HARBIN, Heilongjiang, China, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- China Education Alliance, Inc. (OTC Bulletin Board: CEUA) ("China Education Alliance" or "the Company"), a leading distributor of exam oriented educational resources, offering high-quality materials and training and tutoring services through both online networks and on-site training center in China, today reported financial results for the third quarter ended September 30, 2008.

Xiqun Yu, Chairman and CEO of China Education Alliance, commented, "We experienced a significant increase in revenue this quarter led by our online education business as we continue to dominate the online education business in Heilongjiang Province and expand into surrounding provinces. In the third quarter 2008, we successfully executed on our expansion plan in the cities of Mu Dan Jiang and Qi Qi Ha Er. China Education Alliance continues to leverage its expertise in the education sector, maintain a strong balance sheet, and ability to access capital to further enhance its market position."

Financial Results for the Third Quarter ended September 30, 2008

For the third quarter 2008, China Education Alliance reported net revenue of $7.1 million, representing a 39.2% increase over $5.1 million revenue reported in the third quarter of 2007 and a 57.8% increase over the $4.5 million revenue reported in the second quarter of 2008. The increase in revenue was attributed to an increase of $1.5 million from on-line business and an increase of $0.5 million from on-site business. In addition, we have several new programs in vocational training including two new on-site training centers in Mu Dan Jiang and Qi Qi Ha Er.

Gross profit increased to $5.8 million in the third quarter, up 41.4% from $4.1 million in the same quarter of 2007 and up 56.8% from the $3.7 million in the second quarter of 2008. Gross margin was 80.7% in the third quarter of 2008, down 0.2 basis points year-over-year and down 2.8 basis points, sequentially.

Net income for the third quarter of 2008 was $2.8 million, up 27.3% from $2.2 million in the same period last year, and up 64.7% from $1.7 million in the previous quarter. This represents fully diluted earnings per share of $0.11, compared to $0.11 in the third quarter of 2007, and $0.07 in the second quarter of 2008.

Operating income for the third quarter of 2008 was $2.9 million, up 38% from $2.1 million in the same period last year, and up 61% from $1.8 million in the previous quarter.

As of September 30, 2008, China Education Alliance, Inc. had $20 million in cash and cash equivalents, $21.7 million in working capital, and no long- term debt. Shareholders' equity was approximately $30 million up from $18.6 million at December 31, 2007. The company generated $6.3 million in cash flow from operating activities in the third quarter of 2008.

Financial Results for the Nine Months ended September 30, 2008

For the first nine months of 2008, total revenue was $15.7 million, up 25.6% from $12.5 million in the previous year. Online education revenue was $12.1 million, up 21% from $10 million in the previous year and represented 77% of total revenue. The training center business contributed 23% of revenue or $3.6 million, as compared to 38.5% of revenue or $2.6 million for the first nine months of 2007. Gross profit for the first nine months of 2008 was $12.7 million, up 29.6% from gross profit of $9.8 million in the comparable period a year ago. Gross margin was 81.2% compared to 78.4% for the first nine months of 2007. Income from operations for the nine-months of 2008 was $6.2 million, up 19.2% from $5.2 million from the year ago period. Net income for the first nine months of 2008 was $6.3 million or $0.26 fully diluted earnings per share compared to $4.5 million or $0.22 for the comparable 2007 period.

Business Outlook

Mr. Yu commented, "In the third quarter, despite a challenging economic environment, we experienced significant growth in both online and on site exam orientated training. We continue to make progress in the expansion and establishment of additional English language and vocational training centers.

Despite the difficult financial economic environment, we continue to see opportunities for growth going into 2009. We remain fully confident that we can continue our growth trend in the final quarter of 2008 and into 2009. We will continue to provide exam-oriented education by targeting the 10 million students, ages 7-18, in the northeast region of China, and increasing our market share in these areas. We will continue to expand our language training business and expect to reach our stated goal of 10 branches by the end of 2008 and 20 total branches by the end of 2009. In addition, Scientific Discovery is expected to generate considerable revenues in Q4, and will continue to help us promote the China Education Alliance brand and facilitate our nationwide expansion."

