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: March 31, 2003

     [ ]    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.)

              15165 Ventura Blvd. Suite 400 Sherman Oaks, CA 91403
                    (Address of principal executive offices)

                                 (626) 844 2437
                           (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 registrant 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 March 31, 2003, The Hartcourt  Companies,  Inc. had 113,252,503  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

                              Report on Form 10-QSB
                                For quarter ended
                                 March 31, 2003
                                                                         Page
                                                                         ----
PART 1  FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets at March 31, 2003
        (Unaudited) and December 31, 2002                                 F-3

        Consolidated Statements of Operations for the Three
        Months ended March 31, 2003 and 2002 (Unaudited)                  F-5

        Consolidated Statements of Shareholders' Equity for the
        Three Months ended March 31, 2003 (Unaudited)                     F-6

        Consolidated Statements of Cash Flows for the Three
        Months ended March 31, 2003 and 2002 (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-22


PART II OTHER INFORMATION

Item 1. Legal Proceedings                                                 F-27

Item 2. Changes in Securities                                             F-28

Item 3. Defaults upon Senior Securities                                   F-28

Item 4. Submission of Matters to Vote of Security Holders                 F-28

Item 5. Other Information                                                 F-28

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

Signatures                                                                F-30

302 certification                                                         F-31










                                      F-2
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


Part I
Item 1

                                                 March 31, 2003    December 31,
                                                   (Unaudited)          2002
                                                 --------------   --------------
ASSETS

Current assets:
   Cash and cash equivalents                       $ 2,987,588    $    79,845
   Accounts receivable, net                          6,411,458        260,306
   Inventory                                         1,371,821         16,464
   Notes receivable, current portion                   759,759        709,759
   Prepaid expenses and other                          390,509         49,449
                                                   -----------    -----------
Total current assets                                11,921,135      1,115,823
                                                   -----------    -----------
Property and equipment, net                            376,886        474,521

Investments, net                                       420,000        430,000

Other assets
   Goodwill, net                                     1,867,186        624,689
   Intangibles, net                                    325,951        340,767
   Notes receivable, net of current portion          1,706,012      1,756,012
                                                   -----------    -----------
Total other assets                                   3,899,149      2,721,468
                                                   -----------    -----------
Total assets                                       $16,617,170    $ 4,741,812
                                                   ===========    ===========












          See accompanying notes to consolidated financial statements.










                                      F-3
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                 March 31, 2003    December 31,
                                                   (Unaudited)          2002
                                                 --------------   --------------
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Bank Loans                                    $ 2,056,120      $         -
   Accounts payable                                1,885,014        1,342,284
   Deferred revenue                                  212,864          209,333
   Notes payable, current portion                  4,004,905           18,988
   Due to related parties                          1,289,872        1,343,011
   Advances from customers                         1,127,362                -
   Accrued expenses and other current liabilities    758,162          357,265
                                                 -----------      -----------
Total current liabilities                         11,334,299        3,270,881

Total liabilities                                 11,334,299        3,270,881
                                                 -----------      -----------
Contingencies

Minority interests                                 1,990,985          561,720

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, 250,000,000
     shares authorized; 113,252,503 shares and
     88,518,023 shares issued and outstanding
     at March 31, 2003 and December 31, 2002         113,253           88,518
   Treasury stock, at cost, 4,804,786 and
     5,610,588 shares at March 31, 2003 and
     December 31, 2002                            (3,223,928)      (3,723,928)
   Additional paid-in capital                     57,713,956       55,669,100
   Other comprehensive loss                          (71,094)         (71,094)
   Accumulated deficit                           (51,240,311)     (51,053,395)
                                                 -----------      -----------
Total shareholders' equity                         3,291,886          909,211
                                                 -----------      -----------
Total liabilities and shareholders' equity       $16,617,170      $ 4,741,812
                                                 ===========      ===========




          See accompanying notes to consolidated financial statements.








                                      F-4
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                 For the Three Months Ended
                                                          March 31
                                                 --------------------------
                                                     2003          2002
                                                 ------------  ------------
Net sales                                        $ 5,722,349   $ 3,547,599

Cost of sales                                      5,330,865     3,022,964
                                                 -----------   -----------
Gross profit                                         391,484       524,635
                                                 -----------   -----------
Operating expenses:
 Selling, general and administrative                 421,867     1,079,593
 Depreciation and amortization                        37,628       362,307
 Impairment                                           14,816             -
                                                 -----------   -----------
Total operating expenses                             474,311     1,441,900
                                                 -----------   -----------
Loss from continuing operations                      (82,827)     (917,265)

Other income (expense):
 Equity in earnings (loss) of affiliate                    -         7,040
 Loss on abandonment of property and equipment       (72,371)     (114,891)
 Interest expense                                    (13,149)      (32,926)
 Interest income                                         508        53,618
 Other                                                    30             -
                                                 -----------   -----------
Total other income (expense)                         (84,982)      (87,159)
                                                 -----------   -----------
Loss from continuing operations before
            minority interest                       (167,809)   (1,004,424)

Less:  loss in subsidiary attributed to
            minority interest                        (19,107)      222,595
                                                 -----------   -----------
Loss before discontinued operations                 (186,916)     (781,829)

Discontinued operations:
   Loss from discontinued operations                       -             -
   Gain on disposal of subsidiaries/
            discontinued operations                        -             -
                                                 -----------   -----------
Loss before extraordinary item                   $  (186,916)  $  (781,829)
                                                 -----------   -----------



          See accompanying notes to consolidated financial statements.






                                      F-5
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                 For the Three Months Ended
                                                          March 31
                                                 --------------------------
                                                     2003          2002
                                                 ------------  ------------
Extraordinary item:
   Gain on debt extinguishment                             -             -
                                                 -----------   -----------
Net loss                                            (186,916)     (781,829)
                                                 -----------   -----------
Other comprehensive gain (loss):
   Foreign currency translation gain (loss)                -        13,306
                                                 -----------   -----------
Comprehensive loss                               $  (186,916)  $  (768,523)
                                                 ===========   ===========

Basic and fully diluted loss per common share:
   Loss from continuing operations               $     (0.00)  $     (0.01)
   Gain from discontinued operations                    0.00          0.00
                                                 -----------   -----------
   Loss per share                                $     (0.00)  $     (0.01)
                                                 -----------   -----------
Weighted average number of shares outstanding
  - Basic and fully diluted                      101,630,023    74,150,428
                                                 ===========   ===========
















          See accompanying notes to consolidated financial statements.












                                       F-6
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<S>                    <C>         <C>       <C>    <C>      <C>          <C>
                                                                             Common
                            Common Stock     Preferred Stock  Additional      Stock
                       --------------------- ---------------   Paid-In    Subscriptions
     Description          Shares     Amount  Shares  Amount    Capital      Receivable
---------------------- ----------- --------- ------ -------- ------------ -------------
Balance -
December 31, 2002       88,518,023 $  88,518  1,000  $   10  $55,669,100  $         -

Shares issued for
  consulting services    1,521,446     1,522      -       -      104,211            -
Shares issued in
  connection with
  acquisition
  of HuaQing Group      15,960,474    15,960      -       -    2,186,585            -
Sale of treasury stock           -         -      -       -     (451,187)           -
Shares issued for
  subscriptions          7,252,560     7,253      -       -      205,247            -
Net loss                         -         -      -       -            -            -
                       ----------- --------- ------ -------  -----------  -----------
Balance -
March 31, 2003         113,252,503 $ 113,253  1,000 $    10  $57,713,956  $         -
                       =========== =========  ===== =======  ===========  ===========
</TABLE>
<TABLE>
<S>                     <C>       <C>          <C>           <C>           <C>
                            Treasury Stock         Other                       Total
                        ---------------------- Comprehensive  Accumulated  Shareholders'
     Description          Shares     Amount        Loss         Deficit       Equity
----------------------  --------- ------------ ------------- ------------- -------------
Balance -
December 31, 2002       5,610,588 $(3,723,928) $   (71,094)  $(51,053,395) $    909,211

Shares issued for
  consulting services           -           -            -              -       105,733
Shares issued in
  connection with
  acquisition
  of HuaQing Group              -           -            -              -     2,202,545
Sale of treasury stock   (805,802)    500,000            -              -        48,813
Shares issued for
  subscriptions                 -           -            -              -       212,500
Net loss                        -           -                    (186,916)     (186,916)
                        --------- -----------  -----------   ------------  ------------
Balance -
March 31, 2003          4,804,786 $(3,223,928) $   (71,094)  $(51,240,311) $  3,291,886
                        ========= ===========  ===========   ============  ============
</TABLE>


          See accompanying notes to consolidated financial statements.



                                      F-7
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

                                                           Three Months Ended
                                                                 March 31,
                                                         -----------------------
                                                             2003        2002
                                                         ------------ ----------
Cash flows from operating activities:
   Net loss                                              $  (186,916) $(781,829)
   Adjustments to reconcile net loss to net cash
   used in operating activities:
     Loss on abandonment of property and equipment            72,371    114,891
     Depreciation and amortization                            52,444    362,307
     Gain on debt extinguishment                                   -          -
     Gain on sale of affiliate                                     -          -
     Minority interest in (loss)/gain of subsidiaries         19,107   (201,571)
     Equity in (income) loss of affiliate                          -     (7,040)
     Stock return on lawsuit settlement                            -          -
     Shares issued in lieu of compensation and services      105,733    170,300
     Changes in operating assets and liabilities:
       (Increase) decrease in:
       Accounts receivable                                (2,172,162)   (18,753)
       Inventory                                            (109,579)        (5)
       Prepaid expenses and other                             50,436     26,188
       Increase (decrease) in:
       Cash overdraft                                              -     13,712
       Accounts payable                                     (106,473)   (11,037)
       Accrued expenses and other current liabilities      1,125,097    130,813
       Deferred revenue                                        3,531   (119,299)
                                                         -----------  ---------
Net cash used in operating activities                     (1,146,411)  (321,323)
                                                         -----------  ---------
Cash flows from investing activities:
   Proceeds on notes receivable                                    -     96,792
   Proceeds on return of investment                           10,000          -
   Advance towards investments                                     -          -
   Cash acquired in acquisitions                           2,608,356          -
   Purchase of property and equipment                              -    (25,301)
                                                         -----------  ---------
Net cash provided by investing activities                  2,618,356     71,491
                                                         -----------  ---------




          See accompanying notes to consolidated financial statements.










                                      F-8
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

                                                           Three Months Ended
                                                                 March 31,
                                                         -----------------------
                                                             2003        2002
                                                         ------------ ----------
Cash flows from financing activities:
   Proceeds on sale of common stock                                -    312,876
   Proceeds on sale of treasury stock                         48,813          -
   Proceeds on loans and lines of credit                     604,741          -
   Proceeds from / (payments to) related parties             159,361   (260,849)
   Proceeds on notes payable                                 622,883    104,139
   Payments on capital leases                                      -    (16,477)
                                                         -----------  ---------
Net cash provided by financing activities                  1,435,798    139,689
                                                         -----------  ---------
Foreign currency translation                                       -     13,306

Net increase (decrease) in cash                            2,907,743    (96,837)

Cash and cash equivalents, beginning of period                79,845    281,563
                                                         -----------  ---------
Cash and cash equivalents, end of period                 $ 2,987,588  $ 184,726
                                                         ===========  =========



















          See accompanying notes to consolidated financial statements.











