Lingo Media Inc.
OTC Bulletin Board : LNGMF
TSX VENTURE : LMD
OTC Bulletin Board : LINGMF

Lingo Media Inc.

March 29, 2005 18:01 ET

Lingo Media Announces Restatement of First Three Quarters of 2004 and 2003 Due to Revised Accounting Policy


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: LINGO MEDIA

TSX VENTURE SYMBOL: LMD
OTC Bulletin Board SYMBOL: LNGMF

MARCH 29, 2005 - 18:01 ET

Lingo Media Announces Restatement of First Three
Quarters of 2004 and 2003 Due to Revised Accounting
Policy

TORONTO, CANADA--(CCNMatthews - March 29, 2005) - Lingo Media Inc. (TSX
VENTURE:LMD)(OTCBB:LNGMF) (the "Company" or "Lingo Media") announces
that it has amended and restated its financial statements for the first
three quarters of fiscal 2004 and 2003 as a result of a revision of its
policy for recognition of revenues on a quarterly basis. The summary of
these changes is highlighted in the table below:



Reported Revenues

2004
-----------------------------------

Q1 Q2 Q3
-----------------------------------
Canada $ 7,624 $ 15,448 $ 13,846
China 195,411 284,757 192,066

-----------------------------------
$ 203,035 $ 300,205 $ 205,912
-----------------------------------
-----------------------------------

Restated Revenues

2004
-----------------------------------

Q1 Q2 Q3
-----------------------------------
Canada $ 7,624 $ 15,448 $ 13,846
China - 215,462 -

-----------------------------------
$ 7,624 $ 230,910 $ 13,846
-----------------------------------
-----------------------------------


Reported Revenues

2003
-------------------------------------------------------
Year Ended
December 31,
Q1 Q2 Q3 Q4 2003
-------------------------------------------------------
Canada $ 6,424 $ 9,728 $ 8,271 $ 5,461 $ 29,884
China 218,209 258,763 209,105 301,856 987,933

---------------------------------------------------------------------
$ 224,633 $ 268,491 $ 217,376 $ 307,317 $ 1,017,817
---------------------------------------------------------------------
---------------------------------------------------------------------

Restated Revenues

2003
-------------------------------------------------------
Year Ended
December 31,
Q1 Q2 Q3 Q4 2003
-------------------------------------------------------
Canada $ 6,424 $ 9,728 $ 8,271 $ 5,461 $ 29,884
China - 476,972 - 510,961 987,933

---------------------------------------------------------------------
$ 6,424 $ 486,700 $ 8,271 $ 516,422 $ 1,017,817
---------------------------------------------------------------------
---------------------------------------------------------------------


For greater detail and revised financial statements, see www.sedar.com.
The management discussion and analysis on these re-stated financial
statements will be available and posted on www.sedar.com by April 15,
2005.

Lingo Media earns its royalty revenue in China from its key customer,
People's Education Press ("PEP"), a Chinese State-Owned Educational
Publisher on the following basis:

- Finished Product Sales - PEP prints and sells Lingo Media's English
language learning programs to provincial distributors in China;

- Licensing Sales - PEP licenses Lingo Media's English language learning
programs to provincial publishers who then print and sell the programs
to provincial distributors in China.

Lingo Media earns a significantly higher royalty rate from Finished
Product Sales compared to Licensing Sales.

In accordance with a Co-Publishing Agreement between PEP and Lingo
Media, PEP pays to Lingo Media a royalty on print runs of Finished
Product Sales and a royalty on actual revenues of Licensing Sales. PEP
provides Lingo Media with print run reconciliations on a semi-annual
basis as their reporting systems are unable to provide quarterly sales
information. Under the Co-Publishing Agreement, Lingo Media is entitled
to invoice PEP on a quarterly basis at 40% of the prior six months
actual sales. Consequently, Lingo Media historically recorded estimates
for Q1 and Q3 revenues based upon an amount that is equal to 40% of the
prior six months royalties reported by PEP. PEP then provides a
reconciliation of the royalty revenues for Q1 and Q2 by the end of
August and for Q3 and Q4 by the end of March. These estimates have
historically been close to actual results.

During 2004, the Chinese State Ministry of Education ("MOE") mandated
PEP to increase its market share by shifting from Finished Product Sales
to Licensing Sales. The Company was only informed of this change in
2005. As a result of this new MOE stance, PEP had significantly reduced
the size of its print runs for Finished Product Sales in 2004 and is now
focusing on Licensing Sales. The impact of this new policy stance
resulted in significantly lower revenues from Finished Product Sales and
only a marginal increase in Licensing Sales revenues in 2004. Given this
change in the royalty revenue mix, the Company will no longer record
revenues based on estimates and will only recognize revenues based on
reconciliations provided by PEP on a semi-annual basis.

The Company has implemented a revision in its revenue recognition policy
on a retroactive basis. Lingo Media will now only recognize revenue at
the end of June and at the end of December when it can reconcile to
actual royalty revenues reported by PEP. Funds received for Q1 and Q3
will be recorded as customer advances and not as revenues. The Company
has re-stated its Q1, Q2 and Q3 2004 financial statements to reflect
this revision.

For 2003, the above revision of revenue recognition resulted in
different numbers for Q1, Q2 and Q3 being recorded. However, the
aggregate revenues for the fiscal year did not change. For 2004, the
same revenue recognition change is now reflected in Q1, Q2 and Q3 as
shown in the above table. The Company, however, expects that there will
be an overall reduction in revenue in fiscal 2004 in comparison with
fiscal 2003.

PEP has recently provided Lingo Media with reconciled royalty amounts
for 2004. Revenues from Licensing Sales increased marginally as a result
of the MOE's new stance and at the same time revenues from Finished
Product Sales declined significantly. The decline in royalty revenue
from Finished Product Sales was not off set by the increase in royalty
revenue from Licensing Sales. The Company plans to release its December
31, 2004 year-end audited results prior to April 30, 2005. Lingo Media
expects this shift from Finished Product Sales to Licensing Sales to
continue in future periods as long as the MOE stance remains in effect
and expects future Licensing Sales to increase and future Finished
Products Sales to decrease which will result in an overall revenue
reduction from these sources.

About Lingo Media Inc.

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 90 million units from Lingo Media's library of more than
250 program titles have been published and sold in China.

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.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Lingo Media Inc.
    Khurram Qureshi
    CFO
    (416) 927-7000 ext. 25 or Toll Free: (866) 927-7011
    Email: investor@lingomedia.com
    Website: www.lingomedia.com
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this press release.