HARBIN, China, Aug. 11 /PRNewswire-Asia-FirstCall/ -- China
Education Alliance, Inc. (NYSE Amex: CEU) today announced strong
financial results for the three and six months ended June 30, 2009.
The Company will host a conference call Wednesday, August 12, 2009,
at 10:00 a.m. EDT to discuss these results. Details on accessing
the call and live webcast follow, below. "China Education had a
very strong quarter as demand for our high-quality educational
services and our English language and vocational training programs
in China remains strong," said Xiqun Yu, Chief Executive Officer of
China Education Alliance. "Our results validate the effectiveness
of our business model and support our plans for expansion. We
remain focused on marketing our online test-preparation materials,
developing our language-training programs, and expanding our
vocational and IT training efforts to drive growth for our
businesses." Financial Highlights for the Three Months Ended June
30, 2009 -- Total revenue increased $3.66 million or 82.1%
year-over-year to $8.12 million. -- Net income increased $1.58
million or 95.4% year-over-year to $3.24 million, compared to net
income of $1.66 million in the second quarter of fiscal 2008. --
EPS was $0.13 per fully diluted share, compared to EPS of $0.07 per
fully diluted share in the second quarter of fiscal 2008. --
Operating income totalled $3.72 million, compared to an operating
income of $1.77 million in the second quarter of 2008. -- Gross
profit rose 75.0% to $6.51 million or 80.2% of sales, compared to
83.5% of sales or $3.72 million in the second quarter of 2008.
Financial results for the three months ended June 30, 2009 China
Education Alliance reported revenue of $8.12 million for the second
quarter ended June 30, 2009, an increase of 82.1% compared to the
second quarter of 2008. The Company's online education business
generated 67.4% of its total revenue in the second quarter of 2009
compared to 73.4% for the same prior-year period. Its training
center business generated 24.7% of total revenue in the second
quarter of 2009 compared to 13.6% for the same prior-year period;
its advertising business segment generated the remaining 7.9% of
total revenue in the second quarter of 2009, compared to 13.0% for
the same prior-year period. Online Education revenue was $5.47
million for the second quarter of 2009, an increase of 67.2%
compared to $3.27 million for the second 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 second quarter of 2009 was $2.01 million, up 232.0%
from $0.60 million in the second quarter last year. Advertising
revenue was approximately $0.64 million for the second quarter of
2009, an increase of 10.0% from $0.58 million for the second
quarter in the prior year. Net income for the second quarter of
fiscal 2009 was $3.24 million, representing an increase of 95.4%
over second quarter 2008 net income of $1.66 million. The increase
was largely the result of strong development in the Company's three
business segments. Diluted earnings per share was $0.13, compared
with $0.07 in the same period last year. Operating income in the
second quarter of fiscal 2009 increased to $3.72 million, from
$1.77 million in the same period a year ago. Operating margin was
45.8% in the second quarter of fiscal 2009. Overall cost of sales
increased 117.7% to $1.61 million in the second quarter of fiscal
2009, compared to $0.74 million for the same period in fiscal 2008.
Gross profit increased to $6.51 million in the second quarter of
fiscal 2009, an increase of 75.0% from approximately $3.72 million
for the same quarter in fiscal 2008. Gross margin for the second
quarter of fiscal 2009 was 80.2%, as compared to a record 83.5% for
the same quarter a year ago. The online education gross margin
decreased to 81.1% in the second quarter of fiscal 2009 from 86.7%
for the same period in fiscal 2008. The training center gross
margin increased to 75.0% for the second quarter of fiscal 2009
from 57.9% for the same period last year. Advertising gross margin
decreased to 89.1% in the second quarter of fiscal 2009 from 91.8%
for the same period in 2008. Selling expenses increased 34.7% to
approximately $1.91 million for the second quarter of fiscal 2009,
compared to approximately $1.42 million in the second 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 $0.64 million for the
second quarter of fiscal 2009, an increase from approximately $0.32
million in the second quarter of fiscal 2008, primarily due to an
increase in salaries and decrease in travel and telephone expenses
in the second quarter of fiscal 2009 compared to the prior year. As
a percentage of revenue, G&A expenses increased to 7.9% in the
second quarter of fiscal 2009, down from 7.1% in the same period of
last year. Financial results for the six months ended June 30, 2009
Revenue for the six months ended June 30, 2009 was $16.32 million,
representing an increase of 91.4% compared to the same six-month
period in 2008. Online education revenue was $10.30 million for the
six months ended June 30, 2009, representing an increase of 74.0%
from $5.92 million for the same six-month period in 2008. Training
center revenue in the six months ended June 30, 2009, was $4.56
million, representing an increase of 186.8% from $1.59 million in
the same six-month period last year. The increase was largely the
result of strong development in the Company's three business
segments. Advertising revenue was approximately $1.47 million for
the six months ended June 30, 2009, representing an increase of
43.8% from $1.02 million for the same prior-year, six-month period.