Investor Conference Call / Webcast Details

The Company's management will review detailed third quarter 2008 results on Friday, November 14, 2008 at 8:30 AM EST (9:30 PM, Friday, November 14, Beijing time). The conference dial-in numbers are +1-617-213-8841 (international) and 1-866-202-0886 (U.S. domestic). The passcode to access the conference call is 37608714. The playback will be available beginning two hours after the conclusion of the conference call and will be accessible by dialing +1-617-801-6888 (international) and 1-888-286-8010 (U.S. domestic). The passcode number to access the replay is 30602427.

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 7 to 18 and adults ages 18+. For students ages 7 to 18, China Education Alliance, Inc. offers supplemental online exam-oriented training materials and on-site exam-oriented training and tutoring services. 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 11 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 Accounting training programs. In addition, as of April 2008, the Company has acquired 70% of the 'World Exchange College of Language' English training business, headquartered in Toronto with sites expanding across China. Their comprehensive English programs are designed 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 CEUA, 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 Attached-



               China Education Alliance, Inc. and Subsidiaries
                    Consolidated Statements of Operations


                             Three months ended         Nine months ended
                                September 30               September 30
                             2008         2007          2008         2007
                          (Unaudited)  (Unaudited)   (Unaudited)  (Unaudited)
    Revenues
    Online education
     revenues              $5,126,456   $3,613,550   $12,067,183   $9,958,203
    Training center
     revenues               2,019,933    1,474,969     3,608,317    2,566,298
    Total revenue           7,146,389    5,088,519    15,675,500   12,524,501

    Cost of Goods Sold
    Online education
     costs                    714,995      568,334     1,622,862    1,855,951
    Training center costs     667,066      402,225     1,321,523      848,314
    Total cost of goods
     Sold                   1,382,061      970,559     2,944,385    2,704,265

    Gross Profit
    Online education
     gross profit           4,411,461    3,045,216    10,444,321    8,102,252
    Training center gross
     profit                 1,352,867    1,072,744     2,286,794    1,717,984
    Total gross profit      5,764,328    4,117,960    12,731,115    9,820,236

    Operating Expenses
    Selling expenses        2,352,018    1,573,632     4,965,036    3,412,798
    Administrative            288,083      317,407       935,830      913,073
    Depreciation and
     amortization             264,988      128,124       680,819      341,301
    Total operating
     Expenses               2,905,089    2,019,163     6,581,685    4,667,172

    Other Income
     (Expense)
    Other Income                5,570      243,156       534,067      298,650
    Interest income            37,991       18,253        94,427       34,339
    Interest expense               --      (49,094)           --     (542,173)
    Total other income
     (expense)                 43,561      212,315       628,494     (209,184)

    Net Income Before
     Provision for Income
     Tax                    2,902,800    2,311,112     6,777,924    4,943,880

    Provision for Income
     Taxes
    Current                   145,889      158,469       451,097      395,214

    Net Income             $2,756,911   $2,152,643    $6,326,827   $4,548,666

    Basic Earnings Per
     Share                      $0.13        $0.11         $0.30        $0.24

    Basic Weighted
     Average Shares
     Outstanding           21,434,129   19,321,667    21,434,129   19,319,249

    Diluted Earnings Per
     Share                      $0.11        $0.11         $0.26        $0.22

    Diluted Weighted
     Average Shares
     Outstanding           24,176,509   20,284,937    24,796,069   20,282,519

    The Components of
     Other Comprehensive
     Income
    Net Income             $2,756,911   $2,152,643    $6,326,827   $4,548,666
    Foreign currency
     translation
     adjustment                80,723     (210,170)    1,412,564       48,596

