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EXCHANGE OF SHARES
1.01 EXCHANGE OF SHARES. Subject to the terms and conditions contained in this Agreement, at the Closing (as defined in Section 1.02 below), the parties shall engage in the following transactions, all of which shall be deemed to occur simultaneously:
(a) GTCI shall issue to the Sinobull Shareholders approximately one hundred sixty-six million (166,000,000) of pre-reverse stock split GTCI Shares, representing seventy-six and thirty-two hundredths percent (76.32%) of the total number of issued and outstanding shares of GTCI as of the Closing Date and calculated in accordance with the approved reverse stock split on a ten for one (10 for 1) roll back basis which shall occur shortly after the Closing, which GTCI Shares shall be further allocated among the Sinobull Shareholders in accordance with the chart set forth on Schedule C attached hereto, subject to certain adjustments as further detailed herein; The Sinobull Shareholders acknowledge that some of the shares issued to the Sinobull Shareholders shall be Preferred Shares which may, at the option of the holders, be converted into Common Shares of GTCI at any time; and
(b) in exchange for their GTCI Shares, the Sinobull Shareholders shall each transfer and assign to GTCI their respective shares comprising the Sinobull Shares which, when taken together, represent one hundred percent (100%) of the total number of issued and outstanding Sinobull Shares issued and outstanding as of the date of the Closing. The amounts of the Sinobull Shares owned by each Sinobull Shareholder are as set forth on Schedule B to this Agreement.
1.02 CLOSING. The consummation of the transactions contemplated by this Agreement (the "Closing") shall take place on or about January 18, 2002. At or prior to the Closing, each of the actions required to be taken by the parties pursuant to this Agreement shall have been completed.
SHARE EXCHANGE WITH SINOBULL
On December 14, 2001, The Board of Directors of Global Telephone Communication, Inc. as well as persons holding a majority of the outstanding shares determined that it is in the best interest of the Company to enter into a Share Exchange Agreement, whereby the Company will acquire 100% of the issued and outstanding shares of Sinobull Financial Group, (Sinobull) a Hong Kong corporation, in exchange for the shares representing approximately 76.32% of the total issued and outstanding capital stock of the Company (See attached Appendix "A" Share Exchange Agreement). The proposed exchange is a private placement of restricted securities pursuant to Regulation S and Rule 506 of Regulation D. Following the transaction, Sinobull will operate as a wholly owned subsidiary of the Company.
The Board of Directors of the Company and shareholders representing a majority of the outstanding shares have based their decision to complete the share for share exchange based upon their due diligence, analysis and review of SEC filings & financial statements, interviews with the parent company of Sinobull, The Hartcourt Companies, Inc., interviews with its management team, review and analysis of Information Memorandum prepared by Ernst and Young and the physical onsite inspection of the four different entities within Sinobull.
At the present time, the current operations of GTCI have generated insignificant revenues and after careful consideration and evaluation of its operations by the auditing firm, Merdinger, Fruchter, Rosen, Corso, P.C., the company is reported
to be a going concern and will remain at risk until its operations generate revenues. The possibility of such revenues being generated from its current operations are minimal and the Company cannot guarantee its survival.
It is for these reasons that the management of GTCI decided to complete a merger with Sinobull.
Sinobull Financial Group develops financial technology, financial operating platforms and Internet-based financial services. Sinobull's operating companies include: Shanghai Sinobull Information Company Ltd., Sinobull Network Technology(formerly Shandgi Networks), WindInfo Ltd., Financial Telecom Ltd., Fintel wireless Ltd., Ton Bo software, HCTV Financial TV channel Ltd. and Sinobull Magazine Ltd. Sinobull.com is a financial information and stock trading website. Sinobull Group and its strategic partners provide news, data and analysis of financial information to the business community and media outlets. Services include; real-time pricing, historical pricing, indicative data, analysis of financial information and electronic communications. Clients include China's investment institutions, commercial banks, government offices and agencies,
corporations, and news/media organizations.
Sinobull Group is a financial technology developer and Internet service provider. Sinobull's subsidiaries include: Beijing UAC Stock Exchange Online, Shanghai Guo Mao Science & Technology, Sinobull Network Technology (formerly Shangdi Networks), Financial Telecom (FTL), StreamingAsia and LogicSpace. In addition to quality financial news, real-time market data, financial analysis and commentary via the Sinobull portals, Sinobull currently offers online trading platform services that allow users to trade online for shares listed on stock exchanges in Shenzhen and Shanghai. This trading platform is currently the only such trading platform available in the PRC. Sinobull also has one of the few financial portals, which offers a comprehensive range of Chinese financial content coupled with an online trading platform service in the PRC. Hence Sinobull faces limited competition from major financial portals, which typically only offer English content and limited or possibly no content in Chinese, and no online trading platform service in the PRC.
