[X]
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
for the quarterly period ended September 30,
2005
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[
]
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
for the transition period from _______ to
_______
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North
Carolina
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56-2012361
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(State
or other jurisdiction of
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(IRS
Employer identification No.)
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incorporation
or organization)
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Page
No.
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PART
I
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Item
1. Financial
Statements
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3
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-
As of September
30, 2005
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4
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-
Three-Month and Nine-Month Periods Ended September
30, 2005 and the period from August 9, 2004 (Inception) to September
30,
2004
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5
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-
Nine-Months Period Ended September
30, 2005 and the period from August 9, 2004 (Inception) to September
30,
2004
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6
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11
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Item
3. Controls
and Procedures
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17
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PART
II
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Item
1. Legal
Proceedings
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19
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Item
2. Changes
in Securities
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19
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Item
3. Defaults
Upon Senior Securities
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19
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19
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Item
5. Other
Information
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19
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Item
6. Exhibits
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19
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CHINA
EDUCATION ALLIANCE, INC. AND SUBSIDIARIES
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||||
Condensed
Consolidated Balance Sheet
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||||
As
of September 30, 2005 (Unaudited)
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||||
ASSETS
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||||
CURRENT
ASSETS
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||||
Cash
and cash equivalents
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$
|
363,727
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||
Accounts
receivable, net of allowances
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18,421
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|||
Inventories,
net
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17,128
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|||
Deposit
on purchase of a property
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369,914
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|||
Other
receivables
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308
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|||
TOTAL
CURRENT ASSETS
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769,498
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|||
PROPERTY
AND EQUIPMENT
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||||
Property
and equipment
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2,629,880
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|||
Accumulated
depreciation
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(180,046
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)
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||
PROPERTY
AND EQUIPMENT, NET
|
2,449,834
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|||
TOTAL
ASSETS
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$
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3,219,332
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||
LIABILITIES
AND STOCKHOLDERS' EQUITY
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||||
CURRENT
LIABILITIES
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||||
Other
payables and accrued liabilities
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32,866
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|||
Convertible
note payable
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70,000
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|||
Income
taxes payable
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237,627
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|||
TOTAL
CURRENT LIABILITIES
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340,493
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|||
STOCKHOLDERS'
EQUITY
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||||
Preferred
stock ($0.001 par value, 5,000,000 shares authorized:
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||||
none
issued and outstanding)
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-
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|||
Common
stock ($0.001 par value, 150,000,000 shares authorized:
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||||
57,915,000
issued and outstanding)
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57,915
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|||
Additional
paid-in capital
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2,431,747
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|||
Retained
earnings
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350,930
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|||
Accumulated
other comprehensive income
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9,747
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|||
Due
to stockholders
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28,500
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|||
TOTAL
STOCKHOLDERS' EQUITY
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2,878,839
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|||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
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$
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3,219,332
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||
The
accompanying notes are an integral part of these consolidated financial
statements
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CHINA
EDUCATION ALLIANCE, INC. AND SUBSIDIARIES
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||||||||||||||||
Condensed
Consolidated Statement of Operations and Comprehensive Income (Unaudited)
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For
the three and nine months ended September 30, 2005 and period from
August
9, 2004 (Inception)
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||||||||||||||||
to
September 30, 2004
(Unaudited)
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||||||||||||||||
Period
from
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Period
from
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Three
months
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August
9, 2004
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Nine
months
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August
9, 2004
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|||||
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ended
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(Inception)
to
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ended
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(Inception)
to
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|||||
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September
30,
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September
30,
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September
30,
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September
30,
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|||||
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2005
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2004
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2005
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2004
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||||||
REVENUES:
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||||||||||||||||
Sales
of debit cards
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$
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699,999
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-
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$
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1,064,027
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$
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-
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|||||||||
Tuition
fees
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200,233
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-
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200,233
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-
|
||||||||||||
Technical
service income
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27,052
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-
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27,052
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-
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||||||||||||
Advertising
income
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91,736
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-
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91,736
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-
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||||||||||||
1,019,020
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-
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1,383,048
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-
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|||||||||||||
COST
OF REVENUES
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(477,445
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)
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-
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(533,739
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)
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-
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||||||||||
GROSS
PROFIT
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541,575
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-
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849,309
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-
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OPERATING
EXPENSES:
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Selling,
general and administrative expenses
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36,191
