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City Network, Inc. Announces Financial Results for the Fiscal Year Ended December 31, 2005, Going Concern Qualification, and Resignation of Mr. Lai Tiao-Tsan

Mon, 24 Apr 2006, 20:24:00 EDT

Edited by Carly Zander

TAIPEI, Taiwan - April 24 (SEND2PRESS NEWSWIRE) -- City Network, Inc. (Amex: CSN), a company that designs, manufactures, and markets a comprehensive line of broadband and wireless Internet access solutions and consumer electronic products, announced financial results for the year end December 31, 2005. Net sales for the year ended December 31, 2005 totaled $14,320,409, compared to $15,674,613 for ten months ended December 31, 2004. The decrease in revenues for the year ended December 31, 2005 was due to a decline in the amount of sales of certain merchandise.

Net loss after tax was $1,057,476 or $0.038 per share for the year ended December 31, 2005, compared to net loss after tax of $964,660 or $.035 per share for the ten months ended December 31, 2004.

Furthermore, cost of revenue for the year ended December 31, 2005 totaled $12,881,717, compared to $14,924,938 for the ten months ended December 31, 2004. The decrease in cost of revenues was due to a decrease in sales.

The Company also announced that gross profit increased due to the higher margin of certain merchandise and their decline in cost but not their sales price for the year ended December 31, 2005.

The Company reported that its independent registered public accounting firm included an explanatory paragraph in their opinion in connection with the 2005 audit, relating to the Company's ability to continue as a going concern.

In addition, Mr. "Andy" Lai Tiao-Tsan announced that he will resign from his positions as the Company's Chairman, President and Chief Executive Officer and will be replaced by Ms. Alice Chen, who currently serves as a member of the board of directors of the Company and who will assume the responsibilities of Mr. Lai's positions immediately.


About City Network Inc.

For more information about City Network, Inc., please visit http://www.citynetwork.com.tw


Safe Harbor under the Private Securities Litigation Reform Act of 1995:

The statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including but not limited to risks associated with the uncertainty of future financial results, regulatory approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties as may be detailed in City Network's filings with the Securities and Exchange Commission.


CONSOLIDATED STATEMENTS OF INCOME
"FISCAL YEAR ENDED DECEMBER 31, 2005 AND TEN MONTHS ENDED DECEMBER 31, 2004"

                                               31-Dec-05      31-Dec-04



  Sales, net                                   $14,320,409    $15,674,613



  Cost of sales                                 12,881,717     14,924,938



  Gross Profit                                   1,438,692        749,675



  General and administrative expenses            1,535,808      1,395,388



  Income (loss) from operations                    -97,116       -645,713



  Other (Income) Expense

    Interest income                                 -8,985         -3,785

    Rental income                                 -187,020        -17,858

    Commission income                               -3,846           -281

    (Gain) loss on currency exchange                 9,721        -10,720

    Other income (expense)                          24,518        -32,120

    Reserve for bad debt                           848,517        185,858

    Equity in earnings of investee                  38,167        -58,330

    Miscellaneous                                   12,791          1,303

    Loss on sale of fixed assets                    78,247         32,068



    Interest expense                               147,914        112,922



    Total Other (Income) Expense                   960,024        209,057



  Income (loss) before income taxes             -1,057,140       -854,770



  Provision for income taxes                           336        109,890



       Net income (loss)                       $-1,057,476      $-964,660



  Net income (loss) per share

   (basic and diluted)

    Basic                                          $-0.038        $-0.035

    Diluted                                        $-0.038        $-0.035



  Weighted average number of shares

    Basic                                       27,925,720     27,500,000

    Diluted                                     27,925,720     27,500,000

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ADDITIONAL NEWS FROM City Network Inc.

» City Network, Inc. Receives Notice from Amex That It is Not in Compliance with Continued Listing Standards » City Network, Inc. - Amendment to Press Release dated November 28, 2006 » City Network, Inc. Receives Notice from Amex That It is Not in Compliance with Continued Listing Standards » City Network, Inc. Announces Financial Results for the Fiscal Year Ended December 31, 2005, Going Concern Qualification, and Resignation of Mr. Lai Tiao-Tsan » City Network, Inc. Announces Revised Financial Results For The Fiscal Year Ended December 31, 2004

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