Published:
China Education Alliance, Inc. Announces Strong First Quarter 2008 Results
HARBIN, China, May 16 /Xinhua-PRNewswire-FirstCall/ -- China Education
Alliance, Inc. (OTC Bulletin Board: CEUA) (''China Education Alliance'' or
''the Company''), a leading distributor of educational resources, offering
high-quality programs and training both through online networks and an on-site
training center inthe People's Republic of China, today reported strong
financial results for the first quarter ended March 31, 2008.
First quarter 2008 Highlights
-- Total revenue increased 31.9% year over year to $4.1 million
-- Gross profit rose to $3.2 million, up 47.5% from $2.2 million in the
first quarter of 2007; Gross margin improved to 79.7% from 71.3% for
the first quarter of 2007
-- Operating income totaled $1.5 million, up 30.2% from $1.2 million in
the first quarter of 2007
-- Other net income was $521,829 due to a value added tax refund, versus
other net expense of $98,807 in the first quarter last year
-- Net income grew 90.8% to $1.9 million from $1.0 million in the first
quarter of 2007, fully diluted earnings per share was $0.08 versus
$0.05 in the first quarter of 2007
-- Launched new Corporate and Investor Relations Website
-- Acquired 70% equity interest of World Exchanges Inc., which offers
English training programs, English test preparation courses and
overseas study and consulting services
First Quarter 2008 Results
Revenue in the first quarter increased to $4.1 million, up 31.9% from $3.1
million in the prior year, driven by strong growth in both the training center
business and online education business.
Online education represented 75.8% of total revenue for the first quarter
of 2008 versus 85.1% in the same period in the prior year, while the training
center business generated the remaining 24.2% of total revenue for the first
quarter of 2008 versus 14.9% in the first quarter last year.
''Our training center business improved significantly in this quarter due
to the rapid growth of our vocational education business,'' commented Mr.
Xiqun Yu, Chairman and CEO of China Education Alliance,Inc., ''We experienced
strong sales growth in the quarter, but our bottom line grew faster as we
gained leverage in our online education business and we benefited from a
sizable government tax refund in the quarter.''
Online education revenue was $3.1 million for the first quarter, up 17.5%
from $2.6 million in the first quarter of 2007. Training center revenue for
the first quarter was $983,632, up 114% from $459,559 in the first quarter of
last year. The significant revenue growth in the training center business was
due to the addition of several new programs for vocational studies and
certification programs, which provided new sources of training center income.
Overall cost of sales decreased 7% to $824,632 in the first quarter of
2008, compared to $886,311 in the same period of 2007. Gross profit increased
to $3.2 million in the first quarter, up 47.5% from $2.2 million in the same
quarter of 2007. Gross margin for the quarter increased to 79.7% from 71.3% in
the same quarter a year ago. The improved gross margin was due to the fact
that on-line education costs are somewhat fixed and margins increase with
volume and advertising revenue and there were no substantial costs associated
with such increases, as well as the higher growth rate of the training center
business. The online education gross margin increased to 86.2% in first
quarter of 2008 from 74.6% in the same period of 2007. The training center
gross margin increased to 59.4% for the three months ended March 31, 2008 from
52.4% in the same period of last year.
Selling expenses increased 59.6% to $1.2 million, compared to $750,438 in
the first quarter of 2007, due to increased agency fees associated with
increased sales of our debit cards. General and administrative (''G&A'')
expenses were $307,362, up from $157,663 in the first quarter of 2007,
primarily due to the increase in professional fees and office expenses offset
by decreases in salaries and other administrative expenses.
Operating income in the first quarter increased to $1.5 million, from $1.2
million in the same period a year ago. Operating margin was 37.9% in the first
quarter of 2008 compared to 38.4% in the prior year.
The Company received a value-added tax refund of $521,829 recognized as
other income this quarter. The total net other income was $546,737 this
quarter versus $(98,870) in the first quarter of 2007.
Net income for the first quarter was $1.9 million, up 90.8% from $1.0
million in the year earlier period. Fully diluted earnings per share were
$0.08 compared to $0.05 in the comparable period for 2007.
