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Hartcourt Companies Inc – ‘PRER14C’ on 10/10/03

On: Friday, 10/10/03, at 6:22pm ET · As of: 10/14/03 · Accession #: 1017386-3-200 · File #: 1-12671

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/14/03  Hartcourt Companies Inc           PRER14C    10/10/03    3:185K                                   Completion Corp/FA

Revised Preliminary Proxy Information Statement — Schedule 14C
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRER14C     Amendment 1 to Preliminary 14C                        67    238K 
 3: EX-3        Amended and Restated Bylaws of Ftl                    12     52K 
 2: EX-3.(I)    Articles of Incorporation of Ftl                       2      8K

PRER14C — Amendment 1 to Preliminary 14C
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Common stock Description of Capital Stock Discount on early settlement of mortgage loan Distribution, The Federal Income Tax Consequences of the Distribution FTL's Intellectual Property is Not Registered, Which May Materially Adversely Affect its Business Manner of Effecting the Distribution Risk Factors Summary The Distribution There Can be No Assurance that an Active Trading Market for the FTL Common Stock will be Established or Maintained After the Distribution, and the Stock Price May be Volatile There is a Risk the FTL Common Stock will Constitute Low-Priced Stock Subject to Penny Stock Regulations
1	1st Page - Filing Submission
4	Summary
7	The Distribution
"	Manner of Effecting the Distribution
8	Federal Income Tax Consequences of the Distribution
10	Risk Factors
13	FTL's Intellectual Property is Not Registered, Which May Materially Adversely Affect its Business
15	There Can be No Assurance that an Active Trading Market for the FTL Common Stock will be Established or Maintained After the Distribution, and the Stock Price May be Volatile
"	There is a Risk the FTL Common Stock will Constitute Low-Priced Stock Subject to Penny Stock Regulations
23	Discount on early settlement of mortgage loan
28	Description of Capital Stock
29	Common stock

PRER14C 1st Page of 67 TOC ↑Top Previous Next ↓Bottom Just 1st
 
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14C

 Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No. 1)

Check the appropriate box:                                                      
[X]  Preliminary Information Statement                                        
[ ]  Confidential, for Use of the Commission Only                             
(as permitted by Rule 14c-5(d)(2))                                  
[ ]  Definitive Information Statement                                         

 The Hartcourt Companies, Inc.
----------------------------------------------
(Name of Registrant As Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):                              

X   No fee required                                                         

[ ]  Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11     

(1) Title of each class of securities to which transaction applies: 
(2) Aggregate number of securities to which transaction applies:    
      (3) Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange  Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):  
(4) Proposed maximum aggregate value of transaction:                
(5) Total fee paid:                                                 

[ ]  Fee paid previously with preliminary materials.                          

[ ]  Check box if any part of the fee is offset as provided by Exchange Act   
    Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
   paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.         

(1) Amount Previously Paid:                                         
(2) Form, Schedule or Registration Statement No.:                   
(3) Filing Party:                                                   
(4) Date Filed:                                                     

PRER14C 2nd Page of 67 TOC 1st Previous Next ↓Bottom Just 2nd
 INFORMATION STATEMENT
--------------------
 FINANCIAL TELECOM LIMITED (USA), INC.
($0.001 PAR VALUE PER SHARE)
--------------------

         The Hartcourt Companies, Inc. ("Hartcourt") plans to distribute to each
record holder of Hartcourt  common stock,  $0.001 par value,  as of the close of
business on October 17, 2003 (the "Record Date"),  .09232471 share of the $0.001
par value common stock of Financial  Telecom  Limited (USA),  Inc. ("FTL" or the
"Company"),  for each share of  Hartcourt  common stock owned as of the close of
business  on the Record Date (the  "Distribution").  Hartcourt  is mailing  this
information statement to you on or about ________,  2003 in order to provide you
with certain information about FTL.                                             

         Hartcourt  currently owns 15,100,000 shares of FTL's outstanding common
stock,  representing all of FTL's outstanding capital stock, and will effect the
Distribution as of the close of business on _________,  2004 (the  "Distribution
Date"). As a result,  100% of the outstanding shares of FTL common stock will be
distributed to holders of Hartcourt common stock on a pro rata basis.  Hartcourt
shareholders will not be asked to give any consideration for receiving shares of
FTL common stock. There is no current market for the FTL common stock. FTL is in
the process of applying to have its common  stock  included on the OTC  Bulletin
Board. If its application is granted, trading is expected to commence during the
first quarter of 2004. The  Distribution  is contingent upon the application for
listing being approved.                                                         

IN REVIEWING  THIS  INFORMATION  STATEMENT,  YOU SHOULD  CAREFULLY  CONSIDER THE
MATTERS DESCRIBED UNDER THE CAPTION "RISK FACTORS."                             

WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.     

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION NOR HAS THE SECURITIES
AND  EXCHANGE  COMMISSION  OR ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS INFORMATION  STATEMENT.  ANY  REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.                                                 

THIS  INFORMATION  STATEMENT  DOES  NOT  CONSTITUTE  AN  OFFER  TO  SELL  OR THE
SOLICITATION  OF AN OFFER TO BUY ANY  SECURITIES.  ANY SUCH OFFERING MAY ONLY BE
MADE BY MEANS OF A SEPARATE  PROSPECTUS  PURSUANT TO AN  EFFECTIVE  REGISTRATION
STATEMENT AND OTHERWISE IN COMPLIANCE WITH APPLICABLE LAW.                      

         The  statements  included in this  information  statement  that are not
purely historical are  forward-looking  statements within the meaning of section
27A of the  Securities  Act and  Section  21E of the  Exchange  Act of 1934,  as
amended  (the  "Exchange  Act"),  including,   without  limitation,   statements
regarding our  expectations,  beliefs,  intentions  or strategies  regarding the
future.  These  statements  involve known and unknown risks,  uncertainties  and
other  factors,  which may cause our actual  results to differ  materially  from
those implied by the forward-looking statements. In some cases, you can identify
forward-looking  statements  by  terminology  such as "may,"  "will,"  "should,"

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"expects,"   "plans,"   "believes,"   "predicts,"   "estimates,"   "projection,"
"intends,"  "anticipates" and similar terms.  Readers are cautioned not to place
undue  reliance  on  the   forward-looking   statements  set  forth  below.  All

forward-looking  statements included in this information  statement are based on
information known of the date hereof, and the Company and Hartcourt undertake no
obligation to publicly  update or revise any of the  forward-looking  statements
contained herein.                                                               

         You should only rely upon the information  included in this information
statement.  We have not  authorized  anyone to provide  you with  additional  or
different  information.  The information contained in this information statement
is  believed  by us to be  accurate  as of the date set forth on its cover.  You
should not assume  that the  information  is  accurate as of any date later than
such  date.  Changes  may occur  after  that  date,  and we will not  update the
information  except in the normal  course of our  respective  public  disclosure
obligations and practices.                                                      

         Shareholders  of Hartcourt with inquiries  related to the  Distribution
should contact Hartcourt's general counsel, John Furutani, at (626) 844-2437; or
the FTL common stock Transfer  Agent,  Signature Stock  Transfer,  Inc.,  Plano,
Texas,  Attn:  Jason  Bogutski,   Telephone:  (972)  612-4120.  Signature  Stock
Transfer, Inc. is acting as Distribution Agent for the Distribution.            

The date of this information statement is October 9, 2003.    

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 SUMMARY

         The following is a summary of certain  information  contained elsewhere
in this information  statement and is qualified in its entirety by reference to,
and should be read in conjunction  with, the detailed  information and financial
statements  contained  herein.  Capitalized  terms used in this  Summary and not
defined are defined elsewhere in this information statement.                    

DISTRIBUTING COMPANY         The Hartcourt Companies, Inc. ("Hartcourt")        

DISTRIBUTED COMPANY          Financial Telecom Limited (USA), Inc. ("FTL" or the
                             "Company"), a wholly-owned subsidiary of Hartcourt.
                             FTL  is  principally  engaged  in the  business  of
                             providing  real-time  stock  quotes,  international
                             foreign  currency  exchange  quotes  and  financial
                             information   on  Hong   Kong   listed   companies,
                             including   trading   information  on  other  stock
                             exchanges  in the  United  States  and  Europe,  to
             institutional and retail investors.

SHARES TO BE DISTRIBUTED     15,100,000  shares  of  common  stock  of  FTL.  No
                             fractional  shares will be distributed.  The shares
                             to be  distributed  will  constitute  100%  of  the
                 outstanding shares of FTL common stock.

DISTRIBUTION RATIO           The  Distribution  will  be made  on the  basis  of
                             .09232471  share of FTL common stock for each share
                             of Hartcourt common stock owned of record as of the
                close of business on October 17, 2003.

FRACTIONAL SHARE INTERESTS   Signature Stock  Transfer,  Inc. will aggregate any
                             fractional shares that a Hartcourt shareholder will
                             be   entitled   to  receive  as  a  result  of  the
                             distribution  and  offer  them  for  sale  into the
                             market for cash.  The cash  proceeds  from any sale
                             will be distributed to those shareholders  entitled
                             to a fractional  interest.  See "The Distribution -
                             Manner of Effecting the  Distribution" and "Federal
                       Income Tax Consequences of the Distribution."

TRADING MARKET               FTL is in the  process  of  applying  to  have  its
                             common stock included on the OTC Bulletin Board. If
                             the application is granted,  FTL  anticipates  that
                             trading  of its  common  stock  will  begin on that
                             system  during  the  first  quarter  of  2004.  The
                             Distribution is contingent upon the application for
 listing being approved.

RECORD DATE                  October 17, 2003                                   

DISTRIBUTION DATE            _________, 2004                                    

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MAILING DATE                 __________, 2003                                   

DISTRIBUTION AGENT           Signature Stock Transfer, Inc., Plano, Texas       

FEDERAL INCOME TAX           Hartcourt anticipates that the Distribution will be
CONSEQUENCES                 treated  as a  taxable  distribution  to  Hartcourt
                             shareholders.  See "Federal Income Tax Consequences
                             of  the  Distribution"  and  "Risk  Factors  -  the
                         Distribution Shall be Taxable to Shareholders."

ANTI-TAKEOVER PROVISIONS     Certain state laws applicable to FTL could have the
                      effect of restricting an acquisition of FTL.

TRANSFER AGENT AND REGISTRAR Signature Stock Transfer, Inc., Plano, Texas       
FOR FTL COMMON STOCK                                                            

RELATIONSHIP BETWEEN         Following the  Distribution,  the Company will rely
HARTCOURT AND FTL AFTER      on   Hartcourt   for    accounting   and   business
THE DISTRIBUTION             development  support  and  investor  relations  and
                             corporate governance  consultation for a transition
                             period. It is expected that the Company will either
                             form its own team or  outsource  these  services at
                some point following the Distribution.

RISK FACTORS                 Shareholders  should  be aware of  certain  special
                             considerations,   including,  among  other  things,
                             that: (i) FTL has a history of operating at a loss;
                             (ii) FTL will need to obtain  additional  financing
                             in order to fund its  operating  losses;  (iii) FTL
                             has  no  operating  history  as a  separate  public
                             company;  (iv) Hartcourt's financial and, following
                             a transition  period,  certain other support of FTL
                             will be  discontinued  following the  Distribution;
                             (v) the  Distribution  will be taxable to Hartcourt
                             shareholders;  (v) FTL operates in markets that are
                             highly competitive;  (vi) payment of cash dividends
                             is not expected  for the  foreseeable  future;  and
                             (vii) there has been no prior public market for FTL
                             common stock and the market prices may be volatile.
See "Risk Factors."   

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INTRODUCTION

         Hartcourt currently holds 15,100,000 common shares of FTL, representing
100% of the total  outstanding  common stock of FTL. On September 11, 2003,  the
board of directors of Hartcourt  declared a distribution  payable to the holders
of record of  Hartcourt's  common  stock at the close of business on October 17,
2003,  the Record Date, of .09232471  share of the $0.001 par value common stock
of FTL for each share of Hartcourt  common stock  outstanding as of the close of
business on the Record Date. The  Distribution  will be effected as of the close
of business on __________,  2004, the Distribution Date, assuming the listing of
FTL stock on the OTC  Bulletin  Board  exchange  in the  United  States has been
approved. As a result of the Distribution, 100% of the outstanding shares of FTL
common stock will be distributed to Hartcourt  shareholders on a pro rata basis.
Shares of FTL common stock will  initially be issued in book entry form (without
stock certificates)  entered on the records of FTL.  Shareholders will receive a
written confirmation from Signature Stock Transfer, Inc., the Distribution Agent
and Transfer Agent for FTL common stock, showing the number of FTL shares owned.
Certificates  representing the shares distributed along with certain tax-related
information  will  be  mailed  to  Hartcourt  shareholders  by  Signature  Stock
Transfer, Inc. as soon as practicable following the Distribution Date.          

         Financial  Telecom  Limited,   a  private  company  limited  by  shares
incorporated  in Hong Kong ("FTL  HK"),  was  incorporated  in 1983.  FTL HK was
established by a group of professionals in the financial  service  industry.  It
was the first company in Hong Kong to provide  real-time  financial  information
services  using  a  wireless  network  for the  dissemination  of  data.  FTL HK
generates revenue through the provision of online financial information services
and the sale of well-known  technical analysis software and related Internet and
telephone services. Pursuant to a Stock Purchase Agreement by and between FTL HK
and  Hartcourt  dated August 19, 1999,  Hartcourt  acquired  4,964,990  ordinary
shares of FTL HK. In 2003, FTL HK repurchased 3,427,349 shares and 92,000 shares
of the ordinary shares of FTL HK from Bowland  International Limited ("Bowland")
and Tang Wing On, respectively.  As a result of this repurchase,  Hartcourt held
all the issued and outstanding stock of FTL HK.                                 

         FTL was  incorporated in Nevada in April 2003 with Hartcourt owning all
issued  shares.  On  September  10,  2003,  FTL  entered  into a Share  Exchange
Agreement  with  Hartcourt,  pursuant  to which  FTL  purchased  from  Hartcourt
4,964,990  shares of common stock of FTL HK,  representing all of the issued and
outstanding  capital stock of FTL HK. Pursuant to the Share Exchange  Agreement,
FTL HK became a wholly owned  subsidiary of FTL. As the sole asset of FTL is FTL
HK, the purpose of the  transaction  was to restructure FTL HK as a wholly-owned
subsidiary of FTL.                                                              

         All of the shares of FTL currently held by Hartcourt, representing 100%
of the outstanding shares of FTL, will be distributed to Hartcourt  shareholders
in the Distribution. In order to avoid distributing fractional shares, Signature
Stock Transfer,  Inc. intends to aggregate and offer to sell into the market any
fractional  share  interests and to distribute any cash received to shareholders
for the value of their fractional interests.                                    

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         FTL's  principal  executive  offices  are  located  at 308,  Hang  Bong
Commercial  Center,  28 Shanghai Street,  Kowloon,  Hong Kong. Its United States
mailing address is 15165 Ventura Boulevard,  Suite 400, Sherman Oaks, California
91403 and the telephone number is (626) 844-2437.                               

         Hartcourt  shareholders  with  questions  relating to the  Distribution
should contact  Hartcourt's general counsel,  John Furutani,  at (626) 844-2437.
After the Distribution Date,  shareholders of the FTL with inquiries relating to
the Distribution should contact Stephen Tang at 852 2868 0668, or Jason Bogutski
at Signature Stock Transfer, Inc., the transfer agent, at (972) 612-4120.       

THE DISTRIBUTION

REASONS FOR THE DISTRIBUTION                                                    

         The Hartcourt  board of directors has determined that it is in the best
interests of Hartcourt and its shareholders to separate FTL from Hartcourt.  The
decision to effect the Distribution is part of Hartcourt's  strategy of focusing
on its core  business  of  building  a broad  network  of  Internet,  media  and
telecommunication  companies in Hong Kong and Mainland China. Hartcourt believes
that  the  separation  of its FTL  subsidiary  will  permit  Hartcourt  to adopt
strategies and pursue  opportunities  appropriate to its specific businesses and
industries.  Further,  subsequent to the separation,  FTL may be able to achieve
future growth through  internal  expansions and  acquisitions  utilizing its own
equity.                                                                         

         The  Distribution  will  enable  the  management  of  each  company  to
concentrate  its attention  and financial  resources on the core business of its
respective  company  without  regard to the corporate  objectives,  policies and
investment  standards  of the other.  In  addition,  FTL will be able to provide
incentives for key employees that correspond more directly to the performance of
its  business.  The  Distribution  will  also  allow  FTL to  develop a board of
directors  with  relevant  expertise to its  business.  The  Hartcourt  board of
directors believes that the Distribution will allow investors to better evaluate
the different  merits of each business and its future  prospects,  enhancing the
likelihood  that  each  will  achieve  appropriate  market  recognition  of  its
performance and potential.                                                      

MANNER OF EFFECTING THE DISTRIBUTION                                            

         Hartcourt  will effect the  Distribution  on the  Distribution  Date by
delivering shares of FTL common stock to Signature Stock Transfer,  Inc., as the
Distribution  Agent,  for  distribution to holders of record of Hartcourt common
stock on the Record Date. The  Distribution is contingent on the FTL stock being
approved for listing on the OTC Bulletin Board. The Distribution will be made on
the basis of  .09232471  share of FTL common  stock for each share of  Hartcourt
common stock outstanding on the Record Date. All shares of FTL common stock will
be fully paid and  nonassessable and the holders thereof will not be entitled to
preemptive  rights.  See  "Description  of Capital  Stock." Shares of FTL common
stock will initially be issued in book entry form (without  stock  certificates)
entered on the records of FTL.  Shareholders will receive a written confirmation
from Signature Stock Transfer,  Inc., the Distribution  Agent and Transfer Agent

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for FTL common  stock,  showing  the number of FTL  shares  owned.  Certificates
representing  the shares  being  issued in the  Distribution  along with certain
tax-related  information  will be mailed to Hartcourt  shareholders by Signature
Stock Transfer, Inc. as soon as practicable following the Distribution Date.    

         No certificates representing fractional shares of FTL common stock will
be issued to Hartcourt shareholders as part of the Distribution. Signature Stock
Transfer, Inc. will aggregate any fractional shares issuable to its shareholders
and offer to sell them into the market and such persons  will receive  instead a
cash  payment in the amount of their pro rata  share of any sale  proceeds.  See
"The Distribution - Federal Income Tax Consequences of the Distribution."       

