Hartcourt Companies (fka HRCT)

[The Eagle]

EZZE, fellow Hartcourters,

Here is the reply from Jack Westfield.....I will post more as it is received.

Greetings Andy & Mark:

I will try to answer the balance of the questions that you have raised in a new document.

In the meantime please review the attached. It covers those questions dealing with IPO's in
the Hong Kong market, pricing, dividends and whether folks need to open accounts with Koffman.

Sincerely,
Jack


And the Document that Jack referred to:

April 12, 2001

Dear Hartcourt Shareholders:

A number of questions have been forwarded to me from shareholders over the past few weeks that I would like to address collectively. You may all benefit from seeing these explanations.

I.
Because the planned IPOs of StreamingAsia and SinoBull are scheduled to take place on the Hong Kong Stock Exchange’s GEM Market (Growth Enterprise Market) investors wanting to “purchase shares on the IPO,” that is, buy them the day before they begin trading on the exchange, investors will need to buy through an account not domiciled inside of the United States.

The SEC requires a forty-day “seasoning period” for new issues in foreign markets, which prevents US-based brokerage offices from entering any orders on your behalf to buy IPO shares. They can only buy for you after the shares have been trading for 40 days; at the price the shares are trading for at that time.

Hartcourt management is recommending that investors open accounts with Hong Kong-based Koffman Securities. Koffman is the lead underwriter and is likely to be in position to provide access to all of the IPO shares that investors request.

Forms to open an new account with Koffman can be requested by contacting Grace Li at Hartcourt by e-mail at: [e-mail] or 310-410-7290 ext. 203.

II.

After completing the required paperwork, you should send it back to Grace Li at Hartcourt. She will then combine it with similar packages and have it delivered to Koffman’s offices.

III.

Koffman cannot efficiently process personal or cashiers checks drawn against US or other foreign-based banks. It would take them 20-30 days to actually clear the funds through international intermediaries. Therefore, we are recommending that after your Koffman accounts are established and you have been issued an account number, contact your bank or brokerage firm and have them wire transfer your funds into your Koffman account.
This typically takes 2 business days and you will be in position to make purchases upon receipt of your funds.






IV.

The Hong Kong Stock Exchange has established a flat commission for all IPO shares of one percent (1%). There will also be a clearing charge of 0.01%. So, the total amount of fees charged will be one & one-tenth percent (1.01%).

V.

Because the final pricing of IPOs is set by the underwriter on the day of the offering, rather than requesting a specific number of shares, it would be easier if potential investors send in their request for shares in terms of US Dollar amount. This way, the underwriters will know your full intentions and will act to carry out your wishes to the best of their ability.

VI.

Hartcourt remains committed to the idea of distributing as dividends some portion of the shares it owns in SA, Sinobull or any other company sometime after it completes an IPO. Hartcourt shall structure any such distribution of potential dividends so as to provide the greatest benefit to its long-term shareholders. These anticipated distributions of future dividends are not intended to be one-time events, but rather an incremental process that will be completed over the next few years. The scheduling will be contingent upon Hartcourt receiving a favorable tax ruling so that the Company and its shareholders will not be adversely affected.

Any dividend of shares will be for companies that have successfully completed their respective IPOs and are trading in the open market. Dividends will not be issued at the time of the IPO. However, shares in the IPO are being reserved for Hartcourt shareholders so that they will have access to shares if they choose to buy them at the IPO price. Underwriters will likely issue lock-up agreements on shares held by Hartcourt, which will mean that dividends will not be available for distribution for some time following completion the respective IPOs.

Shareholders not wanting to subscribe to IPO shares do not need to open an offshore account with Koffman or any other broker. We can distribute any potential dividend shares to your existing account, whether based in the US, Germany, or other location.
Again, the Koffman account is only for the purchase of shares at the time of an IPO on the GEM or Hong Kong Main Board markets.

VII.

Until such time that any future IPO offering becomes over-subscribed, we will do our best to work with Koffman and other underwriters to reserve shares in the amount requested by shareholders. Please tell us of your intention by e-mailing Grace Li at: [e-mail] and telling her how many shares your would like to reserve in terms of US Dollars, not the actual number of shares.




If any IPO becomes over-subscribed, we will request that shareholders send us copies of their most recent brokerage account monthly statement showing their holdings of Hartcourt shares, or copies of the certificates. We would then reserve shares on a pro-rata basis. That is, we would reserve one share of the IPO company for each “x” number of Hartcourt shares owned at the time of the IPO. The more Hartcourt shares owned, the more you would qualify for.


I hope that this explanation answers all of the questions that have been forwarded to me.
If not, please feel free to mail me at [e-mail].
My backup e-mail is [e-mail].


Sincerely,
Jack Westfield
Senior Vice President
The Hartcourt Companies, Inc.
9800 S. Sepulveda Blvd., Suite 818
Los Angeles CA 90045
www.hartcourt.com
310-410-7290 ext. 210

Thanks to all that are....like me....waiting to see if Yuanta is going to perform...or the management chooses some other M&A method to monetize the assets and give the shareholders some value.

God Bless ya'll,

Andy