Los Angeles February 18th, 2003
Press Release
Hartcourt Acquire HuaQing Group, a major PC Assembler and Marketer in Shanghai, China.
LOS ANGELES, Feb 18th /PRNewswire-FirstCall/ -- The Hartcourt Companies, Inc. (OTC Bulletin Board: HRCT, Frankfurt: 900009), www.hartcourt.com, today announced that it has signed a definitive agreement to purchase 45 percent of HuaQing Corporation Development Co. Ltd. and HuaQing Economics Development Co. Ltd. a major PC assembler and marketer based in Shanghai, China. Furthermore, Hartcourt has obtained a voting proxy for an additional 10 percent of outstanding shares of both HuaQing companies to effectively control the Board of Directors.
The purchase price for the 45 percent acquisition is 18.2 Million RMB (US$2.2Mil) payable in 15,960,474 restricted common shares of Hartcourt, calculated at $0.138 a share.
In 2002, HuaQing recorded sale revenue of 539 Million RMB (US$65 Million) and a net profit of 7.7 Million RMB (US$940,000). It was recently voted by IDG's Computer World (China) as one of the Top 100 Computer Marketing Companies in China. HuaQing, founded in 1992 in Shanghai, specializes in the niche DIY (do-it-yourself) PC marketing and distribution. The company owns and operates 11 DIY stores in Shanghai area, helping customers build their own PCs with components, technology and after sales support provided by HuaQing. The company was officially promoted as one of the top 100 Hi-Tech enterprises by the Shanghai Government's Science and Technology Commission in 2001 and 2002.
China has experienced explosive growth in PC sales for the last 10 years from 670,000 PC sold in 1994 to 7,260,000 in 2001. IDC predicts China's PC sales will grow at 18-22% for the next 5 year, with sales reaching 19,800,000 PC in 2006 (global PC sales is 131,800,000 in 2002 vs. China's 9,280,000). Experts believe the huge market potential will come from the low PC penetration in home uses (5% in China compared to 49% in the US), as well as demand from technology upgrades and adoption of information technology by SMEs (small medium enterprises).
More details on HuaQing and the PC market in China could be obtained from Hartcourt Web site, www.hartcourt.com.
Mr. David Chen, President and Acting CEO of Hartcourt, stated, "We are looking forward to a profitable year for Hartcourt with this acquisition combined with the spin-off of other loss-making subsidiaries. The low cost DIY PC marketing is very unique in China and growing fast to account for about 34% of the total PC sales annually. Our goal for HuaQing is to build up its brand name and expand the business model throughout China to satisfy the huge market demand for low cost personalized PC products, modeled after the success of Dell in the US. In addition, we are also planning to expand into the Laptop and PC server market for SMEs."
Mr. Li ZhengZheng, President of HuaQing, comments, "For the last 10 years, we have been building our brand name, operation and market share, waiting for the right timing to break out nationwide. I think the partnership with Hartcourt will help us do precisely that."
About Hartcourt
The Hartcourt Companies, Inc. is an investment holding and developing company specializing in the acquisition and development of private companies within high-growth industries in China. Hartcourt's business strategy is to add substantial value in terms of financial restructuring and corporate governance to enable these subsidiaries go public via IPO or reverse merger. Detailed information on Hartcourt can be obtained via the company's Web site: www.hartcourt.com.
Forward-looking statements
The statements made in this press release, which are not historical facts, contain certain forward-looking statements concerning potential developments affecting the business, prospects, financial condition and other aspects of the company to which this release pertains. The actual results of the specific items described in this release, and the company's operations generally, may differ materially from what is projected in such forward-looking statements. Although such statements are based upon the best judgments of management of the company as of the date of this release, significant deviations in magnitude, timing and other factors may result from business risks and uncertainties including, without limitation, the company's dependence on third parties, general market and economic conditions, technical factors, the availability of outside capital, receipt of revenues and other factors, many of which are beyond the control of the company. The company disclaims any obligation to update information contained in any forward-looking statement.
Contact: Ms. Wenny He Tel: 8621 5213 0673 Fax: 8621 5213 0664
Email: wenny.he@hartcourt.com
