SOURCE: Regal Group, Inc.

September 30, 2010 09:00 ET

Regal Group Subsidiary UHF Logistics Makes Strides in Chinese Tobacco Industry

PHOENIX, AZ--(Marketwire - September 30, 2010) - Regal Group, Inc. ("Regal" or the "Company") (OTCBB: RGLG) announced today that over the past 5 months, its operating subsidiary and related companies, Shenzhen Rui Pu Da Electronic Technology Company Ltd. (RPD) and Shenzhen DDCT Communication Technology Co (DDCT), have executed purchase orders for the tobacco industry sector totaling RMB513,616 (US$77,800) from a related company, Kunming Xingaoyuan Science & Technology Co., Ltd, a leading ISO9001:2000-certified technology company focused on the supply of production automation and management systems to the Chinese tobacco industry.

These tobacco sales orders relate to the provision by RPD/DDCT of channel readers, middle-distance antennas, handheld readers, integrative readers and RFID tags to Xiangyun Tobacco Company, a client of Xingaoyuan and a cigarette manufacturer based in Yunnan Province, China's tobacco capital, for production automation and warehouse management; whose orders resulted from a decision by Xiangyun Tobacco to expand its production automation strategy from 1 production line (which trial commenced in April 2009) to a total of 4 production lines.

Commented Mr. Su, Chairman of Regal: "These trial sales demonstrate our Company's execution on our vision to make RFID mainstream in the tobacco industry -- automating processes and optimizing the supply chain to improve efficiency, reduce transport logistics errors, reduce packaging errors, and optimize inventory levels to reduce costs and enable more flexibility in the production process."

"China is the largest tobacco and cigarette producer in the world, accounting for 42% of the world's cigarettes produced, with approximately 350 million smokers who consume 1.7 trillion cigarettes every year and that number is growing. The Chinese tobacco industry manufactures 2.3 trillion cigarettes annually, generating more than RMB388 billion ($53.5 billion U.S. dollars) in taxes and profits in 2007, according to the State Tobacco Monopoly Administration (STMA) of China," added Mr. Su. "With over 100 tobacco companies located in Yunnan Province who have not yet fully embraced the automation process, we will aggressively showcase this trial (tobacco) factory automation project to this vast potential customer base with our partner, Kunming Xingaoyuan Science & Technology Co., Ltd, who has established client relationships with the majority of tobacco industry participants in the country."

The Chinese Tobacco Industry Sector and RFID Applications for the Tobacco Industry
According to a recent report published by China Research and Intelligence titled "Research Report on Chinese Tobacco Industry, 2010-2011," the Chinese tobacco product industry realized sales revenue of RMB443.41 billion (US$67.18 billion) in 2009, an increase of 13.15% over 2008. By the end of 2009, the assets of the Chinese tobacco product industry totalled RMB494.69 billion (US$74.95 billion), an 11.89% increase over 2008. The number of enterprises reached 172 with year over year growth of 9 and the number of industry employees was 188,800, an increase of 16,700 over 2008. In 2009, the total reported profit of the Chinese tobacco product industry amounted to RMB62.59 billion (US$9.48 billion).

In 2009, fixed asset investment in the Chinese tobacco manufacturing industry reached RMB23.70 billion (US$3.59 billion), achieving a growth rate of 63.70% year over year and representing 0.40% of total investment in the Chinese manufacturing industry. During the year, Chinese production of cigarettes totalled 2.29 trillion, rising 3.17% year over year. Yunnan, Hunan, Henan, Shandong and Hubei were the top 5 production provinces, accounting respectively for the production of 345.79 billion, 169.28 billion, 161.35 billion, 130.02 billion and 127.86 billion cigarettes, which in aggregate accounted for 40.78% of the national total in cigarette production.

Presently, RFID could have two applications in the tobacco industry: logistics and inventory. RFID automates processes and optimizes supply-chain processes thereby improving efficiency, reducing mistakes in transport routes, and reducing packaging errors. RFID also enables the optimization of inventory levels which may reduce costs and enable more flexibility in the production process. Using RFID technology integrated with GPS, GIS, and routing technology, tobacco companies could keep track of cigarette merchandise handling with real-time visual tracking by linking businesses, distributors, and retailers to their central information systems. This could provide significant assistance in inventory planning. It could also help ensure a safer distribution of cigarettes, and improve the return on fixed assets, such as transportation equipment. By integrating such a system, tobacco companies could achieve vast improvements in the operational efficiency of their entire supply chain and enhance their industry competitiveness. It could also facilitate the fight against cigarette contraband (a threatening trend) since customers could authenticate their products with the use of encrypted product information contained on RFID labels.

IDTechEx expects that the first major incursion of fully printed RFID labels will be at HF (high frequency) where there is huge untapped potential. For anti-counterfeiting measures, IDTechEx projects pent-up RFID tag demand to service annual production by cigarette manufacturers, and dominated by the China Tobacco Monopoly Authority, totaling over 37.5 billion packs of cigarettes and starting with tags for a minimum of 100 million cases.

Further information:

Please feel free to call Investor Communications toll-free on 1-888-367-3077 or visit our website at or

About Regal Group, Inc.

Regal Group, Inc. is a publicly traded company with headquarters in Phoenix, Arizona. Regal is strategically positioning itself in key industry sectors in China and recently completed the acquisition of UHF Logistics Ltd., a HK-incorporated holding company, which, through its wholly owned Chinese operating subsidiaries, is focused on the development, marketing and implementation of UHF RFID products and solutions in China since 2006. Regal trades on the NASDAQ OTC BB under the ticker symbol: RGLG.

Forward-Looking Statements & Risks

Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Words such as "expects," "intends," "plans," "may," "could," "should," "anticipates," "likely," "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management, including, but not limited to, the Company's belief that Regal can identify and successfully negotiate business prospects in Asia, and that the Company can successfully operate such prospects. Actual results may differ materially from those currently anticipated due to a number of factors and risks beyond the reasonable control of the Company.

In addition to the risks associated with forward-looking statements, statements in this news release are subject to additional risks, which include, among others, the corporate disclosure, governance and regulatory requirements of the Peoples' Republic of China (the "PRC"), and PRC regulations relating to, among others, cross-border mergers and acquisitions, product liability and currency exchange rates. Even though the transaction is completed, anticipated synergies or other intended benefits of the transaction may not be realized, and the prospects of the combined entity will remain subject to all the general risks associated with the RFID industry, the public securities markets and risks related to doing business in China, such as the PRC's economic, political and social environment, and matters relating to PRC taxes, repatriation of profit and currency conversion, acquisition and appropriation of land use rights, foreign investments, permits and business licenses, employment contracts, government intervention, shareholders' rights and enforcement of judgments, as well as the developing PRC legal system. The Company cautions that the foregoing list of material risks is not exhaustive.

When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information on risks and other factors that may affect the business and financial results of the Company can be found in filings of the Company with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Contact Information