Hartcourt Companies (fka HRCT)

[gustavgans]

Hartcourt Announces Signing Memorandum of Understanding to Co-Sponsor and Hold Up to 80% Equity Interest in Hunan Ningxiang Vocational Education Center
The Hartcourt Companies, Inc. (OTCBB: HRCT) (FRANKFURT: 900009) today announced that it ("the Company") has entered into a non-binding Memorandum of Understanding ("MOU") with Ningxiang Vocational Middle Specialty School in Hunan Province, China ("NVMSS") to co-found Ningxiang Vocational Education Center ("NVEC"). The Company will hold up to an 80% equity interest in NVEC. The transaction is expected to be completed by the end of February 2007 and is subject to completion of due diligence by the Company and execution of the definitive purchase agreements.

The estimated total investment of NVEC is about RMB110 million (US$14 million). The Company will contribute a financial investment of approximately US$6 million cash in the next three years for the 80% of NVEC, as well as providing advice and guidance on renovation plans for the Campus and the debt restructuring. NVMSS will hold the remaining 20% by contributing all of its teaching facilities, faculties and incumbent students. NVMSS, on behalf of Ningxiang government, has agreed to guarantee the annual new student recruitments of NVEC will be not less than 1700, making the estimated net revenue at not less than RMB25 million (US$3.2 million) and estimated profit after tax not of less than RMB8.5 million (US$1.08 million) each year for the five years following closing (2007-2011).

Founded in 1985, NVMSS provides post high school education and vocational training services to students in the region of Ningxiang County, a suburb county of Changsha, the capital city of Hunan Province, China. NVMSS has 2068 students and 131 faculty members. As a government-owned institution, NVMSS was instructed by the county executive to establish NVEC, which will be the leading vocational education organization in the county and the only one with government behind it. NVMSS approached the Company and agreed to co-sponsor NVEC with a view to utilizing Hartcourt's international education resources and other education capacities.

NVEC will be the consolidator of the vocational schools within Ningxiang County. The government agreed to migrate gradually most of the 15000 students to NVEC from other vocational school in the county.

Mr. He Jianhui, the Chief Director of NVMSS who is also heading the NVEC project, commented, "NVMSS is a vocational school with over 20 year history. We will not only migrate our students [resources] to NVEC, but also our established teaching capabilities can make substantial contribution to the new entity. We trust that Hartcourt [with 80% control of NVEC] can help to realize the vision of us, which is to make NVEC one of the best vocational institutions in China."

Dr. Yungeng Hu, President and CFO of the Company, commented, "Ningxiang is a county with population of 1.3 million. It is absolutely a large vocational education market. I am glad that by accessing such a huge market and positioning Hartcourt as the leader in the market, we are building a strong business unit. Hartcourt has agreed to work with the local community to make NVEC an important step for the vocational students to achieve their career goals."

Mr. Victor Zhou, CEO of the Company, stated, "The MOU demonstrates our role as an active educator. We thank the Ningxiang government for their appreciation of Hartcourt's value in participating in the vocational education segment as an 80% interest holder. We won their trust by showing them our differentiated investment strategy. We look forward to working with them in this venture."

More information about NVMSS can be found in its web sites: http://www.nxzyzz.com/

About Hartcourt

Hartcourt's achievements and operations can be found on its 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. Forward-looking statements are identified by words such as "expects," "believes," "anticipates," and words of similar import. 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, including those risks identified in the company's filings with the U.S. Securities and Exchange Commission, many of which are beyond the control of the company. The company disclaims any obligation to update information contained in any forward-looking statement.



Source: Market Wire (November 21, 2006 - 6:30 AM EST)

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