Trading Symbols (LMD:TSX V; LNGMF:OTC BB) 151 Bloor St West Kenzo Oriental Tower 11K Suite 890 48 Dongzhimenwai Dajie Toronto, Ontario Dongcheng District Canada M5S 1S4 Beijing 100027 China Tel : +1.416.927.7000 Tel: +011.8610.5160.0689 Fax : +1.416.927.1222 Fax: +011.8610.5160.0788 www.lingomedia.com | |
PRESS RELEASE | FOR IMMEDIATE RELEASE |
Lingo Media Reports 2005 Year End Result
Toronto, Canada, May 2, 2006 -Lingo Media Inc. (LMD: TSX V; LNGMF: OTC BB) (the “Company” or “Lingo Media”), announces its financial results for the year ended December 31, 2005.
The 2005 year-end results compared with 2004, reported in Canadian dollars, are as follows:
Consolidated Balance Sheets
(Expressed in Canadian dollars)
As At December 31 | 2005 | 2004 |
Assets | ||
Current assets: | ||
Cash | $ 144,337 | $ 29,791 |
Accounts and grants receivable | 488,303 | 562,558 |
Inventory | 34,084 | 23,291 |
Prepaid and sundry assets | 134,348 | 133,833 |
801,072 | 749,473 | |
Investment and advances | 182,520 | - |
Deferred costs | 117,102 | - |
Property and equipment, net | 48,770 | 54,491 |
Development costs, net | 408,633 | 489,325 |
Acquired publishing content, net | 53,003 | 123,673 |
$ 1,611,100 | $ 1,416,962 | |
Liabilities and Shareholders’ Equity | ||
Current liabilities: | ||
Bank loan | $ 110,000 | $ 90,000 |
Accounts payable | 247,547 | 252,726 |
Accrued liabilities | 63,844 | 58,000 |
Loans payable | 101,929 | 77,762 |
523,320 | 478,488 | |
Shareholders’ equity: | ||
Capital stock | 3,996,971 | 3,367,119 |
Contributed surplus | 288,437 | 74,100 |
Warrants | 30,849 | - |
Deficit | (3,228,477) | (2,502,745) |
1,087,780 | 938,474 | |
Commitments | ||
$ 1,611,100 | $ 1,416,962 |
Consolidated Statements of Operations
For the years ended December 31 | 2005 | 2004 |
Revenue | $ 906,357 | $ 589,654 |
Direct costs | 123,107 | 94,990 |
Margin | 783,250 | 494,664 |
Expenses: | ||
General and administrative | 855,118 | 651,232 |
Amortization | 267,819 | 488,776 |
Interest and other financial expenses | 42,869 | 19,931 |
Stock-based compensation | 214,337 | 52,176 |
1,380,143 | 1,212,115 | |
Loss before income taxes and other taxes | (596,893) | (717,451) |
Income taxes and other taxes | 128,839 | 77,926 |
Net loss for the year | (725,732) | (795,377) |
Loss per share | $ (0.03) | $ (0.04) |
Weighted average number of Common shares outstanding | 24,711,619 | 22,626,746 |
Consolidated Statements of Cash Flows
For the years ended December 31 | 2005 | 2004 |
Cash flows provided by (used in): | ||
Operations: | ||
Net loss for the year | $ (725,732) | $ (795,377) |
Items not affecting cash: | ||
Amortization of property and equipment | 12,278 | 9,078 |
Amortization of development costs | 184,797 | 377,903 |
Amortization of acquired publishing content | 70,670 | 70,670 |
Amortization of software development costs | - | 31,046 |
Stock-based compensation | 214,337 | 52,176 |
Change in non-cash balances related to operations: | ||
Accounts and grants receivable | 74,255 | (34,466) |
Inventory | (10,793) | 5,818 |
Prepaid and sundry assets | (514) | (99,849) |
Accounts payable | (5,181) | 107,529 |
Accrued liabilities | 5,845 | 25,952 |
Interest payable | (833) | 2,762 |
Cash used by operating activities | (180,871) | (246,758) |
Financing: | ||
Increas4e in bank loan | 20,000 | 90,000 |
Increase in loans payable | 248,500 | 290,000 |
Repayment of loans payable | (223,500) | (215,000) |
Issuance of capital stock | 745,800 | 93,517 |
Share issue costs | (85,099) | (32,191) |
Cash provided by financing activities | 705,701 | 226,326 |
Investing: | ||
Investment and advances | (182,520) | - |
Purchase of property and equipment | (6,556) | (21,725) |
Deferred costs | (117,102) | - |
Development costs | (104,106) | (160,554) |
Cash used in investing activities | (410,284) | (182,279) |
Increase in cash | 114,546 | (202,711) |
Cash, beginning of year | 29,791 | 232,502 |
Cash, end of year | $ 144,337 | $ 29,791 |
Supplemental cash flow information: | ||
Income taxes and other taxes paid | $ 157,121 | $ 41,189 |
Interest paid | $ 9,838 | $ 11,368 |
The notes are an integral part of the financial statements and as such should be read in conjunction with the complete annual audited financial statements and Management’s Discussion and Analysis for the year ended December 31, 2005 available at www.sedar.com.
