Replies to post #7568 on HARTCOURT - Germany/Europe (HRCT)

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Hartcourt Filed Year 2003 Results (10KSB)
Thursday April 15, 10:22 am ET


LOS ANGELES, CA--(MARKET WIRE)--Apr 15, 2004 -- The Hartcourt Companies, Inc. (OTC BB:HRCT.OB - News) (Frankfurt: 900009), www.hartcourt.com, China's fastest growing IT distribution, retail and services company, today filed 10KSB for the financial year ending December 31, 2003.
Financial Highlights for 2003 financial year:

-- Total revenue grew by 9,697% year-over-year to US$111.3 million led by
both internal growth and strategic acquisitions in the IT distribution and
retailing sector
-- Gross profit increase by 586% year-over-year to US$5.3 million.
-- EBITDA turned profit to US$1.7million from a loss of US$0.6 million.
The Company reported total revenues of US$111,397,742 for 2003, a 9,697% increase over total revenues of US$1,137,011 for 2002. The Company reported a net loss of US$758,480, or US$0.005 per share, compared to the 2002's net loss of US$2,559,409, or US$0.04 per share. The fourth quarter of 2003 recorded a net loss of US$1,549,155 compared to a net gain of US$ 514,204 in the previous quarter. The significant loss in the fourth quarter is mainly due to the accrual for contingent liability of SEC civil law suits of US$1,300,000 and impairments for other investments of US$494,478, both are non cash flow event.

The drastic turnaround of Hartcourt's financial performance compared to 2002 was attributed to its core business restructuring. The company adopted an aggressive expansion strategy in the IT distribution and retailing sector, taking advantage of China's long-term economic growth and continuous double digit IT spending growth. Through its acquisition programs, Hartcourt is consolidating and bringing together a group of synergistic businesses each with a strong regional foothold, to become one of the leading companies in the sector.

Revenue from the IT distribution and retailing business for 2003 were US$110,540,456, representing 99% of total revenue of the Company. The ratio of distribution to retail revenue is 68% to 32%. The revenues from IT distribution and retail business for the fourth quarter of 2003 were US$43,897,565 compared to US$33,231,991 in previous quarter, a 32% increase which was the result of the consolidation of Zhongnan Group in fourth quarter.

There was no revenue recorded from financial data services compare to 2002. Sinobull Information Limited was sold to a non-related company, Genius Technology International Limited ("GTI"), majority owned by First Shanghai Group (HKSE: 00227), on May 7, 2003, for a total consideration of $410,163, which was paid by issuance of 57,826,793 common stock of GTI at value of $0.0071 each. On October 9, 2003, Hartcourt filed Schedule 14C with the SEC to distribute all outstanding shares of Financial Telecom Limited (USA) Inc. to all Hartcourt's shareholders on record date of October 17, 2003. As a result, Hartcourt has completely exited the financial data services business and will no longer include any of its financial results in the future.

Revenues from other service for 2003 were US$857,286, representing a 693% increase over US$108,092 for 2002. The increase of other service revenues was attributed to the increased M&A and related activities of our acquisition program.

Gross profit for 2003 was US$ 5,314,979, an increase of 586% over US$ 774,629 for 2002. The gross profit of fourth quarter of US$ 1,970,766 increased 6.3% over the previous quarter of US$1,853,265. The increase in gross profit was contributed primarily to the increase of revenues.

Total operating expenses for 2003 were US$ 3,948,422, representing a 16.1% decrease from 2002 of US$ 4,708,830. Total operating expenses for the fourth quarter was US$ 1,670,345, an increase of 64.9% from the previous quarter of US$1,012,841. This increase was largely due to the impairments of US$ 494,478 and consolidation of the expenses of Zhongnan Group in the fourth quarter.

EBITDA for 2003 was US$1,716,199 compared to the loss of US$564,986 in 2002. EBITDA in the fourth quarter was US$535,263 compared to US$691,238 in the previous quarter. Operating profit before other income and expenses for 2003 is US$1,366,557 compared to net loss of US$3,934,201 in 2002. Operating profit before other income and expenses in the fourth quarter is US$300,421 compared to US$828,255 in the previous quarter. The decrease of operating profit before other income and expenses in the fourth quarter is mainly resulted from the impairment loss of US$ 494,478 due to writing off certain internet related investment made prior to 2002. Total operating profit from continuing operations for 2003 was US$186,629 compared to a loss of US$4,158,702 in 2002. The operating loss in the fourth quarter was US$879,507 compared to the net gain of US$828,255 in the previous quarter. Apart from the impairment loss of US$ 494,478 recorded in the fourth quarter, the decrease of operating profit in the fourth quarter is due to the accrual of contingent liability of SEC civil law suit of US$1.3 million, which the company's attorney believes is the maximum exposure of such litigation threat. The court has ordered both parties to mediation set for April 22, 2004.

As of December 31, 2003, the Company's total cash balance was US$2,486,103, an increase of 3,013.7% over US$79,845 in 2002. Total shareholder equity increased to US$18,259,761 from US$909,211 in 2002, Total current asset increased to US$17,324,781 from US$1,115,823 in 2002. The current ratio for 2003 is 1.6 compared to 0.34 in 2002.

Commenting on the results, Carrie Hartwick, President and CFO of Hartcourt said, "The financial performance of 2003 is the result of the consistent execution of our business strategy. Our revenue from the IT distribution and retailing sector in China continues to be robust and the trend will continue in Q1 2004 as Challenger's results will be added to our financial statements. The write-off of assets will enable us to focus our resources in our core business and start 2004 on a clean slate. We believe more profitable companies will join Hartcourt creating the top IT marketing and service network in China. Hartcourt continues to be well positioned to achieve its goals for 2004, both in terms of our rapidly growing distribution network and upgrade of our internal operations."

About Hartcourt

The Hartcourt Companies, Inc. is one of China's fastest growing companies in the IT distribution, retail and services sector. Hartcourt's growth strategy is to acquire controlling interests in profitable companies with proven management within this sector in key geographical areas of China with high GDP growth. Hartcourt aims to provide capital access, financial control and governance, management talents, cross company synergies, operating efficiencies and expansion strategies to help these companies to outgrow the market. IDC predicts that the IT hardware spending will grow at over 18% in China for the next 5 years. Recent acquisitions of Hartcourt included six key IT distribution and retail services companies covering all major regions of China that have highest GDP-per-capita in China. Detailed information on Hartcourt can be obtained from: 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.



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