                                      F-9
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Item 1

Note 1:  Organization and Nature of Operations:

The Hartcourt  Companies,  Inc. (herein referred to as "Hartcourt" or "Company")
is a holding and  development  enterprise  that is  building a broad  network of
Internet,   media,  and   telecommunication   companies  in  Greater  China.  In
partnership  with  leading  Chinese   entrepreneurs   and   government-sponsored
entities,  Hartcourt is developing and investing in emerging  technologies while
building an  integrated  commercial  framework  for its  subsidiaries  and their
partners.  Hartcourt's  operative  business  strategy is  designed to  establish
market-leading  position and facilitate a series of venture divestitures via IPO
or public mergers in its five main business divisions to fully realize the value
of these assets for its investors.  The five business  divisions are IT products
marketing and distribution Group (including  HuaQing Corporate  Development Co.,
Ltd.  ("HuaQing") of China),  Sinobull  Financial  Group,  Media Services Group,
E-learning Group and Hartcourt Capital Group.

In November  2002,  Hartcourt  obtained a proxy of voting right of 10% of common
shares from two HuaQing  shareholders in a HuaQing's  shareholders  and Board of
Directors meeting.  Such a 10% proxy right covers from February 1, 2003 to March
31, 2006, over a period of three years.  Consequently,  Hartcourt controls a 55%
of the voting right of HuaQing in the first quarter of 2003. As such,  Hartcourt
considers it has  controlling  relationship  on HuaQing's  operation  and treats
HuaQing as its controlling  subsidiary.  Since Hartcourt has management  control
over  HuaQing,  the  HuaQing  financial  statement  was  consolidated  with  the
operation  of  Hartcourt  for the first  quarter  ended on March 31,  2003.  The
accompanied consolidated financial statements of Hartcourt for the first quarter
ended on March 31, 2003  contains  $5,494,725  of sales and $56,726 of operating
profit of HuaQing.  These amounts  represent a one-month's  operating  result of
HuaQing's operation. (See Note #2, Basis of Presentation.)

Hartcourt,  through a combination  of expertly  managed  internal  expansion and
accretive strategic  acquisitions,  is executing plans to provide a sustainable,
growing,  diversified and profitable revenue base throughout its operations. The
company is aggressively identifying and pursuing the best business opportunities
available.  Through a continued  refinement  of  operational  efficiencies,  and
increasing   revenue  margins,   the  Company  is  providing  a  clear  path  to
profitability for its current and future businesses.

Hartcourt is developing  extensive business operations  throughout Greater China
to  position  itself to take full  advantage  of the  substantial  opportunities
presented by the emergence of the worlds largest consumer and business  markets,
and  China's  upcoming  entry  into  the  WTO.  Hartcourt's  ability  to  obtain
government  approved  licenses and its wide array of well  established  business
relationships  is  greatly  facilitating  these  goals and making  Hartcourt  an
attractive entry point for many corporations seeking access to these markets.

IT products marketing and distribution  Group: This Group provides  distribution
and  marketing  services of IT products  ranging from PC  components  to digital
products,  serving  individual  customers and government  executive  accounts as


                                      F-10
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

well. HuaQing Corporate Development Co., Ltd. ("HuaQing") is the first member of
this Group,  helping  customers build their own PCs with components,  technology
and after sales  support.  HuaQing was recently  voted by IDG's  Computer  World
(China) as one of the Top 100 Computer Marketing Companies in China. Followed by
HuaQing,  Guangdong  NewHuaSun  Computer Co., Ltd., the PC distributor with same
business model,  signed definitive  agreements with Hartcourt to join this Group
as of April 29, 2003. With their combined purchasing power and marketing budget,
this Group aims at improving  their profit margin and expanding  their operation
by additional acquisitions.

Sinobull  Financial  Group:  This group consists of Financial  Telecom  Limited,
Sinobull  Information  Company  Limited  (formerly  Shanghai  Guo Mao  Science &
Technology Co. Ltd.), and Sinobull Network  Technology Company Limited (formally
Beijing Net Technologies Center Company,  Ltd.). The Sinobull Financial Group is
a  leading  financial  content  provider,   develops   technologically  advanced
financial services platforms, and operates a financial Internet portal. Sinobull
provides mainland brokerages and financial  institutions the hardware,  software
and  Internet  platforms to enable their  customers'  access to a  comprehensive
suite of quality financial news,  real-time market data,  financial analysis and
professional  market  commentary.   Sinobull.com,  its  financial  services  and
information  portal,  is one of China's  most  popular  financial  portals.  The
company's  E-Finance  platform is an integration of the most advanced  Internet,
telecommunication and wireless access systems available on the market today. The
service  platform and collateral  content is offered via subscription to leading
securities  brokerages,  investment firms, banks, and media companies throughout
Greater China.

Media  Services  Group:  Under this  group,  Hartcourt  formed a new holding and
development  entity  AI-Asia  Inc.  to  acquire  assets  and  companies  in  the
multi-media  technology  and  services  sector.  Its  objective  is to identify,
develop,  and  maintain  first-mover  technologies,  products  and  services for
corporate  and  consumer  Internet  deployment.  AI-Asia  plans to  provide  its
clientele with a comprehensive range of Internet enabling  solutions,  preparing
them  to   participate   in  the  rapidly   emerging   streaming  and  broadband
communications  revolution.  The  operating  companies  in  this  group  include
StreamingAsia Limited, LogicSpace Limited, and Syndicate Asia Limited. The group
provides  comprehensive  real-time  audio and video delivery  (Streaming  Media)
solutions  along with Internet  consulting and web  application  development for
businesses, professionals,  organizations, web sites and content publishers. The
Streaming Media network infrastructure enables the streaming of superior-quality
multimedia  advertising,  live event  broadcasting and on-demand audio and video
content over the Internet to target audiences throughout Asia and globally.

E-learning  Group:  This  group  was  formed  in  a  partnership   agreement  in
cooperation  with Northern  Jiaotong  University and California State University
Fullerton to jointly develop  education  projects and introduce  American career
training courses and post-graduate  business programs in China. The project will
offer prestigious  American  education  programs in China,  utilizing one of the
first online education  licenses  awarded by China's Ministry of Education.  The
project is offering both  certificate and degree programs with courses  designed



                                      F-11
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

for relevance in today's business world. Coursework will initially be offered in
the classroom and later expanded  online.  Hartcourt plans to extend its program
to other potential partners and institutions in the future.

Hartcourt  Capital  Group:  Hartcourt  recently  formed  under  this group a new
company  Hartcourt  Capital Inc., an  investment-banking  arm to act as a bridge
between high-growth Chinese companies and the U.S. capital markets.  The company
will provide a wide range of strategic and financial  advisory services covering
mergers and acquisitions,  fund raising, private placement,  restructuring,  and
public market  listings.  To supplement  this objective,  Hartcourt  published a
magazine  called  China  Report.  The  objective  of the  magazine is to provide
investors with updates and analysis on the fast-changing  investment environment
and opportunities in China.


History of the Company:

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,  for
6,110,337  shares of Stardust  common stock (after taking into account a reverse
stock  split  and  stock  dividend)   pursuant  to  an  Agreement  and  Plan  of
Reorganization dated November 5, 1994. At the time of this acquisition, Stardust
was a "shell" entity with no assets,  business or operations.  Subsequent to the
acquisition of Hartcourt Investments, Stardust changed its name to The Hartcourt
Companies, Inc.

OPERATIONS BY BUSINESS DIVISIONS

IT PRODUCTS MARKETING AND DISTRIBUTION GROUP:

HuaQing Corporate Development Co., Ltd. ("HuaQing"): HuaQing, founded in 1992 in
Shanghai,  China, specializes in the niche DIY (do-it-yourself) PC marketing and
distribution.  The company  owns and  operates  11 DIY stores in Shanghai  area,
helping  customers  build their own PCs with  components,  technology  and after
sales  support  provided by HuaQing.  HuaQing was promoted as one of the top 100
Hi-Tech  enterprises  by  the  Shanghai   Government's  Science  and  Technology
Commission  in 2001 and 2002.  It was  recently  voted by IDG's  Computer  World
(China), a private company,  as one of the Top 100 Computer Marketing  Companies
in China.

On February 14, 2003,  Hartcourt  and  HuaQing's  former  shareholders  signed a
definitive  agreement  ("The  Agreement")  to purchase of 45% of the interest of
HuaQing, for a total consideration of $2,202,545, of which he purchase price was
paid by issuance of 15,960,474 restricted common shares of the Hartcourt. Due to
the temporary  restriction  of the Chinese  government  against  foreign  entity
holding  direct  interest  in  marketing  and  distribution  services  in China,
Hartcourt nominated Mr. Richard Yan, the Financial Controller of Hartcourt and a
Chinese citizen, and Mr. Li ZhengZheng, the major Chinese shareholder of HuaQing
to  hold  the 30% and  15%  interest  of  HuaQing  respectively,  on  behalf  of



                                      F-12
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Hartcourt.  Subject to the Chinese law, the two nominees  have pledged all their
shares to Hartcourt;  as well as its voting power to enable Hartcourt to appoint
the  controlling  slate  of  Directors  of  HuaQing.  The  nomination  could  be
terminated  by Hartcourt at its own option and Hartcourt  holds the  irrevocable
right to receive  back the  ownership of the shares upon  request,  whenever the
Chinese law is revised to allow foreign  ownership in HuaQing,  as stipulated in
the World Trade Organization (WTO) agreement. On March 6, 2003, the shareholders
meeting of HuaQing  approved the share  transferring  agreement and accepted the
two  nominees  of  Hartcourt  to  be  the  new  shareholders  of  HuaQing.   The
shareholders  meeting  updated  the  Article  of  Association  and  elected  new
directors  to satisfy The  Agreement.  In November of 2002,  Hartcourt  obtained
proxy of voting  right of  additional  10% of  common  shares  from two  HuaQing
shareholders,  Mr. Li Zhengzheng and Mr. Zhang Hui in HuaQing's all shareholders
and Board of  Directors'  meeting.  Such 10% proxy right covers from February 1,
2003 to March 31, 2006,  over a period of three years.  Consequently,  Hartcourt
controls a 55% of the voting right of HuaQing in the first  quarter of 2003.  As
such, Hartcourt considers it has controlling relationship on HuaQing's operation
and treats HuaQing as its controlling subsidiary. Since Hartcourt has management
control over HuaQing,  the HuaQing financial statement was consolidated with the
operation  of  Hartcourt  for the first  quarter  ended on March 31,  2003.  The
accompanied consolidated financial statements of Hartcourt for the first quarter
ended on March 31, 2003  contains  $5,494,725  of sales and $56,726 of operating
profit.  These  amounts  represent a one-month's  operating  result of HuaQing's
operation. (See Note # 5, Segment Information). In addition, the total assets of
Hartcourt in amount of $16,617,170  includes  HuaQing's  assets of  $10,696,394.
(See Note $ #5, Segment Information)

We believe that our current ownership  structure  complies with all existing PRC
laws,  rules and  regulations,  according to the legal  opinion of our attorney.
There are, however,  uncertainties  regarding the  interpretation of current PRC
laws and regulations.  Accordingly,  it is possible that the PRC government will
ultimately take a view contrary to ours.