         No holder of Hartcourt common stock will be required to pay any cash or
other  consideration  for  the  shares  of  FTL  common  stock  received  in the
Distribution  or to  surrender or exchange  shares of Hartcourt  common stock in
order to receive shares of FTL common stock.  The  Distribution  will not affect
the number of, or the  rights  attaching  to,  outstanding  shares of  Hartcourt
common stock.                                                                   

LISTING AND TRADING OF THE COMMON STOCK; OWNERSHIP                              

         FTL is in the process of applying for  inclusion of its common stock on
the OTC Bulletin Board.  The  Distribution is contingent upon such listing being
approved.  FTL  currently  anticipates  that trading will  commence in the first
quarter of 2004.                                                                

         No current public  trading market for the FTL common stock exists.  The
extent of the market  for the FTL  common  stock and the prices at which the FTL
common stock may trade cannot be predicted.  See "Risk  Factors- There Can be No
Assurance  that an  Active  Trading  Market  for the FTL  Common  Stock  will be
Established  or Maintained  After the  Distribution,  and the Stock Price May be
Volatile" and "There is a Risk the FTL Common Stock will  Constitute  Low-Priced
Stock Subject to Penny Stock Regulations."                                      

         Subject to approval  for listing on the OTC Bulletin  Board,  shares of
FTL  common  stock   distributed  to  Hartcourt   shareholders  will  be  freely
transferable,  except for  shares  received  by persons  who may be deemed to be
"affiliates"  of the Company under the  Securities  Act of 1933, as amended (the
"Securities  Act").  Individuals or entities that control,  are controlled by or
are under common  control with the Company,  including  directors  and principal
executive  officers  of FTL as  well as  principal  shareholders  of  FTL,  will
generally be considered as affiliates. Persons who are affiliates of the Company
will be  permitted  to sell their  shares of common  stock only  pursuant  to an
effective  registration  statement under the Securities Act or an exemption from
the  registration  requirements  of the  Securities  Act, such as the exemptions
afforded by Section 4(2) of the Securities Act and Rule 144 thereunder.         

         The Company expects to have  approximately  10,000 holders of record of
the FTL common stock immediately after the Distribution.                        

FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION                             

         The  Distribution of the shares of FTL to the shareholders of Hartcourt
is not intended to be a tax-free  distribution of those shares under Section 355

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or Section 368 of the Internal  Revenue Code (the "Code") and will be taxable to
Hartcourt shareholders. Shareholders of Hartcourt are urged to consult their tax
advisors as to the tax consequences to them of the Distribution.                

         Because the  Distribution  will not qualify as a tax-free  distribution
under Section 355 or Section 368 of the Code, the Distribution of shares will be
a taxable transaction both to Hartcourt and to the shareholders of Hartcourt.   

         Pursuant to Section  311(b)(1) of the Code,  Hartcourt  will  recognize
gain (but not loss) on the Distribution of the FTL shares equal to the excess of
the value of such shares over Hartcourt's tax basis in such shares. If the value
of the FTL shares is less than or equal to their basis,  no gain or loss will be
recognized  to  Hartcourt  and  the  basis  Hartcourt  had in such  shares  will
disappear as a result of the Distribution  without  producing any tax benefit to
Hartcourt.                                                                      

         The  shareholders  of  Hartcourt  who  receive  stock  of  FTL  in  the
Distribution  will be treated as  receiving a dividend  from  Hartcourt  (to the
extent of the earnings and profits of Hartcourt) in an amount equal to the value
of the FTL shares on the date of  Distribution.  Hartcourt  and FTL believe that
the earnings and profits of Hartcourt  may be in excess of the value of the FTL.
If the earnings  and profits of Hartcourt  are in excess of the value of the FTL
shares, the full value of the FTL shares will be taxable as a dividend. Any cash
received in lieu of fractional  shares of FTL will also be treated as a dividend
to the Hartcourt  shareholder.  Individual  shareholders will be required to pay
tax at ordinary  income  rates on the amount of the  dividend  received and will
have a basis in the FTL  shares  equal to the value of the FTL  shares as of the
date of Distribution.  In addition,  withholding may be required with respect to
non-U.S.  shareholders who receive the Distribution.  A corporate shareholder of
Hartcourt  may be  permitted  to  exclude a  portion  of the  dividend  received
pursuant  to the  provisions  of  Section  243 of the Code.  Any such  corporate
shareholder  should consult its own tax advisor as to the application of Section
243.                                                                            

         If the  Distribution  is not taxable as a dividend,  it is treated as a
return of capital. To the extent that the value of the FTL shares distributed to
a shareholder  exceeds  Hartcourt's  earnings and profits and the  shareholder's
basis in  Hartcourt  stock,  such  excess  is  treated  as gain from the sale or
exchange of property.  Therefore,  the value of any FTL stock  distributed  to a
Hartcourt  shareholder  will  initially be applied to reduce that  shareholder's
basis in Hartcourt stock. If the value of the FTL stock received exceeds the tax
basis of the recipient shareholder's Hartcourt stock, the excess will be treated
as gain from the sale of such stock. Under most circumstances, such gain will be
taxable as a capital gain.                                                      

         To  the  extent  that  the  Distribution  is  taxable  to  a  Hartcourt
shareholder as a dividend, withholding at a rate of up to 30% may be required if
the shareholder is not a U.S.  shareholder.  However,  capital gains of non-U.S.
shareholders are generally exempt from U.S. tax.  Non-U.S.  shareholders  should
consult with their tax advisors to determine  whether or not they are subject to
U.S.  tax and if there are any tax  treaties  in place  that may  minimize  such
potential U.S. tax liabilities.                                                 

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         The holding  period for the FTL shares for capital gain  purposes  will
begin as of the date following the Distribution Date.                           

         THE  FOREGOING  IS MERELY A  SUMMARY  OF  CERTAIN  FEDERAL  INCOME  TAX
CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW AND IS INTENDED TO BE GENERAL
INFORMATION ONLY. IN VIEW OF THE FOREGOING,  AND THE VARIOUS FOREIGN,  STATE AND
LOCAL TAX  CONSEQUENCES OF THE  DISTRIBUTION,  HOLDERS OF HARTCOURT COMMON STOCK
ARE URGED TO CONSULT THEIR  PERSONAL TAX ADVISORS  REGARDING THE  PARTICULAR TAX
CONSEQUENCES OF THEIR RECEIPT OF FTL COMMON STOCK.                              

REASONS FOR FURNISHING INFORMATION STATEMENT                                    

         Hartcourt is delivering this information  statement to its shareholders
of record solely to provide adequate information to Hartcourt shareholders about
FTL and the  distribution  of FTL shares.  It is not, and is not to be construed
as, an inducement or encouragement to buy or sell any securities of Hartcourt or
FTL. The information  included here is given as of the date of this  information
statement unless otherwise indicated.                                           

RELATIONSHIP BETWEEN HARTCOURT AND THE COMPANY AFTER
THE DISTRIBUTION

         The Company has not entered into any formal arrangements with Hartcourt
concerning their business  relationships  following the  Distribution,  although
they may do so in the  future.  The Company  has a loan from  Hartcourt  with an
outstanding  balance of US$697,566  (as of August 31, 2003) that will be written
off in full  prior  to the  Distribution.  This  write-off  will  result  in tax
consequences  to the Company.  Currently,  the Company  relies on Hartcourt  for
accounting support and certain administrative  services. It is expected that the
Company will rely on Hartcourt for accounting and business  development  support
and investor  relations and corporate  governance  consultation for a transition
period  following the  Distribution.  Following this  transition  period,  it is
expected  that the  Company  will either  form its own team or  outsource  these
services at some point following the Distribution.                              

RISK FACTORS

         The  following  risk  factors,  in  addition  to the other  information
contained  elsewhere  in  this  information  statement,   should  be  considered
carefully in evaluating the Company and its business:                           

FTL HK HAS A HISTORY OF OPERATING AT A LOSS, AND BECAUSE FTL EXPECTS TO CONTINUE
TO INCUR NET LOSSES, IT MAY NEVER BE PROFITABLE                                 

         FTL HK, the Company's subsidiary, was profitable until June 1999. Since
then, the operations of FTL HK have not been profitable.  One of the purposes of
the Distribution is to permit FTL to pursue a strategy of expanding its customer
base and product lines.  FTL's  management  believes that if it is successful in
this strategy,  FTL will be able to generate revenues in excess of its operating
expenses.  However,  there  are  no  assurances  that  FTL's  strategy  will  be
successful and at least for the foreseeable future, FTL will continue to operate

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at a loss. In addition, as a stand-alone entity, FTL is expected to incur, among
other  things,  higher  expenses,  including  the  expense of  establishing  and
maintaining  FTL's own accounting and  administration  team,  which prior to the
Distribution,  have  been and will be  provided  by  Hartcourt.  There can be no
assurance  that it will be able to increase  its sales  revenues to offset these
expenses, if at all.                                                            

IF FTL IS UNABLE TO OBTAIN  ADDITIONAL  FINANCING TO FUND ITS OPERATING  LOSSES,
ITS FINANCIAL PERFORMANCE WILL BE MATERIALLY ADVERSELY AFFECTED                 

         FTL  will  need  to  seek  additional  financing  to  fund  its  future
operations.  FTL HK incurred net losses of  $1,525,127  and  $1,321,200  for the
years ended  December 31, 2002 and 2001,  respectively.  In  addition,  FTL HK's
working  capital  deficit of  $1,752,213  is not  adequate  to meet its  minimum
monthly capital  expenses.  FTL's ability to continue as a going concern depends
on the success of its plan to seek funding  sources once spun-off.  FTL plans to
approach  funding sources such as lenders  interested in funding FTL to meet its
working capital  requirements and investors  interested in purchasing FTL stock.
FTL does not have any  commitments to provide such financing and there can be no
assurance  that  any  such  financing  will be  available  when  needed  or,  if
available,  will be on  terms  acceptable  to the  Company.  In the  event  such
financing  is not  obtained,  FTL's  operations  will  be  materially  adversely
affected  and  may  have to be  substantially  reduced  or  ceased.  Any  equity
financing will be dilutive to FTL's existing  shareholders  and debt financings,
if available, will likely impose restrictive covenants upon FTL.                

FTL MAY BE UNSUCCESSFUL OPERATING INDEPENDENT OF HARTCOURT                      

         The  Company  does  not have an  operating  history  as an  independent
company,   particularly  not  one  that  has  public  reporting  obligations  or
securities  publicly  traded.  Prior to the  Distribution,  the Company has been
operating  under the  control of  Hartcourt.  Following  the  Distribution,  the
Company will no longer be able to rely on  Hartcourt  for  financial  support or
benefit  from its  relationship  with  Hartcourt  to obtain  credit  or  receive
favorable terms for the purchase or sale of certain goods and services.         

         In addition,  after a temporary  transition period, the Company will be
responsible for obtaining its own treasury, cash management,  accounting, legal,
risk management and other administrative  activities.  In order to manage future
growth and meet its reporting requirements as a public company, FTL will need to
secure these sources quickly.                                                   

CONTINUED OR WORSENING UNFAVORABLE  CONDITIONS IN THE FINANCIAL MARKETS MAY HAVE
A SIGNIFICANT ADVERSE AFFECT ON FTL'S BUSINESS                                  

         FTL's business is generally  dependent upon the health of the financial
markets,  particularly the Hong Kong stock market, and the participants in those
markets.  As a provider of  financial  information,  FTL,  like other  financial
services businesses,  is directly affected by economic and political conditions,
broad trends in business and finance and changes in volume, trading activity and
price levels of securities  and future  transactions.  The Hong Kong  securities
market is characterized by considerable fluctuation and downturns in this market
has harmed FTL, and could continue to do so in the future. There is no guarantee
that the securities market will recover from its current  downturn,  and some of

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our competitors  with more diverse  product and service  offerings may withstand
such a downturn in the securities industry better than FTL would.               

DEPENDENCE ON THE LOCAL MARKET MAY IMPACT FTL'S SALES                           

         FTL will need to grow its product  sales  significantly  in order to be
successful.  FTL's customer base is local, and its revenues depend significantly
on the  well-being of the Hong Kong stock market.  A continued  downturn in this
market  would  bring  severe  loss to the  Company.  FTL will need to expand its
customer base to include  international  investors in Europe,  the United States
and Mainland  China.  FTL HK has exerted  substantial  effort  preparing for the
Mainland  China  market  after  the  implementation  of the  Qualified  Domestic
Institutional  Investor  ("QDII") scheme that facilitates the flow of investment
from Chinese investors to the Hong Kong market.  The Company estimates that QDII
will be implemented in the third quarter of 2004. However,  FTL cannot guarantee
that it will benefit from QDII or that it will be able to  significantly  expand
or that any expansion will enhance profitability.                               

RISK OF CHANGES IN TECHNOLOGY MAY MATERIALLY ADVERSELY AFFECT FTL'S BUSINESS    

         FTL's  success  depends  on its  ability  to develop  and  provide  new
products and services. The delivery of products and services online is, and will
continue to be, characterized by rapidly changing technology,  evolving industry
standards, changes in customer requirements and frequent new service and product
introductions.  FTL's future  success will  depend,  in part,  on its ability to
effectively use leading technologies, enhance current services, develop services
that meet changing  customer  requirements and influence and respond to changing
industry   standards   and  other   technological   changes   in  a  timely  and
cost-effective  manner. There can be no assurance that FTL will respond to these
changing  technological  conditions.  The  development  of new,  technologically
advanced products and services is a complex and uncertain process requiring high
levels of innovation,  as well as the accurate anticipation of technological and
market  trends.  FTL  cannot  provide  any  assurance  that  it  will be able to
identify,  develop,  market, support or manage the transition to new or enhanced
products or services  successfully.  FTL's  business,  results of operations and
financial  condition  would be  materially  adversely  affected if it were to be
unsuccessful,  or incur  significant  delays,  in developing and introducing new
products, services or enhancements.                                             

FTL'S DEPENDENCE ON THE INTERNET PLACES ITS BUSINESS AT RISK                    

         FTL's  products and services  have been  designed to  capitalize on the
growing  acceptance and use of the Internet.  Accordingly,  achievement of FTL's
growth and  profitability  objectives  will be  dependent in large part upon the
capacity,  reliability,  integrity and security of the Internet, and the service
providers  and  telecommunications  vendors  associated  therewith.  Use  of the
Internet  depends  on  the  development  of  the  necessary  infrastructure  and
communication  lines.  As the  number of users  and  amount  of  traffic  on the
Internet  continues  to increase,  there can be no  assurance  that the Internet
infrastructure will continue to be able to support the demands placed on it.    

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FTL'S INTELLECTUAL  PROPERTY IS NOT REGISTERED,  WHICH MAY MATERIALLY  ADVERSELY
AFFECT ITS BUSINESS                                                             

         FTL has not registered any of its intellectual  property,  which places
its  intellectual  property  at  risk  of  infringement.  If  FTL is  unable  to
adequately protect its intellectual property from such infringement,  others may
be able to use its  technology,  which  could  adversely  affect its  ability to
compete in the market.  Furthermore,  the laws of some foreign  countries do not
protect  intellectual  property  rights  to the same  extent  as the laws of the
United  States and many  companies  have  encountered  significant  problems  in
protecting  and  defending  their   intellectual   property  rights  in  foreign
jurisdictions.  In addition,  other parties may obtain  registered  intellectual
property  rights that relate to FTL's  technologies  and claim that FTL's use of
these  technologies  infringes  their rights.  Regardless of merit,  such claims
could  require  FTL to incur  substantial  costs,  and divert the  attention  of
management and technical personnel.                                             

FTL'S DEPENDENCE ON COMPUTER SYSTEMS PLACES ITS AT RISK                         

         FTL receives and processes  information through a variety of electronic
mediums.  There can be no assurance  that FTL's network  structure  will operate
appropriately  in the event of a computer  systems failure or that, in the event
of a tornado,  fire or any other natural disaster,  power or  telecommunications
failure,  act of God or war,  the  Company  will be able to prevent an  extended
computer systems failure. Any computer systems failure that causes interruptions
in  the  Company's  operations  could  have a  material  adverse  effect  on the
Company's business, financial condition and operating results.                  

FTL HAS LIMITED  MARKETING  AND SALES  CAPABILITIES  AND MAY BE UNABLE TO EXPAND
SUCCESSFULLY                                                                    

         FTL's operating results will depend to a large extent on its ability to
increase  its  customer  base and brand  awareness.  Although FTL has built name
recognition   through  its  twenty-year   history,   it  has  failed  to  expand
aggressively into the broad financial information industry. FTL plans to rebuild
its sales team into one that has deep penetration  into China and  international
markets.  Although FTL has developed a marketing plan, there can be no assurance
that the plan will be implemented or, if  implemented,  will succeed in creating
sufficient levels of customer demand for its products.                          

FTL IS EXPOSED TO RISKS  ASSOCIATED WITH  INTERNATIONAL  SALES AND MAINTAINING A
FOREIGN SUBSIDIARY                                                              

         FTL's subsidiary, FTL HK, is located in Hong Kong and sells and markets
its products and services in Mainland China and Hong Kong.  FTL's  international
revenues  represent  100%  of our  revenue.  Risks  arising  from  international
business include:                                                               

o   General economic and political conditions in the markets;             
o   Potential increased costs associated with overlapping tax structures; 
o   Potential trade restrictions and exchange controls;                   
o   More limited protection for intellectual property rights in some      
countries;                                                        

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o   Difficulties and costs associated with staffing and managing foreign  
operations;                                                       
o   Unexpected changes in regulatory requirements;                        
o   Difficulties of compliance with a variety of foreign laws and         
regulations; and                                                  
o   Longer accounts receivable cycles in foreign countries.               

         FTL's subsidiary business is conducted in Hong Kong dollars rather than
U.S. dollars,  which is the Company's reporting currency. The Company recognizes
currency gains or losses arising from its operations in the period incurred.  As
a result, currency fluctuations between the U.S. dollar and the Hong Kong dollar
have caused and will continue to cause foreign  currency  transaction  gains and
losses.  The Company  cannot  predict the effects of exchange rate  fluctuations
upon our  future  operating  results  because  of the  variability  of  currency
exposures and the potential volatility of currency exchange rates.              

