Yangtze Telecom Corp.

Yangtze Telecom Corp.

December 03, 2007 03:17 ET

Yangtze Telecom Acquires Technology Company in Mobile Value-Added Services

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 3, 2007) - Yangtze Telecom Corp. (TSX VENTURE:SMS) is pleased to announce that it has entered into a share exchange agreement, subject to TSX-V Exchange acceptance, with China Poly Group Limited, a Hong Kong entity, to acquire a 95% equity interest in Hunchun VAS Company Limited (HCVAS), which is based in Jilin, China. HCVAS is in the business of commercializing technologies in mobile value-added services. It currently owns two patents in China; a push-to-talk (PTT) technology over cellular (PoC) and a mobile phone controlled biometric technology in security systems.

Under the Agreement, Yangtze will initially issue 10 million common shares on closing, and additional shares over a two-year period on an earn-out basis. The earn-out formula calls for the issuance, after the end of every fiscal quarter, of one common share of Yangtze for every $0.30 in net profit contributed by HCVAS to Yangtze from December 1, 2007 to November 30, 2009, calculated in accordance with Canadian GAAP as reported in Yangtze's quarterly financial statements. The limit on the number of shares issued under this earn-out formula is 50 million shares, which would be fully earned when the net profit contributed by HCVAS reaches $15 million cumulatively during this two year period. The net asset value of HCVAS as at December 1, 2007 was approximately $5.7 million, which includes a cash balance of over $5 million.

"We are very excited to reach agreement to acquire HCVAS, a company with these two unique patents in the mobile VAS space. With our experience of working with China Mobile and China Unicom in major provinces and cities, we are confident that with the technology from HCVAS, Yangtze will become the first operator of PoC business in China," said Kevin He, CEO of Yangtze Telecom Corp.

"HCVAS is pleased with the synergy of working with Yangtze, which has its roots in mobile/telecom VAS and extensive working relationships with telephone operators. As a public company with ready access to capital, this will accelerate the growth of HCVAS as we step up our investment in the PoC business," said Wu Chunqiu, CEO of HCVAS.

About Yangtze Telecom Corp.

Yangtze Telecom Corp. is a provider of telecom value-added services and wireless digital TV services for consumers and businesses in China and Mongolia. The Company is focused on business applications utilizing a combination of satellite platforms, the internet, and wireless data communication technologies. Key applications to date are the Credit Management System, Wireless digital broadcasting and Distance Learning. For further information on Yangtze Telecom Corp., please visit the Company's web site at www.yangtzetelecom.com.

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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