Hartcourt has signed a preliminary agreement to acquire GW Digital, a privately held Samsung printer distributor serving the needs of consumers and businesses in Eastern China.

Hartcourt is anticipating a closing date for the transaction in the middle of February 2006. Following the close, GW Digital will operate as a 51% owned, indirect subsidiary of Hartcourt.

The all stock purchase price will be US$1.5 million, subject to customary closing adjustments. The purchase price represents approximately 0.6 times of 2005 GW Digital net assets.

Hartcourt anticipates the GW Digital acquisition will increase its fiscal 2006 (year ending May 31) operating income by US$300,000.

"We have always valued our Samsung franchise. This acquisition expands our existing Samsung distribution business, enhances our ability to grow with market leader Samsung in the attractive sales territory," said Billy Wang, Chairman of Hartcourt. "Utilizing the established channels, we expect to capitalize on the rapidly growing high-end segment of the Chinese printing market." Color laser printers, multi-functional printers, along with photo printers are in high demand in China.

Shanghai-based GW Digital obtained the exclusive Samsung printing product distribution rights in early 2005. In less than one year, it has not only achieved the Samsung sales targets, but became the top distributor of high-end Samsung printing products in China.

GW Digital currently employs about 50 people, including a commissioned sales force. It expects to generate revenue of approximately US$25 million in calendar year 2006.

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