SINOBULL FINANCIAL GROUP:

The Sinobull  Financial  Group  ("Group")  was formed in November  1999 with the
intention to consolidate  various related businesses  acquired or expected to be
acquired by Hartcourt or Sinobull.com Inc. ("Sinobull"),  the holding company of
the Group incorporated in British Virgin Islands. On May 16, 2002,  Sinobull.com
Inc.  changed its name to Hartcourt  Companies  Limited.  In the test hereafter,
Hartcourt  Capital  Limited  is  referred  to as  "Sinobull".  On April 2, 2001,
Sinobull's  one share  issued  and  outstanding  held by Mr.  Tang Wing On,  was
formally transferred to Hartcourt, and Sinobull became a wholly owned subsidiary
of  Hartcourt.  On October 2, 2001,  Hartcourt  announced its intent to publicly
divest the Sinobull Group in a merger with Global Telephone  Communications Inc.
(OTC Bulletin Board:  GTCI).  The reverse merger will allow Sinobull to actively
trade on the equity markets and unlock its value for Hartcourt  investors.  GTCI
shareholders have approved the merger.  However,  both parties agreed to rescind
the agreement due to complication involving outstanding creditors of GTCI.




                                      F-13
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Financial Telecom Limited (FTL): FTL was established in 1983 as 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. FTL is also acting
as the  marketing  agent for  Standard & Poor's  Comstock,  a division of McGraw
Hill, in Hong Kong. FTL was the first company in Hong Kong to transmit real-time
financial  services via a network of wireless system for  dissemination of data.
This was considered as a major breakthrough in the information and communication
industry  in Hong  Kong.  Investors  were no  longer  restricted  to fixed  line
terminals and could use a wireless  network,  such as financial pager, to access
real-time financial  information.  At present,  FTL maintains a financial portal
featuring stock trading,  real-time  quotes and company data banks for investors
in China and Hong Kong. These investors include major investment houses,  banks,
securities firms and mutual fund houses.

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.  The purchase price
was agreed to be HK $4.713 (US$ 0.604) per share for a total of HK$25,563,842 or
US$3,277,412,  payable 50% in cash and the remaining balance in Hartcourt common
shares.  The acquisition was completed on October 4, 1999.  Hartcourt made total
cash payments of $1,638,706 and issued  1,754,552  shares of its common stock to
FTL. As of 31 December 2002,  FTL sold all the shares of Hartcourt  common stock
to satisfy certain obligations.

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. FTL agreed to invest cash by phases, to the amount not
to exceed HK$4,000,000 (approximately US$512,800) in exchange for a total of 51%
ownership  interest in the joint  venture,  and Nice Voice agreed to  contribute
certain assets in FWL. After the completion of due diligence, the parties signed
the formal joint venture agreement on April 28, 2000 and FWL became a subsidiary
of FTL. Although NiceVoice has contributed certain assets in the FWL, due to the
method of funding these assets NiceVoice does not presently have legal ownership
title to such  assets  until the  final  dollar  payment  has been made on these
assets. The accompanying financial statements as of March 31, 2003 reflect FTL's
investment of 51% ownership  interest in FWL. FWL ceased  operations on March 1,
2002 after all its customers  were sold to a third party.  As of March 31, 2003,
FTL had advanced approximately  HK$4,216,162 (US$540,534) towards its investment
in FWL.  During the quarter ended 30 September 2002, FTL disposed off its wholly
owned  subsidiary  Topomedia  to  Bowland,  the  other  shareholder  of FTL.  As
Topomedia  suffered  a big  loss,  FTL  made  bad  debt  provision  HK$8,704,514
(US$1,115,963) for the advance to Topomedia.

Sinobull Network Technology Company Limited (Sinobull  Network):  Formally known
as  Beijing  Shangdi  Net  Technologies  Center  Company,  Ltd.  ("Shangdi")  is
principally  engaged in the  business of data  broadcasting  in China.  Its main
activities include research,  development and sale of data broadcasting hardware
and software. Shangdi is a major shareholder of Hua Xia Info, the financial data


                                      F-14
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

provider of Hua Xia  Securities,  the second  largest  stock  brokerage  firm in
China.  Hua Xia Info has its own financial  reporters for its  data-broadcasting
network via cable TV and  magazine.  Through this  relationship,  Sinobull  will
operate accounts through Hua Xia Securities Brokerages  nationwide.  Shangdi has
completed a software  program  for cable set top boxes,  which  enable  users to
trade stock online from their home television sets.

On December 18, 1999,  Sinobull  signed a Term Sheet  Agreement  with Shangdi to
form a new corporation in Beijing.  Sinobull shall have 40% interest and Shangdi
shall have 60%  interest in the new  corporation.  On April 12,  2000,  Sinobull
signed a Term  Sheet  Agreement  with  revising  the  terms  of the  Term  Sheet
Agreement signed on December 18, 1999. The terms of the revised agreement stated
Sinobull  and Tiandi  Hulian  Technologies  Limited  ("Tiandi"),  an  investment
holding company incorporated in the British Virgin Islands, holding the interest
of the shareholders of Shangdi,  acquired  through its  wholly-owned  subsidiary
Sinobull  Network  Technology  Company Limited  (Sinobull  Network"),  a company
registered in Beijing,  all of the operating assets and business of Shangdi.  To
finance this  acquisition,  Tiandi issued new shares to Sinobull equal to 40% of
the  expanded  capital of Tiandi.  The terms of the revised  agreement  required
Sinobull to pay Shangdi  US$670,000  as the  consideration  for all tangible and
intangible assets in relation to Shangdi's computer network information services
excluding  cash and debts;  invest  US$1,000,000  in  Sinobull  Network  for its
working capital needs;  issue 140,000  restricted  common shares of Hartcourt to
Shangdi and 60,000 restricted common shares of Hartcourt to Sinobull Network for
its working capital needs. In exchange,  Shangdi  transferred without any pledge
and debt,  all tangible and  intangible  assets in relation to computer  network
information  services to Sinobull  Network,  and transferred to Hartcourt 40% of
the ownership interest in Tiandi. On December 28, 2000, Sinobull, Tiandi, and Li
Chun Ying  (representative of the owners of Shangdi) signed a Share Subscription
and Sale and Purchase  Agreement  whereby,  Sinobull  owned 51% of Tiandi and Li
Chun Ying owned 49% of Tiandi  after  payment of  consideration  to Shangdi  for
purchase of all tangible and intangible assets. Sinobull through an advance from
Hartcourt, had paid $1,000,000 in cash towards the purchase of its 51% ownership
interest  of which  $670,000  was  distributed  to the owners of Shangdi and the
remaining  $330,000  was deemed as capital  contribution  in  Sinobull  Network.
Tiandi and Sinobull Network ceased its operations as of May 16, 2001.

Shanghai Sinobull Information Company Limited (Sinobull  Information):  Formally
known as Shanghai Guo Mao Science & Technology  Co. Ltd.  ("Guo Mao").  Sinobull
Information  is a major  real-time  financial  data provider in Shanghai using a
satellite network to transmit data specializes in stock quotes, futures, indexes
and commodities data that compliments the financial  information database of Hua
Xia Info and the financial data delivery  systems of FTL.  Association  with Guo
Mao gives  Sinobull a distinct edge over any  competitive  financial  portals in
China. On December 1, 1999,  Sinobull 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.  Sinobull agreed to
subscribe  for all the new shares  issued by Guo Mao. On May 16, 2000,  Sinobull
and Hopeful Internet  Technologies Limited ("Hopeful") entered into an agreement
whereby  Hopeful,  an investment  holding  company  incorporated  in the British



                                      F-15
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Virgin  Islands,  will  acquire  through its  wholly-owned  subsidiary  Shanghai
Sinobull  Information  Company  Limited  ("Sinobull  Information"),  all  of the
operating assets and business of Guo Mao. To finance this  acquisition,  Hopeful
issued new shares to Sinobull  equal to 40% of the  expanded  capital of Hopeful
for a total  consideration  of $1,000,000.  The terms of payment by Sinobull 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
Sinobull  based upon the  valuation to be agreed on by the parties.  On December
28, 2000,  Sinobull,  Hopeful,  Guo Mao and Lee Lu Ping  (representative  of the
owners of Guo Mao) signed a Share Subscription Agreement whereby,  Sinobull will
own 51%  ownership  in  Hopeful  and Lee Lu Ping  will own 49% of  ownership  in
Hopeful after payment of  consideration  to Guo Mao for purchase of all tangible
and  intangible  assets.  Sinobull  has  paid  $500,000  in cash  received  from
Hartcourt  towards  the  purchase  of new shares of Hopeful  and issued  805,802
shares of Hartcourt's common stock valued at $500,000 to Sinobull Information in
February  2001. The 805,802  common shares issued to Sinobull  Information  were
sold out to satisfy certain obligation as of March 31, 2003.

Haike  Caijin TV ("HCTV"):  HCTV is a joint  venture that calls for a multi-year
effort to jointly develop and deploy a financial TV channel to be marketed to 80
million  Chinese cable TV subscribers  across all Chinese  provinces and cities.
The  agreement  calls for  China  Cable  Networks  to  utilize  its  leading  TV
broadcasting expertise and integrated technologies and services for broadcasting
cable  channel  signals to market the "CCN  Financial  TV Channel"  with content
developed  by Shanghai  Guo Mao  Financial  Corporation.  The  content  would be
transmitted via satellite and ground transceiver  systems optimized for cable TV
networks.  The  financial  content will include  real-time  market data,  market
commentary, financial news and analysis, interviews, paid programming as well as
advertisements.

On September 7, 2000,  Hartcourt  signed a joint venture  agreement with Hopeman
Computer  Services  Corporation  Limited  (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 was named "Haike  Caijin TV"
means  Hartcourt  Financial  Television  (HCTV)  in  English.  HCTV  was  to  be
registered in Shanghai with a funding of $1.0 million. The agreement defined the
first phase joint venture investment terms for the period from September 2000 to
December  2000. In February  2001,  HCTV Joint Venture  Company was formed and a
temporary  license was  obtained to conduct  the  business of the joint  venture
pending  issuance  of a  new  license  upon  China's  entry  into  the  WTO  and
contribution  of $200,000 as the  subscribed  capital of the HCTV Joint  Venture
Company.  As of June 30,  2002,  Hopeman  has  invested  $50,000  for its  33.3%
investment  and  Hartcourt  has  invested  $100,000  towards  its  66.7%  equity
ownership in the HCTV joint venture. The temporary license issued by the Chinese
authorities  expired on February  14, 2002 pending  injection  of an  additional
$850,000  towards  the  capital  subscription.  Due  to the  complex  regulation



                                      F-16
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

regarding foreign  investment in the TV industry sector and due to the fact that
Hartcourt  and  Hopeman  will not have the  financial  resources  to support the
initial investment capital required, on August 28, 2002, Hartcourt has agreed to
sell its entire interest in this joint venture back to Hopeman. According to the
agreement, Hartcourt will receive back all of its investment from Hopeman. As of
March 31, 2003, Hartcourt has received US$ 30,000 from Hopeman.