    Comprehensive Income   $2,837,634   $1,942,473    $7,739,391   $4,597,262




               China Education Alliance, Inc. and Subsidiaries
                          Consolidated Balance Sheet

                                              September 30,      December 31,
                                                   2008              2007
                  ASSETS                        (unaudited)
    Current Assets
       Cash and cash equivalents               $20,048,307       $11,778,954
       Advances to related parties               1,052,269           108,536
       Other receivable                            296,276                --
       Prepaid expenses                          2,585,740         1,612,779
           Total current assets                 23,982,591        13,500,269

     Property and equipment, net                 6,374,735         6,186,824
     Intangible, net                             1,901,123           623,560
     Long term investment                          431,831                --

                                               $32,690,281       $20,310,653

    LIABILITIES AND STOCKHOLDERS' EQUITY

     Current Liabilities
       Accounts payable and accrued
        expenses                                  $712,727          $423,109
       Deferred revenues                         1,996,566         1,245,507
           Total current liabilities             2,709,293         1,668,616

     Stockholders' Equity
     Preferred stock ($0.001 par value,
      20,000,000 shares authorized, of
      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,
      21,892,631 and 19,409,830,
      issued and outstanding,
      respectively                                  21,893            19,410
     Additional paid-in capital                 10,642,986         6,378,110
     Statutory reserve
     Accumulated other comprehensive
      income                                     2,656,105         1,243,541
     Retained earnings                          13,649,860         7,323,032
     Total stockholders' equity                 29,980,988        18,642,037

                                               $32,690,281       $20,310,653



               China Education Alliance, Inc. and Subsidiaries
                    Consolidated Statements of Cash Flows


                                            Nine Months Ended September 30
                                                    2008              2007
                                                (Unaudited)       (Unaudited)
    Cash flows from operating activities
    Net Income                                  $6,326,827        $4,548,666
    Adjustments to reconcile net cash
     provided by operating activities
    Depreciation and amortization                1,193,275           601,441
    Amortization of loan discount -
     warrants attached to loans                         --           420,639
    Warrants issued for services                        --            12,371
    Stock issued for services                           --            15,900
    Other receivables                             (296,276)           40,535
    Prepaid expenses and other                    (972,961)          (90,338)
    Accounts payable and accrued
     Liabilities                                   289,618           239,609
    Deferred revenue                               751,059         1,468,542
    Net cash provided by operating activities    7,291,542         7,257,365

    Cash flows from investing activities
    Purchases of fixed assets                     (994,181)       (1,738,502)
    Purchases of intangible assets                (732,569)               --
    Long-term investment                          (431,831)               --
    Net Cash (used in) investing activities     (2,158,581)       (1,738,502)

    Cash flows from financing activities
    Warrants exercised                           2,667,559                --
    Proceeds from loans                                 --         3,400,000
    Payments on loans                                   --        (1,530,000)
    Advances from (payments to) related parties   (943,733)         (237,443)
    Net cash provided by financing activities    1,723,826         1,632,557

    Effect of exchange rate                      1,412,566           293,316

    Net increase in cash                         8,269,353         7,444,736

    Cash and cash equivalents at
     beginning of year                          11,778,954         1,838,339

    Cash and cash equivalents at end of year   $20,048,307        $9,283,075

    Supplemental disclosure of cash flow
     information:
        Interest paid                                  $--          $297,838
        Taxes paid                                 $94,737               $--
        Stock issued for Services                       --            15,900
        Value of warrants issued for services          $--           $12,371

    Non-cash investing and financing activities:
        Conversion of preferred stock to common   $667,800          $339,076



    For more information, please contact:

    China Education Alliance, Inc.
     Susan Liu
     Chief Financial Officer
     Tel:   +1-778-388-8513
     Email: susan@edu-chn.com

    Investor Relations:
     Lauren Milner
     The Ruth Group
     Tel:   +1-646-536-7026
     Email: lmilner@theruthgroup.com

SOURCE China Education Alliance, Inc.