FTL MAY HAVE DIFFICULTIES IN MANAGING GROWTH                                    

         If FTL is unable to manage growth effectively, it could have a material
adverse affect on FTL's operations,  financial condition or business. FTL cannot
guarantee  that it will  successfully  expand or that any expansion will enhance
profitability. FTL expects its planned growth will place a significant strain on
management and operations.  FTL's ability to manage this growth will depend upon
its ability to attract,  hire and retain skilled employees.  FTL's future growth
success  will also depend in part on the ability of its  officers  and other key
employees  to implement  and improve its  operational  and other  systems and to
expand,  train and manage its employee  base and provide  support to an expanded
customer  base.  FTL's  future  success is  heavily  dependent  upon  growth and
acceptance of new products and services.                                        

OUR  COMPETITORS  MAY  DEVELOP  PRODUCTS  OR  TECHNOLOGY  THAT  PLACES OURS AT A
SIGNIFICANT DISADVANTAGE                                                        

         The  business  of FTL is in  industries  and  markets  that are  highly
competitive.   Some  of  the  Company's   competitors  have  greater  financial,
technical, marketing and other resources than the Company. These competitors may
be able to respond more quickly to new or changing  opportunities,  technologies
and customer  requirements  than FTL and may be able to undertake more extensive
promotional activities,  offer more attractive terms to customers and adopt more
aggressive  pricing  policies  than the Company.  Many  competitors  have gained
market share from FTL by offering similar generic products under a lower pricing
structure.  FTL expects  competition  to continue  and  intensify in the future.
There can be no assurance  that the Company will be able to compete  effectively
with current or future  competitors or that the  competitive  pressures faced by
the Company will not have a material  adverse effect on the Company's  business,
financial condition and operating results.                                      

FTL DOES NOT EXPECT TO PAY DIVIDENDS                                            

         It is currently  contemplated  that,  following the  Distribution,  the
Company  will  use any  excess  cash  flow,  if  any,  for  reinvestment  in its
operations  and will not pay  dividends on its common  stock in the  immediately
foreseeable future.                                                             

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THERE CAN BE NO ASSURANCE THAT AN ACTIVE TRADING MARKET FOR THE FTL COMMON STOCK
WILL BE ESTABLISHED OR MAINTAINED  AFTER THE  DISTRIBUTION,  AND THE STOCK PRICE
MAY BE VOLATILE                                                                 

         Prior to the Distribution,  there has been no public market for the FTL
common  stock.  Although the Company  believes its common stock will be approved
for  inclusion on the OTC  Bulletin  Board,  there can be no  assurance  that an
active trading market for the FTL common stock will be established or maintained
after the  Distribution.  Hartcourt  expects the FTL common  stock to  initially
constitute  penny stock. The prices at which the FTL common stock trades will be
determined by the marketplace  and could be subject to significant  fluctuations
in response to many factors,  including,  among other things,  variations in the
Company's  quarterly  operating  results,  changing  economic  conditions in the
industries  in  which  the  Company   participates  and  changes  in  government
regulations.  In  addition,  the  general  stock  market  has  in  recent  years
experienced  significant  price  fluctuations,  often unrelated to the operating
performance   of  the  specific   companies   whose  stock  is  traded.   Market
fluctuations,  as well as economic  conditions,  may adversely affect the market
price of the FTL common stock.                                                  

THERE IS A RISK THE FTL COMMON STOCK WILL CONSTITUTE LOW-PRICED STOCK SUBJECT TO
PENNY STOCK REGULATIONS                                                         

         The FTL common  stock is expected to be subject to Rule 15g-9 under the
Exchange  Act,  which  imposes   additional   sales  practice   requirements  on
broker-dealers  which sell such  securities  to persons  other than  established
customers and "accredited investors"  (generally,  individuals with net worth in
excess of $1,000,000 or annual incomes exceeding $200,000,  or $300,000 together
with their spouses). For transactions covered by this rule, a broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, such
rule may adversely  affect the ability of  broker-dealers  to sell the Company's
securities and may adversely  affect the ability of  shareholders to sell any of
the shares acquired in the Distribution in the secondary market.                

         The SEC adopted  regulations  which generally define a "penny stock" to
be any non-Nasdaq  equity security that has a market price (as therein  defined)
of less than $5.00 per share, subject to certain exceptions. For any transaction
involving a penny stock, unless exempt, the rules require delivery, prior to any
transaction  in a penny  stock,  of a  disclosure  schedule  prepared by the SEC
relating to the penny stock market. Disclosure is also required to be made about
commissions payable to both the broker-dealer and the registered  representative
and current  quotations  for the  securities.  Finally,  monthly  statements are
required to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks.           

         The foregoing  required penny stock  restrictions will not apply to the
Company's securities if such securities meet certain minimum net tangible assets
or  average  revenue  criteria.  There can be no  assurance  that the  Company's
securities  will qualify for exemption  from these  restrictions.  In any event,
even if the Company's  securities were exempt from such  restrictions,  it would
remain  subject  to  Section  15(b)(6)  of the  Exchange  Act,  which  gives the
Commission  the  authority  to  prohibit  any person that is engaged in unlawful
conduct while  participating in a distribution of a penny stock from associating

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with a broker-dealer or participating in a distribution of a penny stock, if the
Commission finds that such a restriction would be in the public interest.       

         If the Company's  securities are subject to the existing or any amended
rules on penny stocks,  the market liquidity for the Company's  securities could
be severely adversely affected.                                                 

EFFECTS ON HARTCOURT STOCK                                                      

         After the Distribution,  the common stock of Hartcourt will continue to
be listed and traded on the U.S. OTC and Frankfurt stock exchanges.  As a result
of the  Distribution,  the  trading  prices  of  Hartcourt  common  stock may be
correspondingly  lower  than  the  trading  prices  of  Hartcourt  common  stock
immediately prior to the Distribution.  The combined trading prices of Hartcourt
common stock and FTL common stock after the Distribution may be less than, equal
to or greater  than the trading  prices of  Hartcourt  common stock prior to the
Distribution.                                                                   

THE DISTRIBUTION SHALL BE TAXABLE TO HARTCOURT SHAREHOLDERS                     

         The  Distribution  of shares of FTL is not  intended  to be a  tax-free
distribution. Hartcourt will be required to recognize an amount of taxable gain,
if any, equal to the value of the FTL shares being  distributed over Hartcourt's
basis in such shares.  The shareholders of Hartcourt who receive stock of FTL in
the Distribution  will be treated as receiving a dividend from Hartcourt (to the
extent of the earnings and profits of Hartcourt) in an amount equal to the value
of  the  FTL  shares  on  the  date  of  Distribution.   Accordingly,  Hartcourt
shareholders  will be required to pay tax at ordinary income rates on the amount
of the dividend deemed received by them. See "Federal Income Tax Consequences of
the Distribution" above.                                                        

BUSINESS

GENERAL                                                                         

         The  Company,   through  its  wholly-owned   subsidiary,   FTL  HK,  is
principally  engaged in the  business of  providing  real-time  stock quotes and
financial  information of Hong Kong listed companies,  including  information on
other  international  stock  exchanges  in the  United  States  and  Europe,  to
institutional and retail investors. FTL HK was the first company in Hong Kong to
provide real-time  financial  information  services using a wireless network for
the  dissemination  of data. FTL HK generates  revenue  through the provision of
online  financial  information  services  and the sale of  well-known  technical
analysis software and related Internet and telephone services.  FTL HK maintains
a financial  portal  featuring stock trading,  real-time quotes and company data
banks for investors in Hong Kong and Mainland  China.  These  investors  include
major investment  houses,  banks,  securities firms, and mutual fund managers as
well as individual investors.                                                   

         FTL HK was incorporated in 1983. Pursuant to a Stock Purchase Agreement
by and between FTL HK and Hartcourt  dated August 19, 1999,  Hartcourt  acquired
4,964,990  ordinary  shares of FTL HK.  In 2003,  FTL HK  repurchased  3,427,349
shares  and  92,000  shares  of the  ordinary  shares  of FTL  HK  from  Bowland

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International Limited ("Bowland") and Tang Wing On, respectively. As a result of
this repurchase, Hartcourt held all the issued and outstanding stock of FTL HK. 

         FTL was  incorporated in Nevada in April 2003 with Hartcourt owning all
issued  shares.  On  September  10,  2003,  FTL  entered  into a Share  Exchange
Agreement  with  Hartcourt,  pursuant  to which  FTL  purchased  from  Hartcourt
4,964,990  shares of common stock of FTL HK,  representing all of the issued and
outstanding  capital stock of FTL HK. Pursuant to the Share Exchange  Agreement,
FTL HK became a wholly owned  subsidiary of FTL. As the sole asset of FTL is FTL
HK, the purpose of the  transaction  was to restructure FTL HK as a wholly-owned
subsidiary of FTL.                                                              

         The Company's  headquarters  are located at 308,  Hang Bong  Commercial
Center,  28 Shanghai Street,  Kowloon,  Hong Kong. Its telephone number is (852)
2868 0668. The Company also maintains a website at www.fintel.com.              

INDUSTRY OVERVIEW                                                               

         The  financial  information  market in Hong Kong can broadly be divided
into two major segments based on the target  audience and the content  provided.
The first  segment,  served by  international  data  vendors such as Reuters and
Bloomberg,  is comprised of financial  institutions and large  corporations that
receive a wide spectrum of financial data  services.  The second  segment,  much
larger in terms of number of subscribers,  is comprised of retail investors such
as individuals, brokerage firms and small to medium size companies that are more
focused on the local stock  market.  The Company's  services  target this second
segment of retail investors.                                                    

         As of May 15, 2003,  there were  ninety-five  data vendors  licensed to
obtain data from the Hong Kong  Exchanges and Clearing  Limited,  the sole stock
exchange  in Hong Kong.  Of these  ninety-five  vendors,  thirty  are  overseas.
Twenty-five of the vendors, of which the Company is one, are real time data feed
(with broker queue data) licensees.                                             

         The financial information market is largely dependent on the activeness
of financial markets, especially the stock market. The stock market in Hong Kong
has  experienced a contraction in turnover  value.  The annual turnover value in
2001 was $255 billion,  representing  a drop of 33.5% from the previous year. It
further dropped to $210 billion in 2002, a 17.5% decrease. Although the turnover
value has shown an overall improvement of 14% in the first eight months of 2003,
the  discouraging  turnover  in 2001 and 2002  unavoidably  affected  the  sales
performance of the Company.                                                     

         In view of the  gloomy  outlook  of the  local  market  situation,  the
Company  embarked  on cost  saving  measures  as well as  exploring  the Chinese
market.  China's stock market has seen rapid growth since it was  established in
1990. According to recent government  statistics from April 2003, China has over
1,234 public  companies  listed at the Shanghai and Shenzhen stock exchanges and

68.9  million  investors  owning  brokerage  accounts.  Based  on  total  market
capitalization,  China is the world's sixth largest stock market,  and among the
stock markets in Asia, it ranks second only to Japan.                           

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         Based on the historical growth in China's security market,  the Company
predicts  that by 2008 the number of listed  companies in China will increase to
2,000.  Further,  it predicts  that by 2010,  on-line  stock trading will be the
major  transaction  vehicle in China.  Along with these  changes,  an increasing
amount of financial and  investment  products are becoming  available to private
investors.  As China investors have more choices of where to invest their money,
the demand for quality financial information also grows. The explosive growth in
the stock market has created a surge in public demand for investment information
and institutions to provide such information.                                   

OPERATING STRATEGY                                                              

         FTL's mission is to become the premier  financial  information  service
company in Hong Kong and Mainland China. Pursuant to this goal, FTL is committed
to providing the most advanced  network service and  information  technology and
the most timely and relevant  financial  information  to investors and financial
institutions.                                                                   

         FTL  plans  to  aggressively  expand  to  Mainland  China  through  the
formation of strategic  partnerships  with other  technology  and data  solution
companies.  There is  currently  a shortage  of  accurate  and timely  financial
information and investment  options for both consumers and corporate entities in
Mainland  China.  FTL aims to fill  this  void.  FTL is also in the  process  of
forming an  international  network of data vendors to provide a global financial
information  service  using  MetaStock  as the end-user  software.  Through this
operating  strategy,  FTL is positioning  itself to satisfy the growth in demand
for financial  information  in Hong Kong and Mainland  China.  FTL believes that
this  operating  strategy  will help it to achieve its goal of being the premier
financial information service company in Hong Kong and Mainland China.          

CURRENT PRODUCTS AND SERVICES                                                   

         SinoBull   Link-MetaStock.   SinoBull  Link-MetaStock  is  a  real-time
quotation  feed  specifically  designed for the  well-known  technical  analysis
software "MetaStock." MetaStock is a product of Equis, a division of Reuters. In
2001,  FTL HK was  appointed  by  Equis  as the Hong  Kong  and  Mainland  China
distributor  of the MetaStock  software.  This  appointment  lasts until June 1,
2004, and is renewable thereafter upon mutual consent of FTL HK and Equis. Equis
also commissioned FTL HK to prepare a Chinese version of MetaStock, specifically
catered  to the  market  in  China.  FTL HK will  have  the  exclusive  right to
distribute the Chinese version of MetaStock.  To support  MetaStock,  FTL HK has
developed  a data feed with Hong Kong and  Mainland  China  stock and forex data
running  on FTL HK's  proprietary  iServer  and  iSync  platform.  MetaStock  is
marketed  as a  stand-alone  software.  Users  can  also  subscribe  to FTL HK's
end-of-day  or real time data feed  service.  The target market for MetaStock is
institutional investors in the Hong Kong and Mainland China region.             

         EFT Finance.  EFT Finance is a service  jointly  provided by FTL HK and
the  Chinese  data  vendor  Shanghai  NetBank  Limited.   EFT  Finance  provides
international stock quotes along with news and market reports.  EFT Finance also
includes a  semi-professional  charting system.  Two versions of EFT Finance are
presently available:  VIT and ADSL. The VIT version primarily serves the brokers
and  financial  institutions  markets by using the broadband  dedicated  virtual
private network.  The VIT version offers a high speed and reliable data transfer

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capability that is especially helpful when capturing data for charting purposes.
The ADSL  version,  on the  other  hand,  is a  client/server  application  that
utilizes  the ADSL  bandwidth  connected  to  regional  servers  for  access  to
broadband  financial  information.  The  ADSL  version  is  characterized  by  a
flexibility and  convenience of  installation.  It  incorporates  simple display
format and  analytical  tools  targeting  the mass investor  population.  FTL HK
expects a high demand for this quote and trade  platform once the QDII scheme is
launched.                                                                       

         Fintel Data Feed. Fintel Data Feed is a direct feed supplying real-time
or delayed data to third party  applications.  The data provided  through Fintel
Data Feed includes on-line  trading,  portfolio  management,  credit control and
order routing system and back office system.                                    

         SpiderLink Pro. SpiderLink Pro is a comprehensive quotation system that
offers  real-time  quotes  on  Hong  Kong  stocks,   futures,   market  indices,
international  forex,  precious metals and financial  news.  SpiderLink Pro also
offers  charting  tools and  real-time  analytical  reports  designed for use by
personal  investors.  The Hong Kong stock quotes cover all stocks,  warrants and
options in  teletext  format  with  broker  queue and market  trade  information
directly from the Hong Kong Stock  Exchange.  The forex feed  includes  multiple
forex spot and cross rates including Euro,  Japanese Yen, Sterling Pound,  Swiss
Franc,  Australian Dollar, Canadian Dollar, New Zealand Dollar and United States
Dollar.  Major  international  market indices  include the Hang Seng Index,  Dow
Jones  Industrial  Average Index,  London FT 100,  Nikkei Index,  Frankfurt DAX,
Paris CAC General,  Singapore  Straits Times,  Sydney AOL and Toronto  Composite
Index. Precious metals quoted on SpiderLink Pro include Local London Gold, Local
London Silver, Hong Kong Local London Gold and Hong Kong Gold.                  

         Fintel Pro. Fintel Pro is a real-time  quotation terminal  specifically

designed for public display and message broadcast purposes. The service provides
real-time  quotes on Hong Kong stocks,  futures,  indices,  metals and financial
news. Fintel Pro includes the same content as SpiderLink Pro, with the exception
of charting tools.  The Company plans to phase out the Fintel Pro service in the
fourth quarter of 2003.                                                         

MARKETING STRATEGY                                                              

         In an effort to  expand  its  client  base both for  institutional  and
individual users in the China and overseas  markets,  FTL plans to adopt a broad
range of marketing  activities  designed to develop name recognition and promote
its brand and  services.  FTL  intends  to  initiate a number of  strategies  to
promote both its own products as well as bundled  products  with third  parties.
These strategies include:                                                       

         Direct  Marketing.  The Company  plans to market its  services  through
direct  mailing and follow up with  demonstrations  of its product and services.
The Company intends to distribute  registration forms and brochures via mail and
facsimile  that  describe its line of  services.  The Company also plans to hire
sales agents to market the Company's services at shops in complimentary  fields,
such as computer  shops,  electrical  appliance shops and brokerage  firms.  The
Company also plans on hiring  sales  agents to market its  services  directly to
brokerage firms and investors in China.                                         

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         Locating  Joint  Service  Partners.  The  Company  plans to explore the
possibility  of  coordinating  the delivery of its services  with other  service
providers  in  Mainland  China and  Taiwan,  whereby  the  companies  would join
together to deliver comprehensive data coverage.                                

         Chinese  Television.  Over one thousand cable television stations exist
in China.  The  Company  plans to work with its  current  strategic  partner EFO
Group,  which  specializes  in  building  TV  video  cards  and  satellite  data
transmission  systems,  to  approach  these  television  stations to explore the
possibilities of building a financial  television channel or providing financial
quotation services over established networks.                                   

         Advertisements.  The Company  plans to advertise in Hong Kong and China
via traditional media,  including economic  newspapers,  financial magazines and
journals.  The  Company  also  plans to place  printed  brochures  in  prominent
financial institution user outlets to solicit walk-in clients.                  

