Yangtze Telecom Corp.

Yangtze Telecom Corp.

May 29, 2006 20:15 ET

Yangtze Telecom Announces 1st Quarter 2006 Financial Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 29, 2006) - Yangtze Telecom Corp. (TSX VENTURE:SMS) today reported its financial results for three months ended March 31, 2006. The Company operates through two subsidiaries in China - wholly-owned Wuhan Chengxi Information Technology Company Ltd. ("ChengXi") and 65%-owned China United Telecom Technology Company ("UTT"). All dollar amounts are in Canadian dollars unless otherwise noted.

Revenue for the 1st quarter in 2006 was $1,185,000, a 271% increase over the same quarter last year or a 59% increase from the 4th quarter in 2005. Revenue consists of $1,144,000 from UTT and $41,000 from Wuhan ChengXi. The large increase in sales from UTT was all attributed to a strong performance in the education business, which accounted for 97% of the sales in the quarter. The Company issued, during the first 3 months in 2006, 596 certificates to CFO graduates, compared with 597 for the last six months in 2005, and 1,120 certificates to distance learning graduates in various programs, compared with 3,654 for the year of 2005. Sales of $41,000 from Wuhan Chengxi all came from voice information services which saw a decrease of 28% from the 4th quarter in 2005.

The consolidated net loss for the 1st quarter in 2006 was $343,000. UTT made a profit of $65,000. ChengXi accounted for $148,000 of the loss. Canadian head office expenses were higher at $182,000 because of $51,000 in one time filing fees and foreign exchange loss from the private placement. Non-cash stock-based compensation expense totaled $55,000 for the quarter. The financial condition of the company improved during the quarter with the completion of the non-brokered private placement of 15,000,000 shares at $0.18 for total proceeds of $2,700,000. Working capital increased by $2,375,000 during the quarter with current assets at the end of 1st quarter equal to $4,116,000 ($1,718,000 in 4Q 2005) vs. current liabilities of $295,000 ($272,000 in 4Q 2005).

"Two significant events happened in the 1st quarter. First, the completion of the private placement for $2.7 millions in January and second, signing the Asset Purchase Agreement in March to enter the wireless TV business in Ulanbataar, Mongolia," said Kevin He, CEO of Yangtze Telecom. "The Company subsequently completed the purchase in early May and we are now fully engaged in shipping the equipment in, getting the hardware set up and tested. The set top boxes are being ordered from a large Taiwanese manufacturer and we are geared towards a rollout of the service in July. While Mongolia might have a relatively small target population, any degree of success with this subscription revenue business model will open up opportunities elsewhere."

Yangtze Telecom's 2006 first quarter report and Management's Discussion and Analysis are accessible on the Company's web site (www.yangtzetelecom.com) and on SEDAR (www.sedar.com).

About Yangtze Telecom Corp.

Yangtze Telecom Corp. is a provider of value-added services for mobile and fixed phone business and consumer customers in China. The Company is focused on the business applications utilizing a combination of SMS, internet and data broadcast 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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