CHINA INTERACTIVE ED (OTC:CIVN)

Third Quarter 2010 Financial Highlights

• Revenues increased 117% quarter over quarter to $11.6 million

• Gross profit decreased 9% quarter over quarter to $3.5 million, representing a 30% gross margin

• Operating income decreased 21% quarter over quarter to $2.8 million, with a 24% operating profit margin

• Net income decreased 27% to $2.2 million, or $0.03 earnings per basic and diluted share

"The demand for our Interactive Classroom Solutions ("ICS") remains healthy and we are optimistic about the market potential of our products," commented Mr. Ruofei Chen, CEO of China Interactive Education. "Our ICS product line is well-received by our customers and we believe that it will generate additional follow-on opportunities next year when classrooms are due for equipment upgrade or replacement. With the positive returns generated from the initial marketing expenditure made in the first quarter under our brand name "Five Best Student," we continued to devote resources to engage in further marketing during the quarter. We believe this will help to contribute to our long-term growth as additional customers become aware of our products. In the Education Learning Product ("ELP") segment, our competitor began to lower its prices during the quarter faster than we had anticipated. As a result, revenue generated from this segment has been adversely affected. However, the retail distribution channels for our ELPs remained healthy and we expect that this will provide us with up-sell opportunities as we roll-out additional products next year."

Mr. Ruofei Chen further remarked, "During the quarter, we concentrated our efforts on filling orders that with the shortest cash turnaround cycle, and accepting fewer larger orders with a longer cash turnaround cycle, in order to maintain a healthy cash flow cycle.  Several of our expected contracts with local governments have been delayed as we continue to negotiate with such parties on payment terms.   Therefore, we are updating our guidance for 2010 revenue in the range of $52 - $54 million with net income in the range of $8.3 - $9.0 million.