Below is a brief overview of the operations of Sinobull:
DIVISIONS
1. Content Management: Collection and analysis of comprehensive in-house Database of financial news and company reports.
2. Distribution Network: Distribute this content to customers via:
a. Business Terminals: using leased lines, broadband, satellite, Pagers, VBI.
b. Internet-Based: Web sites, wireless portals, SMS.
c. Cable TV Network: HCTV Financial TV.
3. Printed Media: Sinobull Magazine
4. Technology Solutions: Providing technology support to ensure clients get the most efficient solution for their application.
OPERATING COMPANIES
1. Financial Telecom Ltd: Manages and distributes content via terminals in Hong Kong. A 17 year-old company.
2. Fintel Wireless Internet Ltd: Distributes content via pagers in Hong Kong and China.
3. Sinobull Information Co., Ltd: Manages and distributes content via terminals in China. A 4-year old company with major banks and brokerages as clients.
4. Sinobull Network Technology Co., Ltd: Manages the most popular financial portal in China, www.sinobull.com. , which was awarded a medal in two consecutive years in Year 2000 & 2001 as one of the "Outstanding Chinese Financial Websites".
5. Ton Bo Software Ltd: Provides technology solutions to financial institutions. Distributes the well-known Equis products of Reuters.
6. HCTV Financial TV Channel Ltd: Will provide financial news and analysis via a network of cable TV in China (to be launched in 2002).
7. Sinobull Magazine Ltd: Will publish a monthly magazine in financial news and analysis (to be launched in 2002).
TO STOCKHOLDERS OF
GLOBAL TELEPHONE COMMUNICATION, INC.
NOTICE OF PROPOSED ACTION BY WRITTEN CONSENT OF A
MAJORITY OF THE OUTSTANDING COMMON STOCK
TO BE TAKEN ON OR ABOUT MARCH 6, 2002
To the Stockholders of Global Telephone Communication, Inc.
Notice is hereby given that by Written Consent by the shareholders of a majority
of the outstanding common stock of Global Telephone Communication, inc. (the
"Company") it has been proposed that the Company
(1). Approve a Share Exchange Agreement between the Company and Sinobull
Financial Group (Sinobull)
(2). Approve a reverse stock split pursuant to which every ten (10) shares
of the Company outstanding prior to the reverse stock split, will be
reduced to one (1) share.
Only stockholders of record at the close of business on February 8, 2002 will be
given Notice of Action by Written Consent. The Company is not soliciting
proxies.
By order of the Board of Directors
/s/ Terry Wong
---------------------------
Terry Wong, President & CEO
Considering the size of the ETLK float, I doubt you are going to see 100,000 share trading days anytime soon. Of course with the float being so small if ETLK were to get 20 1000 share trades in a day you would probably see some significant movement in the share price. $10,000 spent either way could move ETLK all over the board. The problem with investing $10,000 at this point with no exposure is that it would be easy to run the price up but you couldn't sell it because of the lack of real volume.
Minddoc - I was carried away...... At least my spam was all HRCT related. Be sure to read the ETLK Adobe file - it was too long to repost all of it.
Elephant Talk - Strategies for Growth
Customer strategy
Elephant Talk was one of the first of the emerging carriers to realize the potential of utilizing a niche marketing strategy. It began targeting large operators by providing sophisticated call-back services at low price. We have since expanded the marketing efforts by developing a stronghold in delivery of international traffic into China.
Currently, the company has maintained very good relationship with local and international carriers, as well as licensed China carriers. As such, Elephant Talk can further expand its influence in related telecommunications opportunities in China, by joining force with powerful ministries and operators. This marketing approach has three major advantages. First, it allows Elephant Talk to concentrate its traffic volume in China, winning much lower carrier rate and can resell at higher profit, attracting critical mass and economies of scale, thereby locking in existing and potential wholesale customers who can never beat our rates. When an operator would like to route traffic to China, Elephant Talk is the logical choice.
Second, the customers we target are mostly established operators with larger traffic volume and low debt risk.
Third, establishing good relationship in China ensures early presence in the market by developing further business opportunities when presented. We usually have bi-lateral transmission agreements with our customers, implying that these Tier one to two carriers serve as our customers as well as carriers. We believe such bilateral relationships increase customer stickiness and cross-selling possibilities.
