Ms. Katya Andresen reports

EPALS 2013 FOURTH QUARTER AND YEAR-END RESULTS

ePals Corp. has released its operating results for the fourth quarter and year ended Dec. 31, 2013. Results were prepared by management in accordance with international financial reporting standards. All figures are in U.S. dollars unless otherwise stated.

In a separate news release today, the company announced that it has rebranded and will operate under the name Cricket Media effective immediately. The new brand identity reflects the company's core business of providing award-winning educational content in multiple languages (English, Spanish and Mandarin) on a child-safe social learning network worldwide. Coinciding with the rebranding of the company as Cricket Media, effective as of the opening of trading on Monday, April 21, 2014, the company's voting common shares will commence trading on the TSX Venture Exchange under the new stock symbol CKT. The company will seek the approval of its shareholders to effect a legal name change at the company's next annual meeting of shareholders later this year.

Conference call today at 10 a.m. Eastern Time

To participate in the call, please dial 1-719-325-2144 or 1-888-364-3109 approximately 10 minutes prior to the conference call, and enter passcode 5503886. A recording of the conference call will be available through April 30, 2014, by dialling 1-719-457-0820 or 1-888-203-1112 and entering the passcode 5503886.

"We have prioritized the focus of our business over the past months on our education media," stated chief executive officer Katya Andresen. "'Cricket Media' reflects this evolution. We are leveraging our media assets under the well-respected Cricket brand and making them natively collaborative through the social networking platform we have built over the past five years. Think digital media company meets safe social networking for the kind of learning that children around the world need to work in tomorrow's economy -- digital, collaborative, global. We are unique in that this approach is global and takes advantage of the worldwide demand for cultural exchange and language learning practice."

Year-over-year fourth-quarter highlights

• Total media revenue (subscriptions, licensing, commerce, sponsorship) increased 8 per cent;
• New sales program doubled media licensing revenue;
• Operating expenses net of impairment decreased 16 per cent;
• 30 per cent of fourth-quarter media subscriptions were digital or hybrid (digital plus print), up from 6 per cent;
• Successful commercial launch in China of NeuPals joint venture.

In the fourth quarter, total revenue increased to $4.7-million as ePals focused on its media revenue business lines, driving a year-over-year increase in media revenue of 8 per cent. Media revenue, the core revenue producing business of the company, consists of revenue from annual subscriptions, advertising, e-commerce, product sales and content licensing.

The 8-per-cent increase in media revenue for the quarter was driven primarily by increased licensing and commerce revenue for the period. The media licensing revenue more than doubled year over year in the fourth quarter as a result of new licensing contracts with both new and existing customers. Media licensing continues to grow significantly and will continue to be a primary point of focus for the media business. Fourth-quarter commerce revenue increased 27 per cent year over year due to increased sales related to consumer media products.

At the end of 2013 ePals media subscriptions had increased to approximately 429,000, 13 per cent above the 2012 year-end. In the fourth quarter, ePals enabled digital subscribers to access its products via the platform of their choice -- iOS, Android or browsers. This resulted in increased adoption of digital products, with 30 per cent of subscriptions purchased in digital or hybrid (digital plus print) formats in the fourth quarter of 2013, compared with 6 per cent in the fourth quarter of 2012. The company's focus on offering high-quality physical and digital children's media products has allowed the business to increase its active subscribers (those purchasing both a media subscription and also some form of commerce) by 20 per cent year over year.

In 2013 ePals undertook expense control and reduction initiatives to reduce non-revenue-generating costs. Departmental restructurings and increased product focus have enabled the company to eliminate a number of senior positions and in general substantially reduce fixed costs. Approximately $900,000 in annual costs were reduced as ePals ceased its direct U.S. enterprise platform sales force in order to transition to an indirect model. The result is a more variable cost structure versus the fixed cost structure of a direct sales force. Associated cost reductions were also realized with certain related marketing costs. At Dec. 31, 2013, the company had reduced overall head count by approximately 12 per cent from fourth-quarter 2012 levels, primarily in the sales and technology areas. During 2013, the company also started experiencing cost savings from its new three-year printing contract. Coupled with new paper sourcing, the company expects to see savings of up to $1.5-million over the life of the contract. Due to a combination of these efforts, the company estimates that it has eliminated approximately $3.0-million in annualized costs. Additionally, the company continues to evaluate additional outsourcing opportunities related to technology-based functions to further reduce costs.

