in the
third quarter of fiscal 2009 was almost unchanged from 4.0% in the
same period of last year. Financial results for the nine months
ended September 30, 2009 Revenue for the nine months ended
September 30, 2009 was $26.55 million, representing an increase of
69.4% compared to the same nine-month period in 2008. Online
education revenue was $16.07 million for the nine months ended
September 30, 2009, representing an increase of 56.6% from $10.26
million for the same nine month-period in 2008. Training center
revenue in the nine months ended September 30, 2009, was $8.41
million, representing an increase of 133.0% from $3.61 million in
the same nine-month period last year. The increase was largely the
result of strong development in the Company's online education and
onsite training centers divisions. Advertising revenue was
approximately $2.08 million for the nine months ended September 30,
2009, representing an increase of 14.9% from $1.81 million for the
same prior-year, nine-month period. Net income for the nine-months
ended September 30, 2009 was $10.64 million, representing an
increase of 68.2% over the same nine-month period in 2008 net
income of $6.33 million. Diluted earnings per share for the nine
months ended September 30, 2009 was $0.44, compared with $0.26 in
the same period of 2008. Financial Condition As of September 30,
2009, China Education Alliance had approximately $38.77 million in
cash and cash equivalents, $39.63 million in working capital, and
no long-term debt. Shareholders' equity was approximately $47.83
million, an increase from approximately $33.71 million on June 30,
2009. The Company generated $13.43 million in cash flow from
operating activities in the third quarter of 2009. Business Outlook
China Education Alliance believes the education industry in China
will remain a fast-growth sector. The Company has experienced rapid
growth by providing online and onsite, supplemental educational
training services to students ages 6 to 18 and vocational training
services to adults ages 18 and up. For students ages 6 to 18, the
Company provides downloadable course material and test papers
online and classroom instructions onsite. All the online course
material and test papers and onsite classroom instructions are
provided by famed instructors in the People's Republic of China,
with the purpose of helping the students pass the two most
important exams during their academic life: the high school and
college entrance exams. For adults ages 18 and up, the Company
provides various vocational training including IT and other
professional training programs. China Education Alliance has two
primary business lines: 1. Exam-Oriented Primary and Secondary
School Supplemental Education: The Company provides online
educational resources for primary and secondary students to
download through the Internet, and offers onsite training by highly
regarded instructors. Currently, the Company has expanded its
business network from Heilongjiang province to Jilin, Liaoning and
Inner Mongolia provinces. While the Company plans to penetrate into
new areas, it will continue to explore and increase online market
share in these four provinces. The Company's online educational
resources are provided through its website, http://www.edu-chn.com/
. This website is a comprehensive education network platform that
utilizes video-on-demand technology and houses a large database
that includes more than 350,000 exams and test papers, as well as
courseware for college, secondary and elementary schools. 2.
Vocational Training: The Company operates various vocational
training programs through online services and onsite training at
its main center in Beijing, as well as through its strategic
partnerships with professional organizations such as the National
Association of Vocation Education Society of China (NAVEC). The
Company will focus on its Heilongjiang-based, self-run vocational
education market, which includes IT training and other professional
training programs, such as secretarial training and other
professions with standard exam training. In addition to these
primary businesses, the Company is also invested in the publishing
and circulation of an educational newspaper, Scientific Discovery,
which is enjoying a growing distribution, currently estimated at
60,000. "We will continue to focus on marketing our online
test-preparation materials and our vocational training efforts to
new markets. We will expand our market both in depth and breadth.
We remain committed to our goals for development, and we expect to
continue to enjoy comprehensive growth in each of our business
lines as we develop and strengthen our strategic partnerships and
improve our outreach efforts. We remain very confident in the
future growth and development of the Company," said Mr. Xiqun Yu.
Conference Call and Webcast Details The Company will host a
conference call to discuss financial results for the third quarter
ended September 30, 2009 on Tuesday, November 17, 2009 at 10:00
a.m. Eastern standard time (7:00 a.m. Pacific). To participate in
the call, please dial (877) 407-0789, or (201) 689-8562 for
international calls, approximately 10 minutes prior to the
scheduled start time. Interested parties may also listen via a live
Internet webcast, which can be found at the Company's website at
http://www.chinaeducationalliance.com/ . A replay of the call will
be available for two weeks from 1:00 p.m. EST on November 17, 2009,
until 11:59 p.m. EST on December 1, 2009. The number for the replay
is (877) 660-6853, or (201) 612-7415 for international calls. The
passcode for the replay is 337623, and the account number is 3055.
