Welcome!

Microsoft Cloud Authors: John Basso, Liz McMillan, Pat Romanski, Elizabeth White, Mihai Corbuleac

News Feed Item

China Education Alliance Announces Second Quarter 2014 Financial Results

HARBIN, China, Aug. 14, 2014 /PRNewswire/ -- China Education Alliance, Inc. ("China Education Alliance" or the "Company", OTCQX: CEAI), a China-based education resource and services company, today announced its second quarter 2014 financial results.  The Company will host a conference call on Monday, August 18, 2014, at 8 a.m. EDT (8 p.m. Beijing time the same day).

Financial Highlights for the Second Quarter ended June 30, 2014

  • Total revenues decreased by 69% to $0.6 million.
  • Net loss of $7.4 million.
  • Loss per share was $0.70 per fully diluted share.

"Facing with fierce competition and changing market demand, our business has been experiencing a slowdown in the past few years. However, our management team has been trying their best to explore opportunities or adjust business strategy to improve our performance, including the development of a cloud-based online platform and the establishment and optimization of new training centers. We are hopeful that these efforts will lead to improved revenues and better business prospective in the near future,"  said Mr. Xiqun Yu, Chairman and Chief Executive Officer of China Education Alliance.

Second Quarter 2014 Review:

Revenue decreased by $1.3 million, or 69% to $0.6 million for the quarter ended June 30, 2014 from $1.9 million during the same period in 2013.

Revenue from the on-line education division decreased by $0.6 million, or 83%, to $0.1 million for the quarter ended June 30, 2014 from $0.8 million for the quarter ended June 30, 2013.  Revenue from the training center division decreased by $0.7 million, or 60%, to $0.5 million for the quarter ended June 30, 2014 from $1.1 million for the quarter ended June 30, 2013.

The decline in revenue for the quarter ended June 30, 2014 was a result of decline in revenue across all of our business. We believe the main reason was our continuously weakening brand recognition in the main targeted market and the inability of our existing online education products to meet changing market demand. In addition, the lack of experience of newly opened centers in on-site training, limited expansion capacity, coupled with fierce competition from the top education brands, make it very difficult to establish our brand value in a short period of time.

At present, online education is more widely recognized and accepted by students and educational institutions. We believe online education will gain more popularity in the next three to five years. Therefore, we have spent the past few years building an online education platform and are currently in the process of testing the platform. Many students and teachers have participated in the testing and like the platform for its complete functions and advanced technologies. The platform is expected to be officially launched on by the end of September, 2014. During the initial operation of the platform, we will offer teachers and students free access to the platform for six months or a year to quickly develop the user base and establish a large database. After this initial promotion period, we will share with teachers the platform usage fee and service fee paid by students. We believe that our revenue will improve following the initial promotion period of this platform. In addition, instead of setting up more new training centers, we changed our strategy to focus on integrating and optimizing our existing resources in the training center division in order to maintain our current market share in an increasingly competitive environment..

Overall cost of revenue decreased by $0.5 million, or 27% to $1.5 million for the quarter ended June 30, 2014 from $2.0 million for the same period in 2013.

Cost of revenue for the online education division decreased by $0.3 million, or 24% to $1.1 million for the quarter ended June 30, 2014 from $1.4 million for the same period in 2013. The decrease in cost of revenue was in tandem with the decrease in revenue. However, cost of revenue did not drop in direct proportion with the decline in revenue as the Company had to purchase new study materials to maintain competitiveness. The Company also incurred certain fixed costs to maintain the accuracy and competitiveness of its online materials. In addition, in light of the launch of the platform by the end of September this year, the cost of revenue for online education division, mainly salaries and maintenance costs, is expected to increase for the following year. To effectively control cost of revenue for the online education division, the Company will continue to closely monitor the variable costs while maintaining fixed costs at a stable level.

Cost of revenue for the training center division decreased $0.2 million, or 34% to $0.4 million for the quarter ended June 30, 2014 from $0.6 million for the same period in 2013. The decrease in cost of revenue was mainly due to a decrease in teachers' salary as the Company's teachers are paid by the number of classes they teach and there was a decrease in classes offered during the quarter ended June 30, 2014 as compared to the quarter ended June 30, 2013.

Gross profit margin for the training center division decreased to 18% for the quarter ended June 30, 2013 from 50% during the same period in 2013 as cost of revenue did not decrease as much as revenue.

Gross loss for the second quarter of 2014 was $0.9 million compared to $69 thousand for the second quarter 2013.

