U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB


     [X] QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
         EXCHANGE ACT OF 1934

           For the quarterly period ended: September 30, 2000


     [ ] QUARTERLY  REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES AND
         EXCHANGE ACT OF 1934

        For the transition period from ______________ to _______________


                        Commission File Number: 001-12671


                          The Hartcourt Companies, Inc.
        (Exact name of small business issuer as specified in its charter)

                                      Utah
         (State or other jurisdiction of incorporation or organization)

                                   87-0400541
                        (IRS Employer Identification No.)

          9800 Sepulveda Blvd., Suite 818, Los Angeles California 90045
                    (Address of principal executive offices)

                                 (310) 410-7290
                           (Issuer's telephone number)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the  restraint was required to file such  reports),  and (2)has been
subject to such filing requirements for the past 90 days: Yes [ X ] No[ ].

As of September 30, 2000, The Hartcourt Companies, Inc. had 60,504,024 shares of
Common Stock Outstanding.

Transitional Small Business Disclosure Format (check one):

                                            Yes [  ]                 No [ X ]





                                      F-1
<PAGE>



                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                              Report on Form 10-QSB
                                For quarter ended
                               September 30, 2000
                                                                                                               Page

<S>           <C>                                                                                              <C>
PART 1        FINANCIAL INFORMATION

Item 1.       Financial Statements

              Consolidated Balance Sheets at September 30, 2000 (Unaudited)
              and December 31, 1999                                                                             F-3

              Consolidated Statements of Operations for the Three Months and Nine Months ended
              September 30, 2000 and 1999 (Unaudited)                                                           F-4

              Consolidated Statements of Shareholders' Equity for the Nine Months ended
              September 30, 2000 (Unaudited)                                                                    F-5 - F-6

              Consolidated Statements of Cash Flows for the Nine Months ended
              September 30, 2000 and 1999 (Unaudited)                                                           F-7

              Notes to the Consolidated Financial Statements                                                    F-8

Item 2.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                                                        F-25


PART II  OTHER INFORMATION

Item 1.       Legal Proceedings                                                                                F-28

Item 2.       Changes in Securities                                                                            F-29

Item 3.       Defaults upon Senior Securities                                                                  F-29

Item 4.       Submission of Matters to Vote of Security Holders                                                F-29

Item 5.       Other Information                                                                                F-29

Item 6.       Exhibits and Reports on Form 8-K                                                                 F-29

Signatures                                                                                                     F-30
</TABLE>



                                      F-2
<PAGE>

<TABLE>
<CAPTION>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
Part I
Item 1
<S>                                                                              <C>             <C>
                                                                                 September 30,     December 31,
                                                                                     2000              1999
                                                                                --------------   --------------
ASSETS                                                                             (Unaudited)
Current assets:
   Cash and cash equivalents                                                     $    310,303    $    331,057
   Accounts receivable, net                                                            60,184          37,626
   Inventory                                                                           51,246         127,091
   Notes receivable                                                                     3,800         228,800
   Prepaid expenses and other                                                         187,300         129,114
   Due from related parties                                                           260,222         108,222
                                                                                 ------------    ------------
Total current assets                                                                  873,055         961,910
                                                                                 ------------    ------------
Property and equipment, net                                                           560,880         815,085
Investments and advances                                                            7,690,627       5,554,644
Intangibles, net                                                                    2,036,338       2,206,033
                                                                                 ------------    ------------
Total assets                                                                     $ 11,160,900    $  9,537,672
                                                                                 ------------    ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                              $    441,561    $    152,709
   Deferred revenue                                                                    67,973          78,477
   Notes payable, current portion                                                      74,951         649,998
   Accrued expenses and other current liabilities                                     899,506       4,073,504
   Payables to related parties                                                      1,977,147       2,457,497
                                                                                 ------------    ------------
Total current liabilities                                                           3,461,138       7,412,185
Notes payable, net of current portion                                                 578,615         608,184
                                                                                 ------------    ------------
Total liabilities                                                                   4,039,753       8,020,369
                                                                                 ------------    ------------
Contingencies
Minority interest                                                                     247,692         661,634
Shareholders' Equity
   Preferred stock:  Original preferred stock,
     $0.01 par value, 1,000 authorized, issued and outstanding                             10              10
   Common stock, $0.001 par value, 100,000,000 shares authorized; 60,504,024
     shares and 47,664,304 shares issued and outstanding at September 30, 2000
     and December 31, 1999                                                             60,504          47,666
   Stock subscription receivable                                                  (10,900,000            --
   Treasury stock, at cost (3,557,832 shares and 3,048,728 shares at September
     30, 2000 and December 31, 1999)                                               (1,918,635      (1,680,928
   Additional paid-in capital                                                      61,296,954      38,872,027
   Accumulated deficit                                                            (41,665,378     (36,383,106
                                                                                 ------------    ------------
Total shareholders' equity                                                          6,873,455         855,669
                                                                                 ------------    ------------
Total liabilities and shareholders' equity                                       $ 11,160,900    $  9,537,672
                                                                                 ------------    ------------
          See accompanying notes to consolidated financial statements.
</TABLE>
                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                     Three Months Ended September       Nine Months Ended September 30,
                                                                  30,
                                                     ------------------------------    ----------------------------------
<S>                                                  <C>              <C>              <C>                <C>
                                                         2000             1999             2000                1999
                                                     -------------    -------------    -------------      ---------------
Net sales                                            $    333,641     $          -     $  1,024,081       $            -

Cost of sales                                             271,448                -          503,520                    -
                                                     -------------    -------------    -------------      ---------------
Gross profit                                               62,193                -          520,561                    -
                                                     -------------    -------------    -------------      ---------------
Operating expenses:
   Selling, general and administrative                    715,863          304,710        3,612,095              959,870
   Depreciation and amortization                           99,980                -          307,466                    -
   Impairments                                          2,217,745                -        2,217,745                    -
                                                     -------------    -------------    -------------      ---------------
Total operating expenses                                3,033,588          304,710        6,137,306              959,870
                                                     -------------    -------------    -------------      ---------------
Loss from continuing operations                        (2,971,395 )       (304,710 )     (5,616,745 )           (959,870 )

Other income (expense):
   Equity in earnings (loss) of affiliate                  21,577                -          (11,340 )            (28,298 )
   Interest expense                                       (32,999 )        (19,000 )       (114,953 )            (19,000 )
   Interest income                                            259                -           22,214               20,095
   Other                                                   10,124                -           24,610                    -
                                                     -------------    -------------    -------------      ---------------
Total other income (expense)                               (1,039 )        (19,000 )        (79,468 )           (27,203)
                                                     -------------    -------------    -------------      ---------------
Loss from continuing operations before minority
   interest                                            (2,972,434 )       (323,710 )     (5,696,213 )           (987,073 )

Less:  loss in subsidiary attributed to minority
   interest                                               241,672                -          413,942                    -
                                                     -------------    -------------    -------------      ---------------
Loss before income taxes                               (2,730,762 )       (323,710 )     (5,282,272 )           (987,073 )

Income taxes                                                    -                -                -                  555
                                                     -------------    -------------    -------------      ---------------
Net loss                                             $(2,730,762)     $  (323,710)     $(5,282,272)       $     (987,628 )
                                                     -------------    -------------    -------------      ---------------

Basic and fully diluted loss per common share        $     (0.05)     $     (0.01)     $     (0.10)       $        (0.03 )
                                                     -------------    -------------    -------------      ---------------

Weighted average number of shares outstanding          60,610,794       39,912,558       55,050,778           39,046,236
                                                     -------------    -------------    -------------      ---------------
          See accompanying notes to consolidated financial statements.
</TABLE>
                                      F-4
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         SEPTEMBER 30, 2000 (Unaudited)



<TABLE>
<S>                                       <C>         <C>                  <C>    <C>           <C>

                                                                                                  Additional
                                                Common Stock              Preferred Stock          Paid-In
                                          -------------------------   -------------------------
              Description                   Shares        Amount        Shares        Amount       Capital
----------------------------------------  -----------   -----------   -----------   -----------   -----------

Balance - December 31, 1999               47,664,304  $     47,664         1,000  $         10  $ 38,872,029

Issuance of shares for consulting
  services                                    77,922            78             -             -       103,997
Shares issued to investors                   454,890           455             -             -     3,529,492
Sale of shares under Regulation S            600,000           600             -             -     1,199,400
Shares issued upon exercise of warrants    2,954,150         2,954             -             -        98,916
Issuance of warrants for brokerage
  services                                         -             -             -             -       203,545
Shares issued to directors in lieu of
  compensation and for services            3,243,654         3,244             -             -     3,557,377
Shares issued in connection with FTL
  acquisition                                509,104           509             -             -       237,198
Cancellation of shares per court order     (400,000)          (400 )           -             -     (499,600)
Shares issued upon exercise of options     5,400,000         5,400             -             -    13,994,600
Net loss                                           -             -             -             -             -
                                          -----------   -----------   -----------   -----------   -----------

Balance - September 30, 2000              60,504,024   $    60,504         1,000  $         10  $ 61,296,954
                                         ===========   ===========   ===========   ===========   ===========



          See accompanying notes to consolidated financial statements.
</TABLE>


                                      F-5
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         SEPTEMBER 30, 2000 (Unaudited)
                                  (Continued)

<TABLE>
<S>                                           <C>             <C>         <C>           <C>            <C>
                                                  Common
                                                   Stock                                                   Total
                                               Subscriptions      Treasury Stock         Accumulated   Shareholders'
                                                              ------------------------
              Description                       Receivable      Shares        Amount       Deficit         Equity
----------------------------------------      --------------   ----------  -----------  -------------  -------------

Balance - December 31, 1999                   $           -     3,048,728  $ (1,680,92) $(36,383,106)   $   855,669

Issuance of shares for consulting
  services                                                -             -            -             -        104,075
Shares issued to investors                                -             -            -             -      3,529,946
Sale of shares under Regulation S                         -             -            -             -      1,200,000
Shares issued upon exercise of warrants                   -             -            -             -        101,870
Issuance of warrants for brokerage
  services                                                -             -            -             -        203,545
Shares issued to directors in lieu of
  compensation and for services                           -             -            -             -      3,560,621
Shares issued in connection with FTL
  acquisition                                             -       509,104     (237,707)            -              -
Cancellation of shares per court order                    -             -            -             -       (500,000)
Shares issued upon exercise of options          (10,900,000)            -            -             -      3,100,000
Net loss                                                  -             -            -    (5,282,272)    (5,282,272)
                                              --------------   -----------   -----------  ------------   -----------