We have also entered into strategic distribution and advertising relationships with a number of calling card dealers through the US and SE Asia. We believe that these relationships are important because they allow us to leverage the distribution channels of these companies to effectively market our products and services.
Long term growth strategy
The key to long term growth in the international market rests in the deployment of facilities. As international calling rates decrease, global facilities become critical for maintaining strong revenue growth. More profitable routes to Vietnam, Indonesia and Cuba will be open very soon in view of customer demand.
In addition, the company has plans to offer new value added services to the customers. One recent project is PC-to-Phone service in Greater China areas, which enables a user to conveniently and inexpensively place a call to a standard telephone anywhere in the world directly from a personal computer while remaining on-line. In order to use this service, a user need only download our software for free from our Web site and have access to the Internet. Once the software is downloaded, the user is able to place a call from the user's personal computer and, while browsing the Web, speak to a party who uses a standard telephone. The network diagram is included as Appendix 3.
Other strategies include continuous cost containment and improved cost-effective route restructuring to ensure improved earnings.
Strategies for Growth
Customer strategy
Elephant Talk was one of the first of the emerging carriers to realize the potential of utilizing a niche marketing strategy. It began targeting large operators by providing sophisticated call-back services at low price. We have since expanded the marketing efforts by developing a stronghold in delivery of international traffic into China.
Currently, the company has maintained very good relationship with local and international carriers, as well as licensed China carriers. As such, Elephant Talk can further expand its influence in related telecommunications opportunities in China, by joining force with powerful ministries and operators. This marketing approach has three major advantages. First, it allows Elephant Talk to concentrate its traffic volume in China, winning much lower carrier rate and can resell at higher profit, attracting critical mass and economies of scale, thereby locking in existing and potential wholesale customers who can never beat our rates. When an operator would like to route traffic to China, Elephant Talk is the logical choice.
Second, the customers we target are mostly established operators with larger traffic volume and low debt risk.
Third, establishing good relationship in China ensures early presence in the market by developing further business opportunities when presented. We usually have bi-lateral transmission agreements with our customers, implying that these Tier one to two carriers serve as our customers as well as carriers. We believe such bilateral relationships increase customer stickiness and cross-selling possibilities.
We have also entered into strategic distribution and advertising relationships with a number of calling card dealers through the US and SE Asia. We believe that these relationships are important because they allow us to leverage the distribution channels of these companies to effectively market our products and services.
Long term growth strategy
The key to long term growth in the international market rests in the deployment of facilities. As international calling rates decrease, global facilities become critical for maintaining strong revenue growth. More profitable routes to Vietnam, Indonesia and Cuba will be open very soon in view of customer demand.
In addition, the company has plans to offer new value added services to the customers. One recent project is PC-to-Phone service in Greater China areas, which enables a user to conveniently and inexpensively place a call to a standard telephone anywhere in the world directly from a personal computer while remaining on-line. In order to use this service, a user need only download our software for free from our Web site and have access to the Internet. Once the software is downloaded, the user is able to place a call from the user's personal computer and, while browsing the Web, speak to a party who uses a standard telephone. The network diagram is included as Appendix 3.
Other strategies include continuous cost containment and improved cost-effective route restructuring to ensure improved earnings.
Elephant Talk
Founded in 1994, Elephant Talk is a facility based international long distance carrier offering highly reliable and competitively priced services in the wholesale markets. We enable telecommunications carriers and other service providers the ability to offer voice and fax to their end-customers. We are also quick in seizing opportunities in the communications market worldwide, by expanding our current business and focusing on
high growth segments. The company mainly provides its services to local and international 1st tier carriers.
The basic strategy of Elephant Talk is to leverage on its expertise and established relationships with international carriers to pursue early entry into selected deregulated markets. As part of the execution of its strategy, the company is interconnecting with top carriers in the U.S. and Hong Kong., placing its focus in these two regions as primary service bases. In addition, the company has been one of the few pioneers in developing successful business relationships with various national PTTs, especially in China.
Elephant Talk operates international long distance service on both sides of the Pacific to over 220 foreign countries, through an advanced and flexible network. The company is expanding its foothold in Asia with more profitable routes and is developing value-added services such as PC-to-Phone in China through its domestic partners, which include Jitong and China NetCom, both are top telecom operators in China. We are also actively pursuing new sales channels in developing the higher-margin prepaid calling card market, expanding from the US to several countries in SE Asia region. Elephant Talk is properly focused on its core competence which converts to constant source of revenue and earnings enhancements.