         Seminars and Road Shows.  The Company intends to hold free  interactive
training seminars in locations such as brokerage firms,  university  classes and
bank halls to generate exposure of its terminal products,  including EFT Finance
and  MetaStock.  By  leveraging  the  reputation  of these large and  well-known
institutions,  the Company hopes to attract other  enterprises  and users to its
services.                                                                       

         Establish a Multi-Region Data Network.  The Company intends to approach
individual  market data vendors in various  regions (such as Singapore,  Taiwan,
Thailand,  United States,  Canada and  Australia) to explore the  possibility of
developing a  cross-selling  service.  Under the joint  service,  the individual
market data vendors would provide the local data feed, hardware,  storage space,
internet  access  bandwidth and user account  information,  which FTL would then
distribute through its iServer infrastructure. EFT Finance has already joined as
a member of this network providing data to Mainland China.                      

INTELLECTUAL PROPERTY                                                           

         The Company's subsidiary, FTL HK, owns the intellectual property rights
to its i-Server Data protocol,  I-Link,  Fintel Pro and Fintel  online.  Because
these intellectual property rights have not been registered, they are vulnerable
to  infringement.   See  "Risk  Factors-  FTL's  Intellectual  Property  is  Not
Registered, Which May Materially Adversely Affect its Business."                

PROPERTIES                                                                      

         The Company leases 2,357 square feet for approximately $4,500 per month
($54,000  annually)  for its principal  offices in Kowloon,  pursuant to a lease
that expires in 2004. The Company does not own any real estate.                 

EMPLOYEES                                                                       

         As of May 1, 2003,  the  Company had five  employees,  four of whom are
employed on a full-time  basis.  The Company also utilizes  Hartcourt staff from
time to time.                                                                   

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         Following  the  Distribution,  the  Company  may seek to enter  into an
agreement with Hartcourt,  pursuant to which Hartcourt will agree to continue to
make  available  the  services of certain of its  employees  to the Company on a
part-time basis, if needed by the Company. The Company anticipates that any such
agreement  will be on  commercially  reasonable  terms and have a limited  term,
while the Company develops independent  infrastructure,  including the hiring of
necessary  personnel.  However, no such agreement currently exists and there can
be no assurance  that the Company will be able to secure terms  favorable to it.
If and when such  agreement is entered into,  the Company  believes that it will
enable it to more easily transition from being a subsidiary of Hartcourt into an
independent operating company.                                                  

LEGAL PROCEEDINGS                                                               

         From  time  to  time,  FTL  and FTL HK may be  involved  in  litigation
relating  to  claims  arising  out of their  operations.  As of the date of this
information  statement,  neither FTL nor FTL HK is a party to any material legal
proceedings.                                                                    

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION   
AND RESULTS OF OPERATION

         The  following  discussion  of the  Company's  financial  condition and
results of operations includes certain  forward-looking  statements that involve
risks and uncertainties,  including, without limitation, the risk factors listed
in this  information  statement under the caption "Risk Factors." The statements
included  in this  information  statement  that are not  purely  historical  are
forward-looking  statements  within the meaning of section 27A of the Securities
Act  and  Section  21E of  the  Exchange  Act,  including,  without  limitation,
statements  regarding  our  expectations,   beliefs,  intentions  or  strategies
regarding  the  future.  These  statements  involve  known  and  unknown  risks,
uncertainties  and other  factors,  which may cause our actual results to differ
materially from those implied by the forward-looking  statements. In some cases,
you can  identify  forward-looking  statements  by  terminology  such as  "may,"
"will,"  "should,"  "expects,"  "plans,"  "believes,"  "predicts,"  "estimates,"
"projection,"  "intends," "anticipates" and similar terms. Readers are cautioned
not to place undue reliance on the  forward-looking  statements set forth below.
All forward-looking  statements included in this information statement are based
on information known of the date hereof, and the Company and Hartcourt undertake
no obligation to publicly update or revise any of the forward-looking statements
contained herein.                                                               

OVERVIEW                                                                        

         The Company's wholly-owned subsidiary,  FTL HK, was established in 1983
by a group of professionals in the financial service industry.  It was the first
company in Hong Kong to provide real-time financial information services using a
wireless  network for the  dissemination  of data. The Company,  through FTL HK,
generates revenue through the provision of online financial information services
and the sale of well-known  technical analysis software and related Internet and
telephone services. Through partnership with other financial information related
companies, the Company is undertaking efforts to expand its client base both for
institutional and individual users, and also for China and overseas markets.    

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With the recession in the Hong Kong consumer  market and depressed stock market,
FTL HK has suffered a  significant  drop in revenue.  FTL HK has also suffered a
drop in revenue due to the suspension of its paging service in the first quarter
of  2002,  which  was  suspended  due  to the  downturn  in  the  stock  market.
Fortunately,  the  economics  show  certain  signals of  recovery,  which FTL HK
believes will provide it with the  opportunity to expand its business.  However,
the  ability of FTL to  continue as a going  concern is still  dependent  on its
success  in  obtaining   additional   financing  and   fulfilling  its  plan  of
restructuring.  Please see Appendix 1 attached  hereto for  un-audited pro forma
consolidated financial statements for (1) the six months ended June 30, 2001 and
2002 and (2) the  years  ended  December  31,  2001 and  2002.  Appendix  1 also
includes the audited financial  statements of FTL HK for the year ended December
31, 2002.                                                                       

RESULTS OF OPERATIONS                                                           

Comparison of the Fiscal Years Ended December 31, 2002 and December 31, 2001    

         During 2002, FTL HK suffered from an economic slump,  which resulted in
declines  in  revenue  and net  income.  In 2002,  FTL HK  minimized  its annual
expenses to approximately  55% of the previous year total expenses by suspending
its paging operation in the first quarter of 2002, laying-off over two-thirds of
its  original  employees,  out  sourcing  jobs when  required  and  reducing and
consolidating various professional services and data sources.                   

         Net sales and cost of sales.  FTL HK recorded  net sales of $488,557 in
year 2002, compared to $1,301,079 in 2001. Net sales in 2002 consisted primarily

of  real-time  financial  data  services,  while  net  sales  in 2001  consisted
primarily  of  sales of  real-time  financial  data  services,  wireless  paging
services and rental of  equipment.  The  significant  drop in sales in 2002 when
compared  to 2001 was  mainly  due to the  suspension  of the 51%  owned  paging
service  under the name of FWI in the first quarter of 2002,  plus  shrinkage in
the local financial market caused by reductions by banks and brokerage houses of
their  budgets on data services and  price-cutting  among  competitors.  Cost of
sales  included cost of capacity  associated  with the  acquisition of data-feed
from various data sources  (including the Honk Kong Stock  Exchange,  the Future
Exchange of Hong Kong, Bank of China and various international data vendors) and
the equipment rental necessary to provide  real-time  broadcasting and on-demand
multimedia content delivery services via different connection topology.  Cost of
sales for 2001 was  $385,674  as  compared to  $1,193,973  for 2002,  a decrease
attributable  to a decline  in sales.  The  decrease  in  operational  margin is
primarily  attributable  to the total fixed cost allocated to the lower level of
revenue.                                                                        

         Selling,  general and  administrative  expenses.  Selling,  general and
administrative expenses ("SG&A") expenses amounted to $917,860 for 2002 compared
to  $1,182,939  for 2001.  The decrease in SG&A is primarily  attributed  to the
reduction in staffing costs, consulting, legal and administrative costs incurred
in 2002 as compared to that in 2001.                                            

         Loss on disposal of investment in security.  During 2002 and 2001,  FTL
HK sold  certain  shares it held in Hartcourt  to satisfy its  operational  cash
requirements. This resulted in the realized and unrealized loss on investment in
securities of $142,885 in 2002 and $335,913 in 2001.                            

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         Discount on early  settlement of mortgage  loan. FTL HK's former wholly
owned  subsidiary,  Topomedia  International  Limited  ("Topomedia"),  settled a
mortgage  loan in 2001,  which  resulted in a net gain of  $355,777 in 2001.  No
similar transaction occurred in 2002.                                           

         Loss on disposal of a subsidiary. In 2002, FTL HK disposed of Topomedia
to Bowland, which resulted in a net loss of $494,839 in 2002.                   

Comparison of the Six Months Ended June 30, 2003 and June 30, 2002              

         Net sales  and cost of sales.  FTL HK  recorded  net sales of  $177,184
during the six months  ended June 30,  2003,  compared to $325,385  for the same
period of 2002. Net sales for the six months ended June 30, 2003 represented the
sale of real-time financial data services,  while net sales the six months ended
June 30, 2002 consisted primarily of real-time financial data services and sales
of wireless pagers and the rental of equipment.  The  significant  drop in sales
for the six months  ended June 30, 2003  compared to the same period of 2002 was
principally due to the  discontinuation  of the sale of wireless paging services
and a retraction in the local financial market. Cost of sales for the six months
ended June 30, 2003 was  $113,994 as compared to $228,172 for the same period of
2002.  Cost  of  sales  included  cost of  capacity  associated  with  acquiring
data-feed from various data sources (including the Hong Kong Stock Exchange, the
Future Exchange of Hong Kong, the Bank of China and various  international  data
vendors) and also equipment rental necessary to provide  real-time  broadcasting
and on-demand multimedia content delivery via different connection topology. The
increase in operational  margin is mainly due to the lower direct cost involved,
especially the lower labor cost.                                                

         Selling, general and administrative expenses. SG&A expenses amounted to
$149,273 for the six months  ended June 30,  2003,  compared to $438,978 for the
same  period of 2002.  The  decrease  in SG&A  expenses  is due  primarily  to a
reduction in staffing,  consulting,  legal and  administrative  costs during the
first six months of 2003 as compared to the same period in 2002.                

         Depreciation and amortization. Depreciation expenses amounted to $4,408
for the six months  ended June 30, 2003  compared to $95,232 for the same period
of 2002, of that amount, approximately 80% was attributable to Topomedia assets.
Topomedia was sold in July 2002.                                                

         Impairments.  During the first six months of 2002,  FTL HK  experienced
$218,177 in impairments for its property in Topomedia.  As Topomedia was sold in
July 2002, no further impairments were experienced in 2003.                     

         Other  operating  expenses.   The  decrease  in  interest  expenses  is
primarily due to the sale of Topomedia,  which paid a substantial  interest on a
mortgaged  loan.  During  the first six  months of 2003,  FTL HK waived  certain
long-standing debts.                                                            

LIQUIDITY AND CAPITAL RESOURCES                                                 

         FTL's  principal  capital  requirements  during  2002  were to  satisfy
ordinary operating expenditures. FTL plans to actively seek funding sources once
it is spun-off. FTL plans to approach funding sources such as lenders interested
in lending funds to FTL to meet its working capital  requirements  and investors

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interested in purchasing FTL stock.  FTL has no commitments for any such funding
and there are no assurances that any will be secured on terms acceptable to FTL.

         As shown in the accompanying financial statements,  FTL HK incurred net
losses of $1,525,127  and  $1,231,200  for the years ended December 31, 2002 and
2001, respectively.  In addition, FTL's HK working capital deficit of $1,752,213
is not adequate to meet its minimum monthly expenses. Its ability to continue as
a going concern  depends on the success of its plan to seek funding sources once
it is spun-off.                                                                 

Comparison of the Fiscal Years Ended December 31, 2002 and December 31, 2001    

         Operating  activities.  The net cash used for operating  activities was
$254,959 in 2002,  compared  to  $488,499 in 2001.  The net cash out flow during
2002 was primarily a result of the net loss of $1,525,127 and change of minority
interest  of $44,443.  Non-cash  accounting  items,  including  depreciation  of
$421,270,  bad debt  provision of $50,184,  impairment  loss of $9,557,  loss on
disposal of subsidiaries of $494,839,  loss on disposal of security  investments
of $142,885  and the  increase of current  liabilities  over  current  assets of
$195,876 reduced the actual net cash outflow.  The net cash out flow during 2001
was primarily the result of the net operating  loss of  $1,231,200,  the gain on
disposal  of  property  and  equipment  of $138  and the  gain  on  disposal  of
affiliates of $3,561. Operationally, the cash requirement was funded by increase
of current  liabilities  over current  assets of  $153,220,  loss on disposal of
securities of $335,913,  change of minority interest of $94,247 and depreciation
expenses of $163,020.                                                           

         Investing  activities.   Net  cash  obtained  in  investing  activities
amounted to $52,649  during 2002  compared  to net cash  obtained of  $1,109,247
during 2001.  Net cash in-flow in 2002 resulted from the proceeds on disposal of
security of $60,097.  The cash used in investing  activities  during 2002 was to
purchase  property and equipment  for $7,448.  Net cash in-flow in 2001 resulted
from proceeds on disposal of investment securities of $1,139,675 and proceeds on
disposal of fixed assets of $1,959. The cash used in investing activities during
2001 was to purchase of property and equipment for $32,387.                     

         Financing  activities.   Net  cash  provided  by  financing  activities
amounted to $143,629 in 2002 compared to $663,047 in 2001. The net cash provided
by financing  activities in 2002 was the result of proceeds from a related-party
loan of $145,010 by off setting the payment of loans and  overdrafts  of $1,381.
Net cash used by financing  activities in 2001 was comprised of the repayment of
a shareholders loan of $180,158 and the repayment of bank loan of $482,889.     

Comparison of the Six Months Ended June 30, 2003 and June 30, 2002              

         Operating activities.  The net cash used by operating activities during
the six months ended June 30, 2003 was  $63,123.  The net loss during the period
was $25,298.  The net increase in current  assets over  current  liabilities  of
$96,282  also  contributed  to the  decrease  in cash.  The  change on  minority
interest of $54,049 and the depreciation of $4,408 helped to fund the operations
during the  period.  The net cash used by  operation  activities  during the six
months ended June 30, 2002 was $385,314,  primarily attributable to the net loss
of $682,548, and increase of current assets over current liabilities of $25,781.

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Meanwhile,  the depreciation of $95,232,  impairments of $218,177 and changes on
minority interest of $9,606 helped to increase the cash level during the period.

         Investing activities.  Net cash used by investing activities during the
six months  ended June 30, 2003 was $718,  resulting  from the purchase of fixed
assets.  In the  first  six  months  of  2002,  the net cash  used by  investing
activities was $172,018,  representing  proceeds from the disposal of investment
securities.                                                                     

         Financing  activities.  Net cash  obtained  from  financing  activities
amounted to $62,367 and $174,094 for the six months ended June 30, 2003 and June
30, 2002,  respectively.  The net cash  in-flow was mainly due to proceeds  from
loans from related parties of $62,367 and $181,046 for the six months ended June
30, 2003 and June 30, 2002, respectively.                                       

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table shows the number of shares and  percentage of all
shares of the  Company's  common  stock  outstanding  as of October 17, 2003 and
following  the  Distribution,  held or to be held by (i) any person known to the
Company to be the  beneficial  owner of 5% or more of the Company's  outstanding
common stock,  (ii) each director,  (iii) each executive officer of the Company,
and (iv) all directors and executive  officers as a group.  The following  table
does not reflect the impact of fractional shares.                               

                                                        [Enlarge/Download Table]
Name and Address of     Number of Shares     Percent of Class     Number of Shares    Percent of Class  
Beneficial Owner (1)    Before Distribution  Before Distribution  After Distribution  After Distribution
                        (2)                                       (3)                                   
----------------------  -------------------  -------------------  ------------------  ------------------
                                                                                                        
The Hartcourt           15,100,000           100%                 0                   0%                
Companies, Inc.                                                                                         
15165 Ventura Blvd.                                                                                     
Suite 400                                                                                               
Sherman Oaks, CA 91403                                                                                  

Stephen Tang            0                    0%                   30,413              *                 
(Director, President)                                                                                   

Richard Yan (Director,  0                    0%                   2,770               *                 
Treasurer)                                                                                              

John Furutani           0                    0%                   55,395              *                 
(Director, Secretary)                                                                                   

FTL Officers &          0                    0%                   88,578              *                 
Directors as a Group                                                                                    

----------------------------                                                    
* Less than 1%.                                                                 

(1) Unless otherwise  indicated,  each of these holders has an address of c/o of
    Financial Telecom Limited (USA), Inc., 15165 Ventura  Boulevard,  Suite 400,
Sherman Oaks, California 91403.                                         

(2) For  purposes of this table,  a person or group of persons is deemed to have
    "beneficial  ownership"  of any shares of FTL common stock which such person
    has the right to acquire  within  sixty days after the date set forth in the

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    introductory  paragraph  above.  However,  for  purposes  of  computing  the
    percentage of outstanding  shares of FTL common stock held by each person or
    group of persons  named above,  any  security  which such person or group of
    persons has or have the right to acquire from the Company  within sixty days
    from the date set forth in the introductory paragraph above is not deemed to
    be outstanding for the purpose of computing the percentage ownership for any
other person.                                                           

(3) For  purposes of this table,  the number of shares of the  Company's  common
    stock to be  distributed  in the  Distribution  was  calculated as .09232471
    share of the Company's common stock for each share of outstanding  Hartcourt
    common  stock,  based on  15,100,000  shares to be spun-off and  163,553,177
shares of Hartcourt common stock outstanding as of October 17, 2003.    

DIRECTORS AND EXECUTIVE OFFICERS

         The following  tables sets forth  certain  information  concerning  the
Company's  executive  officers  and  directors  and the  executive  officers and
directors of the Company's  subsidiary,  FTL HK. Except as otherwise noted, none
of the  executive  officers  are  directors  or officers of any  publicly  owned
corporation or entity.                                                          

Company Directors and Executive Officers                                        

Name                            Age                         Principal Position  
----                            ---                         ------------------- 
Stephen Tang                    51                          Director, President 
Richard Yan                     29                          Director, Treasurer 
John Furutani                   35                          Director, Secretary 

         Mr.  Stephen Tang.  Mr. Tang is the founder of FTL HK and a director of
Hartcourt.  Mr. Tang has served as the  President and as a director of FTL since
April 28, 2003. He has substantial  working  experience in financial services in
major  Asian   countries   and  has  been  involved  in  the   development   and
implementation  of consumer  electronics for over twenty years.  From 1985 until
2002,  Mr.  Tang held the  position  of Chief  Executive  Officer of FTL HK. Mr.
Tang's  contributions  include  development of new and  innovative  products and
creation of strategic alliances in China,  Taiwan,  Korea and the United States.
Mr.  Tang  holds a Master's  degree in  Business  Administration  from the Asian
Institute of Management in Manila.                                              

         Mr.  Richard Yan. Mr. Yan is the Financial  Controller of Hartcourt and
is responsible for financial and accounting matters for the Company. Mr. Yan has
served as FTL's  director and Treasurer  since April 28, 2003.  Prior to joining
Hartcourt in September  2002,  he was the  Assistant  Manager of KPMG  Financial
Advisory Services in Shanghai, where he worked on due diligence, asset valuation
work,  financial  analysis and business plans for M&A  transactions.  During the
five years he was at KPMG,  Mr. Yan was also a Management  Consultant  and Audit
Manager.  Mr. Yan is a Certified  Public  Accountant,  and received his Bachelor
degree in 1997 from Shanghai Jiaotong  University.  Mr. Yan is currently working
towards a Masters of Business Administration degree from the same university.   

