HONG KONG, Dec. 19 /PRNewswire-FirstCall/ -- On December 19, 2005, INTAC International, Inc. (Nasdaq: INTN; FSE: WKN 805768) (the "Company"), a leading provider of integrated educational and career development services in China, today announced its results of operations for the nine months ended September 30, 2005. As previously announced on September 1, 2005, the Company has changed its fiscal year-end from December 31 to September 30. As a result of this change, the Company has prepared financial statements for the nine-month transition period ended September 30, 2005. Accordingly, the following discussion of results of operations will compare the audited balances for the nine months ended September 30, 2005 to the unaudited balances for the nine months ended September 30, 2004. Revenue for the Career Development and Training Services Business Segment increased by $4.16 million to $4.22 million for the nine months ended September 30, 2005, from $58,975 for the same period in 2004. The increase results from the change in focus of the Company's business plan from the distribution of premium brand wireless handsets to career development and training services, and primarily consisted of revenues from sales of its education administration software. The Company expects Career Development and Training Services Segment revenue to increase during the remainder of 2005 and throughout 2006. Revenue for the Distribution Segment decreased by $7.4 million, or 11.5%, to $57.0 million for the nine months ended September 30, 2005, from $64.4 million for the same period in 2004. The decrease is mainly due to the Company's shift in emphasis from the distribution business to the career development and training services business, as well as the increased competition in the wireless handset distribution industry in China. Gross profit for the Career Development and Training Services Business Segment was $3.2 million and $58,975 for the nine months ended September 30, 2005 and 2004. This generated a gross margin of 75.4% and 100% for the nine month periods ended September 30, 2005 and 2004, respectively. Gross profit for the Distribution Business Segment decreased by $2.2 million to $2.7 million for the nine months ended September 30, 2005, from $4.9 million for the same period in 2004 and the gross margin decreased by 2.8% to 4.9% for the nine months ended September 30, 2005, from 7.7% for the same period in 2004. Loss from operations was $1.5 million for the nine months ended September 30, 2005, as compared to income from operations of $788,150 for the same period in 2004. The decline in income from operations is primarily due to lower distribution gross margins due to increased competition and higher selling, general and administrative and product development costs, partially offset by improved career development and training services gross margins and the gain on sale of assets. Net loss for the nine months ended September 30, 2005 was $1.5 million, as compared to net income of $974,329 for the nine months ended September 30, 2004. The decline in net income is primarily due to lower distribution gross margins due to increased competition and higher selling, general and administrative and product development costs, partially offset by improved career development and training services gross margins and the gain on sale of assets. "We spent most of our time and efforts throughout the year 2005 on further refining our business strategy and operations model," said Wei Zhou, Chairman and Chief Executive Officer of INTAC. "Although we incurred a loss for the first nine months of 2005, largely due to the decrease of our distribution business revenue and related margins, as well as the increased overhead expenses, we are glad to see a major increase in our career development and training services revenue, with its higher margins, as support for our decision to shift our focus to career development and training services. We expect that, with the stabilization of our distribution business and the expected growth in our career development and training business, we will soon be able to improve our overall margins as well as return to profitability. "As we announced on November 24, 2005, we have refocused and simplified our strategic approach to providing top-class integrated mobile telecommunications/internet services to China's education market," further commented Mr. Zhou, "In line with this refocused strategy, our objective in 2006 is to further expand and enhance the business prospects and opportunities afforded by our relationship with the Ministry of Education ("MOE"), including educational software and database marketing, and to successfully launch our INTAC Mobile Telecommunications Institute. We believe these efforts, combined with our strong relationship with the MOE, our nationwide sales and distribution network, and our extensive student database, will allow us to capitalize on our unique positioning and achieve profitable growth in future years." About INTAC International, Inc. INTAC International, Inc. is a leading provider of integrated educational and career development services as well as management software products for educational institutions in China. INTAC International is also engaged in the distribution of premium brand wireless handset products distribution business. Forward-Looking Statements This press release contains certain "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements expressed or implied by such forward-looking statements to differ materially from those projected or implied. Factors that could cause or contribute to such differences include, among other things: our ability to timely complete our MTSE courseware and facilities; our ability to attract trainees for our MTSE training program; changes in general business conditions; the impact of competition in our industry, especially in the Asia-Pacific Rim; the added expense structure assumed by us as a U.S. public company; political and economic events and conditions in jurisdictions in which we operate; Internet laws and regulations of the government of The People's Republic of China, or the PRC, that are unclear and may change in the near future; regulation and censorship of information distribution in China which may adversely affect our business; political and economic policies of the PRC; the risk of the loss of the agreements, or the exclusivity terms, with the PRC's Education Management Information Center and the Ministry of Education; the high cost of Internet access that may limit the growth of the Internet in China and impede our growth; advertising and e-commerce customers that have only limited experience using the Internet for advertising or commerce purposes; the acceptance of the Internet as a commerce platform in China which depends on the resolution of problems relating to fulfilment and electronic payment; concerns about security of e-commerce transactions and confidentiality of information on the Internet that may increase our costs, reduce the use of our Internet portal and impede our growth; our network operations that may be vulnerable to hacking, viruses and other disruptions, which may make our products and services less attractive and reliable; changes in interest rates, foreign currency fluctuations and capital market conditions; and other factors including those detailed under the heading "Risk Factors" and elsewhere in the INTAC's annual report on Form 10-K for the fiscal year ended September 30, 2005, as filed with the Securities and Exchange Commission. We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future events or otherwise. INTAC undertakes no obligation to update any forward-looking statements made in this media release. For further information, please contact: Lesley Zhang Investor Relations Director Tel: (8610) 83914053 MP: (86) 13910406802 Email: . Internet: http://www.intac-international.com/ DATASOURCE: INTAC International, Inc. CONTACT: Lesley Zhang, Investor Relations Director of INTAC International, Inc., +8610-83914053, or MP, +86-13910406802, or Web site: http://www.intac-international.com/

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