Financial Condition
As of March 31, 2008, China Education Alliance, Inc. had $17.7 million in
cash and cash equivalents, $16.9 million in working capital, and no long-term
debt. Shareholders' equity was $24.1 million up from $18.6 million at December
31, 2007. The company generated $2.7 million in cash flow from operating
activities in the first quarter of 2008.
Recent Developments
In January 2008, the Company signed a series of strategic collaboration
agreements with thirty-five domestic education institutions inBeijing that
cover subjects including remote education, IT training, vocational
qualification education and foreign language.
In January 2008, The Company began operating the National Association of
Vocational Education ofChina's (NAVEC) Education Examination Center, which
has access to the resources of 30,000 famous vocational experts and
instructors who are members and it will provide six national standard exam-
oriented vocational training courses.
In April 2008, China Education Alliance, Inc. launched a new corporate
and investor relations website under the domain name of
http://www.chinaeducationalliance.com to enhance the Company's corporate
branding efforts and strengthen communications with investors, customers and
business partners.
In April 2008, China Education Alliance, Inc. signed an agreement to
issue 400,000 shares of common stock to purchase 70% of the entire issued
share capital of World Exchanges Inc. (''World Exchanges''), which provides
English training programs, English test preparation courses and overseas study
and consulting services through its five existing ''Group Entities''.
World Exchanges will establish a Wholly Foreign Owned Enterprise (''WFOE'')
as its English education headquarters to operate World Exchanges College of
Language (''WECL'') English Education business. WECL works closely with local
universities to promote its on-campus language instruction programs that
create a total English language environment in Chinese universities to enhance
practical English skills and English examination skills for students. In
addition, WECL also provides part-time language training programs, test
preparation programs as well as overseas study and consulting services for
students.
''In this quarter, we experienced robust growth of our on-site education
business due to the fast expansion of our onsite vocational education business
and tutoring business,'' said Mr. Yu, ''We believe the acquisition of World
Exchanges will become a significant factor that will drive our vocational
education segment to further supplement the online business, which will
continue to grow steadily. We plan to establish another ten WECL branches in
addition to setting up over 20 vocational training branches in 2008.''
Conference Call
The Company will host a conference call to discuss its first quarter 2008
results at 8:00 a.m. Eastern Time on Friday, May 16, 2008. The management team
will be on the call to discuss quarterly results and highlights and to answer
questions. The toll-free number for U.S. participants is 800-688-0796.
International participants can dial 617-614-4070. Passcode 182 629 76.
The conference call will also be webcast live over the Internet and can be
accessed by all interested parties by using the following link:
http://phx.corporate-ir.net/playerlink.zhtml?c=178111&s=wm&e=1852386 . To
listen to the call, please visit this link at least 15 minutes prior to the
start of the call to register, download and install any necessary audio
software. For those unable to participate during the live webcast, it will be
archived using the same link for 90 days.
If you are unable to participate in the call at this time, a replay will
be available for fourteen days starting on Friday, May 16 at 10:00 a.m.
Eastern Time. To access the replay, dial 888-286-8010, international callers
should dial 617-801-6888, and enter the passcode 844 289 23.
About China Education Alliance, Inc.