Selling expenses decreased by $51 thousand, or 4%, to $1.2 million in the second quarter of 2014 as compared with the second quarter of 2013. Selling expenses were 201% of total sales in the second quarter of 2014 compared with 65% in the second quarter of 2013. The decrease in selling expenses was mainly due to the decrease in labor costs as a result of cut down in the number of sales and marketing personnel. During the June 30, 2014 Quarter, we continue to focus on rebuilding our brand name and reputation, through advertising via media, online and onsite promotion, handouts, brochures, etc. We expect our selling expenses to increase because we will incur marketing and advertising expenses to promote our new platform and develop a large user base.

Administrative expenses increased by $3.2 million, or 171% to $5.0 million for the quarter ended June 30, 2014 from $1.8 million for the quarter ended June 30, 2013. This was mainly due to the research and development expenses relating to the development of the web-based platform, office expenses, and labor costs throughout the period. In the future we expect the administrative expenses to continue to increase because: 1) we will incur maintenance expenses for the web-based platform after it being successfully launched; 2) we will incur expenses associated with the expansion of our onsite training centers for purposes of gaining more market shares.

Net loss for the second quarter of 2014 was $7.4 million compared to net loss of $3.7 million for the second quarter of 2013. Basic and diluted loss per share was $0.70 for the second quarter of 2014 compared to loss per share of $0.35 for the second quarter of 2013.

Financial Position

As of June 30, 2014, the Company had cash and cash equivalents of $42.6 million. As of June 30, 2014, the Company had no long-term debt.

Conference Call

China Education Alliance will host a conference call and live webcast to discuss its second quarter 2014 financial results at 8 a.m. Eastern Daylight Time (EDT) on Monday, August 18, 2014 (8 p.m. in Harbin/Beijing on the same day).

The dial-in details for the live conference call are as follows:

- Participant Dial-In (Toll Free USA): 1-866-519-4004
- International Dial-In: +65-6723-9381
- China Dial-In:  800-819-0121
- China Dial-In: 400-620-8038
- Hong Kong Toll Free: 8009-30346
  Conference Password: CEU

A live webcast of the conference call will be available in the investor relations section of the Company's website at: http://www.chinaeducationalliance.com/index.jsp. A telephone replay of the call will be available 1 hour after the end of the conference for seven days.

The dial-in details for the replay are as follows:

- US Toll Free:  1-855-452-5696
- International Toll:  +61-2-8199-0299
  Passcode Number: 32871463

About China Education Alliance, Inc.

China Education Alliance, Inc. (http://www.chinaeducationalliance.com) is a leading educational services company offering high-quality instructors and online education materials for students between the ages of 6 to 18 and adults (university students and professionals) aged 18 and over. Divided into two segments, students and graduate professionals, our business model delivers the skills and knowledge necessary to excel in a rapidly growing and highly competitive China. The Company provides students in the first segment with online education materials sourced from top tier schools and famous instructors for download, as well as online training and tutoring services. With teaching centers located across China, the Company also offers hands on training and tutoring to aid Chinese students pass the two most important tests they will face in their educational careers: the senior high school entrance and college entrance exams. In the second segment for graduates and professionals, China Education Alliance provides vocational training courses in subjects including IT, administration, multimedia, as well as several professional training programs.

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 2009 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, 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:

China Education Alliance, Inc.
Ms. Cloris Li
Chief Financial Officer
Email: [email protected]

 

China Education Alliance, Inc. and Subsidiaries

Consolidated Balance Sheets












June 30,


December 31,





2014


2013





(Unaudited)



ASSETS








Current Assets






Cash and cash equivalents

$

42,589,275

$

56,377,154


Accounts receivable


22,724


-


Other receivables


581,304


262,547


Prepaid expenses and other current assets


703,954


727,708



Total current assets


43,897,257


57,367,409








Non-current Assets






Property and equipment, net


7,939,425


8,251,612


Intangibles and capitalized software, net


4,635,416


5,099,934



Total non-current assets


12,574,841


13,351,546










Total Assets

$

56,472,098

$

70,718,955








LIABILITIES AND STOCKHOLDERS' EQUITY








Current Liabilities






Accounts payable and accrued expenses

$

435,365

$

1,076,625


Deferred revenue


1,172,637


854,027


Income tax and other taxes payable


218,348


111,500



Total current liabilities


1,826,350


2,042,152









Commitments and Contingent Liabilities


-


-








Stockholders' Equity






Common stock ($0.001 par value, 150,000,000 shares authorized, 10,582,530 and 10,582,530 issued as of June30, 2014 and December 31, 2013, respectively; 137,512 and 137,512 shares held in treasury, as of June30, 2014 and December 31, 2013, respectively)

10,583


10,583


Additional paid-in capital


40,942,009


40,942,009


Statutory reserve


3,792,161


3,792,161


Retained earnings


(1,852,176)


