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ePals reports wider Q4 loss on impairment charges; revenues more than double

Published: 20:44 29 Apr 2013 BST

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ePals Corp. (CVE:SLN), an education media company, reported a widened net loss in the fourth quarter on impairment charges as the company focused on expansion. 

Net loss for the three months that ended Dec. 31 widened to $14.1 million, or 9 cents a share, from $4.8 million, or 4 cents a share, in the year-earlier period, Herndon, Virgina-based company said in a statement on Monday.  

ePals ascribed the widened loss to a $6.7 million impairment of goodwill and intangible assets. The company recorded a $4.6 million impairment loss on goodwill and a $2.0 million impairment loss on other intangibles during last year, according to the statement.

Revenue for the Oct.-Dec. period more than doubled to $4.6 million.

The company added 1.5 million users in the fourth quarter, 116 percent more than the previous quarter's additions. As of Dec. 31, 2012, ePals had 11.1 million registered users, a 45 percent increase from the year earlier period, as the company expands worldwide. 

"In the fourth quarter ePals demonstrated traction with increased user growth and engagement, and set the stage for international growth through our initiatives in Europe and China," CEO Miles Gilburne said in the statement.

Subscriptions dropped 1 percent to 584,000 subscribers at the end of Dec. 31. The average revenue per user more than tripled, however, to $1.63 per user.

ePals shares were unchanged at 16 Canadian cents at the market close in Toronto on Friday. The stock has given up its value by more than half since the beginning of the year.

ePals offers social learning networks focused on the kindergarten to grade 12 market that connect millions of users in over 330,000 schools for collaboration around content and educational projects.  The company also publishes children's literature in physical and digital formats.

During the fourth quarter, ePals received approval and business license from the Chinese government for its joint venture with NeuEdu Co. and executed an additional agreement with Neusoft Publishing. The joint venture operates as NeuPals, and has been capitalized by its partners, ePals and NeuEdu Co., Ltd. 

The company executed initial launches of native language extensions of the ePals Global Community and focused on audience acquisition. Initial content relationships have been signed in Europe and discussions are underway with potential strategic partners and commercial sponsors for ePals Europe, it said in the statement.

In July, the company launched a digital app and publishing platform starting with its magazines Cricket and Babybug, which can be accessed on smartphones and tablet devices.

 

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