SOURCE: China Digital Wireless, Inc.

May 24, 2005 11:31 ET

China Digital Wireless Reports 22% Increase in Revenues for Q1 2005

SHANGHAI, CHINA -- (MARKET WIRE) -- May 24, 2005 -- China Digital Wireless, Inc. (OTC BB: CHDW) announced revenues increased approximately 22% for the quarter ended March 31, 2005, to $5.8 million compared to $4.7 million for the first quarter of 2004. Gross profit for the first quarter increased by 28%, to $1,034,761 compared to $809,403 for the same period 2004. Net income increased by 11% to $666,408, or $0.04 per share for the first quarter March 31, 2005, compared to $598,462, or $0.04 for the prior year. The company had fewer shares outstanding in the year ago period.

Higher net sales during the first quarter resulted from increased revenues in the company's mobile phone distribution business and the initiation of revenues for advertising design and production under the company's digital TV initiative. This new business segment utilizes the placement of digital TV monitors in lobbies of commercial banks and government buildings throughout Shanghai to promote our services and as a medium for other advertisers. The company recorded $387,954 in advertising design and production fees during the first quarter of 2005. Revenue in the information service business was adversely impacted during the quarter by the prolonged decline in the Chinese stock market. Information service revenue decreased by $211,127 during the first quarter, but it remained the most profitable business division.

"China Digital Wireless remains committed to expanding co-marketing arrangements and increasing the subscriber base in order to grow its financial and entertainment information services revenue," said Mr. Tai Caihua, Chairman of China Digital Wireless. "We are pleased to have recorded our first revenues under the digital TV initiative and expect this exciting new business to increase as the installed base of TV monitors grows throughout 2005."

China Digital Wireless provides wireless users in China access to financial information, and various entertainment-related services via their mobile phones. By bundling its financial information software with the wireless phones it markets, the company is building a recurring high-margin subscriber base. China Digital Wireless intends to grow revenues by expanding its subscriber base, adding additional value-added fee-based services, and increasing its installed based of TV monitors used as a novel advertising medium. In addition, China Digital Wireless distributes various mobile phone models in the Shanghai, China region.

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements to the future financial performance of the Company. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development and acceptance, the impact of competitive services and pricing, or general economic risks and uncertainties.

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