         John A. Furutani.  Mr. Furutani is an attorney  licensed to practice in
the State of California. Mr. Furutani has served as FTL's director and Secretary
since April 28, 2003.  Mr.  Furutani  received a Bachelor's  Degree in Political
Science and Public Relations from the University of Southern California in 1988.

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In 1992, Mr. Furutani  obtained a Juris Doctorate  degree from Loyola Law School
in Los Angeles,  California.  Since 1992, Mr. Furutani has practiced law with an
emphasis on business litigation. Mr. Furutani serves as outside legal counsel to
Hartcourt and the Company.                                                      

FTL HK Directors and Executive Officers                                         

Name                            Age                         Principal Position  
----                            ---                         ------------------- 
Alex Pang                       51                          Executive Director  
Tang Ping Wing                  75                          Finance Director    
Tang Wing Kuen                  45                          Director            

         Alex Pang.  Since  January  2002,  Mr. Alex Pang has been the executive
director in charge of overall  management of FTL HK. Before serving as executive
director,  Mr. Pang was in charge of the  marketing for FTL HK. Prior to joining
FTL HK, he worked for the multi-national company San Miguel Brewery (HK) Limited
in Hong Kong for fifteen years.  Mr. Pang holds a bachelor's  degree in business
management from Hong Kong Baptist University.                                   

         Tang Ping Wing. Mr. Tang Ping Wing oversees the daily administering and
financial  functions of FTL HK. He has been with FTL HK in this  position  since
its  establishment  in 1983.  Mr. Tang Ping Wing has more than  thirty  years of
management and administrative experience.                                       

         Tang Wing Kuen. Mr. Tang Wing Kuen is a  non-executive  director of FTL
HK. He  resides in the U.K.  and for the past  nineteen  years,  has served as a
medical  practitioner.  Mr.  Tang  Wing Kuen is  active  in  neonatal  research,
academic meetings and conferences for professional development. He is a graduate
of the  University  of  Sheffield,  UK,  and a  member  of the  British  Medical
Association,  the Neonatal Society and the Royal College of Pediatrics and Child
Health.                                                                         

ELECTION AND TERM                                                               

         Directors are elected to a one year term at each annual  meeting of the
Company's shareholders.                                                         

EXECUTIVE COMPENSATION                                                          

         None of the Company's  employees' total annual salary and bonus exceeds
$100,000.  Similarly, none of FTL HK's employees' compensation exceeded $100,000
or would have exceeded  $100,000 on an annualized  basis,  for any of the fiscal
years ended December 31, 2000, 2001 and 2002, other than as set forth below.    

         The following  table sets forth,  for each of the years ended  December
31, 2002, 2001 and 2000, all  compensation  earned for services  rendered to FTL
HK, in all capacities,  by the individual  performing similar and related duties
to those performed by a chief executive officer.  No information is provided for
the Company as it has not yet completed a fiscal year.                          

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 FTL HK Summary Compensation Table

                                                        [Enlarge/Download Table]
                                            Annual Compensation              Long-Term 
                                   --------------------------------------  Compensation
                                                                              Awards   
                                                                            Securities 
                                                             Other Annual   Underlying 
Name and Principal Position  Year  Salary($)    Bonus($)     Compensation     Options  
---------------------------  ----  ---------    --------     ------------  ------------
                                                                                       
Alex Pang                    2002   $49,185     $-             $-            $-        
Director                     2001    63,860      -              -             -        

Stephen Tang                 2002         -      -              -             -        
Managing Director            2001   102,670      -              -             -        
                             2000   101,150      -              -             -        

DIRECTOR COMPENSATION                                                           

         Directors of the Company and FTL HK do not receive any compensation for
their services.                                                                 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                  

         The following is a summary of  transactions to which the Company or its
subsidiaries  is a party in which the  amount  involved  since  January  1, 2002
exceeded $60,000 and in which officers,  directors, nominees and/or greater than
5%  beneficial  owners of the Company's  common stock (or any  immediate  family
members of the  foregoing)  had,  or will have,  a direct or  indirect  material
interest.                                                                       

         On July 31, 2002, FTL HK sold its entire  shareholding  in Topomedia to
Bowland for a  consideration  of $122,478 in partial  settlement  of a loan from
Bowland to FTL HK. Mr.  Stephen  Tang, a director and  executive  officer of the
Company, and Mr. Tang Ping Wing, a director and executive officer of FTL HK, are
a shareholder and director, respectively, of Bowland.                           

DESCRIPTION OF CAPITAL STOCK

         The  following  description  of the  capital  stock of the  Company and
certain  provisions of the Company's  Articles of Incorporation  and Bylaws is a
summary and is qualified in its  entirety by the  provisions  of the Articles of
Incorporation  and Bylaws,  which are attached to this information  statement as
Appendix 2 and Appendix 3, respectively.                                        

         The Company  has  authorized  capital of Five  Hundred  Million  shares
(500,000,000)  shares of common  stock with  $0.001 par value.  As of October 8,
2003, there were 15,100,000 shares of FTL common stock outstanding, all of which
are owned by Hartcourt.  All of the shares held by Hartcourt will be distributed
on a pro rata basis to Hartcourt  shareholders as a result of the  Distribution.
See "The Distribution" above.                                                   

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COMMON STOCK                                                                    

         Each share of the Company's common stock entitles the holder thereof to
one  vote on all  matters  submitted  to a vote by the  Company's  shareholders,
except with respect to voting for election of directors.  Generally,  unless the
Company's  Articles  of  Incorporation  or Nevada law  requires  otherwise,  the
affirmative vote of the majority of shares then represented and entitled to vote
on such matter at a meeting at which a quorum was present when commenced,  shall
be the act of the  shareholders.  With  respect to the  election  of  directors,
however, holders of the Company's common stock are entitled to cumulative voting
rights.  Cumulative  voting  permits  each holder of FTL common stock to cast an
aggregate  number of votes  equal to the  number of  directorships  to be filled
multiplied  by the  number of shares of FTL  common  stock as to which  they are
entitled to cast  votes.  The holders may cast all of such votes in favor of any
individual nominee or may allocate them among multiple nominees as they choose. 

         Except  for  shares  received  by  persons  who  may  be  deemed  to be
"affiliates"  of the Company under the Securities Act, none of the shares of FTL
common stock to be distributed  to Hartcourt  shareholders  in the  Distribution
will constitute  "restricted  securities" under the Securities Act. As a result,
such shares will be freely transferable upon their distribution. The Company has
applied for inclusion of its common stock on the OTC Bulletin Board.            

CERTAIN SHAREHOLDER AGREEMENTS                                                  

         No holder of FTL common stock has any preemptive right to subscribe for
or purchase  additional  shares of the  Company's  stock.  Holders of FTL common
stock are entitled to share  ratably in all  dividends  that are declared by the
board  of  directors,   and  in  all  assets  available  for  distribution  upon
liquidation.                                                                    

TRANSFER AGENT                                                                  

         Signature  Stock Transfer,  Inc.,  Plano,  Texas,  will be appointed to
serve as Transfer Agent and  Distribution  Agent for the shares of the Company's
common stock to be distributed to Hartcourt shareholders in the Distribution.   

NEVADA ANTI-TAKEOVER LEGISLATION AND ANTI-TAKEOVER DEVICES                      

         Nevada's  "Combination  with Interested  Stockholders  Statute," Nevada
Revised Statutes  78.411-78.444,  which applies to Nevada corporations that have
at least 200 stockholders,  prohibits an "interested  stockholder" from entering
into a "combination" with the corporation, unless specific conditions are met. A
"combination" includes:                                                         

   o  any merger  with an  "interested  stockholder,"  or any other  corporation
      which is or after the merger  would be, an  affiliate  or associate of the
interested stockholder;                                             

   o  any sale, lease, exchange, mortgage, pledge, transfer or other disposition
      of  assets,  in  one  transaction  or a  series  of  transactions,  to  an
      "interested stockholder," having (i) an aggregate market value equal to 5%
      or more of the aggregate market value of the corporation's assets, (ii) an
      aggregate  market value equal to 5% or more of the aggregate  market value

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      of all outstanding shares of the corporation, or (iii) representing 10% or
more of the earning power or net income of the corporation;         

   o  any issuance or transfer of shares of the corporation or its subsidiaries,
      to the "interested stockholder," having an aggregate market value equal to
      5% or more of the aggregate market value of all the outstanding  shares of
the corporation;                                                    

   o  the adoption of any plan or proposal for the liquidation or dissolution of
the corporation proposed by the "interested stockholder;"           

   o  certain  transactions  which  would  have the  effect  of  increasing  the
      proportionate  share of outstanding shares of the corporation owned by the
"interested stockholder;" or                                        

   o  the receipt of benefits,  except proportionately as a stockholder,  of any
      loans,   advances  or  other   financial   benefits   by  an   "interested
      stockholder." An "interested  stockholder" is a person who (i) directly or
      indirectly owns 10% or more of the voting power of the outstanding  voting
      shares  of the  corporation  or  (ii) an  affiliate  or  associate  of the
      corporation  which at any  time  within  three  years  before  the date in
      question was the beneficial owner, directly or indirectly,  of 10% or more
  of the voting power of the then outstanding shares of the corporation.

         A  corporation  to  which  the  statute  applies  may not  engage  in a
"combination"  within three years after the interested  stockholder acquired its
shares,  unless the combination or the interested  stockholder's  acquisition of
the  shares  that  caused the  interested  stockholder  to become an  interested
stockholder  was  approved  by the  board of  directors  before  the  interested
stockholder acquired those shares. If this approval was not obtained, then after
the three-year  period  expires,  the  combination may be consummated if all the
requirements in FTL's Articles of Incorporation are met and either:             

   o  (i) the  board of  directors  of the  corporation  approves,  prior to the
      person  becoming  an  "interested  stockholder,"  the  combination  or the
      purchase of shares by the "interested stockholder" or (ii) the combination
      is  approved  by the  affirmative  vote of holders of a majority of voting
      power not beneficially owned by the "interested  stockholder" at a meeting
      called  no  earlier  than  three  years  after  the date  the  "interested
stockholder" became one; or                                         

   o  the aggregate amount of cash and the market value of  consideration  other
      than cash to be  received  by holders of common  shares and holders of any
      other class or series of shares meets the minimum  requirements  set forth
      in  Sections   78.411  through  78.443,   inclusive,   and  prior  to  the
      consummation  of the  combination,  except in limited  circumstances,  the
      "interested  stockholder"  will not have  become the  beneficial  owner of
additional voting shares of the corporation.                        

         The above  provisions do not apply to  corporations  that so elect in a
charter  amendment  approved by a majority of the disinterested  shares.  Such a
charter amendment, however, would not become effective for eighteen months after
its  passage  and would  apply only to stock  acquisitions  occurring  after its
effective date.  FTL's Articles of Incorporation do not exclude the Company from
the restrictions imposed by the above provisions.                               

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         Nevada's "Control Share Acquisition  Statute,"  Sections 78.378 through
78.3793 of the Nevada  Revised  Statutes,  prohibits an acquirer,  in particular
circumstances, from exercising voting rights of shares of a target corporation's
stock after crossing  specific  threshold  ownership  percentages,  except those
voting rights that are granted by the target corporation's stockholders.        

         The existence of these statutes may make the Company a less  attractive
merger or acquisition  candidate.  Except as described above with respect to the
statutory  provisions  of the Nevada  anti-takeover  laws,  the  Company has not
adopted any anti-takeover devices with respect to its capital stock.            

DIVIDENDS                                                                       

         The Company has never paid a dividend on its common  stock and does not
anticipate  paying any dividends on its common stock in the foreseeable  future.
It is the  current  policy of the  Company's  board of  directors  to retain any
earnings to finance  operations  and  expansion of the Company's  business.  The
payment of future  dividends is within the  discretion of the board of directors
and  will  depend  upon the  Company's  future  earnings,  if any,  its  capital
requirements, financial condition and other relevant factors.                   

 INDEMNIFICATION OF DIRECTORS AND OFFICERS

         In general,  each director and officer of the Company is eligible to be
indemnified  by the Company  against all expenses,  including  attorneys'  fees,
judgments,  fines,  punitive  damages and amounts paid in settlement,  that were
incurred in connection with a proceeding to which such director or officer was a
party by reason of the fact that such  officer or director  was acting on behalf
of the  Company to the  fullest  extent  permissible  under the  Nevada  Revised
Statutes.                                                                       

         The  Company's  Bylaws  also  require  the  Company  to  indemnify  its
officers, directors,  employees and agents against all expenses incurred by them
in connection with any legal action,  including  shareholder  derivative  suits,
based on any action or  omission  alleged to have been  committed  while  acting
within  the scope of such  relationship  to the  Company to the  fullest  extent
permissible under the Nevada Revised Statutes.  Insofar as  indemnification  for
liabilities  arising  under the  Securities  Act may be permitted to  directors,
officers  or  persons   controlling  the  Company   pursuant  to  the  foregoing
provisions,  the Company has been informed that in the opinion of the Securities
and  Exchange  Commission  such  indemnification  is  against  public  policy as
expressed in the Securities Act and is therefore unenforceable.                 

CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS

         The  Company  has not had any  changes  in or  disagreements  with  its
accountants. FTL HK's current accountant,  Charles Chan, Ip & Fung CPA Ltd., was
appointed  on June  24,  2003  following  the  resignation  of FTL  HK's  former
accountant,  Jimmy C.H.  Cheung & Company,  on the same date.  The  decision  to
change  accountants  was  approved by the board of FTL HK.  Jimmy C.H.  Cheung &
Company  performed the audit of FTL HK's year 2001 financial  statements.  Jimmy
C.H.  Cheung & Company's  report on the financial  statements of FTL HK for that

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year did not contain any adverse  opinion or disclaimer  of opinion,  nor was it
modified as to uncertainty,  audit scope, or accounting  principles.  FTL HK did
not have any  disagreements  with Jimmy  C.H.  Cheung & Company on any matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedure.                                                             

ANNUAL MEETING

         FTL's first  annual  shareholders  meeting  after the  Distribution  is
expected  to be held on August  31,  2004.  If a  shareholder  desires to have a
proposal  formally  considered at the 2004 Annual Meeting of  Shareholders,  and
evaluated  by the FTL board of  directors  for  possible  inclusion in the Proxy
Statement for that meeting,  the proposal must comply with the  requirements  of
Rule 14a-8 promulgated under the Exchange Act and must be received in writing by
the Secretary of the Company at the address set forth in the  "Summary"  section
on or before July 31, 2004.                                                     

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APPENDIX 1
FINANCIAL STATEMENTS

 FINANCIAL TELECOM LIMITED (USA), INC.
 PROFORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2003 AND 2002

ASSET                                                       AS AT 30 JUNE       
                                                     2003             2002
                                                  -----------      -----------
CURRENT ASSETS                                                                  
Cash and cash equivalents                          $     2,351           23,304 
Security investments                                      --             30,963 
Accounts receivable, net of allowance                   81,095          116,539 
Advances and prepayments                                27,699           23,198 
                                                  -----------      -----------
TOTAL CURRENT ASSETS                                   111,145          194,003 
                                                  -----------      -----------

PROPERTY & EQUIPMENT - NET                              11,736          897,229 
                                                  -----------      -----------

                                                  -----------      -----------
TOTAL ASSETS                                       $   122,881        1,091,232 
                                                  ===========      ===========

LIABILITIES AND SHAREHOLDERS' EQUITY                                            

CURRENT LIABILITIES                                                             
Accounts payable                                       541,775          494,287 
Deferred revenue                                        17,858           28,813 
Due to related parties                               1,269,184        1,252,998 
Capital lease liability                                   --              5,688 
                                                  -----------      -----------
TOTAL CURRENT LIABILITIES                            1,828,817        1,781,787 
                                                  -----------      -----------

LONG-TERM LIABILITIES                                                           
Capital lease liability                                   --            149,505 
                                                  -----------      -----------
TOTAL LONG-TERM LIABILITIES                               --            149,505 
                                                  -----------      -----------

                                                  -----------      -----------
TOTAL LIABILITIES                                  $ 1,828,817        1,931,292 
                                                  -----------      -----------

SHAREHOLDERS' EQUITY                                                            
                                                  -----------      -----------
Common Stock                                               100              100 
Accumulated deficit                                 (1,708,036)        (840,160)
                                                  -----------      -----------
TOTAL SHAREHOLDERS' EQUITY                          (1,707,936)        (840,060)
                                                  -----------      -----------
TOTAL LIABILITIES AND SAREHOLDERS' EQUITY          $   122,881        1,091,232 
                                                  ===========      ===========

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 FINANCIAL TELECOM LIMITED (USA), INC.
 PROFORMA CONSOLIDATED INCOME STATEMENTS
 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

                                                    SIX MONTHS ENDED JUNE 30
                                                     2003           2002
                                                    -----------    -----------

SALES                                                $   177,184        325,385 

COST OF SALES                                            113,994        228,172 
                                                    -----------    -----------

GROSS PROFIT (LOSS)                                       63,190         97,213 

OPERATING EXPENSES                                                              
 Selling, general and administrative expenses           149,273        438,978
 Depreciation and amortization                            4,408         95,232
 Impairments                                                  0        218,177
                                                    -----------    -----------
TOTAL OPERATING EXPENSES                                 155,681        752,387 
                                                    -----------    -----------