Balance - September 30, 2000                  $ (10,900,000)    3,557,832  $ (1,918,63) $(41,665,378)  $  6,873,455

                                              ==============   ==========  ===========  ============   ============




          See accompanying notes to consolidated financial statements.
</TABLE>


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Increase (Decrease) in Cash                                                      Nine Months Ended September 30,
                                                                              --------------------------------------
                                                                                    2000                 1999
Cash flows from operating activities:                                         -----------------    -----------------
<S>                                                                           <C>                    <C>
   Net loss                                                                   $     (5,282,272 )     $     (987,628 )
   Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                                                     307,466                    -
     Impairments                                                                     2,217,745                    -
     Changes in minority interest                                                     (413,942 )                  -
     Equity in loss of affiliate                                                        11,340                    -
     Issuance of shares and warrants for services                                    3,661,772              342,771
     Allowance for doubtful notes receivable                                           225,000                    -
     Net loss on sale of property and equipment                                        218,692                    -
     Changes in operating assets and liabilities:
       Accounts receivable                                                             (22,558 )            (17,000 )
       Inventory                                                                        75,845               13,083
       Prepaid expenses and other                                                      (58,186 )             17,500
       Accounts payable                                                                288,851                    -
       Accrued expenses and other current liabilities                               (3,085,144 )             35,256
       Due from related parties                                                       (152,000 )            (15,700 )
       Deferred revenue                                                                (10,505 )                  -
                                                                              -----------------    -----------------
Net cash used by operating activities                                               (2,017,897 )           (611,718 )
                                                                              -----------------    -----------------
Cash flows from investing activities:
   Proceeds from sale of 35% of ECS                                                          -            5,400,000
   Proceeds on sale of marketable securities                                                 -            1,085,607
    Increase in other assets                                                                 -             (500,000 )
   Advances to Sino Bull for investment purposes                                    (3,762,761 )                  -
   Advance towards eMPACT investment                                                  (300,000 )                  -
   Distribution of subsidiaries ownership to shareholders                                    -             (399,388 )
                                                                              -----------------    -----------------
Net cash provided by (used in) investing activities                                 (4,062,761 )          5,586,219
                                                                              -----------------    -----------------
Cash flows from financing activities:
   Proceeds on sale of common stock                                                  2,743,000              554,935
   Common stock issued to directors and officers                                             -              392,689
    Common stock issued in settlement of debt                                                -              100,000
   Proceeds on exercise of options and warrants                                      4,401,870                    -
   Redemption of preferred stock                                                             -           (6,405,000 )
   Payments to related parties                                                        (450,000 )                  -
   Payments on note payable                                                           (604,616 )                  -
   Payments on loans from shareholders                                                 (30,350 )                  -
                                                                              -----------------    -----------------
Net cash provided by (used in) financing activities                                  6,059,904           (5,357,376 )
Net increase (decrease) in cash                                                        (20,754 )           (382,875 )
Cash and cash equivalents, beginning of period                                         331,057              384,453
                                                                              -----------------    -----------------
Cash and cash equivalents, end of period                                      $        310,303     $          1,578
                                                                              -----------------    -----------------
          See accompanying notes to consolidated financial statements.
</TABLE>
                                      F-7
<PAGE>



                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2000 (UNAUDITED)


Item 1

Note 1.    Organization and Nature of Operations

         Stardust,     Inc.-Production-recording-Promotion    ("Stardust"),    a
corporation  organized  under the laws of the State of Utah in  September  1983,
acquired  all of the  outstanding  shares  of  Hartcourt  Investments,  a Nevada
corporation,  pursuant to an Agreement and Plan of Reorganization dated November
5, 1994.  At the time of this  acquisition,  Stardust was a "shell"  corporation
with no  assets,  business  or  operations.  Subsequent  to the  acquisition  of
Hartcourt  Investments,  Stardust changed its name to "The Hartcourt  Companies,
Inc."

         Hartcourt  Pen was  organized  under the laws of the State of Nevada in
October 1993 to engage in the sale of writing instruments. Hartcourt Pen entered
into an  Agreement  and Plan of  Reorganization  dated  December  1,  1994  with
Hartcourt  Investments,  pursuant to which Hartcourt Investments acquired all of
the  outstanding  shares of Hartcourt  Pen.  Through  January 1999,  Hartcourt's
operations   relating  to  writing   instruments   involved   the  assembly  and
distribution of writing instruments. In January 1999, Hartcourt discontinued the
operations of Hartcourt  Investments  and Hartcourt Pen, and disposed of all its
pen related assets.  Losses from disposition of such operations were recorded in
1998 financial statements.

         In August 1996,  Hartcourt  entered into a Purchase and Sale  Agreement
with  NuOasis  International,  Inc.  ("NuOasis"),  an  unaffiliated  corporation
incorporated under the laws of the Commonwealth of Bahamas,  for the purchase of
a  commercial  real  estate  project,  consisting  of three 5-7 story  apartment
buildings,  commonly  known as the Peony  Gardens  Property,  ("Peony  Gardens")
located in the eastern part of Tongxian in Beijing,  China.  The purchase  price
consists of a Convertible  Secured  Promissory  Note granted to NuOasis,  in the
principal  amount of  $12,000,000,  a security  interest in the property and the
greater of 10,000,000  shares of  Hartcourt's  common  stock,  or that number of
shares of  Hartcourt's  common stock having a market value equal to  $10,000,000
immediately  preceding  the closing  date. On August 8, 1996, an Addendum to the
Purchase and Sale  Agreement  was agreed to by Hartcourt  and NuOasis,  by which
Hartcourt's obligation to issue stock to NuOasis was reduced to 4,000,000 shares
(valued  at  $10,000,000)  of its common  stock.  On March 15,  1999,  Hartcourt
entered into an Exchange  Agreement  with Dragon King  Investment  Services Inc.
("Dragon King")  pursuant to which  Hartcourt  agreed to assign its rights under
the  Purchase  and Sale  Agreement  dated  August 8, 1996 of its interest in the
Peony Gardens development for investment  securities valued at $10 million.  Due
to  restrictions  on the ability to trade the  investment  securities  received,
Hartcourt  recorded an  impairment  of  $5,000,000  as of December 31, 1998.  On
August 7, 2000 pursuant to a court order,  Hartcourt  cancelled  200,000  common
shares (valued at $500,000) issued to Asian  Infrastructure  Development Company
(Gibraltar) Limited as commission paid towards Peony Gardens project.

                                      F-8
<PAGE>

         In  September  1996,  Hartcourt  entered  into a Sales  Agreement  with
Mandarin Overseas Investment Co., Ltd.  ("Mandarin"),  an unaffiliated Turks and
Caicos chartered company located in Hong Kong, for its undivided 50% interest in
thirty-four  State of Alaska  mineral lease gold lode claims,  known as Lodestar
claims  numbered  35-68,  consisting  of 160  acres  each,  all  located  in the
Melozitna mining district near Tanana, Alaska,  approximately 300 air-kilometers
west of the City of Fairbanks,  Alaska.  Hartcourt paid  $3,000,000 in shares of
its common stock to Mandarin for its undivided 50% interest in the mineral lease
gold lode claims.  The number of shares were determined by the average price per
share  over a  10-day  period  for the 10 days  prior to the  execution  of this
agreement.  In September  1996,  Hartcourt  entered into a Sales  Agreement with
Promed International Ltd. ("Promed"), an unaffiliated Turks and Caicos chartered
company with offices in the British crown colony of Gibraltar,  for the purchase
of their  undivided 50% interest in  thirty-four  State of Alaska  mineral lease
gold lode claims,  known as Lodestar  claims  numbered  1-34,  consisting of 160
acres each, all located in the Melozitna  mining  district near Tanana,  Alaska,
approximately  300  air-kilometers  west  of  the  City  of  Fairbanks,  Alaska.
Hartcourt  paid  $3,000,000  in shares  of its  common  stock to Promed  for its
undivided  50% interest in the mineral  lease gold lode claims,  all shares were
issued  pursuant to Regulation  "S." The number of shares were determined by the
average  price  per  share  over a 10-day  period  for the 10 days  prior to the
execution of this agreement.  In July 1998, Hartcourt filed notice upon Mandarin
and Promed requesting rescission of the purchase of the Alaska gold mine mineral
leases as the sellers failed to provide  Hartcourt with the required  geological
evaluations. On March 8, 1999 Hartcourt entered into a rescission agreement with
the  sellers,  returning  the  claims and  receiving  back  1,298,700  shares of
Hartcourt common stock.

         In December 1996,  Hartcourt  entered into a Consulting  Agreement with
American  Equities,  LLC,  ("American  Equities"),   and  a  California  Limited
Liability  Company.  Hartcourt  intended to  acquire,  manage and develop a real
estate portfolio through the year 2001. On September 3, 1998,  American Equities
filed suit against  Hartcourt for breach of contract.  Hartcourt  denied that it
had breached any contract with American Equities and filed a cross-complaint for
fraud   and   non-performance   against   American   Equities   and   additional
cross-defendants.  As settlement of these matters on March 8, 1999,  the parties
agreed  that all fees paid to  American  Equities  were  earned  and to  provide
American  Equities with a 27.65% interest in Electronic  Components and Systems,
Inc.  ("ECS").  Also,  American  Equities agreed to pay back 1,075 the Series AB
preferred  stock  dividend  issued by Hartcourt in 1998 and 1,000,000  shares of
Hartcourt common stock.  Accordingly,  all expenses  relating to settlement were
recorded in the year ended December 31, 1998.  Additionally,  American  Equities
agreed to provide working capital for ECS.