Beijing UAC Stock Trading  Online Co. Ltd. (UAC Trading):  UAC Trading  operates
one of the leading  nationwide online securities  trading network called 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.  In May 1999,  UAC  Trading  was  granted a license by the
Chinese  government  and signed a contract with China Telecom to start  building
the network.  On June 20, 1999  Hartcourt  entered  into an  agreement  with UAC
Trading to form a joint venture  company  Beijing UAC Stock Exchange  Online Co.
Ltd. ("UAC  Exchange").  Under the terms of the agreement,  Hartcourt  agreed to
invest in cash and stock  $2,868,000 for the purchase of 51% ownership  interest
in UAC Exchange.  In September 2000, the Chinese  government  allowed all online
transactions  to be conducted via  Internet.  It caused UAC Exchange to lose its
competitiveness  as the  efficiencies  of 162 Network was not  compatible to the
Internet.  Therefore, UAC Exchange started converting its operations to Internet
based operations.

On July 16,  2001,  Hartcourt  and UAC  Trading,  by mutual  consent,  agreed to
rescind the contractual joint venture  agreement named UAC Exchange.  As part of
the rescission,  Hartcourt  agreed to accept a promissory note for the amount of
its net  investment  in UAC Exchange as of the date of  rescission  amounting to
$2,858,286,  bearing  interest  at six per cent  (6%) per anum,  payable  over a
thirty-nine  months  period.  The  parties  mutually  agreed to forego all other
rights  and  benefits   provided   under  the   contractual   joint  venture  as
consideration  for the rescission of the contract.  On September 10, 2001,  Edda
Limited,  a  non-affiliated  company  incorporated  in Hong Kong,  purchased all
existing  tangible  and  intangible  assets of UAC  Exchange  for the  amount of
Hartcourt's net investment in UAC Exchange,  and signed a promissory note in the
amount of $2,858,286  bearing interest at six per cent (6%) per anum, payable in
quarterly  installments  of $50,000  commencing  November 1, 2001 with a balloon
payment of $2,715,772 due on December 1, 2006. The promissory note is secured by
a security agreement granting to Hartcourt all tangible and intangible  property
of Edda Limited. As of December 31, 2002, Edda paid five quarterly note payments
of  $50,000  each.  As of  December  31,  2002,  Hartcourt  corrected  the share
subscription  price of the  shares  issued to Edda,  which lead to  reducing  of
$652,274  towards the promissory  note due to Hartcourt.  In addition,  Edda has
paid $60,459 towards interest due on the promissory note due to Hartcourt.

Shanghai Wind Information Company, Limited ("WindInfo"):  WindInfo is China's #1
financial  research content  provider,  developing  original content through its
nationwide  network.  WindInfo's  flagship  product  is widely  used by  China's
investment  banking and  securities  brokerage  firms.  The  Shanghai  Municipal
Government awarded WindInfo "The High-Tech Model Company" in 1999.  WindInfo has
over 1,000 registered  corporate clients,  including all major investment banks,
securities brokerage firms, and media companies.


                                      F-17
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

On September 18, 2000,  Hartcourt and WindInfo signed a Term Sheet Agreement and
agreed to form a  Joint-Venture  Company  (JVC) to  expand  the  financial  data
service  business in China.  WindInfo 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 JVC.  Hartcourt  agreed to
invest $3.0 million  that  represented  thirty three point thirty three  percent
(33.33%)  ownership in the JVC. Upon  successful  completion of due diligence by
Hartcourt,  WindInfo  will  transfer  all its  assets  except  cash,  marketable
securities  and  insurance  advisory  business  and  related  assets in the JVC.
WindInfo  will  be  responsible  to  obtain  all  relevant  approvals  from  all
governmental  authorities  and  agencies  required to  facilitate  the new share
structure and expanded capitalization.  WindInfo will be responsible to have the
JVC  listed  in the  public  stock  market  within  15  months  from the date of
establishment  of the JVC. It is mutually  agreed that if WindInfo fails to list
the JVC 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 WindInfo was agreed to be paid as follows:  a)
upon  completion of the Agreement of JVC by both parties within 15 days from the
date of the Term Sheet Agreement signed,  Hartcourt shall arrange a payment from
Guo Mao as a loan to WindInfo in the amount of $500,000;  b) pay  $1,500,000  in
the temporary JVC account within 15 days of the  establishment  of the temporary
JVC bank account; c) pay $1,500,000 into the JVC no later than three months from
the date of establishment of the JVC. Upon receipt of all committed capital from
Hartcourt, WindInfo agreed to immediately pay back the $500,000 loan to Guo Mao.
On September 18, 2000, Sinobull advanced $500,000 to Guo Mao who loaned the same
amount to WindInfo on behalf of Hartcourt.  Pursuant to the addendum to the Term
Sheet  Agreement,  on January 10, 2001,  Hartcourt and WindInfo  signed a direct
investment  agreement  whereby Hartcourt agreed to convert the loan from Guo Mao
of  $500,000  to a 5% equity  ownership  in the JVC to be formed.  Upon  further
negotiations  between the two  parties,  Hartcourt  and WindInfo  have  mutually
agreed to  terminate  the Term Sheet  Agreement of formation of JVC and WindInfo
agreed to return Hartcourt's  contribution of $500,000 towards its investment in
the JVC. As of March 31, 2003, WindInfo returned $60,241 to Sinobull Information
on behalf of Hartcourt.  The accompanying  financial  statements as of March 31,
2003  reflect  Hartcourt's  loan of  $439,759  to  WindInfo.  Both  parties  are
negotiating to an acceptable payment plan for Hartcourt to receive the remainder
of its loan during the year 2003.

Equis International  Inc.((R)),  a wholly owned subsidiary of Reuters Limited(R)
signed on June 1, 2001, an International  Distribution  Agreement with Hartcourt
including  Sinobull  Group in Shanghai,  Beijing and Hong Kong, a  non-exclusive
distributor  of licensed  products  within the People's  Republic of China (PRC)
except in Hong Kong and Taiwan,  and grants to Hartcourt a  non-exclusive  right
and license to market,  promote and distribute the licensed  products in the PRC
to  sub-distributors,  resellers and end users to localize Equis'  award-winning
family of MetaStock(R)  products and market them to over 10 million investors in
the Greater  China area.  The initial term of the  agreement is for three years.
Under the terms of the agreement Equis International also granted Sinobull Group



                                      F-18
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

conditional  territory exclusivity for a period of twelve months for the Chinese
versions of MetaStock  products  within the Greater  China  market.  Hartcourt's
remuneration  for the sale of licensed  products will be the difference  between
the selling price to its customers and Hartcourt's  discounted purchase price as
agreed  between  Hartcourt  and Equis.  As of March 31, 2003,  Hartcourt and its
affiliates  sold 5  copies  of  the  Equis's  licensed  products  for  HK$21,000
(US$2,692)  and recorded  data feed income of HK$5,300  (US$679)  for  MetaStock
products, since the inception of this agreement.

YesMobile  Inc.  incorporated  in Hong  Kong,  is  currently  a leading  Chinese
Wireless Application Protocol (WAP) portal with open-standard and multi-platform
compatibility in Asia.  Sinobull.com HK Ltd.  (Sinobull HK) has signed a revenue
sharing  agreement  with  YesMobile  whereby,  Sinobull  HK  agreed  to  provide
financial  contents to YesMobile in China. The data will include real time stock
quotes,  commodities and currencies contracts,  economic news,  commentaries and
research reports. Pursuant to the terms of the agreement, Sinobull HK will share
70% of the  revenues  received  and  YesMobile  will  share  30% of the  revenue
received from the users of the Wireless  Application  Protocol  (WAP) portal and
the Short Message  Service (SMS) of YesMobile.  Users will access these contents
via their mobile phones, as well as PDAs and other wireless  devices.  YesMobile
is currently providing these services to over 105 million users of China Mobile.
As of March 31,  2003,  Sinobull  HK has not  received  any  revenues  under the
revenue sharing agreement.

MEDIA SERVICES GROUP:

The Media  Services  Group mainly  consists of Ai-Asia  Inc.  and  StreamingAsia
Holdings  Limited,  which consists of the operations of  StreamingAsia  Limited,
LogicSpace Limited and SyndicateAsia  Limited. The Media Services Group provides
a comprehensive  real-time audio and video delivery  (Streaming  Media) solution
along with Internet  consulting and web  application  development to businesses,
professionals,  organizations,  web sites and content publishers.  The Streaming
Media Group's network  infrastructure  enables the streaming of superior-quality
multimedia  advertising,  live event  broadcasting and on-demand audio and video
content over the Internet to target audiences throughout Asia and Globally.

AI-Asia Inc. ("AI-Asia"): On August 20, 2001, Hartcourt established a new wholly
owned  subsidiary  AI-Asia Inc. to hold and develop assets of the Media Services
Group.  AI-Asia's  objective is  identify,  develop,  and  maintain  first-mover
technologies,   products  and  services  for  corporate  and  consumer  Internet
deployment. AI-Asia plans to provide its clientele with a comprehensive range of
Internet  enabling  solutions,  preparing  them to  participate  in the  rapidly
emerging streaming and broadband communications revolution.  AI-Asia will create
synergy not only among its streaming  technology  companies but will  coordinate
with other Hartcourt Groups. To achieve this objective, in January 2002, AI-Asia
purchased  Logicspace  Asia  from  third  party  to  conduct  Internet  services
including web page design, system architecture and solution  implementation.  To
facilitate  the merge and  acquisition  work in China,  in August 2002,  AI-Asia
established  AI-Asia  (Shanghai)  Co.,  Ltd.,  its wholly  owned  subsidiary  in
Shanghai China.



                                      F-19
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

StreamingAsia Holdings Limited  ("StreamingAsia  Group"):  StreamingAsia Limited
provides  Internet-related  software  development  service  with an expertise in
audio and video  delivery or  streaming  solutions  to a variety of business and
industry, including major financial institutions.

On April 14, 2000,  Hartcourt announced that Sinobull subscribed 1,200,000 newly
issued  and  outstanding   fully  paid  shares  of  StreamingAsia   Limited  for
HK$7,000,000   (approximately   US$897,500)   on  behalf  of   Hartcourt.   Upon
subscription  of such  shares,  Sinobull  acquired  50%  ownership  interest  in
StreamingAsia  Limited and contributed $897,500 towards its purchase.  Hartcourt
advanced  such funds to  Sinobull  for  StreamingAsia  Limited  acquisition.  In
addition,  both Sinobull and Hartcourt  agreed and confirmed that as part of the
financing  arrangements,  Sinobull held the subscribed  shares in  StreamingAsia
Limited on behalf of Hartcourt and those shares were transferred to Hartcourt on
December 29, 2000.  On December 30, 2000, as part of the  reorganization  of the
StreamingAsia   Holdings   Limited,   the  beneficial   ownership   interest  in
StreamingAsia  Limited was transferred to Asia Top Finance Limited ("Asia Top"),
a company organized under the laws of British Virgin Islands. As a result of the
above transfer,  Hartcourt owned 50% of the Asia Top and remaining 50% ownership
interest was held by the selling shareholders of StreamingAsia Limited.