The Company is an educational resource company offering high-quality
educational programs and training through both online networks and an on-site
training center. The Company's products include online test preparation
materials, researchers' materials, study guides, and audio recordings,
vocational training services and vocational certifications. The Company
conducts educational services through three main channels: a large educational
online portal, educational software and media, and education and vocational
training centers. The Company is currently selling educational products and
services to families, provincial education officials, administrators, schools
and teachers inChina. The Company's website is:
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 Below --
China Education Alliance, Inc. and Subsidiaries
Consolidated Balance Sheet
March 31, December 31,
2008 2007
ASSETS (unaudited)
Current Assets
Cash and cash equivalents $17,733,949 $11,778,954
Advances to related parties -- 108,536
Prepaid expenses 707,619 1,612,779
Total current assets 18,441,568 13,500,269
Property and equipment, net 6,227,965 6,186,824
Franchise rights 883,201 579,864
Intangible, net 40,965 43,696
$25,593,699 $20,310,653
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $406,870 $423,109
Deferred revenues 1,123,339 1,245,507
Total current liabilities 1,530,209 1,668,616
Stockholders' Equity
Preferred stock ($0.001 par value, 20,000,000
shares authorized, 7,597,645 and 9,397,645
issued and outstanding, respectively,
aggregate liquidation preference of $2,717,152
and $3,383,152, respectively) 3,010,144 3,677,944
Common stock ($0.001 par value, 150,000,000
shares authorized, 21,492,631 and 19,409,830,
issued and outstanding, respectively) 21,493 19,410
Additional paid-in capital 9,711,386 6,378,110
Statutory reserve
Accumulated other comprehensive income 2,083,512 1,243,541
Retained earnings 9,236,955 7,323,032
Total stockholders' equity 24,063,490 18,642,037
$ $25,593,699 $ $20,310,653
China Education Alliance, Inc. and Subsidiaries
Consolidated Statements of Operations
For Three Months Ended March 31, 2008 and 2007
(Unaudited)
Three Months Ended March 31,
2008 2007
Revenues
Online education revenues $3,086,785 $2,626,668
Training center revenues 983,632 459,559
Total revenue 4,070,417 3,086,227
Cost of Goods Sold
Online education costs 425,042 667,747
Training center costs 399,590 218,564
Total cost of goods sold 824,632 886,311
Gross Profit
Online education gross profit 2,661,743 1,958,921
Training center gross profit 584,042 240,995
Total gross profit 3,245,785 2,199,916
Operating Expenses
Selling expenses 1,197,335 750,438
Administrative 307,362 157,663
Depreciation and amortization 197,658 106,125
Total operating expenses 1,702,355 1,014,226
Other Income (Expense)
Value-added tax refund 521,829 --
Interest income 24,908 5,627
Interest expense -- (104,497)
Total other income (expense) 546,737 (98,870)
Net Income Before Provision for Income Tax 2,090,167 1,086,820
Provision for Income Taxes 176,244 83,907
Net Income $1,913,923 $1,002,913
Basic Earnings Per Share $0.09 $0.05
Diluted Earnings Per Share $0.08 $0.05
Basic Weighted Average Shares Outstanding 20,898,901 19,314,333
Diluted Weighted Average Shares Outstanding 24,861,752 19,356,361
The Components of Other Comprehensive Income
Net income $1,913,923 $1,002,913
Foreign currency translation adjustment 839,971 258,766
Comprehensive Income $2,753,894 $1,261,679
China Education Alliance, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
2008 2007
Cash flows from operating activities
Net Income $1,913,923 $1,002,913
Adjustments to reconcile net cash
provided by operating activities
Depreciation and amortization 304,081 153,120
Amortization of loan discount -
warrants attached to loans -- 81,563
Warrants issued for services -- 7,876
Stock issued for services -- 15,900
Net change in assets and liabilities
Other receivables -- 54,206
Prepaid expenses and other 508,985 429,227
Advances from related parties 108,536 (952)
Accounts payable and accrued liabilities (16,239) 76,578
Deferred revenue (122,168) (104,767)
Net cash provided by operating activities 2,697,118 1,715,664
Cash flows from investing activities
Purchases of fixed assets (249,653) (25,986)
Cash flows from financing activities
Warrants exercised 2,667,559 --
Effect of exchange rate 839,971 90,200
Net increase in cash 5,954,995 1,779,878
Cash and cash equivalents at beginning
of year 11,778,954 1,838,339
Cash and cash equivalents at end of
year $17,733,949 $3,618,217
Supplemental disclosure of cash flow
information
Interest paid $-- $25,010
Taxes paid $94,737 $--
Value of warrants issued for services $-- $7,876
Non-cash investing and financing activities
Conversion of preferred stock to common $667,800 $--
For more information, please contact:
Company Contact:
Mr. Xiqun Yu
Chairman and CEO
China Education Alliance, Inc.
Tel: +86-451-8233-5794
Email: yxq@edu-chn.com
Investor Relations Contact:
Mr. Crocker Coulson
President
CCG Elite Investor Relations
Tel: +1-646-213-1915 (NY Office)
Email: crocker.coulson@ccgir.com
Web: htp://www.ccgelite.com
SOURCE China Education Alliance, Inc.
Copyright © 2008, PRNewswire
Copyright © 2008, NewsBlaze,
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