         On October 3, 1997,  Hartcourt  purchased all of the outstanding shares
of Pego and Pego  became  a  wholly  owned  subsidiary  of  Hartcourt.  Pego,  a
manufacturer's  representative  organization for air and gas handling equipment,
offers a full line of value added services including  distribution,  service and
manufacturing  of  custom  process  equipment  packages.   The  acquisition  was
accounted for using the purchase  method of accounting.  In connection  with the
purchase,  Hartcourt paid $500,000 in cash,  issued 450,000 shares of restricted


                                      F-9
<PAGE>

common stock,  1,500 shares of Series C redeemable  preferred stock, and entered
into a non-compete agreement with Pego's majority shareholder and director.  The
total value of this transaction was approximately $2,300,000.

         On October  28,  1997,  Hartcourt  through a wholly  owned  subsidiary,
acquired ECS and Pruzin Technologies, Inc. ("Pruzin"), an Arizona corporation, a
related entity of ECS. ECS specializes in high technology contract manufacturing
and assembly of printed  circuit  boards,  phone and cable wires.  ECS has three
manufacturing  facilities,  and contracts  with a maquiladora  in the free trade
zone  in  Sonora,   Mexico.   The  acquisition  was  structured  as  a  tax-free
reorganization and was accounted for using the purchase method of accounting. In
connection with the acquisition,  Hartcourt paid $250,000 in cash, issued a note
payable for  $250,000,  issued  3,400 shares of Series D  convertible  preferred
stock  and  2,500,000  shares  of its  common  stock.  The  total  value  of the
transaction was approximately $9,500,000.

         On August 24, 1998,  Harcourt and ECS executed an agreement and plan of
merger  with Elan  Manufacturing,  Inc.  ("Elan"),  a contract  manufacturer  of
electronic components similar to ECS, located in the Silicon Valley, California.
Under the terms of the  agreement,  Elan was merged  into and with ECS,  thereby
ceasing Elan's  existence.  The merger was effective  September 1, 1998, and the
purchase price of $616,240 was paid by Hartcourt  issuing  724,990 of its common
shares to the three selling shareholders based on a value of $0.85 per share.

         On October 21, 1998,  Mr. James  Pruzin,  the selling  shareholder  and
president  of ECS,  formally  requested  a  rescission  of the  October 28, 1997
acquisition  whereby,  Hartcourt through a wholly owned subsidiary  acquired ECS
and Pruzin.  Mr. Pruzin alleged that he was authorized to request  rescission of
the original transaction based on an alleged breach of the acquisition agreement
by Hartcourt  which Hartcourt  denied.  On November  10,1998,  Hartcourt and Mr.
Pruzin  entered  into a memorandum  of  understanding  whereby Mr.  Pruzin could
reacquire  ECS and Pruzin from  Hartcourt  by returning  all of the  Hartcourt's
common and preferred shares originally  issued to Mr. Pruzin,  making payment to
Hartcourt of $1,850,000 during 1999,  negotiating the return of Hartcourt common
shares issued in the Elan transaction, and issued to Hartcourt a promissory note
for $400,000  amortized over five years with monthly payments beginning in 2000.
Subsequently,  Mr.  Pruzin  was  unable to meet the terms of the  memorandum  of
understanding and entered into new negotiations  with Hartcourt.  Mr. Pruzin and
Hartcourt  reached an agreement whereby Mr. Pruzin agreed to return to Hartcourt
2,000,000 common shares of Hartcourt  representing 80% of the amount  originally
issued, and 3,400 shares of Series D preferred stock. Hartcourt agreed to assign
to Mr.  Pruzin a 30%  ownership  interest  in ECS,  and has a right to  purchase
500,000 shares of Hartcourt  common stock held by Mr. Pruzin at $1 per share. As
of November  10,2000,  Hartcourt has not  exercised its right to purchase  these
500,000 shares.

         Effective  February 1, 1999,  pursuant to a Share  Purchase  Agreement,
Hartcourt  acquired  one (1)  share  of  common  stock of  Enova  Holdings  Inc.
("Enova"),  a Nevada  corporation  representing  100% of the  total  issued  and
outstanding  capital  stock of Enova,  making Enova a  wholly-owned  subsidiary.
Effective March 1, 1999, Hartcourt and Enova executed an Exchange Agreement (the
"Enova Agreement")  whereby Hartcourt exchanged all of its ownership interest in


                                      F-10
<PAGE>

Pego (100%) and ECS (35%)in two wholly  owned  subsidiaries,  Pego and ECS,  for
5,213,594  additional  shares of  common  stock of  Enova.  On March  24,  1999,
Hartcourt  entered into a  Distribution  Agreement  pursuant to which  Hartcourt
agreed to  distribute  to all  shareholders  of record  on March 31,  1999,  the
5,213,595  shares of  common  stock of Enova  and to file,  within a  reasonable
period of time following  such  distribution,  a Registration  Statement on Form
10-SB to cause  the  distributed  shares  of Enova to be  registered  under  the
Securities  Exchange Act of 1934. Enova's  Registration  Statement on Form 10-SB
was filed under the Securities Exchange Act of 1934 on January 24, 2000.

         As a result of the Share Purchase  Agreement,  the Enova  Agreement and
the Distribution Agreement, each shareholder of record of Hartcourt on March 31,
1999  received  one (1)  share of Enova  for  every  four  (4)  shares  owned of
Hartcourt.  Following the  distribution of the Enova shares,  both Hartcourt and
Enova continue to operate as separate companies.

         On August 17, 1999,  Hartcourt entered into a stock purchase  agreement
with FTL, a Hong Kong corporation, to purchase 4,964,990 shares of common stock,
representing  58.53% of the total common stock  outstanding.  FTL is a financial
data bank  providing  real-time  stock quotes and financial  information of Hong
Kong  listed  companies  as well as  information  on other  international  stock
exchanges  in the U.S. and Europe to  institutional  and retail  investors.  The
purchase  price was agreed to be HK $4.713  (US$ 0.604) per share for a total of
HK$23.4 million or US$3.0 million, payable 50% in cash and the remaining balance
in Hartcourt  common shares.  The  acquisition  was completed on October 4, 1999
with Hartcourt  making total cash payments of $801,860,  recording a payable for
$797,140  and issuing  1,500,000  shares of its common  stock to FTL.  The stock
purchase agreement required a post closing adjustment for any deficiency paid to
FTL in the event the final  closing net worth as of the closing date amounted to
more  than  $5,000  over and above the net worth  reported  in  calculating  the
purchase price. As a result of the post closing  adjustment,  the purchase price
was revised to HK$25,563,842 or  US$3,277,412.  At December 31, 1999,  Hartcourt
recorded  the  increase  in  purchase  price  as a result  of the  post  closing
adjustment,  as a note payable to FTL of $138,706 and a payable for the issue of
148,512  shares of common stock of  Hartcourt.  On January 18,  2000,  Hartcourt
issued  254,552  additional  shares of common stock to FTL in  settlement of the
post closing adjustment.  The 1,754,552 shares of common stock issued to FTL are
reflected as treasury shares in the accompanying  financial statements since FTL
is a subsidiary  of  Hartcourt.  As of November 10,  2000,  Hartcourt  has fully
settled its amounts payable to FTL for the acquisition of FTL's shares.

         On March 27, 2000, FTL entered into a Memorandum of Understanding  with
NiceVoice  Investment Holdings Limited (NiceVoice) to form a joint venture named
Fintel  Wireless  Internet  Limited  (FWL) for the purpose of  establishing  and
operating  a  financial  paging  service  network  in  Hong  Kong  on  the  FLEX
transmission protocol on a PDA receiver device. Subject to verification of total
costs to be  incurred  in  erection  of FLEX  transmission  network,  design  of
financial  information  broadcast  system,  sourcing,  testing and tuning of PDA
receiver devices,  etc. and signing of formal joint venture agreement,  FTL will
invest  cash by phases to the amount not to exceed  HK$4,000,000  (approximately
US$512,800) in exchange of a total of 51% ownership in the joint venture.  As of
November 10, 2000,  FTL had advanced  HK$927,295  towards its investment in FWL.
The  transaction is currently  under  management  review and a definitive  joint
venture agreement is expected to be finalized by November 30, 2000.



                                      F-11
<PAGE>

         On June 20, 1999,  Hartcourt entered into an agreement with Beijing UAC
Stock Trading Online Co., Ltd. ("UAC  Trading") to form a joint venture  company
under the laws of China.  The name of the joint  venture  company is Beijing UAC
Stock  Exchange  Online  Co.  Ltd.  ("UAC").  UAC  operates  the  first and only
nationwide  online  securities  trading  network,  UAC 162  Network,  connecting
investors  with their stock  brokerage  offices via China Pac.  China Pac is the
nationwide  packet switched  network in China owned by China Telecom since 1991.
UAC 162 Network  consists of  proprietary  server  software and user  interface,
servers,  gateways  and  other  communication  hardware.  Under the terms of the
agreement,  for a 35% interest in UAC,  Hartcourt agreed to invest $1,000,000 in
UAC, pay $1,700,000 to the owners of UAC Trading and transfer  1,000,000  common
shares of Hartcourt to UAC.  200,000 of these common shares will be  transferred
to UAC Trading for an existing  loan of $168,000 and 800,000  common  shares are
still to be issued and will be  recorded  as a loan from  Hartcourt  to UAC upon
issuance.  On August 9, 1999,  Hartcourt  and UAC Trading  agreed to convert the
Hartcourt loan of $168,000 into an option to purchase an additional 15% interest
in UAC from UAC Trading.  Hartcourt  exercised its option to convert the loan to
UAC for an additional 15% interest in UAC making  Hartcourt's  total  investment
interest in UAC up to 50%. The transaction  became  effective on August 31, 2000
and the accompanying  financial statements reflect Hartcourt's investment in UAC
at 50% as of September 30, 2000.

         On December 30, 1996,  Hartcourt and American  Equities  entered into a
Warrant  Agreement,  whereby  Hartcourt  agreed  to issue  and sell to  American
Equities, for the price of $100, a warrant to purchase up to 2,000,000 shares of
its common stock,  $.01 par value,  in connection  with the consulting  services
provided to Hartcourt. American Equities shall have the right to purchase at any
time and from time to time prior to December 30, 2002, up to the number of fully
paid and  non-assessable  shares of  warrants  stock,  upon  payment of specific
exercise price or apply the cashless exercise clause specified in the Agreement.
On  September  9, 1999,  pursuant  to  Cashless  Exercise  clause in the Warrant
Agreement,  American Equity exercised its cashless  exercise right and converted
800,000 warrants into 621,674  Hartcourt's  common shares without payment of any
consideration. On December 14, 1999, American Equities filed a complaint against
Hartcourt alleging breach of Warrant Agreement, claiming damages of $30,000,000.
The case  concerned  dispute  over  whether  shares  issued  under  the  Warrant
Agreement  would be  issued as  restricted  shares or free  trading  shares.  An
agreement was reached and the litigation was settled on March 20, 2000. American
Equities  was  allowed to  further  exercise  its  cashless  exercise  right and
converted the remaining  1,200,000  warrants into  1,070,075 free trading common
shares of Hartcourt without any payment of consideration.