LOSS FROM CONTINUING OPERATIONS BEFORE                                          
  OTHER INCOME (EXPENSE)                                 (92,491)      (655,174)
                                                    -----------    -----------

OTHER INCOME (EXPENSES)                                                         
  Interest expenses                                          (71)       (17,768)
 Waive-off debts                                         67,264              0
                                                    -----------    -----------

TOTAL OTHER INCOME (EXPENSES)                             67,193        (17,768)
                                                    -----------    -----------

LOSS BEFORE MINORITY INTEREST                            (25,298)      (672,942)

  MINORITY INTEREST                                            0         (9,606)
                                                    -----------    -----------

                                                    -----------    -----------
NET LOSS                                                 (25,298)      (682,548)
                                                    ===========    ===========

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 FINANCIAL TELECOM LIMITED (USA), INC.
PROFORMA CONSOLIDATED CASH FLOW STATEMENTS
 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

                                                     Six Months Ended June 30,
                                                     2003           2002
                                                    -----------    -----------
                                                      US$            US$
Cash flows from operating activities:                                           
   Net gain/(loss)                                       (25,298)      (682,548)
Adjustments to reconcile net loss to net cash                             
used in operating activities:                                             
    Depreciation and amortization                         4,408         95,232
Impairments                                         218,177           
  Changes on minority interest                           54,049          9,606
   Changes in operating assets and liabilities:          (96,282)       (25,781)
                                                    -----------    -----------

Net cash used in operating activities                    (63,123)      (385,314)
                                                    -----------    -----------

Cash flows from investing activities:                                           
  Proceeds on return of investment                         --          172,018
Purchase of property and equipment                       (718)          --
                                                    -----------    -----------

Net cash provided (used) by investing activities            (718)       172,018 
                                                    -----------    -----------

Cash flows from financing activities:                                           
   Payments on loans and lines of credit                    --           (6,952)
  Proceeds from related parties                          62,367        181,046
                                                    -----------    -----------

Net cash provided by financing activities                 62,367        174,094 
                                                    -----------    -----------

Net increase (decrease) in cash                           (1,474)       (39,202)

Cash and cash equivalents, beginning of period             3,825         62,506 
                                                    -----------    -----------

Cash and cash equivalents, end of period                   2,351         23,304 
                                                    -----------    -----------

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 FINANCIAL TELECOM LIMITED (USA), INC.
 PROFORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2002 AND 2001

ASSET                                                      AS AT 31 DECEMBER    
                                                     2002           2001
                                                    -----------    -----------
CURRENT ASSETS                                            US$            US$    
Cash and cash equivalents                           $     3,825          62,506 
Security investments                                       --           202,981 
Accounts receivable, net of allowance                      --           174,369 
Due from related parties                                 25,287           3,310 
Advances and prepayments                                  2,266          38,569 
                                                   -----------     -----------
TOTAL CURRENT ASSETS                                     31,378         481,735 
                                                   -----------     -----------

PROPERTY & EQUIPMENT - NET                               15,426       1,228,353 
                                                   -----------     -----------
TOTAL ASSETS                                        $    46,803       1,710,088 
                                                   ===========     ===========

CURRENT LIABILITIES                                                             
Bank overdraft                                             --             1,381 
Accounts payable                                        497,862         521,296 
Deferred revenue                                         53,625         118,602 
Due to related parties                                1,232,004       1,075,163 
Capital lease liability                                    --            11,181 
                                                   -----------     -----------
TOTAL CURRENT LIABILITIES                             1,783,491       1,727,622 
                                                   -----------     -----------

LONG-TERM LIABILITIES                                                           
Capital lease liability                                    --           149,584 
                                                   -----------     -----------
TOTAL LONG-TERM LIABILITIES                                --           149,584 
                                                   -----------     -----------

                                                   -----------     -----------
TOTAL LIABILITIES                                   $ 1,783,491       1,877,206 
                                                   -----------     -----------

MINORITY INTERESTS                                      (54,049)         (9,606)

SHAREHOLDERS' EQUITY                                                            
Common Stock                                                100             100 
Accumulated deficit                                  (1,682,738)       (157,612)
                                                   -----------     -----------
TOTAL SHAREHOLDERS' EQUITY                           (1,682,638)       (157,512)
                                                   -----------     -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $    46,803       1,710,088 
                                                   ===========     ===========

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 FINANCIAL TELECOM LIMITED (USA), INC.
 PROFORMA CONSOLIDATED INCOME STATEMENTS
 FOR THE YEAR ENDED DECEMBER 31, 2002 AND 2001

                                                     2002           2001
                                                    -----------    -----------
                                                      US$            US$

SALES                                                $   488,557      1,301,079 

COST OF SALES                                            385,674      1,193,973 
                                                    -----------    -----------

GROSS PROFIT                                             102,883        107,106 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES             917,860      1,182,939 

                                                    -----------    -----------
LOSS FROM OPERATIONS                                    (814,977)    (1,075,833)

OTHER INCOME (EXPENSES)                                                         
Other income                                                  0         39,297
 Loss on disposal of investment in security             (142,885)      (235,727)
Provision for doubtful debts                            (50,184)             0
 Unrealized loss on investment in securities                   0       (100,186)
 Other operation expenses                                (21,964)       (35,122)
 Interest (expenses)/income                              (44,721)       (88,721)
Discount on early settlement of mortgage loan                 0        355,777
                                                    -----------    -----------
TOTAL OTHER INCOME (EXPENSES)                           (259,754)       (64,681)
                                                    -----------    -----------

DISCONTINUED OPERATIONS:                                                        
loss on disposal of a subsidiary                       (494,839)         3,561

                                                    -----------    -----------
LOSS BEFORE MINORITY INTEREST                         (1,569,570)    (1,136,953)

 MINORITY INTEREST                                        44,443        (94,247)

                                                    -----------    -----------
NET LOSS                                              (1,525,127)    (1,231,200)
                                                    ===========    ===========

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 FINANCIAL TELECOM LIMITED (USA), INC.
PROFORMA CONSOLIDATED CASH FLOW STATEMENTS
FOR THE YEAR ENDED DEC 31, 2002 AND 2001

                                                     2002           2001
                                                    -----------    -----------
                                                      US$            US$
Cash flows from operating activities:                                           
   Net gain/(loss)                                    (1,525,127)    (1,231,200)
Adjustments to reconcile net loss to net cash                             
used in operating activities:                                             
     Loss on disposal of property and equipment             --             (138)
    Depreciation and amortization                       421,270        163,020
  Bad debt provision                                   50,184           --
  Impairment loss                                       9,557           --
    Loss on disposal of securities                      142,885        335,913
     Loss (gain) on disposal of affiliates               494,839         (3,561)
  Change of minority interest                           (44,443)        94,247
  Changes in operating assets and liabilities           195,876        153,220
                                                    -----------    -----------

Net cash used in operating activities                   (254,959)      (488,499)
                                                    -----------    -----------

Cash flows from investing activities:                                           
  Proceeds on return of investment                       60,097      1,139,675
  Proceeds on sale of property and equipment               --            1,959
   Purchase of property and equipment                     (7,448)       (32,387)
                                                    -----------    -----------

Net cash provided by investing activities                 52,649      1,109,247 
                                                    -----------    -----------

Cash flows from financing activities:                                           
   Payments on loans and lines of credit                  (1,381)      (482,889)
   Proceeds (payments) from (to) related parties         145,010       (180,158)
                                                    -----------    -----------

Net cash provided (used) by financing activities         143,629       (663,047)
                                                    -----------    -----------

Net increase (decrease) in cash                          (58,681)       (42,299)

Cash and cash equivalents, beginning of period            62,506        103,425 
                                                    -----------    -----------

Cash and cash equivalents, end of period                   3,825         62,506 
                                                    -----------    -----------

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Notes to financial statements:                                                  

1.       The  Company  was  formed  on  April  28,  2003,  and  has no  business
         operations except the 100% ownership of FTL HK. The Company has not yet
         prepared its first audited financial  report.  The 2001 and 2002 annual
         financial  statements  were  prepared  based on the  audited  financial
         statements of FTL HK. The financial  statements  covering the first six
         months of 2003 were prepared  based on the  management  accounts of FTL
HK.                                                           

2.       The  financial  statements  and  accounts  presented  herein  have been
         prepared in accordance with the general principles and guidelines under
         U.S.  GAAP and certain  accounting  items have been re-  classified  or
renamed. Specifically, these are:                             

Income Statements:                                            

         a.       "Financial  cost"  has been  included  in  "Other  income  and
expenses"                                   
         b.       "Discount  on early  settlement  of  mortgage  loan"  has been
included in "Other income and expenses"     

Balance Sheet:                                                

         a.       "Fixed  deposits  with  banks" has been  included in "Cash and
cash equivalents"                           
         b.       All  "due  from/to  related  parties"  have  been  net off and
renamed as "Due to related parties"         
         c.       "Receipt in advance" and "Deposits received" have been renamed
"Deferred revenue"                          
         d.       The amount of "Common stock" has been adjusted to US$100,  the
                  amount of  outstanding  common stock as of June 30,  2003,  to
                  keep  consistent  with FTL's  share  capital.  The  difference
                  resulted  from the above  accounting  treatment is included in
             "Accumulated deficits." There is no change on net assets.

3.       The financial statements are presented on a proforma basis as if FTL HK
         was a wholly-owned subsidiary of the Company during the period covered.

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--------------------------------------------------------------------------------

 FINANCIAL TELECOM LIMITED

REPORTS AND FINANCIAL STATEMENTS

31 DECEMBER 2002

--------------------------------------------------------------------------------

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 FINANCIAL TELECOM LIMITED
 REPORT OF THE DIRECTORS
--------------------------------------------------------------------------------

The directors  present  herewith  their annual report and the audited  financial
statements for the year ended 31 December 2002.                                 

PRINCIPAL ACTIVITIES                                                            

The company is  principally  engaged in the provision of  telecommunication  and
financial quotation services.                                                   

The  principal  activities  of the  subsidiaries  are  set out in note 12 to the
financial statements.                                                           

FINANCIAL STATEMENTS AND DIVIDENDS                                              

The  results  of the group for the year are set out in the  consolidated  income
statement on page 5.                                                            

The state of the group and the  company's  affairs as at 31 December 2002 is set

out in the consolidated balance sheet and balance sheet on pages 6 to 9.        

The directors do not recommend payment of dividend.                             

FIXED ASSETS                                                                    

Movements  in  fixed  assets  during  the  year  are  set  out in note 11 to the
financial statements.                                                           

DIRECTORS                                                                       

The  directors who held office during the year and up to the date of this report
were:                                                                           

Mr. PANG Kam Wing                                                   
Mr. TANG Ping Wing                                                  
Mr. TANG Wing Kuen                                                  
      Mr. BOK Wai Kee         (appointed on 16/1/2002 and resigned on 19/8/2002)
Mr. TANG Wing On        (resigned on 1/6/2002)                      
Mr. Alan Viet PHAN      (resigned on 1/6/2002)                      

As  nothing  was  mentioned  to  the  contrary  in  the  company's  Articles  of
Association, all present directors shall continue in office.                    

MANAGEMENT CONTRACTS                                                            

No contracts  concerning the management and  administration  of the whole or any
substantial  part of the  business of the group or the company were entered into
or existed during the year.                                                     

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 REPORT OF THE DIRECTORS

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 (Continued)

DIRECTORS' INTERESTS IN CONTRACTS                                               

No contracts of significance in relation to the company's  business to which the
company,  its holding company or any of its subsidiaries or fellow  subsidiaries
was a party and in which a director  of the  company  had a  material  interest,
whether directly or indirectly,  subsisted at the end of the year or at any time
during the year.                                                                

DIRECTORS' BENEFITS FROM RIGHT TO ACQUIRE SHARES OR DEBENTURES                  

At no time during the year was the  company,  its holding  company or any of its
subsidiaries  or fellow  subsidiaries  a party to any  arrangement to enable the
directors  of the  company to acquire  benefits by means of the  acquisition  of
shares in, or debentures of, the company or any other body corporate.           

AUDITORS                                                                        

The financial  statements have been audited by Charles Chan, Ip & Fung CPA Ltd.,
Certified Public  Accountants,  who retire and being eligible,  offer themselves
for re-appointment.                                                             

On behalf of the board                                                          

/s/ Chairman                                                                    
------------                                                                    
Chairman                                                                        
Hong Kong,                                                                      

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 AUDITORS' REPORT TO THE SHAREHOLDERS OF
 FINANCIAL TELECOM LIMITED
(INCORPORATED IN HONG KONG WITH LIMITED LIABILITY)
--------------------------------------------------------------------------------

We have  audited  the  financial  statements  on pages 5 to 25 which  have  been
prepared in accordance with  accounting  principles  generally  accepted in Hong
Kong.                                                                           

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS                           

The Hong Kong Companies  Ordinance  requires the directors to prepare  financial
statements  which give a true and fair view. In preparing  financial  statements
which give a true and fair view it is fundamental  that  appropriate  accounting
policies are selected and applied consistently.                                 

It is our responsibility to form an independent opinion,  based on our audit, on
those statements and to report our opinion to you.                              

BASIS OF OPINION                                                                

We conducted  our audit in  accordance  with  Statements  of Auditing  Standards
issued by the Hong Kong Society of Accountants.  An audit includes  examination,
on a test basis,  of evidence  relevant  to the amounts and  disclosures  in the
financial  statements.  It  also  includes  an  assessment  of  the  significant
estimates  and  judgements  made  by the  directors  in the  preparation  of the
financial statements,  and of whether the accounting policies are appropriate to
the company's circumstances, consistently applied and adequately disclosed.     

We  planned  and  performed  our audit so as to obtain all the  information  and
explanations  which  we  considered  necessary  in  order  to  provide  us  with
sufficient  evidence to give  reasonable  assurance as to whether the  financial
statements are free from material  misstatement.  In forming our opinion we also
evaluated  the  overall  adequacy  of the  presentation  of  information  in the
financial statements.  We believe that our audit provides a reasonable basis for
our opinion.                                                                    

Fundamental uncertainty                                                         

In forming our opinion,  we have also considered the adequacy of the disclosures
made in note 1(b) to the  financial  statements  concerning  the adoption of the
going concern basis on which the financial  statements  have been prepared.  The
validity of the  applicability  of the going  concern  concept  depends upon the
continuing  financial  support  from of its  ultimate  holding  company  and the
directors.  The financial  statements do not include any adjustments that may be
necessary  should  the  Group be unable to obtain  such  financial  support.  We
consider that the fundamental  uncertainty has been adequately  disclosed in the
financial statements and our opinion is not qualified in this respect.          

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(INCORPORATED IN HONG KONG WITH LIMITED LIABILITY)

--------------------------------------------------------------------------------

 (Continued)

OPINION                                                                         

In our opinion the financial  statements  give a true and fair view of the state
of affairs of the  company  and of the group as at 31  December  2002 and of its
loss for the year then ended and have been properly  prepared in accordance with
the Hong Kong Companies Ordinance.                                              

/s/ Charles Chan                                                                
----------------                                                                
Charles Chan, Ip & Fung CPA Ltd.                                                
Certified Public Accountants                                                    
Hong Kong                                                                       

/s/ Charles Chan Wai Dune                                                       
-------------------------                                                       
Chan Wai Dune, Charles                                                          
Practising Certificate Number P00712                                            

F461-2002                                                                       

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 FINANCIAL TELECOM LIMITED
 CONSOLIDATED INCOME STATEMENT
 FOR THE YEAR ENDED 31 DECEMBER 2002
--------------------------------------------------------------------------------

                                              Note         2002         2001
                                              ----         ----         ----
                                                            HK$          HK$

TURNOVER                                          3     3,810,741   10,148,414  

COST OF SALES                                          (3,008,255)  (9,312,988) 
                                                    -----------  -----------
GROSS PROFIT                                              802,486      835,426  

OTHER REVENUE                                     3             -      306,517  

ADMINISTRATIVE EXPENSES                                 7,159,307    9,226,925  

OTHER OPERATING EXPENSES                          4     1,677,256    2,894,069  
                                                      (8,836,563) (12,120,994)
                                                    -----------  -----------
LOSS FROM OPERATIONS                                   (8,034,077) (10,979,051) 

FINANCE COSTS                                     5      (348,824)    (692,023) 
                                                    -----------  -----------
                                                      (8,382,901) (11,671,074)

(LOSS)/GAIN ON DISPOSAL OF A SUBSIDIARY           6    (3,859,745)      27,778  

DISCOUNT ON EARLY SETTLEMENT OF MORTGAGE LOAN                   -    2,775,061  
                                                    -----------  -----------
LOSS BEFORE TAXATION                              7   (12,242,646)  (8,868,235) 

TAXATION                                          8             -            -  
                                                    -----------  -----------
LOSS AFTER TAXATION                                   (12,242,646)  (8,868,235) 

MINORITY INTEREST                                         346,657     (735,126) 
                                                    -----------  -----------
LOSS ATTRIBUTABLE TO SHAREHOLDERS                10   (11,895,989)  (9,603,361) 
                                                    ===========  ===========

The notes on pages 50 to 66 form an integral part of these financial statements.