Net income for the six-months ended June 30, 2009 was $6.47
million, representing an increase of 81.1% over the same six-month
period in 2008 net income of $3.57 million. Diluted earnings per
share for the six months ended June 30, 2009 was $0.26, compared
with $0.14 in the same period of 2008. Financial Condition As of
June 30, 2009, China Education Alliance had approximately $31.51
million in cash and cash equivalents, $32.62 million in working
capital, and no long-term debt. Shareholders' equity was
approximately $40.32 million, an increase from approximately $36.91
million on March 31, 2009. The Company generated $8.40 million in
cash flow from operating activities in the second quarter of 2009.
Business Outlook China Education 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 aged 6 to 18 and
vocational and language training services to adults aged 18 and
over. For student's ages 6 to 18, CEU 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 the famed instructors in P. R. 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 those age 18 and over CEU provides
various vocational training including IT and other professional
training programs. In addition, the English training program aims
to help college graduates and other professionals improve their
written and spoken English as needed to pursue an overseas
education or an international business environment. China Education
Alliance has three primary businesses: 1. Exam-Oriented Primary and
Secondary School Supplemental Education: China Education Alliance
provides famed instructors educational resources online for primary
and secondary students to download through the Internet, and also
offers onsite training by the same famed instructors as well.
Currently, the Company has expanded its business network from
Heilongjiang province to Jilin, Liaoning and Inner Mongolia. While
the Company plans to penetrate into news areas it will continue to
explore and increase online market shares 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 and courseware for college, secondary and
elementary schools. 2. Vocational Training: China Education
operates various vocational training programs both through online
services and onsite training at its main center in Beijing, as well
as through its strategic partnerships with professional
organizations, including the National Association of Vocation
Education Society of China (NAVEC), whose focus is on vocation and
certification training. The Company will focus on its
Heilongjiang-based, self-run vocational education market, which
includes IT training and other profession training programs, such
as secretarial training and other professions with standard exam
trainings. The vocational training area is expected to have further
improvement in 2009. 3. English Training: The Company actively
carries out high-end foreign language services, primarily focused
on teaching English. At present, the Company has entered foreign
language training contracts with a number of large enterprises and
enterprise groups, including a recently announced strategic
alliance with Peking University to develop their "Practical Oral
English Training Project." Since the embarking in the field of
teaching foreign languages, China Education Alliance, as a leading
provider of educational resources, has insisted on practical
English education by hiring North American teachers, using original
English materials, providing an English-only teaching environment
and setting "practicalness" as its goal. In addition to these
primary businesses, the Company's 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 continue to enjoy comprehensive growth in
each of our business segments, primarily due to our strategic
decision-making and partnerships that enhance our outreach efforts.
We will continue to adhere to our goals for development. We are
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 its second quarter 2009
results at 10:00 a.m. Eastern Time on Wednesday, August 12, 2009.
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/ or alternately at
http://viavid.net/ . A replay of the call will be available for two
weeks from 1:00 p.m. August 12, 2009, EDT until 11:59 p.m. EDT on
August 26, 2009. The number for the replay is (877) 660-6853, or
(201) 612-7415 for international calls. The passcode for the replay
is 330198, 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. In addition, the Company is providing
comprehensive English programs that are taught by the North
American instructors and to assist graduates and professionals in
learning the English language, both written and conversational in
order to better able them to work for a foreign corporation or
work-study abroad. 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. -- Financial
tables follow -- Item 1. Financial Statements (Unaudited) China
Education Alliance, Inc. and Subsidiaries Consolidated Balance
Sheets June 30, December 31, 2009 2008 ASSETS (Unaudited) Current
Assets Cash and cash equivalents $31,508,995 $23,418,098 Advances
to related parties -- 142,006 Accounts receivables 1,099,072
469,607 Prepaid expenses 2,157,767 3,437,506 Total current assets
34,765,834 27,467,217 Property and equipment, net 6,104,710
6,136,252 Intangibles and capitalized software, net 592,412 864,089
Goodwill 431,825 -- Advance on acquisition 233,000 932,000 Long
term investment 338,268 342,357 $42,466,049 $35,741,915 LIABILITIES
AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and
accrued expenses $1,048,033 $800,692 Deferred revenues 1,041,297
1,227,806 Advances from related parties 52,414 -- Total current
liabilities 2,141,744 2,028,498 Stockholders' Equity Preferred
stock ($0.001 par value, 20,000,000 shares authorized, 7,252,143
and 7,597,645 issued and outstanding, respectively, aggregate
liquidation preference of $2,683,293 and $2,811,129, respectively)
2,885,144 3,010,144 Common stock ($0.001 par value, 150,000,000
shares authorized, 22,059,626 and 21,892,631, issued and
outstanding, respectively) 22,060 21,893 Additional paid-in capital
11,208,821 10,751,732 Statutory reserve 1,990,238 1,990,238
Accumulated other comprehensive income 2,501,359 2,688,080 Retained
earnings 21,716,683 15,251,330 Total stockholders' equity
40,324,305 33,713,417 $42,466,049 $35,741,915 The accompanying
notes in the Company's filings with the Securities and Exchange
Commission are an integral part of these unaudited consolidated
financial statements. China Education Alliance, Inc. and
Subsidiaries Consolidated Statements of Operations (Unaudited)
Three months ended June 30, Six months ended June 30, 2009 2008
2009 2008 Revenues Online education revenues $5,470,628 $3,272,441
$10,300,116 $5,920,555 Training center revenues 2,007,947 604,752
4,555,046 1,588,384 Advertising revenues 639,798 581,501 1,467,290
1,020,172 Total revenue 8,118,373 4,458,694 16,322,452 8,529,111
Cost of Goods Sold Online education costs 1,034,312 435,408
2,233,419 822,280 Training center costs 501,789 254,867 1,366,439
654,457 Advertising costs 69,775 47,417 124,914 85,587 Total cost
of goods sold 1,605,876 737,692 3,724,772 1,562,324 Gross Profit
Online education gross profit 4,436,316 2,837,033 8,066,697
5,098,275 Training center gross profit 1,506,158 349,885 3,188,607
933,927 Advertising gross profit 570,023 534,084 1,342,376 934,585
Total gross profit 6,512,497 3,721,002 12,597,680 6,966,787
Operating Expenses Selling expenses 1,906,494 1,415,683 4,117,182
2,613,018 Administrative 639,361 318,543 894,112 625,905
Depreciation and amortization 244,898 218,173 490,351 415,831 Total
operating expenses 2,790,753 1,952,399 5,501,645 3,654,754 Other
Income Other Income -- 6,668 -- 528,497 Interest income 25,783
31,528 48,539 56,436 Investment loss (3,678) (21,842) (4,089)
(21,842) Total other income 22,105 16,354 44,450 563,091 Net Income
Before Provision for Income Tax 3,743,849 1,784,957 7,140,485
3,875,124 Provision For Income Taxes 507,977 128,964 675,132
305,208 Net Income $3,235,872 $1,655,993 $6,465,353 $3,569,916
Basic Earnings Per Share $0.15 $0.08 $0.29 $0.17 Basic Weighted
Average Shares Outstanding 21,930,272 21,202,359 21,930,272
21,202,359 Diluted Earnings Per Share $0.13 $0.07 $0.26 $0.14
Diluted Weighted Average Shares Outstanding 25,085,474 24,818,668
24,459,405 24,818,668 The Components of Other Comprehensive Income
Net Income $3,235,872 $1,655,993 $6,465,353 $3,569,916 Foreign
currency translation adjustment (148,642) 55,303 (186,726)
1,331,841 Comprehensive Income $3,087,230 $1,711,296 $6,278,627
$4,901,757 China Education Alliance, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) Six Months Ended
June 30, 2009 2008 Cash flows from operating activities Net Income
$6,465,353 $3,569,916 Adjustments to reconcile net income to net
cash provided by operating activities Depreciation and amortization
663,830 673,059 Stock based compensation 332,256 -- Loss on equity
investment 4,089 -- Net change in assets and liabilities Account
receivables (626,926) (477,094) Prepaid expenses and other
1,285,913 484,128 Advances to related parties 162,894 108,536
Accounts payable and accrued liabilities 247,341 33,786 Deferred
revenue (186,509) 52,772 Advances from related parties 52,414 --
Net cash provided by operating activities 8,400,655 4,445,103 Cash
flows from investing activities Purchases of fixed assets (348,837)
(409,378) Cash of WEI on date of acquisition 227,964 -- Long-term
investment -- (436,567) Net Cash used in investing activities
(120,873) (845,945) Cash flows from financing activities Warrants
exercised -- 2,667,559 Net Cash Provided by Financing Activity --
2,667,559 Effect of exchange rate on cash (188,885) 1,331,841 Net
increase in cash 8,090,897 7,598,558 Cash and cash equivalents at
beginning of period 23,418,098 11,778,954 Cash and cash equivalents
at end of period 31,508,995 19,377,514 Supplemental disclosure of
cash flow information: Value of equity granted and issued 332,257
94,737 Non-cash investing and financing activities Conversion of
preferred stock to common 125,000 667,800 This information is
intended to be reviewed in conjunction with the Company's filings
with the Securities and Exchange Commission. For more information,
please contact: At the Company: Ms. Susan Liu, CFO China Education
Alliance, Inc. Tel: +1-778-388-8513 Email: Investor Relations:
RedChip Companies, Inc. Jon Cunningham, Investor Relations Tel:
1-800-733-2447, Ext. 107 Email: DATASOURCE: China Education
Alliance, Inc. CONTACT: At the Company: Ms. Susan Liu, CFO of China
Education Alliance, Inc., +1-778-388-8513, or ; Or Investor
Relations: RedChip Companies, Inc., Jon Cunningham, Investor
Relations, +1-800-733-2447 x107, or http://www.redchip.com/ Web
site: http://www.chinaeducationalliance.com/
http://www.edu-chn.com/ http://viavid.net/
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