         In  November  1999,  Sino Bull  Group  (`Group")  was  formed  with the
intention to consolidate  various related businesses  acquired or expected to be
acquired by Hartcourt or Sino Bull.com Inc.  ("Sino Bull").  For the purposes of
presenting these  businesses under a unified  structure and strong brand name, a
restructuring of the Group will result in  consolidating  these businesses under
Sino Bull,  the holding  company of the Group that was  incorporated  in British
Virgin  Islands.  The mission of the Group is to become the  premier  e-commerce
network service provider (providing financial information and related technology
services) to investors and financial  institutions  in Greater China.  Hartcourt
intends to transfer its ownership interests in UAC and FTL into Sino Bull during
calendar year 2000 in exchange for certain equity interest in Sino Bull.



                                      F-12
<PAGE>

         On December 23, 1999,  Hartcourt  entered into an agreement with GoCall
Inc. ("GoCall"),  a Delaware  corporation,  to form a strategic alliance for the
common interest of the respective corporations, including but not limited to the
development  of  GoCall's  Internet  related  development-stage  businesses  and
software.  GoCall agreed to give Hartcourt  1,000,000  shares of its convertible
preferred stock.  Each share of convertible  preferred stock is convertible into
10 shares of common stock (restricted under Rule 144 for 12 months).  In return,
Hartcourt agreed to give GoCall all of the marketable  securities  received from
Dragon King which were carried at $5.0  million  plus  192,000  shares of common
stock of ECS.  Hartcourt  withheld 192,000 shares of common stock of ECS, valued
at $196,358 at the date of closing on December 29, 1999 and this was recorded as
payable to GoCall at December 31, 1999. The GoCall  convertible  preferred stock
has   subsequently   been  valued  at  $1,250,000  at  September  30,  2000  and
accordingly,  Hartcourt has recorded an  impairment  of  $3,946,358  against the
GoCall securities as of September 30, 2000.  Hartcourt has the option to appoint
three out of the five  directors of GoCall.  As of November 10, 2000,  Hartcourt
has not  appointed  any  directors to the GoCall Board and has not exercised any
control on GoCall's operations.

Recent Events

         No assurance  can be given that all  Agreements  discussed  herein will
result in actual  agreements  or that the  terms of the  agreements  will not be
significantly  changed,  or that any of the financing  needs to  consummate  the
agreements discussed below will be successfully completed. Furthermore, approval
from the Chinese  regulatory  authorities  may be required to  consummate  these
agreements.

         Hartcourt's   partners  in  the  joint  ventures  discussed  below  are
expecting  Hartcourt  to  provide  two key  elements  in these  joint  ventures:
Internet  technology and investment  capital.  Hartcourt  management,  which has
recently hired  individuals with extensive  experience and expertise in relevant
industry  sectors,  intends to provide  Internet  technology  by merging with or
acquiring  companies already active in these businesses.  On the financial side,
Hartcourt plans to raise  substantial  funds necessary to carry out the plans of
its   venture   partners   by  selling   its  own  common   shares  to  selected
investors/partners  and bringing in partners whose  contributions  to each joint
venture will include the necessary cash contributions.  If Hartcourt is not able
to raise the necessary funds  indicated in the  agreements,  the agreements will
need to be modified or cancelled.

         Beijing Innostar Hi-Tech  Enterprises,  Ltd.  ("Innostar") - On October
20, 1999,  Hartcourt signed a Joint Venture Agreement with Innostar to establish
a wireless nationwide Internet service provider network and IP phone services in
China  via a Chinese  satellite.  The total  amount of  investment  in the joint
venture company will be $24.0 million of which $14.0 million will be contributed
by Innostar for 65%  ownership  interest and $10.0  million by Hartcourt for 35%
ownership interest.  The profits and losses of the joint venture company will be
distributed in accordance with their ownership  interest ratios. The duration of
the  Joint  Venture  Agreement  is  fifteen  (15)  years.  The date of  official
establishment  of the  joint  venture  company  shall be the  date the  business
license is  issued.  As of  November  10,  2000,  Hartcourt  is waiting  for the
approval and grant of the  business  license.  Hartcourt  will need to raise the
funds needed to complete this transaction.



                                      F-13
<PAGE>

         Beijing  Shangdi Net  Technologies  Center Co.,  Ltd.  ("Shangdi") - On
December 18, 1999,  Sino Bull signed a Term Sheet Agreement with Shangdi to form
a new  corporation  in Beijing.  Sino Bull shall have 40%  interest  and Shangdi
shall have 60% interest in the new  corporation.  On April 12,  2000,  Sino Bull
signed a Term Sheet Agreement with Shangdi  revising the terms of the Term Sheet
Agreement  signed on  December  18,  1999.  The terms of the  revised  agreement
required  Sino Bull to pay Shangdi  US$670,000  being the  consideration  of all
tangible  and  intangible  assets in  relation  to  Shangdi's  computer  network
information  services  excluding  cash and  debts and  33.84%  shares of Hua Xia
Information  Company  Limited;  invest  US$1,000,000  to a newly formed  company
Sinobull  Network  Inc., a corporation  registered  in Beijing,  for its working
capital  needs;  140,000  restricted  common  shares of Hartcourt to Shangdi and
60,000  restricted  common  shares of  Hartcourt  to Sinobull  Network,  Inc. In
exchange,  Shangdi agreed to transfer  without any pledge and debt, all tangible
and intangible  assets in relation to computer network  information  services to
Sinobull Network,  Inc.;  transfer to Hartcourt 40% of the ownership interest in
Tian Di Hu Lian Technologies,  Ltd, a BVI corporation,  holding the interest for
the  shareholders  of  Shangdi.  After the  above  transfers,  Shangdi  shall be
entitled  to own 18% of total  shares  of Sino  Bull.  Sino  Bull has paid  cash
consideration of $1,000,000 towards the purchase of Shangdi.  The $1,000,000 was
advanced by Hartcourt to Sino Bull. These transactions have not been consummated
as of November 10, 2000.

         StreamingAsia.Com Ltd. ("StreamingAsia") - On April 14, 2000, Hartcourt
announced  that Sino Bull  signed a  Subscription  and  Shareholders'  Agreement
("Agreement")  relating to StreamingAsia,  whereby Sino Bull agreed to subscribe
for 1,200,000  newly issued and outstanding  fully paid shares of  StreamingAsia
for HK$7,000,000 (approximately  US$897,500).  Upon subscription of such shares,
Sino  Bull will  have 50%  ownership  interest  in  StreamingAsia.  The terms of
payment included HK$500,000 (approximately US$64,100) payable in cashier's check
upon  signing  of the  Agreement;  at the  option  of  Sino  Bull,  HK$1,500,000
(approximately  US$192,300)  payable in cash or Sino Bull delivering such number
of shares of Hartcourt  within 14 days after signing the  Agreement;  HK$500,000
(approximately  US$64,100)  payable in cash  within 30 days from the date of the
Agreement;  HK$1,000,000  (approximately  US$128,200)  payable in cash within 60
days from the date of the  Agreement;  HK$1,000,000  (approximately  US$128,200)
payable in cash within 90 days of the date of the  Agreement;  and  HK$2,500,000
(approximately  US$320,600) within 120 days from the date of the Agreement. Sino
Bull will  appoint  two  members  to the Board of  Directors  of  StreamingAsia.
Together  with the existing two  directors,  the new board shall consist of four
directors.  As of November 10, 2000, Sino Bull has advanced $660,256 towards the
purchase of StreamingAsia which was advanced by Hartcourt to Sino Bull.

         Shanghai  Guo Mao  Science  &  Technology  Co.  Ltd.  ("Guo  Mao") - On
December 1, 1999,  Sino Bull signed a Term Sheet  Agreement with Guo Mao whereby
Guo Mao agreed to issue new shares for a total proceeds of $1,000,000 which will
represent 50% of the expanded  capital of Guo Mao. Sino Bull agreed to subscribe
for all the new shares issued by Guo Mao. On May 16, 2000, Sino Bull and Hopeful
Internet  Technologies  Limited  ("Hopeful")  entered into an agreement  whereby
Hopeful,  an  investment  holding  company  incorporated  in the British  Virgin
Islands,  will acquire through its  wholly-owned  subsidiary  Shanghai  Sinobull
Financial  Information Company Limited, all of the operating assets and business
of Guo Mao. To finance this  acquisition,  Hopeful will issue new shares to Sino
Bull equal to 40% of the expanded  capital of Hopeful for a total  consideration


                                      F-14
<PAGE>

of $1,000,000.  The terms of payment by Sino Bull for the purchase of new shares
will be: $200,000 in cash upon signing of the agreement; $150,000 in cash within
30 days of signing of the agreement;  $150,000 in cash within 60 days of signing
of the agreement;  and $500,000 within 30 days after signing of the agreement in
shares of  Hartcourt  based on the average  closing  price in the last 7 trading
days before  payment,  or in shares of Sino Bull based upon the  valuation to be
agreed on by the parties. Sino Bull will appoint not more than five directors to
the board of Guo Mao.  Together with the existing five directors,  the new board
shall consist of not more than ten directors. As of November 10, 2000, Sino Bull
has  advanced  $600,453  towards  the  purchase  of new shares of  Hopeful.  The
$600,453 was advanced by Hartcourt to Sino Bull. The  transaction is expected to
close by November 30, 2000.

