HRCT Overview:
Just the facts. Hype is not necessary when the product is this good.
HARTCOURT
The Hartcourt Companies, Inc. (OTCBB: HRCT), established in 1990, was initially a manufacturer and distributor of writing instruments with facilities in China, Mexico, Arizona and California.
In March of 1999, the company went forward with a major restructuring, contributing all of its major investments to a newly formed subsidiary, Enova Holdings, Inc. (Enova). Effective March 31, 1999, the Company contributed its investment in Enova to its shareholders. As a result, Hartcourt effectively became a shell corporation with no operations and its principal assets being investment securities received in exchange for its investment in the Peony Gardens condominium project.
Hartcourt's new international growth strategy has focused on acquiring companies in the Internet sector - specifically in China and Asia. To this end, the Company is in the process of finalizing and securing financing for three separate ventures. Each transaction is subject to the Company's ability to obtain funding for the transaction.
1. UAC ONLINE TRADING: First, the Company has agreed to purchase 50% of UAC Online Stock Trading Ltd ("UAC") for $2.5 million. UAC is a company providing on-line trade execution for stock brokerage firms in China via an intranet service called CHINAPAC which is owned by China Telecom. UAC intends to use the cash received from the Company to complete the testing and installation of its systems into all 98 offices of Hua Xia Securities in China. Current plans are for all 98 offices of Hoa Xia Securities to be operational within 6 months and up to 4,000 other offices serving 40 million investors by 2004. Projected revenues and net profit are expected to be $41 Million and $22 Million respectively.
2. FINANCIAL TELECOM LTD: In the next transaction and the first to be completed, the Company purchased 58.5% of Financial Telecom Ltd. ("FTL") for $3 million in cash and stock. FTL is a Hong Kong corporation in business since 1983. It provides financial data and real time stock quotes to brokerage firms in Hong Kong via terminals; and individual investors via computer terminals, cable boxes, custom-designed PDA and digital pagers. They are also exclusive agents for Standard & Poor?s in Hong Kong. They are planning to go into the China market providing the same services, in addition to creating a financial portal on the Internet for China and Hong Kong investors. They agreed to issue new shares and sell 58% of the company to Hartcourt. The money received will be used to carry out the China expansion plan. Revenues for 1998 were $ 2.3 Million and net profit was $160,000. Revenue is expected to reach $9 Million by 2004.
3. INNOSTAR HITECH ENTERPRISES: The company signed a Joint Venture agreement with Innostar HiTech Enterprises of China to establish a nationwide Internet Service Provider (ISP) and IP phone service in China. Innostar has been operating an IP Phone Service in Beijing for the last 14 months, in cooperation with a leading Chinese telecom company. The Joint Venture will be called INNOSTAR, and should start the operation within 4 months. Innostar will hold 65 percent
and Hartcourt will hold 35 percent of ownership in the Joint Venture.
Innostar also owns the license for a national ISP. The Joint Venture Company will provide high-speed Internet connections to hotels, office buildings and apartment complexes, using a
Chinese satellite with bi-directional KU bands to transmit data to these commercial users. It will be a first for China. Both parties are committed to providing the most sophisticated technology for the system infrastructure in addition to strong strategic alliances for its marketing program. China Internet Data Research expects the number of Chinese internet users to grow to more than 100 million by 2005, second only to the United States.
The Joint Venture will also bring in additional JV partners, well-known American and Chinese firms, to strengthen its unique market position. The national license will also allow the Joint Venture to engage in e-commerce activities and other Internet services. With the participation of Hartcourt, Innostar could expand this IP Phone Service to other cities and provinces in China. Projected revenue from the IP Phone Service alone would be $2.8 million in 2000. Net profit is estimated at $1.6 million.
4. SINOBULL.COM: In November, Hartcourt announced that it has formed a new entity called Sinobull.com which consists of the Chinese Internet holdings of Hartcourt, including UAC
Online Stock Trading Inc. (UAC), Financial Telecom Ltd. (FTL), Innostar HiTech Enterprises, StreamingAsia.com and others currently under negotiation. Preparations are currently being made for the Initial Public Offering (IPO) of Sinobull, which likely will consummate in Sinobull being up and traded in the summer of 2000.
5. eSAT, Inc.: Next, Hartcourt announced that it has entered into an agreement to purchase 2 Million common shares of eSAT, Inc. (OTC Bulletin Board: ASAT; Frankfurt: ES8) with an option to buy an additional 2 million shares. Fully-exercised, it will represent a 20 percent ownership of eSAT. eSAT Inc., based in Fountain Valley, California is a hi-tech company, which specializes in providing high-speed Internet connections via satellite, through their proprietary Satellite Internet Gateway products and services. eSAT system is a user-friendly cost-effective, solution, plug and play installation, easily interfaces with any existing computer LAN. eSAT has been serving many clients here in the US, from multi-national corporations to governments and educational institutions.
6. STREAMINGASIA.COM: Most recently, Hartcourt's Sinobull.com Inc. has agreed to purchase 50 percent of StreamingAsia.com Ltd., the leading Internet software company in Hong Kong. Among StreamingAsia.com's clients are South China Morning Post, Securities and Futures Commission, Citicomp Cyberworks, iMerchant Ltd., Hong Kong Commercial Broadcasting Company Ltd. and Metro Broadcast Corporation Ltd. in Hong Kong. Streaming Asia has also been contracted to design, construct and operate the financial portal of Sinobull.com.
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