Elephant Talk
Founded in 1994, Elephant Talk is a facility based international long distance carrier offering highly reliable and competitively priced services in the wholesale markets. We enable telecommunications carriers and other service providers the ability to offer voice and fax to their end-customers. We are also quick in seizing opportunities in the communications market worldwide, by expanding our current business and focusing on
high growth segments. The company mainly provides its services to local and international 1st tier carriers.
The basic strategy of Elephant Talk is to leverage on its expertise and established relationships with international carriers to pursue early entry into selected deregulated markets. As part of the execution of its strategy, the company is interconnecting with top carriers in the U.S. and Hong Kong., placing its focus in these two regions as primary service bases. In addition, the company has been one of the few pioneers in developing successful business relationships with various national PTTs, especially in China.
Elephant Talk operates international long distance service on both sides of the Pacific to over 220 foreign countries, through an advanced and flexible network. The company is expanding its foothold in Asia with more profitable routes and is developing value-added services such as PC-to-Phone in China through its domestic partners, which include Jitong and China NetCom, both are top telecom operators in China. We are also actively pursuing new sales channels in developing the higher-margin prepaid calling card market, expanding from the US to several countries in SE Asia region. Elephant Talk is properly focused on its core competence which converts to constant source of revenue and earnings enhancements.
Shareholder Letter from Mr. Russelle Choi
07 Feb 2002
Welcome, first I would like to say that these first weeks of being a public company have been an exciting and rewarding time for our organization. I would like to thank the investors in Hartcourt and ETLK for their support and I can assure you we are working extremely hard to build on our success as we move confidently and aggressively into the future. The ETLK team has done an excellent job of consolidating information on our company's operations into an investor friendly format, and I highly recommend you take the time to read the following summary. I believe it will provide you with a renewed appreciation for your investment in Elephant Talk and in Hartcourt.
Best Regards,
Mr Russelle Choi
Issued by Elephant Talk Limited
Issued Date 07 Feb , 2002
Office Tel (852) 2 707070 3
Office Fax (852) 2 707070 7
E-mail info@elephanttalk.com
Shareholder Letter from Dr. Wallace Ching
What’s New...
I have been on the job for a month now. Although you haven’t heard much from me since my last letter, you all can rest assured that I am definitely earning my pay. I have been to Shanghai twice and Guangzhou/Shenzhen numerous times exploring development options for the Chinese divisions of our subsidiaries, while continuing evaluations of new acquisition and investment banking opportunities for Hartcourt and Hartcourt Capital respectively.
My review of our operations is nearing completion and we are implementing a number of initiatives designed to move us more efficiently into high growth markets and to continue the streamlining of our organization through cost reductions and improved margin opportunities. I had placed a temporary delay on press releases until I had finished my preliminary operational review. The status of our pr is now back to active mode and in fact, we are working towards installing a full-time investor relations presence as part of a new program to attract investors. We will be reviewing more information on that front soon.
Hartcourt Capital is rapidly taking shape. The organizational structure of this new Hrct division has been established and we are beginning to staff up. As a matter of fact, we are already in the process of signing up business contracts. You will be receiving additional information on transactions that we are working on as soon as it can be publicly disseminated. I can assure you that this division has the potential to become a flagship operation for Hrct. We are also presenting our Sinobull Media’s proposal to capital sources, and Elephant Talk is about to unveil a new service initiative and additional international routes. Our subsidiaries are making business gains across the board and I am initiating follow through requirements to keep investors informed as these deals begin to generate revenues. The Sinobull/GTCI listing is on track, we are currently providing some additional information that was requested by the SEC and then we just need to acquire the exact listing date and our new trading symbol. The 10k filing for 2001 is on schedule as well.
Our Strategy...
Now, I’d like to again review some basics of Hrct’s operating strategy so investors like yourself will have a better understanding of the process as our business plans unfold.
Our focus is primarily to capture opportunities in China. It is the world’s fastest growing economy and presents enormous untapped corporate and consumer markets. As the post WTO era unfolds more deregulation and liberalization will take place across various sectors, opening up an even wider range of investment and acquisition opportunities for well-positioned foreign companies. The historical and cultural architecture of China’s economy has created high barriers to entry. Hrct has established a broad network of relationships throughout Greater China’s business and government communities. In addition, our ability to provide solutions in this difficult and complex regulatory environment is a much sought after commodity as international corporate interests seek access and entry points to these vast markets. We are structuring Hrct to capitalize on these unique advantages.