         Swartz Private Equity,  LLC ("Swartz") - Swartz is an investment entity
focused on equity  investments in Internet and other high technology  companies.
On November 3, 1999,  Hartcourt  signed an  Investment  Agreement  with  Swartz.
Swartz  agreed  to  purchase  from  Hartcourt,  from  time to  time,  shares  of
Hartcourt's common stock, as part of an offering of common stock by Hartcourt to
Swartz, for a maximum aggregate  offering amount of $25,000,000.  These fundings
will be used to satisfy  Hartcourt's  working capital  requirements for the year
2000 and complete  acquisitions of Internet  related  operations.  On January 5,
2000,  Hartcourt  and  Swartz  agreed to  increase  the equity  line  funding to
$35,000,000  due to the planned  acquisitions  of Internet  operations in China.
Hartcourt  has filed a form SB-2  Registration  document  with SEC on August 24,
2000 to register  additional common shares for issuance to Swartz. Once approved
by SEC,  Swartz has the  obligation to purchase these shares at the market price
less 10 percent discount during the next 24 months.

         eMPACT  Solutions,  Inc.  ("eMPACT")  - On February 9, 2000,  Hartcourt
entered  into a Stock  Purchase  Agreement  Term  Sheet to  purchase  30% of the
authorized and  outstanding  shares of eMPACT's new shares of common stock.  The
purchase  price was agreed to be $2,000,000,  payable  $1,000,000 in cash at the
date of closing,  and the  remainder  $1,000,000  in cash within  ninety days of
closing.  In the event that eMPACT shall fail to meet the  revenues  projections
for the fiscal year 2000,  Hartcourt  shall receive an additional one percent of
the  shares  of  eMPACT  for  every  percent  that  revenue  does  not  meet the
projections  for revenue to a maximum of an  additional  twenty  percent.  As of
November  10, 2000,  Hartcourt  paid a  consideration  of $300,000 as an advance
towards the purchase price of eMPACT shares.  Hartcourt is currently negotiating
to finalize the remaining investment.

         Shenzhen China Cable Integrated Network Co. Ltd. ("SCIC") - On February
25, 2000,  Hartcourt  signed a Letter of Intent with Shenzhen Sinlan  Investment
Co.,  Ltd.  to  jointly  invest  in SCIC.  No terms  have  been  reached,  and a
definitive  agreement to form a joint venture company is currently being delayed
pending the implementation of the WTO (World Trade Organization) agreement. SCIC
operates  an  exclusive  television  and cable  network in the  capital  city of
Chengdu.  SCIC is  planning  an  expansion  program  to add  subscribers  and to
modernize  the  existing  system  and  make  it a  showcase  cable  system  with
interconnecting   data  transmission  via  a  network  of  satellite  and  cable
transmission.



                                      F-15
<PAGE>

         Heads of Agreement:  On April 8, 2000,  Hartcourt entered into Heads of
Agreement  ("Agreement")  with DF Ltd.,  Loughborough Ltd., and Express Internet
Investment Ltd. (collectively, "the Management") and a fourth investor to form a
joint venture company for the commercial  exploitation of the Publication Rights
of the internet and  production  of the content of the website in respect of the
laws of China.  Hartcourt is currently  having  discussions  with three possible
investors  and is trying to  recruit  one of these  investors  to be the  fourth
investor.  The Agreement does not require Hartcourt to bring on board the fourth
investor  and there are no  guarantees  that  Hartcourt  will be  successful  in
recruiting the fourth investor.  Per the terms of the Agreement,  both Hartcourt
and the fourth investor's obligation are to invest $2,000,000 each, in the joint
venture  company for 25%  ownership  interest  and share the  responsibility  in
providing  funding,   finance  and  technological  support.  The  obligation  of
Hartcourt and the fourth  investor is to provide  funding as working capital for
the joint venture  company  subject to the  conditions  precedent that the joint
venture  company shall have entered into an agreement with the relevant  parties
in China  for the  commercial  exploitation  of the  Publication  Rights  on the
Internet and the website. Each of the investors shall within 14 days of entering
into such  agreement by the joint venture  company,  pay  $1,000,000  each for a
total sum of  $2,000,000  being the 1st Tranche of the working  capital;  within
three (3)  months  thereafter  pay  another  $1,000,000  each for a total sum of
$2,000,000  being the 2nd  Tranche  of the  working  capital  for the  remaining
portion of their  investment.  Production of the website shall commence upon the
payment in full of the 1st Tranche by the investors to the joint venture company
and the  appropriate  production  costs  being  made  available  to the  parties
responsible for production.  The joint venture company is currently  negotiating
agreements with the relevant  parties in China and has not been granted approval
for the commercial  exploitation of the  Publication  Rights on the Internet and
the  website.  Therefore,  as of November  10,  2000,  Hartcourt  has no payment
obligations under this Agreement.

         Fee Agreement for Introduction  Services:  On April 19, 2000, Hartcourt
entered into a Fee Agreement for Introduction  Services  ("Agreement") with Tang
Wai Leong and  Thomas  Kwok,  (collectively  referred  to as the  "Introducers")
whereby the Introducers will use their best efforts to search for,  identify and
make  known  to  Hartcourt   Internet-related  business  and  opportunities  for
potential  acquisition  by  Hartcourt.  In addition,  Introducers  will seek out
sources  of funding  and  search  for  suitable  candidates  for  employment  by
Hartcourt  in  its  Chinese   operations.   Hartcourt   agrees  to  satisfy  the
Introducers'  time  and  expense  incurred,   up  to  and  including  the  first
acquisition  by  Hartcourt  of an  opportunity  introduced  or  arranged  by the
Introducers,  by granting to the Introducers options to purchase up to 2,500,000
shares of Hartcourt  common  stock at a price of $5.50 per share.  The option is
non-transferable  and will  expire  unless  exercised  on or  before  the  third
anniversary of the date of Agreement.  Upon  consummation of the introduction by
the Introducers and Hartcourt  completing the  acquisition,  Hartcourt agreed to
register  with the SEC under a Form S-8 such  shares  granted  under the  option
agreement,  and shall cause such  registration  statement to remain effective at
all times while the Introducers holds the options.

         The Introducers  have  introduced to Hartcourt a potential  acquisition
opportunity  and  Hartcourt  signed the necessary  documents to  consummate  the
purchase of an entity  (Shenzhen  Rayes Group  Limited) on April 27,  2000.  The


                                      F-16
<PAGE>

Introducers have subsequently exercised their option to acquire 2,500,000 shares
of Hartcourt  common stock.  On May 8, 2000, in accordance with the terms of the
Agreement,  Hartcourt  filed a Form  S-8 to  register  with the  Securities  and
Exchange  Commission the 2,500,000  options granted to the Introducers under the
Agreement.  As of September  30, 2000,  Hartcourt  received  $2,850,000  towards
exercise of 2,500,000  options into shares  exercised  by the  Introducers.  The
remaining  balance of  $10,900,000  is recorded as  subscriptions  receivable at
September 30, 2000 in the accompanying financial statements.

         Shenzhen Rayes Group Limited ("Shenzhen"): On April 27, 2000, Hartcourt
signed a Stock Purchase  Agreement Term Sheet with Shenzhen to form a new entity
of  which  Hartcourt  desired  to  purchase   fifty-one  percent  (51%)  of  the
outstanding  shares of the  capital  stock  and  Shenzhen  agreed to retain  the
remaining forty-nine percent (49%) of the outstanding shares. Shenzhen being the
sole owner all of rights,  title and interest in an operating company desired to
contribute  fifty-one  percent  (51%)  of its  share  to  the  new  entity.  The
transaction  was expected to close no later than 45 days following the execution
of this Agreement during which time all due diligence was to be completed, which
included  evaluation  of the third  party and the  operating  company  by Morgan
Stanley,  a legal  opinion of counsel as to the  acceptability  of the  proposed
structure of Hartcourt's  acquisition of fifty-one  percent (51%) of new entity,
financial reviews, et al. The purchase price was not to be less than $50,000,000
in cash and not exceeding  $76,000,000  (including  $50,000,000 in cash together
with  marketable  shares  of up to  $26,000,000  in  value).  The  terms  of the
Agreement required:  a) Hartcourt to deposit $10,000,000 in an escrow account no
later than April 28, 2000 upon  complete  execution  of the  Agreement;  b) upon
completion of all of its due diligence,  including  evaluation by Morgan Stanley
and  confirmation by legal counsel as to acceptable  structure,  Hartcourt shall
deposit such  additional  funds as shall be determined as required in conformity
with the value  established  by Morgan  Stanley.  On April 28,  2000,  Hartcourt
entered into an agreement with another third party who provided a bank guarantee
for  $10,000,000  on behalf of Hartcourt.  As of November 10, 2000, the terms of
the bank  guarantee  had  expired  and the  parties  mutually  agreed to have no
obligation  to each other should each of the parties  decided to  terminate  the
Agreement.  The parties  agreed to further  negotiate and extend the term of the
Agreement and complete the transaction to each other's  satisfaction by December
31, 2000.  Hartcourt is currently  performing its own due diligence and plans to
complete the  transaction.  However,  the terms of the agreement,  including the
amounts involved, may be significantly modified.

         Sino Bull.Com Inc. ("Sino Bull"): - On May 1, 2000,  Hartcourt and Sino
Bull  entered  into an  Exchange  Agreement  wherein  Sino Bull agreed to accept
ownership of interests  Hartcourt has in certain related  businesses in exchange
for Sino Bull common  stock.  The terms of the  Agreement  required Sino Bull to
exchange  forty-eight  (48%) percent of its common stock for all of  Hartcourt's
ownership  interests in FTL (58.53%) and UAC (50%). The Agreement  required Sino
Bull to form an eleven (11) member  Board of Directors  group with  Hartcourt to
appoint  six (6)  members  and  Sino  Bull to  appoint  five  (5)  members.  The
transaction  closed on May 1, 2000 and the parties have mutually  agreed to make
it effective upon  finalizing the structure of operations of Sino Bull under the
laws of China and Hong Kong by the end of November 2000. Upon completion of this
restructuring, Sino Bull will become an investment holding company and Hartcourt
will retain 48% ownership interest in Sino Bull.



