So this is what Hades looks like:RE:DISAGREEMENTS on Hartcourt's Form 8-K contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 29, 2004
THE HARTCOURT COMPANIES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
UTAH
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(State or Other Jurisdiction of Incorporation)
001-12671 87-0400541
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(Commission File Number) (IRS Employer Identification No.)
3F, 710 CHANGPING ROAD, SHANGHAI CHINA 200040
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(Address of Principal Executive Offices) (Zip Code)
(86 21) 52138810
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(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) On January 6, 2005, The Hartcourt Companies, Inc (the "Company") filed its report on Form 8-K disclosing the termination of Loral International Certified Public Accountants ("Loral") as the Company's certifying accountant. The Company now amends and updates such 8-K by filing Loral's written response thereto pursuant to Regulation S-B Item
304(a)(3). A copy of Loral's letter is attached to this Form 8-K/A as Exhibit 16.2 and filed herewith.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
16.2 Letter dated January 3, 2005, from Loral International Certified Public Accountants.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE HARTCOURT COMPANIES, INC.
(Registrant)
Date: January 20, 2005 By: /S/ CARRIE HARTWICK
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Carrie Hartwick
Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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16.2 Letter dated January 3, 2005, from Loral International Certified
Public Accountants responding to Company's form 8-K.
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EXHIBIT 16.2
Loral International CPA and Advisor LLC
Member of PCAOB Seattle Office: 720 Third Avenue, Suite 1611, Seattle WA, 98104 Phone: (206)264-8065 Fax: (206)264-7971
January 3, 2005
Ms. Carrie Hartwick, CEO & CFO BY FAX AND BY REGISTERED LETTER
Board of Directors
The Hartcourt Companies, Inc.
3F, No. 710, Chang Ping Road
Shanghai, China 200040
RE: DISAGREEMENTS on Hartcourt's Form 8-K contents
Dear Ms. Carrie Hartwick:
As mentioned to you in the email dated December 30, 2004, that Loral DISAGREES with Harcourt (The Registrant, "HC") the content of HC's Form 8-K filing regarding Loral's resignation as the independent auditor of the HC.
1. CONTRARY TO YOUR 2ND PARAGRAPH, UNDER ITEM 4.01 (a) OF FORM 8-K :
- Loral QUALIFIED both 2002 and 2003 audit reports:
a) Loral 2002 audit report contains a qualified statement, which was issued for HC's financial statements ended on December 31, 2002. The qualified opinion contained an explanatory paragraph expressed substantial doubts on HC ability to continue as a going concern, due to its recurring losses and negative cash flows from operations. The accompanying financial statements to the Loral 2002 audited report were not adjusted to reflect such a going concern uncertainties.
b) Loral 2003 audit report contains a qualified audit opinion, issued for HC's financial statements ended on December 31, 2003. The 2003 opinion contained a paragraph expressing substantial doubts on HC's ability to continue its business as a going concern, due to HC recurring losses and negative cash flows from operations. This going concern was also included in the 2003 opinion under the fifth paragraph of Loral's report. The accompanying financial statements to the Loral 2003 audited report was not adjusted to reflect such a going concern uncertainties. In addition, two exceptions (red flags) on Hartcourt's tax issues. One of the red flags related to Hartcourt's failure to file the United States federal and state tax returns. The second exception related to HC China tax documents. Reason for such a red flag is that Hartcourt may keep different sets of accounting books in China, which Loral could not have full access to determine HC's Chinese tax liabilities. These two exceptions were described in the third paragraph of Loral's 2003 audit report. Additional disclosures of the tax issues were made in two (2) separate "Footnotes to the Hartcourt financial statements" to further discuss details of the exceptions. These exceptions and a going concerns led to Loral's qualified ("except for") opinion, indicated in the fourth paragraph of Loral's 2003 audit report.
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2. CONTRARY TO YOUR 3RD PARAGRAPH UNDER ITEM 4.01(a) OF FORM 8-K:
- Despite of Loral's requests to conduct an audit to clarify HC 2003 tax issues, HARTCOURT WAS NOT ABLE TO PROVIDE RELEVANT DOCUMENTS TO RESOLVE THE 2003 CHINESE TAX LIABILITIES ISSUES. As of today, Loral has not received any records or direct confirmation indicating complete and accurate 2003 tax records are readily available in China, to be used to serve as a base to resolve the outstanding tax issues. Despite of Loral's good faith efforts to co-ordinate during the past months, prima-facie 2003 tax documents was not provided to Loral. NOR THE HC MANAGEMENT CONFIRMED IN WRITING THAT THE 2003 OPERATIONS ARE FULLY IN COMPLIANCE WITH THE CHINESE TAX REGULATIONS.
- HC management refuses to provide the compressive tax records, nor is willing to pay a reasonable fee for an audit, while implying that Loral does not wish to re-audit 2003 tax deficiency. As a result, much discussed audit to follow up the 2003 deficiency can not performed in China after the issuance of the qualified 2003 audit opinion.
- In a lawyer's letter dated December 3, 2004 to Loral, HC threatened legal actions against Loral, if Loral does not "immediately begin the analysis in order for Loral to remove its qualifications from the 2003 Audit Report". Loral wishes to disclose that it is HC's inability to provide complete tax documents, hinders a re-audit of the 2003 issue. LORAL WELCOMES OTHER INDEPENDENT CPA FIRMS TO CONDUCT A FOLLOW-UP ON THE TAX DEFICIENCY. LORAL IS NOT INTIMIDATED BY LAWYER'S THREATENING LETTER. HOWEVER, LORAL BELIEVES THAT THE DISTURBING LEGAL LETTER IMPAIRS ITS ABILITY TO PERFORM ASSIGNMENTS INDEPENDENTLY. THUS, LORAL RESIGNED ON DECEMBER 30, 2004.
This letter is Loral's response to the Registrant's SEC Form 8-K disclosure filing, which was forward to Loral for comments on December 30, 2004.
Thank for your attention.
Sincerely Yours
/s/ LORAL INTERNATIONAL CPA AND ADVISOR, LLC
Loral International CPA and Advisor, LLC
January 3, 2005
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