LogicSpace  Limited  ("LogicSpace"):  LogicSpace,  a wholly-owned  subsidiary of
StreamingAsia Limited, is an Internet consulting and web application development
company  that  provides a wide range of  Internet  services  including  web page
design,  system  architecture  and solution  implementation.  LogicSpace  offers
cost-effective  and one-stop shop Internet  solutions  that enable  companies to
achieve  smooth  results in doing  business on the Internet.  Solutions  include
top-notch  eBusiness  & Internet  consultation,  B2B/B2C  Portal  Development  &
Implementation,   Web-Based  &  Wireless   application   design  and  "know-how"
implementation.  The  operating  results of  LogicSpace  are  consolidated  with
StreamingAsia  Limited in the accompanying  financial statements as of March 31,
2003.

SyndicateAsia Limited  ("SyndicateAsia"):  SyndicateAsia,  is pioneer in content
distribution,   providing  the   marketplace   for   exchanging,   managing  and
distributing   content  media  across  the  Asian  region.   The   revolutionary
SyndicateAsia  platform  offers  flexibility  to providers and content buyers to
transform formats (Web to WAP) and exchange content,  including text, graphical,
audio  and  video,   across  a  wide  range  of  sources  in  the  Asia  region.
SyndicateAsia's  mission is to serve as the bridge between the content providers
and end users by  providing  the foremost  syndication  solution for delivery of
multi-media  content on cross  devices and  platforms,  including the World Wide
Web,  wireless,  and streaming media. In December 2000, the StreamingAsia  Group
issued 50% of the enlarged  share  capital of  SyndicateAsia  to  Hartcourt.  On
December 30, 2000, as part of the reorganization of the StreamingAsia Group, the
entire   beneficial   ownership  in  the  share  capital  of  SyndicateAsia  was
transferred to China Top Worldwide Limited ("China Top"), a company incorporated
in the British Virgin Islands.  As a result of the transfer  Hartcourt owned 50%
of the ownership interest in China Top.

On May 16, 2001  Hartcourt  took control over the  management  and operations of
Asia Top and  China  Top,  and  signed a Term  Sheet  Agreement  to  acquire  an

                                      F-20
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

additional 35% ownership  interest in Asia Top and China Top. On August 9, 2001,
Hartcourt  closed the escrow and completed the  acquisition of an additional 35%
ownership interest in Asia Top and China Top for a total purchase  consideration
of  HK$800,000  (US$102,564).  On April 1,  2002,  Asia Top and China Top ceased
operations  and  transferred  its 85%  ownership  in  StreamingAsia  Limited and
Syndicated  Asia  Limited  to  Hartcourt  Companies  Limited.  The  accompanying
financial  statements at March 31, 2003 reflect Hartcourt's  ownership of 85% of
the  StreamingAsia  Limited  and  Syndicate  Asia  Limited  and its  results  of
operations  from  the  date of  acquisition  are  consolidated  with  Hartcourt.
StreamingAsia Limited, Logicspace Limited and SyndicateAsia Limited ceased their
operation as of June 30, 2002.

eMPACT Solutions,  Inc.  ("eMPACT") - eMPACT,  development stage enterprise,  an
e-commerce systems management and consulting  company,  specializes in providing
back-office   infrastructure  for  Internet  companies.   The  services  include
technology  selection,  system design and  management,  transaction  performance
monitoring,  resource utilization tracking and security monitoring. On April 30,
2000, Harcourt executed a Subscription  Agreement and Investment  Representation
and agreed to  subscribe  and  purchase  three  hundred  (300) shares of Class B
Convertible  Preferred Stock, par value $0.001 per share of eMPACT for $300,000.
Hartcourt has determined  that at this time to increase its investment in eMPACT
would not be  advantageous  to the  company or its  shareholders.  On January 7,
2002, eMPACT received $7,500,000 as the second round of funding from the venture
capital  partners  for  further  expansion  of the  company's  Internet  related
business.  The  accompanying  financial  statements  at March 31,  2003  reflect
Hartcourt's investment in eMPACT of $300,000.

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 agreed to contribute $2.4 million for 60% ownership  interest
in the JVC and TSS  agreed to  contribute  all of its  tangible  and  intangible
assets of its existing operations in China for its 40% ownership interest in the
JVC.  On  December  1,  2000,  Hartcourt  and TSS  signed a loan  agreement  and
Hartcourt  advanced  $70,000 as a loan to support  TSS's  2000  marketing  plan,
convertible into for the ownership of 5% shares of TSS. Upon contribution of the
remaining  $2,330,000,  Hartcourt could acquire the additional 55% shares of the
JVC.  Hartcourt  has not  converted  its loan into an  investment  of 5% in TSS.
Hartcourt has not exercised its right to subscribe for the additional 55% of the
ownership  interest in the JVC and such right has subsequently been lapsed.  The
accompanying  financial statements reflect Hartcourt's loan of $70,000 to TSS as
of March 31, 2003.  Hartcourt does not intend to acquire any ownership  interest
in TSS at this time.

HARTCOURT CAPITAL GROUP:

On August 8, 2000, Hartcourt  established  Hartcourt Capital Inc, a wholly owned
subsidiary,  to act as a bridge between  high-growth  Chinese  companies and the
U.S.  capital markets.  On January 25, 2002,  Hartcourt  Capital Inc.  purchased



                                      F-21
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Sinobull.com  Limited from  Sinobull  Group as its wholly owned  subsidiary  and
changed  its name to  Hartcourt  Capital  Limited.  On July 1,  2002,  Hartcourt
Capital  Inc.  purchased  Fintel  International  Limited from third party as its
wholly owned subsidiary and changed its name to Hartcourt  Capital Asia Limited.
Hartcourt  Capital  Ltd. and  Hartcourt  Capital Asia Limited were aiming at the
Hong Kong venture  capital  market and Asian  capital  market  respectively.  To
cut-down costs and to get closer to our potential  acquisition  target,  in July
2002, Hartcourt established Hartcourt Investment Management (Shanghai) Co., Ltd,
a wholly  owned  subsidiary  of  Hartcourt  Capital Inc to act as its  executive
office.

E-LEARNING GROUP:

On June 18, 2001,  Hartcourt executed a Revenue Sharing Agreement in cooperation
with Northern Jiaotong University and California State  University-Fullerton  to
jointly  develop  education  projects and  introduce  American  career  training
courses  and  post-graduate  business  programs  in China.  The  project  offers
prestigious  American  education  programs in China,  utilizing one of the first
online education licenses awarded by China's Ministry of Education.  The project
offers both  certificate and degree programs with courses designed for relevance
in today's business world. Coursework will be offered initially in the classroom
and later  expanded  online.  Hartcourt  plans to extend  its  program  to other
potential  partners  and  institutions  in the future.  Hartcourt  has  advanced
$100,000  towards the working  capital for its  investment in this project as of
March 31,  2003.  The  accompanying  financial  statements  as of March 31, 2003
reflect Hartcourt's  investment of $100,000 in the education project.  The total
financial  commitments  of  Hartcourt  and terms of payment on this  project are
currently  being  negotiated  between the parties and expect to be  finalized by
June 30, 2003.

OTHER VENTURES:

Elephant Talk Limited ("ElephantTalk"): ElephantTalk (OTC:BB ETLK), is a leading
telecommunications  company  located and  operated in Hong Kong with  offices in
Cerritos,  California and switching facilities in China, Hong Kong, U.S., Taiwan
and Singapore. ElephantTalk operates international long distance service on both
sides of the Pacific to over 220 foreign cities. They enable  telecommunications
carriers and other service providers the ability to offer long distance,  voice,
data/fax,  calling card, and  voice-over-internet-phone  (VOIP) services through
advanced,  scaleable  networks.  ElephantTalk  is expanding its networks and has
international operating agreements with telecommunications  carriers,  including
AT&T Corp.,  Cignal Global Ltd., Frontier Telecom Ltd. and MCI Worldcom Inc. Its
customers include the largest first and second tier telecommunications  carriers
in the U.S. and Asia,  including two of the four fixed network operators in Hong
Kong;  New  T&T  and  New  World  Telephone.  On May  16,  2001,  Hartcourt  and
ElephantTalk  executed a Sale and Purchase  Agreement whereby Hartcourt acquired
51% of the  ownership  interest in  ElephantTalk  for a total  consideration  of
$4,194,000.

Pursuant to an Agreement of Merger and Plan of Reorganization,  effective August
27, 2001, and through the subsequent transaction that closed on January 4, 2002,


                                      F-22
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Staruni Corporation, a California corporation merged with Elephant Talk Limited.
Staruni was the surviving  corporation  and  continued  its corporate  existence
under the laws of California. On January 9, 2002, Staruni filed a Certificate of
Amendment of Articles of  Incorporation  to amend its corporate name to Elephant
Talk Communications,  Inc. (ETCI). This name change was done in conjunction with
the merger, and to emphasize that the new focus of the ETCI will be the business
of Elephant  Talk Limited.  Pursuant to the terms of the merger,  each holder of
ordinary shares of ElephantTalk  common stock,  par value of HK$1 (One Hong Kong
Dollar) immediately prior to the effective time of the merger date, by virtue of
the merger and without any action on the part of such holder, received as of the
merger date, such number of shares of common stock of ETCI, no par value, as the
number of shares of  ElephantTalk  common  stock  owned by such holder as of the
merger  date.  Collectively,   following  the  merger,  the  former  holders  of
ElephantTalk common stock held an aggregate of 90% of the issued and outstanding
shares of ETCI's common stock.  The merger caused no change in any of the shares
of the  ETCI's  common  stock  outstanding  on the  merger  date,  and no  other
securities were converted as a result of the merger.  Prior to the completion of
the merger  with  Staruni,  on January 2, 2002,  Hartcourt  purchased  7,500,000
shares of  Elephant  Talk  Limited  from a  shareholder  for a note  payable  of
$140,595  bearing an annual interest rate of 8%. At the conclusion of the merger
on January 4, 2002, Hartcourt retained a 51.7% ownership in ETCI.

However,  on October 21, 2002,  Hartcourt has decided to divest the relationship
with ETCI, via  distributing  of 5 million shares of ETCI that it still retained
as  dividends  to all of its  shareholders.  Furthermore,  on October 23,  2002,
Hartcourt  and ETCI has  completed  an agreement  in which  Hartcourt  agreed to
return to ETCI 12,895,579  shares of ETCI in exchange for 2 promissory  notes of
$1,250,000  and  $140,595  plus  4,756,058  shares  of HRCT held by ETCI and its
shareholders.  As a result, as of October 23, 2002,  Hartcourt has completed its
divesture of ETCI and no longer has any interest in ETCI.

Acquisitions and Partnerships Disclaimer:

Hartcourt's  partners  in the  joint  ventures  discussed  above  are  expecting
Hartcourt to provide key elements in these joint ventures:  Internet  technology
and  investment  capital.   Hartcourt  management  has  hired  individuals  with
extensive  experience and expertise in relevant industry sectors, and 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  may  need  to be  modified  or
cancelled.

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  all 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 some agreements.


                                      F-23
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Funding:

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 funds will be used to
satisfy  Hartcourt's working capital  requirements 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.