                                      F-17
<PAGE>

         Koffman Securities  Limited  ("Koffman"):  On June 12, 2000,  Hartcourt
entered into a Stock Purchase  Agreement  Term Sheet with Koffman,  a securities
brokerage  firm,  to purchase 30% of the expanded  capital  stock of Koffman for
HK$22,285,000 (approximately US$2,857,050). The transaction shall close no later
than 60 days following the execution of the Agreement  during which time all due
diligence shall have been  completed,  which shall include but not be limited to
an evaluation of Koffman by the auditors, appraisers and legal counsel appointed
by  Hartcourt  for this  purpose  and a legal  opinion of its  counsel as to the
acceptability  of the proposed  structure of  Hartcourt's  acquisition of 30% of
Koffman,  financial  reviews,  and other usual and customary due diligence.  The
purchase  price shall be payable as follows:  1/4 of the purchase price shall be
payable upon  execution  of a definitive  agreement to purchase and sell by both
parties based upon completion of all of its due diligence,  including evaluation
and appraisal and  confirmation by legal counsel as to the  acceptability of the
proposed structure of Hartcourt's  acquisition of 30% of Koffman; and 3/4 of the
purchase price payable in three successive equal monthly  installments.  The net
asset  value  of  Koffman  of   approximately   HK$52   million   (approximately
US$6,666,667)  as at  March  31,  2000  was  agreed  to be  the  benchmark.  The
consideration  to be paid for Koffman is subject to adjustment  after the result
of an independent  audit by the auditors and appraisal of the net asset value of
Koffman  within the time set forth  above with the  adjusted  net asset value of
Koffman not being greater than HK$52 million.

         Hartcourt has recently  completed its due diligence review and both the
parties  have  mutually  agreed  to  revise  the  purchase  price for 30% of the
expanded capital stock of Koffman to HK$14,357,143 (approximately US$1,840,659).
The net asset  value of  Koffman's  assets was  determined  to be  HK$33,500,000
(approximately  US$4,294,872)  based upon the actual  valuation of assets by the
appraisers.  Hartcourt's legal counsel is preparing and to finalize a definitive
agreement  for the  purchase of Koffman and both  parties have agreed to execute
the purchase agreement prior to December 1, 2000. The transaction is expected to
close no later than January 31, 2001. As of November 10, 2000, Hartcourt has not
made any contributions towards the purchase of Koffman.

         Hopeman  Computer  Services  Corporation  Limited  ("Hopeman"):   -  On
September 7, 2000,  Hartcourt  signed a joint venture  agreement with Hopeman to
form a joint  venture  in  Shanghai  and  jointly  develop  and market a 24-hour
financial   television   program  and/or  provide  financial  data  services  to
existing/new  financial  television  programs  for China  market.  The new joint
venture is named "Haike Caijin TV" (HCTV) means Hartcourt  Financial  Television
(HCTV) in English.  HCTV will be  registered  in Shanghai with a funding of $1.0
million.  The agreement  defines the first phase joint venture  investment terms
for the period from  September  2000 to  December  2000.  The parties  agreed to
invest  $150,000 by September 15, 2000 and another $50,000 by November 30, 2000.
Hartcourt  agreed to invest  $100,000  to receive  an initial  66.7% of the HCTV
equity ownership and Hopeman agreed to invest $50,000 for the remaining 33.3% of
the HCTV equity  ownership.  Hopeman agreed to identify an  investment/strategic
partner  and  commit $3  million  in China as the  second  round  investment  by
December 31, 2000. If the second round fund raising  agreement  with a strategic
partner is signed by December 31,  2000,  Hopeman will have the option to invest
an additional  $50,000 and increase its equity  ownership to 50% and receive the
same ownership as Hartcourt.  Both the parties mutually agreed to redistribution
of equity  ownership with the second round  investors to be negotiated  over the
course of the joint venture. As of November 10, 2000, Hartcourt and Hopeman have
contributed $100,000 and $50,000 as their respective share of the first phase of
joint venture investment.

                                      F-18
<PAGE>

         Beijing Total  Solution  System,  Ltd.  ("TSS"):  On September 15, 2000
Hartcourt and TSS signed a Term Sheet  Agreement to form a Joint Venture Company
(JVC) called TSS Streaming,  Ltd to develop  broadband  enabling  technology for
internet  broadcasting market and develop world leading web-casting solution and
global market. Hartcourt will contribute $2.4 million for 60% ownership interest
in the JVC and TSS will contribute all of its tangible and intangible  assets of
its  existing  operations  in China for its 40%  ownership  interest in the JVC.
Hartcourt's  contribution to the JVC will be payable as follows:  a) $480,000 to
be paid in an escrow  account in China  within 15 days after the approval of the
due  diligence  and business  plan to guarantee  that TSS will not default.  TSS
agrees to compensate  Hartcourt  $480,000 for damages in case of default by TSS;
b)  $960,000  to be paid  within 30 days  after the  issuance  of joint  venture
license by the relevant government authority. At the same time $480,000 referred
to in a) above will be  transferred  to the JVC as  Hartcourt's  investment;  c)
$960,000  to be paid  within 90 days  after the  issuance  of the joint  venture
license. In addition to the above $2.4 million contribution, Hartcourt agrees to
pay an  additional  $600,000  to four  existing  shareholders  of TSS within six
months after the issuance of the joint venture license. One-half of the $600,000
in  payable  in  cash  and  the  remaining   balance  in  either   Hartcourt  or
StreamingAsia  stock.  All other terms and  conditions  are to be specified by a
Definitive  Agreement to be agreed and signed by both parties before October 30,
2000.  Hartcourt is currently performing its due diligence of TSS operations and
plans to  complete  the review of  business  plan by November  17,  2000.  As of
November  10,  2000,  Hartcourt  has not  made  any  contributions  towards  its
investment in the JVC.

         Shanghai Wind Information Company,  Limited ("Wind"):  On September 18,
2000,  Hartcourt  and Wind  signed a Term Sheet  Agreement  and agreed to form a
Joint-venture  Company to expand the financial  data service  business in China.
Wind agreed to transfer its entire fixed assets  excluding  cash and  marketable
securities held at July 31, 2000 and the insurance advisory business and related
assets,  and is entitled an ownership  interest of  sixty-six  point sixty seven
percent (66.67%) in the Joint-venture  Company.  Hartcourt agreed to invest $3.0
million  which  represented  thirty three point thirty  three  percent  (33.33%)
ownership  in the  Joint-venture  Company.  Upon  successful  completion  of due
diligence  by  Hartcourt,  Wind  will  transfer  all  its  assets  except  cash,
marketable  securities and insurance advisory business and related assets in the
Joint-venture Company. Wind will be responsible to obtain all relevant approvals
from all  governmental  authorities and agencies  required to facilitate the new
share  structure and expanded  capitalization.  Wind will be responsible to have
the  Joint-venture  Company  listed in the public stock market  within 15 months
from the date of  establishment  of the  Joint-venture  Company.  It is mutually
agreed that if Wind fails to list the Joint-venture  Company on or before such a
time frame, Hartcourt shall have the management right for listing of the company
in the public market.

         The investment  from Hartcourt to Wind shall be payable as follows:  a)
upon completion of the Agreement of Joint-venture Company by both parties within
15 days  from the date of the  Term  Sheet  Agreement  signed,  Hartcourt  shall
arrange a payment to from Guo Mao as a loan to Wind in the  amount of  $500,000;
b) pay $1,500,000 in the temporary  Joint-venture  account within 15 days of the
establishment  of the  temporary  Joint-venture  Company  bank  account;  c) pay


                                      F-19
<PAGE>

$1,500,000  into the  Joint-venture  Company no later than three months from the
date  of  establishment  of  the  Joint-venture  Company.  Upon  receipt  of all
committed  capital from Hartcourt,  Wind will  immediately pay back the $500,000
loan to Guo Mao.

         Hartcourt has completed its due diligence  review on the  operations of
Wind  and  Hartcourt's  affiliate  Guo Mao has made a  payment  of  $500,000  on
September  18,  2000 on  behalf of  Hartcourt.  As of  November  10,  2000,  the
temporary  Joint-venture  Company  bank  account has not been opened by Wind and
therefore, no further payments have been made by Hartcourt.

         Mahadev.com  Inc.  ("Mahadev"):  On October  10,  2000,  Hartcourt  and
Mahadev entered into an exclusive licensing and marketing agreement for a period
of three years whereby,  Hartcourt and its subsidiaries  will have the exclusive
right to market Mahadev's next generation  eBusiness solutions with cutting-edge
products   developed   for   e-Business,   eBanking,   and   security   Internet
infrastructures  in China and Hong Kong.  Pursuant to the terms of the agreement
in the performance of its duties,  Hartcourt will solicit  customers and promote
the sale and  stimulate  interest  for all of Mahadev  products and services and
maintain an office in China for the purpose of efficiently conducting its duties
under the  agreement.  Mahadev,  in turn will supply to Hartcourt all technical,
business, financial and economic information as may be necessary; make available
any such information  necessary to create and maintain a presence for Mahadev in
China and Hong Kong; and participate in the maintenance of any physical premises
that  Hartcourt  may  deem   reasonable  and  necessary   under  the  particular
circumstances.  The parties  agreed that  Hartcourt will be required to maintain
sales in the  amount of $1.5  million  in the first  year,  $3.5  million in the
second  year and  $8.0  million  in the  third  year.  Hartcourt  shall  receive
compensation  a sum  agreeable on a  project-by-project  basis for such sales in
China and Hong Kong. Said compensation  shall be paid to Hartcourt no later than
fifteen (15) days from the date of rendering of quarterly  sales  statements  by
Hartcourt to Mahadev.  Hartcourt is currently  evaluating  the business model of
Mahadev's  products  and  service in China and Hong Kong and has not sold any of
its products or services as of November 10, 2000.

         @Family  Broadband  Networks  Ltd."(@Family"):  On  October  25,  2000,
Hartcourt and @Family signed a Stock Purchase Term Sheet Agreement ("Agreement")
whereby,  Hartcourt  agreed to purchase 25% of the  authorized  and  outstanding
shares of the issued and  outstanding  capital  voting  stock of @Family for the
purchase  price of $1.0 million.  The  transaction  shall close no later than 45
days from the date of signing of the Agreement,  obtaining governmental approval
and upon  satisfactory  completion  of  Hartcourt's  due  diligence  which shall
include but not limited to examination of @Family's  business alliances with its
affiliates and delivery of reviewed financial statements of @Family to Hartcourt
and approval of same by Hartcourt before the closing date. The purchase price of
$1.0  million in cash is payable  to @Family at the date of  closing.  Hartcourt
will have the sole option to acquire at any time within 12 months  following the
execution of the formal agreement  contemplated  herein to acquire an additional
15% of the issued and  outstanding  shares for an additional  $2.0  million.  On
closing,  Hartcourt  shall have the right to appoint new  directors  so as to no
less than 25% of the total members of the Board of Directors. As of November 10,
2000,  Hartcourt  is  performing  its due  diligence  and  expects  to close the
transaction on time.