We are fine tuning the commerce framework established to create interrelated business opportunities throughout our organization. This cross promotional effort is already producing increases in revenue streams and reductions in expense margins. As we efficiently drive the internal organic growth of each business we will continue to exploit the benefits of synergies existing between our companies and to drive this aspect of our strategy to new levels of revenue production, a higher competitive profile and increased market penetration.
We are establishing clear paths to profitability for our companies and are making hard decisions concerning our operations. Our focus near term is to become EBITDA positive as we re-establish solid fundamentals throughout the organization. We will be making strategic modifications to certain units and considering the sale of maturing and under performing assets while concentrating our efforts on building our stronger businesses. At the same time we will continue to aggressively identify and pursue small industry-leading, profitable, technology companies for acquisition in order to provide impetus and momentum for future growth; and to develop and expand existing and new higher margin business opportunities, such as Hartcourt Capital’s investment banking services. We will, however, monitor and evaluate the growth prospects for each sector and make the appropriate strategic decisions whenever they are warranted. One of the great advantages of our command structure is that it allows quick and effective response to change.
Our Companies...
Hrct’s expanding enterprise consists of a large network of companies engaging in a variety of technologically advanced businesses operating throughout Greater China and HK. The scope of our operations can make the integration of information for investors a little challenging. To make this process easier I have asked the leaders of each division to provide overviews of their businesses so you will have a clearer and more confident understanding of their operations and subsequently, your investment. Since we have just taken our Elephant Talk subsidiary public we’ll begin this week with Mr. Russelle Choi’s review of Elephant Talk. This is excellent work and it will be posted shortly. In my next update we will be taking a look at Sinobull.
In Conclusion...
Two things have jumped out at me as I have evaluated Hartcourt’s organization and contacted potential partners and investors over the last month; the tremendous dedication and work ethic of our employees and the broad scope of opportunity that exists for our companies. It’s not always smooth sailing but we are very well positioned in the worlds largest emerging corporate and consumer marketplace, and we’re moving in the right direction. We all appreciate your support and are working hard to deliver Hartcourt to the next level of success.
Best Regards,
Dr. Wallace Ching
Certain statements in this news release 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 achievement expressed or implied by such forward looking statements to differ materially from the forward looking statements.
Shareholder Letter from Mr. Russelle Choi
07 Feb 2002
Welcome, first I would like to say that these first weeks of being a public company have been an exciting and rewarding time for our organization. I would like to thank the investors in Hartcourt and ETLK for their support and I can assure you we are working extremely hard to build on our success as we move confidently and aggressively into the future. The ETLK team has done an excellent job of consolidating information on our company's operations into an investor friendly format, and I highly recommend you take the time to read the following summary. I believe it will provide you with a renewed appreciation for your investment in Elephant Talk and in Hartcourt.
Best Regards,
Mr Russelle Choi
Issued by Elephant Talk Limited
Issued Date 07 Feb , 2002
Office Tel (852) 2 707070 3
Office Fax (852) 2 707070 7
E-mail info@elephanttalk.com
Shareholder Letter from Dr. Wallace Ching
What’s New...
I have been on the job for a month now. Although you haven’t heard much from me since my last letter, you all can rest assured that I am definitely earning my pay. I have been to Shanghai twice and Guangzhou/Shenzhen numerous times exploring development options for the Chinese divisions of our subsidiaries, while continuing evaluations of new acquisition and investment banking opportunities for Hartcourt and Hartcourt Capital respectively.
My review of our operations is nearing completion and we are implementing a number of initiatives designed to move us more efficiently into high growth markets and to continue the streamlining of our organization through cost reductions and improved margin opportunities. I had placed a temporary delay on press releases until I had finished my preliminary operational review. The status of our pr is now back to active mode and in fact, we are working towards installing a full-time investor relations presence as part of a new program to attract investors. We will be reviewing more information on that front soon.
Hartcourt Capital is rapidly taking shape. The organizational structure of this new Hrct division has been established and we are beginning to staff up. As a matter of fact, we are already in the process of signing up business contracts. You will be receiving additional information on transactions that we are working on as soon as it can be publicly disseminated. I can assure you that this division has the potential to become a flagship operation for Hrct. We are also presenting our Sinobull Media’s proposal to capital sources, and Elephant Talk is about to unveil a new service initiative and additional international routes. Our subsidiaries are making business gains across the board and I am initiating follow through requirements to keep investors informed as these deals begin to generate revenues. The Sinobull/GTCI listing is on track, we are currently providing some additional information that was requested by the SEC and then we just need to acquire the exact listing date and our new trading symbol. The 10k filing for 2001 is on schedule as well.
Our Strategy...