PYR Management LLC ("PYR") - On January 26, 2000,  Hartcourt completed a private
placement of 227,445  Units,  each unit  consisting  of a Class I and a Class II
Warrant,  to  PYR  for  $3,000,000  pursuant  to  a  Regulation  D  Subscription
Agreement.  On January 27, 2000,  Hartcourt  received  $2,743,000 from PYR to be
used for  working  capital  requirements  of  Hartcourt.  On  February  4,  2000
Hartcourt filed a Form 8-K with the SEC. On February 21, 2001, Hartcourt and PYR
Management  entered into a Letter  Agreement  whereby the parties  agreed on the
maximum  number of Units PYR can  receive  under  the  reset  provisions  of the
Subscription Agreement.  Pursuant to the terms of the agreement, the quantity of
Units and the exercise  price of the warrants  will no longer  reset.  The final
amount of Units that can be issued shall be 4,000,000 shares of common stock and
4,000,000 Class I Warrants.  The cap amount shall be 8,000,000  shares of common
stock (on a "post-split" basis) including Class I warrants. As a result of reset
calculations, Hartcourt issued on March 6, 2001 an additional 930,784 shares and
on May 18, 2001 an  additional  1,035,308  shares of common stock for a total of
4,000,000  shares as of March 31, 2003 and  4,000,000  warrants  exercisable  at
$0.69375 per share of common stock.  No warrants have been  exercised to convert
into common shares as of April 29, 2003.

Edda Limited ("Edda"):  On December 26, 2000,  Hartcourt and Edda signed a Stock
Sale Agreement (Agreement) whereby Hartcourt agreed to sell 4,000,000 restricted
shares of its common stock as a block to Edda at the agreed price of fifty cents
($0.50)  per  share.  Pursuant  to the terms of the  Agreement,  Hartcourt  will
deliver to Edda the requisite number of common shares  restricted under the Rule
144 of SEC regulations  upon receipt of the full and complete  purchase price in
the amount of $2,000,000.  On October 31, 2001,  Hartcourt  issued an additional
1,363,636 common shares valued at $0.22 per share for a subscription  receivable
of  $300,000.  On March 4,  2002,  Hartcourt  and Edda  signed a new Stock  Sale
Agreement  whereby  Hartcourt agreed to sell 5,000,000  restricted shares of its
common stock as a block to Edda at the agreed price of twelve cents  ($0.12) per
share or $600,000.  The accompanying financial statements reflect that Hartcourt
received $2,326,819 from Edda as of March 31, 2003.

However,  during the 2002 audit,  Hartcourt  found that the issued  share prices
should have been  calculated  differently  according  to the  agreement  and its
addendum.  Therefore, the correct price of 4,000,000 restricted shares issued on
December 26, 2000 and the 1,363,636 restricted shares issued on October 31, 2001
and 5,000,000  restricted shares issued on March 4, 2002 should have been $0.28,


                                      F-24
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

$0.095 and $0.085 per share  respectively.  As a result,  Hartcourt has adjusted
the additional  paid-in capital and subscription  receivable  respectively as of
December 31, 2002.


Enlight Corporation ("Enlight"):  On May 9, 2002, Hartcourt and Enlight signed a
Stock Purchase  Agreement whereby Hartcourt agreed to sell 5,000,000  restricted
shares of its common  stock as a block to  Enlight  at the price of eight  cents
($0.08) per share.  However,  as Hartcourt share price kept decreasing,  the two
sides have agreed to revise the  agreement on 10 October  2002.  Pursuant to the
terms of the new  agreement,  Enlight will purchase  $1,000,000  worth of common
shares of Hartcourt,  restricted  under Rule 144 and/or Reg S  regulation,  at a
discount to current market price.  As of March 31, 2003,  Hartcourt has received
$1,000,000  from  Enlight  and agreed to issue  2,417,520  restricted  shares to
Enlight each month starting  December 2002. As of March 31, 2003,  Hartcourt has
issued four  installments  of the restricted  shares to Enlight as in accordance
with the agreement.

Hartcourt's future business,  including  expansion of its current operations and
acquisition plans requires  additional  equity and/or debt financing,  which may
not be  available  in a  timely  manner  or on  commercially  reasonable  terms.
Currently,  Hartcourt'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.

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 audited  financial  statements and related
notes included in the Company's 2002 Form 10-KSB.

During the first quarter of 2003,  ended on March 31, 2003, the Company acquired
a controlling  interest of HuaQing.  This  acquisition  consummated  via a proxy
exercise,  .has a significant financial implication to Hartcourt's operations as
to  Hartcourt's  sales  operating  results,  and  assets  (See Note # 1). As the
Company  is a public  traded  entity in the United  States,  it is  required  to
disclose  such a major  event  on Form  8-K with  the  Securities  and  Exchange
Commission  under  the  federal  securities  laws  of  the  United  States.  The
disclosure should include audited financial  statements of HuaQing, the recently
acquired  entity,  for the two most recent fiscal years and any interim  periods
prior to the date of such an acquisition. Such a disclosure should also included
in a pro forma financial  information showing the effect of the acquisition.  As
of this review date such required audited financial statements and the pro forma
financial information have not been filed with the SEC..

In the opinion of management,  the accompanying unaudited consolidated financial
statements   contain  all  adjustments  (which  include  only  normal  recurring



                                      F-25
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

adjustments)  necessary to present  fairly the Balance  Sheets of The  Hartcourt
Companies, Inc. and its subsidiaries as of March 31, 2003 and December 31, 2002,
and the results of their  operations  and their cash flows for the three  months
ended March 31, 2003 and 2002,  respectively.  The financial  statements for the
three  months ended March 31, 2003 are  consolidated  to include the accounts of
The Hartcourt  Companies  Inc., its 58.53% owned  subsidiary  Financial  Telecom
Limited, its wholly owned subsidiary Hartcourt Companies Ltd. (formerly known as
Sinobull.com  Inc.) which owns 85% of StreamingAsia  Limited Group, its 5% owned
subsidiary  HuaQing  Corporate  Development  Co.,  Ltd.  and  its  wholly  owned
subsidiary Hartcourt Capital Inc.

The  financial  statements  for the  three  months  ended  March  31,  2002  are
consolidated  to include the  accounts of The  Hartcourt  Companies,  Inc.,  its
58.53% owned subsidiary Financial Telecom Limited, its 85% owned subsidiary Asia
Top of StreamingAsia  Limited Group,  its 51.7% owned  subsidiary  Elephant Talk
Communications,  Inc., its wholly owned  subsidiary  Sinobull.com  Inc., and its
66.7% owned subsidiary HCTV.

The  results of  operations  for the three  months  ended March 31, 2003 are not
necessarily indicative of the results to be expected for the entire year.

Certain  2002  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, 2002.

Note 3.  Supplemental Disclosure of Non-Cash Financing Activities

                                            Three Months     Three Months
                                               Ended            Ended
                                             March 31,        March 31,
                                              2003              2002
                                            -------------    -------------
Cash paid for:
  Interest                                  $     13,149     $     32,926
  Taxes                                                -                -
                                            ============     ============
Non-cash operating and
financing activities:
 Shares issued to directors for
  compensation and services                 $          -     $     94,800
 Shares issued for consulting
  services                                       105,733           75,500
 Shares issued for subscription
  payable                                        212,500                -
 Shares issued in connection
  with acquisitions (See Note #1)              2,202,545                -



                                      F-26
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

Note 4.  Loss per Share
                                            Three Months     Three Months
                                               Ended            Ended
                                             March 31,        March 31,
                                              2003              2002
                                            -------------    -------------
Net loss                                    $    186,916     $    768,523
Effects of dilutive securities                         -                -
                                            ------------     ------------
Weighted average shares outstanding          101,630,023       74,150,428

Basic and dilutive earnings per share       $      (0.00)    $      (0.01)
                                            ============     ============

At March 31, 2003 and 2002, the Company had 9,733,530 and 4,733,530 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.

Note 5.  Segment and related information:

The  Company  has  five(5)  reportable  segments.  Each  segment is a  strategic
business that the Company manages  separately because each business develops and
sells products to a specific market. The reportable  segments are as follows: a)
IT Products Marketing and Distribution Group,  provides services to customers to
build their own PCs with  components,  technology  and after sales  support;  b)
Financial Services, provides financial content through various sources including
television,   internet  and  wireless  access  systems;  c)  Telecommunications,
provides comprehensive  telecommunications services, which was divested in 2002;
d) Streaming Media, provides internet related software development services with
an  expertise  in audio and video  streaming to  businesses.  e)The  Consulting,
E-learning  Group  and  Capital  Groups  operating  segments  do  not  meet  the
quantitative  threshold for a reportable  segment and are therefore  included in
the "Other"  category.  The  principal  market and  operation  for the Company's
products is located in China.  Foreign  sales,  primarily  in China  amounted to
$5,722,349  during the three months  ended March 31, 2003 (see Note #1,  HuaQing
acquisition, and Note #2. Basis of Presentation). The Chinese operations account
for $13,167,147 of  consolidated  total assets as of March 31, 2003 (See Note #1
HuaQing acquisition).  As Hartcourt divested its relationship with Elephant Talk
Communications Inc. (ETCI), a former controlling subsidiary on October 23, 2002,
the  segment  information  of the first  quarter  of 2003 does not  include  any
financial  information of ETCI. The accounting  policies of the segments are the
same as described in the summary of significant accounting policies.


 The Company  evaluates  segment  performance  based on income from  prospective
operations.   All  inter  company   transactions   between  segments  have  been
eliminated.  As a result,  the  components of operating loss for one segment may
not be comparable to another segment.



                                      F-27
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)


Segment  results  for the three  months  ended  March  31,  2003 and 2002 are as
follows:

<TABLE>
<S>                 <C>         <C>            <C>          <C>        <C>         <C>
                    IT-Products     Tele-       Financial   Streaming
                     Marketing  Communications   Services     Media       Other       Total
                    ----------- -------------- ------------ ---------- ----------- ------------
2003
----
Net sales            5,494,725  $          -   $   181,342  $       -  $   46,282  $ 5,722,349

Gain/(Loss) from
operations              56,726             -       (95,342)   (23,463)   (124,837)    (186,916)

Depreciation and
amortization               151             -        34,348          -       3,129       37,628

Assets              10,696,394             -     2,244,619    142,525   3,533,632   16,617,170

Capital
expenditures                 -             -             -          -           -            -
                    --------------------------------------------------------------------------
2002
----
Net sales                    -  $  2,947,878   $   373,880  $  76,115  $  149,726  $ 3,547,599

Loss from
operations                   -      (223,370)     (337,835)   (69,366)   (373,853)  (1,004,424)

Depreciation and
amortization                 -       148,807       192,899     18,473       2,128      362,307

Assets                       -     7,929,177     4,375,132    404,151   3,718,385   16,426,845

Capital
expenditures                 -             -       (25,301)         -           -      (25,301)
                    --------------------------------------------------------------------------
</TABLE>

Note 7.  Litigations

Comerica Bank of California v. Pego Systems,  Inc., et al. ("Pego"), Los Angeles
Superior Court Case No. NC 027 075:

This litigation concerns  Hartcourt's alleged obligation as an alleged guarantor
of Pego's  alleged  obligation  on a  promissory  note that is asserted to be in
non-financial default. The complaint alleges that Hartcourt executed a guarantee
of obligation of Pego which obligation went into non-financial default. Comerica
entered the stipulation for entry of judgment to enforce a settlement agreement,
which stipulation calls for certain payments and transfers of funds by Pego, and



                                      F-28
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

a  judgment  of   approximately   $635,000   exists  of  which  Hartcourt  is  a
co-guarantor.   The  assets  of  Pego  including  accounts  receivable  will  be
liquidated  to pay down the debt.  The case is ongoing  and the  Company has not
accrued any of the guaranteed  payments in its financial  statements as of March
31, 2003.