                                      F-20
<PAGE>


Note 2.    Basis of Presentation

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions  to Form 10-QSB.  Accordingly,
they do not include all of the information  and footnotes  required by generally
accepted  accounting  principles for complete  financial  statements and related
notes included in the Company's 1999 Form 10-KSB.

         In the opinion of management,  the accompanying  unaudited consolidated
financial   statements  contain  all  adjustments  (which  include  only  normal
recurring  adjustments)  necessary to present  fairly the balance  sheets of The
Hartcourt Companies, Inc. and Subsidiaries as of September 30, 2000 and December
31, 1999, and the results of their  operations and their cash flows for the nine
months ended September 30, 2000 and 1999. The financial statements for the three
months and nine months ended September 30, 2000 are  consolidated to include the
accounts of The Hartcourt  Companies and its 58.53% owned  subsidiary  Financial
Telecom  Limited,  and its 35% owned  equity  investment  in  Beijing  UAC Stock
Exchange Online Co. Ltd. for July and August 2000, and 50% equity  investment in
September  2000.  The financial  statements for the three months and nine months
period ended  September  30, 1999  include  only the  accounts of The  Hartcourt
Companies,  Inc. The operations of Hartcourt Pen and Hartcourt  Investments were
discontinued  in January 1999 and Hartcourt's  investment in Pego Systems,  Inc.
and  Electronic  Components  and Systems,  Inc. was spun-off to Enova  effective
March 1, 1999 and distributed as stock dividend.

         The results of  operations  for the three  months and nine months ended
September 30, 2000 are not necessarily  indicative of the results to be expected
for the entire year.

         Certain  1999  amounts  have been  reclassified  to  conform to current
period  presentation.  These  reclassifications  have no  effect  on  previously
reported net income.

         The accounting policies followed by the Company are set forth in Note A
to the Company's financial statements as stated in its report on Form 10-KSB for
the fiscal year ended December 31, 1999.



                                      F-21
<PAGE>


Note 3.    Supplemental Disclosure of Non-Cash Financing Activities

<TABLE>
<CAPTION>
                                                                            Nine Months           Nine Months
                                                                               Ended                 Ended
                                                                           September 30,         September 30,
                                                                               2000                   1999
                                                                          ----------------      -----------------
Cash paid for:
<S>                                                                     <C>                   <C>
   Interest                                                             $         114,953     $           19,000
   Taxes                                                                                -                      -
                                                                          ----------------      -----------------

Non-cash operating and financing activities:
   Shares issued to director in liquidation of payable                  $       3,560,621     $                -

   Preferred stock issued for dividends                                                 -                270,000
</TABLE>


Note 4.    Loss per Share

<TABLE>
<CAPTION>
                                              Three Months    Three Months     Nine Months        Nine Months
                                                 Ended            Ended           Ended              Ended
                                               September        September       September           September
                                                30, 2000        30, 1999         30, 2000           30, 1999
                                              -------------   --------------   -------------      -------------
<S>                                         <C>             <C>              <C>                <C>
Net loss                                    $    2,730,762  $       323,710  $    5,282,272     $      987,628

Effects of dilutive securities                           -                -               -                  -
                                              -------------   --------------   -------------      -------------

Weighted average shares outstanding             60,610,794       39,912,558      55,050,778         39,046,236
                                              -------------   --------------
                                                                               -------------      -------------

Basic and dilutive earnings per share       $       (0.05)  $        (0.01)  $       (0.10)     $        (.03)
                                              -------------   --------------   -------------      -------------
</TABLE>

         At September 30, 2000 and 1999, the Company had 1,210,975 and 2,000,000
warrants  and options  outstanding,  each  exercisable  into one share of common
stock.  These  instruments  were not  included  in the  computation  of  diluted
earnings per share for any of the periods presented,  due to their anti-dilutive
effects based on the net loss reported for each period.

         The weighted average shares outstanding  reflect the retroactive effect
of the 2-for-1 stock split discussed in Note 6.

                                      F-22
<PAGE>



Note 5.  Litigations

Charles E. Hogue vs.  Hartcourt,  Circuit Court of the Ninth  Judicial  Circuit,
Orange County, Florida Case No. CIO-2190

         The  litigation  concerns  a claim  filed  on  April  8,  2000  against
Hartcourt  for  breach  of  contract  for  alleged  fees  due to  Charles  Hogue
("plaintiff") for introductory services. Such fee was set as a percentage of the
transaction  contemplated and a check of $40,500 for payment in full thereof was
tendered to the  plaintiff  which the  plaintiff  refused  claiming  sums far in
excess of those agreed to.  Hartcourt's legal counsel has interposed a motion to
dismiss the suit which is pending  before the court and is  confident of success
in disposition of this matter.

ComericaBank  of California  ("Comerica")  vs. Enova.  Et al.  Superior Court of
California, County of Los Angeles, California. Case No. BC 221 594.

         This litigation  concerns  Hartcourt's alleged obligation as an alleged
guarantor of another entity's  ("Pego") alleged  obligation on a promissory note
that is asserted to be in  non-financial  default.  The plaintiff in that matter
may be the subject of a cross-complaint  by Hartcourt,  which will depend on the
evidence disclosed by documents Harcourt has demanded be produced. The complaint
alleges that Harcourt executed a guarantee of obligation of Pego  (approximately
$925,000) which obligation went into non-financial  default.  Pego expects to be
able to settle with plaintiff and such  settlement  will  eliminate  Hartcourt's
liability.  The prospects for the success of those settlement  negotiations,  as
well as the  approximately  range or amount of any potential  loss by Hartcourt,
are uncertain at this time.

American  Equities,  LLC v.  Hartcourt,  Los Angeles Superior Court:

         American  Equities  alleges  that they are  entitled to further  shares
pursuant to an  anti-dilution  clause  contained in a warrant  certificate.  The
Company disputes such an assertion, and trial is scheduled for March 2001.

The Hartcourt Companies, Inc. v. American Equities, Sherman Mazur, Reid Breitman
and Corporate Financial  Enterprises,  Inc., Los Angeles Superior Court Case No.
BC 237 714:

         The Company is seeking to rescind  certain  consulting  agreements  and
warrant  agreements  with  American  Equities,  LLC., on the basis that American
Equities,  LLC and its  principals,  Sherman Mazur and Reid Breitman,  failed to
disclose Mr.  Mazur's felony  convictions  and  voluminous  bankruptcies  of his
former real estate  limited  partnership  entities  and  therefore  fraudulently
induced the Company to enter into such  agreements.  The Company is also seeking
to rescind various stock  issuances  based on the failure of American  Equities,
LLC and Corporate Financial  Enterprises,  Inc. to pay the promissory notes upon
which such shares were issued.  This litigation has only recently commenced.


                                      F-23
<PAGE>

         The Company is party to various  claims and legal  proceedings  arising
out of the normal  course of its  business.  These claims and legal  proceedings
relate to contractual rights and obligations,  employment matters, and claims of
product liability. While there can be no assurance that an adverse determination
of any such  matters  could not have a  material  adverse  impact in any  future
period,  management does not believe,  based upon information  known to it, that
the final resolution of any of these matters will have a material adverse effect
upon the  Company's  consolidated  financial  position  and  annual  results  of
operations and cash flows.

Note 6.    Shareholders' Equity - Stock split

         On September 14, 2000,  the Board of Directors of Hartcourt  approved a
two-for-one split of the company's common stock to be distributed in the form of
a stock dividend,  payable on October 23, 2000 to the  shareholders of record at
the close of business on October 16, 2000.  All  references in the  consolidated
financial  statements  to shares,  share prices and per share  amounts have been
adjusted retroactively for the split.




                                      F-24
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                         SEPTEMBER 30, 2000 (UNAUDITED)


Part I

Item 2

         Currently,  Hartcourt is involved in Internet joint ventures in Asia to
facilitate the expansion of China's first commercial  e-trade  financial network
and wireless Internet Service Provider  services.  Hartcourt has set as its goal
to create the  premiere  financial  portal in the  Chinese  market by building a
network of Internet companies in partnership with young Chinese enterprenuers as
well as government  owned entities.  Its mission is to become one of the leading
Internet  companies  in Asia.  With a a vision to create the  premier  financial
portal and financial information  technology service provider in Asia, Sino Bull
was incorporated in the BVI in November 1999 as an investment holding company to
consolidate  various related businesses  acquired by Hartcourt during the period
from  August  1999 to  December  1999.  For the  purposes  of  presenting  these
businesses  under a unified and strong  brandname,  a restructuring  exercise is
currently  underway  to  consolidate  these  businesses  under Sino  Bull.  Upon
completion of the  restructuring  exercise and obtaining  approvals from Chinese
regulatory authorities, Sino Bull will operate a premier financial portal on the
Chinese  Internet with a  comprehensive  Web site and supporting  utilities that
will be capable of  executing  securities  transactions  on-line in a timely and
efficient manner while providing  real-time quotes,  research,  charts and other
collateral information regarding stocks, bonds,  currencies and other markets in
China and other Asian markets.

         Hartcourt's future business, including expansion of its current limited
operations  and  acquisition  plans  requires   additional  equity  and/or  debt
financing,  which  may not be  available  in a  timely  manner  on  commercially
reasonable  terms,  or at  all.  Harcourt's  primary  objective  is  to  acquire
established  operating companies with histories of growth and profitability,  in
order to  diversify  and create a  multi-dimensional  Internet  service  related
company.