You will need both the passcode and the account number to listen to
the replay. In addition, a recording of the call will be available
via the company's website at http://www.chinaeducationalliance.com/
for one year. About China Education Alliance, Inc. China Education
Alliance, Inc. is a fast growing, leading China-based company
offering high-quality education resources and services to students
ages 6 to 18 and adults ages 18+ (University students and
professionals). For students ages 6 to 18, China Education
Alliance, Inc. offers supplemental online exam-oriented training
materials and on-site exam-oriented training and tutoring services.
The company is providing on-line downloadable famous teachers
resources and on-site face to face instructions. All resources and
tutoring services are provided by famous teachers within mainland
China. The purpose of online exam orientated resources and on-site
tutoring is to help Chinese students ages 6 to 18 to pass the two
most important, and highly competitive exams in their educational
career: senior high school entrance exam and college entrance exam.
For graduates and professionals age 18+, China Education Alliance
provides vocational training including IT and several professional
training programs. For more information about China Education
Alliance, please visit http://www.chinaeducationalliance.com/ .
Safe Harbor Statement Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995: Certain statements in
this press release, constitute forward-looking statements for
purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. These statements include, without
limitation, statements regarding our ability to prepare the company
for growth, the Company's planned expansion in 2008 and predictions
and guidance relating to the Company's future financial
performance. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial
needs and are not a guarantee of future performance but they
involve risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements,
which may include, but are not limited to, such factors as
unanticipated changes in product demand especially in the education
industry, pricing and demand trends for the Company's products,
changes to government regulations, risk associated with operation
of the Company's new facilities, risk associated with large scale
implementation of the company's business plan, the ability to
attract new customers, ability to increase its product's
applications, cost of raw materials, downturns in the Chinese
economy, the adoption by consumers of its new game business, the
unproven advertising model that is dependent on attracting a large
game user base, and other information detailed from time to time in
the Company's filings and future filings with the United States
Securities and Exchange Commission. Investors are urged to consider
these factors carefully in evaluating the forward-looking
statements herein and are cautioned not to place undue reliance on
such forward-looking statements, which are qualified in their
entirety by this cautionary statement. The forward-looking
statements made herein speak only as of the date of this press
release, readers are cautioned not to place undue reliance on any
of them and the Company undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or changes in the company's expectations. For more
information, please contact: At the Company: China Education
Alliance, Inc. Zack Pan, CFO Tel: +1-405-315-9987 Investor
Relations: RedChip Companies, Inc. Jon Cunningham, Investor
Relations Tel: +1-800-733-2447 x107 Email: Web:
http://www.redchip.com/ China Education Alliance, Inc. and
Subsidiaries Consolidated Balance Sheet September 30, December 31,
2009 2008 ASSETS Unaudited Audited Current Assets Cash and cash
equivalents $38,771,932 $23,418,098 Advances to related parties
204,569 142,006 Account receivables 1,195,623 469,607 Prepaid
expenses 2,006,620 3,437,506 Total current assets 42,178,744
27,467,217 Property and equipment, net 6,585,397 6,519,229
Intangible, net 346,771 481,113 Advance on acquisition 932,000
932,000 Long term investment 338,056 342,357 $50,380,968
$35,741,915 LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Accounts payable and accrued expenses $1,295,291
$800,692 Deferred revenues 1,252,563 1,227,806 Total current
liabilities 2,547,854 2,028,498 Stockholders' Equity Preferred
stock ($0.001 par value, 20,000,000 shares authorized, 4,502,142