Charles Hogue v. The Hartcourt  Companies,  Orange Court Circuit Court,  Florida
Case No. CIO 00-2190, filed on or about March 22, 2000:

Charles  Hogue  filed a  complaint  to  claim  a  finder's  fee for  introducing
Hartcourt to a potential  acquisition target.  Hartcourt sent the payment to Mr.
Hogue via check in the amount of $40,500 for such  finder's  fee,  but Mr. Hogue
demanded  that he be paid in shares of  Hartcourt  with the  amount of shares in
dispute.  Hartcourt's  counsel in Florida failed to timely file an Answer to the
complaint,  and default  judgment in the amount of $2,901,752 was entered in the
trial court on January 31, 2001  without a trial and despite  serious  questions
raised by Hartcourt as to the propriety of the exercise of jurisdiction  over it
by a Florida court.  Hartcourt brought a motion to set aside the default,  which
was  denied.  Hartcourt  appealed  the  judgment  entered by the trial  court on
multiple grounds. On June 7, 2002, the Florida Appellate Court ruled in favor of
Hartcourt and reversed the judgment in its  entirety,  finding that Florida does
not have jurisdiction over Hartcourt. The case is no longer active.

In Apollo Financial Network, LLC v. The Hartcourt  Companies,  Inc., Los Angeles
Superior Court Case No. BC 245398, filed on February 21, 2001,

Apollo Financial Network filed an action for breach of contract arising out of a
consulting agreement, which was canceled in January 1999. The matter was settled
when the Company  stipulated  to entry of  judgment  against it in the amount of
$11,500.00,  which  represented  an  amount  less  than the  projected  costs of
defense. Judgment in such amount was entered against the Company on November 20,
2002.  The case is ongoing and the Company has not accrued any of the guaranteed
payments in its financial statements as of March 31, 2003.

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
primarily to contractual rights and obligations,  and employment matters.  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 8.  Subsequent events

Guangdong  NewHuaSun  Computer  Co.,  Ltd.  ("NewHuaSun"):  On April  30,  2003,
Hartcourt  signed  a  definitive  agreement  to  purchase  of  45% of all of the
interest of NewHuaSun,  for a total  consideration  of $3,304,597.  The purchase
price will be paid by issuance of  13,769,156  restricted  common  shares of the
Registrant.  NewHuaSun,  founded  in  1998,  specializes  in the  marketing  and
distribution  of PC and other digital  products.  NewHuaSun  owns and operates 5


                                      F-29
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2003 (UNAUDITED)

flagship  stores  and  service  centers,  as well  as 60  affiliated  stores  in
Guangdong,  Guangxi, Fujian, Hunan and Hainan provinces,  serving customers with
latest computer hardware, software, technical services and digital products.

Shanghai  GuoWei  Science and  Technology  Ltd  ("GuoWei"):  On April 30,  2003,
Hartcourt  signed  a  definitive  agreement  to  purchase  of  45% of all of the
interest of GuoWei, for a total consideration of $4,345,517.  The purchase price
will  be  paid  by  issuance  of  10,863,792  restricted  common  shares  of the
Registrant.  GuoWei,  founded in 1996,  owns and  operates 13 stores in Shanghai
area and  surrounding  areas,  completed  with  service  centers  and  warehouse
distribution.  The stores  provide  customers  with  latest  computer  hardware,
software,  technical services and other digital products. It is also the leading
online PC retailer in Shanghai for computer products at www.12diy.com.

Changes in the Board of Directors:  On April 2, 2003,  the Board of Directors of
the Company has accepted the  resignation  of Mr. Anthony Qiao, who had resigned
due to potential conflict of interest, because he is also the Company's attorney
in China.  The Board has appointed Dr.  XiaoYang Li to replace Mr. Qiao.  Dr. Li
has accepted the assignment.  In addition,  the Board has appointed Mr. Geoffrey
Wei as a new member to its Board. Mr. Wei has accepted the assignment.  Mr. Wei,
a certified public accountant, will head the Audit Committee.  Together with Dr.
Billy Wang, the two new independent directors will share equal voting power with
the management, reflecting the standard set forth by Sarbanes-Oxley Act.






























                                      F-30
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                           MARCH 31, 2003 (UNAUDITED)

Part I

Item 2  Management's Discussion and Analysis or Plan of Operation

General

The following is a summary of certain  information  contained in this report and
is  qualified  in  its  entirety  by  the  detailed  information  and  financial
statements that appear elsewhere herein.  Except for the historical  information
contained herein,  the matters set forth in this report include  forward-looking
statements  within the meaning of the "safe  harbor"  provisions  of the Private
Securities Litigation Reform Act of 1995. These  forward-looking  statements are
subject  to risks and  uncertainties  that may cause  actual  results  to differ
materially. These risks and uncertainties are detailed throughout the report and
will be further  discussed  from time to time in  Hartcourt's  periodic  reports
filed with the commission. The forward-looking statements included in the report
speak only as of the date hereof.

Plan of Operation

The Hartcourt  Companies,  Inc. is a holding and development  enterprise that is
building a broad network of IT products'  marketing and distribution,  Internet,
media,  and  telecommunication  companies in Greater China. In partnership  with
leading Chinese entrepreneurs and  government-sponsored  entities,  Hartcourt is
developing and investing in emerging  technologies  while building an integrated
commercial  framework  for its  subsidiaries  and  their  partners.  Hartcourt's
operative business strategy is designed to establish market-leading position and
facilitate  a series of venture  divestitures  via IPO or public  mergers in its
five main business  divisions to fully realize the value of these assets for its
investors.   The  five  business   divisions  are  IT  Products   Marketing  and
Distribution Group,  Sinobull Financial Group, Media Services Group,  E-learning
Group and Hartcourt Capital Group.

Hartcourt,  through a combination  of expertly  managed  internal  expansion and
accretive strategic  acquisitions,  is executing plans to provide a sustainable,
growing,  diversified and profitable revenue base throughout its operations. The
company is aggressively identifying and pursuing the best business opportunities
available.  Through a continued  refinement  of  operational  efficiencies,  and
increasing   revenue  margins,   the  Company  is  providing  a  clear  path  to
profitability for its current and future businesses."

Results of Operations

Since  mid-1999,  Hartcourt  has been  focusing on  assembling a  collection  of
companies and services that will provide  citizens of China with next generation
communication  services,  including  China-focused Internet access and financial
portals,  online  share  trading  services,  data  broadcasting,  and  financial
services.  The Company  signed  underwriting  agreements  for the initial public
offerings of shares of its two most  developed  investments,  both of which were
planned in the year 2001. On January 4, 2002, pursuant to an Agreement of Merger
and Plan of Reorganization,  Hartcourt's subsidiary Elephant Talk Limited merged


                                      F-31
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                           MARCH 31, 2003 (UNAUDITED)

with Staruni Corporation, a California corporation,  organized under the laws of
California  and  listed  on the over the  counter  on  bulletin  board of NASDAQ
exchange. Hartcourt plans to eventually build all of its current operations into
stand-alone entities that will also be taken public on US and/or Asian Financial
markets.  During 2003,  Hartcourt  continued its previously  implemented plan to
acquire profitable companies that were in established  industries with a history
of  growth.  In  February  2003,  Hartcourt  successfully  acquired  HuaQing,  a
profitable  and growing IT service  related  company.  In April 2003,  Hartcourt
signed definite  agreements to acquire NewHuaSun Group,  another PC distributor,
to further  consolidate the marketing  position and improve the operating result
of the whole Company.  When appropriate,  Hartcourt will seek ways to make these
entities be public to give shareholders high returns.

The  operations of Hartcourt for the three months ended March 31, 2003 consisted
of the  operations  of FTL  (58.53%  ownership  interest),  Hartcourt  Companies
Limited  (formerly known as Sinobull.com  Inc.) (100% ownership  interest) which
holds 85%  ownership  interest  in  StreamingAsia  Limited  and  Syndicate  Asia
Limited,   Ai-Asia  Limited  (100%  ownership   interest),   HuaQing   Corporate
Development  Co., Ltd. (45% ownership  interest),  Hartcourt  Capital Inc. (100%
ownership interest),  and Hartcourt's  investment and advances to other entities
in US, China and Hong Kong. Operations for the three months ended March 31, 2003
consisted of operations of FTL (58.53%  ownership  interest),  Sinobull.com Inc.
(100% ownership interest),  Elephant Talk Communications,  Inc. (51.7% ownership
interest),  StreamingAsia Holdings Limited (85% ownership interest), HCTV (66.7%
ownership  interest),  and  Hartcourt's  investment  and  advances to  Hartcourt
Capital Limited for acquisitions in China and Hong Kong.

Net sales and cost of sales:  The Company  recorded net sales of $5,722,349  for
the three  months  ended March 31,  2003,  compared to  $3,547,599  for the same
periods  in 2002.  Net  sales  during  the three  months  ended  March 31,  2003
primarily  consisted of revenues derived from sales of IT products to customers,
providing  services  to help  customers  build  their  own PCs with  components,
technology  and after sales  support.  Net sales also  include sale of rental of
equipment,  and the related Internet and telephone services provided by FTL; and
real-time  financial data services  provided by Sinobull  Financial  Information
using a satellite network to transmit data specializes in stock quotes, futures,
indexes  and  commodities  to its  customers  in China.  Net sales for the three
months  ended March 31,  2002  primarily  consisted  of  revenues  derived  from
providing  telecommunication  services relating to voice, data transmission like
IDD,  pre-paid  calling  cards and ISP  services  to a wide  range of  customers
including major telecommunication  companies in US and Hong Kong. Net sales also
include sale of wireless pagers,  rental of equipment,  and the related Internet
and  telephone  services  provided by FTL;  real-time  financial  data  services
provided by Sinobull Financial Information using a satellite network to transmit
data  specializes  in stock  quotes,  futures,  indexes and  commodities  to its
customers  in China;  and  StreamingAsia  providing  web  hosting  and  software
development  services in audio and video  delivery or streaming  solutions.  The
increase of sales was mainly attributed due to the sales of HuaQing, acquired in
February 2003,  although the accompanied  financial  statements only include one
month's  operating  result of HuaQing.  Cost of sales amounted to $5,330,865 for
the three months ended March 31, 2003 compared to $3,022,964 for the same period


                                      F-32
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                           MARCH 31, 2003 (UNAUDITED)

in 2002.  Cost of sales for the three  months  ended  March 31,  2003  primarily
included the costs of IT products sold to customers provided by HuaQing; cost of
transmission and Internet services provided to FTL customers; and costs incurred
in providing financial data services in stock quotes, futures and commodities by
Sinobull.  Cost of sales for the three  months  ended March 31,  2002  primarily
included  the  costs  in  providing  resale   arrangements  with  long  distance
providers,  cost  of  leasing  transmission  facilities,  international  gateway
switches voice,  data  transmission  and ISP services  offered by Elephant Talk;
cost of wireless pagers,  cost of transmission and Internet services provided to
FTL and FWL customers;  costs  incurred in providing  financial data services in
stock  quotes,  futures  and  commodities  by  Sinobull;  and costs  incurred in
providing audio and video delivery and streaming solutions by StreamingAsia. The
drop in  operational  margin  was  mainly  contributed  to the  lower  margin in
distribution sector when compared to the margin of telecommunication sector.