         During 1999,  Hartcourt  continued its previously  implemented  plan to
acquire operating  companies that were in established  industries with a history
of  growth.  However,  as a result  of  continued  losses,  particularly  at the
Company's Electronic Components and Systems, Inc. subsidiary, Hartcourt recorded
significant  impairments  to its  goodwill  in 1998.  In March  1999,  Hartcourt
entered into a series of agreements and transactions  that in the aggregate were
designed to streamline and restructure the company while dissolving the entities
comprising of inactive assets and settle outstanding litigation.  As a result of
such restructuring,  Hartcourt  discontinued the operations of Hartcourt Pen and
Hartcourt  Investments  and had a spin-off  of  Hartcourt's  investment  in Pego
(100%) and ECS (35%). Hartcourt effectively became an entity with no operations.



                                      F-25
<PAGE>

Results of Operations:

         The  operations of Hartcourt for the three months and nine months ended
September 30, 2000  primarily  consisted of  operations  of FTL and  Hartcourt's
investment   interest  in  UAC.   Operations  of  Hartcourt  Pen  and  Hartcourt
Investments  were  discontinued at the beginning of 1999, and operations of Pego
and ECS were  disposed  off as a result of spin-off to Enova and the  subsequent
distribution of Enova as a stock dividend to Hartcourt shareholders.

         Net sales and cost of sales: The Company recorded net sales of $333,641
and  $1,024,081  for the three months and nine months ended  September  30, 2000
compared to zero for the same periods in 1999.  Net sales  consisted of the sale
of financial  pagers and the related  Internet and telephone  services.  Cost of
sales  amounted to $271,448  and  $503,520  for the three months and nine months
ended  September 30, 2000 compared to zero for the same periods in 1999. Cost of
sales for the three months  ended  September  30, 2000  included a write down of
$150,771 of inventory relating to the financial pagers that will become obsolete
in December 2000 as FTL switches their wireless network to a new platform.

         Corporate selling,  general and  administrative  expenses were $715,863
and  $3,612,095  for the three months and nine months ended  September  30, 2000
compared to $304,710 and  $959,870,  respectively  for the same periods in 1999.
The increase is primarily  attributed to additional  consulting  and legal costs
associated with the restructuring of Hartcourt's business, and expenses incurred
in brokerage fees in connection  with the issuance of warrants  raising  working
capital.

         Impairments:   Impairments  expenses  during  the  three  months  ended
September 30, 2000 resulted  primarily due to the write down of the  investments
in Go Call of $1,250,000,  write down of wireless  network  assets  amounting to
$195,623 as FTL is switching its wireless network structure to a new platform in
the December 2000, and providing for an impairment  allowance of $772,122 due to
delays  in  completing  acquisitions  in Hong Kong and  China,  on  advances  of
$3,860,608 as of September 30, 2000 extended to Sino Bull. No  impairments  were
identified in 1999.

         Other expenses:  Total other expenses net of other income,  were $1,039
and  $79,468  for the three  months and nine  months  ended  September  30, 2000
compared to $19,000 and $27,203, respectively for the same periods in 1999.

Liquidity and Capital Resources:

         Hartcourt's  principal capital requirements during the year 2000 are to
fund the acquisitions of growth oriented Internet related operating companies in
China and Asia.  During the nine months ended September 30, 2000,  Hartcourt has
raised necessary funds to carry out its plans of acquisitions by selling its own
common  shares to selected  investors  and bringing in business  partners  whose
contributions included the necessary cash.

         As shown in the accompanying  financial statements,  Hartcourt incurred
net losses of  $5,282,272  and $987,628 for the nine months ended  September 30,
2000 and  1999,  respectively.  Additionally,  Hartcourt's  current  liabilities
exceeded its current assets by $2,588,083 at September 30, 2000.  These factors,


                                      F-26
<PAGE>

as well as negative cash flows from  operations,  Hartcourt's  inability to meet
debt  obligations  and the need to raise  additional  funds  to  accomplish  its
objectives,  create substantial doubt about Hartcourt's ability to continue as a
going concern.

         Hartcourt  has  taken  certain   restructuring   steps,  which  in  the
management's  opinion  will  provide  the  necessary  capital  to  continue  its
operations.  These  steps  included:  1) the  settlement  of certain  matters of
litigation  and  disputes;  2) exchange of its  interests  in Peony  Gardens for
investment  securities which were  subsequently  exchanged for the investment in
GoCall  Inc.;  3) completed a private  placement  with PYR  Management,  LLC and
received  $2,743,000 on January 27, 2000; 4) signed a Investment  Agreement with
Swartz  Private  Equity,  LLC, which agreed to purchase from time to time, up to
$35,000,000  Hartcourt  shares of common stock.  The  Investment  Agreement with
Swartz is still  subject to the  approval of SEC; 5) raised  $4,401,870  in cash
through the issuance of its  3,407,000  common  shares upon exercise of an equal
number of options and warrants.

         Operating activities.  During the nine months ended September 30, 2000,
the Company had a net loss of $5,282,272.  Net cash used by operating activities
increased to $2,017,897 during the nine months ended September 30, 2000 compared
to $611,718 during the same period in 1999. This is primarily due to the funding
of increase in losses.

         Investing activities.  Net cash used in investing activities during the
nine months ended  September 30, 2000 was  primarily  due to advancing  $300,000
towards the purchase of eMPACT and advances to Sino Bull for investment purposes
of $3,762,761.

         Financing activities.  Net cash provided by financing activities during
the nine months ended September 30, 2000 was primarily due to proceeds from sale
of common stock amounting to $2,743,000,  issuance of common shares and exercise
of options and warrants  amounting to  $4,401,870  offset by advances to related
parties of $450,000, payments on notes payable of $604,616 and payments on loans
from shareholders amounting to $30,350.

         As a result of the above  activities,  the  company  experienced  a net
decrease in cash of $20,754 for the nine months ended  September  30, 2000.  The
ability of  Hartcourt to continue as a going  concern is still  dependent on its
success  in  obtaining   additional   financing  and   fulfilling  its  plan  of
restructuring as outlined above.




                                      F-27
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                OTHER INFORMATION
                         SEPTEMBER 30, 2000 (UNAUDITED)

Part II

Item 1.    LEGAL PROCEEDINGS

Charles E. Hogue vs.  Hartcourt,  Circuit Court of the Ninth  Judicial  Circuit,
Orange County, Florida Case No. CIO-2190

         The  litigation  concerns  a claim  filed  on  April  8,  2000  against
Hartcourt  for  breach  of  contract  for  alleged  fees  due to  Charles  Hogue
("plaintiff") for introductory services. Such fee was set as a percentage of the
transaction  contemplated and a check of $40,500 for payment in full thereof was
tendered to the  plaintiff  which the  plaintiff  refused  claiming  sums far in
excess of those agreed to.  Hartcourt's legal counsel has interposed a motion to
dismiss the suit which is pending  before the court and is  confident of success
in disposition of this matter.

ComericaBank  of California  ("Comerica")  vs. Enova.  Et al.  Superior Court of
California, County of Los Angeles, California. Case No. BC 221594.

         This litigation  concerns  Hartcourt's alleged obligation as an alleged
guarantor of another entity's  ("Pego") alleged  obligation on a promissory note
that is asserted to be in  non-financial  default.  The plaintiff in that matter
may be the subject of a cross-complaint  by Hartcourt,  which will depend on the
evidence disclosed by documents Harcourt has demanded be produced. The complaint
alleges that Harcourt executed a guarantee of obligation of Pego  (approximately
$925,000) which obligation went into non-financial  default.  Pego expects to be
able to settle with plaintiff and such  settlement  will  eliminate  Hartcourt's
liability.  The prospects for the success of those settlement  negotiations,  as
well as the  approximately  range or amount of any potential  loss by Hartcourt,
are uncertain at this time.

American  Equities,  LLC v.  Hartcourt,  Los Angeles Superior Court:

         American  Equities  alleges  that they are  entitled to further  shares
pursuant to an  anti-dilution  clause  contained in a warrant  certificate.  The
Company disputes such an assertion, and trial is scheduled for March 2001.

The Hartcourt Companies, Inc. v. American Equities, Sherman Mazur, Reid Breitman
and Corporate Financial  Enterprises,  Inc., Los Angeles Superior Court Case No.
BC 237 714:

         The Company is seeking to rescind  certain  consulting  agreements  and
warrant  agreements  with  American  Equities,  LLC., on the basis that American
Equities,  LLC and its  principals,  Sherman Mazur and Reid Breitman,  failed to
disclose Mr.  Mazur's felony  convictions  and  voluminous  bankruptcies  of his
former real estate  limited  partnership  entities  and  therefore  fraudulently


                                      F-28
<PAGE>

induced the Company to enter into such  agreements.  The Company is also seeking
to rescind various stock  issuances  based on the failure of American  Equities,
LLC and Corporate Financial  Enterprises,  Inc. to pay the promissory notes upon
which such shares were issued.  This litigation has only recently commenced.

         The Company is party to various  claims and legal  proceedings  arising
out of the normal  course of its  business.  These claims and legal  proceedings
relate to contractual rights and obligations,  employment matters, and claims of
product liability. While there can be no assurance that an adverse determination
of any such  matters  could not have a  material  adverse  impact in any  future
period,  management does not believe,  based upon information  known to it, that
the final resolution of any of these matters will have a material adverse effect
upon the  Company's  consolidated  financial  position  and  annual  results  of
operations and cash flows.




Item 2.  CHANGES IN SECURITIES

Not applicable

Item 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable

Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS

None

Item 5.  OTHER INFORMATION

None

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a) Exhibits - None

         b) Reports on Form 8-K

             o  On  September  28, 2000,  resignation  of BDO  International  as
                Hartcourt's  independent Certified Public Accountants,  File No.
                731300. Incorporated herein by reference.

             o  On  September  29,  2000,  appointment  of KPMG  as  Hartcourt's
                independent  Certified  Public  Accountants,  File  No.  732487.
                Incorporated herein by reference.








                                      F-29
<PAGE>


                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES

                                OTHER INFORMATION
                         SEPTEMBER 30, 2000 (UNAUDITED)

                                                 SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
 has caused this report signed on its behalf by the undersigned,  thereunto duly
 authorized.


                                         The Hartcourt Companies, Inc.

Date:  November 28, 2000                 By:  /s/ Dr. Alan V. Phan
                                         --------------------------------
                                                  Dr. Alan V. Phan
                                                  President & CEO























                                      F-30