BASIS VON 0.09....???wENN DAS KLAPPEN SOLLTE, SEHEN DIE WIR BALD WIEDER VIEL WEITER OBEN!
It’s only 75 days before the landmark date of turning the corner for Hartcourt financial results. There is no doubt that we are pulling out all stops to make the time. We appreciate all the assistance and support we can get during this crucial period. We would love to hear from you. My email is david.chen@hartcourt.com.
I am going to meet some of you during our Annual Shareholders Meeting on November 15th, 2002 in Los Angeles. Afterwards, I will stop by New York, Miami and Frankfurt to pursue some company business and to meet more shareholders. Details of these meetings will be released soon. Right now, please go to our Web site, download the Proxy Statements and send them in if you cannot go to the meeting. We need your votes.
Since your October questions have been very thorough, we don’t need to add much here. We believe in our ability to deliver to you the best operating results possible and we will do it.
Q. The bashers are concerned (sic) that Hartcourt has no business plan or strategy. How do you answer such criticism?
R. Our business strategy is predominantly displayed on the first page of our Web site for the last 2 years. It is repeated on every PR we issued. It never changes. If you take time to read it, you will know that we are a development and investment company, specializing in China projects, with the mission to maximize shareholder value of the company. We do it by consolidating companies in the same business sector; or by expanding a going concern to reach the level of optimum profitability. Eventually, these companies are spun off or disposed of, with the ultimate goal of distributing dividends to shareholders.
We might have carried out this strategy a little too ambitious, considering the worsening investment environment, but we have not changed the core of our mission.
Q. What are exactly the management role and duties of Dr. Phan right now? What is his compensation package? What about the $3 Million he received in 1999?
R. Dr. Phan has considered leaving the business world (not just Hartcourt) long before his heart surgery last December. The only reason he is still with us is that he’s trying to help Hartcourt completing a major transaction to make up for the fall of HRCT share price. Once this transaction is completed, he will leave. Right now, he is our Chairman of the Board, working for no compensation except $24,000 worth of restricted shares for his Director’s fee. The Board is considering giving him an option package of 10 Million shares at 10 cents a share if he completes this major deal.
In 1999, he received 650,000 shares for his salary and bonus. At share price of about $5.20, it was calculated to be $3.3 Million against Hartcourt expenses. However, the shares have not been sold and they are worth $32,500 at today price. In 2000, he received $1 for his salary; and he donated back 5 Million shares worth about $2.4 Million at that time.
Q. Forget the share price for the moment, how do you see Hartcourt operations would evolve 1, 2 and 5 years from now?
R. We strongly believe that Hartcourt operation will be profitable in fiscal 2003. Our 5-year goal is to maintain that profitability while growing at a minimum rate of 100 percent per annum in sales revenue.
Q. What are the other assets to be distributed in Q4 of 2002 and Q1 of 2003?
R. We still have 4 different entities in Sinobull Group and 2 in AI-Asia Group. Details will be given as the deals are completed.
Q. What do you think is the biggest mistake of Hartcourt management in recent years? What's the excuse?
R. In retrospect, we think we miscalculated the length and the severity of the stock market depression, especially with respect to hi-tech sector. Instead of a quick retrenchment to ensure minimum loss, we waited for too long, hopeful for a recovery that never came. It caused a huge problem with our cash flow and the planned capital investments. However, we are almost completing the re-structure and we should turn the corner by year-end. We stand by our operating results: there is no excuse.
Q. What do you think of the constant attacks of the bashers? Their motives? Any counter measures?
R. We are very receptive to criticism; it is the only way to improve and adjust our management actions to bring optimum performance. However, what we got from this bashers group are libelous lies and slanders, repeated over and over again, every day for the last 4 years. The sadder part is the “racist” undertone of their bashings. We all know their motive, their character and their financial interest. Fortunately, we do not think their daily efforts have any effect on Hartcourt business plan or share price. Therefore, we do not see any need to do anything to counter-measure this hateful attack.
Q. Can you update us on the status of e-ED project(s)?
R. As discussed earlier, our Chinese partner changed the JV business strategy. Instead of offering distance learning programs via Internet as agreed, they have used traditional teaching method via classroom instruction. As a result, Hartcourt has not invested any additional money into the JV and Cal State Fullerton has stopped its cooperation. On the other hand, the JV is making some profit, so we can afford to take our time to negotiate a satisfactory solution for all parties.
Q. Looking out into 2003, what do you consider to be Hartcourt's
#1 opportunity and
#1 obstacle?
R. Our greatest opportunity is the possibility to become the first-mover player in a growing business sector in the most dynamic major market of the world, China. Our biggest challenge will be the continuing depression of the stock market and its financing activities.
Q. How much is the share distribution cost HRCT? ETLK?
R. We are going to distribute 5 Million shares of ETLK. The trading price of ETLK on 10/21/02 will give you an indication of our cost.
Q. What is HRCT's ownership approximate percentage after the deal is done? What are the ramifications of the reduced ownership to the company?