Selling,  general and administrative expenses (SG&A): SG&A were $421,867 for the
three months ended March 31, 2003 compared to $1,079,593  for the same period in
2002. Apart from reduction in consulting,  legal and  administrative  costs, the
significant  decrease was primarily attributed due to lower expenses ratio of IT
distribution sector, compared to its higher sales amount.

Depreciation and  amortization:.  The depreciation and amortization were $37,628
for the three  months  ended  March 31, 2003  compared to $362,307  for the same
period  in 2002.  The  significant  decrease  resulted  mainly  due to the lower
equipment  requirements in distribution  sector in 2003 compared with the higher
equipment requirements in telecommunication sector in 2002.

Liquidity and Capital Resources:

Hartcourt's  principal capital requirements during the year 2003 are to fund the
acquisitions  of growth  oriented IT related  operating  companies  in China and
Asia.  During the three months ended March 31, 2003,  Hartcourt 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 a net loss
of $186,916  for the three months ended March 31, 2003 as compared to a net loss
of $768,523 for the same period in 2002,  although  Hartcourt's  current  assets
exceeded its current  liabilities by $586,836 at March 31, 2003. This factor and
the need to raise additional funds to accomplish its objectives,  create a 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.
The Company  plans to actively  seek funding  sources once  Hartcourt is able to
discontinue and dispose-off all non-profitable assets by selling or spinning-off
or restructuring to minimize loss or liability.

Operating  activities:  During the three months  ended March 31, 2003,  net cash
used by operating activities increased to $1,146,411 compared to $321,323 during

                                      F-33
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                           MARCH 31, 2003 (UNAUDITED)

the same  period in 2002.  The cash  outflow in  operating  activities  resulted
primarily due to the increase of accounts  receivable of $2,172,162,  netting of
the increase of accrued  expenses and other  current  liabilities  of $1,125,097
after acquisition of HuaQing, due to the net loss during the period of $186,916,
and also due to the increase of inventory, decrease of accounts payable, etc.

Investing activities. Net cash provided by investing activities during the three
months ended March 31,  2003,  was  $2,618,356  compared to $71,491 for the same
period in 2002.  Cash provided  during the three months ended March 31, 2003 was
primarily due to proceeds  received on return of investment from HCTV of $10,000
and the cash acquired resulted from the acquisition of HuaQing of $2,608,356.

Financing activities. Net cash provided by financing activities during the three
months ended March 31, 2003 was $1,435,798  compared to $139,689 during the same
period in 2002. Net cash was provided primarily due to proceeds from increase of
bank loans and notes payable amounted to $604,741 and 622,883 respectively.

As a result of the above activities,  the company  experienced a net increase in
cash of  $2,987,588  for the three months ended March 31, 2003.  In spite of the
positive  cashflow  results,  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.































                                      F-34
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                                OTHER INFORMATION
                           MARCH 31, 2003 (UNAUDITED)

Part II

Item 1.  LEGAL PROCEEDINGS

Comerica Bank of California v. Pego Systems,  Inc., et al. ("Pego"), Los Angeles
Superior Court Case No. NC 027 075:

This litigation concerns  Hartcourt's alleged obligation as an alleged guarantor
of Pego's  alleged  obligation  on a  promissory  note that is asserted to be in
non-financial default. The complaint alleges that Hartcourt executed a guarantee
of obligation of Pego which obligation went into non-financial default. Comerica
entered the stipulation for entry of judgment to enforce a settlement agreement,
which stipulation calls for certain payments and transfers of funds by Pego, and
a  judgment  of   approximately   $635,000   exists  of  which  Hartcourt  is  a
co-guarantor.   The  assets  of  Pego  including  accounts  receivable  will  be
liquidated  to pay down the debt.  The case is ongoing  and the  Company has not
accrued any of the guaranteed  payments in its financial  statements as of March
31, 2003.

Charles Hogue v. The Hartcourt  Companies,  Orange Court Circuit Court,  Florida
Case No. CIO 00-2190, filed on or about March 22, 2000:

Charles  Hogue  filed a  complaint  to  claim  a  finder's  fee for  introducing
Hartcourt to a potential  acquisition target.  Hartcourt sent the payment to Mr.
Hogue via check in the amount of $40,500 for such  finder's  fee,  but Mr. Hogue
demanded  that he be paid in shares of  Hartcourt  with the  amount of shares in
dispute.  Hartcourt's  counsel in Florida failed to timely file an Answer to the
complaint,  and default  judgment in the amount of $2,901,752 was entered in the
trial court on January 31, 2001  without a trial and despite  serious  questions
raised by Hartcourt as to the propriety of the exercise of jurisdiction  over it
by a Florida court.  Hartcourt brought a motion to set aside the default,  which
was  denied.  Hartcourt  appealed  the  judgment  entered by the trial  court on
multiple grounds. On June 7, 2002, the Florida Appellate Court ruled in favor of
Hartcourt and reversed the judgment in its  entirety,  finding that Florida does
not have jurisdiction over Hartcourt. The case is no longer active.

In Apollo Financial Network, LLC v. The Hartcourt  Companies,  Inc., Los Angeles
Superior Court Case No. BC 245398, filed on February 21, 2001,

Apollo Financial Network filed an action for breach of contract arising out of a
consulting agreement, which was canceled in January 1999. The matter was settled
when the Company  stipulated  to entry of  judgment  against it in the amount of
$11,500.00,  which  represented  an  amount  less  than the  projected  costs of
defense. Judgment in such amount was entered against the Company on November 20,
2002.  The case is ongoing and the Company has not accrued any of the guaranteed
payments in its financial statements as of March 31, 2003.

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
primarily to contractual rights and obligations,  and employment matters.  While
there can be no  assurance  that an adverse  determination  of any such  matters


                                      F-35
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                                OTHER INFORMATION
                           MARCH 31, 2003 (UNAUDITED)

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.

















































                                      F-36
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                                OTHER INFORMATION
                           MARCH 31, 2003 (UNAUDITED)

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

        On February 25, 2003,  Hartcourt's  acquisition  of  45%  of  ownership
        interest  in  Shanghai  HuaQing Corporation  Development Co., Ltd. File
        Number 001-12671.  Incorporated herein by reference.


























                                      F-37
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                                OTHER INFORMATION
                           MARCH 31, 2003 (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:  May 13, 2003           By: /s/ Alan V. Phan
                              --------------------------------
                              Dr. Alan V. Phan
                              Chairman


Date:  May 13, 2003           By: /s/ David Chen
                              --------------------------------
                              David Chen
                              Chief Executive Officer and
                              Principal Accounting Officer
































                                      F-38
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                                OTHER INFORMATION
                           MARCH 31, 2003 (UNAUDITED)

                                302 CERTIFICATION
I, David Y. Chen, certify that:

1.       I  have  reviewed  this  transition  report on Form 10-QSB of HARTCOURT
         COMPANIES INC;
2.       Based on my  knowledge,  this  transition  report  does not contain any
         untrue  statement of a material  fact or omit to state a material  fact
         necessary to make the  statements  made, in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this transition report;
3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included in this transition report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this transition report;
4.       The registrant's  other  certifying  officers and I are responsible for
         establishing  and maintaining  disclosure  controls and  procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:
         a.   designed such disclosure  controls and  procedures  to ensure that
              material  information  relating to the  registrant,  including its
              consolidated  subsidiaries,  is made known to us by  others within
              those  entities,  particularly  during the period  in   which this
              transition report is being prepared;
         b.   evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls and procedures as of a date within 90 days prior to   the
              filing date of this transition report (the "Evaluation Date"); and
         c.   presented  in  this  transition  report our conclusions  about the
              effectiveness of the disclosure  controls and procedures  based on
              our evaluation as of the Evaluation Date;
5.       The registrant's other certifying officers and I have disclosed,  based
         on  our  most recent  evaluation,  to the registrant's auditors and the
         audit  committee  of  the  registrant's  board of directors (or persons
         performing the equivalent functions):
         a.   all  significant  deficiencies  in  the  design  or  operation  of
              internal  controls  which  could adversely affect the registrant's
              ability to  record,  process, summarize  and report financial data
              and have identified for the  registrant's  auditors  any  material
              weaknesses in internal controls; and
         b.   any fraud, whether or not material,  that involves  management  or
              other  employees who have a significant  role in the  registrant's
              internal controls; and
6.       The registrant's other certifying officers and I have indicated in this
         transition  report  whether  or not there were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:  May 13, 2003                By: /s/ David Chen
                                   --------------------------------
                                   David Chen
                                   Acting Chief Executive Officer and
                                   Principal Accounting Officer
                                      F-39
<PAGE>
                 THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
                                OTHER INFORMATION
                           MARCH 31, 2003 (UNAUDITED)

                                302 CERTIFICATION
I, Richard Yan, certify that:

1.       I  have  reviewed  this  transition report on  Form 10-QSB of HARTCOURT
         COMPANIES INC;
2.       Based on my  knowledge,  this  transition  report  does not contain any
         untrue  statement of a material  fact or omit to state a material  fact
         necessary to make the  statements  made, in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this transition report;
3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included in this transition report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this transition report;
4.       The  registrant's  other certifying  officers and I are responsible for
         establishing and maintaining  disclosure  controls  and  procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:
         a.   designed such disclosure  controls and  procedures  to ensure that
              material  information  relating to the  registrant,  including its
              consolidated  subsidiaries,  is made known to us by  others within
              those  entities,  particularly  during the period in   which  this
              transition report is being prepared;
         b.   evaluated  the  effectiveness  of   the  registrant's   disclosure
              controls and procedures as of a date within 90 days prior to   the
              filing date of this transition report (the "Evaluation Date"); and
         c.   presented  in  this  transition  report our conclusions  about the
              effectiveness of the disclosure  controls and procedures  based on
              our evaluation as of the Evaluation Date;
5.       The registrant's  other certifying officers and I have disclosed, based
         on  our  most  recent evaluation,  to the registrant's auditors and the
         audit  committee  of  the  registrant's  board of directors (or persons
         performing the equivalent functions):
         a.   all  significant   deficiencies  in  the  design or  operation  of
              internal  controls  which  could adversely affect the registrant's
              ability to  record,  process,  summarize and report financial data
              and have  identified for the  registrant's  auditors  any material
              weaknesses in internal controls; and
         b.   any fraud, whether or not material, that  involves  management  or
              other  employees who have a significant  role in the  registrant's
              internal controls; and
6.       The registrant's other certifying officers and I have indicated in this
         transition  report  whether  or not there were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date:  May 13, 2003              By: /s/ Richard Yan
                                 --------------------------------
                                 Richard Yan
                                 Acting Chief Financial Officer and
                                 Financial Controller
                                      F-40