During the fourth quarter, ePals continued to develop its application programming interfaces to further enable third party developers to build products on top of the ePals platform to improve product features and functionality and enhance revenue opportunities. The company's Chinese joint venture, NeuPals, is the first customer to actively use the APIs.

Through NeuPals, the company launched enterprise services in a district of 10,000 students in the city of Shenyang. NeuPals' new products, the result of two years of planning and pilots, provide Chinese schools with curricula, media products and collaborative experiences with other schools around the world. The product line promotes cultural understanding, provides language learning practice and builds skills that meet the new innovative teaching and learning goals set by China's Ministry of Education as well as U.S. Common Core State Standards. ePals is expanding its international footprint with a launch of additional product lines for collaborative learning in China including policy managed mail utilizing ePals APIs to offer the mail service using locally deployed mail servers.

Fourth-quarter financial review

Total revenue for the three months ended Dec. 31, 2013, was $4.7-million, compared with $4.6-million in the fourth quarter of 2012. Media revenue increased $400,000, or 8 per cent, to $4.6-million for the fourth quarter primarily as a result of increases in licensing, up $200,000 to $400,000, and commerce revenues, up $200,000 to $1.0-million. Licence revenue was driven by new licensing deals with new and existing customers resulting from shifting resources from the unprofitable direct sales model. Commerce revenue was driven by an increase in sales of product and back issues to consumers as well as increased book sales. A year-over-year decrease in platform business revenue during the fourth quarter of 2013 was primarily due to a shift away from a direct sales approach in the United States.

Operating expenses for the fourth quarter of 2013 were $9.8-million, a decrease of $8.5-million, or 47 per cent, compared with the prior-year period. The company did not recognize any impairment losses during the fourth quarter of 2013 compared with the impairment loss of approximately $6.7-million during the fourth quarter of 2012. Excluding the impairment loss, operating expenses decreased $1.9-million, or 16 per cent, year over year. This decrease was due to decreases in general and administrative, stock-based compensation and technology, research and development costs, partially offset by an increase in operations and support costs. General and administrative expenses decreased $1.2-million during the period due to lower legal costs compared with those incurred in 2012 associated with the litigation related to the acquisition of Carus Publishing Company, as well as lower employee-related costs due to decreases in bonus and recruiting expenses. Stock-based compensation decreased $300,000 during the three months ended Dec. 31, 2013, compared with the prior-year period due to equity awards carrying lower fair value during the current year, as well as an increase in forfeitures during 2013. Technology, research and development costs, which consist of expenses related to the development and maintenance of the technology associated with the company's platform and media business, decreased $200,000 due primarily to head count reductions in this area resulting from a shift of focus to products expected to generate near-term revenue. Operation and support costs increased $200,000 due primarily to increased expenses related to development of the company's e-commerce offering and the distribution of its media products.

2013 financial review

For the year ended Dec. 31, 2013, total revenue increased 8 per cent to $16.4-million driven by a media revenue increase of $2.1-million, or 15 per cent compared with the prior year, partially offset by a decrease in platform revenues. Media licensing revenue increased $800,000 compared with the prior year driven by new licensing deals with new and existing customers resulting from shifting resources from the unprofitable direct sales model. Media subscription revenue increased $600,000 as the company increased its subscription base. Through a series of steps including introducing several digital editions, offering hybrid print and electronic subscriptions, and bringing on affiliates and new channels such as the ePals Global Community, the company experienced a 13-per-cent year-over-year increase in media subscriptions. Advertising revenue increased $400,000 compared with the prior year primarily due to new advertising relationships and increased revenue from existing relationships. The increase in commerce revenue of $300,000 was driven by an increase in sales of product and back issues to consumers as well as increased book sales. Decreasing platform business revenue during the year ended Dec. 31, 2013, compared with the prior year was primarily due to a shift away from a direct sales approach in the United States.