11,516,661


Accumulated other comprehensive income


12,253,850


12,705,287


Less: Treasury stock


(977,072)


(977,072)



Stockholders' equity - CEAI and Subsidiaries


54,169,355


67,989,629


Noncontrolling interests in subsidiaries


476,393


687,174



Total stockholders' equity


54,645,748


68,676,803










Total Liabilities and Stockholders' Equity

$

56,472,098

$

70,718,955








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

 

 

China Education Alliance, Inc. and Subsidiaries

 Consolidated Statements of Operations and Comprehensive Income

(Unaudited)





Three months ended June 30,



Six months ended June 30,





2014


2013



2014


2013













Revenue











Online education revenue

$

130,383

$

767,888


$

257,647

$

1,394,599


Training center revenue


459,155


1,142,759



1,056,585


2,958,580


Other revenue


-


-





-



Total revenue


589,538


1,910,647



1,314,232


4,353,179













Cost of Revenue











Online education costs


1,072,595


1,409,183



2,107,464


2,763,504


Training center costs


377,479


570,107



775,004


1,286,952


Other costs


-


-





-



Total cost of revenue


1,450,074


1,979,290



2,882,468


4,050,456













Gross Profit/(Loss)











Online education gross profit/(loss)


(942,212)


(641,295)



(1,849,817)


(1,368,905)


Training center gross profit


81,676


572,652



281,581


1,671,628


Other gross profit


-


-



-


-



Total gross profit/(loss)


(860,536)


(68,643)



(1,568,236)


302,723













Operating Expenses











Selling expenses


1,185,254


1,236,637



2,395,702


2,336,139


Administrative expenses


5,001,944


1,846,937



8,704,791


3,496,898


Depreciation and amortization


523,968


785,847



1,016,164


1,594,219



Total operating expenses


6,711,166


3,869,421



12,116,657


7,427,256













Loss from operations


(7,571,702)


(3,938,064)



(13,684,893)


(7,124,533)













Other Income (Expense)











Other income(expenses), net


9,967


(1,090)



38,023


(2,807)


Loss on disposal of property and equipment


(10,709)


(7,363)



(16,162)


(10,132)


Impairment loss on intangible assets


-


-



-


(606,032)


Interest income


42,284


58,678



87,870


110,394



Total other income/(Expense), net


41,542


50,225



109,731


(508,577)













Net Loss Before Provision for Income Tax


(7,530,160)


(3,887,839)



(13,575,162)


(7,633,110)


Income taxes:












Current


-


-



-


-



Deferred


-


-



-


-













Net Loss


(7,530,160)


(3,887,839)



(13,575,162)


(7,633,110)


Net Loss attributable to the noncontrolling interests


(138,388)


(147,991)



(206,325)


(190,243)

Net Loss - attributable to CEAI and Subsidiaries

$

(7,391,772)

$

(3,739,848)


$

(13,368,837)

$

(7,442,867)













Net Loss per common stock-basic and diluted

$

(0.70)

$

(0.35)


$

(1.26)

$

(0.70)













Weighted Average Shares Outstanding-basic and diluted


10,582,530


10,582,530



10,582,530


10,582,530













The Components of Other Comprehensive Income











Net Loss

$

(7,391,772)

$

(3,739,848)


$

(13,368,837)

$

(7,442,867)


Foreign currency translation adjustment


60,654


1,271,607



(451,437)


1,789,284













Comprehensive Loss

$

(7,331,118)

$

(2,468,241)


$

(13,820,274)

$

(5,653,583)













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

 

 

China Education Alliance, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)














Six Months ended June 30,






2014


2013









Cash flows from operating activities






Net loss

$

(13,575,162)

$

(7,633,110)


Adjustments to reconcile net loss to net cash used in







operating activities








Depreciation and amortization - operating expenses


1,016,164


1,496,222




Depreciation and amortization - cost of revenue


875,902


1,375,335




Loss on disposal of fixed assets


16,162


10,132




Bad debt written off on other receivables


-


-




Impairment loss on intangible assets


-


606,032




Stock based compensation


-


794


Net changes in operating assets and liabilities







Accounts receivable


(22,586)


(76,128)



Prepaid expenses and other receivables


(300,171)


237,990



Deferred tax assets


-


-



Accounts payable and accrued liabilities


(631,355)


(137,570)



Income tax and other taxes payable


106,848


(67,984)



Deferred revenue


322,784


(97,793)

Net cash used in operating activities


(12,191,414)


(4,286,080)









Cash flows from investing activities






Purchases of property and equipment


(1,205,116)


(35,235)