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CONSOLIDATED BALANCE SHEET
31 DECEMBER 2002
--------------------------------------------------------------------------------

                                              Note         2002         2001
                                              ----         ----         ----
                                                            HK$          HK$
ASSETS                                                                          
Non-current assets                                                              
Fixed assets                                   11       120,320    9,581,155

Current assets                                                                  
Investment in securities                       13             -    1,583,254
Due from a related company                     14             -       25,038
Due from fellow subsidiaries                   18       196,456            -
Deposits and prepayments                                 17,672      300,836
Trade receivables                                             -    1,360,076
Fixed deposits with banks                                13,444            -
Cash and bank balances                                   16,394      487,549
                                                        243,966    3,756,753
LIABILITIES                                                                     
Current liabilities                                                             
Bank overdraft, secured                                       -       10,768
Trade payables and accrued charges                    3,883,325    4,066,110
Receipts in advance                                     204,957      627,954
Deposits received                                       213,318      297,138
Due to a related company                       15        44,655            -
Due to ultimate holding company                17     4,747,109    3,667,974
Due to a fellow subsidiary                     18       598,898      441,591
Due to directors                               19        21,401            -
Loans from a shareholder                       16     4,197,565    4,276,703
Current portion of interest-bearing                                         
  bank borrowings                                             -       87,214
                                                     13,911,228   13,475,452
                                                    -----------  -----------
Net current liabilities                               (13,667,262)  (9,718,699) 
                                                    -----------  -----------
Total assets less current assets                      (13,546,942)    (137,544) 

Non-current liabilities                                                         
 Interest-bearing bank borrowings               20             -   (1,166,752)

Minority interest                                         421,583       74,926  
                                                    -----------  -----------
                                                     (13,125,359)  (1,229,370)
                                                    ===========  ===========

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CONSOLIDATED BALANCE SHEET
31 DECEMBER 2002

--------------------------------------------------------------------------------

 (Continued)

                                              Note         2002         2001
                                              ----         ----         ----
                                                            HK$          HK$

CAPITAL AND RESERVES                                                            
Issued capital                                 22     8,484,339    8,484,339
 Reserves                                       23   (21,609,698)  (9,713,709)
                                                    -----------  -----------

                                                     (13,125,359)  (1,229,370)
                                                    ===========  ===========

Approved by the board of directors on                                           

On behalf of the board                                                          

/s/ Director                                                      /s/ Director  
------------                                                      ------------  
Director                                                          Director      

The notes on pages 50 to 66 form an integral part of these financial statements.

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31 DECEMBER 2002

--------------------------------------------------------------------------------

                                              Note         2002         2001
                                              ----         ----         ----
                                                            HK$          HK$

ASSETS                                                                          
Non-current assets                                                              
Fixed assets                                   11       120,320    3,148,614
Interest in subsidiaries                       12            51   12,745,391
                                                        120,371   15,894,005
Current assets                                                                  
Investment in securities                       13             -    1,583,254
Due from a related company                     14             -       25,038
Due from fellow subsidiaries                   18       196,455            -
Deposits and prepayments                                 17,672      198,468
Trade receivables                                             -      454,705
Fixed deposits with banks                                13,444            -
Cash at banks and in hand                                16,343      372,425
                                                        243,914    2,633,890

LIABILITIES                                                                     
Current liabilities                                                             
Bank overdraft, secured                                       -            -
Bills payable, secured                                        -            -
Trust receipts, secured                                       -            -
Trade payables and accrued charges                    2,549,943    2,196,731
Receipts in advance                                     204,957      251,319
Deposits received                                       213,318      297,138
Due to a related company                                 44,655            -
Due to ultimate holding company                17     4,747,109    3,667,974
Due to a fellow subsidiary                     18       598,898      441,591
Due to directors                               19        21,401            -
Loans from a shareholder                       16     4,197,565    4,276,703
                                                     12,577,846   11,131,456
                                                    -----------  -----------

Net current liabilities                               (12,333,932)  (8,497,566) 
                                                    -----------  -----------

NET (LIABILITIES)/ASSETS                              (12,213,561)   7,396,439  
                                                    ===========  ===========

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 BALANCE SHEET
31 DECEMBER 2002

--------------------------------------------------------------------------------

 (Continued)

                                              Note         2002         2001
                                              ----         ----         ----
                                                            HK$          HK$

CAPITAL AND RESERVES                                                            
Issued capital                                 22     8,484,339    8,484,339
 Reserves                                       23   (20,697,900)  (1,087,900)
                                                    -----------  -----------

                                                    (12,213,561)   7,396,439
                                                    ===========  ===========

Approved by the board of directors on                                           

On behalf of the board                                                          

/s/ Director                                                      /s/ Director  
------------                                                      ------------  
Director                                                          Director      

The notes on pages 50 to 66 form an integral part of these financial statements.

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 FINANCIAL TELECOM LIMITED
 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 YEAR ENDED 31 DECEMBER 2002

--------------------------------------------------------------------------------

              Share          Share     Accumulated
                          capital        premium          losses         Total
                          -------        -------    ------------         -----
                              HK$            HK$             HK$           HK$

At 1 January 2001        8,484,339     23,221,552    (23,331,900)     8,373,991 

Loss for the year                -              -     (9,603,361)    (9,603,361)
                      -----------    -----------    -----------    -----------

At 31 December 2001 and                                                         
   at 1 January 2002     8,484,339     23,221,552    (32,935,261)    (1,229,370)

Loss for the year                -              -    (11,895,989)   (11,895,989)
                      -----------    -----------    -----------    -----------

At 31 December 2002      8,484,339     23,221,552    (44,831,250)   (13,125,359)
                      ===========    ===========    ===========    ===========

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 NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2002
--------------------------------------------------------------------------------

1.    BASIS OF PREPARATION                                                      

a)    PRINCIPAL ACTIVITIES                                          

            The   company   is   principally   engaged  in  the   provision   of
            telecommunication  and financial quotation  services.  The principal
            activities  of  the  subsidiaries  are  set  out in  note  12 to the
financial statements.                                   

b)    GOING CONCERN CONCEPT                                         

            The Group sustained a consolidated loss attributable to shareholders
            of HK$11,895,989 for the year ended 31 December 2002. At 31 December
            2002,  the  Group  has  consolidated  net  current  liabilities  and
            negative  shareholders'  funds of  HK$13,667,262  and  HK$13,125,359
respectively.                                           

            Notwithstanding  the  above,  the  financial  statements  have  been
            prepared  under the  going  concern  concept  because  the  ultimate
            holding  company  and  certain  directors  have  agreed  to  provide
            adequate funds for the company to meet its  liabilities as they fall
due.                                                    

            The financial  statements have not  incorporated any adjustments for
            the possible failure of the group to obtain such financial  support.
            Should  the  group  be  unable  to  continue  as  a  going  concern,
            adjustments  would have to be made to restate the value of assets to
            their  immediate  recoverable  amounts,  to provide  for any further
            liabilities which might arise and to reclassify  non-current  assets
            and liabilities as current assets and liabilities, respectively. The
            effects  of  these  adjustments  have  not  been  reflected  in  the
financial statements.                                   

2.    PRINCIPAL ACCOUNTING POLICIES                                             

      The financial  statements  have been prepared in accordance with generally
      accepted accounting  principles in Hong Kong and comply with Statements of
      Standard  Accounting Practice ("SSAPs") issued by the Hong Kong Society of
      Accountants  ("HKSA")  and the  requirements  of the Hong  Kong  Companies
      Ordinance. The financial statements are prepared under the historical cost
convention.                                                         

      In the current year, the company has adopted,  for the first time, SSAP 34
      (revised)  "Employee  benefits" issued by the HKSA which are effective for
accounting periods commencing on or after 1 January 2002.           

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 NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2002
--------------------------------------------------------------------------------
2.    PRINCIPAL ACCOUNTING POLICIES                                             

a)    BASIS OF CONSOLIDATION                                        

            The  consolidated   financial   statements   include  the  financial
            statements  of  the  company  and  its  subsidiaries  made  up to 31
            December 2002. The results of  subsidiaries  as acquired or disposed
            of during the year are included in the consolidated income statement
            from the effective  date of  acquisition or up to the effective date
            of  disposal,   as   appropriate.   All   significant   intercompany
            transactions  and  balances  within  the  Group  are  eliminated  on
consolidation.                                          

            The  gain  or  loss  on  disposal  of a  subsidiary  represents  the
            difference between the proceeds of the sale and the Group's share of
            its net assets  together with any  unamortised  goodwill or negative
            goodwill or  goodwill/negative  goodwill taken to reserves and which
            was not previously charged or recognised in the consolidated  income
statement.                                              

            Minority interests  represent the interests of outside  shareholders
in the operating results and net assets of subsidiaries.

            In the company's  balance sheet the investments in subsidiaries  are
            stated at cost less provision for impairment  losses. The results of
            subsidiaries  are  accounted  for by the  company  on the  basis  of
dividends received and receivable.                      

b)    REVENUE RECOGNITION                                           

            i)    Revenue  from sale of goods is  recognised  on the transfer of
                  risks and rewards of ownership, which generally coincides with
                  the time when the goods are  delivered to customers  and title
has passed.                                 

            ii)   Revenue from sale of services is recognised  when the services
are rendered.                               

            iii)  Operating lease rental income is recognised on a straight-line
    basis over the periods of the respective leases.

c)    FIXED ASSETS                                                  

      Fixed assets are stated at cost less accumulated depreciation.

            Fixed assets are depreciated at rates  sufficient to write off their
            cost over their estimated useful lives on a straight-line basis. The
principal annual rates are as follows:                  

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31 DECEMBER 2002
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2.    PRINCIPAL ACCOUNTING POLICIES (Continued)                                 

c)    FIXED ASSETS (Continued)                                      

                Leasehold land and building                Over the lease term
Leasehold improvements                     10%
    Computer and transmission equipment        33 1/3%
Office equipment                           20%
Furniture and equipment                    20%

            In previous years, the Group  depreciated  computer and transmission
equipment at a rate of 15% per annum.                   

            During the year  ended 31  December  2002,  the Group  performed  an
            independent  review on the useful lives of the equipment.  After the
            review of useful lives, the Group changed the  depreciation  rate to
            331/3% to better  reflect the actual useful lives of the  equipment.
            The change in  depreciation  rate has  resulted  in an  increase  in
depreciation charge by HK$1,412,075 for the year.       

            Major  costs  incurred in  restoring  fixed  assets to their  normal
            working condition are charged to the income statement.  Improvements
            are capitalised and depreciated  over their expected useful lives to
the company.                                            

            The carrying amount of fixed assets are reviewed regularly to assess
            whether their recoverable amounts have declined below their carrying
            amounts.  Expected  future  cash flows have not been  discounted  in
determining the recoverable amount.                     

            The gain or loss on  disposal  of  fixed  assets  is the  difference
            between  the net  sales  proceeds  and the  carrying  amount  of the
  relevant asset, and is recognised in the income statement.

d)    SUBSIDIARIES                                                  

            A  subsidiary  is  a  company  in  which  the  company  directly  or
            indirectly,  controls  more  than half of its voting power or issued
share capital or controls the composition of its board. 

            Investment in  subsidiaries  in the balance sheet are stated at cost
            less  provision,  if  necessary,  for  any  permanent  diminution in
            value.  The results of subsidiaries are  accounted for to the extent
of dividends received and receivable.                   

e)    INVESTMENT IN SECURITIES                                      

            Security  is  a  bond  or  share  or  other  negotiable   instrument
            evidencing debts or ownership which is distinguished  between equity
            and debt securities,  is classified as held-to-maturity  securities,
investment securities and other investments.            

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31 DECEMBER 2002
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2.    PRINCIPAL ACCOUNTING POLICIES (Continued)                                 

e)    INVESTMENT IN SECURITIES (Continued)                          

            Investments  in other  than  held-to-maturity  debt  securities  are
            accounted for using the benchmark  treatment.  Investments  in other
            than  held-to-maturity  debt  securities  and  long-term  investment
            securities are accounted for as other  investments and are stated at
            fair values with  unrealised  gains or losses included in the income
statement.                                              

            Gain or loss on disposal of investment in  securities,  representing
            the difference between the net sale proceeds and the carrying amount
            of the  securities,  is  recognised  in the income  statement in the
period in which the disposal occurs.                    

f)    IMPAIRMENT OF ASSETS                                          

            Internal and external  sources of  information  are reviewed at each
            balance  sheet date to identify  indications  that the assets may be
            impaired  or an  impairment  loss  previously  recognised  no longer
exists or may have decreased.                           

            If any such indication  exists,  the asset's  recoverable  amount is
            estimated.  An impairment  loss is recognised  whenever the carrying
amount of an asset exceeds its recoverable amount.      

i)    Calculation of recoverable amount                 

                  The  recoverable  amount of an asset is the greater of its net
                  selling price and value in use. In assessing value in use, the
                  estimated  future cash flows are  discounted  to their present
                  value  using a pre-tax  discount  rate that  reflects  current
                  market  assessment  of time  value  of  money  and  the  risks
                  specific to the asset.  Where an asset does not generate  cash
                  inflows  largely  independent of those from other assets,  the
                  recoverable  amount is  determined  for the smallest  group of
                  assets that  generates  cash  inflows  independently  (i.e.  a
cash-generating unit).                      

ii)   Reversal of impairment losses                     

                  In respect of assets,  an impairment loss is reversed if there
                  has been a  change  in the  estimates  used to  determine  the
                  recoverable  amount. An impairment loss in respect of goodwill
                  is reversed only if the loss was caused by a specific external
                  event of an exceptional  nature that is not expected to recur,
                  and the increase in recoverable  amount relates clearly to the
  reversal of the effect of that specific event.

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31 DECEMBER 2002
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2.    PRINCIPAL ACCOUNTING POLICIES (Continued)                                 

ii)   Reversal of impairment losses (Continued)         

                  A reversal  of  impairment  losses is  limited to the  asset's
                  carrying  amount  that  would  have  been  determined  had  no
                  impairment loss been recognised in prior periods. Reversals of
                  impairment  losses are credited to the income statement in the
 period in which the reversals are recognised.

g)    TRADE RECEIVABLE                                              

            Provision is made against  trade  receivable to the extent that they
            are considered to be doubtful. Trade receivable in the balance sheet
is stated net of such provision.                        

h)    CASH EQUIVALENTS                                              

            Cash equivalents are short-term, highly liquid investments which are
            readily  convertible  into known amounts of cash without  notice and
            which were within  three  months of  maturity  when  acquired;  less
            advances from banks  repayable  within three months from the date of
            the  advance.  Cash  equivalents  include  investments  and advances
            denominated  in foreign  currencies  provided  that they  fulfil the
above criteria.                                         

i)    DEFERRED TAXATION                                             

            Deferred  taxation is accounted  for under the  liability  method in
            respect  of  timing  differences  between  profit  as  computed  for
            taxation purposes and profit as stated in the accounts to the extent
            that a liability or asset is expected with reasonable probability to
            crystallise  in the  foreseeable  future.  Deferred tax asset is not
            recognised  unless  its  realization  is assured  beyond  reasonable
doubt.                                                  

j)    OPERATING LEASES                                              

            Leases where substantially all the rewards and risks of ownership of
            assets remain with the lessor are accounted for as operating leases.
            Where the Group is the lessee,  rental  payable  under the operating
            leases  are  charged to the income  statement  on the  straight-line
basis over the lease terms.                             

k)    EMPLOYEE BENEFITS                                             

            i)    Salaries, annual bonuses, paid annual leave, leave passage and
                  the cost to the company of  non-monetary  benefits are accrued
                  in the year in which the  associated  services are rendered by
                  employee of the Group. Where payment or settlement is deferred
                  and the effect would be material,  these amounts are stated at
their present values.                       

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2.    PRINCIPAL ACCOUNTING POLICIES (Continued)                                 

k)    EMPLOYEE BENEFITS (Continued)                                 

            ii)   Contributions  to Mandatory  Provident Funds as required under
                  the Hong Kong Mandatory  Provident Fund Scheme Ordinance,  are
                 recognised as an expense in the income statement as incurred.

            iii)  Termination  benefits are recognised  when, and only when, the
                  Group demonstrably  commits itself to terminate  employment or
                  to provide  benefits as a result of  voluntary  redundancy  by
                  having a  detailed  formal  plan  which is  without  realistic
possibility of withdrawal.                  

l)    TRANSLATION OF FOREIGN CURRENCIES                             

            Transactions in foreign currencies during the year are translated at
            exchange rates ruling at the transaction dates.  Monetary assets and
            liabilities  expressed in foreign  currencies  at the balance  sheet
            date are translated at rates of exchange ruling at the balance sheet
            date. Exchange  differences arising in these cases are dealt with in
the income statement.                                   

m)    RELATED PARTIES                                               

            For  the  purpose  of  these  financial   statements,   parties  are
            considered  to be related to the Group if the Group has the ability,
            directly,   or   indirectly,   to  control  the  party  or  exercise
            significant  influence  over  the  party  in  making  financial  and
            operating decisions, or vice versa, or where the Group and the party
            are  subject  to common  control  or common  significant  influence.
Related parties may be individuals or other entities.   

n)    PROVISIONS AND CONTINGENT LIABILITIES                         

            A provision is recognised when there is present obligation, legal or
            constructive,  as a result of past events and it is  probable  (i.e.
            more  likely  than  not)  that an  outflow  of  resources  embodying
            economic  benefits will be required to settle the obligation,  and a
            reliable  estimate  can be made  of the  amount  of the  obligation.
            Provisions  are  reviewed  regularly  and  adjusted  to reflect  the
            current best  estimate.  Where the effect of the time value of money
            is material,  the amount of a provision is the present  value of the
      expenditures expected to be required to settle the obligation.

            A  contingent  liability is a possible  obligation  that arises from
            past  events  and  whose  existence  will only be  confirmed  by the
            occurrence or  non-occurrence of one or more uncertain future events
            not wholly  within  the  control  of the  company.  It can also be a
            present  obligation  arising from past events that is not recognised
            because it is not probable that outflow of economic  resources  will
            be required or the amount of obligation cannot be measured reliably.

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2.    PRINCIPAL ACCOUNTING POLICIES (Continued)                                 

n)    PROVISIONS AND CONTINGENT LIABILITIES (Continued)             

            A  contingent  liability is not  recognised  but is disclosed in the
            notes to the financial statements.  When a change in the probability
            of an outflow occurs so that outflow is probable,  they will then be
recognised as a provision.                              

