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| ||Tue May 1, 2007|
China Education Resources Inc. Announces Year-End Audited Financial Results
| ||VANCOUVER, BC - May 1, 2007 - Vancouver-based, China Education Resources Inc. (CER, the Company) (TSX-V: CHN), today announced its audited financial results for the year ended December 31, 2006.|
HIGHLIGHTS FOR 2006
- CER, together with the Curriculum Development Centre of China's Ministry of Education, developed a new teacher training model combining traditional teaching methods with leading edge technology offering video streaming and allowing teachers to interact with each other and with leading subject matter experts.
- The viability of the new teacher model both from a pedagogical and financial viewpoint was confirmed with the launch of a 10,000 teacher training program in the summer of 2006, furthering CER's goal of developing the standard for teacher training in China.
- Working with Apple Inc., CER increased its training capacity to reach 500,000 teachers simultaneously.
- CER now has the world's largest kindergarten to grade 12 teacher blogger system.
- The credibility of the CERSP portal was furthered affirmed by the endorsement of the Ministry of Education as a recommended portal for use by China's educational system.
- CER sold one of its subsidiaries in the textbook distribution business Northern Education Books Ltd. (NEB) and purchased the remaining 13% interest in its main operating subsidiary, Today's Teacher Technology & Culture Ltd. (TTTC), allowing CER to focus its efforts on the development of its education portal (www.CERSP.com).
YEAR END RESULTS (all figures in $U.S.)
- CER reported total revenues of $1.43 million for 2006 as compared to $6.01 million in 2005. The decrease was due to CER's phasing out of its traditional textbook distribution business and redirecting its efforts to portal development.
- Selling and administrative costs increased from $1.18 million to $1.83 million, due to an increase in accounting, legal, advertising and promotion fees and an increase in salaries as CER hired more people to assist with portal development.
- Expenses associated with stock based compensation increased from $91,039 in 2005 to $585,304 in 2006 as all outstanding options were vested and the fair value of these options were expensed using the Black Scholes option processing method.
- CER set up a provision for bad debt of $656,141 relating to the uncertainties of the collectibility of 2 loans made to companies in China. If these loans are subsequently collected, the proceeds will be brought into revenue.
- The net loss for 2006 was $2.57 million as compared to $.71 million in 2005. Basic and diluted EPS for the year was (0.0696) and (0.022) respectively.
- The net loss for 2006 before non-cash and one time charges was $1.03 million.
As of December 31, 2006, the Company had cash and cash equivalents of $2.56 million as compared to $2.81 million as at December 31, 2005. Capital expenditures on the portal totaled $1.86 million during the year.
Chengfeng Zhou, Chairman and CEO, said "Throughout 2006 and part of 2007, China Education Resources Inc., has been in a transitional period, having transformed ourselves from a traditional textbook distribution company to an online education product and service provider. We are developing and will continue to develop a number of revenue streams through our CERSP portal; I am pleased to say that our recent success with our teacher training program has confirmed the viability of this revenue stream. I believe that with leading edge publishing technology through our use of Web 2.0, that our online distribution of educational materials will be a significant contributor in the future. The recent launch of our instant messaging utility (EM) has also been very encouraging. Given our unique positioning in the education sector, I am confident that the use of EM will increase significantly over time, giving us another potential revenue stream.
From a financial and accounting point of view, while we incurred a loss of some $2.6 million, approximately $1.35 million involved non-cash expenses. We have also been very conservative in our valuation of assets with the objective of 'cleaning up' our balance sheet to better position ourselves in coming years.
I am very excited about the prospects for the China Education Resources Inc., and believe that we are well on our way to developing China's leading educational portal in the kindergarten to grade 12 area."
ABOUT CHINA EDUCATION RESOURCES INC.
In collaboration with China's Ministry of Education Curriculum Development Center, China Education Resources Inc., (CER), is helping to transform the curriculum of the world's largest educational system. Recognizing the need for centralization and increased accessibility to address the Chinese Central government's 2000 education reform policy changes, China Education Resource Inc. has created educational tools and curricula for China's entire kindergarten through twelfth grade system. By implementing the government's goal of converting the existing educational system from memory-based learning to creative thinking and utilizing a more interactive approach to embrace a world-based economy, CER has played an integral part in positioning China's educational system to reach new heights.
SAFE HARBOR STATEMENT:
This press release contains certain forward-looking statements that reflect the current views and/or expectations of China Education Resources Inc. with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.
The TSX Venture Exchange has not reviewed, and does not accept, responsibility for the adequacy or accuracy of the contents of this press release.
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China Education Resources Inc.
(P) 604.683.6865 (F) 604.681.5636
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