and 7,597,645 issued and outstanding, respectively, aggregate
liquidation preference of $1,665,793 and 2,811,129, respectively)
1,867,644 3,010,144 Common stock ($0.001 par value, 150,000,000
shares authorized, 24,732,914 and 21,892,631issued and outstanding,
respectively) 24,733 21,893 Additional paid-in capital 15,283,404
10,751,732 Statutory reserve 1,990,238 1,990,238 Accumulated other
comprehensive income 2,775,834 2,688,080 Retained earnings
25,891,261 15,251,330 Total stockholders' equity before related
parties offset 47,833,114 33,713,417 $50,380,968 $35,741,915 The
accompanying notes are an integral part of these financial
statements. China Education Alliance, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited) Three months
ended Nine months ended September 30, September 30, 2009 2008 2009
2008 Revenues Online education revenues $5,768,667 $4,339,119
$16,068,783 $10,259,674 Training center revenues 3,853,285
2,019,933 8,408,331 3,608,317 Advertising revenues 609,726 787,337
2,077,016 1,807,509 Total revenue 10,231,678 7,146,389 26,554,130
15,675,500 Cost of Goods Sold Online education costs 1,223,984
667,373 3,457,403 1,489,653 Training center costs 736,215 667,066
2,102,654 1,321,523 Advertising costs 48,491 47,622 173,405 133,209
Total cost of goods sold 2,008,690 1,382,061 5,733,462 2,944,385
Gross Profit Online education gross profit 4,544,683 3,671,746
12,611,380 8,770,021 Training center gross profit 3,117,070
1,352,867 6,305,677 2,286,794 Advertising gross profit 561,235
739,715 1,903,611 1,674,300 Total gross profit 8,222,988 5,764,328
20,820,668 12,731,115 Operating Expenses Selling expenses 3,079,340
2,352,018 7,196,522 4,965,036 Administrative 425,990 288,083
1,320,102 935,830 Depreciation and amortization 275,909 264,988
766,260 680,819 Total operating expenses 3,781,239 2,905,089
9,282,884 6,581,685 Other Income (Expense) Value-added tax refund 0
5,570 -- 534,067 Interest income 36,085 37,991 84,624 94,427
Investment loss (1,275) -- (5,364) -- Total other income 34,810
43,561 79,260 628,494 Net Income Before Provision for Income Tax
4,476,559 2,902,800 11,617,044 6,777,924 Provision for Income Taxes
301,980 145,889 977,112 451,097 Net Income $4,174,579 $2,756,911
$10,639,932 $6,326,827 Basic Earnings Per Share $0.18 $0.13 $0.48
$0.30 Diluted Earnings Per Share $0.16 $0.11 $0.44 $0.26 Basic
Weighted Average Shares Outstanding 23,069,062 21,434,129
22,341,051 21,434,129 Diluted Weighted Average Shares Outstanding
25,566,705 24,176,509 24,254,521 24,796,069 The Components of Other
Comprehensive Income Net income $4,174,579 $2,756,911 $10,639,932
$6,326,827 Foreign currency translation adjustment 274,480 80,723
87,754 1,412,564 Comprehensive Income $4,449,059 $2,837,634
$10,727,686 $7,739,391 Consolidated Statements of Cash Flows
(Unaudited) Nine Months Ended September 30, 2009 2008 Cash flows
from operating activities Net Income $10,639,932 $6,326,827
Adjustments to reconcile net cash provided by Operating activities
Depreciation and amortization 1,176,723 1,193,275 Stock based
compensation 442,450 -- Loss on equity investment 5,132 -- Net
change in assets and liabilities Account receivables (724,876)
(296,276) Prepaid expenses and other 1,439,230 (972,961) Advances
to related parties (62,217) (943,733) Accounts payable and accrued
liabilities 492,655 289,618 Deferred revenue 21,776 751,059 Net
cash provided by operating activities 13,430,805 6,347,809 Cash
flows from investing activities Purchases of fixed assets
(1,091,554) (1,726,750) Long-term investment -- (431,831) Net cash
(used in) investing activities (1,091,554) (2,158,581) Cash flows
from financing activities Warrants exercised 2,949,559 2,667,559
Effect of exchange rate 65,024 1,412,565 Net increase in cash
15,353,834 8,269,352 Cash and cash equivalents at beginning of year
23,418,098 11,778,954 Cash and cash equivalents at end of year
$38,771,932 $20,048,306 Supplemental disclosure of cash flow
information Interest paid $-- $-- Taxes paid $870,797 $94,737
Non-cash investing and financing activities Conversion of preferred
stock to common $1,142,500 $667,800 DATASOURCE: China Education
Alliance, Inc. CONTACT: At the Company - Zack Pan, CFO, China
Education Alliance, Inc., +1-405-315-9987; Investor Relations -
RedChip Companies, Inc., Jon Cunningham, Investor Relations,
+1-800-733-2447, Ext. 107, or Web site:
http://www.chinaeducationalliance.com/ http://www.redchip.com/
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