7. My Ph.D. Degree: In 1970, Sussex College Of Technology and the University of Saigon started a joint post-graduate program in Management. It took me 6 years to complete and I am proud of my achievement. To say this degree is not as valuable as other degrees is a matter of personal opinion. But the value of this knowledge and the relationships made during my education are invaluable to where I am today. In any case, this subject of which University my doctoral degree is from has nothing to do with our company's achievements or the future of the company. Paid bashers seem to just try and create smokescreens to confuse, and focus away from the real business model and operations.
Letter from Dr. Alan Phan:
August 31st, 2000
Dear Shareholders: The following is an exchanged between myself and a shareholder. I think it might be of your interest to read them as well:
From: Richard
Dear Dr. Phan,
I attach here some of the recent postings on the Raging Bull chat room from the bashing cockroaches. We don't want to bother you; but some sort of reply from you will put an end to these lies and half-truths. We believe in you and your achievements, let's squash these cockroaches together.
Go HRCT.
From: Dr. Alan Phan
Dear Richard:
Since I have some free time due to a slow Labor Day weekend coming up, I am happy to clarify all these questions once and for all:
1. The News Conference on September 21st, 2000: This is the first time in the history of Hartcourt that a news conference is held to announce major news. Besides the importance of the new strategic structure for Hartcourt, we want to introduce the Hartcourt success story to our new shareholders in Hong Kong. I believe this plan to "monetize" the existing assets of Hartcourt will not only increase shareholder value substantially; it will also give us the required capital to accelerate our acquisitions. I don't know how the investment community will react to this development; but I am confident that all of you will be happy with our performance.
2. The $35 Million Swartz Equity Financing: We have filed the SB-2 form to register the 5 Million shares to utilize the $35 Million equity line as a standby measure. However, we do not think we will need it since our new structure and partners will generate more than enough funding for Hartcourt.
3. Trading Of Foreign Shares: There is a good possibility that you will end up owning shares listed in Hong Kong, Singapore, NASDAQ and OTC. In this global economy, it is simple and easy to trade foreign shares, as you do with domestic shares. All you need to do is to open an online trading account with an international firm like Merrill Lynch, Charles Schwab, TD Waterhouse, etc. Better yet, you could try our Hartcourt Capital partner in Hong Kong, Koffman Securities.
4. The Public Relations Program: We are walking a very tightrope here. It is common knowledge that all government officials hate publicity, whether it is good or bad. We don't want to become the loud-mouthed capitalist type so detested by the Chinese bureaucracy. Even though SinoBull is quite popular with the Chinese media, Hartcourt itself prefers to keep a low profile. I think the lack of publicity will affect public perception in the short term; but I believe the operating results (revenue and profit) are always the key measure of success, and a key factor to the share price.
5. My 1999 Salary: My employment contract gave me the option at the beginning of the year to receive cash or restricted stock. For the last 7 years, I always opted for stock. These shares are paid every 2 weeks, just like the paychecks to other employees, based on my cash equivalent annual salary. Last year was a great year as the share price started at $0.28 and ended with $15.06. Shares paid out over that one-year period, resulted in a value of $3.4 Million due to the rise in price. However, in 2000, I will get only about 13,000 shares; so my current salary is about $65,000-70,000. The cash value in 1996 at the time was about $26,000, and in 1997 about $42,000 at the time. Well, you got the picture. Actually, all of these discussions are pointless, since I intend to donate my 7 million shares to charities (but retain voting rights) after the completion of our mission (3 years or less). My motivations are to build and succeed.
6. Other Issuance Of Shares: Chateau D'Orly purchased 300,000 restricted shares on November 30th, 1999 at a price of $4 per share. The average closing market price of the preceding 5-day period was $4.95. It's common practice for certain percentage discounts on large private placements. We have gotten good value from those funds generated in Hartcourt's expansion. On December 24th, 1998, we sold 500,000 shares of restricted stock and warrant to 11 investors at the price of $0.25 a unit. The average 5-day closing price was $0.28 a share. Again, for that time, I think we got a good deal.
7. My Ph.D. Degree: In 1970, Sussex College Of Technology and the University of Saigon started a joint post-graduate program in Management. It took me 6 years to complete and I am proud of my achievement. To say this degree is not as valuable as other degrees is a matter of personal opinion. But the value of this knowledge and the relationships made during my education are invaluable to where I am today. In any case, this subject of which University my doctoral degree is from has nothing to do with our company's achievements or the future of the company. Paid bashers seem to just try and create smokescreens to confuse, and focus away from the real business model and operations.
8. Lawsuit Against The Bashers: We have filed a lawsuit 5 weeks ago; and our attorney has subpoenaed the chat rooms to reveal the identities of the paid bashers who posted false and libelous statements. I am not upset or angry of these lies (they come with the territory), but I am interested in knowing the names of those responsible who would employ such less than ethical tactics for profit.
Looking back at the past 8 months, I am very happy with our results and all we continue to build. I am disappointed that our share price does not reflect the true value of Hartcourt, as compared to other international technology and growth companies. However, we have taken a positive step to rectify this situation with the September 21st, 2000 news conference. Due to the low share price, I have heard sentiments of discouragement here and there, but overall, our army of HRCT longs is still formidable. In this market environment, even well known Chinadotcom's $16 share price is a far cry from its $78 price in March, a few months ago. Time and China's enormous growth of its economy and internet technology are on our side. I am as proud as ever, looking back at our 8 acquisitions in the last 8 months. The bashers said we would never be able to close on these deals. We already closed 5 transactions, with others pending. They still have not shut up. This news conference will be our answer.
Somebody told me once, "Give the world the best that you have, and the best will come back to you." Thank you for your support.
Sincerely,
Dr. Alan V. Phan
Chairman & CEO
Certain statements in this letter may constitute "forward - looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such "forward - looking" statements involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements expressed or implied by such "forward - looking" statements to differ materially.
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