15. Commitments and Contingencies We are presently involved in two putative class action lawsuits filed in the U.S. District Court for the Central District of California. The first action, Apicella v. China Education Alliance, Inc., et al., No. 10-cv-09239 (CAS)(JCx), was filed on December 2, 2010; the second action, Clemens v. China Education Alliance, Inc., et al., No. 10-cv-09987 (JFW)(AGRx), was filed on December 28, 2010. On March 2, 2011, both actions were consolidated in In re China Education Alliance, Inc. Securities Litigation, No. 10-cv-09239 (CAS) (JCx)(C.D. Cal.). The Consolidated Amended Complaint alleges that we and the other defendants are liable under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 for allegedly false and misleading statements and omissions in our public filings between 2008 and 2010 and in an investor conference call in December 2010. The Consolidated Amended Complaint also asserts claims under Section 20(a) of the Securities Exchange Act of 1934 against the individual defendants. The Court denied the company's motion to dismiss the Consolidated Amended Complaint on October 11, 2011. In addition, on October 28, 2011, a derivative lawsuit was filed on behalf of the company in the U.S. District Court for the Central District of California against the individuals named as defendants in the securities class action lawsuit for alleged breaches of fiduciary duties based on similar facts as alleged in the class action. The derivative lawsuit is Padnos v. Yu, et al., No. 11-cv-8973 (C.D. Cal.). If we were to be subsequently involved in more litigation proceedings, and/or we are unable to settle these lawsuits or any other similar lawsuits on terms favorable to us and/or if adverse judgments were to be levied against us, our profitability could be severely impacted. Also, these lawsuits could result in substantial costs, potential liabilities and the diversion of management s attention and resources and result in a material adverse effect on our financial condition