March 28, 1998

The Hartcourt Companies, Inc.
19104 S. Norwalk Blvd.
Artesia, California 90701

AttentionMr. Alan V. Phan
                  President

Gentlemen:

This letter is to confirm our  understanding  with respect to the  engagement of
DanAllen  Investment Group,  Inc.  (DanAllen) by The Hartcourt  Companies,  Inc.
(Hartcourt) on a non-exclusive  basis for one year (the "Engagement  Period") to
render certain financial  advisory and investment  banking services to Hartcourt
in  connection  with the  raising  capital  for  Hartcourt  and other  financing
transactions.

1.       Services to be Rendered.  In our role as non-exclusive financial
 advisor, DanAllen will provide, during the
         Engagement Period, the following services:

         a.       We will investigate companies which are possible targets fo
 acquisition by Hartcourt, as directed
                  by Hartcourt (a "Subject Company").

         b.       We will review the proposed  acquisition of a Subject  Company
                  from both a  strategic  and  valuation  viewpoint  and  render
                  merger,   acquisition  and  advisory   services   include  the
                  following:

                  i.         Make  recommendations on an acquisition  structure,
                             the terms and  conditions  on which an  acquisition
                             could be proposed and the capital  structure of the
                             entity  formed to effect an  acquisition,  and help
                             develop  strategies  as  needed  to be  used in the
                             approach   to  the   Subject   Company   based   on
                             preliminary due diligence; and
                  ii.        Assist in preliminary due diligence required to
submit initial letters of interest in auction
                             situations.

         c.       In the event Hartcourt,  in its sole and absolute  discretion,
                  elects to pursue an  acquisition  or merger with any  company,
                  DanAllen  will,  at  Hartcourt's  request  (which  shall be at
                  Hartcourt's  sole and  absolute  discretion),  render  certain
                  financial  advisory and investment  banking services including
                  the following:

                  i.         Assist with the due diligence and review any
 proposed acquisition from both a strategic
                             and valuation viewpoint.
                  ii.        Make recommendations on an acquisition structure, 
the terms and conditions on which an
                             acquisition could be proposed and the capital
structure of the entity formed to effect an
                             acquisition.
                  iii.       Help develop strategies as need to be used in the
 negotiations with the management and
                             advisors of the Subject Company.
                  iv.        Assist in negotiations with, preparation of
presentation materials to management, lenders,
                             other sources of financing and other parties 
required to effect the acquisition.
                  v.         Assist in identifying and approaching sources 
of financing for the acquisition; and
                  vi.        Use our reasonable best efforts to arrange the
 financing of the acquisition, including:

                                                             62

<PAGE>



                             (1)       Identifying    financing    alternatives,
                                       analyzing the  structuring  and timing of
                                       the  financing  and  assessing the terms,
                                       conditions   and   pricing   under  which
                                       financing  could be  obtained in the time
                                       frame    required   to    complete    the
                                       acquisition;
                             (2)       Acting as advisor and agent in raising o
 assisting in raising all financing required
                                       to complete the acquisition; and
                             (3)       Presenting  as  required  a letter to the
                                       Subject    Company   or   its    advisors
                                       representing  our level of  comfort  with
                                       respect  to the  financing  which will be
                                       required for the acquisition.

2.       Retainer.  As compensation for our services, DanAllen will be paid an
 advance payment of 100,000 shares
         of restricted common stock ("Common stock") of Hartcourt as a deposit
 against fees associated with the first
         three financings completed by DanAllen for the benefit of Hartcourt.

3.       DanAllen's  engagement  hereunder may be terminated by either Hartcourt
         or  DanAllen at any time with or without  cause,  upon thirty (30) days
         written notice to the other party, provided,  however, that if DanAllen
         or Hartcourt so  terminates  this  agreement,  DanAllen  will  promptly
         return any unearned fees paid pursuant to Section 2 above.

The  validity  and  interpretation  of this  Agreement  shall be governed by and
construed in accordance  with the laws of the State of California  applicable to
agreements  made and to be performed  therein.  The  benefits of this  agreement
shall inure to the respective  successors and assigns of the parties hereto, and
the obligations and liabilities  assumed in this Agreement by the parties hereto
shall be binding upon their  respective  successors and assigns.  This Agreement
shall be not amended, modified or waived orally.

If the foregoing  correctly sets forth our understanding,  please sign below and
return an executed copy to DanAllen  Investment  Group,  19 Rector Street,  21st
Floor, New York, NY 10005.

Sincerely,

DANALLEN INVESTMENT GROUP, INC.

 /s/ Richard Bell
President

AGREED TO AND ACCEPTED
THE HARTCOURT COMPANIES, INC.

/s/ Alan V. Phan
President