R. Details of the newest agreement between HRCT and ETLK shall be disclosed in Form 8K 10 days after the closing. Please wait.
Q. What can you tell about Onse Telecom. We wanted to assist the company in completing a private share placement. Are there more details available in the near future?
R. We are still working on the private placement for ONSE Telecom. The environment is extremely difficult. If you could assist in our effort, please feel free to Email me details. (david.chen@hartcourt.com)
Q. It has been stated that HRCT is in the process of consolidating in order to become more viable and, hopefully, focused. What is the anticipated time frame and when might shareholders know just what direction the company is taking?
R. The process of disposing unprofitable assets and replace them with one big acquisition should be completed by year-end. The financial results should start to show up in our Q1 of 2003 report.
Q. We closed an interesting partnership with Jitong. And we are looking for some more agreements. After the split of China Telecom they got together with China Communications the north provinces. And now they are bigger and some more interesting. Is it possible we get some more agreements very soon?
R. We cannot disclose details of anything under current negotiation. However, ETLK should be able to continue their active search for partnerships and acquisitions.
Q. HSBC Allowed to do On-line Banking in the Mainland. Is this step good or bad for us? Maybe, they could work with some parts of our products, or we have one more competition?
R. The inclusion of HSBC in China’s banking system signifies a landmark in WTO implementation. As the economy opens up to these big players, the growth will be fast and accelerating. It will be a good environment for all participants in China business. HSBC is our potential partner or customer, not a competitor.
Q. Richard Yan is our new Financial Controller. Could you explain some more about his work?
R. Please review his brief resume on our Web site,
www.hartcourt.com.Q. It was a goal from Dr Phan go to other stock exchange like Hongkong and so. With the target to handle HRCT shares round the clock. When we will become a listing out of the OTC or is this target dead?
R. It is still one of our short-term objectives. However, with the world’s stock markets in doldrums, and Hartcourt in tight cash flow, the project must be delayed until the conditions are more feasible.
Q. Is it possible we could get some interesting interviews from HCTV via Media Player of Microsoft on Sinobull Website?
R. It is possible but it is not economical to broadcast these interviews over the Net. Besides, the demand or the audience is very limited.
Q. Can you name your "Big Profitable Company" candidates on your "to acquire" list?
R. We cannot. You will find out when we issue the Press Release after signing the deal.
Q. Could you explain some more about Sinobull and xinet? I wondered because "contact with us" is ...@163.com. Did we have something together with them? I found a lot of hints to 163.com.
R. 163.com offers a popular web email service, many of our staff like to use them. Please go to our filing and web site for information on Sinobull.
Q. Bank of Communications Shenzhen Branch is powered by fx168.com. Are there some more parts powered by fx168.com?
R. We have many other customers, banks such as branch of Bank of China, Industrial Commercial Bank, Agriculture Bank of China, China Construction Bank, China Merchant Bank as well as People’s Bank of China.
Q. What could you tell about "
www.24k.99" solid gold? Is it a partnership or a part of product fx168?
R. This is designed by fx168 for the Shanghai Gold Exchange, which is going to open by the end of Oct 2002.
Q. You told us in your last Q&A response the "We cannot wait for another 3 years until maturity. Therefore, we have replaced it with a one-year plan whereas we will spin-off or dispose most divisions and will acquire only one big profitable business, instead of trying to support 5 start-up ones."...My question is, without telling us exactly who we are buying, what area is the one big profitable business in? Banking? Securities Investment? Telecom? Is it currently a government owned business we are looking to purchase?
R. Please be patient and get the details in the PR once the deal is completed.
Q. After the HRCT changes it's focus from 5 companies to one big profitable one, can we still expect to be a part of the integrated network HRCT has created or are we going into a separate area all together?
R. Please re-read our Business Strategy as explained previously. You will see that we will continue the merging and acquiring of profitable companies to earn bigger and bigger dividends for shareholders.
Q. Will HRCT continues to own some percentage of any of the companies that we sell or dispose of?
R. It will depend on the short-term and long-term growth of each individual company. We will take a cold hard look at each company fundamentals and prospect to decide if we want to stay or leave.
Q. When should we expect that the one-year plan will be concluded? One year from now or by 2004?
R. One year from September 2002.
Please note again that our Los Angeles office has been relocated to:
2500 E. Colorado Blvd Suite 301
Pasadena, CA. 91107
Forward-looking statements
The statements made in this press release, which are not historical facts, contain certain forward-looking statements concerning potential developments affecting the business, prospects, financial condition and other aspects of the company to which this release pertains. The actual results of the specific items described in this release, and the company's operations generally, may differ materially from what is projected in such forward-looking statements. Although such statements are based upon the best judgments of management of the company as of the date of this release, significant deviations in magnitude, timing and other factors may result from business risks and uncertainties including, without limitation, the company's dependence on third parties, general market and economic conditions, technical factors, the availability of outside capital, receipt of revenues and other factors, many of which are beyond the control of the company. The company disclaims any obligation to update information contained in any forward-looking statement.