Now, I’d like to again review some basics of Hrct’s operating strategy so investors like yourself will have a better understanding of the process as our business plans unfold.
Our focus is primarily to capture opportunities in China. It is the world’s fastest growing economy and presents enormous untapped corporate and consumer markets. As the post WTO era unfolds more deregulation and liberalization will take place across various sectors, opening up an even wider range of investment and acquisition opportunities for well-positioned foreign companies. The historical and cultural architecture of China’s economy has created high barriers to entry. Hrct has established a broad network of relationships throughout Greater China’s business and government communities. In addition, our ability to provide solutions in this difficult and complex regulatory environment is a much sought after commodity as international corporate interests seek access and entry points to these vast markets. We are structuring Hrct to capitalize on these unique advantages.
We are fine tuning the commerce framework established to create interrelated business opportunities throughout our organization. This cross promotional effort is already producing increases in revenue streams and reductions in expense margins. As we efficiently drive the internal organic growth of each business we will continue to exploit the benefits of synergies existing between our companies and to drive this aspect of our strategy to new levels of revenue production, a higher competitive profile and increased market penetration.
We are establishing clear paths to profitability for our companies and are making hard decisions concerning our operations. Our focus near term is to become EBITDA positive as we re-establish solid fundamentals throughout the organization. We will be making strategic modifications to certain units and considering the sale of maturing and under performing assets while concentrating our efforts on building our stronger businesses. At the same time we will continue to aggressively identify and pursue small industry-leading, profitable, technology companies for acquisition in order to provide impetus and momentum for future growth; and to develop and expand existing and new higher margin business opportunities, such as Hartcourt Capital’s investment banking services. We will, however, monitor and evaluate the growth prospects for each sector and make the appropriate strategic decisions whenever they are warranted. One of the great advantages of our command structure is that it allows quick and effective response to change.
Our Companies...
Hrct’s expanding enterprise consists of a large network of companies engaging in a variety of technologically advanced businesses operating throughout Greater China and HK. The scope of our operations can make the integration of information for investors a little challenging. To make this process easier I have asked the leaders of each division to provide overviews of their businesses so you will have a clearer and more confident understanding of their operations and subsequently, your investment. Since we have just taken our Elephant Talk subsidiary public we’ll begin this week with Mr. Russelle Choi’s review of Elephant Talk. This is excellent work and it will be posted shortly. In my next update we will be taking a look at Sinobull.
In Conclusion...
Two things have jumped out at me as I have evaluated Hartcourt’s organization and contacted potential partners and investors over the last month; the tremendous dedication and work ethic of our employees and the broad scope of opportunity that exists for our companies. It’s not always smooth sailing but we are very well positioned in the worlds largest emerging corporate and consumer marketplace, and we’re moving in the right direction. We all appreciate your support and are working hard to deliver Hartcourt to the next level of success.
Best Regards,
Dr. Wallace Ching
Certain statements in this news release 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 achievement expressed or implied by such forward looking statements to differ materially from the forward looking statements.
Uh Oh.... CNBC just said that there are accounting questions at Intel..........
Things in North Dakota can't be THAT bad......
Aries - Participation is the key.... discussion is the purpose. Cutting and pasting unrelated information doesn't add anything. Original posts that forment discussion (even if it is just the weather where the poster is at) allows for a dialogue. Spamming unrelated news doesn't do that.
Unfortunately this board does not have an "ignore" feature so the only alterantive I have is to not bother to read the board at all.
I have to disagree. It violates the board rules but I will put it to the board monitors. The spam by you and biemo contributed to the demise of the RB HRCT board as much as the flaming by Floyd.
Then maybe you can explain the direct connection to HRCT? Spamming the board with every news story you can find that has some connection to China is not condusive to any type of discussion. If I wanted to read general China business news I would go to a web site dedicated to that. This is a discussion board not the web site for the China Business Daily.
More unrelated spam from hrctfacts?
rman - If you don't know the answer to your question you probably shouldn't be investing in equities. Have you considered bonds or CDs? Are you related to Sensual Gal on RB?
Ok.... I just thought you might have lost a day somewhere. I took New England and the points so it must be me that has your $100 - lol.
Spinoffs can be good for investors if done right....
MERGER TALK: Are heydays over for conglomerates?
February 04, 2002 5:11:00 PM ET
By Arindam Nag
NEW YORK, Feb 4 (Reuters) - Conglomerate is once again a dirty word on Wall Street.
Giant corporations that handle diverse lines of business -- typified by Jack Welch's General Electric Co. (GE) and Tyco International Ltd (TYC) -- have held investor interest over the past decade.