During the fiscal year 2005, Lingo Media focused on its core royalty co-publishing business with People’s Education Press in China and continued to pursue its China Expansion Plan.
Highlights of the year are as follows:
·
Revenues increased by 53% over 2004 fiscal year end.
·
Maintained the Company’s dominant market share of over 60% of the primary English language learning textbook market in China through its co-publishing agreement with People’s Education Press selling its 100 millionthcopy.
·
Signed the Company’s first Sino-Foreign JV with Sanlong Cultural Communication Co. Ltd. for a 51% ownership interest in the Hebei Jintu Education Book Co. Ltd. Joint Venture (“Jintu JV”). To date, this Joint Venture has received approvals from the General Administration of Press and Publications Bureau and from the Ministry of Commerce and is currently awaiting its business license registration expected by the end of Q2 2006.
·
Signed a second Sino-Foreign JV Agreement with Liaoning Publishing Group for a 51% ownership interest in an English language learning product and services joint venture awaiting Chinese regulatory approval. Liaoning Publishing Group is a RMB 3.645 billion (US$450 million) Chinese publishing conglomerate headquartered in Shenyang, Liaoning Province, PRC.
·
Developing new English language learning programs and is pursuing co-publishing agreements with PEP and other Chinese publishers.
·
Enhanced our Board of Directors with the addition of Nereida Flannery, a market entry and relationship expert based in China.
Michael Kraft, President & CEO of Lingo Media, commented on the results, “We have started to develop two new English language learning programs and are confident that we can secure strong co-publishing partners and incremental revenues through this organic growth strategy during the second half of 2006. Under our China Expansion Plan, the Jintu JV will provide increased revenue and establish a new distribution channel, which will serve as a valuable direct-to-consumer selling platform. In 2006, we plan to add new products such as newspapers and magazines which will transform our co-publishing royalty business into an integrated publishing and distribution company with increased top-line sales.”
About Lingo Media
Lingo Media is a leading publisher of English language learning programs in China, incorporating print, audio/video cassette and CD-based products for students and teachers from pre-school through university. Founded in 1996, Lingo Media has an established presence in the Chinese educational market of more than 200 million English language students. To date, over 100 million units from Lingo Media's library of more than 285 program titles have been published and sold in China. While Lingo Media remains focused on its royalty-based educational publishing business, it is advancing its China Expansion Plan to establish itself as a distributor of educational print media including books, newspapers and magazines in China.
For further information, contact:
Michael P. Kraft, President & CEO
Tel: (416) 927-7000, ext. 23
Toll Free Tel: (866) 927-7011
Email: investor@lingomedia.com
To learn more, visitwww.lingomedia.com
Portions of this press release include "forward-looking statements", which may be understood as any statement other than a statement of historical fact. Forward-looking statements contained in this press release are made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from management's expectations and projections expressed in this press release. Certain factors that can affect the Company's ability to achieve projected results are described in the Company's Annual Report 20-F and other reports filed with the Securities and Exchange Commission.
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