3.     TURNOVER AND OTHER REVENUE                                               
                                                    2002                  2001
                                                    ----                  ----
                                                     HK$                   HK$

       Sales of goods                                  -               536,670
       Service fee income                      3,810,741             9,315,351
       Equipment rental income                         -               296,393
                                               3,810,741            10,148,414

Other revenue                                                   
         Interest income                               -                13,006
         Gain on disposals of fixed assets             -                 1,080
         Others                                        -               292,431
                                                       -               306,517
                                            ------------        --------------

       Total revenue                           3,810,741            10,454,931
                                            ============        ==============

4.    OTHER OPERATING EXPENSES                                                  
                                                    2002                  2001
                                                    ----                  ----
                                                     HK$                   HK$

Impairment loss on computer and                                     
              transmission equipment              74,545                     -
Loss on disposal of investment                                      
              in securities                    1,114,500             1,838,667
     Provision for doubtful debts                391,434                     -
Written off of amount due from                                      
              a related company                   25,435                     -
     Written off of deposits                      71,342                     -
     Obsolete stock written off                        -               236,662
     Bad debts written off                             -                37,289
Unrealised loss on investment                                       
              in securities                            -               781,451
                                            ------------          ------------
                                               1,677,256             2,894,069
                                            ============          ============

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5.    FINANCE COSTS                                                             
                                                    2002                  2001
                                                    ----                  ----
                                                     HK$                   HK$
Interest expenses on bank loans                                     
and overdraft repayable within                                    
          5 years                                      -                39,544
Interest expenses on shareholders'                                  
           loans                                 348,824               652,479
                                              ----------            ----------
                                                 348,824               692,023
                                              ==========            ==========

6.    (LOSS)/GAIN ON DISPOSAL OF A SUBSIDIARY                                   
                                                    2002                  2001
                                                    ----                  ----
                                                     HK$                   HK$

     Loss on disposal of a subsidiary                  -                27,778
     Gain on disposal of a subsidiary          4,844,769                     -
Waiver of amount due from                                           
      subsidiary upon disposal                (8,704,514)                    -
                                          --------------            ----------
                                              (3,859,745)               27,778
                                          ==============            ==========

      During  the  year  ended  31  December  2002,  the  Group  disposed  of  a
      subsidiary,    namely   Topomedia   International   Limited   to   Bowland
      International  Limited, a shareholder of the Company,  for a consideration
      of  HK$955,328  and  recorded  a gain  on  disposal  of  HK$4,844,769.  In
      addition,  the Company has agreed to waive the amount of HK$8,704,514  due
      from  Topomedia   International   Limited   subsequent  to  the  disposal.
   Therefore, the net loss on disposal of the subsidiary was HK$3,859,745.

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7.    LOSS BEFORE TAXATION                                                      

Loss before taxation is stated after charging the following:        

                                                   2002                 2001
                                                   ----                 ----
                                                    HK$                  HK$

    Auditors' remuneration                       81,727              132,283
    Cost of inventories sold                          -              638,229
Staff costs (excluding                                              
directors' remuneration)                                          
      Salaries, wages and welfare               935,486            2,982,010
      Severance payment                         341,334                    -
Mandatory Provident                                             
        Fund contribution                       128,120              175,404
                                              1,404,940            3,157,414
    Depreciation on owned assets              3,285,907            1,271,559
    Exchange losses                               1,547                5,064
Operating lease rental in                                           
     respect of land and buildings              479,078              870,671
                                           ============         ============

8.    TAXATION                                                                  

      No Hong Kong profits tax has been provided for in the financial statements
as the Group has no assessable profits for the year.                

9.    DIRECTORS' REMUNERATION                                                   

      Directors' remuneration disclosed pursuant to section 161 of the Companies
Ordinance is as follows:                                            

                                                   2002                 2001
                                                   ----                 ----
                                                    HK$                  HK$

    Fees                                              -                    -
Other emoluments                                                    
      Salaries                                  757,490            1,473,895
Mandatory Provident Fund                                        
         contribution                            24,743               64,521
                                           ------------         ------------
                                                782,233            1,538,416
                                           ============         ============

10.   LOSS ATTRIBUTABLE TO SHAREHOLDERS                                         

      The consolidated  loss for the year includes loss of HK$19,610,000  (2001:
HK$8,761,421) dealt with in the financial statement of the company. 

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11.   FIXED ASSETS                                                              

The Group                                                           
---------                                                           

                                                        [Enlarge/Download Table]
                                                                                                   
                                                                            Computer               
                       Leasehold                              Furniture          and               
                        land and       Office     Leasehold         and transmission               
                       buildings    equipment  improvements   equipment    equipment         Total 
                       ---------    ---------  ------------   ---------  -----------         ----- 
                             HK$          HK$           HK$         HK$          HK$           HK$ 
Cost                                                                                               

   At 1/1/2002         7,000,580    2,826,180       277,970   1,286,421   13,548,190    24,939,341 
  Additions                    -       18,468             -           -       39,630        58,098 
  Disposals           (7,000,580)     (95,962)     (163,870)   (414,091)           -    (7,674,503)
                    ------------ ------------    ----------  ----------  -----------  ------------ 
  At 31/12/2002                -    2,748,686       114,100     872,330   13,587,820    17,322,936 
                    ------------ ------------    ----------  ----------  -----------  ------------ 
Accumulated                                                                                        
   depreciation and                                                                                
   impairment                                                                                      

  At 1/1/2002            901,521    2,552,015        80,809   1,255,089   10,568,752    15,358,186 
  Charge for the year     97,230      243,053       108,694       8,480    2,828,450     3,285,907 
   Impairment loss             -            -             -           -       74,545        74,545 
  Disposals             (998,751)     (46,382)      (79,650)   (391,239)           -    (1,516,022)
                    ------------ ------------    ----------  ----------  -----------  ------------ 
  At 31/12/2002                -    2,748,686       109,853     872,330   13,471,747    17,202,616 
                    ------------ ------------    ----------  ----------  -----------  ------------ 
Net book value                                                                                     

  At 31/12/2002                -            -         4,247           -      116,073       120,320 
                    ============ ============    ==========  ==========  ===========  ============ 
  At 31/12/2001        6,099,059      274,165       197,161      31,332    2,979,438     9,581,155 
                    ============ ============    ==========  ==========  ===========  ============ 

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11.   FIXED ASSETS (Continued)                                                  
The Company                                                         
-----------                                                         

                                                        [Enlarge/Download Table]
                                                                                             
                                                                      Computer               
                                                       Furniture           and               
                              Office      Leasehold          and  transmission               
                           equipment   improvements    equipment     equipment        Total  
                           ---------   ------------    ---------     ---------        -----  
                                 HK$            HK$          HK$           HK$          HK$  
Cost                                                                                         

   At 1/1/2002             2,776,210        277,970      910,600    13,134,594    17,154,874 
  Additions                   18,468              -            -        39,630        58,098 
  Disposals                  (95,962)      (163,870)     (43,850)            -      (303,682)
                          ----------    -----------   ----------   -----------  ------------ 
  At 31/12/2002            2,748,686        114,100      872,330    13,174,174    16,909,290 
                          ----------    -----------   ----------   -----------  ------------ 
Accumulated depreciation                                                                     
   and impairment                                                                            

  At 1/1/2002              2,552,015         80,809      884,848    10,488,588    14,006,260 
  Charge for the year        243,053        108,694        8,480     2,569,513     2,929,740 
  Disposals                  (46,382)       (79,650)     (20,998)            -      (147,030)
                          ----------    -----------   ----------   -----------  ------------ 
  At 31/12/2002            2,748,686        109,853      872,330    13,058,101    16,788,970 
                          ----------    -----------   ----------   -----------  ------------ 
Net book value                                                                               

  At 31/12/2002                    -          4,247            -       116,073       120,320 
                          ==========    ===========   ==========   ===========  ============ 
  At 31/12/2001              274,165        244,958       31,332     2,645,956     3,148,614 
                          ==========    ===========   ==========   ===========  ============ 

12.   INTEREST IN SUBSIDIARIES                                                  
                                         The Company
                                         -----------
                                          2002                  2001
                                          ----                  ----
                                           HK$                   HK$

Investments at cost:                                                
 Unlisted shares                            51                    54
Due from a subsidiary (note a)       4,217,905            12,745,337
Written off of amount due from                                      
   a former subsidiary              (4,217,905)                    -
                                --------------        --------------
                                            51            12,745,391
                                ==============        ==============

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12.   INTEREST IN SUBSIDIARIES (Continued)                                      

Notes:                                                              

      (a) The amounts were interest  free,  unsecured and have no fixed terms of
repayment.                                                  

      (b) The  following  are the details of the subsidiary at 31 December 2002:

                                                 Nominal value      % of
                           Place of      Principal    of issued      interests
      Name            incorporation  activities    ordinary         held
                                                      capital       directly
         ----            -------------  ----------  -------------   ----------
                                                                    2002  2001
                                                                    ----  ----
         Fintel Wireless   Hong Kong   Trading and    HK$10,000      51%   51%
Internet Limited               financial                    
           quotation
          services

      A subsidiary,  Topomedia International Limited, was disposed of during the
year.                                                               

13.   INVESTMENT IN SECURITIES                                                  

Under benchmark treatment:                                          
                                             The Group and the Company
                                              --------------------------
                                                   2002             2001
                                                   ----             ----
                                                    HK$              HK$

    Overseas listed shares, at market value           -        1,583,254
                                           ============     ============

      At 31 December 2001, the amount of the company's holdings in the following
company exceeded 10% of total assets of the company.                            

             Particulars
                       Country of       of issued        % of      Principal
     Name               incorporation   shares held   interest held activities
     ----               -------------   -----------   ------------- ----------
     The Hartcourt          USA         Common stock      5.24      Investment
    Companies, Inc.                                                holding

      The Hartcourt  Companies,  Inc.  ("Hartcourt")  is the company's  ultimate
      holding  company.  The  investments  detailed above  represent part of the
      consideration from Hartcourt in settlement of the new shares issued by the
Company.                                                            

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14.   DUE FROM A RELATED COMPANY                                                

The Group and The Company                                           
-------------------------                                           
                                                             Maximum
                                                 Balance at  outstanding
                           Connected   Balance at  beginning  balance during
   Name                    parties    end of year  of year        the year
     ----                 ------------- ----------- ---------- ---------------
                                                HK$        HK$   2002     2001
                                                                 ----     ----
                                                                  HK$      HK$

     Hartcourt Capital    Tang Wing On            -     25,038 25,038   25,038
Asia Limited            and       ==========  =========         
(formerly "Fintel  Pang Kam Wing                                
International                                                   
Limited")                                                       

      The  amounts  are  unsecured,  interest  free and  without  fixed terms of
repayment.                                                          

15.   DUE TO A RELATED COMPANY                                                  

      The  amount  is  unsecured,  interest  free  and  has  no  fixed  terms of
repayment.                                                          

16.   LOANS FROM A SHAREHOLDER                                                  
                                       The Group and the Company
                                       -------------------------
                                       2002                 2001
                                       ----                 ----
                                        HK$                  HK$

Current account                     545,980                    -
Interest bearing loan             3,651,585            4,276,703
                               ------------         ------------
                                  4,197,565            4,276,703
                               ============         ============

      The loans are unsecured and have no fixed terms of repayment.  Interest is
      charged on the  outstanding  balances  at prime rate plus 3% per annum for
the interest bearing portion.                                       

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17.   DUE TO ULTIMATE HOLDING COMPANY                                           

      The  amount  is  unsecured,  interest  free  and  has no  fixed  terms  of
repayment.                                                          

18.   DUE TO/FROM FELLOW SUBSIDIARIES                                           

      The  amounts  are  unsecured,  interest  free and  have no fixed  terms of
repayment.                                                          

19.   DUE TO DIRECTORS                                                          

      The  amounts  are  unsecured,  interest  free and  have no fixed  terms of
repayment.                                                          

20.   INTEREST-BEARING BANK BORROWINGS                                          
                                         The Group and the Company
                                         -------------------------
                                         2002                 2001
                                         ----                 ----
                                          HK$                  HK$

Secured bank loans not wholly                                       
   repayable within five years              -            1,253,966
Current portion                              -              (87,214)
                                -------------        -------------
Non-current portion                          -            1,166,752 
                                =============        =============

21.   DEFERRED TAXATION                                                         

      Deferred  taxation has not been  provided for as the deferred tax asset is
      not expected to be recoverable in the foreseeable  future.  At 31 December
   2002, the components of unprovided deferred tax assets were as follows:

                                      Group              Company
                                   --------------------- ---------------------
                                   2002       2001       2002       2001
                                   ----       ----       ----       ----
                                    HK$        HK$        HK$        HK$

The potential deferred tax                                          
(liability)/asset not provided                                  
for in the financial                                            
statements amounts to:                                          

Accelerated depreciation                                    
             allowance                59,513   (459,627)    50,131   (419,930)
        Tax losses                5,151,286  5,543,561  4,574,573  4,082,009
                                  ---------  ---------  ---------  ---------
                                  5,210,799  5,083,934  4,624,704  3,662,079
                                  =========  =========  =========  =========

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22.   ISSUED CAPITAL                                                            
                                                     2002                 2001
                                                     ----                 ----
                                                      HK$                  HK$

Authorised:                                                         
      8,800,000 ordinary shares of HK$1 each    8,800,000            8,800,000
                                             ============        =============
Issue and fully paid:                                               
      8,484,339 ordinary shares of HK$1 each    8,484,339            8,484,339
                                             ============        =============

23.      RESERVES                                                               
                                Share  Accumulated
                                          premium       losses       Total
                                          ------- ------------       -----
                                              HK$          HK$         HK$
The Group                                                       

      At 1/1/2001                       23,221,552 (23,331,900)    (110,348)
      Loss for the year                          -  (9,603,361)  (9,603,361)
                                     ------------ -----------  -----------
      At 31/12/2001 and at 1/1/2002     23,221,552 (32,935,261)  (9,713,709)
      Loss for the year                          - (11,895,989) (11,895,989)
                                     ------------ -----------  -----------
      At 31/12/2002                     23,221,552 (44,831,250) (21,609,698)
                                     ============ ===========  ===========
The Company                                                     

     At 1/1/2001                       23,221,552 (15,548,031)   7,673,521
      Loss for the year                          -  (8,761,421)  (8,761,421)
                                     ------------ -----------  -----------
      At 31/12/2001 and at 1/1/2002     23,221,552 (24,309,452)  (1,087,900)
      Loss for the year                          - (19,610,000) (19,610,000)
                                     ------------ -----------  -----------
      At 31/12/2002                     23,221,552 (43,919,452) (20,697,900)
                                     ============ ===========  ===========

24.   RELATED PARTY TRANSACTIONS                                                

      During the year,  the Group had the following  related party  transactions
which were carried out in the normal course of its business:        

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24.   RELATED PARTY TRANSACTIONS (Continued)                                    

        Nature of transaction              Note       2002            2001
        ---------------------              ----       ----            ----
                                                       HK$             HK$

a)   Bowland International Limited                                  
        -  Loan interest expense           (i)     348,824         652,479
-  Proceeds on disposal of a                              
             subsidiary (Note 6)                  (955,328)              -
-  Rental charge in respect of                            
             leasing of office premises            197,573         258,876
        -  Management fee                          341,520               -
        -  Maintenance service fee                       -         250,000

b)   Hartcourt Capital Asia Limited                                 
(formerly known as Fintel        (ii)                 
International Limited)                      
-  Rental charge in respect of                            
              leasing of office premises            11,358               -
-  Waiver of amount due from                              
Hartcourt Capital Asia                        
              Limited                               25,435               -

c)   Topomedia International Limited    (iii)                       
-  Rental charge in respect of                            
              leasing of office premises            75,500               -
-  Waiver of amount due from                              
TopomediaInternational                        
              Limited                            8,704,514               -

d)   Hartcourt Capital, Inc.            (iv)                        
-  Disposal of fixed assets                               
              at net book value                    156,652               -
                                              ============      ==========

Notes:                                                              

      In the opinion of the directors,  the above  transactions were carried out
on normal commercial terms.                                         

      (i)   Bowland International Limited is a shareholder of the company.  Loan
interest was charged at prime rate plus 3% per annum.   

      (ii)  Fintel  International  Limited  is  a  related  company  with common
directors.                                              

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24.   RELATED PARTY TRANSACTIONS (Continued)                                    

      (iii) Topomedia  International Limited is a former subsidiary of the Group
            which had been disposed of to Bowland  International  Limited during
the year.                                               

(iv)  Hartcourt Capital, Inc. is a fellow subsidiary.               

25.   OPERATING LEASE COMMITMENT                                                

      As  at  31  December   2002,  the  future  minimum  lease  payments  under
      non-cancellable  operating  leases in  respect  of land and  building  are
analysed as follows:                                                

                                         The Group and the Company
                                         -------------------------
                                         2002                   2001
                                         ----                   ----
                                          HK$                    HK$
Amount payable                                                  
    - Not later than one year         373,200                321,573
- Later than one year but not                               
          later than five years       121,700                      -
                                  -----------            -----------
                                      494,900                321,573
                                  ===========            ===========

26.   ULTIMATE HOLDING COMPANY                                                  

      The  directors  regard  The  Hartcourt  Companies,  Inc., a public company
      incorporated and listed on the Over-The-Counter  Bulleting   Board  in the
United States of America, as the ultimate holding company.          

27.   COMPARATIVE FIGURES                                                       

      With a review of financial statements  presentation,  certain items in the
      financial  statements  were  reclassified  which  would  result  in a more
      appropriate   presentation   of  events  or   transactions.   Accordingly,
      comparative  figures  have been  reclassified  to conform with the current
year's presentation.                                                

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘PRER14C’ Filing	Date	First	Last	Other Filings

	8/31/04	32		8-K
	7/31/04	32
	6/1/04	18
	10/17/03	2	26
Filed as of:	10/14/03
Filed on:	10/10/03
	10/9/03	3		DEF 14C, PRE 14C
	10/8/03	28
	9/11/03	6
	9/10/03	6	17
	8/31/03	10
	6/30/03	23	39	10QSB
	6/24/03	31
	5/15/03	17		10QSB
	5/1/03	20
	4/28/03	26	39
	12/31/02	11	37	10KSB, 10KSB/A, NT 10-K
	7/31/02	28
	6/30/02	22	35	10QSB, NT 10-Q
	1/1/02	28
	12/31/01	11	37	10KSB, NT 10-K
	6/30/01	22		10QSB, NT 10-Q
	12/31/00	27		10KSB
	8/19/99	6	16
				List all Filings

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Filing Submission 0001017386-03-000200 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Hartcourt Companies Inc – ‘PRER14C’ on 10/10/03

On: Friday, 10/10/03, at 6:22pm ET · As of: 10/14/03 · Accession #: 1017386-3-200 · File #: 1-12671

Revised Preliminary Proxy Information Statement — Schedule 14CFiling Table of Contents

PRER14C — Amendment 1 to Preliminary 14CDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Revised Preliminary Proxy Information Statement — Schedule 14C
Filing Table of Contents

PRER14C — Amendment 1 to Preliminary 14C
Document Table of Contents