Hartcourt (OTC: HRCT.OB) today announced that it has signed a definitive agreement to purchase 90% of Control Tech Electrics Technology Company, a sole distributor of Radvision video & audio conferencing products in China.

The purchase price for 90 percent of Control Tech is 16.2 Million CNY (US$1.96 Million) payable in 8,516,902 restricted common shares of Hartcourt. Control Tech's management team will hold the remaining equity interest. The boards of both companies have approved the transaction, which is expected to close in November, 2004 subject to certain preconditions being satisfied, including the receipt of all necessary governmental approvals.

Started in 2001, Control Tech today is a leading distributor and service provider in the fast growing interactive, multimedia industry in China. Control Tech is the sole distributor and marketing partner of Radvision in China, specializing in the distribution of video and audio conferencing equipment and multimedia communication systems, as well as related after-sale services, with sales channels covering the key markets in China. Control Tech had net income of CNY3.1 million (US$0.4 million) on net sales of CNY29 million (US$3.5 million), for the year ended December 31, 2003, and net income of CNY1.7 million (US$0.2 million) on net sales of CNY25 million (US$3 million) for the nine months ended September 30, 2004.

The acquisition marks Hartcourt's first step in implementing management's strategy of shifting the business towards higher margin, value-added service sector in the rapidly growing Chinese IT industry.

Mr. Li Yi Zheng, Chairman of Control Tech (Shanghai), comments, "We are delighted to join Hartcourt group at the current expansion stage. The management, marketing and business expertise that Hartcourt can bring to us is crucial for a fast growing company like Control Tech. We believe that the synergies that will result from the acquisition will contribute significantly to both Hartcourt and Control Tech's profitability and business growth in the coming years."


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