UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November
19, 2014
CHINA EDUCATION ALLIANCE, INC.
(Exact name of
registrant as specified in its charter)
North Carolina
(State or other jurisdiction of
incorporation) |
001-34386
(Commission
File Number) |
56-2012361
(IRS Employer
Identification No.) |
58 Heng Shan Road, Kun Lun Shopping
Mall
Harbin, People’s Republic of
China
(Address of principal executive offices) |
|
150090
(Zip Code) |
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Registrant’s telephone number, including
area code: 86-451-8233-5794
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. |
Results of Operations and Financial Condition. |
On November 19, 2014,
China Education Alliance, Inc., a North Carolina corporation (the “Company”), announced its results of operations for
the third quarter ended September 30, 2014. A copy of the press release is annexed as Exhibit 99.1 hereto.
In accordance with
General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall
not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s
filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or
after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set
forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
99.1 |
Press release, dated November 19, 2014, issued by China Education Alliance, Inc. |
SIGNATURES
Pursuant to the requirements of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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CHINA EDUCATION ALLIANCE, INC. |
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Dated: November 25, 2014 |
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By: |
/s/Xiqun Yu |
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Name: |
Xiqun Yu |
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Title: |
Chief Executive Officer |
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Exhibit 99.1
China Education Alliance Announces Third
Quarter 2014 Financial Results
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
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