Loan received back from NIT


-


8,013,462


Proceeds from disposal of property and equipment


2,602


1,186

Net cash (used in) provided by investing activities


(1,202,514)


7,979,413









Cash flows from financing activities






Advance to a stockholder


-


-


Dividend paid to noncontrolling shareholders


-


(352,592)

Net cash used in financing activities


-


(352,592)









Effect of exchange rate changes on cash


(393,951)


1,380,701









Net increase (decrease) in cash and cash equivalents


(13,787,879)


4,721,442









Cash and cash equivalents at beginning of period


56,377,154


64,172,917









Cash and cash equivalents at end of period

$

42,589,275

$

68,894,359









Supplemental disclosure of cash flow information






Income tax paid

$

-

$

93,858









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

 

SOURCE China Education Alliance, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develo...
SYS-CON Events announced today that MangoApps will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device.
Basho Technologies has announced the latest release of Basho Riak TS, version 1.3. Riak TS is an enterprise-grade NoSQL database optimized for Internet of Things (IoT). The open source version enables developers to download the software for free and use it in production as well as make contributions to the code and develop applications around Riak TS. Enhancements to Riak TS make it quick, easy and cost-effective to spin up an instance to test new ideas and build IoT applications. In addition to...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
"We've discovered that after shows 80% if leads that people get, 80% of the conversations end up on the show floor, meaning people forget about it, people forget who they talk to, people forget that there are actual business opportunities to be had here so we try to help out and keep the conversations going," explained Jeff Mesnik, Founder and President of ContentMX, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
“delaPlex Software provides software outsourcing services. We have a hybrid model where we have onshore developers and project managers that we can place anywhere in the U.S. or in Europe,” explained Manish Sachdeva, CEO at delaPlex Software, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
From wearable activity trackers to fantasy e-sports, data and technology are transforming the way athletes train for the game and fans engage with their teams. In his session at @ThingsExpo, will present key data findings from leading sports organizations San Francisco 49ers, Orlando Magic NBA team. By utilizing data analytics these sports orgs have recognized new revenue streams, doubled its fan base and streamlined costs at its stadiums. John Paul is the CEO and Founder of VenueNext. Prior ...
IoT is rapidly changing the way enterprises are using data to improve business decision-making. In order to derive business value, organizations must unlock insights from the data gathered and then act on these. In their session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, and Peter Shashkin, Head of Development Department at EastBanc Technologies, discussed how one organization leveraged IoT, cloud technology and data analysis to improve customer experiences and effi...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform and how we integrate our thinking to solve complicated problems. In his session at 19th Cloud Expo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm ...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Big Data engines are powering a lot of service businesses right now. Data is collected from users from wearable technologies, web behaviors, purchase behavior as well as several arbitrary data points we’d never think of. The demand for faster and bigger engines to crunch and serve up the data to services is growing exponentially. You see a LOT of correlation between “Cloud” and “Big Data” but on Big Data and “Hybrid,” where hybrid hosting is the sanest approach to the Big Data Infrastructure pro...
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
With 15% of enterprises adopting a hybrid IT strategy, you need to set a plan to integrate hybrid cloud throughout your infrastructure. In his session at 18th Cloud Expo, Steven Dreher, Director of Solutions Architecture at Green House Data, discussed how to plan for shifting resource requirements, overcome challenges, and implement hybrid IT alongside your existing data center assets. Highlights included anticipating workload, cost and resource calculations, integrating services on both sides...
"We are a well-established player in the application life cycle management market and we also have a very strong version control product," stated Flint Brenton, CEO of CollabNet,, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Unless your company can spend a lot of money on new technology, re-engineering your environment and hiring a comprehensive cybersecurity team, you will most likely move to the cloud or seek external service partnerships. In his session at 18th Cloud Expo, Darren Guccione, CEO of Keeper Security, revealed what you need to know when it comes to encryption in the cloud.
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
What are the successful IoT innovations from emerging markets? What are the unique challenges and opportunities from these markets? How did the constraints in connectivity among others lead to groundbreaking insights? In her session at @ThingsExpo, Carmen Feliciano, a Principal at AMDG, will answer all these questions and share how you can apply IoT best practices and frameworks from the emerging markets to your own business.
Ask someone to architect an Internet of Things (IoT) solution and you are guaranteed to see a reference to the cloud. This would lead you to believe that IoT requires the cloud to exist. However, there are many IoT use cases where the cloud is not feasible or desirable. In his session at @ThingsExpo, Dave McCarthy, Director of Products at Bsquare Corporation, will discuss the strategies that exist to extend intelligence directly to IoT devices and sensors, freeing them from the constraints of ...
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...