But now a growing list of top corporations are breaking up or spinning off valuable businesses to prop up their stock price as the economy creeps out from recession. But these dramatic strategy shifts are frought with challenges, such as generating investor interest in new spin-offs, ensuring they are tax free to shareholders and equitably distributing debts.
Among the best known companies attempting a big change, diversified group Tyco has dominated the headlines with its four-pronged plan to break itself up.
Drugmaker Merck (MRK) announced plans to spin off its pharmacy benefits business, while retailer J.C. Penney (JCP) is expected to follow suit with its Eckerd drugstore unit. And industry analysts say there is more to come.
"Given the current economic cycle ... this year, one could see a rebound in spin-offs," says Mark Minichiello, principal at Spin-Off Advisors, a Chicago firm that tracks corporate restructuring.
While the situation may vary from company to company, most spin-offs are driven by one thing: The need to extract value from a business that is in danger of losing management focus. Owners, having nursed their companies through lean times, are now looking at how their components fit into the company's long-range plans.
"Today's merger is tomorrow's spin-off," says Minichiello.
Last year there were only 39 spin-offs, valued at $255 billion, down from 63 in 2000 and 66 in 1999, according to Spin-Off Advisors.
The level of spin-offs have, however, intensified since the late 1980s. More than 300 spin-offs took place in the United States between 1988 and 1998 with the number varying from year to year. Most notable among those has been the breakup of telecoms giant AT&T (T) and diversified group ITT Industries (ITT).
"There are very rare instances where conglomerates work properly," says Bill Fat, Chief Executive of Canada's Fairmont Hotels & Resorts , which spun off from Canadian Pacific Ltd, once a diversified group that owned businesses ranging from porcelain ware to railways.
With today's sophisticated fund managers more keen to diversify their stock portfolio themselves, the need to own shares in a conglomerate is less than ever, which can lead to its shares trading at a discount.
In a sluggish economy, like the present, spin-offs play two roles: They offer more value than the sum of the parts of the parent company, and they can raise valuable cash for the group. Tyco is aiming for both.
Before AT&T announced it would break out Lucent Technologies and NCR in 1996, its market value was $75 billion. A little over a year later, in January 1998, the separately trading AT&T, Lucent and NCR had a combined market capitalization of $159 billion.
Tyco is planning to spin off its healthcare, fire protection and flow control, as well as its financial services businesses while it would sell off its plastics business.
Another motivation for Tyco to do so is to help provide access to cheaper capital for its individual divisions.
"If you have to use your parent company's multiple, which may be lower, to fund acquisitions it may be competitively disadvantageous", says an investment banker.
For instance, once Tyco's healthcare business is spun off it is expected to get a similar rating of about 22 times earnings its industry peers enjoy as opposed to the parent which is now trading at about 12 times its earnings.
ROAD AHEAD
But a successful spin-off calls for a cautious approach.
"You must ensure those businesses survive. Make sure the debts are properly in place," advises Fat, who was the chief financial officer of Canadian Pacific before it broke up. "Be thorough on details," he says, adding that his company documents which were sent to shareholders ran into 800 pages.
Transparency in accounts and keeping the transactions tax-free for existing shareholders are two other key factors for a successful break-up, says Stephen Fraidin, partner in the law firm Fried, Frank, Harris, Shriver & Jacobson.
Tyco's shares have fallen by about 40 percent since the company announced its plans -- partly on fears that the sum-of-parts or values of individual businesses may not turn out to be more than, or at least equal to, the value of the whole of Tyco.
Tyco's woes were excerbated further with credit rating agencies downgrading its debt on Monday.
Analysts point out how the spin-offs of communications chip firm Agere Systems by Lucent, and office equipment firm Lanier by Harris Corp (HRS) were prolonged as their parent companies took longer to sort several issues including allocation of debts.
But successful break-ups do occur.
Investment bank Goldman Sachs (GS), Tyco's advisors, in 1988 advised a medium-sized British firm Racal Electronics to sell 20 percent shares in its mobile phone arm. Three years later, the company was spun off and became Vodafone Group Plc , one of the world's biggest mobile phone companies.
And Wall Street is waiting for similar hot properties to put their money in. Citigroup (C) is spinning off its wholly owned subsidiary Travelers Property Casualty.
Nasdaq-listed Conexant Systems (CNXT) announced plans to spin off its wireless division and merge it with Alpha Industries (AHAA) and once completed, the new business will be a pure wireless company.
And then there's the ultimate question of how long will GE hold on to its current conglomerate status.
