HARBIN, China, Nov. 19, 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 third quarter
2014 financial results.
Financial Highlights for
the Third Quarter ended September 30, 2014
- Total revenues decreased by 34% to $1.1
million.
- Net loss of $14.4 million.
- Loss per share was $1.36 per
fully diluted share.
Third Quarter 2014 Review
Revenue decreased by $0.56
million, or 34% to $1.1
million for the quarter ended September 30, 2014 from $1.6 million during the same period in 2013.
Revenue from the on-line education division decreased by
$0.4 million, or 73%, to $0.1 million for the quarter ended September 30, 2014 from $0.5 million for the quarter ended September 30, 2013. Revenue from the
training center division decreased by $0.2
million, or 16%, to $0.9
million for the quarter ended September 30, 2014 from $1.1 million for the quarter ended September 30, 2013.
The decline in revenue for the quarter ended September 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. However, we believe the rise of the online education
industry in China presents a good
opportunity for us to improve and develop our online education
business. We have been focusing on the development of our online
education business and recently launched the online education
platform - "China Education Cloud Platform", which we had been
building over the past few years.
During the initial operation of the platform, we will offer free
access to the platform to teachers and students with an aim to
quickly develop the user base, establish an interactive teaching
and learning platform and further achieve a leading position within
the industry. After this initial promotion period, we will share
with teachers and educational institutions the platform usage,
maintenance and service fees paid by students. Within the next
year, we target to contract up to
one thousand educational institutions and reputable teachers in
China who will use our platform
and services to offer live or on demand online courses. We believe
we will be able to attract more students to use our platform
through extensive partnership with more schools and teachers. We
are optimistic about the future profitability of the platform and
believe that our revenue will improve following the initial
promotion period of this platform.
Overall cost of revenue decreased by $0.4
million, or 18% to $1.6
million for the quarter ended September 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 22% to $1.1 million for the quarter ended September 30, 2014 from $1.4 million for the same period in 2013. The
decrease was primarily due to the decrease in purchase of study
materials and decrease in depreciation costs resulting from
decreased expenditure on fixed assets. While we strive to provide
high-quality and update-to-date online materials, we continue to
control cost of revenue for the online education division by
closely monitoring the variable costs while maintaining fixed costs
at a stable level.
Cost of revenue for the training center division decreased
$0.1 million, or 12% to $0.6 million for the quarter ended September 30, 2014 from $0.7 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 September 30,
2014 as compared to the quarter ended September 30, 2013.
Gross profit margin for the training center division decreased
to 37% for the quarter ended September 30,
2014 from 40% during the same period in 2013 as cost of
revenue did not decrease as much as revenue.
Selling expenses decreased by $0.3
million, or 8%, to $3.4
million in the third quarter of 2014 as compared with the
third quarter of 2013. Selling expenses were 317% of total sales in
the third quarter of 2014 compared with 201% in the third quarter
of 2013. The decrease in selling expenses was mainly due to the
decrease in labor costs as a result of the cut-down in the number
of sales and marketing personnel. During the quarter ended
September 30, 2014, we continued 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 larger user base as quickly as possible.
Administrative expenses increased by $6.7
million, or 215% to $9.7
million for the quarter ended September 30, 2014 from $3.1 million for the quarter ended
September 30, 2013. This was mainly
due to the increase in research and development expenses primarily
consisting of bonuses of approximately $4.5
million granted to our research and development staff for
the development and launch of the web-based platform. In the future
we expect the administrative expenses to continue to increase
because we will incur ongoing maintenance expenses for the
web-based platform.
Net loss for the third quarter of 2014 was $14.4 million compared to net loss of
$7.8 million for the third quarter of
2013. Basic and diluted loss per share was $1.36 for the third quarter of 2014 compared to
loss per share of $0.74 for the third
quarter of 2013.
Financial Position
As of September 30, 2014, the
Company had cash and cash equivalents of $30.7 million.
As of September 30, 2014, the Company
had no long-term debt.
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
+86-186-6812-0018
Email: cloris@edu-chn.com
SOURCE China Education Alliance, Inc.