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-
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57,354
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-
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||||||||||||
Professional
fees
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3,500
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-
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10,500
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-
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||||||||||||
Depreciation
and amortization
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26,240
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-
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76,338
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-
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||||||||||||
TOTAL
OPERATING EXPENSES
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65,931
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-
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144,192
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-
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||||||||||||
INCOME
FROM OPERATIONS
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475,644
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-
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705,117
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-
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||||||||||||
OTHER
INCOME (EXPENSES):
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||||||||||||||||
Interest
income
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6
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-
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266
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-
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||||||||||||
Interest
expense
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(635
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)
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-
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(5,818
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)
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-
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||||||||||
Other
expense
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(51
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)
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(8
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)
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(1,287
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)
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(8
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)
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||||||||
TOTAL
OTHER INCOME (EXPENSES)
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(680
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)
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(8
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)
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(6,839
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)
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(8
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)
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||||||||
INCOME
(LOSS) BEFORE INCOME TAXES
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474,964
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(8
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)
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698,278
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(8
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)
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||||||||||
INCOME
TAX EXPENSE
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(159,913
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)
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-
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(237,627
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)
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-
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||||||||||
NET
INCOME (LOSS)
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315,051
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(8
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)
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460,651
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(8
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)
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OTHER
COMPREHENSIVE INCOME
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||||||||||||||||
Foreign
currency translation income
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9,747
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-
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9,747
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-
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||||||||||||
COMPREHENSIVE
INCOME (LOSS)
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$
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324,798
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(8
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)
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$
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470,398
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$
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(8
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)
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Basic
and fully diluted net income per common share
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$
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0.01
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*
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$
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0.01
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$
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*
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|||||||||
Basic
and fully diluted weighted average shares
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57,915,000
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55,000,000
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57,915,000
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55,000,000
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||||||||||||
*Less
than $0.01
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||||||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements
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CHINA
EDUCATION ALLIANCE, INC. AND SUBSIDIARIES
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|||||||
Condensed
Consolidated Statement of Cash Flows
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|||||||
For
the nine months ended September 30, 2005 and period from August
9, 2004
(Inception)
|
|||||||
to
September 30, 2004 (Unaudited)
|
|||||||
2005
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2004
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income (loss)
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$
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460,651
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$
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(8
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)
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Adjustments
to reconcile net income (loss) to net
|
|||||||
cash
provided by (used in) operating activities:
|
|||||||
Depreciation-cost
of goods sold
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71,189
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-
|
|||||
Depreciation
and amortization
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76,338
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-
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|||||
(Increase)
decrease in operating assets:
|
|||||||
Accounts
receivable
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(18,421
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)
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-
|
||||
Inventories
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(5,963
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)
|
-
|
||||
Deposit
on purchase a property
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(369,914
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)
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-
|
||||
Other
receivables
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(308
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)
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-
|
||||
Increase
(decrease) in operating liabilities:
|
|||||||
Income
taxes payable
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235,430
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-
|
|||||
Other
payables and accrued liabilities
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9,422
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-
|
|||||
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
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458,424
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(8
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)
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchase
of properties and equipments
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(222,281
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)
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-
|
||||
NET
CASH USED IN INVESTING ACTIVITIES
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(222,281
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)
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-
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Insuance
of common stock
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-
|
55,000
|
|||||
Increase
in additional paid-in capital
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23,778
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5,386
|
|||||
Payment
on convertible note
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(19,182
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)
|
-
|
||||
Due
to stockholders
|
23,500
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-
|
|||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
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28,096
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60,386
|
|||||
EFFECT
OF EXCHANGE RATE ON CASH
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9,747
|
-
|
|||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
273,986
|
60,378
|
|||||
CASH
AND CASH EQUIVALENTS:
|
|||||||
Beginning
of period
|
89,741
|
-
|
|||||
End
of period
|
$
|
363,727
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$
|
60,378
|
|||
Cash
paid during the period for interest expense
|
$
|
5,818
|
$
|
-
|
|||
Cash
paid during the period for income taxes
|
$
|
2,197
|
$
|
-
|
|||
The
accompanying notes are an integral part of these consolidated financial
statements
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(1)
|
The
balance sheet consists of the net assets of the acquirer at historical
cost and the net assets of the acquiree at historical
cost.