Operating expenses for the year ended Dec. 31, 2013, were $39.3-million, a decrease of $2.3-million or 5 per cent from the prior-year period. This change was primarily due to decreases in expenses related to impairment losses, acquisition investigation and general and administrative expenses, partially offset by changes in the fair value of acquisition consideration, increased operations and support expenses, and higher marketing and promotion costs. Acquisition investigation expenses, which represent legal, audit and tax fees related to business acquisitions and joint ventures that the company is considering and/or negotiating, decreased for the year ended Dec. 31, 2013, compared with the prior year primarily due to legal work in 2012 relating to the negotiation of agreements for the company's joint venture in China and because of several business acquisitions that were being contemplated to accelerate the launch of the company's European initiatives. General and administrative expenses decreased $1.2-million due primarily to the reduction in legal and bonus expenses. The company recorded a $300,000 loss for the year ended Dec. 31, 2013, for the change in the estimated fair value of the share consideration related to the acquisition of Carus Publishing Company in 2011, compared with a gain of $2.2-million that was recorded in 2012. Operation and support expenses increased $1.7-million during the year ended Dec. 31, 2013, compared with the prior-year period primarily due to additional costs incurred to support expansion of international operations in China and increased costs related to the functionality and support of the ePals Global Community. Marketing and promotion expenses increased $1.9-million during the year ended Dec. 31, 2013, compared with the prior year due to a larger investment in on-line marketing acquisition efforts and expenses related to new marketing initiatives for the media portion of the company's business.

Additionally, the company did not recognize any impairment losses during the year ended Dec. 31, 2013, compared with the impairment loss of approximately $6.7-million during the year ended Dec. 31, 2012.

The net loss for the year ended Dec. 31, 2013, was $22.5-million, or 12 cents per share, compared with a net loss of $26.8-million, or 20 cents per share for the year ended Dec. 31, 2012. In addition to the factors discussed above, increases in gains associated with the fair value of the company's derivatives and foreign currency exchange contributed to the lower net loss in 2013. These increased gains were offset by increased interest expense during 2013 related to the debentures issued in 2013.

At Dec. 31, 2013, ePals had $3.6-million in cash and cash equivalents. In the fourth quarter of 2013, the company closed multiple tranches of a non-brokered private placement and issued approximately 109 million units of the company at a price of 7.5 Canadian cents per unit for gross proceeds of approximately $8.2-million (Canadian). Each unit consisted of one common share of the company and one-third of one common share purchase warrant. Subsequent to year-end, the company has raised an additional $3.7-million through a combination of private placements and borrowings under its revolving credit facility. The company intends to use the net proceeds for general corporate purposes and working capital.

As of April 15, 2014, ePals had a total of 344,145,116 common shares outstanding, of which 108,308,886 are voting common shares and 235,836,230 are restricted voting common shares.

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)
                               (in U.S. dollars)
                                                         Year ended Dec. 31,
                                                        2013           2012

Revenue                                         $ 16,412,256   $ 15,201,910
Operating expenses
Cost of sales                                     10,671,488      9,934,572
Technology, research and development costs         5,350,347      4,831,631
Operations and support expenses                    4,939,259      3,280,187
General and administrative expenses                6,153,711      7,358,876
Marketing and promotion expenses                   8,603,246      6,728,407
Stock-based compensation                           1,490,826      1,753,397
Depreciation and amortization                      1,305,768      1,552,530
Loss on investment in NeuPals                        352,594         60,477
Acquisition investigation expenses                         -      1,279,128
Financing transaction costs                          137,238        300,225
Change in estimated fair value of
acquisition share consideration                      278,877     (2,204,107)
Impairment of goodwill and intangible assets               -      6,671,355
                                                -------------  -------------
Total operating expenses                          39,283,354     41,546,678
                                                -------------  -------------
(Loss) from operations                           (22,871,098)   (26,344,768)
Other income (expense)
Gain from change in fair value of
derivatives                                        3,130,000              -
Interest expense, net                             (3,444,090)      (521,617)
Other income                                           6,400          9,600
Net foreign currency exchange gains                  664,750         36,103
                                                -------------  -------------
Net (loss)                                      $(22,514,038)  $(26,820,682)
                                                =============  =============
Other comprehensive income (loss)
Items that may be subsequently reclassified
into net income (loss)
Foreign currency translation                          (2,612)       (42,618)
                                                -------------  -------------
Total comprehensive (loss)                       (22,516,650)   (26,863,300)
Net (loss) per common share, basic and diluted         (0.12)         (0.20)

We seek Safe Harbor.