"There is a limit to which you can grow by acquisitions, and for GE that's not far away," says one investment banker.
Bankers say there will be a time when GE management will get fed up seeing its shares trading at a discount, compared to some pure industry players. "That will be the ultimate spin-off," says Minichiello. REUTERS
© 2002 Reuters
goldengate - I hate to be the one to point this out.... but the Superbowl was yesterday.
Not much action here.... pending financials. ETLK trading at $0.45 (unchanged) with the bid at $0.40 and ask at $0.52. Volume so far today - 35,200.
This is the only problem with this board...... There is no way to put a poster on ignore. If biemo is going to trash the board with his endless unrelated copy and paste spam, I'll stick to RB where I can choose what I read.
Have you been talking to Madam Lulu again?
OT: Bill - Retired and living in Florida? I just met you 6 months ago and you don't look old enough to be retiring for another 20 years. Get back to work!
boatgirl - In the end, that is all that counts. To be a successful company in the long run you can't rely on wheeling and dealing, fancy accounting, hype, or hope. Enron just got through proving that. A good company offers a useful product or service and manages to accomplish that while making a profit for its shareholders. There will always be up markets and down markets and some periods of time will be better than others but being able to adapt to the changing situations is what seperates the good ones from the bad ones.
Many of these ideas would have worked in 1999 but the situation has changed since then. The opportunity for HRCT and other companies to do deals with shares at inflated prices has passed. Alan has accepted that HRCT must use different methods to achieve its goals. He would still like to distribute those shares but realizes that it can't be done at this time and have HRCT remain viable. It may be possible to do at some future point after Dr. Ching has had time to establish HRCT Capital and develop the e-learning program. HRCT needs to retain the ETLK shares for the present to be able to include ETLK's revenues on HRCT's balance sheet. Sinobull is moving along and the media group (TV program) has real potential if they can raise the necessary funding. The go-go days may be over but HRCT has survived and will have to take the time required to build its businesses. It can't be done overnight or even in two weeks - lol.
HRCT's outstanding shares increased as they were acquiring companies because they were using shares to buy them. Bringing a subsidiary public doesn't affect the total number of HRCT shares outstanding it merely transfers the asset value of those shares from HRCT to the new shares. As long as HRCT holds those new shares then the asset remains with HRCT. Distributing those new shares to existing HRCT shareholders would reduce the value of HRCT shares because HRCT would no longer hold those assets.
As for the second part of your question.... I don't know what their plans are. HRCT could do a reverse split of HRCT shares at any time but I don't think that would be beneficial to us as shareholders and I don't expect that they will do that. If it were me.... (it isn't but you asked) I would find a nice little profitable AMEX company (EDT maybe?) and reverse merge HRCT into it and do the share reduction in conjunction with that merger. That way the total outstanding shares would be reduced, HRCT would get an AMEX listing, and they would develop synergies with an existing, small e-learning company.
If everything were an ideal world...... lol.
I agree. They are probably waiting on the audited 2001 financials before releasing projections on ETLK. Mr. Weinberg recently took a trip to China with Manu to have an "on-sight" look at the subsidiaries and obtain detailed information prior to doing the audited 10k for HRCT. Auditors are being very careful these days so I expect a realistic SEC filing.
MBR - Thanks for shareing your info from Manu. It was no suprise since distribution of the ETLK shares at this time was not an option if HRCT was to survive. Contrary to what many posters seemed to have hoped, there is no such thing as "free" shares in any spinoff no matter what company is doing it. If the shares of the spinoff are distributed to the shareholders of the parent company then the value of the spinoff shares is automatically removed from the value of the shares of the parent company. In HRCT's case, the value of ETLK and Sinobull are 98% of the value of HRCT at this time. At some future point when HRCT Capital and the e-learning division achieve significant revenues and earnings then HRCT may have the option of distributing shares of ETLK and Sinobull.
bedfordboy - If a tunnel dead ends it isn't a tunnel it is a cave. ETLK has already been spun off..... why would that affect the # of HRCT shares outstanding? The Sinobull spinoff would have no effect on the # of HRCT shares outstanding.
Are you touting PACT or is there some relationship to HRCT?
I already spend too much time with your dog prying inside information out of him. His "cousin" should have warned all those K-Mart and Enron stockholders. If that dog wasn't so lazy we would get more information to kick around.
Did I miss something? Ron removed it too quickly. I didn't even see who was here.
It won't help.... Half of them are deaf and would get it wrong the second time around anyway.
He is running for President in the next election. Business as usual.