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(2)
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The
statement of operations includes the operations of the acquirer for
the
periods presented and the operations of the acquiree from the date
of the
merger.
|
September
|
|
|
|
||||
|
|
30,
2005
|
|
December
31,
|
|
||
|
|
(Unaudited)
|
|
2004
|
|||
Accounts
receivable
|
$
|
18,421
|
$
|
-
|
|||
Less:
allowance for doubtful accounts
|
-
|
-
|
|||||
$
|
18,421
|
$
|
-
|
September
|
|
|
|
||||
|
|
30,
2005
|
|
December
|
|
||
|
|
(Unaudited)
|
|
31,
2004
|
|||
Debit
cards
|
$
|
17,128
|
$
|
11,165
|
|||
Less:
provision of obsolescence
|
-
|
-
|
|||||
$
|
17,128
|
$
|
11,165
|
September
|
|
|
|
||||
|
|
30,
2005
|
|
December
|
|
||
|
|
(Unaudited)
|
|
31,
2004
|
|||
Note
payable
|
$
|
70,000
|
$
|
89,192
|
|
|
Technical
|
|
|||||||||||||
|
Sales
of
|
Tuition
|
Advertising
|
service
|
|
|||||||||||
|
debit
cards
|
fees
|
income
|
income
|
Total
|
|||||||||||
2005
|
||||||||||||||||
Three
months ended September 30, 2005
|
||||||||||||||||
Sales
|
$
|
699,999
|
$
|
200,233
|
$
|
91,736
|
$
|
27,052
|
$
|
1,019,020
|
||||||
Gross
profit
|
312,462
|
110,410
|
91,736
|
26,968
|
541,576
|
|||||||||||
Depreciation
and amortization
|
49,191
|
779
|
-
|
-
|
49,970
|
|||||||||||
Nine
months ended September 30, 2005
|
||||||||||||||||
Sales
|
1,064,027
|
200,233
|
91,736
|
27,052
|
1,383,048
|
|||||||||||
Gross
profit
|
626,647
|
110,410
|
91,736
|
26,968
|
855,761
|
|||||||||||
Depreciation
and amortization
|
146,748
|
779
|
-
|
-
|
147,527
|
|||||||||||
As
of September 30, 2005
|
||||||||||||||||
Total
assets
|
2,729,722
|
184,862
|
235,346
|
69,402
|
3,219,332
|
|||||||||||
Additions
to long-lived assets
|
-
|
222,281
|
-
|
-
|
222,281
|
|||||||||||
2004
|
||||||||||||||||
Three
months ended September 30, 2004
|
||||||||||||||||
Sales
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Gross
profit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Depreciation
and amortization
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Nine
months ended September 30, 2004
|
||||||||||||||||
Sales
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Gross
profit
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Depreciation
and amortization
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
As
of September 30, 2004
|
||||||||||||||||
Total
assets
|
60,378
|
-
|
-
|
-
|
60,378
|
|||||||||||
Additions
to long-lived assets
|
-
|
-
|
-
|
-
|
-
|
-
|
Buildup
of infrastructure to ensure fast access and to satisfy the volume
coming
with increasing demand ;
|
-
|
Boost
market shares via nation-wide advertising campaigns;
|
-
|
Investment
in the education training remediation
program.
|
-
|
Investment in human resources to improve the quality of
services;
|
-
|
Opening branch offices in key
cities.
|
|
|
|
|
CHINA
EDUCATION ALLIANCE, INC.
(Registrant)
|
|
|
|
|
Date: November
18, 2005
|
By:
|
/s/ Yu,
Xi Qun
|
|
Yu,
Xi Qun
President
|